ELECTION TO CONVERT AND AMENDMENT TO DEBT EXCHANGE AGREEMENT
EXHIBIT
A
ELECTION
TO CONVERT AND AMENDMENT TO
ELECTION
TO CONVERT AND AMENDMENT TO DEBT EXCHANGE AGREEMENT
(this
“Amendment”),
dated
as of July 10, 2006, by and among NEW GENERATION HOLDINGS, INC., a Delaware
corporation (“NGH”),
PLASTINUM CORP. (formerly named New Generation Plastic, Inc.), a Delaware
corporation (“Plastinum”),
and
JACQUES MOT (“JM”).
W I T N E S
S E T H
WHEREAS, the
parties hereto are parties to that certain Debt Exchange Agreement, dated as
of
December 7, 2006 (the “Agreement”);
and
WHEREAS,
pursuant to Section 1 of the Agreement, JM has the right, among other things,
to
elect to convert the principal and interest of the Convertible Note into shares
of Series A Preferred Stock of NGH; and
WHEREAS,
pursuant to Section 1 of the Agreement, and in accordance with the terms and
subject to the conditions of this Amendment, JM hereby elects to convert all
of
the outstanding Convertible Note into shares of Series A Preferred Stock of
NGH;
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants and agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
to
be legally bound, hereby agree as follows:
1. Capitalized
Terms.
Capitalized terms used and not otherwise defined in this Amendment shall have
the meanings ascribed to such terms in the Agreement.
2. Election
to Convert the Convertible Note.
Pursuant to Section 1 of the Agreement and pursuant to the terms and subject
to
the conditions of this Amendment, JM hereby elects to convert all of the
outstanding principal and interest under the Convertible Note as of July 10,
2006, in the aggregate amount of $796,644.78 as of such date, into an
aggregate of 528,629.58 shares of Series A Preferred Stock of NGH. Pursuant
to
Section 1 of the Agreement, JM agrees to return the Convertible Note to NGH
for
cancellation and such Note shall be deemed satisfied in full upon such
conversion. The Company agrees to issue to JM a certificate representing
528,629.58 shares of Series A Preferred Stock of NGH.
3. Preferred
Stock Terms.
The
terms of the Series A Preferred Stock of NGH as set forth on Exhibit B to the
Agreement are hereby amended and restated in the form of Schedule A to this
Amendment. NGH agrees to take all necessary actions to file such amended and
restated Preferred Stock terms promptly with the Secretary of State of Delaware.
Notwithstanding the provisions of the Preferred Stock terms attached to this
Amendment, JM agrees that he will not convert the shares of Series A Preferred
Stock held by him into shares of Common Stock of NGH until the filing in
Delaware of an amendment to the Restated Certificate of Incorporation of NGH
providing for an increase in the number of authorized shares of Common Stock
of
NGH in order to permit the conversion of all outstanding shares of Series A
Preferred Stock into Common Stock of NGH.
4. No
Further Amendments.
Except
as specifically set forth or as amended in this Amendment, the Agreement remains
in full force and effect.
IN
WITNESS WHEREOF,
the
undersigned have executed this Amendment as of the day and year first above
written.
NEW
GENERATION HOLDINGS, INC.
By:
/s/ Jacques
Mot
Name:
Jacques Mot
Title:
President
PLASTINUM
CORP.
(formerly
named New Generation Plastic, Inc.)
By:
/s/ Jacques
Mot
Name:
Jacques Mot
Title:
President
/s/
Jacques
Mot
JACQUES
MOT
SCHEDULE
A
Series
A Preferred Stock Terms
CERTIFICATE
OF DESIGNATIONS,
PREFERENCES
AND RIGHTS
OF
SERIES
A PREFERRED STOCK
OF
NEW
GENERATION HOLDINGS, INC.
Pursuant
to Section 151 of the General Corporation Law
of
the State of Delaware
NEW
GENERATION HOLDINGS, INC., a corporation organized and existing under and
by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), in accordance with the provisions of Section 151(g) thereof,
DOES
HEREBY CERTIFY:
That
pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, as amended, the Board of
Directors on June 29, 2006 by unanimous written consent, adopted the following
resolution creating a series of Five Hundred Twenty Eight Thousand Six Hundred
Twenty Nine and 58/00 (528,629.58) shares of Preferred Stock, $.01 par value,
designated as "Series A Preferred Stock":
RESOLVED,
that
pursuant to the authority granted to the Board of Directors by Certificate
of
Incorporation, as amended (the "Certificate"), the Board of Directors hereby
authorizes the issuance of Five Hundred Twenty Eight Thousand Six Hundred
Twenty
Nine and 58/00 (528,629.58) shares of Preferred Stock of the Corporation
and
hereby fixes the following designations, powers, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of such shares, in addition to those
set
forth in the Certificate:
Section
II. Preferred
Stock.
The designation of the series of Preferred Stock created hereby is Series
A
Preferred Stock and the number of shares constituting such series is Five
Hundred Twenty Eight Thousand Six Hundred Twenty Nine and 58/00 (528,629.58)
(the "Series
A Preferred Stock"
or the
"Preferred
Stock").
The
powers, privileges, preferences, rights, restrictions of, and other matters
relating to the Series A Preferred Stock, are as follows:
| 1. |
Dividends.
|
The
holders of the Series A Preferred Stock shall not be entitled to receive
dividends.
| 2. |
Liquidation
Preference.
|
(a) In
the
event of any liquidation, dissolution, Deemed Liquidation (as hereinafter
defined) or winding up of the Corporation, whether voluntary or involuntary
(a
“Liquidation
Event”),
the
holders of the Series A Preferred Stock, shall be entitled to receive, prior
and
in preference to any distribution of any of the assets, capital or surplus
funds
of the Corporation to the holders of the Company's Common Stock, an amount
per
share equal to $1.507 per share of Series A Preferred Stock (as adjusted
for any
stock dividends, combinations, splits or the like with respect to such share)
(the “Series
A Liquidation Preference”)
If
upon the occurrence of a Liquidation Event, (i) the assets, capital and funds
thus distributed among the holders of the Series A Preferred Stock shall
be
insufficient to permit the payment to such holders of the full Series A
Liquidation Preference, then the entire assets and funds of the Corporation
legally available for distribution shall be distributed ratably among the
holders of the Series A Preferred Stock in proportion to the aggregate Series
A
Liquidation Preference each such holder is otherwise entitled to receive
or (ii)
after payment to the holders of the Series A Preferred Stock their full Series
A
Liquidation Preference there shall remain assets, capital or funds of the
Corporation legally available for distribution to the holders of the
Corporation’s Common Stock, then unless the assets of the Corporation are not
being liquidated in connection with such Liquidation Event, the holders of
the
Series A Preferred Stock shall be entitled to receive a distribution of such
remaining assets, capital or funds ratably with the holders of the Common
Stock
as if such Series A Preferred Stock had been converted into Common
Stock.
(b) A
“Deemed
Liquidation”
shall
mean (A) the acquisition of the Corporation by another entity or the acquisition
of another entity by the Corporation by means of any transaction or series
of
related transactions (including, without limitation, any reorganization,
merger,
or consolidation other than any merger effected exclusively for the purpose
of
changing the domicile of the Corporation) or a sale of all or substantially
all
of the assets of the Corporation unless, in the case of any such transaction,
series of transactions or sale, the Corporation’s stockholders of record as
constituted immediately prior to such transaction, series of transactions
or
sale shall, immediately after such transaction, series of transactions or
sale
(by virtue of securities issued as consideration for the Corporation’s
securities or otherwise) hold more than 50% of the voting power and economic
interest of the surviving or (in the case of a sale of all or substantially
all
of the assets of the Corporation) acquiring entity in the same proportions
among
such stockholders as held by them, and with the same relative powers,
privileges, preferences, rights and restrictions as among themselves and
as
against the Corporation as, immediately prior to such transaction, series
of
transactions or sale, or (B) a transaction or series of transactions in which
a
person or group of persons (as defined in Rule 13d-5(b)(1) of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”))
acquires or following which has acquired beneficial ownership (as determined
in
accordance with Rule 13d-3 of the Exchange Act) of 50% or more of the voting
power or economic interest of the Corporation.
(c) In
the
event of any Deemed Liquidation, if the consideration received is other than
cash, its value shall be deemed to be its Current Market Price (as such term
is
defined herein). The consideration to be received by the holders of Series
A
Preferred Stock in any such transaction shall be of the same type (cash,
securities or other property) and in the same proportion, as is payable to
holders of Common Stock as a result of the transaction unless the holders
of a
majority of the outstanding shares of Series A Preferred Stock consent
otherwise.
(d) The
Corporation shall give each holder of record of Series A Preferred Stock
written
notice of an impending Liquidation Event not later than thirty (30) days
prior
to the stockholders’ meeting called to approve such transaction, or thirty (30)
days prior to the consummation of such transaction, whichever is earlier,
and
shall also notify such holders in writing of the final approval of such
Liquidation Event. The initial notice shall describe the material terms and
conditions of the impending Liquidation Event and the provisions of this
Section
II.2, and the Corporation shall thereafter give such holders prompt notice
of
any material changes. The Liquidation Event shall not be consummated sooner
than
the later of thirty (30) days after the Corporation has given the first notice
provided for herein or ten (10) days after the Corporation has given notice
of
any material changes to such impending transaction; provided,
however,
that
such periods may be shortened upon the written consent of the holders of
at
least 67% of the Series A Preferred Stock.
(e) Notwithstanding
the foregoing, in the event of any Liquidation Event, each holder of Series
A
Preferred Stock shall be entitled to receive the amount such holder would
have
received under Section II.2(a).
(f) Except
as
provided in Section II.2(c) with respect to a Deemed Liquidation, any amounts
payable to the holders of the Series A Preferred Stock this Section II.2
shall
be payable in cash.
(g)
For
purposes hereof, the “Current
Market Price”
of
any
asset other than cash means:
(i) in
the
case of a publicly traded security, the average of the daily closing prices
for
such security for the 20 consecutive business days commencing 20 business
days
before the date of determination, in which case the closing price for each
day
shall be (x) the last reported sales price regular way or, in case no such
reported sale takes place on such day, the average of the reported closing
bid
and asked prices regular way, in either case on the principal national
securities exchange on which such security is listed or admitted to trading,
or
(y) if not listed or admitted to trading on any national securities exchange,
the average of the highest reported bid and lowest reported asked prices
as
furnished by the National Association of Securities Dealers, Inc.’s Automated
Quotation System, or the nearest comparable system; provided
that in
the event that the security for which the Current Market Price is to be
determined is subject to any restriction on free marketability, then the
method
of valuation of such security shall be to take an appropriate discount from
the
Current Market Price as determined above to reflect the approximate fair
market
value thereof and if the holders of a majority of the Series A Preferred
Stock
shall object to the amount of such discount, such objection shall be resolved
by
an independent appraiser as provided in (ii) below and such appraiser’s
determination of value shall be final, conclusive and binding on the Company
and
the holders of Series A Preferred Stock; and
(ii) in
the
case of any other asset, as determined in good faith by the Board of Directors;
provided
that if
the holders of a majority of the outstanding Series A Preferred Stock object
to
such determination by the Board of Directors, the Board of Directors shall
retain an independent appraiser reasonably satisfactory to such holders and
such
appraiser’s determination of value shall be final, conclusive and binding on the
Company and the holders of Series A Preferred Stock.
|
3.
|
Redemption.
|
The
Series A Preferred Stock shall not have any redemption or similar
rights.
| 4. |
Voting
Rights.
|
Each
holder of shares of Series A Preferred Stock shall be entitled to the number
of
votes equal to the number of shares of Common Stock into which such shares
of
Series A Preferred Stock may then be converted and shall have voting rights
and
powers equal to the voting rights and powers of the Common Stock (except
as
otherwise expressly provided herein or as required by law, voting together
with
the Common Stock as a single class) and shall be entitled to notice of any
stockholders’ meeting in accordance with the By-Laws of the Corporation.
Fractional votes shall not, however, be permitted and any fractional voting
rights shall be rounded upward to the nearest whole number. For avoidance
of
doubt, each reference herein to a percentage or other amount of shares of
Series
A Preferred Stock, the holders of which are entitled to consent rights, approval
rights or other rights, shall be deemed to refer to such percentage or other
amount of the voting power of such shares determined as provided
above.
| 5. |
Conversion.
|
(a)
The
holders of the Series A Preferred Stock shall have conversion rights as
follows:
(i)
Each
share of Series A Preferred Stock along with the aggregate accrued and unpaid
dividends thereon shall be convertible, at the option of the holder thereof,
at
any time and from time to time into the number of fully paid and non-assessable
shares of Common Stock of the Corporation as is determined by dividing $1.507
aggregate accrued and unpaid dividends thereon by the Conversion Price in
effect
at the time of conversion; provided, that in no event shall the Series A
Preferred Stock convert to an amount of Common Stock which when added to
the
existing outstanding Common Stock will exceed the amount of Common Stock
authorized by the Company's Certificate of Incorporation. The Conversion
Price
at which shares of Common Stock shall be deliverable upon conversion of the
Series A Preferred Stock shall initially be $.0206 per share (as adjusted
for
any stock dividends, combinations, splits or the like with respect to the
Series
A Preferred Stock). A holder of the Series A Preferred Stock may convert
any or
all of its shares at any time in accordance with this Section II.5.
(ii) Each
share of Series A Preferred Stock shall automatically be converted into shares
of Common Stock at the then effective Conversion Price upon (A) the approval
and
filing of an amendment to the Corporation’s Restated Certificate of
Incorporation providing for an increase in the number of authorized shares
of
Common Stock to permit the conversion of all outstanding shares of Series
A
Preferred Stock and (B) the consummation of the contemplated “spin-off” by the
Corporation of all of its Common Stock in Plastinum Corp. to the Corporation’s
stockholders. In addition, in connection with the automatic conversion referred
to in this Section II.5.(a)(ii), the holders of shares of Series A Preferred
Stock shall automatically be entitled to receive the number of shares of
common
stock of Plastinum Corp. equal to the number of shares of Common Stock of
the
Corporation issuable upon conversion of the Series A Preferred Stock. In
the
case of any conversion pursuant to this Section II.5(a)(ii), the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders
of
such shares of Common Stock as of the date on which the “spin-off” occurs,
regardless of whether the shares of Series A Preferred Stock have been
surrendered as of such date.
(b) A
holder
of Series A Preferred Stock who elects to convert such shares into shares
of
Common Stock, shall surrender the certificate or certificates representing
such
shares of Series A Preferred Stock at the principal United States office
of the
Corporation, together with written notice that such holder elects to convert
all
or any number of the shares of the Series A Preferred Stock represented by
such
certificate or certificates. Such notice shall state such holder’s name or the
names of the nominees in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. If required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by a written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or
its
attorney duly authorized in writing. The date of receipt of such certificates
and notice by the transfer agent is referred to herein as the “Conversion
Date”.
The
Corporation shall, as soon as practicable after the Conversion Date, issue
and
deliver to such holder, or to its nominee, at such holder’s address as shown in
the records of the Corporation, a certificate or certificates for the number
of
whole shares of Common Stock issuable upon such conversion in accordance
with
the provisions hereof, together with cash in lieu of any fractional shares,
after aggregating all fractional shares as to which a holder shall have elected
conversion. If less than all of the shares of Series A Preferred Stock
represented by a stock certificate are converted into shares of Common Stock,
the Corporation shall issue a new stock certificate in the amount of the
shares
not so converted.
(c) No
fractional shares of Common Stock shall be issued upon conversion of shares
of
Series A Preferred Stock and, after aggregating all fractional shares as
to
which a holder shall have elected conversion, any remaining fractional share
to
which the holder would otherwise be entitled shall be rounded up to the nearest
whole number.
(d) The
Corporation shall at all times when any shares of the Series A Preferred
Stock
shall be outstanding, reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of the Series
A
Preferred Stock such number of its duly authorized shares of Common Stock
as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series A Preferred Stock.
(e) All
shares of Series A Preferred Stock which shall have been surrendered for
conversion as herein provided shall no longer be deemed to be outstanding,
and
all rights with respect to such shares shall immediately cease and terminate
on
the applicable Conversion Date, except only the right of the holders thereof
to
receive shares of Common Stock in exchange therefor and the payment of any
declared and unpaid dividends thereon. On the Conversion Date, the shares
of
Common Stock issuable upon such conversion shall be deemed to be outstanding,
and the holder thereof shall be entitled to exercise and enjoy all rights
with
respect to such shares of Common Stock. All shares of Series A Preferred
Stock,
tendered for conversion shall, from and after the applicable Conversion Date,
be
deemed to have been retired and cancelled and shall not be reissued as Preferred
Stock, and the Corporation may thereafter take such appropriate action as
may be
necessary to reduce accordingly the authorized number of shares of Preferred
Stock.
(f)
The term
“Conversion
Price”
shall
mean, as of any time, the Conversion Price of the Series A Preferred Stock
as
applicable at that time, as specified in paragraph (a) of this Section II.5
in
case no adjustment shall have been required, or such Conversion Price as
adjusted and further adjusted pursuant to this paragraph (f) of this Section
II.5, as the case may be.
(1) If
at any
time the Corporation shall issue any shares of Common Stock or any Convertible
Securities, Rights or Related Rights (each as herein defined) (such Convertible
Securities, Rights or Related Rights being hereinafter referred to collectively
as “Securities”)
(other
than a dividend or other distribution payable solely in Common Stock or such
Securities) for a consideration per share of Common Stock (the consideration
in
each case to be determined in the manner provided in subparagraph (2) below)
less than the Conversion Price in effect immediately prior to the issuance
of
such Common Stock or Securities, then the Conversion Price in effect immediately
prior to each such issuance shall forthwith be reduced to a new Conversion
Price
equal to the lowest amount of consideration per share of Common Stock (to
be
determined in the manner provided in subparagraph (2) below) paid for such
Common Stock or Securities.
(2) For
the
purpose of any adjustment of the Conversion Price pursuant to this paragraph
(f)
of this Section II.5, the following provisions shall be applicable:
(a) If
the
Corporation shall effect a subdivision of the outstanding Common Stock, the
Conversion Price then in effect immediately before such subdivision shall
be
proportionately decreased. If the Corporation shall combine the outstanding
shares of Common Stock, the Conversion Price then in effect immediately before
the combination shall be proportionately increased. If the Corporation shall
make or issue a dividend or other distribution payable in securities, then
and
in each such event provision shall be made so that the holders of shares
of the
Series A Preferred Stock shall receive upon conversion thereof in addition
to
the number of shares of Common Stock receivable thereupon, the amount of
securities that they would have received had their Series A Preferred Stock
been
converted into Common Stock on the date of such event and had they thereafter
during the period from the date of such event to and including the Conversion
Date, retained such securities receivable by them as aforesaid during such
period giving effect to all adjustments called for during such period under
this
paragraph with respect to the rights of the holders of the Series A Preferred
Stock. If the Corporation shall reclassify its Common Stock (including any
reclassification in connection with a consolidation or merger in which the
Corporation is the surviving corporation), then and in each such event provision
shall be made so that the holders of Series A Preferred Stock shall receive
upon
conversion thereof, the amount of such reclassified Common Stock that they
would
have received had their Series A Preferred Stock been converted into Common
Stock immediately prior to such reclassification and had they thereafter
during
the period from the date of such event to and including the Conversion Date,
retained such reclassified Common Stock giving effect to all adjustments
called
for during such period under this paragraph with respect to the rights of
these
holders of the Series A Preferred Stock.
(b) Whenever
the Conversion Price shall be adjusted as provided in this Section II.5,
the
Corporation shall forthwith provide notice of such adjustment to each holder
of
shares of the Series A Preferred Stock, a statement, certified by the chief
financial officer of the Corporation, showing in detail the facts requiring
such
adjustment and the Conversion Price that shall be in effect after such
adjustment. The Corporation shall send such notice and statement by first
class
mail, postage prepaid, to each holder of record of Series A Preferred Stock
at
such holder’s address as shown in the records of the Corporation.
(c) If
a
state of facts shall occur which, without being specifically controlled by
the
provisions of this Section II.5, would not fairly protect the conversion
rights
of the holders of the Series A Preferred Stock in accordance with the essential
intent and principles of such provisions, then the Board of Directors of
the
Corporation shall make an adjustment in the application of such provisions,
in
accordance with such essential intent and principles, so as to protect such
conversion rights.
IN
WITNESS WHEREOF, this Certificate has been signed on this ________ day of
____________, 2006, and the signature of the undersigned shall constitute
the
affirmation and acknowledgement of the undersigned , under penalties of perjury,
that this Certificate if the act of the undersigned and that the facts stated
in
this Certificate are true.
| NEW GENERATION HOLDINGS, INC. | |
| By: /s/Jacques Mot | |
| Name: Jacques Mot | |
| Title: President |