REGISTRATION RIGHTS AGREEMENT
by and among
MemberWorks Incorporated
as the Company,
each of the Guarantors party hereto
and
Lehman Brothers Inc., UBS Securities LLC and ABN AMRO Incorporated
as the Initial Purchasers
Dated as of April 13, 2004
TABLE OF CONTENTS
Page
1. Definitions...........................................................1
2. Registered Exchange Offer.............................................4
3. Shelf Registration....................................................6
4. Liquidated Damages....................................................7
5. Registration Procedures...............................................8
6. Registration Expenses................................................18
7. Indemnification and Contribution.....................................18
8. Rule 144A and Rule 144...............................................21
9. Future Subsidiary Guarantees.........................................21
10. Miscellaneous........................................................22
This Registration Rights Agreement (this "Agreement") is dated as of
April 13, 2004, by and among MemberWorks Incorporated, a Delaware corporation
(together with any successor entity, herein referred to as the "Company"),
Billing Services International, Inc., Best Benefits, Inc., Impac Marketing
Corp., MyHealthySavings.com, Inc., CountryWide Dental, Inc., MemberWorks Canada
Holdco, Inc., Interactive Media Consolidated, Inc., and Interactive Media Group
(USA) Ltd., each a Delaware corporation; MemberWorks Canada LLC, Interactive
Voice Media Baltimore LLC, Interactive Voice Media Colorado LLC, Interactive
Voice Media Georgia LLC, Interactive Voice Media Michigan LLC, Interactive Voice
Media New Jersey LLC, Interactive Voice Media New York LLC, Interactive Voice
Media Ohio LLC, Interactive Voice Media Pennsylvania LLC, Lavalife Washington DC
LLC, each a Delaware limited liability company; Quota Phone, Inc. and Barnes
Holding Corp., each a New York corporation; Interactive LA Voice Media Corp.,
Interactive SJ Voice Media Corp., Interactive Voice Media (CA) Corp.,
Interactive Voice Media (Sacramento) Corp., each a California corporation;
Discount Development Services, LLC, an Illinois limited liability company,
Unicare, Inc., an Illinois corporation, Interactive Media (IL) Corp., an
Illinois corporation, Coverdell & Company Inc., a Georgia corporation,
Interactive Media MO Corp., a Missouri corporation, Interactive Voice Media (MN)
Corp., a Minnesota corporation, Interactive (TX) Voice Media Corp., a Texas
corporation and Lavalife Corp., a Nova Scotia unlimited liability company
("Lavalife") (each of the foregoing, collectively referred to as the
"Guarantors") and Lehman Brothers Inc., UBS Securities LLC and ABN AMRO
Incorporated (the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated April
7, 2004, by and among the Company, the Guarantors and the Initial Purchasers
(the "Purchase Agreement"), the Initial Purchasers have agreed to purchase from
the Company $150,000,000 aggregate principal amount of 9 1/4% Senior Notes due
2014 (the "Notes"). The Notes are being issued pursuant to an indenture (the
"Indenture"), dated the date hereof, among the Company, the Guarantors and
LaSalle Bank National Association, as Trustee (the "Trustee"). The Notes will
have terms and provisions as described in the Indenture and will be
unconditionally guaranteed on a senior unsecured basis (the "Subsidiary
Guarantees" and together with the Notes, collectively referred to as the
"Securities" ) by the Guarantors and certain subsidiaries that guarantee the
Company's Credit Facilities in the future. To induce the Initial Purchasers to
purchase the Securities, the Company and the Guarantors have agreed to provide
the registration rights set forth in this Agreement pursuant to the Purchase
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Indenture.
The parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following capitalized
terms shall have the following meanings:
Affiliate: As such term is defined in Rule 144 under the Securities
Act.
Agreement: This Registration Rights Agreement, as amended, modified or
otherwise supplemented from time to time in accordance with the terms hereof.
Blackout Period: As defined in Section 4 hereof.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Business Day: A day other than a Saturday or Sunday or any day on which
banking institutions in The City of New York are authorized or obligated by law
to close.
Closing Date: The date of this Agreement.
Commission: The U.S. Securities and Exchange Commission.
Company: As defined in the preamble hereto.
Consummate: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Securities Act of the Exchange Offer Registration
Statement relating to the Exchange Securities to be issued in the Exchange
Offer, (b) the maintenance of such Exchange Offer Registration Statement
continuously effective and the keeping of the Exchange Offer open for a period
not less than the period required pursuant to Section 2(b) hereof and (c) the
delivery by the Company and the Guarantors to the Registrar under the Indenture
of Exchange Securities in the same aggregate principal amount as the aggregate
principal amount of Securities tendered by Holders thereof pursuant to the
Exchange Offer.
Consummation Deadline: As defined in Section 2(b) hereof.
Effectiveness Deadline: As defined in Section 2(a)(ii) and 3(a) hereof.
Exchange Act: The U.S. Securities Exchange Act of 1934, as amended.
Exchange Guarantees: The Subsidiary Guarantees, registered under the
Securities Act, to be issued pursuant to the Indenture (a) in the Exchange Offer
or (b) as contemplated by Section 3 hereof.
Exchange Notes: The Company's 9 1/4% Senior Notes due 2014, registered
under the Securities Act, to be issued pursuant to the Indenture (a) in the
Exchange Offer or (b) as contemplated by Section 3 hereof.
Exchange Offer: The exchange and issuance by the Company and the
Guarantors of a principal amount of Exchange Securities (which shall be
registered pursuant to the Exchange Offer Registration Statement) equal to the
outstanding principal amount of Securities that are tendered by such Holders in
connection with such exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exchange Securities: collectively refers to the Exchange Notes and the
related Exchange Guarantees.
Filing Deadline: As defined in Sections 2(a)(i) and 3(a) hereof.
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Guarantors: As defined in the preamble hereto.
Holder: A Person who owns, beneficially or otherwise, Transfer
Restricted Securities.
Indenture: The Indenture, dated as of April 13, 2004, by and among the
Company, the Guarantors and LaSalle Bank National Association, as trustee (the
"Trustee"), pursuant to which the Securities are to be issued, as such Indenture
is amended, modified or supplemented from time to time in accordance with the
terms thereof.
Initial Purchasers: As defined in the preamble hereto.
Interest Payment Date: Each April 1 and October 1 of each year,
commencing October 1, 2004.
Majority of Holders: Holders holding more than 50% of the aggregate
principal amount of Notes outstanding.
Notes: As defined in the preamble hereto.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company, or government or other entity.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Purchase Agreement: As defined in the preamble hereto.
Recommencement Date: As defined in Section 5(e) hereof.
Registration Default: As defined in Section 4 hereof.
Registration Statement: Any registration statement of the Company and
the Guarantors relating to (a) an offering of Exchange Securities pursuant to an
Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case (i) that
is filed pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
Securities: As defined in the preamble hereto.
Securities Act: The U.S. Securities Act of 1933, as amended.
Shelf Registration Statement: As defined in Section 3(a) hereof.
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Subsidiary Guarantee: As defined in the preamble hereto.
Suspension Notice: As defined in Section 5(e) hereof.
TIA: The Trust Indenture Act of 1939, as amended, and the rules and
regulations of the Commission thereunder, in each case, as in effect on the date
the Indenture is qualified under the TIA.
Transfer Restricted Securities: (a) Each Security, until the earliest
to occur of (i) the date on which such Security has been exchanged by a Person
other than a Broker-Dealer for an Exchange Security in the Exchange Offer and
entitled to be resold to the public by such Person without complying with the
prospectus delivery requirements of the Securities Act, (ii) the date on which
such Security has been effectively registered under the Securities Act and sold
or otherwise disposed of in accordance with a Shelf Registration Statement or
(iii) the date on which such Security is eligible to be distributed to the
public pursuant to Rule 144(k) under the Securities Act; and (b) each Exchange
Security acquired by the Broker-Dealer in the Exchange Offer of a Security for
such Exchange Security, until the date on which such Exchange Security is sold
to a purchaser who receives from such Broker-Dealer on or prior to the date of
such sale a copy of the Prospectus contained in the Exchange Offer Registration
Statement.
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. Registered Exchange Offer.
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Sections 5(a)(i) hereof have been
complied with), the Company and the Guarantors shall (i) cause the Exchange
Offer Registration Statement to be filed with the Commission as soon as
practicable after the Closing Date, but in no event later than 120 days after
the Closing Date (such 120th day being the "Filing Deadline"), (ii) use their
reasonable best efforts to cause such Exchange Offer Registration Statement to
become effective at the earliest possible time, but in no event later than 210
days after the Closing Date (such 210th day being the "Effectiveness Deadline"),
(iii) in connection with the foregoing, (A) file all pre-effective amendments to
such Exchange Offer Registration Statement as may be necessary in order to cause
it to become effective, (B) file, if applicable, a post-effective amendment to
such Exchange Offer Registration Statement pursuant to Rule 430A under the
Securities Act and (C) cause all necessary filings, if any, in connection with
the registration and qualification of the Exchange Securities to be made under
the Blue Sky laws of such jurisdictions as are necessary to permit Consummation
of the Exchange Offer and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, commence and Consummate the Exchange Offer. The Exchange
Offer Registration Statement shall be on the appropriate form permitting (I)
registration of the Exchange Securities to be offered in exchange for the
Securities that are Transfer Restricted Securities and (II) resales of Exchange
Securities by Broker-Dealers that tendered into the Exchange Offer Securities
that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Securities acquired
directly from the Company or any of its Affiliates) as contemplated by Section
2(c) hereof.
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(b) The Company and the Guarantors shall use their reasonable best
efforts to cause the Exchange Offer Registration Statement to be effective
continuously and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; provided, however, that in no event shall
such period be less than 20 Business Days. The Company and the Guarantors shall
cause the Exchange Offer to comply with all applicable federal and state
securities laws. No securities other than the Exchange Securities shall be
included in the Exchange Offer Registration Statement. The Company and the
Guarantors shall use their reasonable best efforts to cause the Exchange Offer
to be Consummated on or prior to 30 Business Days, or longer, if required by the
federal securities laws, after the Exchange Offer Registration Statement has
become effective (the "Consummation Deadline") and to issue Exchange Securities
in exchange for all Securities tendered prior thereto in the Exchange Offer.
(c) The Company and the Guarantors shall include a "Plan of
Distribution" section in the Prospectus contained in the Exchange Offer
Registration Statement and indicate therein that any Broker-Dealer who holds
Transfer Restricted Securities that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities (other than Securities acquired directly from the Company or any
Affiliate of the Company), may exchange such Transfer Restricted Securities
pursuant to the Exchange Offer. Such "Plan of Distribution" section shall also
contain all other information with respect to such sales by such Broker-Dealers
that the Commission may require in order to permit such sales pursuant thereto,
but such "Plan of Distribution" shall not name any such Broker-Dealer or
disclose the amount of Transfer Restricted Securities held by any such
Broker-Dealer, except to the extent required by the Commission as a result of a
change in policy, rules or regulations after the date of this Agreement.
Because such Broker-Dealer may be deemed to be an "underwriter" within
the meaning of the Securities Act and must, therefore, deliver a prospectus
meeting the requirements of the Securities Act in connection with its initial
sale of any Exchange Securities received by such Broker-Dealer in the Exchange
Offer, the Company and the Guarantors shall permit the use of the Prospectus
contained in the Exchange Offer Registration Statement by such Broker-Dealer to
satisfy such prospectus delivery requirement. To the extent necessary to ensure
that the prospectus contained in the Exchange Offer Registration Statement is
available for sales of Exchange Securities by Broker-Dealers, the Company and
the Guarantors agree to use their reasonable best efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented and amended as
required by and subject to the provisions of Sections 5(a) and 5(c) hereof and
in conformity with the requirements of this Agreement, the Securities Act and
the policies, rules and regulations of the Commission as announced from time to
time, for a period of 270 days from the date on which the Exchange Offer
Registration Statement is declared effective or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Registration
Statement have been sold pursuant thereto. The Company shall provide sufficient
copies of the latest version of such Prospectus to such Broker-Dealers, promptly
upon request at any time during such 270-day period (or shorter as provided in
the foregoing sentence) in order to facilitate resales.
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3. Shelf Registration.
(a) If: (i) the Company and the Guarantors are not required to file the
Exchange Offer Registration Statement, (ii) the Exchange Offer is not permitted
by applicable law or Commission policy (after the Company and the Guarantors
have complied with the procedures set forth in Section 5(a)(i) hereof), or (iii)
any Holder of Transfer Restricted Securities notifies the Company prior to the
20th Business Day following the Consummation of the Exchange Offer that (x) such
Holder was prohibited by applicable law or Commission policy from participating
in the Exchange Offer, (y) such Holder may not resell the Exchange Securities
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder or (z)
such Holder is a Broker-Dealer and holds Securities acquired directly from the
Company or any of its Affiliates, then the Company and the Guarantors shall:
(I) use their reasonable best efforts to cause to be filed not later
than 30 days after the earlier of, (x) the date on which the Company determines
that the Exchange Offer Registration Statement cannot be filed as a result of
clause (a)(i) of this Section or (y) the date on which the Company receives the
notice specified in clause (a)(ii) of this Section (such earlier date, the
"Filing Deadline"), a shelf registration statement pursuant to Rule 415 under
the Securities Act (which may be an amendment to the Exchange Offer Registration
Statement (in either event, together with any amendments thereto, and including
any documents incorporated by reference therein, the "Shelf Registration
Statement")), which Shelf Registration Statement shall provide for resales of
all Transfer Restricted Securities held by Holders that have provided the
information required pursuant to the terms of Section 3(b) hereof; and
(II) use their reasonable best efforts to cause such Shelf Registration
Statement to become effective at the earliest time, but in no event later than
on or prior to the later of 210 days after the Closing Date or 120 days after
the Filing Deadline for the Shelf Registration Statement (such later date, the
"Effectiveness Deadline").
If, after the Company and the Guarantors have filed an Exchange Offer
Registration Statement that satisfies the requirements of Section 2(a) hereof,
the Company and the Guarantors are required to file and make effective a Shelf
Registration Statement solely because the Exchange Offer is not permitted under
applicable federal law (i.e., clause (a)(i) of this Section), then the filing of
the Exchange Offer Registration Statement shall be deemed to satisfy the
requirements of clause (I) above; provided that, in such event, the Company and
the Guarantors shall remain obligated to meet the Effectiveness Deadline set
forth in clause (II) above.
To the extent necessary to ensure that the Shelf Registration Statement
is available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 3(a) and the other securities required
to be registered therein pursuant to Section 5(b)(ii) hereof, the Company and
the Guarantors shall use their reasonable best efforts to keep any Shelf
Registration Statement required by this Section 3(a) continuously effective,
supplemented, amended and current as required by and subject to the provisions
of Sections 5(b) and (c) hereof and in conformity with the requirements of this
Agreement, the Securities Act and the policies, rules and regulations of the
Commission as announced from time to time, for a
6
period of at least two years (as extended pursuant to Section 5(c)(i)hereof)
following the Closing Date, or such shorter period as will terminate when all
Transfer Restricted Securities covered by such Shelf Registration Statement
have been sold pursuant thereto.
(b) No Holder of Transfer Restricted Securities may include any of its
Transfer Restricted Securities in any Shelf Registration Statement pursuant to
this Agreement unless and until such Holder furnishes to the Company in writing,
within 20 Business Days after receipt of a request therefor, such information as
the Company may reasonably request in connection with any Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein, including,
but not limited to, the information specified in Item 507 or 508 of Regulation
S-K, as applicable, of the Securities Act for use in connection with any Shelf
Registration Statement or Prospectus or preliminary Prospectus included therein.
No Holder of Transfer Restricted Securities shall be entitled to liquidated
damages pursuant to Section 4 hereof unless and until such Holder shall have
provided all such information. By its acceptance of Transfer Restricted
Securities, each Holder agrees to promptly furnish additional information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not materially misleading.
4. Liquidated Damages.
If (a) any Registration Statement required by this Agreement is not
filed with the Commission prior to or on the applicable Filing Deadline, (b) any
such Registration Statement has not been declared effective by the Commission
prior to or on the applicable Effectiveness Deadline, (c) the Exchange Offer has
not been Consummated on or prior to the Consummation Deadline, or (d) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded within two Business Days by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective within five Business Days of filing such
post-effective amendment, except in the case of this clause (d) under the
circumstances set forth in the following paragraph (each such event referred to
in clauses (a) through (d), a "Registration Default"); then the Company and the
Guarantors hereby jointly and severally agree to pay to each Holder, liquidated
damages in the form of an increase in the interest rate borne by the Transfer
Restricted Securities in an amount equal to, with respect to the first 90
day-period immediately following the occurrence of the first Registration
Default, to 0.50% per annum per $1,000 principal amount of Notes held by such
Holder; and the amount of the liquidated damages will increase by an additional
0.50% per annum per $1,000 principal amount of Notes with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages for all Registration Defaults equal to
1.0% per annum; provided that the Company and the Guarantors shall in no event
be required to pay liquidated damages for more than one Registration Default at
any given time. Following the cure of all Registration Defaults, the accrual of
liquidated damages will cease. Notwithstanding anything to the contrary set
forth herein, (i) upon filing of the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement), in the case of (a)
above, (ii) upon the effectiveness of the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement), in the case of (b)
above, (iii) upon Consummation of the Exchange Offer, in the case of (c) above,
or (iv) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the
7
Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement) to again be declared effective or made usable, in the
case of (d) above, the liquidated damages payable with respect to the Transfer
Restricted Securities as a result of such clause (a), (b), (c) or (d),
as applicable, shall cease.
A Registration Default referred to in clause (d) above shall be deemed
not to have occurred and be continuing in respect of a Shelf Registration
Statement or the related Prospectus if (A) such period of time during which the
Shelf Registration Statement is not effective or such Shelf Registration
Statement or the related Prospectus is not useable ( the "Blackout Period")
occurred solely as a result of (x) the filing of a post-effective amendment to
such Shelf Registration Statement to incorporate annual audited financial
information with respect to the Company and the Guarantors where such
post-effective amendment is not yet effective and needs to be declared effective
to permit Holders to use the related Prospectus or (y) the occurrence of other
material events with respect to the Company and the Guarantors that would need
to be described in such Shelf Registration Statement or the related Prospectus
and (B) in the case of clause (y), the Company and the Guarantors are proceeding
promptly and in good faith to amend or supplement (including by way of filing
documents under the Exchange Act which are incorporated by reference into the
Shelf Registration Statement) such Shelf Registration Statement and the related
Prospectus to describe such events; provided, however, that in the event a
Blackout Period exceeds an aggregate of 60 days in any 90-day period, a
Registration Default shall be deemed to have occurred on the 61st day of such
Blackout Period and liquidated damages shall be payable in accordance with the
above paragraph from the day such Shelf Registration Default occurs until such
Registration Default is cured or until the Company and the Guarantors are no
longer required pursuant to this Agreement to keep such Shelf Registration
Statement effective or such Registration Statement or the related Prospectus
usable; provided that in the event a disclosure under clause (y) above relates
to a previously undisclosed proposed or pending material transaction, the
disclosure of which would impede the Company's or such Guarantors ability to
consummate such transaction, the Blackout Period may be extended from 60 days to
90 days; provided, however, that Blackout Period shall not exceed an aggregate
of 120 days in any 360-day period.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture, the Notes
and the Exchange Notes. Notwithstanding the fact that any securities for which
liquidated damages are due cease to be Transfer Restricted Securities, all
obligations of the Company and the Guarantors to pay liquidated damages with
respect to securities shall survive until such time as such obligations with
respect to such securities shall have been satisfied in full.
5. Registration Procedures.
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company and the Guarantors shall (i) comply with all
applicable provisions of Section 5(c) hereof and Section 5(d) hereof with
respect to certain exchange offer prospectuses as described therein, below, (ii)
use their reasonable best efforts to effect such exchange and to permit the
resale of Exchange Securities by any Broker-Dealer that tendered Securities in
the Exchange Offer that such Broker-Dealer acquired for its own account as a
result of its market
8
making activities or other trading activities (other than Securities acquired
directly from the Company or any of its Affiliates) being sold in accordance
with the intended method or methods of distribution thereof; and (iii) comply
with all of the following provisions:
(A) If, following the date hereof there has been announced a change in
Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Company raises
a question as to whether the Exchange Offer is permitted by applicable
federal law, the Company and the Guarantors hereby agree to seek a
no-action letter or other favorable decision from the Commission
allowing the Company and the Guarantors to Consummate an Exchange Offer
for such Transfer Restricted Securities. The Company and the Guarantors
hereby agree to pursue the issuance of such a decision to the
Commission staff level, but shall not be required to take commercially
unreasonable action to effect a change of Commission policy. The
Company and the Guarantors hereby agree to: (I) participate in
telephonic conferences with the Commission staff, (II) deliver to the
Commission staff an analysis prepared by counsel to the Company setting
forth the legal bases, if any, upon which such counsel has concluded
that such an Exchange Offer should be permitted and (III) diligently
pursue a resolution by the Commission staff.
(B) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without
limitation, any Holder who is a Broker-Dealer) shall furnish, upon the
request of the Company, prior to the Consummation of the Exchange
Offer, a written representation to the Company and the Guarantors
(which may be contained in the letter of transmittal contemplated by
the Exchange Offer Registration Statement) to the effect that (I) it is
not an Affiliate of the Company, (II) it is not engaged in, does not
intend to engage in and has no arrangement or understanding with any
Person to participate in, a distribution of the Exchange Securities to
be issued in the Exchange Offer, (III) it is acquiring the Exchange
Securities in its ordinary course of business and (IV) if such Holder
is a Broker-Dealer, that it will receive Exchange Securities for its
own account in exchange for Securities that were acquired as a result
of market-making activities or other trading activities and that it
will deliver a Prospectus in connection with any resale of such
Exchange Securities. Each Holder shall be required to make such other
representations as may be reasonably necessary under applicable
Commission rules, regulations or interpretations to render the use of
Form S-4 or another appropriate form under the Securities Act available
and will be required to agree to comply with their agreements and
covenants set forth in this Agreement. Each Holder using the Exchange
Offer to participate in a distribution of the Exchange Securities will
be required to acknowledge and agree that, if the resales are of
Exchange Securities obtained by such Holder in exchange for Securities
acquired directly from the Company or an Affiliate thereof, it (1)
could not, under Commission policy as in effect on the date of this
Agreement, rely on the position of the Commission enunciated in Morgan
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital
Holdings Corporation (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and
similar no-action letters (including,
9
if applicable, any no-action letter obtained pursuant to clause (A)
above), and (2) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a
secondary resale transaction and that such a secondary resale
transaction must be covered by an effective Registration Statement
containing the selling security holder information required by Item 507
or 508, as applicable, of Regulation S-K.
(C) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall, if requested by the
Commission, provide a supplemental letter to the Commission (I) stating
that the Company and the Guarantors are registering the Exchange Offer
in reliance on the position of the Commission enunciated in Exxon
Capital Holdings Corporation (available May 13, 1988), Morgan Stanley
and Co., Inc. (available June 5, 1991) as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and, if
applicable, any no-action letter obtained pursuant to clause (A) above,
(II) including a representation that neither the Company nor any
Guarantor has entered into any arrangement or understanding with any
Person to distribute the Exchange Securities to be received in the
Exchange Offer and that, to the best of the Company's and each
Guarantor's information and belief, each Holder participating in the
Exchange Offer is acquiring the Exchange Securities in its ordinary
course of business and has no arrangement or understanding with any
Person to participate in the distribution of the Exchange Securities
received in the Exchange Offer and (III) including any other
undertaking or representation required by the Commission as set forth
in any no-action letter obtained pursuant to clause (A) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall:
(i) comply with all the provisions of Section 5(c) and (d) below and
shall use its reasonable best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof,
and pursuant thereto, shall prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate
form under the Securities Act, which form shall be available for the
sale of the Transfer Restricted Securities in accordance with the
intended method or methods of distribution thereof within the time
periods and otherwise in accordance with the provisions hereof; and
(ii) issue, upon request of any Holder or purchaser of Securities
covered by any Shelf Registration Statement contemplated by this
Agreement, Exchange Securities, having an aggregate principal amount
equal to the aggregate principal amount of Securities sold pursuant to
the Shelf Registration Statement and surrendered to the Company for
cancellation; and the Company and the Guarantors shall register
Exchange Securities on the Shelf Registration Statement for this
purpose and issue the Exchange Securities to the purchaser(s) of
securities
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subject to the Shelf Registration Statement in the names as such
purchaser(s) shall designate.
(c) General Provisions. In connection with any Registration Statement
and any related Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities, the Company and the Guarantors shall:
(i) use their reasonable best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 2 or 3 hereof, as
applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to
contain an untrue statement of material fact or omit to state any
material fact necessary to make the statements therein (and, in the
case of a Prospectus, in the light of the circumstances under which it
was made) not misleading or (B) not to be effective and usable for
resale of Transfer Restricted Securities during the period required by
this Agreement, the Company and the Guarantors shall file promptly an
appropriate amendment to such Registration Statement curing such
defect, and, if Commission review is required, use their reasonable
best efforts to cause such amendment to be declared effective as soon
as practicable. If at any time the Commission shall issue any stop
order suspending the effectiveness of any Registration Statement, or
any state securities commission or other regulatory authority shall
issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state
securities or Blue Sky laws, the Company and the Guarantors shall use
their reasonable best efforts to obtain the withdrawal or lifting of
such order at the earliest possible time;
(ii) use their reasonable best efforts to prepare and file with the
Commission such amendments and post-effective amendments to the
applicable Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period set forth in
Section 2 or 3 hereof, as the case may be; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act,
and to comply fully with Rules 424, 430A and 462, as applicable, under
the Securities Act in a timely manner, and comply with the provisions
of the Securities Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement
to the Prospectus;
(iii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive
legends; and enable such Transfer Restricted Securities to be
registered in such denominations and such names as the selling Holders
may
11
request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(iv) use its reasonable best efforts to cause the disposition of the
Transfer Restricted Securities covered by such Registration Statement
to be registered with or approved by such other U.S. governmental
agencies or authorities as may be necessary to enable the seller or
sellers thereof to consummate the disposition of such Transfer
Restricted Securities; provided, however, that neither the Company nor
any Guarantor shall be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that
would subject it to the service of process in suits or to taxation,
other than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
(v) provide CUSIP numbers for all Transfer Restricted Securities or
Exchange Securities, as the case may be, not later than the effective
date of such Registration Statement covering such Transfer Restricted
Securities or Exchange Securities, as the case may be, and provide the
Trustee under the Indenture with certificates for the Transfer
Restricted Securities or Exchange Securities, as the case may be, which
are in a form eligible for deposit with The Depository Trust Company;
(vi) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to Holders with regard to any applicable Registration
Statement, as soon as practicable, a consolidated earnings statement
meeting the requirements of Rule 158 (which need not be audited)
covering a twelve month period beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of
the Registration Statement (as such term is defined in paragraph (c)
Rule 158 under the Securities Act; and
(vii) cause the Indenture to be qualified under the TIA not later
than the effectiveness date of the first Registration Statement
required by this Agreement, and, in connection therewith, cooperate
with the Trustee and the Holders to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use its
reasonable best efforts to cause the Trustee thereunder to execute all
documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable
such Indenture to be so qualified in a timely manner.
(d) Additional Provisions Applicable to Shelf Registration Statements
and Certain Exchange Offer Prospectuses. In connection with (1) each Shelf
Registration Statement, and (2) each Exchange Offer Registration Statement if
and to the extent that an Initial Purchaser has notified the Company that it is
a holder of Exchange Securities that are Transfer Restricted Securities (for so
long as such Exchange Securities are Transfer Restricted Securities
12
or for the period provided in Section 2 hereof, whichever is shorter); the
Company and the Guarantors shall:
(i) advise each Holder promptly (but in any event within two
Business Days) and, if requested by such Persons, to confirm such
advice in writing (A) when the Prospectus or any Prospectus supplement
or post-effective amendment has been filed, and, with respect to any
applicable Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments
or supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the
Securities Act or of the suspension by any state securities commission
of the qualification of the Transfer Restricted Securities for offering
or sale in any jurisdiction, or the initiation of any proceeding for
any of the preceding purposes, or (D) of the existence of any fact or
the happening of any event that makes any statement of a material fact
made in the Registration Statement, the Prospectus, any amendment or
supplement thereto, or any document incorporated by reference therein
untrue, or that requires the making of any additions to or changes in
the Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes
in the Prospectus in order to make the statements therein, in the light
of the circumstances under which it was made, not misleading; and if at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws,
the Company and Guarantors shall use their reasonable best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time and will provide to the Initial Purchasers and each Holder who is
named in the Registration Statement prompt notice of the withdrawal of
any such order;
(ii) subject to 5(c)(i), if any fact or event contemplated by
Section 5(d)(i)(D) hereof shall exist or have occurred, use their
reasonable best efforts to prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(iii) furnish to each Holder in connection with such exchange or
sale, if any (or, in connection with any Exchange Offer Registration
Statement, furnish to counsel for the Initial Purchasers), before
filing with the Commission, copies of any Registration Statement or any
Prospectus included therein (except the Prospectus included in the
Exchange Offer Registration Statement at the time it
13
was declared effective) or any amendments or supplements to any such
Registration Statement or Prospectus (but excluding any documents
incorporated by reference as a result of the Company's or the
Guarantors' periodic reporting requirements under the Exchange Act),
which documents will be subject to the reasonable review and comment of
such Holders (and counsel, as the case may be) in connection with such
sale, if any, for a period of at least four Business Days, and the
Company will not file any such Registration Statement or Prospectus or
any amendment or supplement to any such Registration Statement or
Prospectus (excluding all such documents incorporated by reference as a
result of the Company's or the Guarantors' periodic reporting
requirements under the Exchange Act) to which such Holders (or counsel,
as the case may be) shall reasonably object within five Business Days
after the receipt thereof. A Holder shall be deemed to have reasonably
objected to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed,
contains an untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein, in light of the
circumstances under which it was made, not misleading or fails to
comply with the applicable requirements of the Securities Act;
(iv) prior to the filing of any document that is to be incorporated
by reference into a Registration Statement or Prospectus, provide
copies of such document to each Holder (or, in connection with any
Exchange Offer Registration Statement, furnish to counsel for the
Initial Purchasers) in connection with such exchange or sale, if any,
make the Company's and the Guarantors' representatives available as may
be reasonably necessary for discussion of such document and other
customary due diligence matters, and include such information in such
document prior to the filing thereof as such Holders (and counsel, as
the case may be) may reasonably request;
(v) make available, at reasonable times, for inspection by each
Holder in connection with any Shelf Registration Statement or Exchange
Offer Registration Statement and any attorney or accountant retained by
such Holders in connection with such Registration Statement, all
relevant financial and other records, pertinent corporate documents of
the Company and the Guarantors, subject to customary confidentiality
agreements, and cause the Company's and the Guarantors' officers,
directors and employees to supply all information reasonably requested
by any such Holder, attorney or accountant in connection with such
Registration Statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its effectiveness and
which is customarily furnished in transactions of the type contemplated
by such Registration Statement; provided, however, that the foregoing
inspection and information gathering (A) shall be coordinated on behalf
of the selling Holders, underwriters or any representative thereof by
one counsel, who shall be Milbank, Tweed, Hadley & McCloy LLP or such
other counsel as may be chosen by the Holders of a majority in
principal amount of Transfer Restricted Securities and (B) shall not be
available to any such Holder who does not agree to hold such
information in confidence;
14
(vi) if requested by any Holders (or, in connection with any
Exchange Offer Registration Statement, the Initial Purchasers and their
counsel) in connection with such exchange or sale, use their reasonable
best efforts to include promptly in any Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such Holders may reasonably request to
have included therein, including, without limitation, information
relating to the "Plan of Distribution" of the Transfer Restricted
Securities; and make all required filings of such Prospectus supplement
or post-effective amendment as soon as practicable after the Company is
notified of the matters to be included in such Prospectus supplement or
post-effective amendment;
(vii) furnish to each Holder (or, in connection with any Exchange
Offer Registration Statement, counsel for the Initial Purchasers) in
connection with such exchange or sale without charge, at least one copy
of the Registration Statement, as first filed with the Commission, and
of each amendment thereto, and upon request all documents incorporated
by reference therein and all exhibits (including exhibits incorporated
therein by reference);
(viii) deliver to each Holder (or, in connection with any Exchange
Offer Registration Statement, the Initial Purchasers and their counsel)
without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Holder (or, in connection with any Exchange Offer Registration
Statement, the Initial Purchasers and their counsel) reasonably may
request; the Company and the Guarantors hereby consent to the use (in
accordance with law) of the Prospectus and any amendment or supplement
thereto by each selling Holder in connection with the offering and the
sale of the Transfer Restricted Securities covered by the Prospectus or
any amendment or supplement thereto; provided that such use of the
Prospectus and any amendment or supplement thereto and such offering
and sale conforms to the Plan of Distribution set forth in the
Prospectus and complies with the terms of this Agreement and all
applicable laws and regulations thereunder;
(ix) upon the request of any Holder in connection with any
Registration Statement, enter into such customary agreements (including
an underwriting agreement) and make such customary representations and
warranties and take all such other customary actions in connection
therewith in order to expedite or facilitate the disposition of the
Transfer Restricted Securities pursuant to any applicable Registration
Statement contemplated by this Agreement as may be reasonably requested
by any Holder in connection with any sale or resale pursuant to any
applicable Registration Statement. In such connection, the Company and
the Guarantors shall have no obligation to enter into an underwriting
agreement or permit an underwritten offering unless a request therefore
shall have been received from Holders of not less than 33% of the
aggregate principal amount of Transfer Restricted Securities then
outstanding; and whether or not an underwriting agreement is entered
into and whether or not the registration is an underwritten
registration, the Company and the Guarantors shall:
15
(A) upon request of the underwriters in connection with any
Underwritten Registration under any Registration Statement, furnish
(or in the case of paragraphs (2) and (3) below, use their
reasonable best efforts to cause to be furnished) to each Holder,
upon the effectiveness of the such Registration Statement:
(1) a certificate, dated such date, signed on behalf of the
Company and each Guarantor by (x) a senior officer and (y) a
principal financial or accounting officer of the Company and such
Guarantor, confirming, as of the date thereof, the matters set forth
in Sections 7(m) and (o) of the Purchase Agreement and such other
similar matters as such Holders may reasonably request;
(2) in connection with any Underwritten Registration or
Underwritten Offering, an opinion, dated the date of the closing of
the Underwritten Offering, of counsel for the Company and the
Guarantors covering the matters set forth in Sections 7(c) and 7(d)
of the Purchase Agreement and such other matters as such Holder may
reasonably request, as well as a letter from counsel including a
representation to the effect that such counsel has participated in
conferences with officers and other representatives of the Company
and the Guarantors, representatives of the independent public
accountants for the Company and the Guarantors and has considered
the matters required to be stated therein and the statements
contained therein, although such counsel has not independently
verified the accuracy, completeness or fairness of such statements;
and that such counsel advises that, on the basis of the foregoing,
no facts came to such counsel's attention that caused such counsel
to believe that the applicable Registration Statement, at the time
the Shelf Registration Statement or any post-effective amendment
thereto became effective and, in the case of the Exchange Offer
Registration Statement, as of the date of Consummation of the
Exchange Offer, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus contained in the Shelf Registration Statement as of its
date and, in the case of the opinion dated the date of Consummation
of the Exchange Offer, as of the date of Consummation, contained an
untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
Without limiting the foregoing, such counsel may state further that
such counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness of
the financial statements, notes and schedules and other financial
data included in any Registration Statement contemplated by this
Agreement or the related Prospectus; and
(3) in connection with any Underwritten Registration or
Underwritten Offering, customary comfort letters, dated as of the
date of
16
the closing of the Underwritten Offering, from the Company's and
Lavalife's independent accountant (to the extent separate financial
statements or other financial data of Lavalife are included in the
applicable Registration Statement), in the customary form and
covering matters of the type customarily covered in comfort letters
to underwriters in connection with underwritten offerings, and
affirming the matters set forth in the comfort letters delivered
pursuant to Section 7(f) and 7(g) of the Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence compliance
with the matters covered in clause (A) above and with any customary
conditions contained in any agreement entered into by the Company
and the Guarantors pursuant to this clause (ix);
(x) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders and their counsel in connection with
the registration and qualification of the Transfer Restricted
Securities under the securities or Blue Sky laws of such jurisdictions
as the selling Holders may request and do any and all other acts or
things reasonably necessary or advisable to enable the disposition in
such jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that neither the
Company nor any Guarantor shall be required to register or qualify as a
foreign corporation where it is not now so qualified or to take any
action that would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so
subject;
(xi) provide promptly to each Holder, upon written request, each
document filed with the Commission pursuant to the requirements of
Section 13 or Section 15(d) of the Exchange Act; and
(xii) if requested by the Underwriter(s), make appropriate officers
of the Company and the Guarantors available to the Underwriter(s) for
meetings with prospective purchasers of the Transfer Restricted
Securities and prepare and present to potential investors customary
"road show" or marketing materials in a manner consistent with new
issuances of securities similar to the Transfer Restricted Securities.
(e) Each Holder's acquisition of a Transfer Restricted Security
constitutes such Holder's agreement that, upon receipt of the notice referred to
in Section 5(d)(i)(C) or any notice from the Company of the existence of any
fact of the kind described in Section 5(d)(i)(D) hereof (in each case, a
"Suspension Notice"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 5(d)(ii) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings
17
that are incorporated by reference in the Prospectus (the "Advice"). Each Holder
receiving a Suspension Notice shall be required to either (I) destroy any
Prospectuses, other than permanent file copies, then in such Holder's possession
that have been replaced by the Company with a more recently dated Prospectus or
(II) deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Holder's possession of the Prospectuses
covering such Transfer Restricted Securities that was current at the time of
receipt of the Suspension Notice. The time period regarding the effectiveness of
such Registration Statement set forth in Section 2 or 3 hereof, as applicable,
shall be extended by a number of days equal to the number of days in the period
from and including the date of delivery of the Suspension Notice to the date of
delivery of the Advice.
6. Registration Expenses. (a) All expenses incident to the Company's
and each Guarantor's performance of or compliance with this Agreement shall be
borne, jointly and severally, by the Company and the Guarantors regardless of
whether a Registration Statement becomes effective, including, without
limitation: (i) all registration and filing fees and expenses; (ii) all fees and
expenses of compliance with federal securities and state Blue Sky or securities
laws; (iii) all expenses of printing (including certificates for the Exchange
Securities to be issued in the Exchange Offer and printing the Prospectuses) and
the Company's expenses for messenger and delivery services and telephone; (iv)
all fees and disbursements of counsel for the Company and the Guarantors, and
one counsel for the Holders of Transfer Restricted Securities as described in
Section 6(b) below; and (v) all fees and disbursements of independent certified
public accountants of the Company, the Guarantors and Lavalife, if applicable
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Company shall bear its and each Guarantor's internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal, accounting or other duties), the expenses of any
annual audit and the fees and expenses of any Person, including special experts,
retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), including any amendment or
supplement thereto, and any other documents delivered to any Holders, the
Company and the Guarantors shall reimburse the Initial Purchasers and the
Holders of Transfer Restricted Securities who are tendering Securities in the
Exchange Offer and/or selling or reselling Securities or Exchange Securities
pursuant to the "Plan of Distribution" contained in the Exchange Offer
Registration Statement or the Shelf Registration Statement, as applicable, for
the reasonable fees and disbursements of not more than one counsel (who shall be
Milbank, Tweed, Hadley & McCloy LLP unless another firm shall be chosen by the
Holders of a majority in principal amount of the Transfer Restricted Securities
for whose benefit such Registration Statement is being prepared).
7. Indemnification and Contribution.
(a) The Company and the Guarantors agree, jointly and severally, to
indemnify and hold harmless each Holder, its directors, officers and each
Person, if any, who controls such Holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act), to the fullest extent
lawful, from and against any and all losses, claims, damages, liabilities
18
or judgments (including without limitation, any reasonable legal or other
expenses incurred in connection with investigating or defending any matter,
including any action that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (or any amendment or supplement thereto) provided by the Company to
any Holder or any prospective purchaser of Exchange Securities or registered
Securities, or caused by any omission alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by an untrue statement or omission or
alleged untrue statement or omission that is based upon information relating to
any of the Holders furnished in writing to the Company by any of the Holders.
(b) By its acquisition of Transfer Restricted Securities, each Holder
of Transfer Restricted Securities agrees, severally and not jointly, to
indemnify and hold harmless the Company and the Guarantors, and their respective
directors and officers, and each Person, if any, who controls (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
the Company or the Guarantors to the same extent as the foregoing indemnity from
the Company and the Guarantors set forth in Section 7(a) hereof, but only with
reference to information relating to such Holder furnished in writing to the
Company by such Holder expressly for use in any Registration Statement or in any
amendment or supplement thereto. In no event shall any Holder, its directors,
officers or any Person who controls such Holder be liable or responsible for any
amount in excess of the total amount received by such Holder with respect to its
sale of Transfer Restricted Securities pursuant to a Registration Statement.
(c) In case any action shall be commenced involving any Person in
respect of which indemnity may be sought pursuant to Section 7(a) or (b) hereof
(the "indemnified party") the indemnified party shall promptly notify the Person
against whom such indemnity may be sought (the "indemnifying person") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 7(a) and (b) hereof, a Holder shall not be required to assume
the defense of such action pursuant to this Section 7(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
19
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by a majority of the Holders, in the case of the parties indemnified,
pursuant to Section 7(a) hereof, and by the Company and the Guarantors, in the
case of parties indemnified, pursuant to Section 7(b) hereof. The indemnifying
party shall indemnify and hold harmless the indemnified party from and against
any and all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (A) effected with its written consent or (B) effected
without its written consent if the settlement is entered into more than 20
Business Days after the indemnifying party shall have received a request from
the indemnified party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party) and, prior to the date of such settlement, the indemnifying party shall
have failed to comply with such reimbursement request. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (I) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (II) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent that the indemnification provided for in this Section
7 is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors on the one hand, and the Holders, on the other hand, from their
initial sale of Transfer Restricted Securities (or in the case of Exchange
Securities that are Transfer Restricted Securities, the sale of the Securities
for which such Exchange Securities were exchanged) or (ii) if the allocation
provided by clause 7(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in such clause 7(d)(i) but also the relative fault of the Company and the
Guarantors, on the one hand, and of the Holder, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the Company and the Guarantors, on the one
hand, and of the Holder, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or such Guarantor, on the one hand, or by
the Holder, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and judgments referred to above shall be deemed to
include, subject to the limitations set forth in Section 7(c) hereof, any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
20
The Company, the Guarantors and, by its acquisition of Transfer Restricted
Securities, each Holder agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any matter, including any action
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 7, no Holder, its
directors, its officers or any Person, if any, who controls such Holder shall be
required to contribute, in the aggregate, any amount in excess of the total
amount received by such Holder with respect to the sale of Transfer Restricted
Securities pursuant to a Registration Statement. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant to
this Section 7(d) are several in proportion to the respective principal amount
of Transfer Restricted Securities held by each Holder hereunder and not joint.
8. Rule 144A and Rule 144.
The Company and each Guarantor agrees with each Holder, for so long as
any Transfer Restricted Securities remain outstanding and during any period in
which the Company or such Guarantor (i) is not subject to Section 13 or 15(d) of
the Exchange Act, to make available, upon request of any Holder or beneficial
owner of Transfer Restricted Securities in connection with any sale thereof and
any prospective purchaser of such Transfer Restricted Securities designated by
such Holder or beneficial owner, the information required by Rule 144A(d)(4)
under the Securities Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of
the Exchange Act, to use its reasonable best efforts to make all filings
required thereby in a timely manner in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144.
9. Future Subsidiary Guarantees.
If, prior to the Consummation of the Exchange Offer or prior to the
effectiveness of the Shelf Registration Statement, as the case may be, any
subsidiary of the Company executes a Subsidiary Guarantee in accordance with the
terms and provisions of the Indenture, the Company shall cause such subsidiary
to execute and deliver to the parties hereto a counterpart signature page to
this Agreement and such subsidiary shall be bound by all the provisions of this
Agreement as a "Guarantor."
10. Miscellaneous.
(a) Remedies. The Company and the Guarantors acknowledge and agree that
monetary damages (including the liquidated damages contemplated by Section
4hereof) would not be adequate compensation for any loss incurred by reason of a
breach by the Company or the
21
Guarantors of the provisions of this Agreement and the Company and the
Guarantors hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate; provided that the
liquidated damages contemplated by Section 4 hereof shall be the exclusive
remedy for any such breach of Section 2 or 3 of this Agreement.
(b) Actions Affecting Transfer Restricted Securities. The Company and
the Guarantors shall not, directly or indirectly, take any action with respect
to the Transfer Restricted Securities as a class that would adversely affect the
ability of the Holders of Transfer Restricted Securities to include such
Transfer Restricted Securities in a registration undertaken pursuant to this
Agreement.
(c) No Inconsistent Agreements. The Company and the Guarantors will
not, on or after the date of this Agreement, enter into any agreement with
respect to their respective securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. In addition, the Company and the Guarantors shall not grant
to any of its security holders (other than the Holders of Transfer Restricted
Securities in such capacity) the right to include any of its securities in the
Registration Statement provided for in this Agreement other than the Transfer
Restricted Securities. The Company has not previously entered into any agreement
(which has not expired or been terminated) granting any registration rights with
respect to its securities to any Person which rights conflict with the
provisions hereof.
(d) Amendments and Waivers. This Agreement may not be amended, modified
or supplemented, and waivers or consents to or departures from the provisions
hereof may not be given, unless (i) in the case of Section 4 hereof and this
Section 11(d)(i), the Company has obtained the written consent of Holders of all
outstanding Transfer Restricted Securities and (ii) in the case of all other
provisions hereof, the Company has obtained the written consent of a Majority of
Holders (excluding Transfer Restricted Securities held by the Company and its
Affiliates) or such greater percentage of the Holders as required by the
Indenture. Notwithstanding the foregoing, a waiver or consent to depart from the
provisions of this Agreement with respect to a matter that relates exclusively
to the rights of Holders whose Transfer Restricted Securities are being tendered
pursuant to the Exchange Offer and thereby does not directly or indirectly
affect the rights of other Holders may be given by a majority of Holders of the
Transfer Restricted Securities being tendered or registered pursuant to such
Exchange Offer.
(e) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one band, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect their rights hereunder.
(f) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, facsimile
transmission, or air courier guaranteeing overnight delivery:
22
(i) if to a Holder, at the address set forth on the records of
the registrar under the Indenture, as the case may be; and
(ii) if to the Company or any of the Guarantors:
MemberWorks Incorporated
680 Washington Boulevard
Stamford, CT 06901
Attention: George W.M. Thomas
Fax: (203) 674-7026
Telephone: (203) 674-7069
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if transmitted by
facsimile; and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(g) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
(i) this Agreement shall not inure to the benefit of or be binding upon a
successor or assign of a Holder unless and to the extent such successor or
assign acquired Transfer Restricted Securities from such Holder and (ii) nothing
contained herein shall be deemed to permit any assignment, transfer or other
disposition of Transfer Restricted Securities in violation of the terms of the
Purchase Agreement or the Indenture. If any transferee of any Holder shall
acquire Transfer Restricted Securities, in any manner, whether by operation of
law or otherwise, such Transfer Restricted Securities shall be held subject to
all of the terms of this Agreement, and by taking and holding such Transfer
Restricted Securities such Person shall be conclusively deemed to have agreed to
be bound by and to perform all of the terms and provisions of this Agreement,
including the restrictions set forth in this Agreement and, if applicable, the
Purchase Agreement, and such Person shall be entitled to receive the benefits
hereof.
(h) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Securities Held by the Company or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Transfer Restricted
Securities is required hereunder, Transfer Restricted Securities held by the
Company or its Affiliates shall not be
23
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
(j) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(k) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York.
(l) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(m) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
MEMBERWORKS INCORPORATED
By /s/
----------------------------
Name:
Title:
BILLING SERVICES INTERNATIONAL, INC.
BEST BENEFITS, INC.
IMPAC MARKETING CORP.
MYHEALTHYSAVINGS.COM, INC.
COUNTRYWIDE DENTAL, INC.
MEMBERWORKS CANADA LLC
QUOTA PHONE, INC.
DISCOUNT DEVELOPMENT SERVICES, LLC
UNICARE, INC.
COVERDELL & COMPANY INC.
MEMBERWORKS CANADA HOLDCO, INC.
LAVALIFE CORP.
INTERACTIVE MEDIA GROUP (USA) LTD.
INTERACTIVE MEDIA CONSOLIDATED, INC.
INTERACTIVE VOICE MEDIA BALTIMORE LLC
INTERACTIVE VOICE MEDIA COLORADO LLC
INTERACTIVE VOICE MEDIA GEORGIA LLC
INTERACTIVE VOICE MEDIA MICHIGAN LLC
INTERACTIVE VOICE MEDIA NEW JERSEY LLC
INTERACTIVE VOICE MEDIA NEW YORK LLC
INTERACTIVE VOICE MEDIA OHIO LLC
INTERACTIVE VOICE MEDIA PENNSYLVANIA LLC
LAVALIFE WASHINGTON DC LLC
INTERACTIVE (TX) VOICE MEDIA CORP.
INTERACTIVE LA VOICE MEDIA CORP.
INTERACTIVE MEDIA (IL) CORP.
INTERACTIVE MEDIA MO CORP.
INTERACTIVE SJ VOICE MEDIA CORP.
INTERACTIVE VOICE MEDIA (CA) CORP.
INTERACTIVE VOICE MEDIA (MN) CORP.
INTERACTIVE VOICE MEDIA (SACRAMENTO) CORP.
BARNES HOLDING CORP.
By /s/
----------------------------
Name:
Title:
Accepted and agreed by:
LEHMAN BROTHERS INC.
UBS SECURITIES LLC
ABN AMRO INCORPORATED
By: LEHMAN BROTHERS INC.
By /s/
--------------------------
Authorized Representative