8 K Item 2.03 Creation of a Direct Financial Obligation.
As previously reported in our Current Report on Form 8-K filed with the SEC on August 2, 2006, TXP Corporation (the "Company") entered into an Agreement (the "Agreement") with an accredited investor (the "Investor") on July 28, 2006 pursuant to which the Company issued to the Investor five-year warrants to purchase an aggregate of 320,000 shares of common stock (the "Warrants") as consideration for the Investor agreeing to pledge an aggregate of $2,000,000 in free-trading shares of common stock of Adobe Systems Incorporated (NASDAQ:ADBE), Fossil Incorporated (NASDAQ:FOSL) or such other shares of free-trading common stock having a value of $2,000,000 in the aggregate beneficially owned by the Investor as may be agreed upon between the parties (the “Collateral”). The Collateral is to be pledged on behalf of the Company in favor of First Bank of Canyon Creek, or such other lending or financing institution as may be agreed upon between the parties (a “Lender”), as Collateral for a loan to be obtained Company from a Lender in an amount up to $2,000,000.
On August 9, 2006, the Company consummated a Loan Agreement dated as of August 3, 2006 with First Bank of Canyon Creek (“FBCC”) pursuant to which FBCC agreed to extend a line of credit to the Company in an aggregate amount of $1,000,000 (the “Loan”) to be used by the Company for working capital and general corporate purposes. The Loan pays interest at a rate of 8.25% per annum and all principal, and accrued and unpaid interest, and is due on August 3, 2008. The Company’s obligations under the Loan Agreement are secured by a pledge of an aggregate of $1,507,000 in free-trading shares of Fossil Incorporated by the Investor. In addition, the Company’s obligations under the Loan Agreement are further guaranteed personally and through the pledge of an aggregate of 4,520,000 shares of common stock beneficially owned by Michael Shores, the Company’s Chief Executive Officer.
On August 14, 2006, the Company issued a press release announcing the consummation of the Loan Agreement with First Bank of Canyon Creek, a copy of which is attached hereto as Exhibit 99.1.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
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