Item 1.01. Entry Into a Material Agreement.
Indenture
On March 23, 2016, MDC Partners Inc. (“MDC”
or the “Company”) entered into an indenture (the “Indenture”) among MDC, its existing and future restricted
subsidiaries that guarantee, or are co-borrowers under or grant liens to secure, MDC’s senior secured revolving credit facility,
dated March 20, 2013 (the “Facility”), as guarantors (the “Guarantors”) and The Bank of New York Mellon,
as trustee, relating to the issuance by MDC of its 6.50% Senior Notes due 2024 (the “Notes”). The Notes bear interest
at a rate of 6.50% per annum, accruing from March 23, 2016. Interest is payable semiannually in arrears in cash on May 1 and November
1 of each year, beginning on November 1, 2016. The Notes will mature on May 1, 2024, unless earlier redeemed or repurchased.
The Notes are guaranteed on a senior unsecured
basis by all of MDC’s existing and future restricted subsidiaries that guarantee, or are co-borrowers under or grant liens
to secure, the Facility. The Notes are unsecured and unsubordinated obligations of MDC and rank (i) equally in right of payment
with all of MDC’s or any Guarantor’s existing and future senior indebtedness, (ii) senior in right of payment to MDC’s
or any Guarantor’s existing and future subordinated indebtedness, (iii) effectively subordinated to all of MDC’s or
any Guarantor’s existing and future secured indebtedness to the extent of the collateral securing such indebtedness, including
the Facility, and (iv) structurally subordinated to all existing and future liabilities of MDC’s subsidiaries that are not
Guarantors.
MDC may, at its option, redeem the Notes
in whole at any time or in part from time to time, on and after May 1, 2019 at a redemption price of 104.875% of the principal
amount thereof if redeemed during the twelve-month period beginning on May 1, 2019, at a redemption price of 103.250% of the principal
amount thereof if redeemed during the twelve-month period beginning on May 1, 2020, at a redemption price of 101.625% of the principal
amount thereof if redeemed during the twelve-month period beginning on May 1, 2021 and at a redemption price of 100.000% of the
principal amount thereof if redeemed on May 1, 2022 and thereafter.
Prior to May 1, 2019, MDC may, at its option,
redeem some or all of the Notes at a price equal to 100% of the principal amount of the Notes plus a “make whole” premium
(as described in the Indenture) and accrued and unpaid interest. MDC may also redeem, at its option, prior to May 1, 2019, up to
35% of the Notes with the net proceeds from one or more equity offerings at a redemption price of 106.5% of the principal amount
thereof.
If MDC experiences certain kinds of changes
of control (as defined in the Indenture), holders of the Notes may require MDC to repurchase any Notes held by them at a price
equal to 101% of the principal amount of the Notes plus accrued and unpaid interest. In addition, if MDC sells assets under certain
circumstances, it must offer to repurchase the Notes at a price equal to 100% of the principal amount of the Notes plus accrued
and unpaid interest. MDC may also redeem all, but not a portion, of the Notes in the event of changes affecting withholding taxes
that would require MDC to pay “additional amounts” (as described in the Indenture) to holders of the Notes.
The Indenture includes covenants that,
among other things, restrict MDC’s ability and the ability of its restricted subsidiaries (as defined in the Indenture)
to incur or guarantee additional indebtedness; pay dividends on or redeem or repurchase the capital stock of MDC; make certain
types of investments; create restrictions on the payment of dividends or other amounts from MDC’s restricted subsidiaries;
sell assets; enter into transactions with affiliates; create liens; enter into sale and leaseback transactions; and consolidate
or merge with or into, or sell substantially all of MDC’s assets to, another person. These covenants are subject to a number
of important limitations and exceptions. The Notes are also subject to customary events of default, including cross-payment default
and cross-acceleration provisions.
Amendment to Senior Secured Revolving
Credit Facility
On March 23, 2016, MDC entered into a
consent and amendment (the “Amendment”) to the Facility, among the Company, Maxxcom Inc., as the borrower,
and the agents and lenders party thereto. The Amendment, among other things, increases the amount of senior unsecured
notes the Company is permitted to incur to $925 million from $800 million.
The foregoing descriptions of the Indenture
and the Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of the agreements,
which are filed hereto as Exhibits 4.1 and 10.1, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
Certain Relationships
The initial purchasers of the Notes, the
financial institutions party to the Facility and their respective affiliates perform various financial advisory, investment banking
and commercial banking services from time to time for MDC and its affiliates, for which they receive customary fees.