Document:

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>
<CAPTION>
<S>       <C>                                                                             <C>
                                TABLE OF CONTENTS
                                -----------------

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
</TABLE>

                                       i
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<TABLE>
<CAPTION>
<S>       <C>                                                                             <C>
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
</TABLE>

                                       ii
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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  Cappello  Capital  Corp.  ("Grantee"  and,  together  with  any
transferee of Warrants or Warrant Stock, the "Warrantholder").

     WHEREAS,  Cappello has commenced  litigation  against the Company,  and the
Company and Cappello have agreed to settle said litigation, and

     WHEREAS,  part of the  consideration for such settlement in the issuance of
warrants by the Company to Cappello.

     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
                  --------------------------------------------------------------
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.

                                       1
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     Section 2. Warrant Price, Manner of Exercise.
                ----------------------------------

     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)
                              ---------------------
                                       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).

                                       2
<PAGE>

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.
           ---------------------------------------------------------------------

     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;

                                       3
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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

                                       4
<PAGE>

     (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.
           -----------------------------------------------------------

     (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).

                                       5
<PAGE>

     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:
                 ----------------------------

     (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.

                                       6
<PAGE>

     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.
                ---------------------

     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
                --------------------------------------------------------------
of Warrant Certificates.
------------------------

     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.

                                       7
<PAGE>

     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.
                --------------------

     8.1 Company Registration.
         ---------------------

     (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.

                                       8
<PAGE>

     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.

                                       9
<PAGE>

     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
<PAGE>

     (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
<PAGE>

     (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
<PAGE>

     (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
<PAGE>

     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
<PAGE>

     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
<PAGE>

     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.
         100 Wilshire Blvd., Suite 1200
         Santa Monica, CA 90401
         Attention:  Rob Deutschman
         Telefax: (310) 393-4838

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 20 Greenway Plaza, Suite 600, Houston, Texas 77046, 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
<PAGE>

     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
<PAGE>

     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
<PAGE>

     IN WITNESS  WHEREOF,  the Company and the Warrant  holder have caused their
respective duly authorized officers to sign this Agreement.

                                                         GEXA CORP.

                                                         By: /s/ Neil Leibman
                                                         -----------------------
                                                         Name: Neil Leibman
                                                         -----------------------
                                                         Title:Chairman and CEO
                                                         -----------------------

Appendices:

Appendix A        Form of Warrant Certificate
Appendix B        Election to Exercise

Schedules:

Schedule 11.1     Outstanding Options, Etc.

<PAGE>

                                                                      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  Cappello  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.

<PAGE>

     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/ Neil Leibman
                                                         -----------------------
                                                         Name:  Neil Leibman
                                                         -----------------------
                                                         Title: Chairman and CEO
                                                         -----------------------

<PAGE>

                                                                      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.Exhibit 10.1
                                                                    ------------

                                PROMISSORY NOTE
                                ---------------

U.S. $500,000.00                                         Los Angeles, California
Five Hundred Thousand Dollars                             November 29, 2004

     FOR VALUE  RECEIVED,  the  receipt  and  sufficiency  of which  are  hereby
acknowledged,  the undersigned,  GEXA CORP.  ("Maker"),  hereby  irrevocably and
unconditionally  promises  to pay to the  order  of  CAPPELLO  CAPITAL  CORP,  a
California corporation ("Holder"), the principal amount of Five Hundred Thousand
Dollars  ($500,000.00)  with no interest,  as hereinafter set forth. Maker shall
pay the outstanding  principal  balance of this Promissory Note (this "Note") to
Holder in ten (10) equal monthly payments of Fifty Thousand Dollars ($50,000.00)
with the first such payment due on January 3, 2005 and continuing  thereafter on
the first of each month consecutively through and including October 1, 2005.

     If any installment is not paid by the first of each month, then Maker shall
have  three (3)  business  days in the form of a grace  period  within  which to
perform its obligations under this Note.  Except as payment  instructions may be
changed by written  notice  delivered to Maker at least ten (10) days in advance
of a payment due date,  Maker shall make all payments to Holder by wire transfer
in lawful  money of the United  States of America to Holder's  Bank  address set
forth below without any deduction whatsoever,  including but not limited to, any
deduction for any set-off, recoupment or counterclaim:

                  Bank Name:        First Regional Bank
                                    501 Santa Monica Blvd.
                                    Santa Monica, CA 90401
                  ABA #:            122037760
                  Account Name:     Cappello Capital Corp.
                  Account #:        776007870

     In the event of Maker's  failure to pay any installment due under this Note
when and as due, or within the three  business  day grace period set forth above
(a  "Default"),  Holder  shall give Maker and its  attorneys  of record  written
notice of Default via priority  overnight  Federal  Express to the addresses set
forth  below (the  "Notice of  Reinstating").  The Notice of  Reinstating  shall
specify  the date and amount of any  claimed  Default  under this Note and shall
provide Maker with an additional three (3) business days from Maker's receipt of
the Notice of Reinstating within which to cure the claimed Default by paying the
past due installment.

GEXA Corporation                             Lisa L. Coplen, Esq.
c/o Neil Leibman                             Anderson, McPharlin & Conners LLP
20 Greenway Plaza, Suite 600 Houston, TX     444 South Flower Street, 31st Floor
77046                                        Los Angeles, CA 90071-2901
(713) 470-0400                               (213) 688-0080
(713) 961-7997 (fax)                         (213) 622-7594 (fax)

<PAGE>

     Upon Maker's  failure to cure the claimed Default within three (3) business
days from Maker's receipt of the Notice of Reinstating,  Holder becomes entitled
to enforce  all of  Maker's  obligations  under  this  Note,  and all of Maker's
remaining obligations hereunder shall be immediately accelerated.  Additionally,
should Holder  enforce any of its  reinstatement  remedies  given under a Mutual
Release and Settlement  Agreement  between Maker and Holder dated as of the date
hereof  ("Settlement  Agreement")  and pursue  claims that had arisen before the
time of the parties' entry into the  Settlement  Agreement by filing suit in Los
Angeles County Superior Court, then no additional amounts shall be due under the
Note and the Note shall  expire.  In the event of the  expiration  of this Note,
Holder  shall be under no  obligation  to refund  payments  made under this Note
prior  to its  expiration,  however  any  recovery  by  Holder  pursuant  to its
reinstatement  remedies  under the  Settlement  Agreement  will be offset by the
amount of these payments.

     Maker may prepay all or any part of the unpaid balance of this Note without
notice, penalty or premium.

     The  debt  evidenced  by this  Note  and the  provisions  hereof  shall  be
construed,  interpreted and enforced in accordance with the laws of the State of
California  without  reference to choice of law  principles.  This Note shall be
binding on, and shall  inure to the  benefit  of, the  parties  hereto and their
respective  heirs,  legal  representatives,  successors  and assigns;  provided,
however,  that Maker  shall not assign its rights or  delegate  its  obligations
hereunder  without the express  prior written  consent of Holder,  which consent
shall not be withheld unreasonably by Holder.

     All notices  concerning this Note, other than as described above concerning
the Notice of  Reinstating,  must be in writing  and will be deemed to have been
duly given when (a)  delivered by hand (with written  confirmation  of receipt),
(b)  sent by  facsimile  (with  written  confirmation  of  successful  facsimile
transmission), provided that a copy is mailed by registered mail, return receipt
requested,   or  (c)   when   received   by  the   addressee,   if   sent  by  a
nationally-recognized   overnight   delivery  service,   in  each  case  to  the
appropriate  address  and  facsimile  number  set forth  below (or to such other
addresses  and  facsimile  numbers as each party may  designate  to the other by
notice pursuant to this Note).

     Except as set forth in this Note, Maker (a) waives presentment,  demand for
payment,  protest, notice of demand, dishonor, and all other notices and demands
in connection  with the  delivery,  acceptance,  performance,  default under and
enforcement  of this  Note;  (b)  waives  the right to  assert  any  statute  of
limitations  as a defense to the  enforcement of this Note to the fullest extent
permitted by law; and (c) consents to any  forbearance  by Holder without in any
way affecting the liability for payment of this Note.

<PAGE>

     IN WITNESS WHEREOF, Maker has executed this Note as of the day and year set
forth below.
                                       "Maker,"

                                       GEXA ENERGY CORP., a Texas Company

                                       By  /s/ Neil Leibman
                                           -------------------------------------
                                           Neil Leibman, Chief Executive Officer
                                           GEXA ENERGY CORP.,
                                           a Texas corporation

Holder Address:                        Maker Address:

Cappello Capital Corp.                 Gexa Energy Corp.
100 Wilshire Boulevard, Suite 1200     20 Greenway Plaza, Suite 600
Santa Monica, CA 90401-1195.           Houston, Texas 77046
Attention: Robert M. Deutschman,       Attention: Neil Leibman, Chief
Managing Director                      Executive Officer
Facsimile: (310) 393-4838              Facsimile: (713) 961-7997

                                       With copy to:
                                       Lisa L. Coplen, Esq.
                                       Anderson, McPharlin & Conners LLP
                                       444 South Flower Street, 31st Floor
                                       Los Angeles, CA 90071-2901
                                       (213) 688-0080
                                       (213) 622-7594 (fax)

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