GUARANTY
GUARANTY,
dated
as of May 29, 2008 made by each of the undersigned (each a "Guarantor",
and
collectively, the "Guarantors"),
in
favor of YA
GLOBAL INVESTMENTS, L.P.
(the
“Buyer”).
WHEREAS,
TXP
Corporation, a Nevada corporation (the "Debtor"),
and
the Buyer are parties to the Securities Purchase Agreement of even date herewith
(the “Securities
Purchase Agreement”);
WHEREAS,
it is a
condition precedent to the Buyer purchasing the Debentures (as defined below)
that the Guarantors execute and deliver to the Buyer a guaranty guaranteeing
a
portion of the Obligations (as defined below) of the Debtor;
WHEREAS,
each
Guarantor has determined that the execution, delivery and performance of this
Guaranty directly benefits, and is in the best interest of, such
Guarantor;
WHEREAS,
the
Company has an outstanding loan (the “A/R
Loan”)
from a
bank in the amount of $500,000 which is secured by, among other things, its
accounts receivable, and guaranteed by the Guarantor;
WHEREAS,
the
A/R
Loan is due on June 1, 2008 and the Company intends to repay the loan from
the
proceeds of the Debentures and subsequently enter into a similar replacement
loan.
NOW,
THEREFORE,
in
consideration of the premises and the agreements herein and in order to induce
the Buyer to perform under the Securities Purchase Agreement, each Guarantor
hereby agrees with each Buyer as follows:
SECTION
1. Definitions.
Reference is hereby made to the Securities Purchase Agreement and the
"Convertible Debentures" (as defined therein) issued pursuant thereto
(collectively, the "Debentures")
for a
statement of the terms thereof. All terms used in this Guaranty, which are
defined in the Securities Purchase Agreement or the Debentures and not otherwise
defined herein, shall have the same meanings herein as set forth therein.
SECTION
2. Guaranty.
The
Guarantors, jointly and severally, hereby unconditionally and irrevocably,
guaranty the punctual payment, as and when due and payable, by stated maturity
or otherwise, of all Obligations (as defined in the Security Agreement between
the Debtor and the Buyer of even date herewith) of the Debtor (such Obligations,
to the extent not paid by the Debtor, being the "Guaranteed
Obligations"),
up to
a maximum of $500,000, and agrees to pay any and all expenses (including
reasonable counsel fees and expenses) reasonably incurred by the Buyer in
enforcing any rights under this Guaranty. Without limiting the generality of
the
foregoing, each Guarantor's liability hereunder shall extend to all amounts
that
constitute part of the Guaranteed Obligations and would be owed by the Debtor
to
the Buyer but for the fact that they are unenforceable or not allowable due
to
the existence of an insolvency proceeding involving any Guarantor or the Debtor
(each, a "Transaction
Party").
(a)
The
Guarantors, jointly and severally, guaranty that the Guaranteed Obligations
will
be paid strictly in accordance with the terms such obligations regardless of
any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Buyer with respect thereto.
The
obligations of each Guarantor under this Guaranty are independent of the
Guaranteed Obligations, and a separate action or actions may be brought and
prosecuted against any Guarantor to enforce such obligations, irrespective
of
whether any action is brought against any Transaction Party or whether any
Transaction Party is joined in any such action or actions. The liability of
any
Guarantor under this Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and each Guarantor hereby irrevocably waives, to the extent
permitted by law, any defenses it may now or hereafter have in any way relating
to, any or all of the following:
(i) any
lack
of validity or enforceability of the Debentures or any agreement or instrument
relating thereto;
(ii) any
change in the time, manner or place of payment of, or in any other term of,
all
or any of the Guaranteed Obligations, or any other amendment or waiver of or
any
consent to departure from the Debentures, including, without limitation, any
increase in the Guaranteed Obligations resulting from the extension of
additional credit to any Transaction Party or otherwise;
(iii) any
taking, exchange, release or non-perfection of any Collateral (as defined in
the
Security Documents), or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(iv) any
change, restructuring or termination of the corporate, limited liability company
or partnership structure or existence of any Transaction Party; or
(v) any
other
circumstance (including any statute of limitations) or any existence of or
reliance on any representation by the Buyer that might otherwise constitute
a
defense available to, or a discharge of, any Transaction Party or any other
guarantor or surety.
(b)
This
Guaranty shall continue to be effective or be reinstated, as the case may be,
if
at any time any payment of any of the Guaranteed Obligations is rescinded or
must otherwise be returned by the Buyer or any other Person upon the insolvency,
bankruptcy or reorganization of any Transaction Party or otherwise, all as
though such payment had not been made.
(c)
This
Guaranty is a continuing guaranty and shall (i) subject to Section 3(d) below,
remain in full force and effect until the payment in full of the Guaranteed
Obligations (other than inchoate indemnity obligations) and payment of all
other
amounts payable under this Guaranty (other than inchoate indemnity obligations)
and shall not terminate for any reason prior to the payment in full of the
Obligations or the Guaranteed Obligations, and (ii) be binding upon each
Guarantor and its respective successors and assigns. For the sake of clarity,
the payment or satisfaction in full or conversion in full of the Debentures
shall be deemed as payment in full of the Guaranteed Obligations and shall
immediately terminate this Guaranty automatically. This Guaranty shall inure
to
the benefit of and be enforceable by the Buyer
and its
successors, and permitted pledgees, transferees and assigns. Without limiting
the generality of the foregoing sentence, the Buyer or any Buyer may pledge,
assign or otherwise transfer all or any portion of its rights and obligations
hereunder to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Buyer herein
or
otherwise.
(d)
This
Guaranty shall automatically terminate upon the satisfaction of the following
condition: the Company has entered into a replacement loan to the A/R Loan
on
similar terms which are acceptable to the Buyer and the Company has received
proceeds from such loan of at least $500,000.
SECTION
4. Waivers.
To the
extent permitted by applicable law, each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of
the
Guaranteed Obligations and this Guaranty and any requirement that the Buyer
exhaust any right or take any action against any Transaction Party or any other
Person or any Collateral. The Guarantor acknowledges that it will receive direct
and indirect benefits from the financing arrangements contemplated herein and
that the waiver set forth in this Section 4 is knowingly made in contemplation
of such benefits. The Guarantors hereby waive any right to revoke this Guaranty,
and acknowledges that this Guaranty is continuing in nature and applies to
all
Guaranteed Obligations, whether existing now or in the future.
SECTION
5. Subrogation.
No
Guarantor may exercise any rights that it may now or hereafter acquire against
any Transaction Party or any other guarantor that arise from the existence,
payment, performance or enforcement of any Guarantor's obligations under this
Guaranty, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Buyer against any Transaction Party
or
any other guarantor or any Collateral, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from any Transaction Party
or
any other guarantor, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security solely on account of such
claim, remedy or right, unless and until all of the Guaranteed Obligations
(other than inchoate indemnity obligations) and all other amounts payable under
this Guaranty (other than inchoate indemnity obligations) shall have
indefeasibly been paid in full in cash. If any amount shall be paid to the
Guarantor in violation of the immediately preceding sentence at any time prior
to the later of the payment in full in cash of the Guaranteed Obligations and
all other amounts payable under this Guaranty, such amount shall be held in
trust for the benefit of the Buyer and shall forthwith be paid to the Buyer
to
be credited and applied to the Guaranteed Obligations and all other amounts
payable under this Guaranty, whether matured or unmatured, in accordance with
the terms of the Debenture, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Guaranty thereafter arising.
If
(a) any Guarantor shall make payment to the Buyer of all or any part of the
Guaranteed Obligations, and (b) all of the Guaranteed Obligations (other
than inchoate indemnity obligations) and all other amounts payable under this
Guaranty (other than inchoate indemnity obligations) shall indefeasibly be
paid
in full in cash, the Buyer will, at such Guarantor's request and expense,
execute and deliver to such Guarantor appropriate documents, without recourse
and without representation or warranty, necessary to evidence the transfer
by
subrogation to such Guarantor of an interest in the Guaranteed Obligations
resulting from such payment by such Guarantor.
SECTION
6. Representations,
Warranties and Covenants.
(a) Each
Guarantor hereby represents and warrants as of the date first written above
as
follows:
(i) RESERVED.
(ii) The
execution, delivery and performance by the Guarantor of this Guaranty to which
the Guarantor is a party (A) have been duly authorized by all necessary
corporate, limited liability company or limited partnership action, if
applicable, (B) do not and will not contravene its charter or by-laws, its
limited liability company or operating agreement or its certificate of
partnership or partnership agreement, as applicable, or any applicable law
or
any contractual restriction binding on the Guarantor or its properties (except
where the contravention of such contractual restriction would not result in
a
Material Adverse Effect), (C) do not and will not result in or require the
creation of any lien (other than pursuant to any Transaction Document) upon
or
with respect to any of its properties, and (D) do not and will not result in
any
default, noncompliance, suspension, revocation, impairment, forfeiture or
nonrenewal of any material permit, license, authorization or approval applicable
to it or its operations or any of its properties.
(iii) No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority is required in connection with the due execution,
delivery and performance by the Guarantor of this Guaranty or any of the other
Transaction Documents to which the Guarantor is a party (other than expressly
provided for in any of the Transaction Documents).
(iv) Each
of
this Guaranty and the other Transaction Documents to which the Guarantor is
or
will be a party, when delivered, will be, a legal, valid and binding obligation
of the Guarantor, enforceable against the Guarantor in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, suretyship or other similar
laws and equitable principles (regardless of whether enforcement is sought
in
equity or at law).
(v) There
is
no pending or, to the knowledge of the Guarantor, threatened action, suit or
proceeding against the Guarantor or to which any of the properties of the
Guarantor is subject, before any court or other governmental authority or any
arbitrator that (A) if adversely determined, could reasonably be expected to
have a Material Adverse Effect or (B) relates to this Guaranty or any of the
other Transaction Documents to which the Guarantor is a party or any transaction
contemplated hereby or thereby.
(vi) The
Guarantor (A) has read and understands the terms and conditions of the
Securities Purchase Agreement and the other Transaction Documents, and (B)
now
has and will continue to have independent means of obtaining information
concerning the affairs, financial condition and business of the Debtor and
the
other Transaction Parties, and has no need of, or right to obtain from any
Buyer, any credit or other information concerning the affairs, financial
condition or business of the Debtor or the other Transaction Parties that may
come under the control of any Buyer.
SECTION
7. Right
of Set-off.
Upon
the occurrence and during the continuance of any Event of Default, any
Buyer may, and is hereby authorized to, at any time and from time to time,
without notice to the Guarantors (any such notice being expressly waived by
each
Guarantor) and to the fullest extent permitted by law, set-off and apply any
and
all deposits (general or special, time or demand, provisional or final) at
any
time held and other indebtedness at any time owing by any Buyer to or for the
credit or the account of any Guarantor against any and all obligations of the
Guarantors now or hereafter existing under this Guaranty or any other
Transaction Document, irrespective of whether or not any Buyer shall have made
any demand under this Guaranty or any other Transaction Document and although
such obligations may be contingent or unmatured. Each Buyer agrees to notify
the
relevant Guarantor promptly after any such set-off and application made by
such
Buyer, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of any Buyer under this
Section 7 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Buyer may have under this
Guaranty or any other Transaction Document in law or otherwise.
SECTION
8. Notices,
Etc.
All
notices and other communications provided for hereunder shall be in writing
and
shall be mailed, telecopied or delivered, if to any Guarantor, to it at its
address set forth on the signature page hereto, or if to the Buyer or any Buyer,
to it at its respective address set forth in the Securities Purchase Agreement;
or as to either such Person at such other address as shall be designated by
such
Person in a written notice to such other Person complying as to delivery with
the terms of this Section 8. All such notices and other communications shall
be
effective (i) if mailed (by certified mail, postage prepaid and return receipt
requested), when received or three Business Days after deposited in the mails,
whichever occurs first; (ii) if telecopied, when transmitted and confirmation
is
received, provided same is on a Business Day and, if not, on the next Business
Day; or (iii) if delivered by hand, upon delivery, provided same is on a
Business Day and, if not, on the next Business Day.
SECTION
9. Governing
Law.
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of New Jersey without regard to the principles of conflict of laws.
The parties further agree that any action between them shall be heard in Xxxxxx
County, New Jersey, and expressly consent to the jurisdiction and venue of
the
Superior Court of New Jersey, sitting in Xxxxxx County and the United States
District Court for the District of New Jersey sitting in Newark, New Jersey
for
the adjudication of any civil action asserted pursuant to this
Paragraph.
SECTION
10. Miscellaneous.
(a)
Each
Guarantor will make each payment hereunder in lawful money of the United States
of America and in immediately available funds to each Buyer, at such address
specified by such Buyer from time to time by notice to the
Guarantors.
(b)
No
amendment or waiver of any provision of this Guaranty and no consent to any
departure by any Guarantor therefrom shall in any event be effective unless
the
same shall be in writing and signed by each Guarantor and each Buyer, and then
such waiver or consent shall be effective only in the specific instance and
for
the specific purpose for which given.
(c)
No
failure on the part of any Buyer to exercise, and no delay in exercising, any
right hereunder or under any other Transaction Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder
or under any Transaction Document preclude any other or further exercise thereof
or the exercise of any other right. The rights and remedies of the Buyer and
the
Buyer provided herein and in the other Transaction Documents are cumulative
and
are in addition to, and not exclusive of, any rights or remedies provided by
law. The rights of the Buyer and the Buyer under any Transaction Document
against any party thereto are not conditional or contingent on any attempt
by
the Buyer or any Buyer to exercise any of their respective rights under any
other Transaction Document against such party or against any other
Person.
(d)
Any
provision of this Guaranty that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.
(e)
This
Guaranty shall (i) be binding on each Guarantor and its respective successors
and assigns, and (ii) inure, together with all rights and remedies of the Buyer
hereunder, to the benefit of the Buyer, the Buyer and their respective
successors, transferees and assigns. None of the rights or obligations of any
Guarantor hereunder may be assigned or otherwise transferred without the prior
written consent of each Buyer.
(f)
This
Guaranty reflects the entire understanding of the transaction contemplated
hereby and shall not be contradicted or qualified by any other agreement, oral
or written, entered into before the date hereof.
(g)
Section
headings herein are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
SECTION
11. WAIVER
OF JURY TRIAL, ETC.
EACH
GUARANTOR HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS GUARANTY, OR UNDER ANY
AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED
OR
WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, AND
AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE
A
COURT AND NOT BEFORE A JURY. EACH GUARANTOR CERTIFIES THAT NO OFFICER,
REPRESENTATIVE, AGENT OR ATTORNEY OF THE BUYER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT ANY BUYER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING
OR
COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH GUARANTOR HEREBY
ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BUYER
ENTERING
INTO THIS AGREEMENT.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF,
each
Guarantor has caused this Guaranty to be executed by its respective duly
authorized officer, as of the date first above written.
|
Guarantor
|
|
|
By:
|
/s/
Xxxxxxx X. Xxxxxx
|
|
Name:
Xxxxxxx X. Xxxxxx
|
|
|
Address:
|
|
|
c/o
TXP Corporation
|
|
|
0000
Xxxxxxxx Xxxxx
|
|
|
Xxxxxxxxxx,
Xxxxx 00000
|
|
|
Attention:
Xxxxxxx X. Xxxxxx
|
|
|
Telephone:
(000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
|
|
