DEBT EXCHANGE AGREEMENT
EXHIBIT
10(xxii)
DEBT
EXCHANGE AGREEMENT
(this
"Agreement"),
dated
as of December 7, 2005, by and between NEW
GENERATION HOLDINGS, INC.,
a
Delaware corporation (“NGH”),
NEW
GENERATION PLASTIC, INC.,
a
Delaware corporation wholly owned by NGH ("NGP")
and
JACQUES
MOT,
the
Chief Executive Officer of NGH ("JM").
W I T N E S S E T
H:
WHEREAS,
NGH is
indebted to JM in the amount of $753,304.27 representing fees owed to JM
under
his Consulting Agreement with the Company (the "JM
Agreement")
through December 31, 2004 (the “NGH
Debt”);
WHEREAS,
NGP is
indebted to NGH in the amount of $3,978,682.18 (the “NGP
Debt”);
WHEREAS,
NGH
had
been dormant with no business activities for more than two (2) years;
WHEREAS,
through
the efforts of JM, the Company has survived and raised additional funds in
an
effort to revive its dormant plastic business through NGP;
WHEREAS,
in
order to recognize the significant efforts of JM in attempting to revive
the
Company's business and continue to retain his services, the parties desire
to
reward JM with an increased equity stake in the Company by exchanging the
NGH
Debt owed to JM for a Convertible Promissory Note in the original principal
amount of the NGH Debt which note shall be convertible into shares of NGH
or NGP
Preferred Stock, upon the terms and subject to the conditions set forth in
this
Agreement.
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. EXCHANGE
OF DEBT.
The
parties agree that, upon the execution and delivery of this Agreement, NGH
will
issue JM a Convertible Promissory Note substantially in the form of Exhibit
A
attached hereto in the amount of NGH Debt (the "Convertible
Note").
The
Convertible Note shall be convertible, at the option of JM, into shares of
Series A Preferred Stock of either: (i) NGH at a conversion price of $1.507
per
share; or (ii) NGP at a conversion price of $1.507 per share subject to the
conditions set forth in Section 2 below. In the event that JM elects to convert
the Convertible Note into shares of NGH Preferred Stock the NGH Debt owed
to JM
shall be deemed satisfied in full with no further obligation from NGH to
JM. In
the event that JM elects to convert the Convertible Note into shares of NGP
Preferred Stock the NGP Debt owed to NGH and the NGH Debt owed to JM shall
each
be deemed satisfied in full with no further obligation from NGH to JM and
no
further obligation from NGP to NGH. Upon execution of this Agreement and
issuance of the Convertible Note, JM shall return the JM Note (or an affidavit
of loss in lieu thereof) to NGH for cancellation. Nothing contained herein
shall
affect JM's right to receive additional fees under the JM Agreement that
become
due following the date of this Agreement.
2. CONDITIONS.
JM's
option to convert principal and interest under the Convertible Note into
shares
of NGP Preferred Stock pursuant to Section 1 shall be subject to the
satisfaction of the following conditions:
(i) The
stockholders of NGH shall have approved the "spinoff" of NGP to the shareholders
of NGH on or before June 30, 2006; and
(ii) NGP
shall
have become a reporting company under the Securities Exchange Act of 1934,
as
amended (the “Exchange
Act”).
3. REPRESENTATIONS
AND WARRANTIES OF THE PARTIES; COVENANTS.
(a) NGP
represents and warrants that the NGP Debt owed to NGH is a valid debt, not
subject to offset or counterclaim of any nature. NGH represents and warrants
that the NGH Debt owed to JM is a valid debt not subject to offset or
counterclaim of any nature. NGH represents and warrants that this Agreement
has
been duly authorized by its Board of Directors, including its Independent
Director, and that this Agreement is binding and enforceable against it in
accordance with its terms. Following execution of this Agreement, NGH shall
seek
stockholder approval of the “spinoff” of NGP once NGH is current in its Exchange
Act filings. NGP represents and warrants that this Agreement has been duly
authorized by its Board of Directors, including its Independent Director,
and by
its stockholders. In addition, NGP represents and warrants that the shares
of
NGP Preferred Stock issuable to JM upon the conversion of the Convertible
Promissory Note will be fully paid, validly issued and non-assessable. JM
represents that this Agreement is binding and enforceable against him in
accordance with its terms.
(b) NGH
and
NGP each covenant and agree that promptly following a request by JM, such
company shall file documents or instruments necessary or appropriate to adopt
Preferred Stock terms substantially in the form of Exhibit B attached hereto.
NGH covenants and agrees to submit this Agreement to its stockholders for
ratification at its next stockholders meeting. In the event that either NGH
or
NGP proposes to register any of its securities under the Securities Act of
1933,
as amended, whether for its own account or for the account of holders of
its
securities (except with respect to registration statements on Forms X-0,
X-0 or
any successor or similar form or “Rule 145” transactions), the Company shall
provide JM with prior written notice and JM shall have the right to include
any
shares of Common Stock underlying Preferred Stock issued pursuant to this
Agreement and/or the Convertible Note in such registration; provided, however,
if any particular registration to be effected by NGH or NGP shall be, in
whole
or in part, an underwritten public offering of Common Stock for the account
of
NGH or NGP, as applicable, the number of shares of JM's Common Stock to be
included in such an underwriting may be reduced pro rata among JM, the Company
and/or the other holders of NGH or NGP Common Stock requesting inclusion
in such
registration and if, and to the extent that the managing underwriter shall
be of
the opinion that the inclusion of all of the shares requested to be included
in
such underwriting by JM would materially and adversely affect the marketing
of
the Common Stock to be sold by the Company under such registration
statement.
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4. LAW
APPLICABLE. This
Agreement shall be governed by and construed pursuant to the laws of Delaware
without giving effect to any choice of law or conflict of law provision or
rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware.
5. SEVERABILITY.
If any
provision of this Agreement shall be held to be invalid or unenforceable,
and is
not reformed by a court of competent jurisdiction, such invalidity or
unenforceability shall attach only to such provision and shall not in any
way
affect or render invalid or unenforceable any other provision of this Agreement,
and this Agreement shall be carried out as if such invalid or unenforceable
provision were not contained herein.
6. NO
WAIVER.
A
waiver of any breach or violation of any term, provision or covenant contained
herein shall not be deemed a continuing waiver or a waiver of any future
or past
breach or violation. No oral waiver shall be binding.
7. ENTIRE
AGREEMENT; AMENDMENT.
This
Agreement constitutes the entire agreement between the parties and supersedes
all prior understandings or agreements, whether written or oral, with respect
to
the subject matter hereof. No amendment or modification of this Agreement
shall
be valid unless it is in writing and signed by each party.
8. COUNTERPARTS.
This
Agreement may be executed in counterparts, each of which shall be an original,
but all of which together shall constitute one and the same instrument and
it
shall not be necessary in making proof of this agreement to account for all
such
counterparts.
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[Signature
page to Debt Exchange Agreement]
IN
WITNESS WHEREOF,
the
undersigned have hereunto set their hands to this Agreement as of the day
and
year first above written.
NEW
GENERATION HOLDINGS, INC.
By:
/s/ Jacques Mot
Name:
Jacques Mot
Title:
President and CEO
NEW
GENERATION PLASTICS, INC.
By:
/s/ Jacques Mot
Name:
Jacques Mot
Title:
President and CEO
JACQUES
MOT
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Exhibit
A
Form
of
Convertible Promissory Note
See
Attached
-5-
Exhibit
B
Form
of
Preferred Stock Terms
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 One
Million
(1,000,000) (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.
When
and
as declared by the Corporation’s Board of Directors and to the extent permitted
under the General Corporation Law of Delaware, the Corporation shall be
obligated to pay preferential dividends to the holders of the Series A Preferred
Stock prior and in preference to Common Stock as provided in this Section
II.1.
Dividends on each share of the Series A Preferred Stock (a “Series
A Share”)
shall
accrue at the rate of 8% per annum, compounded quarterly, on the sum of the
Series A Liquidation Preference thereof plus all accumulated and unpaid
dividends thereon from and including the Date of Issuance of such Series
A Share
to and including the first to occur of (i) the date on which the Series A
Liquidation Preference of such Series A Share, plus all accrued and unpaid
dividends thereon, is paid to the holder thereof in connection with the
liquidation of the Corporation, (ii) the date on which such Series A Share
is
converted into shares of Common Stock hereunder or (iii) the date on which
such
Series A Share is otherwise acquired by the Corporation. Such dividends shall
accrue whether or not they have been declared and whether or not there are
profits, surplus or other funds of the Corporation legally available for
the
payment of dividends, and such dividends shall be cumulative such that all
accrued and unpaid dividends shall be fully paid or declared with funds
irrevocably set apart for payment before any dividends, distributions,
redemptions or other payments may be made with respect to any Common
Stock.
Except
as
otherwise provided herein, if at any time the Corporation pays less than
the
total amount of dividends then accrued with respect to the Series A Preferred,
such payment shall be distributed, pro rata among the holders of Series A
Preferred based upon the preferences set forth in Section II.1(a) above and
based upon the aggregate accrued but unpaid dividends on the Shares held
by each
such holder.
In
the
event that the Corporation declares or pays any dividends upon the Common
Stock
(whether payable in cash, securities or other property) other than dividends
payable solely in shares of Common Stock, the Corporation shall also declare
and
pay to the holders of the Series A Preferred Stock at the same time that
it
declares and pays such dividends to the holders of the Common Stock, the
dividends which would have been declared and paid with respect to the Common
Stock issuable upon conversion of the Series A Preferred Stock had all of
the
outstanding Series A Preferred Stock been converted immediately prior to
the
record date for such dividend, or if no record date is fixed, the date as
of
which the record holders of Common Stock entitled to such dividends are to
be
determined.
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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.
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(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
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(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.
The
holders of the Series A Preferred Stock shall have conversion rights as
follows:
(a) 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.
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(i) Each
share of Series A Preferred Stock shall automatically be converted into shares
of Common Stock at the then effective Conversion Price upon written notice
to
the Corporation by the holder of such share of Series A Preferred Stock.
In the
case of any conversion pursuant to this Section II.5(a)(i) 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 of such notice, 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.
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(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.
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