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FORBEARANCE AGREEMENT FORBEARANCE AGREEMENT
(this “Agreement”), dated of as January 15, 2009, by
and between TXP CORPORATION, a Nevada corporation (the
“Company”), and YA GLOBAL INVESTMENTS, L.P. (formerly,
CORNELL CAPITAL PARTNERS, LP) (“YA
Global”). All capitalized terms used herein shall
have the respective meanings assigned thereto in the Transaction
Documents (as defined below) unless otherwise defined herein.
W I T N E S S E T H: WHEREAS, on March
30, 2007, the parties hereto entered into a Securities Purchase
Agreement (the “2007 Securities Purchase Agreement”);
WHEREAS, pursuant to the 2007 Securities Purchase
Agreement, YA Global purchased from the Company, among other
things, (i) Secured Convertible Note No. TXP-2-1 which was issued
on March 30, 2007 in the original principal amount of $4,000,000,
as amended, and (ii) Secured Convertible Note No. TXP-2-2 which was
issued on December 11, 2007 in the original principal amount of
$1,000,000, as amended (collectively, the “2007
Debentures”); WHEREAS, on May 29, 2008, the
parties hereto entered into a Securities Purchase Agreement (the
“2008 Securities Purchase Agreement” and collectively
with the 2007 Securities Purchase Agreement, the “Securities
Purchase Agreements”); WHEREAS, pursuant to the
2008 Securities Purchase Agreement, YA Global purchased from the
Company (i) Secured Convertible Debenture No. TXPO 3-1 which was
issued on May 29, 2008 in the original principal amount of
$3,000,000 and (ii) Secured Convertible Debenture No. TXPO 3-2
which was issued on August 31, 2008 in the original principal
amount of $1,500,000 (collectively, the “Debentures,”
and along with the 2007 Debentures, the “Debentures”);
WHEREAS, pursuant to the Securities Purchase
Agreements, the Company has issued to YA Global the
following warrants (collectively, the “Existing
Warrants”) (i) Warrant issued on March 30, 2007 for 3,850,000
shares (Warrant No: CCP-1-2/A), (ii) Warrant issued on June 5, 2006
for 3,700,000 shares (Warrant No: CCP-2-2/A), (iii) Warrant issued
on May 29, 2008 for 8,870,000 shares (Warrant No: TXPO-3-1), and
(iv) Warrant issued on August 13, 2008 for 4,430,000 shares
(Warrant No: TXPO-3-2); WHEREAS, the Securities Purchase
Agreements, the Debentures, the Warrants, and all documents and
instruments entered into in connection therewith shall be referred
to herein as the “Transaction Documents”) and
capitalized terms which are used but not defined herein have the
meaning given thereto in the Transaction Documents;
WHEREAS, the outstanding principal and accrued and unpaid interest
on the Debentures is as follows:
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Debenture Description
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Principal Outstanding
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Accrued and Unpaid Interest (as of December 17, 2008)
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Secured Convertible Debenture due issued on March
30, 2007 in the original principal amount of $4,000,000
(TXP-2-1)
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$4,000,000
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$347,027
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Secured Convertible Debenture issued on December
11, 2007 in the original principal amount of US $1,000,000
(TXP-2-2)
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$1,000,000
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$103,671
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Secured Convertible Debenture issued on May 29,
2008 in the original amount of US$3,000,000 (TXPO 3-1)
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$3,000,000
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$199,232
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Secured Convertible Debenture issued on August 13,
2008 in the original amount of US$1,500,000 (TXPO 3-2)
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$1,500,000
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$62,137
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WHEREAS, the Company has failed to make payments pursuant to
the Debentures that were due on December 15, 2008 (the
“Payment Defaults”); WHEREAS, the Company has
failed to meet certain Milestones by December 15, 2008, the
deadline to meet such Milestones (the “Milestone
Defaults”); WHEREAS, in addition, the Company has
breached the terms of the Transaction Documents as set forth in the
notice of default dated December 11, 2008 (such breaches
collectively along with the Payment Defaults and the Milestone
Defaults shall be referred to herein as the “Existing
Defaults”); WHEREAS, YA Global is willing to agree to
forbear from exercising certain of its rights and remedies on the
terms and conditions specified herein;
2
NOW, THEREFORE, in consideration of the foregoing, and the
respective agreements, warranties and covenants contained herein,
the parties hereto agree, covenant and warrant as follows:
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a.
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Acknowledgement of Obligations. The Company hereby
acknowledges, confirms and agrees that as of the date hereof, the
Company is indebted to YA Global under the Debentures and the
Transaction Documents in the outstanding principal amount plus
accrued and unpaid interest thereon set forth in the first Whereas
clause above. In addition to the principal and interest
set forth herein, all interest accrued and accruing hereafter and
all liquidated damages, fees, costs, expenses and other charges now
or hereafter payable by the Company to YA Global under the
Transaction Documents (collectively, the
“Obligations”), are unconditionally owing by the
Company to YA Global, without offset, defense or counterclaim of
any kind, nature or description whatsoever.
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b.
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Acknowledgement of Security Interests. The Company
hereby acknowledges, confirms and agrees that YA Global has and
shall continue to have valid, enforceable and perfected
first-priority liens upon and security interests in the Pledged
Property heretofore granted to YA Global pursuant to (i) the
Security Agreement between the Company and YA Global dated March
29, 2008, (ii) the intellectual property security agreement between
the Company and YA Global dated March 29, 2008, (iii) the Security
Agreement between the Company and YA Global dated March 30, 2007,
or otherwise granted to or held by YA Global.
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c.
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Binding Effect of Documents. The Company hereto
acknowledges, confirms and agrees that: (a) each of
the Transaction Documents to which it is a party has been duly
executed and delivered to YA Global by the Company, and each is in
full force and effect as of the date hereof, (b) the
agreements and obligations of the Company contained in such
documents and in this Agreement constitute the legal, valid and
binding obligations of the Company, enforceable against each in
accordance with their respective terms, and (c) YA Global is
and shall be entitled to the rights, remedies and benefits provided
for in the Transaction Documents and applicable law.
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2.
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FORBEARANCE IN RESPECT OF CERTAIN EVENTS OF DEFAULT.
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a.
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Acknowledgement of Default. The Company hereby
acknowledges and agrees that the Existing Defaults have occurred
and are continuing, and each constitutes an Event of Default and
entitles YA Global to exercise its rights and remedies under the
Transaction Documents, applicable law or otherwise. The
Company further represents and warrants that as of the date hereof
no other Event of Default under the Transaction Documents
exists. YA Global has not waived, presently do not
intend to waive and may never waive such Existing Defaults and
nothing contained herein or the transactions contemplated hereby
shall be deemed to constitute any such waiver. The
Company hereby acknowledges and agrees that YA Global has the
presently exercisable right to declare the Obligations to be
immediately due and payable under the terms of the Transaction
Documents.
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3
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i.
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In reliance upon the representations, warranties and covenants
of the Company contained in this Agreement, and subject to the
terms and conditions of this Agreement and any documents or
instruments executed in connection herewith, YA Global
agrees to forbear from exercising its rights and remedies under the
Transaction Documents or applicable law in respect of or arising
out of the Existing Defaults, subject to the conditions, amendments
and modifications contained herein for the period (the
“Forbearance Period”) commencing on the date hereof and
ending upon the occurrence of any of the following events: (i) the
Company fails to comply with any term, condition, or agreement set
forth in this Agreement, or (ii) any occurrence or existence of any
Event of Default, other than the Existing Defaults.
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ii.
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Upon the termination or expiration of th
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