Exhibit 4.1
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Warrant Agreement
Dated as of November 1, 2004
Warrants Exercisable for Common Stock
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TABLE OF CONTENTS
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Section 1. Issuance of Warrants; Execution and Delivery of Warrant Certificates..........1
1.1 Issuance of Warrants..........................................................1
1.2 Execution and Delivery of Warrant Certificates................................1
Section 2. Warrant Price, Manner of Exercise.............................................2
2.1 Warrant Price, Term, Expiration and Notice....................................2
2.2 Manner of Exercise............................................................2
2.3 Conversion of Warrant.........................................................2
2.4 When Exercise Deemed Effected.................................................3
2.5 Delivery of Stock Certificates, etc...........................................3
Section 3. Adjustment of Shares of Common Stock Purchasable and Warrant Price............3
3.1 Antidilution Provision........................................................3
3.2 Consolidation, Merger, Sale of Assets, Reorganization, etc....................5
3.3 Warrant Price Adjustment......................................................5
3.4 Statements on Warrant Certificates............................................6
3.5 Accountants' Report as to Adjustments.........................................6
Section 4. Notices of Corporate Action...................................................6
Section 5. Legend on Warrant Stock.......................................................7
Section 6. Reservation of Stock..........................................................7
6.1 Reservation of Stock..........................................................7
Section 7. Other Provisions Relating to Rights and Obligations of Holders of Warrant
Certificates.................................................................7
7.1 No Rights as Stockholder Conferred by Warrants or Warrant Certificates........7
7.2 Lost, Stolen, Mutilated or Destroyed Warrant Certificates.....................7
7.3 Warrantholder May Enforce Rights..............................................8
Section 8. Registration Rights...........................................................8
8.1 Company Registration..........................................................8
8.2 Expenses of Registration.....................................................10
8.3 Registration Procedures......................................................10
8.4 Related Registration Matters.................................................11
8.5 Indemnification and Contribution.............................................12
8.6 Information by Stockholders..................................................13
8.7 Sales Without Registration...................................................14
8.8 Rule 144.....................................................................14
8.9 Transfer of Registration Rights..............................................14
8.10 Post-Effective Amendments....................................................14
8.11 Cessation of Sale Activities.................................................14
8.12 Supplements..................................................................15
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Section 9. Exchange and Transfer of Warrant Certificates................................15
9.1 Exchange and Transfer of Warrant Certificates................................15
9.2 Treatment of Holders of Warrant Certificates.................................15
9.3 Cancellation of Warrant Certificates.........................................16
Section 10. Notices......................................................................16
Section 11. Representations and Warranties...............................................16
11.1 Capitalization...............................................................16
11.2 Authorization; Enforceability................................................17
11.3 Issuance of Shares...........................................................17
Section 12. Miscellaneous................................................................17
12.1 Amendment....................................................................17
12.2 Parties in Interest..........................................................17
12.3 Applicable Law...............................................................17
12.4 Consent to Jurisdiction......................................................17
12.5 Waiver of Jury Trial.........................................................18
12.6 Counterparts.................................................................18
12.7 Inspection of Agreement......................................................18
12.8 Headings.....................................................................18
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WARRANT AGREEMENT
THIS WARRANT AGREEMENT ("Agreement"), dated as of November 1, 2004 (the
"Effective Date"), is made by and between Gexa Corp., a Texas corporation (the
"Company") and ▇▇▇▇▇▇▇▇ Capital Corp. ("Grantee" and, together with any
transferee of Warrants or Warrant Stock, the "Warrantholder").
WHEREAS, ▇▇▇▇▇▇▇▇ has commenced litigation against the Company, and the
Company and ▇▇▇▇▇▇▇▇ have agreed to settle said litigation, and
WHEREAS, part of the consideration for such settlement in the issuance of
warrants by the Company to ▇▇▇▇▇▇▇▇.
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
Section 1. Issuance of Warrants; Execution and Delivery of Warrant
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Certificates.
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1.1 Issuance of Warrants. The Company will issue and deliver to Grantee,
effective as of the Effective Date, warrants (the "Warrants") to purchase
400,000 shares ("Warrant Shares") of common stock of the Company, par value
$0.01 per share ("Common Stock"). The Warrants shall be exercisable on or after
the Effective Date. Such Warrants shall be evidenced by a certificate (the
"Warrant Certificate") which the Company will issue and deliver to Grantee on
the Closing Date.
1.2 Execution and Delivery of Warrant Certificates. Each original Warrant
Certificate issued shall be in substantially the form set forth in Appendix A
hereto and may have such letters, numbers, or other marks of identification or
designation and such legends or endorsements printed thereon as the officers of
the Company executing the same may approve (execution thereof to be conclusive
evidence of such approval) and as are not inconsistent with this Agreement, or
as may be required to comply with any law or with any rule or regulation made
pursuant thereto. The Warrant Certificates shall be executed on behalf of the
Company by its Chief Executive Officer, its President or one of its Vice
Presidents and by its Treasurer or its Secretary.
In case any officer of the Company who shall have signed any Warrant
Certificate shall cease to be an officer before the Warrant Certificate so
signed shall have been delivered by the Company, such Warrant Certificate may be
delivered notwithstanding that such person ceased to be an officer of the
Company, and any Warrant Certificate may be signed on behalf of the Company by
such person as, at the actual date of the execution of the Warrant Certificate,
shall be the proper officer of the Company, even if at the date of the execution
of this Agreement such person was no such officer.
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Section 2. Warrant Price, Manner of Exercise.
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2.1 Warrant Price, Term, Expiration and Notice. Each Warrant Certificate
shall entitle the Warrantholder, subject to the provisions thereof and of this
Agreement, to purchase from the Company one share of Common Stock for each of
the Warrants evidenced thereby at a price per share equal to $4.50 per share,
subject to adjustment as provided herein (the "Warrant Price"). The
Warrantholder may exercise any Warrants issued pursuant to this Agreement at any
time or from time to time, from the date hereof and prior to 5:00 p.m., Houston,
Texas time, on November 1, 2009 (the "Expiration Date"). If the Expiration Date
is not a Business Day, then this Warrant may be exercised on the next succeeding
Business Day. For purposes hereof, the term "Business Day" shall mean any day
other than a Saturday or a Sunday or a day on which commercial banking
institutions in the Cities of New York, New York or Houston, Texas are
authorized or required by law to be closed, and provided that any reference to
"days" (unless Business Days are specified) shall mean calendar days.
2.2 Manner of Exercise. The Warrants may be exercised by the Warrantholder,
in whole or in part, during normal business hours on any Business Day by
surrender of a Warrant Certificate, together with the form of Election to
Exercise included as Appendix B hereto (or a reasonable facsimile thereof) duly
executed by such Warrantholder, to the Company at its principal office,
accompanied by the required payment of the Warrant Price as then in effect, in
cash or other immediately available funds, or as provided in Section 2.3 below,
or a combination thereof.
2.3 Conversion of Warrant. Notwithstanding any provisions herein to the
contrary, if the Current Market Price (as hereinafter defined) is greater than
the Exercise Price (at the date of calculation, as set forth below), in lieu of
exercising the Warrants, the Warrantholder may elect to convert all or a portion
of the Warrants into shares of Common Stock equal to the value (as determined
below) of the converted Warrants by surrender of the Warrants to the Company for
conversion, together with the Election of Exercise, in which event the Company
shall issue to the Warrantholder that number of shares of Common Stock computed
using the following formula:
CS = WCS x (FMV-WP)
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FMV
Where
CS equals the number of shares of Common Stock to be issued to the Holder
WCS equals the number of shares of Common Stock purchasable under the
Warrants to be converted
FMV equals the Current Market Price of one share of Common Stock on the
date of the Election to Exercise, determined as provided in Section
3.1(d)(ii) of this Agreement.
WP equals the Warrant Price (as adjusted to the date of the Election to
Exercise).
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In the event of such conversion, all applicable references herein to "exercise"
of the Warrants shall be deemed to refer to conversion of such Warrants into
Common Stock pursuant to this Section 2.3.
2.4 When Exercise Deemed Effected. Each exercise of Warrants pursuant to this
Agreement shall be deemed to have been effected immediately upon surrender of
such Warrants to the Company as provided in Section 2.2 or Section 2.3, and at
such time, the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such exercise as
provided in Section 2.5 shall be deemed to have become the holder of record
thereof.
2.5 Delivery of Stock Certificates, etc. As soon as practicable after the
exercise of Warrants pursuant to this Agreement (and in no event more than 5
Business Days after delivery of the Election to Exercise), in whole or in part,
the Company at its expense will cause
(a) a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock to which the
Warrantholder shall be entitled upon such exercise, to be issued in the name of
and delivered to such Warrantholder or such other name as shall be designated by
the Warrantholder in the Election of Exercise; and
(b) in case less than all the Warrants represented by a Warrant Certificate
are exercised, a new Warrant Certificate of the same tenor and for the number of
Warrants not exercised to be registered in such name or names as may be directed
in writing by the Warrantholder and to be delivered to the person entitled to
receive such new Warrant Certificate.
Section 3. Adjustment of Shares of Common Stock Purchasable and Warrant Price.
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3.1 Antidilution Provision. So long as any Warrants are outstanding and
unexercised, in whole or in part:
(a) if the Company shall pay a dividend in Common Stock or make any other
distribution in Common Stock on or with respect to its Common Stock, the number
of shares of Common Stock purchasable upon exercise of each Warrant outstanding
and unexercised at such time shall be increased by multiplying such number of
shares by a fraction, the denominator of which shall be the number of shares of
Common Stock outstanding at the close of business on the day immediately
preceding the date of such dividend or other distribution and the numerator of
which shall be the sum of such number of shares and the total number of shares
of Common Stock constituting such dividend or other distribution, such increase
to become effective immediately after the record date of such dividend or other
distribution;
(b) in the event outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the number of shares of Common
Stock purchasable upon exercise of each Warrant shall be proportionately
increased, and conversely, in case outstanding shares of Common Stock shall be
combined into a smaller number of shares of Common Stock, the number of shares
of Common Stock purchasable upon exercise of each Warrant shall be
proportionately decreased, such increase or decrease, as the case may be, to
become effective immediately after the effective date of such subdivision or
combination;
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(c) if the Company issues or distributes to all holders of Common Stock (i)
rights or warrants entitling them to subscribe for or purchase shares of any
class of capital stock of the Company or (ii) evidences of its indebtedness,
cash or other assets (including cash dividends but excluding stock dividends
referred to in subsection (a) above), the Company shall issue or distribute to
each Warrantholder such rights, warrants, evidences of indebtedness, cash or
other assets that such Warrantholder would have been entitled to receive as a
stockholder if such Warrantholder had exercised all of its Warrants immediately
prior thereto; and
(d)
(i) if the Company shall sell or issue shares of Common Stock or securities
convertible or exchangeable into shares of Common Stock or rights, options
or warrants to purchase shares of Common Stock, or securities convertible
or exchangeable into shares of Common Stock (collectively, the "Additional
Shares") at a price per share of Common Stock lower than the Warrant Price
per share of Common Stock immediately prior to such sale or issuance, then
the number of shares of Common Stock issuable upon exercise of the Warrant
shall be adjusted to that number determined by multiplying the number of
shares of Common Stock issuable upon exercise of the Warrant immediately
prior to such adjustment by a fraction (y) the numerator of which shall be
number of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares plus the number of such Additional
Shares to be issued and (z) the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of
such Additional Shares plus the number of shares of Common Stock which the
aggregate consideration for the total number of such Additional Shares to
be issued would purchase at the Current Market Price. Notwithstanding the
foregoing, the provisions of this Section 3.1(d) shall not apply to any
securities issued (A) in any of the transactions described in Sections
3.1(a), (b) or (c), or (B) upon exercise of this Warrant;
(ii) For the purposes of this Agreement, the "Current Market Price" shall
mean the average of the closing prices per share of the Common Stock sold
on all securities exchanges located in the United States on which the
Common Stock may at the time be listed or traded (including, for this
purpose, the NASDAQ National Market System or NASDAQ SmallCap System), on
the five (5) consecutive trading days immediately preceding the date as of
which the "Current Market Price" is to be determined, or, if there shall
have been no sales on any such exchange on such day, the average of the
highest bid and the lowest asked prices per share on all such exchanges at
the end of such day, or if there is no such exchange on which the Common
Stock is so listed or traded, the average of the high and low bid and asked
prices per share of Common Stock on such five (5) consecutive trading days
in the domestic over-the-counter market as reported by the National
Quotation Bureau Incorporated, or any similar successor organization. If at
any time the Common Stock is not listed or traded on any United States
securities exchange (including, for this purpose, the NASDAQ National
Market), or quoted in the domestic over-the-counter market, the "Current
Market Price" shall be the fair market value per share of the Common Stock
as determined in good faith by the Board of Directors of the Company.
Notwithstanding the preceding, if the Warrantholder shall disagree with the
determination made by the Board of Directors of the Current Market Price,
it may so notify the Company and a reputable investment bank or appraiser
mutually satisfactory to the Company and the Warrantholder shall be
appointed to make such determination. All expenses of such investment bank
or appraiser shall be paid by the Warrantholder, unless the determination
of Current Market Price by such investment bank or appraiser is greater
than 105% of the determination thereof made by the Board of Directors, in
which event the expenses of such investment bank or appraiser shall be paid
by the Company. In either event, the determination made by the investment
bank or appraiser shall be the Current Market Price for all purposes of
this Agreement; and
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(iii) If, at any time after any adjustment of the number of shares of
Common Stock purchasable upon exercise of each Warrant pursuant to this
Section 3.1(d), such rights, options, warrants or convertible or
exchangeable securities shall expire or no longer be outstanding and shall
not have been exercised for or converted or exchanged into Common Stock,
such previous adjustment shall be rescinded and annulled and the Additional
Shares which are deemed to have been issued by virtue of the computation
made in connection with the adjustment so rescinded and annulled, shall no
longer be deemed to have been issued by virtue of such computation.
Thereupon, a recomputation shall be made to give effect to the expiration
or non-exercise of, or failure to convert, such rights, options, warrants
or convertible or exchangeable securities.
3.2 Consolidation, Merger, Sale of Assets, Reorganization, etc.
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(a) If the stockholders of the Company shall participate in a share
exchange or if the Company shall be a party to any transaction (including,
without limitation, a merger, consolidation, sale of all or substantially all of
the Company's assets, liquidation or recapitalization of the Common Stock) in
which the previously outstanding Common Stock shall be changed into or exchanged
for different securities of the Company or common stock or other securities of
another corporation, or interests in a non-corporate entity or other property
(including cash), or any combination of the foregoing (each such transaction
being herein called a "Transaction"), then, as a condition to the consummation
of the Transaction, the Company, in the case of the recapitalization or
liquidation of the Common Stock, or such other corporation or entity, in the
case of a share exchange, merger, consolidation or sale of all or substantially
all of the assets, shall make lawful and adequate provision so that, upon the
exercise thereof at any time on or after the consummation of the Transaction,
each Warrantholder shall be entitled to receive, and such Warrant shall
represent the right to receive, in lieu of the Common Stock, the securities or
other property (including cash) to which the Warrantholder would have been
entitled upon the consummation of the Transaction if such Warrantholder had
exercised such Warrant immediately prior thereto, subject to adjustment from and
after the consummation date as nearly equivalent as possible to the adjustments
provided for in Section 3.1.
(b) The provisions of this Section 3 shall similarly apply to successive
share exchanges, consolidations, mergers, sales of all or substantially all of
the assets, or successive recapitalizations and changes of shares of Common
Stock.
3.3 Warrant Price Adjustment. Whenever the number of shares of Common Stock
purchasable upon exercise of a Warrant is adjusted as provided herein, the
Warrant Price payable upon exercise of the Warrant shall be adjusted by
multiplying such Warrant Price immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of shares of Common Stock
purchasable upon exercise of the Warrant immediately prior to such adjustment,
and the denominator of which shall be the number of shares of Common Stock
purchasable immediately thereafter; provided, however, that in no event shall
the Warrant Price be adjusted below the par value of the Common Stock
(currently, $.01 per share).
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3.4 Statements on Warrant Certificates. The form of Warrant Certificate
need not be changed because of any adjustment made pursuant to this Section 3
and Warrant Certificates issued after such adjustment may state the same Warrant
Price and the same number of shares of Common Stock as are stated in the Warrant
Certificates initially issued pursuant to this Agreement.
3.5 Accountants' Report as to Adjustments. In each case of any adjustment
or readjustment in the shares of Common Stock (or other securities) issuable
upon the exercise of the Warrants, the Company at its expense will promptly
compute such adjustment or readjustment in accordance with the terms of the
Warrants and prepare a report setting forth such adjustment or readjustment and
showing in reasonable detail the method of calculation thereof and the facts
upon which such adjustment or readjustment is based. The Company will forthwith
mail a copy of each such report to each Warrantholder. The Company will also
keep copies of all such reports at its principal office and will cause the same
to be available for inspection at such office during normal business hours by
any Warrantholder or any prospective purchaser of a Warrant designated by the
Warrantholder.
Section 4. Notices of Corporate Action. In the event of:
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(a) any offer to any holders of Common Stock of rights to subscribe for or
to purchase any Additional Shares or other securities, or
(b) any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, or
(c) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or
merger involving the Company and any other person or entity, any share exchange
involving stockholders of the Company or any transfer of all or substantially
all the assets of the Company to any other person or entity, or
(d) any voluntary or involuntary dissolution, liquidation or winding up of
the Company,
the Company will mail to each known Warrantholder a notice specifying (i) the
terms of such offer, and (ii) the date or expected date on which any such record
is to be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right, and (iii) the date
or expected date on which any such reorganization, reclassification,
recapitalization, consolidation, merger, share exchange, transfer, dissolution,
liquidation or winding up is to take place and the time, if any such time is to
be fixed, as of which the holders of record of Common Stock shall be entitled to
exchange their shares of Common Stock for the securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
consolidation, merger, share exchange, transfer, dissolution, liquidation or
winding up. Such notice shall be mailed at least 15 days prior to the date
therein specified.
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Section 5. Legend on Warrant Stock. Each certificate for Warrant Shares
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares (i) are registered under the Securities Act of 1933, as
amended from time to time (the "Securities Act"), or (ii) may be sold in
reliance on Rule 144(k) under the Securities Act, shall bear the following
legend (and any additional legend(s) required by any securities exchange upon
which such Warrant Stock may, at the time of such exercise, be listed) on the
face thereof:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, or registered or qualified under
applicable state securities laws. Such shares may not be offered, sold,
transferred, pledged or hypothecated in the absence of an effective
registration statement in effect with respect to the shares under such Act
and registration or qualification under any applicable state securities
laws or an opinion of counsel reasonably satisfactory to the Company that
such registration or qualification is not required under applicable federal
and state securities laws."
Section 6. Reservation of Stock.
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6.1 Reservation of Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon exercise of the Warrants, the
number of shares of Common Stock from time to time issuable upon exercise of all
Warrants at the time outstanding. All shares of Common Stock shall be duly
authorized and, when issued upon such exercise and payment of the Warrant Price,
shall be validly issued, fully paid and nonassessable with no liability on the
part of the holders thereof.
Section 7. Other Provisions Relating to Rights and Obligations of Holders
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of Warrant Certificates.
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7.1 No Rights as Stockholder Conferred by Warrants or Warrant Certificates.
No Warrant Certificate or Warrant evidenced thereby shall entitle the
Warrantholder to any of the rights of a holder of Common Stock, including,
without limitation, any right to vote at, or to receive notice of, any meeting
of stockholders of the Company; the consent of any Warrantholder shall not be
required with respect to any action or proceeding of the Company.
7.2 Lost, Stolen, Mutilated or Destroyed Warrant Certificates. Upon receipt
by the Company of evidence reasonably satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of any Warrant Certificate and of
indemnity reasonably satisfactory to it and, in the case of mutilation, upon
surrender of the Warrant Certificate to the Company for cancellation, then, in
the absence of notice to the Company that such Warrant Certificate has been
acquired by a bona fide purchaser, the Company shall execute and deliver, in
exchange for or in lieu of the lost, stolen, destroyed or mutilated Warrant
Certificate, a substitute Warrant Certificate of the same tenor and evidencing a
like number of Warrants. Upon the issuance of any substitute Warrant Certificate
under this Section 7.2, the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses in connection therewith. Every substitute Warrant
Certificate executed and delivered pursuant to this Section 7.2 in lieu of any
lost, stolen or destroyed Warrant Certificate shall represent an additional
contractual obligation of the Company, whether or not the lost, stolen or
destroyed Warrant Certificate shall be at any time enforceable by anyone, and
every holder thereof shall be entitled to the benefits of this Warrant Agreement
equally and proportionately with any and all other Warrant Certificates duly
executed and delivered hereunder.
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7.3 Warrantholder May Enforce Rights. Notwithstanding any of the provisions
of this Warrant Agreement, any Warrantholder, without the consent of the holder
of any Common Stock or the holder of any other Warrant Certificate, may, on its
own behalf and for its own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company suitable to enforce, or otherwise
in respect of, such Warrantholder's right to exercise the Warrants evidenced by
such Warrantholder's Warrant Certificate in the manner provided in its Warrant
Certificate and in this Agreement.
Section 8. Registration Rights.
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8.1 Company Registration.
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(a) Right to Inclusion. If at any time (or from time to time) the Company
shall determine to register any of its securities pursuant to the Securities
Act, either for its own account or the account of a holder of Registrable
Securities or any other holder of securities of the Company, other than (i) a
registration relating solely to employee benefit or stock option plans, (ii) a
registration relating solely to a transaction described in Rule145 under the
Securities Act, (iii) a transaction relating solely to an exchange offering,
(iv) a transaction relating solely to an acquisition of assets or property for
securities, (v) a registration statement filed pursuant to Section 6.1 of the
Securities Purchase Agreement dated November 23, 2004 between the Company and
certain investors, in the form filed as an exhibit to a Form 8-K Report dated
November 24, 2004, or (vi) a registration on any form that does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities by such
holders, then the Company will:
(i) promptly give to each holder of Registrable Securities written notice
thereof (which shall include a list of the jurisdictions in which the
Company intends to attempt to qualify the offer and sale of such securities
under the applicable blue sky or other state securities laws); and
(ii) 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 any written request or requests
by any holder received by the Company within 15 days after such written
notice is given.
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As used in this Agreement, the term "Registrable Securities" shall mean,
collectively, the shares of Common Stock acquired or to be acquired by any
Warrantholder upon exercise of the Warrants pursuant to this Agreement and any
shares of Common Stock or other securities issued with respect to such Common
Stock by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation, share exchange,
reorganization or otherwise; provided, however, that such Common Stock or other
securities shall cease to be Registrable Securities when (i) a registration
statement with respect to the disposition of such Common Stock or other
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with the plan of
distribution set forth in such registration statement, (ii) such Common Stock or
other securities shall have been sold pursuant to Rule 144 (or any successor
provision) under the Securities Act, (iii) an opinion of counsel, reasonably
satisfactory to the Company and the holders of Common Stock or other securities
to which the opinion relates shall have been delivered to the Company and such
holders to the effect that the subsequent disposition of such Common Stock or
other securities may be made pursuant to Rule 144(k) (or any successor
provision) under the Securities Act, or (iv) such Common Stock or other
securities shall cease to be outstanding.
(b) Underwriting. In the event of an underwritten offering, the right of
any holder of Registrable Securities to registration pursuant to Section 8.1
shall be conditioned upon such holder's participation in the underwriting and
the inclusion of such holder's Registrable Securities in the underwriting to the
extent provided herein. All holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting by the Company. Such holders of Registrable Securities shall also
execute and deliver, to the extent required by the managing underwriter, a
Custody Agreement and Power of Attorney satisfactory to the Company with respect
to the Registrable Securities to be registered. The Custody Agreement and Power
of Attorney will provide, among other things, that such holders of Registrable
Securities will deliver to and deposit in custody with the custodian named
therein a certificate or certificates representing such Registrable Securities
(duly endorsed in blank by the registered owner or owners thereof or accompanied
by duly executed stock powers in blank) and irrevocably appoint said custodian
and attorney-in-fact with full power and authority to act under the Custody
Agreement and Power of Attorney, respectively, on the holder's behalf with
respect to matters specified therein, including the execution and delivery of an
underwriting agreement.
Notwithstanding any other provisions of this Section 8.1, if the managing
underwriter determines and advises the Company that marketing factors require a
limitation on the number of shares to be underwritten, the underwriter and the
Company may limit or exclude entirely the Registrable Securities to be included
in any registration and underwriting. In such event, the Company shall so advise
all holders of Registrable Securities that would otherwise be registered and
underwritten pursuant hereto, and the number of shares of Common Stock
(including the Registrable Securities) or other securities that may be included
in the registration and underwriting shall be allocated among all holders of
Registrable Securities and any other holders of Common Stock or other securities
requesting to be registered in proportion, as nearly as practicable, to the
respective amounts of Common Stock (including the Registrable Securities) or
other securities that were proposed to be sold by all holders of Registrable
Securities and holders of Common Stock or other securities entitled to
participate therein. No Registrable Securities excluded from the underwriting by
reason of the underwriter's marketing limitation shall be included in such
registration.
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If any holder of Registrable Securities disapproves of the terms of the
underwriting, such holder may elect to withdraw therefrom by written notice to
the Company and the managing underwriter(s). The Registrable Securities so
withdrawn shall also be withdrawn from registration; provided that if by the
withdrawal of such Registrable Securities a greater number of Registrable
Securities held by other holders may be included in such registration (up to the
maximum of any limitation imposed by the underwriters), then the Company shall
offer to all holders who have included Registrable Securities in the
registration the right to include additional shares in the same proportion used
in effecting the limitation referred to above in this Section 8.1(b). With
respect to any registration withdrawal by the Company pursuant to this Section
8.1(b), the Company shall have the right to withdraw such registration at any
time at its sole discretion without the consent or approval of any stockholder,
including the holders of Registrable Securities, in such registration.
8.2 Expenses of Registration. All out-of-pocket expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Section 8, including, without limitation, all registration, filing and
qualification fees, printing expenses, escrow fees, reasonable fees and
disbursements of counsel for the Company and reasonable fees and out-of-pocket
expenses of accountants incidental to or required by such registration, the
reasonable fees and disbursements of one special counsel retained by the holders
of Registrable Securities covered by such registration, (but excluding
underwriters' fees, discount and commissions relating to the Registrable
Securities sold), shall be borne by the Company.
8.3 Registration Procedures. In the case of such registration,
qualification or compliance effected by the Company pursuant to this Section 8,
the Company will keep each holder of Registrable Securities participating
therein advised in writing as to the initial filing of each registration,
qualification and compliance and as to the completion thereof. At its expense,
the Company will:
(a) keep such registration, qualification or compliance pursuant to Section
8.1 effective for a period of 180 days or until the holders of Registrable
Securities participating therein have completed the distribution described in
the registration statement relating thereto, whichever occurs first;
(b) furnish such number of prospectuses and other documents incident
thereto as a holder of Registrable Securities participating therein from time to
time may reasonably request;
(c) make available, upon reasonable notice and during business hours, for
inspection by the managing underwriter all financial and other records,
pertinent corporate documents, agreements and properties of the Company as shall
be reasonably necessary to enable such managing underwriter to exercise its due
diligence responsibilities, and cause the Company's officers, directors and
employees to supply all information reasonably requested by such managing
underwriter in connection with the registration;
10
(d) during the period when the registration is required to be effective,
notify the holders of the Registrable Securities participating in the
registration of the happening of any event as a result of which the prospectus
included in the registration statement contains an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and the Company will
forthwith prepare a supplement or amendment to such prospectus or take other
appropriate action so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement or
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading;
(e) cause such Registrable Securities included in the registration to be
listed or authorized for trading on each securities exchange (including, for
this purpose, the NASDAQ National Market System or NASDAQ SmallCap System) on
which similar securities issued by the Company are then traded; provided that
the Company is eligible to do so under applicable listing requirements; and
(f) otherwise use its best efforts to comply with all applicable rules and
regulations of the Securities and Exchange Commission (the "Commission") and all
of the terms and provisions of this Agreement.
Notwithstanding the foregoing, (x) the Company may delay the filing of any
registration statement covering the Registrable Securities, any amendment
thereof or any supplement to the related prospectus, and may withhold efforts to
cause any registration statement covering the Registrable Securities to become
effective, and (y) the Company may prohibit offers and sales of Registrable
Securities pursuant to a registration statement at any time if (i) (A) the
Company is in possession of material non-public information, (B) the Board of
Directors of the Company determines in good faith that such prohibition is
necessary in order to avoid an obligation to disclose such information and (C)
the Board of Directors of the Company determines in good faith that disclosure
of such information would not be in the best interest of the Company or its
shareholders or (ii) the Company is pursuing an acquisition or business
combination transaction including the Company and/or one or more of its
subsidiaries for which the Board of Directors of the Company determines in good
faith that offers and sales of Registrable Securities pursuant to a Registration
Statement prior to the consummation of such transaction would not be in the best
interest of the Company or its shareholders; provided, however, that the
duration of all such delays or periods in which shares of Registrable Securities
may not be sold pursuant to an effective registration statement shall not exceed
180 days in the aggregate.
8.4 Related Registration Matters. In the event of an underwritten offering,
the Company shall enter into an underwriting agreement in connection with any
registration subject to the provisions of Section 8.1 hereof, which agreement
shall contain such terms, provisions and agreements as are customary and
appropriate for such registration. In connection with the registration, to the
extent not provided in the underwriting agreement related to such registration,
the Company also shall:
(a) engage a bank or other company to act as transfer agent and registrar
for the Registrable Securities;
11
(b) cause customary opinions of counsel, comfort letters of accountants and
other appropriate documents to be delivered by representatives of the Company,
which documents shall be addressed to the holders of Registrable Securities
participating in the offering in addition to the Underwriters or other parties
designated as addressees in such documents; and
(c) as soon as practicable after the effective date of the registration
statement, and, in any event, within 16 months thereafter, make "generally
available to its stockholders" within the meaning of Rule 158 under the
Securities Act) an earnings statement (which need not be audited) complying with
Section 11(a) of the Securities Act and covering a period of at least 12
consecutive months beginning after the effective date of the registration
statement.
8.5 Indemnification and Contribution.
---------------------------------
(a) In the event of registration of any of the Registrable Securities under
the Securities Act, the Company will indemnify and hold harmless each holder of
Registrable Securities included in such registration and each of its directors,
officers, stockholders, partners and members, each underwriter of such
Registrable Securities and each of its directors and officers, and each other
person and each of its directors and officers, if any, who controls such seller
or underwriter within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended from time to time (the "Exchange Act"), or
otherwise, against any losses, claims, damages or liabilities (or actions in
respect thereof), joint or several, to which such seller, underwriter or
controlling person (or their respective directors and officers) may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (and each of its directors and officers
or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such Registrable Securities were registered
under the Securities Act, any preliminary prospectus or final prospectus
contained in the registration statement, or any amendment or supplement to such
registration statement, or arise out of or are based upon the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and the Company will
reimburse such seller, underwriter and each such controlling person (and their
respective directors and officers) for any legal or any other expenses
reasonably incurred by such seller, underwriter or controlling person (and their
respective directors and officers) in connection with investigating or defending
any such loss, claim, damage, liability or action; provided that the Company
will not have any liability (and shall not be required to provide such indemnity
and hold harmless obligation) to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or omission made
in such registration statement, preliminary prospectus or prospectus, or any
such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by or
on behalf of such holder of Registrable Securities or underwriter specifically
for use in preparation thereof.
12
(b) In the event of any registration of any of the Registrable Securities
under the Securities Act, each holder of Registrable Securities included in such
registration, severally and not jointly, will indemnify and hold harmless the
Company, each of its directors and officers and each underwriter (if any) and
each of its directors and officers and each person and each of its directors and
officers, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against losses, claims,
damages or liabilities (or actions in respect thereof), joint or several, to
which the Company, such directors and officers, underwriter or controlling
person (or their respective directors and officers) may become subject under the
Securities Act, Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement under which such Registrable Securities
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the registration statement, or any amendment or
supplement to the registration statement, or arise out of or are based upon any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, if the
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of such holder,
specifically for use in connection with the preparation of such registration
statement, prospectus, amendment or supplement; provided the liability of each
holder of Registrable Securities pursuant to this Section 8.5(b) shall be
limited to the proceeds actually received by such holder from the disposition of
the Registrable Securities disposed of by such holder pursuant to such
registration.
(c) Each party entitled to indemnification under this Section 8.5 (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 be unreasonably
withheld, delayed or conditioned), 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 Section 8.5 (except and to the
extent the rights of the Indemnifying Party are materially prejudiced thereby).
After notice from the Indemnifying Party to the Indemnified Party of its
election to assume the defense of such claim or litigation, the Indemnifying
Party will not be liable to such Indemnified Party for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation so long as and to
the extent the Indemnifying Party continues to defend the Indemnified Party,
unless the 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 thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) To the extent the Company after the date hereof shall agree to provide
for contribution in any written agreement entered into with the stockholders of
the Company if the indemnification obligations are otherwise unavailable, then
the Company shall provide such similar rights to the Warrantholders in the
registration of their shares.
8.6 Information by Stockholders. Each holder of Registrable Securities
requesting to be included in any registration shall furnish to the Company such
information regarding such holder and the distribution proposed by such holder
as the Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this Section
8.
13
8.7 Sales Without Registration. If, at the time of any transfer of any
Registrable Securities, such Registrable Securities shall not be registered
under the Securities Act, the Company may require, as a condition of allowing
such transfer, that the holder of Registrable Securities or transferee furnish
to the Company an opinion of legal counsel satisfactory in form and substance to
the Company to the effect that such transfer may be made without registration
under the Securities Act; provided that nothing contained in this Section 8.7
shall relieve the Company from complying with any request for registration,
qualification or compliance made pursuant to the other provisions of this
Section 8.
8.8 Rule 144. The Company covenants that it will file the reports required
to be filed by it under the 1933 Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder so long as necessary to permit
sales of Registrable Securities under Rule 144 under the 1933 Act, and it will
take such other action as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the 1933 Act within the
limitation of the exemptions provided by (a) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
8.9 Transfer of Registration Rights. The right to participate in a Company
registration under Section 8.1 may be assigned by any holder of Registrable
Securities to a transferee or assignee of any Registrable Securities (if such
transfer or assignment of Registrable Securities is permitted under Section 5),
unless such transferee or assignee acquires such Registrable Securities through
a transaction or chain of transactions involving a public offering or a sale
effected pursuant to Rule 144; provided: (i) the holder shall give the Company
written notice at the time of or within ten days after said transfer, setting
forth the name and address of said transferee or assignee and identifying the
Registrable Securities with respect to which such registration rights are being
assigned; (ii) such transferee or assignee agrees in writing to be bound by and
subject to the terms and conditions of this Agreement, including without
limitation Section 8; and (iii) such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Securities Act.
8.10 Post-Effective Amendments. In connection with any registration
statement filed pursuant to this Section 8, the Company shall file any
post-effective amendment or amendments to the registration statement which may
be required under the Securities Act during the period reasonably required to
effect the distribution contemplated thereby.
8.11 Cessation of Sale Activities. The Company shall notify each
participating holder of Registrable Securities during the period any
registration statement filed pursuant to this Section 8 is required to remain
effective, or at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which such registration statement or the prospectus contained therein, as then
in effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading. Each participating holder agrees, upon receipt of such
notice, forthwith to cease making offers and sales of such securities pursuant
to such registration statement or deliveries of the prospectus contained therein
for any purpose and to return to the Company the copies of such prospectus not
theretofore delivered by such holder.
14
8.12 Supplements. At a participating holder's request, the Company shall
prepare and furnish to such participating holder a reasonable number of copies
of any supplement to or amendment of such prospectus that may be necessary so
that, as thereafter delivered to the purchaser of any shares of Registrable
Securities, such prospectus shall not include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statement therein not misleading in the light of the circumstances
then existing. The Company shall promptly notify each participating holder of
any stop order or similar proceeding initiated by state or Federal regulatory
bodies and use reasonable efforts to take all necessary steps expeditiously to
remove such stop order or similar proceeding.
Section 9. Exchange and Transfer of Warrant Certificates.
----------------------------------------------
9.1 Exchange and Transfer of Warrant Certificates. Subject to the terms
contained in this Agreement, upon surrender at the principal office of the
Company, Warrant Certificates evidencing Warrants may be exchanged for Warrant
Certificates in other denominations evidencing such Warrants or the transfer
thereof may be registered in whole or in part; provided that such other Warrant
Certificates evidence the same aggregate number of Warrants as the Warrant
Certificates so surrendered. The Company shall keep the Warrant register in
which, subject to such reasonable regulations as it may prescribe, it shall
register Warrant Certificates upon surrender of such Warrant Certificates to the
Company at its principal office for exchange or registration of transfer,
properly endorsed or accompanied by appropriate instruments of registration of
transfer and written instructions for transfer, all in form satisfactory to the
Company. No service charge shall be made for any exchange or registration of
transfer of Warrant Certificates, but the Company may require payment of a sum
sufficient to cover any stamp or other tax or other governmental charge that may
be imposed in connection with any such exchange or registration of transfer.
Whenever any Warrant Certificates are so surrendered for exchange or
registration of transfer, the authorized officers of the Company shall execute
and deliver to the person or persons entitled thereto a Warrant Certificate or
Warrant Certificates duly authorized and executed by the Company, as so
requested. All Warrant Certificates issued upon any exchange or registration of
transfer of the Warrant Certificates shall be the valid obligations of the
Company, evidencing the same obligations, and entitled to the same benefits
under this Agreement, as the Warrant Certificate surrendered for such exchange
or registration of transfer.
9.2 Treatment of Holders of Warrant Certificates. Every holder of a Warrant
Certificate, by accepting the same, consents and agrees with the Company and
with every subsequent holder of such Warrant Certificate that until the transfer
of the Warrant Certificate is registered on the Warrant register, before such
Warrant Certificate is surrendered for transfer pursuant to Section 9.1 hereof,
the Company may treat the registered holder of a Warrant Certificate as the
absolute owner thereof for any purpose and as the person entitled to exercise
the rights represented by the Warrants evidenced thereby, any notice to the
contrary notwithstanding.
15
9.3 Cancellation of Warrant Certificates. Any Warrant Certificate
surrendered for exchange, registration of transfer or transfer or exercise of
the Warrants evidenced thereby shall be surrendered to the Company, and all
Warrant Certificates surrendered and so delivered to the Company shall be
promptly cancelled by the Company and shall not be reissued and, except as
expressly permitted by this Agreement, no Warrant Certificate shall be issued
hereunder in exchange or in lieu thereof.
Section 10. Notices. Any notice or other document required or permitted to
be given or delivered to the Warrantholders prior to the transfer or other
disposition of any Warrant by the original recipient of this Warrant shall be
delivered at or sent by certified or registered mail to the following address or
such other address as shall have been furnished in writing by such original
recipient to the Company:
Capello Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Thereafter, any notice or other document required or permitted to be given or
delivered to the Warrantholders shall be delivered at, or sent by certified or
registered mail to, each such holder at the last address shown on the books of
the Company maintained at the principal office of the Company for the
registration of transfer of the Warrants or at any more recent address of which
any Warrantholder shall have notified the Company in writing. Any notice or
other document required or permitted to be given or delivered to holders of
record of outstanding Registrable Securities shall be delivered at, or sent by
certified or registered mail to, each such holder at such holder's address as
the same appears on the stock records of the Company. Any notice or other
document required or permitted to be given or delivered to the Company shall be
delivered at, or sent by certified or registered mail to, the principal office
of the Company at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention:
Chief Executive Officer, or such other address within the United States of
America as shall have been furnished by the Company to the Warrantholders and
the holders of record of Registrable Securities. Any notice or other document
required or permitted to be given or delivered hereunder shall be deemed to have
been given when actually delivered to the addressee at the address provided
herein.
Section 11. Representations and Warranties. The Company represents and
warrants as follows:
11.1 Capitalization. The authorized capital stock of the Company consists
of 75,000,000 shares of $0.01 par value Common Stock, of which approximately
9.65 million shares are outstanding and 2,500,000 shares of $0.05 par value
Preferred Stock of which none is outstanding. All of the shares of Common Stock
are duly authorized, validly issued, fully paid and nonassessable. The only
rights, options or other agreements which are outstanding which authorize the
acquisition of newly issued shares of Common Stock are set forth on Schedule
11.1 attached hereto.
16
11.2 Authorization; Enforceability. The Company has the corporate power and
authority to enter into and perform its obligations under this Agreement. The
execution and delivery by the Company of this Agreement have been approved by
all requisite corporate action and no other corporate proceeding on its part are
necessary to authorize this Agreement and the transactions contemplated hereby.
This Agreement constitutes the valid and binding obligation of the Company,
except as it may be affected by bankruptcy, insolvency, moratorium,
reorganization or other laws and judicial decisions affecting the rights of
creditors generally and general principles of equity.
11.3 Issuance of Shares. The issuance of the shares of Common Stock subject
to the Warrants has been duly authorized and, when issued upon exercise of the
Warrants, such shares will have been validly issued and will be fully paid and
nonassessable.
Section 12. Miscellaneous.
--------------
12.1 Amendment. This Warrant Agreement may be amended by the Company, with
the consent of the Warrantholders representing a majority of the then
outstanding Warrants, for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective provision contained herein, or making
any other provisions with respect to matters or questions arising under this
Agreement as the Company may deem necessary or desirable, provided that such
action shall not affect adversely the interests of the Warrantholders. This
Agreement may otherwise be amended only with the consent of the Company and all
of the Warrantholders.
12.2 Parties in Interest. The agreements of the Company contained herein,
other than those applicable solely to the Warrants and the Warrantholders
thereof, shall continue to inure to the benefit of, and be enforceable by, any
Warrantholder(s) subsequent to the time Common Stock is issued upon the exercise
of Warrants, whether so expressed or not.
12.3 Applicable Law. THE VALIDITY, INTERPRETATION AND PERFORMANCE OF THIS
AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED HEREUNDER AND OF THE RESPECTIVE
TERMS AND PROVISIONS THEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS THEREOF EXCEPT TO THE EXTENT TEXAS LAW MANDATORILY GOVERNS THE
AUTHORIZATRION AND ISSUANCE OF THE WARRANTS AND THE WARRANT SHARES.
12.4 Consent to Jurisdiction. The Company hereby irrevocably consents to
the personal jurisdiction of the state and federal courts located in the Borough
of Manhattan, New York, New York in any action, claim or other proceeding
arising out of any dispute in connection with this Agreement, any rights or
obligations hereunder, or the performance of such rights and obligations. The
Company hereby irrevocably consents to the service of a summons and complaint
and other process in any action, claim or proceeding brought by the
Warrantholder in connection with this Agreement, any rights or obligations
hereunder, or the performance of such rights and obligations.
17
12.5 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE
LAW, THE COMPANY AND THE WARRANTHOLDER HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR
OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
12.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which as so executed shall be deemed to be an original,
but such counterparts shall together constitute but one and the same instrument.
12.7 Inspection of Agreement. A copy of this Agreement shall be available
at all reasonable times at the principal office of the Company for inspection by
the holder of any Warrant Certificate. The Company may require such holder to
submit his Warrant Certificate for inspection by it.
12.8 Headings. The section headings in this Agreement are for the purposes
of convenience only and shall not constitute a part hereof.
18
IN WITNESS WHEREOF, the Company and the Warrant holder have caused their
respective duly authorized officers to sign this Agreement.
GEXA CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Title:Chairman and CEO
-----------------------
Appendices:
Appendix A Form of Warrant Certificate
Appendix B Election to Exercise
Schedules:
Schedule 11.1 Outstanding Options, Etc.
APPENDIX A
[FORM OF WARRANT CERTIFICATE]
Warrant No. ____ ____ Warrants
WARRANT TO PURCHASE COMMON STOCK OF
GEXA CORP.
THIS WARRANT IS SUBJECT TO RESTRICTIONS
ON TRANSFER SET FORTH IN THE
AGREEMENT REFERENCED BELOW.
This certificate certifies that _________________ is the registered owner
of the above indicated number of Warrants, each Warrant entitling such owner to
purchase initially one share of Common Stock, $.01 par value ("Common Stock"),
of Gexa Corp., a Texas corporation, (hereinafter called the "Company"), at the
price per share (the "Warrant Price") set forth in Section 2 of the Warrant
Agreement, subject to the terms of that Warrant Agreement hereafter referred to.
The holder may exercise the Warrant evidenced hereby by surrender, to the
Company at its principal office in Houston, Texas, of this Warrant Certificate
and the form of Election to Exercise attached hereto, both duly filled in and
signed, along with payment in full to the Company of the Warrant Price in cash
or immediately available funds or may surrender this Warrant Certificate for
conversion into shares of Common Stock, all as provided in the Warrant Agreement
and upon compliance with and subject to the conditions set forth herein and in
the Warrant Agreement. According to the terms of the Warrant Agreement, the
Warrants shall cease to be exercisable at 5:00 p.m., Houston, Texas time, on
November 1, 2009.
The Warrant Certificate is issued under and in accordance with the Warrant
Agreement dated as of November 1, 2004 (the "Warrant Agreement"), by and between
the Company and ▇▇▇▇▇▇▇▇ Capital Corp., and is subject to the terms and
provisions of the Warrant Agreement, which terms and provisions are hereby
incorporated by reference herein and made a part hereof. Each holder of this
Warrant Certificate consents to all of the terms contained in the Warrant
Agreement by acceptance hereof. A copy of the Warrant Agreement is available for
inspection by the registered holder hereof at the principal office of the
Company in Houston, Texas.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH SUCH ACT AND
THE RULES AND REGULATIONS THEREUNDER AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS. THE COMPANY WILL NOT TRANSFER SUCH SECURITIES EXCEPT
UPON RECEIPT OF A FAVORABLE OPINION OF COUNSEL AND/OR EVIDENCE SATISFACTORY
TO THE COMPANY THAT THE REGISTRATION PROVISIONS OF SUCH ACT HAVE BEEN
COMPLIED WITH OR THAT SUCH REGISTRATION IS NOT REQUIRED AND THAT SUCH
TRANSFER WILL NOT VIOLATE ANY APPLICABLE STATE SECURITIES LAWS.
The Warrant Agreement and each Warrant Certificate, including this Warrant
Certificate, shall be deemed a contract made under the laws of the State of New
York and for all purposes shall be construed in accordance with the laws of the
State of New York.
Dated:
GEXA CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Title: Chairman and CEO
-----------------------
APPENDIX B
ELECTION TO EXERCISE
(To be executed only upon exercise of warrant)
To _____________________
The undersigned registered holder of the attached warrant hereby
irrevocably exercises or converts and surrenders to the Company the attached
warrant for ________* shares of Common Stock of Gexa Corp., and herewith (1)
makes payment of $__________ therefor, in cash or immediately available funds or
(2) elects to effect a conversion into Common Stock as requested below, and
requests that the certificates for such the applicable number of shares be
issued in the name of, and delivered to ___________________________, whose
address is _______________________________________________________________.
Check one of the following boxes: |_| Payment in cash or immediately available
funds
|_| Conversion into ________shares of Common
Stock
Dated: _________________
__________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
this warrant)
__________________________________________
(Street Address)
__________________________________________
(City) (State) (Zip Code)
____________________________________
* Insert here the number of shares called for on the face of this warrant (or,
in the case of a partial exercise, the portion thereof as to which this warrant
is being exercised), in either case without making any adjustment for additional
shares of common stock or any other stock or other securities or property or
cash which, pursuant to the adjustment provisions of this warrant, may be
delivered upon exercise. In the case of a partial exercise, a new warrant or
warrants will be issued and delivered, representing the unexercised portion of
this warrant, to the holder surrendering the same. In the case of a conversion
into Common Stock, the number of shares to be issued shall be determined as set
forth in Section 2.3 of the Warrant Agreement.
