LIMITED PARTNERSHIP UNIT PURCHASE AGREEMENT
Exhibit
10.17.1
LIMITED PARTNERSHIP UNIT PURCHASE
AGREEMENT (this "Agreement") dated as of
November 30, 2010, by and among MDC PARTNERS INC., a Canadian corporation (the
"Purchaser"), NEWPORT
PARTNERS HOLDINGS LP, an Ontario limited partnership ("Newport"), CAP C LP HOLDCO
INC., an Ontario corporation ("Communications Holdco"),
2265174 ONTARIO LIMITED ("Kenna
Holdco"), an Ontario corporation, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇, each an
individual resident in the Province of Ontario (collectively, the "Kenna Principals" and
each a "Kenna
Principal").
WITNESSETH:
WHEREAS, in order to
facilitate a sale to the Purchaser, each of Newport and the Kenna Principals
have caused Kenna Communications LP ("▇▇▇▇▇ ▇▇") to be formed for
the purpose of demerging the businesses of Capital C Communications LP ("Cap C LP"), which consisted of
a technology based, customer relationship business and related database
marketing services business (the "Kenna Business") and the
separate business of rendering advertising, customer relationship, marketing or
communications services (the "Cap C Business") (see
reorganization chart attached as Exhibit A (the "Reorganization");
AND WHEREAS immediately prior
to the execution and delivery of this Agreement, Newport, Communications Holdco,
the Kenna Principals and ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Calvelery (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 part of the Kenna Business (the "Acquired Kenna Assets") and
certain disclosed liabilities and obligations of the Kenna Business to ▇▇▇▇▇ ▇▇,
pursuant to an Assignment and Assumption Agreement, and certain ancillary
documents (collectively, the "Conveyance Documents")
following which Cap C LP was dissolved;
AND WHEREAS, immediately
following the Reorganization, Newport holds 67.13% of the limited partnership
units of ▇▇▇▇▇ ▇▇ (the "Purchased Units"), and the
Purchaser wishes to purchase the Purchased Units from Newport, such that after
giving effect to such purchase, the Purchaser will own 67.13% of ▇▇▇▇▇ ▇▇ and
the Kenna Principals will own 32.87% of ▇▇▇▇▇ ▇▇, indirectly through their
equity interest in Communications Holdco;
AND WHEREAS simultaneous with
the execution and delivery of this Agreement, the Purchaser, Kenna Holdco, the
Kenna Principals and ▇▇▇▇▇ ▇▇ are executing and delivering an amended and
restated limited partnership agreement in respect of ▇▇▇▇▇ ▇▇;
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
SALE
OF THE PURCHASED UNITS
Section
1.1 Sale of the Purchased
Units. Subject to the terms and conditions herein stated,
Newport agrees to sell, assign, transfer and deliver to the Purchaser on the
Closing Date (as defined in Section 2.2), and the
Purchaser agrees to purchase from Newport on the Closing Date, the Purchased
Units.
ARTICLE II
PURCHASE
PRICE AND CLOSING
Section
2.1 Purchase
Price.
2.1.1 Purchase
Price. In full consideration for the purchase by the Purchaser
of the Purchased Units, the purchase price (the "Purchase Price") shall be
calculated and paid by the Purchaser to Newport, as set forth
below.
(a) Closing
Payment. At the Closing, the Purchaser shall pay to Newport an
amount equal to CDN $17,000,000.
(b) Payment of Purchase
Price. At the Closing, the Purchaser shall pay the Purchase
Price by wire transfer of immediately available funds as follows:
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(i)
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$16,060,000
to the order of DB Newport LLC (as successor to Fortress Credit Corp.);
and
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(ii)
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an
amount equal to $940,000 to
Newport.
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(c) For
the purposes of any wire transfers contemplated in this Agreement, the following
particulars of accounts into which funds are to be issued:
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(i)
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in
respect of Fortress Credit Corp.:
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Destination
Bank:
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TD
Canada Trust
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▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
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Bank
No.:
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004
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Transit
No.:
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10202
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Account
No.:
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0690-▇▇▇▇▇▇▇
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SWIFT
Code:
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▇▇▇▇▇▇▇▇▇▇▇
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Beneficiary:
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Torys
LLP, in Trust
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Client
Contact:
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▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
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(▇▇▇)
▇▇▇-▇▇▇▇
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(ii)
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in
respect of Newport:
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Destination
Bank:
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Royal
Bank of Canada
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Main
Branch Royal Bank Plaza
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▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
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Bank
No.:
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003
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Transit
No.:
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00002
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Account
No.:
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▇▇▇-▇▇▇-▇
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SWIFT
Code:
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▇▇▇▇▇▇▇▇
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Beneficiary:
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Newport
Partners Holdings LP
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Client
Contact:
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▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
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(▇▇▇)
▇▇▇-▇▇▇▇
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Section
2.2 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 Fogler, ▇▇▇▇▇▇▇▇ LLP, 95 Wellington Street West, Suite
1200, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, 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").
Section
2.3 Third Party Consents.
Anything in this Agreement to the contrary notwithstanding, in the event an
assignment or purported assignment to ▇▇▇▇▇ ▇▇ of any of the agreements,
contracts or commitments of the Kenna Business pursuant to the Conveyance
Documents or any claim, right or benefit arising thereunder or resulting
therefrom, without the consent of other parties thereto, would constitute a
breach thereof or would not result in ▇▇▇▇▇ ▇▇ receiving all of the rights
thereunder, such agreement, contract or commitment shall be deemed not to have
been assigned to ▇▇▇▇▇ ▇▇. In those circumstances, if requested by
the Purchaser, after the Closing, each Kenna Principal will use their best
efforts to obtain any such consent (excluding the payment of any
fees). If such consent is not obtained and is required to effectively
assign any agreement, contract or commitment to ▇▇▇▇▇ ▇▇, the ▇▇▇▇▇ Principals
will cooperate to provide ▇▇▇▇▇ ▇▇ with the full claims, rights and benefits
thereunder, including enforcement at the cost and for the benefit of ▇▇▇▇▇ ▇▇ of
any and all rights of Communications Holdco, against a third party thereto
arising out of the breach or cancellation by such third party or otherwise, and
any amount received by Communications Holdco in respect thereof shall be held
for and paid over to ▇▇▇▇▇ ▇▇.
Section
2.4 Further Assurance;
Post-Closing Cooperation. Newport and the Kenna Indemnitors (as defined
in Article III.B) will, from time to time, at the reasonable request of the
Purchaser, whether at or after the Closing Date, execute and deliver such other
and further instruments of conveyance, assignment, transfer and consent
reasonably required for the conveyance, assignment and transfer of the Assets
(as defined in the Conveyance Documents) pursuant to the Conveyance
Documents. Following the Closing, upon reasonable advance notice,
each party will afford each other party, its counsel and its accountants, during
normal business hours, reasonable access to the books, records and other data
relating to Newport or the Kenna Indemnitors or any of the Kenna Indemnitors'
respective subsidiary entities, if any, in its possession with respect to
periods prior to the Closing and the right to make copies and extracts
therefrom, to the extent that such access may be reasonably required by the
requesting party strictly in connection with (i) the preparation of tax returns,
(ii) the determination and enforcement of rights and obligations under this
Agreement, (iii) compliance with the requirements of any Governmental or
Regulatory Authority (as defined in Section 3.1.2), (iv)
any actual or threatened action or proceeding, and (v) the verification of the
“Assets” and “Assumed Liabilities” (as such terms are defined in the Conveyance
Documents), in each case only to the extent relating to the Kenna
Business.
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ARTICLE III
REPRESENTATIONS
OF NEWPORT, COMMUNICATIONS HOLDCO,
KENNA
HOLDCO AND THE KENNA PRINCIPALS
A. Newport
represents and warrants to the Purchaser, as follows:
Section
3.1 Execution and Validity of
Agreements; Restrictive Documents.
3.1.1 Execution and
Validity. Newport has the full legal right and capacity to
enter into this Agreement and to perform its obligations
hereunder. This Agreement has been duly and validly executed and
delivered by Newport and, assuming due authorization, execution and delivery by
the other parties hereto, constitutes a legal, valid and binding obligation of
Newport, enforceable against Newport in accordance with its terms.
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 Canada, 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 is
pending or, to Newport's knowledge, threatened against Newport with respect to
the execution, delivery and performance of this Agreement or the transactions
contemplated hereby or any other agreement entered into by Newport in connection
with the transactions contemplated hereby.
3.1.3 Non-Contravention. The
execution, delivery and performance by Newport of its obligations hereunder and
the consummation of the transactions contemplated hereby, will not as of the
Closing Date: (a) result in the violation by Newport 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 Newport, 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 Newport 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 Newport, under any of the terms,
conditions or provisions of any agreement, commitment, lease, license, evidence
of indebtedness, letter of credit, mortgage, indenture, security agreement,
instrument, note, bond, franchise, permit, concession, or other instrument,
obligation or agreement of any kind, written or oral (collectively, the "Newport Contracts"), to which
Newport is a party or by which Newport or any of its assets or properties are
bound.
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3.1.4 Approvals and
Consents. Other than the consents required pursuant to the
Credit Agreement (as defined below) to the Reorganization and any corporate or
partnership consents required for the Reorganization, no consent, approval or
action of, 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 Newport
Contract for the execution and delivery of this Agreement by Newport, the
performance by Newport of its obligations hereunder or the consummation of the
transactions contemplated hereby. For the purposes of this Agreement, the term
"Credit Agreement" means
that certain Credit Agreement dated as of December 7, 2006 by and among Newport
Finance Corp., as borrower, Newport, Newport Private Yield LP, NPY GP Trust,
Newport Partners Commercial Trust, Newport Partners Trustee Inc., Newport
Partners GP Inc. and NPY Beneficiary Inc., as parent obligors, DB Newport LLC
(as successor to Fortress Credit Corp.), as administrative agent and the lenders
from time to time party thereto (as amended by the First Amendment to
Credit Agreement dated as of May 9, 2007, the Second Amendment to the Credit
Agreement dated as of July 5, 2007, the Third Amendment to Credit Agreement and
Consent dated as of January 7, 2008 and the Fourth Amendment to Credit Agreement
and Consent dated September 30, 2008).
3.1.5 Limited Partnership Units;
Equity Ownership; No Options or Restrictions. Newport owns of
record and beneficially has valid title to 67.13% of the limited partnership
units of the ▇▇▇▇▇ ▇▇, which constitute the Purchased Units, and such ownership
shall be free and clear of all Liens except for those Liens in respect of which
the personal property security registrations set out on Schedule 3.1.5 have
been filed, which Liens shall not apply in respect of the Purchased Units, as
confirmed by evidence to be delivered pursuant to Section 5.10
hereof.
B. Communications
Holdco, Kenna Holdco and the Kenna Principals (the "Kenna Indemnitors"), jointly
and severally, represent and warrant to the Purchaser, as follows:
Section
3.2 Existence and Good
Standing.
3.2.1 Full
Power. Each of Communications Holdco, Kenna Holdco and the
Kenna Principals has the full power and authority to enter into this Agreement
and the Conveyance Documents and to perform their respective obligations
hereunder and thereunder. The execution and delivery of this
Agreement and the Conveyance Documents by Communications Holdco, and the
consummation by such parties of the transactions contemplated hereby and thereby
have been duly authorized by all required company action on behalf of such
parties. This Agreement and the Conveyance Documents have been duly
and validly executed and delivered by Communications Holdco and constitute a
legal, valid and binding obligation of Communications Holdco, enforceable
against it in accordance with their terms. Communications Holdco,
Kenna Holdco and the ▇▇▇▇▇ ▇▇ are each duly organized and are each validly
existing under the laws of the Province of Ontario, with the full power and
authority to own their respective properties and to carry on their respective
businesses, including the Kenna Business, all as and in the places where such
properties are now owned or operated or such businesses are now being conducted
except where such failure to qualify would not have a material adverse effect on
the respective businesses. The ▇▇▇▇▇ ▇▇, ▇▇▇▇▇ Holdco and
Communications Holdco are each duly qualified, licensed or admitted to do
business and each of them is in good company and tax standing in the
jurisdictions set forth on Schedule 3.2.1, which
are the only jurisdictions in which the ownership, use or leasing of their
respective assets and properties, or the conduct or nature of their respective
businesses, makes such qualification, licensing or admission
necessary.
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3.2.2 Capital Stock; Equity
Ownership; No Options or Restrictions; Subsidiaries and
Investments. 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 the ▇▇▇▇▇ ▇▇, or which grants any Person
other than the Kenna Principals and Newport the right to share in the earnings
of the ▇▇▇▇▇ ▇▇. The ▇▇▇▇▇ ▇▇ does not, directly or indirectly, own
any equity interest in or have any voting rights with respect to any
Person. There are no outstanding subscriptions, options, rights,
warrants, calls, commitments or arrangements of any kind to acquire any of the
Purchased Units and there are no agreements or understandings with respect to
the sale or transfer of any of the Purchased 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 threatened, against Communications Holdco, the ▇▇▇▇▇ ▇▇, the ▇▇▇▇▇
Principals or any of the Purchased 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 Newport in connection with the transactions contemplated hereby or
thereby.
3.2.3 Litigation. Except
as set forth on Schedule 3.2.3, 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 Kenna Principals, Kenna Holdco or Communications Holdco, any
investigation by) any Governmental or Regulatory Authority, pending or, to the
knowledge of the Kenna Principals, Kenna Holdco or Communications Holdco,
threatened, against the Kenna Principals, Kenna Holdco or Communications Holdco
with respect to this Agreement or the transactions contemplated hereby or by the
Conveyance Documents, or any other agreement entered into by the ▇▇▇▇▇ ▇▇, ▇▇▇▇▇
Holdco or Communications Holdco in connection with the transactions contemplated
hereby, or against or affecting the Kenna Business or the assets transferred to
the ▇▇▇▇▇ ▇▇ pursuant to the Conveyance Documents; and no acts, facts,
circumstances, events or conditions occurred or exist which are a basis for any
such action, proceeding or investigation. None of the Kenna
Principals, Kenna Holdco or Communications Holdco is subject to any Order
entered in any lawsuit or proceeding.
3.2.4 Compliance with
Laws. Each of the Kenna Principals, Kenna Holdco and
Communications Holdco is in compliance with all applicable Laws and Orders,
except in each case where the failure to so comply would not reasonably be
expected to have a Material Adverse Effect (as defined below). Each of the Kenna
Principals, Kenna Holdco and Communications Holdco has all Required Permits,
except where the failure to have such Required Permits would not reasonably be
expected to have a Material Adverse Effect. All of such Required
Permits are in full force and effect and no action or claim is pending, nor to
the knowledge of Communications Holdco, the Kenna Principals or Kenna Holdco
threatened, to revoke or terminate any such Required Permit or declare any such
Required Permit invalid in any respect. For the purposes of this Agreement, (a)
the term "Material Adverse
Effect" means, in respect of any Person, any effect or effects that are
materially adverse to the operations, business, prospects, assets or financial
condition of such Person, and (b) the term "Required Permits" means,
collectively, in respect of any Person, all permits, licenses, and other
government certificates, authorizations and approvals required by any
Governmental or Regulatory Authority for the operation of such Person's
business.
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3.2.5 Non-Contravention; Approvals
and Consents. The execution, delivery and performance by the
Kenna Principals, Communications Holdco and Kenna Holdco of their respective
obligations under this Agreement and the Conveyance Documents and the
consummation of the transactions contemplated hereby and thereby, as applicable,
will not (a) violate, conflict with or result in the breach of any provision of
the declaration and limited partnership agreement (or other comparable
documents) of Communications Holdco or Kenna Holdco; (b) result in the violation
by Communications Holdco, the Kenna Principals and Kenna Holdco of any Laws or
Orders of any Governmental or Regulatory Authority, or (c) if the consents and
notices set forth in Schedule 3.2.5 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
Communications Holdco, the Kenna Principals or Kenna Holdco 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 their respective assets or
properties, or under any of the terms, conditions or provisions of any Contract
(as defined in Section
3.2.12) to which Communications Holdco, the Kenna Principals or Kenna
Holdco is a party or by which Communications Holdco, the Kenna Principals or
Kenna Holdco or any of their respective assets or properties are or were bound.
Except as set forth in Schedule 3.2.5, 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 to which Communications Holdco, the Kenna
Principals or Kenna Holdco is a party, or by which their respective assets or
properties were or are bound, for the execution and delivery of this Agreement
or the Conveyance Documents, the performance by Communications Holdco, the Kenna
Principals or Kenna Holdco of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby.
C. Each
of Newport and the Kenna Indemnitors (jointly and severally as among the Kenna
Indemnitors) and severally between Newport and the Kenna Indemnitors, represent
and warrant to the Purchaser, as follows:
3.2.6 Financial Statements and No
Material Changes.
(a) Schedule 3.2.6(a)(i)
sets forth (i) the unaudited balance sheets of the Kenna Business as at December
31, 2008 and December 31, 2009 and the related unaudited statements of
operations for the fiscal years then ended, and (ii) the unaudited balance
sheets of the Kenna Business as at October 31, 2010 (the "Balance Sheet") and the
related unaudited statements of operations for the ten months then
ended. Such financial statements have been prepared in accordance
with GAAP throughout the periods indicated except as set forth on Schedule
3.2.6(a)(ii). Each balance sheet fairly presents the financial
condition of the entity or entities included within such balance sheet, at the
respective date thereof, and 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 and the related statements of
operations fairly present the results of operations for the respective period
indicated. Except for the transactions consummated pursuant to the
Conveyance Documents, since October 31, 2010 (the "Balance Sheet Date"), there
has been no material adverse change in the assets or liabilities, or in the
business or condition, financial or otherwise, or in the results of operations
or prospects of Cap C LP and the Kenna Business.
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(b) Schedule 3.2.6(b)(i)
sets forth (i) the unaudited consolidated balance sheets for Cap C LP as at
December 31, 2008 and December 31, 2009, and the related unaudited consolidated
statements of operations for the fiscal years then ended, and (ii) the unaudited
consolidated balance sheet of Cap C LP as at September 30, 2010 (the "Current Balance Sheet") and
the related unaudited consolidated statements of operations for the nine months
then ended. Such financial statements have been prepared in
accordance with GAAP throughout the periods indicated except as set forth on
Schedule
3.2.6(b)(ii). Each balance sheet fairly presents the financial
condition of the entity or entities included within such balance sheet, at the
respective date thereof, and 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 and the related statements of
operations fairly present the results of operations for the respective period
indicated. Except for the transactions consummated pursuant to the
Conveyance Documents, since September 30, 2010 (the "Current Balance Sheet Date"), there
has been no material adverse change in the assets or liabilities, or in the
business or condition, financial or otherwise, or in the results of operations
or prospects of Cap C LP and the Kenna Business.
3.2.7 Books and
Records. The Kenna Principals have delivered to the Purchaser
complete and correct copies of the partnership declaration and the partnership
agreement of the ▇▇▇▇▇ ▇▇ in effect immediately prior to the execution of this
Agreement.
3.2.8 Title to Properties;
Encumbrances. The ▇▇▇▇▇ ▇▇ has good and valid title to, or
enforceable leasehold interests in or valid rights under contract to use, all
the properties and assets owned or used in the Kenna Business, 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 ▇▇▇▇▇ ▇▇ 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) all monies received from clients of the Kenna
Business (including, without limitation, all monies received in connection with
the Kenna Business' media purchase obligations on behalf of its clients), in
each case free and clear of all Liens, except for Liens set forth on Schedule
3.2.8.
3.2.9 No Prior
Activities. The ▇▇▇▇▇ ▇▇ was created in order to facilitate a
sale to the Purchaser and solely for the purpose of engaging in the transactions
contemplated by the Conveyance Documents and this Agreement. The
▇▇▇▇▇ ▇▇ has not engaged in any activities other than in connection with its
formation, the negotiation, execution and delivery of this Agreement, the
Conveyance Documents and the ▇▇▇▇▇ ▇▇ partnership agreement, and the
consummation of the transactions contemplated hereby and
thereby. Except for liabilities incurred in connection with its
formation and the consummation of the transactions contemplated by this
Agreement, the Conveyance Documents and the ▇▇▇▇▇ ▇▇ partnership agreement, the
▇▇▇▇▇ ▇▇ has not incurred any liabilities or entered into any agreements or
arrangements with any Person.
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3.2.10 Owned Real
Property. The ▇▇▇▇▇ ▇▇ 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.
3.2.11 Leased Real
Property. Schedule 3.2.11
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 ▇▇▇▇▇ ▇▇, or by
Cap C LP in relation to the Kenna Business and assigned to the ▇▇▇▇▇ ▇▇ pursuant
to the Conveyance Documents, to which the ▇▇▇▇▇ ▇▇ is a party (as lessee,
sublessee, lessor, sublessor, licensor or licensee) (each individually, a "Real Property Lease" and
collectively, the "Real
Property Leases"). Each Real Property Lease 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 Real Property Lease have
been paid; and the lessee has been in peaceable possession since the
commencement of the original term of each 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
Cap C LP or the ▇▇▇▇▇ ▇▇ or to the knowledge of Newport or the Kenna Principals
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 Cap C
LP or the ▇▇▇▇▇ ▇▇ 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. Cap C LP held and the ▇▇▇▇▇ ▇▇ now holds the
leasehold estate on all the Real Property Leases free and clear of all Liens
except as set forth on Schedule
3.2.11. The real property leased by Cap C LP and/or the ▇▇▇▇▇
▇▇ 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, and there are no material repair or restoration works likely to be
required in connection with any of the leased real properties. Cap C
LP was, and the ▇▇▇▇▇ ▇▇ now is, in physical possession and actual and exclusive
occupation of the whole of each of its leased properties. No
environmental claim has been made against Cap C LP or the ▇▇▇▇▇ ▇▇ with respect
to any Real Property Lease. Neither Cap C LP nor the ▇▇▇▇▇ ▇▇ owes
any brokerage commission with respect to any of the Real Property
Leases.
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3.2.12 Contracts. For
purposes of this Agreement, the term “Contract” shall mean any
written agreement, commitment, lease, license, evidence of indebtedness, letter
of credit, mortgage, indenture, security agreement, instrument, note, bond,
franchise, permit, concession, or other instrument, obligation or agreement of
any kind. Schedule
3.2.12 hereto contains an accurate and complete list of the following
Contracts to which the ▇▇▇▇▇ ▇▇ is currently a party or Cap C LP was a party
prior to the assignment of the same to the ▇▇▇▇▇ ▇▇ pursuant to the Conveyance
Documents (and Schedule 3.2.12
indicates if a listed item has not been assigned as of the Closing Date (in
which case, Section
2.3 shall apply) to and assumed by the ▇▇▇▇▇ ▇▇ pursuant to the
Conveyance Documents): (a) all Plans (as such term is defined in Section 3.2.24), (b)
any personal property lease with a fixed annual rental of $10,000 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, (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,
(f) any management service, employment, consulting or similar type of Contract
which is not cancelable by the ▇▇▇▇▇ ▇▇ or Cap C LP without penalty or other
financial obligation within 30 days, (g) any Contract
limiting the Kenna LP'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 ▇▇▇▇▇ ▇▇ or Cap C LP 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 ▇▇▇▇▇ ▇▇,
on the one hand, and any officer or director thereof, on the other hand, 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 3.2.17) other
than "shrink-wrap" and similar end-user licenses, (l) any agreement with a
client required to be listed on Schedule 3.2.21, (m)
any agreement, indenture or other instrument which restricts the ability of the
▇▇▇▇▇ ▇▇ or any of its subsidiaries to make distributions in respect of its
equity, (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 3.2.12) which
involves $50,000 or more over the unexpired term thereof and is not cancelable
by the ▇▇▇▇▇ ▇▇, without penalty or other financial obligation within 30 days;
provided, however, Contracts of a similar nature which individually do not
involve $50,000 but in the aggregate involve $50,000 or more over the unexpired
terms shall also be set forth on Schedule 3.2.12, (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
3.2.12, and (q) any agreement (not covered by another subsection of this
Section 3.2.12)
between the ▇▇▇▇▇ ▇▇, on the one hand, and any member of the ▇▇▇▇▇ ▇▇, on the
other hand. Notwithstanding anything to the contrary contained above, (x)
commitments to 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
3.2.12. Each Contract which has been assigned to and assumed by the ▇▇▇▇▇
▇▇ pursuant to the Conveyance Documents, including without limitation, those
required to be set forth on Schedule 3.2.12, is
in full force and effect, and there exists no default or event of default by the
▇▇▇▇▇ ▇▇ or Cap C LP or, to the knowledge of Newport or the Kenna Principals, 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 by the ▇▇▇▇▇ ▇▇, and there are no outstanding claims
of breach or indemnification or notice of default or termination of any such
Contract.
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3.2.13 Litigation. Except as
set forth on Schedule
3.2.13, 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 Newport, the Kenna Principals, Kenna Holdco or
Communications Holdco, any investigation by) any Governmental or Regulatory
Authority, pending or, to the knowledge of the Kenna Principals, Kenna Holdco or
Communications Holdco, threatened, against the ▇▇▇▇▇ ▇▇, the ▇▇▇▇▇ Business or
Cap C LP with respect to this Agreement or the transactions contemplated hereby
or by the Conveyance Documents, or any other agreement entered into by the Kenna
Business in connection with the transactions contemplated hereby, or against or
affecting the Kenna Business, and no acts, facts, circumstances, events or
conditions occurred or exist which are a basis for any such action, proceeding
or investigation. The Kenna Business is not subject to any Order
entered in any lawsuit or proceeding.
3.2.14 Taxes. Cap
C LP has timely filed, or caused to be filed, taking into account any valid
extensions of due dates, completely and accurately, all federal and provincial
tax or information returns required under the statutes, rules or regulations of
such jurisdictions to be filed by it for all fiscal periods of Cap C LP. 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, 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 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 Cap C LP
pursuant to the Income Tax
Act (Canada) (the "ITA") or any similar provision
of provincial or foreign law, but only to the extent that such Taxes relate to
or are in connection with the Kenna Business which has been heretofore carried
on by Cap C LP. 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
3.2.14. Cap C LP has collected all sales, use, goods and
services, harmonized 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. Cap C LP 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. Newport and/or the Kenna Principals have
delivered or caused to be delivered to the Purchaser correct and complete copies
of all federal or provincial income tax returns or information returns filed
with respect to Cap C LP that were requested by the Purchaser. Except
as set forth on Schedule 3.2.14, none
of the federal or provincial income tax returns or information returns of Cap C LP have, to the
knowledge of Newport, Communications Holdco or the Kenna Principals, ever been
audited by the Canada Revenue Agency or any other Governmental or Regulatory
Authority. None of Newport, the Kenna Principals or Communications
Holdco are non-residents of Canada within the meaning of the ITA.
3.2.15 Liabilities. Except
as incurred in the ordinary course since October 31, 2010 or as set forth in the
Conveyance Documents, the Balance Sheet, the Current Balance Sheet or on Schedule 3.2.15,
neither the Kenna Business, the ▇▇▇▇▇ ▇▇ nor Cap C LP has any outstanding
claims, liabilities or indebtedness of any nature whatsoever as to which the
Kenna Business, the ▇▇▇▇▇ ▇▇ or Cap C LP is or may become responsible
(collectively in this Section 3.2.15,
"Liabilities"), whether
accrued, absolute or contingent, determined or undetermined, asserted or
unasserted, and whether due or to become due.
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3.2.16 Insurance. Schedule 3.2.16
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 and employees of the Kenna Business, including but
not limited to the property, assets, business and employees of Cap C LP that
were transferred to the ▇▇▇▇▇ ▇▇ pursuant to the Conveyance Documents (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 neither Cap C LP, the Kenna Business nor the ▇▇▇▇▇
▇▇ has received any notice of cancellation or termination in respect of any such
policy or default thereunder. Neither Cap C LP, the Kenna Business
nor the ▇▇▇▇▇ ▇▇, or to the knowledge of Newport, the Kenna Principals or
Communications Holdco, the Person to whom such policy has been issued has
received notice that any insurer under any policy referred to in this Section 3.2.16 is
denying liability with respect to a claim thereunder or defending under a
reservation of rights clause. Within the last two years neither Cap C
LP, the Kenna Business nor the ▇▇▇▇▇ ▇▇ has filed for any claims exceeding
$25,000 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 the Conveyance
Documents and all such policies shall continue in effect after the Closing Date
for the benefit of the ▇▇▇▇▇ ▇▇. Neither Cap C LP, the Kenna Business
nor the ▇▇▇▇▇ ▇▇ has received any notice of cancellation of any such
policy. Neither Cap C LP, the Kenna Business nor the ▇▇▇▇▇ ▇▇ has
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
3.2.16 will not be available in the future on substantially the same
terms now in effect, unless as a result of the Reorganization or the change of
control contemplated herein. Neither Cap C LP, the Kenna Business nor the ▇▇▇▇▇
▇▇ has been refused any insurance or required to pay higher than normal or
customary premiums, nor has its coverage been limited by any insurance carrier
to which it has applied for insurance during the last three years.
3.2.17 Intellectual
Property.
Definitions.
For purposes of this Agreement, the following terms have the following
definitions:
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(a) "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, re-examinations, 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 a Person 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 ▇▇▇▇ 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.
(b) "Intellectual Property of the ▇▇▇▇▇
▇▇" shall mean any Intellectual Property that is owned by the ▇▇▇▇▇ ▇▇
(including Intellectual Property transferred by Cap C LP to the ▇▇▇▇▇ ▇▇
pursuant to the Conveyance Documents), including Registered IP and Unregistered
IP.
(c) "Licensed Intellectual
Property" means any Intellectual Property owned by another Person that is
used by the ▇▇▇▇▇ ▇▇ in the operation of the Kenna Business, including
Off-the-Shelf Software (as defined below), but excluding rights in or to
materials created for clients of the Kenna Business, to the extent to which such
(x) client of the Kenna Business is the first owner of copyright in such
materials or (y) the materials are subject to a written assignment of copyright
in favour of clients of the Kenna Business.
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3.2.18 Representations.
Except as set forth on Schedule 3.2.18, all
of the Intellectual Property of Cap C LP used in the Kenna Business was
transferred to the ▇▇▇▇▇ ▇▇ pursuant to the Conveyance Documents. Schedule 3.2.18
hereto contains an accurate and complete list of all the Intellectual Property
of the ▇▇▇▇▇ ▇▇ and the Licensed Intellectual Property including, without
limitation, (a) patents, patent applications, registered trademarks,
applications for registered trademarks, registered service marks, domain names,
applications for registered service marks, logos, registered copyrights and
applications for registered copyrights, and all registered design rights and
applications thereto which are owned by the ▇▇▇▇▇ ▇▇ (the "Registered IP"), (b) all
unregistered trademarks, unregistered service marks and material unregistered
copyrights and all designs which are owned by the ▇▇▇▇▇ ▇▇ (the "Unregistered IP") and (c) all
Licensed Intellectual Property that is material to the operation of the Kenna
Business, other than widely distributed off-the-shelf applications subject to
shrink-wrap and similar non-negotiated end-user license agreements ("Off-the-Shelf Software").
Except as set forth on Schedule 3.2.18, the
registrations and applications of the Registered IP listed on Schedule 3.2.18, are
in the name of Cap C LP, 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 jurisdictions where the Kenna Business is conducted for the purposes of
maintaining such Intellectual Property registrations, and applications therefor,
and no actions (including filing of documents or payments of fees) are due
within ninety (90) days after the Closing. 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 3.2.18, (i)
the ▇▇▇▇▇ ▇▇ is the sole and exclusive owner of all rights, title and interest
in and to the Intellectual Property of the ▇▇▇▇▇ ▇▇, free and clear of all
Liens, (ii) no Person has any rights to use any of the Intellectual Property of
the ▇▇▇▇▇ ▇▇, (iii) neither Cap C LP nor the ▇▇▇▇▇ ▇▇ has granted to any Person,
or authorized any Person to retain, any ownership in the Intellectual Property
of the ▇▇▇▇▇ ▇▇, and (iv) all Licensed Intellectual Property in the Kenna LP's
possession or used in the operation of the Kenna Business has been properly
licensed from the owner of such Intellectual Property, and the ▇▇▇▇▇ ▇▇
possesses all license agreements, certificates or documentation sufficient to
substantiate such rights, and the ▇▇▇▇▇ ▇▇ is in compliance with, and Cap C LP
has not in the past violated, such license agreements. Except as set
forth on Schedule
3.2.18, the consummation of the transactions contemplated hereby will not
result in any loss or impairment of the Kenna LP'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
Newport, the Kenna Principals or Communications Holdco, the operation of the
Kenna Business and use of all Intellectual Property therein does not infringe
the Intellectual Property of any other Person. There are no proceedings pending
or, to the knowledge of Newport, the Kenna Principals or Communications Holdco,
threatened against Cap C LP, the Kenna Business or the ▇▇▇▇▇ ▇▇ with respect to
the Intellectual Property, or with respect to any other Intellectual Property,
alleging the infringement or misappropriation by Cap C LP, the Kenna Business or
the ▇▇▇▇▇ ▇▇ of any Intellectual Property of any Person, and neither Cap C LP,
the Kenna Business nor the ▇▇▇▇▇ ▇▇ has received notice from any Person that the
operation of the Kenna Business infringes the Intellectual Property of any
Person. There are no claims pending or, to the knowledge of Newport,
the Kenna Principals or Communications Holdco, threatened challenging the
validity of any Intellectual Property of the ▇▇▇▇▇ ▇▇ or any Intellectual
Property used by the ▇▇▇▇▇ ▇▇ in the conduct of the Kenna Business. Neither Cap
C LP, the Kenna Principals nor the ▇▇▇▇▇ ▇▇ has entered into or is otherwise
bound by any consent, forbearance or any settlement agreement which limits the
rights of the ▇▇▇▇▇ ▇▇ to use the Intellectual Property of the Kenna
Business. To the knowledge of Newport, the Kenna Principals or
Communications Holdco, no Person is infringing or misappropriating any of the
Intellectual Property of the Kenna Business. All Intellectual Property of the
Kenna Business was either developed (a) by employees of Cap C LP within the
scope of such employee's employment duties; or (b) by independent contractors or
other third parties who have assigned all of their rights therein to Cap C LP
pursuant to a written agreement, and all such employees, independent
contractors, and other third parties have waived, pursuant to a written
agreement, their moral rights in all such Intellectual Property in favour of the
▇▇▇▇▇ ▇▇ or Cap C LP. Except as set forth on Schedule 3.2.18, the
Intellectual Property of the ▇▇▇▇▇ ▇▇ does not contain any software licensed
under terms which require, as a condition of the use, modification, or
distribution of such software, that other software incorporated into, derived
from, or distributed with such software: (x) be disclosed or distributed in
source code form; (y) be licensed under terms that permit making derivative
works; or (z) be redistributable at no charge to subsequent
licensees.
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3.2.19 Privacy and
Security. All information or data of any kind relating to the
Kenna Business possessed by the ▇▇▇▇▇ ▇▇, including but not limited to,
personally identifiable information collected from consumers ("PII"), aggregate or anonymous
information collected from consumers ("Non-PII") and employee data
relating to the Kenna Business or possessed by the ▇▇▇▇▇ ▇▇ (collectively,
"Data"), has been
collected, by Cap C LP, the Kenna Business or the ▇▇▇▇▇ ▇▇, and is being
maintained, stored, processed and used by the ▇▇▇▇▇ ▇▇ in connection with the
Kenna Business, in compliance with all Laws and Orders. Cap C LP and
the ▇▇▇▇▇ ▇▇ have at all times presented a privacy policy ("Privacy Policy") to consumers
prior to the collection of any PII or Non-PII online. The Privacy
Policy, and any other representations, marketing materials and advertisements
that address privacy issues and the treatment of PII and Non-PII, accurately and
completely describe Cap C LP, the Kenna Business and the Kenna LP's respective
information collection and use practices, and no such notices or disclosures
have been inaccurate, misleading or deceptive. Neither Cap C LP nor
the ▇▇▇▇▇ ▇▇ has collected or received any PII from children under the age of 13
without verifiable parental consent or directed any of its websites to children
under the age of 13 through which such PII could be obtained. Cap C
LP and the ▇▇▇▇▇ ▇▇ have stored and maintained all Data in a secure manner,
using commercially reasonable technical measures, to assure the integrity and
security of the Data and to prevent loss, alteration, corruption, misuse and
unauthorized access to such Data. There has been no unauthorized use,
access to or disclosure of any Data. Neither Cap C LP nor the ▇▇▇▇▇
▇▇ has received any claims, notices or complaints regarding its information
practices or use of Data. The consummation of the transactions
contemplated hereby will not result in any loss or impairment of the rights to
own and use any Data, nor will such consummation require the consent of any
third party in respect of any Data.
3.2.20 Compliance with Laws.
The Kenna Business (including the business conducted by Cap C LP) has been
conducted, in compliance with all applicable Laws and Orders, except in each
case where the failure to so comply would not reasonably be expected to have a
Material Adverse Effect. The Kenna Business has all Required Permits except
where the failure to have such Required Permits would not reasonably be expected
to have a Material Adverse Effect. All of such Required Permits are
in full force and effect and no action or claim is pending, nor to the knowledge
of Newport or Communications Holdco, threatened, to revoke or terminate any such
Required Permit or declare any such Required Permit invalid in any
respect.
3.2.21 Client
Relations. Schedule 3.2.21 sets
forth (a) the ten (10) largest clients of the Kenna Business (measured by
revenues), and the revenues from each such client and from all clients (in the
aggregate) for the calendar year ended December 31, 2009 and (b) the clients
projected to be the ten (10) largest clients (measured by revenues) of the Kenna
Business based on its current profit plan for the twelve months ending December
31, 2010 and 2011, together with the estimated revenues from each such client
and all clients (in the aggregate) for such periods. Communications
Holdco represents that the estimated revenues set forth on Schedule 3.2.21 were
made in good faith and on a reasonable basis. Except as set forth on
Schedule
3.2.21, no client of the Kenna Business has advised Communications
Holdco, the ▇▇▇▇▇ ▇▇ or any Kenna Principal in writing that it is (x)
terminating or considering terminating the handling of its business by Cap C LP
or the ▇▇▇▇▇ ▇▇ or in respect of any particular product, project or service or
(y) planning to reduce its future spending with Cap C LP, the Kenna Business or
the ▇▇▇▇▇ ▇▇ in any material manner; and no client has orally advised the ▇▇▇▇▇
▇▇, Communications Holdco, the Kenna Business or any Kenna Principal of any of
the foregoing events.
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3.2.22 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 Kenna Business
and which was transferred to the ▇▇▇▇▇ ▇▇ pursuant to the Conveyance Documents,
as being due to the Kenna Business 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 and will be good and collectible in full (less the amount of any
provision, reserve or similar adjustment therefor reflected on the Balance Sheet
and the Closing Balance Sheet) in the ordinary course of business, and none of
the accounts receivable or other debts (or accounts receivable arising from any
such work-in-process or unbilled invoices) is or will be subject to any
counterclaim or set-off except to the extent of any such provision, reserve or
adjustment. The accounts payable set forth on the Balance Sheet, and
the accounts payable incurred since the Balance Sheet Date through the Closing
Date, represent trade payables resulting from bona fide transactions incurred in
the ordinary course of business. 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 Kenna Business, or the reserves
with respect thereto, or accounts payable of the Kenna Business which would have
a Material Adverse Effect.
3.2.23 Employment
Relations. (a) No unfair labour practice complaint against Cap
C LP, the Kenna Business or the ▇▇▇▇▇ ▇▇ is pending before any Governmental or
Regulatory Authority; (b) there is no organized labour strike, dispute, slowdown
or stoppage pending or to the knowledge of Newport or Communications Holdco,
threatened against or involving the Kenna Business; (c) there are no labour
unions representing or, to the knowledge of Newport or Communications Holdco,
attempting to represent the employees of the Kenna Business who became employees
of the ▇▇▇▇▇ ▇▇; (d) no claim or grievance nor any arbitration proceeding
arising out of or under any collective bargaining agreement is pending against
any of the Kenna Business, the ▇▇▇▇▇ ▇▇ or Communications Holdco and to the
knowledge of Newport or Communications Holdco, no such claim or grievance has
been threatened; (e) no collective bargaining agreement is currently being
negotiated by Cap C LP or the ▇▇▇▇▇ ▇▇; and (f) Cap C LP did not experience any
work stoppage or similar organized labour dispute during the last three years.
Except as set forth on Schedule 3.2.23,
there is no legal action, suit, proceeding or claim pending or, to the knowledge
of Newport, Kenna Holdco or the Kenna Principals or Communications Holdco,
threatened between the Kenna Business, ▇▇▇▇▇ ▇▇ or Cap C LP and any employees or
former employees of Cap C LP or the Kenna Business.
3.2.24 Pension and Other Benefit
Plans.
(a) Schedule 3.2.24 sets
forth a true and complete list of all employee benefit plans, including, without
limitation, pension/benefit plans maintained by Cap C LP and/or the ▇▇▇▇▇ ▇▇
(each a "Plan").
(b) Except
as disclosed in Schedule 3.2.24 each
Plan is, and has been, established, registered, qualified, administered and
invested, in compliance with (i) the terms thereof, and (ii) all applicable
Laws.
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(c) All
obligations under the Plans (whether pursuant to the terms thereof or applicable
Law) have been satisfied.
(d) All
contributions or premiums required to be paid to or in respect of each Plan have
been paid in a timely fashion in accordance with the terms thereof and all
applicable Law, and no Taxes, penalties or fees are owing or exigible under any
Plan.
(e) There
are no going concern unfunded actuarial liabilities, past service unfunded
liabilities or solvency deficiencies respecting any of the Plans.
(f) No
material changes have occurred in respect of any Plan since the date of the most
recent financial, accounting or actuarial report, as applicable, issued in
connection with any Plan, which could reasonably be expected to adversely affect
the relevant report (including rendering it misleading in any material
respect).
(g) There
have been no improper withdrawals or transfer of assets from any
Plan.
(h) None
of the Plans require or permit a retroactive increase in premiums or payments,
and the level of insurance reserves, if any, under any insured Plan is
reasonable and sufficient to provide for all incurred but unreported
claims.
3.2.25 Interests in Customers,
Suppliers, etc. Except as set forth on Schedule 3.2.25,
neither Newport nor to the knowledge of Newport or Communications Holdco
(without making any inquiry of any member of the Related Group, as hereinafter
defined), any officer, director, or employee of Cap C LP or the ▇▇▇▇▇ ▇▇
immediately prior to the Closing Date, any parent, brother, sister, child or
spouse of any such officer, director, key executive or employee of the ▇▇▇▇▇ ▇▇,
Communications Holdco or Newport (collectively, the "Related Group"), or any Person
controlled by anyone in the Related Group:
(a) 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 Cap C LP or the ▇▇▇▇▇ ▇▇;
(b) owns,
directly or indirectly (other than through the ownership of Limited Partnership
Units), in whole or in part, any tangible or intangible property that the ▇▇▇▇▇
▇▇ used in the conduct of the Kenna Business, other than immaterial personal
items owned and used by employees at their work stations; or
(c) has
any cause of action or other claim whatsoever against, or owes any amount to,
Cap C LP or the ▇▇▇▇▇ ▇▇, 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.
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3.2.26 Bank Accounts and Powers of
Attorney. Set forth in Schedule 3.2.26 is an
accurate and complete list showing (a) the name and address of, and account
information for, each bank in which Cap C LP had immediately prior to the
transfer of the Kenna Business to the ▇▇▇▇▇ ▇▇, or the ▇▇▇▇▇ ▇▇ 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 Cap C LP or the ▇▇▇▇▇ ▇▇ and a summary statement
of the terms thereof.
3.2.27 Compensation of
Employees. Schedule 3.2.27 is an
accurate and complete list showing: (a) the names and positions of all employees
and exclusive consultants of the Kenna Business, or Cap C LP immediately prior
to the transfer of the Kenna Business by Cap C LP to the Kenna Business, who
are, or were being, compensated at an annualized rate of $50,000 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
2008 and 2009, and a statement of the projected annual salary, bonus and
incentive compensation payable with respect to the calendar year ended December
31, 2010, and the material fringe benefits of such employees and exclusive
consultants not generally available to all employees of Cap C LP or the Kenna
Business; (b) all bonus and incentive compensation paid or payable (whether by
agreement, custom or understanding) to any employee of Cap C LP or the Kenna
Business not listed in clause (a) above for services rendered or to be rendered
during calendar years 2008 and 2009; (c) the names of all retired employees, if
any, of Cap C LP or the Kenna Business who are receiving or entitled to receive
any healthcare or life insurance benefits or any payments from Cap C LP or the
Kenna Business not covered by any pension plan to which Cap C LP or the Kenna
Business is a party, their ages and current unfunded pension rate, if any; and
(d) a description of the current severance and vacation policy of Cap C LP and
the Kenna Business. Neither Cap C LP nor the Kenna Business has,
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). Each of Cap C LP and
the Kenna Business has properly classified and compensated all employees and
consultants in accordance with all applicable Laws and Orders of any
Governmental and Regulatory Authority.
3.2.28 Non-Contravention; Approvals
and Consents. The execution, delivery and performance by the
▇▇▇▇▇ ▇▇ and Cap C LP of their respective obligations under this Agreement and
the Conveyance Documents, as the case may be, and the consummation of the
transactions contemplated hereby and thereby, as the case may be, will not (a)
violate, conflict with or result in the breach of any provision of the
declaration and limited partnership agreement (or other comparable documents) of
the ▇▇▇▇▇ ▇▇ and Cap C LP, (b) result in the violation by the ▇▇▇▇▇ ▇▇ or Cap C
LP of any Laws or Orders of any Governmental or Regulatory Authority, or (c) if
the consents and notices set forth in Schedule 3.2.28 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 ▇▇▇▇▇
▇▇ or Cap C LP 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
their respective assets or properties, or under any of the terms, conditions or
provisions of any Contract to which the ▇▇▇▇▇ ▇▇ or Cap C LP is a party or by
which the ▇▇▇▇▇ ▇▇ or Cap C LP or any of their respective assets or properties
are or were bound. Except as set forth in Schedule 3.2.28, 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 to which the ▇▇▇▇▇ ▇▇ or Cap C LP is a
party, or by which their respective assets or properties were or are bound, for
the execution and delivery of this Agreement or the Conveyance Documents, the
performance by the ▇▇▇▇▇ ▇▇ or Cap C LP of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby.
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3.2.29 No Changes Since the Balance
Sheet Date. From the Balance Sheet Date through the date
hereof, except as specifically stated on Schedule 3.2.29,
neither Cap C LP nor the ▇▇▇▇▇ ▇▇ (i) incurred any liability or obligation of
any nature (whether accrued, absolute, contingent or otherwise), except in the
ordinary course of business, (ii) permitted any of its assets to be subjected to
any Lien, (iii) sold, transferred or otherwise disposed of any assets except in
the ordinary course of business, (iv) made any capital expenditure or commitment
therefor which individually or in the aggregate exceeded $50,000; (v) made any
distributions or dividend payments on any shares of its capital stock or equity
participation rights, or redeemed, purchased or otherwise acquired any shares of
its capital stock, or any option, warrant or other right to purchase or acquire
any shares of capital stock or equity participation rights of Cap C LP or the
▇▇▇▇▇ ▇▇, (vi) made any bonus or profit sharing distribution, (vii) increased or
prepaid its indebtedness for borrowed money, except current borrowings under
credit lines, 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 Cap C LP or the ▇▇▇▇▇
▇▇, (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 Cap C LP or the ▇▇▇▇▇ ▇▇ at an
annual rate of $100,000 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 Cap C LP or the ▇▇▇▇▇ ▇▇ (and will not be
cancelable by the ▇▇▇▇▇ ▇▇) without penalty or other financial obligation within
30 days, (xi) canceled or waived any claims or rights of material value, (xii)
made any change in any method of accounting procedures, (xiii) otherwise
conducted Cap C LP's business or the Kenna 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 is material to
their businesses, (xv) renewed, extended or modified any lease of real property
or any lease of personal property, except in the ordinary course of business, or
(xvi) agreed, whether or not in writing, to do any of the actions set forth in
any of the above clauses.
3.2.30 Corporate
Controls. To the knowledge of the Kenna Principals, no
officer, authorized agent, employee, consultant or any other Person while acting
on behalf of Cap C LP, the Kenna Business or the ▇▇▇▇▇ ▇▇, 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, or other payment of a similar or comparable
nature, to any Person, private or public, regardless of form, whether in money,
property, or services, to obtain favourable treatment in securing business or to
obtain special concessions, or to pay for favourable treatment for business
secured or for special concessions already obtained, and neither Communications
Holdco, the Kenna Business nor the ▇▇▇▇▇ ▇▇ have participated in any illegal
boycott or other similar illegal practices affecting any of its actual or
potential customers.
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3.2.31 Brokers. No
broker, finder, agent or similar intermediary has acted on behalf of Newport,
Communications Holdco or the ▇▇▇▇▇ ▇▇ 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 Communications Holdco, Kenna Holdco,
the ▇▇▇▇▇ ▇▇ or Newport in connection therewith based on any agreement,
arrangement or understanding with any of them.
3.2.32 Repayment of
Loans. Except as set forth on Schedule 3.2.32, as
of the Closing, all (i) intercompany indebtedness and (ii) indebtedness
(including unpaid distributions) of the ▇▇▇▇▇ ▇▇ or Capital CEK LP to
Communications Holdco or Newport has been repaid in full, other than routine
travel expense advances in the ordinary course of business and consistent in
amount with past practice.
3.2.33 Disclosure. No
representation or warranty of Newport, Communications Holdco, Kenna Holdco or
the Kenna Principals contained in this Agreement contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements herein or therein, in the light of the circumstances under which
they were made, not misleading.
3.2.34 Copies of
Documents. Communications Holdco and/or the Kenna Principals
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.C or in any Schedule.
ARTICLE IV
REPRESENTATIONS
OF THE PURCHASER
The Purchaser represents and warrants
to Newport, the Kenna Principals, Kenna Holdco and Communications 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 Canada with full
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and 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.
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Section
4.2 Execution and Validity of
Agreement. 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 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 the Purchaser and, assuming due authorization, execution and
delivery by the other parties hereto, constitutes the legal, valid and binding
obligation of the Purchaser, enforceable against it in accordance with its
terms.
Section
4.3 Litigation. 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 the Purchaser, threatened
against the Purchaser or any of its properties or rights with respect to this
Agreement. The Purchaser is not 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. The execution, delivery and performance by the
Purchaser of its 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 certificate of incorporation and bylaws of the
Purchaser, (b) result in the violation by the Purchaser of any Laws or Orders of
any Governmental or Regulatory Authority applicable to the Purchaser 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 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
post-Closing, result in the creation or imposition of any Lien upon any of the
respective assets or properties of the Purchaser, under any of the terms,
conditions or provisions of any Contract to which the Purchaser is a party or by
which the Purchaser or any of its assets or properties are bound. 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 to which the Purchaser is a party or by which the
Purchaser or any of its assets or properties are bound for the execution and
delivery of this Agreement by the Purchaser, the performance by the Purchaser of
its obligations hereunder or the consummation by the Purchaser of the
transactions contemplated hereby.
Section
4.5 Brokers. No
broker, finder, agent or similar intermediary has acted on behalf of the
Purchaser 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 in connection therewith based on any
agreement, arrangement or understanding with either of them.
Section
4.6 Investment
Canada. The Purchaser is not a “non-Canadian" within the
meaning of the Investment
Canada Act (Canada).
Section
4.7 Status. The Purchaser
is not a person exempt from tax under section 149 of the ITA.
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ARTICLE V
ACTIONS
AT CLOSING
Simultaneously
herewith:
Section
5.1 Pre-Closing Restructuring
Proceedings. All proceedings taken in connection with the Reorganization
and the Conveyance Documents and all documents incident thereto shall have been
completed in form and substance satisfactory to the Purchaser and Newport and
their respective counsel, and the Purchaser shall have received copies of all
such documents and other evidences as it or its counsel reasonably requested in
order to establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
Section
5.2 Resolutions. Each
of Newport, Kenna Holdco and Communications Holdco shall have delivered to the
Purchaser a copy of the resolutions of their respective partners, or board of
directors, as the case may be, authorizing the execution, delivery and
performance of this Agreement and the Conveyance Documents to which it is a
party, and the transactions contemplated hereby and thereby. The Purchaser shall
have delivered to the other parties hereto a copy of the resolutions of its
board of directors authorizing the execution, delivery and performance of this
Agreement and the transactions contemplated hereby.
Section
5.3 Required Approvals and
Consents. Newport and the Kenna Principals shall have obtained
or given, at no expense to the Purchaser, and there shall not have been
withdrawn or modified, any consents or approvals or other actions listed on
Schedule 3.2.5
hereof (including without limitation, obtaining all such consents, approvals
and/or waivers required under the Contracts listed on Schedule 3.2.12).
Each such consent or approval shall be in a form satisfactory to counsel for the
Purchaser, acting reasonably.
Section
5.4 Limited Partnership
Agreement. The Kenna Principals and the Purchaser shall have
entered into the Amended and Restated ▇▇▇▇▇ ▇▇ Agreement.
Section
5.5 Employment
Agreements. The Kenna Principals shall have entered into an Employment
Agreement with the ▇▇▇▇▇ ▇▇ on terms and conditions satisfactory to the
Purchaser.
Section
5.6 Non-Competition.
Newport shall have entered into a Non-Competition Agreement with the Purchaser,
and the Kenna Principals shall have entered into a Non-Competition Agreement
with the Purchaser and ▇▇▇▇▇ ▇▇ in the form and to the effect of Exhibit D
hereto.
Section
5.7 Capital C Partners LP
Purchase Agreement. Cap C LP, Communications Holdco, the Cap C
Principals, Newport and the Purchaser shall have entered into and delivered a
purchase agreement pursuant to which Newport sells to the Purchaser its
interests in Capital C Partners
LP.
Section
5.8 Conveyance
Documents. Communications Holdco and the ▇▇▇▇▇ ▇▇ shall have
entered into the Conveyance Documents.
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Section
5.9 Mutual
Release. Newport, the Kenna Principals and Communications
Holdco, among others, shall have entered into a mutual release in the form of
Exhibit E hereto, and the parties thereto shall have dismissed with prejudice
the related pending litigation matters.
Section
5.10 Fortress Release of
Liens. Newport shall have delivered to the Purchaser evidence
reasonably satisfactory to the Purchaser of the release of all security
interests encumbering the Purchased Units and the Acquired Kenna
Assets.
ARTICLE VI
OTHER
AGREEMENTS
Section
6.1 Tax
Matters.
6.1.1 Tax
Returns. Communications Holdco, Newport, ▇▇▇▇▇ ▇▇ and/or the
Kenna Principals, as applicable, shall timely and properly prepare or cause to
be prepared, execute, file and deliver all (i) Tax returns, information returns,
Tax elections or other tax filings required to be filed by ▇▇▇▇▇ ▇▇, Cap C LP
and Capital CEK LP in connection with the Reorganization (each a "LP Tax Filing"),
and (ii) all Tax elections required to be filed by Communications
Holdco or Newport in connection with the Reorganization (each, a "Tax Election"), and shall
permit the Purchaser to review and comment on each such LP Tax Filing or Tax
Election prior to filing. Each of Communications Holdco and Newport shall
include their respective share of any taxable income allocated to them in
respect of their partnership interest in Cap C LP for the fiscal period ending
on the dissolution of Cap C LP in their return filed under the ITA for the
taxation year that includes the end of such fiscal period.
6.1.2 Tax
Cooperation. The Purchaser, Newport, Communications Holdco and
the Kenna Principals shall cooperate fully as and to the extent reasonably
requested by the other party, in connection with any Tax Filing pursuant to
Section 6.1.1
or other Tax returns relating to the operations of the Kenna Business and any
audit, litigation or other proceeding with respect to Taxes.
Section
6.2 Change of
Name. At the Closing or as soon as practicable after the
Closing Date, Kenna Holdco shall execute appropriate documents to change its
name to a name dissimilar to "Kenna", and promptly thereafter shall file any
necessary documents to reflect the name change with the appropriate governmental
authorities.
Section
6.3 Pre-Closing
Distribution.
6.3.1 Return of Capital; Repayment
of Loans. Immediately prior to the commencement of the
Reorganization: Newport and Communications Holdco shall have caused (i) Capital
CEK LP to distribute to Newport $1,990,453 as a return of capital on the limited
partnership units of Capital CEK LP held by Newport at October 31, 2010; and
(ii) Capital CEK LP to repay in full Newport’s outstanding loans (including all
accrued interest) to Capital CEK LP in the amount of $1,787,229.33 owing as of
the Closing Date.
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6.3.2 Return of Capital. As
soon as reasonably practicable but not later than forty-five (45) days of the Closing, the
Purchaser shall ensure that ▇▇▇▇▇ ▇▇ and/or Capital C Partners LP distribute to
Newport an amount equal to the amount due as a return of capital on the limited
partnership units of Capital CEK LP held by Newport from November 1, 2010 until
the Closing Date (the "November
Capital Distribution"). The amount of the November Capital Distribution
shall be determined by the Purchaser's auditor in accordance with GAAP based on
the financial statements relating to the Kenna Business and the Cap C Business,
and allocated in a manner consistent with the allocations from January 1, 2010
to October 31, 2010; provided, however, that any controversy, dispute, question
or difference between the parties hereto regarding the determination of the
November Capital Distribution shall be resolved by a senior officer of the
Purchaser and a senior officer of Newport working in good faith to come to a
mutually acceptable determination of the November Capital Distribution within 10
days of notice from Newport of such controversy, dispute, question or
difference.
Section
6.4 Key Man
Insurance. Newport shall cause Newport Partners Income Fund to
assign all current
key man insurance policies relating to ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇ effective as of the Closing Date.
ARTICLE VII
SURVIVAL;
INDEMNITY
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. Subject to the limitations set forth in Section 7.6, the
respective representations, warranties, covenants and agreements of Newport,
Communications Holdco, the Kenna Principals, Kenna Holdco and the Purchaser
contained in this Agreement shall survive the Closing for sixteen (16) months
following the Closing Date.
Section
7.2 Obligation of Newport,
Communications Holdco, Kenna Holdco and the Kenna Principals to
Indemnify.
7.2.1 Newport
Indemnity. Subject to the limitations contained in Sections
7.2.3, 7.6.1 and 7.6.2, Newport hereby
agrees to indemnify the Purchaser and its affiliates, 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
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 misrepresentation, inaccuracy or breach of
any warranty or representation contained in Article III.A or Article III.C
hereof; (b) any action, demand, proceeding, investigation or claim by any third
party (including any Governmental or Regulatory Authority) against or affecting
any Purchaser Indemnified Party which may give rise to or evidence the existence
of or relate to a misrepresentation or breach of any of the representations and
warranties of Newport contained in Article III.A or Article III.C hereof; (c)
any breach or failure by Newport to comply with, perform or discharge any
obligation, agreement or covenant by Newport contained in this Agreement; (d)
any liability or obligation or any assertion against any Purchaser Indemnified
Party, arising out of or relating, directly or indirectly, to any Excluded Asset
or any Retained Liability (as such terms are defined in the Conveyance
Documents) or other liability arising, in whole or in part, out of the conduct
of the business of Cap C LP or any of its subsidiaries or successors, if any,
prior to the Closing except for the Assumed Liabilities (as such term is defined
in the Conveyance Documents); (e) any litigation or claim disclosed on Schedule 3.2.3 to
this Agreement; and (f) any liability or obligation arising out of or relating,
directly or indirectly, to the classification of any individual performing
services for Cap C LP as an independent contractor, as a freelancer, as a
consultant or in any other capacity other than as an employee.
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7.2.2 Indemnity by Kenna
Indemnitors. Subject to the limitations contained in Sections 7.2.3, 7.6.1 and 7.6.2, the Kenna
Indemnitors hereby agree, jointly and severally, to indemnify the Purchaser
Indemnified 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 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 misrepresentation,
inaccuracy or breach of any warranty or representation contained in Article
III.B or Article III.C hereof; (b) any action, demand, proceeding, investigation
or claim by any third party (including any Governmental or Regulatory Authority)
against or affecting any Purchaser Indemnified Party which may give rise to or
evidence the existence of or relate to a misrepresentation or breach of any of
the representations and warranties of Communications Holdco, Kenna Holdco or the
applicable Kenna Principals contained in Article III.B or Article III.C hereof;
(c) any breach or failure by Communications Holdco, Kenna Holdco or the
applicable Kenna Principals to comply with, perform or discharge any obligation,
agreement or covenant by Communications Holdco, Kenna Holdco or the applicable
Kenna Principals contained in this Agreement; (d) any liability or obligation or
any assertion against any Purchaser Indemnified Party, arising out of or
relating, directly or indirectly, to any Excluded Asset or any Retained
Liability (as such terms are defined in the Conveyance Documents) or other
liability arising, in whole or in part, out of the conduct of the business of
Cap C LP or any of its subsidiaries or successors, if any, prior to the Closing
except for the Assumed Liabilities (as such term is defined in the Conveyance
Documents); (e) any litigation or claim disclosed on Schedule 3.2.3 to
this Agreement; and (f) any liability or obligation arising out of or relating,
directly or indirectly, to the classification of any individual performing
services for Cap C LP as an independent contractor, as a freelancer, as a
consultant or in any other capacity other than as an employee.
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7.2.3 Notwithstanding
anything to the contrary contained herein, Newport's obligation to indemnify the
Purchaser Indemnified Parties under this Agreement shall only occur after the
aggregate amount of all Losses claimed by the Purchaser Indemnified Parties
against the Kenna Indemnitors (including Losses previously claimed by the
Purchaser Indemnified Parties against the Kenna Indemnitors) exceeds
$750,000. Any such claims made against the Kenna Indemnitors may be
made against Newport if such claims remain unpaid by the Kenna Indemnitors or
any of them after sixty (60) days from the date of claim; provided that the
Kenna Indemnitors have acted in good faith in response to such claim and that
the Purchaser shall have exercised its commercially reasonable efforts to
recover against such claim (including exercising its right to offset any claim
for indemnity against payments due and/or payable to Kenna Holdco or the Kenna
Principals in accordance with Section 7.5).
7.2.4 Losses. The
term "Losses" as used in
this Article VII 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 7.4.2
hereof).
Section
7.3 Obligation of the Purchaser
to Indemnify.
7.3.1 Subject
to the limitations set forth in Section 7.6.3 hereof,
the Purchaser hereby agrees to indemnify Newport (together with its affiliates,
partners, officers, directors, employees, agents, representatives, successors
and permitted assigns, collectively, the "Newport Indemnified Parties"),
Communications Holdco, Kenna Holdco and the Kenna Principals (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 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 misrepresentation, inaccuracy or breach of any warranty or representation of
the Purchaser contained in Article IV hereof; or (b) any action, demand,
proceeding, investigation or claim by any third party (including any
Governmental or Regulatory Authority) against or affecting any Seller
Indemnified Party which may give rise to or evidence the existence of or relate
to a misrepresentation or breach of any of the representations and warranties of
the Purchaser contained in Article IV hereof; or (c) any breach or failure by
the Purchaser to comply with, perform or discharge any obligation, agreement or
covenant by the Purchaser contained in this Agreement.
7.3.2 The
Purchaser shall indemnify the Newport Indemnified Parties against, and protect,
save and keep harmless the Newport Indemnified Parties from, any Taxes (within
the meaning of Section
3.2.14 hereof) incurred by the Newport Indemnified Parties solely as a
result of the Reorganization (including any of the individual transactions
forming part thereof), without duplication, in an aggregate amount not to exceed
$1 million (the "Newport
Reorganization Indemnity"). For greater certainty, the Newport
Reorganization Indemnity shall exclude any Taxes which would, but for the
Reorganization, have been incurred by Newport in connection with the sale of its
partnership interest in Capital CEK LP or Cap C LP. Notwithstanding
anything to the contrary, the Purchaser shall not indemnify the Newport
Indemnified Parties in respect of any Taxes imposed on Newport which were
existing liabilities of Capital CEK LP or its affiliates at the time of, or
arising in connection with any matter or omission occurring prior to, the
commencement of the Reorganization.
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Section
7.4 Indemnification
Procedures.
7.4.1 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
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.
(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 favour 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.
7.4.2 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 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").
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(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.
(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 favour 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.
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(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.
(g) A
failure by an Indemnified Party to give timely, complete or accurate notice as
provided in this Section 7.4.2 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.
Section
7.5 Right of
Offset. Without limiting any other rights or remedies
available to it, the Purchaser shall be entitled to offset any claim for
indemnity made pursuant to Section 7.2 and in
accordance with Section 7.4, against
any payments due and/or payable to Kenna Holdco or the Kenna Principals,
including, without limitation, up to $3,000,000 of any payments made pursuant to
the limited partnership unit purchase agreement (the "13% Purchase Agreement") of
even date made among Kenna Holdco, the Kenna Principals and the Purchaser
pursuant to which the Purchaser indirectly acquired an additional approximately
13% limited partnership interest in ▇▇▇▇▇ ▇▇, provided, however, the Purchaser
may only exercise such right of offset in respect of claims relating to Losses
actually incurred by a Purchaser Indemnified Party (in which case the amount of
such offset shall be the amount of such actual Loss) or claims actually asserted
by a third party (in which case the amount of the offset shall not exceed the
Purchaser's good faith estimate of the amount of indemnifiable Losses that will
ultimately be payable to a Purchaser Indemnified Party in respect of such
claims).
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Section
7.6 Limitations On and Other
Matters Regarding Indemnification.
7.6.1 Indemnity Cushion and
Cap. Subject to Section 7.6.5,
neither Newport, nor the Kenna Indemnitors shall have any liability to any
Purchaser Indemnified Party with respect to Losses arising out of any of the
matters referred to in Section 7.2 until
such time as the amount of such liability shall exceed $100,000 in the aggregate
(in which case Newport and the Kenna Indemnitors shall be severally liable for
all Losses). Notwithstanding anything to the contrary herein, subject
to Section
7.6.5 below, (a) the maximum aggregate liability of Newport for indemnity
payments under Section
7.2.1 shall be an aggregate amount equal to $6,000,000; and (b) the
maximum aggregate joint and several liability of the Kenna Indemnitors for
indemnity payments under Section 7.2.2 shall
be an aggregate amount equal to the sum of $750,000 plus a right of setoff of
all "Contingent Payments" (as defined in the 13% Purchase Agreement) payable
pursuant to the 13% Purchase Agreement, subject to a maximum aggregate of such
Contingent Payments of $3,000,000.
7.6.2 Termination of
Indemnification Obligations of Newport and the Kenna
Principals. Subject to Section 7.6.5, the
obligation of Newport, Kenna Holdco and the Kenna Principals to indemnify under
Section 7.2
hereof shall terminate sixteen (16) months following the Closing Date, except as
to matters as to which the Purchaser Indemnified Party has made a claim for
indemnification on or prior to such date, in which case the right to
indemnification with respect thereto shall survive the expiration of such period
until such claim for indemnification is finally resolved and any obligations
with respect thereto are fully satisfied.
7.6.3 Termination of
Indemnification Obligations of the Purchaser; Purchaser Indemnity
Cap. Subject to Section 7.6.5, the
obligation of the Purchaser to indemnify under Section 7.3 hereof
shall terminate sixteen (16) months following the Closing Date, except as to
matters as to which any Seller Indemnified Party has made a claim for
indemnification on or prior to such date, in which case the right to
indemnification with respect thereto for such party shall survive the expiration
of such period until such claim for indemnification is finally resolved and any
obligations with respect thereto are fully satisfied. The Purchaser shall have
no liability to the Seller Indemnified Parties with respect to Losses arising
out of any of the matters referred to in Section 7.3 until
such time as the amount of such liability shall exceed $100,000 in the
aggregate. Notwithstanding anything to the contrary herein, the
maximum aggregate liability of the Purchaser for indemnity payments under this
Agreement shall be an aggregate amount equal to $6,000,000.
7.6.4 Treatment. Any
indemnity payments by an Indemnifying Party to an Indemnified Party under this
Article VII shall be treated by the parties as an adjustment to the Purchase
Price.
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7.6.5 Exceptions. Each
of the limitations set forth above in this Section 7.6 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 Newport,
Communications Holdco, Kenna Holdco or the Kenna Principals; (ii) any breach of
a representation or warranty contained in Sections 3.1.1, 3.1.3, 3.1.5, 3.2.1, 3.2.5, 3.2.9 or 3.2.14, and (iii) any
indemnification obligation under Sections 7.2.1(d),
7.2.2(c) and
(d); and (iv)
the obligations of Newport, Communications Holdco, Kenna Holdco and the Kenna
Principals set forth in Section 8.1 to pay
certain expenses; or (b) apply to any Losses incurred by a Seller Indemnified
Party which relate, directly or indirectly, to (i) any fraudulent acts committed
by the Purchaser and (ii) the Purchaser's obligations set forth in Section 8.1 to pay
certain expenses.
7.6.6 Indemnification Sole
Remedy. Except as otherwise expressly provided in this Agreement or as it
relates to any claim for fraud or intentional misrepresentation, the
indemnifications provided for in this Article VII constitute the sole remedy
available to an Indemnified Party hereunder with respect to any and all breaches
or failures of representations, warranties, covenants, conditions, agreements or
obligations contained in this Agreement. In furtherance of the
foregoing, each of the parties hereby waives to the fullest extent permitted
under applicable Law, any and all other rights, claims and causes of action it
may have against the other parties relating to the subject matter of this
Agreement.
ARTICLE VIII
MISCELLANEOUS
Section
8.1 Expenses. Except
as otherwise provided in this Agreement, each of the parties hereto shall pay
its or his own expenses relating to the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of its
respective counsel, financial advisors and accountants and any brokerage
commissions, finder's fees, consulting fees, break-up or termination fees, or
similar fees or commissions.
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 enforceability of this Agreement), shall be
governed by the laws of the Province of Ontario and the laws of Canada
applicable therein.
Section
8.3 "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
8.4 "Knowledge"
Defined. Where any representation and warranty contained in
this Agreement is expressly specified by reference to the knowledge of Newport,
Kenna Holdco or any Kenna Principal, such term shall be limited to the actual
knowledge of the executive officers of Newport, Kenna Holdco or the Kenna
Principals, respectively, and unless otherwise stated, such knowledge that would
have been discovered by the executive officers of Newport, Kenna Holdco or the
applicable Kenna Principal, respectively, after reasonable
inquiry. Where any representation and warranty contained in this
Agreement is expressly specified by reference to the knowledge of the Purchaser,
as the case may be, such term shall be limited to the actual knowledge of the
executive officers of such entity and unless otherwise stated, such knowledge
that would have been discovered by such executive officers after reasonable
inquiry.
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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.
Section
8.6 Captions. The
Article and Section headings used herein are for reference purposes only, and
shall not in any way affect the meaning or interpretation of this
Agreement.
Section
8.7 Publicity. Subject
to the provisions of the next sentence, no party to this Agreement shall, and
Newport and Kenna Holdco shall use their reasonable efforts to ensure that no
representative of either of them 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 the
Purchaser. Notwithstanding the foregoing, the foregoing provision
shall not apply to the extent that the Purchaser or Newport 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 United States Securities and Exchange Commission or any
announcement by any party hereto pursuant to applicable law or
regulations.
Section
8.8 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 mail, postage prepaid,
or (c) the next business day if sent by a prepaid overnight courier service, and
in each case at the respective addresses set forth below or such other address
as such party may have fixed by notice:
(a) If
to the Purchaser, addressed to:
c/o MDC
Partners Inc.
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
with
a copy to (which shall not constitute notice):
c/o MDC
Partners Inc.
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General
Counsel
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(b) If
to Newport, to:
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇
▇▇▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
with
a copy to (which shall not constitute notice):
▇▇▇▇▇▇
▇▇▇▇▇▇▇ LLP
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
(c) If
to Kenna Holdco, to:
c/o ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇
▇▇▇▇▇▇▇
with
a copy to (which shall not constitute notice):
▇▇▇▇▇▇,
Zener & Waxman LLP
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
(d) If
to the Kenna Principals, to:
▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
and
▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
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with
a copy to (which shall not constitute notice):
▇▇▇▇▇▇,
Zener & Waxman LLP
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
|
|
Attention:
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
|
|
Facsimile:
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
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
8.9 Parties in
Interest. This Agreement may not be transferred, assigned,
pledged or hypothecated by any party hereto, other than by operation of
law. Any purported transfer, assignment, pledge, or hypothecation
(other than by operation of law) of this Agreement 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.
Section
8.10 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
8.11 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
8.12 Entire
Agreement. This Agreement, together with the Schedules and
Exhibits hereto, constitutes the sole, exclusive and only agreements of the
parties hereto pertaining to the subject matter hereof, contains all of the
covenants, conditions and agreements between the parties, express or implied,
whether by statute or otherwise, and sets forth the respective rights, duties
and obligations of each party to the other party as of the date hereof. No oral
understandings, oral statements, oral promises or oral inducements relating to
the subject matter hereof exist.
Section
8.13 Amendments. This
Agreement may not be amended, supplemented or modified orally, but only by an
agreement in writing signed by each of the parties hereto.
Section
8.14 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
8.9.
Section
8.15 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. Whenever used in this Agreement,
the terms "Dollars" and "$" shall mean Canadian Dollars.
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Section
8.16 "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
8.17 No Strict Construction;
Representation by Counsel. 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. The
provisions of this Agreement shall be construed according to their fair meaning
and neither for nor against any party hereto irrespective of which party caused
such provisions to be drafted. Each of the parties acknowledges that
it has been represented by legal counsel in connection with the preparation and
execution of this Agreement.
[Remainder
of page intentionally left blank.]
- 35
-
IN WITNESS WHEREOF, the
parties hereto have executed this Limited Partnership Unit Purchase Agreement,
on the day and year first above written.
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Per:
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/s/
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
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Title: General
Counsel
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NEWPORT
PARTNERS HOLDINGS LP, by its general
partner NPY GP TRUST, by its
trustee NEWPORT PARTNERS GP INC.
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Per:
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/s/
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
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Title: Vice
President
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CAP
C LP HOLDCO INC.
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Per:
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/s/
▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇
▇▇▇▇▇▇▇
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Title: President
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2265174
ONTARIO LIMITED
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Per:
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/s/
▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇
▇▇▇▇▇▇▇
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Title: Authorized
Signatory
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/s/
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Witness
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▇▇▇▇▇
▇▇▇▇▇▇▇
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/s/
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/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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Witness
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▇▇▇▇
▇▇▇▇▇▇▇
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