10.4 Registration Rights Agreement


    Exhibit
      10.4 

     

    REGISTRATION
      RIGHTS AGREEMENT

     

    THIS
      REGISTRATION RIGHTS AGREEMENT
      (this
“Agreement”),
      dated
      as of March _____, 2007, by and among NS8
      CORPORATION, INC.,
      a
      Delaware corporation (the “Company”),
      and
      the undersigned Buyers listed on Schedule I attached hereto (each, a
“Buyer”
and
      collectively, the “Buyers”).

     

    WHEREAS:

     

    A. In
      connection with the Securities Purchase Agreement by and among the parties
      hereto of even date herewith (the “Securities
      Purchase Agreement”),
      the
      Company has agreed, upon the terms and subject to the conditions of the
      Securities Purchase Agreement, to issue and sell to the Buyers secured
      convertible debentures (the “Convertible
      Debentures”)
      which
      shall be convertible into shares of the Company’s common stock, par value
      $0.0001 per share (the “Common
      Stock,”
as
      converted, the “Conversion
      Shares”)
      in
      accordance with the terms of the Convertible Debentures. Capitalized terms
      not
      defined herein shall have the meaning ascribed to them in the Securities
      Purchase Agreement.

     

    B. To
      induce
      the Buyers to execute and deliver the Securities Purchase Agreement, the Company
      has agreed to provide certain registration rights under the Securities Act
      of
      1933, as amended, and the rules and regulations thereunder, or any similar
      successor statute (collectively, the “Securities
      Act”),
      and
      applicable state securities laws.

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and the Buyers hereby agree as
      follows:

     

    1.  DEFINITIONS.

     

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

     

    (a)  “Effectiveness
      Deadline”
means,
      with respect to the initial Registration Statement required to be filed
      hereunder, the 90th calendar day following the date filed and, with respect
      to
      any additional Registration Statements which may be required pursuant to Section
      3(c), the 90th calendar day following the date on which the Company files such
      additional Registration Statement is required hereunder; provided, however,
      in
      the event the Company is notified by the Commission that one of the above
      Registration Statements will not be reviewed or is no longer subject to further
      review and comments, the Effectiveness Date as to such Registration Statement
      shall be the fifth Trading Day following the date on which the Company is so
      notified if such date precedes the dates required above.

     

    (b)  “Filing
      Deadline”
means,
      with respect to the initial Registration Statement required hereunder, the
      30th
      calendar day following the date the Buyer delivers a written notice requesting
      the Company to file such Registration Statement, with respect to any additional
      Registration Statements which may be required pursuant to Section 3(c), the
      30th
      day following the date on which the Company first knows, or reasonably should
      have known that such additional Registration Statement is required
      hereunder.

     

    (c)  “Person”
means
      a
      corporation, a limited liability company, an association, a partnership, an
      organization, a business, an individual, a governmental or political subdivision
      thereof or a governmental agency.

     

    (d)  “Prospectus”
means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by a Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (e)  “Registrable
      Securities”
means
      all of (i) the Conversion Shares issuable upon conversion of the Convertible
      Debentures, (ii) any additional shares issuable in connection with any
      anti-dilution provisions in the Convertible Debentures (without giving effect
      to
      any limitations on exercise set forth in the Convertible Debentures) (iii)
      any
      shares of Common Stock issued or issuable with respect to the Conversion Shares,
      the Convertible Debentures, as a result of any stock split, dividend or other
      distribution, recapitalization or similar event or otherwise, without regard
      to
      any limitations on the conversion of the Convertible Debentures; and (iv) any
      shares acquired or potentially acquired pursuant to the Warrant issued by the
      Company to Cornell Capital Partners, L.P., dated March 30, 2007 (the
“Warrant,”
or
      “Warrants,”
and
      the
      shares into which the Warrant are exercisable, the “Warrant
      Shares.”)

     

    (f)  “Registration
      Statement”
means
      the registration statements required to be filed hereunder and any additional
      registration statements contemplated by Section 3(c), including (in each case)
      the Prospectus, amendments and supplements to such registration statement or
      Prospectus, including pre- and post-effective amendments, all exhibits thereto,
      and all material incorporated by reference or deemed to be incorporated by
      reference in such registration statement.

     

    (g)  “Required
      Registration Amount”
means
      (i) 300% (or such lesser amount as the SEC may permit as evidenced in comments
      received to a filed Registration Statement) of the number of Conversion Shares
      issued and issuable pursuant to the Convertible Debentures as of the trading
      day
      immediately preceding the applicable date of determination (without regard
      to
      any limitations on conversion of the Convertible Debentures).

     

    (h)  “Rule
      415”
means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same purpose and
      effect as such Rule.

     

    2.  REGISTRATION.

     

    (a)  On
      or
      prior to each Filing Deadline, the Company shall prepare and file with the
      SEC a
      Registration Statement on Form S-1 or SB-2 (or, if the Company is then eligible,
      on Form S-3) covering the resale of all of the Registrable Securities. The
      Registration Statement prepared pursuant hereto shall register for resale at
      least the number of shares of Common Stock equal to the Required Registration
      Amount as of date the Registration Statement is initially filed with the SEC.
      The Registration Statement shall contain the “Selling
      Stockholders”
and
      “Plan
      of Distribution”
      sections in substantially the form attached hereto as Exhibit
      A
      and
      contain all the required disclosures set forth on Exhibit
      B.
      The
      Company shall use its best efforts to have the Registration Statement declared
      effective by the SEC as soon as practicable, but in no event later than the
      Effectiveness Deadline. By 9:30 am on the date following the date of
      effectiveness, the Company shall file with the SEC in accordance with Rule
      424
      under the 1933 Act the final Prospectus to be used in connection with sales
      pursuant to such Registration Statement. The Company shall cause the
      Registration Statement to remain effective until all of the Registrable
      Securities have been sold or may be sold without volume restrictions pursuant
      to
      Rule 144(k), as determined by the counsel to the Company pursuant to a written
      opinion letter to such effect, addressed and acceptable to the Company’s
      transfer agent and the affected Holders (“Registration
      Period”).
      Prior
      to the filing of the Registration Statement with the SEC, the Company shall
      furnish a copy of the Initial Registration Statement to the Buyers for their
      review and comment. The Buyers shall furnish comments on the Initial
      Registration Statement to the Company within twenty-four (24) hours of the
      receipt thereof from the Company.

     

    (b)  Failure
      to File or Obtain Effectiveness of the Registration Statement.
      If: (i)
      a Registration Statement is not filed on or prior to its Filing Date (if the
      Company files a Registration Statement without affording the Holders the
      opportunity to review and comment on the same as required by Section 3(a),
      the
      Company shall not be deemed to have satisfied this clause (i)), or (ii) the
      Company fails to file with the SEC a request for acceleration in accordance
      with
      Rule 461 promulgated under the Securities Act, within five Trading Days of
      the
      date that the Company is notified (orally or in writing, whichever is earlier)
      by the SEC that a Registration Statement will not be “reviewed,” or not subject
      to further review, or (iii) a Registration Statement filed or required to be
      filed hereunder is not declared effective by the SEC by its Effectiveness
      Deadline, or (iv) after the effectiveness, a Registration Statement ceases
      for
      any reason to remain continuously effective as to all Registrable Securities
      for
      which it is required to be effective, or the Holders are otherwise not permitted
      to utilize the Prospectus therein to resell such Registrable Securities for
      more
      than 30 consecutive calendar days or more than an aggregate of 40 calendar
      days
      during any 12-month period (which need not be consecutive calendar days) (any
      such failure or breach being referred to as an “Event”),
      then
      in addition to any other rights the holders of the Convertible Debentures may
      have hereunder or under applicable law, on each such Event date and on each
      monthly anniversary of each such Event date (if the applicable Event shall
      not
      have been cured by such date) until the applicable Event is cured, the Company
      shall pay to each holder of Convertible Debentures an amount in cash, as partial
      liquidated damages (“Liquidated
      Damages”)
      and
      not as a penalty, equal to 2.0% of the aggregate purchase price paid by such
      holder pursuant to the Securities Purchase Agreement for any Convertible
      Debentures then held by such holder. The parties agree that (1) the Company
      shall not be liable for Liquidated Damages under this Agreement with respect
      to
      any Warrants or Warrant Shares and (2) the maximum aggregate Liquidated Damages
      payable to a holder of Convertible Debentures under this Agreement shall be
      fifteen percent (15%) of the aggregate Purchase Price paid by such holder
      pursuant to the Securities Purchase Agreement. The partial Liquidated Damages
      pursuant to the terms hereof shall apply on a daily pro-rata basis for any
      portion of a month prior to the cure of an Event.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)  Liquidated
      Damages.
      The
      Company and the Buyer hereto acknowledge and agree that the sums payable under
      subsection 2(b) above shall constitute liquidated damages and not penalties
      and
      are in addition to all other rights of the Buyer, including the right to call
      a
      default. The parties further acknowledge that (i) the amount of loss or damages
      likely to be incurred is incapable or is difficult to precisely estimate, (ii)
      the amounts specified in such subsections bear a reasonable relationship to,
      and
      are not plainly or grossly disproportionate to, the probable loss likely to
      be
      incurred in connection with any failure by the Company to obtain or maintain
      the
      effectiveness of a Registration Statement, (iii) one of the reasons for the
      Company and the Buyer reaching an agreement as to such amounts was the
      uncertainty and cost of litigation regarding the question of actual damages,
      and
      (iv) the Company and the Buyer are sophisticated business parties and have
      been
      represented by sophisticated and able legal counsel and negotiated this
      Agreement at arm’s length. 

     

    3.  RELATED
      OBLIGATIONS.

     

    (a)  The
      Company shall, not less than three (3) Trading Days prior to the filing of
      each
      Registration Statement and not less than one (1) Trading Day prior to the filing
      of any related amendments and supplements to all Registration Statements (except
      for annual reports on Form 10-K or Form 10-KSB), furnish to each Buyer copies
      of
      all such documents proposed to be filed, which documents (other than those
      incorporated or deemed to be incorporated by reference) will be subject to
      the
      reasonable and prompt review of such Buyers, The Company shall not file a
      Registration Statement or any such Prospectus or any amendments or supplements
      thereto to which the Buyers shall reasonably object in good faith; provided
      that,
      the Company is notified of such objection in writing no later than two (2)
      Trading Days after the Buyers have been so furnished copies of a Registration
      Statement.

     

    (b)  The
      Company shall (i) prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to a Registration Statement and
      the
      Prospectus used in connection with such Registration Statement, which prospectus
      is to be filed pursuant to Rule 424 promulgated under the Securities Act, as
      may
      be necessary to keep such Registration Statement effective at all times during
      the Registration Period, and prepare and file with the SEC such additional
      Registration Statements in order to register for resale under the Securities
      Act
      all of the Registrable Securities; (ii) cause the related Prospectus to be
      amended or supplemented by any required Prospectus supplement (subject to the
      terms of this Agreement), and as so supplemented or amended to be filed pursuant
      to Rule 424; (iii) respond as promptly as reasonably possible to any comments
      received from the SEC with respect to a Registration Statement or any amendment
      thereto and as promptly as reasonably possible provide the Buyers true and
      complete copies of all correspondence from and to the SEC relating to a
      Registration Statement (provided that the Company may excise any information
      contained therein which would constitute material non-public information as
      to
      any Buyer which has not executed a confidentiality agreement with the Company);
      and (iv) comply with the provisions of the Securities Act with respect to the
      disposition of all Registrable Securities of the Company covered by such
      Registration Statement until such time as all of such Registrable Securities
      shall have been disposed of in accordance with the intended methods of
      disposition by the seller or sellers thereof as set forth in such Registration
      Statement. In the case of amendments and supplements to a Registration Statement
      which are required to be filed pursuant to this Agreement (including pursuant
      to
      this Section 3(b)) by reason of the Company’s filing a report on Form 10-KSB,
      Form 10-QSB or Form 8-K or any analogous report under the Securities Exchange
      Act of 1934, as amended (the “Exchange
      Act”),
      the
      Company shall incorporate such report by reference into the Registration
      Statement, if applicable, or shall file such amendments or supplements with
      the
      SEC on the same day on which the Exchange Act report is filed which created
      the
      requirement for the Company to amend or supplement the Registration Statement.
      

     

    (c)  If
      during
      the Registration Period, the number of Registrable Securities at any time
      exceeds the number of shares of Common Stock then registered in a Registration
      Statement, then the Company shall file as soon as reasonably practicable but
      in
      any case prior to the applicable Filing Deadline, an additional Registration
      Statement covering the resale by the Buyers of not less than 300% of the number
      of such Registrable Securities.

     

    (d)  The
      Company shall furnish to each Buyer whose Registrable Securities are included
      in
      any Registration Statement, without charge, (i) at least one (1) copy of such
      Registration Statement as declared effective by the SEC and any amendment(s)
      thereto, including financial statements and schedules, all documents
      incorporated therein by reference, all exhibits and each preliminary prospectus,
      (ii) ten (10) copies of the final prospectus included in such Registration
      Statement and all amendments and supplements thereto (or such other number
      of
      copies as such Buyer may reasonably request) and (iii) such other documents
      as
      such Buyer may reasonably request from time to time in order to facilitate
      the
      disposition of the Registrable Securities owned by such Buyer.

     

    (e)  The
      Company shall use its best efforts to (i) register and qualify the Registrable
      Securities covered by a Registration Statement under such other securities
      or
“blue sky” laws of such jurisdictions in the United States as any Buyer
      reasonably requests, (ii) prepare and file in those jurisdictions, such
      amendments (including post-effective amendments) and supplements to such
      registrations and qualifications as may be necessary to maintain the
      effectiveness thereof during the Registration Period, (iii) take such other
      actions as may be necessary to maintain such registrations and qualifications
      in
      effect at all times during the Registration Period, and (iv) take all other
      actions reasonably necessary or advisable to qualify the Registrable Securities
      for sale in such jurisdictions; provided, however, that the Company shall not
      be
      required in connection therewith or as a condition thereto to (w) make any
      change to its articles of incorporation or by-laws, (x) qualify to do business
      in any jurisdiction where it would not otherwise be required to qualify but
      for
      this Section 3(d), (y) subject itself to general taxation in any such
      jurisdiction, or (z) file a general consent to service of process in any such
      jurisdiction. The Company shall promptly notify each Buyer who holds Registrable
      Securities of the receipt by the Company of any notification with respect to
      the
      suspension of the registration or qualification of any of the Registrable
      Securities for sale under the securities or “blue sky” laws of any jurisdiction
      in the United States or its receipt of actual notice of the initiation or threat
      of any proceeding for such purpose.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (f)  As
      promptly as practicable after becoming aware of such event or development,
      the
      Company shall notify each Buyer in writing of the happening of any event as
      a
      result of which the Prospectus included in a Registration Statement, as then
      in
      effect, includes an untrue statement of a material fact or omission to state
      a
      material fact required to be stated therein or necessary to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading (provided that in no event shall such notice contain any material,
      nonpublic information), and promptly prepare a supplement or amendment to such
      Registration Statement to correct such untrue statement or omission, and deliver
      ten (10) copies of such supplement or amendment to each Buyer. The Company
      shall
      also promptly notify each Buyer in writing (i) when a Prospectus or any
      Prospectus supplement or post-effective amendment has been filed, and when
      a
      Registration Statement or any post-effective amendment has become effective
      (notification of such effectiveness shall be delivered to each Buyer by
      facsimile on the same day of such effectiveness), (ii) of any request by the
      SEC
      for amendments or supplements to a Registration Statement or related prospectus
      or related information, and (iii) of the Company’s reasonable determination
      that a post-effective amendment to a Registration Statement would be
      appropriate.

     

    (g)  The
      Company shall use its best efforts to prevent the issuance of any stop order
      or
      other suspension of effectiveness of a Registration Statement, or the suspension
      of the qualification of any of the Registrable Securities for sale in any
      jurisdiction within the United States of America and, if such an order or
      suspension is issued, to obtain the withdrawal of such order or suspension
      at
      the earliest possible moment and to notify each Buyer who holds Registrable
      Securities being sold of the issuance of such order and the resolution thereof
      or its receipt of actual notice of the initiation or threat of any proceeding
      for such purpose.

     

    (h)  If,
      after
      the execution of this Agreement, a Buyer believes, after consultation with
      its
      legal counsel, that it could reasonably be deemed to be an underwriter of
      Registrable Securities, at the request of any Buyer, the Company shall furnish
      to such Buyer, on the date of the effectiveness of the Registration Statement
      and thereafter from time to time on such dates as a Buyer may reasonably request
      (i) a letter, dated such date, from the Company’s independent certified public
      accountants in form and substance as is customarily given by independent
      certified public accountants to underwriters in an underwritten public offering,
      and (ii) an opinion, dated as of such date, of counsel representing the Company
      for purposes of such Registration Statement, in form, scope and substance as
      is
      customarily given in an underwritten public offering, addressed to the
      Buyers.

     

    (i)  If,
      after
      the execution of this Agreement, a Buyer believes, after consultation with
      its
      legal counsel, that it could reasonably be deemed to be an underwriter of
      Registrable Securities, at the request of any Buyer, the Company shall make
      available for inspection by (i) any Buyer and (ii) one (1) firm of
      accountants or other agents retained by the Buyers (collectively, the
“Inspectors”)
      all
      pertinent financial and other records, and pertinent corporate documents and
      properties of the Company (collectively, the “Records”),
      as
      shall be reasonably deemed necessary by each Inspector, and cause the Company’s
      officers, directors and employees to supply all information which any Inspector
      may reasonably request; provided, however, that each Inspector shall agree,
      and
      each Buyer hereby agrees, to hold in strict confidence and shall not make any
      disclosure (except to a Buyer) or use any Record or other information which
      the
      Company determines in good faith to be confidential, and of which determination
      the Inspectors are so notified, unless (a) the disclosure of such Records is
      necessary to avoid or correct a misstatement or omission in any Registration
      Statement or is otherwise required under the Securities Act, (b) the release
      of
      such Records is ordered pursuant to a final, non-appealable subpoena or order
      from a court or government body of competent jurisdiction, or (c) the
      information in such Records has been made generally available to the public
      other than by disclosure in violation of this or any other agreement of which
      the Inspector and the Buyer has knowledge. Each Buyer agrees that it shall,
      upon
      learning that disclosure of such Records is sought in or by a court or
      governmental body of competent jurisdiction or through other means, give prompt
      notice to the Company and allow the Company, at its expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, the Records deemed confidential.

     

    (j)  The
      Company shall hold in confidence and not make any disclosure of information
      concerning a Buyer provided to the Company unless (i) disclosure of such
      information is necessary to comply with federal or state securities laws, (ii)
      the disclosure of such information is necessary to avoid or correct a
      misstatement or omission in any Registration Statement, (iii) the release of
      such information is ordered pursuant to a subpoena or other final,
      non-appealable order from a court or governmental body of competent
      jurisdiction, or (iv) such information has been made generally available to
      the
      public other than by disclosure in violation of this Agreement or any other
      agreement. The Company agrees that it shall, upon learning that disclosure
      of
      such information concerning a Buyer is sought in or by a court or governmental
      body of competent jurisdiction or through other means, give prompt written
      notice to such Buyer and allow such Buyer, at the Buyer’s expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, such information.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (k)  The
      Company shall use its best efforts either to cause all the Registrable
      Securities covered by a Registration Statement (i) to be listed on each
      securities exchange on which securities of the same class or series issued
      by
      the Company are then listed, if any, if the listing of such Registrable
      Securities is then permitted under the rules of such exchange or (ii) the
      inclusion for quotation on the National Association of Securities Dealers,
      Inc.
      OTC Bulletin Board for such Registrable Securities. The Company shall pay all
      fees and expenses in connection with satisfying its obligation under this
      Section 3(j).

     

    (l)  The
      Company shall cooperate with each Buyer who holds Registrable Securities being
      offered and, to the extent applicable, to facilitate the timely preparation
      and
      delivery of certificates (not bearing any restrictive legend) representing
      the
      Registrable Securities to be offered pursuant to a Registration Statement and
      enable such certificates to be in such denominations or amounts, as the case
      may
      be, as the Buyers may reasonably request and registered in such names as the
      Buyers may request.

     

    (m)  The
      Company shall use its best efforts to cause the Registrable Securities covered
      by the applicable Registration Statement to be registered with or approved
      by
      such other governmental agencies or authorities as may be necessary to
      consummate the disposition of such Registrable Securities.

     

    (n)  The
      Company shall make generally available to its security holders as soon as
      practical, but not later than ninety (90) days after the close of the period
      covered thereby, an earnings statement (in form complying with the provisions
      of
      Rule 158 under the Securities Act) covering a twelve (12) month period beginning
      not later than the first day of the Company’s fiscal quarter next following the
      effective date of the Registration Statement.

     

    (o)  The
      Company shall otherwise use its best efforts to comply with all applicable
      rules
      and regulations of the SEC in connection with any registration
      hereunder.

     

    (p)  Within
      two (2) business days after a Registration Statement which covers Registrable
      Securities is declared effective by the SEC, the Company shall deliver, and
      shall cause legal counsel for the Company to deliver, to the transfer agent
      for
      such Registrable Securities (with copies to the Buyer whose Registrable
      Securities are included in such Registration Statement) confirmation that such
      Registration Statement has been declared effective by the SEC in the form
      attached hereto as Exhibit
      C.

     

    (q)  The
      Company shall take all other reasonable actions necessary to expedite and
      facilitate disposition by each Buyer of Registrable Securities pursuant to
      a
      Registration Statement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.  OBLIGATIONS
      OF THE BUYERS.

     

    (a)  Each
      Buyer agrees that, upon receipt of any notice from the Company of the happening
      of any event of the kind described in Section 3(f) or the first sentence of
      Section 3(e), such Buyer will immediately discontinue disposition of Registrable
      Securities pursuant to any Registration Statement covering such Registrable
      Securities until such Buyer’s receipt of the copies of the supplemented or
      amended prospectus contemplated by Section 3(f) or the first sentence of Section
      3(e) or receipt of notice that no supplement or amendment is required.
      Notwithstanding anything to the contrary, the Company shall cause its transfer
      agent to deliver unlegended certificates for shares of Common Stock to a
      transferee of a Buyer in accordance with the terms of the Securities Purchase
      Agreement in connection with any sale of Registrable Securities with respect
      to
      which a Buyer has entered into a contract for sale prior to the Buyer’s receipt
      of a notice from the Company of the happening of any event of the kind described
      in Section 3(f) or the first sentence of 3(e) and for which the Buyer has not
      yet settled.

     

    (b)  Each
      Buyer covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it or an exemption therefrom
      in connection with sales of Registrable
      Securities pursuant to the Registration Statement.

     

    5.  EXPENSES
      OF REGISTRATION.

     

    All
      expenses incurred in connection with registrations, filings or qualifications
      pursuant to Sections 2 and 3, including, without limitation, all registration,
      listing and qualifications fees, printers, legal and accounting fees shall
      be
      paid by the Company. 

     

    6.  INDEMNIFICATION.

     

    With
      respect to Registrable Securities which are included in a Registration Statement
      under this Agreement:

     

    (a)  To
      the
      fullest extent permitted by law, the Company will, and hereby does, indemnify,
      hold harmless and defend each Buyer, the directors, officers, partners,
      employees, agents, representatives of, and each Person, if any, who controls
      any
      Buyer within the meaning of the Securities Act or the Exchange Act (each, an
      “Indemnified
      Person”),
      against any losses, claims, damages, liabilities, judgments, fines, penalties,
      charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
      expenses, joint or several (collectively, “Claims”)
      incurred in investigating, preparing or defending any action, claim, suit,
      inquiry, proceeding, investigation or appeal taken from the foregoing by or
      before any court or governmental, administrative or other regulatory agency,
      body or the SEC, whether pending or threatened, whether or not an indemnified
      party is or may be a party thereto (“Indemnified
      Damages”),
      to
      which any of them may become subject insofar as such Claims (or actions or
      proceedings, whether commenced or threatened, in respect thereof) arise out
      of
      or are based upon: (i) any untrue statement or alleged untrue statement of
      a
      material fact in a Registration Statement or any post-effective amendment
      thereto or in any filing made in connection with the qualification of the
      offering under the securities or other “blue sky” laws of any jurisdiction in
      which Registrable Securities are offered (“Blue
      Sky Filing”),
      or
      the omission or alleged omission to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading; (ii) any
      untrue statement or alleged untrue statement of a material fact contained in
      any
      final prospectus (as amended or supplemented, if the Company files any amendment
      thereof or supplement thereto with the SEC) or the omission or alleged omission
      to state therein any material fact necessary to make the statements made
      therein, in light of the circumstances under which the statements therein were
      made, not misleading; or (iii) any violation or alleged violation by the Company
      of the Securities Act, the Exchange Act, any other law, including, without
      limitation, any state securities law, or any rule or regulation there under
      relating to the offer or sale of the Registrable Securities pursuant to a
      Registration Statement (the matters in the foregoing clauses (i) through (iii)
      being, collectively, “Violations”).
      The
      Company shall reimburse the Buyers and each such controlling person promptly
      as
      such expenses are incurred and are due and payable, for any legal fees or
      disbursements or other reasonable expenses incurred by them in connection with
      investigating or defending any such Claim. Notwithstanding anything to the
      contrary contained herein, the indemnification agreement contained in this
      Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising
      out of or based upon a Violation which occurs in reliance upon and in conformity
      with information furnished in writing to the Company by such Indemnified Person
      expressly for use in connection with the preparation of the Registration
      Statement or any such amendment thereof or supplement thereto; (y) shall not
      be
      available to the extent such Claim is based on a failure of the Buyer to deliver
      or to cause to be delivered the prospectus made available by the Company, if
      such prospectus was timely made available by the Company pursuant to Section
      3(c); and (z) shall not apply to amounts paid in settlement of any Claim if
      such settlement is effected without the prior written consent of the Company,
      which consent shall not be unreasonably withheld. Such indemnity shall remain
      in
      full force and effect regardless of any investigation made by or on behalf
      of
      the Indemnified Person and shall survive the transfer of the Registrable
      Securities by the Buyers pursuant to Section 9 hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)  In
      connection with a Registration Statement, each Buyer agrees to severally and
      not
      jointly indemnify, hold harmless and defend, to the same extent and in the
      same
      manner as is set forth in Section 6(a), the Company, each of its directors,
      each
      of its officers, employees, representatives, or agents and each Person, if
      any,
      who controls the Company within the meaning of the Securities Act or the
      Exchange Act (each an “Indemnified
      Party”),
      against any Claim or Indemnified Damages to which any of them may become
      subject, under the Securities Act, the Exchange Act or otherwise, insofar as
      such Claim or Indemnified Damages arise out of or is based upon any Violation,
      in each case to the extent, and only to the extent, that such Violation occurs
      in reliance upon and in conformity with written information furnished to the
      Company by such Buyer expressly for use in connection with such Registration
      Statement; and, subject to Section 6(d), such Buyer will reimburse any legal
      or
      other expenses reasonably incurred by them in connection with investigating
      or
      defending any such Claim; provided, however, that the indemnity agreement
      contained in this Section 6(b) and the agreement with respect to contribution
      contained in Section 7 shall not apply to amounts paid in settlement of any
      Claim if such settlement is effected without the prior written consent of such
      Buyer, which consent shall not be unreasonably withheld; provided, further,
      however, that the Buyer shall be liable under this Section 6(b) for only that
      amount of a Claim or Indemnified Damages as does not exceed the net proceeds
      to
      such Buyer as a result of the sale of Registrable Securities pursuant to such
      Registration Statement. Such indemnity shall remain in full force and effect
      regardless of any investigation made by or on behalf of such Indemnified Party
      and shall survive the transfer of the Registrable Securities by the Buyers
      pursuant to Section 9. Notwithstanding anything to the contrary contained
      herein, the indemnification agreement contained in this Section 6(b) with
      respect to any prospectus shall not inure to the benefit of any Indemnified
      Party if the untrue statement or omission of material fact contained in the
      prospectus was corrected and such new prospectus was delivered to each Buyer
      prior to such Buyer’s use of the prospectus to which the Claim
      relates.

     

    (c)  Promptly
      after receipt by an Indemnified Person or Indemnified Party under this Section
      6
      of notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party shall, if a Claim in respect thereof is to be made against
      any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and, to the extent the indemnifying party
      so
      desires, jointly with any other indemnifying party similarly noticed, to assume
      control of the defense thereof with counsel mutually satisfactory to the
      indemnifying party and the Indemnified Person or the Indemnified Party, as
      the
      case may be; provided, however, that an Indemnified Person or Indemnified Party
      shall have the right to retain its own counsel with the fees and expenses of
      not
      more than one (1) counsel for such Indemnified Person or Indemnified Party
      to be
      paid by the indemnifying party, if, in the reasonable opinion of counsel
      retained by the indemnifying party, the representation by such counsel of the
      Indemnified Person or Indemnified Party and the indemnifying party would be
      inappropriate due to actual or potential differing interests between such
      Indemnified Person or Indemnified Party and any other party represented by
      such
      counsel in such proceeding. The Indemnified Party or Indemnified Person shall
      cooperate fully with the indemnifying party in connection with any negotiation
      or defense of any such action or claim by the indemnifying party and shall
      furnish to the indemnifying party all information reasonably available to the
      Indemnified Party or Indemnified Person which relates to such action or claim.
      The indemnifying party shall keep the Indemnified Party or Indemnified Person
      fully apprised at all times as to the status of the defense or any settlement
      negotiations with respect thereto. No indemnifying party shall be liable for
      any
      settlement of any action, claim or proceeding effected without its prior written
      consent; provided, however, that the indemnifying party shall not unreasonably
      withhold, delay or condition its consent. No indemnifying party shall, without
      the prior written consent of the Indemnified Party or Indemnified Person,
      consent to entry of any judgment or enter into any settlement or other
      compromise which does not include as an unconditional term thereof the giving
      by
      the claimant or plaintiff to such Indemnified Party or Indemnified Person of
      a
      release from all liability in respect to such claim or litigation. Following
      indemnification as provided for hereunder, the indemnifying party shall be
      subrogated to all rights of the Indemnified Party or Indemnified Person with
      respect to all third parties, firms or corporations relating to the matter
      for
      which indemnification has been made. The failure to deliver written notice
      to
      the indemnifying party within a reasonable time of the commencement of any
      such
      action shall not relieve such indemnifying party of any liability to the
      Indemnified Person or Indemnified Party under this Section 6, except to the
      extent that the indemnifying party is prejudiced in its ability to defend such
      action.

     

    (d)  The
      indemnification required by this Section 6 shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, as and
      when bills are received or Indemnified Damages are incurred.

     

    (e)  The
      indemnity agreements contained herein shall be in addition to (i) any cause
      of action or similar right of the Indemnified Party or Indemnified Person
      against the indemnifying party or others, and (ii) any liabilities the
      indemnifying party may be subject to pursuant to the law.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    7.  CONTRIBUTION.

     

    To
      the
      extent any indemnification by an indemnifying party is prohibited or limited
      by
      law, the indemnifying party agrees to make the maximum contribution with respect
      to any amounts for which it would otherwise be liable under Section 6 to the
      fullest extent permitted by law; provided, however, that: (i) no seller of
      Registrable Securities guilty of fraudulent misrepresentation (within the
      meaning of Section 11(f) of the Securities Act) shall be entitled to
      contribution from any seller of Registrable Securities who was not guilty of
      fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
      Securities shall be limited in amount to the net amount of proceeds received
      by
      such seller from the sale of such Registrable Securities.

     

    8.  REPORTS
      UNDER THE EXCHANGE ACT.

     

    With
      a
      view to making available to the Buyers the benefits of Rule 144 promulgated
      under the Securities Act or any similar rule or regulation of the SEC that
      may
      at any time permit the Buyers to sell securities of the Company to the public
      without registration (“Rule
      144”)
      the
      Company agrees to:

     

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

     

    (b)  file
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under the Securities Act and the Exchange Act so long as the Company
      remains subject to such requirements (it being understood that nothing herein
      shall limit the Company’s obligations under Section 4(c) of the Securities
      Purchase Agreement) and the filing of such reports and other documents as are
      required by the applicable provisions of Rule 144; and

     

    (c)  furnish
      to each Buyer so long as such Buyer owns Registrable Securities, promptly upon
      request, (i) a written statement by the Company that it has complied with the
      reporting requirements of Rule 144, the Securities Act and the Exchange Act,
      (ii) a copy of the most recent annual or quarterly report of the Company and
      such other reports and documents so filed by the Company, and (iii) such other
      information as may be reasonably requested to permit the Buyers to sell such
      securities pursuant to Rule 144 without registration.

     

    9.  AMENDMENT
      OF REGISTRATION RIGHTS.

     

    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with the written consent of the Company and Buyers who
      then
      hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
      or
      waiver effected in accordance with this Section 9 shall be binding upon
      each Buyer and the Company. No such amendment shall be effective to the extent
      that it applies to fewer than all of the holders of the Registrable Securities.
      No consideration shall be offered or paid to any Person to amend or consent
      to a
      waiver or modification of any provision of any of this Agreement unless the
      same
      consideration also is offered to all of the parties to this
      Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    10.  MISCELLANEOUS.

     

    (a)  A
      Person
      is deemed to be a holder of Registrable Securities whenever such Person owns
      or
      is deemed to own of record such Registrable Securities or owns the right to
      receive the Registrable Securities. If the Company receives conflicting
      instructions, notices or elections from two (2) or more Persons with respect
      to
      the same Registrable Securities, the Company shall act upon the basis of
      instructions, notice or election received from the registered owner of such
      Registrable Securities.

     

    (b)  No
      Piggyback on Registrations.
      Except
      as set forth on Schedule
      10(b)
      attached
      hereto, neither the Company nor any of its security holders (other than the
      Buyers in such capacity pursuant hereto) may include securities of the Company
      in the initial Registration Statement other than the Registrable Securities.
      The
      Company shall not file any other registration statements until the initial
      Registration Statement required hereunder is declared effective by the SEC,
      provided that this Section 10(b) shall not prohibit the Company from filing
      amendments to registration statements already filed.

     

    (c)  Piggy-Back
      Registrations.
      If at
      any time during the Registration Period there is not an effective Registration
      Statement covering all of the Registrable Securities and the Company shall
      determine to prepare and file with the SEC a registration statement relating
      to
      an offering for its own account or the account of others under the Securities
      Act of any of its equity securities, other than on Form S-4 or Form S-8 (each
      as
      promulgated under the Securities Act) or their then equivalents relating to
      equity securities to be issued solely in connection with any acquisition of
      any
      entity or business or equity securities issuable in connection with the stock
      option or other employee benefit plans, then the Company shall send to each
      Buyer a written notice of such determination and, if within fifteen (15) days
      after the date of such notice, any such Buyer shall so request in writing,
      the
      Company shall include in such registration statement all or any part of such
      Registrable Securities such Buyer requests to be registered; provided,
      however,
      that,
      the Company shall not be required to register any Registrable Securities
      pursuant to this Section 10(c) that are eligible for resale pursuant to Rule
      144(k) promulgated under the Securities Act or that are the subject of a then
      effective Registration Statement.

     

    (d)  Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (iii) one (1) business day after deposit with a nationally recognized
      overnight delivery service, in each case properly addressed to the party to
      receive the same. The addresses and facsimile numbers for such communications
      shall be:

     

    
      	
              If
                to the Company, to:

            	
              TXP
                Corporation 

            
	 	
              1299
                Commerce Drive

            
	 	
              Richardson,
                Texas 75081

            
	 	
              Attention:
                Michael Shores

            
	 	
              Telephone:
                (214) 575-9300

            
	 	
              Facsimile:
                (214) 575-9314

            
	 	 
	
              With
                Copy to:

            	
              Sichenzia
                Ross Friedman Ference LLP

            
	 	
              1065
                Avenue of the Americas

            
	 	
              New
                York, New York 10018

            
	 	
              Attention:
                Gregory Sichenzia, Esq.

            
	 	
              Telephone:
                (212) 930-9700

            
	 	
              Facsimile:
                (212) 930-9725

            


    

     

    If
      to an
      Buyer, to its address and facsimile number on the Schedule of Buyers attached
      hereto, with copies to such Buyer’s representatives as set forth on the Schedule
      of Buyers or to such other address and/or facsimile number and/or to the
      attention of such other person as the recipient party has specified by written
      notice given to each other party five (5) days prior to the effectiveness of
      such change. Written confirmation of receipt (A) given by the recipient of
      such
      notice, consent, waiver or other communication, (B) mechanically or
      electronically generated by the sender’s facsimile machine containing the time,
      date, recipient facsimile number and an image of the first page of such
      transmission or (C) provided by a courier or overnight courier service shall
      be
      rebuttable evidence of personal service, receipt by facsimile or receipt from
      a
      nationally recognized overnight delivery service in accordance with clause
      (i),
      (ii) or (iii) above, respectively.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (e)  Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

     

    (f)  The
      laws
      of the State of New Jersey shall govern all issues concerning the relative
      rights of the Company and the Buyers as its stockholders. All other questions
      concerning the construction, validity, enforcement and interpretation of this
      Agreement shall be governed by the internal laws of the State of New Jersey,
      without giving effect to any choice of law or conflict of law provision or
      rule
      (whether of the State of New Jersey or any other jurisdiction) that would cause
      the application of the laws of any jurisdiction other than the State of New
      Jersey. Each party hereby irrevocably submits to the non-exclusive jurisdiction
      of the Superior Courts of the State of New Jersey, sitting in Hudson County,
      New
      Jersey and federal courts for the District of New Jersey sitting Newark, New
      Jersey, for the adjudication of any dispute hereunder or in connection herewith
      or with any transaction contemplated hereby or discussed herein, and hereby
      irrevocably waives, and agrees not to assert in any suit, action or proceeding,
      any claim that it is not personally subject to the jurisdiction of any such
      court, that such suit, action or proceeding is brought in an inconvenient forum
      or that the venue of such suit, action or proceeding is improper. Each party
      hereby irrevocably waives personal service of process and consents to process
      being served in any such suit, action or proceeding by mailing a copy thereof
      to
      such party at the address for such notices to it under this Agreement and agrees
      that such service shall constitute good and sufficient service of process and
      notice thereof. Nothing contained herein shall be deemed to limit in any way
      any
      right to serve process in any manner permitted by law. If any provision of
      this
      Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
      or unenforceability shall not affect the validity or enforceability of the
      remainder of this Agreement in that jurisdiction or the validity or
      enforceability of any provision of this Agreement in any other jurisdiction.
      EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
      TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

     

    (g)  This
      Agreement shall inure to the benefit of and be binding upon the permitted
      successors and assigns of each of the parties hereto.

     

    (h)  The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    (i)  This
      Agreement may be executed in identical counterparts, each of which shall be
      deemed an original but all of which shall constitute one and the same agreement.
      This Agreement, once executed by a party, may be delivered to the other party
      hereto by facsimile transmission of a copy of this Agreement bearing the
      signature of the party so delivering this Agreement.

     

    (j)  Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    (k)  The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent and no rules of strict construction
      will
      be applied against any party.

     

    (l)  This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person.

     

    


    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their signature page to this Registration
      Rights Agreement to be duly executed as of the date first above
      written.

     

    
      	 	
              COMPANY:

            
	 	
              TXP
                CORPORATION 

            
	 	 
	 	
              By:      

            
	 	
              Name: Michael
                Shores

            
	 	
              Title: Chief
                Executive Officer

            
	 	 


    

    


    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their signature page to this Registration
      Rights Agreement to be duly executed as of the date first above
      written.

     

    
      	 	
              BUYER:

            
	 	
              CORNELL
                CAPITAL PARTNERS, LP

            
	 	 
	 	
              By: Yorkville
                Advisors, LLC

            
	 	
              Its: Investment
                Manager

            
	 	 
	 	 
	 	
              By:      

            
	 	
              Name: Mark
                Angelo

            
	 	
              Title: Portfolio
                Manager

            


    

    


    


    


    


    



    
      
        
           

          


           

          


        

         

      

      
         

        
          

        

      

      
         

        
        

      

    



    


     

    SCHEDULE
      I

     

     

    SCHEDULE
      OF BUYERS

     

    


    
      	
              Buyer

            	
              Address/Facsimile
                

              Number
                of Buyer

            	
              Address/Facsimile
                

              Number
                of Buyer’s Representative

            
	 	 	 
	 	 	 
	
              Cornell
                Capital Partners, LP

            	
              101
                Hudson Street - Suite 3700

            	
              101
                Hudson Street - Suite 3700

            
	 	
              Jersey
                City, NJ 07303

            	
              Jersey
                City, NJ 07303

            
	 	
              Facsimile: (201)
                985-8266

            	
              Facsimile: (201)
                985-8266

            
	 	 	
              Attention:
                Troy Rillo, Esq. or David Gonzalez, Esq.

            
	 	 	 
	 	 	 
	 	 	 


    

    


    


    


    


    



    
      
        
          


        

         

      

      
         

        
          

        

      

      
         

        
        

      

    



    EXHIBIT
      A

     

    SELLING
      STOCKHOLDERS 

     

     

    AND
      PLAN OF DISTRIBUTION

     

    


    Selling
      Stockholders

    


    The
      shares of Common Stock being offered by the selling stockholders are issuable
      upon conversion of the convertible debentures and upon exercise of the warrants.
      For additional information regarding the issuance of those convertible notes
      and
      warrants, see “Private Placement of Convertible Debentures and Warrants” above.
      We are registering the shares of Common Stock in order to permit the selling
      stockholders to offer the shares for resale from time to time. Except as
      otherwise notes and except for the ownership of the convertible Debentures
      and
      the warrants issued pursuant to the Securities Purchase Agreement, the selling
      stockholders have not had any material relationship with us within the past
      three years.

     

    The
      table
      below lists the selling stockholders and other information regarding the
      beneficial ownership of the shares of Common Stock by each of the selling
      stockholders. The second column lists the number of shares of Common Stock
      beneficially owned by each selling stockholder, based on its ownership of the
      convertible debentures and warrants, as of ________, 200_, assuming conversion
      of all convertible debentures and exercise of the warrants held by the selling
      stockholders on that date, without regard to any limitations on conversions
      or
      exercise.

     

    The
      third
      column lists the shares of Common Stock being offered by this prospectus by
      the
      selling stockholders.

     

    In
      accordance with the terms of a registration rights agreement with the selling
      stockholders, this prospectus generally covers the resale of at least 300%
      of
      the number of Conversion Shares issued and issuable pursuant to the convertible
      debentures as of the trading day immediately preceding the date the registration
      statement is initially filed with the SEC, and.
      Because
      the conversion price of the convertible debentures may be adjusted, the number
      of shares that will actually be issued may be more or less than the number
      of
      shares being offered by this prospectus. The fourth column assumes the sale
      of
      all of the shares offered by the selling stockholders pursuant to this
      prospectus.

     

    Under
      the
      terms of the convertible debentures and the warrants, a selling stockholder
      may
      not convert the convertible debentures or exercise the warrants to the extent
      such conversion or exercise would cause such selling stockholder, together
      with
      its affiliates, to beneficially own a number of shares of Common Stock which
      would exceed 4.99% of our then outstanding shares of Common Stock following
      such
      conversion or exercise, excluding for purposes of such determination shares
      of
      Common Stock issuable upon conversion of the convertible debentures which have
      not been converted and upon exercise of the warrants which have not been
      exercised. The number of shares in the second column does not reflect this
      limitation. The selling stockholders may sell all, some or none of their shares
      in this offering. See "Plan of Distribution."

     

     

    
      	
               

              Name
                of Selling Stockholder

               

            	
               

              Number
                of Shares Owned Prior to Offering

               

            	
              Maximum
                Number of Shares to be Sold Pursuant to this
                Prospectus

               

            	
               

              Number
                of Shares Owned After Offering

               

            
	
               

              Cornell
                Capital Partners, L.P. (1)

            	 	 	 


    

    


     

    (1) Cornell
      Capital Partners, L.P. is a Cayman Island limited partnership. Cornell is
      managed by Yorkville Advisors, LLC. Investment decisions for Yorkville Advisors
      are made by Mark Angelo, its portfolio manager. 

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Plan
      of
      Distribution

     

    Each
      Selling Stockholder (the “Selling
      Stockholders”)
      of the
      common stock and any of their pledgees, assignees and successors-in-interest
      may, from time to time, sell any or all of their shares of common stock on
      the
      __________ or any other stock exchange, market or trading facility on which
      the
      shares are traded or in private transactions. These sales may be at fixed or
      negotiated prices. A Selling Stockholder may use any one or more of the
      following methods when selling shares:

     

    	·  	
            ordinary
              brokerage transactions and transactions in which the broker-dealer
              solicits purchasers;

          


     

    	·  	
            block
              trades in which the broker-dealer will attempt to sell the shares as
              agent
              but may position and resell a portion of the block as principal to
              facilitate the transaction;

          


     

    	·  	
            purchases
              by a broker-dealer as principal and resale by the broker-dealer for
              its
              account;

          


     

    	·  	
            an
              exchange distribution in accordance with the rules of the applicable
              exchange;

          


     

    	·  	
            privately
              negotiated transactions;

          


     

    	·  	
            broker-dealers
              may agree with the Selling Stockholders to sell a specified number
              of such
              shares at a stipulated price per share;

          


     

    	·  	
            through
              the writing or settlement of options or other hedging transactions,
              whether through an options exchange or otherwise;
              

          


     

    	·  	
            a
              combination of any such methods of sale;
              or

          


     

    	·  	
            any
              other method permitted pursuant to applicable
              law.

          


     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities
      Act”),
      if
      available, rather than under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the Selling Stockholders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated, but,
      except as set forth in a supplement to this Prospectus, in the case of an agency
      transaction not in excess of a customary brokerage commission in compliance
      with
      NASDR Rule 2440; and in the case of a principal transaction a markup or markdown
      in compliance with NASDR IM-2440. 

     

    In
      connection with the sale of the common stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the Common
      Stock in the course of hedging the positions they assume. The Selling
      Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales. In such event, any commissions
      received by such broker-dealers or agents and any profit on the resale of the
      shares purchased by them may be deemed to be underwriting commissions or
      discounts under the Securities Act. Each Selling Stockholder has informed the
      Company that it does not have any written or oral agreement or understanding,
      directly or indirectly, with any person to distribute the Common Stock. In
      no
      event shall any broker-dealer receive fees, commissions and markups which,
      in
      the aggregate, would exceed eight percent (8%).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares. The Company has agreed to indemnify
      the Selling Stockholders against certain losses, claims, damages and
      liabilities, including liabilities under the Securities Act. 

     

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act including Rule 172 thereunder. In addition, any securities
      covered by this prospectus which qualify for sale pursuant to Rule 144 under
      the
      Securities Act may be sold under Rule 144 rather than under this prospectus.
      There is no underwriter or coordinating broker acting in connection with the
      proposed sale of the resale shares by the Selling Stockholders.

     

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the date on which
      the
      shares may be resold by the Selling Stockholders without registration and
      without regard to any volume limitations by reason of Rule 144(k) under the
      Securities Act or any other rule of similar effect or (ii) all of the shares
      have been sold pursuant to this prospectus or Rule 144 under the Securities
      Act
      or any other rule of similar effect. The resale shares will be sold only through
      registered or licensed brokers or dealers if required under applicable state
      securities laws. In addition, in certain states, the resale shares may not
      be
      sold unless they have been registered or qualified for sale in the applicable
      state or an exemption from the registration or qualification requirement is
      available and is complied with.

     

    Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in
      the distribution of the resale shares may not simultaneously engage in market
      making activities with respect to the common stock for the applicable restricted
      period, as defined in Regulation M, prior to the commencement of the
      distribution. In addition, the Selling Stockholders will be subject to
      applicable provisions of the Exchange Act and the rules and regulations
      thereunder, including Regulation M, which may limit the timing of purchases
      and
      sales of shares of the common stock by the Selling Stockholders or any other
      person. We will make copies of this prospectus available to the Selling
      Stockholders and have informed them of the need to deliver a copy of this
      prospectus to each purchaser at or prior to the time of the sale (including
      by
      compliance with Rule 172 under the Securities Act).

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    EXHIBIT
      B

     

    OTHER
      DISCLOSURES 

     

    


    See
      attachment provided separately. 


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    EXHIBIT
      C

     

    FORM
      OF NOTICE OF EFFECTIVENESS

     

     

    OF
      REGISTRATION STATEMENT

     

    


    Attention: 

    


    
      	 	
              Re:

            	
              TXP
                CORPORATION

            


    

    


    Ladies
      and Gentlemen:

    


    We
      are
      counsel to TXP Corporation, a Nevada corporation (the “Company”),
      and
      have represented the Company in connection with that certain Securities Purchase
      Agreement (the “Securities
      Purchase Agreement”)
      entered into by and among the Company and the Buyers named therein
      (collectively, the “Buyers”)
      pursuant to which the Company issued to the Buyers shares of its Common Stock,
      par value $0.001 per share (the “Common
      Stock”).
      Pursuant to the Purchase Agreement, the Company also has entered into a
      Registration Rights Agreement with the Buyers (the “Registration
      Rights Agreement”)
      pursuant to which the Company agreed, among other things, to register the
      Registrable Securities (as defined in the Registration Rights Agreement) under
      the Securities Act of 1933, as amended (the “Securities
      Act”).
      In
      connection with the Company’s obligations under the Registration Rights
      Agreement, on ____________ ____, the Company filed a Registration Statement
      on
      Form ________ (File No. 333-_____________) (the “Registration
      Statement”)
      with
      the Securities and Exchange SEC (the “SEC”)
      relating to the Registrable Securities which names each of the Buyers as a
      selling stockholder there under.

     

    In
      connection with the foregoing, we advise you that a member of the SEC’s staff
      has advised us by telephone that the SEC has entered an order declaring the
      Registration Statement effective under the Securities Act at [ENTER
      TIME OF EFFECTIVENESS]
      on
[ENTER
      DATE OF EFFECTIVENESS]
      and we
      have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that
      any stop order suspending its effectiveness has been issued or that any
      proceedings for that purpose are pending before, or threatened by, the SEC
      and
      the Registrable Securities are available for resale under the Securities Act
      pursuant to the Registration Statement.

     

    Very
      truly yours,

    


    [Law
      Firm]

    


    By:                                  
         
          

    


    cc: [LIST
      NAMES OF BUYERS]