Exhibit 10.2

 

EXECUTION COPY

 

AMENDED AND RESTATED

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

ZYMAN GROUP, LLC

 

 

Dated April 1, 2005

 

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AMENDED AND RESTATED

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

ZYMAN GROUP, LLC

 

 

THIS AMENDED AND RESTATED OPERATING AGREEMENT (this “Agreement”) dated April 1,
2005, is made and entered into by and among ZG ACQUISITION INC., a Delaware
corporation (“MDC”), ZYMAN COMPANY, INC., a Delaware corporation (“Zyman”); the
management unitholders signatory hereto (together with any management
unitholders who are admitted as members following the date hereof pursuant to
Section 2.4, the “Management Unitholders” (which term, for the avoidance of any
doubt, shall not include Sergio Zyman (“SZ”)); the Management Unitholders
together with Zyman and MDC collectively referred to as the “Members” and
individually a “Member”), MDC PARTNERS INC., a corporation organized under the
federal laws of Canada (“MDC Partners”), and ZYMAN GROUP, LLC, a Delaware
limited liability company (the “Company”).  Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to such terms in
Article XIII.

 

WHEREAS, Zyman and the Management Unitholders are parties to a Limited Liability
Company Agreement (the “Original Operating Agreement”);

 

WHEREAS, pursuant to the Membership Unit Purchase Agreement dated April 1, 2005
(the “Purchase Agreement”), Zyman and certain Management Unitholders sold,
transferred, conveyed and delivered to MDC 30,794,384 Class B Units, which units
were, effective upon such transfer, automatically converted into Class A Units
of the Company pursuant to the terms of the Original Operating Agreement (the
“Purchase Transaction”), such that immediately after giving effect to such
transfer, the issued and outstanding Units of the Company were as set forth on
Schedule 2.1; and

 

WHEREAS, in connection with the Closing of the Purchase Transaction, the Members
now desire to admit MDC as a member, and to amend and restate the Original
Operating Agreement in the form hereof;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Members and the
other parties hereto do hereby agree as follows:

 

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ARTICLE I

 

FORMATION OF LIMITED LIABILITY COMPANY

 

Section 1.1   Formation.  The Company was formed as a limited liability company
under the laws of the State of Delaware by the filing with the Secretary of
State of Delaware of the Certificate of Formation (as may be amended from time
to time, the “Certificate”).

 

Section 1.2   Purpose.  The Company may engage in any lawful business of every
kind and character for which a limited liability company may be organized under
the Delaware Limited Liability Company Act (as amended from time to time, the
“Act”) or any successor statute.  The Company shall have all of the powers
provided for a limited liability company under the Act.

 

Section 1.3   Offices; Registered Agent.  The principal place of business of the
Company shall be 950 East Paces Ferry Road, N.E., Suite 3300, Atlanta, Georgia
30326, or such other principal place of business as the Managers (as defined in
Section 11.5) may from time to time determine.  The Company may have, in
addition to such office, such other offices and places of business at such
locations, both within and without the State of Delaware, as the Managers may
from time to time determine or the business and affairs of the Company may
require.  The registered agent of the Company in the State of Delaware shall be
the initial registered agent named in the Certificate or such other Person (as
defined in Section 13.1) as the Managers may designate from time to time in the
manner provided by law.

 

Section 1.4   Filings and Foreign Qualification.  Upon the request of the
Managers, the Members shall promptly execute and deliver all such certificates
and other instruments conforming hereto as shall be necessary for the Managers
to accomplish all filing, recording, publishing and other acts appropriate to
comply with all requirements for the formation and operation of a limited
liability company under the laws of the State of Delaware and for the
qualification and operation of a limited liability company in all other
jurisdictions where the Company shall propose to conduct business.

 

Section 1.5   Term.  The Company commenced on the date the Company initially
filed its Certificate with the Secretary of State of Delaware and shall continue
in existence, unless sooner terminated in accordance with the provisions of this
Agreement.

 

ARTICLE II

 

MEMBERS; MEMBERSHIP INTERESTS; UNITS

 

Section 2.1   Members and Membership Units.  The Company is authorized to issue
31,500,000 Class A Units and 25,000,000 Class B Units and the issued Class A
Units and Class B Units are allocated among the Members as set forth on
Schedule 2.1.  Except as the Board of Managers may otherwise determine, all
Units acquired by the Company from any Member pursuant to Article X hereof or
otherwise shall not be cancelled but shall constitute authorized but unissued
Units.  Upon any change in the Members or Units, including by reason of the

 

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issuance of additional Units, Schedule 2.1 shall be deemed to be updated to
reflect such changes and the Members agree to complete a revised Schedule 2.1
hereof, which shall be deemed incorporated into this Agreement as part of this
Section 2.1.

 

Section 2.2   Classes of Units.

 

(a)                                  Class A Units.  The Class A Units shall
have the following characteristics: (i) an initial Unit Capital Account (as
defined in Section 7.2(e) hereof), (ii) provisions relating to transfer as
provided in Article X hereof, (iii) entitlement to a share of Profits and Losses
as set forth in Section 3.3, (iv) entitlement to distributions as provided in
Sections 3.4 and 9.2, (v) entitlement to allocations of PBT as provided in
Section 3.5 and (vi) voting rights equal to one vote per Unit.

 

(b)                                 Class B Units. The Class B Units shall have
the following characteristics: (i) an initial Unit Capital Account (as defined
in Section 7.2(e) hereof), (ii) provisions relating to transfer as provided in
Article X hereof, (iii) entitlement to a share of Profits and Losses as set
forth in Section 3.3, (iv) entitlement to distributions as provided in Sections
3.4 and 9.2, (v) entitlement to allocations of PBT as provided in Section 3.5
and (vi) voting rights equal to one vote per Unit.

 

Section 2.3   Transfer of Units.  In the event a Member transfers all or a
portion of its Membership Interests in accordance with Article X hereof, then
effective as of the date of the sale and subject to compliance with Section 10.1
hereof, such Member shall automatically cease to be a Member in the Company as
to such sold Unit.  Except as otherwise expressly provided herein, upon a
transfer of Units permitted by this Agreement, the transferee shall have all of
the rights, powers and duties of the transferor hereunder with respect to the
transferred Units and shall be admitted as a Member, the transferee shall sign a
counterpart to this Agreement and Schedule 2.1 shall be amended as set forth in
Section 2.1.

 

Section 2.4   Additional Members and Membership Interests.  Subject to
Section 2.3, additional Persons may be admitted to the Company as Members and
Membership Interests may be created and issued to such Persons on such terms and
conditions as the Board of Managers shall approve, subject to Section 4.1
hereof.  The terms of admission or issuance may specify the creation of
different classes or groups of Members having different rights, powers and
duties.  The creation of any new class or group of Members shall be indicated in
an amendment to this Agreement in accordance with Section 14.4 hereof and such
amendment shall indicate the different rights, powers and duties of the classes
or groups of Members.  Upon admission of a new Member, such Person shall sign a
counterpart to this Agreement and Schedule 2.1 shall be amended as set forth in
Section 2.1.

 

Section 2.5   Liability of Member.  Except as expressly provided under the Act,
no Member shall be liable for the debts, liabilities, contracts or other
obligations of the Company, and no Member shall be required to make any loans to
the Company.  Subject to the limitations and conditions provided for in
Article XI hereof and the Act, the Company shall indemnify and hold harmless a
Member in the event a Member becomes liable, notwithstanding the preceding
sentence, for any debt, liability, contract or other obligation of the Company
except to the extent expressly provided in the preceding sentence.

 

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Section 2.6   Limitations on Members.  Other than as specifically provided for
in this Agreement, the Purchase Agreement, an Employment Agreement entered into
pursuant to the Purchase Agreement, or the Act, no Member shall: (a) be
permitted to take part in the business or control of the business or affairs of
the Company; (b) have any voice in the management or operation of any Company
property; or (c) have the authority or power to act as agent for or on behalf of
the Company or any other Member, to do any act which would be binding on the
Company or any other Member, or to incur any expenditures, debts, liabilities or
obligations on behalf of or with respect to the Company.

 

Section 2.7   Certification of Units. Unless a majority of the Members of each
class of Units otherwise agree, the Company shall issue certificates to the
Members representing the Units held by such Members. The following provisions
shall apply:

 

(A)                                  CERTIFICATES ATTESTING TO THE OWNERSHIP OF
UNITS IN THE COMPANY SHALL BE IN SUCH FORM AS SHALL BE APPROVED BY THE MANAGERS
AND SHALL STATE THAT THE COMPANY IS A LIMITED LIABILITY COMPANY FORMED UNDER THE
LAWS OF THE STATE OF DELAWARE, THE NAME OF THE MEMBER TO WHOM SUCH CERTIFICATE
IS ISSUED AND THAT THE CERTIFICATE REPRESENTS LIMITED LIABILITY COMPANY
INTERESTS WITHIN THE MEANING OF THE ACT.  EACH SUCH CERTIFICATE SHALL BE SIGNED
BY SUCH OFFICERS OF THE COMPANY AS ARE APPROVED BY THE MANAGERS AND SHALL BEAR A
LEGEND IN SUBSTANTIALLY THE FOLLOWING FORM:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO AN
EXEMPTION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  IN
ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER AND OTHER RESTRICTIONS SET FORTH IN THE AMENDED AND RESTATED LIMITED
LIABILITY COMPANY OPERATING AGREEMENT, DATED APRIL 1, 2005, AMONG ZYMAN GROUP,
LLC AND ITS MEMBERS (THE “AGREEMENT”) AND MAY NOT BE OFFERED OR SOLD EXCEPT IN
COMPLIANCE WITH SUCH TRANSFER RESTRICTIONS.  COPIES OF THE AGREEMENT ARE ON FILE
WITH THE SECRETARY OF THE LIMITED LIABILITY COMPANY AND ARE AVAILABLE WITHOUT
CHARGE UPON WRITTEN REQUEST THEREFOR. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF
THE AFORESAID AGREEMENT AND THE APPLICABLE RESTRICTIONS UNDER THE ACT.

 

(B)                                 THE TRANSFER REGISTER OR TRANSFER BOOK AND
BLANK CERTIFICATES SHALL BE KEPT BY THE SECRETARY OF THE COMPANY OR BY ANY
TRANSFER AGENT OR REGISTRAR APPROVED BY THE MANAGERS FOR THAT PURPOSE. THE
CERTIFICATES SHALL BE NUMBERED AND REGISTERED IN THE SHARE OR UNIT REGISTER OR

 

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TRANSFER BOOKS OF THE COMPANY AS THEY ARE ISSUED. EXCEPT TO THE EXTENT THAT THE
COMPANY SHALL HAVE RECEIVED WRITTEN NOTICE OF AN ASSIGNMENT OF ANY UNIT IN THE
COMPANY, THE COMPANY SHALL BE ENTITLED TO TREAT THE PERSON IN WHOSE NAME ANY
CERTIFICATES ISSUED BY THE COMPANY STAND ON THE BOOKS OF THE COMPANY AS THE
ABSOLUTE OWNER THEREOF, AND SHALL NOT BE BOUND TO RECOGNIZE ANY EQUITABLE OR
OTHER CLAIM TO, OR INTEREST IN, SUCH UNIT ON THE PART OF ANY OTHER PERSON.

 

(C)                                  SUBJECT TO ALL PROVISIONS HEREIN RELATING
TO TRANSFERS OF UNITS, IF THE COMPANY SHALL ISSUE CERTIFICATES IN ACCORDANCE
WITH THE PROVISIONS OF THIS SECTION 2.7, TRANSFERS OF UNITS SHALL BE MADE ON THE
REGISTER OR TRANSFER BOOKS OF THE COMPANY UPON SURRENDER OF THE CERTIFICATE
THEREFOR, ENDORSED BY THE PERSON NAMED IN THE CERTIFICATE OR BY AN ATTORNEY
LAWFULLY CONSTITUTED IN WRITING.

 

(D)                                 THE HOLDER OF ANY CERTIFICATES ISSUED BY THE
COMPANY SHALL IMMEDIATELY NOTIFY THE COMPANY OF ANY LOSS, DESTRUCTION OR
MUTILATION OF SUCH CERTIFICATES, AND THE MANAGERS MAY CAUSE A NEW CERTIFICATE OR
CERTIFICATES TO BE ISSUED TO SUCH HOLDER, IN CASE OF MUTILATION OF THE
CERTIFICATE, UPON THE SURRENDER OF THE MUTILATED CERTIFICATE OR, IN CASE OF LOSS
OR DESTRUCTION OF THE CERTIFICATE, UPON SATISFACTORY PROOF OF SUCH LOSS OR
DESTRUCTION AND, IF THE MANAGERS SHALL SO DETERMINE, THE GRANTING OF AN
INDEMNITY AS IS APPROVED BY THE MANAGERS.

 

ARTICLE III

 

CAPITAL CONTRIBUTIONS; ALLOCATIONS AND DISTRIBUTIONS

 

Section 3.1   Capital Account; Capital Contributions.  The Capital Accounts of
each Member shall be computed in accordance with Section 7.2.  Notwithstanding
the foregoing, the initial Capital Accounts of the Members shall be set forth as
on Schedule 3.1 and adjusted on the same basis as the initial Capital Accounts
were determined to reflect (grossed-up) any additional payments made by MDC for
its interest pursuant to the Purchase Agreement.

 

Section 3.2   Withdrawal and Return of Capital Contribution.  No Member shall
have the right to receive or withdraw its Capital Contribution except to the
extent, if any, that any distribution made pursuant to the express terms of this
Agreement may be considered as such by law or as expressly provided for in this
Agreement.

 

Section 3.3   Allocation of Profits and Losses.

 

(A)                                  EXCEPT AS OTHERWISE PROVIDED IN THIS
SECTION 3.3, ALL PROFITS AND LOSSES OF THE COMPANY (AS SUCH TERMS ARE DEFINED IN
SECTION 13.1 HEREOF) FOR ANY CALENDAR YEAR SHALL BE ALLOCATED AND CHARGED TO THE
MEMBERS FOR INCOME TAX PURPOSES (INCLUDING WITHOUT LIMITATION THE CAPITAL
ACCOUNT MAINTENANCE REGULATIONS UNDER SECTION 704(B) OF THE CODE) AS FOLLOWS:

 

(I)                                     PROFITS SHALL BE ALLOCATED AS FOLLOWS:

 

(A)                              FIRST, PRO RATA TO THOSE MEMBERS TO WHOM PBT
(AS SUCH TERM IS DEFINED IN SECTION 13.1) FOR SUCH CALENDAR YEAR AND EACH PRIOR
CALENDAR YEAR SINCE THE EFFECTIVE TIME HAS BEEN ALLOCATED UNDER SECTION 3.5
UNTIL THE EXCESS OF THE ALLOCATION TO EACH SUCH MEMBER

 

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OF PROFITS UNDER THIS SECTION 3.3(A)(I)(A) OVER ANY ALLOCATION TO EACH SUCH
MEMBER OF LOSSES UNDER SECTION 3.3(A)(II)(B) FOR SUCH CALENDAR YEARS EQUALS THE
AMOUNT OF PBT SO ALLOCATED TO EACH SUCH MEMBER DURING SUCH CALENDAR YEARS; AND

 

(B)                                THEREAFTER, TO THE MEMBERS IN ACCORDANCE WITH
THE NUMBER OF UNITS OWNED BY EACH.

 

(II)                                  LOSSES SHALL BE ALLOCATED AS FOLLOWS:

 

(A)                              FIRST, TO THE EXTENT THAT PROFITS ALLOCATED
UNDER SECTION 3.3(A)(I)(B) OVER LOSSES PREVIOUSLY ALLOCATED UNDER THIS
SECTION 3.3(A)(II)(A) EXCEED DISTRIBUTIONS MADE IN ACCORDANCE WITH THE NUMBER OF
UNITS OWNED BY EACH MEMBER UNDER SECTION 3.4(A)(IV), TO THE MEMBERS IN THE
PROPORTION IN WHICH SUCH EXCESS WAS ALLOCATED;

 

(B)                                SECOND, TO THE EXTENT THAT PROFITS ALLOCATED
UNDER SECTION 3.3(A)(I)(A) OVER LOSSES PREVIOUSLY ALLOCATED UNDER THIS
SECTION 3.3(A)(II)(B) EXCEED DISTRIBUTIONS UNDER SECTIONS 3.4(A)(I), (II) OR
(III), AS APPLICABLE, TO THE MEMBERS IN THE PROPORTION IN WHICH SUCH EXCESS WAS
ALLOCATED;

 

(C)                                THIRD, TO THE MEMBERS IN ACCORDANCE WITH THE
NUMBER OF UNITS OWNED BY EACH.

 

(B)                                 SPECIAL ALLOCATIONS AND LIMITATIONS

 

(1)                                  IN THE EVENT A MEMBER UNEXPECTEDLY RECEIVES
IN ANY TAXABLE YEAR ANY ADJUSTMENTS, ALLOCATIONS, OR DISTRIBUTIONS DESCRIBED IN
TREASURY REGULATION SECTION 1.704-1(B)(2)(II)(D)(4), (5), OR (6) WHICH CAUSE OR
INCREASE AN ADJUSTED CAPITAL ACCOUNT DEFICIT (AS DEFINED IN SECTION 13.1) OF
SUCH MEMBER, ITEMS OF COMPANY INCOME AND GAIN SHALL BE SPECIALLY ALLOCATED TO
SUCH MEMBER IN SUCH TAXABLE YEAR (AND, IF NECESSARY IN SUBSEQUENT TAXABLE
YEARS), IN AN AMOUNT AND MANNER SUFFICIENT TO ELIMINATE, TO THE EXTENT REQUIRED
BY THE TREASURY REGULATIONS, THE ADJUSTED CAPITAL ACCOUNT DEFICIT OF SUCH MEMBER
AS QUICKLY AS POSSIBLE, PROVIDED THAT AN ALLOCATION PURSUANT TO THIS
SECTION 3.3(B)(1) SHALL BE MADE ONLY IF AND TO THE EXTENT THAT THE MEMBERS WOULD
HAVE AN ADJUSTED CAPITAL ACCOUNT DEFICIT AFTER ALL THE ALLOCATIONS PROVIDED FOR
IN THIS SECTION 3 HAVE BEEN TENTATIVELY MADE AS IF THIS SECTION 3.3(B)(1) WERE
NOT IN THE AGREEMENT.

 

(2)                                  IN THE EVENT ANY MEMBER HAS AN ADJUSTED
CAPITAL ACCOUNT DEFICIT AT THE END OF ANY TAXABLE YEAR WHICH IS IN EXCESS OF THE
SUM OF (I) THE AMOUNT SUCH MEMBER IS OBLIGATED TO RESTORE PURSUANT TO ANY
PROVISION OF THIS AGREEMENT AND (II) THE AMOUNT SUCH MEMBER IS DEEMED TO BE
OBLIGATED TO RESTORE PURSUANT TO THE PENULTIMATE SENTENCES OF REGULATIONS
SECTIONS 1.704-2(G)(1) AND 1.704-2(I)(5), THE MEMBER SHALL BE SPECIALLY
ALLOCATED ITEMS OF THE COMPANY INCOME AND GAIN IN THE AMOUNT OF SUCH EXCESS AS
QUICKLY AS POSSIBLE, PROVIDED THAT AN ALLOCATION PURSUANT TO THIS
SECTION 3.3(B)(2) SHALL BE MADE ONLY IF AND TO THE EXTENT THAT SUCH MEMBER WOULD
HAVE AN ADJUSTED CAPITAL ACCOUNT DEFICIT IN EXCESS OF SUCH SUM

 

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after all other allocations provided for in this Article III have been
tentatively made as if Section 3.3(b)(1) hereof and this Section 3.3(b)(2) were
not in the Agreement.

 

(3)                                  NOTWITHSTANDING THE PROVISIONS OF
SECTION 3.3(A), IN NO EVENT SHALL LOSSES OF THE COMPANY BE ALLOCATED TO A MEMBER
IF SUCH ALLOCATION WOULD RESULT IN SUCH MEMBER’S HAVING AN ADJUSTED CAPITAL
ACCOUNT DEFICIT AT THE END OF ANY TAXABLE YEAR.  ALL LOSSES IN EXCESS OF THE
LIMITATION SET FORTH IN THIS SECTION 3.3(B)(3) SHALL BE ALLOCATED TO THE MEMBERS
WITH POSITIVE BALANCES IN THEIR CAPITAL ACCOUNTS, AS A CLASS PRO RATA IN
PROPORTION TO SUCH POSITIVE BALANCES.

 

(4)                                  TO THE EXTENT AN ADJUSTMENT TO THE ADJUSTED
TAX BASIS OF ANY COMPANY ASSET, PURSUANT TO SECTION 734(B) OR SECTION 743(B) OF
THE CODE IS REQUIRED, PURSUANT TO TREASURY REGULATIONS
SECTION 1.704-1(B)(2)(IV)(M)(2) OR SECTION 1.704-1(B)(2)(IV)(M)(4), TO BE TAKEN
INTO ACCOUNT IN DETERMINING CAPITAL ACCOUNTS AS THE RESULT OF A DISTRIBUTION TO
A MEMBER IN COMPLETE LIQUIDATION OF SUCH MEMBER’S INTEREST IN THE COMPANY, THE
AMOUNT OF SUCH ADJUSTMENT TO CAPITAL ACCOUNTS SHALL BE TREATED AS AN ITEM OF
GAIN (IF THE ADJUSTMENT INCREASES THE BASIS OF THE ASSET) OR LOSS (IF THE
ADJUSTMENT DECREASES SUCH BASIS) AND SUCH GAIN OR LOSS SHALL BE SPECIFICALLY
ALLOCATED TO THE MEMBERS IN ACCORDANCE WITH THEIR INTERESTS IN THE COMPANY IN
THE EVENT TREASURY REGULATIONS SECTION 1.704-1(B)(2)(IV)(M)(2) APPLIES, OR TO
THE MEMBER TO WHOM SUCH DISTRIBUTION WAS MADE IN THE EVENT TREASURY REGULATIONS
SECTION 1.704-1(B)(2)(IV)(M)(4) APPLIES.

 

(5)                                  THE ALLOCATIONS SET FORTH IN SECTIONS
3.3(B)(1), (2), (3) AND (4) (THE “REGULATORY ALLOCATIONS”) ARE INTENDED TO
COMPLY WITH CERTAIN REQUIREMENTS OF TREASURY REGULATIONS PROMULGATED UNDER
SECTION 704 OF THE CODE.  THE REGULATORY ALLOCATIONS SHALL BE TAKEN INTO ACCOUNT
IN ALLOCATING OTHER PROFITS, LOSSES, AND ITEMS OF INCOME, GAIN, LOSS, AND
DEDUCTION TO EACH MEMBER SO THAT, TO THE EXTENT POSSIBLE, AND TO THE EXTENT
PERMITTED BY TREASURY REGULATIONS, THE NET AMOUNT OF SUCH ALLOCATIONS OF OTHER
PROFITS, LOSSES, AND OTHER ITEMS AND THE REGULATORY ALLOCATIONS TO EACH MEMBER
SHALL BE EQUAL TO THE NET AMOUNT THAT WOULD HAVE BEEN ALLOCATED TO EACH MEMBER
IF THE REGULATORY ALLOCATIONS HAD NOT BEEN MADE.

 

(6)                                  THE RESPECTIVE INTERESTS OF THE MEMBERS IN
THE PROFITS, LOSSES, OR ITEMS THEREOF SHALL REMAIN AS SET FORTH ABOVE UNLESS
CHANGED BY AMENDMENT TO THIS AGREEMENT OR BY AN ASSIGNMENT OF A UNIT AUTHORIZED
BY THE TERMS OF THIS AGREEMENT.  EXCEPT AS OTHERWISE PROVIDED HEREIN, FOR TAX
PURPOSES, ALL ITEMS OF INCOME, GAIN, LOSS, DEDUCTION, OR CREDIT SHALL BE
ALLOCATED TO THE MEMBERS IN THE SAME MANNER AS ARE PROFITS AND LOSSES; PROVIDED,
HOWEVER, THAT WITH RESPECT TO PROPERTY CONTRIBUTED TO THE COMPANY BY A MEMBER,
SUCH ITEMS SHALL BE SHARED AMONG THE MEMBERS SO AS TO TAKE INTO ACCOUNT THE
VARIATION BETWEEN THE BASIS OF SUCH PROPERTY AND ITS FAIR MARKET VALUE AT THE
TIME OF CONTRIBUTION IN ACCORDANCE WITH SECTION 704(C) OF THE CODE.

 

(7)                                  THE CAPITAL ACCOUNTS OF ALL MEMBERS SHALL
BE ADJUSTED PURSUANT TO THE RULES OF TREASURY REGULATION
SECTION 1.704-1(B)(2)(IV)(F) UPON THE CIRCUMSTANCES SET FORTH IN TREASURY
REGULATION SECTION 1.704-1(B)(2)(IV)(F)(5).  CORRESPONDING ADJUSTMENTS SHALL BE
MADE AS PROVIDED FOR UNDER TREASURY REGULATION 1.704-1(B)(2), INCLUDING
SECTION 1.704-1(B)(2)(IV)(G).

 

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(c)                                  Other Special Allocations.  The following
special allocations shall be made in the following order:

 

(1)                                  EXCEPT AS OTHERWISE PROVIDED IN
SECTION 1.704-2(F) OF THE TREASURY REGULATIONS, NOTWITHSTANDING ANY OTHER
PROVISION OF THIS SECTION 3, IF THERE IS A NET DECREASE IN COMPANY MINIMUM GAIN
(AS DEFINED IN SECTION 13.1) DURING ANY FISCAL YEAR, EACH MEMBER SHALL BE
SPECIALLY ALLOCATED ITEMS OF COMPANY INCOME AND GAIN FOR SUCH FISCAL YEAR (AND,
IF NECESSARY, SUBSEQUENT FISCAL YEARS) IN AN AMOUNT EQUAL TO SUCH MEMBER’S SHARE
OF THE NET DECREASE IN COMPANY MINIMUM GAIN, DETERMINED IN ACCORDANCE WITH
SECTION 1.704-2(G) OF THE TREASURY REGULATIONS.  ALLOCATIONS PURSUANT TO THE
PREVIOUS SENTENCE SHALL BE MADE IN PROPORTION TO THE RESPECTIVE AMOUNTS REQUIRED
TO BE ALLOCATED TO EACH MEMBER PURSUANT THERETO.  THE ITEMS TO BE SO ALLOCATED
SHALL BE DETERMINED IN ACCORDANCE WITH SECTIONS 1.704-2(F)(6) AND
1.704-2(J)(2) OF THE TREASURY REGULATIONS.  THIS SECTION 3.3(C)(1) IS INTENDED
TO COMPLY WITH THE MINIMUM GAIN CHARGEBACK REQUIREMENT IN SECTION 1.704-2(F) OF
THE TREASURY REGULATIONS AND SHALL BE INTERPRETED CONSISTENTLY THEREWITH.

 

(2)                                  EXCEPT AS OTHERWISE PROVIDED IN
SECTION 1.704-2(I)(4) OF THE TREASURY REGULATIONS, NOTWITHSTANDING ANY OTHER
PROVISION OF THIS SECTION 3, IF THERE IS A NET DECREASE IN MEMBER NONRECOURSE
DEBT MINIMUM GAIN (AS DEFINED IN SECTION 13.1) ATTRIBUTABLE TO A MEMBER
NONRECOURSE DEBT (AS DEFINED IN SECTION 13.1) DURING ANY FISCAL YEAR, EACH
MEMBER WHO HAS A SHARE OF THE MEMBER NONRECOURSE DEBT MINIMUM GAIN ATTRIBUTABLE
TO SUCH MEMBER NONRECOURSE DEBT, DETERMINED IN ACCORDANCE WITH
SECTION 1.704-2(I)(5) OF THE TREASURY REGULATIONS, SHALL BE SPECIALLY ALLOCATED
ITEMS OF COMPANY INCOME AND GAIN FOR SUCH FISCAL YEAR (AND, IF NECESSARY,
SUBSEQUENT FISCAL YEARS) IN AN AMOUNT EQUAL TO SUCH MEMBER’S SHARE OF THE NET
DECREASE IN MEMBER NONRECOURSE DEBT MINIMUM GAIN ATTRIBUTABLE TO SUCH MEMBER
NONRECOURSE DEBT, DETERMINED IN ACCORDANCE WITH SECTION 1.704-2(I)(4) OF THE
TREASURY REGULATIONS.  ALLOCATIONS PURSUANT TO THE PREVIOUS SENTENCE SHALL BE
MADE IN PROPORTION TO THE RESPECTIVE AMOUNTS REQUIRED TO BE ALLOCATED TO EACH
MEMBER PURSUANT THERETO.  THE ITEMS TO BE SO ALLOCATED SHALL BE DETERMINED IN
ACCORDANCE WITH SECTIONS 1.704-2(I)(4) AND 1.704-2(J)(2) OF THE TREASURY
REGULATIONS.  THIS SECTION 3.3(C)(2) IS INTENDED TO COMPLY WITH THE MINIMUM GAIN
CHARGEBACK REQUIREMENT IN SECTION 1.704-2(I)(4) OF THE TREASURY REGULATIONS AND
SHALL BE INTERPRETED CONSISTENTLY THEREWITH.

 

(3)                                  NONRECOURSE DEDUCTIONS (AS DEFINED IN
SECTION 13.1) FOR ANY FISCAL YEAR SHALL BE SPECIALLY ALLOCATED AMONG THE MEMBERS
IN PROPORTION TO THEIR ALLOCABLE PROFITS.

 

(4)                                  ANY MEMBER NONRECOURSE DEDUCTIONS (AS
DEFINED IN SECTION 13.1) FOR ANY FISCAL YEAR SHALL BE SPECIALLY ALLOCATED TO THE
MEMBER WHO BEARS THE ECONOMIC RISK OF LOSS WITH RESPECT TO THE MEMBER
NONRECOURSE DEBT TO WHICH SUCH MEMBER NONRECOURSE DEDUCTIONS ARE ATTRIBUTABLE IN
ACCORDANCE WITH SECTION 1.704-2(I)(1) OF THE TREASURY REGULATIONS.

 

(5)                                  SOLELY FOR PURPOSES OF DETERMINING A
MEMBER’S PROPORTIONATE SHARE OF THE “EXCESS NONRECOURSE LIABILITIES” OF THE
COMPANY WITHIN THE MEANING OF SECTION 1.752-3(A)(3) OF THE TREASURY REGULATIONS,
THE MEMBERS’ INTERESTS IN COMPANY PROFITS ARE IN PROPORTION TO THEIR ALLOCABLE
PROFITS, AND, FOR PURPOSES OF ALLOCATING NONRECOURSE LIABILITIES (AS DEFINED IN
SECTION 13.1) OF THE COMPANY AMONG THE MEMBERS PURSUANT TO TREASURY REGULATION

 

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SECTION 1.752-3(A)(3), THE PARTIES AGREE THAT EACH MEMBER’S INTEREST IN COMPANY
PROFITS SHALL BE IN PROPORTION TO THEIR ALLOCABLE PROFITS.

 

(6)                                  TO THE EXTENT PERMITTED BY
SECTION 1.704-2(H)(3) OF THE TREASURY REGULATIONS, THE MEMBERS SHALL ENDEAVOR TO
TREAT DISTRIBUTIONS OF FUNDS AS HAVING BEEN MADE FROM THE PROCEEDS OF A
NONRECOURSE LIABILITY (AS DEFINED IN SECTION 13.1) OR A MEMBER NONRECOURSE DEBT
(AS DEFINED IN SECTION 13.1) ONLY TO THE EXTENT THAT SUCH DISTRIBUTIONS WOULD
OTHERWISE CAUSE OR INCREASE AN ADJUSTED CAPITAL ACCOUNT DEFICIT FOR ANY MEMBER.

 

(7)                                  FOR PURPOSES OF DETERMINING THE CHARACTER
(AS ORDINARY INCOME OR CAPITAL GAIN) OF ANY PROFITS ALLOCATED TO THE MEMBERS
PURSUANT TO THIS SECTION 3.3, SUCH PORTION OF PROFITS THAT IS TREATED AS
ORDINARY INCOME ATTRIBUTABLE TO THE RECAPTURE OF DEPRECIATION SHALL, TO THE
EXTENT POSSIBLE, BE ALLOCATED AMONG THE MEMBERS IN THE PROPORTION WHICH (I) THE
AMOUNT OF DEPRECIATION PREVIOUSLY ALLOCATED TO EACH MEMBER BEARS TO (II) THE
TOTAL OF SUCH DEPRECIATION ALLOCATED TO ALL MEMBERS.  THIS
SECTION 3.3(C)(7) SHALL NOT ALTER THE AMOUNT OF ALLOCATIONS AMONG THE MEMBERS
PURSUANT TO THIS SECTION 3.3, BUT MERELY THE CHARACTER OF INCOME SO ALLOCATED.

 

(D)                                 THE MEMBERS ARE AWARE OF THE INCOME TAX
CONSEQUENCES OF THE ALLOCATIONS DESCRIBED, AND HEREBY AGREE TO BE BOUND BY THE
PROVISIONS OF SECTION 3.3 IN REPORTING THEIR RESPECTIVE SHARES OF COMPANY INCOME
AND LOSS FOR INCOME TAX PURPOSES.

 

(E)                                  IT IS THE INTENTION OF THE COMPANY AND ITS
MEMBERS THAT THE COMPANY BE TAXED AS A PARTNERSHIP FOR ALL PURPOSES OF THE CODE
AND SIMILAR INCOME TAX LAWS.

 

(F)                                    ALL MATTERS CONCERNING THE VALUATION OF
SECURITIES, THE ALLOCATION OF PROFITS, GAINS AND LOSSES AMONG THE MEMBERS,
INCLUDING THE TAXES ON THOSE PROFITS, GAINS AND LOSSES, AND ACCOUNTING
PROCEDURES, NOT SPECIFICALLY AND EXPRESSLY PROVIDED FOR BY THE TERMS OF THIS
AGREEMENT, SHALL BE DETERMINED IN GOOD FAITH BY THE MANAGERS WITH REGARD TO
THEIR FIDUCIARY DUTY TO THE MEMBERS, WHOSE DETERMINATION IN ACCORDANCE WITH THE
TERMS HEREOF SHALL BE FINAL, BINDING AND CONCLUSIVE UPON ALL OF THE MEMBERS.

 

(G)                                 IN CONNECTION WITH THE EXERCISE OF A PUT OR
A CALL WITH RESPECT TO CLASS B UNITS PURSUANT TO ARTICLE X HEREOF, ANY PROFITS
ATTRIBUTABLE TO SUCH CLASS B UNITS ARISING AFTER THE DATE OF EXERCISE OF THE
APPLICABLE PUT OR CALL SHALL BE ALLOCATED TO THE TRANSFEREE OF SUCH CLASS B
UNITS SO LONG AS THE CLOSING OF SUCH TRANSFER OCCURS.

 

Section 3.4   Distributions.

 

(A)                                  SUBJECT TO THE MAKING OF THE TAX
DISTRIBUTIONS (AS DEFINED IN CLAUSE (D) BELOW) AND ACCRUED DISTRIBUTIONS (AS
DEFINED IN CLAUSE (E) BELOW), IF ANY, TO THE EXTENT PERMITTED BY THE ACT, THE
COMPANY SHALL MAKE DISTRIBUTIONS AS FOLLOWS:

 

(i)                                     first, 100% to the holders of the
Class A Units in an amount equal to the sum of (a) the allocation to such
holders of PBT under Section 3.5(a)(i) for such calendar year plus (b) the
Class A Distribution Shortfall Amount (as defined in Section 13.1) for such
year;

 

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(ii)                                  second, following the distribution
pursuant to clause (i) above, 100% to the holders of the Class B Units in an
amount equal to the sum of (a) the allocation to such holders of PBT under
Section 3.5(a)(ii) for such calendar year plus (b) the Class B Distribution
Shortfall Amount (as defined in Section 13.1) for such year;

 

(iii)                               third, following the distributions pursuant
to clauses (i) and (ii) above, 100% to the Members in accordance with any other
amounts which have been allocated pursuant to either or both of
Section 3.5(a) and Section 3.5(b) and which have not previously been
distributed, with any distributions under this clause (iii) first being applied
to the allocation of PBT for the earliest year or period for which PBT has been
allocated but has not been fully distributed (using a first in-first out
approach); and

 

(iv)                              fourth, following distributions pursuant to
clauses (i), (ii) and (iii) above, 100% to the members pro rata in accordance
with the number of Units owned by each.

 

It is the intention of the Members that, subject to clause (b) below, the
Company shall generally make Distributions as described in 3.4(a)(i), (ii) and
(iii) above on a quarterly basis, generally in arrears of no more than 90 days,
based upon the financial statements and the then-current forecasts prepared in
good faith by the officers of the Company and its subsidiaries and taking into
account the ongoing capital requirements of the Company.  Determinations as to
the amount of such distributions shall be made by MDC in good faith after
consultation with Zyman.  Furthermore, in the event that MDC reasonably
anticipates that, based on the financial statements and then-current forecasts
of the Company and its subsidiaries, the Company will be able to make
distributions in an amount equal to the amount set forth in
Section 3.4(a)(i) above during a given calendar year, MDC will in good faith
cause the Company to make distributions to the holders of the Class B Units
towards the amount set forth in Section 3.4(a)(ii) prior to the end of such
calendar year, at such times and in such amounts as MDC may in good faith
determine.

 

(B)                                 ANY DISTRIBUTION OF FUNDS PRIOR TO THE END
OF THE FISCAL YEAR IN WHICH SUCH FUNDS CAME INTO POSSESSION OF THE COMPANY
(INCLUDING ANY TAX DISTRIBUTION, BUT EXCLUDING ANY ACCRUED DISTRIBUTION) SHALL
BE TREATED AS A NON-INTEREST-BEARING LOAN (A “DRAW”) FROM THE COMPANY TO EACH
MEMBER RECEIVING SUCH DRAW AND SHALL BE DEEMED REPAID BY REDUCING THE AMOUNT OF
EACH SUBSEQUENT DISTRIBUTION TO THE MEMBER RECEIVING SUCH DRAW PURSUANT TO THIS
SECTION 3.4(B) BY THE LESSER OF (I) THE ENTIRE AMOUNT OTHERWISE DISTRIBUTABLE TO
THE MEMBER RECEIVING SUCH DRAW, AND (II) THE ENTIRE AMOUNT OF ANY UNREPAID DRAWS
PURSUANT TO THIS SECTION 3.4(B).  FOR PURPOSES OF THIS CLAUSE, A SELLING MEMBER
(AS DEFINED BELOW) AND ANY TRANSFEREE OF SUCH SELLING MEMBER SHALL BE TREATED AS
A SINGLE MEMBER WITH RESPECT TO THE UNITS TRANSFERRED BY SUCH SELLING MEMBER TO
SUCH TRANSFEREE.

 

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(C)                                  ALL AMOUNTS WITHHELD PURSUANT TO THE CODE
AND TAX REGULATIONS OR ANY PROVISION OF ANY STATE OR LOCAL TAX LAW WITH RESPECT
TO ANY PAYMENT, DISTRIBUTION, OR ALLOCATION TO THE COMPANY OR THE MEMBERS SHALL
BE TREATED AS AMOUNTS DISTRIBUTED TO THE MEMBERS PURSUANT TO THIS SECTION 3.4
FOR ALL PURPOSES UNDER THIS AGREEMENT.  THE MANAGERS ARE AUTHORIZED TO WITHHOLD
FROM DISTRIBUTIONS, OR WITH RESPECT TO ALLOCATIONS, TO THE MEMBERS AND TO PAY
OVER TO ANY FEDERAL, STATE, OR LOCAL GOVERNMENT ANY AMOUNTS REQUIRED TO BE SO
WITHHELD PURSUANT TO THE CODE AND TAX REGULATIONS OR ANY PROVISIONS OF ANY OTHER
FEDERAL, STATE, OR LOCAL LAW, AND SHALL ALLOCATE ANY SUCH AMOUNTS TO THE MEMBERS
WITH RESPECT TO WHICH SUCH AMOUNT WAS WITHHELD.  NOTWITHSTANDING ANY OTHER
PROVISION IN THIS AGREEMENT, PRIOR TO THE MAKING ANY SUCH DISTRIBUTION, THE
MANAGERS IN THEIR SOLE DISCRETION MAY REQUIRE THE DELIVERY TO THE MANAGERS FROM
EACH OR ANY POTENTIAL DISTRIBUTEE SUCH EVIDENCE AS THE MANAGERS MAY REASONABLY
REQUEST EVIDENCING THE ABSENCE OF ANY THIRD-PARTY CLAIMS WITH RESPECT TO SUCH
POTENTIAL DISTRIBUTION.

 

(D)                                 NOTWITHSTANDING ANYTHING IN THIS AGREEMENT
TO THE CONTRARY, IN PREFERENCE TO ANY OTHER DISTRIBUTIONS PURSUANT TO THIS
SECTION 3.4, THE MEMBERS SHALL CAUSE THE COMPANY TO DISTRIBUTE CASH OF THE
COMPANY TO ITS MEMBERS ON A QUARTERLY (OR OTHER REASONABLE) BASIS EQUAL TO THE
PRODUCT OF (I) EACH MEMBER’S DISTRIBUTIVE SHARE OF THE COMPANY’S TAXABLE INCOME
(DETERMINED WITHOUT REGARD TO THE ELECTION MADE UNDER SECTION 754 OF THE CODE)
FOR THE CURRENT YEAR AND (II) THE MAXIMUM INDIVIDUAL TAX RATES FOR FEDERAL
TAXPAYERS AND GEORGIA TAXPAYERS (THE “TAX DISTRIBUTIONS”); PROVIDED, THAT, NO
MEMBER WILL RECEIVE A TAX DISTRIBUTION UNLESS SUCH MEMBER’S ALLOCATION OF THE
COMPANY’S TAXABLE INCOME EXCEEDS ALL PRIOR CUMULATIVE ALLOCATIONS OF THE
COMPANY’S TAXABLE LOSSES AND PROVIDED FURTHER THAT IF A MEMBER RECEIVES A TAX
DISTRIBUTION FOR A PARTICULAR YEAR THAT IS GREATER THAN ANY DISTRIBUTION TO
WHICH THAT MEMBER IS ENTITLED UNDER SECTION 3.4(A), THAT MEMBER WILL CONTRIBUTE
TO THE COMPANY AN AMOUNT EQUAL TO THE PORTION OF THE AGGREGATE AMOUNT OF ANY TAX
DISTRIBUTION(S) RECEIVED BY SUCH MEMBER WHICH EXCEED THE AMOUNT OF TAX WHICH IS
CALCULATED AS PROVIDED ABOVE AND IS ATTRIBUTABLE TO SUCH MEMBER’S ALLOCABLE
SHARE OF THE COMPANY’S TAXABLE INCOME FOR SUCH YEAR.  FOR PURPOSES OF
SECTION 3.4(A) HEREOF, A TAX DISTRIBUTION SHALL BE DEEMED TO BE A DISTRIBUTION
AT THE TIME OF SUCH TAX DISTRIBUTION AND SHALL REDUCE THE AMOUNT OF EACH
SUBSEQUENT DISTRIBUTION TO ANY MEMBER RECEIVING SUCH TAX DISTRIBUTION BY THE
AMOUNT OF ANY SUCH TAX DISTRIBUTION.

 

(E)                                  EXHIBIT 3.4(E) HERETO SETS FORTH THE
PORTION OF “5% EQUITY” (AS SET FORTH ON THE CLOSING BALANCE SHEET (AS DEFINED IN
THE PURCHASE AGREEMENT)) ALLOCATED TO EACH OF THE PERSONS SET FORTH ON SUCH
EXHIBIT (SUCH EXHIBIT, THE “PRE-CLOSING MEMBER SCHEDULE”).  NO LATER THAN 5 DAYS
AFTER THE FINALIZATION OF THE CLOSING BALANCE SHEET PURSUANT TO SECTION 5.11 OF
THE PURCHASE AGREEMENT, THE COMPANY SHALL UPDATE THE PRE-CLOSING MEMBER
SCHEDULE TO SET FORTH THE FINAL AMOUNT OF 5% EQUITY AND DIVIDENDS PAYABLE (AS
EACH SUCH TERM IS DEFINED IN THE PURCHASE AGREEMENT) ON THE COMPANY’S CLOSING
BALANCE SHEET AND THE PORTION OF EACH SUCH AMOUNT ALLOCATED TO EACH OF THE
PERSONS LISTED ON SUCH SCHEDULE.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS AGREEMENT, PRIOR TO ANY DISTRIBUTION PURSUANT TO SECTION 3.4(A) BUT IN
ACCORDANCE WITH THE LAST PARAGRAPH OF SECTION 3.4(A), THE COMPANY SHALL
DISTRIBUTE CASH TO THE PERSONS SET FORTH ON THE PRE-CLOSING MEMBER SCHEDULE IN
THE AMOUNTS SET FORTH OPPOSITE EACH SUCH PERSON’S NAME (COLLECTIVELY, THE
“ACCRUED DISTRIBUTIONS”).  SUCH AMOUNTS SHALL BE DISTRIBUTED FIRST, IN
SATISFACTION OF THE 5% EQUITY AMOUNTS AND SECOND IN SATISFACTION OF THE
DIVIDENDS PAYABLE AMOUNTS ALLOCATED TO EACH SUCH PERSON.

 

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(F)                                    NOTWITHSTANDING ANYTHING IN THIS
AGREEMENT TO THE CONTRARY, ANY PBT WHICH HAS BEEN ALLOCATED TO THE TRANSFERRED
UNITS OF A SELLING MEMBER PURSUANT TO SECTION 3.5(C) SHALL, SUBJECT TO
SECTION 3.4(B), BE DISTRIBUTED TO SUCH SELLING MEMBER IN ACCORDANCE WITH
SECTION 3.4(A) AS IF SUCH SELLING MEMBER OWNED UNITS.

 

Section 3.5   Allocation of PBT. 

 

(A)                                  PBT FOR PURPOSES OF THIS AGREEMENT SHALL BE
ALLOCATED FOR EACH DISTRIBUTION PERIOD CALENDAR YEAR AS FOLLOWS:

 

(i)                                     first, 100% to the holders of the
Class A Units until the holders of Class A Units have been allocated the
Preferred Return Amount and any Class A PBT Shortfall Amount with respect to
such Distribution Period Calendar Year;

 

(ii)                                  second, 100% of any remaining PBT after
giving effect to the allocations outlined in clause (i) above to the holders of
Class B Units until the holders of Class B Units have been allocated an amount
equal to the Class B Catch-Up Amount;

 

(iii)                               third, (x) in the event that the PBT Margin
for such Distribution Period Calendar Year is at least 30%, 100% of any
remaining PBT after giving effect to the allocations outlined in clauses (i) and
(ii) above to the Members pro rata in accordance with the number of Units owned
by each Member until the Members have been allocated an amount equal to the
product of 30% and the Revenues for such Distribution Period Calendar Year and
any remainder in accordance with clause (iv) below and (y) in the event that the
PBT Margin for such Distribution Period Calendar Year is less than 30%, 100% of
any remaining PBT after giving effect to the allocations outlined in clauses
(i) and (ii) above to the Members pro rata in accordance with the number of
Units owned by each Member; and

 

(iv)                              fourth, (x) for the first two Distribution
Period Calendar Years and the portion of the third Distribution Period Calendar
Year ending on the second anniversary of the Effective Time (such date, the
“Second Anniversary”) 100% of any remaining PBT after giving effect to the
allocations outlined in clauses (i), (ii) and (iii) above to the Members,
allocated 25% to the holders of the Class A Units and 75% to the holders of the
Class B Units and (y) for the remaining Distribution Period Calendar Years
(including the portion of the third Distribution Period Calendar Year following
the Second Anniversary), 100% of any remaining PBT after giving effect to the
allocations outlined in clauses (i), (ii) and (iii) above to the Members,
allocated 30% to the holders of the Class A Units and 70% to the holders of the
Class B Units, in each case pro rata

 

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in accordance with the number of Units of such class owned by each Member.

 

(B)                                 PBT FOR PURPOSES OF THIS AGREEMENT SHALL BE
ALLOCATED FOR ANY POST DISTRIBUTION PERIOD CALENDAR YEAR TO THE MEMBERS PRO RATA
IN ACCORDANCE WITH THE NUMBER OF UNITS OWNED BY EACH MEMBER.

 

(C)                                  NOTWITHSTANDING ANYTHING IN THIS AGREEMENT
TO THE CONTRARY, IN THE EVENT THAT A MEMBER TRANSFERS ANY UNITS (SUCH MEMBER, A
“SELLING MEMBER”), THEN, WITH RESPECT TO THE CALENDAR YEAR IN WHICH SUCH
TRANSFER OCCURRED, THE COMPANY SHALL ALLOCATE PBT TO SUCH SELLING MEMBER’S
TRANSFERRED UNITS IN ACCORDANCE WITH SECTIONS 3.5(A) AND 3.5(B) ABOVE PRO RATA
BASED ON THE NUMBER OF DAYS ELAPSED IN SUCH CALENDAR YEAR FROM THE FIRST DAY OF
SUCH CALENDAR YEAR THROUGH THE DATE OF SUCH TRANSFER RELATIVE TO A 365-DAY YEAR
AND PRO RATA TO THE TRANSFEREE BASED ON THE REMAINDER OF THE NUMBER OF DAYS IN
SUCH CALENDAR YEAR SUBSEQUENT TO THE DATE OF TRANSFER.

 

ARTICLE IV

 

MANAGEMENT

 

Section 4.1   Management of the Company.

 

(A)                                  EXCEPT TO THE EXTENT OTHERWISE PROVIDED FOR
HEREIN, THE POWERS OF THE COMPANY SHALL BE EXERCISED BY AND UNDER THE AUTHORITY
OF, AND THE BUSINESS AND AFFAIRS OF THE COMPANY SHALL BE MANAGED UNDER, THE
DIRECTION OF THE MANAGERS OF THE COMPANY. NOTWITHSTANDING THE FOREGOING OR ANY
OTHER PROVISIONS HEREOF TO THE CONTRARY, FOR AS LONG AS ZYMAN AND THE MANAGEMENT
UNITHOLDERS OWN CLASS B UNITS REPRESENTING AT LEAST 20% OF THE OUTSTANDING
UNITS, THE TAKING OF ANY OF THE ACTIONS LISTED IN CLAUSES (I) THROUGH (XI) BELOW
SHALL REQUIRE THE CONSENT OF HOLDERS OF A MAJORITY OF THE CLASS B UNITS.

 

(i)                                     a sale, lease or other disposition of
all or substantially all of the assets or business of the Company, except in
connection with (x) a sale, lease or other disposition of all or substantially
all of the assets or business or stock of MDC or MDC Partners, including
pursuant to merger, consolidation, amalgamation or similar transaction, (an “MDC
Sale”) or (y) an MDC Financing (as defined in Section 4.1(f) hereof) or the
exercise of a default remedy under any agreement entered into in connection with
an MDC Financing;

 

(ii)                                  a merger, consolidation or amalgamation of
the Company or any of its subsidiaries with and into another Person or of
another Person with and into the Company or any of its subsidiaries;

 

(iii)                               the authorization or issuance of additional
Class A Units, Class B Units or other equity ownership interests in, or the
granting of any other rights to participate in the proceeds of the sale of
assets of the Company which are dilutive to the Class B Unitholders; or the
incurring of debt for borrowed money in excess of the amount provided for in the
approved annual operating budget or capital expenditure budget, except in
connection with borrowings under the terms and conditions of the MDC

 

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Cash Management Program (and in compliance with Section 4.1(d) below); provided,
that the agreement of MDC and holders of a majority of the Class B Units shall
not be required in connection with issuances of Units to employees of the
Company and its subsidiaries from time to time so long as such issuances
represent in the aggregate no more than 10% of the fully-diluted Units
outstanding; and provided, further, that no approval shall be required in
connection with issuances of Units contemplated by this Agreement and the
Purchase Agreement;

 

(iv)                              a material acquisition by the Company or any
of its subsidiaries of the stock, assets or business of another Person or any
investment by the Company of funds or other assets in another Person (other than
money market investments or their equivalent);

 

(v)                                 except as permitted under Section 14.4
hereof, an amendment or modification to the Certificate or this Agreement;

 

(vi)                              the payment by the Company or any of its
subsidiaries of any management fee to any Member or one of such Member’s
Affiliates;

 

(vii)                           a relocation of the Company’s primary offices
outside of the Atlanta metropolitan area;

 

(viii)                        entering into any business other than, or any
transaction outside of, the normal business activities of the Company and any of
its subsidiaries and related activities other than in connection with a transfer
by MDC or any of its Affiliates of their respective interests in the Company to
another wholly-owned subsidiary of MDC Partners;

 

(ix)                                the making of any loan to any employee of
the Company or any of its subsidiaries other than reasonable travel and business
expense advances in the ordinary course and consistent with past practices
exceeding $10,000, in the aggregate, at any one time outstanding, other than any
loans contemplated by Article X hereof;

 

(x)                                   any change in the name of the Company; and

 

(xi)                                the delegation to any Manager or to any
committee of the Board of Managers of the Company or any subsidiary or to any
officer of the Company or any subsidiary the power to take any of the actions
referred to in the foregoing clauses before obtaining the authorization required
by this Section;

 

provided that, notwithstanding anything in the foregoing to the contrary,
nothing in this clause (a) shall require the consent of the holders of the
Class B Units in connection with or related to a purchase of Units by the
Company or MDC pursuant to Article X hereof (including, without limitation, any
incurrence of indebtedness in connection therewith) or any subsequent sale or
issuance of an equal number of Units, options to purchase an equal number of
Units or other equity-based awards with respect to an equal number of Units by
MDC or the Company to any employee, director or consultant of the Company.

 

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(B)                                 AS LONG AS THIS AGREEMENT IS IN FULL FORCE
AND EFFECT, THE COMPANY SHALL KEEP ON FILE AT ITS PRINCIPAL OFFICE A COPY OF
THIS AGREEMENT. THE COMPANY SHALL MAKE SUCH COPY AVAILABLE TO ANY MEMBER DURING
NORMAL BUSINESS HOURS AND UPON REASONABLE ADVANCE WRITTEN NOTICE.

 

(C)                                  AS LONG AS THIS AGREEMENT IS IN FULL FORCE
AND EFFECT, THE COMPANY AND THE MEMBERS AGREE THAT THEY SHALL CAUSE ANY AND ALL
SUBSIDIARIES OF THE COMPANY TO COMPLY WITH THE PROVISIONS OF THIS SECTION 4.1 TO
THE EXTENT SUCH PROVISIONS ARE APPLICABLE TO SUCH SUBSIDIARY.

 

(D)                                 THE PARTIES HERETO FURTHER AGREE THAT THE
OPERATIONS OF THE COMPANY AND ITS SUBSIDIARIES SHALL BE CONDUCTED (I) TO
PARTICIPATE IN THE OVERALL CASH MANAGEMENT AND BANKING PROGRAM OF MDC PARTNERS
AS SET FORTH ON SCHEDULE 4.1(D) HERETO (THE “MDC CASH MANAGEMENT PROGRAM”), AND
(II) TO COMPLY ON A TIMELY BASIS WITH THE FINANCIAL REPORTING AND BUDGETING
PROCEDURES, AS WELL AS INTERNAL CONTROLS OVER FINANCIAL REPORTING, OF MDC
PARTNERS AS FROM TIME TO TIME IN EFFECT, WHICH PROCEDURES REQUIRE THE APPROVAL
OF AN ANNUAL OPERATING BUDGET, CAPITAL EXPENDITURE BUDGET AND CASH FLOW
PROJECTIONS AND REQUIRE MANAGEMENT OF OPERATING COMPANIES TO SEEK APPROVAL PRIOR
TO MATERIAL DEVIATIONS FROM SUCH BUDGETS.  IF ANY AFFILIATE OF MDC PARTNERS
(OTHER THAN THE COMPANY OR ANY OF ITS SUBSIDIARIES) FAILS TO MEET ITS
OBLIGATIONS UNDER THE MDC CASH MANAGEMENT PROGRAM, THEN MDC PARTNERS SHALL
SATISFY SUCH OBLIGATIONS TO THE EXTENT THAT SUCH AFFILIATE FAILED TO DO SO.

 

(E)                                  THE PARTIES HERETO FURTHER AGREE THAT THE
COMPANY SHALL HEREBY ADOPT, AND SHALL TAKE APPROPRIATE STEPS TO CAUSE THE
EMPLOYEES OF THE COMPANY TO COMPLY WITH, THE CODE OF CONDUCT OF MDC PARTNERS, AS
THE SAME MAY BE AMENDED FROM TIME TO TIME.

 

(F)                                    NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT, IN CONSIDERATION FOR THE PAYMENT OF THE PURCHASE
PRICE UNDER SECTION 2.1 OF THE PURCHASE AGREEMENT AND FOR OTHER GOOD AND
VALUABLE CONSIDERATION, THE PARTIES HERETO HEREBY (I) AGREE THAT MDC PARTNERS
AND/OR ANY OF ITS AFFILIATES, IN CONNECTION WITH ITS OR ANY OF ITS AFFILIATES’
CURRENT OR FUTURE CREDIT FACILITIES, DEBT OFFERINGS (INCLUDING, WITHOUT
LIMITATION, SENIOR, SUBORDINATED OR MEZZANINE DEBT ISSUED IN A PUBLIC OFFERING
OR A REGULATION S OR RULE 144A PRIVATE PLACEMENT) OR ANY OTHER DEBT AGREEMENTS,
SHALL BE ENTITLED TO: (W) PLEDGE OR GRANT A SECURITY INTEREST IN OR OTHERWISE
HAVE A LIEN PLACED UPON MDC’S MEMBERSHIP INTERESTS; (X) PLEDGE OR GRANT A
SECURITY INTEREST IN OR OTHERWISE HAVE A LIEN PLACED UPON THE ASSETS AND
PROPERTIES OF THE COMPANY AND/OR ITS SUBSIDIARIES; (Y) ASSIGN ALL OF ITS RIGHTS,
BENEFIT, TITLE AND INTEREST IN THE COMPANY AND DISTRIBUTIONS THEREFROM,
INCLUDING, WITHOUT LIMITATION, ALL RIGHTS AND CLAIMS PURSUANT TO AND UNDER ANY
PUT OR CALL TO, OR TO AN AGENT OR REPRESENTATIVE ON BEHALF OF, ITS BANK OR
LENDER OR GROUP OF BANKS OR GROUP OF LENDERS OR HOLDERS OF ITS OTHER SENIOR DEBT
(AS APPLICABLE AND COLLECTIVELY, THE “LENDER”); AND (Z) HAVE THE COMPANY AND/OR
ITS SUBSIDIARIES PROVIDE GUARANTEES AND SUCH OTHER ANCILLARY SECURITY AND
RELATED DOCUMENTATION AS REASONABLY REQUIRED BY THE LENDER FROM TIME TO TIME
(THE ITEMS IN (W), (X), (Y) AND (Z) BEING COLLECTIVELY REFERRED TO AS AN “MDC
FINANCING”); AND (II) CONSENT UNCONDITIONALLY TO (X) THE GRANTING OF ALL
SECURITY AND THE EXECUTION OF ALL DOCUMENTS REQUIRED IN CONNECTION WITH AN MDC
FINANCING AND THE ENFORCEMENT THEREOF, WHERE APPLICABLE, BY THE LENDER; AND (Y)
ANY TRANSACTION BY WHICH THE LENDER BECOMES THE ABSOLUTE LEGAL AND BENEFICIAL
OWNER OF ANY MEMBERSHIP INTERESTS WHICH HAVE BEEN PLEDGED OR ASSIGNED BY IT. 

 

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(G)                                 MDC PARTNERS SHALL CAUSE SUFFICIENT WORKING
CAPITAL TO BE MADE AVAILABLE TO THE COMPANY AS SHALL BE DETERMINED BY THE BOARD
OF MANAGERS TO BE REASONABLY NECESSARY TO EXECUTE UPON ITS APPROVED ANNUAL
OPERATING AND CAPITAL EXPENDITURE BUDGETS, BUT IN NO EVENT SHALL MDC PARTNERS OR
ANY OF ITS AFFILIATES BE REQUIRED TO FUND LOSSES OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES.  SUCH WORKING CAPITAL SHALL BE PROVIDED TO THE COMPANY ON TERMS
CONSISTENT WITH THE MDC CASH MANAGEMENT PROGRAM AND ACCORDINGLY, NEITHER MDC NOR
ANY OF ITS AFFILIATES SHALL BE REQUIRED TO PROVIDE WORKING CAPITAL IN THE EVENT
THAT THE CONSOLIDATED CASH BALANCE OF THE COMPANY IN THE MDC CASH MANAGEMENT
PROGRAM IS NEGATIVE.

 

(H)                                 THE COMPANY SHALL COMPLY WITH ALL APPLICABLE
FEDERAL, STATE AND LOCAL LAWS AND THE COMPANY SHALL PROVIDE REASONABLE
ASSISTANCE TO MDC AND ITS AFFILIATES IN THEIR COMPLIANCE WITH ALL APPLICABLE
FEDERAL, STATE AND LOCAL LAWS, INCLUDING WITHOUT LIMITATION, THE PROVISIONS OF
THE SARBANES-OXLEY ACT OF 2002, AS AMENDED FROM TIME TO TIME.  THE COMPANY SHALL
USE ITS REASONABLE BEST EFFORTS TO UNDERTAKE THE ACTIONS RECOMMENDED IN THE 404
REPORT (AS DEFINED IN THE PURCHASE AGREEMENT).

 

Section 4.2   Authority of Managers.  Except as set forth below, unless
specifically authorized by a resolution duly adopted by the Managers, no
Manager, solely in his capacity as a Manager, shall have the authority or power
to act as agent for or on behalf of the Company or any other Manager, to do any
act which would be binding on the Company or any other Manager, to incur any
expenditures on behalf of or for the Company, or to execute, deliver and perform
any agreements, acts, transactions or other matters on behalf of the Company. 

 

Section 4.3   Number and Qualifications of Managers.  As long as Sergio Zyman is
the Chief Executive Officer of the Company, there shall be seven Managers of the
Company of which MDC shall be entitled to appoint four Managers and Zyman shall
be entitled to appoint three Managers, one of whom shall be Sergio Zyman (each
Manager appointed by Zyman must be a full-time employee of the Company or one of
its subsidiaries) and, in the event that Sergio Zyman is no longer the Chief
Executive Officer of the Company, and for so long as the Management Unitholders
own at least 5% of the outstanding Units, the Management Unitholders shall be
entitled to appoint one Manager (who must be a full-time employee of the
Company) and MDC shall be entitled to appoint two additional Managers or, at
MDC’s election, the number of Managers shall be reduced to five.  Thereafter,
the Managers shall be elected in accordance with Section 4.4.  No decrease in
the number of Managers shall have the effect of shortening the term of any
incumbent Manager.  None of the Managers need be Members of the Company or
residents of the State of Delaware.  The initial designees of MDC are Miles
Nadal, Graham Rosenberg, Steven Berns and Mitchell Gendel.  The initial
designees of Zyman are Sergio Zyman, Lee White and Craig Binkley.

 

Section 4.4   Election and Term of Service.  At each annual meeting of Members
held in accordance with this Agreement, the Members may elect Managers to serve
until the next succeeding annual meeting.  Subject to Section 4.3, the
individuals receiving the greatest number of votes (determined by number of
Units cast in favor) shall be the Managers.  Cumulative voting for the election
of Managers shall not be permitted.  Each Manager elected shall serve as Manager
for the term for which he is elected and until his successor shall have been
elected by the Members and qualified or until his earlier death, resignation,
retirement, disqualification or removal in accordance with this Agreement.

 

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Section 4.5   Removal; Filling of Vacancies.  As long as Sergio Zyman is the
Chief Executive Officer or the Management Unitholders own at least 5% of the
outstanding Units, only MDC can remove and replace its appointed Managers and
only Zyman or the Management Unitholders, as the case may be, can remove and
replace its or their respective appointed Managers.  Following such time as SZ
ceases to be Chief Executive Officer of the Company and the Management
Unitholders cease to own at least 5% of the outstanding Units, the Members by
the required vote as set forth in Section 5.5 shall be entitled to remove any
Manager and to elect for the unexpired term of such Manager so removed another
individual.  Upon the resignation, retirement or death of any of the Managers of
the Company, subject to Section 4.3, the Members by the required vote as set
forth in Section 5.5, shall be entitled to elect another Person for the
unexpired term of such Manager.

 

Section 4.6   Place of Meetings.  Meetings of the Managers, annual, regular or
special, may be held either in Atlanta, Georgia or Toronto, Ontario, unless
otherwise agreed to by the Managers (including, for as long as Sergio Zyman is
the Chief Executive Officer of the Company, at least one Manager appointed by
MDC and one Manager appointed by Zyman).

 

Section 4.7   Annual Meetings.  Annual meetings of the Managers, of which no
notice shall be required, shall be held at the discretion of the Managers
immediately following the annual meeting of Members for the purpose of
designating officers of the Company and the transaction of any other business. 

 

Section 4.8   Regular Meetings.  The Managers shall notify each of the Members
of regular meetings of the Managers, which meetings shall be held no less
frequently than quarterly on the last business day of each fiscal quarter or at
such times and places as may be fixed from time to time by resolution adopted by
the Managers.  Except as otherwise provided by statute, any and all business may
be transacted at any regular meeting.  The Managers shall be given reasonable
notice of the date, time and place of any scheduled regular meeting.

 

Section 4.9   Special Meetings.  Special meetings of the Managers may be called
by any Manager on not less than forty-eight hours’ notice to each Manager,
either personally or by mail (overnight service), email, telephone, facsimile or
similar communication.  Only business within the purpose or purposes described
in the notice of special meeting of Managers may be conducted at the meeting.

 

Section 4.10   Quorum of and Action by Managers.  At all meetings of the
Managers the presence of a majority of the number of Managers fixed by or in the
manner provided by this Agreement shall be necessary and sufficient to
constitute a quorum for the transaction of business.  Unless otherwise
specifically required by law or this Agreement, the act of a majority of
Managers present at a meeting at which a quorum is present shall be the act of
the Managers; provided that such majority includes the affirmative vote of one
MDC Manager.  If a quorum shall not be present at any meeting of the Managers,
the Managers present may adjourn the meeting to another time by giving
reasonable notice of the date, time and place of the adjourned meeting to all
Managers. At any such adjourned meeting at which a quorum is present, any
business may be transacted that might have been transacted at the meeting as
originally convened.

 

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Section 4.11   Approval or Ratification of Acts or Contracts by Members.  The
Managers, in their discretion, may submit any act or contract for approval or
certification at any annual meeting of the Members, or at any special meeting of
the Members called for the purpose of considering any such act or contract, and
subject to the provisions of Section 4.1(a), any act or contract that shall be
approved or ratified by the holders of a majority of the Units entitled to vote
thereon or such greater percentage as may be provided by any other applicable
provision of this Agreement shall be as valid and binding upon the Company and
upon all the Members as if it shall have been approved or ratified by every
Member of the Company.

 

Section 4.12   Action Without a Meeting.  Subject to Section 4.1(a), any action
required or permitted to be taken at any meeting of the Managers may be taken
without a meeting, with prior notice of such contemplated action to each of the
Managers (with no requirement to provide copies to any additional persons
described in Section 14.1 or otherwise), and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall be signed by the
minimum number of Managers that would have been required to approve such action
at a meeting and the writing or writings are filed with the minutes of
proceedings of the Managers.  A telegram, telex, cablegram, an email or similar
transmission by a Manager, or a photographic, photostatic, facsimile or similar
reproduction of a writing signed by a Manager, shall be regarded as signed by
the Manager for purposes of this Section 4.12.

 

Section 4.13   Telephone Meetings.  Any Manager may participate in any meeting
of Managers by using conference telephone or similar communications equipment by
means of which all individuals participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section shall constitute
presence in person at such meeting.

 

Section 4.14   Interested Managers and Officers.  No contract or transaction
between the Company and one or more of its Managers or between the Company and
any other Person in which one or more of its Members, Managers or officers are
shareholders, partners, members, directors, managers or officers, or have a
financial or equity interest, shall be void or voidable solely for this reason,
or solely because the Manager is present at or participates in the meeting of
the Managers which authorizes the contract or transaction, or solely because his
or their votes are counted for such purpose, if: (i) all material facts as to
the relationship or interest and as to the contract or transaction are disclosed
or are known to the Managers, and the Managers in good faith authorize the
contract or transaction by the affirmative vote of a majority of the
disinterested Managers, even though the disinterested Managers be less than a
quorum; (ii) the material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the Members entitled to
vote thereon, and the contract or transaction is specifically approved in good
faith by vote of a majority of the disinterested holders of Units entitled to
vote thereon or such greater percentage as may be provided by any other
applicable provision of this Agreement; or (iii) the contract or transaction is
fair as to the Company as of the time it is authorized, approved or ratified by
the Managers or the Members. 

 

Section 4.15   Manager’s Compensation.  No Manager shall be entitled to receive
any compensation for attendance at meetings of the Managers or otherwise serving
as a Manager. Nothing in this Agreement shall be construed to preclude any
Manager from serving the Company in any other capacity and receiving proper
compensation therefor.

 

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Section 4.16   Time Devoted to Company.  The Managers shall devote such time to
Company business as they deem necessary to manage and supervise the business and
affairs of the Company in an efficient manner; but nothing in this Agreement
shall preclude the employment of any agent, third party or Affiliate to manage
or provide other services with respect to the Company’s assets or business as
the Managers shall determine.

 

Section 4.17   Liability of Managers.  Except as expressly provided under the
Act, no Manager shall be liable for the debts, liabilities, contracts or other
obligations of the Company; provided, however, that each Manager shall be liable
for any debts, liabilities, contracts or other obligations of the Company
incurred or agreed to by such Manager without authorization and in violation of
Section 4.2 of this Agreement.

 

Section 4.18   2005 Budget.  During calendar year 2005, the Company shall
operate in accordance with the budget attached hereto as Exhibit 4.18.

 

ARTICLE V

 

MEETINGS OF MEMBERS

 

Section 5.1   Annual Meetings.  An annual meeting of the Members shall be held
on such date, at such time and at such place as shall be determined by the
Managers and stated in the notice of the meeting.  At such meeting, the Members
shall elect the Managers (subject to Section 4.3 above) and transact such other
business as may properly be brought before the meeting.

 

Section 5.2   Special Meetings.  Special meetings of the Members, for any
purpose or purposes, unless otherwise prescribed by statute, the Certificate or
this Agreement, may be called by holders of at least a majority of any class of
Units.  Only business within the purpose or purposes described in the notice of
special meeting of Members may be conducted at the meeting.

 

Section 5.3   Place of Meetings.  Meetings of Members shall be held at such
places, within or without the State of Delaware, as may from time to time be
fixed by the Managers or as shall be specified or fixed in the respective
notices or waivers of notice thereof; provided, however, the Members agree that
such meetings of Members shall be held in Atlanta or Toronto, unless otherwise
agreed upon by the Members.

 

Section 5.4   Notice of Meetings.  Written or printed notice (which may be given
by email) stating the place, day and hour of each meeting of the Members and, in
case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than five nor more than fifty days before
the date of the meeting, either personally, by mail or by email, by or at the
direction of any Manager or individual calling the meeting, to each Member
entitled to vote at the meeting; provided, however, that notice of any meeting
shall not be required if all Members not receiving notice waive any and all
requirements for giving notice of such meeting of the Members.

 

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Section 5.5   Quorum of and Action by Members.  With respect to any matter, the
holders of at least a majority of the Units entitled to vote on that matter,
present in person or represented by proxy shall constitute a quorum of each
meeting of Members for the transaction of business with respect to that matter. 
Unless otherwise provided in this Agreement, the Members represented in person
or by proxy at a meeting of Members at which a quorum is not present may adjourn
the meeting until such time and place as may be determined by a vote of the
holders of a majority of the Units represented in person or by proxy at that
meeting.  At any such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted that might have been transacted at
the meeting as originally convened.  Except as otherwise specifically provided
in this Agreement (including without limitation, the provisions of
Section 4.1(a) hereof) or under applicable law, with respect to any matter the
affirmative vote or consent of the holders of a majority of the Units (voting
together as one class) entitled to vote on that matter and represented in person
or by proxy at a meeting of Members at which a quorum is present shall be the
act of the Members.  Unless otherwise provided in this Agreement, once a quorum
is present at a meeting of Members, the Members represented in person or by
proxy may conduct such business as may be properly brought before the meeting
until it is adjourned, and the subsequent withdrawal from the meeting of any
Member or the refusal of any Member represented in person or by proxy to vote
shall not affect the presence of a quorum at the meeting.

 

Section 5.6   Action Without a Meeting.  Any action required by the Act to be
taken at any annual or special meeting of Members, or any action which may be
taken at any annual or special meeting of Members, may be taken without a
meeting, with prior notice of such contemplated action to each of the Members
thereof (with no requirement to provide copies to any additional persons
described in Section 14.1 or otherwise), and subject to Section 4.1(a), without
a vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the Members holding a majority of all of the Units (or if a
higher percentage of Units is required to take action, such higher percentage). 
A telegram, telex, cablegram, an email or similar transmission by a Member, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a Member, shall be regarded as signed by the Member for purposes of this
Section 5.6.

 

Section 5.7   Telephone Meetings.  Subject to the provisions of applicable law
and this Agreement regarding notice of meetings, a Member may participate in any
meeting by using conference telephone or similar communications equipment by
means of which all individuals participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 5.7 shall constitute
presence in person at such meeting, except when a Person participates in the
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting was not lawfully called or convened.

 

ARTICLE VI

 

OFFICERS

 

Section 6.1   Officers.  The Managers may designate one or more individuals (who
may or may not be Managers) to serve as officers of the Company.  The Company
shall have such

 

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officers as the Managers may from time to time determine.  Any two or more
offices may be held by the same individual.  An officer of the Company shall
have the duties and responsibilities consistent with his position and shall
perform such duties and responsibilities as shall from time to time be
prescribed or delegated to him by the Managers, subject to the terms of any
employment agreement with the Company or one of its subsidiaries to which such
officer may be a party. The parties hereto hereby initially designate the
following persons as officers of the Company: Sergio Zyman, Chairman and Chief
Executive Officer; Jeff Pruett, Vice President, Finance, Lee White, Vice
President and Chief Operations Officer, Craig Binkley, Vice President and Chief
Consulting Officer, Graham Rosenberg, Vice President, and Mitchell Gendel,
Secretary.  The Managers agree that the officers shall be authorized to take the
actions set forth on Exhibit 6.1 hereto without further approval of the
Managers.

 

ARTICLE VII

 

ACCOUNTING AND TAX MATTERS; REPORTS; BANKING

 

Section 7.1   Books and Records.  At all times during the continuance of the
Company, the Company shall maintain and cause each of its subsidiaries, if any,
to maintain, at their respective principal place of business, separate books of
account that shall show a true and accurate record of all costs and expenses
incurred, all charges made, all credits made and received and all income derived
in connection with the operation of their respective businesses in accordance
with United States generally accepted accounting principles, consistently
applied from year to year (“GAAP”).  Such books of account, together with a copy
of this Agreement and of the Certificate, shall at all times be maintained at
the principal place of business of the Company, shall be open to inspection and
examination at reasonable times by each Member and its duly authorized
representative for any purpose reasonably related to such Member’s interest as a
Member of the Company.

 

Section 7.2   Capital Accounts.  Each Member’s initial individual capital
account (the “Capital Account”) shall be as set forth on Schedule 3.1 and
adjusted pursuant to Section 3.1.  Each Capital Account shall be maintained by
the Company for each Member as provided below:

 

(A)                                  EACH MEMBER’S CAPITAL CONTRIBUTIONS WHEN
MADE SHALL BE CREDITED TO SUCH MEMBER’S CAPITAL ACCOUNT.  THE CAPITAL ACCOUNT OF
EACH MEMBER SHALL, EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, BE
(I) CREDITED WITH THE AMOUNT OF CASH AND THE FAIR MARKET VALUE OF ANY PROPERTY
CONTRIBUTED TO THE COMPANY BY SUCH MEMBER OR ITS PREDECESSOR IN INTEREST (NET OF
LIABILITIES SECURED BY SUCH CONTRIBUTED PROPERTY THAT THE COMPANY IS CONSIDERED
TO ASSUME OR TAKE SUBJECT TO UNDER SECTION 752 OF THE CODE), (II) CREDITED WITH
THE AMOUNT OF ANY PROFITS OR ITEMS OF INCOME ALLOCATED TO SUCH MEMBER UNDER
SECTION 3.3 OR ITS PREDECESSOR IN INTEREST FOR FEDERAL INCOME TAX PURPOSES,
(III) DEBITED BY THE AMOUNT OF ANY LOSS OR ITEMS OF DEDUCTIONS ALLOCATED TO SUCH
MEMBER UNDER SECTION 3.3 OR ITS PREDECESSOR IN INTEREST FOR FEDERAL INCOME TAX
PURPOSES, AND (IV) DEBITED BY THE AMOUNT OF CASH OR THE FAIR MARKET VALUE OF ANY
PROPERTY DISTRIBUTED TO SUCH MEMBER ITS PREDECESSOR IN INTEREST (NET OF
LIABILITIES SECURED BY SUCH DISTRIBUTED PROPERTY THAT SUCH MEMBER IS CONSIDERED
TO ASSUME OR TAKE SUBJECT TO UNDER SECTION 752 OF THE CODE).  IMMEDIATELY PRIOR
TO ANY DISTRIBUTION OF PROPERTY BY THE COMPANY, THE MEMBERS’ CAPITAL ACCOUNTS
SHALL BE ADJUSTED, AS REQUIRED BY TREASURY REGULATION SECTION 1.704-1(B)(2).

 

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(B)                                 ANY ADJUSTMENTS OF BASIS OF COMPANY PROPERTY
PROVIDED FOR UNDER SECTIONS 734 AND 743 OF THE CODE AND COMPARABLE PROVISIONS OF
STATE LAW (RESULTING FROM AN ELECTION UNDER SECTION 754 OF THE CODE OR
COMPARABLE PROVISIONS OF STATE LAW) SHALL NOT AFFECT THE CAPITAL ACCOUNTS OF THE
MEMBERS EXCEPT TO THE EXTENT REQUIRED BY TREASURY REGULATION
§ 1.704-1(B)(2)(IV)(M), AND THE MEMBERS’ CAPITAL ACCOUNTS SHALL BE DEBITED OR
CREDITED PURSUANT TO THE TERMS OF THIS SECTION 7.2 AS IF NO SUCH ELECTION HAD
BEEN MADE.

 

(C)                                  IT IS THE INTENTION OF THE PARTIES THAT THE
CAPITAL ACCOUNT OF EACH MEMBER BE KEPT IN THE MANNER REQUIRED UNDER TREASURY
REGULATION § 1.704-1(B)(2)(IV).

 

(D)                                 CAPITAL ACCOUNTS SHALL BE ADJUSTED, IN A
MANNER CONSISTENT WITH THIS SECTION 7.2, TO REFLECT ANY ADJUSTMENTS IN ITEMS OF
COMPANY PROFITS, LOSSES, INCOME, GAIN OR DEDUCTION THAT RESULT FROM AMENDED
RETURNS FILED BY THE COMPANY OR PURSUANT TO AN AGREEMENT BY THE COMPANY WITH THE
INTERNAL REVENUE SERVICE OR A FINAL COURT DECISION.

 

(E)                                  THE “UNIT CAPITAL ACCOUNT” OF ANY UNIT
OWNED BY A MEMBER SHALL BE EQUAL TO THE CAPITAL ACCOUNT OF SUCH MEMBER DIVIDED
BY THE NUMBER OF UNITS OWNED BY SUCH MEMBER.  UPON A TRANSFER OF CLASS B UNITS
PURSUANT TO ARTICLE X HEREOF, AN ALLOCABLE PORTION OF THE CLASS B MEMBER’S
CAPITAL ACCOUNT WITH RESPECT TO SUCH CLASS B UNITS SHALL BE TRANSFERRED TO THE
PURCHASER OF SUCH UNITS. 

 

Section 7.3   Tax Matters Partner.  The Managers shall appoint one of the
Members as the tax matters partner (“TMP”) under Section 6231 of the Code, and
until the Managers shall appoint another Member, such TMP shall be MDC.  The TMP
shall inform each other Member of all significant tax matters that may come to
its attention (including, without limitation, any tax audits of the Company) and
shall forward to each other Member copies of all written communications it may
receive in that capacity.  The TMP will permit each Member to participate in any
conferences or meetings with any taxing authority relating to any tax audit of
the Company and any subsequent administrative or judicial proceedings.  Nothing
in this Section 7.3 shall limit the ability of any Member to take any action in
its individual capacity with respect to tax audit matters that is left to the
determination of an individual Member under Sections 6221 through 6233 of the
Code or under any similar state or local provision.  The TMP shall be entitled
to the indemnification provided by the Company as set forth in Article XI.

 

Section 7.4   Tax Elections.  The TMP shall make the following elections on
behalf of the Company: 

 

(A)                                  TO ELECT THE FISCAL YEAR ENDING DECEMBER 31
AS THE COMPANY’S FISCAL YEAR;

 

(B)                                 TO ELECT THE ACCRUAL METHOD OF ACCOUNTING
AND PARTNERSHIP TAX TREATMENT; 

 

(C)                                  TO ELECT, IN ACCORDANCE WITH SECTIONS 195
AND 709 OF THE CODE AND APPLICABLE TREASURY REGULATIONS AND COMPARABLE STATE LAW
PROVISIONS, TO TREAT ALL ORGANIZATION COSTS OF THE COMPANY AS DEFERRED EXPENSES
AMORTIZABLE OVER 180 MONTHS;

 

(D)                                 TO ELECT UNDER SECTION 754 OF THE CODE TO
ADJUST THE BASIS OF THE COMPANY’S ASSETS PURSUANT TO SECTIONS 734 AND 743 OF THE
CODE; AND

 

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(E)                                  TO ELECT WITH RESPECT TO SUCH OTHER
FEDERAL, STATE AND LOCAL TAX MATTERS AS THE MANAGERS SHALL DETERMINE FROM TIME
TO TIME.

 

Section 7.5   Bank Accounts; Investment of Company Funds.  The Managers shall
cause one or more accounts to be maintained in the name of the Company in one or
more banks, which accounts shall be used for the payment of expenditures
incurred in connection with the business of the Company and in which shall be
deposited any and all receipts of the Company.  All amounts shall be and remain
the property of the Company and shall be received, held and disbursed for the
purposes specified in this Agreement.  There shall not be deposited in any of
such accounts any funds other than funds belonging to the Company, and no other
funds shall in any way be commingled with such funds.  The Managers may invest
or cause to be invested the Company funds in any manner which the Managers deem
appropriate, in their discretion, and is consistent with prudent business
practices.  Notwithstanding anything in this Section 7.5 to the contrary, the
Company and/or its subsidiaries shall maintain such accounts and deposit the
funds of the Company and its subsidiaries in such manner as may be required or
advisable in connection with (i) the MDC Cash Management Program during the
Company’s participation in the program or (ii) an MDC Financing.

 

Section 7.6   Signature of Negotiable Instruments.  All bills, notes, checks or
other instruments for the payment of money shall be signed or countersigned by
such officer, officers, agent or agents, and in such manner, as are permitted by
this Agreement and as from time to time may be prescribed by resolution (whether
general or special) of the Managers.

 

ARTICLE VIII

 

COVENANTS OF THE MEMBERS

 

Section 8.1   Independent Accountants.  Notwithstanding anything to the contrary
in this Agreement, MDC shall be entitled to appoint the independent public
accountants of the Company to audit the Company’s financial statements.

 

ARTICLE IX

 

DISSOLUTION, LIQUIDATION AND TERMINATION

 

Section 9.1   Dissolution.  The Company shall be dissolved upon the first to
occur of either of the approval of the Members or the entry of a decree of
judicial dissolution under the Act.  As promptly as possible following the
occurrence of either of the foregoing events effecting the dissolution of the
Company, a Manager of the Company shall execute a statement of intent to
dissolve, in such form as shall be prescribed by the Secretary of State of
Delaware.

 

Section 9.2   Liquidation.  Upon dissolution of the Company, the Members shall
appoint a Manager as liquidating trustee, who shall immediately commence to wind
up the Company’s affairs; provided, however, that a reasonable time shall be
allowed for the orderly liquidation of the assets of the Company and the
satisfaction of liabilities to creditors so as to enable the

 

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Members to minimize the normal losses attendant upon a liquidation.  After
making payment or provision for all debts and liabilities of the Company, if
determined to be necessary under the circumstances by the Managers, the Members’
Capital Accounts shall be adjusted by debiting or crediting each Member’s
Capital Account with its respective share of the hypothetical gains or losses
resulting from the assumed sale of all remaining assets of the Company for cash
at their respective fair market values as of the date of dissolution of the
Company in the same manner as gains and losses on actual sales of such
properties are allocated under Section 3.3 hereof.  Any distribution to the
Members in liquidation of the Company shall be made by the later of the end of
the taxable year in which the liquidation occurs or 90 days after the date of
such liquidation.  Notwithstanding any provisions in this Agreement to the
contrary, no Member shall be obligated to restore a deficit balance in its
Capital Account at any time.  The proceeds of liquidation shall be distributed,
as realized, in the manner provided in the Act, pursuant to Section 3.4. 
Subject to the immediately following sentence, the Members shall continue to
share Profits and Losses during liquidation in the same proportions, as
specified in Section 3.3 hereof, as before liquidation.  Notwithstanding
anything to the contrary herein, the Managers shall in their good faith
discretion (and in a manner which reflects the economic interests of the Members
consistent with the intent of the transactions set forth in this Agreement and
the Purchase Agreement) allocate items of income, gain, deduction, and loss for
the year of liquidation (and for earlier years if necessary to the extent then
possible) so as to give Members positive Capital Account balances, immediately
before the distributions provided for in the second preceding sentence, equal to
the amount (if any) that would be distributed to Members if distributions were
made in accordance with Section 3.4(a) hereof.  In the event that such Manager
is unable to perform in his capacity as liquidating trustee due to bankruptcy,
dissolution, death, adjudicated incompetency or any other termination of such
Manager as an entity, the liquidating trustee shall be a Person approved by the
unanimous vote of the Membership Interests.  With respect to this provision, the
term “liquidation” shall have the same meaning as set forth in Treasury
Regulation §1.704-1(b)(2)(ii) as in effect at such time, provided that the
events specified in Section 10 shall not be deemed a “liquidation”.

 

Section 9.3   Termination.  The Company shall terminate when all of the assets
of the Company have been distributed in the manner provided for in this
Article IX, and the Certificate shall have been canceled in the manner required
by the Act.

 

Section 9.4   Claims of the Members.  Members and former Members shall look
solely to the Company’s assets for the return of their Capital Contributions,
and if the assets of the Company remaining after payment of or due provision for
all debts, liabilities and obligations of the Company are insufficient to return
such Capital Contributions, the Members and former Members shall have no
recourse against the Company or any other Member.

 

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ARTICLE X

 

RESTRICTIONS ON TRANSFERS; LIQUIDITY RIGHTS

 

Section 10.1   Transfer by the Members. 

 

(A)                                  EXCEPT AS PROVIDED IN THE NEXT SENTENCE, NO
HOLDER OF CLASS B UNITS SHALL DIRECTLY OR INDIRECTLY SELL, TRANSFER, ASSIGN,
PLEDGE, ENCUMBER, HYPOTHECATE, DISTRIBUTE, DIVIDEND OR SIMILARLY DISPOSE OF,
EITHER VOLUNTARILY OR INVOLUNTARILY, OR ENTER INTO ANY CONTRACT, OPTION OR OTHER
ARRANGEMENT OR UNDERSTANDING WITH RESPECT TO THE SALE, TRANSFER, ASSIGNMENT,
PLEDGE, ENCUMBRANCE, HYPOTHECATION, DISTRIBUTION, DIVIDEND OR SIMILAR
DISPOSITION OF (COLLECTIVELY, “TRANSFER”) ANY CLASS B UNIT WITHOUT THE CONSENT
OF MDC (WHICH SHALL NOT BE UNREASONABLY WITHHELD IN CONNECTION WITH A TRANSFER
TO ANY TRUST FOR THE BENEFIT OF A HOLDER OF CLASS B UNITS OR HIS OR HER
IMMEDIATE FAMILY FOR ESTATE PLANNING PURPOSES), EXCEPT IN A TRANSACTION PURSUANT
TO THIS ARTICLE X.  CLASS A UNITS AND ANY CLASS B UNITS HELD BY MDC OR ITS
TRANSFEREES SHALL BE FREELY TRANSFERABLE, DIRECTLY OR INDIRECTLY, WITHOUT
RESTRICTION.

 

(B)                                 NOTWITHSTANDING ANYTHING IN THE FOREGOING TO
THE CONTRARY, A MANAGEMENT UNITHOLDER MAY OFFER TO SELL ANY OR ALL OF ITS
CLASS B UNITS (FOR PURPOSES OF THIS SECTION 10.1, THE “SUBJECT UNITS”) TO THE
FOLLOWING PERSONS IN ACCORDANCE WITH THE FOLLOWING PROCEDURES:

 

(I)                                     SUCH MANAGEMENT UNITHOLDER SHALL FIRST
OFFER TO SELL SUCH SUBJECT UNITS TO THE COMPANY AND THE COMPANY SHALL HAVE THE
EXCLUSIVE RIGHT TO PURCHASE SUCH SUBJECT UNITS FOR A PERIOD OF 30 DAYS FOLLOWING
THE LATER OF (X) THE RECEIPT OF THE NOTICE REFERRED TO IN SECTION 10.1(C) AND
(Y) THE DAY THAT IS SIX MONTHS AND ONE DAY AFTER SUCH SUBJECT UNITS WERE
ACQUIRED BY THE MANAGEMENT UNITHOLDER; AND

 

(II)                                  IN THE EVENT THAT NOT ALL OF THE SUBJECT
UNITS ARE PURCHASED PURSUANT TO CLAUSE (I) ABOVE BY THE END OF THE PERIOD
SPECIFIED THEREIN, SUCH MANAGEMENT UNITHOLDER SHALL OFFER TO SELL SUCH UNSOLD
SUBJECT UNITS TO MDC AND MDC SHALL HAVE THE EXCLUSIVE RIGHT TO PURCHASE SUCH
SUBJECT UNITS FOR A PERIOD OF 30 DAYS FOLLOWING THE TERMINATION OF THE PERIOD
SET FORTH IN CLAUSE (I) ABOVE.  FOR PURPOSES OF THIS SECTION 10.1, THE PERSONS
DESCRIBED IN CLAUSES (I) AND (II) ARE KNOWN COLLECTIVELY AS THE “PURCHASERS”.

 

(C)                                  IN ORDER FOR A MANAGEMENT UNITHOLDER TO
EXERCISE ITS RIGHT TO SELL ITS CLASS B UNITS PURSUANT TO SECTION 10.1(B), SUCH
MANAGEMENT UNITHOLDER SHALL DELIVER A WRITTEN NOTICE TO THE COMPANY OF ITS
INTENTION TO SELL ITS UNITS PURSUANT TO THIS SECTION 10.1, WHICH NOTICE SHALL
SET FORTH THE NUMBER OF SUBJECT UNITS BEING OFFERED FOR SALE AND THE FMV (AS
DEFINED IN SECTION 10.10) PER UNIT (WHICH MAY BE THE MOST RECENT DETERMINATION
MADE BY THE BOARD OF MANAGERS).    EACH PURCHASER MAY EXERCISE ITS RIGHTS UNDER
THIS SECTION 10.1 BY DELIVERING A WRITTEN NOTICE TO THE SELLING MANAGEMENT
UNITHOLDER.  THE PURCHASE AND SALE OF THE UNITS UPON THE EXERCISE OF AN OFFER TO
SELL PURSUANT TO SECTION 10.1(B) SHALL BE MADE IN ACCORDANCE WITH THE APPLICABLE
PROVISIONS OF SECTION 10.10.

 

Section 10.2   Five Year Call; Five Year Put; Eight Year Call.

 

(A)                                  SUBJECT TO SECTION 10.2(D), AT ANY TIME
DURING THE PERIOD COMMENCING ON THE FIFTH ANNIVERSARY OF THE EFFECTIVE TIME AND
ENDING, SOLELY IN THE CASE OF THE MANAGEMENT UNITHOLDERS, ON THE DAY PRIOR TO
THE EIGHTH ANNIVERSARY OF THE EFFECTIVE TIME (SUCH PERIOD BEING REFERRED TO
HEREIN AS THE “FIFTH ANNIVERSARY CALL PERIOD”) (IT BEING UNDERSTOOD THAT WITH
RESPECT TO ZYMAN, THE RIGHT OF MDC TO CALL THE SPECIAL ZYMAN UNITS SHALL
CONTINUE INDEFINITELY), MDC SHALL HAVE THE RIGHT (BUT NOT THE OBLIGATION),
EXERCISABLE NO MORE THAN ONCE IN ANY TWELVE-MONTH PERIOD (BUT WHICH MAY BE
EXERCISED FOR ALL OR A PORTION OF SUCH UNITS UPON EACH SUCH EXERCISE)

 

25

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WITH RESPECT TO EACH OF ZYMAN AND EACH MANAGEMENT UNITHOLDER, TO REQUIRE ZYMAN
AND EACH MANAGEMENT UNITHOLDER TO SELL TO IT (SUCH RIGHT, THE “CALL”), IN THE
CASE OF ZYMAN, UP TO AN AGGREGATE OF 2,750,000 UNITS (SUCH NUMBER OF UNITS, THE
“SPECIAL ZYMAN UNITS”) FROM TIME TO TIME, AND IN THE CASE OF EACH MANAGEMENT
UNITHOLDER, UP TO AN AGGREGATE OF SUCH MANAGEMENT UNITHOLDER’S PRO RATA PORTION
(AS DEFINED IN SECTION 13.1) OF 3,250,000 UNITS DURING THE FIFTH ANNIVERSARY
CALL PERIOD (SUCH CALL, THE “FIVE YEAR CALL”); PROVIDED THAT MDC SHALL NOT BE
ENTITLED TO CALL ANY UNITS FROM A MEMBER UNTIL THE DAY THAT IS SIX MONTHS AND
ONE DAY AFTER THE DATE ON WHICH SUCH UNITS WERE ACQUIRED BY SUCH MEMBER.  MDC
MAY EXERCISE THE FIVE YEAR CALL BY DELIVERING WRITTEN NOTICE OF EXERCISE (A
“CALL EXERCISE NOTICE” (WHICH TERM SHALL APPLY TO ANY NOTICE OF EXERCISE OF A
CALL PURSUANT TO THIS ARTICLE X)) TO ZYMAN AT ANY TIME ON OR AFTER THE FIFTH
ANNIVERSARY OF THE EFFECTIVE TIME AND TO THE MANAGEMENT UNITHOLDERS DURING THE
FIFTH ANNIVERSARY CALL PERIOD.  THE PURCHASE AND SALE OF UNITS UPON THE EXERCISE
OF A FIVE YEAR CALL SHALL BE MADE IN ACCORDANCE WITH THE APPLICABLE PROVISIONS
SET FORTH IN SECTION 10.10.  ANY CALL EXERCISE NOTICE DELIVERED PURSUANT TO THIS
SECTION OR ANY OTHER RELEVANT SECTION OF THIS ARTICLE X SHALL SET FORTH THE
NUMBER OF UNITS SUBJECT TO THE CALL.  THE SPECIAL ZYMAN UNITS SUBJECT TO THE
FIVE YEAR CALL AT ANY TIME SHALL BE REDUCED BY ANY SPECIAL ZYMAN UNITS PURCHASED
BY MDC PURSUANT TO SECTION 10.2(B).

 

(B)                                 SUBJECT TO SECTION 10.2(D), AT ANY TIME
COMMENCING ON THE FIFTH ANNIVERSARY OF THE EFFECTIVE TIME AND SO LONG AS, PRIOR
TO SUCH DATE, SZ HAS NOT BEEN TERMINATED UNDER ANY OF THE CIRCUMSTANCES
DESCRIBED IN SECTION 10.4(A) (IT BEING UNDERSTOOD THAT THE RIGHT OF ZYMAN TO PUT
THE SPECIAL ZYMAN UNITS DESCRIBED HEREIN SHALL CONTINUE INDEFINITELY; PROVIDED
THAT, IF SZ’S EMPLOYMENT IS TERMINATED AS DESCRIBED IN SECTION 10.4(A), ZYMAN’S
RIGHTS UNDER THIS SECTION 10.2(B) SHALL AUTOMATICALLY TERMINATE), ZYMAN SHALL
HAVE THE RIGHT (BUT NOT THE OBLIGATION), EXERCISABLE NOT MORE THAN ONCE IN ANY
TWELVE-MONTH PERIOD (BUT WHICH MAY BE EXERCISED FOR ALL OR A PORTION OF SUCH
UNITS UPON EACH SUCH EXERCISE), TO REQUIRE MDC TO PURCHASE FROM IT (SUCH RIGHT,
THE “PUT” (WHICH TERM SHALL APPLY TO ANY SIMILAR RIGHT HELD BY ZYMAN OR A
MANAGEMENT UNITHOLDER UNDER THIS ARTICLE X)), THE SPECIAL ZYMAN UNITS (SUCH PUT,
THE “FIVE YEAR PUT”); PROVIDED THAT ZYMAN SHALL NOT BE ENTITLED TO PUT ANY UNITS
UNTIL THE DAY THAT IS SIX MONTHS AND ONE DAY AFTER THE DATE ON WHICH SUCH UNITS
WERE ACQUIRED BY ZYMAN.  ZYMAN MAY EXERCISE THE FIVE YEAR PUT BY DELIVERING
WRITTEN NOTICE OF EXERCISE (A “PUT EXERCISE NOTICE” (WHICH TERM SHALL APPLY TO
ANY NOTICE OF EXERCISE OF A PUT PURSUANT TO THIS ARTICLE X) AND TOGETHER WITH A
CALL EXERCISE NOTICE, AN “EXERCISE NOTICE”) TO MDC AFTER THE FIFTH ANNIVERSARY
OF THE EFFECTIVE TIME.  THE PURCHASE AND SALE OF THE SPECIAL ZYMAN UNITS UPON
THE EXERCISE OF A FIVE YEAR PUT SHALL BE MADE IN ACCORDANCE WITH THE APPLICABLE
PROVISIONS SET FORTH IN SECTION 10.10.  ANY PUT EXERCISE NOTICE DELIVERED
PURSUANT TO THIS SECTION OR ANY OTHER RELEVANT SECTION OF THIS ARTICLE X SHALL
SET FORTH THE NUMBER OF SPECIAL ZYMAN UNITS SUBJECT TO THE PUT.  THE SPECIAL
ZYMAN UNITS SUBJECT TO THE FIVE YEAR PUT AT ANY TIME SHALL BE REDUCED BY ANY
SPECIAL ZYMAN UNITS PURCHASED BY MDC PURSUANT TO SECTION 10.2(A).

 

(C)                                  AT ANY TIME ON OR AFTER THE EIGHTH
ANNIVERSARY OF THE EFFECTIVE TIME (THE “EIGHTH ANNIVERSARY CALL PERIOD”), MDC
SHALL HAVE THE RIGHT (BUT NOT THE OBLIGATION) TO CALL ANY AND ALL UNITS THEN
OWNED BY ZYMAN (SUCH RIGHT, THE “EIGHT YEAR CALL”); PROVIDED THAT MDC SHALL NOT
BE ENTITLED TO CALL ANY UNITS FROM ZYMAN UNTIL THE DAY THAT IS SIX MONTHS AND
ONE DAY AFTER THE DATE ON WHICH SUCH UNITS WERE ACQUIRED BY ZYMAN.  MDC MAY
EXERCISE THE EIGHT YEAR CALL BY DELIVERING A CALL EXERCISE NOTICE TO ZYMAN
DURING THE EIGHTH ANNIVERSARY CALL PERIOD.

 

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THE PURCHASE AND SALE OF THE UNITS UPON THE EXERCISE OF A CALL SHALL BE MADE IN
ACCORDANCE WITH THE APPLICABLE PROVISIONS SET FORTH IN SECTION 10.10. 

 

(D)                                 NOTWITHSTANDING THE FOREGOING, IF THE
REVENUES FOR THE TWELVE MONTHS ENDING ON THE DATE OF AN EXERCISE NOTICE (SUCH
DATE, THE “EXERCISE DATE”) ARE LESS THAN THE AVERAGE REVENUES FOR THE TWO
CONSECUTIVE TWELVE MONTH PERIODS IMMEDIATELY PRECEDING THE MONTH OF THE EXERCISE
DATE, THEN NEITHER MDC NOR ZYMAN MAY EXERCISE THE FIVE YEAR CALL OR THE FIVE
YEAR PUT, AS APPLICABLE, IN SUCH YEAR.

 

Section 10.3   Put and Call of Zyman Units upon SZ Involuntary Termination of
Employment.

 

(A)                                  NOTWITHSTANDING THE PUT AND CALL PERIODS
DESCRIBED IN SECTION 10.2(A) AND SECTION 10.2(B) ABOVE, IN THE EVENT THAT DURING
THE PERIOD COMMENCING ON THE EFFECTIVE TIME AND ENDING ON THE EIGHTH ANNIVERSARY
OF THE EFFECTIVE TIME (SUCH PERIOD, THE “ZYMAN INVOLUNTARY TERMINATION PERIOD”)
SZ SHALL NO LONGER BE AN EMPLOYEE OF THE COMPANY OR ANY OF ITS SUBSIDIARIES BY
REASON OF SZ’S DEATH, DISABILITY (AS DEFINED IN SZ’S EMPLOYMENT AGREEMENT WITH
THE COMPANY), A TERMINATION BY THE COMPANY WITHOUT CAUSE (INCLUDING, WITHOUT
LIMITATION, IF THE COMPANY GIVES WRITTEN NOTICE OF ITS INTENTION NOT TO RENEW
THE TERM OF SZ’S EMPLOYMENT PURSUANT TO THE TERMS OF SZ’S EMPLOYMENT AGREEMENT)
OR A TERMINATION BY SZ FOR GOOD REASON, THEN

 

(I)                                     ZYMAN SHALL BE ENTITLED TO PUT ALL OR A
PORTION OF ITS UNITS TO THE COMPANY (THE “ZYMAN TERMINATION PUT”) PURSUANT TO
AND IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF SECTION 10.10; PROVIDED,
THAT ZYMAN SHALL NOT BE ENTITLED TO PUT ANY UNITS THAT IT HAS HELD FOR A PERIOD
OF SIX MONTHS OR LESS.  ZYMAN MAY EXERCISE THE ZYMAN TERMINATION PUT BY
DELIVERING A PUT EXERCISE NOTICE TO THE COMPANY ANYTIME DURING THE ZYMAN
INVOLUNTARY TERMINATION PERIOD.  THE COMPANY SHALL BE ENTITLED TO ASSIGN ITS
OBLIGATION TO PURCHASE ALL OR A PORTION OF SUCH UNITS PUT BY ZYMAN TO MDC; AND

 

(II)                                  THE COMPANY SHALL BE ENTITLED TO CALL (THE
“COMPANY TERMINATION CALL”) ALL OR A PORTION OF ZYMAN’S UNITS PURSUANT TO AND IN
ACCORDANCE WITH THE APPLICABLE PROVISIONS OF SECTION 10.10 AND, TO THE EXTENT
THAT THE COMPANY HAS NOT EXERCISED THE COMPANY TERMINATION CALL, MDC SHALL BE
ENTITLED TO CALL ANY REMAINING UNITS; PROVIDED, THAT NEITHER THE COMPANY NOR MDC
SHALL BE ENTITLED TO CALL ANY UNITS WHICH HAVE NOT BEEN HELD BY ZYMAN FOR AT
LEAST SIX MONTHS.  EACH OF THE COMPANY AND MDC MAY EXERCISE THE COMPANY
TERMINATION CALL BY DELIVERING A CALL EXERCISE NOTICE TO ZYMAN ANYTIME DURING
THE ZYMAN INVOLUNTARY TERMINATION PERIOD.

 

(B)                                 ANY UNITS WHICH HAVE NOT BEEN PURCHASED
PURSUANT TO THIS SECTION 10.3 DURING THE ZYMAN INVOLUNTARY TERMINATION PERIOD
SHALL BECOME SUBJECT TO THE EIGHT YEAR CALL.

 

Section 10.4   Call for Zyman Units upon SZ Resignation Prior to Fifth
Anniversary of Effective Time; Termination for Cause.

 

(A)                                  NOTWITHSTANDING THE CALL PERIODS DESCRIBED
IN SECTION 10.2(A) ABOVE, IN THE EVENT THAT SZ VOLUNTARILY TERMINATES HIS
EMPLOYMENT WITH THE COMPANY AT ANY TIME PRIOR TO THE FIFTH ANNIVERSARY OF THE
EFFECTIVE TIME (OTHER THAN FOR GOOD REASON) OR IN THE EVENT THAT SZ’S

 

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EMPLOYMENT IS TERMINATED BY THE COMPANY FOR CAUSE AT ANY TIME, THEN THE COMPANY
SHALL HAVE THE RIGHT TO CALL ALL OR A PORTION OF ZYMAN’S UNITS PURSUANT TO AND
IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF SECTION 10.10 AND, TO THE EXTENT
THAT THE COMPANY HAS NOT EXERCISED THE CALL, MDC SHALL BE ENTITLED TO CALL ANY
REMAINING UNITS; PROVIDED THAT NEITHER THE COMPANY NOR MDC SHALL BE ENTITLED TO
CALL ANY UNITS WHICH ZYMAN HAS NOT HELD FOR A PERIOD OF AT LEAST SIX MONTHS. 
EACH OF THE COMPANY AND MDC MAY EXERCISE THE CALL BY DELIVERING A CALL EXERCISE
NOTICE TO ZYMAN.  UPON THE OCCURRENCE OF A TERMINATION OF EMPLOYMENT DESCRIBED
IN THIS SECTION 10.4, ZYMAN SHALL NO LONGER BE ENTITLED TO EXERCISE THE FIVE
YEAR PUT.

 

(B)                                 ANY UNITS WHICH HAVE NOT BEEN PURCHASED
PURSUANT TO THIS SECTION 10.4 ON OR BEFORE THE EIGHTH ANNIVERSARY OF THE
EFFECTIVE TIME SHALL BECOME SUBJECT TO THE EIGHT YEAR CALL.

 

Section 10.5   Call for Zyman Units upon SZ Resignation On or Following the
Fifth Anniversary of Effective Time and Prior to the Eighth Anniversary of the
Effective Time.

 

(A)                                  NOTWITHSTANDING THE CALL PERIODS DESCRIBED
IN SECTION 10.2(A) ABOVE, IN THE EVENT THAT SZ VOLUNTARILY TERMINATES HIS
EMPLOYMENT WITH THE COMPANY AT ANY TIME ON OR FOLLOWING THE FIFTH ANNIVERSARY OF
THE EFFECTIVE TIME AND PRIOR TO THE EIGHTH ANNIVERSARY OF THE EFFECTIVE TIME
(INCLUDING, WITHOUT LIMITATION, IF SZ GIVES WRITTEN NOTICE OF HIS INTENTION NOT
TO RENEW THE TERM OF SZ’S EMPLOYMENT PURSUANT TO THE TERMS OF HIS EMPLOYMENT
AGREEMENT), THEN THE COMPANY SHALL HAVE THE RIGHT TO CALL ALL OR A PORTION OF
ZYMAN’S UNITS PURSUANT TO AND IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF
SECTION 10.10 AND, TO THE EXTENT THAT THE COMPANY HAS NOT EXERCISED THE CALL,
MDC SHALL BE ENTITLED TO CALL ANY REMAINING UNITS; PROVIDED THAT NEITHER THE
COMPANY NOR MDC SHALL BE ENTITLED TO CALL ANY UNITS WHICH ZYMAN HAS NOT HELD FOR
A PERIOD OF AT LEAST SIX MONTHS.  EACH OF THE COMPANY AND MDC MAY EXERCISE THE
CALL BY DELIVERING A CALL EXERCISE NOTICE TO ZYMAN.

 

(B)                                 ANY UNITS WHICH HAVE NOT BEEN PURCHASED
PURSUANT TO THIS SECTION 10.5 ON OR BEFORE THE EIGHTH ANNIVERSARY OF THE
EFFECTIVE TIME SHALL BECOME SUBJECT TO THE EIGHT YEAR CALL.

 

Section 10.6   Put and Call for Management Unitholders’ Units upon Termination
of Employment.  In the event that a Management Unitholder shall no longer be an
employee of the Company or any of its subsidiaries by reason of such Management
Unitholder’s death, Disability, a termination by the Company without Cause or a
termination by such Management Unitholder for Good Reason, then:

 

(a) such Management Unitholder shall be entitled to Put any such Units to the
Company at a price per Unit equal to the FMV by delivering a Put Exercise Notice
to the Company (“Manager Termination Put”); provided that such Management
Unitholder shall not be entitled to Put any Units which have not been held by
such Management Unitholder for a period of at least six months.  The Company
shall be entitled to assign its obligation to purchase all or a portion of such
Units to MDC; and

 

(b) the Company shall be entitled to Call (the “Manager Termination Call”) all
or a portion of such Management Unitholder’s Units pursuant to and in accordance
with the

 

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applicable provisions of Section 10.10 and, to the extent that the Company has
not exercised the Manager Termination Call, MDC shall be entitled to Call any
remaining Units; provided that neither the Company nor MDC shall be entitled to
Call any Units which have not been held by such Management Unitholder for a
period of at least six months.  Each of the Company and MDC may exercise the
Manager Termination Call by delivering a Call Exercise Notice to the Management
Unitholder.

 

Section 10.7   Call for Management Unitholders’ Units Upon Resignation of a
Management Member; Termination for Cause.  Notwithstanding the Call Periods
described in Section 10.2(a) above, in the event that a Management Unitholder
voluntarily terminates his employment with the Company (other than a termination
for Good Reason) or in the event that such Management Unitholder’s employment is
terminated by the Company for Cause at any time, then the Company shall have the
right to Call any or all of such Management Unitholder’s Units pursuant to and
in accordance with the applicable provisions of Section 10.10 and, to the extent
that the Company has not exercised the Call, MDC shall be entitled to Call any
remaining Units; provided that neither the Company nor MDC shall be entitled to
Call any Units which have not been held by such Management Unitholder for a
period of at least six months.  Each of the Company and MDC may exercise the
Call by delivering a Call Exercise Notice to the Management Unitholder.

 

Section 10.8   Sale of Units by Zyman to the Company.

 

(A)                                  THE COMPANY HAS ESTABLISHED THE RESTRICTED
UNIT PURCHASE PLAN SET FORTH AS EXHIBIT 10.8 (THE “PLAN”), PURSUANT TO WHICH IT
WILL OFFER TO SELL UP TO 4,379,374 UNITS TO EMPLOYEES OF THE COMPANY, FROM TIME
TO TIME.  SUCH UNITS SHALL BE OFFERED FOR SALE TO SUCH EMPLOYEES DESIGNATED BY
THE CHIEF EXECUTIVE OFFICER OF THE COMPANY AND APPROVED BY MDC FROM TIME TO TIME
(THE “EMPLOYEE OFFEREES”), IN ACCORDANCE WITH THE FOLLOWING SCHEDULE: 

 

(I)                                     2,360,000 UNITS WILL BE OFFERED TO THE
EMPLOYEE OFFEREES ON OR AS SOON AS REASONABLY PRACTICABLE AFTER THE CLOSING DATE
(AS DEFINED IN THE PURCHASE AGREEMENT) FOR A PERIOD OF 60 DAYS;

 

(II)                                  1,000,000 UNITS PLUS ANY UNITS NOT SOLD
PURSUANT TO CLAUSE (I) ABOVE WILL BE OFFERED TO THE EMPLOYEE OFFEREES ON OR
BEFORE THE FIRST ANNIVERSARY OF THE CLOSING DATE FOR A PERIOD OF 60 DAYS;

 

(III)                               1,000,000 UNITS PLUS ANY UNITS NOT SOLD
PURSUANT TO CLAUSES (I) AND (II) ABOVE WILL BE OFFERED TO THE EMPLOYEE OFFEREES
ON OR BEFORE THE SECOND ANNIVERSARY OF THE CLOSING DATE FOR A PERIOD OF 60 DAYS;
AND

 

(IV)                              ANY UNITS NOT PURCHASED PURSUANT TO CLAUSES
(I), (II) AND (III) WILL BE OFFERED TO THE EMPLOYEE OFFEREES ON OR BEFORE THE
THIRD ANNIVERSARY OF THE CLOSING DATE FOR A PERIOD OF 60 DAYS;

 

PROVIDED, THAT IN THE EVENT THAT SZ SHALL NO LONGER BE AN EMPLOYEE OF THE
COMPANY OR ANY OF ITS SUBSIDIARIES BY REASON OF HIS DEATH OR DISABILITY (AS
DEFINED IN SZ’S EMPLOYMENT AGREEMENT WITH THE COMPANY), THE COMPANY SHALL
IMMEDIATELY OFFER TO SELL TO THE APPLICABLE EMPLOYEE OFFEREES ANY OF THE
4,379,374 UNITS WHICH HAVE NOT PREVIOUSLY BEEN

 

29

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OFFERED PURSUANT TO THIS SECTION 10.8(A) AND, PROVIDED FURTHER, THAT ZYMAN SHALL
BE REQUIRED TO HOLD (AND MAY NOT PUT PURSUANT TO SECTION 10.3) A NUMBER OF UNITS
EQUAL TO SUCH UNITS UNTIL THE 60TH DAY FOLLOWING THE DATE OF SZ’S DEATH OR THE
DATE ON WHICH SZ’S EMPLOYMENT IS TERMINATED DUE TO DISABILITY, AS THE CASE MAY
BE AND SHALL BE REQUIRED TO HOLD UNTIL THE CLOSING OF THE PURCHASE ANY UNITS
SUBSCRIBED FOR PURSUANT TO THE OFFERING. 

 

(B)                                 SUCH UNITS SHALL BE OFFERED TO THE EMPLOYEE
OFFEREES PURSUANT TO CLAUSE (A) FOR FMV (AS DETERMINED BASED ON THE MOST RECENT
VALUATION PRIOR TO THE DATE OF EACH OFFER) AND THE CONSIDERATION IN RESPECT OF
SUCH UNITS SHALL BE IN THE FORM OF CASH AND/OR NOTES PAYABLE BY THE EMPLOYEE
OFFEREES TO THE COMPANY SUBSTANTIALLY IN THE FORM OF EXHIBIT 10.8 (EACH A
“PURCHASE NOTE”) OR, AT THE ELECTION OF THE RELEVANT BUYER (AS DEFINED BELOW),
CASH.

 

(C)                                  IN THE EVENT THAT ALL OF THE 4,379,374
UNITS HAVE NOT BEEN SUBSCRIBED FOR BY THE EMPLOYEE OFFEREES PURSUANT TO CLAUSE
(A) BY THE 61ST DAY AFTER THE DATE ON WHICH UNITS ARE OFFERED PURSUANT TO CLAUSE
(A)(IV) ABOVE AND PURCHASED BY SUCH EMPLOYEE OFFEREES WITHIN THE TIME PERIOD SET
FORTH IN SECTION 10.10(D) TO THE EXTENT SUCH UNITS HAVE BEEN SUBSCRIBED FOR, THE
COMPANY SHALL CREATE A PLAN PURSUANT TO WHICH IT SHALL OFFER TO THE EMPLOYEE
OFFEREES THE OPTION TO PURCHASE ANY SUCH UNSOLD UNITS BEGINNING NO LATER THAN
THE 90TH DAY AFTER THE THIRD ANNIVERSARY OF THE EFFECTIVE TIME, WHICH OPTION MAY
BE EXERCISED ON OR BEFORE THE FIFTH ANNIVERSARY OF THE EFFECTIVE TIME (SUCH
PERIOD, THE “OPTION PERIOD”) AT A PRICE EQUAL TO THE FMV PER UNIT AS OF THE DATE
OF SUCH OFFER (SUCH OPTION, THE “EMPLOYEE OPTION”).  THE CONSIDERATION PAID BY
AN EMPLOYEE OFFEREE UPON THE EXERCISE OF SUCH EMPLOYEE OPTION SHALL BE CASH IN
AN AMOUNT EQUAL TO NO LESS THAN $0.50 PER PURCHASED UNIT (OR SUCH LESSER CASH
AMOUNT AS DETERMINED BY THE BOARD OF MANAGERS, IN ITS SOLE DISCRETION) AND A
PURCHASE NOTE FOR THE REMAINING CONSIDERATION.  NOTWITHSTANDING ANYTHING IN THIS
AGREEMENT TO THE CONTRARY (INCLUDING SECTIONS 10.3 AND 10.4), DURING THE OPTION
PERIOD, ZYMAN SHALL BE REQUIRED TO HOLD A NUMBER OF UNITS AT LEAST EQUAL TO THE
NUMBER OF UNITS SUBJECT TO THE EMPLOYEE OPTION (AS SUCH NUMBER MAY BE REDUCED
FROM TIME TO TIME).

 

(D)                                 FOR EACH UNIT SOLD BY THE COMPANY PURSUANT
TO THIS SECTION 10.8 ZYMAN SHALL SELL AND THE COMPANY SHALL PURCHASE OR REDEEM
ONE UNIT FROM ZYMAN AND IN CONSIDERATION THEREFOR THE COMPANY SHALL PAY AND
ASSIGN TO ZYMAN THE CASH AND/OR PURCHASE NOTES PAID TO THE COMPANY BY ANY HOLDER
IN RESPECT OF SUCH UNITS; PROVIDED THAT THE COMPANY SHALL NOT PURCHASE OR REDEEM
ANY UNITS WHICH HAVE NOT BEEN HELD BY ZYMAN FOR A PERIOD OF AT LEAST SIX MONTHS.

 

Section 10.9   Binding Obligations Upon Exercise of a Put, a Call or an Offer to
Sell.  Upon the proper delivery of an Exercise Notice in respect of the exercise
of a Put by a Seller or a Call by a Buyer or a notice of an Offer to Sell by the
Management Unitholders or the Company, any such Seller shall be obligated to
sell the Units subject to the Call or the Offer to Sell or which it has agreed
to sell pursuant to a Put as set forth in the applicable notice and any such
Buyer shall be obligated to buy the Units subject to the Put or which it has
agreed to purchase pursuant to an Offer to Sell or a Call as set forth in the
applicable notice, in each case, in accordance with the applicable provisions of
Section 10.10.

 

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Section 10.10   Put/Call Purchase Price.

 

(A)                                  CALCULATION/PAYMENT OF THE PUT/CALL
PURCHASE PRICE.

 

(I)  IN CONNECTION WITH THE EXERCISE OF ANY PUT PURSUANT TO SECTION 10.2(B) OR
SECTION 10.3(A) OR ANY CALL PURSUANT TO SECTION 10.2(A), SECTION 10.3(A) OR
SECTION 10.5, OR CALL OF THE SPECIAL ZYMAN UNITS PURSUANT TO THE EIGHT YEAR
CALL, EACH BUYER SHALL CALCULATE AND PAY TO ZYMAN OR THE MANAGEMENT UNITHOLDERS,
AS APPLICABLE, THE FOLLOWING AMOUNTS (COLLECTIVELY, THE “PUT/CALL PURCHASE
PRICE”):

 

(x)                                   within 5 Business Days following the
determination of PBT for YP-1, but in no event earlier than the Article X
Closing Date (as defined in Section 10.10(d) hereof), an amount (the “First
Payment”) equal to:

 

AP ×

{

(PBT for YP-1)

× 4.75

}

3

 

(y)                                 within 5 Business Days following the
determination of PBT for YP,  but in no event earlier than the Article X Closing
Date), an amount (the “Second Payment”) equal to:

 

{

AP ×

(((PBT for YP-1) + (PBT for YP)) × 4.75)

}

– {First Payment}

3

 

(z)                                   within 5 Business Days following the
determination of PBT for YP+1, but in no event earlier than the Article X
Closing Date), an amount (the “Final Payment”) equal to:

 

{

AP ×

(

((PBT for YP-1) + (PBT for YP)
 + (PBT for YP+1))

× AM

)

}

 – {First Payment + Second Payment}

3

 

(II)                                  IN CONNECTION WITH THE EXERCISE OF THE
EIGHT YEAR CALL (EXCEPT TO THE EXTENT SUCH EIGHT YEAR CALL RELATES TO THE
SPECIAL ZYMAN UNITS TO WHICH CLAUSE (I) ABOVE SHALL APPLY) AND A CALL PURSUANT
TO SECTION 10.4(A), THE BUYER SHALL CALCULATE AND PAY TO ZYMAN THE PRODUCT OF
50% MULTIPLIED BY THE PUT/CALL PURCHASE PRICE; PROVIDED THAT IN CONNECTION WITH
A CALL PURSUANT TO SECTION 10.4(A) BECAUSE SZ VOLUNTARILY TERMINATES HIS
EMPLOYMENT WITH THE COMPANY, THE PRICE PAID FOR ANY ZYMAN SPECIAL UNITS SHALL BE
THE PUT/CALL PURCHASE PRICE.

 

(III)                               IN CONNECTION WITH THE EXERCISE OF A CALL
PURSUANT TO SECTION 10.7 OR AN OPTION PURSUANT TO SECTION 10.8(C) OR A PUT
PURSUANT TO SECTION 10.6, THE BUYER SHALL PAY TO THE APPLICABLE SELLER THE
PRODUCT OF THE NUMBER OF UNITS BEING PURCHASED AND THE FMV PER UNIT.

 

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(B)                                 OTHER DEFINITIONS.

 

(i)                                     “AM” shall mean the multiple based on
applicable PBT Margin and CRGR, as set forth below:

 

 

 

Multiple Range

 

PBT Margin

 

CRGR <=10%

 

CRGR >=25%

 

< 30%

 

4.0

 

4.0

 

>= 30% & < 35%

 

4.0

 

4.5

 

>= 35% & < 40%

 

4.5

 

5.0

 

>= 40%

 

5.0

 

5.5

 

 

To the extent that CRGR and/or PBT Margin are within the ranges noted above, the
applicable multiple shall be prorated accordingly.

 

(ii)                                  “Applicable Percentage” or “AP” shall mean
the percentage that the Class B Units being sold and purchased pursuant to a Put
or Call represents out of the total number of issued and outstanding Units,
regardless of class.

 

(iii)                               “Cumulative Revenue Growth Rate” or “CRGR”
shall mean the cumulative annual percentage growth rate in Revenues for the
three-year period ending December 31 of YP+1 (based on the applicable Base
Revenues).  CRGR shall be calculated as follows:

 

CRGR =

[(

Revenues for YP + 1

)

1/3

– 1

]

× 100%

Base Revenues

 

For purposes of calculating CRGR, the base revenues (“Base Revenues”) shall be
the Revenues for YP-2.

 

(iv)                              “FMV” shall mean, with respect to any Units,
the price that would be paid for such Units, assuming a willing seller and a
willing buyer, as determined in good faith by the Board of Managers of the
Company from time to time (and no less frequently than annually) with the advice
of an independent appraiser selected by the Board of Managers of the Company.

 

(v)                                 “Market Value” with respect to the First
Payment, Second Payment and Final Payment, as the case may be, shall be the
average of the closing prices per share of MDC Stock in United States dollars
reported on the NASDAQ Stock Market for the 20 consecutive trading days ending
three trading days immediately prior to the date the First Payment, Second
Payment, Final Payment, as the case may be, are required to be paid pursuant to
Sections 10.10(a)(i)(x), (y), and (z), respectively.  The closing price for each
day shall be the closing price on the NASDAQ Stock Market.

 

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(vi)                              “Measuring Period” shall mean, as applicable,
(x) the calendar year or years included in the applicable Put/Call Purchase
Price calculation under Section 10.10(a) above or (y) any Distribution Period
Calendar Year.

 

(vii)                           “PBT Margin” for the Measuring Period shall
equal the percentage equivalent of the quotient determined by dividing (a) the
total PBT for the Measuring Period, by (b) the total Revenues for the Measuring
Period.  For purposes of this Agreement, the PBT Margin shall be rounded up or
down, as the case may be, to the nearest one-tenth of one percent.

 

(viii)                        “Revenues” during each relevant calendar year or
other period, as applicable, shall mean consolidated revenues of the Company and
its subsidiaries determined in accordance with GAAP, consistently applied with
the accounting principles and procedures historically utilized by the Company. 

 

(ix)                                “YP” shall mean the calendar year in which
the respective Put or Call was exercised by proper delivery of an Exercise
Notice.

 

(x)                                   “YP+1” shall mean the calendar year
immediately following YP.

 

(xi)                                “YP+2” shall mean the calendar year
immediately following YP+1.

 

(xii)                             “YP-1” shall mean the calendar year
immediately preceding YP.

 

(xiii)                          “YP-2” shall mean the calendar year immediately
preceding YP-1.

 

(C)                                  ACCOUNTING PROCEDURES.

 

(i)                                     Upon the exercise of (x) a Put pursuant
to Section 10.2(b) or Section 10.3(a) or (y) a Call pursuant to Section 10.2(a),
Section 10.2(c), Section 10.4(a) or Section 10.5(a) involving the sale of Units
representing at least 2% of the outstanding Units, MDC shall, and upon the
exercise of any Put or Call pursuant to any of the foregoing sections involving
the sale of Units representing less than 2% of the outstanding Units, MDC may at
its option, cause KPMG LLP, or another independent national accounting firm
chosen by MDC (the “Accountants”), as soon as practicable after the end of years
YP, YP+1 and YP+2, to prepare in accordance with GAAP, a report containing an
audited consolidated balance sheet of the Company and its subsidiaries, if any,
as of the close of business on the anniversary of the Effective Time of each
such period, and a related audited consolidated statement of income of the
Company and its subsidiaries, if any, for the relevant year then ended, in each
case together with a statement of the Accountants based upon such report which
(x) states that it was prepared in accordance with this Agreement and (y) sets
forth for the period under examination the applicable calculation of PBT,
Revenues, PBT Margin and AM, and (z) sets forth all adjustments required to be
made to such audited financial statements in order to make the calculations
required under this Section 10.10 (the “Annual Determination”).  MDC shall
instruct the Accountants to deliver a copy of each such Annual Determination to
Zyman as soon as possible after the completion of each year and shall use
commercially

 

33

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reasonable efforts to have each such Annual Determination delivered not later
than 90 days after the end of the period to which such Annual Determination
relates.

 

(ii)                                  If Zyman does not agree that any Annual
Determination correctly states the applicable calculations of PBT, Revenues, PBT
Margin or AM for the period under examination, Zyman shall promptly (but not
later than 30 days after the delivery of such Annual Determination to Zyman)
give written notice to MDC of any exceptions thereto (in reasonable detail
describing the nature of the disagreement asserted).  If Zyman and MDC reconcile
their differences, the Annual Determination shall be adjusted accordingly and
shall thereupon become binding, final and conclusive upon all of the parties
hereto and enforceable in a court of law.  If Zyman and MDC are unable to
reconcile their differences in writing within 20 days after written notice of
exceptions is delivered to Zyman (the “Reconciliation Period”), the items in
dispute shall be submitted to a mutually acceptable accounting firm (other than
the Accountants) (the “Independent Auditors”) for final determination, and the
Annual Determination shall be deemed adjusted in accordance with the
determination of the Independent Auditors and shall become binding, final and
conclusive upon all of the parties hereto and enforceable in a court of law. 
The Independent Auditors shall consider only the items in dispute and shall be
instructed to act within 20 days (or such longer period as Zyman and MDC may
agree) to resolve all items in dispute.  If Zyman does not give written notice
of any exception within 30 days after the delivery of an Annual Determination or
if Zyman gives written notification of its acceptance of an Annual Determination
prior to the end of such 30 day period, such Annual Determination shall
thereupon become binding, final and conclusive upon all the parties hereto and
enforceable in a court of law.

 

(iii)                               In the event the Independent Auditors are
for any reason unable or unwilling to perform the services required of it under
this Section 10.10, then Zyman and MDC agree to select another mutually
acceptable accounting firm to perform the services to be performed under this
Section 10.10 by the Independent Auditors.  If Zyman and MDC fail to select the
Independent Auditors as required by clause (i) above within seven days after the
expiration of the Reconciliation Period or fail to select another accounting
firm within seven days after it is determined that the Independent Auditors will
not perform the services required, either Zyman or MDC may request the American
Arbitration Association in Atlanta (the “AAA”) to appoint an independent firm of
certified public accountants to perform the services required under this
Section 10.10 by the Independent Auditors.  MDC, on the one hand, and Zyman, on
the other hand, shall share the fees of the AAA equally.  For purposes of this
Section 10.10(c) the term “Independent Auditors” shall include such other
accounting firm chosen in accordance with this clause (iii).

 

(iv)                              The Independent Auditors shall determine the
party (i.e., Zyman or MDC) whose asserted position as to the calculation of PBT,
Revenues, PBT Margin, or AM for the period under examination before the
Independent Auditors is furthest from the determination of PBT, Revenues, PBT
Margin, or AM, as the case may be, by the Independent Auditors, which
non-prevailing party shall pay the fees and expenses of the Independent Auditors
and shall reimburse the prevailing party for the portion of the fees of the AAA
previously paid by it.

 

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(v)                                 The books and records of the Company and its
subsidiaries shall be made available during normal business hours upon
reasonable advance notice at the principal office of the Company, to the parties
hereto and their representatives, the Accountants and the Independent Auditors
to the extent required to determine the calculations required under
Section 10.10.  Zyman, on the one hand, and MDC, on the other hand, shall make
available to the other party and their representatives (including auditors) any
back-up materials generated by or for them to support a position that is
contrary to the position taken by the other party.

 

(D)                                 CLOSING.  THE CLOSING FOR EACH PURCHASE AND
SALE OF UNITS (AN “ARTICLE X CLOSING”) PURSUANT TO THIS ARTICLE X SHALL BE HELD
AT THE OFFICES OF THE COMPANY WITHIN 30 DAYS AFTER THE LATER OF (I) THE DELIVERY
OF AN EXERCISE NOTICE, (II) IN THE CASE OF OFFERS TO SELL, 30 DAYS AFTER THE
RECEIPT OF AN ACCEPTANCE OF AN OFFER TO SELL AND (III) THE DAY THAT IS SIX
MONTHS AND ONE DAY AFTER SUCH UNITS WERE FIRST ACQUIRED BY THE SELLER.  THE DATE
ON WHICH THE RESPECTIVE ARTICLE X CLOSING TAKES PLACE IS REFERRED TO IN THIS
AGREEMENT AS ITS “ARTICLE X CLOSING DATE”.  AT EACH ARTICLE X CLOSING, THE
PARTIES SHALL EXECUTE AN ASSIGNMENT OF UNIT AGREEMENT IN FORM AND SUBSTANCE
REASONABLY ACCEPTABLE TO THE PURCHASER AND THE SELLER IN SUCH TRANSACTION AND AN
AMENDMENT TO THIS AGREEMENT IN ACCORDANCE WITH SECTION 14.4 REFLECTING SUCH
TRANSFER AND THE REALLOCATED UNITS (INCLUDING THE RELATED PORTION OF THE CAPITAL
ACCOUNT).  THE TRANSFER OF ANY UNITS PURSUANT TO THIS SECTION 10.10 SHALL BE
FREE AND CLEAR OF ALL CLAIMS, LIENS AND ENCUMBRANCES OTHER THAN AS CREATED BY
THE PROVISIONS OF THIS AGREEMENT.  PRIOR TO ANY ARTICLE X CLOSING, THE
APPLICABLE PURCHASER AND SELLER SHALL USE THEIR BEST EFFORTS TO OBTAIN ANY
REQUIRED GOVERNMENTAL OR REGULATORY APPROVAL OR APPROVALS.  MDC SHALL HAVE THE
RIGHT TO POSTPONE ANY SCHEDULED ARTICLE X CLOSING UNTIL ANY SUCH GOVERNMENTAL OR
REGULATORY APPROVAL IS OBTAINED.  IN CONNECTION WITH A SALE PURSUANT TO THIS
ARTICLE X, THE TRANSFEROR SHALL BE ENTITLED TO DISTRIBUTIONS PURSUANT TO
SECTION 3.4 AS AND WHEN DECLARED BY THE BOARD OF MANAGERS IN RESPECT OF ANY
AMOUNTS WHICH HAVE BEEN ALLOCATED TO THE TRANSFERRED UNITS AS OF THE DAY PRIOR
TO THE EFFECTIVE DATE OF ANY PUT OR CALL OR, IN THE CASE OF AN OFFER TO SELL,
THE APPLICABLE ARTICLE X CLOSING DATE, AND THE TRANSFEREE SHALL BE ENTITLED TO
DISTRIBUTIONS PURSUANT TO SECTION 3.4 IN RESPECT OF ANY AMOUNTS WHICH ARE
ALLOCATED TO THE TRANSFERRED UNITS ON AND AFTER THE EFFECTIVE DATE OR THE
ARTICLE X CLOSING DATE, AS THE CASE MAY BE.

 

(E)                                  PUT/CALL PURCHASE PRICE PAYMENT. 

 

(I) IF MDC IS PURCHASING UNITS FROM ZYMAN PURSUANT TO SECTION 10.2,
SECTION 10.3, SECTION 10.4 OR SECTION 10.5, PAYMENT OF EACH COMPONENT OF THE
PUT/CALL PURCHASE PRICE SHALL BE MADE BY MDC (X) AT LEAST 80% IN CASH (ANY
AMOUNT IN EXCESS OF 80% WILL BE DETERMINED BY MDC IN ITS SOLE DISCRETION) BY
DIRECT WIRE TRANSFER TO THE ACCOUNT OF ZYMAN DESIGNATED IN WRITING TO MDC
PURSUANT TO THIS AGREEMENT AND (Y) UP TO 20% OF EACH COMPONENT OF THE PUT/CALL
PURCHASE PRICE MAY BE MADE IN CLASS A SHARES (SUBORDINATE VOTING SHARES), OF MDC
PARTNERS (“MDC STOCK”) (ROUNDED UP OR DOWN TO THE NEAREST WHOLE SHARE) HAVING AN
AGGREGATE MARKET VALUE (AS DEFINED ABOVE) EQUAL TO UP TO 20% OF SUCH COMPONENT
OF THE PUT/CALL PURCHASE PRICE AND, IF THE COMPANY IS PURCHASING UNITS PURSUANT
TO SECTION 10.2, SECTION 10.3, SECTION 10.4 OR SECTION 10.5, THE PURCHASE PRICE
SHALL BE PAID IN CASH.  EACH OF THE FIRST PAYMENT, SECOND PAYMENT AND FINAL
PAYMENT SHALL BE DEEMED TO INCLUDE IMPUTED INTEREST, TO THE EXTENT REQUIRED BY
THE CODE.  PRIOR TO MDC’S DELIVERY TO ZYMAN OF EACH PUT/CALL PURCHASE PRICE
PAYMENT IN

 

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SHARES OF MDC STOCK, ZYMAN SHALL BE REQUIRED TO DELIVER AN INVESTMENT
REPRESENTATION CERTIFICATE IN THE FORM OF EXHIBIT 10.10(E) HERETO.  THE SHARES
OF MDC STOCK SHALL BE ELIGIBLE FOR SALE IN ACCORDANCE THE APPLICABLE SECURITIES
LAWS OF THE U.S. AND CANADA, AND THE TERMS OF THE INVESTMENT REPRESENTATION
CERTIFICATE TO BE DELIVERED BY THE RECEIPT OF SUCH SHARES OF MDC STOCK.

 

(ii)                                  Any purchase of Units pursuant to
Section 10.1 shall be made in cash; provided that if the Seller is the obligor
on any Purchase Note(s) at the time of sale, the Buyer may elect to assume a
portion of the amounts outstanding under any such Purchase Note(s) (equal in
proportion to the number of Units being purchased by such Buyer relative to the
number of Units owned by such Seller immediately prior to the relevant Article X
Closing) and the amount of cash payable shall be reduced by the value of the
portion of the Purchase Note(s) assumed by such Buyer.

 

(iii)                               Any purchase of Units pursuant to
Section 10.6, Section 10.7 or Section 10.8 shall be made in cash and/or Purchase
Notes, or some combination thereof in accordance with the terms set forth in
such sections (to the extent provided); provided that if the Seller is the
obligor on any Purchase Note(s) at the time of sale, the Buyer may elect to
assume a portion of the amounts outstanding under any such Purchase Note(s)
(equal in proportion to the number of Units being purchased by such Buyer
relative to the number of Units owned by such Seller immediately prior to the
relevant Article X Closing) and the amount of cash and/or Purchase Notes payable
shall be reduced by the value of the portion of the Purchase Note(s) assumed by
such Buyer.

 

(F)                                    EFFECT OF EVENTS DURING PERIOD CLASS B
UNITS ARE ISSUED.  THE PARTIES HERETO UNDERSTAND AND AGREE THAT UNDER THE TERMS
OF EACH MANAGEMENT UNITHOLDER’S EMPLOYMENT AGREEMENT WITH THE COMPANY, IF ANY,
SUCH MANAGEMENT UNITHOLDER MAY BE TERMINATED FOR CAUSE OR WITHOUT CAUSE. 
ACCORDINGLY, EACH OF THE PARTIES HERETO AGREES THAT IF (A) ANY MANAGEMENT
UNITHOLDER CEASES TO BE AN EMPLOYEE OF THE COMPANY, REGARDLESS OF THE REASON
THEREFOR, OR (B) THERE ARE CHANGES IN THE COMPOSITION OF THE BOARD OF MANAGERS
OF THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY, NO PARTY TO THIS AGREEMENT OR
ANY PERSON DERIVING RIGHTS THROUGH ANY SUCH PARTY SHALL HAVE THE RIGHT TO MAKE A
CLAIM THAT SUCH CESSATION OF EMPLOYMENT OR CHANGE IN THE COMPOSITION OF THE
BOARD OF MANAGERS OF THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY (X)
CONSTITUTES A BREACH BY MDC OR ANY OF ITS AFFILIATES OF THIS AGREEMENT, (Y)
RESULTED IN AN ADVERSE EFFECT ON ANY PUT/CALL PURCHASE PRICE PAYMENT UNDER THIS
AGREEMENT FORMING THE BASIS FOR A CLAIM AGAINST MDC OR ANY OF ITS AFFILIATES, OR
(Z) CONSTITUTES AN EVENT FORMING THE BASIS FOR SUCH PARTY TO DISPUTE ANY
CALCULATION REQUIRED TO BE MADE PURSUANT TO THE ACCOUNTING PROCEDURES SET FORTH
IN SECTION 10.10(C) HEREOF.  IN THE EVENT A MANAGEMENT UNITHOLDER CEASES TO BE
EMPLOYED BY THE COMPANY, REGARDLESS OF THE REASON THEREFOR, SUCH EVENT SHALL NOT
AFFECT THE RIGHT OF ANY UNITHOLDER TO RECEIVE ANY PUT/CALL PURCHASE PRICE
PAYMENT UNDER THIS AGREEMENT.

 

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ARTICLE XI

 

INDEMNIFICATION

 

Section 11.1   Indemnification of Managers and Members.  The Company shall
indemnify and advance expenses to a Person who was or is threatened to be made a
named defendant or respondent in a proceeding because the individual is or was a
Manager or Member to the fullest extent permitted or authorized by the laws of
the State of Delaware as if the Company was a corporation organized under the
laws of Delaware.  This indemnification provision shall inure to each of the
Managers and Members of the Company, and other Persons serving at the request of
the Company (as provided in this Article), and in the event of his death shall
extend to his legal representatives; but such rights shall not be exclusive of
any other rights to which he may be entitled.

 

Section 11.2   Others.  The Company may indemnify and advance expenses to an
officer, employee or agent of the Company to the same extent that it is required
to indemnify and advance expenses to Managers or Members under this Agreement or
by statute.  The Company may indemnify and advance expenses to Persons who are
not or were not officers, employees or agents of the Company but who are or were
“serving at the request of the Company” (as defined in Section 11.5(d)) as a
director, officer, partner, manager, member, venturer, proprietor, trustee,
employee, agent or similar functionary of another limited liability company,
corporation, partnership, employee benefit plan, or other enterprise or entity
(individually, an “Other Entity”) to the same extent that the Company is
required to indemnify and advance expenses to Managers or Members under this
Article or by statute.

 

Section 11.3   Insurance and Other Arrangements.  The Company may purchase and
maintain insurance or establish and maintain another arrangement on behalf of
any individual who is or was a Manager, officer, employee, Member or agent of
the Company or who is or was serving at the request of the Company as a
director, officer, partner, manager, member, venturer, proprietor, trustee,
employee, agent or similar functionary of an Other Entity, against or in respect
of any liability asserted against him and incurred by him in such a capacity or
arising out of his status as such an individual, whether or not the Company
would have the power to indemnify him against that liability under this
Agreement or by statute.  If the insurance or other arrangement is with a Person
or entity that is not regularly engaged in the business of providing insurance
coverage, the insurance or other arrangement may provide for payment of a
liability with respect to which the Company would not have the power to
indemnify the Person only if including coverage for the additional liability has
been approved by the Members of the Company.  Without limiting the power of the
Company to purchase, procure, establish or maintain any kind of insurance or
other arrangement, the Company may, for the benefit of persons indemnified by
the Company, (a) create a trust fund; (b) establish any form of self-insurance;
(c) secure its indemnity obligation by grant of a security interest or other
lien on the assets of the Company; or (d) establish a letter of credit, guaranty
or surety arrangement.  The insurance or other arrangement may be purchased,
procured, maintained or established within the Company or with any insurer or
other Person deemed appropriate by the Managers regardless of whether all or
part of the stock or other securities of the insurer or other Person are owned
in whole or part by the Company.  In the absence of fraud, the judgment of the
Managers as to the terms and conditions of the insurance or other arrangement
and the identity of the insurer or

 

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other Person participating in an arrangement shall be conclusive and the
insurance or arrangement shall not be voidable and shall not subject the
Managers approving the insurance or arrangement to liability, on any ground,
regardless of whether Managers participating in the approval are beneficiaries
of the insurance or arrangement.

 

Section 11.4   Report to Members.  Any indemnification of or advance of expenses
to a Manager or Member in accordance with this Article or the provisions of any
statute shall be reported in writing to the Members with or before the notice or
waiver of notice of the next Members’ meeting or with or before the next
submission to the Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

 

Section 11.5   Definitions.  For purposes of this Article XI:

 

(A)                                  THE TERM “EXPENSES” INCLUDES COURT COSTS
AND ATTORNEYS’ FEES AND DISBURSEMENTS;

 

(B)                                 THE TERM “PROCEEDING” MEANS ANY THREATENED,
PENDING OR COMPLETED ACTION, SUIT OR PROCEEDING, WHETHER CIVIL, CRIMINAL,
ADMINISTRATIVE, ARBITRATIVE OR INVESTIGATIVE, ANY APPEAL IN SUCH AN ACTION, SUIT
OR PROCEEDING, AND ANY INQUIRY OR INVESTIGATION THAT COULD LEAD TO SUCH AN
ACTION, SUIT OR PROCEEDING;

 

(C)                                  THE TERM “MANAGER” MEANS ANY PERSON WHO IS
OR WAS A MANAGER OF THE COMPANY AND ANY PERSON WHO, WHILE A MANAGER OF THE
COMPANY, IS OR WAS SERVING AT THE REQUEST OF THE COMPANY AS A DIRECTOR, OFFICER,
PARTNER, MANAGER, MEMBER, VENTURER, PROPRIETOR, TRUSTEE, EMPLOYEE, AGENT OR
SIMILAR FUNCTIONARY OF AN OTHER ENTITY;

 

(D)                                 THE TERM “SERVING AT THE REQUEST OF THE
COMPANY” AS USED ABOVE SHALL INCLUDE ANY SERVICE AS A MANAGER, DIRECTOR,
OFFICER, EMPLOYEE OR AGENT OF THE COMPANY OR WHERE ANY SUCH PERSON PERFORMS
DUTIES ON OR OTHERWISE INVOLVES SERVICES WITH RESPECT TO AN EMPLOYEE BENEFIT
PLAN, OR THE PARTICIPANTS OR BENEFICIARIES OF THE EMPLOYEE BENEFIT PLAN
SPONSORED BY THE COMPANY.  EXCISE TAXES ASSESSED ON A MANAGER WITH RESPECT TO AN
EMPLOYEE BENEFIT PLAN PURSUANT TO APPLICABLE LAW ARE DEEMED FINES.  ACTION TAKEN
OR OMITTED TO BE TAKEN BY A MANAGER WITH RESPECT TO AN EMPLOYEE BENEFIT PLAN IN
THE PERFORMANCE OF HIS DUTIES FOR A PURPOSE REASONABLY BELIEVED BY HIM TO BE IN
THE INTEREST OF THE PARTICIPANTS AND BENEFICIARIES OF THE PLAN IS DEEMED TO BE
FOR A PURPOSE WHICH IS NOT OPPOSED TO THE BEST INTERESTS OF THE COMPANY.

 

Section 11.6   Severability.  The provisions of this Article are intended to
comply with the Act.  To the extent that any provision of this
Article authorizes or requires indemnification or the advancement of expenses
contrary to such statute or the Certificate, the Company’s power to indemnify or
advance expenses under such provision shall be limited to that permitted by such
statute and the Certificate and any limitation required by such statute or the
Certificate shall not affect the validity of any other provision of this
Article XI.

 

Section 11.7   Nonexclusivity of Rights.  The right to indemnification and the
advancement and payment of expenses conferred in this Article XI shall not be
exclusive of any other right that a Manager or other Person indemnified pursuant
hereto may have or hereafter

 

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acquire under any law (common or statutory), provision of the Certificate or
this Agreement or otherwise.

 

ARTICLE XII

 

ADDITIONAL AGREEMENTS

 

Section 12.1   “Zyman” Name.  The Members hereby agree that (a) all right, title
and interest in the trade name “Zyman Group” or any variation thereof belong to
the Company and (b) so long as the Company is an Affiliate of MDC Partners, the
Company, the Members and SZ shall endeavor to have any materials, documents or
other items that reference the name “Zyman Group” or any variations thereof to
be followed by the words “an MDC Partners Company”.

 

Section 12.2   2005 Option Plan.  For each Unit issued to a participant in the
Company’s 2005 Unit Option Plan (the “Plan”) pursuant to the exercise of any
option granted under such plan, Zyman shall sell and the Company shall purchase
or redeem one Unit from Zyman and, in consideration therefor, the Company shall
pay and assign the consideration paid to the Company by such participant upon
the exercise of such option.  Zyman agrees that, until the expiration of such
options, Zyman will hold a number of Units equal to the number of Units issued
under the Plan and such Units shall not be subject to any of the Puts or Calls
hereunder.

 

ARTICLE XIII

 

OTHER DEFINITIONS

 

Section 13.1   Other Definitions.  When used herein, the following terms shall
have the following meanings:

 

“Additional Payment” shall have the meaning given thereto in the Purchase
Agreement.

 

“Adjusted Capital Account Deficit” with respect to any Member means the deficit
balance, if any, in such Member’s Capital Account as of the end of the relevant
fiscal year, after giving effect to the following adjustments:

 

(i)                                     Credit to such Capital Account any
amounts which such Member is obligated to restore pursuant to any provision of
this Agreement or is otherwise treated as being obligated to restore under
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to
restore pursuant to the penultimate sentence of Treasury Regulation Sections
1.704-2(g)(1) and 1.704-2(i)(5); and

 

(ii)                                  Debit to such Capital Account the items
described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6).

 

The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

 

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“Affiliate” of any Person shall mean any Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with such Person.

 

“Business Day” shall mean any day on which commercial banks are not authorized
or required to close in Atlanta, Georgia and Toronto, Ontario.

 

“Buyer” shall mean the purchaser of Units in any transaction described in
Article X.

 

“Capital Contribution” shall mean the contribution of a Member and any
subsequent contributions of capital made by that Member to the Company as set
forth in Article III.

 

“Cause” means, with respect to SZ, “Cause” as defined in SZ’s employment
agreement with the Company and, with respect to any other employee of the
Company and its subsidiaries, “Cause” means (A) such employee’s willful failure
to perform his or her duties in any material respect (other than as a result of
total or partial incapacity due to physical illness), (B) commission of (x) a
felony (other than traffic-related) under the laws of the United States or any
state thereof or any similar criminal act in a jurisdiction outside the United
States or (y) a crime involving moral turpitude, (C) such employee’s willful
malfeasance or willful misconduct which is injurious to the Company, (D) any act
of fraud by such employee or (E) such employee’s material breach of the
Company’s code of conduct.

 

“Class A Distribution Shortfall Amount” with respect to any Distribution Period
Calendar Year and any Post-Distribution Period Calendar Year, shall mean the
cumulative amount by which distributions under Section 3.4(a)(i) to holders of
Class A Units for all preceding years since the Effective Time fell short of the
cumulative allocations to holders of Class A Units of PBT under
Section 3.5(a)(i) for such prior years (for this purpose treating any negative
PBT for any calendar year as $0).

 

“Class A PBT Shortfall Amount” shall mean, with respect to any calendar year
other than the first Distribution Period Calendar Year, the amount by which the
actual allocation of PBT to holders of Class A Units under Section 3.5(a)(i) for
all previous Distribution Period Calendar Year(s) is less than the aggregate
Preferred Return Amount(s) with respect to such Distribution Period Calendar
Year(s).

 

“Class B Catch-Up Amount” shall mean, with respect to any Distribution Period
Calendar Year, the lesser of (i) the difference between (A) the product of the
amounts allocated to the holders of Class A Units pursuant to
Section 3.5(a)(i) for the current and all previous Distribution Period Calendar
Year(s) and the fraction (expressed as a percentage) in which the numerator is
the number of outstanding Class B Units and the denominator is the number of
outstanding Class A Units and (B) the amounts allocated to the holders of
Class B Units pursuant to Section 3.5(a)(ii) for all previous Distribution
Period Calendar Year(s) and (ii) the positive difference (if any) of PBT for
such Distribution Period Calendar Year less the Preferred Return Amount and less
the Class A PBT Shortfall Amount, if any.

 

“Class B Distribution Shortfall Amount” with respect to any Distribution Period
Calendar Year and any Post-Distribution Period Calendar Year, shall mean the
cumulative amount by which distributions under Section 3.4(a)(ii) to holders of
Class B Units for all preceding calendar years since the Effective Time fell
short of the cumulative allocations to

 

40

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holders of Class B Units of PBT under Section 3.5(a)(ii) for such prior years
(for this purpose treating any negative PBT for any calendar year as $0).

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute or statutes.

 

“Company Credit Facility” shall mean the revolving credit facility dated as of
November 8, 2005 by and between the Company and Wachovia Bank, National
Association, as amended, modified or supplemented from time to time.

 

“Company Minimum Gain” shall have the meaning for “Partnership Minimum Gain” set
forth in Sections 1.704-2(b)(2) and 1.704-2(d) of the Treasury Regulations.

 

“Depreciation” shall mean for each fiscal year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such fiscal year, except that if the Gross Asset Value
of an asset differs from its adjusted basis for Federal income tax purposes at
the beginning of such fiscal year, Depreciation shall be an amount which bears
the same ratio to such beginning Gross Asset Value as the Federal income tax
depreciation, amortization, or other cost recovery deduction for such fiscal
year bears to such beginning adjusted tax basis; provided, however, that if the
adjusted basis for Federal income tax purposes of an asset at the beginning of
such fiscal year is zero, Depreciation shall be determined with reference to
such beginning Gross Asset Value using any reasonable method selected by the
TMP. 

 

“Disability” means, with respect to SZ, “Disability” as defined in SZ’s
employment agreement with the Company and, with respect to any other employee of
the Company and its subsidiaries, “Disability” means the inability of an
employee to perform the essential functions of the employee’s job, with or
without reasonable accommodation, by reason of a physical or mental infirmity,
for a continuous period of six months or for an aggregate of nine months in a
twenty-four month period.

 

“Distribution Period” shall mean the period from the Effective Time until the
earlier of the termination of the Company or the date that is the fifth
anniversary of the Effective Time.

 

“Distribution Period Calendar Year” shall mean any of (i) the period from the
Effective Time until December 31, 2005, (ii) the period from January 1st through
December 31st of each of 2006, 2007, 2008 and 2009 and (iii) the period from
January 1, 2010 until the date that is the fifth anniversary of the Effective
Time; provided that if the Company is terminated prior to the fifth anniversary
of the Effective Time, the last calendar year shall be the period from
January 1st of the year in which the Company is terminated until that date on
which the Company is terminated.

 

“Effective Time” shall mean the date of the closing of the Purchase Transaction.

 

“Good Reason” shall mean, with respect to SZ, “Good Reason” as defined in SZ’s
employment agreement with the Company and, with respect to any other employee of
the Company and its subsidiaries, “Good Reason” means a failure by the Company
to pay such

 

41

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employee’s compensation when due, which failure remains uncured for a period of
20 days after written notice of such breach from the employee to the Company.

 

“Gross Asset Value”, with respect to any asset, the asset’s adjusted basis for
Federal income tax purposes, except as follows:

 

(I)                                     SUBJECT TO THE FINAL SENTENCE OF THIS
DEFINITION AND CONSISTENT WITH THE CAPITAL ACCOUNTS AS DESCRIBED IN SECTION 3.1,
THE INITIAL GROSS ASSET VALUE OF ANY ASSET CONTRIBUTED BY A MEMBER TO THE
COMPANY SHALL BE THE GROSS FAIR MARKET VALUE OF SUCH ASSET, AS DETERMINED BY THE
BOARD OF MANAGERS;

 

(II)                                  THE GROSS ASSET VALUE OF ALL COMPANY
ASSETS SHALL BE ADJUSTED TO EQUAL THEIR RESPECTIVE GROSS FAIR MARKET VALUES AS
OF THE FOLLOWING TIMES: (A) THE ACQUISITION OF ADDITIONAL UNITS BY ANY NEW OR
EXISTING MEMBER IN EXCHANGE FOR A CAPITAL CONTRIBUTION; (B) THE DISTRIBUTION BY
THE COMPANY TO A MEMBER OF PROPERTY AS CONSIDERATION FOR A UNIT; AND (C) THE
LIQUIDATION OF THE COMPANY WITHIN THE MEANING OF TREASURY REGULATIONS
SECTION 1.704-1(B)(2)(II)(G); PROVIDED, HOWEVER, THAT ADJUSTMENTS PURSUANT TO
CLAUSES (A) AND (B) ABOVE SHALL BE MADE ONLY IF THE MANAGERS REASONABLY
DETERMINE THAT SUCH ADJUSTMENTS ARE NECESSARY OR APPROPRIATE TO REFLECT THE
RELATIVE ECONOMIC INTERESTS OF THE MEMBERS IN THE COMPANY; AND

 

(III)                               THE GROSS ASSET VALUE OF ANY COMPANY ASSET
DISTRIBUTED TO ANY MEMBER SHALL BE ADJUSTED TO EQUAL THE GROSS FAIR MARKET VALUE
OF SUCH ASSET ON THE DATE OF DISTRIBUTION.

 

If the Gross Asset Value of an asset has been determined or adjusted pursuant to
clauses (i) or (ii), hereof, such Gross Asset Value shall thereafter be adjusted
by the Depreciation taken into account with respect to such asset for purposes
of computing Profits and Losses.

 

“MDC Credit Facility” shall mean the Credit Agreement, dated as of September 22,
2004, among MDC Partners, Maxxcom Inc., an Ontario corporation, Maxxcom Inc., a
Delaware corporation, the lending institutions identified in the Credit
Agreement, JPMorgan Chase Bank, Toronto Branch, as Canadian Administrative Agent
and JPMorgan Chase Bank as Administrative Agent and as Collateral Agent.

 

“Member Nonrecourse Debt” shall have the meaning for “Partner Nonrecourse Debt”
set forth in Section 1.704-2(b)(4) of the Treasury Regulations.

 

“Member Nonrecourse Debt Minimum Gain” shall mean an amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Section 1.704-2(i)(3) of the Treasury Regulations.

 

“Member Nonrecourse Deductions” shall have the meaning set forth in
Section 1.704-2(i)(2) of the Treasury Regulations.

 

42

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“Membership Interest” of any Member shall mean such Member’s interest in the
Company under this Agreement (including, without limitation, such Member’s
interest in Profits and Losses, distributions, voting, and management, all as
specified in this Agreement).

 

“Nonrecourse Deductions” shall have the meaning set forth in
Section 1.704-2(b)(1) of the Treasury Regulations.

 

“Nonrecourse Liability” shall have the meaning set forth in
Section 1.704-2(b)(3) of the Treasury Regulations.

 

“Offer to Sell” shall mean an offer to sell Units pursuant to Section 10.1 or
Section 10.8.

 

“Original Unitholders” shall mean, those Members who owned Membership Units
immediately prior to the consummation of the transactions contemplated by the
Purchase Agreement.

 

“PBT” for any relevant period shall mean the consolidated net income (loss) of
the Company and its subsidiaries but before provision for all federal, state and
local income taxes for such period, determined in accordance with United States
generally accepted accounting principles consistently applied (“GAAP”);
provided, that the following amounts shall be excluded:

 

(1)                                  ANY EXPENSES FOR NON-CASH EQUITY-BASED
COMPENSATION WHICH ACCRUES PRIOR TO, ON OR AFTER CLOSING AND IS ATTRIBUTABLE TO
TRANSACTIONS CONTEMPLATED BY THE PURCHASE AGREEMENT.

 

(2)                                  ANY AMORTIZATION OR DEPRECIATION EXPENSE
ATTRIBUTABLE TO THE INCREASE IN THE BOOK VALUE OF ANY ASSETS (WHETHER TANGIBLE
OR INTANGIBLE) OF THE COMPANY RESULTING FROM THE MERGER INTO THE COMPANY OF THE
NEVADA LIMITED LIABILITY COMPANY PREDECESSOR OF THE COMPANY, ANY AMORTIZATION OR
DEPRECIATION EXPENSE ATTRIBUTABLE TO THE INCREASE IN THE BOOK VALUE OF ANY
ASSETS (WHETHER TANGIBLE OR INTANGIBLE) OF THE COMPANY RESULTING FROM ANY
ACQUISITION OF ANY UNITS BY MDC PURSUANT TO THE PURCHASE AGREEMENT, AND INTEREST
PAYABLE BY OR FOR THE COMPANY ON INDEBTEDNESS RELATED TO ANY SUCH ACQUISITION;

 

(3)                                  NEITHER THE PROCEEDS FROM NOR ANY DIVIDENDS
OR REFUNDS WITH RESPECT TO, NOR ANY INCREASES IN THE CASH SURRENDER VALUE OF,
ANY LIFE INSURANCE POLICY UNDER WHICH THE COMPANY, OR ANY SUBSIDIARY THEREOF, IS
THE NAMED BENEFICIARY OR OTHERWISE ENTITLED TO RECOVERY SHALL BE INCLUDED AS
INCOME, NOR SHALL THE PREMIUMS PAYABLE WITH RESPECT TO ANY SUCH LIFE INSURANCE
POLICY BE CONSIDERED AN EXPENSE FOR A PERIOD TO THE EXTENT A DEATH COVERED BY
SUCH LIFE INSURANCE POLICY OCCURS IN ANY SUCH PERIOD;

 

(4)                                  ANY INTERCOMPANY MANAGEMENT FEES AND
OVERHEAD ALLOCATIONS CHARGED BY MDC OR ANY AFFILIATE OF MDC, TO THE COMPANY OR
ANY OF ITS SUBSIDIARIES;

 

(5)                                  ANY INTEREST ARISING FROM LOANS TO FINANCE
THE PAYMENT OF ANY OF THE PURCHASE PRICE PAYMENTS AND FROM ANY INDEBTEDNESS
ALLOCATED TO THE COMPANY BY MDC AS A RESULT OF MDC’S ACQUISITION OF MEMBERSHIP
INTERESTS OF THE COMPANY; PROVIDED, HOWEVER, THAT ANY INTEREST OR FEES (OTHER
THAN FEES INCURRED IN CONNECTION WITH TERMINATING THE COMPANY CREDIT

 

43

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FACILITY) ARISING UNDER THE COMPANY CREDIT FACILITY (OR ANY INTEREST OR FEES
ALLOCABLE TO THE COMPANY UNDER THE MDC CREDIT FACILITY, IF SUCH FACILITY IS USED
TO REFINANCE THE COMPANY CREDIT FACILITY) AND ANY WORKING CAPITAL LOANS PROVIDED
BY MDC TO THE COMPANY FROM TIME TO TIME SHALL BE INCLUDED IN DETERMINING PBT;

 

(6)                                  ANY INTEREST CHARGES INCURRED BY THE
COMPANY OR ANY SUBSIDIARY RESULTING FROM ANY MDC FINANCING (AS DEFINED IN THE
PURCHASE AGREEMENT);

 

and, solely for the purposes of calculating any Puts or Calls or Offers to Sell
exercised by Zyman,

 

(7)                                  ANY EXTRAORDINARY OR UNUSUAL GAINS OR
LOSSES AND ANY GAINS OR LOSSES FROM THE SALE OF ANY CAPITAL ASSETS USED BY THE
COMPANY OR ANY SUBSIDIARY THEREOF IN ITS OPERATIONS (AS OPPOSED TO ASSETS
ACQUIRED IN THE ORDINARY COURSE OF THE BUSINESS OF THE COMPANY AND ITS
SUBSIDIARIES FOR RESALE OR OTHER DISPOSITION);

 

(8)                                  SEVERANCE EXPENSE ARISING FROM A
TERMINATION OF SZ BY THE COMPANY OR BY SZ WITH GOOD REASON; AND

 

(9)                                  PREMIUMS OF UP TO $75,000 PAYABLE WITH
RESPECT TO ANY LIFE INSURANCE POLICY UNDER WHICH THE COMPANY, OR ANY SUBSIDIARY
THEREOF, IS THE NAMED BENEFICIARY OR OTHERWISE ENTITLED TO RECOVERY TO THE
EXTENT NOT ALREADY EXCLUDED PURSUANT TO (3) ABOVE.

 

“Person” shall mean an individual, partnership, limited partnership, limited
liability company, trust, estate, corporation, custodian, trustee, executor,
administrator, nominee or entity in a representative capacity.

 

“Post Distribution Period Calendar Year” shall mean (i) the period from the
fifth anniversary of the Effective Time until December 31, 2010 and
(ii) thereafter, each calendar year ending December 31; provided that if the
Company is terminated prior to December 31 in any calendar year, the last
calendar year shall be the period from January 1 of the year in which the
Company is terminated until the date on which the Company is terminated.

 

“Preferred Return Amount” shall mean, with respect to any Distribution Period
Calendar Year, the sum of (i) $13,000,000 (provided, that with respect to the
first and last Distribution Period Calendar Years, the amount in this clause
(i) shall be equal to the product of $13,000,000 and the fraction (expressed as
a percentage) in which the numerator is the number of days elapsed in such
Distribution Period Calendar Year and the denominator is 365) and (ii) in the
event that an Additional Payment (as defined in Section 13.1) is made, from the
date on which such Additional Payment is made, an amount equal to the product of
20% multiplied by the amount of such Additional Payment (the “Additional Payment
Amount”) (provided, that with respect to the first and last Distribution Period
Calendar Years, the amount in this clause (ii) shall be equal to the product of
the Additional Payment Amount and the fraction (expressed as a percentage) in
which the numerator is the number of days elapsed in such Distribution Period
Calendar Year and the denominator is 365).

 

“Profits and Losses”, shall mean, for each fiscal year, an amount equal to the
Company’s taxable income or loss for such fiscal year, determined in accordance
with

 

44

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Section 703(a) of the Code (for this purpose, all items of income, gain, loss,
or deduction required to be stated separately pursuant to Section 703(a)(1) of
the Code shall be included in taxable income or loss), with the following
adjustments:

 

(I)                                     ANY INCOME OF THE COMPANY THAT IS EXEMPT
FROM FEDERAL INCOME TAX AND NOT OTHERWISE TAKEN INTO ACCOUNT IN COMPUTING
PROFITS OR LOSSES PURSUANT TO THIS DEFINITION SHALL BE ADDED TO SUCH TAXABLE
INCOME OR LOSS;

 

(II)                                  ANY EXPENDITURES OF THE COMPANY DESCRIBED
IN SECTION 705(A)(2)(B) OF THE CODE OR TREATED AS CODE
SECTION 705(A)(2)(B) EXPENDITURES PURSUANT TO SECTION 1.704-1(B)(2)(IV)(I) OF
THE TREASURY REGULATIONS, AND NOT OTHERWISE TAKEN INTO ACCOUNT IN COMPUTING
PROFITS OR LOSSES PURSUANT TO THIS DEFINITION, SHALL BE SUBTRACTED FROM SUCH
TAXABLE INCOME OR LOSS;

 

(III)                               IN THE EVENT THE GROSS ASSET VALUE OF ANY
COMPANY ASSET IS ADJUSTED PURSUANT TO CLAUSES (II) OR (III) OF THE DEFINITION OF
“GROSS ASSET VALUE” HEREIN, THE AMOUNT OF SUCH ADJUSTMENT SHALL BE TAKEN INTO
ACCOUNT AS GAIN OR LOSS FROM THE DISPOSITION OF SUCH ASSET FOR PURPOSES OF
COMPUTING PROFITS OR LOSSES;

 

(IV)                              GAIN OR LOSS RESULTING FROM ANY DISPOSITION OF
PROPERTY WITH RESPECT TO WHICH GAIN OR LOSS IS RECOGNIZED FOR FEDERAL INCOME TAX
PURPOSES SHALL BE COMPUTED BY REFERENCE TO THE GROSS ASSET VALUE OF THE PROPERTY
DISPOSED OF, NOTWITHSTANDING THAT THE ADJUSTED TAX BASIS OF SUCH PROPERTY
DIFFERS FROM ITS GROSS ASSET VALUE;

 

(V)                                 IN LIEU OF THE DEPRECIATION, AMORTIZATION,
AND OTHER COST RECOVERY DEDUCTIONS TAKEN INTO ACCOUNT IN COMPUTING SUCH TAXABLE
INCOME OR LOSS, THERE SHALL BE TAKEN INTO ACCOUNT DEPRECIATION FOR SUCH FISCAL
YEAR OR OTHER PERIOD, COMPUTED IN ACCORDANCE WITH THE DEFINITION THEREOF;

 

(VI)                              TO THE EXTENT AN ADJUSTMENT TO THE ADJUSTED
TAX BASIS OF ANY COMPANY ASSET PURSUANT TO CODE SECTION 734(B) OR CODE
SECTION 743(B) IS REQUIRED PURSUANT TO TREASURY REGULATIONS
SECTION 1.704-1(B)(2)(IV)(M)(4) TO BE TAKEN INTO ACCOUNT IN DETERMINING CAPITAL
ACCOUNTS AS A RESULT OF A DISTRIBUTION OTHER THAN IN LIQUIDATION OF A MEMBER’S
UNITS, THE AMOUNT OF SUCH ADJUSTMENT SHALL BE TREATED AS AN ITEM OF GAIN (IF THE
ADJUSTMENT INCREASES THE BASIS OF THE ASSET) OR LOSS (IF THE ADJUSTMENT
DECREASES THE BASIS OF THE ASSET) FROM THE DISPOSITION OF THE ASSET AND SHALL BE
TAKEN INTO ACCOUNT FOR THE PURPOSES OF COMPUTING PROFITS OR LOSSES; AND

 

(VII)                           NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS
DEFINITION, ANY ITEMS WHICH ARE SPECIALLY ALLOCATED PURSUANT TO
SECTION 3.3(B) AND (C) SHALL NOT BE TAKEN INTO ACCOUNT IN COMPUTING PROFITS OR
LOSSES.

 

“Pro Rata Portion” shall mean, with respect to any Management Unitholder at any
given time, the number of Units held by such Management Unitholder relative to
the number of Units held by all of the Management Unitholders.

 

“Seller” shall mean the seller of Units in any transaction described in
Article X.

 

45

--------------------------------------------------------------------------------

 

“Treasury Regulations” shall mean final regulations issued by the Department of
the Treasury interpreting the Code.

 

“Units” shall mean Class A Units or Class B Units, as applicable.

 

ARTICLE XIV

 

MISCELLANEOUS

 

Section 14.1   Manner of Giving Notice.  Whenever under the provisions of the
Act, the Certificate or this Agreement, notice is required to be given to the
Company, any Member or Manager of the Company, and no provision is made as to
how such notice shall be given, any such notice to be given hereunder shall be
in writing and shall be deemed to have been given (a) upon personal delivery, if
delivered by hand or courier, (b) three days after the date of deposit in the
mails, postage prepaid, or (c) the next Business Day if sent by facsimile
transmission (if transmission is electronically confirmed) or by a prepaid
overnight courier service, and in each case at the respective addresses or
numbers set forth below or such other address or number as such party may have
fixed by notice:

 

If to MDC or MDC Partners, to:

 

MDC Partners
45 Hazelton Avenue
Toronto, Ontario
Canada M5R 2E3
Attention:  Graham Rosenberg
Fax:  (416) 960-9555

Attention: Mitch Gendel

Fax:  (212) 463-3274

 

with a copy to:

 

Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: Marni Lerner, Esq.
Fax:  (212) 455-2502

 

If to Zyman, to:

 

Zyman Company, Inc.
100 South Point Drive

Apartment 2905/06

Miami Beach, Florida 33139-7373

Attention: Sergio Zyman
Fax: (305) 674-3806

 

46

--------------------------------------------------------------------------------

 

with a copy to:

 

Zyman Group LLC

950 East Paces Ferry Road, N.E.

Suite 3300

Atlanta, Georgia 30326
Attention: Chief Financial Officer
Fax:

 

with a copy to:

 

Jones Day

1420 Peachtree Street, N.E.

Suite 800

Atlanta, Georgia 30309-3053
Attention: Milford B. Hatcher
Fax:  (404) 581-8330

 

If to the Company, to:

 

c/o MDC Partners Inc.
45 Hazelton Avenue
Toronto, Ontario
Canada M5R 2E3
Attention:  Graham Rosenberg
Fax:  (416) 960-9555

Attention: Mitch Gendel

Fax:  (212) 463-3274

 

with a copy to:

 

Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: Marni Lerner, Esq.
Fax: (212) 455-2502

 

If to any Management Unitholder, to such person at the address set forth on the
signature pages hereto.

 

or to such other address or fax as hereafter shall be designated in writing by
the applicable party sent in accordance herewith or in the records of the
Company.

 

Section 14.2   Waiver of Notice.  Whenever any notice is required to be given to
any Member or Manager of the Company under the provisions of the Act, the
Certificate or this Agreement, a waiver thereof in writing signed by the Person
or Persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.

 

47

--------------------------------------------------------------------------------

 

Section 14.3   No Company Seal.  The Company shall not have a Company seal, and
no agreement, instrument or other document executed on behalf of the Company
that would otherwise be valid and binding on the Company shall be invalid or not
binding on the Company solely because no Company seal is affixed thereto.

 

Section 14.4   Amendment or Modification.  The power to adopt, alter, amend or
repeal this Agreement is vested solely in the Members. Except for the amendments
contemplated by Sections 2.1, Section 2.3, and Section 2.4 hereof and subject to
the provisions of Section 4.1, this Agreement may be altered or amended only by
the vote or written consent of MDC and holders of a majority of the outstanding
Class B Units; provided that, in the event that an amendment does not affect the
interests of any holder of Class B Units other than Zyman, then such amendment
may only be effected with the vote or written consent of MDC and Zyman (it being
understood that the consent of any other holders of Class B Units shall not be
required to effect such amendment).

 

Section 14.5   Binding Effect; Assignment.  Subject to the restrictions on
transfer and assignment set forth in Article X of this Agreement, this Agreement
is binding on and inures to the benefit of the Members and their respective
successors and assigns, including without limitation, any Lender who exercises a
default remedy under any agreement entered into in connection with an MDC
Financing.  Except as expressly provided herein, none of the Company, Zyman nor
any Management Unitholder shall be entitled to assign any of its rights or
obligations under this Agreement.  Except as expressly provided herein, the
rights and obligations of MDC under this Agreement shall be freely assignable;
provided that, except in connection with a transfer by MDC of its Units (in
which case MDC shall have no further obligations hereunder), MDC shall continue
to remain liable for any of its obligations under this Agreement in the event
that MDC assigns its rights hereunder.

 

Section 14.6   Governing Law; Severability.  This Agreement is governed by and
shall be construed in accordance with the law of the State of Delaware without
regard to the principles of conflict of laws thereof.  In the event of a direct
conflict between the provisions of this Agreement and any provision in the
Certificate or any mandatory provision of the Act, the applicable provisions of
the Certificate or the Act shall control.  If any provision of this Agreement or
the application thereof to any Person or circumstance is held invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of that provision to other Persons or circumstances is not affected thereby and
that provision shall be enforced to the greatest extent permitted by law.

 

Section 14.7   Counterparts.  This Agreement may be executed by the parties
hereto in any number of counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same agreement.

 

Section 14.8   Entire Agreement.  This Agreement, including the other documents
referred to herein and the Exhibits and Schedules hereto that form a part
hereof, contains the entire understanding of the parties hereto with respect to
the subject matter contained herein and therein.  This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter, including without limitation, the Original Operating Agreement.

 

48

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated
Limited Liability Company Agreement as of the day and year first above written.

 

 

 

MDC PARTNERS INC.

 

 

 

 

 

 

 

By:

/s/

GRAHAM ROSENBERG

 

 

 

Name:

Graham Rosenberg

 

 

Title:

Managing Director

 

 

 

 

 

 

 

 

 

By:

/s/

MITCHELL GENDEL

 

 

 

Name:

Mitchell Gendel

 

 

Title:

Secretary

 

 

 

 

 

 

 

 

 

ZG ACQUISITION INC.

 

 

 

 

 

 

 

 

 

By:

/s/

GRAHAM ROSENBERG

 

 

 

Name:

Graham Rosenberg

 

 

Title:

Vice President

 

 

 

 

 

 

 

 

 

By:

/s/

MITCHELL GENDEL

 

 

 

Name:

Mitchell Gendel

 

 

Title:

Secretary

 

 

 

 

 

 

 

 

 

ZYMAN COMPANY INC.

 

 

 

 

 

 

 

 

 

By:

/s/

SERGIO ZYMAN

 

 

 

Name:

Sergio Zyman

 

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

 

 

ZYMAN GROUP LLC

 

 

 

 

 

 

 

 

 

By:

/s/

SERGIO ZYMAN

 

 

 

Name:

Sergio Zyman

 

 

Title:

Chief Executive Officer

 

--------------------------------------------------------------------------------

 

[Signature page to Amended and Restated Limited Liability Company Agreement of
Zyman Group, LLC]

 

 

MANAGEMENT UNITHOLDER:

 

 

 

 

 

 

 

 

 

/s/ Ricardo Alvarez

 

 

Printed Name:

Ricardo Alvarez

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

[Signature page to Amended and Restated Limited Liability Company Agreement of
Zyman Group, LLC]

 

 

MANAGEMENT UNITHOLDER:

 

 

 

 

 

 

 

 

 

/s/ Arthur Ash

 

 

Printed Name:

Arthur Ash

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

[Signature page to Amended and Restated Limited Liability Company Agreement of
Zyman Group, LLC]

 

 

MANAGEMENT UNITHOLDER:

 

 

 

 

 

 

 

 

 

/s/ Craig Lee Binkley

 

 

Printed Name:

Craig Lee Binkley

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

[Signature page to Amended and Restated Limited Liability Company Agreement of
Zyman Group, LLC]

 

 

MANAGEMENT UNITHOLDER:

 

 

 

 

 

 

 

 

 

/s/ Jeffrey M. Herbert

 

 

Printed Name:

Jeffrey M. Herbert

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

[Signature page to Amended and Restated Limited Liability Company Agreement of
Zyman Group, LLC]

 

 

MANAGEMENT UNITHOLDER:

 

 

 

 

 

 

 

 

 

/s/ Patricia L. Klingbiel

 

 

Printed Name:

Patricia L. Klingbiel

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

[Signature page to Amended and Restated Limited Liability Company Agreement of
Zyman Group, LLC]

 

 

MANAGEMENT UNITHOLDER:

 

 

 

 

 

 

 

 

 

/s/ Michael F. McEnany

 

 

Printed Name:

Michael F. McEnany

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

[Signature page to Amended and Restated Limited Liability Company Agreement of
Zyman Group, LLC]

 

 

MANAGEMENT UNITHOLDER:

 

 

 

 

 

 

 

 

 

/s/ Ted Richardson

 

 

Printed Name:

Ted Richardson

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

[Signature page to Amended and Restated Limited Liability Company Agreement of
Zyman Group, LLC]

 

 

MANAGEMENT UNITHOLDER:

 

 

 

 

 

 

 

 

 

/s/ Michael J. Sinclair

 

 

Printed Name:

Michael J. Sinclair

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

[Signature page to Amended and Restated Limited Liability Company Agreement of
Zyman Group, LLC]

 

 

MANAGEMENT UNITHOLDER:

 

 

 

 

 

 

 

 

 

/s/ David A. Singleton

 

 

Printed Name:

David A. Singleton

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

[Signature page to Amended and Restated Limited Liability Company Agreement of
Zyman Group, LLC]

 

 

MANAGEMENT UNITHOLDER:

 

 

 

 

 

 

 

 

 

/s/ Jon Stewart

 

 

Printed Name:

Jon Stewart

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

[Signature page to Amended and Restated Limited Liability Company Agreement of
Zyman Group, LLC]

 

 

MANAGEMENT UNITHOLDER:

 

 

 

 

 

 

 

 

 

/s/ N. Lee White

 

 

Printed Name:

N. Lee White

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------