Exhibit 10.1
PLAN FOR EXCHANGE OF CLAIMS
AND
RE-ORGANIZATION
This Plan for Exchange of Claims and Re-Organization (the "Plan of
Exchange") is entered into this 24th day of November 2006 by and between
WGL Entertainment Holdings, Inc. ("WGL Entertainment" or the "Issuer") and DLC
Capital Group, LLC ("DLC Capital" or the "Lender").
W I T N E S S E S T H :
WHEREAS, DLC Capital is in the business of providing financial support for
companies, such as WGL Entertainment, and, in fact, DLC Capital has provided
debt financing to WGL Entertainment;
WHEREAS, as a result, as evidenced by the various promissory notes,
debentures, and debt memoranda in existence between the Parties prior to the
execution of this Plan of Exchange, as are set forth in SCHEDULEI attached
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hereto (the "Original Debt Instruments"), WGL Entertainment is indebted to DLC
Capital (the "Original Debt");
WHEREAS, there are issues between the Parties as to the procedure for the
discharge by WGL Entertainment of its obligations to DLC Capital pursuant to the
Original Debt Instruments;
WHEREAS, the Parties acknowledge that the Original Debt, as evidenced by
the Original Debt Instruments, constitutes a claim (the "Original Claim") which
DLC Capital has against WGL Entertainment;
WHEREAS, in order to arrive at a mutually acceptable and amicable
resolution of these issues, the Parties have agreed
(a) that WGL Entertainment shall be deemed to indebted to DLC Capital
in the amount of at least approximately approximately $795,252.00 (the
"Revised Debt"), which sum includes unpaid interest, legal fees, and other
related expenses; and
(b) that the Revised Debt be evidenced by a new written instrument, in
the form attached hereto as EXHIBIT A (the "Revised Note");
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WHEREAS, the Parties acknowledge that the Revised Debt, as evidenced by the
Revised Note when executed, shall constitute a claim (the "Revised Claim") which
DLC Capital shall have against WGL Entertainment;
WHEREAS, it is the intent of the Parties that, subject to the terms of this
Plan of Exchange, the Revised Claim (and, therefore, the Revised Debt) shall be
exchanged for the Original Claim (and, therefore, the Original Debt);
WHEREAS, the Parties have agreed to petition a court of competent
jurisdiction (the "Court") for entry of an order (the "Order"), which, pursuant
to Section 3 (a) (10) of the Securities Act of 1933, as amended (the "Securities
Act") and Section 517.061 (5), Florida Statutes (collectively, the "Exemption
Statutes"), would approve this Plan of Exchange and
(a) declare that the Revised Claim (and, therefore, the Revised Debt)
may be exchanged for the Original Claim (and, therefore, the Original
Debt); and
(b) declare that the Revised Note may be exchanged for the Original
Debt Instruments.
WHEREAS, the agreement of the Parties that the Revised Claim (and,
therefore, the Revised Debt) may be exchanged for the Original Claim (and,
therefore, the Original Debt) and that the Revised Note may be exchanged for the
Original Debt Instruments shall be expressly conditioned upon entry of an Order
by Court approving this Plan of Exchange; and
WHEREAS, the Parties wish to memorialize their relationship by executing
this Plan of Exchange.
N O W T H E R E F O R E ,
In consideration of the Promises and Mutual Covenants contained herein,
given by each Party to the other in order to induce the other to enter into this
Plan of Exchange, and for other good and valuable consideration, the truth and
sufficiency of which are acknowledged, the Parties agree as follows:
1. EXCHANGES; LENDER'S RIGHTS.
The rights and obligation of the Lender under this Plan of Exchange are
subject to the following approval, terms, and conditions:
(a) upon the Order of the Court being approved by the Lender, which
approval the Lender may arbitrarily withhold in the exercise of its
absolute discretion; and
(b) upon the receipt by the Lender (or any designee of the Lender),
pursuant to the Revised Note, and on a continuous basis, of the number of
"Exchange Shares" called for by any "Notice of Exchange", as those terms
are defined in the Revised Note,
(i) without any legend restricting transfer being affixed to or
noted on said Exchange Shares;
(ii) with said Exchange Shares not being subject to any
stop-transfer restrictions; and
(iii) with said Exchange Shares being freely transferable on the
books and records of the Issuer.
Consequently, none of the provisions in this Plan of Exchange shall be
binding upon either of the Parties until the Order of the Court is approved by
the Lender, which approval the Lender may arbitrarily withhold in the exercise
of its absolute discretion.
Moreover,
(a) if any Exchange Shares are not issued and delivered to the Lender
(or the Lender's designee) by the Issuer in the manner and within the time
frame required by any Notice of Exchange; or
(b) if any Exchange Shares are issued and delivered to the Lender (or
the Lender's designee) by the Issuer
(i) with any legend restricting transfer being affixed to or
noted on said Exchange Shares; or
(ii) being subject to any stop-transfer restrictions;
or
(iii) not being freely transferable on the books and records of
the Issuer, then, at the Lender's option, the Lender may declare, and,
if so, the Issuer hereby agrees, that the Original Debt Instruments
and the Original Debt (reduced by any principal payment made under the
Revised Note) remain, and continue to be, in full force and effect,
and, if so, the Issuer also hereby agrees that any statute of
limitations, laches, or any other defenses with respect to the
Original Debt or the Original Debt Instruments are waived by the
Issuer.
2. PROCEDURE FOR EXCHANGE OF THE REVISED NOTE FOR THE ORIGINAL DEBT
INSTRUMENTS.
Upon the approval by the Lender of the Order of the Court,
(a) the Issuer shall deliver the Issuer's Revised Note to the Lender,
duly executed by the Issuer, and dated as at the date this Agreement is
executed; and, simultaneously,
(b) the Lender shall deliver to the Issuer the Original Debt
Instruments marked "Repayment hereunder by the Issuer is subject to that
certain Plan for Exchange of Claims and Re-Organization dated November
24th, 2006 by and between WGL Entertainment Holdings, Inc. and DLC
Capital Group, LLC." The exchange of these Claims and the Securities which
evidence them, to wit: the Original Debt Instruments and the Revised Note,
shall take place at the offices of counsel to the Lender soon as
practicable following the execution of this Agreement.
3. THE LENDER'S WARRANTIES AND REPRESENTATIONS.
The Lender represents and warrants to, and covenants and agrees with the
Issuer as follows:
(a) The Lender is not now, nor in the future will become nor allow
itself to become, an Affiliate of the Issuer.
(b) The Lender is a limited liability Issuer duly organized and
validly existing under the laws of the jurisdiction in which it was
incorporated. The Lender has all requisite corporate power and authority to
own, lease and operate its properties and assets, and to carry on its
business as presently conducted.
(c) This Plan of Exchange has been duly authorized, validly executed
and delivered on behalf of the Lender and is a valid and binding agreement
in accordance with its terms, subject to general principles of equity and
to bankruptcy or other laws affecting the enforcement of creditors' rights
generally. All corporate action on the part of the Lender or its members
necessary for the authorization, execution, delivery and performance of
this Plan of Exchange has been taken.
(d) The execution and delivery of this Plan of Exchange do not, and
the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default (with or without notice or
lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit, under, any provision of the charter or operating agreement of the
Lender, and any amendments thereto, or any material mortgage, indenture,
lease or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law ordinance, rule or
regulation applicable to the Lender its properties or assets.
(e) The Lender understands that the Revised Note is registered under
the Securities Act and is being offered and sold to the Lender in reliance
on specific exemptions from the registration requirements of Federal and
State securities laws, and that no Federal or State or foreign government
agency has passed on or made any recommendation or endorsement of the
Revised Note.
(f) The Lender has had an opportunity to receive and review all
material information and financial data and to discuss with the officers of
the Issuer, and all matters relating to the securities, financial
condition, operations and prospects of the Issuer and any questions raised
by the Lender have been answered to the Lender's satisfaction.
(g) The Lender acknowledges that the acquisition of the Revised Note
involves a high degree of risk. The Lender has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of purchasing the Issuer's Revised Note.
4. THE ISSUER'S WARRANTIES AND REPRESENTATIONS.
The Issuer represents and warrants to, and covenants and agrees with the
Issuer as follows:
(a) The Issuer is not now, nor in the future will become nor allow
itself to become, an Affiliate of the Lender.
(b) The Issuer is a corporation duly organized and validly existing
under the laws of the jurisdiction in which it was incorporated. The Issuer
has all requisite corporate power and authority to own, lease and operate
its properties and assets, and to carry on its business as presently
conducted. The Issuer is qualified to do business as a foreign business
organization in each jurisdiction in which the ownership of its property or
the nature of its business requires such qualification, except where
failure to so qualify would not have a "Material Adverse Effect" on the
Issuer, the term "Material Adverse Effect" as used in this Plan of Exchange
meaning and encompassing any change in or effect on the business of the
Issuer that, individually or in the aggregate (taking into account all
other such changes or effects), is, or is reasonably likely to be,
materially adverse to the business, assets, liabilities, financial
condition, results of operations of the Issuer, or of its ability to
perform under the Revised Note, taken as a whole, except to the extent any
such change or effect results from or is attributable to changes in general
economic conditions or changes affecting the industry generally in which
Issuer operates (provided that such changes do not affect the Issuer in a
materially disproportionate manner).
(c) This Plan of Exchange has been duly authorized, validly executed
and delivered on behalf of the Issuer and is a valid and binding agreement
in accordance with its terms, subject to general principles of equity and
to bankruptcy or other laws affecting the enforcement of creditors' rights
generally. All corporate action on the part of the Issuer or its members
necessary for the authorization, execution, delivery and performance of
this Plan of Exchange has been taken.
(d) The execution and delivery by the Issuer of the Revised Note and
the consummation by the Issuer of the other transactions contemplated
hereby and thereby do not, and compliance with the provisions of this Plan
of Exchange and will not conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any
obligation or loss of a material benefit under, or result in the creation
of any Lien (as such term is hereinafter defined) upon any of the
properties or assets of the Issuer or any of its Subsidiaries under, or
result in the termination of, or require that any consent be obtained or
any notice be given with respect to (i) the Articles or Certificate of
Incorporation or By-Laws of the Issuer or the comparable charter or
organizational documents of any of its Subsidiaries, in each case as
amended to the date of this Plan of Exchange or as required to be amended
to comply with this Agreement, (ii) any loan or credit agreement, Revised
Note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or permit applicable to the Issuer or any of its Subsidiaries or
their respective properties or assets or (iii) any Law (as such term is
hereinafter defined) applicable to, or any judgment, decree or order of any
court or government body having jurisdiction over, the Issuer or any of its
Subsidiaries or any of their respective properties or assets.
(e) The Revised Note has been duly and validly authorized for issuance
by the Issuer and, when executed and delivered by the Issuer, will be a
valid and binding obligation of the Issuer enforceable against the Issuer
in accordance with its respective terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally.
(f) The Issuer is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
issuer's Common Stock is traded on the OTC Bulletin Board service of the
National Association of Securities Dealers, Inc. ("OTCBB") under the symbol
"WGFL", and the Issuer has not received any notice regarding, and to its
knowledge there is no threat of, the termination or discontinuance of the
eligibility of the Common Stock for such trading.
(g) The Issuer has properly filed with the Commission all reports,
proxy statements, forms and other documents required to be filed with the
Commission under the Securities Act and the Exchange Act since becoming
subject to such Acts (the "Commission Filings"). As of their respective
dates, (i) the Commission Filings complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the Commission promulgated thereunder
applicable to such Commission Filings and (ii) to the best of the current
management's and Board of Directors' knowledge, none of the Commission
Filings contained at the time of its filing any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Issuer included in the Commission Filings, as of the
dates of such documents, were true and complete in all material respects
and complied with applicable accounting requirements and the published
rules and regulations of the Commission with respect thereto, were prepared
in accordance with generally accepted accounting principles in the United
States ("GAAP") (except in the case of unaudited statements permitted by
Form 10-Q under the Exchange Act) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and
fairly presented the consolidated financial position of the Issuer and its
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments that in the
aggregate are not material and to any other adjustment described therein).
(h) There is no fact known to the Issuer (other than general economic
or industry conditions known to the public generally) that has not been
fully disclosed in the Commission Filings that (i) reasonably could be
expected to have a Material Adverse Effect or (ii) reasonably could be
expected to materially and adversely affect the ability of the Issuer to
perform its obligations pursuant to the Documents.
(i) Assuming the accuracy of the representations and warranties of the
Lender set forth herein, the offer and sale by the Issuer of the Revised
Note is exempt from the registration and prospectus delivery requirements
of the Securities Act and the rules and regulations of the Commission
thereunder, the Issuer shall not directly or indirectly take, and shall not
permit any of its directors, officers or Affiliates directly or indirectly
to take, any action (including, without limitation, any offering or sale to
any person or entity of any security similar to the Revised Note) which
will make unavailable the exemption from Securities Act registration being
relied upon by the Issuer for the offer and sale to the Lender of the
Revised Note as contemplated by this Plan of Exchange.
(j) No form of general solicitation or advertising has been used or
authorized by the Issuer or any of its officers, directors or Affiliates in
connection with the offer or sale of the Revised Note as contemplated by
this Plan of Exchange or any other agreement to which the Issuer is a
party.
(k) As at the date of the execution of this Re-Organization Agreement,
the authorized capital stock of the Issuer consists of
(i) 10,000,000,000 shares of Common Stock, Par Value $.001 per
share, (A) of which 4,522,805,663 shares are issued and outstanding
as of the date hereof and are fully paid and non-assessable; and
(ii) 10,000,000 shares of Series A non-convertible, redeemable
Preferred Stock, Par Value $.001 per share,
(A) of which 10,000,000 shares are issued and outstanding as
of the date hereof and are fully paid and non-assessable; and
(iii) no other securities except as set forth the Issue's Form
10-QSB for the quarterly period ended September 30, 2006, as recently
filed with the SEC.
(l) The Issuer understands and acknowledges the potentially dilutive
effect on its Common Stock upon the exercise of the exchange provisions of
the Revised Note.
(m) The Issuer further acknowledges that its obligation to issue
Exchange Shares upon the exercise of the exchange provisions of the Revised
Note in accordance with this Plan of Exchange is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the
ownership interests of other stockholders of the Issuer and notwithstanding
the commencement of any case under 11 U.S.C. Sec. 101 et seq. (the
"Bankruptcy Code"). In the event the Issuer is a debtor under the
Bankruptcy Code, the Issuer hereby waives to the fullest extent permitted
any rights to relief it may have under the Bankruptcy Code in respect of
the exchange provisions of the Revised Note.
5. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
(a) So long as the Lender beneficially owns any interest in the
Revised Note, the Issuer shall timely file, including any requests for
extension or notices of late filings, all reports required to be filed by
it with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
(b) Except to the extent the Issuer lists its Common Stock on The New
York Stock Exchange, The American Stock Exchange or The NASDAQ Stock Market
or other nationally recognized securities exchange, the Issuer shall use
its best efforts to maintain its listing of the Common Stock on OTCBB. If
the Common Stock is de-listed from OTCBB, the Issuer will use its best
efforts to list the Common Stock on the most liquid national securities
exchange or quotation system that the Common Stock is qualified to be
listed on.
(c) The Issuer shall maintain a standard and uniform system of
accounting and shall keep proper books and records and accounts in which
full, true, and correct entries shall be made of its transactions, all in
accordance with GAAP applied on consistent basis through all periods, and
shall set aside on such books for each fiscal year all such reserves for
depreciation, obsolescence, amortization, bad debts and other purposes in
connection with its operations as are required by such principles so
applied.
(d) Except as permitted by agreements existing on the date of
execution hereof, so long as the Revised Note is outstanding, neither the
Issuer nor any of its Subsidiaries shall, directly or indirectly, enter
into any material transaction or agreement with any stockholder, officer,
director or Affiliate of the Issuer or family member of any officer,
director or Affiliate of the Issuer, unless the transaction or agreement is
(i) reviewed and approved by a majority of Disinterested Directors (as such
term is hereinafter defined) and (ii) on terms no less favorable to the
Issuer or the applicable Subsidiary than those obtainable from a
nonaffiliated person. A "Disinterested Director" shall mean a director of
the Issuer who is not and has not been an officer or employee of the Issuer
and who is not a member of the family of, controlled by or under common
control with, any such officer or employee.
(e) Until all amounts due under the Revised Note are paid, no
dividends shall be declared or paid or set apart for payment nor shall any
other distribution be declared or made upon any capital stock of the
Issuer, nor shall any capital stock of the Issuer be redeemed, purchased or
otherwise acquired [other than a redemption, purchase or other acquisition
of shares of Common Stock made for purposes of an employee incentive or
benefit plan (including a stock option plan)] of the Issuer for any
consideration by the Issuer, directly or indirectly, nor shall any moneys
be paid to or made available for a sinking fund for the redemption of any
Common Stock.
(f) Until all amounts due under the Revised Note are paid, the Issuer
irrevocably agrees to reserve and keep available out of its authorized but
unissued shares of Common Stock a sufficient amount of its Common Stock to
meet its obligations to issue Exchange Shares upon the exercise of the
exchange provisions of the Revised Note in accordance with this Plan of
Exchange. Initially, the Issuer shall, for that purpose, reserve and keep
available 2,000,000,000 shares of its authorized but unissued Common Stock.
(g) Until all amounts due under the Revised Note are paid, the Lender
agrees and covenants on its behalf and on behalf of its affiliates that
neither the Lender, nor its affiliates shall at any time engage in any
short sales with respect to the Issuer's Common Stock, or sell put options
or similar instruments with respect to the Issuer's Common Stock.
(h) Until all amounts due under the Revised Note are paid, the Issuer
agrees not to incur additional debt through third party financing without
giving the Lender a right of first refusal. The Lender shall be entitled to
a right of first refusal to enable it to, at Holder's option, either: (i)
match the terms of the other financing, or (ii) add additional principal to
this Revised Note, in the amount of such other financing, on the same terms
and conditions as this Revised Note. The Lender must exercise such right of
first refusal within ten (10) days of the Lender's receipt of written
notice of the Issuer's intent to seek said financing. In the event the
Lender does not elect to exercise said right of first refusal, it has the
right to demand repayment of 150% of the outstanding principal and accrued
interest on the Revised Note as a pre-condition to the Issuer closing on
said third party financing. For purposes of this Right of First Refusal,
the Issuer shall be defined to include all subsidiaries in which the Issuer
holds a twenty-five percent (25%) or greater interest, all successors and
assigns.
(i) Until all amounts due under the Revised Note are paid, the Issuer
shall refrain from entering into agreements, arrangements or understandings
similar to this one with other persons (the "Exclusivity Right"). If the
Issuer, for the purpose of obtaining any additional financing, wishes to
enter into any other agreements, arrangements or understandings similar to
this one (a "Similar Re-Organizational Agreement") with a party other than
the Lender (the "Third Party"), the Issuer shall first offer (the "Offer")
to the Lender, in writing, the right to enter into a Similar Plan of
Exchange. The Offer shall grant the Lender the right during the five (5)
Trading Days immediately following the date of the Offer to elect to enter
into a Similar Plan of Exchange. If the Lender so exercises its right to
enter into a Similar Plan of Exchange, the Issuer and the Lender shall do
so, and the Similar Plan of Exchange shall replace this Plan of Exchange.
If the Lender fails to enter into a Similar Plan of Exchange, then the
Issuer shall be free to enter into a Similar Plan of Exchange with the
Third Party.
(j) Until all amounts due under the Revised Note are paid, the Issuer
agrees and covenants that it shall maintain, as its transfer agent, an
organization with the capability to electronically deliver securities via
The Depository Trust Company's ("DTC") Fast Automated Securities Transfer
Program through its Deposit Withdrawal At Custodian ("DWAC") system.
(k) Except as otherwise has been disclosed as of the date of this
Agreement, until all amounts due under the Revised Note are paid, the
Issuer agrees and covenants that it shall not enter into any agreements
which shall result in a lien, encumbrance, mortgage, security agreement, or
direct claim against any asset or revenues of the Issuer or any of its
affiliates; provided however, the Issuer may enter into transactions which
are in the ordinary course of business, or which create a purchase money
security interest against an a newly acquired asset.
(l) Until all amounts due under the Revised Note are paid, the Issuer
agrees and covenants that it will not enter into any extraordinary
transactions which would materially alter the business of the Issuer,
including but not limited to, the sale of all, or substantially of its
assets, the sale of any subsidiary or the spin-off of a subsidiary, unless
the purchaser of such assets or subsidiary, or board of directors, and
shareholders if necessary, of such spun off entity, affirmatively provide
written agreement to be a party to and bound by the terms and conditions of
this Agreement, jointly and severally with the Issuer.
(m) Without the Lender's prior written consent, which consent shall
not be unreasonably withheld, the Issuer shall not undertake any capital
reorganization, reclassification of its Common Stock (by way of forward or
reverse split, or otherwise) or the consolidation or merger of the Issuer
with or into another corporation (other than a consolidation or merger in
which the Issuer is the surviving corporation).
(n) There is no finder's fee, brokerage commission or like payment in
connection with the transactions contemplated by this Plan of Exchange for
which the Lender or the Issuer is liable or responsible.
(o) The Exchange Shares, whether issued in certificated form (or
transferred electronically through the DWAC system) shall, and need not,
bear a Restrictive Legend. To that end, the Issuer shall deliver to its
Transfer Agent the opinion of ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq., Special Counsel to
the Issuer, which shall state
(i) that the certificates (and/or shares transferred through the
DWAC system) representing the Exchange Shares, shall, and need not,
bear any legend restricting transfer the transfer thereof, shall not
be subject to any stop-transfer restrictions, may be offered for sale,
transfer or assignment immediately upon receipt thereof by the holder
(or its designees), and otherwise shall be freely transferable on the
books and records of the Issuer;
(ii) that it shall not be necessary for a separate opinion of
counsel to be prepared and deliver to the Transfer Agent each time
Notice of Exchange is delivered to the Issuer; and
(iii) that once this opinion of counsel has been issued, the
Issuer will not repudiate it, and if the Transfer Agent requests that
a separate opinion be submitted with successive Notices of Exchanges,
the Issuer will retain ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq. to do so.
(p) The information furnished by the Parties to each other for
purposes of or in connection with this Plan of Exchange or any transaction
contemplated hereby does not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which
they are made, not misleading.
6. CONDITIONS TO THE ISSUER'S OBLIGATIONS.
The Lender understands that the Issuer's obligation to perform pursuant to
this Plan of Exchange is conditioned
(a) upon the accuracy, on, as of, and, as at the day this Plan of
Exchange is executed, of the representations and warranties of the Lender
contained in this Plan of Exchange (except for representations and
warranties which, by their express terms, speak as of and relate to a
specified date, in which case such accuracy shall be measured as of such
specified date) and the performance by the Lender in all material respects
of all covenants and agreements of the Lender required to be performed by
it pursuant to this Plan of Exchange;
(b) upon there not being threatened, pending, or in effect any
proceeding, law or order, ruling, judgment or writ of any court or public
or governmental authority:
(i) restraining, enjoining or otherwise prohibiting any of the
transactions contemplated by this Plan of Exchange; or
(ii) asserting that the transactions contemplated by this Plan of
Exchange are subject to the registration requirements of the
Securities Act; or
(iii) no Stop Order suspending the sale of the Issuer's
Securities having been issued, and no proceedings for that purpose
shall having been commenced or being pending.
7. CONDITIONS TO THE LENDER'S OBLIGATIONS.
The Issuer understands that the Lender's liability and its obligation to
perform hereunder, is conditioned
(b) upon the accuracy, on, as of, and, as at the day this Plan of
Exchange is executed, of the representations and warranties of the Issuer
contained in this Plan of Exchange, and the performance by the Issuer in
all material respects of all covenants and agreements of the Issuer
required to be performed by it pursuant to this Plan of Exchange;
(c) upon there not having occurred any event or development, and there
being in existence no condition, having or which reasonably and foreseeably
could have a Material Adverse Effect upon the Issuer;
(d) upon the Lender having received such additional documents,
certificates, payment, assignments, transfers and other deliveries as it or
its legal counsel may reasonably request, including due diligence
documents, and as are customary to effect a closing of the matters herein
contemplated;
(e) upon there not being threatened, pending, or in effect any
proceeding, law or order, ruling, judgment or writ of any court or public
or governmental authority:
(i) restraining, enjoining or otherwise prohibiting any of the
transactions contemplated by this Plan of Exchange; or
(ii) asserting that the transactions contemplated by this Plan of
Exchange are subject to the registration requirements of the
Securities Act; or
(iii) no Stop Order suspending the sale of the Issuer's
Securities having been issued, and no proceedings for that purpose
shall having been commenced or being pending; and
(f) the delivery of the Revised Note by the Issuer to the Lender, duly
executed by the Issuer, and dated as at the date this Agreement is
executed.
8. NOTICE.
(a) Any notice, request, instruction or other document required by the
terms of this Agreement to be given to any other Party hereto shall be in
writing and shall be given either
(i) by telephonic facsimile, in which case notice shall be
presumptively deemed to have been given at the date and time displayed
on the sender's transmission confirmation receipt showing the
successful receipt thereof by the recipient;
(ii) by nationally recognized courier or overnight delivery
service in which the date of delivery is recorded by the delivery
service, in which case notice shall be presumptively deemed to have
been given at the time that records of the delivery service indicate
the writing was delivered to the addressee;
(iii) by United States sent by registered or certified mail,
postage prepaid, with return receipt requested, in which case notice
shall be presumptively deemed to have been given at the time that
records of the United States Postal Service indicate the writing was
delivered to the addressee.
(b) Notice shall be sent:
(i) If to WGL Entertainment, to:
WGL Entertainment Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO
Voice Telephone Number (407) 328 - 8538
Facsimile Telephone Number (407) 328 - 8540
Cellular Telephone Number (908) 512 - 4959
With a copy to:
▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Voice Telephone Number (561) 659 - 1810
Facsimile Telephone Number (561) 659 - 3888
(ii) If to DLC Capital, to:
DLC Capital Group, LLC
▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Voice Telephone Number: (732) 303 - 7487
Facsimile Telephone Number: (732) 303 - 7488
Cellular Telephone Number: (732) 239 - 7523
With a copy to:
▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Voice Telephone Number (561) 659 - 1810
Facsimile Telephone Number (561) 659 - 3888
(iii) If to WGL Entertainment's Transfer Agent, to
Registrar and Transfer Issuer
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Voice Telephone Number (908) 497 - 2333
Facsimile Telephone Number (908) 497 - 2314
(iv) or to such other address as a Party may have specified in
writing to the other Parties using the procedures specified above in
this Section.
9. INDEMNIFICATION.
(a) The Issuer agrees to indemnify and hold harmless the Lender, its
partners, affiliates, officers, directors, employees, and duly authorized
agents, and each Person or entity, if any, who controls the Lender within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, together with its controlling persons from and against any
Damages, joint or several, and any action in respect thereof to which the
Lender, its partners, affiliates, officers, directors, employees, and duly
authorized agents, and any such controlling person becomes subject to,
resulting from, arising out of or relating to any misrepresentation, breach
of warranty or non-fulfillment of or failure to perform any covenant or
agreement on the part of Issuer contained in this Plan of Exchange, as such
Damages are incurred, unless such Damages result primarily from the
Lender's gross negligence, recklessness or bad faith in performing its
obligations under this Plan of Exchange.
(b) The Lender agrees to indemnify and hold harmless the Issuer, its
partners, affiliates, officers, directors, employees, and duly authorized
agents, and each Person or entity, if any, who controls the Issuer within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, together with its controlling persons from and against any
Damages, joint or several, and any action in respect thereof to which the
Issuer, its partners, affiliates, officers, directors, employees, and duly
authorized agents, and any such controlling person becomes subject to,
resulting from, arising out of or relating to any misrepresentation, breach
of warranty or non-fulfillment of or failure to perform any covenant or
agreement on the part of the Lender contained in this Plan of Exchange, as
such Damages are incurred, unless such Damages result primarily from the
Issuer's gross negligence, recklessness or bad faith in performing its
obligations under this Plan of Exchange; provided, however, that the
maximum aggregate liability of the Lender shall be limited to the amount
actually invested by the Lender under this Plan of Exchange.
(c) All claims for indemnification by any Indemnified Party (as
defined below) under this Plan of Exchange shall be asserted and resolved
as follows:
(i) In the event any claim or demand in respect of which any
person claiming indemnification under any provision of SECTION 9(an
---------
"Indemnified Party") might seek indemnity under SECTION 9 is asserted
---------
against or sought to be collected from such Indemnified Party by a
person other than the Issuer, the Lender or any affiliate of the
Issuer (a "Third Party Claim"), the Indemnified Party shall deliver a
written notification, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party Claim and
for the Indemnified Party's claim for indemnification that is being
asserted under any provision of SECTION 9 against any person (the
---------
"Indemnifying Party"), together with the amount or, if not then
reasonably ascertainable, the estimated amount, determined in good
faith, of such Third Party Claim (a "Claim Notice") with reasonable
promptness to the Indemnifying Party. If the Indemnified Party fails
to provide the Claim Notice with reasonable promptness after the
Indemnified Party receives notice of such Third Party Claim, the
Indemnifying Party shall not be obligated to indemnify the Indemnified
Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been irreparably prejudiced
by such failure of the Indemnified Party. The Indemnifying Party shall
notify the Indemnified Party as soon as practicable within the period
ending 15 calendar days following receipt by the Indemnifying Party of
either a Claim Notice or an Indemnity Notice (as defined below) (the
"Dispute Period") whether the Indemnifying Party disputes its
liability or the amount of its liability to the Indemnified Party
under SECTION 9 and whether the Indemnifying Party desires, at its
---------
sole cost and expense, to defend the Indemnified Party against such
Third Party Claim.
(ii) If the Indemnifying Party notifies the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to
defend the Indemnified Party with respect to the Third Party Claim
pursuant to SECTION 9, then the Indemnifying Party shall have the
---------
right to defend, with counsel reasonably satisfactory to the
Indemnified Party, at the sole cost and expense of the Indemnifying
Party, such Third Party Claim by all appropriate proceedings, which
proceedings shall be vigorously and diligently prosecuted by the
Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with the consent of the
Indemnified Party in the case of any settlement that provides for any
relief other than the payment of monetary damages or that provides for
the payment of monetary damages as to which the Indemnified Party
shall not be indemnified in full pursuant to SECTION 9). The
---------
Indemnifying Party shall have full control of such defense and
proceedings, including any compromise or settlement thereof; provided,
however, that the Indemnified Party may, at the sole cost and expense
of the Indemnified Party, at any time prior to the Indemnifying
Party's delivery of the notice referred to in the first sentence of
this clause (i), file any motion, answer or other pleadings or take
any other action that the Indemnified Party reasonably believes to be
necessary or appropriate to protect its interests; and provided
further, that if requested by the Indemnifying Party, the Indemnified
Party will, at the sole cost and expense of the Indemnifying Party,
provide reasonable cooperation to the Indemnifying Party in contesting
any Third Party Claim that the Indemnifying Party elects to contest.
The Indemnified Party may participate in, but not control, any defense
or settlement of any Third Party Claim controlled by the Indemnifying
Party pursuant to this clause (ii), and except as provided in the
preceding sentence, the Indemnified Party shall bear its own costs and
expenses with respect to such participation. Notwithstanding the
foregoing, the Indemnified Party may take over the control of the
defense or settlement of a Third Party Claim at any time if it
irrevocably waives its right to indemnity under SECTION 9
---------
with respect to such Third Party Claim.
(iii) If the Indemnifying Party fails to notify the Indemnified
Party within the Dispute Period that the Indemnifying Party desires to
defend the Third Party Claim pursuant to SECTION 9, or if the
---------
Indemnifying Party gives such notice but fails to prosecute vigorously
and diligently or settle the Third Party Claim, or if the Indemnifying
Party fails to give any notice whatsoever within the Dispute Period,
then the Indemnified Party shall have the right to defend, at the sole
cost and expense of the Indemnifying Party, the Third Party Claim by
all appropriate proceedings, which proceedings shall be prosecuted by
the Indemnified Party in a reasonable manner and in good faith or will
be settled at the discretion of the Indemnified Party (with the
consent of the Indemnifying Party, which consent will not be
unreasonably withheld). The Indemnified Party will have full control
of such defense and proceedings, including any compromise or
settlement thereof; provided, however, that if requested by the
Indemnified Party, the Indemnifying Party will, at the sole cost and
expense of the Indemnifying Party, provide reasonable cooperation to
the Indemnified Party and its counsel in contesting any Third Party
Claim which the Indemnified Party is contesting. Notwithstanding the
foregoing provisions of this CLAUSE (III), if the Indemnifying Party
-----------
has notified the Indemnified Party within the Dispute Period that the
Indemnifying Party disputes its liability or the amount of its
liability hereunder to the Indemnified Party with respect to such
Third Party Claim and if such dispute is resolved in favor of the
Indemnifying Party in the manner provided in CLAUSE (IV) below, the
----------
Indemnifying Party will not be required to bear the costs and expenses
of the Indemnified Party's defense pursuant to this CLAUSE (III) or of
-----------
the Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party shall reimburse the
Indemnifying Party in full for all reasonable costs and expenses
incurred by the Indemnifying Party in connection with such litigation.
The Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party pursuant to
this CLAUSE (III), and the Indemnifying Party shall bear its own costs
-----------
and expenses with respect to such participation.
(iv) If the Indemnifying Party notifies the Indemnified Party
that it does not dispute its liability or the amount of its liability
to the Indemnified Party with respect to the Third Party Claim under
SECTION 9 or fails to notify the Indemnified Party within the Dispute
---------
Period whether the Indemnifying Party disputes its liability or the
amount of its liability to the Indemnified Party with respect to such
Third Party Claim, the Damages in the amount specified in the Claim
Notice shall be conclusively deemed a liability of the Indemnifying
Party under SECTION 9, and the Indemnifying Party shall pay the amount
---------
of such Damages to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its liability or the amount of
its liability with respect to such claim, the Indemnifying Party and
the Indemnified Party shall proceed in good faith to negotiate a
resolution of such dispute, and if not resolved through negotiations
within the period of thirty (30) calendar days immediately following
the Dispute Period, such dispute shall be resolved by arbitration in
accordance with SECTION 10
----------
(d) In the event any Indemnified Party should have a claim under
SECTION 9 against the Indemnifying Party that does not involve a Third
---------
Party Claim, the Indemnified Party shall deliver a written notification of
a claim for indemnity under SECTION 9 specifying the nature of and basis
---------
for such claim, together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such
claim (an "Indemnity Notice") with reasonable promptness to the
Indemnifying Party. The failure by any Indemnified Party to give the
Indemnity Notice shall not impair such party's rights hereunder except to
the extent that the Indemnifying Party demonstrates that it has been
irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim or the amount of the
claim described in such Indemnity Notice or fails to notify the Indemnified
Party within the Dispute Period whether the Indemnifying Party disputes the
claim or the amount of the claim described in such Indemnity Notice, the
Damages in the amount specified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under SECTION 9,
---------
and the Indemnifying Party shall pay the amount of such Damages to the
Indemnified Party on demand. If the Indemnifying Party has timely disputed
its liability or the amount of its liability with respect to such claim,
the Indemnifying Party and the Indemnified Party shall proceed in good
faith to negotiate a resolution of such dispute, and if not resolved
through negotiations within the period of thirty (30) calendar days
immediately following the Dispute Period, such dispute shall be resolved by
arbitration in accordance with SECTION 10.
----------
SECTION 10. CHOICE OF LAW, VENUE, ARBITRATION, WAIVER OF JURY TRIAL.
(a) All questions concerning the construction, validity, enforcement
and interpretation of this Plan of Exchange shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Florida without regard to the principles of conflicts of law thereof.
(b) The Lender and the Issuer hereby mutually waive trial by jury
IN THAT CONNECTION, EACH OF THE PARTIES WAIVES THE
RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN CONNECTION
WITH OR RELATING TO THIS PLAN OF EXCHANGE, ANY RELATED
AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED
HEREIN OR THEREIN, AND AGREES TO TAKE ANY AND ALL
ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.
(c) The Parties hereto irrevocably agree and consent that all disputes
concerning this Plan of Exchange or any claim or issue of any nature
whatsoever (whether brought by the Parties hereto) arising from or relating
to this Plan of Exchange or to the corporate steps taken to enter into it
(including, without limitation, claims for alleged fraud, breach of
fiduciary duty, breach of contract, tort, etc.) which cannot be resolved
within reasonable time through discussions between the opposing entities,
shall be resolved solely and exclusively by means of arbitration to be
conducted in Freehold, New Jersey (or the nearest town in which such
arbitration may be conducted), which arbitration will proceed in accordance
with the rules of the American Arbitration Association (or any successor
organization thereto) then in force for resolution of commercial disputes.
(d) The Parties hereby mutually waive trial by jury and consent to the
exclusive jurisdiction of and the venue in the forum of the American
Arbitration Association (or any successor organization thereto) then in
force for resolution of commercial disputes in Freehold, New Jersey (or the
nearest town in which such arbitration may be conducted), and, in addition,
they waive, to the maximum extent permitted by law, any objection,
including any objection based on forum non coveniens, to the bringing of
any such proceeding in such forum.
(e) The Arbitrators themselves shall have the right to determine and
to arbitrate the threshold issue of arbitrability itself, the decision of
the Arbitrators shall be final, conclusive, and binding upon the opposing
entities, and a judgment upon the award may be obtained and entered in any
federal or state court of competent jurisdiction; and
(f) Each Party involved in litigation or arbitration shall be
responsible for its own costs and expenses of any litigation or arbitration
proceeding, including its own attorney's fees (for any litigation,
arbitration, and any appeals).
11. MISCELLANEOUS.
(a) APPENDICES AND EXHIBITS; ENTIRE AGREEMENT. All Exhibits to this
Plan of Exchange are incorporated herein by reference and shall constitute
part of this Plan of Exchange. This Plan of Exchange sets forth the entire
agreement and understanding of the Parties relating to the subject matter
hereof and thereof, and it supersede all prior and contemporaneous
agreements, negotiations and understandings between the Parties, both oral
and written, relating to the subject matter hereof.
(b) TITLE AND SUBTITLES. The titles and subtitles used in this Plan of
Exchange are used for the convenience of reference and are not to be
considered in construing or interpreting this Plan of Exchange.
(c) COUNTERPARTS. This Plan of Exchange may be executed in multiple
counterparts, each of which may be executed by less than all of the
Parties. each of which shall be deemed to be an original instrument which
shall be enforceable against the Parties actually executing such
counterparts, and all of which together shall constitute one and the same
instrument.
(d) SEVERABILITY. In the event that any provision of this Plan of
Exchange becomes or is declared by a court or other tribunal of competent
jurisdiction to be illegal, unenforceable or void, this Plan of Exchange
shall continue in full force and effect without said provision; provided,
however, that such severability shall be ineffective if it materially
changes the economic benefit of this Plan of Exchange to any party.
(e) AMENDMENT; NO WAIVER. No Party shall be liable or bound to any
other Party in any manner by any warranties, representations or covenants
except as specifically set forth in this Plan of Exchange. Except as
expressly provided in this Plan of Exchange, neither this Plan of Exchange
nor any term hereof may be amended, waived, discharged or terminated other
than by a written instrument signed by both parties hereto. The failure of
the either Party to insist on strict compliance with this Plan of Exchange,
or to exercise any right or remedy under this Plan of Exchange, shall not
constitute a waiver of any rights provided under this Plan of Exchange, nor
estopp a Party from thereafter demanding full and complete compliance nor
prevent a Party from exercising such a right or remedy in the future.
(f) INDEPENDENT CONTRACTOR. The Lender is an independent contractor
and is not the agent of the Issuer. The Lender is not authorized to bind
the Issuer or to make any representation or warranties on behalf of Issuer,
and the Issuer is not authorized to bind the Lender or to make any
representation or warranties on behalf of Lender.
(g) ASSIGNMENT. The Lender's rights and duties in this Plan of
Exchange may be freely assigned or delegated at any time, in whole or in
part; provided, however, that any such delegation of the Lender's duties
shall not relieve the Lender of its duties under this Plan of Exchange
until full performance of such by any such delagatee. The Issuer's rights
and duties in this Plan of Exchange may not be assigned or delegated.
(h) TRANSACTION COSTS. Each Party shall bear its own legal fees and
other out of pocket costs in connecting with the negotiation and execution
of this Plan of Exchange; provided, however, that should the Holder of the
Revised Note employ an attorney for the purpose of enforcing or construing
the Revised Note, or any judgment based on the Revised Note, in any legal
proceeding whatsoever, including insolvency, bankruptcy, arbitration,
declaratory relief or other litigation, the Lender shall be entitled to
receive from the Issuer reimbursement for all reasonable attorneys' fees
and all reasonable costs, including but not limited to service of process,
filing fees, court and court reporter costs, investigative costs, expert
witness fees, and the cost of any bonds, whether taxable or not, and that
such reimbursement shall be included in any judgment or final order issued
in that proceeding.
(i) SURVIVAL. The representations, warranties and covenants made by
each of the Issuer and the Lender in this Plan of Exchange, the annexes,
schedules and exhibits hereto and in each instrument, agreement and
certificate entered into and delivered by them pursuant to this Plan of
Exchange shall survive the consummation of the transactions contemplated
hereby. In the event of a breach or violation of any of such
representations, warranties or covenants, the Party to whom such
representations, warranties or covenants have been made shall have all
rights and remedies for such breach or violation available to it under the
provisions of this Plan of Exchange or otherwise, whether at law or in
equity, irrespective of any investigation made by or on behalf of such
party on or prior to the date of the execution of this Plan of Exchange.
(j) TIME OF ESSENCE. Time is of the essence for the performance of all
obligations set forth in this Plan of Exchange.
In Witness Whereof, the undersigned Parties have executed this Plan of
Exchange as of the date first set forth above.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURES APPEAR ON THE FOLLOWING PAGE
THE ISSUER:
WGL ENTERTAINMENT HOLDINGS, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO
THE LENDER:
DLC CAPITAL GROUP, LLC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SCHEDULE I APPEARS ON THE FOLLOWING PAGE
---------
SCHEDULE I
----------
TO
PLAN FOR EXCHANGE OF CLAIMS
AND
RE-ORGANIZATION
THE VARIOUS PROMISSORY NOTES, REVISED NOTES, AND DEBT MEMORANDA ARE SET FORTH IN
THIS SCHEDULE,
I.E., THE "ORIGINAL DEBT INSTRUMENTS"
EXHIBIT A APPEARS ON THE FOLLOWING PAGE
---------
EXHIBIT A
---------
TO
PLAN FOR EXCHANGE OF CLAIMS
AND
RE-ORGANIZATION
FORM OF REVISED NOTE
$_______________.00
Lake Mary, Florida November _____, 2006
PROMISE TO PAY
For Value Received, on demand, WGL Entertainment Holdings, Inc. (the
"Issuer" or the "Maker", as the text may require) promises to pay to the
order of DLC Capital Group, LLC, or any successor thereto ("DLC Capital" or
the "Holder") at the offices of the Holder, the principal sum of
$__________________, together with interest at the rate of 6% per annum on
the then outstanding unpaid principal balance.
In the event of any default under this Revised Note, the unpaid principal
balance and all accrued and unpaid interest thereon shall become immediately due
and payable without notice or presentment, and the unpaid principal balance
shall bear interest thereafter the rate of 10 % per annum on the then
outstanding unpaid principal balance.
PREPAYMENT - IN CASH ONLY
Prepayment may be made at anytime in whole or in part without penalty only
in lawful currency of the United States of America. Each such payment shall be
credited first to accrued and unpaid interest, and the remainder to the
principal amount then outstanding.
REVISED NOTE IS SUBJECT TO ANOTHER AGREEMENT
Unless expressly stated otherwise, this Revised Note is subject to that
certain Plan for Exchange of Claims and Re-Organization dated November 24, 2006,
by and between WGL Entertainment Holdings, Inc. and DLC Capital Group, LLC. (the
"Plan of Exchange").
HOLDER'S EXCHANGE RIGHTS
At the option of the Holder, the Holder shall have the right (the "Exchange
Right"), but not the obligation, to exchange the debt evidenced by this Revised
Note, either in whole or in part ("Exchanges"), up to the full principal amount
of this Revised Note, together with any accrued and unpaid interest with respect
to any such principal balance, into shares of Common Stock of the Issuer (the
"Exchange Shares").
Exchanges pursuant to this Revised Note may be exercised on any Business
Day by the Holder by telecopying an executed completed Notice of Exchange (a
"Notice"), in the form as set forth in EXHIBIT A - 1 hereto, to the Issuer and
------- - - -
to the Issuer's Transfer Agent.
Such Notice shall be deemed dated and effective as at the date set forth on
the Notice (the "Exchange Date").
Such Notice of Exchange shall be given to the Issuer and to the Issuer's
Transfer Agent in the manner set forth in the Plan of Exchange.
The number of Exchange Shares into which the debt evidenced by this Revised
Note may be exchanged shall be equal to (w) the dollar amount of the principal
portion of the debt evidenced by this Revised Note being exchanged (together
with any accrued and unpaid interest with respect to any such principal balance)
(x) divided by the "Exchange Price"; provided, however, that the Holder shall
have the option to collect said dollar amount of interest (y) in cash, or (z)
into a number of Exchange Shares, by dividing said dollar amount of interest by
the Exchange Price.
The "Exchange Price" shall be a number equal to 70 % of the highest closing
bid price of the Common Stock of the Issuer as reported on the OTC Electronic
Bulletin Board (the "OTC-BB"), or any exchange on which shares of the Issuer's
Common Stock are traded, for any trading day on which the given Notice is
received by the Issuer.
FORM OF EXAMPLE TO AVOID FUTURE MISUNDERSTANDINGS
Assume that the Maker is indebted to the Holder in the principal
amount of $795,252.00.
If the Holder wished to exchange principal (but no interest) in the
amount of $10,000.00 for equity of the Maker on a day in which the highest
closing bid price of the Common Stock of the Maker as reported on the OTC
Electronic Bulletin Board was $0.02, the Holder would be entitled to receive
714,286 shares of WGL Entertainment Common Stock (i. e., Exchange Shares), as
follows:
1. The highest closing bid price of the Common Stock of WGL
Entertainment as reported on the OTC Electronic Bulletin Board on that day
was $0.02.
2. The Exchange Price is equal to 70 % of $0.02, or $0.014.
3. $10,000 divided by $0.014 is 714,286 Exchange Shares.
4. Upon receipt of the 714,286 Exchange Shares, the principal balance
would be reduced by $10,000.00, and the unpaid principal balance of the
Revised Note would now be $785,252.00.
If a later time the Holder wished to exchange principal (but no interest)
in the amount of $30,000.00 for equity of WGL Entertainment on a day in which
the highest closing bid price of the Common Stock of WGL Entertainment as
reported on the OTC Electronic Bulletin Board was $0.04, the Holder would be
entitled to receive 1,071,429 Exchange Shares, as follows:
1. The highest closing bid price of the Common Stock of WGL
Entertainment as reported on the OTC Electronic Bulletin Board on that day
was $0.04.
2. The Exchange Price is equal to 70 % of $0.04, or $0.028.
3. $30,000 divided by $0.028 is 1,071,429 Exchange Shares.
4. Upon receipt of the 1,071,429 Exchange Shares, the principal
balance would be reduced by $30,000.00, and the unpaid principal balance of
the Revised Note would now be $755,252.00 (A principal reduction of
$10,000.00 per the First Example, followed by a principal reduction of $
30,000.00 per the Second Example.) If a later time the Holder wished to
exchange principal in the amount of $15,000.00 plus accrued interest in the
amount of $3,724.53 (30 days of interest on previous principal balance of
$755,252.00, for a total of $18,724.53) for equity of WGL Entertainment on
a day in which the highest closing bid price of the Common Stock of WGL
Entertainment as reported on the OTC Electronic Bulletin Board was $0.05,
the Holder would be entitled to receive 534,987 Exchange Shares, as
follows:
1. The highest closing bid price of the Common Stock of WGL
Entertainment as reported on the OTC Electronic Bulletin Board on that day
was $0.05.
2. The Exchange Price is equal to 70 % of $0.05, or $0.035.
3. $18,724.53 divided by $0.035 is 534,987 Exchange Shares. (If
accrued interest is paid in cash, $15,000 divided by $.035 is 428,571
Exchange Shares.)
4. Upon receipt of the 534,987 Exchange Shares INcluding accrued
--
interest (or 428,571 Exchange Shares EXcluding interest), the principal
--
balance would be reduced by $15,000.00, and the unpaid principal balance of
the Revised Note would now be $740,252.00 (A principal reduction of
$10,000.00 per the First Example, followed by a principal reduction of $
30,000.00 per the Second Example, followed by a principal reduction of
$15,000.00.)
MECHANICS OF EXCHANGES, RIGHTS AND DUTIES
As promptly as practicable after the receipt of a Notice as aforesaid,
but in any event not more than one (1) Business Day after the Transfer
Agent's receipt of such Exchange Notice,
(a) at the Holder's request, the Issuer shall cause its Transfer
Agent to immediately transfer electronically the Exchange Shares as
indicated in the Notice via The Depository Trust Company's ("DTC")
Fast Automated SecuritiesTransfer Program through its Deposit
Withdrawal At Custodian ("DWAC") system; or
(b) at the Holder's request, the Issuer shall cause its Transfer
Agent to issue and deliver via a common carrier for overnight delivery
to the address as specified in the Exchange Notice, a certificate(s),
registered in the name(s) of the Holder(s) or its designee(s) for the
number of shares of Exchange Shares to which the Holder shall be
entitled as set forth in the Notice.
The Issuer shall, as indicated in the Notice,
(a) pay cash to the Holder
(i) in respect of any fraction of an Exchanged Share deliverable
upon such Exchange; and
(ii) as requested by and to the Holder for the amount of accrued
and unpaid interest on this Revised Note as of the Exchange Date.
The Notice shall state the name or names (with addresses) of the persons
who are to become the holders of the Exchange Shares in connection with such
Exchange. Such Exchange shall be deemed to have been effected as at the Exchange
Date, and as at that date, the Person(s) designated in the Notice shall be
deemed to have become the holder or holders of record of the shares of the
Common Stock of the Issuer represented thereby, and all voting and other rights
associated with the beneficial ownership of such shares of Common Stock of the
Issuer shall at such time vest with such Person(s).
No cash payment aggregating less than $1.00 shall be required to be given
unless specifically requested by the Holder.
If, at any time after the date of this Revised Note,
(a) the Issuer challenges, disputes or denies the right of the Holder
hereof to effect the exchange of this Revised Note into Exchange Shares or
otherwise dishonors or rejects any Notice; or
(a) any third party who is not and has never been an Affiliate of the
Holder commences any lawsuit or legal proceeding or otherwise asserts any
claim before any court or public or governmental authority which seeks to
challenge, deny, enjoin, limit, modify, delay or dispute the right of the
Holder hereof to effect the exchange of this Revised Note into Exchange
Shares, then the Holder shall have the right, but not the obligation, by
written notice to the Issuer, to require the Issuer to promptly redeem this
Revised Note for cash at one hundred and fifty (150%) of the then
outstanding Principal Amount thereof, together with all accrued and unpaid
interest thereon to the date of redemption.
Under any of the circumstances set forth above, the Issuer shall be
responsible for the payment of all costs and expenses of the Holder, including
reasonable legal fees and expenses, as and when incurred in defending itself in
any such action or pursuing its rights hereunder (in addition to any other
rights of the Holder).
The Holder shall be entitled to exercise its Exchange privilege
notwithstanding the commencement of any case under the Bankruptcy Code. In the
event the Issuer is a debtor under the Bankruptcy Code, the Issuer hereby waives
to the fullest extent permitted any rights to relief it may have under the
Bankruptcy Code in respect of the Holder's Exchange Privilege and this Revised
Note. The Issuer agrees, without cost or expense to the Holder, to take or
consent to any and all action necessary to effectuate relief under the
Bankruptcy Code.
No fractional shares of Common Stock or scrip representing fractional
shares of Common Stock shall be delivered upon Exchange of this Revised Note.
Instead of any fractional Common Shares which otherwise would be delivered upon
exchange of this Revised Note, the Issuer shall pay a cash adjustment in respect
of such fraction in an amount equal to the same fraction multiplied by the
Current Market Price on the Exchange Date. No cash payment of less than $1.00
shall be required to be given unless specifically requested by the Holder.
The Issuer shall act as Registrar with respect to Exchange Rights and shall
maintain an appropriate ledger containing the necessary information with respect
to the exercise of Exchange Rights, including the number of shares of Common
Stock issued pursuant to each Lender's Notice.
EXCHANGE SHARES TO BE FREELY TRANSFERABLE
The Exchange Shares, whether issued in certificated form (or transferred
electronically through the DWAC system) shall, and need not, bear a Restrictive
Legend. The Exchange Shares, whether issued in certificated form (or transferred
electronically through the DWAC system) shall, and need not, bear a Restrictive
Legend.
To that end, the Issuer has, this day, delivered its Transfer Agent the
opinion of ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq., Special Counsel to the Issuer, which
states:
(a) that the certificates (and/or shares transferred through the DWAC
system) representing the Exchange Shares, shall, and need not, bear any
legend restricting transfer the transfer thereof, shall not be subject to
any stop-transfer restrictions, may be offered for sale, transfer or
assignment immediately upon receipt thereof by the holder (or its
designees), and otherwise shall be freely transferable on the books and
records of the Issuer; and
(b) that it shall not be necessary for a separate opinion of counsel
to be prepared and deliver to the Transfer Agent each time Notice of
Exchange is delivered to the Issuer.
Furthermore, once this opinion of counsel has been issued, the Issuer will
not repudiate it, and if the Transfer Agent requests that a separate opinion be
submitted with successive Notices of Exchanges, the Issuer will retain ▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇., Esq. to do so.
ADJUSTMENTS
The Exchange Price and the number of Exchange Shares deliverable upon
Exchange of this Revised Note are subject to adjustment from time to time as
follows:
RECLASSIFICATION, ETC.
In case the Issuer shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another Person (where
the Issuer is not the survivor or where there is a change in or
distribution with respect to the Common Stock of the Issuer), sell,
convey, transfer or otherwise dispose of all or substantially all its
property, assets or business to another Person, spin-off or otherwise
change the Capital Structure of a subsidiary, or effectuate a
transaction or series of related transactions in which more than fifty
percent (50%) of the voting power of the Issuer is disposed of (each,
a "Fundamental Corporate Change") and, pursuant to the terms of such
Fundamental Corporate Change, shares of common stock of the successor
or acquiring corporation, or any cash, shares of stock or other
securities or property of any nature whatsoever (including warrants or
other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other
Property") are to be received by or distributed to the holders of
Common Stock of the Issuer, then the Holder of this Revised Note shall
have the right thereafter, at its sole option, to (x) require the
Issuer to prepay this Revised Note for cash at one hundred and fifty
percent (150%) of the then outstanding Principal Amount thereof,
together with all accrued and unpaid interest thereon to the date of
prepayment, (y) receive the number of shares of common stock of the
successor or acquiring corporation or of the Issuer, if it is the
surviving corporation, or of the subsidiary, and Other Property as is
receivable upon or as a result of such Fundamental Corporate Change by
a holder of the number of shares of Common Stock into which the
outstanding portion of this Revised Note may be exchange ed at the
Exchange Price applicable immediately prior to such Fundamental
Corporate Change or (z) require the Issuer, or such successor,
resulting or purchasing corporation, as the case may be, to, without
benefit of any additional consideration therefor, execute and deliver
to the Holder a Revised Note with substantial identical rights,
privileges, powers, restrictions and other terms as this Revised Note
in an amount equal to the amount outstanding under this Revised Note
immediately prior to such Fundamental Corporate Change. For purposes
hereof, "common stock of the successor, subsidiary or acquiring
corporation" shall include stock of such corporation of any class
which is not preferred as to dividends or assets over any other class
of stock of such corporation and which is not subject to prepayment
and shall also include any evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any
such stock, either immediately or upon the arrival of a specified date
or the happening of a specified event and any warrants or other rights
to subscribe for or purchase any such stock. The foregoing provisions
shall similarly apply to successive Fundamental Corporate Changes.
ANTI-DILUTION ADJUSTMENT
If and whenever after the date hereof, the Issuer shall issue or
sell any shares of its Common Stock for a consideration per share less
than the Exchange Price in effect immediately prior to the time of
issue or sale, then forthwith the Exchange Price shall be reduced to
the prices (calculated to the nearest tenth of a cent) determined by
dividing (1) an amount equal to the sum of (aa) the number of shares
of the Issuer's Common Stock outstanding immediately prior to such
issue or sale (assuming the exchange of all securities convertible
into shares of the Issuer's Common Stock) multiplied by the Exchange
Price in effect immediately prior to such issue or sale, and (bb) the
consideration, if any, received and deemed received by the Issuer upon
such issue or sale, by (2) the total number of shares of the Issuer's
Common Stock outstanding and deemed outstanding immediately after such
issue or sale.
CERTAIN EXCHANGE LIMITS
If, and to the extent that, on any date, the holding by the Holder of this
Revised Note would result in the Holder's being deemed the beneficial owner of
more than 4.99% of the then Issued and Outstanding number of shares of Common
Stock of the Issuer, then the Holder shall not have the right, and the Issuer
shall not have the obligation, to Exchange any portion of this Revised Note as
shall cause such Holder to be deemed the beneficial owner of more than 4.99% of
the then Issued and Outstanding number of shares of Common Stock of the Issuer.
If any court of competent jurisdiction shall determine that the foregoing
limitation is ineffective to prevent a Holder from being deemed the beneficial
owner of more than 4.99% of the then Issued and Outstanding number of shares of
Common Stock of the Issuer, then the Issuer shall prepay in cash such portion of
this Revised Note as shall cause such Holder not to be deemed the beneficial
owner of more than 4.99% of the then Issued and Outstanding number of shares of
Common Stock of the Issuer. Upon such determination by a court of competent
jurisdiction, the Holder shall have no interest in or rights under such portion
of the Revised Note. Any and all interest paid on or prior to the date of such
determination shall be deemed interest paid on the remaining portion of this
Revised Note held by the Holder. Such prepayment shall be for cash at a
prepayment price of one hundred and fifty percent (150%) of the Principal Amount
thereof, together with all accrued and unpaid interest thereon to the date of
prepayment.
TIME OF ESSENCE
Time is of the essence for the performance of all obligations set forth in
this Revised Note.
MISCELLANEOUS
In case any provision of this Revised Note is held by a tribunal of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Revised Note will not in any
way be affected or impaired thereby.
Should the Holder of this Revised Note employ an attorney for the purpose
of enforcing or construing this Revised Note, or any judgment based on this
Revised Note, in any legal proceeding whatsoever, including insolvency,
bankruptcy, arbitration, declaratory relief or other litigation, the Holder
shall be entitled to receive from the Maker reimbursement for all of the
Holder's reasonable attorneys' fees and all reasonable costs, including but not
limited to service of process, filing fees, court and court reporter costs,
investigative costs, expert witness fees, and the cost of any bonds, whether
taxable or not, and that such reimbursement shall be included in any judgment or
final order issued in that proceeding.
The Maker waives presentment, protest and notice of dishonor. No failure or
delay by the Holder in exercising any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right preclude other or
further exercises thereof or the exercise of any other right. The Holder may
extend the time of payment of this Revised Note, postpone the enforcement
hereof, grant any other indulgences without affecting or diminishing the
Holder's right of recourse against the Maker, which right is hereby expressly
reserved.
THE MAKER:
WGL ENTERTAINMENT HOLDINGS, INC.
By:
-----------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as Chief Executive Officer,
and not personally.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
EXHIBIT A- I APPEARS ON THE FOLLOWING PAGE
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EXHIBIT A- 1
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TO
REVISED NOTE
FORM OF NOTICE OF EXCHANGE
WGL ENTERTAINMENT HOLDINGS, INC.
The undersigned Holder of this Revised Note dated November ___, 2006 (the
"Revised Note ") issued by WGL Entertainment Holdings, Inc. (the "Issuer")
hereby irrevocably exercises its option
_______ to Exchange $_______.00 of Principal of the
--------- Revised Note plus $______.00 of Accrued Interest into shares
of Common Stock of the Issuer (the "Exchange Shares") in
accordance with the terms of the Revised Note.
OR
_______ to Exchange $_______.00 of Principal of the
--------- Revised Note into shares of Common Stock of the Issuer (the
"Exchange Shares"), and in addition to receive $______.00 of
Accrued Interest in cash, in accordance with the terms of
the Revised Note.
The undersigned directs that the shares of Common Stock of the Issuer and
the certificates therefor deliverable upon Exchange, together with any check in
payment for fractional Common Stock (or payment for interest, if so indicated
above), be registered in the name of and/or delivered to the undersigned unless
a different name has been indicated below.
All capitalized terms used and not defined herein have the respective
meanings assigned to them in the Revised Note.
The Exchange to be effected pursuant hereto shall be deemed to have been
effected at the date and time specified below, and as at that date, the
Person(s) designated in this Notice shall be deemed to have become the holder(s)
of record of the shares of the Common Stock of the Issuer represented thereby,
and all voting and other rights associated with the beneficial ownership of such
shares of Common Stock of the Issuer shall at such time vest with such
Person(s).
DATE OF THIS NOTICE OF EXCHANGE ____________, 20 __
ORIGINAL REVISED NOTE AMOUNT $_____________.00
APPLICABLE EXCHANGE PRICE _________ % of the
highest closing bid price of
the Common Stock of the Issuer
as reported on the OTC
Electronic Bulletin Board (the
"OTC-BB"), or any exchange on
which shares of the Issuer's
Common Stock are traded, for
any trading day on which the
given Notice is received by
the Issuer.
PRINCIPAL DOLLAR AMOUNT EXCHANGED $ _____________.00
ACCRUED BUT UNPAID INTEREST EXCHANGED $ _____________.00
TOTAL SHARES TO BE EXCHANGED _______________ Shares
PRINCIPAL AMOUNT OUTSTANDING AFTER THIS EXCHANGE $ _____________.00
NAME OF HOLDER ______________________
DELIVERY INSTRUCTIONS
PLEASE DWAC SHARES TO _______________________
CLEARING AGENT _______________________
DTC NUMBER _______________________
ACCOUNT NAME _______________________
ACCOUNT NUMBER _______________________
SIGNATURE OF HOLDER
By: /s/
-----------------------------
Name Title
END OF PLAN OF EXCHANGE