Cornell Yorkville Clients

[jonesieatl]

TXP : 8-K

http://www.sec.gov/Archives/edgar/data/1171749/000114420408033239/v116271_8k.htm

Of course , conversion prices of previous warrants and notes issued to Yorkville were reduced from 0.50 , 0.60 , 0.70 , 0.75 and 1.00 to 0.20. Interest rates were raised. 25% discounts to 20-day VWAP. Further adjustments beneficial to Yorkville possible.

TXP Outstanding as of May 20, 2008 : 116,704,428 shares.

That will be going up before long.

Excerpts:

On May 29, 2008, TXP Corporation (the “Company”) consummated a Securities Purchase Agreement (the “Purchase Agreement”) with YA Global Investments, L.P. (“YA Global”) providing for the sale by the Company to YA Global of its 12% secured convertible debentures in the aggregate principal amount of $5,750,000 (the “Debentures”), of which a $3,000,000 Debenture was issued on May 29, 2008 (the “First Closing”), a $1,500,000 Debenture will be issued on or about July 30, 2008 (the “Second Closing”), and a $1,250,000 Debenture will be issued on or about October 15, 2008 (the “Third Closing”).

In addition, the Purchase Agreement provides for the issuance by the Company to YA Global of five-year warrants (the “Warrants”) to purchase an aggregate of 17,000,000 shares of common stock, of which a warrant to purchase 8,870,000 shares of common stock was issued on the First Closing, a warrant to purchase 4,430,000 shares of common stock will be issued on the Second Closing, and a warrant to purchase 3,700,000 shares of common stock will be issued on the Third Closing, each exercisable into common stock a price equal to $0.20 per share, subject to adjustment as set forth in the Warrants (the “Exercise Price”).

The Debentures mature on the third anniversary of the date of issuance (the “Maturity Date”) and bear interest at a rate equal to 12% per annum. In addition, the Debentures are convertible at any time into shares of common stock of the Company at a conversion price per share equal to $0.20, subject to adjustment as set forth in the Debentures (the “Conversion Price”).

Beginning on October 31, 2008 and each monthly anniversary thereafter until paid in full, the Company will be required to redeem the outstanding principal amount of the Debentures in installments equal to $167,777 per month, in cash or in common stock (the “Redemption Shares”) at the Company’s option and if certain additional conditions are met, at a per share price equal to the lesser of (i) the Conversion Price, or (ii) a 25% discount to the lowest daily volume weighted average price for the common stock for the 20 trading days prior to the redemption payment date; provided that, the Redemption Share component of each redemption payment will be limited to 15% of the dollar value of the common stock traded over the previous 30 trading days. Moreover, the Company has the right to redeem a portion or all amounts outstanding under the Debentures prior to the Maturity Date at a 20% redemption premium provided that no event of default has occurred or is continuing.

Under the Purchase Agreement, the Company must (i) enter into a contract (or series of contracts) for the development and sale of optical network terminals on terms that are satisfactory to YA Global in total value of contracts, counterparty, and gross product margins to the Company, and (ii) complete an equity raise resulting in proceeds to the Company of at least $5,000,000 (collectively, the “Milestones”). If the Company fails to achieve at least one of the Milestones on or before October 15, 2008, then the Third Closing will not occur and YA Global will have the right to require the Company to sell the business or the assets of its iPhotonics business unit before December 31, 2008. The Company shall apply at least 80% of the proceeds of any such sale directly from the sale towards the redemption of the Debentures.

On May 29. 2008, Mr. Shores granted YA Global a five-year option to purchase an aggregate of 35,000,000 shares of common stock of the Company beneficially owned by Mr. Shores at an exercise price equal to $0.01 per share, of which the option to purchase 18,261,000 shares vested on the First Closing, the option to purchase 9,130,000 shares vests on the Second Closing, and the option to purchase 7,609,000 shares vests on the Third Closing.

In addition, on May 29, 2008 the Company amended its outstanding warrants and notes issued to YA Global pursuant to the Company’s June 2006 and March 2007 private placements. The June 2006 and March 2007 warrants to purchase an aggregate of 3,700,000 and 3,850,000 shares of common stock, respectively, were amended to reduce the exercise prices to $0.20 per share. The March 2007 notes in the aggregate principal amount of $4,000,000 were amended to reduce the conversion prices to $0.20 per share. Also, the interest rates were increased to 12% per annum and mandatory redemption payments by the Company in the amount of $100,000 per month, consisting of accrued and unpaid interest and principal, will commence on October 31, 2008.