LIMITED PARTNERSHIP UNIT PURCHASE AGREEMENT (13%)
Exhibit
10.17.2
LIMITED PARTNERSHIP UNIT PURCHASE
AGREEMENT (this “Agreement”) dated as of
November 30, 2010, by and among MDC PARTNERS INC., a Canadian
corporation (the “Purchaser”), 2265174 Ontario
Limited (“Kenna
Holdco”), XXXXX XXXXXXX and XXXX XXXXXXX (collectively, the “Kenna Principals” and each, a
"Kenna
Principal").
WHEREAS, Newport Holdco
Partners Holding LP (“Newport”) and the Kenna
Principals formed Kenna
Communications LP
("Xxxxx XX") for the
purpose of demerging the businesses of Capital C Communications LP ("Cap C LP"), which consisted of
the Kenna business (the "Kenna
Business") and the Cap C business (see reorganization chart attached as
Exhibit A to the Newport Purchase Agreement (the "Reorganization");
AND WHEREAS immediately prior
to the execution and delivery of this Agreement, Newport, Cap C LP, the Kenna
Principals and the Cap C principals consummated the transactions contemplated by
the Reorganization. In connection with such Reorganization, Newport
and the Kenna Principals caused Cap C LP to transfer all of the assets utilized
as the Kenna Business and certain disclosed liabilities and obligations and the
Kenna Business to Xxxxx XX, pursuant to an Assignment and Assumption Agreement
(the "Conveyance
Documents");
AND WHEREAS, immediately
following the Reorganization, Newport held 67.13% of the partnership units of
Xxxxx XX (the “67% Purchased
Units”), and Purchaser purchased such 67% Purchased Units from Newport
pursuant to a Limited Partnership Purchase Agreement dated the date hereof (the
“Newport Purchase
Agreement”), such that after giving effect to such purchase, Purchaser
owned 67.13% of Xxxxx XX, Xxxxx Holdco owned 20% of Xxxxx XX and 2265176 Ontario
Limited, a wholly owned subsidiary of Kenna Holdco (“2265176”) owned 12.86% of the
partnership units of Xxxxx XX (the “13% Units”);
AND WHEREAS, the issued
capital of 2265176 consists of 101 common shares (the “Purchased Shares”), all of
which are legally and beneficially owned by Kenna Holdco;
AND WHEREAS, Kenna Holdco now
desires to sell, and Purchaser desires to purchase, the Purchased Shares such
that after giving effect to such purchase, Purchaser will own 67.13% of Xxxxx XX
directly, 12.87% of Xxxxx XX through ownership of 2265176 which owns the 13%
Units, beneficially and of record, aggregating a 80.0% ownership interest in
Xxxxx XX and Xxxxx Holdco will own 20% of Xxxxx XX;
AND WHEREAS simultaneous with
the execution and delivery of this Agreement, the Purchaser, Kenna Holdco, the
Kenna Principals and Xxxxx XX are executing and delivering an amended and
restated limited partnership agreement in respect of Xxxxx XX (the “Xxxxx XX
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
ARTICLE II
FAP = 36% x 2010 PBT
; provided, however, that for
purposes of calculating the FAP, “2010 PBT” shall be calculated for the period
commencing on the Closing Date and ending on December 31, 2010.
SAP =
Applicable Percentage x 36% x 2011 PBT
; provided, however, in the event
that 2011 PBT were less than $4,000,000, then SAP shall equal (A) the excess, if
any, of (i) 2011 PBT over (ii) $2,400,000, multiplied by (B) 90%, multiplied by
(C) the Applicable Percentage.
2
TAP =
Applicable Percentage x 36% x 2012 PBT
; provided, however, in the event
that 2012 PBT were less than the sum of (i) $4,000,000 plus (ii) 33% of the
aggregate Top-Up Payments made as of such determination, then TAP shall equal
(A) the excess, if any, of (i) 2012 PBT over (ii) 2,400,000 plus (20% of
aggregate Top-Up Payments), multiplied by (B) 90%, multiplied by (C) the
Applicable Percentage;
provided further, however, in the event
that (x) 2011 PBT minus (y) (i) SAP divided by the Applicable Percentage
applicable to SAP divided by (ii) 90%, were less than $2,400,000 plus (20% of
aggregate Top-Up Payments), then for purposes of the calculations of TAP above,
2012 PBT shall be reduced by the amount of such shortfall;
FOAP =
Applicable Percentage x 36% x 2013 PBT
; provided, however, in the event
that 2013 PBT were less than the sum of (i) $4,000,000 plus (ii) 33% of the
aggregate Top-Up Payments made as of such determination, then FOAP shall equal
(A) the excess, if any, of (i) 2013 PBT over (ii) 2,400,000 plus (20% of
aggregate Top-Up Payments), multiplied by (B) 90%, multiplied by (C) the
Applicable Percentage;
provided further, however, in the event
that (x) the sum of 2011 PBT and 2012 PBT minus (y) (i) the sum of (A) SAP
divided by the Applicable Percentage applicable to SAP and (B) TAP divided by
the Applicable Percentage applicable to TAP divided by (ii) 90%, were less than
$4,800,000 plus (20% of aggregate Top-Up Payments), then for purposes of the
calculations of FOAP above, 2013 PBT shall be reduced by the amount of such
shortfall;
FIAP =
Applicable Percentage x 36% x 2014 PBT
3
; provided, however, in the event
that 2014 PBT were less than the sum of (i) 4,000,000 plus (ii) 33% of the
aggregate Top-Up Payments made as of such determination, then FIAP shall equal
(A) the excess, if any, of (i) 2014 PBT over (ii) $2,400,000 plus (20% of
aggregate Top-Up Payments), multiplied by (B) 90%, multiplied by (C) the
Applicable Percentage;
; provided further, however, in the event
that (x) the sum of 2011 PBT, 2012 PBT and 2013 PBT minus (y) (i) the sum of (A)
SAP divided by the Applicable Percentage applicable to SAP, (B) TAP divided by
the Applicable Percentage applicable to TAP and (C) FOAP divided by the
Applicable Percentage applicable to FOAP divided by (ii) 90%, were less than
$7,200,000 plus (20% of aggregate Top-Up Payments), then for purposes of the
calculations of FIAP above, 2014 PBT shall be reduced by the amount of such
shortfall.
LAP =
Applicable Percentage x 36% x 2015 PBT
; provided, however, in the event
that 2015 PBT were less than the sum of (i) $4,000,000 plus (ii) 33% of the
aggregate Top-Up Payments made as of such determination, then LAP shall equal
(A) the excess, if any, of (i) 2015 PBT over (ii) $2,400,000 plus (20% of
aggregate Top-Up Payments), multiplied by (B) 90%, multiplied by (C) the
Applicable Percentage;
; provided further, however, in the event
that (x) the sum of 2011 PBT, 2012 PBT, 2013 PBT and 2014 PBT minus (y) (i) the
sum of (A) SAP divided by the Applicable Percentage applicable to SAP, (B) TAP
divided by the Applicable Percentage applicable to TAP, (C) FOAP divided by the
Applicable Percentage applicable to FOAP and (D) FIAP divided by the Applicable
Percentage applicable to FIAP, divided by (ii) 90%, were less than $9,600,000
plus (20% of aggregate Top-Up Payments), then for purposes of the calculations
of LAP above, 2015 PBT shall be reduced by the amount of such
shortfall.
(i)
Within
thirty (30) days after the Annual Determination (as defined below) has been
determined for each 12-month calendar year 2010 and 2011, Kenna Holdco will be
eligible to receive a “First
Top-Up Payment” (if any) equal to the highest amount calculated under
clauses (1), (2), (3) and (4) below:
|
1.
|
If average
PBT for calendar years 2010 and 2011 is greater than $4,500,000 but less
than $5,000,001, then the Company will be eligible to receive a First
Top-Up Payment equal to
$1,250,000;
|
4
|
2.
|
If average
PBT for calendar years 2010 and 2011 is equal to or greater than
$5,000,001 but less than $5,500,000, then the Company will be eligible to
receive a First Top-Up Payment equal to
$1,500,000;
|
|
3.
|
If average
PBT for calendar years 2010 and 2011 is equal to or greater than
$5,500,001 but less than $5,800,000, then the Company will be eligible to
receive a First Top-Up Payment equal to $2,000,000;
or
|
|
4.
|
If
average PBT for calendar years 2010 and 2011 is equal to or greater than
$5,800,000, then the Company will be eligible to receive a First Top-Up
Payment equal to $2,500,000.
|
(ii)
Within
thirty (30) days after the Annual Determination (as defined below) has been
determined for each 12-month calendar year 2010, 2011 and 2012, Kenna Holdco
will be eligible to receive a “Second Top-Up Payment” (if
any) equal to the highest amount calculated under clauses (1), (2), (3) and (4)
below:
|
1.
|
If average
PBT for calendar years 2010, 2011 and 2012 is greater than $4,500,000 but
less than $5,000,001, then the Company will be eligible to receive a
Second Top-Up Payment equal to $2,500,000 minus the amount of the First
Top-Up Payment;
|
|
2.
|
If average
PBT for calendar years 2010, 2011 and 2012 is equal to or greater than
$5,000,001 but less than $5,500,000, then the Company will be eligible to
receive a Second Top-Up Payment equal to $3,000,000 minus the amount of
the First Top-Up Payment;
|
|
3.
|
If average
PBT for calendar years 2010, 2011 and 2012 is equal to or greater than
$5,500,001 but less than $5,800,000, then the Company will be eligible to
receive a Second Top-Up Payment equal to $4,000,000 minus the amount of
the First Top-Up Payment; or
|
|
4.
|
If average
PBT for calendar years 2010, 2011 and 2012 is equal to or greater than
$5,800,000, then the Company will be eligible to receive a Second Top-Up
Payment equal to $5,000,000 minus the amount of the First Top-Up
Payment.
|
5
(i) Payment of the Purchase
Price; Limitations and Conditions Precedent to Contingent Payments and Top-Up
Payments. Payment of each
component of the Purchase Price and any Contingent Payment or Top-Up Payment
that is required to be made under this Section 2.1 shall be
made in Canadian dollars by the Purchaser by direct wire transfer to the account
of Kenna Holdco, as set forth on Schedule 2.1 (or to such other
account as Kenna Holdco may notify the Purchaser in
writing). Notwithstanding the foregoing provisions in this Section
2.1, the Purchaser shall not be obligated to pay any Contingent Payments or
Top-Up Payments to Kenna Holdco unless and until (i) Xxxxx XX has Working
Capital of at least the Working Capital Target for a continuous period of at
least 6 months, (ii) Xxxxx XX has paid Kenna Holdco the Pre-Closing
Undistributed Profit Amount in accordance with the Xxxxx XX Agreement and (iii)
Xxxxx XX has sufficient cash on-hand to pay distributions due in accordance with
the Xxxxx XX Agreement.
(j) Termination of Contingent
Payments. Upon the exercise and closing of a Call option or
the consummation of a sale to a Prospective Purchaser (as such terms are defined
in the Xxxxx XX Agreement) pursuant to the Xxxxx XX Agreement (collectively, a
"Sale Event"), Kenna
Holdco’s right to receive any Contingent Payments based upon PBT for the
calendar year in which the applicable Sale Event occurred or for any calendar
year(s) thereafter, shall cease, and the obligation of the Purchaser to pay to
Kenna Holdco any such Contingent Payments shall terminate, contemporaneously
with the applicable Sale Event.
2.2
|
|
(i)
|
"Contingent Payments"
shall mean the aggregate amount of the payments made in Sections 2.1(a)
through (f).
|
|
(ii)
|
“Annual Determination”
shall have the meaning ascribed to such term in the Xxxxx XX
Agreement.
|
|
(iii)
|
"Applicable Percentage"
shall mean, with respect to any Contingent Payment, a percentage equal to
the result of (A) the quotient of (x) the average number of LP Units of
Xxxxx XX owned by Kenna Holdco during the calendar year for which PBT is
used to calculate such Contingent Payment (such average being determined
as the quotient of (1) the sum of the products of the varying numbers of
LP Units so owned by Kenna Holdco by the number of days in such year each
such number was owned by Kenna Holdco, and (2) 365 or 366 days, as
applicable for such year), divided by (y) the average total number of
outstanding Class A Units and LP Units for such year (calculated on the
same basis as provided in the parenthetical under (A)(x) above), divided
by (B) 20%.
|
|
(iv)
|
"GAAP" shall mean United
States generally accepted accounting principles consistently
applied.
|
|
(v)
|
“Pre-Closing Undistributed
Profit Amount” shall mean the amount of undistributed profits owed
to the Kenna Principals from Cap C LP immediately prior to the
consummation of the Reorganization, which amount shall be determined as of
the Closing Date in accordance with the Xxxxx XX Agreement and which
amount is estimated at Closing to be equal to
$648,000.
|
6
|
(vi)
|
"PBT" with respect to any
year, shall mean the consolidated net income (loss) of Xxxxx XX before
provision for any income taxes for such year, determined in accordance
with GAAP; provided, however, that for purposes of calculating PBT for
2010, PBT shall be deemed to include the PBT of the Kenna Business for the
period from January 1, 2010 until the Closing Date, plus the PBT of Xxxxx
XX for the period from the Closing Date through December 31,
2010.
|
|
(vii)
|
“Working Capital” shall
mean current assets minus current liabilities as determined in accordance
with GAAP.
|
(viii)
|
“Working Capital Target”
shall mean the sum of (x) $1,500,000 plus (b) the Pre-Closing
Undistributed Profit Amount (to the extent not yet distributed in
accordance with the Xxxxx XX
Agreement).
|
Section 2.3 Closing. The
closing of the transactions contemplated by this Agreement (the "Closing") shall take place
simultaneously with the execution and delivery of this Agreement on the date
hereof, at the offices of MDC Partners Inc., 00 Xxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx, X0X 0X0, or by the exchange of documents and instruments by mail,
courier, telecopy and wire transfer to the extent mutually acceptable to the
parties hereto (such date is herein referred to as the "Closing Date").
ARTICLE III
Kenna
Holdco and the Kenna Principals, jointly and severally, represent and warrant to
and with the Purchaser, as follows:
7
3.3 Limited
Partnership Units and Purchased Shares Free and Clear of All Liens; No Options
or Restrictions; Subsidiaries and Investments. Immediately prior
to the consummation of the transactions contemplated by this Agreement, (a)
Kenna Holdco owns of record and beneficially has valid title to the Purchased
Shares, and (b) 2265176 owns of record and beneficially has valid title to 13%
Units of Xxxxx XX and such ownership, in each case, is free and clear or all
Liens. There are no outstanding subscriptions, options, warrants, rights
(including "phantom stock rights"), calls, commitments, understandings,
conversion rights, rights of exchange, plans or other agreements of any kind
providing for the purchase, issuance or sale of any equity or ownership or
proprietary interest of 2265176 or the 13% Units , or which grants any Person
(other than 2265176 or the Kenna Principals) the right to share in the earnings
of Xxxxx XX. 2265176 does not, directly or indirectly, own any equity
interest in or have any voting rights with respect to any Person other than the
13% Units. There are no outstanding subscriptions, options, rights,
warrants, calls, commitments or arrangements of any kind to acquire any of the
Purchased Shares or 13% Units and there are no agreements or understandings with
respect to the sale or transfer of any of the Purchased Shares or 13% Units
other than this Agreement. There is no suit, action, claim, investigation or
inquiry by any Governmental or Regulatory Authority, and no legal,
administrative or arbitration proceeding pending or, to the knowledge of Kenna
Holdco or the Kenna Principals, threatened, against Kenna Holdco, 2265176 or
Xxxxx XX or any of the Purchased Shares or any of the 13% Units, with respect to
the execution, delivery and performance of this Agreement or the Conveyance
Documents or the transactions contemplated hereby or thereby or any other
agreement entered into by Kenna Holdco in connection with the transactions
contemplated hereby or thereby.
8
Section 3.5 Reaffirmation
of Representations and Warranties. Kenna Holdco and the Kenna
Principals hereby reaffirm and restate, to Purchaser, each of their respective
representations and warranties set forth in Article III.C. of the Newport
Purchase Agreement, which representations and warranties shall be true and
correct as of the Closing Date.
ARTICLE IV
The Purchaser represents, warrants and
agrees to and with Kenna Holdco as follows:
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 Province
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.
9
ARTICLE V
Simultaneously
herewith:
Section 5.
2 Certified
Resolutions. Kenna
Holdco shall have delivered to the Purchaser a copy of the resolutions of
authorizing the execution, delivery and performance of this Agreement and the
Conveyance Documents and the transactions contemplated hereby and thereby,
certified by one of its
officers.
10
ARTICLE VI
(a) As
long as Kenna Holdco beneficially owns any equity interests in Xxxxx XX, no
Xxxxx Principal shall sell or in any other way transfer, assign, distribute,
pledge, encumber or otherwise dispose of any of the equity securities of Kenna
Holdco or permit Kenna Holdco to issue any additional equity
securities.
(b) From
and after the Closing, Kenna Holdco covenants and agrees that it shall not,
directly or indirectly (i) authorize, create, issue, amend or modify any equity
interests (whether common or preferred), subscriptions, options, warrants,
rights (including "phantom equity rights"), calls, commitments, understandings,
conversion rights, rights of exchange, plans or other agreements of any kind,
providing for the purchase, issuance or sale of any membership interests,
profits interests, capital interests or equity interests of any kind in Kenna
Holdco; or (ii) provide compensation to any employee of Xxxxx XX or any
subsidiary, if any, except to the extent such employee was entitled or eligible
to receive such compensation at the time of, and as a result of, the
Closing. Kenna Holdco further covenants and agrees that it shall not,
directly or indirectly modify or xxxxx Xxxxx Holdco's Articles of Incorporation
(as amended through the Closing Date), a copy of each of which is attached
hereto, without the prior written consent of MDC Partners.
11
ARTICLE VII
Section 7.1 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. Subject to the limitations set forth in Section 7.6, the
respective representations, warranties, covenants and agreements of Kenna
Holdco, the Kenna Principals and the Purchaser contained in this Agreement shall
survive the Closing.
12
(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
7.4.2) (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.
13
(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 7.4.1, or
once any dispute under this Section 7.4.1 has
been finally resolved in favor of indemnification by a court or other tribunal
of competent jurisdiction, subject to the provisions of Section 7.6.1, 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.
(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 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") within 20 days after asserting or learning of such
Third Party Claim (or within such shorter time as may be necessary to give the
Indemnifying Party a reasonable opportunity to respond to such 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 within 15 days after receipt of the
Third Party Claims Notice or within such shorter time as may be necessary to
give the Indemnified Party a reasonable opportunity to respond to such Third
Party Claim (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 "Defense Notice"), 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 the Indemnifying
Party 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, except that such
approval may be withheld if the defense is to be in the name of the Indemnified
Party. 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 7.6.1, the
Indemnifying Party will be liable for all costs, expenses, settlement amounts or
other Losses paid or incurred in connection therewith.
14
(c) In
the event that the Indemnifying Party provides in the Indemnification Notice
that it 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 7.6.1, 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, which consent will not be unreasonably withheld or delayed; provided, however, such consent
may be withheld if, among other reasons, as a result of such settlement or
cessation of defense, (i) injunctive relief or specific performance would be
imposed 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) Notwithstanding
clause (d) above, the Indemnifying Party shall not be entitled to control, but
may participate in, and the Indemnified Party shall be entitled to have sole
control over, the defense or settlement of (x) that part of any Third Party
Claim that (i) seeks a temporary restraining order, a preliminary or permanent
injunction or specific performance against the Indemnified Party, (ii) involves
criminal allegations against the Indemnified Party or (iii) may 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 and (y) the entire Third Party Claim if such Third
Party Claim would impose liability on the part of the Indemnified Party in an
amount which is greater than the amount as to which the Indemnified Party is
entitled to indemnification under this Agreement.
15
(g) A
failure by an Indemnified Party to give timely, complete or accurate notice as
provided in this Section 7.4 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.
16
ARTICLE VIII
Section 8.2 Governing
Law; Service of Process and Consent to Jurisdiction. 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 Province of Ontario and the laws of Canada
applicable therein.
17
Section
8.5 "Affiliate"
Defined. As used in this Agreement, an "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.
If to the Purchaser, addressed
to:
c/o MDC
Partners Inc.
00
Xxxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx
Xxxxxx
X0X 0X0
Attention: Xxxxx
Xxxxxxxxx
with a copy
to:
c/o MDC
Partners Inc.
000 Xxxxx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention: General
Counsel
18
If to Kenna Holdco, to:
c/o Xxxx
Xxxxxxx
000
Xxxxxxxx Xxxxx
Xxxxxxxxx,
Xxxxxxx X0X 0X0
Attention: Xxxx
Xxxxxxx
with
a copy to (which shall not constitute notice):
Xxxxxx,
Zener & Waxman LLP
0000
Xxxxxxxx Xxxxxx Xxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Attention: Xxxxxxx
X. Xxxxxx
Facsimile: (000)
000-0000
If to the Kenna Principals,
to:
Xxxx
Xxxxxxx
000
Xxxxxxxx Xxxxx
Xxxxxxxxx,
Xxxxxxx X0X 0X0
and
Xxxxx
Xxxxxxx
000
Xxxxxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
with
a copy to (which shall not constitute notice):
Xxxxxx,
Zener & Waxman LLP
0000
Xxxxxxxx Xxxxxx Xxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Attention: Xxxxxxx
X. Xxxxxx
Facsimile: (000)
000-0000
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.
19
20
IN WITNESS WHEREOF, the
parties hereto have executed this Limited Partnership Unit Purchase Agreement,
on the day and year first above written.
By:
|
/s/ Xxxxxxxx Xxxxxx
|
||
Name:
Xxxxxxxx Xxxxxx
|
|||
Title: General
Counsel
|
|||
2265174
ONTARIO LIMITED
|
|||
By:
|
/s/ Xxxxx Xxxxxxx
|
||
Name:
Xxxxx Xxxxxxx
|
|||
Title:
Authorized Officer
|
|||
/s/
|
/s/ Xxxxx Xxxxxxx
|
||
Witness
|
Xxxxx
Xxxxxxx
|
||
/s/
|
/s/ Xxxx Xxxxxxx
|
||
Witness
|
Xxxx
Xxxxxxx
|
21