Document:

Dated:
      December 13, 2007

     

    NEITHER
      THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN
      REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”),
      AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
      EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS.

    

      
        	
                No.
                  TXP-2-2

              	
                $1,000,000

              

      

    

     

    TXP
      CORPORATION

     

    Secured
      Convertible Note

     

    Due:
      December 13, 2010

     

    This
      Secured Convertible Note (the “Note”)
      is
      issued by TXP
      CORPORATION, a
      Nevada
      corporation (the “Company”),
      to
YA
      GLOBAL INVESTMENTS, L.P. (F/K/A CORNELL CAPITAL PARTNERS,
      L.P.)
      (the
“Holder”),
      pursuant to that certain Securities Purchase Agreement (the “Securities
      Purchase Agreement”)
      dated
      March 30, 2007. 

     

    FOR
      VALUE RECEIVED,
      the
      Company hereby promises to pay to the Holder or its successors and assigns
      the
      principal sum of One Million Dollars ($1,000,000) together with accrued but
      unpaid interest on or before December 13, 2010 (the “Maturity
      Date”)
      in
      accordance with the following terms:

     

    Section
      1. General
      Terms

     

    (a) Interest.
      Interest shall accrue on the outstanding principal balance hereof at an annual
      rate equal to eight percent (8%). Interest shall be calculated on the basis
      of a
      365-day year and the actual number of days elapsed, to the extent permitted
      by
      applicable law. Interest hereunder shall be paid on the Maturity Date (or sooner
      as provided herein) to the Holder or its assignee in whose name this Note is
      registered on the records of the Company regarding registration and transfers
      of
      Notes in cash or in Common Stock (valued at the Closing Bid Price on the Trading
      Day immediately prior to the date paid) at the option of the Company.

     

    (b)  Security.
      The
      Note
is
      secured by a security interest in certain assets of the Company, including
      intellectual property and rights to intellectual property, as evidenced by
      the
      Security Agreement dated as of March 30, 2007 (the “Security
      Agreement”).
      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c) Monthly
      Payments.
      Beginning on the date that is the twelve (12) month anniversary of the date
      hereof, the Company shall make monthly payments of interest, and beginning
      on
      the date that is the eighteen (18) month anniversary of the date hereof, the
      Company shall make monthly payments of interest plus principal payments in
      the
      amount of One Hundred Thousand Dollars ($100,000) (such payments shall be
      referred to as “Scheduled
      Payments”).
      After
      the first Scheduled Payment, each subsequent Scheduled Payment shall be due
      and
      payable on the same day of each subsequent calendar month until the Maturity
      Date. All payments in respect of the indebtedness evidenced hereby shall be
      made
      in collected funds, and shall be applied to principal, accrued interest and
      charges and expenses owing under or in connection with this Note in such order
      as the Holder elects, except that payments shall be applied to accrued interest
      before principal. Notwithstanding the foregoing, this Note shall become due
      and
      immediately payable, including all accrued but unpaid interest, upon an Event
      of
      Default (as defined in Section
      2
      hereof).
      Notwithstanding any provision of this Section 1(c) to the contrary, the Holder
      may, at its option and in its sole discretion, deliver a written notice to
      the
      Company at least two (2) days prior to any Scheduled Payment due date electing
      to have the payment of all or any portion of Scheduled Payment payable on the
      next Scheduled Payment due date deferred to the Maturity Date. Any amount
      deferred to the Maturity Date pursuant to this Section shall continue to accrue
      interest through the Maturity Date. In the event that the Company redeems a
      portion of the principal amount outstanding under this Note, the Company shall
      be entitled to an off-set to the amount of principal due pursuant to the next
      Schedule Payment equal to the amount of principal redeemed or converted (the
      “Off-Set
      Amount”).
      In
      such event the Company shall be obligated to make the next Scheduled Payment
      reduced by any Off-Set Amount as contemplated hereunder. 

     

    Section
      2. Events
      of Default.

     

    (a) An
      “Event
      of Default”,
      wherever used herein, means any one of the following events (whatever the reason
      and whether it shall be voluntary or involuntary or effected by operation of
      law
      or pursuant to any judgment, decree or order of any court, or any order, rule
      or
      regulation of any administrative or governmental body):

     

    (i) Any
      default in the payment of the principal of, interest on or other charges in
      respect of this Note, free of any claim of subordination, as and when the same
      shall become due and payable whether upon an Optional Redemption (as defined
      in
Section
      3(a)),
      the
      Maturity Date, by acceleration, or otherwise;

     

    (ii) The
      Company or any subsidiary of the Company shall commence, or there shall be
      commenced against the Company or any subsidiary of the Company under any
      applicable bankruptcy or insolvency laws as now or hereafter in effect or any
      successor thereto, or the Company or any subsidiary of the Company commences
      any
      other proceeding under any reorganization, arrangement, adjustment of debt,
      relief of debtors, dissolution, insolvency or liquidation or similar law of
      any
      jurisdiction whether now or hereafter in effect relating to the Company or
      any
      subsidiary of the Company or there is commenced against the Company or any
      subsidiary of the Company any such bankruptcy, insolvency or other proceeding
      which remains undismissed for a period of 61 days; or the Company or any
      subsidiary of the Company is adjudicated insolvent or bankrupt; or any order
      of
      relief or other order approving any such case or proceeding is entered; or
      the
      Company or any subsidiary of the Company suffers any appointment of any
      custodian, private or court appointed receiver or the like for it or any
      substantial part of its property which continues undischarged or unstayed for
      a
      period of sixty one (61) days; or the Company or any subsidiary of the Company
      makes a general assignment for the benefit of creditors; or the Company or
      any
      subsidiary of the Company shall fail to pay, or shall state that it is unable
      to
      pay, or shall be unable to pay, its debts generally as they become due; or
      the
      Company or any subsidiary of the Company shall call a meeting of its creditors
      with a view to arranging a composition, adjustment or restructuring of its
      debts; or the Company or any subsidiary of the Company shall by any act or
      failure to act expressly indicate its consent to, approval of or acquiescence
      in
      any of the foregoing; or any corporate or other action is taken by the Company
      or any subsidiary of the Company for the purpose of effecting any of the
      foregoing;

     

    
      
         

      

      
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    (iii) The
      Company or any subsidiary of the Company shall default in any of its obligations
      under any other debenture or any mortgage, credit agreement or other facility,
      indenture agreement, factoring agreement or other instrument under which there
      may be issued, or by which there may be secured or evidenced any indebtedness
      for borrowed money or money due under any long term leasing or factoring
      arrangement of the Company or any subsidiary of the Company in an amount
      exceeding $100,000, whether such indebtedness now exists or shall hereafter
      be
      created and such default shall result in such indebtedness becoming or being
      declared due and payable prior to the date on which it would otherwise become
      due and payable;

     

    (iv) The
      Common Stock shall cease to be quoted for trading or listing for trading on
      any
      of (a) the American Stock Exchange, (b) New York Stock Exchange, (c) the Nasdaq
      National Market, (d) the Nasdaq Capital Market, or (e) the Nasdaq OTC Bulletin
      Board (“OTC”)
      (each,
      a “Primary
      Market”)
      and
      shall not again be quoted or listed for trading on any Primary Market within
      five (5) Trading Days of such delisting;

     

    (v) The
      Company or any subsidiary of the Company shall be a party to any Change of
      Control Transaction (as defined in Section
      6);
      

     

    (vi) The
      Company shall fail to file the Underlying Shares Registration Statement (as
      defined in Section
      6)
      with
      the Commission (as defined in Section
      6),
      or the
      Underlying Shares Registration Statement shall not have been declared effective
      by the Commission, in each case within the time periods set forth in the
      Investor Registration Rights Agreement (“Registration
      Rights Agreement”)
      dated
      as of March 30, 2007, between the Company and the Holder;

     

    (vii) If
      the
      effectiveness of the Underlying Shares Registration Statement lapses for any
      reason or the Holder shall not be permitted to resell the shares of Common
      Stock
      underlying this Note under the Underlying Shares Registration Statement, in
      either case, for more than five (5) consecutive Trading Days or an aggregate
      of
      eight Trading Days (which need not be consecutive Trading Days);

     

    (viii) The
      Company shall fail for any reason to deliver Common Stock certificates to a
      Holder prior to the fifth (5th)
      Trading
      Day after a Conversion Date, or the Company shall provide notice to the Holder,
      including by way of public announcement, at any time, of its intention not
      to
      comply with requests for conversions in accordance with the terms hereof;

     

    
      
         

      

      
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    (ix) The
      Company shall fail for any reason to deliver the payment in cash pursuant to
      a
      Buy-In (as defined herein) within three (3) days after notice is claimed
      delivered hereunder; 

     

    (x) The
      Company shall fail to observe or perform any other covenant, agreement or
      warranty contained in, or otherwise commit any breach or default of any
      provision of this Note (except as may be covered by Section
      2(a)(i) through 2(a)(ix)
      hereof)
      or any Transaction Document (as defined in Section
      6)
      which
      is not cured with in the time prescribed, or an Event of Default under any
      other
      debenture issued to the Holder in connection with the Securities Purchase
      Agreement shall occur;

     

    (b) During
      the time that any portion of this Note is outstanding, if any Event of Default
      has occurred and
      shall
      continue for a period of ten (10) days after a notice of such default has been
      delivered by the Holder to the Obligor (the “Notice
      Period”),
      the
      full principal amount of this Note, together with interest and other amounts
      owing in respect thereof, to the date of acceleration shall become at the
      Holder's election, immediately due and payable in cash, provided
      however,
      the
      Holder may request (but shall have no obligation to request) payment of such
      amounts in Common Stock of the Company. If an Event of Default shall occur
      the
      Conversion Price shall be reduced to twenty percent (20%) of the lowest Volume
      Weighted Average Price, as quoted by Bloomberg, LP, of the Common Stock during
      the thirty (30) trading days immediately preceding the date upon which the
      Event
      of Default occurred (the “Default
      Conversion Price”),
      provided however, that the Default Conversion Price may not be lower than $0.10,
      as adjusted pursuant to this Note. Furthermore, in addition to any other
      remedies, the Holder shall have the right (but not the obligation) to convert
      this Note at any time after (x) an Event of Default or (y) the Maturity Date
      at
      the Conversion Price then in-effect. The Holder need not provide and the Company
      hereby waives any presentment, demand, protest or other notice of any kind,
      and
      the Holder may immediately and without expiration of any grace period enforce
      any and all of its rights and remedies hereunder and all other remedies
      available to it under applicable law. Such declaration may be rescinded and
      annulled by Holder at any time prior to payment hereunder. No such rescission
      or
      annulment shall affect any subsequent Event of Default or impair any right
      consequent thereon. Except with respect to the limitation set forth in Section
      4(b)(i) hereof upon an Event of Default, notwithstanding any other provision
      of
      this Note or any Transaction Document, the Holder shall have no obligation
      to
      comply with or adhere to any limitations, if any, on the conversion of this
      Note
      or the sale of the Underlying Shares. 

     

    Section
      3. Redemptions.

     

    (a) Company’s
      Optional Cash Redemption.
      The
      Company at its option shall have the right to redeem (“Optional
      Redemption”)
      a
      portion or all amounts outstanding under this Note prior to the Maturity Date
      provided
      that
      as of
      the date of the Holder’s receipt of a Redemption Notice (as defined herein) (i)
      the Closing Bid Price of the of the Common Stock, as reported by Bloomberg,
      LP,
      is less than the Conversion Price, (ii) the Underlying Share Registration
      Statement is effective, and (iii) no Event of Default has occurred. The Company
      shall pay an amount equal to the principal amount being redeemed plus a
      redemption premium (“Redemption
      Premium”)
      equal
      to twenty percent (20%) of the principal amount being redeemed, and accrued
      interest, (collectively referred to as the “Redemption
      Amount”).
      In
      order to make a redemption, the Company shall first provide written notice
      to
      the Holder of its intention to make a redemption (the “Redemption
      Notice”)
      setting forth the amount of principal it desires to redeem. After receipt of
      the
      Redemption Notice the Holder shall have three (3) business days to elect to
      convert all or any portion of this Note, subject to the limitations set forth
      in
Section
      4(b).
      On the
      fourth (4th)
      business day after the Redemption Notice, the Company shall deliver to the
      Holder the Redemption Amount with respect to the principal amount redeemed
      after
      giving effect to conversions effected during the three (3) business day period.
      

     

    
      
         

      

      
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    Section
      4. Conversion.

     

    (a) Conversion
      at Option of Holder.

     

    (i) This
      Note
      shall be convertible into shares of Common Stock at the option of the Holder,
      in
      whole or in part at any time and from time to time, after the Original Issue
      Date (as defined in Section
      6)
      (subject to the limitations on conversion set forth in Section
      4(b)
      hereof).
      The number of shares of Common Stock issuable upon a conversion hereunder equals
      the quotient obtained by dividing (x) the outstanding amount of this Note to
      be
      converted by (y) the Conversion Price (as defined in Section
      4(c)(i)).
      The
      Company shall deliver Common Stock certificates to the Holder prior to the
      Fifth
      (5th)
      Trading
      Day after a Conversion Date.

     

    (ii) Notwithstanding
      anything to the contrary contained herein, if on any Conversion Date: (1) the
      number of shares of Common Stock at the time authorized, unissued and unreserved
      for all purposes, or held as treasury stock, is insufficient to pay principal
      and interest hereunder in shares of Common Stock; (2) the Common Stock is not
      listed or quoted for trading on the a Primary Market; or (3) the Company has
      failed to timely satisfy a conversion; then, at the option of the Holder, the
      Company, in lieu of delivering shares of Common Stock pursuant to Section
      4(a)(i),
      shall
      deliver, within three (3) Trading Days of each applicable Conversion Date,
      an
      amount in cash equal to the product of the outstanding principal amount to
      be
      converted divided by the applicable Conversion Price, and multiplied by the
      highest Closing Bid Price of the stock from date of the conversion notice till
      the date that such cash payment is made.

     

    Further,
      if the Company shall not have delivered any cash due in respect of conversion
      of
      this Note by the fifth (5th)
      Trading
      Day after the Conversion Date, the Holder may, by notice to the Company, require
      the Company to issue shares of Common Stock pursuant to Section
      4(c),
      except
      that for such purpose the Conversion Price applicable thereto shall be the
      lesser of the Conversion Price on the Conversion Date and the Conversion Price
      on the date of such Holder demand. Any such shares will be subject to the
      provisions of this Section.

     

    (iii) The
      Holder shall effect conversions by delivering to the Company a completed notice
      in the form attached hereto as Exhibit A (a “Conversion
      Notice”).
      The
      date on which a Conversion Notice is delivered is the “Conversion
      Date.”
Unless
      the Holder is converting the entire principal amount outstanding under this
      Note, the Holder is not required to physically surrender this Note to the
      Company in order to effect conversions. Conversions hereunder shall have the
      effect of lowering the outstanding principal amount of this Note plus all
      accrued and unpaid interest thereon in an amount equal to the applicable
      conversion. The Holder and the Company shall maintain records showing the
      principal amount converted and the date of such conversions. In the event of
      any
      dispute or discrepancy, the records of the Holder shall be controlling and
      determinative in the absence of manifest error.

     

    
      
         

      

      
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    (b) Certain
      Conversion Restrictions.

     

    (i) The
      Company shall not effect any conversions of this Note and the Holder shall
      not
      have the right to convert any portion of this Note or receive shares of Common
      Stock as payment of interest hereunder to the extent that after giving effect
      to
      such such conversion or receipt of such interest payment, the Holder, together
      with any affiliate thereof, would beneficially own (as determined in accordance
      with Section 13(d) of the Exchange Act and the rules promulgated thereunder)
      in
      excess of 4.99% of the number of shares of Common Stock outstanding immediately
      after giving effect to such conversion or receipt of shares as payment of
      interest. Since the Holder will not be obligated to report to the Company the
      number of shares of Common Stock it may hold at the time of a conversion
      hereunder, unless the conversion at issue would result in the issuance of shares
      of Common Stock in excess of 4.99% of the then outstanding shares of Common
      Stock without regard to any other shares which may be beneficially owned by
      the
      Holder or an affiliate thereof, the Holder shall have the authority and
      obligation to determine whether the restriction contained in this Section will
      limit any particular conversion hereunder and to the extent that the Holder
      determines that the limitation contained in this Section applies, the
      determination of which portion of the principal amount of this Note is
      convertible shall be the responsibility and obligation of the Holder. If the
      Holder has delivered a Conversion Notice for a principal amount of this Note
      that, without regard to any other shares that the Holder or its affiliates
      may
      beneficially own, would result in the issuance in excess of the permitted amount
      hereunder, the Company shall notify the Holder of this fact and shall honor
      the
      conversion for the maximum principal amount permitted to be converted on such
      Conversion Date in accordance with the periods described in Section
      4(a)(i)
      and, any
      principal amount tendered for conversion in excess of the permitted amount
      hereunder shall remain outstanding under this Note. The provisions of this
      Section may be waived by a Holder (but only as to itself and not to any other
      Holder) upon not less than 65 days prior notice to the Company. Other Holders
      shall be unaffected by any such waiver.

     

    (ii)
      (RESERVED) 

     

    (c) Conversion
      Price and Adjustments to Conversion Price.

     

    (i) The
      conversion price in effect on any Conversion Date shall be equal to $0.41 per
      share (the “Conversion
      Price”).
      In
      the event that the Company has not raised at least One Million Dollars
      ($1,000,000) in additional equity capital between the date of the First Closing
      and the date that is one hundred twenty (120) days after the date of the First
      Closing (the “Equity Requirement Date”), the Conversion Price shall
      automatically become $0.25 per share, effective the first Business Day after
      the
      Equity Requirement Date. The Conversion Price may be adjusted pursuant to the
      terms of this Note.

     

    (ii) If
      the
      Company, at any time while this Note is outstanding, shall (a) pay a stock
      dividend or otherwise make a distribution or distributions on shares of its
      Common Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock, (b) subdivide outstanding shares of Common Stock into
      a
      larger number of shares, (c) combine (including by way of reverse stock split)
      outstanding shares of Common Stock into a smaller number of shares, or (d)
      issue
      by reclassification of shares of the Common Stock any shares of capital stock
      of
      the Company, then the Conversion Price shall be multiplied by a fraction of
      which the numerator shall be the number of shares of Common Stock (excluding
      treasury shares, if any) outstanding before such event and of which the
      denominator shall be the number of shares of Common Stock outstanding after
      such
      event. Any adjustment made pursuant to this Section shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such dividend or distribution and shall become effective immediately
      after the effective date in the case of a subdivision, combination or
      re-classification.

     

    
      
         

      

      
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    (iii) If
      the
      Company, at any time while this Note is outstanding, shall issue rights, options
      or warrants to all holders of Common Stock (and not to the Holder) entitling
      them to subscribe for or purchase shares of Common Stock at a price per share
      less than the Conversion Price, then the Conversion Price shall be multiplied
      by
      a fraction, of which the denominator shall be the number of shares of the Common
      Stock (excluding treasury shares, if any) outstanding on the date of issuance
      of
      such rights or warrants (plus the number of additional shares of Common Stock
      offered for subscription or purchase), and of which the numerator shall be
      the
      number of shares of the Common Stock (excluding treasury shares, if any)
      outstanding on the date of issuance of such rights or warrants, plus the number
      of shares which the aggregate offering price of the total number of shares
      so
      offered would purchase at the Conversion Price. Such adjustment shall be made
      whenever such rights or warrants are issued, and shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such rights, options or warrants. However, upon the expiration of
      any
      such right, option or warrant to purchase shares of the Common Stock the
      issuance of which resulted in an adjustment in the Conversion Price pursuant
      to
      this Section, if any such right, option or warrant shall expire and shall not
      have been exercised, the Conversion Price shall immediately upon such expiration
      be recomputed and effective immediately upon such expiration be increased to
      the
      price which it would have been (but reflecting any other adjustments in the
      Conversion Price made pursuant to the provisions of this Section after the
      issuance of such rights or warrants) had the adjustment of the Conversion Price
      made upon the issuance of such rights, options or warrants been made on the
      basis of offering for subscription or purchase only that number of shares of
      the
      Common Stock actually purchased upon the exercise of such rights, options or
      warrants actually exercised.

     

    (iv) If
      the
      Company or any subsidiary thereof, as applicable, at any time while this Note
      is
      outstanding, shall issue shares of Common Stock or rights, warrants, options
      or
      other securities or debt that are convertible into or exchangeable for shares
      of
      Common Stock (“Common
      Stock Equivalents”)
      entitling any Person to acquire shares of Common Stock, at a price per share
      less than the Conversion Price (if the holder of the Common Stock or Common
      Stock Equivalent so issued shall at any time, whether by operation of purchase
      price adjustments, reset provisions, floating conversion, exercise or exchange
      prices or otherwise, or due to warrants, options or rights per share which
      is
      issued in connection with such issuance, be entitled to receive shares of Common
      Stock at a price per share which is less than the Conversion Price, such
      issuance shall be deemed to have occurred for less than the Conversion Price),
      then, at the sole option of the Holder, the Conversion Price shall be adjusted
      to mirror the conversion, exchange or purchase price for such Common Stock
      or
      Common Stock Equivalents (including any reset provisions thereof) at issue.
      Such
      adjustment shall be made whenever such Common Stock or Common Stock Equivalents
      are issued. The Company shall notify the Holder in writing, no later than one
      (1) business day following the issuance of any Common Stock or Common Stock
      Equivalent subject to this Section, indicating therein the applicable issuance
      price, or of applicable reset price, exchange price, conversion price and other
      pricing terms. No adjustment under this Section shall be made as a result of
      issuances of Excluded Securities.

     

    
      
         

      

      
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    (v) If
      the
      Company, at any time while this Note is outstanding, shall distribute to all
      holders of Common Stock (and not to the Holder) evidences of its indebtedness
      or
      assets or rights or warrants to subscribe for or purchase any security, then
      in
      each such case the Conversion Price at which this Note shall thereafter be
      convertible shall be determined by multiplying the Conversion Price in effect
      immediately prior to the record date fixed for determination of stockholders
      entitled to receive such distribution by a fraction of which the denominator
      shall be the Closing Bid Price determined as of the record date mentioned above,
      and of which the numerator shall be such Closing Bid Price on such record date
      less the then fair market value at such record date of the portion of such
      assets or evidence of indebtedness so distributed applicable to one outstanding
      share of the Common Stock as determined by the Board of Directors in good faith.
      In either case the adjustments shall be described in a statement provided to
      the
      Holder of the portion of assets or evidences of indebtedness so distributed
      or
      such subscription rights applicable to one share of Common Stock. Such
      adjustment shall be made whenever any such distribution is made and shall become
      effective immediately after the record date mentioned above.

     

    (vi) In
      case
      of any reclassification of the Common Stock or any compulsory share exchange
      pursuant to which the Common Stock is converted into other securities, cash
      or
      property, the Holder shall have the right thereafter to, at its option, (A)
      convert the then outstanding principal amount, together with all accrued but
      unpaid interest and any other amounts then owing hereunder in respect of this
      Note into the shares of stock and other securities, cash and property receivable
      upon or deemed to be held by holders of the Common Stock following such
      reclassification or share exchange, and the Holder of this Note shall be
      entitled upon such event to receive such amount of securities, cash or property
      as the shares of the Common Stock of the Company into which the then outstanding
      principal amount, together with all accrued but unpaid interest and any other
      amounts then owing hereunder in respect of this Note could have been converted
      immediately prior to such reclassification or share exchange would have been
      entitled, or (B) require the Company to prepay the outstanding principal amount
      of this Note, plus all interest and other amounts due and payable thereon.
      The
      entire prepayment price shall be paid in cash. This provision shall similarly
      apply to successive reclassifications or share exchanges.

     

    (vii) Whenever
      the Conversion Price is adjusted pursuant to Section
      4
      hereof,
      the Company shall promptly mail to the Holder a notice setting forth the
      Conversion Price after such adjustment and setting forth a brief statement
      of
      the facts requiring such adjustment.

     

    
      
         

      

      
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    (viii) If
      (A)
      the Company shall declare a dividend (or any other distribution) on the Common
      Stock; (B) the Company shall declare a special nonrecurring cash dividend on
      or
      a redemption of the Common Stock; (C) the Company shall authorize the granting
      to all holders of the Common Stock rights or warrants to subscribe for or
      purchase any shares of capital stock of any class or of any rights; (D) the
      approval of any stockholders of the Company shall be required in connection
      with
      any reclassification of the Common Stock, any consolidation or merger to which
      the Company is a party, any sale or transfer of all or substantially all of
      the
      assets of the Company, of any compulsory share exchange whereby the Common
      Stock
      is converted into other securities, cash or property; or (E) the Company shall
      authorize the voluntary or involuntary dissolution, liquidation or winding
      up of
      the affairs of the Company; then, in each case, the Company shall cause to
      be
      filed at each office or agency maintained for the purpose of conversion of
      this
      Note, and shall cause to be mailed to the Holder at its last address as it
      shall
      appear upon the stock books of the Company, at least twenty (20) calendar days
      prior to the applicable record or effective date hereinafter specified, a notice
      stating (x) the date on which a record is to be taken for the purpose of such
      dividend, distribution, redemption, rights or warrants, or if a record is not
      to
      be taken, the date as of which the holders of the Common Stock of record to
      be
      entitled to such dividend, distributions, redemption, rights or warrants are
      to
      be determined or (y) the date on which such reclassification, consolidation,
      merger, sale, transfer or share exchange is expected to become effective or
      close, and the date as of which it is expected that holders of the Common Stock
      of record shall be entitled to exchange their shares of the Common Stock for
      securities, cash or other property deliverable upon such reclassification,
      consolidation, merger, sale, transfer or share exchange, provided, that the
      failure to mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to convert this Note during the 20-day
      calendar period commencing the date of such notice to the effective date of
      the
      event triggering such notice.

     

    (ix) In
      case
      of any (1) merger or consolidation of the Company or any subsidiary of the
      Company with or into another Person, or (2) sale by the Company or any
      subsidiary of the Company of more than one-half of the assets of the Company
      in
      one or a series of related transactions, a Holder shall have the right to (A)
      exercise any rights under Section
      2(b),
      (B)
      convert the aggregate amount of this Note then outstanding into the shares
      of
      stock and other securities, cash and property receivable upon or deemed to
      be
      held by holders of Common Stock following such merger, consolidation or sale,
      and such Holder shall be entitled upon such event or series of related events
      to
      receive such amount of securities, cash and property as the shares of Common
      Stock into which such aggregate principal amount of this Note could have been
      converted immediately prior to such merger, consolidation or sales would have
      been entitled, or (C) in the case of a merger or consolidation, require the
      surviving entity to issue to the Holder a convertible note with a principal
      amount equal to the aggregate principal amount of this Note then held by such
      Holder, plus all accrued and unpaid interest and other amounts owing thereon,
      which such newly issued convertible Note shall have terms identical (including
      with respect to conversion) to the terms of this Note, and shall be entitled
      to
      all of the rights and privileges of the Holder of this Note set forth herein
      and
      the agreements pursuant to which this Notes were issued. In the case of clause
      (C), the conversion price applicable for the newly issued shares of convertible
      preferred stock or convertible Notes shall be based upon the amount of
      securities, cash and property that each share of Common Stock would receive
      in
      such transaction and the Conversion Price in effect immediately prior to the
      effectiveness or closing date for such transaction. The terms of any such
      merger, sale or consolidation shall include such terms so as to continue to
      give
      the Holder the right to receive the securities, cash and property set forth
      in
      this Section upon any conversion or redemption following such event. This
      provision shall similarly apply to successive such events.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (d) Other
      Provisions.

     

    (i) The
      Company shall at all times reserve and keep available out of its authorized
      Common Stock the full number of shares of Common Stock issuable upon conversion
      of all outstanding amounts under this Note; and within three (3) Business Days
      following the receipt by the Company of a Holder's notice that such minimum
      number of Underlying Shares is not so reserved, the Company shall promptly
      reserve a sufficient number of shares of Common Stock to comply with such
      requirement.

     

    (ii) All
      calculations under this Section
      4
      shall be
      rounded up to the nearest $0.0001 or whole share.

     

    (iiii) The
      Company covenants that it will at all times reserve and keep available out
      of
      its authorized and unissued shares of Common Stock solely for the purpose of
      issuance upon conversion of this Note and payment of interest on this Note,
      each
      as herein provided, free from preemptive rights or any other actual contingent
      purchase rights of persons other than the Holder, not less than such number
      of
      shares of the Common Stock as shall (subject to any additional requirements
      of
      the Company as to reservation of such shares set forth in this Note or in the
      Transaction Documents) be issuable (taking into account the adjustments and
      restrictions set forth herein) upon the conversion of the outstanding principal
      amount of this Note and payment of interest hereunder. The Company covenants
      that all shares of Common Stock that shall be so issuable shall, upon issue,
      be
      duly and validly authorized, issued and fully paid, nonassessable and, if the
      Underlying Shares Registration Statement has been declared effective under
      the
      Securities Act, registered for public sale in accordance with such Underlying
      Shares Registration Statement.

     

    (iv) Upon
      a
      conversion hereunder the Company shall not be required to issue stock
      certificates representing fractions of shares of the Common Stock, but may
      if
      otherwise permitted, make a cash payment in respect of any final fraction of
      a
      share based on the Closing Bid Price at such time. If the Company elects not,
      or
      is unable, to make such a cash payment, the Holder shall be entitled to receive,
      in lieu of the final fraction of a share, one whole share of Common
      Stock.

     

    (v) The
      issuance of certificates for shares of the Common Stock on conversion of this
      Note shall be made without charge to the Holder thereof for any documentary
      stamp or similar taxes that may be payable in respect of the issue or delivery
      of such certificate, provided that the Company shall not be required to pay
      any
      tax that may be payable in respect of any transfer involved in the issuance
      and
      delivery of any such certificate upon conversion in a name other than that
      of
      the Holder of such Note so converted and the Company shall not be required
      to
      issue or deliver such certificates unless or until the person or persons
      requesting the issuance thereof shall have paid to the Company the amount of
      such tax or shall have established to the satisfaction of the Company that
      such
      tax has been paid.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (vi) Nothing
      herein shall limit a Holder's right to pursue actual damages or declare an
      Event
      of Default pursuant to Section
      2
      herein
      for the Company 's failure to deliver certificates representing shares of Common
      Stock upon conversion within the period specified herein and such Holder shall
      have the right to pursue all remedies available to it at law or in equity
      including, without limitation, a decree of specific performance and/or
      injunctive relief, in each case without the need to post a bond or provide
      other
      security. The exercise of any such rights shall not prohibit the Holder from
      seeking to enforce damages pursuant to any other Section hereof or under
      applicable law. 

     

    (vii) In
      addition to any other rights available to the Holder, if the Company fails
      to
      deliver to the Holder such certificate or certificates pursuant to Section
      4(a)(i) by
      the
      fifth (5th)
      Trading
      Day after the Conversion Date, and if after such fifth (5th)
      Trading
      Day the Holder purchases (in an open market transaction or otherwise) Common
      Stock to deliver in satisfaction of a sale by such Holder of the Underlying
      Shares which the Holder anticipated receiving upon such conversion (a
“Buy-In”),
      then
      the Company shall (A) pay in cash to the Holder (in addition to any remedies
      available to or elected by the Holder) the amount by which (x) the Holder's
      total purchase price (including brokerage commissions, if any) for the Common
      Stock so purchased exceeds (y) the product of (1) the aggregate number of shares
      of Common Stock that such Holder anticipated receiving from the conversion
      at
      issue multiplied by (2) the market price of the Common Stock at the time of
      the
      sale giving rise to such purchase obligation and (B) at the option of the
      Holder, either reissue a Note in the principal amount equal to the principal
      amount of the attempted conversion or deliver to the Holder the number of shares
      of Common Stock that would have been issued had the Company timely complied
      with
      its delivery requirements under Section
      4(a)(i).
      For
      example, if the Holder purchases Common Stock having a total purchase price
      of
      $11,000 to cover a Buy-In with respect to an attempted conversion of Notes
      with
      respect to which the market price of the Underlying Shares on the date of
      conversion was a total of $10,000 under clause (A) of the immediately preceding
      sentence, the Company shall be required to pay the Holder $1,000. The Holder
      shall provide the Company written notice indicating the amounts payable to
      the
      Holder in respect of the Buy-In.

     

    Section
      5. Notices.
       Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms hereof 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) Trading 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
                a copy to: 

            	 	
              Hodgson
                Russ LLP

            
	 	 	
              1540
                Broadway, 24th
                Floor

            
	 	 	
              New
                York, New York 10036

            
	 	 	
              Attention:
                Eric Pinero, Esq.

            
	 	 	
              Telephone:
                (212) 751-4300

            
	 	 	
              Facsimile:
                (212) 751-0928

            

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    
      	
              If
                to the Holder:

            	 	
              YA
                Global Investments, L.P. 

              (f/k/a
                Cornell Capital Partners, L.P.)

            
	 	 	
              101
                Hudson Street, Suite 3700

            
	 	 	
              Jersey
                City, NJ 07303

            
	 	 	
              Attention: Mark
                Angelo

            
	 	 	
              Telephone: (201)
                985-8300

            
	 	 	 
	
              With
                a copy to:

            	 	
              Troy
                Rillo, Esq. or David Gonzalez, Esq. 

            
	 	 	
              101
                Hudson Street - Suite 3700

            
	 	 	
              Jersey
                City, NJ 07302

            
	 	 	
              Telephone: (201)
                985-8300

            
	 	 	
              Facsimile: (201)
                985-8266

            
	 	 	 

    

    

    or
      at
      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 three (3) business days prior to the effectiveness of such change.
      Written confirmation of receipt (i) given by the recipient of such notice,
      consent, waiver or other communication, (ii) 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 (iii)
      provided by a nationally recognized overnight delivery 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.

     

    Section
      6. Definitions.
      For the
      purposes hereof, the following terms shall have the following
      meanings:

     

    “Approved
      Stock Plan”
means
      a
      stock or stock option plan that has been or will be approved by the Board of
      Directors of the Company pursuant to which the Company’s securities may be
      issued to any employee, officer, director or consultant for services provided
      to
      the Company.

     

    “Business
      Day”
means
      any day except Saturday, Sunday and any day which shall be a federal legal
      holiday in the United States or a day on which banking institutions are
      authorized or required by law or other government action to close.

     

    “Change
      of Control Transaction”
means
      the occurrence of (a) an acquisition after the date hereof by an individual
      or
      legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the
      Exchange Act) of effective control (whether through legal or beneficial
      ownership of capital stock of the Company, by contract or otherwise) of in
      excess of fifty percent (50%) of the voting securities of the Company (except
      that the acquisition of voting securities by the Holder shall not constitute
      a
      Change of Control Transaction for purposes hereof), (b) a replacement at one
      time or over time of more than one-half of the members of the board of directors
      of the Company which is not approved by a majority of those individuals who
      are
      members of the board of directors on the date hereof (or by those individuals
      who are serving as members of the board of directors on any date whose
      nomination to the board of directors was approved by a majority of the members
      of the board of directors who are members on the date hereof), (c) the merger,
      consolidation or sale of fifty percent (50%) or more of the assets of the
      Company or any subsidiary of the Company in one or a series of related
      transactions with or into another entity, or (d) the execution by the Company
      of
      an agreement to which the Company is a party or by which it is bound, providing
      for any of the events set forth above in (a), (b) or (c).

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    “Closing
      Bid Price”
means
      the price per share in the last reported trade of the Common Stock on a Primary
      Market or on the exchange which the Common Stock is then listed as quoted by
      Bloomberg, LP.

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock, par value $.001, of the Company and stock of any other class
      into which such shares may hereafter be changed or reclassified.

     

    “Conversion
      Date”
shall
      mean the date upon which the Holder gives the Company notice of their intention
      to effectuate a conversion of this Note into shares of the Company’s Common
      Stock as outlined herein.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Excluded
      Securities”
means,
      (a) shares issued or deemed to have been issued by the Company pursuant to
      an
      Approved Stock Plan (b) shares of Common Stock issued or deemed to be issued
      by
      the Company upon the conversion, exchange or exercise of any right, option,
      obligation or security outstanding on the date prior to date of the Securities
      Purchase Agreement, provided that the terms of such right, option, obligation
      or
      security are not amended or otherwise modified on or after the date of the
      Securities Purchase Agreement, and provided that the conversion price, exchange
      price, exercise price or other purchase price is not reduced, adjusted or
      otherwise modified and the number of shares of Common Stock issued or issuable
      is not increased (whether by operation of, or in accordance with, the relevant
      governing documents or otherwise) on or after the date of the Securities
      Purchase Agreement, (c) the shares of Common Stock issued or deemed to be
      issued by the Company upon conversion of this Note, (d) any
      issuance by the Company of securities in connection with a strategic partnership
      or a joint venture (the primary purpose of which is not to raise equity
      capital), (e) any issuance by the Company of securities as consideration for
      a
      merger or consolidation or the acquisition of a business, product, license,
      or
      other assets of another person or entity, (f)
      securities which may be issued by the Company for aggregate gross proceeds
      not
      to exceed Two Million Dollars ($2,000,000) from sources other than the Buyer(s)
      in the next six (6) months from the date hereof.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    “Original
      Issue Date”
shall
      mean the date of the first issuance of this Note regardless of the number of
      transfers and regardless of the number of instruments, which may be issued
      to
      evidence such Note.

     

    “Person”
means
      a
      corporation, an association, a partnership, organization, a business, an
      individual, a government or political subdivision thereof or a governmental
      agency.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder.

     

    “Trading
      Day”
means
      a
      day on which the shares of Common Stock are quoted on the OTC or quoted or
      traded on such Primary Market on which the shares of Common Stock are then
      quoted or listed; provided, that in the event that the shares of Common Stock
      are not listed or quoted, then Trading Day shall mean a Business
      Day.

     

    “Transaction
      Documents”
means
      the Securities Purchase Agreement or any other agreement delivered in connection
      with the Securities Purchase Agreement, including, without limitation, the
      Security Agreement, the Irrevocable Transfer Agent Instructions, and the
      Registration Rights Agreement.

     

    “Underlying
      Shares”
means
      the shares of Common Stock issuable upon conversion of this Note or as payment
      of interest in accordance with the terms hereof.

     

    “Underlying
      Shares Registration Statement”
means
      a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement, covering among other things the resale of the Underlying
      Shares and naming the Holder as a “selling stockholder” thereunder.

     

    Section
      7. Except
      as
      expressly provided herein, no provision of this Note shall alter or impair
      the
      obligations of the Company, which are absolute and unconditional, to pay the
      principal of, interest and other charges (if any) on, this Note at the time,
      place, and rate, and in the coin or currency, herein prescribed. This Note
      is a
      direct obligation of the Company. This Note ranks pari passu with all other
      Notes now or hereafter issued under the terms set forth herein. As long as
      this
      Note is outstanding, the Company shall not and shall cause their subsidiaries
      not to, without the consent of the Holder, (i) amend its certificate of
      incorporation, bylaws or other charter documents so as to adversely affect
      any
      rights of the Holder; (ii) repay, repurchase or offer to repay, repurchase
      or
      otherwise acquire shares of its Common Stock or other equity securities other
      than as to the Underlying Shares to the extent permitted or required under
      the
      Transaction Documents; or (iii) enter into any agreement with respect to any
      of
      the foregoing. 

     

    Section
      8. This
      Note
      shall not entitle the Holder to any of the rights of a stockholder of the
      Company, including without limitation, the right to vote, to receive dividends
      and other distributions, or to receive any notice of, or to attend, meetings
      of
      stockholders or any other proceedings of the Company, unless and to the extent
      converted into shares of Common Stock in accordance with the terms
      hereof.

     

    Section
      9. If
      this
      Note is mutilated, lost, stolen or destroyed, the Company shall execute and
      deliver, in exchange and substitution for and upon cancellation of the mutilated
      Note, or in lieu of or in substitution for a lost, stolen or destroyed Note,
      a
      new Note for the principal amount of this Note so mutilated, lost, stolen or
      destroyed but only upon receipt of evidence of such loss, theft or destruction
      of such Note, and of the ownership hereof, and indemnity, if requested, all
      reasonably satisfactory to the Company.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    Section
      10. No
      indebtedness of the Company is senior to this Note in right of payment, whether
      with respect to interest, damages or upon liquidation or dissolution or
      otherwise. Without the Holder’s consent, the Company will not and will not
      permit any of their subsidiaries to, directly or indirectly, enter into, create,
      incur, assume or suffer to exist any indebtedness of any kind, on or with
      respect to any of its property or assets now owned or hereafter acquired or
      any
      interest therein or any income or profits there from that is senior in any
      respect to the obligations of the Company under this Note.

     

    Section
      11. This
      Note
      shall be governed by and construed in accordance with the laws of the State
      of
      New Jersey, without giving effect to conflicts of laws thereof. Each of the
      parties consents to the jurisdiction of the Superior Courts of the State of
      New
      Jersey sitting in Hudson County, New Jersey and the U.S. District Court for
      the District of New Jersey sitting in Newark, New Jersey in connection with
      any
      dispute arising under this Note and hereby waives, to the maximum extent
      permitted by law, any objection, including any objection based on forum non conveniens
      to the
      bringing of any such proceeding in such jurisdictions. 

     

    Section
      12. If
      the
      Company fails to strictly comply with the terms of this Note, then the Company
      shall reimburse the Holder promptly for all fees, costs and expenses, including,
      without limitation, attorneys’ fees and expenses incurred by the Holder in any
      action in connection with this Note, including, without limitation, those
      incurred: (i) during any workout, attempted workout, and/or in connection with
      the rendering of legal advice as to the Holder’s rights, remedies and
      obligations, (ii) collecting any sums which become due to the Holder, (iii)
      defending or prosecuting any proceeding or any counterclaim to any proceeding
      or
      appeal; or (iv) the protection, preservation or enforcement of any rights or
      remedies of the Holder.

     

    Section
      13. Any
      waiver by the Holder of a breach of any provision of this Note shall not operate
      as or be construed to be a waiver of any other breach of such provision or
      of
      any breach of any other provision of this Note. The failure of the Holder to
      insist upon strict adherence to any term of this Note on one or more occasions
      shall not be considered a waiver or deprive that party of the right thereafter
      to insist upon strict adherence to that term or any other term of this Note.
      Any
      waiver must be in writing.

     

    Section
      14. If
      any
      provision of this Note is invalid, illegal or unenforceable, the balance of
      this
      Note shall remain in effect, and if any provision is inapplicable to any person
      or circumstance, it shall nevertheless remain applicable to all other persons
      and circumstances. If it shall be found that any interest or other amount deemed
      interest due hereunder shall violate applicable laws governing usury, the
      applicable rate of interest due hereunder shall automatically be lowered to
      equal the maximum permitted rate of interest. The Company covenants (to the
      extent that it may lawfully do so) that it shall not at any time insist upon,
      plead, or in any manner whatsoever claim or take the benefit or advantage of,
      any stay, extension or usury law or other law which would prohibit or forgive
      the Company from paying all or any portion of the principal of or interest
      on
      this Note as contemplated herein, wherever enacted, now or at any time hereafter
      in force, or which may affect the covenants or the performance of this
      indenture, and the Company (to the extent it may lawfully do so) hereby
      expressly waives all benefits or advantage of any such law, and covenants that
      it will not, by resort to any such law, hinder, delay or impeded the execution
      of any power herein granted to the Holder, but will suffer and permit the
      execution of every such as though no such law has been enacted.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    Section
      15. Whenever
      any payment or other obligation hereunder shall be due on a day other than
      a
      Business Day, such payment shall be made on the next succeeding Business
      Day.

     

    Section
      16. This
      Note
      is exchangeable for an equal aggregate principal amount of Notes of different
      authorized denominations, as requested by the Holder surrendering the same.
      No
      service charge will be made for such registration of transfer or
      exchange.

     

    Section
      17. THE
      PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY
      OF
      THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON
      OR
      ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
      DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
      OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT
      FOR
      THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

     

    [REMAINDER
      OF PAGE INTENTIONLLY LEFT BLANK]

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Secured Convertible Note to be duly executed by a duly
      authorized officer as of the date set forth above.

    
      	 	 	 
	 	
              COMPANY:

              
                TXP
                  CORPORATION 

              

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Michael Shores
	 	
              

              Name: Michael
                Shores

            
	 	
              Title: Chief
                Executive Officer

            

    

    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

     

    CONVERSION
      NOTICE

     

    (To
      be executed by the Holder in order to Convert the Note)

    

    
      	
              TO:
                

            

    

    

    The
      undersigned hereby irrevocably elects to convert $      
      of the principal amount of Note No. TXP-2-2 into Shares of Common Stock of
      TXP
      CORPORATION,
      according to the conditions stated therein, as of the Conversion Date written
      below.

     

    
      	
              Conversion
                Date:

            	 
	
              Amount
                to be converted:

            	 $	
                      

            
	
              Conversion
                Price:

            	 $	
                      

            
	
              Number
                of shares of Common 

              Stock
                to be issued:

            	 
	
              Amount
                of Note

              Unconverted:

            	 $	
                        

            
	 	 	 
	
              Please
                issue the shares of Common Stock in the following name and to the
                following address:

            
	
              Issue
                to:

            	 	 
	 	 	 
	
              Authorized
                Signature:

            	 
	
              Name:

            	 
	
              Title:

            	 
	
              Broker
                DTC Participant Code:

            	 	 
	
              Account
                Number:

            	 	 

    

    

    
      
         

      

      
        18Exhibit
      10.1

     

    DIRECTOR
      AND OFFICER INDEMNIFICATION AGREEMENT

     

    THIS
      INDEMNIFICATION AGREEMENT, dated as of December __, 2007 (this "Agreement"),
      is
      made by and between HOUSERAISING, INC., a North Carolina corporation (the
      "Company"), and _________________________ ("Indemnitee").

     

    RECITALS

     

    A.
      It is
      important to the Company to attract and retain as directors and officers the
      most capable persons reasonably available.

     

    B.
      Indemnitee is a director and/or officer of the Company.

     

    C.
      Both
      the Company and Indemnitee recognize the increased risk of litigation and other
      claims being asserted against directors and officers of companies in today's
      environment.

     

    D.
      The
      Company's Amended Articles of Incorporation and By-laws (together, the
      "Constituent Documents") do not provide that the Company will indemnify its
      directors and officers and will advance expenses in connection therewith, and
      Indemnitee's continued willingness to serve as a director and/or officer of
      the
      Company, or at the Company's request to serve another entity in any capacity,
      is
      based in part on the Company’s agreement to provide indemnification of directors
      and officers by contract.

     

    E.
      In
      recognition of Indemnitee's need for substantial protection against personal
      liability in order to encourage Indemnitee's continued service to the Company
      or, at the Company's request, another entity, in an effective manner, and to
      provide Indemnitee with express contractual indemnification (regardless of,
      among other things, the absence of indemnification provisions in the Company’s
      Consituent Documents), the Company wishes to provide in this Agreement for
      the
      indemnification of Indemnifiable Losses (as defined in Section 1(d)) and the
      advancement of Expenses (as defined in Section 1(c)) to Indemnitee as set forth
      in this Agreement and, to the extent insurance is maintained, for the continued
      coverage of Indemnitee under the Company's directors' and officers' liability
      insurance policies.

     

    NOW,
      THEREFORE, the parties hereby agree as follows:

     

    1.
      CERTAIN DEFINITIONS. In addition to terms defined elsewhere herein, the
      following terms have the following meanings when used in this Agreement with
      initial capital letters:

     

    (a)
      "AFFILIATE" has the meaning given to that term in Rule 405 under the Securities
      Act of 1933, provided, however, that for purposes of this Agreement the Company
      and its subsidiaries will not be deemed to constitute Affiliates of Indemnitee
      or the Indemnitee.

     

    (b)
      "CLAIM" means any threatened, pending or completed action, suit or proceeding
      (whether civil, criminal, administrative, arbitrative, investigative or
other),
      whether instituted by the Company or any other party (including, without
      limitation, any governmental entity), or any inquiry or investigation, whether
      instituted by the Company or any other party (including, without limitation,
      any
      governmental entity) that Indemnitee in good faith believes might lead to the
      institution of any such action, suit or proceeding.

     

    (c)
      "EXPENSES" includes all attorneys' and experts' fees, expenses and charges
      and
      all other costs, expenses and obligations paid or incurred in connection with
      investigating, defending, or participating (as a party, a witness, or otherwise)
      in (including on appeal), or preparing to defend or participate in, any
      Claim.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (d)
      "INDEMNIFIABLE LOSSES" means any and all Expenses, damages, losses, liabilities,
      judgments, fines, penalties and amounts paid or payable in settlement
      (including, without limitation, all interest, assessments and other charges
      paid
      or payable in connection with or in respect of any of the foregoing) relating
      to, resulting from or arising out of any act or failure to act by the
      Indemnitee, or his or her status as any person referred to in clause (i) of
      this
      sentence, (i) in his or her capacity as a director, officer, employee or agent
      of the Company, any of its Affiliates or any other entity as to which the
      Indemnitee is or was serving at the request of the Company as a director,
      officer, employee, member, manager, trustee, agent or any other capacity of
      another corporation, limited liability company, partnership, joint venture,
      trust or other entity or enterprise, whether or not for profit and (ii) in
      respect of any business, transaction or other activity of any entity referred
      to
      in clause (i) of this sentence.

     

    2.
      BASIC
      INDEMNIFICATION ARRANGEMENT. The Company will indemnify and hold harmless
      Indemnitee to the fullest extent permitted by the laws of the State of North
      Carolina in effect on the date hereof or as such laws may from time to time
      hereafter be amended to increase the scope of such permitted indemnification
      (but in no case less than the extent permitted under the laws in effect as
      of
      the date hereof) against all Indemnifiable Losses relating to, resulting from
      or
      arising out of any Claim. The failure by Indemnitee to notify the Company of
      such Claim will not relieve the Company from any liability hereunder unless,
      and
      only to the extent that, the Company did not otherwise learn of the Claim and
      such failure results in forfeiture by the Company of substantial defenses,
      rights or insurance coverage. Except as provided in Sections 4 and 18,
      Indemnitee will not be entitled to indemnification pursuant to this Agreement
      in
      connection with any Claim initiated by Indemnitee against the Company or any
      director or officer of the Company unless the Company has joined in or consented
      to the initiation of such Claim.

     

    3.
      ADVANCEMENT OF EXPENSES. The Indemnitee's right to indemnification in Section
      2
      of this Agreement shall include the right of Indemnitee to be advanced by the
      Company any Expenses. If so requested by Indemnitee, the Company will advance
      within two business days of such request any and all Expenses to Indemnitee
      which Indemnitee reasonably determines likely to be payable; provided, however,
      that Indemnitee will return, without interest, any such advance which remains
      unspent at the final conclusion of the Claim to which the advance related;
      and
      provided, further, that, except as provided in
      Section 18, all amounts advanced in respect of such Expenses shall be repaid
      to
      the Company by Indemnitee if it shall ultimately be determined in a final
      judgment that Indemnitee is not entitled to be indemnified for such
      Expenses.

     

    4.
      INDEMNIFICATION FOR ADDITIONAL EXPENSES. Without limiting the generality or
      effect of the foregoing, the Company will indemnify Indemnitee against and,
      if
      requested by Indemnitee, will within two business days of such request advance
      to Indemnitee, any and all attorneys' fees and other Expenses paid or incurred
      by Indemnitee in connection with any Claim asserted or brought by Indemnitee
      for
      (i) indemnification or advance payment of Expenses by the Company under this
      Agreement or any other agreement or under any provision of the Company's
      Constituent Documents now or hereafter in effect relating to Claims for
      Indemnifiable Losses and/or (ii) recovery under any directors' and officers'
      liability insurance policies maintained by the Company, regardless of whether
      Indemnitee ultimately is determined to be entitled to such indemnification,
      advance expense payment or insurance recovery, as the case may be.

     

    5.
      PARTIAL INDEMNITY, ETC. If Indemnitee is entitled under any provision of this
      Agreement to indemnification by the Company for some or a portion of any
      Indemnifiable Loss but not for all of the total amount thereof, the Company
      will
      nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee
      is
      entitled. Moreover, notwithstanding any other provision of this Agreement,
      to
      the extent that Indemnitee has been successful on the merits or otherwise in
      defense of any or all Claims relating in whole or in part to an Indemnifiable
      Loss or in defense of any issue or matter therein, including, without
      limitation, dismissal without prejudice, Indemnitee will be indemnified against
      all Expenses incurred in connection therewith. In connection with any
      determination as to whether Indemnitee is entitled to be indemnified hereunder,
      there will be a presumption that Indemnitee is so entitled, and the burden
      of
      proof shall, to the extent permitted by law, be on the Company to establish
      that
      Indemnitee is not so entitled.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    6.
      NO
      OTHER PRESUMPTION. For purposes of this Agreement, the termination of any Claim
      by judgment, order, settlement (whether with or without court approval) or
      conviction, or upon a plea of nolo contendere or its equivalent, will not create
      a presumption that Indemnitee did not meet any particular standard of conduct
      or
      have any particular belief or that a court has determined that indemnification
      is not permitted by applicable law.

     

    7.
      NON-EXCLUSIVITY, ETC. The rights of Indemnitee hereunder will be in addition
      to
      any other rights Indemnitee may have under the Constituent Documents, or the
      substantive laws of the Company's jurisdiction of incorporation, any other
      contract or otherwise (collectively, "Other Indemnity Provisions"); provided,
      however, that (i) to the extent that Indemnitee otherwise would have any greater
      right to indemnification under any Other Indemnity Provision, Indemnitee will
      be
      deemed to have such greater right hereunder and (ii) to the extent that any
      change is made to any Other Indemnity Provision which permits any greater right
      to indemnification than that provided under this Agreement as of the date
      hereof, Indemnitee will be deemed to have such greater right hereunder. The
      Company will not adopt any amendment to any of the Constituent Documents
      the effect of which would be to deny, diminish or encumber Indemnitee's right
      to
      indemnification under this Agreement or any Other Indemnity
      Provision.

     

    8.
      LIABILITY INSURANCE. To the extent the Company maintains an insurance policy
      or
      policies providing directors' and officers' liability insurance (the "D&O
      Insurance"), Indemnitee will be covered by such policy or policies, in
      accordance with its or their terms, to the maximum extent of the coverage
      available for any director or officer of the Company. Notwithstanding the
      foregoing, the Company shall not be required to cover the Indemnitee under
      its
      D&O Insurance to the same extent as other directors or officers of the
      Company, or at all, if the Company determines in good faith that such insurance
      is not available, or the premium costs (or increases in premium costs of other
      directors or officers of the Company as a result of such coverage) for such
      insurance is materially disproportionate to the amount of coverage
      provided.

     

    9.
      SUBROGATION. In the event of payment under this Agreement, the Company will
      be
      subrogated to the extent of such payment to all of the related rights of
      recovery of Indemnitee against other persons or entities (other than
      Indemnitee's successors). The Indemnitee will execute all papers reasonably
      required to evidence such rights (all of Indemnitee's reasonable Expenses,
      including attorneys' fees and charges, related thereto to be reimbursed by
      or,
      at the option of Indemnitee, advanced by the Company).

     

    10.
      NO
      DUPLICATION OF PAYMENTS. The Company will not be liable under this Agreement
      to
      make any payment in connection with any Indemnifiable Loss made against
      Indemnitee to the extent Indemnitee has otherwise actually received payment
      (net
      of Expenses incurred in connection therewith) under any insurance policy, the
      Constituent Documents and Other Indemnity Provisions or otherwise of the amounts
      otherwise indemnifiable hereunder provided that, if Indemnitee for any reason
      is
      required to disgorge any payment actually received by him, the Company shall
      be
      obligated to pay such amount to Indemnitee in accordance with the other terms
      of
      this Agreement (i.e., disregarding the terms of this Section 10).

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    11.
      DEFENSE OF CLAIMS. The Company will be entitled to participate in the defense
      (including, without limitation, the negotiation and approval of any settlement)
      of any Claim in respect of which Indemnitee may seek indemnification from the
      Company hereunder, or to assume the defense thereof, with counsel reasonably
      satisfactory to the Indemnitee, provided that in the event that (i) the use
      of
      counsel chosen by the Company to represent Indemnitee would present such counsel
      with an actual or potential conflict, (ii) the named parties in any such Claim
      (including any impleaded parties) include both the Company and Indemnitee and
      Indemnitee shall conclude that there may be one or more legal defenses available
      to him or her that are different from or in addition to those available to
      the
      Company, or (iii) any such representation by the Company would be precluded
      under the applicable standards of professional conduct then prevailing, then
      Indemnitee will be entitled to retain separate counsel (but not more than one
      law firm plus, if applicable, local counsel in respect of any particular Claim)
      at the Company's expense. Notwithstanding the preceding sentence, in any event
      the Company shall be liable to Indemnitee under this Agreement for the
      reasonable costs of investigation and preparation for the defense of any Claim
      (including, without limitation, appearing as a witness
      and reasonable fees and expenses of counsel in connection therewith). The
      Company will not, without the prior written consent of the Indemnitee, effect
      any settlement of any threatened or pending Claim that the Indemnitee is or
      could have been a party to unless such settlement solely involves the payment
      of
      money and includes an unconditional release of the Indemnitee from all liability
      on any claims that are the subject matter of such Claim.

     

    12.
      SUCCESSORS AND BINDING AGREEMENT. (a) The Company will require any successor
      (whether direct or indirect, by purchase, merger, consolidation, reorganization
      or otherwise) to all or substantially all of the business or assets of the
      Company (a "Successor"), by agreement in form and substance satisfactory to
      Indemnitee and his or her counsel, expressly to assume and agree to perform
      this
      Agreement in the same manner and to the same extent the Company would be
      required to perform if no such succession had taken place. This Agreement will
      be binding upon and inure to the benefit of the Company and may be assigned
      to a
      Successor, but will not otherwise be assignable or delegatable by the
      Company.

     

    (b)
      This
      Agreement will inure to the benefit of and be enforceable by the Indemnitee's
      personal or legal representatives, executors, administrators, successors, heirs,
      distributees, legatees and other successors.

     

    (c)
      This
      Agreement is personal in nature and neither of the parties hereto will, without
      the consent of the other, assign or delegate this Agreement or any rights or
      obligations hereunder except as expressly provided in Sections 12(a) and 12(b).
      Without limiting the generality or effect of the foregoing, Indemnitee's right
      to receive payments hereunder will not be assignable, whether by pledge,
      creation of a security interest or otherwise, other than by a transfer by the
      Indemnitee's will or by the laws of descent and distribution, and, in the event
      of any attempted assignment or transfer contrary to this Section 12(c), the
      Company will have no liability to pay any amount so attempted to be assigned
      or
      transferred.

     

    13.
      NOTICES. For all purposes of this Agreement, all communications, including
      without limitation notices, consents, requests or approvals, required or
      permitted to be given hereunder will be in writing and will be deemed to have
      been duly given when hand delivered or dispatched by electronic facsimile
      transmission (with receipt thereof orally confirmed), or five business days
      after having been mailed by United States registered or certified mail, return
      receipt requested, postage prepaid or one business day after having been sent
      for next-day delivery by a nationally recognized overnight courier service,
      addressed to the Company (to the attention of the Secretary of the Company)
      and
      to the Indemnitee at the addresses shown on the signature page hereto, or to
      such other address as any party may have furnished to the other in writing
      and
      in accordance herewith, except that notices of changes of address will be
      effective only upon receipt.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    14.
      GOVERNING LAW. The validity, interpretation, construction and performance of
      this Agreement will be governed by and construed in accordance with the
      substantive laws of the State of North Carolina, without giving effect to the
      principles of conflict of laws of such State. Each party consents to
      non-exclusive jurisdiction of the North Carolina
      Superior Court in Mecklenburg County, North Carolina or the United States
      District Court for the Western District of North Carolina (Charlotte Division)
      for purposes of any action, suit or proceeding hereunder, waives any objection
      to venue therein or any defense based on forum non conveniens or similar
      theories and agrees that service of process may be effected in any such action,
      suit or proceeding by notice given in accordance with Section 13.

     

    15.
      VALIDITY. If any provision of this Agreement or the application of any provision
      hereof to any person or circumstance is held invalid, unenforceable or otherwise
      illegal, the remainder of this Agreement and the application of such provision
      to any other person or circumstance will not be affected, and the provision
      so
      held to be invalid, unenforceable or otherwise illegal will be reformed to
      the
      extent, and only to the extent, necessary to make it enforceable, valid or
      legal.

     

    16.
      MISCELLANEOUS. No provision of this Agreement may be waived, modified or
      discharged unless such waiver, modification or discharge is agreed to in writing
      signed by Indemnitee and the Company. No waiver by either party hereto at any
      time of any breach by the other party hereto or compliance with any condition
      or
      provision of this Agreement to be performed by such other party will be deemed
      a
      waiver of similar or dissimilar provisions or conditions at the same or at
      any
      prior or subsequent time. No agreements or representations, oral or otherwise,
      expressed or implied with respect to the subject matter hereof have been made
      by
      either party that are not set forth expressly in this Agreement. References
      to
      Sections are to references to Sections of this Agreement.

     

    17.
      COUNTERPARTS. This Agreement may be executed in one or more counterparts, each
      of which will be deemed to be an original but all of which together will
      constitute one and the same agreement.

     

    18.
      LEGAL
      FEES AND EXPENSES. It is the intent of the Company that the Indemnitee not
      be
      required to incur legal fees and or other Expenses associated with the
      interpretation, enforcement or defense of Indemnitee's rights under this
      Agreement by litigation or otherwise because the cost and expense thereof would
      substantially detract from the benefits intended to be extended to the
      Indemnitee hereunder. Accordingly, without limiting the generality or effect
      of
      any other provision hereof, if it should appear to the Indemnitee that the
      Company has failed to comply with any of its obligations under this Agreement
      or
      in the event that the Company or any other person takes or threatens to take
      any
      action to declare this Agreement void or unenforceable, or institutes any
      litigation or other action or proceeding designed to deny, or to recover from,
      the Indemnitee the benefits provided or intended to be provided to the
      Indemnitee hereunder, the Company irrevocably authorizes the Indemnitee from
      time to time to retain counsel of Indemnitee's choice, at the expense of the
      Company as hereafter provided, to advise and represent the Indemnitee in
      connection with any such interpretation, enforcement or defense, including
      without limitation the initiation or defense of any litigation or other legal
      action, whether by or against the Company or any director, officer, stockholder
      or other person affiliated with the Company. Notwithstanding any existing or
      prior attorney-client relationship between the Company and such counsel, the
      Company irrevocably consents to the Indemnitee's entering into an
      attorney-client relationship with such
      counsel, and in that connection the Company and the Indemnitee agree that a
      confidential relationship shall exist between the Indemnitee and such counsel.
      Without respect to whether the Indemnitee prevails, in whole or in part, in
      connection with any of the foregoing, the Company will pay and be solely
      financially responsible for any and all attorneys' and related fees and expenses
      incurred by the Indemnitee in connection with any of the foregoing.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    19.
      RIGHT
      OF INDEMNITEE TO INDEMNIFICATION UPON APPLICATION; PROCEDURE UPON APPLICATION.
      Except as provided in Section 3, any indemnification under this Agreement shall
      be made as soon as practicable but in any event no later than 30 days after
      receipt of the written request of the Indemnitee for such indemnification (such
      request to be accompanied by reasonable supporting documentation of the
      Indemnifiable Losses), unless a determination is made within said 30 day period
      by (a) the Board by a majority vote of a quorum thereof consisting of directors
      who were not parties to such proceedings, or (b) independent legal counsel
      in a
      written opinion (which counsel shall be appointed if such a quorum is not
      obtainable), that the Indemnitee has not met the relevant standards for
      indemnification set forth in this Agreement. In the case of either (a) or (b)
      above, the Company shall send prompt written notice to the Indemnitee of such
      determination.

     

    20.
      CERTAIN INTERPRETIVE MATTERS. No provision of this Agreement will be interpreted
      in favor of, or against, either of the parties hereto by reason of the extent
      to
      which any such party or its counsel participated in the drafting thereof or
      by
      reason of the extent to which any such provision is inconsistent with any prior
      draft hereof or thereof.

     

    IN
      WITNESS WHEREOF, Indemnitee has executed and the Company has caused its duly
      authorized representative to execute this Agreement as of the date first above
      written.

     

    HOUSERAISING,
      INC.

    4801
      East
      Independence Blvd., Suite 201

    Charlotte,
      NC 28212

    

    

    By:_________________________________________

    Name:
      Greg Wessling

    Title:
      Chairman, CEO and President

    

    

    [NAME]

    [Address]

    

    

    ____________________________________________

    [Name]

    

    

    

    

    

    

    

    

    

    
      
        8

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