Exhibit 10.1


 


EXECUTION COPY


 




 


 





MEMBERSHIP
UNIT PURCHASE AGREEMENT


 


by and
among


 


ZG
ACQUISITION INC.,


 


MDC
PARTNERS INC.,


 


ZYMAN
GROUP, LLC,


 


ZYMAN
COMPANY, INC.,


 


SERGIO
ZYMAN (only with respect to Section 7.3)


 


and


 


MANAGEMENT
SELLERS SIGNATORY HERETO




 


 





 


Dated April 1,
2005


 





















 


TABLE OF CONTENTS


 


	
  ARTICLE I PRE-CLOSING TRANSACTIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 1.1

  	
  Bonuses

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II SALE OF THE PURCHASED
  UNITS; PURCHASE PRICE AND CLOSING

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 2.1

  	
  Sale of the Purchased Units

  	
   

  
	
   

  	
  Section 2.2

  	
  Purchase Price

  	
   

  
	
   

  	
  Section 2.3

  	
  Payment of the Purchase Price

  	
   

  
	
   

  	
  Section 2.4

  	
  Closing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS OF THE
  COMPANY AND THE SELLERS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 3.1

  	
  Execution and Validity of Agreements;
  Zyman; Restrictive Documents

  	
   

  
	
   

  	
  Section 3.2

  	
  Representation by Zyman re: Investment in
  MDC Stock

  	
   

  
	
   

  	
  Section 3.3

  	
  Execution and Validity; Existence and Good
  Standing

  	
   

  
	
   

  	
  Section 3.4

  	
  Capital Stock; Equity Ownership; No Options
  or Restrictions; Subsidiaries and Investments

  	
   

  
	
   

  	
  Section 3.5

  	
  Financial Statements; Internal Controls; No
  Material Changes

  	
   

  
	
   

  	
  Section 3.6

  	
  Books and Records

  	
   

  
	
   

  	
  Section 3.7

  	
  Title to Properties; Encumbrances; No Prior
  Activities by Merger Sub

  	
   

  
	
   

  	
  Section 3.8

  	
  Real Property

  	
   

  
	
   

  	
  Section 3.9

  	
  Contracts

  	
   

  
	
   

  	
  Section 3.10

  	
  Non-Contravention; Approvals and Consents

  	
   

  
	
   

  	
  Section 3.11

  	
  Litigation

  	
   

  
	
   

  	
  Section 3.12

  	
  Taxes

  	
   

  
	
   

  	
  Section 3.13

  	
  Liabilities

  	
   

  
	
   

  	
  Section 3.14

  	
  Insurance

  	
   

  
	
   

  	
  Section 3.15

  	
  Intellectual Properties

  	
   

  
	
   

  	
  Section 3.16

  	
  Compliance with Laws; Permits

  	
   

  
	
   

  	
  Section 3.17

  	
  Client Relations

  	
   

  
	
   

  	
  Section 3.18

  	
  Accounts Receivable; Work-in-Process;
  Accounts Payable

  	
   

  
	
   

  	
  Section 3.19

  	
  Employment Relations

  	
   

  
	
   

  	
  Section 3.20

  	
  Employee Benefit Matters

  	
   

  
	
   

  	
  Section 3.21

  	
  Interests in Customers, Suppliers, Etc.

  	
   

  
	
   

  	
  Section 3.22

  	
  Bank Accounts and Powers of Attorney

  	
   

  
	
   

  	
  Section 3.23

  	
  Compensation of Employees

  	
   

  
	
   

  	
  Section 3.24

  	
  No Changes Since the Balance Sheet Date

  	
   

  
	
   

  	
  Section 3.25

  	
  Corporate Controls

  	
   

  
	
   

  	
  Section 3.26

  	
  Brokers

  	
   

  
	
   

  	
  Section 3.27

  	
  Copies of Documents

  	
   

  
	
   

  	
  Section 3.28

  	
  Entire Business

  	
   

  



 





















 


	
  ARTICLE IV REPRESENTATIONS OF THE
  PURCHASER AND MDC PARTNERS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 4.1

  	
  Existence and Good Standing

  	
   

  
	
   

  	
  Section 4.2

  	
  Execution and Validity of Agreement

  	
   

  
	
   

  	
  Section 4.3

  	
  Litigation; Solvency

  	
   

  
	
   

  	
  Section 4.4

  	
  Non-Contravention; Approvals and Consents

  	
   

  
	
   

  	
  Section 4.5

  	
  Brokers

  	
   

  
	
   

  	
  Section 4.6

  	
  MDC Stock

  	
   

  
	
   

  	
  Section 4.7

  	
  MDC Filings

  	
   

  
	
   

  	
  Section 4.8

  	
  Representations re: Investment in the Units

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V COVENANTS OF THE PARTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 5.1

  	
  Conduct of the Business

  	
   

  
	
   

  	
  Section 5.2

  	
  Access to Books and Records

  	
   

  
	
   

  	
  Section 5.3

  	
  Regulatory Filings

  	
   

  
	
   

  	
  Section 5.4

  	
  Conditions

  	
   

  
	
   

  	
  Section 5.5

  	
  Transfers

  	
   

  
	
   

  	
  Section 5.6

  	
  Notification

  	
   

  
	
   

  	
  Section 5.7

  	
  Consents and Approvals

  	
   

  
	
   

  	
  Section 5.8

  	
  Further Assurances

  	
   

  
	
   

  	
  Section 5.9

  	
  Intellectual Property Assignment

  	
   

  
	
   

  	
  Section 5.10

  	
  LLC Agreement

  	
   

  
	
   

  	
  Section 5.11

  	
  Accrued Distributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI CONDITIONS TO CLOSING

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 6.1

  	
  Conditions to Closing of the Parties

  	
   

  
	
   

  	
  Section 6.2

  	
  Conditions to Purchasers’ Obligations

  	
   

  
	
   

  	
  Section 6.3

  	
  Conditions to the Sellers’ Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII OTHER AGREEMENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.1

  	
  MDC Financing

  	
   

  
	
   

  	
  Section 7.2

  	
  Tax Matters

  	
   

  
	
   

  	
  Section 7.3

  	
  Zyman Activities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII SURVIVAL; INDEMNITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 8.1

  	
  Survival

  	
   

  
	
   

  	
  Section 8.2

  	
  Obligation of the Sellers to Indemnify

  	
   

  
	
   

  	
  Section 8.3

  	
  Obligation of the Purchaser and MDC
  Partners to Indemnify

  	
   

  
	
   

  	
  Section 8.4

  	
  Indemnification Procedures

  	
   

  
	
   

  	
  Section 8.5

  	
  Right of Offset

  	
   

  
	
   

  	
  Section 8.6

  	
  Limitations On and Other Matters Regarding
  Indemnification

  	
   

  



 


ii





















 


	
  ARTICLE IX MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 9.1

  	
  Termination

  	
   

  
	
   

  	
  Section 9.2

  	
  Expenses

  	
   

  
	
   

  	
  Section 9.3

  	
  Governing Law

  	
   

  
	
   

  	
  Section 9.4

  	
  “Person” Defined

  	
   

  
	
   

  	
  Section 9.5

  	
  “Knowledge” Defined

  	
   

  
	
   

  	
  Section 9.6

  	
  “Affiliate” Defined

  	
   

  
	
   

  	
  Section 9.7

  	
  Captions

  	
   

  
	
   

  	
  Section 9.8

  	
  Publicity

  	
   

  
	
   

  	
  Section 9.9

  	
  Zyman Authority

  	
   

  
	
   

  	
  Section 9.10

  	
  Notices

  	
   

  
	
   

  	
  Section 9.11

  	
  Parties in Interest

  	
   

  
	
   

  	
  Section 9.12

  	
  Severability

  	
   

  
	
   

  	
  Section 9.13

  	
  Counterparts

  	
   

  
	
   

  	
  Section 9.14

  	
  Entire Agreement

  	
   

  
	
   

  	
  Section 9.15

  	
  Amendments

  	
   

  
	
   

  	
  Section 9.16

  	
  Third Party Beneficiaries

  	
   

  
	
   

  	
  Section 9.17

  	
  Use of Terms

  	
   

  
	
   

  	
  Section 9.18

  	
  “Liens” Defined

  	
   

  
	
   

  	
  Section 9.19

  	
  No Strict Construction

  	
   

  



 


iii





















 


MEMBERSHIP UNIT PURCHASE AGREEMENT


 


MEMBERSHIP UNIT PURCHASE AGREEMENT
(this “Agreement”) dated April 1,
2005, by and among ZG ACQUISITION INC.,
a Delaware corporation (the “Purchaser”),
MDC PARTNERS INC., a corporation
organized under the federal laws of Canada (“MDC
Partners”), Sergio Zyman (with respect to Section 7.3.),
ZYMAN GROUP, LLC, a Delaware
limited liability company (together with any predecessor company, including
Zyman Group, LLC, a Nevada limited liability company (“Nevada LLC”), and including, for purposes
of Article III (other than Sections 3.1-3.4, 3.6 and 3.7.2), its
subsidiaries, the “Company”), ZYMAN COMPANY, INC., a Delaware corporation
(“Zyman”), and the other
unitholders of the Company listed on the signature page hereto
(collectively, the “Management Sellers”;
together with Zyman, the “Sellers” and
each individually, a “Seller”).


 


W I  T  N  E
S  S  E  T  H  :


 


WHEREAS, as of the
date hereof, Zyman and the Management Sellers own approximately 98% of the
outstanding units of membership interests of the Company (the “Units”);


 


WHEREAS, the
Purchaser shall acquire on the terms and conditions set forth below, up to 63%
of the Units owned by each Seller, subject to Section 2.1 below;


 


WHEREAS, the
Purchaser and the Sellers shall become parties to a limited liability company
agreement relating to the Company (the “LLC
Agreement”); and


 


WHEREAS, the boards of directors or
managers, as applicable, of the Purchaser, the Company and Zyman have approved,
and each of the Management Sellers has approved, the transactions contemplated
in this Agreement upon the terms and subject to the conditions set forth in
this Agreement;


 


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 parties do hereby agree as follows:


 


ARTICLE I


PRE-CLOSING
TRANSACTIONS


 


Section 1.1                                   Bonuses.  The Sellers shall take all action necessary
to cause the Company to establish a bonus plan for employees of the Company
following Closing, which plan shall be substantially in the form set forth on Exhibit 1.1
and otherwise be satisfactory to the Purchaser (the “Bonus Plan”).  Any bonus payments made pursuant to the Bonus
Plan are referred to in this Agreement as “Management Bonus Payments”.


 





















 


ARTICLE II


SALE OF
THE PURCHASED UNITS; PURCHASE PRICE AND CLOSING


 


Section 2.1                                   Sale of
the Purchased Units. 
Subject to the terms and conditions herein stated, each Seller agrees to
sell, assign, transfer and deliver to the Purchaser on the Closing Date (as
defined in Section 2.3), and the Purchaser agrees to purchase from each
such Seller on the Closing Date, the number of Class B Units of the
Company (the “Class B Units”) set forth opposite such Seller’s name
on Schedule 2.1
hereto which units, pursuant to the terms of the operating agreement of the
Company shall automatically be converted into Class A Units of the Company
(the “Class A
Units” and together with the Class B Units, the “Units”).  To the extent that 31,500,000 exceeds the
number of Units specified on Schedule 2.1 as of Closing
for all Sellers, then, at the Purchaser’s election, on the Closing Date Zyman
will sell a number of additional Units to Purchaser up to the amount of such
excess.  The actual number of Units
purchased and sold pursuant to the foregoing provisions of this Section 2.1
are referred to herein as the “Purchased Units”.  The Purchased Units sold by the Management
Sellers pursuant to this Section 2.1 are referred to herein as the “Management
Purchased Units” and the Purchased Units sold by Zyman pursuant to
this Section 2.1 are referred to herein as the “Zyman
Purchased Units”.


 


Section 2.2                                   Purchase
Price.  In full
consideration for the purchase by the Purchaser of the Purchased Units, the
purchase price for the Purchased Units shall be equal to the product of the
number of Purchased Units and $2.07143 per Unit, subject to the required
additional payment pursuant to Section 2.2.1 and subject to adjustment
pursuant to Section 2.2.1(i) (the “Purchase
Price”), which Purchase Price shall be paid as follows:


 


2.2.1                        Payments.


 


(i)                                     Cash
Payments.  At the Closing, the
Purchaser shall pay (x) to Zyman the difference between (A) the product of
the number of Zyman Purchased Units and $1.70003 per Unit minus (B) the
product of (1) the sum of (a) the amount, if any, by which the total
unpaid principal balance reflected in the Revolving Credit Payoff Amount (as
defined below) exceeds $2,581,424 (such difference, the “Revolving
Credit Deficit Amount”) and (b) the amount, if any, by which
the total unpaid principal balance under the Company’s credit agreement dated June 8,
2004 with Wachovia Bank (as such agreement has been amended, supplemented or
modified, the “Term Loan”) exceeds
$5,942,645 (such difference, the “Term Loan Deficit Amount”)
and (2) the fraction (expressed as a percentage) in which the numerator is
the number of Zyman Purchased Units and the denominator is the total number of
Purchased Units; (y) to each Management Seller the product of (A) the
difference between (1) the product of the number of Management Purchased
Units and $1.86429 per Unit minus (2) the product of (a) the sum of
the Revolving Credit Deficit Amount and the Term Loan Deficit Amount and (b) a
fraction (expressed as a percentage) in which the numerator is the number of
Management Purchased Units and the denominator is the total number of Purchased
Units multiplied by (B) the fraction (expressed as a percentage) in which
the numerator is the number of Management Purchased Units being sold by such
Management Seller and the denominator is the total number of Management
Purchased Units (the “Management Percentage”)
and (z) to JPMorgan Chase Bank, N.A. (the “Escrow Agent”),
on behalf


 


2





















 


of each Management Seller, an
amount equal to the product of (A) the number of Management Purchased
Units and (B) $0.20714 and (C) the applicable Management Percentage,
which amount shall be held in escrow subject to the terms and conditions of an
escrow agreement in the form attached hereto as Exhibit 2.2.1(ii) and Article VIII (while
held in escrow, the “Escrow Cash Amount”).


 


(ii)                                  Stock
Payments. Subject to Section 2.3 below, at the Closing, the Purchaser
shall deliver to (x) the Escrow Agent on behalf of Zyman 635,795 Class A
Shares (subordinate voting shares) of MDC Partners (“MDC Stock”), registered in the name of Zyman, to be held in
escrow subject to the terms and conditions of an escrow agreement in the form
attached hereto as Exhibit 2.2.1(ii) and
Article VIII (while held in escrow, the “Escrow Share
Amount” and, together with the Escrow Cash Amount, the “Escrow Amount”) and (y) Zyman 504,180 shares of MDC Stock,
registered in the name of Zyman.  The
stock payments made pursuant to this Section 2.2.1(ii) are referred
to herein collectively as the “Stock Payment”.


 


(iii)                               Additional
Payment. Within forty-five days after the 2005 Determination (as defined
below) shall have become binding on the parties pursuant to the procedures set
forth in Section 2.2.3, the Purchaser shall pay to the Sellers an aggregate
additional payment (the “2005  Additional Payment”) equal to the positive
difference, if any, between $7,820,796 minus an amount, if any, equal to the
greater of (x) the positive difference, if any, of $35,000,000 less the
Additional Payment PBT for the Company’s 2005 fiscal year and (y) the product
of (1) 50% and (2) the positive difference, if any, of $75,000,000
less the amount of Revenues for the Company’s 2005 fiscal year (the greater of
the amounts in clauses (x) and (y), the “Additional Payment Shortfall
Amount”); provided, further, that in the event that Revenues for the
Company’s 2006 fiscal year exceed $75,000,000 and Additional Payment PBT for
the Company’s 2006 fiscal year exceeds $35,000,000 but is equal to or less than
$42,000,000, within forty-five days after the 2006 Determination (as defined
below) shall have become binding on the parties pursuant to the procedures set
forth in Section 2.2.3, the Purchaser shall pay to the Sellers an
additional aggregate payment together with the payment described in the further
proviso set forth below (the “2006 Additional Payment”
and, together with the 2005 Additional Payment, the “Additional
Payment”) equal to the product of (x) $4,252,558 and (y) a fraction,
the numerator of which is the difference between actual Additional Payment PBT
for the Company’s 2006 fiscal year and $35,000,000 and the denominator of which
is $7,000,000; provided, further that in the event that Revenues for the
Company’s 2006 fiscal year exceed $75,000,000 and Additional Payment PBT for
the Company’s 2006 fiscal year exceeds $42,000,000, the 2006 Additional Payment
shall equal (A) $4,252,558, plus (B) an amount equal to the lesser of
(1) the difference between Additional Payment PBT for the Company’s 2006
fiscal year and $42,000,000, and (2) an amount equal to the Additional
Payment Shortfall Amount.  The Purchaser
shall pay to each Seller an amount equal to the product of the Additional
Payment and the fraction in which the numerator is the number of Purchased
Units being sold by such Seller and the denominator is the total number of
Purchased Units (with respect to a Seller, such Seller’s “Seller
Percentage”).  All of the
Additional Payment which is paid to the Management Sellers shall be paid in
cash.  At least eighty percent (80%) of
any applicable Additional Payment paid to Zyman shall be paid in cash and the
remainder of


 


3





















 


the Additional Payment paid to
Zyman shall be paid in MDC Stock having a Market Value equal to the amount of
the remainder of the Additional Payment paid to Zyman (the portion up to 20% of
the Additional Payment to be made in stock being in the Purchaser’s sole
discretion), in each case in accordance with Section 2.3.  For purposes of this Agreement “Market Value” shall mean the average of the
closing prices per share of MDC Stock in U.S. dollars reported on the NASDAQ
Stock Market for the 20 consecutive trading days immediately prior to the date
on which the Additional Payment is required to be paid.


 


2.2.2                        Article II Defined
Terms.


 


(i)                                     The
term “Closing Balance Sheet” means
the balance sheet of the Company as of the Closing Date to be prepared in
accordance with GAAP consistently applied.


 


(ii)                                  The
term “Additional Payment PBT”
shall mean the consolidated net income (loss) of the Company and its
subsidiaries, for a specified calendar year, 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:


 


(a)                                  any
expenses for equity-based compensation which accrues prior to, on or after
Closing and is attributable to transactions contemplated by this Agreement,
including, without limitation, expenses or other charges related to the
acceleration of vesting of any units of Nevada LLC, the exchange of units of
Nevada LLC, cash and promissory notes for Units, the issuance of units of
Nevada LLC or Units, the issuance or exercise of options to acquire units of
Nevada LLC or Units, and the cancellation or exchange of options to acquire
units of Nevada LLC;


 


(b)                                 any
expenses incurred prior to or after the Closing in connection with the
negotiation, preparation and execution of this Agreement and the other
documents to be delivered at the Closing hereunder and the consummation of the
transactions contemplated under this Agreement, including 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, 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 Purchased Units by Purchaser pursuant to this
Agreement, and interest payable by or for the Company on indebtedness related
to any such acquisition;


 


(c)                                  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


 


4





















 


in a calendar
year with respect to any such life insurance policy be considered as an expense
to the extent a death occurs in such calendar year;


 


(d)                                 any
intercompany management fees and overhead allocations charged by MDC Partners
or any Affiliate of MDC Partners, to the Company or any of its subsidiaries;


 


(e)                                  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 Partners as
a result of the Purchaser’s acquisition of Membership Interests (as defined in
the LLC Agreement) of the Company; provided, however, that any interest or fees
(other than fees incurred in connection with terminating the Company Credit
Facility) arising under the Company Credit Facility (as defined in the LLC
Agreement) (or any interest or fees allocable to the Company under the MDC
Credit Facility (as defined in the LLC Agreement), if such facility is used to
refinance the Company Credit Facility) and any working capital loans provided
by the Purchaser or MDC Partners to the Company from time to time shall be
included in determining Additional Payment PBT;


 


(f)                                    any
interest charges incurred by the Company or any subsidiary resulting from any
MDC Financing (as defined in the LLC Agreement); and


 


(g)                                 any
bonus paid by the Company to Sergio Zyman pursuant to the terms of the
employment agreement between SZ and the Company dated as of the date hereof
(the “SZ Employment Agreement”).


 


(iii)                               The
term “Revenues” shall mean the
consolidated revenues of the Company and its subsidiaries, for a specified
calendar year, determined in accordance with GAAP, consistently applied.


 


2.2.3                        Accounting Procedures.


 


(i)                                     The
Purchaser shall cause an independent accounting firm chosen by Purchaser and
reasonably acceptable to Zyman (the “Accountants”),
as soon as practicable after the end of calendar year 2005, to prepare in
accordance with GAAP, a report containing audited consolidated and
consolidating balance sheets of the Company (for the avoidance of all doubt,
inclusive of its predecessor) and its subsidiaries as of the close of business
on December 31, 2005, and related audited consolidated and consolidating
statements of income of the Company for such calendar year, 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 the
calculation of Revenues and Additional Payment PBT for calendar year 2005, 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 2.2
(the “2005 Determination”).  The Accountants shall deliver a copy of the
2005 Determination to Zyman not later than 120 days after December 31,
2005.  The Company shall pay the fees and
expenses of the Accountant.


 


5





















 


(ii)                                  If
Zyman does not agree that the 2005 Determination correctly states the
calculation of Additional Payment PBT and Revenues for fiscal year 2005, Zyman
shall, within 30 days after the delivery of such 2005 Determination to Zyman,
give written notice to the Purchaser of any exceptions thereto (in reasonable
detail describing the nature of the disagreement asserted).  If the Purchaser and Zyman reconcile their
differences, the 2005 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
the Purchaser and Zyman are unable to reconcile their differences in writing
within the Reconciliation Period, the items in dispute shall be submitted to
the Independent Auditors for final determination, and the 2005 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 the Purchaser 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 the 2005
Determination or if Zyman gives written notification of its acceptance of the
2005 Determination prior to the end of such 30 day period, such 2005
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 2.2.3, then the
Purchaser and Zyman agree to select another mutually acceptable accounting firm
to perform the services to be performed under this Section 2.2.3 by the
Independent Auditors.  If the Purchaser
and Zyman 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 the
Purchaser or Zyman may request the American Arbitration Association in New
York, New York (the “AAA”) to
appoint an independent firm of certified public accountants to perform the
services required under this Section 2.2.3 by the Independent
Auditors.  The Company shall pay the fees
and expenses of the AAA and the Independent Auditors.  For purposes of this Section 2.2.3 the
term “Independent Auditors” shall
include such other accounting firm chosen in accordance with this clause (iii).


 


(iv)                              The
procedures specified in clauses (i)-(iii) above shall be used for purposes
of determining Revenue and Additional Payment PBT for 2006 except that each
occurrence of “2005” shall be deemed to refer to “2006”.


 


2.2.4                        Examination of Books and
Records.  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, the Accountants and the Independent Auditors to the extent
required to determine the calculations required under Section 2.2.  Zyman, on the one hand, and the Purchaser, on
the other hand, shall make available to the other party and their
representatives (including auditors) any back-up materials generated by them to
support a position that is contrary to the position taken by the other party.


 


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Section 2.3                                   Payment
of the Purchase Price. 
The cash portion of the Purchase Price shall be made by the Purchaser to
the Escrow Agent and each Seller in accordance with Section 2.1.1(i) by
bank check or direct wire transfer of immediately available funds to the
account designated by the Escrow Agent or the applicable Seller, as the case
may be, in writing to the Purchaser pursuant to this Agreement at least two
business days prior to Closing.  The
Stock Payment described in Section 2.1.1(ii) shall be made by
delivery of certificates representing MDC Stock to the Escrow Agent and to
Zyman.  Any payment in shares of MDC
Stock pursuant to Section 2.1.1(iii) shall be made by delivery of
certificates representing MDC Stock to Zyman or its nominee.  Certificates representing MDC Stock shall be
delivered no later than 5 business days after the Closing Date.  Payment shall be deemed to include imputed
interest, to the extent required by the Internal Revenue Code of 1986, as
amended (the “Code”).  Subject to this Section 2.3, the shares
of MDC Stock shall be eligible for sale by the holders thereof subject to and
in accordance with the applicable securities laws of the U.S. and Canada.  Zyman agrees that (i) none of the shares
of MDC Stock delivered as part of the Stock Payment to Zyman may be sold before
the first anniversary of the Closing Date and (ii) no more than 33.33% of
the shares of MDC Stock delivered to Zyman as part of the Stock Payment may be
sold on or after the first anniversary of the Closing Date and prior to the
second anniversary of the Closing Date; provided,
however, that a distribution from Zyman to its shareholders of such MDC Stock
or interests in the escrow agreement including such stock shall not be deemed
to be a sale for these purposes or restricted by the foregoing; nor shall any
further contribution or other transfer by any such shareholder to one or more
of the other shareholders or to a trust for the benefit of one or more of the
shareholders, or a distribution by a trust shareholder to its beneficiaries in
accordance with the terms of the respective trust agreement, be restricted, in
any such case, to the extent such permitted transferee shall agree to be bound
by the restrictions of this sentence.


 


Section 2.4                                   Closing.  The closing of the transactions contemplated
by this Agreement (the “Closing”) shall
take place as promptly as practicable (and in any event within two business
days) after satisfaction or waiver of the conditions set forth in Article VI
(such date is herein referred to as the “Closing Date”),
at the offices of Jones Day, 1420 Peachtree Street, N.E., Suite 800,
Atlanta, Georgia, 30309.


 


2.4.1                        Closing Deliveries.


 


(i)                                     At
the Closing, Zyman shall deliver to the Purchaser:


 


(a)                                  a
payoff letter (which shall include commitments from the obligees to fully
discharge and release all Liens affecting property or assets of the Company and
its subsidiaries upon the receipt of the payoff amount) with respect to the
Company Credit Facility (the payoff amount with respect to the Company Credit
Facility, the “Revolving Credit Payoff Amount”);


 


(b)                                 a
copy of the certificate of formation of the Company, certified by the Secretary
of State of Delaware, dated within two business days of the Closing Date;


 


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(c)                                  certified
copies of the resolutions duly adopted by the Zyman board of directors and the
Company’s board of managers authorizing the execution, delivery and performance
of this Agreement and the other agreements contemplated hereby, and the
consummation of all transactions contemplated hereby and thereby; and


 


(d)                                 a
copy of the certificate of merger, certified by the Secretary of State of
Delaware, with respect to the Merger.


 


(ii)                                  At
the Closing, the Purchaser shall deliver to Zyman, on behalf of the Sellers:


 


(a)                                  a
copy of the certificate of incorporation of the Purchaser, certified by the
Secretary of State of Delaware, dated within two business days of the Closing
Date;


 


(b)                                 a
certified copy of the Articles of Amalgamation of MDC Partners; and


 


(c)                                  certified
copies of the resolutions duly adopted by each of the Purchaser’s board of
directors and MDC Partners board of directors authorizing the execution,
delivery and performance of this Agreement and the other agreements
contemplated hereby, and the consummation of all transactions contemplated
hereby and thereby.


 


ARTICLE III

REPRESENTATIONS OF THE COMPANY AND THE SELLERS


 


A.                                   Each of the Sellers
(except that the representations and warranties made in clause (ii) of Section 3.1.1,
the last sentence of Section 3.1.3 and the last sentence of Section 3.1.4
and Section 3.2 are made only by Zyman) severally represents and warrants
to the Purchaser and MDC Partners as follows:


 


Section 3.1                                   Execution
and Validity of Agreements; Zyman; Restrictive Documents.


 


3.1.1                        Execution and Validity.


 


(i)                                     Such
Seller has the full legal right and capacity to enter into this Agreement and
to perform such Seller’s obligations hereunder. 
This Agreement has been and each other agreement entered into by such
Seller in connection with the transactions contemplated hereby (all such
agreements executed by the Sellers and the Company, the “Other
Agreements”) will be, duly and validly executed and delivered by
such Seller and, assuming due authorization, execution and delivery by the
Purchaser, MDC Partners and each other party hereto or thereto, constitutes or,
when executed, will constitute a legal, valid and binding obligation of such
Seller, enforceable against such Seller in accordance with its terms, except
that (i) such enforcement may be subject to applicable


 


8





















 


bankruptcy, insolvency or other
similar laws, now or hereinafter in effect, affecting creditors’ rights
generally and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding may be brought
(collectively, the “Enforceability Exceptions”).


 


(ii)                                  With
respect to Zyman, the execution and delivery of this Agreement and the Other
Agreements to which it is a party, and the consummation by it of the
transactions contemplated hereby and thereby, have been duly authorized by all
required corporate action on behalf of Zyman. 
Zyman is duly organized and is validly existing and in good standing
(including tax status) under the laws of the State of Delaware, with the full
power and authority to own its property and to carry on its business all as and
in the places where such properties are now owned or operated or such business
is now being conducted, except where such failure to be in good standing or so
qualify would not have a Zyman Material Adverse Effect.  The term “Zyman
Material Adverse Effect” shall
mean any circumstance, change in or effect on Zyman that is or would reasonably
be likely to be materially adverse to Zyman’s ability to consummate any
transaction contemplated under this Agreement to be undertaken by it or any
Other Agreement to which it is a party.


 


3.1.2                        No Restrictions.  There is no suit, action, claim,
investigation or inquiry by any court, tribunal, arbitrator, authority, agency,
commission, official or other instrumentality of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision (“Governmental or Regulatory Authority”), and no legal,
administrative or arbitration proceeding pending or, to such Seller’s
knowledge, threatened against such Seller with respect to the execution,
delivery and performance of this Agreement or any Other Agreement entered into
by such Seller or the transactions contemplated hereby or thereby.


 


3.1.3                        Non-Contravention.  The execution and delivery by such Seller of
this Agreement and any Other Agreement, and the performance by such Seller of
such Seller’s obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby, will not (a) result in the
violation by such Seller of any statute, law, rule, regulation or ordinance
(collectively, “Laws”), or any judgment, decree, order, writ, permit or
license (collectively, “Orders”), of any Governmental or
Regulatory Authority, applicable to such Seller, or (b) conflict with,
result in a violation or breach of, constitute (with or without notice or lapse
of time or both) a default under, or require such Seller to obtain any consent,
approval or action of, make any filing with or give any notice to, or result in
or give to any Person (as defined in Section 9.4) any right of payment or
reimbursement, termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any Lien upon any of the assets or
properties of such Seller, under any of the terms, conditions or provisions of
any agreement, commitment, lease, license, evidence of indebtedness, mortgage,
indenture, security agreement, instrument, note, bond, franchise, permit,
concession, or other instrument, obligation or agreement of any kind, written
or oral (collectively, “Contracts”) to which such Seller
is a party or by which such Seller or any of his or her assets or properties
are bound except for, in any such case, such failures as would not,
individually or in the aggregate, have a Seller Material Adverse Effect.  The term “Seller
Material Adverse Effect” shall mean any circumstance, change in or
effect on such Seller that is or would reasonably be likely to be materially
adverse


 


9





















 


to such Seller’s ability to consummate any transaction contemplated to
be undertaken by it under this Agreement or any Other Agreement to which it is
a party.  The execution and delivery by
Zyman of this Agreement and any Other Agreement, and the performance by Zyman
of its obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby and thereby, will not result in a violation or
breach of any provision of its organizational documents.


 


3.1.4                        Approvals and Consents.  Except as described in Section 5.3, no
consent, approval or action of, or filing with or notice to, any Governmental
or Regulatory Authority or Person is necessary or required under any of the
terms, conditions or provisions of any Law or Order of any Governmental or
Regulatory Authority or any Contract to which such Seller is a party or by
which such Seller’s assets are bound, for the execution and delivery of this
Agreement and any Other Agreement by such Seller, the performance by such
Seller of such Seller’s obligations hereunder or thereunder or the consummation
of the transactions contemplated hereby or thereby.  No consent, approval, notice or other action
is required under Zyman’s amended and restated certificate of incorporation or
its bylaws.


 


3.1.5                        Units; Class B Units.  Such Seller is the record owner of the number
of Units of the Company set forth opposite such Seller’s name on Schedule 3.1.5.  Upon delivery of the Purchased Units owned by
such Seller to the Purchaser at Closing and the conversion of such Units into Class A
Units, and payment of the purchase price therefor as provided herein, such
Seller will transfer good and valid title to such Purchased Units to the
Purchaser, free and clear of all Liens.


 


3.1.6                        Bonuses and Remuneration.  Except as set forth on Schedule 3.1.6,
neither such Seller nor any of such Seller’s respective affiliates (other than
the Company) has given, and such Seller has not agreed or made any written or
verbal commitment to give, any employee of the Company (or any family member or
any affiliate of any employee of the Company, in the case of Zyman, or any
other employee of the Company, in the case of any Management Seller) any bonus,
gift, award, or any similar type of remuneration in connection with the
transactions contemplated hereby and the LLC Agreement.


 


3.1.7                        Merger.  Prior to the date hereof, Zyman and the
Management Sellers have taken all necessary action to approve the merger of
Nevada LLC with and into the Company pursuant to an agreement and plan of
merger dated as of March 29, 2005 (such transaction, the “Merger”
and such agreement, the “Merger Agreement”) and, prior to
the Closing, the Merger shall have been consummated in accordance with the
provisions of such agreement.


 


Section 3.2                                   Representation
by Zyman re: Investment in MDC Stock.


 


3.2.1                        Investment.  Zyman is acquiring MDC Stock for Zyman’s own
account, not as a nominee or agent, and not with a view to, of for sale in
connection with, any distribution thereof. 
Zyman understands that the MDC Stock has not been, and at Closing will
not have been, registered under the Securities Act, or any state securities
laws, by reason of specific exemptions from the registration provisions of the
Securities Act.  Zyman is an “accredited
investor” within the meaning of Rule 501(a) promulgated under the
Securities Act.


 


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3.2.2                        Investment Experience.  Zyman represents that Zyman has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in MDC Stock, and has the
ability to bear the economic risks of an investment in MDC Stock.  Zyman further represents that Zyman has had
access, during the course of the transactions and prior to the execution and
delivery of this Agreement to all such information as it deemed necessary or
appropriate.


 


3.2.3                        Restrictions on Transfer.  Zyman understands that the MDC Stock may not
be sold, transferred, or otherwise disposed of without registration under the
Securities Act or an exemption therefrom.


 


3.2.4                        Legend.  Zyman understands that each certificate
representing the MDC Stock will be endorsed with a legend substantially as
follows:


 


“THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES
LAWS, OR FOLLOWING RECEIPT BY THE ISSUER OF AN OPINION SATISFACTORY TO THE
ISSUER THAT SUCH TRANSFER MAY BE EFFECTUATED PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION PROVISIONS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS.


 


THE TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER PROVIDED IN THAT CERTAIN MEMBERSHIP UNIT PURCHASE AGREEMENT DATED APRIL 1,
2005 PURSUANT TO WHICH SUCH SECURITIES WERE ISSUED.”


 


B.                                     The Company and
the Sellers, jointly and severally, represent and warrant, as of the date
hereof, to the Purchaser and MDC Partners, as follows:


 


Section 3.3                                   Execution
and Validity; Existence and Good Standing.  The Company has the full power and authority
to enter into this Agreement and the Other Agreements to which it is a party
and to perform its obligations hereunder and thereunder. The


 


11





















 


execution and delivery of this Agreement and the Other Agreements to
which it is a party by the Company, the performance of its obligations
hereunder and thereunder, and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all required
limited liability company action on behalf of the Company. Each of this
Agreement and the Other Agreements to which it is a party has been or, in the
case of Other Agreements not executed as of the date hereof, will be duly and
validly executed and delivered by the Company and, assuming due authorization,
execution and delivery by the Purchaser, MDC Partners and any other party
hereto or thereto, constitutes (or will constitute) a legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
subject to the Enforceability Exceptions. 
The Company and each of its subsidiaries is duly organized and is
validly existing and in good standing (including tax status) under the laws of
the jurisdiction in which it was organized, with the full power and authority
to own its property and to carry on its business all as and in the places where
such properties are now owned or operated or such business is now being
conducted except where such failure to be in good standing or to qualify would
not have a Material Adverse Effect.  The
Company and each of its subsidiaries is duly qualified, licensed or admitted to
do business and is in good standing (including tax status) in each jurisdiction
in which the ownership, use or leasing of its assets and properties, or the conduct
or nature of its business, makes such qualification, licensing or admission
necessary except where such failure to qualify would not have a Material
Adverse Effect.  The term “Material
Adverse Effect” as it applies to the Company and its subsidiaries,
shall mean any circumstance, change in or effect on the Company that is or
would reasonably be likely to be materially adverse to its business, assets,
properties, liabilities, obligations (whether absolute, accrued, conditional or
otherwise), condition (financial or otherwise) or results of operations.


 


Section 3.4                                   Capital
Stock; Equity Ownership; No Options or Restrictions; Subsidiaries and
Investments.  Schedule 3.4
sets forth the number of authorized Units of the Company and the number of
outstanding Units of the Company.  The
record owners of the outstanding Units of the Company are as set forth on Schedule 3.4.  Except as set forth on Schedule 3.4,
there are no outstanding subscriptions, options, warrants, rights (including “phantom
stock rights”), calls, commitments, conversion rights, rights of exchange,
plans or other agreements or arrangements of any kind providing for the
purchase, issuance or sale of any equity or ownership or proprietary interest
of the Company or any of its subsidiaries, or which grants any Person the right
to share in the earnings of the Company or any of its subsidiaries or with
respect to the sale or transfer of any equity interest of the Company or any of
its subsidiaries.  Each outstanding Unit
was duly and validly authorized and issued by the Company, and is fully paid
and non-assessable, and was not issued in violation of any preemptive right
which has not been waived.  Each
outstanding equity security of each of the Company’s subsidiaries was duly and
validly authorized and issued by such subsidiary, and is fully paid and
non-assessable, and was not issued in violation of any preemptive right which
has not been waived.  There is no suit,
action, claim, or to the knowledge of the Company, investigation or inquiry by
any Governmental or Regulatory Authority, and no legal, administrative or
arbitration proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries, with respect to the execution,
delivery and performance of this Agreement or the Other Agreements or the
transactions contemplated hereby or thereby or any other agreement entered into
by the Company in connection with the transactions contemplated hereby or
thereby. Except as set forth on Schedule 3.4, the Company does
not own any capital stock or other equity or ownership or proprietary interest
in any Person.


 


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Section 3.5                                   Financial
Statements; Internal Controls; No Material Changes


 


3.5.1                        Schedule 3.5(a) sets
forth (a) the audited combined balance sheets of the Company (for the
avoidance of all doubt, including its predecessor) as at December 31,
2002, December 31, 2003 and December 31, 2004 (the December 31,
2004 balance sheet being referred to herein as the “Balance Sheet”) and (b) the
related audited combined statements of operations and comprehensive income,
stockholders’ equity and cash flows for the fiscal years then ended as audited
by Moore Stephens Tiller LLC.  Such
financial statements have been prepared in accordance with GAAP consistently
applied throughout the periods indicated and fairly present the
financial condition of the entity or entities included within such balance
sheet, at the respective date thereof, and the results of operations,
comprehensive income, stockholders’ equity and cash flows for the periods
indicated.  Each balance sheet included
in the financial statements reflects all claims against and all debts and
liabilities of such entities, fixed or contingent, as at the respective date thereof,
required to be shown thereon under GAAP.


 


3.5.2                        Schedule 3.5(b) attached
hereto sets forth a complete and correct copy of the Sarbanes-Oxley Section 404
compliance audit review report prepared by the Bonadio Group for the Company
(the “404
Report”).  The Company has
devised and maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations; and (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with GAAP.


 


3.5.3                        Since December 31, 2004
(the “Balance
Sheet Date”), there has been no Material Adverse Effect.


 


Section 3.6                                   Books
and Records.  The Company
has delivered to the Purchaser complete and correct copies of the Certificate
of Formation and the operating agreement of the Company and the comparable
organizational documents of its subsidiaries.


 


Section 3.7                                   Title to
Properties; Encumbrances; No Prior Activities by Merger Sub.


 


3.7.1                        Title to Properties;
Encumbrances.  Except as set forth on
Schedule 3.7.1
and except for the assets and rights to be conveyed pursuant to the
Intellectual Property Assignment (as defined below) contemporaneously with the
Closing, the Company has good and valid title to, or enforceable leasehold
interests in or valid rights under contract to use, all properties and assets
owned or used by the Company (real, personal, tangible and intangible),
including, without limitation (a) all the properties and assets reflected
in the Balance Sheet, (b) all the properties and assets purchased or
otherwise contracted for by the Company since the Balance Sheet Date (except
for properties and assets reflected in the Balance Sheet or acquired or
otherwise contracted for since the Balance Sheet Date that have been sold or
otherwise disposed of in the ordinary course of business) and (c) to the
extent not addressed in clauses (a) or (b), the Learjet Model 60 Aircraft
(the “Airplane”),
in each case free and clear of all Liens, except for Permitted Liens and Liens
set forth on Schedule 3.7.1.  As
of the Closing Date, the Company shall have good and valid title to, or
enforceable leasehold interests in or valid rights under contract to use, all
of the assets
and rights to be conveyed pursuant to the Intellectual Property
Assignment.  The term “Permitted Liens” as used herein means any of the following: (i) liens


 


13





















 


for Taxes or assessments not yet due and
payable or being contested in good faith; (ii) mechanics’, carriers’,
workers’, repairers’ and other similar liens arising or incurred in the
ordinary course of business relating to obligations as to which there is no
default on the part of Seller; and (iii) such liens, imperfections in
title, charges, easements, restrictions, encumbrances or other matters that do
not adversely and materially affect the use of the Company’s assets to which
they are currently put, or the Company, each taken as a whole.  The property and equipment used by the
Company and its subsidiaries in the conduct of their business (the “Business”),
whether owned or otherwise contracted for, is in a state of good maintenance
and repair (ordinary wear and tear excepted) and is adequate and suitable for the
purposes for which they are presently being used.


 


3.7.2                        No Prior Activities.  Prior to the Merger, the Company (for this
purpose, excluding Nevada LLC and its subsidiaries) had not engaged in any
activities other than in connection with its formation, the negotiation,
execution and delivery of the Merger Agreement and the consummation of the
transactions contemplated thereby.


 


Section 3.8                                   Real
Property.


 


3.8.1                        Owned Real Property.  The Company does not own any real property
(including ground leases) or hold a freehold interest in any real property or
any option or right of first refusal or first offer to acquire any real
property.


 


3.8.2                        Leased Real Property.  Schedule 3.8.2 contains an
accurate and complete list of all real property leases, subleases, real
property licenses and other occupancy agreements, including without limitation,
any modification, amendment or supplement thereto and any other related
document or agreement executed or entered into by the Company (each
individually, a “Real Property Lease” and collectively, the “Real
Property Leases”).  Each Real
Property Lease set forth on Schedule 3.8.2 (or required
to be set forth on Schedule 3.8.2) is valid, binding and in full force and
effect; all rents and additional rents and other sums, expenses and charges due
thereunder to date on each such Real Property Lease have been paid; and the
lessee has been in peaceable possession since the commencement of the original
term of such Real Property Lease and no waiver, indulgence or postponement of
the lessee’s obligations thereunder has been granted by the lessor.  There exists no default or event of default
by the Company or to the knowledge of the Company, by any other party to any
Real Property Lease; and there exists no occurrence, condition or act (including
the purchase of the Purchased Units hereunder) which, with the giving of
notice, the lapse of time or the happening of any further event or condition,
would become a default or event of default by the Company under any Real
Property Lease, and there are no outstanding claims of breach or
indemnification or notice of default or termination of any Real Property
Lease.  The Company holds the leasehold
estate on all the Real Property Leases free and clear of all Liens except as
set forth on Schedule 3.8.2. 
The real property leased by the Company is in a state of good
maintenance and repair (ordinary wear and tear excepted), adequate and suitable
for the purposes for which it is presently being used.  The Company is in physical possession and
actual and exclusive occupation of the whole of each of its leased
properties.  The Company does not owe any
brokerage commission with respect to any of the Real Property Leases.


 


14





















 


Section 3.9            Contracts.  Schedule 3.9 hereto
contains an accurate and complete list of the following Contracts to which the
Company is a party:  (a) all Plans
(as such term is defined in Section 3.20), (b) any personal property
lease with a fixed annual rental of $25,000 or more, (c) any Contract
relating to capital expenditures which involves payments of $50,000 or more in
any single transaction or series of related transactions, (d) any Contract
relating to the making of a loan or advance to or investment in, any other
Person, except for advances to employees for business expenses in the ordinary
course of business and consistent with past practices, (e) any agreement,
instrument or arrangement evidencing or relating in any way to indebtedness for
money borrowed or to be borrowed, whether directly or indirectly, by way of
loan, purchase money obligation, guarantee (other than the endorsement of
negotiable instruments for collection in the ordinary course of business),
conditional sale, purchase or otherwise, in any such case, in an amount that
exceeds $50,000, (f) any management service, employment, consulting or
similar type of Contract which is not cancelable by the Company without penalty
or other financial obligation within 30 days, (g) any Contract limiting
the Company’s freedom to engage in any line of business or to compete with any
other Person, including, without limitation, any agreement limiting the ability
of the Company or any of their respective affiliates to take on competitive
accounts during or after the term thereof, (h) any collective bargaining
or union agreement, (i) any Contract between the Company and any officer
or member of the Board of Managers of the Company not covered by subsection (f) above
(including indemnification agreements), (j) any secrecy or confidentiality
agreement (other than standard confidentiality agreements in computer software
license agreements or agreements with clients entered into in the ordinary
course of business), (k) any agreement with respect to any Intellectual
Property (as defined in Section 3.15) other than “shrink-wrap” and similar
end-user licenses, (l) any agreement with a client required to be listed
on Schedule 3.17,
(m) any agreement, indenture or other instrument which contains
restrictions with respect to the payment of distributions in respect of the
Units, (n) any joint venture agreement involving a sharing of profits not
covered by clauses (a) through (m) above, (o) any Contract (not
covered by another subsection of this Section 3.9) which involves
$100,000 or more over the unexpired term thereof and is not cancelable by the
Company, as the case may be, without penalty or other financial obligation
within 30 days, (p) any Contract with a media buying service; provided,
however, commitments to purchase media in the ordinary course of business do
not have to be set forth on Schedule 3.9, and (q) any
agreement between the Company and any of the Sellers. Notwithstanding anything
to the contrary contained above, (x) commitments for media and production
expenses which are fully reimbursable from clients, and (y) estimates or
purchase orders given in the ordinary course of business relating to the
execution of projects, do not have to be set forth on Schedule 3.9.
Each Contract set forth on Schedule 3.9, is in full
force and effect, and there exists no default or event of default by the
Company in any material respect or to the knowledge of the Company, by any
other party, or occurrence, condition, or act (including the purchase of the
Purchased Units hereunder) which, with the giving of notice, the lapse of time
or the happening of any other event or condition, would become a default or
event of default thereunder in any material respect by the Company, and there
are no outstanding claims of breach or indemnification or notice of default or
termination of any such Contract. 
Summaries of all oral Contracts contained on Schedule 3.9
are complete and accurate in all material respects.


 


Section 3.10                            Non-Contravention;
Approvals and Consents. 
As of the Closing Date, the execution and delivery by the Company of
this Agreement and any Other Agreement to


 


15





















 


which it is a party and the performance by the Company of each of its
obligations hereunder or thereunder and the consummation of the transactions
contemplated hereby and thereby, will not (a) violate, conflict with or
result in the breach of any provision of the certificate of formation or the
LLC Agreement; (b) result in the violation by the Company of any Laws or
Orders of any Governmental or Regulatory Authority applicable to the Company or
any of the Company’s assets or properties, or (c) if the consents and
notices set forth in Schedule 3.10 are obtained, conflict with, result in a
violation or breach of, constitute (with or without notice or lapse of time or
both) a default under, or require the Company to obtain any consent, approval
or action of, make any filing with or give any notice to, or result in or give
to any Person any right of payment or reimbursement, termination, cancellation,
modification or acceleration of, or result in the creation or imposition of any
Lien upon any of the assets or properties of the Company, or under any of the
terms, conditions or provisions of any Contract or Permit to which the Company
is a party or by which the Company or any of their respective assets or
properties were or are bound, except, in the case of the foregoing clauses (b) and
(c), for any such failures to be correct that would not be material to the
Company or its subsidiaries.  Except as
set forth in Schedule 3.10, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority or other
Person is necessary or required under any of the terms, conditions or
provisions of any Law or Order of any Governmental or Regulatory Authority or
any Contract or Permit to which the Company is a party, or by which the Company’s
assets or properties were or are bound for the execution and delivery of this
Agreement or the Other Agreements by the Company, the performance by the
Company of its obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or thereby, except
in connection with the Merger or as described in Section 5.6 and except
for such consents, approvals, actions, filings or notices the failure of which
to be obtained or made would not be material to the Company or its
subsidiaries.


 


Section 3.11                            Litigation.  Except as set forth on Schedule 3.11,
there is no action, claim, suit, proceeding at law or in equity by any Person,
or any arbitration or any administrative or other proceeding by or before (or
to the knowledge of the Company, any investigation by) any Governmental or
Regulatory Authority, pending or, to the knowledge of the Company, threatened,
against the Company or any of its subsidiaries or any of their respective
properties or rights.  The Company is not
subject to any Order entered in any lawsuit or proceeding. Schedule 3.11
also sets forth with respect to each pending or threatened action, claim, suit
or proceeding listed thereon, the amount of costs, expenses or damages the
Company has incurred to date and reasonably expects to incur through the
conclusion thereof.


 


Section 3.12                            Taxes.  The Company has timely completed and filed,
or caused to be filed, taking into account any valid extensions of due dates,
completely and accurately, all federal, state, local and foreign (if any)
returns, declarations, reports, claims for refunds or information returns or
statements relating to Taxes, including any schedules or attachments thereto
and including any amendments thereof (“Tax Returns”) required under
the statutes, rules or regulations of such jurisdictions to be filed by
it.  The term “Taxes”
means taxes, duties, charges or levies of any nature imposed by any taxing or
other Governmental or Regulatory Authority, including without limitation
income, gains, capital gains, surtax, capital, franchise, capital stock,
value-added taxes, gross receipts, license, employment, severance, premium,
windfall profits, registration, alternative or add-on minimum, estimated, taxes
required to be deducted from payments made by the payor and accounted for to
any tax authority, employees’ income withholding, back-up withholding,
withholding on payments to foreign Persons, social


 


16





















 


security, national insurance, unemployment, worker’s compensation,
payroll, disability, real property, personal property, sales, use, goods and
services or other commodity taxes, business, occupancy, excise, customs and
import duties, transfer, stamp, and other taxes (including interest, penalties
or additions to tax in respect of the foregoing), and includes all taxes
payable by the Company pursuant to Treasury Regulations §1.1502-6 or any
similar provision of state, local or foreign law.  All Taxes shown on said returns to be due and
all other Taxes due and owing (whether or not shown on any Tax Return) have
been paid and all additional assessments received prior to the date hereof have
been paid or are being contested in good faith, in which case, such contested
assessments are set forth on Schedule 3.12.  The Company is not currently the beneficiary
of any extension of time within which to file any Tax Return.  No claim has ever been made by an authority
in a jurisdiction where the Company does not file Tax Returns that the Company
is or may be subject to taxation by that jurisdiction and to Sellers’
knowledge, there is no basis for any such claim to be made.  There are no liens for Taxes (other than
Taxes not yet due and payable) upon any of the assets of the Company.  No power of attorney has been executed with
respect to any matter relating to Taxes of the Company which is currently in
force.  Subject to the provisions of Section 7.2.4
below, the Company has collected all sales, use, goods and services or other
commodity Taxes required to be collected and remitted or will remit the same to
the appropriate taxing authority within the prescribed time periods.  The Company has withheld all amounts required
to be withheld on account of Taxes from amounts paid to employees, former
employees, directors, officers, members, residents and non-residents and
remitted or will remit the same to the appropriate taxing authorities within
the prescribed time periods.  The amount
set up as an accrual for Taxes (aside from any reserved for deferred Taxes
established to reflect timing differences between book and Tax accrual) on the
Balance Sheet (as opposed to the notes thereto) is sufficient, as computed in
accordance with GAAP, for the payment of all unpaid Taxes of the Company,
whether or not disputed, for all periods ended on and prior to the date
thereof.  Since the Balance Sheet Date,
the Company has not incurred any liabilities for Taxes other than in the
ordinary course of the business of the Company consistent with past custom and
practice.  The Company has no Knowledge
that any authorities may assess any additional Taxes for any period for which
Tax Returns have been filed.  The Company
has delivered to the Purchaser correct and complete copies of all federal,
state and local income Tax Returns filed with respect to the Company.  Except as set forth on Schedule 3.12,
none of the federal, state or local income Tax Returns of the Company have ever
been audited by the Internal Revenue Service or any other Governmental or
Regulatory Authority.  To the Company’s
knowledge, no examination of any return of the Company is currently in
progress, and the Company has not received notice of any proposed audit or
examination.  No deficiency in the
payment of Taxes by the Company for any period has been asserted in writing by
any taxing authority and remains unsettled at the date of this Agreement.  The Company has made no agreement, waiver or
other arrangement providing for an extension of time with respect to the
assessment or collection of any Taxes against it.  The Company has not been a member of an
affiliated group filing consolidated federal income Tax Returns, nor has it
been included in any combined, consolidated or unitary state or local income
Tax Return.  The Company will not be
required as a result of a change in accounting method for any period ending on
or before the Closing Date to include any adjustment under Section 481 of
the Code (or any similar provision of state, local or foreign income tax law)
in income for any period ending after the Closing Date, and there is no
application pending with any governmental authority requesting permission for
any changes in any of the Company’s accounting methods for Tax purposes.  No governmental


 


17





















 


authority has proposed any such adjustment or change in accounting
method.  The Company has not entered into
any Tax allocation, sharing or indemnification agreement with any party.  Since its formation, the Company has been
treated as a partnership for purposes of federal, state and local income tax
laws and, accordingly, has not been subject to federal, state or local tax
based on gross or net income.  Zyman (and
any predecessor of Zyman) has been a validly electing S corporation within the
meaning of Sections 1361 and 1362 of the Code at all times since January 1,
2003 and Zyman will be an S corporation up to and including the Closing
Date.  Neither the Purchaser nor the
Company will be required to include any item of income in, or exclude any item
of deduction from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any:  (i) ”closing agreement” as described in
Code Section 7121 (or any corresponding or similar provision of state,
local, or foreign income tax law); (ii) installment sale or open
transaction disposition made on or prior to the Closing Date; or (iii) prepaid
amount received on or prior to the Closing Date.


 


Section 3.13                            Liabilities.  Except as set forth in the Balance Sheet or
the notes thereto or as set forth on Schedule 3.13, to the
knowledge of the Company, the Company has no outstanding claims, obligations,
liabilities or indebtedness of any nature whatsoever as to which the Company is
or may become responsible (collectively in this Section 3.13, “Liabilities”),
whether accrued, absolute or contingent, determined or undetermined, asserted
or unasserted, and whether due or to become due, other than (i) Liabilities
specifically disclosed on Schedule 3.13 hereto; (ii) Liabilities
under Contracts of the type required to be disclosed by the Sellers or the
Company on any Schedule and so disclosed or which because of the dollar
amount or other qualifications are not required to be listed on such Schedule other
than liquidated damages or Liabilities arising from default or breach of such
Contract; (iii) Liabilities arising under this Agreement; and (iv) Liabilities
incurred in the ordinary course of business and consistent with past practice of
the Company since the Balance Sheet Date not involving borrowings and which are
not and are not expected to be material to the Company.


 


Section 3.14                            Insurance.  Schedule 3.14 contains a
true and complete list (including the names and addresses of the insurers, the
names of the Persons to whom such insurance policies have been issued, the
expiration dates thereof, the annual premiums and payment terms thereof,
whether it is a “claims made” or an “occurrence” policy and a brief description
of the interests insured thereby) of all liability, property, workers’
compensation and other insurance policies currently in effect that insure the
property, assets or business of the Company or the employees of the Company
(other than self-obtained insurance policies by such employees).  Each such insurance policy is valid and
binding and in full force and effect, all premiums due thereunder have been
paid and the Company has not received any notice of cancellation or termination
in respect of any such policy or default thereunder.  Neither the Company nor to the knowledge of
the Company, the Person to whom such policy has been issued has received notice
that any insurer under any policy referred to in this Section 3.14 is
denying liability with respect to a claim thereunder or defending under a
reservation of rights clause.  Except as
set forth on Schedule 3.14, within the last two years the Company
has not filed for any claims exceeding $20,000 against any of its insurance
policies, exclusive of automobile and health insurance policies. None of such
policies shall lapse or terminate by reason of the transactions contemplated by
this Agreement or any of the Other Agreements and all such policies shall
continue in effect after the Closing Date for the benefit of the Company.  The Company has not received any notice of
cancellation of any such policy.  The
Company has not


 


18





















 


received written notice from any of its insurance carriers that any
premiums will be materially increased in the future or that any insurance
coverage listed on Schedule 3.14 will not be available in the future on
substantially the same terms now in effect.


 


Section 3.15                            Intellectual
Properties.


 


3.15.1                  Definitions.  For purposes of this Agreement, the following
terms have the following definitions:


 


“Intellectual
Property” shall include, without limitation, any or all of the
following and all rights associated therewith: (a) all domestic and
foreign patents, and applications therefor, and all reissues, reexaminations,
divisions, renewals, extensions, continuations and continuations-in-part
thereof; (b) all inventions (whether patentable or not), invention
disclosures, improvements; (c) trade secrets, confidential and proprietary
information, know how, technology, technical data and customer lists, financial
and marketing data, pricing and cost information, business and marketing plans,
databases and compilations of data, rights of privacy and publicity, and all
documentation relating to any of the foregoing; (d) all copyrights,
copyright registrations and applications therefor, unregistered copyrights, the
content of all World Wide Web sites of the Company, and all other rights
corresponding thereto throughout the world; (e) all mask works, mask work
registrations and applications therefor; (f) all industrial designs and
any registrations and applications therefor; (g) all trade names,
corporate names, logos, trade dress, common law trademarks and service marks,
trademark and service mark registrations and applications therefor and all
goodwill associated therewith; (h) any and all Internet domain names and
Web sites (including all software and applications, and all components and/or
modules thereof), used in connection therewith; and (i) all computer
software including all source code, object code, firmware, development tools,
files, records and data, all media on which any of the foregoing is recorded,
and all documentation related to any of the foregoing.


 


“Intellectual Property of the Company”
shall mean any Intellectual Property that is owned by or exclusively licensed
to the Company, but shall specifically not include any rights in or to
materials created for clients as “work-made-for-hire” or which are subject to
an assignment in favor of clients of the Company.  In addition, Intellectual Property of the
Company includes all Intellectual Property transferred to the Company at
Closing pursuant to the Intellectual Property Assignment.


 


3.15.2                  Representations.  Schedule 3.15.2 hereto
contains an accurate and complete list of all patents, patent applications,
registered trademarks, applications for registered trademarks, registered
service marks, applications for registered service marks, registered copyrights
and applications for registered copyrights and Internet domain names owned by
the Company or owned by Zyman and exclusively licensed to the Company (the “Registered
IP”). Except as set forth on Schedule 3.15.2, the
registrations and applications of the Registered IP listed on Schedule 3.15.2
are in the name of the Company or Zyman, as the case may be, and are valid, in
proper form, enforceable and subsisting, all necessary registration and renewal
fees in connection with such registrations have been made and all necessary
documents and certificates in connection with such registrations have been
filed with the relevant patent and Internet domain names, copyrights and
trademark authorities in the United States or other jurisdiction for the


 


19





















 


purposes of maintaining such Intellectual Property registrations, and
applications therefor.  No registration,
or application therefor, for any of the Registered IP has lapsed, expired, or
been abandoned, and no such registrations, or applications therefor, are the
subject of any opposition, interference, cancellation, or other legal,
quasi-legal, or governmental proceeding pending before any governmental,
registration, or other authority in any jurisdiction.  Except as set forth on Schedule 3.15.2,
(i) to the knowledge of the Company, no Person other than the Company has
any rights to use any of the Intellectual Property of the Company, (ii) the
Company has not granted to any Person, nor authorized any Person to retain, any
rights in the Intellectual Property of the Company, and (iii) the Company
owns all rights, title and interest in, or has the right to use pursuant to
valid license agreements, all Intellectual Property used in, or reasonably
necessary for, the conduct of the Business as historically conducted, free and
clear of all Liens.  The Intellectual
Property Assignment (as defined in Section 5.9) transfers to the Company
all Intellectual Property owned by Zyman and used in, or reasonably necessary
for, the conduct of the Business as historically conducted, except for the
trademark, “Sergio Zyman”.  Except as set
forth on Schedule 3.15.2, the consummation of the
transactions contemplated hereby will not result in any loss or impairment of
Company’s rights to own or use any Intellectual Property, nor will such
consummation require the consent of any third party in respect of any
Intellectual Property. To the knowledge of the Company, the operation of the
Business does not infringe the valid Intellectual Property of any other Person.
There are no proceedings pending or, to the knowledge of the Company,
threatened against the Company with respect to the Intellectual Property or the
Company, or with respect to any other Intellectual Property, alleging the
infringement or misappropriation by the Company of any Intellectual Property of
any Person, and the Company has not received written notice from any Person
that the operation of the Business infringes the Intellectual Property of any
Person.  There are no claims pending or,
to the knowledge of the Company, threatened challenging the validity of any
Intellectual Property of the Company. The Company has not entered into, nor is
it otherwise bound by any consent, forbearance or any settlement agreement
which limits the rights of the Company to use the Intellectual Property of the
Company. To the knowledge of the Company, no Person is infringing or
misappropriating any of the Intellectual Property of the Company. All computer
software and applications, other than off-the-shelf applications subject to
shrink-wrap and similar end-user licenses, included in the Intellectual
Property of the Company (“Software”) was either developed (a) by
employees of the Company within the scope of such employee’s employment duties;
(b) by independent contractors as “works-made-for-hire,” as that term is
defined under Section 101 of the United States Copyright Act, 17 U.S.C. § 101,
pursuant to written agreement; or (c) by third parties who have assigned
all of their rights therein to the Company pursuant to a written
agreement.  Except as set forth on Schedule 3.15.2,
no former or present employees, officers or directors of the Company retain any
rights of ownership or use of any Software, and no employees or third parties
who have developed or participated in the development of Software have any
claims to any rights therein.


 


Section 3.16                            Compliance
with Laws; Permits.


 


3.16.1                  Compliance.  The Company is, and the Business has been
conducted, in compliance with all applicable Laws and Orders, except in each
case (other than with respect to compliance with environmental Laws and Orders
relating to the regulation or protection of the environment (“Environmental
Laws and Orders”)) where the failure to so comply would not,
individually or in the aggregate, have a Material Adverse Effect, including
without limitation: (a)


 


20





















 


all Laws and Orders promulgated by the Federal Trade Commission or any
other Governmental or Regulatory Authority; (b) all Environmental Laws and
Orders; and (c) all Laws and Orders relating to labor, civil rights, and
occupational safety and health laws, worker’s compensation, employment and
wages, hours and vacations, or pay equity. Except as set forth on Schedule 3.16.1,
the Company has not been charged with, or, to the knowledge of the Company,
threatened with or under any investigation with respect to, any charge
concerning any violation of any Laws or Orders.


 


3.16.2                  Permits. The Company has all
permits, licenses, and other government certificates, authorizations and
approvals (“Permits”) required by any Governmental or Regulatory
Authority for the operation of the Business and the use of the assets
transferred to the Company as presently operated or used, except where the
failure to have such Permits would not, individually or in the aggregate, have
a Material Adverse Effect.  All of the
material Permits are in full force and effect and no action or claim is
pending, nor to the knowledge of the Company is threatened, to revoke or
terminate any such Permit or declare any such Permit invalid.


 


Section 3.17                            Client
Relations.  Schedule 3.17
sets forth the 10 largest clients of the Company (measured by revenues), and
the revenues from each such client and from all clients (in the aggregate) for
the calendar years ended December 31, 2003 and December 31,
2004.  Except as set forth on Schedule 3.17,
to the knowledge of the Company, without any obligation of reasonable inquiry,
(including, for the purposes of this Section 3.17, the actual knowledge of
Ted Richardson, Kirk Spresser, John Stewart, Dave Singleton, Patricia Klingbiel
and Ricardo Alvarez), none of the 10 largest clients of the Company for the
calendar year ended December 31, 2004 has advised the Company in writing
that it is (x) terminating or considering terminating the handling of its business
by the Company or in respect of any particular product, project or service or
(y) planning to reduce its future spending with the Company in any material
manner under an existing Contract; and to the knowledge of the Company no
client has orally advised the Company or the Sellers of any of the foregoing
events.


 


Section 3.18                            Accounts
Receivable; Work-in-Process; Accounts Payable.  The amount of all work-in-process, accounts
receivable, unbilled invoices (including without limitation unbilled invoices
for services and out-of-pocket expenses) and other debts due or recorded in the
records and books of account of the Company and reflected on the Balance Sheet
and the Closing Balance Sheet represent or will represent valid obligations
arising from sales actually made or services actually performed in the ordinary
course of business.  Except as set forth
on Schedule 3.18,
there has been no change since the Balance Sheet Date in the amount or aging of
the work-in-process, accounts receivable, unbilled invoices, or other debts due
to the Company, or the reserves with respect thereto, or accounts payable of
the Company which would have a Material Adverse Effect on the Company.


 


Section 3.19                            Employment
Relations.  (a) No
unfair labor practice complaint against the Company is pending before any
Governmental or Regulatory Authority; (b) there is no organized labor
strike, dispute, slowdown or stoppage actually pending or to the knowledge
of the Company threatened against or involving the Business; (c) there are
no labor unions representing or, to the knowledge of the Company, attempting to
represent the employees of the Company; (d) no claim or grievance nor any
arbitration proceeding arising out of or under any collective bargaining
agreement is pending against the Company or Zyman and to the knowledge


 


21





















 


of the Company, no such claim or grievance has been threatened; (e) no
collective bargaining agreement is currently being negotiated by the Company;
and (f) the Company did not experience any organized work stoppage or
similar organized labor dispute during the last three years.  Except as set forth on Schedule 3.11,
there is no legal action, suit, proceeding or claim pending or, to the
knowledge of the Company, threatened between the Company and any employees or
former employees of the Company, agents or former agents of the Company, job
applicants or any association or group of any employees of the Company.


 


Section 3.20                            Employee
Benefit Matters.


 


3.20.1                  List of Plans.  Schedule 3.9 to this
Agreement contains a true and complete list of all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”)) and all bonus,
incentive, deferred compensation, stock option, restricted stock, stock
appreciation rights, phantom stock rights, collective bargaining, retiree
medical or life insurance, supplemental retirement, employment, change in
control, severance or other benefit plans, individual retirement programs or
arrangements, and all termination, severance or other Contracts, and all other
plans, agreements, benefit programs, policies or other arrangements, whether
covering one Person or more than one Person, and whether or not subject to any
of the provisions of ERISA, whether formal or informal, whether oral or
written, (x) which are maintained, contributed to or sponsored by the Company
or any Affiliate for the benefit of any current or former employee, director or
consultant of the Company or (y) under which the Company has any current or
future liability (each item listed on Schedule 3.9 being referred
to herein individually, as a “Plan” and collectively, as the “Plans”).
The Company has delivered to or made available for review by the Purchaser or
its representative, to the extent applicable, a complete and accurate copy of: (a) each
written Plan and descriptions of any unwritten Plan (including all amendments
thereto whether or not such amendments are currently effective); (b) each
summary plan description and all summaries of material modifications relating
to a Plan and other written communications concerning the Plan; (c) each
trust agreement or other funding arrangement with respect to each Plan,
including insurance contracts; (d) the most recently filed IRS Form 5500
relating to each Plan and attached schedules; (e) the most recently
received IRS determination letter for each Plan; and (f) the three most
recently prepared audited financial statements in connection with each
Plan.  The Company has not made any
commitment, (i) to create or cause to exist any Plan not set forth on Schedule 3.9
or (ii) to modify, change or terminate any Plan.


 


3.20.2                  Severance.  None of the Plans, except as set forth on Schedule 3.20.2,
(a) provides for the payment of or obligates the Company to pay
separation, severance, termination or similar-type benefits to any Person; (b) obligates
the Company to pay separation, severance, termination or similar-type benefits
as a result of any transaction contemplated by this Agreement or as a result of
a “change in control,” within the meaning of such term under Section 280G
of the Code, either alone or in conjunction with any subsequent occurrence, or (c) accelerates
or provides any other rights or benefits as a result of any transaction
contemplated by this Agreement.


 


3.20.3                  Multi-Employer Plans. None of
the Company or any ERISA Affiliate has at any time maintained, contributed to
or participated in a multi employer plan (within the meaning of Section 3(37)
or 4001(a)(3) of ERISA) or a multiple employer plan subject to Sections
4063 and


 


22





















 


4064 of ERISA, nor has any obligations or liabilities, including
withdrawal, reorganization or successor liabilities, regarding any such plan.
As used herein, the term “ERISA Affiliate” means any
Person that is or has been treated as a single employer with the Company
(within the meaning of Sections 414(b), (c), (m) or (o) of the Code).  None of the Company or any ERISA Affiliate
has at any time maintained (nor has the Company been part of any controlled
group of corporations that at any time has), contributed to, or participated in
a defined benefit pension plan covered by Title IV of ERISA.


 


3.20.4                  Welfare Benefit Plans.  The Company has expressly reserved the right,
in all Plan documents relating to welfare benefits provided to current or
former employees, officers, directors and other participants and beneficiaries,
to amend, modify or terminate at any time the Plans which provide for welfare benefits,
and the Sellers are not aware of any fact, event or condition that could
reasonably be expected to restrict or impair such right. Except as required
under Section 601 of ERISA and Section 4980B of the Code, the Company
has not made any promises or commitments to provide, and is not obligated to
provide (i) medical benefits to retirees or former employees, officers or
directors of the Company or their respective dependants, or (ii) life
insurance or other death benefits to retired employees or former employees,
officers or directors of the Company or their respective dependants.


 


3.20.5                  Administrative Compliance.  Each Plan is now and has been established and
operated in all material respects in accordance with the requirements of all
applicable Laws, including, without limitation, ERISA, the Health Insurance
Portability and Accountability Act of 1996 and the Code.  The Company has performed all material
obligations required to be performed by it under, is not in any respect in
default under or in violation of, and the Company does not have any knowledge
of any default or violation by any Person under, any Plan.  Except as set forth on Schedule 3.11,
(i) no legal action, suit, audit, investigation or claim is pending or, to
the knowledge of the Company, threatened with respect to any Plan (other than
claims for benefits in the ordinary course), (ii) no fact, event or
condition exists that would be reasonably likely to provide a legal basis for
any such action, suit, audit, investigation or claim (iii) no administrative
investigation, audit or other administrative proceeding by any Governmental or
Regulatory Authority is pending, threatened or in progress.  All reports, disclosures, notices and filings
with respect to such Plans required to be made to employees, officers,
directors, participants, beneficiaries, alternate payees and any Governmental
or Regulatory Authority have been timely made or an extension has been timely
obtained. With respect to any insurance policy providing funding for benefits
or an investment alternative under any Plan, (i) no liability or loss
shall be incurred by the Company or any such Plan in the nature of a
retroactive rate adjustment, loss sharing arrangement or other liability or
loss, and (ii) no insurance company issuing any such policy is in
receivership, conservatorship, liquidation or similar proceeding and, to the
knowledge of the Company, no such proceedings with respect to any insurer are
imminent.


 


3.20.6                  Tax-Qualification. Each Plan
which is intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter from the IRS that it is so
qualified and that any related trust is exempt from federal income tax (or,
alternatively, if such Plan is maintained pursuant to the adoption of a master
or prototype plan document, the National Office of the IRS has issued an
opinion letter to the effect that the form of the master or prototype plan
document is acceptable for the implementation of a qualified retirement plan);
and no fact or event has occurred or condition exists since the date of such
determination or


 


23





















 


opinion letter from the IRS which would be reasonably likely to
adversely affect the qualified status of any such Plan or the exempt status of
any such trust.


 


3.20.7                  Excise Taxes. No event has
occurred and no condition exists that would subject the Company to any tax,
fine, lien, penalty or other liability imposed by ERISA, the Code or other
applicable laws, rules and regulations.


 


3.20.8                  Tax Deductions.  All contributions, premiums or payments
(including all employer contributions and, if applicable, employee salary
reduction contributions) required to be made, paid or accrued with respect to
any Plan have been made, paid or accrued on or before their due dates,
including extensions thereof.  All such
contributions have been fully deducted or in the case of the current year will
be deducted for income tax purposes and no such deduction has been challenged
or disallowed by any Governmental or Regulatory Authority, and no fact or event
exists which could give rise to any such challenge or disallowance.


 


Section 3.21                            Interests
in Customers, Suppliers, Etc. 
Except as set forth on Schedule 3.21, neither
Zyman nor to the knowledge of the Company, any officer, director, or employee
of the Company immediately prior to the Closing Date, any parent, brother,
sister, child or spouse of any such officer, director, key executive or
employee of the Company or the Sellers (collectively, the “Related
Group”), or any Person controlled by anyone in the Related Group:


 


(i)                                     owns,
directly or indirectly, any interest in (excepting for ownership, directly or
indirectly, of less than 1/4 of 1% of the issued and outstanding shares of any
class of securities of a publicly held and traded company), or received or has
any right to receive payments from, or is an officer, director, employee, agent
or consultant of, any Person which is, or is engaged in business as, a
competitor, lessor, lessee, supplier, distributor, sales agent, customer or
client of the Company;


 


(ii)                                  owns,
directly or indirectly (other than through the ownership of Units), in whole or
in part, any tangible or intangible property (including, but not limited to
Intellectual Property), that the Company used in the conduct of the Business,
other than immaterial personal items owned and used by employees at their work
stations; or


 


(iii)                               has
any cause of action or other claim whatsoever against, or owes any amount to,
the Company, except for claims in the ordinary course of business such as for
accrued vacation pay, accrued benefits under employee benefit plans, and
similar matters and agreements existing on the date hereof.


 


Section 3.22                            Bank
Accounts and Powers of Attorney. 
Set forth in Schedule 3.22 is an accurate and complete list showing (a) the
name and address of, and account information for each bank in which the Company
has an account, credit line or safe deposit box and the names of all Persons
authorized to draw thereon or to have access thereto, and (b) the names of
all Persons, if any, holding powers of attorney from the Company and a summary
statement of the terms thereof.


 


Section 3.23                            Compensation
of Employees.  Schedule 3.23
is an accurate and complete list showing: (a) the names and positions of
all employees and exclusive consultants


 


24





















 


who are being compensated by the Company at an annualized rate of
$100,000 or more, together with a statement of the current annual salary, and
the annual salary, bonus and incentive compensation paid or payable with
respect to calendar years 2004 and 2005, and a statement of the projected
annual salary, bonus and incentive compensation payable with respect to the
calendar year ended December 31, 2005, and the material fringe benefits of
such employees and exclusive consultants not generally available to all
employees of the Company; (b) all bonus and incentive compensation paid or
payable (whether by agreement, custom or understanding) to any employee of the
Company not listed in clause (a) above for services rendered or to be
rendered during the calendar years 2004 and 2005 in excess of $100,000 per
annum; (c) the names of all retired employees, if any, of the Company who
are receiving or entitled to receive any healthcare or life insurance benefits
or any payments from the Company not covered by any pension plan to which the
Company is a party, their ages and current unfunded pension rate, if any; and (d) a
description of the current severance and vacation policy of the Company.  The Company has not, because of past
practices or previous commitments with respect to its employees, established
any rights on the part of any of its employees to additional compensation with
respect to any period after the Closing Date (other than wage increases in the
ordinary course of business).


 


Section 3.24                            No
Changes Since the Balance Sheet Date.  From the Balance Sheet Date through the date
hereof, except as specifically stated on Schedule 3.24, the Company
has not and no subsidiary of the Company has (i) permitted any of its
assets to be subjected to any Lien other than Permitted Liens, (ii) sold,
transferred or otherwise disposed of any assets in excess of $50,000, (iii) made
any capital expenditure or commitment therefor which individually or in the
aggregate exceeded $100,000; (iv) made any distributions or dividend payments
on any of its equity securities or equity participation rights, (v) redeemed,
purchased or otherwise acquired any of its equity securities, or any option,
warrant or other right to purchase or acquire any equity securities of the
Company, (vi) made any bonus or profit sharing distribution, (vii) incurred,
increased or prepaid its indebtedness for borrowed money, except current
borrowings under credit lines listed on Schedule 3.9, or made any
loan to any Person other than to any employee for normal travel and expense
advances, (viii) wrote down the value of any work-in-process, or wrote off
as uncollectible any notes or accounts receivable, except write-downs and
write-offs in the ordinary course of business, none of which individually or in
the aggregate, were material to the Company, (ix) granted any increase in
the rate of wages, salaries, bonuses or other remuneration of any employee who,
whether as a result of such increase or prior thereto, received aggregate
compensation from the Company at an annual rate of $200,000 or more, or except
in the ordinary course of business to any other employees, (x) entered into any
employment or exclusive consulting agreement which is not cancelable by the
Company (and will not be cancelable by the Company) without penalty or other
financial obligation within 30 days, (xi) canceled or waived any claims or
rights of material value, (xii) made any material change in any method of
accounting procedures, (xiii) otherwise conducted the Business or entered
into any transaction, except in the usual and ordinary manner and in the
ordinary course of its business, (xiv) amended or terminated any agreement
which, if not terminated, would be required to be disclosed on Schedule 3.9
or Schedule 3.15,
(xv) renewed, extended or modified any lease of real property or any lease of
personal property, except in the ordinary course of its business, (xvi) made or
changed any material Tax election, filed any material amended Tax Return or
settled any material Tax claim, audit or assessment or (xvii) agreed,
whether or not in writing, to do any of the actions set forth in any of the
above clauses.


 


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Section 3.25                            Corporate
Controls.  To the
knowledge of the Company, no officer, authorized agent, employee, consultant or
any other Person while acting on behalf of the Company or any subsidiary of the
Company, has, directly or indirectly: used any corporate fund for unlawful
contributions, gifts, or other unlawful expenses relating to political activity;
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; established or maintained any unlawful or unrecorded fund of
corporate monies or other assets; made any false or fictitious entry on its
books or records; participated in any racketeering activity; or made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful payment of a
similar or comparable nature, to any Person, private or public, regardless of
form, whether in money, property, or services, to obtain favorable treatment in
securing business or to obtain special concessions, or to pay for favorable
treatment for business secured or for special concessions already obtained, and
the Company has not participated in any illegal boycott or other similar
illegal practices affecting any of its actual or potential customers.


 


Section 3.26                            Brokers.  Except as set forth on Schedule 3.26,
no broker, finder, agent or similar intermediary has acted on behalf of the
Sellers or the Company in connection with this Agreement or the transactions
contemplated hereby, and no brokerage commissions, finder’s fees, consulting
fees or similar fees or commissions are payable by the Company or the Sellers
in connection therewith based on any agreement, arrangement or understanding
with any of them.


 


Section 3.27                            Copies
of Documents.  The Sellers
have caused to be made available for inspection and copying by the Purchaser
and its advisers, true, complete and correct copies of all documents referred
to in this Article III or in any Schedule.


 


Section 3.28                            Entire
Business.  The assets
reflected on the Balance Sheet, together with the assets and rights to be
conveyed pursuant to the Intellectual Property Assignment, are sufficient in
all respects to enable the Company to conduct or operate the Business as it is
presently conducted.  As of the Closing
Date, all assets required or necessary to conduct or operate the Business
substantially as it has been reflected on the Financial Statements (including
the notes thereto) as of and for the year ended December 31, 2004 will be
owned or leased by the Company.


 


ARTICLE IV

REPRESENTATIONS OF THE PURCHASER AND MDC PARTNERS


 


The Purchaser and MDC Partners, jointly and severally, represent and
warrant to the Sellers as follows (except the representation and warranties set
forth in Sections 4.6 and 4.7 are made only by MDC Partners and only to Zyman):


 


Section 4.1                                   Existence
and Good Standing.  The
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate power and
authority to own its property and to carry on its business all as and in the
places where such properties are now owned or operated or such business is now
being conducted, except where the failure to be in good standing or so qualify
would not have a material adverse effect on the Purchaser.  MDC Partners is a corporation duly organized,
validly


 


26





















 


existing and in good standing under the laws of Ontario with full
corporate power and authority to own its property and to carry on its business
all as and in the places where such properties are now owned or operated or
such business is now being conducted, except where the failure to be in good
standing or so qualify would not have a material adverse effect on the
Purchaser.


 


Section 4.2                                   Execution
and Validity of Agreement. 
Each of MDC Partners and the Purchaser has the full corporate power and
authority to make, execute, deliver and perform this Agreement and the
transactions contemplated hereby.  The
execution and delivery of this Agreement by MDC Partners and the Purchaser and
the consummation of the transactions contemplated hereby have been duly
authorized by all required corporate action on behalf of the Purchaser.  This Agreement has been duly and validly
executed and delivered by MDC Partners and the Purchaser and, assuming due
authorization, execution and delivery by the Company and the Sellers,
constitutes legal, valid and binding obligations of MDC Partners and the
Purchaser, enforceable against each of them in accordance with its terms,
subject to the Enforceability Exceptions.


 


Section 4.3                                   Litigation;
Solvency.  There is no
action, suit, proceeding at law or in equity by any Person, or any arbitration
or any administrative or other proceeding by or before (or to the knowledge of
the Purchaser, any investigation by), any Governmental or Regulatory Authority
pending or, to the knowledge of MDC Partners and the Purchaser, threatened
against MDC Partners or the Purchaser with respect to this Agreement.  Neither MDC Partners nor the Purchaser is
subject to any Order entered in any lawsuit or proceeding with respect to this
Agreement or the transactions contemplated hereby.


 


Section 4.4                                   Non-Contravention;
Approvals and Consents. 
As of the Closing Date, the execution, delivery and performance by the
Purchaser and MDC Partners of their respective obligations hereunder and the
consummation of the transactions contemplated hereby will not (a) violate,
conflict with or result in the breach of any provision of the articles of
incorporation and bylaws of the Purchaser or MDC Partners, or (b) assuming
the truth and accuracy of the Investment Representation Certificate, result in
the violation by the Purchaser or MDC Partners of any Laws or Orders of any
Governmental or Regulatory Authority applicable to the Purchaser or MDC
Partners or any of its assets or properties, or (c) result in a violation
or breach of, constitute (with or without notice or lapse of time or both) a
default under, or require the Purchaser or MDC Partners to obtain any consent,
approval or action of, make any filing with or give any notice to, or result in
or give to any Person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, or, except for such Liens as may
be created in connection with an MDC Financing, result in the creation or
imposition of any Lien upon any of the respective assets or properties of the
Purchaser or MDC Partners, under any of the terms, conditions or provisions of
any Contract to which the Purchaser or MDC Partners is a party or by which the
Purchaser or MDC Partners or any of its assets or properties are bound, except,
in the case of the foregoing clauses (b) and (c), for any such failures to
be correct that would not be material to the Purchaser or MDC Partners. Except
as set forth on Schedule 4.4, assuming the truth and accuracy of the
Investment Representation Certificate, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority or other
public or private third party is necessary or required under any of the terms,
conditions or provisions of any Law or Order of any Governmental or Regulatory
Authority or any Contract to which the Purchaser or MDC Partners is a party or
by which the Purchaser or MDC Partners or


 


27





















 


any of their respective assets or properties are bound for the
execution and delivery of this Agreement by the Purchaser or MDC Partners, the
performance by the Purchaser or MDC Partners of their respective obligations
hereunder or the consummation by the Purchaser or MDC Partners of the transactions
contemplated hereby, except for such consents, approvals, actions, filings or
notices the failure of which to be obtained or made would not be material to
the Purchaser or MDC Partners.


 


Section 4.5                                           Brokers.  No broker, finder, agent or similar intermediary
has acted on behalf of the Purchaser or MDC Partners in connection with this
Agreement or the transactions contemplated hereby, and no brokerage
commissions, finder’s fees or similar fees or commissions are payable by the
Purchaser or MDC Partners in connection therewith based on any agreement,
arrangement or understanding with either of them.


 


Section 4.6                                           MDC
Stock.


 


4.6.1                        Each share of MDC Stock to be
issued pursuant to the terms of this Agreement will be duly and validly
authorized for issuance by MDC Partners, and upon consummation of the
transactions contemplated hereby will be duly and validly issued, fully paid
and non-assessable, and not issued in violation of any preemptive rights that
have not been waived.  All of the shares
of MDC Stock to be issued pursuant to this Agreement will be (a) issued in
transactions exempted under all applicable Canadian securities laws and in
compliance with the rules and regulations of the Toronto Stock Exchange,
and assuming the accuracy and truthfulness of the representations in Section 3.2,
United States federal and state securities laws and (b) at the time of
issuance, approved for listing on The NASDAQ National Market and the Toronto
Stock Exchange, subject to official notice of issuance and/or the filing of customary
documents and payment of listing fees.


 


4.6.2                        As of December 31, 2004,
the authorized capital stock of MDC Partners consisted of unlimited Class A
Subordinate Voting Shares, unlimited Class B Shares, unlimited preference
shares, issuable in series, 5,000 Series 1 preference shares, 700,000 Series 2
preference shares and unlimited Series 3 preference shares, of which
21,937,871 Class A Subordinate Voting Shares and 2,502 Class B Shares
and no other shares were issued and outstanding as of such date.  All of the issued and outstanding shares of
MDC Stock have been duly and validly issued and are fully paid and
nonassessable, and not issued in violation of any preemptive rights that have
not been waived.


 


Section 4.7                                   MDC
Filings.  MDC Partner’s (i) annual
report on Form 40-F/A for its fiscal year ended December 31,
2003, (ii) quarterly reports on Form 10-Q/A for its fiscal
quarters ended March 31, 2004, June 30, 2004 and on Form 10-Q
for its fiscal quarter ended September 30, 2004, (iii) management
information circular relating to the 2004 annual and special meeting of
shareholders, and (iv) other reports, statements and schedules filed with
the Securities and Exchange Commission (the “SEC”)
since December 31, 2003 and prior to the date hereof are referred to
collectively herein as the “MDC Documents.”  As of their respective dates (or, if amended
or superseded by a filing prior to the date of this Agreement, then on the date
of such amendment or superseding document), the MDC Documents (i) complied
as to form in all material respects with the applicable requirements of the
Securities and Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder and (ii) did not as of


 


28





















 


their respective dates contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, provided that the foregoing clause (ii) shall
not apply to the financial statements included in the MDC Documents (which are
covered by the following sentence).  The
audited consolidated financial statements and unaudited consolidated interim
financial statements included in the MDC Documents have been prepared in
accordance with GAAP (except for the absence of notes and normal and customary
year-end adjustments for the unaudited balance sheet and related statements of
income and cash flow), consistently applied throughout the periods indicated,
and fairly present in all material respects the financial condition of MDC
Partners and its consolidated subsidiaries as their respective dates and the
results of operations for the periods covered thereby in all material respects.  To the knowledge of MDC Partners, the
unaudited consolidated financial statements of MDC Partners for its fiscal year
ended December 31, 2004 included in the March 31, 2005 draft annual
report on Form 10-K for its fiscal year ended December 31, 2004
delivered to Zyman have been prepared in accordance with GAAP, consistently
applied throughout the periods indicated, and fairly present in all material
respects the financial condition of MDC Partners and its consolidated
subsidiaries as their respective dates and the results of operations for the
periods covered thereby in all material respects.


 


Section 4.8                                   Representations
re: Investment in the Units.


 


4.8.1                        Investment.  Purchaser is acquiring the Purchased Units
for its own account, not as a nominee or agent, and not with a view to, of for
sale in connection with, any distribution thereof.  Purchaser understands that the Purchased
Units have not been, and at Closing will not have been, registered under the
Securities Act, or any state securities laws, by reason of specific exemptions
from the registration provisions of the Securities Act.  Purchaser is an “accredited investor” within
the meaning of Rule 501(a) promulgated under the Securities Act.


 


4.8.2                        Investment Experience.  Purchaser represents that it has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Purchased Units, and
has the ability to bear the economic risks of an investment in the Purchased
Units.  Purchaser further represents that
it has had access, during the course of the transactions and prior to the
execution and delivery of this Agreement to all such information as it deemed
necessary or appropriate.


 


ARTICLE V

COVENANTS OF THE PARTIES


 


Section 5.1                                   Conduct
of the Business.


 


5.1.1                        From the date hereof until the
Closing Date, the Company shall and shall cause its subsidiaries to operate in
the ordinary course of business in all material respects unless Purchaser shall
have consented in writing, which consent shall not be unreasonably withheld or
delayed.  Without limiting the generality
of the foregoing, the Company shall and shall cause its subsidiaries to pay
their respective receivables and collect their respective payables in the
ordinary course of business consistent with past practice.


 


29





















 


5.1.2                        From the date hereof until the
Closing Date, except as otherwise provided for by this Agreement or consented
to in writing by Purchaser, the Sellers shall cause the Company not to, and the
Company shall not, nor shall it permit any of its subsidiaries to, (i) issue
or sell any of its or its subsidiaries’ equity interests, (ii) other than
pursuant to the exercise of options outstanding on the date hereof and disclosed
in Schedule 3.4, issue or
sell any securities convertible into, or options with respect to, warrants to
purchase or rights to subscribe for any of its or its subsidiaries’ equity
interests, (iii) effect any recapitalization, reclassification, dividend,
split or like change in its capitalization, (iv) amend its or any of its
subsidiaries’ organizational documents, (v) otherwise voluntarily take any
action that would require disclosure under Section 3.24 hereof (other than
clause (iii)), (vi) declare, make or pay any dividend or other
distribution to the holders of its Units, (vii) make any capital
expenditure or commitment therefor which individually or in the aggregate
exceeds $100,000 or (viii) agree, whether or not in writing, to take any
of the actions set forth in any of the above clauses.


 


Section 5.2                                   Access
to Books and Records.  From the date hereof until the Closing Date,
the Company shall (and shall cause the respective officers, directors,
employees, auditors and agents of the Company and its subsidiaries to provide
Purchaser and its accountants, investment bankers, lenders (including their
counsel), counsel and other authorized representatives (“Purchaser’s
Representatives”) with full access at all reasonable times and upon
reasonable notice to the offices, properties, personnel, books, records and
other information of the Company and its subsidiaries and will cause the
officers of the Company and each of its subsidiaries to furnish to Purchaser
and its Purchaser’s Representatives, promptly upon request therefor, any and
all financial, technical and operating data and other information pertaining to
such entity and otherwise fully cooperate with the conduct of due diligence by
Purchaser and its Purchaser’s Representatives in order for Purchaser to have
the opportunity to make such investigation as it shall desire to make of the
affairs of the Company and its subsidiaries.


 


Section 5.3                                   Regulatory
Filings.  As promptly as
possible after the date of this Agreement, Purchaser, the Company and, if
applicable, the Sellers shall make or cause to be made all filings and
submissions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the “HSR Act”) (requesting termination of the waiting period
thereunder), if required, and any other laws or regulations applicable to
Purchasers, Sellers and the Company for the consummation of the transactions
contemplated herein.  Purchaser, Sellers
and the Company shall coordinate and cooperate in exchanging such information
and assistance as each party may reasonably request in connection with all of
the foregoing.  In furtherance and not in limitation of the
covenants of the Purchaser contained in this Sections 5.3 and in Section 5.7,
Purchaser, Sellers and the Company shall use all reasonable best efforts to
cause the expiration or termination of the applicable waiting periods under the
HSR Act and not to extend any waiting period under the HSR Act.  For purposes of this Section 5.06,
“reasonable best efforts” shall not require any party to agree to dispose of
any of its existing assets or discontinue or alter the operation of its or any
of its affiliates’ businesses as they are currently operated.


 


Section 5.4                                   Conditions.


 


Sellers and the Company
shall use reasonable best efforts to cause the conditions set forth in Sections
6.1 and 6.2 to be satisfied and to consummate the transactions contemplated


 


30





















 


herein.  Purchaser shall use reasonable best efforts
to cause the conditions set forth in Sections 6.1 and 6.3 to be satisfied and
to consummate the transactions contemplated herein.


 


Section 5.5                                   Transfers.  Each Seller agrees that, from and after the
date of this Agreement until the Closing, such Seller shall not sell, convey,
assign, transfer, pledge or otherwise dispose of any Units except as expressly
contemplated by this Agreement.


 


Section 5.6                                   Notification.  From the date hereof until the Closing Date,
the Sellers and the Company shall disclose to Purchaser in writing any
variances from the representations and warranties contained in Article III
and any failure of Sellers or the Company or its subsidiaries, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by any of them under this Agreement, promptly upon
the Sellers’ or the Company’s obtaining knowledge thereof, in any such case,
that will or is reasonably likely to result in the failure to satisfy any of
the conditions, prior to Closing, specified in Article VI of this
Agreement.  The Sellers acknowledge that
Purchaser does not and will not waive any rights it may have under this
Agreement as a result of any such notifications. No supplement or amendment to
any schedule will have any effect for the purposes of determining satisfaction
of the conditions set forth in Section 6.2, liability for breaches of this
Agreement or the indemnification provided for in Article VIII.


 


Section 5.7                                   Consents
and Approvals.


 


5.7.1                        The Company shall use its reasonable best efforts
(including, as soon as practicable, giving any required notices, or making any
required filings) to obtain the consents listed on Schedule 5.7.1 (the “Company
Consents”).


 


5.7.2                        The Purchaser shall use its reasonable best
efforts (including, as soon as practicable, giving any required notices, or
making any required filings) to obtain the consents listed on Schedule 5.7.2 (the “Purchaser Consents”).


 


Section 5.8                                   Further
Assurances.  From time to time, as and when requested by
any party hereto and at such party’s expense, any other party shall execute and
deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions as the requesting party may reasonably deem necessary or desirable to evidence
and effectuate the transactions contemplated by this Agreement.


 


Section 5.9                                   Intellectual
Property Assignment.  The Company and Zyman shall enter into the
intellectual property assignment in form attached hereto as Exhibit 5.9
(the “Intellectual
Property Assignment”), transferring, effective as of the Closing,
ownership of the assets and rights described therein to the Company.


 


Section 5.10                            LLC
Agreement. At the Closing, the Purchaser and MDC Partners shall
execute and deliver, and become party to, the LLC Agreement.


 


Section 5.11                            Accrued
Distributions.  The
Purchaser shall cause the Accountants as soon as practicable after the Closing,
to prepare in accordance with GAAP, a report containing the Closing Balance Sheet, together with a
statement of the Accountants based upon such report which sets forth the
profits of the Company payable to unitholders as of December 31, 2004 that


 


31





















 


have not been distributed as of the Closing Date (the “5% Equity”)
and the PBT (for purposes of this sentence, as such term is defined in the LLC
Agreement) of the Company payable to unitholders from January 1, 2005 up
to the Closing Date that have not been distributed as of the Closing Date (the “Dividends
Payable”) line items from the Company’s balance sheet (the “Special
Determination”).  For purposes
of this Section 5.11, any of the Company’s expenses referred to in Section 9.2
which have not been paid as of the Closing shall be accrued on the Closing
Balance Sheet.  If Zyman does not agree
that the Special Determination correctly states 5% Equity or Dividends Payable,
Zyman shall promptly (but not later than 30 days after the delivery to them of
the Special Determination) give written notice to the Purchaser of any exceptions
thereto (in reasonable detail describing the nature of the disagreement
asserted).  If the Purchaser and Zyman
reconcile their differences, the calculations of 5% Equity and Dividends
Payable shall be adjusted accordingly and shall thereupon become binding, final
and conclusive for purposes of Section 3.4(e) of the LLC
Agreement.  If Zyman and the Purchaser
are unable to reconcile their differences in writing within 20 days after
written notice of exceptions is delivered to the Purchaser (the “Reconciliation
Period”), the items in dispute shall be submitted to a mutually
acceptable accounting firm (other than the Accountants) selected from any of
the four largest accounting firms in the United States in terms of gross
revenues (the “Independent Auditors”) for final determination.  The calculations of 5% Equity and Dividends
Payable shall be deemed adjusted in accordance with the determination of the
Independent Auditors and shall become binding, final and conclusive for
purposes of Section 3.5(e) of the LLC Agreement.  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 the Purchaser may agree) to resolve all items in dispute.  If Zyman does not give written notice of any
exception within 30 days after the delivery to them of the Special
Determination or if Zyman gives written notification of its acceptance of 5%
Equity and Dividends Payable prior to the end of such 30 day period, 5% Equity
and Dividends Payable set forth in the Special Determination shall thereupon
become binding, final and conclusive for purposes of the LLC Agreement.  The determinations of 5%
Equity and Dividends Payable pursuant to the terms of this Section 5.11
shall be binding on all of the members of the Company.


 


ARTICLE VI

CONDITIONS TO CLOSING


 


Section 6.1                                   Conditions
to Closing of the Parties.  The respective obligations of each party to
this Agreement to effect the transactions contemplated by this Agreement is
subject to the satisfaction of the following conditions as of the Closing:


 


6.1.1                        The applicable waiting periods,
if any, under the HSR Act shall have expired or been terminated;


 


6.1.2                        No statute, Law or Order shall
have been enacted or issued by a Governmental or Regulatory Entity after the
date hereof which would impair the full performance of the terms of this
Agreement or the consummation of any of the transactions contemplated hereby,
declare unlawful the transactions contemplated by this Agreement or cause such
transactions to be rescinded and no proceeding or lawsuit will have been
commenced by any Governmental or Regulatory Entity for the purpose of obtaining
any such injunction, writ, judgment, decree or other order and no written
notice will have been received from any Governmental or Regulatory


 


32





















 


Entity indicating an intent to restrain, prevent or restructure the
transactions contemplated by this Agreement; and


 


6.1.3                        All consents, approvals, orders
or authorizations of, or registrations, declarations or filings with, any
Governmental or Regulatory Entity required in connection with the execution,
delivery or performance of this Agreement will have been obtained or made,
except where the failure to obtain such consents, approvals, orders,
authorizations, registrations, declarations or filings would not reasonably be
expected to be materially adverse to the Company, the Sellers, MDC Partners or
the Purchaser or the transactions contemplated under this Agreement.


 


Section 6.2                                   Conditions
to Purchasers’ Obligations.  The obligation of the Purchaser to consummate
the transactions contemplated by this Agreement is subject to the satisfaction
of the following conditions as of the Closing:


 


6.2.1                        The representations and warranties of
the Company and the Sellers contained herein shall be true and correct (without
regard to any qualification in such representations and warranties by “Material
Adverse Effect”, “Seller Material Adverse Effect”, “Zyman Material Adverse
Effect”, “in all material respects” or other similar materiality qualifiers) as
of the date hereof and as of the Closing Date with the same effect as though
made on the Closing Date (other than those representations and warranties that
address matters as of particular dates which shall be true and correct at and
as of such particular dates), with such exceptions to be true and correct as
would not, individually or in the aggregate, have a Material Adverse Effect,
Seller Material Adverse Effect or Zyman Material Adverse Effect; provided, that
the representations and warranties in Section 3.1.5 shall be true and
correct in all respects as of the Closing Date as though then made and as
though the Closing Date was substituted for the date of this Agreement
throughout such representation and warranties. 
Zyman shall have delivered to the Purchaser a certificate, dated the
Closing Date, to the foregoing effect.


 


6.2.2                        The Company and the Sellers shall
have performed and complied in all material respects with all agreements
contained herein required to be performed or complied with by them on or before
the Closing Date and the Company and Zyman shall have delivered to the
Purchaser a certificate, dated the Closing Date, to such effect.


 


6.2.3                        Between the date hereof and the
Closing Date, there shall not have occurred any event or change which would
reasonably be expected to have a Material Adverse Effect on the Company and its
subsidiaries or which would adversely affect the Company’s or any Seller’s
ability to consummate the transactions contemplated in this Agreement or in any
Other Agreement in any material respect, and Zyman shall have delivered to the
Purchaser a certificate, dated the Closing Date, to such effect.  For purposes of this Section 6.2.3, “Material
Adverse Effect” shall not include any change to the extent relating to or
arising from any change in laws or regulation or change in enforcement thereof
after the date of this Agreement.


 


6.2.4                        The Company shall have obtained
or given, at no expense to the Purchaser or MDC Partners all of the Company
Consents, and there shall not have been withdrawn or modified, any Company
Consent.  Each such consent or approval
shall be in form satisfactory to counsel for the Purchaser.


 


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6.2.5                        The transfer of intellectual
property shall have been completed pursuant to and in accordance with the
Intellectual Property Assignment.


 


6.2.6                        The Purchaser shall have received
the opinion of Jones Day, counsel to the Company and the Sellers, dated as of
the Closing Date, substantially in the form and to the effect of Exhibit 6.2.6 hereto.


 


6.2.7                        The Company shall be the beneficiary
of one or more “key man” life insurance policies providing no less than $30
million in benefits in the aggregate upon the death of Sergio Zyman.


 


6.2.8                        Each of the transactions described
in this Agreement shall have been consummated in a manner satisfactory to the
Purchaser and Seller shall have provided evidence of same reasonably
satisfactory to Purchaser and its counsel.


 


6.2.9                        The Company shall have executed the
documentation required under Section 7.1.


 


6.2.10                  Sergio Zyman and the Company shall
have executed the employment agreement in the form of Schedule 6.2.10 and Sergio Zyman shall
be actively employed by the Company.


 


Section 6.3                                   Conditions
to the Sellers’ Obligations.  The obligation of the Sellers to consummate
the transactions contemplated by this Agreement is subject to the satisfaction
of the following conditions as of the Closing:


 


6.3.1                        The representations and warranties
of the MDC Partners and the Purchaser contained herein shall be true and
correct (without regard to any qualification in such representations and
warranties by “material adverse effect” or other similar materiality
qualifiers) as of the date hereof and as of the Closing Date with the same
effect as though made on the Closing Date (other than those representations and
warranties that address matters as of particular dates which shall be true and
correct at and as of such particular dates), with such exceptions to be true
and correct as would not, individually or in the aggregate, have a material
adverse effect on the Purchaser.


 


6.3.2                        MDC Partners and the Purchaser shall
have performed and complied in all material respects with all agreements contained
herein required to be performed or complied with by them on or before the
Closing Date, and MDC Partners and the Purchaser shall have delivered to Zyman
a certificate, dated the Closing Date, to such effect.


 


6.3.3                        The Company shall have received the opinions
of counsel to the Purchaser, dated as of the Closing Date, substantially in the
form and to the effect of Exhibit 6.3.3
hereto.


 


ARTICLE VII

OTHER AGREEMENTS 


 


Section 7.1                                   MDC
Financing.


 


Notwithstanding anything
to the contrary contained in this Agreement, in consideration for the payment
of the Purchase Price under Section 2.1 hereof and for other good


 


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and valuable
consideration, the parties hereto hereby (i) agree that MDC Partners
and/or one 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 the Purchased Units; (x) pledge or grant a
security interest in or to otherwise have a Lien placed upon the assets and
properties of the Company and/or its subsidiaries (if any); (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 the Puts and Calls (as such terms are defined in the LLC Agreement) to or
to an agent or representative on behalf of, its bank or lender or group of
banks or group of lenders (as applicable and collectively, the “Lender”);
and (z) have the Company and/or its subsidiaries (if any) 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) consents
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 Units which have
been pledged or assigned by it.


 


Section 7.2                                   Tax Matters.


 


7.2.1                        Allocation.  The Purchaser shall prepare an allocation of
the Purchase Price (and of other capitalized costs) among the assets of the Company
pursuant to the election under Section 754 of the Code and the Treasury
Regulations thereunder (or comparable provisions of state, local or foreign
law) (the “Section 754 Election”) described in Section 7.2.2
hereunder and in accordance with Section 755 of the Code and other
applicable provisions of the Code and Treasury Regulations thereunder (the “Purchase
Price Allocation”).  The
Purchase Price Allocation shall be adjusted as necessary to take into account
any payments, including the Additional Payment, appropriately treated as
purchase price pursuant to U.S. federal Tax law and any analogous provision of
foreign, state or local law.


 


7.2.2                        754 Election.  In cooperation with the Purchaser, the
Company, which is classified as a partnership for U.S. federal income Tax
purposes (and for applicable state and local income Tax purposes), shall file a
valid Section 754 Election, which Section 754 Election shall be filed
by the Company with its U.S. federal income tax return for the taxable year
that includes the Purchaser’s acquisition of the Purchased Unit and shall be
effective for such year (unless such entity already has a valid Section 754
Election in effect and filed with the Internal Revenue Service) and any other
forms necessary for the completion of a valid Section 754 Election
effective as of such taxable year, and shall not take any action or position
inconsistent with such Section 754 Election on any Tax Return or before
any taxing authority.


 


7.2.3                        Tax Cooperation.  The Purchaser, the Company, and the Sellers
shall cooperate fully, as and to the extent reasonably requested by the other
party, in connection with the filing of Tax Returns relating to the operations
of the Company and its subsidiaries, and any audit, litigation or other
proceeding with respect to Taxes.  Such
cooperation shall include the retention and (upon the other party’s request)
the provision of records and information which are reasonably relevant to any
such audit, litigation or other proceeding and making employees


 


35





















 


available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.  The Company and the Sellers agree (A) to
retain all books and records with respect to Tax matters pertinent to the
Company and its subsidiaries relating to any taxable period beginning before
the Closing Date until the expiration of the statute of limitations (and, to
the extent notified by the Purchaser, any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements entered into
with any taxing authority, and (B) to give the other party reasonable
written notice prior to transferring, destroying or discarding any such books
and records and, if the other party so requests, the Company and the Sellers
shall allow the other party to take possession of such books and records.


 


7.2.4                        Tax Liability.  To the extent that any of the transactions contemplated by this
Agreement gives rise to sales and/or use tax liability or other transfer,
purchase, stamp or recordation documentary tax and fees (collectively, “Sales
Taxes”), the Sellers shall promptly pay such Sales Taxes to the
appropriate tax authorities.  The Sellers
shall cause the Company to deliver to the Purchaser completed returns in
respect of any Sales Taxes required to be filed with respect to the
transactions contemplated herein (regardless of whether such returns are
informational or show Sales Tax liability) for filing with the appropriate taxing
authority.


 


7.2.5                        Pre-Closing Taxes.  Unless accrued for on the books of the
Company as Taxes payable (including income and franchise Taxes) by the Company,
Sellers shall pay (i) all Taxes of the Company for all Taxable periods
ending on or before the Closing Date and the portion through the end of the
Closing Date for any Taxable period that includes (but does not end on) the
Closing Date, (ii) all Taxes of any member of an affiliated, consolidated,
combined or unitary group of which the Company is or was a member on or prior
to the Closing Date; (iii) any and all Taxes of any person imposed on the
Company for any period as a transferee or successor in respect of a transaction
occurring on or before the Closing Date, by law, contract, or otherwise; and (iv) any
Taxes imposed upon and payable by the Company for any period ending on or
before the Closing Date, which Taxes are attributable to the issuance of
options, the exercise of options, or the exchange of units of Nevada LLC for Class B
Units pursuant to the Merger.


 


Section 7.3                                   Zyman
Activities.  Zyman
shall not (i) conduct any business or have any assets or liabilities other
than its ownership of the Units and the MDC Stock and its performance of its
obligations under this Agreement and ownership of cash or marketable securities
not representing more than 1% of the issued and outstanding stock of any public
company, (ii) transfer any Units other than in accordance with the LLC
Agreement, (iii) liquidate, dissolve or wind-up or take any action in
connection therewith, or (iv) transfer any of its assets (other than the
Units the transfer of which shall be governed by the LLC Agreement) to any
Person other than its direct stockholders provided that in connection with any
such transfer to its direct stockholders, the transferee shall execute a
guaranty with respect to Zyman’s indemnification obligations under Article VIII
which guaranty shall be in form and substance reasonably satisfactory to the
Purchaser and which shall provide that the transferee is jointly and severally
liable with Zyman and that the transferee shall not make any further transfers
of such transferred amounts; provided, that such transferee’s liability under
such guaranty shall not exceed (A) in the case of any stockholder of Zyman
that is a trust, the lesser of (1) the fair market value of such
transferred assets received by it and (2) the total liability of Zyman
under this Agreement multiplied by the percentage of Zyman’s outstanding shares
owned by such transferee and (B) in the case of any other stockholder of
Zyman, the fair market value of such


 


36





















 


transferred assets; provided
further that, with respect to a transfer to a trust described in clause (A), SZ
hereby agrees to provide a guaranty with respect to Zyman’s indemnification
obligations for an amount equal to the positive difference, if any, between the
fair market value of the assets transferred to such trust and the amount of
liability assumed by such trust pursuant to the guaranty executed by such
trust.


 


ARTICLE VIII


SURVIVAL; INDEMNITY


 


Section 8.1                                   Survival.  Notwithstanding any right of any party hereto
fully to investigate the affairs of any other party, and notwithstanding any
knowledge of facts determined or determinable pursuant to such investigation or
right of investigation, each party hereto shall have the right to rely fully
upon the representations, warranties, covenants and agreements of the other
parties contained in this Agreement and the Schedules, if any, furnished by any
other party pursuant to this Agreement, or in any certificate or document
delivered at the Closing by any other party. 
The respective representations, warranties, covenants and agreements of
the Sellers, the Company, the Purchaser and MDC Partners contained in this
Agreement shall survive the Closing as follows:


 


8.1.1                        the representations and
warranties in this Agreement and any covenant or agreement to be performed
prior to the Closing shall survive until the later to occur of the first
anniversary of the Closing Date, or 90 days after the issuance of audited
financial statements for the Company, at and for the period ending, December 31,
2005; provided, that the representations and warranties set forth in Section 3.12
shall survive for a period of ninety days after the termination of the
applicable statute of limitations period and; provided, further that the
representations and warranties set forth in Sections 3.1.1, 3.1.2, the last
sentence of 3.1.3, 3.1.5, 3.2, 3.3, 3.4, 3.24(iv), 3.26, 4.1, 4.2, and 4.5 and Section 4.6.1
and the covenant set forth in Section 5.1.2(vi) shall not terminate;


 


8.1.2                        any covenant or agreement to be
performed after the Closing shall survive the Closing in accordance with its
terms.


 


No claim for indemnification hereunder for
breach of any such representations, warranties, covenants or agreements may be
made after the expiration of the survival period applicable to such claims;
provided, that any claim for indemnification for which notice has been given
within the prescribed period may be prosecuted to conclusion notwithstanding
the subsequent expiration of such period.


 


Section 8.2                                   Obligation
of the Sellers to Indemnify.


 


8.2.1                        General Indemnity.
Subject to the limitations contained in Sections 8.1 and 8.6.1, each of the
Sellers, jointly and severally (with respect to clauses (a) and (b) below)
and Zyman only (with respect to clause (c) below), hereby agrees to
indemnify the Purchaser and its affiliates (including the Company),
stockholders, officers, directors, employees, agents, representatives and
successors, permitted assignees of the Purchaser and their affiliates
(individually, a “Purchaser Indemnified Party” and collectively, the “Purchaser
Indemnified


 


37





















 


Parties”) against,
and to protect, save and keep harmless the Purchaser Indemnified Parties from,
and to pay on behalf of or reimburse the Purchaser Indemnified Parties as and
when incurred for, any and all liabilities (including liabilities for Taxes),
obligations, losses, damages, penalties, demands, claims, actions, suits,
judgments, settlements, penalties, interest, out-of-pocket costs, expenses and
disbursements (including reasonable costs of investigation, and reasonable
attorneys’, accountants’ and expert witnesses’ fees) of whatever kind and
nature (collectively, “Losses”), that may be imposed on
or incurred by any Purchaser Indemnified Party as a consequence of, in
connection with, incident to, resulting from or arising out of or in any way
related to or by virtue of (a) any breach of any warranty or
representation contained in Article III B hereof or in any certificate
delivered by Zyman on behalf of the Sellers at the Closing; (b) any breach
or failure by the Company to comply with, perform or discharge any obligation,
agreement or covenant by the Company contained in this Agreement required to be
performed on or prior to the Closing Date and (c) any breach or failure by
the Company to comply with, perform or discharge any obligation, agreement or
covenant by the Company contained in this Agreement to be performed after the
Closing Date; provided, that, for purposes of clause (a) above, any
qualification of such representations and warranties by reference to the
materiality of matters stated therein, or words of similar effect, shall be
disregarded in determining a breach thereof; provided, that, with respect to
any Losses suffered by the Company or any subsidiary of the Company, the amount
of such Losses payable to any Purchaser Indemnified Party (other than the
Company, in which case the Losses payable shall be 100% of such Losses) shall
equal 61.65% of the aggregate amount of Losses suffered by the Company.


 


8.2.2                        Special
Indemnification.  Subject to the
limitations contained in Sections 8.1 and 8.6.1, each of the Sellers hereby
severally agrees to indemnify the Purchaser Indemnified Parties against, and to
protect, save and keep harmless the Purchaser Indemnified Parties from, and to
assume liability for, the payment of all Losses that may be imposed on or incurred
by any Purchaser Indemnified Party as a consequence of or in connection with,
incident to, resulting from or arising out of or in any way related to or by
virtue of: (a) any breach of a representation or warranty by such Seller
contained in Article III A hereof; and (b) any breach or failure by
such Seller to comply with, perform or discharge any obligation, agreement or
covenant by such Seller contained in this Agreement; provided, that, for
purposes of clause (a) above, any qualification of such representations
and warranties by reference to the materiality of matters stated therein, or
words of similar effect, shall be disregarded in determining a breach
thereof.  Any claim for indemnity made
under this Section 8.2.2 shall not be construed as a claim under Section 8.2.1
hereof even if the Purchaser Indemnified Party could have made a claim under Section 8.2.1
hereof in respect of the same matters.


 


8.2.3                        “Losses”.
The term “Losses” as used in this Article VIII is not limited to
matters asserted by third parties against any Purchaser Indemnified Party but
includes Losses incurred or sustained by a Purchaser Indemnified Party in the
absence of Third Party Claims (as defined in Section 8.4.2 hereof).


 


Section 8.3                                   Obligation
of the Purchaser and MDC Partners to Indemnify.  Subject to the limitations set forth in Section 8.1
and 8.6.1 hereof, the Purchaser and MDC Partners hereby agree, jointly and
severally, to indemnify the Sellers (individually a “Seller
Indemnified Party” and collectively, the “Seller Indemnified
Parties”) against, and to protect, save and keep harmless the Seller
Indemnified Parties from, and to pay on behalf of or reimburse


 


38





















 


the Seller Indemnified Parties as and when incurred for, any and all
Losses that may be imposed on or incurred by the Seller Indemnified Parties as
a consequence of, in connection with, incident to, resulting from or arising
out of or in any way related to or by virtue of: (a) any breach of any
warranty or representation of the Purchaser or MDC Partners contained in Article IV
hereof or in any certificate delivered by the Purchaser at the Closing; and (b) any
breach or failure by the Purchaser or MDC Partners to comply with, perform or
discharge any obligation, agreement or covenant by the Purchaser or MDC
Partners contained in this Agreement; provided, that, for purposes of clause (a) above,
any qualification of such representations and warranties by reference to the
materiality of matters stated therein, or words of similar effect, shall be
disregarded in determining a breach thereof.


 


Section 8.4                                   Indemnification
Procedures.


 


8.4.1                        Non-Third Party Claims.


 


(a)                                  In the event that any
Person entitled to indemnification under this Agreement (an “Indemnified Party”) asserts a claim for indemnification
which does not involve a Third Party Claim (as defined in Section 8.4.2)
(a “Non-Third Party Claim”), against which
a Person is required to provide indemnification under this Agreement (an “Indemnifying Party”), the Indemnified Party shall give
written notice to the Indemnifying Party (the “Non-Third
Party Claim Notice”), which Non-Third Party Claim Notice shall (i) describe
the claim in reasonable detail, and (ii) indicate the amount (estimated,
if necessary, and to the extent feasible) of the Losses that have been or may
be suffered by the Indemnified Party.


 


(b)                                 The Indemnifying Party
may acknowledge and agree by written notice (the “Non-Third
Party Acknowledgement of Liability”) to the Indemnified Party to
satisfy the Non-Third Party Claim within 30 days of receipt of the Non-Third
Party Claim Notice.  In the event that
the Indemnifying Party disputes the Non-Third Party Claim, the Indemnifying
Party shall provide written notice of such dispute (the “Non-Third
Party Dispute Notice”) to the Indemnified Party within 30 days of
receipt of the Non-Third Party Claim Notice (the “Non-Third
Party Dispute Period”), setting forth a reasonable basis of such
dispute.  In the event that the
Indemnifying Party shall fail to deliver the Non-Third Party Acknowledgement of
Liability or Non-Third Party Dispute Notice within the Non-Third Party Dispute
Period, the Indemnifying Party shall be deemed to have acknowledged and agreed
to pay the Non-Third Party Claim in full and to have waived any right to
dispute the Non-Third Party Claim.  Once
the Indemnifying Party has acknowledged and agreed to pay any Non-Third Party
Claim pursuant to this Section 8.4.1, or once any dispute under this Section 8.4.1
has been finally resolved in favor of indemnification by a court or other
tribunal of competent jurisdiction, subject to the provisions of Section 8.6.1,
the Indemnifying Party shall pay the amount of such Non-Third Party Claim to
the Indemnified Party within 10 days of the date of acknowledgement or
resolution, as the case may be, to such account and in such manner as is
designated in writing by the Indemnified Party.


 


8.4.2                        Third-Party Claims.


 


(a)                                  In the event that any
Indemnified Party asserts a claim for indemnification or receives notice of the
assertion of any claim or of the commencement of any action or proceeding by
any Person who is not a party to this Agreement or an affiliate of a party to
this


 


39





















 


Agreement in respect of which such Indemnified Party is entitled to
indemnification by an Indemnifying Party under this Agreement (a “Third Party Claim”), the Indemnified Party shall give
written notice to the Indemnifying Party (the “Third Party
Claims Notice”) as promptly as practicable and, in any such event,
not later than 10 days after asserting or learning of such Third Party Claim,
together with a statement specifying the basis of such Third Party Claim.  The Third Party Claim Notice shall (i) describe
the claim in reasonable detail, and (ii) indicate the amount (estimated,
if necessary, and to the extent feasible) of the Losses that have been or may
be suffered by the Indemnified Party. The Indemnifying Party must provide
written notice to the Indemnified Party that it is either (i) assuming responsibility
for the Third Party Claim or (ii) disputing the claim for indemnification
against it (the “Indemnification Notice”).  The Indemnification Notice must be provided
by the Indemnifying Party to the Indemnified Party as promptly as practicable and,
in any such event, not later than 30 days after receipt of the Third Party
Claims Notice (the “Indemnification Notice
Period”).


 


(b)                                 If the Indemnifying
Party provides an Indemnification Notice to the Indemnified Party within the
Indemnification Notice Period that it assumes responsibility for the Third
Party Claim, the Indemnifying Party shall conduct at its expense the defense
against such Third Party Claim in its own name, or if necessary in the name of
the Indemnified Party.  The Defense
Notice shall specify the counsel it will appoint to defend such claim (“Defense Counsel”); provided, however, that
the Indemnified Party shall have the right to approve the Defense Counsel,
which approval shall not be unreasonably withheld or delayed.  In the event that the Indemnifying Party
fails to give the Indemnification Notice within the Indemnification Notice
Period, the Indemnified Party shall have the right to conduct the defense and
to compromise and settle such Third Party Claim without the prior consent of
the Indemnifying Party and subject to the provisions of Section 8.6.1, the
Indemnifying Party will be liable for all costs, expenses, settlement amounts
or other Losses paid or incurred in connection therewith.


 


(c)                                  In the event that the
Indemnifying Party disputes the claim for indemnification against it, the
Indemnified Party shall have the right to conduct the defense and to compromise
and settle such Third Party Claim, without the prior consent of the
Indemnifying Party. Once such dispute has been finally resolved in favor of
indemnification by a court or other tribunal of competent jurisdiction or by
mutual agreement of the Indemnified Party and Indemnifying Party, subject to
the provisions of Section 8.6.1, the Indemnifying Party shall within 10
days of the date of such resolution or agreement, pay to the Indemnified Party
all Losses paid or incurred by the Indemnified Party in connection therewith.


 


(d)                                 In the event that the
Indemnifying Party delivers an Indemnification Notice pursuant to which it elects
to conduct the defense of the Third Party Claim, the Indemnifying Party shall
be entitled to have the exclusive control over the defense of the Third Party
Claim and the Indemnified Party will cooperate in good faith with and make
available to the Indemnifying Party such assistance and materials as it may
reasonably request, all at the expense of the Indemnifying Party.  The Indemnified Party shall have the right at
its expense to participate in the defense assisted by counsel of its own
choosing.  The Indemnifying Party will
not settle the Third Party Claim or cease to defend against any Third Party
Claim as to which it has delivered an Indemnification Notice (as to which it
has assumed responsibility for the Third Party Claim), without the prior written
consent of the Indemnified Party if, as a result of such settlement or
cessation of defense, (i) injunctive relief or specific performance would
be imposed


 


40





















 


against the Indemnified Party, or (ii) such settlement or
cessation would lead to liability or create any financial or other obligation
on the part of the Indemnified Party for which the Indemnified Party is not
entitled to indemnification hereunder.


 


(e)                                  If an Indemnified
Party refuses to consent to a bona fide offer of settlement which the
Indemnifying Party wishes to accept, which provides for a full release of the
Indemnified Party and its affiliates relating to the Third Party Claims
underlying the offer of settlement and solely for a monetary payment, the
Indemnified Party may continue to pursue such matter, free of any participation
by the Indemnifying Party, at the sole expense of the Indemnified Party. In
such an event, the obligation of the Indemnifying Party shall be limited to the
amount of the offer of settlement which the Indemnified Party refused to accept
plus the reasonable costs and expenses of the Indemnified Party incurred prior
to the date the Indemnifying Party notified the Indemnified Party of the offer
of settlement.


 


(f)                                    A failure by an
Indemnified Party to give timely, complete or accurate notice as provided in
this Section 8.4 will not affect the rights or obligations of any party
hereunder except and only to the extent that, as a result of such failure, any
party entitled to receive such notice was deprived of its right to recover any
payment under its applicable insurance coverage or was otherwise directly and
materially damaged as a result of such failure to give timely notice.


 


8.4.3                        Manner of Payment.  Any indemnification of a Purchaser
Indemnified Party by one or more Seller(s) pursuant to this Article VIII
shall first be disbursed from such Seller(s)’ portion of the Escrow Amount in
accordance with the Escrow Agreement up to (and in no event exceeding) an
amount equal to such Seller(s)’ pro rata portion (based on the applicable
Seller Percentage(s)) of the Escrow Amount (taking into account any prior
disbursements from such Seller(s)’ portion of the Escrow Amount) and after
there are no assets available for disbursement from the Escrow Account,
indemnification shall be effected by wire transfer of immediately available
funds or delivery of shares from the applicable individual Seller to an account
designated by such Purchaser Indemnified Party within 10 days after the determination
thereof pursuant to the procedures of this Article VIII.  For purposes of the preceding sentence, to
the extent that Zyman is to satisfy all or a portion of its indemnity claim
with shares of MDC Stock, the number of shares of MDC Stock which shall be
disbursed to any Purchaser Indemnified Party out of the Escrow Share Amount
shall be the number of shares of MDC Stock equal to the cash amount owed by
Zyman to such Purchaser Indemnified Party, based on the Market Price of a share
of MDC Stock as of the date on which such shares are released to any Purchaser
Indemnified Party.  Any indemnification
of a Seller Indemnified Party pursuant to this Article VIII shall be
effected by wire transfer of immediately available funds from the Purchaser to
account(s) designated by such Seller Indemnified Party within 10 days after the
determination thereof pursuant to the procedures of this Article VIII.


 


Section 8.5                                   Right of
Offset.  Without limiting
any other rights or remedies available to it, the Purchaser shall be entitled,
subject to the limitations set forth in Section 8.6, to offset any claim
for indemnity made pursuant to Section 8.2 and in accordance with Section 8.4,
against any payment of the Purchase Price due under Section 2.1; provided,
however, the Purchaser may only exercise such right of offset in respect of
claims relating to Losses which have been determined to be subject to
indemnification by the Seller in accordance with the procedures set forth in Section 8.4.


 


41





















 


Section 8.6                                   Limitations
On and Other Matters Regarding Indemnification.


 


8.6.1                        Indemnity Cushion and Cap; Sole
and Exclusive Remedy.


 


(i)                                     Subject
to Section 8.6.3, no Seller shall have any liability to any Purchaser
Indemnified Party under Section 8.2 of this Agreement until such time as
the total amount of Losses incurred by the Purchaser Indemnified Parties
arising out of the matters referred to in Sections 8.2.1 and 8.2.2 exceeds
$650,000, at which time each Seller shall be liable for all Losses under Section 8.2.1,
and shall be liable for all Losses under Section 8.2.2 in connection with
breaches by such Seller, in excess of the product of such Seller’s Seller
Percentage multiplied by $650,000.  Subject to Section 8.6.3, the maximum
aggregate liability of each Seller under Section 8.2 of this Agreement
shall be equal to such Seller’s Seller Percentage multiplied by $6,500,000
(the “Cap”).


 


(ii)                                  Subject
to Section 8.6.3, the Purchaser shall not have any liability to any Seller
Indemnified Party with respect to Losses arising out of any of the matters
referred to in Section 8.3 until such time as the amount of such liability
shall exceed $650,000 in the aggregate (in which case the Purchaser shall be
liable for all Losses in excess of $650,000). 
Notwithstanding anything to the contrary herein, subject to Section 8.6.3,
the maximum aggregate liability of the Purchaser for indemnity payments under
this Agreement and in connection with the transactions contemplated hereby
shall be equal to the Cap.


 


(iii)                               Notwithstanding
anything herein to the contrary, no Indemnifying Party Sellers shall be liable
to any Indemnified Party for indirect damages for “lost profits” or loss of
business opportunity or special, punitive or exemplary losses, other than to
the extent that any such damages or losses arise out of a Third Party Claim.


 


(iv)                              The
indemnification provided for in this Article VIII shall be the sole and
exclusive remedy for any breach of this Agreement by any party hereto, other
than for fraud.


 


8.6.2                        Treatment. Any indemnity
payments by an Indemnifying Party to an Indemnified Party under this Article VIII
shall be treated by the parties as an adjustment to the Purchase Price.


 


8.6.3                        Exceptions. Each of the
limitations set forth above in this Section 8.6 shall in no event (a) apply
to any Losses incurred by a Purchaser Indemnified Party which relate, directly
or indirectly, to (i) any fraudulent acts committed by the Company or any
Seller; (ii) any breach of a representation or warranty contained in
Sections 3.1.1, 3.1.2, the last sentence of Section 3.1.3, 3.1.5, 3.2,
3.3, 3.4, 3.12 or any other provision hereof relating to Taxes, 3.24(iv) or
3.26, (iii) any indemnification obligation under Sections 8.2.1(b), 8.2.1(c) or
8.2.2(b); and (iv) the obligations of the Sellers and the Company set
forth in Section 9.2 to pay their respective expenses; or (b) apply
to any Losses incurred by the Seller Indemnified Parties which relate, directly
or indirectly, to (i) any fraudulent acts committed by the Purchaser; (ii) any
breach of a representation or warranty contained in Section 4.1, 4.2, 4.5
or Section 4.6.1, (iii) any indemnification obligation under Section 8.3(c);
and (iv) the Purchaser’s obligations set forth in


 


42





















 


Section 9.2 to pay its expenses; provided, that no Management
Seller’s liability with respect to the provisions set forth in Section 8.6.3(a)(ii) (other
than Sections 3.1.1, 3.1.2, 3.1.3, 3.1.5) or Section 8.6.3(a)(iii) shall
exceed the portion of the Purchase Price received by such Management Seller;
and, provided further that Zyman shall be liable for the amount of any Loss
incurred by a Purchaser Indemnified Party which would be subject to
indemnification but for the limitation set forth in the immediately proceeding
proviso.


 


8.6.4                        Control by MDC Partners.
All decisions and determinations to be made by the Purchaser and/or a Purchaser
Indemnified Party under this Article VIII shall be made by MDC Partners in
the name of and on behalf of the Purchaser and/or such other Purchaser
Indemnified Party.


 


8.6.5                        Tax and Insurance Effects.  Any indemnity payment due and payable by an
Indemnifying Party under this Article VIII shall be decreased to the
extent of any net actual reduction in Taxes payable by the Indemnified Party
upon its payment of Losses, and taking into account the tax consequences to the
Indemnified Party of the receipt of any indemnity payment due and payable by
the Indemnifying Party under this Article VIII.  In addition, any amounts otherwise required
to be paid by an Indemnifying Party under this Article VIII shall be net
of any insurance proceeds received by the Indemnified Party in respect of such
Losses.


 


ARTICLE IX

MISCELLANEOUS


 


Section 9.1                                   Termination.This
Agreement may be terminated at any time prior to the Closing:


 


(i)                                     in
writing by the mutual written consent of Purchaser and Zyman;


 


(ii)                                  by
Purchaser, if there has been a material violation or breach by any Sellers or
the Company of any covenant, representation or warranty contained in this
Agreement which would be reasonably likely to prevent the satisfaction of any
condition to the obligations of Purchaser at the Closing and such violation or
breach has not been waived by Purchaser or, in the case of a covenant breach, cured
by the Sellers or the Company within fifteen days after written notice thereof
from Purchaser;


 


(iii)                               by
Zyman, if there has been a material violation or breach by Purchaser or MDC
Partners of any covenant, representation or warranty contained in this Agreement
which would be reasonably likely to prevent the satisfaction of any condition
to the obligations of the Sellers or the Company at the Closing and such
violation or breach has not been waived by Zyman or, in the case of a covenant
breach, cured by Purchaser within fifteen days after written notice thereof by
Zyman; or


 


(iv)                              by
either Zyman or Purchaser if a Governmental or Regulatory Entity shall have
issued a judgment, decree or order or taken any other action, in each case
which has become final and non-appealable and which restrains or otherwise
prohibits the sale of the Purchased Units to Purchaser.


 


43





















 


9.1.2                        Effect of Termination.  In the event of termination of this Agreement
by either Purchaser or Sellers as provided above, the provisions of this
Agreement shall immediately become void and of no further force and effect
(other than this Section 9.1 and Section 9.2 which shall survive the
termination of this Agreement), and there shall be no liability on the part of
any of the Purchaser, the Company, or the Sellers to one another, except for
knowing or willful breaches of this Agreement prior to the time of such
termination.


 


Section 9.2                                   Expenses.  Except as otherwise provided in this
Agreement, the Purchaser and MDC Partners, on the one hand, and the Company, on
the other hand, shall pay their own expenses relating to the transactions
contemplated by this Agreement, including, without limitation, the fees and
expenses of their respective counsel, financial advisors and accountants.  The expenses of the Sellers related to the
transactions contemplated by this Agreement shall be paid or accrued prior to
Closing by the Company including, without limitation, the fees and expenses of
Jones Day, counsel to Zyman, and Burr & Forman LLP, counsel to the
Management Sellers.


 


Section 9.3                                   Governing
Law.  The interpretation
and construction of this Agreement, and all matters relating hereto (including,
without limitation, the validity or enforcement of this Agreement), shall be
governed by the laws of the State of New York.


 


Section 9.4                                   “Person”
Defined.  “Person”
shall mean and include an individual, a company, a joint venture, a corporation
(including any non-profit corporation), an estate, an association, a trust, a
general or limited partnership, a limited liability company, a limited
liability partnership, an unincorporated organization and a government or other
department or agency thereof.


 


Section 9.5                                   “Knowledge”
Defined.  Where any
representation and warranty contained in this Agreement is expressly qualified
by reference to the knowledge of the Sellers, such term shall be limited to the
actual knowledge of the Sellers (or, in the case of Zyman, Sergio Zyman).  Where any representation and warranty
contained in this Agreement is expressly specified by reference to the
knowledge of the Company, such term shall be limited to the actual knowledge of
Sergio Zyman, Jeff Pruett, Craig Binkley, Arthur Ash and Lee White.  Where any representation and warranty in this
Agreement is expressly specified by reference to the knowledge of the
Purchaser, such term shall be limited to the actual knowledge of the executive
officers of the Purchaser, as the case may be. 
Unless otherwise stated, actual knowledge shall be deemed to include
knowledge that would have been discovered after reasonable inquiry of other
employees.


 


Section 9.6                                   “Affiliate”
Defined.  As used in this
Agreement, an “Affiliate” or “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.


 


Section 9.7                                   Captions.  The Article and Section captions
used herein are for reference purposes only, and shall not in any way affect
the meaning or interpretation of this Agreement.


 


44





















 


Section 9.8                                   Publicity.  Subject to the provisions of the next
sentence, no party to this Agreement shall, and the Sellers shall use
reasonable efforts to insure that no representative of the Company shall issue
any press release or other public document or make any public statement
relating to this Agreement or the matters contained herein without obtaining
the prior approval of MDC Partners and the Sellers.  Notwithstanding the foregoing, the foregoing
provision shall not apply to the extent that MDC Partners is required to make
any announcement relating to or arising out of this Agreement by virtue of the
securities laws of the United States or Canada or the rules and
regulations promulgated thereunder or other rules of the NASDAQ Stock
Market, Toronto Stock Exchange or the SEC or any announcement by any party or
the Company pursuant to applicable law or regulations.


 


Section 9.9                                   Zyman
Authority.


 


9.9.1                        Appointment.  Each of the Sellers, by the execution of this
Agreement, hereby irrevocably appoints Zyman as the agent, proxy and
attorney-in-fact for such Seller with respect to the matters set forth in
Sections 2.2.1(iii), Article VIII and Article IX to be performed by
Zyman on behalf of the Sellers and to take all action required to be taken
pursuant to such sections on behalf of the Sellers, which actions shall be
binding on all of the Sellers.  Each of
the Sellers agrees that such agency and proxy are coupled with an interest, are
therefore irrevocable without the consent of Zyman and shall survive the death,
incapacity, bankruptcy, dissolution or liquidation of such Seller.  All decisions and actions by Zyman (to the
extent authorized by this Agreement) shall be binding upon all such Sellers,
and no such Seller shall have the right to object, dissent, protest or
otherwise contest the same.


 


9.9.2                        Exculpation.  Neither Zyman, Purchaser or any of its
affiliates nor any agent employed by them shall incur any liability to any
Seller by virtue of the failure or refusal of Zyman for any reason to
consummate the transactions contemplated hereby or relating to the performance
of its other duties hereunder, except Zyman shall remain liable for actions or
omissions constituting fraud, gross negligence or bad faith.


 


Section 9.10                            Notices.  Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by any party to
any other party 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 the Purchaser, addressed to:


 


	
   

  	
  c/o MDC Partners

  
	
   

  	
  45 Hazelton Avenue

  
	
   

  	
  Toronto, Ontario

  
	
   

  	
  Canada M5R 2E3

  
	
   

  	
  Attention: Graham Rosenberg

  
	
   

  	
  Fax: (416) 960-9555

  
	
   

  	
  Attention: Mitch Gendel

  
	
   

  	
  Fax: (212) 463-3274

  



 


45





















 


	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Simpson Thacher & Bartlett LLP

  
	
   

  	
  425 Lexington Avenue

  
	
   

  	
  New York, New York 10017

  
	
   

  	
  Attention: Marni J. Lerner

  
	
   

  	
  Fax: (212) 455-2502

  
	
   

  	
   

  
	
  If to the Company or any Seller, to:

  
	
   

  	
   

  
	
   

  	
  Zyman Group, LLC

  
	
   

  	
  950 East Paces Ferry Road, N.E.

  
	
   

  	
  Suite 3300

  
	
   

  	
  Atlanta, Georgia 30326

  
	
   

  	
  Attention:

  	
  Sergio Zyman

  
	
   

  	
   

  	
  Jeff Pruett

  
	
   

  	
  Fax: (404) 682-5686

  
	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Jones Day

  
	
   

  	
  1420 Peachtree Street, N.E.

  
	
   

  	
  Suite 800

  
	
   

  	
  Atlanta, Georgia 30309-3053

  
	
   

  	
  Attention: Milford B. Hatcher, Jr.

  
	
   

  	
  Fax: (404) 581-8330

  



 


If to any Seller other than Zyman, to such Seller at the address set
forth under such Seller’s name on the signature page hereto, with a copy
to:


 


	
   

  	
  Burr & Forman, LLP

  
	
   

  	
  171 17th Street, N.W., Suite 1100

  
	
   

  	
  Atlanta, Georgia 30363

  
	
   

  	
  Attention: Tully Hazell

  
	
   

  	
  Fax: (404) 214-7391

  



 


Any party may change the address to which notices are to be sent by
giving notice of such change of address to the other parties in the manner
herein provided for giving notice.


 


Section 9.11                            Parties
in Interest.  This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law.  Any such purported transfer,
assignment, pledge, or hypothecation (other than by operation of law) shall be
void and ineffective.  This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, executors, administrators, successors and permitted
assigns.


 


46





















 


Section 9.12                            Severability.  In the event any provision of this Agreement
is found to be void and unenforceable by a court of competent jurisdiction, the
remaining provisions of this Agreement shall nevertheless be binding upon the
parties with the same effect as though the void or unenforceable part had been
severed and deleted.


 


Section 9.13                            Counterparts.  This Agreement may be executed in two or more
counterparts or by facsimile transmission, all of which taken together shall
constitute one instrument.


 


Section 9.14                            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.


 


Section 9.15                            Amendments.  Subject to Section 9.9.2(iv), this
Agreement may not be amended, supplemented or modified orally, but only by an
agreement in writing signed by the Purchaser, the Company and Zyman.


 


Section 9.16                            Third
Party Beneficiaries.  Each party hereto intends that this Agreement
shall not benefit or create any right or cause of action in or on behalf of any
Person other than the parties hereto and their respective successors and
assigns as permitted under Section 9.11, except the Purchaser Indemnified
Parties as provided in Article VIII hereof and with respect to the
provisions of Section 8.6.4, MDC Partners.


 


Section 9.17                            Use of
Terms.  Whenever the
context so requires or permits, all references to the masculine herein shall
include the feminine and neuter, all references to the neuter herein shall
include the masculine and feminine, all references to the plural shall include
the singular and all references to the singular shall include the plural.


 


Section 9.18                            “Liens”
Defined.  With respect to any
asset, a “Lien” shall mean (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (other than an
operating lease) (or any financial lease having substantially the same economic
effect as any of the foregoing) relating to such asset and (c) in the case
of securities, any purchase option, call or similar right of a third party with
respect to such securities.


 


Section 9.19                            No
Strict Construction.  The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of law or contract interpretation that provides that
in the case of ambiguity or uncertainty a provision should be construed against
the draftsman will be applied against any party hereto.


 


47





















 


IN WITNESS WHEREOF,
the parties hereto have executed this Membership Unit Purchase Agreement, on
the day and year first above written.


 


	
   

  	
  ZG ACQUISITION INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  STEVEN BERNS

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Steven Berns

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  GRAHAM ROSENBERG

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Graham Rosenberg

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MDC PARTNERS INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  GRAHAM ROSENBERG

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Graham Rosenberg

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  MITCHELL GENDEL

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mitchell Gendel

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ZYMAN GROUP LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  SERGIO ZYMAN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Sergio Zyman

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ZYMAN COMPANY, INC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  SERGIO ZYMAN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Sergio Zyman

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  



 





















 


	
   

  	
  SERGIO ZYMAN

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  SERGIO ZYMAN

  	
   

  



 





















 


	
   

  	
  MANAGEMENT SELLER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  MICHAEL J. SINCLAIR

  	
   

  
	
   

  	
  Name:

  	
  Michael J. Sinclair

  
	
   

  	
  Address:

  	
  2392 Hurst Drive N.E.

  Atlanta, Georgia 30305

  



 





















 


	
   

  	
  MANAGEMENT SELLER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  PATRICIA L. KLINGBIEL

  	
   

  
	
   

  	
  Name:

  	
  Patricia L. Klingbiel

  
	
   

  	
  Address:

  	
  75 South Highwood Avenue

  Glen Rock, New Jersey 07452

  



 





















 


	
   

  	
  MANAGEMENT SELLER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  ARTHUR ASH

  	
   

  
	
   

  	
  Name:

  	
  Arthur Ash

  
	
   

  	
  Address:

  	
  10360 Oxford Mill Circle

  Alpharetta, Georgia 30022