Document:

TERMINATION AGREEMENT

         THIS TERMINATION AGREEMENT (this "Agreement") is made and entered into
on this 7th day of July, 2004, by and among Gexa Corp., a Texas corporation (the
"Company"), The Catalyst Fund, Ltd., a Texas limited partnership ("Catalyst"),
Southwest/Catalyst Capital, Ltd., a Texas limited partnership ("SWCC"),
Catalyst/Hall Growth Capital, LP, a Texas limited partnership ("CHGC"), Neil M.
Leibman, an individual ("Leibman"), Robert C. Orr, an individual ("Orr"), Don
Aron, an individual ("Aron"), and Gaylor Investment Trust Partnership, a Texas
partnership ("Gaylor"). All capitalized terms not herein defined shall have the
respective meanings given to them in that certain Loan Agreement dated as of
July 16, 203 (the "Loan Agreement"), between the Company and Catalyst.

                                    RECITALS

         WHEREAS, pursuant to the Loan Agreement, Catalyst, SWCC, CHGC, Leibman,
Orr, Aron, Gaylor and JTS Enterprises, Inc., a Texas corporation ("JTS"), have
made a loan (the "Loan") to the Company in the original principal amount of
$3,650,000, upon and subject to the terms and conditions of the Loan Agreement;

         WHEREAS, in connection with the Loan, the Company and Catalyst entered
into that certain Commercial Security Agreement dated as of July 16, 2003 (the
"Security Agreement"), that certain Consulting Agreement dated as of July 16,
2003 (the "Consulting Agreement"), and that certain Registration Rights
Agreement dated as of July 16, 2003 (the "Registration Rights Agreement");

         WHEREAS, in connection with the Loan, the Company issued Catalyst,
SWCC, CHGC, Leibman, Orr, Aron and Gaylor warrants (the "Warrants") to purchase
up to 550,000 shares of the Company's common stock, par value $.01 per share
(the "Common Stock"), upon and subject to the terms and conditions contained
therein;

         WHEREAS, in connection with the Loan, the Company, Catalyst, SWCC,
CHGC, Leibman, Orr, Aron, Gaylor and JTS entered into that certain Non-Recourse
Loan Participation and Collateral Agency Agreement dated as of July 16, 2003
(the "Participation Agreement"), pursuant to which, Leibman, Orr, Aron and
Gaylor (collectively, the "Company Related Parties") contributed $500,000 of the
Loan for the rights described therein, including the right to shares in the
Warrants on a pro rata basis according to their respective Agreed Interests (as
defined in the Participation Agreement);

         WHEREAS, a credit facility (the "Credit Facility") not to exceed
$15,000,000 has been proposed and negotiated among the Company, each of the
lenders from time to time party thereto (the "Lenders"), and Highbridge/Zwirn
Special Opportunities Fund, L.P., as administrative agent for the Lenders (the
"Administrative Agent");

         WHEREAS, in connection with the consummation of the Credit Facility,
the Company will satisfy in full all of the indebtedness and obligations of the
Company evidenced by the Lender Notes, the JTS Note and the other Subject
Documents, and the Company and Catalyst desire to terminate the Loan Agreement,
the Security Agreement, the Consulting Agreement and the Registration Rights
Agreement;

<PAGE>

         WHEREAS, in connection with termination of the Consulting Agreement,
the Company has agreed to pay to Leibman, Orr, Aron and Gaylor one-time cash
payments equal to $9,166.50, $9,166.50, $18,334.00 and $9,166.50, respectively;

         WHEREAS, in order to induce the Lenders and the Administrative Agent to
consummate the Credit Facility, Catalyst, SWCC and CHGC (collectively, the
"Sellers") desire to sell and the Company desires to purchase, the pro rata
share of the Warrants of the Sellers in accordance with their Agreed Interests
as provided in the Participation Agreement, or 458,333 of the Warrants (the
"Sellers Warrants"), for an aggregate purchase price of $1,629,832 (the
"Purchase Price");

         WHEREAS, the Company also desires to grant Catalyst a look back right
that will protect the Purchase Price, on a per share basis, for a period of one
year from the date hereof;

         WHEREAS, the Company Related Parties will indirectly benefit from the
consummation of the Credit Facility;

         WHEREAS, in order to induce the Lenders and the Administrative Agent to
consummate the Credit Facility, the Company and the Company Related Parties have
agreed to cancel the pro rata share of the Warrants of the Company Related
Parties in accordance with their Agreed Interests (as defined in the
Participation Agreement), or 91,667 of the Warrants (the "Company Related
Parties Warrants"), and the Company has agreed to issue to Leibman, Orr, Aron
and Gaylor replacement warrants (the "Replacement Warrants") to purchase 18,333,
18,333, 36,668 and 18,333 shares of Common Stock, respectively, in the form
attached hereto as Exhibit A;

         WHEREAS, the Company has agreed to grant the Company Related Parties
certain piggy-back registration rights in connection with the Replacement
Warrants; and

         WHEREAS, in connection with the consummation of the Credit Facility,
the Company, Catalyst, SWCC, CHGC, Leibman, Orr, Aron and Gaylor desire to
terminate the Participation Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:

     1.  Termination of Agreements.  Subject to the  consummation  of the Credit
Facility and the satisfaction in full all of the indebtedness and obligations of
the Company  evidenced by the Lender  Notes,  the JTS Note and the other Subject
Documents,  the  parties  hereto  terminate  the Loan  Agreement,  the  Security
Agreement,  the Consulting Agreement,  the Registration Rights Agreement and the
Participation Agreement by mutual consent.

     2. Consulting  Agreement  Payments.  Upon the termination of the Consulting
Agreement,  the Company agrees to pay to Leibman,  Orr, Aron and Gaylor one-time
cash  payments  equal  to  $9,166.50,   $9,166.50,   $18,334.00  and  $9,166.50,
respectively.

     3.  Purchase of Warrants.  The Company  agrees to purchase and acquire from
the Sellers,  and the Sellers agree to sell, assign,  transfer and convey to the
Company,  the Sellers  Warrants for the Purchase Price. The Purchase Price shall
be  payable  to the  Sellers in cash or by wire  transfer  or other  immediately
available  funds.  The  Sellers  further  agree to  transfer  and deliver to the
Company, upon receipt by Catalyst of the Purchase Price, certificates,  properly

                                       2
<PAGE>

endorsed  in  blank  or  accompanied   by  a  properly   executed  stock  power,
representing the Sellers Warrants. The Sellers, jointly and severally, represent
and warrant (i) the Sellers Warrants are owned  beneficially or of record by the
Sellers,  (ii) the Sellers hold good,  valid and marketable title to the Sellers
Warrants,  free and clear of all liens,  charges  and  encumbrances,  (iii) each
Seller possesses full authority and legal right to sell,  transfer and assign to
the Company the entire legal and beneficial  ownership of the Sellers  Warrants,
free and clear of all liens, charges and encumbrances, and (iv) upon transfer to
the  Company by the Sellers of the Sellers  Warrants,  the Company  will own the
entire legal and beneficial  interest in the Sellers  Warrants free and clear of
all  liens,  charges  and  encumbrances,  and  subject  to no legal,  equitable,
transfer or other restrictions of any kind, except transfer restrictions imposed
by operation of applicable  securities  laws,  and any of all liens,  charges or
encumbrances imposed or created by the Company.

     4.  Cancellation  and  Issuance  of  Warrants.  The Company and the Company
Related  Parties  agree to cancel the  Company  Related  Parties  Warrants.  The
Company  Related  Parties  further  agree to transfer and deliver to the Company
certificates,  property  endorsed in blank or accompanied by a properly executed
stock power,  representing  the Company  Related Parties  Warrants.  The Company
agrees to issue and deliver to  Leibman,  Orr,  Aron and Gaylor the  Replacement
Warrants to purchase 18,333,  18,333,  36,668 and 18,333 shares of Common Stock,
respectively, in the form attached hereto as Exhibit A.

     5. Grant of  Registration  Rights.  The Company grants the Company  Related
Parties the piggy-back registration rights set forth on Exhibit B hereto.

     6. Look Back Right. In the event the Company consummates within one year of
the date hereof, the disposition, by way of a sale, business combination, merger
or other  transaction by a corporation or other business entity,  of all or part
of the Company's  outstanding  capital stock or all or substantially  all of the
Company's  assets (each such transaction  being herein called a  "Transaction"),
and the price  per share of Common  Stock  actually  received  by the  Company's
shareholders or the Company  pursuant to the terms of the Transaction is greater
than $4.00,  then, upon the consummation of the  Transaction,  the Company shall
pay to Catalyst a one-time  payment  equal to the product of (a) 458,333 and (b)
the difference between (i) the price per share of Common Stock actually received
by the  Company's  shareholders  or the  Company  pursuant  to the  terms of the
Transaction and (ii) $4.00. The Company  represents and warrants that, as of the
date hereof,  it is not presently  involved in any  discussions or  negotiations
with an underwriter  concerning the underwritten  registered  public offering of
the Common Stock.

     7. Release by Leibman, Orr, Aron and Gaylor. Leibman, Orr, Aron and Gaylor,
on behalf of themselves, their successors,  assigns, heirs, affiliates, parents,
subsidiaries, representatives, officers, directors, employees and agents, hereby
release,   acquit,  and  forever  discharge  Catalyst,   SWCC  and  CHGC,  their
successors,   assigns,  affiliates,   parents,  subsidiaries,   representatives,
officers,  directors,  employees and agents from any and all actions,  causes of
action, choses in action, claims,  demands,  rights,  damages,  costs, expenses,
compensation,  liabilities or suits of any nature whatsoever,  whether at law or
in equity, whether or not now or heretofore known, unknown, suspected,  accrued,
alleged,  or claimed,  in contract or in tort, past, present or future,  arising
out of any act, occurrence,  omission,  cause, matter, activity,  transaction or
other thing  whatsoever,  which  occurred prior to the date hereof and up to and
including the date of execution of this  Agreement,  including,  but not limited
to,  any  such  claim  or  action  arising  out of the  negotiation,  existence,
performance or non performance of the Participation Agreement.

                                       3
<PAGE>

     8. Release by Catalyst,  SWCC and CHGC. Catalyst,  SWCC and CHGC, on behalf
of themselves,  their successors,  assigns, affiliates,  parents,  subsidiaries,
representatives,  officers,  directors,  employees and agents,  hereby  release,
acquit, and forever discharge Leibman,  Orr, Aron and Gaylor,  their successors,
assigns, heirs, affiliates,  parents, subsidiaries,  representatives,  officers,
directors,  employees  and agents  from any and all  actions,  causes of action,
choses  in  action,  claims,   demands,   rights,   damages,   costs,  expenses,
compensation,  liabilities or suits of any nature whatsoever,  whether at law or
in equity, whether or not now or heretofore known, unknown, suspected,  accrued,
alleged,  or claimed,  in contract or in tort, past, present or future,  arising
out of any act, occurrence,  omission,  cause, matter, activity,  transaction or
other thing  whatsoever,  which  occurred prior to the date hereof and up to and
including the date of execution of this  Agreement,  including,  but not limited
to,  any  such  claim  or  action  arising  out of the  negotiation,  existence,
performance or non performance of the Participation Agreement.

     9. Further  Assurances.  Each party to this Agreement hereby agrees that it
will at any time and from time to time upon the  request of any other party (and
at the expense of such other party),  execute and deliver such  instruments  and
other documents (in appropriate  form for recording or filing,  as requested) as
such other party may deem  reasonably  necessary in order to fully  implement or
further evidence or give effect to the understandings  and agreements  contained
in this Agreement.

     10. Headings. The headings of sections in this Agreement have been included
for convenience only and should not be construed in interpreting this Agreement.

     11. Severability.  If any part of this Agreement is for any reason found to
be unenforceable, all other portions nevertheless remain enforceable.

     12. Successors and Assigns.  This Agreement binds and inures to the benefit
of the parties and their respective successors and assigns.

     13.  Counterparts.  This  Agreement  may  be  executed  in  any  number  of
counterparts  with the same  effect as if all  signatories  had  signed the same
document.  All counterparts must be construed together to constitute one and the
same instrument.

     14.  Governing Law. This Agreement must be construed,  and its  performance
enforced, under Texas law.

                            [Signature Pages Follow]

                                       4
<PAGE>

         IN WITNESS WHEREOF, this Agreement is duly executed by the undersigned
as of the date set forth above.

                  COMPANY:

                 Gexa Corp.

                                   By: /s/ Neil M. Leibman
                                       -----------------------------------------
                                   Name: Neil M. Leibman
                                         ---------------------------------------
                                   Title: Chief Executive Officer
                                          --------------------------------------

                  CATALYST:

                                   The Catalyst Fund, Ltd.

                                   By:      RDR Management I, Inc.,
                                            its general partner

                                   By: /s/ Ron Nixon
                                       -----------------------------------------
                                   Name: Ron Nixon
                                         ---------------------------------------
                                   Title: Vice President
                                          --------------------------------------

                    SWCC:

                                Southwest/Catalyst Capital, Ltd

                            By: SWC Management, Inc.,
                               its general partner

                                By: /s/ Ron Nixon
                                    --------------------------------------------
                                Name: Ron Nixon
                                      -----------------------------------------
                                Title: Vice President
                                       -----------------------------------------

                       CHGC:

                                      Catalyst/Hall Growth Capital, LP

                                      By:      Catalyst/Hall Growth Management
                                               Company, LLC, its general partner

                                      By: /s/ Ron Nixon
                                          --------------------------------------
                                      Name: Ron Nixon
                                            ------------------------------------
                                      Title: Vice President
                                             -----------------------------------

                                       5
<PAGE>

                                    LEIBMAN:

                                    /s/ Neil M. Leibman
                                    --------------------------------------------
                                    Neil M. Leibman

                                      ORR:

                                    /s/ Robert C. Orr
                                    --------------------------------------------
                                    Robert C. Orr

                                      ARON:

                                    /s/ Don Aron
                                    --------------------------------------------
                                    Don Aron

                                     GAYLOR:

                                   Gaylor Investment Trust Partnership

                                   By: /s/ Stuart Gaylor
                                       ----------------------------------------
                                   Name: Stuart Gaylor
                                         ---------------------------------------
                                   Title: General Partner
                                          --------------------------------------

                                       6
<PAGE>
                                    EXHIBIT A
                           FORM OF REPLACEMENT WARRANT

<PAGE>

                                    EXHIBIT B
                         PIGGY-BACK REGISTRATION RIGHTS

     1.  Piggyback  Registration  Rights.  At  any  time  prior  to  the  second
anniversary  of this  Agreement,  whenever the Company  proposes to register any
Common  Stock under the  Securities  Act of 1933,  as amended  (the  "Securities
Act"),  for its own account or for the account of a shareholder  of the Company,
other than a  registration  relating  to the  offering  or issuance of shares in
connection  with (i) employee  compensation or benefit plans or (ii) one or more
acquisition  transactions under a Registration Statement on Form S-4 or Form S-1
under  the  Securities  Act (or a  successor  to Form S-4 or Form S-1) (any such
offering or issuance being an "Exempt Offering"), the Company will give Leibman,
Orr, Aron and Gaylor (each a "Holder")  written notice of its intent to do so (a
"Registration  Notice")  at least 20 days  prior to the  filing  of the  related
registration statement with the United States Securities and Exchange Commission
(the "SEC"). Such notice shall specify the approximate date on which the Company
proposes to file such registration  statement and shall contain a statement that
the Holder is entitled to  participate  in such offering and shall set forth the
number of shares of Common Stock  underlying  the Holder's  Replacement  Warrant
(the  "Registrable  Common")  that  represents  the  best  estimate  of the lead
managing  underwriter (or if not known,  the Company) that will be available for
sale by the  holders of  Registrable  Common in the  proposed  offering.  If the
Company shall have delivered a Registration Notice, the Holder shall be entitled
to  participate  on the same terms and  conditions  as the Company in the public
offering to which the  Registration  Notice relates and to offer and sell shares
of Registrable Common therein only to the extent provided in this Section 1. The
Holder  desiring to  participate  in such  offering  shall notify the Company no
later than 10 days following receipt of the Registration Notice of the aggregate
number of shares of Registrable  Common that such Holder then desires to sell in
the public  offering.  The Holder desiring to participate in the public offering
may include shares of Registrable Common in the registration  statement relating
to such  offering,  to the extent that the  inclusion  of such shares  shall not
reduce  the  number  of shares of  Common  Stock to be  offered  and sold by the
Company to be included therein. If the lead managing underwriter selected by the
Company  for a public  offering  determines  that  marketing  factors  require a
limitation on the number of shares of Registrable  Common to be offered and sold
in such  offering,  there shall be included in the offering  only that number of
shares of Registrable  Common, if any,  requested to be included in the offering
that such lead managing  underwriter  reasonably and in good faith believes will
not jeopardize the success of the offering,  provided, however, that if the lead
managing  underwriter  determines that marketing factors require a limitation on
the number of shares of  Registrable  Common to be offered and sold as aforesaid
and so notifies the Company and the requesting Holder in writing,  the number of
shares of  Registrable  Common to be  offered  and sold by holders  desiring  to
participate in the offering, shall be allocated among such holders on a pro rata
basis based on their holdings of Registrable Common.

     2. Registration Procedures.  In connection with registrations under Section
1, and subject to the terms and conditions contained therein, the Company shall:

     (a) use its  best  efforts  to  prepare  and  file  with the SEC as soon as
reasonably practicable, a registration statement with respect to the Registrable
Common  and  use  its  commercially   reasonable  best  efforts  to  cause  such
registration to promptly become effective;

<PAGE>

     (b) prepare and file with the SEC such amendments (including post-effective
amendments)  to such  registration  statement  and  supplements  to the  related
prospectus to reflect  appropriately  the plan of distribution of the securities
registered  thereunder until the completion of the distribution  contemplated by
such registration statement or for so long thereafter as a dealer is required by
law to deliver a prospectus in connection  with the offer and sale of the shares
of Registrable Common covered by such registration  statement and/or as shall be
necessary so that neither such registration statement nor the related prospectus
shall  contain  any  untrue  statement  of a  material  fact or omit to  state a
material fact required to be stated  therein or necessary to make the statements
therein not misleading and so that such  registration  statement and the related
prospectus will otherwise comply with applicable legal requirements;

     (c) use its  commercially  reasonable  best efforts to register and qualify
the Registrable  Common covered by such registration  statement under applicable
securities  or  "Blue  Sky"  laws of such  jurisdictions  as the  holders  shall
reasonably request for the distribution of the Registrable Common;

     (d) take such other actions as are  reasonable and necessary to comply with
the requirements of the Securities Act;

     (e)   furnish   such   number  of   prospectuses   (including   preliminary
prospectuses) and documents incident thereto as the Holder from time to time may
reasonably request;

     (f) provide to the Holder requesting to include  Registrable Common in such
registration  statement  and  any  managing  underwriter  participating  in  any
distribution thereof, and to any attorney, accountant or other agent retained by
such Holder or managing  underwriter,  reasonable access to appropriate officers
and  directors  of the  Company  to ask  questions  and  to  obtain  information
reasonably requested by such Holder, managing underwriter,  attorney, accountant
or other agent in connection with such  registration  statement or any amendment
thereto;  provided,  however,  that (i) in  connection  with any such  access or
request,  any such requesting  persons shall cooperate to the extent  reasonably
practicable  to minimize any  disruption  to the operation by the Company of its
business  and  (ii)  any  records,   information  or  documents  shall  be  kept
confidential by such requesting persons, unless (A) such records, information or
documents  are in the  public  domain or  otherwise  publicly  available  or (B)
disclosure  of such  records,  information  or documents is required by court or
administrative  order or by applicable law (including,  without limitation,  the
Securities Act);

     (g) notify the Holder and the managing  underwriters  participating  in the
distribution  pursuant  to such  registration  statement  promptly  (i) when the
Company is  informed  that such  registration  statement  or any  post-effective
amendment to such registration statement becomes effective,  (ii) of any request
by the SEC for an amendment or any supplement to such registration  statement or
any  related  prospectus,  (iii) of the  issuance  by the SEC of any stop  order
suspending  the  effectiveness  of such  registration  statement or of any order
preventing or suspending the use of any related  prospectus or the initiation or
threat  of any  proceeding  for  that  purpose,  (iv) of the  suspension  of the
qualification of any shares of Registrable  Common included in such registration
statement  for  sale  in any  jurisdiction  or the  initiation  or  threat  of a
proceeding for that purpose,  (v) of any  determination  by the Company that any
event has occurred  which makes untrue any  statement of a material fact made in
such  registration  statement or any related  prospectus  or which  requires the
making of a change in such registration  statement or any, related prospectus in
order that the same will not contain any untrue  statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the  statements  therein  not  misleading,  and  (vi) of the  completion  of the
distribution  contemplated  by such  registration  statement if it relates to an
offering by the Company;

                                      B-2
<PAGE>

     (h)  in the  event  of  the  issuance  of any  stop  order  suspending  the
effectiveness  of such  registration  statement  or of any order  suspending  or
preventing the use of any related  prospectus or suspending the qualification of
any shares of Registrable  Common  included in such  registration  statement for
sale in any jurisdiction, use its commercially reasonable best efforts to obtain
its withdrawal;

     (i) otherwise use its  commercially  reasonable best efforts to comply with
all  applicable  rules and  regulations  of the SEC,  and make  available to its
security holders, as soon as reasonably practicable,  but not later than fifteen
months after the  effective  date of such  registration  statement,  an earnings
statement covering the period of at least twelve months beginning with the first
full fiscal  quarter after the effective  date of such  registration  statement,
which  earnings  statement  shall satisfy the provisions of Section 11(a) of the
Securities Act;

     (j) use  reasonable  diligence  to cause all shares of  Registrable  Common
included in such registration  statement to be listed on any securities exchange
on which the Common Stock is then listed at the initiation of the Company;

     (k) provide a transfer agent and registrar for all such Registrable  Common
not later than the effective date of such registration statement; and

     (l)  enter  into  such  customary  agreement   (including  an  underwriting
agreement in customary form) as the underwriters, if any, may reasonably request
in order to expedite or facilitate the disposition of such shares of Registrable
Common.

     3. Underwriting Agreement. In connection with each registration pursuant to
Section 1 covering an underwritten  registered public offering,  the Company and
the  participating  Holder  agree to enter  into a  written  agreement  with the
managing  underwriter  in  such  form  and  containing  such  provisions  as are
customary  in the  securities  business  for such an  arrangement  between  such
underwriter  and  companies  of  the  Company's  size  and  investment  stature,
including  provisions for  indemnification by the Company and the Selling Holder
as more fully described in Section 9.

                                      B-3
<PAGE>

     4. Rule 144  Reporting.  With a view to making  available  the  benefits of
certain rules and regulations of the SEC which may permit the sale of the shares
of Registrable Common held by the Holder to the public without registration, the
Company agrees to:

     (a) make  and  keep  public  information  available  (as  those  terms  are
understood and defined in Rule 144) at all times;

     (b) use its commercially  reasonable best efforts to file with the SEC in a
timely manner all reports and other documents  required of the Company under the
Securities  Act and  the  Securities  Exchange  Act of  1934,  as  amended  (the
"Exchange Act"), at any time that it is subject to such reporting requirements;

     (c) so long as the Holder owns any shares of Registrable Common, furnish to
the Holder  forthwith upon request a written  statement by the Company as to its
compliance  with the reporting  requirements of Rule 144, the Securities Act and
the  Exchange   Act  (at  any  time  that  it  is  subject  to  such   reporting
requirements),  a copy of the most  recent  annual  or  quarterly  report of the
Company,  and such other  reports and documents  filed in  accordance  with such
reporting  requirements as the Holder may reasonably  request in availing itself
of any  rule or  regulation  of the SEC  allowing  the  Holder  to sell any such
securities without registration; and

     (d) if required by the transfer  agent and  registrar for the Common Stock,
use  reasonable  diligence  to obtain an opinion from legal  counsel  (which may
include the General Counsel of the Company) addressed to such transfer agent and
registrar,  with respect to any sale of shares of Registrable Common pursuant to
Rule 144 (or, at the option of the Company, pay the reasonable fees and expenses
of legal counsel retained by the Holder to provide such an opinion).

     5. Market  Standoff.  In consideration of the granting to the Holder of the
registration rights pursuant to this Agreement,  Holder agrees that, for so long
as such  Holder  holds  shares  of  Registrable  Common  which are not part of a
registration  as permitted by Section 1, such Holder will not sell,  transfer or
otherwise  dispose of, including  without  limitation  through put or short sale
arrangements,  such  shares of  Registrable  Common in the 30 days  prior to the
effectiveness of any registration (other than relating to an Exempt Offering) of
Common  Stock  for  sale  to the  public  and for up to 90  days  following  the
effectiveness of such registration.

     6.  Registration  Expenses.  All expenses  incurred in connection  with any
registration,  qualification  and compliance  under this  Agreement  (including,
without limitation, all registration, filing, qualification, legal, printing and
accounting fees) shall be borne by the Company. All underwriting commissions and
discounts   applicable  to  shares  of  Registrable   Common   included  in  the
registrations  under this  Agreement  and all legal fees for  counsel  acting on
behalf  of the  holders  shall be  borne by the  holders  of the  securities  so
registered pro rata on the basis of the number of shares so registered.  Subject
to the  foregoing,  all expenses  incident to the  Company's  performance  of or
compliance with this Agreement,  including, without limitation, all filing fees,
fees and expenses of compliance  with  securities  or Blue Sky laws  (including,
without  limitation,  fees and  disbursements of counsel in connection with Blue
Sky qualifications of the Registrable Common), printing expenses,  messenger and
delivery  expenses,  internal  expenses  (including,   without  limitation,  all
salaries and expenses of the Company's  officers and employees  performing legal
or accounting duties), the fees and expenses applicable to shares of Registrable
Common  included  in  connection  with  the  listing  of  the  securities  to be
registered on each securities exchange on which similar securities issued by the
Company are then listed at the initiation of the Company, registrar and transfer
agents'  fees and fees and  disbursements  of counsel  for the  Company  and its
independent certified public accountants,  Securities Act liability insurance of
the Company and its officers and directors (if the Company elects to obtain such
insurance), the fees and expenses of any special experts retained by the Company

                                      B-4
<PAGE>

in  connection  with such  registration  and fees and expenses of other  persons
retained by the  Company  and  incurred  in  connection  with each  registration
hereunder  (but  not  including,  without  limitation,  any  underwriting  fees,
discounts or commissions  attributable  to the sale of Registrable  Common,  and
transfer taxes, if any), will be borne by the Company.

     7.  Participation in Underwritten  Registrations.  No holder of Registrable
Common may participate in any  underwritten  registration  hereunder unless such
holder (a) agrees to sell such holder's  securities on the basis provided in any
underwriting  arrangements approved by the persons entitled hereunder to approve
such arrangements and (b) completes and executes all  questionnaires,  powers of
attorney,  custody  agreement,  indemnities,  underwriting  agreement  and other
documents reasonably required under the terms of such underwriting arrangements.

     8.  Transfer of  Registration  Rights;  Additional  Grants of  Registration
Rights.  The registration  rights provided to the holders of Registrable  Common
under  Section 1 hereof may not be  transferred  to any other  person or entity,
except pursuant to the laws of descent and distribution; provided, however, that
such transferees are bound by and subject to the terms and conditions  contained
herein.  The Company may,  without the prior  consent of the Holder,  extend the
registration  rights  provided for in this  Agreement to  additional  persons or
entities  who become  holders  of Common  Stock  subsequent  to the date of this
Agreement by entering into one or more addenda to this  Agreement  with any such
stockholders, and, upon execution of any such addenda, any stockholder that is a
party thereto shall  thereafter be a "Holder" for purposes of this Agreement and
any  shares of Common  Stock  referred  to  therein  as such  shall be shares of
"Registrable Common" for purposes of this Agreement.  Nothing herein shall limit
the ability of the Company to grant to any person or entity any  registration or
similar rights in the future with respect to Common Stock or other securities of
the Company (whether pursuant to the foregoing provision or otherwise).

     9. Indemnification and Contribution.

     (a)  Indemnification  by the Company.  To the extent  permitted by law, the
Company  agrees to  indemnify  and hold  harmless the Holder who sells shares of
Registrable Common in a registered  offering pursuant to Section 1 (the "Selling
Holder"), from and against any and all losses, claims, damages,  liabilities and
expenses (including  reasonable legal expenses) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
registration  statement or prospectus  relating to the Registrable  Common or in
any amendment or supplement thereto or in any related preliminary prospectus, or
arising out of or based upon 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  such  losses,  claims,  damages,
liabilities  or  expenses  arise  out of,  or are based  upon,  any such  untrue
statement or omission or allegation thereof based upon information  furnished in
writing to the Company by such Selling Holder or on such Selling Holder's behalf
expressly  for  use  therein.   Notwithstanding  the  foregoing,  the  Company's
indemnification obligations with respect to any preliminary prospectus shall not
inure to the benefit of the Selling  Holder or  underwriter  with respect to any
loss,  claim,  damage,  liability  (or  actions in respect  thereof)  or expense
arising out of or based on any untrue  statement or alleged untrue  statement or
omission  or  alleged  omission  to state a  material  fact in such  preliminary
prospectus, in any case where (i) a copy of the prospectus used to confirm sales
of shares of  Registrable  Common was not sent or given to the person  asserting
such loss, claim, damage or liability at or prior to the written confirmation of
the sale to such  person  and (ii)  such  untrue  statement  or  alleged  untrue
statement or omission or alleged omission was corrected in such prospectus.

                                      B-5
<PAGE>

     (b) Conduct of Indemnification  Proceedings.  Promptly after receipt by the
Selling  Holder  of notice of any  claim or the  commencement  of any  action or
proceeding  brought or asserted  against such Selling Holder in respect of which
indemnity may be sought from the Company,  such Selling  Holder shall notify the
Company  in  writing  of the  claim  or  the  commencement  of  that  action  or
proceeding;  provided,  however, that the failure to so notify the Company shall
not  relieve  the  Company  from any  liability  that it may have to the Selling
Holder  otherwise  than  pursuant  to the  indemnification  provisions  of  this
Agreement.  If any such claim or action or proceeding  shall be brought  against
the Selling  Holder and such Selling Holder shall have duly notified the Company
thereof,  the  Company  shall  have the right to  assume  the  defense  thereof,
including the employment of counsel. Such Selling Holder shall have the right to
employ  separate  counsel in any such action and to  participate  in the defense
thereof,  but the fees and expenses of such  counsel  shall be at the expense of
such  Selling  Holder  unless  (i) the  Company  has agreed to pay such fees and
expenses or (ii) the named parties to any such action or proceeding include both
such  Selling  Holder and the Company,  and such Selling  Holder shall have been
advised by counsel  that there may be one or more legal  defenses  available  to
such Selling Holder which are different from or additional to those available to
the  Company,  in which case,  if such  Selling  Holder  notifies the Company in
writing that it elects to employ separate counsel at the expense of the Company,
the  Company  shall not have the right to assume the  defense of such  action or
proceeding on behalf of such Selling Holder. The Company shall not be liable for
any settlement of any such action or proceeding  effected  without the Company's
written consent.

     (c) Indemnification by the Holder of Registrable Common. In connection with
any  registration  in which the Selling  Holder is  participating,  such Selling
Holder will furnish to the Company in writing such information and affidavits as
the  Company  reasonably  requests  for  use  in  connection  with  any  related
registration  statement  or  prospectus.  To the extent  permitted  by law,  the
Selling Holder agrees to indemnify and hold harmless the Company,  its directors
and  officers  who  sign  the  registration  statement  relating  to  shares  of
Registrable  Common offered by such Selling Holder and each person,  if any, who
controls the Company  within the meaning of either  Section 15 of the Securities
Act or  Section  20 of the  Exchange  Act to the same  extent  as the  foregoing
indemnity  from the Company to such  Selling  Holder,  but only with  respect to
information  concerning such Selling Holder furnished in writing by such Selling
Holder or on such Selling  Holder's behalf expressly for use in any registration
statement or prospectus relating to shares of Registrable Common offered by such
Selling  Holder,  or  any  amendment  or  supplement  thereto,  or  any  related
preliminary  prospectus.  In case any  action  or  proceeding  shall be  brought
against  the  Company or its  directors  or  officers,  or any such  controlling
person, in respect of which indemnity may be sought against such Selling Holder,
such Selling  Holder shall have the rights and duties given to the Company,  and
the Company or its directors or officers or such controlling  persons shall have
the rights and duties given to such Selling Holder, by the preceding  paragraph.

                                      B-6
<PAGE>

The Selling  Holder also agrees to indemnify and hold harmless any  underwriters
of the  Registrable  Common,  their  partners,  officers and  directors and each
person who controls such  underwriters  (within the meaning of either Section 15
of the  Securities Act or Section 20 of the Exchange Act) on  substantially  the
same  basis  as that of the  indemnification  of the  Company  provided  in this
Section 9(c). Notwithstanding anything to the contrary herein, in no event shall
the amount paid or payable by the Selling  Holder under this Section 9(c) exceed
the amount of proceeds  received by such Selling Holder from the offering of the
Registrable Common.

     (d) Contribution.  If the indemnification provided for in this Section 9 is
unavailable to any indemnified party in respect of any losses, claims,  damages,
liabilities or expenses  referred to herein,  then each  indemnifying  party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or  payable  by such  indemnified  party as a  result  of such  losses,  claims,
damages,  liabilities  and  expenses in such  proportion  as is  appropriate  to
reflect the relative fault of the indemnifying party and the indemnified parties
in connection  with the actions that 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 or omission
or alleged omission to state a material fact relates to information  supplied by
such indemnified party or indemnified  parties and the parties' relative intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
action.  The Company and the Selling  Holder agree that it would not be just and
equitable if  contribution  pursuant to this Section 9(d) were determined by pro
rata  allocation or by any other method of allocation that does not take account
of the  equitable  considerations  referred to in this Section  9(d).  No person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the Securities  Act) shall be entitled to  contribution  from any person who was
not guilty of such fraudulent misrepresentation. If indemnification is available
under this Section 9, the indemnifying  parties shall indemnify each indemnified
party to the full extent  provided in Sections  9(a) and 9(c) without  regard to
the relative fault of said indemnifying  party or indemnified party or any other
equitable consideration provided for in this Section 9(d).

                                      B-7Prepared by R.R. Donnelley Financial -- Individual Non-Statutory Stock Option Agreement

 Exhibit 10.29 
  
 XENOGEN CORPORATION 
  
 STAND-ALONE STOCK OPTION AGREEMENT 
  

	I.	NOTICE OF STOCK OPTION GRANT 

  
 William A. Albright, Jr. 
  
 You have been granted a Nonstatutory Stock Option to purchase Common Stock of the Company, subject to the terms and conditions of this Agreement, as
follows: 
  

			
	 Date of Grant
	  	July 13, 2004
		
	 Vesting Commencement Date
	  	July 1, 2004
		
	 Exercise Price per Share
	  	$6.50
		
	 Total Number of Shares Granted
	  	200,000
		
	 Total Exercise Price
	  	$1,300,000.00
		
	 Term/Expiration Date:
	  	July 13, 2014

  
 Vesting
Schedule: 
  
 This Option shall vest and may be exercised, in
whole or in part, in accordance with the following schedule: 
  
 25% of the Shares subject to the Option shall vest one year after the Vesting Commencement Date, and 1/48th of the Shares subject to the Option shall vest each month thereafter, subject to Optionee continuing to be a Service Provider
through each such date. 
  
 Termination Period 

 
 This Option will be exercisable for thirty (30) days after Optionee
ceases to be a Service Provider to the extent it has vested as of such date (in accordance with Section 8 of this Agreement); provided, however, that if Optionee ceases to be a Service Provider as the result of his or her death or Disability, this
Option may be exercised for twelve (12) months after Optionee ceases to be a Service Provider to the extent it has vested as of such date (in accordance with Sections 9 and 10 of this Agreement). In no event may Optionee exercise this Option after
the Term/Expiration Date as provided above. 
  

	II.	AGREEMENT 

  
 1. Definitions. As used herein, the following definitions shall apply: 
  
 (a) “Agreement” means this stock option agreement between the Company and Optionee
evidencing the terms and conditions of this Option. 
  
 (b) “Applicable Laws” means the requirements relating to the administration of stock options under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which
the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction that may apply to this Option. 
  
 (c) “Board” means the Board of Directors of the Company or any committee of the Board that has been designated by the
Board to administer this Agreement. 
  
 (d)
“Cause” means (1) a Service Provider’s failure to perform (other than due to mental or physical disability or death) the duties of his or her position (as they may exist from time to time) to the reasonable satisfaction of the
Company (or the successor corporation) after receipt of a written warning and failure to cure any such non-performance within ten business days of receipt of such written warning; (2) any act of dishonesty taken in connection with a Service
Provider’s responsibilities as a service provider that is intended to result in such Service Provider’s personal enrichment; (3) a Service Provider’s conviction or plea of no contest to a crime that negatively reflects on such Service
Provider’s fitness to perform his or her duties or harms the Company’s (or the successor corporation’s) reputation or business; (4) willful misconduct by a Service Provider that is injurious to the Company’s (or the successor
corporation’s) reputation or business; or (5) a Service Provider’s willful violation of a material Company employment policy. For purposes of this definition, an act or failure to act will be deemed “willful” if effected not in
good faith or without reasonable belief that such action or failure to act was in the best interests of the Company (or the successor corporation). 
  
 (e) “Change in Control” means the occurrence of any of the following events: 
  
 (1) Any “person” (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power
represented by the Company’s then outstanding voting securities; or 
  
 (2) The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or 
  
 (3) The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation. 
  
 Notwithstanding the foregoing, a transaction shall not constitute a Change in
Control if: (i) its sole purpose is to change the state of the Company’s incorporation; (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s
securities immediately before such transaction; (iii) it constitutes the 

  

 -2- 

 
Company’s initial public offering of its equity securities; or (iv) it is a transaction effected primarily for the purpose of financing the Company with
cash (as determined by the Board in its discretion and without regard to whether such transaction is effectuated by a merger, equity financing or otherwise). 
  

(f) “Code” means the Internal Revenue Code of 1986, as amended. 
  
 (g) “Common Stock” means the common stock
of the Company. 
  
 (h)
“Company” means Xenogen Corporation, a Delaware corporation. 
  
 (i) “Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity and is compensated for such services. 
  
 (j) “Director” means a member of the Board.

  
 (k) “Disability” means total
and permanent disability as defined in Section 22(e)(3) of the Code. 
  
 (l) “Employee” means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. An individual shall not cease to be an Employee in the case of
(i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. Neither service as a Director nor payment of a director’s fee by the
Company shall be sufficient to constitute “employment” by the Company. 
  
 (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
  
 (n) “Fair Market Value” means, as of any
date, the value of Common Stock determined as follows: 
  
 (1) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall
be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable; 
  
 (2)
If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day
prior to the time of determination; or 
  
 (3) In
the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Board. 
  

 -3- 

 (o) “Nonstatutory Stock Option” means an Option not intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. 
  
 (p) “Notice of Grant” means a written notice, in Part I of this Agreement, evidencing certain the terms and conditions of
this Option grant. The Notice of Grant is part of the Option Agreement. 
  
 (q) “Option” means this stock option. 
  
 (r) “Optioned Stock” means the Common Stock subject to this Option. 
  
 (s) “Optionee” means the person named in
the Notice of Grant or such person’s successor. 
  
 (t) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code. 
  
 (u) “Securities Act” means the Securities Act of 1933, as amended. 
  
 (v) “Service Provider” means an Employee,
Director or Consultant. 
  
 (w)
“Share” means a share of the Common Stock, as adjusted in accordance with Section 11 of this Agreement. 
  
 (x) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing, as defined in Section
424(f) of the Code. 
  
 2. Grant of Option. The Board
hereby grants to the Optionee named in the Notice of Grant attached as Part I of this Agreement the Option to purchase the number of Shares, as set forth in the Notice of Grant, at the exercise price per share set forth in the Notice of Grant (the
“Exercise Price”), subject to the terms and conditions of this Agreement. 
  
 3. Exercise of Option. 
  
 (a) Right to Exercise. This Option is exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and the applicable provisions of this Agreement. 
  
 (b) Method of Exercise. This Option is exercisable by
delivery of an exercise notice, in the form attached as Exhibit A (the “Exercise Notice”), which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the
“Exercised Shares”), and such other representations and agreements as may be required by the Company. The Exercise Notice shall be completed by the Optionee and delivered to the Company. The Exercise Notice shall be accompanied by payment
of the aggregate Exercise Price as to all Exercised Shares together with any required withholding taxes. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price and applicable withholding taxes. 
  

 -4- 

 (c) Legal Compliance. No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the Exercised Shares shall be considered transferred to the Optionee on the date the Option is exercised with respect to such
Exercised Shares. 
  
 4. Optionee’s Representations.
In the event the Shares have not been registered under the Securities Act at the time this Option is exercised, the Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the
Company his or her Investment Representation Statement in the form attached hereto as Exhibit B. 
  
 5. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the
Optionee: 
  
 (a) cash or check; 
  
 (b) consideration received by the Company under a cashless
exercise program implemented by the Company; or 
  
 (c) if permitted by the Board, surrender of other Shares, provided Shares acquired directly or indirectly from the Company, (i) have been owned by the Optionee and not subject to substantial risk of forfeiture for more than six (6) months
on the date of surrender, and (ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised Shares. 
  
 6. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by the Optionee. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. 
  
 7. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in accordance with the terms of this Agreement. 
  
 8. Termination of Relationship as a Service Provider. If the Optionee ceases to be a Service Provider (other than for death or Disability), this
Option may be exercised for a period of thirty (30) days after the date of such termination (but in no event later than the expiration date of this Option as set forth in the Notice of Grant) to the extent that the Option is vested on the date of
such termination. To the extent that the Optionee does not exercise this Option within the time specified herein, the Option shall terminate. 
  
 9. Disability of Optionee. If the Optionee ceases to be a Service Provider as a result of the Optionee’s Disability, this Option may be
exercised for a period of twelve (12) months after the date of such termination (but in no event later than the expiration date of this Option as set forth in the Notice of Grant) to the extent that the Option is vested on the date of such
termination. To the extent that Optionee does not exercise this Option within the time specified herein, the Option shall terminate. 
  

 -5- 

 10. Death of Optionee. If the Optionee dies while a Service Provider, the Option may be exercised
at any time within twelve (12) months following the date of death (but in no event later than the expiration date of this Option as set forth in the Notice of Grant), by the Optionee’s estate or by a person who acquired the right to exercise
the Option by bequest or inheritance, but only to the extent that the Optionee was entitled to exercise the Option at the date of death. If, after death, the Optionee’s estate or a person who acquired the right to exercise the Option by bequest
or inheritance does not exercise the Option within the time specified herein, the Option shall terminate. 
  
 11. Adjustments , Dissolution, Merger or Asset Sale. 
  
 (a) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or
other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares occurs, the Board, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under this Option, may (in its sole discretion) adjust the number,
class, and price of Shares covered by the Option. 
  
 (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Board shall notify Optionee as soon as practicable prior to the effective date of such proposed transaction. The Board in its
discretion may provide for the Optionee to have the right to exercise his or her Option until such period of time as the Board may determine prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the
Option would not otherwise be exercisable. To the extent it has not been previously exercised, the Option will terminate immediately prior to the consummation of such proposed 
  
 (c) Merger or Change in Control. In the event of a merger of the Company with or into another
corporation, or a Change in Control, this Option may be assumed or an equivalent option may be substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to
assume or substitute for this Option, then in the sole discretion of the Board, (i) the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be
vested or exercisable, and/or (ii) the Optionee will become entitled to receive an amount of cash equal to the quotient of (A) aggregate Fair Market Value of the unexercised Optioned Stock on the date of the merger or Change in Control (whether or
not vested) less the aggregate Exercise Price per Share of the unexercised Optioned Stock on the date thereof, divided by (B) the per share Fair Market Value of a Share on the date of the merger or Change in Control. If the Option becomes fully
vested and exercisable in lieu of assumption or substitution in the event of a merger or Change in Control, the Board shall notify the Optionee in writing or electronically that the Option shall be fully exercisable for a period of time determined
by the Board, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or Change in Control, the Option confers the right to purchase or
receive, for each Share of Optioned Stock subject to this Option immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of
Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding 

  

 -6- 

 
Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or
its Parent, the Board may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by holders of Stock in the merger or Change in Control. 
  
 (d) Termination Following Change of Control. If within twelve (12) months of a Change in Control the Optionee is terminated by the
Company for other than Cause, death or Disability, then this Option will immediately vest and become exercisable as to 100% of the Shares subject to this Option. 
  
 12. Lock-Up Period. Optionee hereby agrees that Optionee shall not offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Common Stock (or other securities) of the Company or
enter into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Common Stock (or other securities) of the Company held by Optionee (other than those included in
the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one hundred eighty (180) days following the effective date of a registration statement of the
Company filed under the Securities Act. 
  
 Optionee agrees to
execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. The Company may impose stop-transfer
instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one hundred eighty (180) day period. Optionee agrees that any transferee of any Option shall be bound by this
Section. 
  
 13. Registration. The Company intends to
register on Form S-8 or a similar form that may be promulgated in the future the shares of Common Stock underlying this Option (the “Registrable Securities”) in connection with an initial public offering of the Company’s Common Stock.
In the event the Registrable Securities are not registered, the Optionee shall have the same registration rights as those set forth in Section 2.6 of that certain Investor Rights Agreement, dated June 8, 2003, between the Company and the individuals
and entities listed on Exhibit A attached thereto. 
  
 14.
Notices. Any notice to be given to the Company hereunder shall be in writing and shall be addressed to the Company. at its then current principal executive office or to such other address as the Company may hereafter designate to the Optionee
by notice as provided in this Section. Any notice to be given to the Optionee hereunder shall be addressed to the Optionee at the address set forth beneath his signature hereto, or at such other address as the Optionee may hereafter designate to the
Company by notice as provided herein. A notice shall be deemed to have been duly given when personally delivered or mailed by registered or certified mail to the party entitled to receive it. 
  
 15. Withholding Taxes. Optionee agrees to make appropriate
arrangements with the Company (or the Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all 

  

 -7- 

 
Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. Optionee acknowledges and agrees that
the Company may refuse to honor the exercise and refuse to deliver the Shares if such withholding amounts are not delivered at the time of exercise. 
  
 16. Entire Agreement; Governing Law. This Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the
Company and Optionee. This agreement is governed by the internal substantive laws, but not the choice of law rules, of California. 
  
 17. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE
WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE. 
  
 By Optionee’s signature and the signature of the Company’s representative below, Optionee and the Company agree that this Option is granted
under and governed by the terms and conditions of this Agreement. Optionee has reviewed this Agreement in its entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of
this Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions relating to this Agreement. Optionee further agrees to notify the Company upon any change in the
residence address indicated below. 
  

					
	 OPTIONEE
	 	 	 	 XENOGEN CORPORATION

			
	  

	 	 	 	  

	 Signature
	 	 	 	 By

			
	  

	 	 	 	  

	 Print Name
	 	 	 	 Title

			
	  

	 	 	 	  
	 Residence Address
	 	 	 	 
			
	  

	 	 	 	  
			
	  

	 	 	 	  

  

 -8- 

 EXHIBIT A 
  
 XENOGEN CORPORATION 
  
 EXERCISE NOTICE 
  
 Xenogen Corporation 
 860 Atlantic Avenue 
 Alameda, CA 94501 
  

	Attention:	Corporate Secretary 

  
 1. Exercise of Option. Effective as of today, ________________, 20__, the undersigned (“Optionee”) hereby elects to exercise
______________ shares (the “Shares”) of the Common Stock of Xenogen Corporation (the “Company”) under and pursuant to the Stand-Alone Stock Option Agreement dated July 13, 2004, (the “Option Agreement”). The purchase
price for the Shares shall be $_______, as required by the Option Agreement. 
  
 2. Delivery of Payment. Optionee herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding taxes due in connection with the
exercise of the Option. 
  
 3. Representations of Optionee.
Optionee acknowledges that Optionee has received, read and understood the Option Agreement and agrees to abide by and be bound by their terms and conditions. 
  
 4. Rights as Stockholder. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date of issuance, except as provided in Section 11 of the Option Agreement. 

 
 5. Company’s Right of First Refusal. Before any Shares held by
Optionee or any transferee (either being sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this Section (the “Right of First Refusal”). 
  
 (a) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”)
stating: (i) the Holder’s bona fide intention to sell or otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the number of Shares to be transferred to each
Proposed Transferee; and (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the 

  

 
Shares (the “Offered Price”), and the Holder shall offer the Shares at the Offered Price to the Company or its assignee(s). 
  
 (b) Exercise of Right of First Refusal. At any time
within thirty (30) days after receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not less than all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with subsection (c) below. 
  
 (c) Purchase Price. The purchase price (“Purchase Price”) for the Shares purchased by the Company or its assignee(s)
under this Section shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board in good faith. 
  
 (d) Payment. Payment of the Purchase Price shall be
made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within thirty (30) days after receipt of the Notice or in the manner and at the times set forth in the Notice. 
  
 (e) Holder’s Right to Transfer. If all of the Shares proposed in the Notice to be transferred to a given Proposed Transferee
are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other
transfer is consummated within 120 days after the date of the Notice, that any such sale or other transfer is effected in accordance with any applicable securities laws and that the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not transferred to the Proposed Transferee within such period, a new Notice shall be given to the Company, and the
Company and/or its assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred. 
  
 (f) Exception for Certain Family Transfers. Anything to the contrary contained in this Section notwithstanding, the transfer of any
or all of the Shares during the Optionee’s lifetime or on the Optionee’s death by will or intestacy to the Optionee’s immediate family or a trust for the benefit of the Optionee’s immediate family shall be exempt from the
provisions of this Section. “Immediate Family” as used herein shall mean spouse, lineal descendant or antecedent, father, mother, brother or sister. In such case, the transferee or other recipient shall receive and hold the Shares so
transferred subject to the provisions of this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section. 
  
 (g) Termination of Right of First Refusal. The Right of First Refusal shall terminate as to any
Shares upon the earlier of (i) first sale of Common Stock of the Company to the general public, or (ii) a Change in Control in which the successor corporation has equity securities that are publicly traded. 
  

 -2- 

 6. Tax Consultation. Optionee understands that Optionee may suffer adverse tax consequences as a
result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not
relying on the Company for any tax advice. 
  
 7. Restrictive
Legends and Stop-Transfer Orders. 
  
 (a)
Legends. Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other
legends that may be required by the Company or by state or federal securities laws: 
  
 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH. 
  
 THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF
THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES. 
  
 THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR A PERIOD NOT TO EXCEED 180 DAYS FOLLOWING THE EFFECTIVE DATE OF
UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY’S SECURITIES AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT THE CONSENT OF THE COMPANY OR THE MANAGING UNDERWRITER. 
  
 (b) Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with the restrictions
referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own
records. 
  
 (c) Refusal to Transfer. The
Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice or (ii) to treat as owner of such Shares or to accord the right to vote
or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred. 
  

 -3- 

 8. Successors and Assigns. The Company may assign any of its rights under this Exercise Notice to
single or multiple assignees, and this Exercise Notice shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice shall be binding upon Optionee and his or
her heirs, executors, administrators, successors and assigns. 
  
 9. Interpretation. Any dispute regarding the interpretation of this Exercise Notice shall be submitted by Optionee or by the Company forthwith to the Board, which shall review such dispute at its next regular meeting. The resolution
of such a dispute by the Board shall be final and binding on all parties. 
  
 10. Entire Agreement; Governing Law. The Option Agreement is incorporated herein by reference. This Agreement, and the Option Agreement constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to Optionee’s interest except by means of a writing
signed by the Company and Optionee. This agreement is governed by the internal substantive laws, but not the choice of law rules, of California. 
  

					
	 Submitted by:
	 	 	 	 Accepted by:

			
	 OPTIONEE
	 	 	 	 XENOGEN CORPORATION

			
	
	 	 	 	

	 Signature
	 	 	 	 
			
	
	 	 	 	

	 Print Name
	 	 	 	 
			
	
	 	 	 	

	 Address
	 	 	 	 Address

			
	
	 	 	 	

			
	
	 	 	 	

			
	  	 	 	 	 Date Received:                                   
                                      
 

  

 -4- 

 EXHIBIT B 
  
 INVESTMENT REPRESENTATION STATEMENT 
  

			
		
	 OPTIONEE:
	 	 
		
	 COMPANY:
	 	 XENOGEN CORPORATION

		
	 SECURITY:
	 	 COMMON STOCK

		
	 AMOUNT:
	 	 
		
	 DATE:
	 	 

  
 In connection with the
purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following: 
  
 (a) Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any
“distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”). 
  
 (b) Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and
have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Optionee’s representation was predicated solely upon a present intention to hold these Securities for
the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. Optionee further
understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Optionee further acknowledges and understands that the Company is under
no obligation to register the Securities. Optionee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not
required in the opinion of counsel satisfactory to the Company, and any other legend required under applicable state securities laws. 
  
 (c) Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance,
permit limited public resale of “restricted 

  

 
securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule
701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the
satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined
under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Securities being sold during any three month period not exceeding the limitations
specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable. 
  
 In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in
certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate
of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above. 
  
 (d) Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons
and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event. 
  

			
	 Signature of Optionee:

	
	 
		
	 Date:
	 	 

  

 -2-

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