EXHIBIT 99.4
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REGISTRATION RIGHTS AGREEMENT
Dated as of July 16, 2003
By and Between
THE CATALYST FUND, LTD.
and
GEXA CORP.
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REGISTRATION RIGHTS AGREEMENT
TABLE OF CONTENTS
Section 1. DEFINITIONS
Section 2. REGISTRATION RIGHTS
2.1 Piggyback Registration..........................................................................2
2.2 Demand Registration Rights......................................................................3
(a) Right to Demand........................................................................3
(b) Number of Demand Registrations; Payment of Expenses....................................4
(c) Selection of Underwriters..............................................................5
(d) Company Registration...................................................................5
(e) Limitations on Registration Rights.....................................................5
2.3 Registration Procedures.........................................................................6
2.4 Registration Expenses..........................................................................10
2.5 Indemnification; Contribution..................................................................10
(a) Indemnification by the Company........................................................10
(b) Indemnification by Holders of Registrable Securities..................................11
(c) Conduct of Indemnification Proceedings................................................11
(d) Contribution..........................................................................12
2.6 Participation in Underwriting Registrations....................................................13
2.7 Rule 144; Information..........................................................................13
SECTION 3. OTHER REGISTRATION RIGHTS
3.1 Future Rights..................................................................................13
3.2 Representation and Warranty....................................................................14
SECTION 4. MISCELLANEOUS
4.1 Recapitalization, Exchanges, etc...............................................................14
4.2 Opinions.......................................................................................14
4.3 Notices........................................................................................14
4.4 Applicable Law.................................................................................15
4.5 Amendment and Waiver...........................................................................15
4.6 Remedy for Breach of Contract..................................................................15
4.7 Severability...................................................................................15
4.8 Counterparts...................................................................................16
4.9 Headings.......................................................................................16
4.10 Binding Effect.................................................................................16
4.11 Entire Agreement...............................................................................16
4.12 Multiple Holders...............................................................................16
4.13 Assignment.....................................................................................16
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is entered into and
made as of July 16, 2003, by and among GEXA CORP., a Texas corporation having
its headquarters at 00 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 (the
"Company"), THE CATALYST FUND, LTD., a Texas limited partnership having its
headquarters at Xxx Xxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 ("Catalyst").
The Company has agreed to grant certain demand and piggyback registration
rights to Catalyst in connection with the issuance by the Company of the Warrant
(as hereinafter defined) to Catalyst.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the panics hereto agree as follows:
Section 1. DEFINITIONS. As used in this Agreement, the following terms have
the respective meanings set forth below or set forth in the Section or paragraph
following such term:
Advice - Section 2.4.
Agent - Section 2.6(a).
Agreement- introductory paragraph.
Business Day - day other than a Saturday, Sunday or legal holiday for
commercial banks in the State of Texas.
Catalyst- introductory paragraph.
Commission- the Securities and Exchange Commission.
Common Stock - the Company's Common Stock, $.01 par value per share, or any
successor class of the Company's Common Stock.
Company- introductory paragraph.
Demand Notice - Section 2.2.(a)(i).
Demand Registration - Section 2.2(a)(1).
Exchange Act - the Securities Exchange Act of 1934, as amended.
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Holder - Catalyst, any limited or general partner of Catalyst to whom
Registrable Securities are distributed by Catalyst and any Person holding
Registrable Securities.
Holders' Representative- Section 4.12.
Inspectors- Section 2.3(n).
Liabilities - Section 2.5(a).
1933 Act - the Securities Act of 1933, as amended.
Person - any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or a political subdivision, agency or instrumentality thereof or
other entity or organization of any kind.
Piggyback Registration - Section 2.1(a).
Records- Section 2.3(n).
Registrable Securities - any (i) shares of Common Stock or other securities
issued or issuable pursuant to the Warrant and (ii) any securities issued in
exchange for, as a dividend on, or in replacement or upon conversion of, or
otherwise issued in respect of (including securities issued in a stock dividend,
split or recombination or pursuant to the exercise of preemptive rights), any
shares of Common Stock or other securities described in clause (i), until such
time as such securities have been (w) distributed to the public pursuant to a
registration statement covering such securities that has been declared effective
under the 1933 Act, (x) distributed to the public in accordance with the
provisions of Rule 144 (or any similar provision then in force) under the 1933
Act, (y) repurchased by the Company, or (z) registered before issuance to a
Holder.
Registration Expenses - Section 2.4.
Warrant - that certain Warrant (No. W-116) of even date herewith for the
purchase of 450,000 shares (subject to adjustment as provided therein) of Common
Stock granted by the Company to Catalyst and, collectively, any and all warrants
issued in substitution or replacement of such Warrant.
Section 2. REGISTRATION RIGHTS.
2.1 Piggyback Registration.
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(a) If the Company proposes to file a registration statement under the 1933
Act with respect to an offering by the Company for its own account or for the
account of any other Person of any class of equity security, including any
security convertible into or exchangeable for any equity security, then the
Company shall in each case give written notice of such proposed filing to the
Holder at least twenty days before the anticipated filing date, and such notice
shall offer the Holder the opportunity to register such number of Registrable
Securities as the Holder may request (a "Piggyback Registration"). The Company
shall exercise commercially reasonable best efforts to cause the managing
underwriter or underwriters of a proposed underwritten offering to permit the
Holder to include the Registrable Securities requested by the Holder to be
included in the registration statement and in such offering on the same terms
and conditions as any similar securities of the Company included therein, to the
extent permitted by applicable law. Notwithstanding the foregoing, if the
managing underwriter or underwriters of such offering delivers a written opinion
to the Holder that the total amount of securities which the Holder requests to
include in such offering is sufficiently large to materially and adversely
affect the success of such offering, then the amount or kind of shares of stock
in the Company to be offered for the accounts of all Persons whose shares of
stock were requested to be included in such offering (including but not limited
to the Holder and holders of "new rights" as defined in Section 3.1, but
excluding the Company) shall be reduced pro rata with respect to each such
Person to the extent necessary to reduce the total amount of securities to be
included in such offering to the amount recommended by such managing
underwriter.
(b) Notwithstanding anything to the contrary contained in Section 2.1(a),
the Company shall not be required to include Registrable Securities in any
registration statement pursuant to this Section 2.1 if the proposed registration
is (i) a registration of a stock option or other employee incentive compensation
plan or of securities-issued or issuable pursuant to any such plan, (ii) a
registration of securities issued or issuable pursuant to a stockholder
reinvestment plan or other similar plan, (iii) a registration of securities
issued in exchange for any securities or any assets of, or in connection with a
merger or consolidation with, an unaffiliated company, or (iv) a registration of
securities pursuant to a "rights" or other similar plan designed to protect the
Company's stockholders from a coercive or other attempt to take control of the
Company.
(c) The Company may withdraw any registration statement and abandon any
proposed offering initiated by the Company without the consent of the Holder
notwithstanding the request of the Holder to participate therein in accordance
with this provision, if the Company determines that such action is in the best
interests of the Company and its stockholders (for this limited purpose only,
the interests of the Holder shall not be considered).
2.2 Demand Registration Rights.
(a) Right to Demand.
(i) Subject to the conditions stated hereinafter in this Section 2.2(a),
beginning 24 months after the date hereof, the Holder may make a written request
to the Company for registration with the Commission of the sale of all or part
of the Registrable Securities owned by the Holder under and in accordance with
the provisions of the 1933 Act (a "Demand Registration"); provided that the
Company may if necessary delay the filing of any registration statement relating
to any such Demand Registration for such reasonable period of time as is
necessary to prepare the financial statements of the Company for the fiscal
period most recently ended prior to such written request; provided further,
however, that the Holder will use its good-faith, reasonable efforts to time its
requests for the Demand Registration in such a manner so as to minimize, to the
extent possible, the cost of such Demand Registration to the Company; provided
further, however, that the preceding proviso shall in no way limit the rights of
the Holder to realize the maximum possible value for its shares of Registrable
Securities to be offered to the public under such Demand Registration; provided
further that the effective date of any registration statement relating to any
such Demand Registration shall occur as soon as practicable, and no later than
75 days after the filing of the Demand Registration is made (unless a delay
beyond such 75-day period occurs despite the Company's having acted with
diligence and good faith towards obtaining the effectiveness of such
registration statement within such 75-day period); and provided further that in
the event that more than one Person shall constitute the "Holder" under this
Agreement, any such written request for a Demand Registration may be made only
by the Holders' Representative.
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(ii) All requests made pursuant to this Section 2.2(a) will specify the
amount and kind of securities to be registered, the Person (or Persons) who is
the owner of such Registrable Securities, and will also specify the intended
methods of disposition thereof. Notwithstanding anything to the contrary in this
Section 2.2, the Company shall not be obligated to take any action with respect
to a request for a Demand Registration by the Holder unless such request would
involve the registration with the Commission of at least 100,000 shares of
Registrable Securities.
(b) Number of Demand Registrations; Payment of Expenses. The Holder shall
be entitled to one (1) Demand Registration (which, except as provided to the
contrary in the immediately succeeding sentence, must become effective to count
as having occurred). The Holder shall pay all Registration Expenses (as
hereinafter defined) of the Demand Registration (and, until a Demand
Registration becomes effective, of each attempted Demand Registration that does
not become effective); provided, however, that if the Holder, prior to the date
that a Demand Registration becomes effective, chooses in its sole discretion not
to sell the Registrable Securities requested by it to be included in such Demand
Registration, such Demand Registration shall count as having occurred,
notwithstanding anything to the contrary in the first sentence of this Section
2.2(b); provided further that if (x) the Holder prior to the date that the
registration statement for a Demand Registration has been filed with the
Commission, chooses in its sole discretion not to require the Company to file
such registration statement pursuant to a notice to such effect to the Company
or (y) the Holder, prior to the Date that the registration statement for a
Demand Registration has been filed with the Commission or thereafter but prior
to the date that the Demand Registration becomes effective, releases the Company
of its obligation to proceed toward obtaining the effectiveness of such
registration statement for such Demand Registration pursuant to a request for
such release by the Company, such Demand Registration shall not count as having
occurred for purposes of this Section 2.2(b) and the request for such Demand
Registration shall be treated as if it had never been made. The Company shall
not be obligated to file a registration statement on Form S-1 under the 1933
Act, or any successor forms, with respect to a Demand Registration under Section
2.2(a), and the Company's registration statement filing obligations pursuant to
this Agreement may be fulfilled by its filing, in accordance with the provisions
of this Agreement, of registration statements on Form S-2 or Form S-3 under the
1933 Act or any successor forms.
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(c) Selection of Underwriters. If any Demand Registration is an
underwritten offering, the Holder will select a managing underwriter or
underwriters acceptable to the Company to administer the offering, which
acceptance will not be unreasonably withheld or delayed.
(d) Company Registration. Notwithstanding the provisions of Sections
2.2(a)-(c), the Company shall not be obligated to effect a registration
requested pursuant to Sections 2.2(a)-(c) if (i) within 20 days after receiving
the notice provided by the Holder under Sections 2.2(a)-(c), the Company
notifies Holder of its intention to file a registration statement for a firm
commitment underwritten public offering of Common Stock for the account of the
Company and, within 120 days after providing such notice, the Company files a
registration statement for such offering and (ii) the Company has never before
exercised its rights under this Section 2.2(d). In such case, the Holder shall
have all the rights provided herein as if no such Demand Registration had been
requested. If at any time the Company fails to diligently pursue any such
registration statement or offering, the provisions of the first sentence of this
Section 2.2(d) shall not apply, and the Company shall be obligated, upon
abandoning such registration statement for such offering for any reason, to
satisfy its obligations under Sections 2.2(a)-(c). With respect to such Company
registration, the Company shall have the sole authority to select or terminate
the employment of underwriters, and to make all decisions in connection with the
filing, effectiveness and consummation of the proposed offering, subject to the
express provisions hereof.
(e) Limitations on Registration Rights. The obligations of the Company
under Sections 2.2(a)-(c) are subject to each of the following limitations,
conditions and qualifications:
(1) The Company shall be entitled to postpone for a reasonable
period of time (as short as practicable, but not exceeding 180 days)
the distribution of preliminary or final prospectuses under any
registration statement required to be prepared and filed by it pursuant
hereto, if at the time such prospectus distribution would otherwise be
made, the Company is engaged in an issuer tender offer within the
meaning of Section 13(e) of the Exchange Act for securities of the same
class as the Registrable Securities that are proposed to be registered,
unless the Holder or the Holders' Representative, as applicable, can
obtain a no-action letter from the staff of the Commission to the
effect that the staff would not recommend enforcement action to the
Commission if offers or sales were made pursuant to a prospectus under
such circumstances.
(2) The Company shall be entitled to postpone for a reasonable
period of time (as short as practicable, but not exceeding 180 days)
the effectiveness (but not the filing or preparation) of any
registration statement otherwise required to be prepared and filed by
it pursuant hereto if, within 10 Business Days after it receives a
request for a registration pursuant hereto, the Company's investment
banking firm delivers to Holder a written opinion that in its judgment,
such registration and offering would materially interfere with any
financing, acquisition, corporate reorganization or other material
transaction involving the Company that prior to such request the Board
of Directors of the Company had agreed by resolution to pursue.
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2.3 Registration Procedures. Whenever any Registrable Securities are to be
registered pursuant to Sections 2.1 or 2.2, the Company will use reasonable
diligence to effect the registration of such Registrable Securities in
accordance with the intended method of disposition thereof as quickly as
practicable and in accordance with the provisions of Section 2. In connection
with any Piggyback Registration or Demand Registration, the Company shall as
expeditiously as possible:
(a) prepare and file with the Commission a registration statement that
includes the Registrable Securities requested to be included therein in
accordance with Section 2.1 or 2.2 and use reasonable diligence to cause such
registration statement to become effective; provided, however, that at least ten
Business Days before filing a registration statement or prospectus or any
amendment or supplement thereto, including documents incorporated by reference
therein, the Company will furnish to the Holder, and the underwriters, if any,
draft copies of all such documents proposed to be filed, which documents will be
subject to the review of the Holder and such underwriters, and in the case of a
Demand Registration the Company will not file any registration statement or
prospectus or amendment or supplement thereto (including such documents
incorporated by reference) to which the Holder or the underwriters with respect
to such Registrable Securities, if any, shall reasonably object; however, in the
case of a Piggyback Registration, if the Holder objects to such documents and
the Company desires to proceed with the registration of its shares, the Holder
may withdraw the Registrable Securities from being included in such offering,
using its good-faith efforts to minimize delay caused by such withdrawal, and
the Company may then, notwithstanding anything to the contrary in the
immediately preceding proviso, proceed with such offering; the Company and the
Holder acknowledge that such withdrawal by the Holder will delay such offering
for as much time as is necessary to amend such registration statement or
prospectus to reflect the withdrawal of such Registrable Securities from such
offering;
(b) prepare and file with the Commission such amendments and post-effective
amendments to the registration statement as may be necessary to keep the
registration statement effective for a period of twenty-four months (or such
shorter period which will terminate when all Registrable Securities covered by
such registration statement have been sold or withdrawn, but not prior to the
expiration of the 90-day period referred to in Section 4(3) of the 1933 Act and
Rule 174 thereunder, if applicable); cause the prospectus to be supplemented by
any required prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the 1933 Act; and comply with the provisions of the 1933 Act
applicable to it with respect to the disposition of all securities covered by
such registration statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement or supplement to the prospectus; the Company shall not be
deemed to have complied with its obligations hereunder to keep a registration
statement effective during the applicable period if it voluntarily takes any
action that would result in the prevention of the Holder from selling such
Registrable Securities during that period unless such action is required under
applicable law;
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(c) furnish to the Holder and the underwriter or underwriters, if any,
without charge, such reasonable number of conformed copies of the registration
statement and any post-effective amendment thereto and such reasonable number of
copies of the prospectus (including each preliminary prospectus) and any
amendments or supplements thereto, and any documents incorporated by reference
therein, as the Holder or underwriter may request in order to facilitate the
disposition of the Registrable Securities being sold by the Holder (it being
understood that the Company consents to the use of the prospectus and any
amendment or supplement thereto by the Holder and the underwriter or
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by the prospectus or any amendment or supplement
thereto);
(d) notify the Holder at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act, when the Company becomes aware of
the happening of any event as a result of which the prospectus included in such
registration statement (as then in effect) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading and, as promptly as practicable thereafter, prepare and file with the
Commission and furnish a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(e) use reasonable diligence to cause all Registrable Securities included
in such registration statement to be listed, by the date of the first sale of
Registrable Securities pursuant to such registration statement, on each
securities exchange (including, for this purpose, NASDAQ) on which the Common
Stock of the Company is then listed or proposed to be listed, if any;
(f) make generally available to its security holders an earnings statement
satisfying the provisions of Section 11(a) of the 1933 Act no later than 45 days
after the end of the 12-month period beginning with the first day of the
Company's first fiscal quarter commencing after the effective date of the
registration statement, which earnings statement shall cover said 12-month
period, which requirement will be deemed to be satisfied if the Company timely
files complete and accurate information on such forms and reports as the Company
may be required to file under the Exchange Act and otherwise complies with Rule
158 under the 1933 Act as soon as feasible;
(g) notify the Holder of any stop order issued or threatened by the
Commission in connection therewith and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered, and make every
reasonable effort to obtain the withdrawal of any order suspending the
effectiveness of the registration statement at the earliest possible moment;
(h) if requested by the managing underwriter or underwriters, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or underwriters or the Holder reasonably
requests to be included therein, including, without limitation, the purchase
price being paid therefor by such underwriter or underwriters and any other
terms of the underwritten offering of such Registrable Securities (excluding,
however, information with respect to the number of Registrable Securities being
sold to such underwriter or underwriters by the Holder), and promptly make all
required filings of such prospectus supplement or post-effective amendment;
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(i) as promptly as practicable after filing with the Commission of any
document which is incorporated by reference into a registration statement,
deliver to the Holder as many copies of that document as may be reasonably
requested by the Holder;
(j) on or prior to the date on which the registration statement is declared
effective, use reasonable diligence to register or qualify, and cooperate with
the Holder the underwriter or underwriters, if any, and their counsel, in
connection with the registration or qualification of the Registrable Securities
covered by the registration statement for offer and sale under the securities or
blue sky laws of each state and other jurisdiction of the United States as the
Holder or underwriter reasonably requests in writing, to use reasonable
diligence to keep each such registration or qualification effective, including
through new filings, or amendments or renewals, during the period such
registration statement is required to be kept effective and to do any and all
other acts or things necessary or advisable to enable the disposition in all
such jurisdictions of the Registrable Securities covered by the applicable
registration statement; provided that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process in any such jurisdiction where it is not then so subject; and provided,
further, however, that while it is the present intention of the Holder to
cooperate with the Company to keep the costs of compliance with state blue sky
laws to a minimum, the Holder shall have the right to require compliance by the
Company with the blue sky laws of as many states as the managing underwriter
deems reasonably necessary in its good faith judgment to realize the maximum
possible value for the Registrable Securities included in such registration
statement;
(k) cooperate with the Holder and the managing underwriter or underwriters,
if any, to facilitate the timely preparation and delivery of certificates
representing securities to be sold under the registration statement and enable
such securities to be in such denominations and registered in such names as the
managing underwriter or underwriters, if any, may request, subject to the
underwriters' obligation to return any certificates representing securities not
sold;
(l) use reasonable diligence to cause the Registrable Securities covered by
the registration statement to be registered with or approved by such other
governmental agencies or authorities within the United States as may be
necessary to enable the seller or sellers thereof or the underwriter or
underwriters, if any, to consummate the disposition of such securities;
(m) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other reasonable actions as the
Holder or the underwriters retained by the Holder participating in an
underwritten public offering, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities;
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(n) make available for inspection by the Holder, any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by any such seller or
underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records"), as shall be necessary to enable them to exercise their due diligence
responsibility; and cause the Company's officers, directors and employees to
make available for inspection and/or copying all Records reasonably requested by
any such Inspector in connection with such registration statement; provided
however, that in the case of a second Demand Registration (within the meaning of
Section 2.2(b)), the Holder shall bear the out-of-pocket costs of copying such
documents as are requested by any such Inspector in accordance with this Section
2.3(n); and
(o) use reasonable diligence to obtain a "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by cold comfort letters covering
registration statements similar to the registration statement at issue as the
Holder reasonably requests.
The Holder, upon receipt of any notice from the Company of the occurrence
of any event of the kind described in subsection (d) of this Section 2.3, will
forthwith discontinue disposition of the Registrable Securities until the
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by subsection (d) of this Section 2.3 and copies of any additional
or supplemental filings which are incorporated by reference in the prospectus,
or until it is advised in writing (the "Advice") by the Company that the use of
the prospectus may be resumed. If so directed by the Company, the Holder shall
deliver to the Company (at the Company's expense) all copies in its possession
or control, other than permanent file copies then in the Holder's possession, of
the prospectus covering such Registrable Securities. In the event the Company
shall give any such notice, the time periods mentioned in subsection (b) of this
Section 2.3 shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the date when
each seller of Registrable Securities covered by such registration statement
shall have received the copies of the supplemented or amended prospectus
contemplated by subsection (d) of this Section 2.3 hereof or the Advice.
If such registration statement refers to the Holder by name or otherwise as
the holder of any securities of the Company, then the Holder shall have the
right to require (i) the insertion therein of language, in form and substance
satisfactory to the Holder, to the effect that the holding by such Holder of
such securities is not to be construed as a recommendation of such Holder of the
investment quality of the Company's securities covered thereby and that such
holding does not imply that the Holder will assist in meeting any future
financial requirements of the Company, or (ii) in the event that such reference
to such Holder by name or otherwise is not required by the Securities Act or any
similar federal statute then in force, the deletion of the reference to such
Holder.
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2.4 Registration Expenses. Except as otherwise provided in Section 2.2(b),
all expenses incident to the Company's performance of or compliance with this
Agreement, including without limitation, all registration and filing fees for
the Commission, securities exchanges or National Association of Securities
Dealers, Inc., all fees and expenses (other than the pro rata portion of filing
fees that are required by state law with respect to the securities to be sold)
relating to compliance with securities or blue sky laws (including fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), all printing expenses, messenger and delivery expenses,
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), fees and
expenses incurred in connection with the listing of the securities to be
registered on securities exchanges, fees and disbursements of counsel for the
Company and its independent certified public accountants (including the expenses
required for "cold comfort" letters required by or incident to such
performance), and fees and expenses of any special experts retained by the
Company in connection with such registration (but not including any underwriting
fees, discounts or commissions directly attributable to the sale of Registrable
Securities) (all such expenses being herein called "Registration Expenses"),
will be borne by the Company; provided, however that, the Company shall not be
obligated to pay (i) the fees and disbursements of any counsel for the Holder or
liability insurance (if the Company elects to obtain such insurance) for the
Holder, or (ii) any out-of-pocket expenses of the Holder, which fees,
disbursements and expenses described in clauses (i) and (ii) preceding shall be
borne by the Holder, and provided that the Holder shall bear its pro rata
portion of any underwriting fees, discounts or commissions directly attributable
to any sale of Registrable Securities in which the Holder participates.
2.5 Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Holder of Registrable Securities, its officers, directors,
partners and each Person who controls such Holder (within the meaning of the
1933 Act), and any Agent (as hereinafter defined) or investment advisor thereof
against all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation, and attorneys fees and expenses as further
provided in Section 2.5(c)) (collectively, "Liabilities") arising out of or
based upon any untrue or alleged untrue statement of material fact contained in
any registration statement, any amendment or supplement thereto, or any
prospectus or preliminary prospectus contained therein, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
any such Liabilities arise out of or are based upon any untrue statement or
omission based upon information with respect to such indemnified Person
furnished in writing to the Company by such indemnified Person expressly for use
therein. In connection with an underwritten offering, the Company will indemnify
the underwriters thereof, their officers and directors and each Person who
controls such underwriters (within the meaning of the 0000 Xxx) to the same
extent as provided above with respect to the indemnification of the Holders of
Registrable Securities or to such other extent as the Company and such
underwriters may agree. For purposes of this Section 2.5(a), an "Agent" of a
Holder of Registrable Securities is any Person acting for or on behalf of such
Holder with respect to the holding or sale of such Registrable Securities.
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(b) Indemnification by Holders of Registrable Securities. In connection
with any registration statement in which the Holder is participating, the Holder
will furnish to the Company in writing such information with respect to the name
and address of the Holder and the amount of Registrable Securities held by the
Holder and such other information as the Company shall reasonably request for
use in connection with any such registration statement or prospectus, and agrees
to indemnify, to the extent permitted by law, the Company, its directors and
officers and each Person who controls the Company (within the meaning of the
0000 Xxx) against any losses, claims, damages, liabilities and expenses
resulting from any untrue statement of a material fact or any omission of a
material fact required to be stated in the registration statement or prospectus
or any amendment thereof or supplement thereto or necessary to make the
statements therein not misleading, to the extent, but only to the extent, that
such untrue statement or omission is based upon any information with respect to
the Holder so furnished in writing by the Holder specifically for inclusion in
any prospectus or registration statement. In connection with an underwritten
offering, the Holder participating in such offering will indemnify the
underwriters thereof, their officers and directors and each Person who controls
such underwriters (within the meaning of the 0000 Xxx) to the same extent as
provided in the immediately preceding sentence with respect to indemnification
of the Company. In no event shall the liability of the Holder hereunder be
greater in amount than the dollar amount of the proceeds received by the Holder
upon the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such Person of any written notice of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing for which such Person may claim indemnification or contribution
pursuant to this Agreement and, unless in the written opinion of counsel for
such indemnified party a conflict of interest may exist between such indemnified
party and the indemnifying party with respect to such claim, permit the
indemnifying party to assume, at the sole cost and expense of the indemnifying
party, the defense of such claim with counsel reasonably satisfactory to such
indemnified party. Whether or not such defense is assumed by the indemnifying
party, the indemnifying party will not be subject to any liability for any
settlement made without its consent. No indemnifying party will 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 of such claim or
litigation. If the indemnifying party is not entitled to, or elects not to,
assume the defense of a claim, the indemnified party shall be entitled to hire
counsel reasonably satisfactory to it, the fees and expenses of which shall be
borne by, in their entirety, the indemnifying party; provided, however, that the
indemnifying party shall not be obligated to pay the fees and expenses of more
than one counsel with respect to such claim, unless in the opinion of counsel
for any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the fees
and expenses of such additional counsel.
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(d) Contribution. If the indemnification provided for in this Section 2.5
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 2.5(c), any legal or
other fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2.5(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 2.5(d), the Holder shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of the Holder were offered to the
public exceeds the amount of any damages which the Holder has otherwise been
required to pay by reason of such untrue statement or omission. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11 of the 0000
Xxx) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.
The obligations of the Company pursuant to this Section 2.5 shall be
further subject to such additional express agreements of the Company as may be
required to facilitate an underwritten offering, provided that no such agreement
shall in any way limit the rights of the Holder under this Agreement, or create
additional obligations of the Holder not set forth herein, except as otherwise
expressly agreed in writing by the Holder.
2.6 Participation in Underwriting Registrations. Holder may not participate
in any underwritten registration hereunder unless the Holder (a) agrees to sell
its securities on the terms of and on the basis provided in any underwriting
arrangements approved by the Company in the case of an offering of securities by
the Company and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
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2.7 Rule 144; Information. The Company covenants that, upon any
registration statement covering Company securities becoming effective, 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 (or, if
the Company is not required to file such reports, it will, upon the request of
the Holder make publicly available other nonconfidential information as is
necessary to permit sales under Rule 144 under the 1933 Act), and it will take
such other action as the Holder may reasonably request, all to the extent
required from time to time to enable the 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; provided further that if the Company is not required to file reports
under the 1933 Act and the Exchange Act and the rules and regulations adopted by
the Commission thereunder, the Company shall, upon the request of the Holder,
provide the Holder audited financial statements and access to the books and
records of the Company and, if requested by the Holder sufficient information to
enable the Holder to comply with Rule 144 or Rule 144A under the 1933 Act. Upon
the request of the Holder, the Company will deliver to the Holder a written
statement as to whether it has complied with such requirements.
SECTION 3. OTHER REGISTRATION RIGHTS.
3.1 Future Rights. From the date of this Agreement until the earlier to
occur of the seventh anniversary hereof or the date that all Registrable
Securities have been registered under the 1933 Act, the Company will not grant
to any Person (excluding the Holder) any registration rights with respect to any
securities of the Company other than registration rights ("new rights") that are
granted in connection with the investment in the Company by such grantee of at
least $2,000,000. Such new rights must (i) be pari passu with the registration
rights granted by the Company under this Agreement, and (ii) not be inconsistent
with the terms of this Agreement. Additionally, new rights may not be granted
without expressly providing that, with respect to demand registration rights
granted to such other Persons, the Holder have a piggyback right upon the
exercise of such new rights and shall be included in any related registration
statement on the same terms and conditions as the holders of the new rights,
subject to possible reduction at the initiative of the managing underwriter or
underwriters, on terms substantially equivalent to those set forth in Section
2.1. The Company may grant registration rights that permit any Person the right
to piggyback or may itself exercise the right to piggyback on any Demand
Registration; provided that if the managing underwriter or underwriters of such
offering delivers an opinion to the Holder that the total amount of securities
which they and the holders of such piggyback rights intend to include in any
offering is so large as to materially and adversely affect the success of such
offering (including the price at which such securities can be sold), then the
amount or kind of securities to be offered for the account of holders of such
piggyback rights, or the Company if it is exercising piggyback rights, will be
reduced to the extent necessary to reduce the total amount of securities to be
included in such offering to the amount recommended by the managing underwriter
prior to any reduction in the amount of Registrable Securities to be included;
and further provided that if such offering is not underwritten, then any such
piggyback shall only be exercised with the consent of the Holder.
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3.2 Representation and Warrant. The Company hereby represents and warrants
to Catalyst that on or prior to the date hereof, (a) the Company has not granted
registration rights to any Person except for the registration rights granted
under this Agreement, and (b) no consent, approval, authorization or waiver of
any Person is required to permit the Company to (i) execute or deliver this
Agreement or (ii) perform this Agreement in accordance with its terms other than
with respect to registration under the 1933 Act and comparable registrations
with state securities commissions.
SECTION 4. MISCELLANEOUS.
4.1 Recapitalization, Exchanges, etc. The provisions of this Agreement
shall apply, to the full extent set forth herein with respect to the Registrable
Securities, to any and all shares of equity capital of the Company or any
successor or assign of the Company (whether by merger, consolidation, sale of
assets or otherwise) which may be issued in respect of, in exchange for, or in
substitution of the Registrable Securities, in each case as the amounts of such
securities outstanding are appropriately adjusted for any equity dividends,
splits, reverse splits, combinations, recapitalization and the like occurring
after the date of this Agreement.
4.2 Opinions. When any legal opinion is required to be delivered hereunder,
such opinion may contain such qualifications as may be customary or otherwise
appropriate for legal opinions in similar circumstances.
4.3 Notices. (a) All communications under this Agreement shall be in
writing to the following addresses:
(i) If to Company, to:
GEXA Corp.
00 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxx
(ii) If to the Holder, to:
The Catalyst Fund, Ltd.
Xxx Xxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxx
or to such other address as any party may furnish to the others in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
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(b) Any communication so addressed and mailed by first class registered or
certified mail, postage prepaid, shall be deemed to be received on the third
Business Day after so mailed, and if delivered by personal delivery (including
by courier), upon delivery during normal business hours.
4.4 Applicable Law. This contract is entered into under, and shall be
governed for all purposes by, the laws of the State of Texas.
4.5 Amendment and Waiver. This Agreement may be amended, and the provisions
hereof may be waived, only by a written instrument signed by the Holder and the
Company. No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
4.6 Remedy for Breach of Contract. The parties agree that in the event
there is any breach or asserted breach of the terms, covenants or conditions of
this Agreement, the remedy of the parties hereto shall be in law and in equity
and injunctive relief shall lie for the enforcement of or relief from any
provisions of this Agreement. If any remedy or relief is sought and obtained by
any party against one of the other parties pursuant to this Section 4.6, the
other party shall, in addition to the remedy of relief so obtained, be liable to
the party seeking such remedy or relief for the reasonable expenses incurred by
such party in successfully obtaining such remedy or relief, including the fees
and expenses of such party's counsel.
4.7 Severability. It is a desire and intent of the parties that the terms,
provisions, covenants and remedies contained in this Agreement shall be
enforceable to the fullest extent permitted by law. If any such term, provision,
covenant or remedy of this Agreement or the application thereof to any Person or
circumstances shall, to any extent, be construed to be invalid or unenforceable
in whole or in part, then such term, provision, covenant or remedy shall be
construed in a manner so as to permit its enforceability under the applicable
law to the fullest extent permitted by law. In any case, the remaining
provisions of this Agreement or the application thereof to any Person or
circumstances other than those to which they have been held invalid or
unenforceable, shall remain in full force and effect.
4.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
4.9 Headings. The section and paragraph headings have been inserted for
purposes of convenience and shall not be used for interpretive purposes.
4.10 Binding Effect. Unless otherwise provided herein, the provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, legal representatives, successors and
permitted assigns, and is not intended to confer upon any other Person any right
or remedies hereunder, provided, however, that a transferee of Holder shall be
deemed to be a Holder for purposes of obtaining the benefits or enforcing the
rights of a Holder.
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4.11 Entire Agreement. This Agreement, together with the other agreements
referenced herein, constitutes the entire agreement and supersedes all prior
agreements, understandings, both written and oral, among the parties with
respect to the subject matter hereof.
4.12 Multiple Holders. In the event that more than one Person shall
constitute the "Holder" under this Agreement each such Person shall have the
rights and duties of the Holder hereunder with respect to its Registrable
Securities but not those of any other such Persons. In that event, however,
Catalyst (or if Catalyst no longer is a Person constituting the Holder, such
other Person as all of the Persons constituting the Holder shall designate with
the Company's consent) shall act as representative of all such Persons
constituting the Holder (the "Holders' Representative") for the purposes of
giving and receiving consents, notices, amendments, and documents and exercising
the rights of the Holder. Accordingly, if more than one Person shall constitute
the Holder (a) any amendment signed by the Holders' Representative shall be
conclusively deemed, as between the parties hereto, as having been signed by the
Holder, (b) any consent required or permitted to be obtained from the Holder
shall be obtained only from the Holders' Representative, and (c) any notice
required to be given or document delivered pursuant to this Agreement shall be
deemed duly given or delivered only if given to the Holders' Representative in
accordance with Section 4.3. In no event, however, shall the Holder's
Representative or any other Person constituting the Holder be liable for
information supplied by a Person constituting the Holder, and that Person and
the Company shall deal directly with each other with respect to matters in
Section 2.6.
4.13 Assignment. The Holder shall have the right to assign its rights in
this Agreement to any other Person who is assigned at least 15,000 shares of
Registrable Securities.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
GEXA CORP.
By:/s/ Xxxx Xxxxxxx
-------------------------------------
Xxxx Xxxxxxx, Chief Executive Officer
THE CATALYST FUND, LTD.
By: RDR Management I, Inc.,
its general partner
By:/s/ Xxxx Xxxxxxx
------------------------------------
Xxxx Xxxxxxx, President
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