Unassociated Document


    
      EXHIBIT
        10(xxii)

       

      DEBT
        EXCHANGE AGREEMENT

       

      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 S-4,
        S-8 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

       


      
        
          
          

        

        
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      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.

       

      To
        the
        extent not paid on March 31, June 30, September 30, and December 31 of each
        year, with respect to each Series A Share (the “Dividend
        Reference Dates”),
        all
        dividends which have accrued on each Series A Share outstanding during the
        three-month period (or other period in the case of the initial Dividend
        Reference Date) ending upon each such Dividend Reference Date shall be
        accumulated and shall remain accumulated dividends with respect to such Share
        until paid to the holder thereof.

       

      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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