Document:

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.

 

6

 

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;

 

7

 

(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.

 

10

 

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.

 

12

 

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.

 

25

 

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.

 

33

 

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

 

34

 

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 30022Exhibit 10.2

 

EXECUTION COPY

 

AMENDED AND RESTATED

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

ZYMAN GROUP, LLC

 

 

Dated April 1,
2005

 

 

AMENDED AND RESTATED

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

ZYMAN GROUP, LLC

 

 

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

 

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

 

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

 

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

 

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

 

 

ARTICLE I

 

FORMATION
OF LIMITED LIABILITY COMPANY

 

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

 

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

 

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

 

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

 

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

 

ARTICLE II

 

MEMBERS;
MEMBERSHIP INTERESTS; UNITS

 

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

 

2

 

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

 

Section 2.2   Classes of
Units. 

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

(a)                                  Certificates attesting to the
ownership of Units in the Company shall be in such form as shall be approved by
the Managers and shall state that the Company is a limited liability company
formed under the laws of the State of Delaware, the name of the Member to whom
such certificate is issued and that the certificate represents limited
liability company interests within the meaning of the Act.  Each such certificate shall be signed by such
officers of the Company as are approved by the Managers and shall bear a legend
in substantially the following form:

 

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

 

(b)                                 The transfer register or
transfer book and blank certificates shall be kept by the secretary of the
Company or by any transfer agent or registrar approved by the Managers for that
purpose. The certificates shall be numbered and registered in the share or unit
register or

 

4

 

transfer books of the Company as they are
issued. Except to the extent that the Company shall have received written
notice of an assignment of any Unit in the Company, the Company shall be
entitled to treat the Person in whose name any certificates issued by the
Company stand on the books of the Company as the absolute owner thereof, and
shall not be bound to recognize any equitable or other claim to, or interest
in, such Unit on the part of any other Person.

 

(c)                                  Subject to all provisions herein
relating to transfers of Units, if the Company shall issue certificates in
accordance with the provisions of this Section 2.7, transfers of Units
shall be made on the register or transfer books of the Company upon surrender
of the certificate therefor, endorsed by the Person named in the certificate or
by an attorney lawfully constituted in writing.

 

(d)                                 The holder of any certificates
issued by the Company shall immediately notify the Company of any loss,
destruction or mutilation of such certificates, and the Managers may cause a
new certificate or certificates to be issued to such holder, in case of
mutilation of the certificate, upon the surrender of the mutilated certificate
or, in case of loss or destruction of the certificate, upon satisfactory proof
of such loss or destruction and, if the Managers shall so determine, the
granting of an indemnity as is approved by the Managers.

 

ARTICLE III

 

CAPITAL
CONTRIBUTIONS; ALLOCATIONS AND DISTRIBUTIONS

 

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

 

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

 

Section 3.3   Allocation of
Profits and Losses.

 

(a)                                  Except as otherwise provided in
this Section 3.3, all Profits and Losses of the Company (as such terms are
defined in Section 13.1 hereof) for any calendar year shall be allocated
and charged to the Members for income tax purposes (including without
limitation the capital account maintenance regulations under Section 704(b) of
the Code) as follows:

 

(i)                                     Profits
shall be allocated as follows:

 

(A)                              First,
pro rata to those Members to whom PBT (as such term is defined in Section 13.1)
for such calendar year and each prior calendar year since the Effective Time
has been allocated under Section 3.5 until the excess of the allocation to
each such Member

 

5

 

of Profits under this Section 3.3(a)(i)(A) over
any allocation to each such Member of Losses under Section 3.3(a)(ii)(B) for
such calendar years equals the amount of PBT so allocated to each such Member
during such calendar years; and

 

(B)                                Thereafter,
to the Members in accordance with the number of Units owned by each.

 

(ii)                                  Losses
shall be allocated as follows:

 

(A)                              First,
to the extent that Profits allocated under Section 3.3(a)(i)(B) over
Losses previously allocated under this Section 3.3(a)(ii)(A) exceed
distributions made in accordance with the number of Units owned by each Member
under Section 3.4(a)(iv), to the Members in the proportion in which such
excess was allocated;

 

(B)                                Second,
to the extent that Profits allocated under Section 3.3(a)(i)(A) over
Losses previously allocated under this Section 3.3(a)(ii)(B) exceed
distributions under Sections 3.4(a)(i), (ii) or (iii), as applicable, to
the Members in the proportion in which such excess was allocated;

 

(C)                                Third,
to the Members in accordance with the number of Units owned by each. 

 

(b)                                 Special Allocations and
Limitations

 

(1)                                  In
the event a Member unexpectedly receives in any taxable year any adjustments,
allocations, or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5), or (6) which cause or increase an Adjusted Capital Account Deficit
(as defined in Section 13.1) of such Member, items of Company income and
gain shall be specially allocated to such Member in such taxable year (and, if
necessary in subsequent taxable years), in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, the Adjusted
Capital Account Deficit of such Member as quickly as possible, provided that an
allocation pursuant to this Section 3.3(b)(1) shall be made only if
and to the extent that the Members would have an Adjusted Capital Account Deficit
after all the allocations provided for in this Section 3 have been
tentatively made as if this Section 3.3(b)(1) were not in the
Agreement.

 

(2)                                  In
the event any Member has an Adjusted Capital Account Deficit at the end of any
taxable year which is in excess of the sum of (i) the amount such Member
is obligated to restore pursuant to any provision of this Agreement and (ii) the
amount such Member is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5),
the Member shall be specially allocated items of the Company income and gain in
the amount of such excess as quickly as possible, provided that an allocation
pursuant to this Section 3.3(b)(2) shall be made only if and to the
extent that such Member would have an Adjusted Capital Account Deficit in
excess of such sum

 

6

 

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

 

(3)                                  Notwithstanding
the provisions of Section 3.3(a), in no event shall Losses of the Company
be allocated to a Member if such allocation would result in such Member’s
having an Adjusted Capital Account Deficit at the end of any taxable year.  All Losses in excess of the limitation set
forth in this Section 3.3(b)(3) shall be allocated to the Members
with positive balances in their Capital Accounts, as a class pro rata in
proportion to such positive balances.

 

(4)                                  To
the extent an adjustment to the adjusted tax basis of any Company asset,
pursuant to Section 734(b) or Section 743(b) of the Code is
required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as the result of a distribution to a Member in
complete liquidation of such Member’s interest in the Company, the amount of
such adjustment to Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specifically allocated to
the Members in accordance with their interests in the Company in the event
Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to
whom such distribution was made in the event Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

 

(5)                                  The
allocations set forth in Sections 3.3(b)(1), (2), (3) and (4) (the “Regulatory Allocations”) are intended to
comply with certain requirements of Treasury Regulations promulgated under Section 704
of the Code.  The Regulatory Allocations
shall be taken into account in allocating other Profits, Losses, and items of
income, gain, loss, and deduction to each Member so that, to the extent
possible, and to the extent permitted by Treasury Regulations, the net amount
of such allocations of other Profits, Losses, and other items and the
Regulatory Allocations to each Member shall be equal to the net amount that
would have been allocated to each Member if the Regulatory Allocations had not
been made.

 

(6)                                  The
respective interests of the Members in the Profits, Losses, or items thereof
shall remain as set forth above unless changed by amendment to this Agreement
or by an assignment of a Unit authorized by the terms of this Agreement.  Except as otherwise provided herein, for tax
purposes, all items of income, gain, loss, deduction, or credit shall be allocated
to the Members in the same manner as are Profits and Losses; provided, however,
that with respect to property contributed to the Company by a Member, such
items shall be shared among the Members so as to take into account the
variation between the basis of such property and its fair market value at the
time of contribution in accordance with Section 704(c) of the Code.

 

(7)                                  The
Capital Accounts of all Members shall be adjusted pursuant to the rules of
Treasury Regulation Section 1.704-1(b)(2)(iv)(f) upon the
circumstances set forth in Treasury Regulation Section 1.704-1(b)(2)(iv)(f)(5).  Corresponding adjustments shall be made as
provided for under Treasury Regulation 1.704-1(b)(2), including Section 1.704-1(b)(2)(iv)(g).

 

7

 

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

 

(1)                                  Except
as otherwise provided in Section 1.704-2(f) of the Treasury
Regulations, notwithstanding any other provision of this Section 3, if
there is a net decrease in Company Minimum Gain (as defined in Section 13.1)
during any fiscal year, each Member shall be specially allocated items of
Company income and gain for such fiscal year (and, if necessary, subsequent
fiscal years) in an amount equal to such Member’s share of the net decrease in
Company Minimum Gain, determined in accordance with Section 1.704-2(g) of
the Treasury Regulations.  Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant thereto.  The items to be so allocated shall be
determined in accordance with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of
the Treasury Regulations.  This Section 3.3(c)(1) is
intended to comply with the minimum gain chargeback requirement in Section 1.704-2(f) of
the Treasury Regulations and shall be interpreted consistently therewith.

 

(2)                                  Except
as otherwise provided in Section 1.704-2(i)(4) of the Treasury
Regulations, notwithstanding any other provision of this Section 3, if
there is a net decrease in Member Nonrecourse Debt Minimum Gain (as defined in Section 13.1)
attributable to a Member Nonrecourse Debt (as defined in Section 13.1)
during any fiscal year, each Member who has a share of the Member Nonrecourse
Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Section 1.704-2(i)(5) of the Treasury
Regulations, shall be specially allocated items of Company income and gain for
such fiscal year (and, if necessary, subsequent fiscal years) in an amount
equal to such Member’s share of the net decrease in Member Nonrecourse Debt
Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Section 1.704-2(i)(4) of the Treasury
Regulations.  Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member pursuant thereto.  The items to be so allocated shall be
determined in accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of
the Treasury Regulations.  This Section 3.3(c)(2) is
intended to comply with the minimum gain chargeback requirement in Section 1.704-2(i)(4) of
the Treasury Regulations and shall be interpreted consistently therewith. 

 

(3)                                  Nonrecourse
Deductions (as defined in Section 13.1) for any fiscal year shall be
specially allocated among the Members in proportion to their allocable Profits.

 

(4)                                  Any
Member Nonrecourse Deductions (as defined in Section 13.1) for any fiscal
year shall be specially allocated to the Member who bears the economic risk of
loss with respect to the Member Nonrecourse Debt to which such Member
Nonrecourse Deductions are attributable in accordance with Section 1.704-2(i)(1) of
the Treasury Regulations.

 

(5)                                  Solely
for purposes of determining a Member’s proportionate share of the “excess
nonrecourse liabilities” of the Company within the meaning of Section 1.752-3(a)(3) of
the Treasury Regulations, the Members’ interests in Company profits are in proportion to their allocable Profits, and, for
purposes of allocating Nonrecourse Liabilities (as defined in Section 13.1)
of the Company among the Members pursuant to Treasury Regulation

 

8

 

Section 1.752-3(a)(3),
the parties agree that each Member’s interest in Company profits shall be in
proportion to their allocable Profits.

 

(6)                                  To
the extent permitted by Section 1.704-2(h)(3) of the Treasury
Regulations, the Members shall endeavor to treat distributions of funds as
having been made from the proceeds of a Nonrecourse Liability (as defined in Section 13.1)
or a Member Nonrecourse Debt (as defined in Section 13.1) only to the
extent that such distributions would otherwise cause or increase an Adjusted
Capital Account Deficit for any Member.

 

(7)                                  For
purposes of determining the character (as ordinary income or capital gain) of
any Profits allocated to the Members pursuant to this Section 3.3, such
portion of Profits that is treated as ordinary income attributable to the
recapture of depreciation shall, to the extent possible, be allocated among the
Members in the proportion which (i) the amount of depreciation previously
allocated to each Member bears to (ii) the total of such depreciation
allocated to all Members.  This Section 3.3(c)(7) shall
not alter the amount of allocations among the Members pursuant to this Section 3.3,
but merely the character of income so allocated.

 

(d)                                 The Members are aware of the
income tax consequences of the allocations described, and hereby agree to be
bound by the provisions of Section 3.3 in reporting their respective
shares of Company income and loss for income tax purposes.

 

(e)                                  It is the intention of the
Company and its Members that the Company be taxed as a partnership for all
purposes of the Code and similar income tax laws.

 

(f)                                    All matters concerning the
valuation of securities, the allocation of profits, gains and losses among the
Members, including the taxes on those profits, gains and losses, and accounting
procedures, not specifically and expressly provided for by the terms of this Agreement,
shall be determined in good faith by the Managers with regard to their
fiduciary duty to the Members, whose determination in accordance with the terms
hereof shall be final, binding and conclusive upon all of the Members.

 

(g)                                 In connection with the exercise
of a Put or a Call with respect to Class B Units pursuant to Article X
hereof, any Profits attributable to such Class B Units arising after the
date of exercise of the applicable Put or Call shall be allocated to the
transferee of such Class B Units so long as the closing of such transfer
occurs.

 

Section 3.4   Distributions.

 

(a)                                  Subject to the making of the Tax
Distributions (as defined in clause (d) below) and Accrued Distributions
(as defined in clause (e) below), if any, to the extent permitted by the
Act, the Company shall make distributions as follows:

 

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

 

9

 

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

 

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

 

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

 

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

 

(b)                                 Any distribution of funds prior
to the end of the fiscal year in which such funds came into possession of the
Company (including any Tax Distribution, but excluding any Accrued
Distribution) shall be treated as a non-interest-bearing loan (a “draw”) from the Company to each Member
receiving such draw and shall be deemed repaid by reducing the amount of each
subsequent distribution to the Member receiving such draw pursuant to this Section 3.4(b) by
the lesser of (i) the entire amount otherwise distributable to the Member
receiving such draw, and (ii) the entire amount of any unrepaid draws
pursuant to this Section 3.4(b). 
For purposes of this clause, a Selling Member (as defined below) and any
transferee of such Selling Member shall be treated as a single Member with
respect to the Units transferred by such Selling Member to such transferee.

 

10

 

(c)                                  All amounts withheld pursuant to
the Code and Tax Regulations or any provision of any state or local tax law
with respect to any payment, distribution, or allocation to the Company or the
Members shall be treated as amounts distributed to the Members pursuant to this
Section 3.4 for all purposes under this Agreement.  The Managers are authorized to withhold from
distributions, or with respect to allocations, to the Members and to pay over
to any Federal, state, or local government any amounts required to be so
withheld pursuant to the Code and Tax Regulations or any provisions of any
other Federal, state, or local law, and shall allocate any such amounts to the
Members with respect to which such amount was withheld.  Notwithstanding any other provision in this
Agreement, prior to the making any such distribution, the Managers in their
sole discretion may require the delivery to the Managers from each or any
potential distributee such evidence as the Managers may reasonably request
evidencing the absence of any third-party claims with respect to such potential
distribution.

 

(d)                                 Notwithstanding anything in this
Agreement to the contrary, in preference to any other distributions pursuant to
this Section 3.4, the Members shall cause the Company to distribute cash
of the Company to its Members on a quarterly (or other reasonable) basis equal
to the product of (i) each Member’s distributive share of the Company’s
taxable income (determined without regard to the election made under Section 754
of the Code) for the current year and (ii) the maximum individual tax
rates for federal taxpayers and Georgia taxpayers (the “Tax Distributions”); provided,
that, no Member will receive a Tax Distribution unless such Member’s allocation
of the Company’s taxable income exceeds all prior cumulative allocations of the
Company’s taxable losses and provided further that if a Member receives a Tax
Distribution for a particular year that is greater than any distribution to
which that Member is entitled under Section 3.4(a), that Member will
contribute to the Company an amount equal to the portion of the aggregate
amount of any Tax Distribution(s) received by such Member which exceed the
amount of tax which is calculated as provided above and is attributable to such
Member’s allocable share of the Company’s taxable income for such year.  For purposes of Section 3.4(a) hereof, a Tax
Distribution shall be deemed to be a distribution at the time of such Tax
Distribution and shall reduce the amount of each subsequent distribution to any
Member receiving such Tax Distribution by the amount of any such Tax
Distribution.

 

(e)                                  Exhibit 3.4(e) hereto
sets forth the portion of “5% Equity” (as set forth on the Closing Balance
Sheet (as defined in the Purchase Agreement)) allocated to each of the Persons
set forth on such exhibit (such exhibit, the “Pre-Closing Member Schedule”).  No later than 5 days after the finalization
of the Closing Balance Sheet pursuant to Section 5.11 of the Purchase
Agreement, the Company shall update the Pre-Closing Member Schedule to set
forth the final amount of 5% Equity and Dividends Payable (as each such term is
defined in the Purchase Agreement) on the Company’s Closing Balance Sheet and
the portion of each such amount allocated to each of the Persons listed on such
schedule.  Notwithstanding anything to
the contrary in this Agreement, prior to any distribution pursuant to Section 3.4(a) but
in accordance with the last paragraph of Section 3.4(a), the Company shall
distribute cash to the Persons set forth on the Pre-Closing Member Schedule in
the amounts set forth opposite each such Person’s name (collectively, the “Accrued Distributions”).  Such amounts shall be distributed first, in
satisfaction of the 5% Equity amounts and second in satisfaction of the
Dividends Payable amounts allocated to each such Person.

 

11

 

(f)                                    Notwithstanding anything in this
Agreement to the contrary, any PBT which has been allocated to the transferred
Units of a Selling Member pursuant to Section 3.5(c) shall, subject
to Section 3.4(b), be distributed to such Selling Member in accordance
with Section 3.4(a) as if such Selling Member owned Units.

 

Section 3.5   Allocation of
PBT.  

 

(a)                                  PBT for purposes of this
Agreement shall be allocated for each Distribution Period Calendar Year as
follows:

 

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

 

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

 

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

 

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

 

12

 

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

 

(b)                                 PBT for purposes of this
Agreement shall be allocated for any Post Distribution Period Calendar Year to
the Members pro rata in accordance with the number of Units owned by each
Member.

 

(c)                                  Notwithstanding anything in this
Agreement to the contrary, in the event that a Member transfers any Units (such
Member, a “Selling Member”),
then, with respect to the calendar year in which such transfer occurred, the
Company shall allocate PBT to such Selling Member’s transferred Units in
accordance with Sections 3.5(a) and 3.5(b) above pro rata based on
the number of days elapsed in such calendar year from the first day of such
calendar year through the date of such transfer relative to a 365-day
year and pro rata to the transferee based on the remainder of the number of
days in such calendar year subsequent to the date of transfer.

 

ARTICLE IV

 

MANAGEMENT

 

Section 4.1   Management of
the Company.

 

(a)                                  Except to the extent otherwise
provided for herein, the powers of the Company shall be exercised by and under
the authority of, and the business and affairs of the Company shall be managed
under, the direction of the Managers of the Company. Notwithstanding the
foregoing or any other provisions hereof to the contrary, for as long as Zyman
and the Management Unitholders own Class B Units representing at least 20%
of the outstanding Units, the taking of any of the actions listed in clauses (i) through
(xi) below shall require the consent of holders of a majority of the Class B
Units. 

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

(b)                                 As long as this Agreement is in
full force and effect, the Company shall keep on file at its principal office a
copy of this Agreement. The Company shall make such copy available to any
Member during normal business hours and upon reasonable advance written notice.

 

(c)                                  As long as this Agreement is in
full force and effect, the Company and the Members agree that they shall cause
any and all subsidiaries of the Company to comply with the provisions of this Section 4.1
to the extent such provisions are applicable to such subsidiary.

 

(d)                                 The parties hereto further agree
that the operations of the Company and its subsidiaries shall be conducted (i) to
participate in the overall cash management and banking program of MDC Partners
as set forth on Schedule 4.1(d) hereto (the “MDC Cash Management Program”), and (ii) to
comply on a timely basis with the financial reporting and budgeting procedures,
as well as internal controls over financial reporting, of MDC Partners as from
time to time in effect, which procedures require the approval of an annual
operating budget, capital expenditure budget and cash flow projections and
require management of operating companies to seek approval prior to material
deviations from such budgets.  If any
Affiliate of MDC Partners (other than the Company or any of its subsidiaries)
fails to meet its obligations under the MDC Cash Management Program, then MDC
Partners shall satisfy such obligations to the extent that such Affiliate
failed to do so. 

 

(e)                                  The parties hereto further agree
that the Company shall hereby adopt, and shall take appropriate steps to cause
the employees of the Company to comply with, the Code of Conduct of MDC Partners,
as the same may be amended from time to time.

 

(f)                                    Notwithstanding anything to the
contrary contained in this Agreement, in consideration for the payment of the
Purchase Price under Section 2.1 of the Purchase Agreement and for other
good and valuable consideration, the parties hereto hereby (i) agree that
MDC Partners and/or any of its Affiliates, in connection with its or any of its
Affiliates’ current or future credit facilities, debt offerings (including,
without limitation, senior, subordinated or mezzanine debt issued in a public
offering or a Regulation S or Rule 144A private placement) or any other
debt agreements, shall be entitled to: (w) pledge or grant a security interest
in or otherwise have a lien placed upon MDC’s Membership Interests; (x) pledge
or grant a security interest in or otherwise have a lien placed upon the assets
and properties of the Company and/or its subsidiaries; (y) assign all of its
rights, benefit, title and interest in the Company and distributions therefrom,
including, without limitation, all rights and claims pursuant to and under any
Put or Call to, or to an agent or representative on behalf of, its bank or
lender or group of banks or group of lenders or holders of its other senior
debt (as applicable and collectively, the “Lender”); and (z) have the Company and/or its subsidiaries provide
guarantees and such other ancillary security and related documentation as
reasonably required by the Lender from time to time (the items in (w), (x), (y)
and (z) being collectively referred to as an “MDC Financing”); and (ii) consent unconditionally to (x) the
granting of all security and the execution of all documents required in
connection with an MDC Financing and the enforcement thereof, where applicable,
by the Lender; and (y) any transaction by which the Lender becomes the absolute
legal and beneficial owner of any Membership Interests which have been pledged
or assigned by it.  

 

15

 

(g)                                 MDC Partners shall cause
sufficient working capital to be made available to the Company as shall be
determined by the Board of Managers to be reasonably necessary to execute upon
its approved annual operating and capital expenditure budgets, but in no event
shall MDC Partners or any of its Affiliates be required to fund losses of the
Company or any of its subsidiaries.  Such
working capital shall be provided to the Company on terms consistent with the
MDC Cash Management Program and accordingly, neither MDC nor any of its
Affiliates shall be required to provide working capital in the event that the
consolidated cash balance of the Company in the MDC Cash Management Program is
negative.

 

(h)                                 The Company shall comply with
all applicable federal, state and local laws and the Company shall provide
reasonable assistance to MDC and its Affiliates in their compliance with all
applicable federal, state and local laws, including without limitation, the
provisions of the Sarbanes-Oxley Act of 2002, as amended from time to
time.  The Company shall use its
reasonable best efforts to undertake the actions recommended in the 404 Report
(as defined in the Purchase Agreement).

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

ARTICLE V

 

MEETINGS
OF MEMBERS

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

ARTICLE VI

 

OFFICERS

 

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

 

20

 

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

 

ARTICLE VII

 

ACCOUNTING
AND TAX MATTERS; REPORTS; BANKING

 

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

 

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

 

(a)                                  Each Member’s Capital
Contributions when made shall be credited to such Member’s Capital
Account.  The Capital Account of each
Member shall, except as otherwise provided in this Agreement, be (i) credited
with the amount of cash and the fair market value of any property contributed
to the Company by such Member or its predecessor in interest (net of
liabilities secured by such contributed property that the Company is considered
to assume or take subject to under Section 752 of the Code), (ii) credited
with the amount of any Profits or items of income allocated to such member
under Section 3.3 or its predecessor in interest for federal income tax
purposes, (iii) debited by the amount of any Loss or items of deductions
allocated to such member under Section 3.3 or its predecessor in interest
for federal income tax purposes, and (iv) debited by the amount of cash or
the fair market value of any property distributed to such Member its
predecessor in interest (net of liabilities secured by such distributed
property that such Member is considered to assume or take subject to under Section 752
of the Code).  Immediately prior to any
distribution of property by the Company, the Members’ Capital Accounts shall be
adjusted, as required by Treasury Regulation Section 1.704-1(b)(2).

 

21

 

(b)                                 Any adjustments of basis of
Company property provided for under Sections 734 and 743 of the Code and
comparable provisions of state law (resulting from an election under Section 754
of the Code or comparable provisions of state law) shall not affect the Capital
Accounts of the Members except to the extent required by Treasury Regulation § 1.704-1(b)(2)(iv)(m),
and the Members’ Capital Accounts shall be debited or credited pursuant to the
terms of this Section 7.2 as if no such election had been made.

 

(c)                                  It is the intention of the
parties that the Capital Account of each Member be kept in the manner required
under Treasury Regulation § 1.704-1(b)(2)(iv).

 

(d)                                 Capital Accounts shall be
adjusted, in a manner consistent with this Section 7.2, to reflect any adjustments
in items of Company Profits, Losses, income, gain or deduction that result from
amended returns filed by the Company or pursuant to an agreement by the Company
with the Internal Revenue Service or a final court decision.

 

(e)                                  The “Unit Capital Account” of any Unit owned by a Member shall be
equal to the Capital Account of such Member divided by the number of Units
owned by such Member.  Upon a transfer of
Class B Units pursuant to Article X hereof, an allocable portion of
the Class B Member’s Capital Account with respect to such Class B
Units shall be transferred to the purchaser of such Units.  

 

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

 

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

 

(a)                                  To elect the fiscal year ending December 31
as the Company’s fiscal year; 

 

(b)                                 To elect the accrual method of
accounting and partnership tax treatment; 

 

(c)                                  To elect, in accordance with
Sections 195 and 709 of the Code and applicable Treasury Regulations and
comparable state law provisions, to treat all organization costs of the Company
as deferred expenses amortizable over 180 months; 

 

(d)                                 To elect under Section 754
of the Code to adjust the basis of the Company’s assets pursuant to Sections
734 and 743 of the Code; and

 

22

 

(e)                                  To elect with respect to such
other federal, state and local tax matters as the Managers shall determine from
time to time. 

 

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

 

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

 

ARTICLE VIII

 

COVENANTS
OF THE MEMBERS

 

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

 

ARTICLE IX

 

DISSOLUTION,
LIQUIDATION AND TERMINATION

 

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

 

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

 

23

 

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

 

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

 

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

 

24

 

ARTICLE X

 

RESTRICTIONS
ON TRANSFERS; LIQUIDITY RIGHTS

 

Section 10.1   Transfer by
the Members. 

 

(a)                                  Except as provided in the next
sentence, no holder of Class B Units shall directly or indirectly sell,
transfer, assign, pledge, encumber, hypothecate, distribute, dividend or
similarly dispose of, either voluntarily or involuntarily, or enter into any
contract, option or other arrangement or understanding with respect to the
sale, transfer, assignment, pledge, encumbrance, hypothecation, distribution,
dividend or similar disposition of (collectively, “transfer”) any Class B Unit without the consent of MDC (which
shall not be unreasonably withheld in connection with a transfer to any trust
for the benefit of a holder of Class B Units or his or her immediate
family for estate planning purposes), except in a transaction pursuant to this Article X.  Class A Units and any Class B units
held by MDC or its transferees shall be freely transferable, directly or
indirectly, without restriction.

 

(b)                                 Notwithstanding anything in the
foregoing to the contrary, a Management Unitholder may offer to sell any or all
of its Class B Units (for purposes of this Section 10.1, the “Subject Units”) to the following Persons in
accordance with the following procedures:

 

(i)                                     such
Management Unitholder shall first offer to sell such Subject Units to the
Company and the Company shall have the exclusive right to purchase such Subject
Units for a period of 30 days following the later of (x) the receipt of the
notice referred to in Section 10.1(c) and (y) the day that is six
months and one day after such Subject Units were acquired by the Management
Unitholder; and

 

(ii)                                  in
the event that not all of the Subject Units are purchased pursuant to clause (i) above
by the end of the period specified therein, such Management Unitholder shall
offer to sell such unsold Subject Units to MDC and MDC shall have the exclusive
right to purchase such Subject Units for a period of 30 days following the
termination of the period set forth in clause (i) above.  For purposes of this Section 10.1, the
Persons described in clauses (i) and (ii) are known collectively as
the “Purchasers”. 

 

(c)                                  In order for a Management
Unitholder to exercise its right to sell its Class B Units pursuant to Section 10.1(b),
such Management Unitholder shall deliver a written notice to the Company of its
intention to sell its Units pursuant to this Section 10.1, which notice
shall set forth the number of Subject Units being offered for sale and the FMV
(as defined in Section 10.10) per Unit (which may be the most recent
determination made by the Board of Managers).   
Each Purchaser may exercise its rights under this Section 10.1 by
delivering a written notice to the selling Management Unitholder.  The purchase and sale of the Units upon the
exercise of an offer to sell pursuant to Section 10.1(b) shall be
made in accordance with the applicable provisions of Section 10.10.

 

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

 

(a)                                  Subject to Section 10.2(d),
at any time during the period commencing on the fifth anniversary of the
Effective Time and ending, solely in the case of the Management Unitholders, on
the day prior to the eighth anniversary of the Effective Time (such period
being referred to herein as the “Fifth Anniversary Call Period”) (it being understood
that with respect to Zyman, the right of MDC to call the Special Zyman Units
shall continue indefinitely), MDC shall have the right (but not the
obligation), exercisable no more than once in any twelve-month period (but
which may be exercised for all or a portion of such Units upon each such
exercise)

 

25

 

with respect to each of Zyman and each
Management Unitholder, to require Zyman and each Management Unitholder to sell
to it (such right, the “Call”), in
the case of Zyman, up to an aggregate of 2,750,000 Units (such number of Units,
the “Special Zyman Units”)
from time to time, and in the case of each Management Unitholder, up to an
aggregate of such Management Unitholder’s Pro Rata Portion (as defined in Section 13.1)
of 3,250,000 Units during the Fifth Anniversary Call Period (such Call, the “Five Year Call”); provided that MDC shall not
be entitled to Call any Units from a Member until the day that is six months
and one day after the date on which such Units were acquired by such
Member.  MDC may exercise the Five Year
Call by delivering written notice of exercise (a “Call Exercise Notice” (which term shall apply to any notice of
exercise of a Call pursuant to this Article X)) to Zyman at any time on or
after the fifth anniversary of the Effective Time and to the Management
Unitholders during the Fifth Anniversary Call Period.  The purchase and sale of Units upon the
exercise of a Five Year Call shall be made in accordance with the applicable
provisions set forth in Section 10.10. 
Any Call Exercise Notice delivered pursuant to this section or any
other relevant section of this Article X shall set forth the number
of Units subject to the Call.  The
Special Zyman Units subject to the Five Year Call at any time shall be reduced
by any Special Zyman Units purchased by MDC pursuant to Section 10.2(b).

 

(b)                                 Subject to Section 10.2(d),
at any time commencing on the fifth anniversary of the Effective Time and so
long as, prior to such date, SZ has not been terminated under any of the
circumstances described in Section 10.4(a) (it being understood that
the right of Zyman to put the Special Zyman Units described herein shall
continue indefinitely; provided that, if SZ’s employment is terminated as
described in Section 10.4(a), Zyman’s rights under this Section 10.2(b) shall
automatically terminate), Zyman shall have the right (but not the obligation),
exercisable not more than once in any twelve-month period (but which may be
exercised for all or a portion of such Units upon each such exercise), to
require MDC to purchase from it (such right, the “Put” (which term shall apply to any similar right held by
Zyman or a Management Unitholder under this Article X)), the Special Zyman
Units (such Put, the “Five Year Put”);
provided that Zyman shall not be entitled to Put any Units until the day that
is six months and one day after the date on which such Units were acquired by
Zyman.  Zyman may exercise the Five Year
Put by delivering written notice of exercise (a “Put Exercise Notice” (which term shall apply to any notice of
exercise of a Put pursuant to this Article X) and together with a Call
Exercise Notice, an “Exercise Notice”)
to MDC after the fifth anniversary of the Effective Time.  The purchase and sale of the Special Zyman
Units upon the exercise of a Five Year Put shall be made in accordance with the
applicable provisions set forth in Section 10.10.  Any Put Exercise Notice delivered pursuant to
this section or any other relevant section of this Article X
shall set forth the number of Special Zyman Units subject to the Put.  The Special Zyman Units subject to the Five
Year Put at any time shall be reduced by any Special Zyman Units purchased by
MDC pursuant to Section 10.2(a).

 

(c)                                  At any time on or after the
eighth anniversary of the Effective Time (the “Eighth Anniversary Call Period”), MDC shall have the right
(but not the obligation) to Call any and all Units then owned by Zyman (such
right, the “Eight Year Call”);
provided that MDC shall not be entitled to Call any Units from Zyman until the
day that is six months and one day after the date on which such Units were
acquired by Zyman.  MDC may exercise the
Eight Year Call by delivering a Call Exercise Notice to Zyman during the Eighth
Anniversary Call Period.

 

26

 

The purchase and sale of the Units upon the
exercise of a Call shall be made in accordance with the applicable provisions
set forth in Section 10.10.  

 

(d)                                 Notwithstanding the foregoing,
if the Revenues for the twelve months ending on the date of an Exercise Notice
(such date, the “Exercise Date”)
are less than the average Revenues for the two consecutive twelve month periods
immediately preceding the month of the Exercise Date, then neither MDC nor
Zyman may exercise the Five Year Call or the Five Year Put, as applicable, in
such year.

 

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

 

(a)                                  Notwithstanding the Put and Call
Periods described in Section 10.2(a) and Section 10.2(b) above,
in the event that during the period commencing on the Effective Time and ending
on the eighth anniversary of the Effective Time (such period, the “Zyman Involuntary Termination
Period”) SZ
shall no longer be an employee of the Company or any of its subsidiaries by
reason of SZ’s death, Disability (as defined in SZ’s employment agreement with
the Company), a termination by the Company without Cause (including, without
limitation, if the Company gives written notice of its intention not to renew
the term of SZ’s employment pursuant to the terms of SZ’s employment agreement)
or a termination by SZ for Good Reason, then 

 

(i)                                     Zyman
shall be entitled to Put all or a portion of its Units to the Company (the “Zyman Termination Put”) pursuant to and in accordance with
the applicable provisions of Section 10.10; provided, that Zyman shall not
be entitled to Put any Units that it has held for a period of six months or
less.  Zyman may exercise the Zyman
Termination Put by delivering a Put Exercise Notice to the Company anytime
during the Zyman Involuntary Termination Period.  The Company shall be entitled to assign its
obligation to purchase all or a portion of such Units Put by Zyman to MDC; and 

 

(ii)                                  the
Company shall be entitled to Call (the “Company  Termination Call”) all or a portion of Zyman’s Units
pursuant to and in accordance with the applicable provisions of Section 10.10
and, to the extent that the Company has not exercised the Company Termination
Call, MDC shall be entitled to Call any remaining Units; provided, that neither
the Company nor MDC shall be entitled to Call any Units which have not been
held by Zyman for at least six months. 
Each of the Company and MDC may exercise the Company Termination Call by
delivering a Call Exercise Notice to Zyman anytime during the Zyman Involuntary
Termination Period.

 

(b)                                 Any Units which have not been
purchased pursuant to this Section 10.3 during the Zyman Involuntary
Termination Period shall become subject to the Eight Year Call.

 

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

 

(a)                                  Notwithstanding the Call Periods
described in Section 10.2(a) above, in the event that SZ voluntarily
terminates his employment with the Company at any time prior to the fifth
anniversary of the Effective Time (other than for Good Reason) or in the event
that SZ’s

 

27

 

employment is terminated by the Company for
Cause at any time, then the Company shall have the right to Call all or a
portion of Zyman’s Units pursuant to and in accordance with the applicable
provisions of Section 10.10 and, to the extent that the Company has not
exercised the Call, MDC shall be entitled to Call any remaining Units; provided
that neither the Company nor MDC shall be entitled to Call any Units which
Zyman has not held for a period of at least six months.  Each of the Company and MDC may exercise the
Call by delivering a Call Exercise Notice to Zyman.  Upon the occurrence of a termination of
employment described in this Section 10.4, Zyman shall no longer be
entitled to exercise the Five Year Put. 

 

(b)                                 Any Units which have not been
purchased pursuant to this Section 10.4 on or before the eighth
anniversary of the Effective Time shall become subject to the Eight Year Call.

 

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

 

(a)                                  Notwithstanding the Call Periods
described in Section 10.2(a) above, in the event that SZ voluntarily
terminates his employment with the Company at any time on or following the
fifth anniversary of the Effective Time and prior to the eighth anniversary of
the Effective Time (including, without limitation, if SZ gives written notice
of his intention not to renew the term of SZ’s employment pursuant to the terms
of his employment agreement), then the Company shall have the right to Call all
or a portion of Zyman’s Units pursuant to and in accordance with the applicable
provisions of Section 10.10 and, to the extent that the Company has not
exercised the Call, MDC shall be entitled to Call any remaining Units; provided
that neither the Company nor MDC shall be entitled to Call any Units which
Zyman has not held for a period of at least six months.  Each of the Company and MDC may exercise the
Call by delivering a Call Exercise Notice to Zyman.

 

(b)                                 Any Units which have not been
purchased pursuant to this Section 10.5 on or before the eighth
anniversary of the Effective Time shall become subject to the Eight Year Call.

 

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

 

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

 

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

 

28

 

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

 

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

 

Section 10.8  
Sale of Units by Zyman to
the Company.

 

(a)                                  The Company has established the
restricted Unit purchase plan set forth as Exhibit 10.8 (the “Plan”), pursuant to which it will
offer to sell up to 4,379,374 Units to employees of the Company, from time to
time.  Such Units shall be offered for
sale to such employees designated by the Chief Executive Officer of the Company
and approved by MDC from time to time (the “Employee Offerees”), in accordance with the
following schedule:  

 

(i)                                     2,360,000
Units will be offered to the Employee Offerees on or as soon as reasonably
practicable after the Closing Date (as defined in the Purchase Agreement) for a
period of 60 days; 

 

(ii)                                  1,000,000
Units plus any Units not sold pursuant to clause (i) above will be offered
to the Employee Offerees on or before the first anniversary of the Closing Date
for a period of 60 days;

 

(iii)                               1,000,000
Units plus any Units not sold pursuant to clauses (i) and (ii) above
will be offered to the Employee Offerees on or before the second anniversary of
the Closing Date for a period of 60 days; and

 

(iv)                              any
Units not purchased pursuant to clauses (i), (ii) and (iii) will be
offered to the Employee Offerees on or before the third anniversary of the
Closing Date for a period of 60 days; 

 

provided, that in the event
that SZ shall no longer be an employee of the Company or any of its
subsidiaries by reason of his death or Disability (as defined in SZ’s employment
agreement with the Company), the Company shall immediately offer to sell to the
applicable Employee Offerees any of the 4,379,374 Units which have not
previously been

 

29

 

offered pursuant to this Section 10.8(a) and,
provided further, that Zyman shall be required to hold (and may not Put
pursuant to Section 10.3) a number of Units equal to such Units until the
60th day following the date of SZ’s death or the date on which SZ’s employment
is terminated due to Disability, as the case may be and shall be required to
hold until the closing of the purchase any Units subscribed for pursuant to the
offering.  

 

(b)                                 Such Units shall be offered to
the Employee Offerees pursuant to clause (a) for FMV (as determined based
on the most recent valuation prior to the date of each offer) and the
consideration in respect of such Units shall be in the form of cash and/or
notes payable by the Employee Offerees to the Company substantially in the form
of Exhibit 10.8
(each a “Purchase Note”) or, at the election of the
relevant Buyer (as defined below), cash.

 

(c)                                  In the event that all of the
4,379,374 Units have not been subscribed for by the Employee Offerees pursuant
to clause (a) by the 61st day after the date on which Units are
offered pursuant to clause (a)(iv) above and purchased by such Employee
Offerees within the time period set forth in Section 10.10(d) to the
extent such Units have been subscribed for, the Company shall create a plan
pursuant to which it shall offer to the Employee Offerees the option to
purchase any such unsold Units beginning no later than the 90th day
after the third anniversary of the Effective Time, which option may be
exercised on or before the fifth anniversary of the Effective Time (such period, the “Option Period”) at a price equal to the FMV
per Unit as of the date of such offer (such option, the “Employee Option”).  The consideration paid by an Employee Offeree
upon the exercise of such Employee Option shall be cash in an amount equal to
no less than $0.50 per purchased Unit (or
such lesser cash amount as determined by the Board of Managers, in its sole
discretion) and a Purchase Note for the remaining consideration.  Notwithstanding anything in this Agreement to
the contrary (including Sections 10.3 and 10.4), during the Option Period,
Zyman shall be required to hold a number of Units at least equal to the number
of Units subject to the Employee Option (as such number may be reduced from
time to time).

 

(d)                                 For each Unit sold by the
Company pursuant to this Section 10.8 Zyman shall sell and the Company
shall purchase or redeem one Unit from Zyman and in consideration therefor the
Company shall pay and assign to Zyman the cash and/or Purchase Notes paid to
the Company by any holder in respect of such Units; provided that the Company
shall not purchase or redeem any Units which have not been held by Zyman for a
period of at least six months.

 

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

 

30

 

Section 10.10   Put/Call
Purchase Price. 

 

(a)                                  Calculation/Payment of the
Put/Call Purchase Price.

 

(i)  In connection with the exercise of
any Put pursuant to Section 10.2(b) or Section 10.3(a) or
any Call pursuant to Section 10.2(a), Section 10.3(a) or Section 10.5,
or Call of the Special Zyman Units pursuant to the Eight Year Call, each Buyer
shall calculate and pay to Zyman or the Management Unitholders, as applicable,
the following amounts (collectively, the “Put/Call
Purchase Price”):

 

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

 

	
  AP ×

  	
  {

  	
  (PBT for YP-1)

  	
  × 4.75

  	
  }

  
	
  3

  

 

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

 

	
  {

  	
  AP ×

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

  	
  }

  	
  – {First Payment}

  
	
  3

  

 

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

 

	
  {

  	
  AP ×

  	
  (

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

  	
  × AM

  	
  )

  	
  }

  	
   – {First Payment + Second
  Payment}

  
	
  3

  

 

(ii)                                  In
connection with the exercise of the Eight Year Call (except to the extent such
Eight Year Call relates to the Special Zyman Units to which clause (i) above
shall apply) and a Call pursuant to Section 10.4(a), the Buyer shall
calculate and pay to Zyman the product of 50% multiplied by the Put/Call
Purchase Price; provided that in connection with a Call pursuant to Section 10.4(a) because
SZ voluntarily terminates his employment with the Company, the price paid for
any Zyman Special Units shall be the Put/Call Purchase Price.

 

(iii)                               In
connection with the exercise of a Call pursuant to Section 10.7 or an
option pursuant to Section 10.8(c) or a Put pursuant to Section 10.6,
the Buyer shall pay to the applicable seller the product of the number of Units
being purchased and the FMV per Unit.

 

31

 

(b)                                 Other Definitions.

 

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

 

	
   

  	
   

  	
  Multiple Range

  	
   

  
	
  PBT Margin

  	
   

  	
  CRGR <=10%

  	
   

  	
  CRGR >=25%

  	
   

  
	
  < 30%

  	
   

  	
  4.0

  	
   

  	
  4.0

  	
   

  
	
  >= 30% &
  < 35%

  	
   

  	
  4.0

  	
   

  	
  4.5

  	
   

  
	
  >= 35% &
  < 40%

  	
   

  	
  4.5

  	
   

  	
  5.0

  	
   

  
	
  >= 40%

  	
   

  	
  5.0

  	
   

  	
  5.5

  	
   

  

 

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

 

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

 

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

 

	
  CRGR =

  	
  [(

  	
  Revenues for YP + 1

  	
  )

  	
  1/3

  	
  – 1

  	
  ]

  	
  × 100%

  
	
  Base Revenues

  

 

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

 

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

 

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

 

32

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)                                  Accounting Procedures.

 

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

 

33

 

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

 

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

 

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

 

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

 

34

 

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

 

(d)                                 Closing.  The closing for each purchase and sale of
Units (an “Article X Closing”)
pursuant to this Article X shall be held at the offices of the Company
within 30 days after the later of (i) the delivery of an Exercise Notice, (ii) in
the case of Offers to Sell, 30 days after the receipt of an acceptance of an
Offer to Sell and (iii) the day that is six months and one day after such
Units were first acquired by the Seller. 
The date on which the respective Article X Closing takes place is
referred to in this Agreement as its “Article X
Closing Date”.  At each Article X
Closing, the parties shall execute an Assignment of Unit Agreement in form and
substance reasonably acceptable to the purchaser and the seller in such
transaction and an amendment to this Agreement in accordance with Section 14.4
reflecting such transfer and the reallocated Units (including the related
portion of the Capital Account).  The
transfer of any Units pursuant to this Section 10.10 shall be free and
clear of all claims, liens and encumbrances other than as created by the
provisions of this Agreement.  Prior to
any Article X Closing, the applicable purchaser and seller shall use their
best efforts to obtain any required governmental or regulatory approval or
approvals.  MDC shall have the right to
postpone any scheduled Article X Closing until any such governmental or
regulatory approval is obtained.  In
connection with a sale pursuant to this Article X, the transferor shall be
entitled to distributions pursuant to Section 3.4 as and when declared by
the Board of Managers in respect of any amounts which have been allocated to
the transferred Units as of the day prior to the effective date of any Put or
Call or, in the case of an Offer to Sell, the applicable Article X Closing
Date, and the transferee shall be entitled to distributions pursuant to Section 3.4
in respect of any amounts which are allocated to the transferred Units on and
after the effective date or the Article X Closing Date, as the case may
be.

 

(e)                                  Put/Call Purchase Price Payment.  

 

(i) If MDC is purchasing Units from
Zyman pursuant to Section 10.2, Section 10.3, Section 10.4 or Section 10.5,
payment of each component of the Put/Call Purchase Price shall be made by MDC
(x) at least 80% in cash (any amount in excess of 80% will be determined by MDC
in its sole discretion) by direct wire transfer to the account of Zyman
designated in writing to MDC pursuant to this Agreement and (y) up to 20% of
each component of the Put/Call Purchase Price may be made in Class A
Shares (subordinate voting shares), of MDC Partners (“MDC Stock”) (rounded up or down to the
nearest whole share) having an aggregate Market Value (as defined above) equal
to up to 20% of such component of the Put/Call Purchase Price and, if the
Company is purchasing Units pursuant to Section 10.2, Section 10.3, Section 10.4
or Section 10.5, the purchase price shall be paid in cash.  Each of the First Payment, Second Payment and
Final Payment shall be deemed to include imputed interest, to the extent
required by the Code.  Prior to MDC’s
delivery to Zyman of each Put/Call Purchase Price payment in

 

35

 

shares of MDC Stock, Zyman shall be required to deliver an Investment
Representation Certificate in the form of Exhibit 10.10(e) hereto.  The shares of MDC Stock shall be eligible for
sale in accordance the applicable securities laws of the U.S. and Canada, and
the terms of the Investment Representation Certificate to be delivered by the
receipt of such shares of MDC Stock. 

 

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

 

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

 

(f)                                    Effect of Events During Period Class B
Units Are Issued.  The parties hereto understand and agree that
under the terms of each Management Unitholder’s employment agreement with the
Company, if any, such Management Unitholder may be terminated for Cause or
without Cause.  Accordingly, each of the
parties hereto agrees that if (a) any Management Unitholder ceases to be
an employee of the Company, regardless of the reason therefor, or (b) there
are changes in the composition of the Board of Managers of the Company or any
subsidiary of the Company, no party to this Agreement or any Person deriving rights
through any such party shall have the right to make a claim that such cessation
of employment or change in the composition of the Board of Managers of the
Company or any subsidiary of the Company (x) constitutes a breach by MDC or any
of its Affiliates of this Agreement, (y) resulted in an adverse effect on any
Put/Call Purchase Price payment under this Agreement forming the basis for a
claim against MDC or any of its Affiliates, or (z) constitutes an event forming
the basis for such party to dispute any calculation required to be made
pursuant to the accounting procedures set forth in Section 10.10(c) hereof.  In the event a Management Unitholder ceases
to be employed by the Company, regardless of the reason therefor, such event
shall not affect the right of any Unitholder to receive any Put/Call Purchase
Price payment under this Agreement.

 

36

 

ARTICLE XI

 

INDEMNIFICATION

 

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

 

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

 

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

 

37

 

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

 

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

 

Section 11.5   Definitions.  For purposes of this Article XI:

 

(a)                                  The term “expenses” includes court costs and attorneys’
fees and disbursements;

 

(b)                                 The term “proceeding” means any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, any appeal in such an action,
suit or proceeding, and any inquiry or investigation that could lead to such an
action, suit or proceeding;

 

(c)                                  The term “Manager” means any Person who is or was a
Manager of the Company and any Person who, while a Manager of the Company, is
or was serving at the request of the Company as a director, officer, partner,
manager, member, venturer, proprietor, trustee, employee, agent or similar
functionary of an Other Entity;

 

(d)                                 The term “serving at the request of the Company” as
used above shall include any service as a manager, director, officer, employee
or agent of the Company or where any such Person performs duties on or
otherwise involves services with respect to an employee benefit plan, or the
participants or beneficiaries of the employee benefit plan sponsored by the Company.  Excise taxes assessed on a Manager with
respect to an employee benefit plan pursuant to applicable law are deemed
fines.  Action taken or omitted to be
taken by a Manager with respect to an employee benefit plan in the performance
of his duties for a purpose reasonably believed by him to be in the interest of
the participants and beneficiaries of the plan is deemed to be for a purpose
which is not opposed to the best interests of the Company.

 

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

 

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

 

38

 

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

 

ARTICLE XII

 

ADDITIONAL
AGREEMENTS

 

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

 

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

 

ARTICLE XIII

 

OTHER
DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

(i)                                     Subject
to the final sentence of this definition and consistent with the capital
accounts as described in Section 3.1, the initial Gross Asset Value of any
asset contributed by a Member to the Company shall be the gross fair market
value of such asset, as determined by the Board of Managers;

 

(ii)                                  The
Gross Asset Value of all Company assets shall be adjusted to equal their
respective gross fair market values as of the following times: (a) the
acquisition of additional Units by any new or existing Member in exchange for a
Capital Contribution; (b) the distribution by the Company to a Member of
property as consideration for a Unit; and (c) the liquidation of the
Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g);
provided, however, that adjustments pursuant to clauses (a) and (b) above
shall be made only if the Managers reasonably determine that such adjustments
are necessary or appropriate to reflect the relative economic interests of the
Members in the Company; and

 

(iii)                               The
Gross Asset Value of any Company asset distributed to any Member shall be
adjusted to equal the gross fair market value of such asset on the date of
distribution.

 

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

 

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

 

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

 

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

 

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

 

42

 

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

 

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

 

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

 

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

 

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

 

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

 

(1)                                  any
expenses for non-cash equity-based compensation which accrues prior to, on or
after Closing and is attributable to transactions contemplated by the Purchase
Agreement.

 

(2)                                  any
amortization or depreciation expense attributable to the increase in the book
value of any assets (whether tangible or intangible) of the Company resulting
from the merger into the Company of the Nevada limited liability company
predecessor of the Company, any amortization or depreciation expense
attributable to the increase in the book value of any assets (whether tangible
or intangible) of the Company resulting from any acquisition of any Units by
MDC pursuant to the Purchase Agreement, and interest payable by or for the
Company on indebtedness related to any such acquisition;

 

(3)                                  neither
the proceeds from nor any dividends or refunds with respect to, nor any
increases in the cash surrender value of, any life insurance policy under which
the Company, or any subsidiary thereof, is the named beneficiary or otherwise
entitled to recovery shall be included as income, nor shall the premiums
payable with respect to any such life insurance policy be considered an expense
for a period to the extent a death covered by such life insurance policy occurs
in any such period;

 

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

 

(5)                                  any
interest arising from loans to finance the payment of any of the Purchase Price
payments and from any indebtedness allocated to the Company by MDC as a result
of MDC’s acquisition of Membership Interests of the Company; provided, however,
that any interest or fees (other than fees incurred in connection with
terminating the Company Credit

 

43

 

Facility)
arising under the Company Credit Facility (or any interest or fees allocable to
the Company under the MDC Credit Facility, if such facility is used to
refinance the Company Credit Facility) and any working capital loans provided
by MDC to the Company from time to time shall be included in determining PBT; 

 

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

 

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

 

(7)                                  any
extraordinary or unusual gains or losses and any gains or losses from the sale
of any capital assets used by the Company or any subsidiary thereof in its
operations (as opposed to assets acquired in the ordinary course of the
business of the Company and its subsidiaries for resale or other disposition);

 

(8)                                  severance
expense arising from a termination of SZ by the Company or by SZ with Good
Reason; and

 

(9)                                  premiums
of up to $75,000 payable with respect to any life insurance policy under which
the Company, or any subsidiary thereof, is the named beneficiary or otherwise
entitled to recovery to the extent not already excluded pursuant to (3) above.

 

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

 

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

 

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

 

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

 

44

 

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

 

(i)                                     Any
income of the Company that is exempt from Federal income tax and not otherwise
taken into account in computing Profits or Losses pursuant to this definition
shall be added to such taxable income or loss;

 

(ii)                                  Any
expenditures of the Company described in Section 705(a)(2)(B) of the
Code or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and
not otherwise taken into account in computing Profits or Losses pursuant to
this definition, shall be subtracted from such taxable income or loss;

 

(iii)                               In
the event the Gross Asset Value of any Company asset is adjusted pursuant to
clauses (ii) or (iii) of the definition of “Gross Asset Value”
herein, the amount of such adjustment shall be taken into account as gain or
loss from the disposition of such asset for purposes of computing Profits or
Losses;

 

(iv)                              Gain
or loss resulting from any disposition of property with respect to which gain
or loss is recognized for Federal income tax purposes shall be computed by
reference to the Gross Asset Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its Gross Asset
Value;

 

(v)                                 In
lieu of the depreciation, amortization, and other cost recovery deductions
taken into account in computing such taxable income or loss, there shall be
taken into account depreciation for such fiscal year or other period, computed
in accordance with the definition thereof;

 

(vi)                              To
the extent an adjustment to the adjusted tax basis of any Company asset
pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) to
be taken into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Member’s Units, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
the purposes of computing Profits or Losses; and

 

(vii)                           Notwithstanding
any other provisions of this definition, any items which are specially
allocated pursuant to Section 3.3(b) and (c) shall not be taken
into account in computing Profits or Losses.

 

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

 

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

 

45

 

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

 

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

 

ARTICLE XIV

 

MISCELLANEOUS

 

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

 

If to MDC or MDC Partners, to:

 

MDC Partners

45 Hazelton Avenue

Toronto, Ontario

Canada M5R 2E3

Attention:  Graham Rosenberg

Fax:  (416) 960-9555

Attention:
Mitch Gendel

Fax:  (212) 463-3274

 

with a copy to:

 

Simpson
Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Attention: Marni Lerner, Esq. 

Fax:  (212) 455-2502

 

If to Zyman, to:

 

Zyman Company, Inc.

100 South Point Drive

Apartment
2905/06

Miami Beach,
Florida 33139-7373

Attention:
Sergio Zyman

Fax: (305) 674-3806

 

46

 

with a copy to:

 

Zyman Group
LLC

950 East Paces
Ferry Road, N.E.

Suite 3300

Atlanta,
Georgia 30326

Attention: Chief Financial Officer

Fax:

 

with a copy to:

 

Jones Day

1420 Peachtree
Street, N.E.

Suite 800

Atlanta,
Georgia 30309-3053

Attention: Milford B. Hatcher

Fax:  (404) 581-8330

 

If to the Company, to:

 

c/o MDC
Partners Inc.

45 Hazelton Avenue

Toronto, Ontario

Canada M5R 2E3

Attention:  Graham Rosenberg

Fax:  (416) 960-9555

Attention:
Mitch Gendel

Fax:  (212) 463-3274

 

with a copy to:

 

Simpson
Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Attention: Marni Lerner, Esq. 

Fax: (212) 455-2502

 

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

 

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

 

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

 

47

 

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

 

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

 

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

 

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

 

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

 

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

 

48

 

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

 

 

	
   

  	
  MDC PARTNERS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  GRAHAM ROSENBERG

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Graham Rosenberg

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  MITCHELL GENDEL

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mitchell
  Gendel

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ZG ACQUISITION INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  GRAHAM ROSENBERG

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Graham
  Rosenberg

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  MITCHELL GENDEL

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mitchell
  Gendel

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ZYMAN COMPANY INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  SERGIO ZYMAN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Sergio Zyman

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ZYMAN GROUP LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  SERGIO ZYMAN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Sergio Zyman

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
						

 

 

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

 

	
   

  	
  MANAGEMENT
  UNITHOLDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Ricardo
  Alvarez

  	
   

  
	
   

  	
  Printed Name:

  	
  Ricardo
  Alvarez

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

 

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

 

	
   

  	
  MANAGEMENT
  UNITHOLDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Arthur
  Ash

  	
   

  
	
   

  	
  Printed Name:

  	
  Arthur Ash

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

 

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

 

	
   

  	
  MANAGEMENT
  UNITHOLDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Craig
  Lee Binkley

  	
   

  
	
   

  	
  Printed Name:

  	
  Craig Lee
  Binkley

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

 

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

 

	
   

  	
  MANAGEMENT
  UNITHOLDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Jeffrey
  M. Herbert

  	
   

  
	
   

  	
  Printed Name:

  	
  Jeffrey M.
  Herbert

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

 

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

 

	
   

  	
  MANAGEMENT
  UNITHOLDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Patricia
  L. Klingbiel

  	
   

  
	
   

  	
  Printed Name:

  	
  Patricia L.
  Klingbiel

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

 

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

 

	
   

  	
  MANAGEMENT
  UNITHOLDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Michael
  F. McEnany

  	
   

  
	
   

  	
  Printed Name:

  	
  Michael F.
  McEnany

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

 

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

 

	
   

  	
  MANAGEMENT
  UNITHOLDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Ted
  Richardson

  	
   

  
	
   

  	
  Printed Name:

  	
  Ted
  Richardson

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

 

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

 

	
   

  	
  MANAGEMENT
  UNITHOLDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Michael
  J. Sinclair

  	
   

  
	
   

  	
  Printed Name:

  	
  Michael J.
  Sinclair

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

 

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

 

	
   

  	
  MANAGEMENT
  UNITHOLDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ David A.
  Singleton

  	
   

  
	
   

  	
  Printed Name:

  	
  David A.
  Singleton

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

 

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

 

	
   

  	
  MANAGEMENT
  UNITHOLDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Jon
  Stewart

  	
   

  
	
   

  	
  Printed Name:

  	
  Jon Stewart

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

 

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

 

	
   

  	
  MANAGEMENT
  UNITHOLDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ N. Lee
  White

  	
   

  
	
   

  	
  Printed Name:

  	
  N. Lee White

  
	
   

  	
  Address:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00082-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00082-of-00352.parquet"}]]