EXHIBIT 4.1
- --------------------------------------------------------------------------------
iEXALT, INC.
REGISTRATION RIGHTS
AGREEMENT
DATED AS OF NOVEMBER 1 2000
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
1. Certain Definitions............................................ 1
2. Company Definitions............................................ 2
(a) Notice of Registration.................................... 2
(b) Underwriting.............................................. 3
(c) Right to Terminate Registration........................... 3
3. Registration on Form S-3....................................... 3
(a) Request for Registration.................................. 3
(b) Limitations............................................... 3
4. Expenses of Registration....................................... 4
(a) Registration Expenses...................................... 4
(b) Selling Expenses.......................................... 4
5. Registration Procedures........................................ 4
6. Indemnification................................................ 5
(a) By Company................................................ 5
(b) By Holders................................................ 5
(c) Procedures................................................ 6
7. Information by Holders......................................... 6
8. Rule 144 Reporting............................................. 6
9. Transfer of Registration Rights................................ 6
10. Termination.................................................... 7
11. Governing Law.................................................. 7
12 Amendments and Waivers......................................... 7
13. Severability................................................... 7
14 Notices........................................................ 7
15. Counterparts................................................... 8
16. Titles and Subtitles........................................... 8
17. Arbitration.................................................... 8
EXHIBIT A
Right Holders........................................................ 10
i
iEXALT, INC.
---------------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
November 1 2000 by and between iExalt, Inc., a Nevada corporation (the
"Company"), and PsyCare America, LLC, a Georgia limited liability company (the
"Right Holder"). Together, the parties to this Agreement are referred to as the
"Parties".
R E C I T A L S :
A. WHEREAS, the Company and the Right Holder are Parties to that certain
Acquisition Agreement dated as of November 1, 2000, pursuant to which, among
other things, certain assets of the Right Holder shall be acquired by the
Company (the "Acquisition") and the Company shall issue shares of Common Stock,
$.00 par value (the "iExalt Common Stock") to the Right Holder; and
B. WHEREAS, in connection with the issuance of iExalt Common Stock, the
Parties desire to provide for the registration of the iExalt Common Stock in
accordance with the terms of this Agreement;
NOW, THEREFORE, the Parties agree as follows:
A G R E E M E N T :
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"CLOSING DATE" shall mean the date of execution of this Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission of
the United States or any other U.S. federal agency at the time administering the
Securities Act.
"HOLDER" shall mean the Right Holder and any assignee as permitted
by Section 9.
"INITIATING HOLDERS" shall mean in aggregate the Holders of fifty
percent (50%) or more of the iExalt Common Stock that initiate a registration
pursuant to this Agreement.
"OTHER HOLDERS" shall mean the holders of the Company securities,
other than the Initiating Holders, that are proposing or electing to distribute
their securities pursuant to a registration under this Agreement.
"REGISTRABLE SECURITIES" shall mean any shares of iExalt Common
Stock and any share of Common Stock or other security issued or issuable in
respect of such iExalt Common Stock upon any
1
stock split, stock dividend, recapitalization or similar event; provided,
however, that such shares shall only be treated as Registrable Securities if
they have not been (i) sold to or through a broker or dealer of underwriter in a
public distribution or a public securities transaction or (ii) sold in a single
transaction exempt from the registration and prospectus delivery requirements
and restrictive legends with respect thereto have been removed upon the
consummation or such sale.
The terms "REGISTER", "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement by the Commission and such other
governmental or regulatory bodies as are appropriate.
"REGISTRATION EXPENSES" shall mean all expenses, except as otherwise stated
below, incurred by the Company in complying with Section 2 and 3 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements or counsel for the
Company (but not fees and disbursements of special counsel for Holder, if any),
blue sky fees and expenses and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of the Company which shall be paid in any event by the Company).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or any
similar United States federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holder.
Other capitalized terms used herein without definition shall have the same
meaning as set forth in the Acquisition Agreement.
2. COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time during a two-year period
commencing with the date of issuance of shares of iExalt Common Stock to the
Right Holder (whether at the First Closing or the Second Closing), the Company
shall determine to register any of its securities, either for its own account or
the account of a security holder or holders, other than:
(i) a registration relating solely to employee benefit plans or
(ii) a registration relating solely to a Commission Rule 145
transaction, the Company will:
(A) promptly give to each Holder written notice thereof;
and
(B) include in such registration (and any related
qualification under blue sky laws or other compliance),
and in any underwriting involved therein, all the
Registrable Securities specified in a written request
or requests, made within 20 days after receipt of such
written notice from the Company, by any Holder.
2
(b) UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holder as a part of the written notice given
pursuant to Subsection 2(a)(i). In such event, the right of any Holder to
registration pursuant to this Section 2 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein.
All Holders proposing to distribute their securities through such underwriting
shall, together with the Company, enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company. Notwithstanding any other provision of this Section 2, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
Registrable Securities and other securities to be included in such registration;
provided, however, that the number of securities to be included for the account
of the Holders shall not be so limited if any securities are to be included in
such underwriting for the account of any person other than the Company or the
Holders. The Company shall so advise all Holders proposing to distribute their
securities through such underwriting and the number of shares that may be
included in the registration and underwriting by all such Holders shall be
allocated among them, as nearly as practicable, first, to the Company and
second, pro rata among the Holders based upon the respective amounts of
Registrable Securities that each such Holder has elected to include in such
registration. To facilitate the allocation of shares in accordance with the
above provisions, the Company may round the number of shares allocated to any
Holder to the nearest one hundred shares. If any Holder disapproves of the terms
of any such underwriting, he may elect, unless otherwise agreed in writing by
such Holder, to withdraw therefrom by written notice to the Company and the
managing underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2 prior to the effectiveness of such registration whether or not any
Holder has elected to include Registrable Securities in such registration.
3. REGISTRATION ON FORM S-3.
(a) REQUEST FOR REGISTRATION. If, at any time during the two-year
period commencing with the date of issuance of shares of iExalt Common Stock to
the Right Holder (whether at the First Closing or the Second Closing), the
Initiating Holders request that the Company file a registration statement on
Form S-3 (or any successor form to Form S-3) for a public offering of shares of
the Registrable Securities and the Company is a registrant entitled to use Form
S-3 to register the Registrable Securities for such an offering, the Company
shall file such registration statement with the Commission within 30 days after
such request is received by the Company, and shall use its best efforts to cause
the sale of such Registrable Securities to be registered for the offering on
such form as soon as possible after such filing, to cause such Registrable
Securities to be qualified in such jurisdictions as the Initiating Holders may
reasonably request, and to cause such registration to remain effective for a
two-year period.
(b) LIMITATIONS. Notwithstanding the foregoing, the Company shall
not be obligated to take action pursuant to this Section 3:
(i) in any particular jurisdiction in which the Company would be
required to
3
execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already
subject to service in such jurisdiction and except as may be required by
the Securities Act;
(ii) if the Company, within ten days of the receipt of the request of
the Initiating Holders, gives notice of its bona fide intention to effect
the filing of a registration statement with the Commission within 30 days
of receipt of such request (other than with respect to a registration
statement relating to a Rule 145 transaction, an offering solely to
employees or any other registration which is not appropriate for the
registration of Registrable Securities); provided, however, if the Holder
elects to participate in such a registration statement, the Holder shall
be entitled to include all of the shares requested to be included,
notwithstanding the provisions of Subsection 2(b) hereof to the contrary;
(iii) during the period starting with the date 30 days prior to the
Company's estimated date of filing, and ending on the date six months
immediately following the effective date, of any registration statement
pertaining to securities of the Company (other than a registration of
securities in a Rule 145 transaction or with respect to an employee
benefit plan), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to
become effective; provided, however, if the Holder elects to participate
in such a registration statement, the Holder shall be entitled to include
all of the shares requested to be included, notwithstanding the provisions
of Subsection 2(b) hereof to the contrary; or
(c) The Company shall use its best efforts to make such timely
filings with the Commission and to otherwise conduct its affairs so that the
Company at all times shall be a registrant entitled to use Form S-3 to register
the sale of the Registrable Securities.
4. EXPENSES OF REGISTRATION.
(a) REGISTRATION EXPENSES. The Company shall bear all Registration
Expenses incurred in connection with all registrations pursuant to Sections 2
and 3 hereof.
(b) SELLING EXPENSES. Unless other stated, all Selling Expenses
relating to securities registered on behalf of the Holders shall be borne by the
Holders pro rata on the basis of the number of shares so registered.
5. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will:
(i) keep each Holder participating in such registration advised as
to the initiation of each registration, qualification and compliance and
as to the completion thereof;
(ii) furnish to the Holders participating in such registration and
to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus,
final prospectus and such other documents as such parties may reasonably
request in order to facilitate the public offering of such securities.
4
6. INDEMNIFICATION.
(a) BY COMPANY. The Company will indemnify each Holder, each of its
officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by the Company of the Securities Act or any
rule or regulation promulgated under the Securities Act applicable to the
Company in connection with any such registration, qualification or compliance,
and the Company will reimburse each such Holder, each of its officers and
directors and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by such Holder, controlling person or underwriter and
stated specifically for use therein. If the Holders are represented by counsel
other than counsel for the Company, the Company will not be obligated under this
Subsection 6(a) to reimburse legal fees and expenses of more than one separate
counsel for the Holders.
(b) BY HOLDERS. Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, and will
reimburse the Company, such Holders, such directors, officers, persons,
underwriters or controlling persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement or omission is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein. Notwithstanding the foregoing, the liability of
each Holder under this Subsection 6(b) shall be limited to an amount equal to
the initial public offering price of the shares sold by such Holder, unless such
liability arises out of or is based on willful conduct of such Holder.
5
(c) PROCEDURES. Each Party entitled to indemnification under this
Section 6 (the "INDEMNIFIED PARTY") shall give notice to the Party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such Party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action and provided further, that the Indemnifying Party shall not
assume the defense for matters as to which there is a conflict of interest or
separate and different defenses. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term hereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
7. INFORMATION BY HOLDERS. As the Company may request in writing and only
as shall be necessary to enable the Company to comply with the provisions hereof
in connection with any registration, qualification or compliance referred to in
this Agreement, all Holders of Registrable Securities included in any
registration shall furnish to the Company such information regarding such
Holders, the Registrable Securities held by them and the distribution proposed.
8. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all
times while the Company is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT");
(ii) file with the Commission in a timely manner all mandated,
material reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(iii) furnish to any Holder forthwith upon request a written
statement by the Company as to its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act, a
copy of the most recent annual or quarterly report of the Company, and
such other reports and documents of the Company and other information in
the possession of or reasonably obtainable by the Company as such Holder
may reasonably request in availing itself of any rule or regulation of the
Commission allowing such Holder to sell any such securities without
registration.
9. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register securities granted Holders under Section 2 and 3 hereof may otherwise
be assigned in connection with any transfer or assignment by a Holder of
Registrable Securities provided that:
6
(i) such transfer may otherwise be effected in accordance with
applicable securities laws;
(ii) such transfer is effected in compliance with the
restrictions on transfer contained in this Agreement and in any other
agreement between the Company and the Holder.
10. TERMINATION. All rights granted and obligations imposed pursuant to
Sections 2 and 3 of this Agreement shall terminate on the earlier of (i) two
years after the Second Closing or (ii) as to each Holder, at such time as such
Holder has sold all Registrable Securities held by it pursuant to Rule 144 or
pursuant to a registration.
11. GOVERNING LAW. This Agreement will be governed by and construed under
the internal laws of the State of Georgia.
12. AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively) only with
the written consent of the Company and the Holders of a majority of the iExalt
Common Stock with registration rights pursuant to this Agreement. Any amendment
or waiver effected in accordance with this paragraph will be binding upon the
Company and each Holder of any securities subject to this Agreement and future
Holders of all such securities.
13. SEVERABILITY. If any provision of this Agreement or any portion
thereof is finally determined to be unlawful or unenforceable, such provision or
portion thereof shall be deemed to be severed from this Agreement. Every other
provision, and any portion of such an invalidated provision that is not
invalidated by such a determination, shall remain in full force and effect.
14. NOTICES. Any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given upon personal
delivery; upon confirmed transmission by telecopy or telex; or three days after
deposit with the United States Postal Service via first class mail, postage
paid, registered or certified with return receipt requested, addressed,
(i) if to the Company, to:
iExalt, Inc.
4301 Windfern Drive
Houston, TX 77041
Attn: Donald Sapaugh
Telecopier: (281) 922-4114
(ii) if to PsyCare America, LLC, to:
PsyCare America, LLC
4351 Shackleford Road
Norcross, Georgia 30093
Attention: President
Telecopier: (770) 381-2802
7
And if to any other Holder, at the address for such Holder maintained in the
Company's records, in each case with a required copy to PsyCare America LLC at
the address noted above.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together will constitute one and the same instrument, and any of
which shall be enforceable against the person who has executed the
same.
16. TITLES AND SUBTITLES. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
17. ARBITRATION. Both parties agree to follow the RULES OF PROCEDURE FOR
CHRISTIAN CONCILIATION of the Institute for Christian Conciliation (a
division of Peacemaker Ministries) for any and all disputes concerning
or arising out of this Agreement. Both parties agree that the Bible
commands parties to make every effort to resolve disputes with each
other in private and in obedience agree to proceed to legally binding
arbitration before a mutually agreed arbitrator. Both parties realize
that arbitration will be the exclusive remedy for potential disputes
and may not later litigate these or any other related matters in civil
court.
8
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first-above written.
"Company"
iEXALT, INC.
a Nevada corporation
By: /s/ DONALD SAPAUGH
-----------------------
Donald Sapaugh, President
"Right Holder:
PsyCare America, LLC
a Georgia limited liability company
By: /s/ J. LELAND STRANGE
-------------------------
J. Leland Strange, President
9
EXHIBIT A
RIGHT HOLDERS
Number of Shares
of iExalt Common
Name Stock Held
- ---------------------------------------------------------- ------------------
------------------
Total:
==================
10