Document:

Unassociated Document

    CERTIFICATE
      OF DESIGNATIONS,

    PREFERENCES
      AND RIGHTS OF SERIES B

    CONVERTIBLE
      PREFERRED STOCK OF

    WLG
      INC.

     

    WLG
      Inc.
      (the “Company”),
      a
      corporation organized and existing under the General Corporation Law of the
      State of Delaware, does hereby certify that, pursuant to the authority conferred
      upon the Board of Directors of the Company by the Certificate of Incorporation
      of the Company (the “Certificate
      of Incorporation”),
      and
      pursuant to Section 151 of the General Corporation Law of the State of
      Delaware, the Board of Directors of the Company at a meeting duly held, adopted
      resolutions (i) authorizing a series of the Company’s previously authorized
      preferred stock, par value $.001 per share, and (ii) providing for the
      designations, preferences and relative, participating, optional or other rights,
      and the qualifications, limitations or restrictions thereof, of 1,700,000 shares
      of Series B Convertible Preferred Stock of the Company as
      follows:

     

    RESOLVED,
      that
      the Company is authorized to issue one million seven hundred thousand
      (1,700,000) shares of Series B Convertible Preferred Stock (the
“Series
      B Preferred Shares”),
      par
      value $.001 per share, which shall have the powers, designations, preferences
      and other special rights set forth below.

     

    1. Voting
      Rights.
      Except
      as otherwise provided herein or the Certificate of Incorporation or required
      by
      law, the holders of the Series B Preferred Shares and the holders of the
      Company’s Series A Convertible Preferred Stock, par value $.001 per share (the
“Series
      A Preferred Shares”)
      and
      the holders of the Company’s common stock, par value $.001 per share (the
“Common
      Stock”)
      shall
      vote together as a single class with each Series B Preferred Share having the
      number of votes equal to the largest whole number of shares of Common Stock
      into
      which such Series B Preferred Share could be converted, at the record date
      for
      the determination of the shareholders entitled to vote on such matters or,
      if no
      such record date is established, at the date such vote is taken.

     

    2. Stated
      Value.
      Each
      Preferred Share shall have a “Stated
      Value”
equal
      to one dollar ($1.00) per share.

     

    3. Conversion.
      Series B
      Preferred Shares shall be convertible into shares of Common Stock, on the terms
      and conditions set forth in this Section 3.

     

    (a) Holders’
      Conversion Right.
      At any
      time and/or from time to time on or after the first issuance of any Series
      B
      Preferred Shares (the “Original
      Issuance Date”)
      any
      holder of Series B Preferred Shares shall be entitled to convert any whole
      or
      partial number of Series B Preferred Shares into fully paid and non-assessable
      shares of Common Stock in accordance with this Section 3(a).
      The
      Company shall not issue any fraction of a share of Common Stock upon any
      conversion. All shares of Common Stock (including fractions thereof) issuable
      upon conversion of more than one Series B Preferred Share by a holder thereof
      shall be aggregated for purposes of determining whether the conversion would
      result in the issuance of a fraction of a share of Common Stock. If, after
      the
      aforementioned aggregation, the issuance would result in the issuance of a
      fraction of a share of Common Stock, the Company shall, in lieu of issuing
      such
      fractional share, pay to the holder the fair value thereof in cash. The Company
      shall pay any and all taxes that may be payable with respect to the issuance
      and
      delivery of Common Stock upon conversion of Series B Preferred Shares unless
      such taxes result from the issuance of Common Stock upon conversion to a person
      other than the holder of Series B Preferred Shares.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b) Company
      Forced Conversion.
      Upon a
      Change of Control (as defined in Section
      12
      of this
      Certificate of Designation (this “Certificate”)),
      the
      Company shall have a one (1) time right to require the automatic conversion
      of
      the Series B Preferred Shares into shares of Common Stock at the Conversion
      Price (as defined below). To effectuate such conversion, the Company shall
      send
      to the holders a written notice (the “Company
      Notice of Conversion”),
      not
      less than ten (10) business days prior to the date such conversion shall occur,
      which conversion date may not be later than the effective date of the Change
      of
      Control (the “Company
      Conversion Date”),
      informing the holders of the Company Conversion Date, the reason for such
      conversion and the number of shares of Common Stock they will receive upon
      conversion of the Series B Preferred Shares.

     

    (c) Conversion
      Price.
      Subject
      to anti-dilution adjustment as provided in Section 3(e),
      the
      conversion price (the “Conversion
      Price”)
      of
      each Series B Preferred Share shall be $0.70. Each Series B Preferred Share
      will
      convert into that number of shares of Common Stock determined by dividing the
      Stated Value of the Series B Preferred Share by the Conversion Price, as
      adjusted at the time of conversion. 

     

    (d) Mechanics
      of Conversion.
      To
      convert Series B Preferred Shares into shares of Common Stock on any date (a
      “Conversion
      Date”),
      pursuant to Section
      3(a)
      of this
      Certificate, the holder thereof shall (i) transmit by facsimile (or
      otherwise deliver), a copy of an executed notice of conversion in the form
      attached hereto as Exhibit A
      (the
“Conversion
      Notice”)
      to the
      Company, and (ii) surrender to a common carrier for delivery to the Company
      the original certificates representing the Series B Preferred Shares being
      converted (or an indemnification undertaking with respect to such shares in
      the
      case of their loss, theft or destruction) (the “Series
      B Preferred Stock Certificates”).
      Following the date of receipt of a Conversion Notice (the “Share
      Delivery Date”),
      the
      Company shall issue and deliver to the address as specified in the Conversion
      Notice, a certificate, registered in the name of the holder or its designee,
      for
      the number of shares of Common Stock to which the holder shall be entitled.
      If
      the number of Series B Preferred Shares represented by the Series B Preferred
      Stock Certificate(s) submitted for conversion pursuant to Section 3(a)
      of this
      Certificate (ii) is greater than the number of Series B Preferred Shares
      being converted, then the Company shall, as soon as practicable after receipt
      of
      the Series B Preferred Stock Certificate(s) (the “Preferred
      Stock Delivery Date”)
      and at
      its own expense, issue and deliver to the holder a new Series B Preferred Stock
      Certificate representing the number of Series B Preferred Shares not converted.
      The person or persons entitled to receive the shares of Common Stock issuable
      upon a conversion of Series B Preferred Shares shall be treated for all purposes
      as the record holder or holders of such shares of Common Stock on the Conversion
      Date.

    
      
         

      

      
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    (e) Anti-Dilution
      Provisions.
      The
      Conversion Price in effect at any time and the number and kind of securities
      issuable upon conversion of the Series B Preferred Shares shall be subject
      to
      adjustment from time to time upon the happening of certain events as
      follows:

     

    (i) Adjustment
      for Stock Splits and Combinations.
      If the
      Company at any time or from time to time on or after the Original Issuance
      Date
      effects a subdivision of the outstanding Common Stock, the Conversion Price
      then
      in effect immediately before that subdivision shall be proportionately
      decreased, and conversely, if the Company at any time or from time to time
      on or
      after the Original Issuance Date combines the outstanding shares of Common
      Stock
      into a smaller number of shares, the Conversion Price then in effect immediately
      before the combination shall be proportionately increased. Any adjustment under
      this subsection (e)(i) shall become effective at the close of business
      on the date the subdivision or combination becomes effective.

     

    (ii) Adjustment
      for Certain Dividends and Distributions.
      If the
      Company at any time or from time to time on or after the Original Issuance
      Date
      makes, or fixes a record date for the determination of holders of Common Stock
      entitled to receive, a dividend or other distribution payable in additional
      shares of Common Stock, then and in each such event the Conversion Price then
      in
      effect shall be decreased as of the time of such issuance or, in the event
      such
      record date is fixed, as of the close of business on such record date, by
      multiplying the Conversion Price then in effect by a fraction (1) the numerator
      of which is the total number of shares of Common Stock issued and outstanding
      immediately prior to the time of such issuance or the close of business on
      such
      record date and (2) the denominator of which shall be the total number of shares
      of Common Stock issued and outstanding immediately prior to the time of such
      issuance or the close of business on such record date plus the number of shares
      of Common Stock issuable in payment of such dividend or distribution;
provided,
      however,
      that if
      such record date is fixed and such dividend is not fully paid or if such
      distribution is not fully made on the date fixed therefor, the Conversion Price
      shall be recomputed accordingly as of the close of business on such record
      date
      and thereafter the Conversion Price shall be adjusted pursuant to this
      subsection (e)(ii) as of the time of actual payment of such dividends or
      distributions.

     

    (iii) Adjustments
      for Other Dividends and Distributions.
      In the
      event the Company at any time or from time to time on or after the Original
      Issuance Date makes, or fixes a record date for the determination of holders
      of
      Common Stock entitled to receive, a dividend or other distribution payable
      in
      securities of the Company other than shares of Common Stock, then and in each
      such event provision shall be made so that the holders of Series B Preferred
      Shares shall receive upon conversion thereof, in addition to the number of
      shares of Common Stock receivable thereupon, the amount of securities of the
      Company which they would have received had their Series B Preferred Shares
      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, subject to all other adjustments called for during such period under
      this subsection (e) with respect to the rights of the holders of the Series
      B Preferred Shares.

     

    (iv) Adjustment
      for Reclassification, Exchange and Substitution.
      In the
      event that at any time or from time to time on or after the Original Issuance
      Date, the Common Stock issuable upon the conversion of the Series B Preferred
      Shares is changed into the same or a different number of shares of any class
      or
      classes of stock, whether by recapitalization, reclassification or otherwise
      (other than a subdivision or combination of shares or stock dividend or a
      reorganization, merger, consolidation or sale of assets, provided for elsewhere
      in this subsection (e)), then and in any such event each holder of Series B
      Preferred Shares shall have the right thereafter to convert such stock into
      the
      kind and amount of stock and other securities and property receivable upon
      such
      recapitalization, reclassification or other change, by holders of the maximum
      number of shares of Common Stock into which such shares of Series B Preferred
      Shares could have been converted immediately prior to such recapitalization,
      reclassification or change, all subject to further adjustment as provided
      herein.

    
      
         

      

      
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    (v) Reorganizations,
      Mergers, Consolidations or Sales of Assets.
      If at
      any time or from time to time on or after the Original Issuance Date there
      is a
      capital reorganization of the Common Stock (other than a recapitalization,
      subdivision, combination, reclassification or exchange of shares provided for
      elsewhere in this subsection (e)) or a merger or consolidation of the
      Company with or into another corporation, or the sale of all or substantially
      all of the Company’s properties and assets to any other person, then, as a part
      of such reorganization, merger, consolidation or sale, provision shall be made
      so that the holders of the Series B Preferred Shares shall thereafter be
      entitled to receive upon conversion of the Series B Preferred Shares the number
      of shares of stock or other securities or property to which a holder of the
      number of shares of Common Stock deliverable upon conversion would have been
      entitled on such capital reorganization, merger, consolidation, or sale. In
      any
      such case, appropriate adjustment shall be made in the application of the
      provisions of this subsection (e)(v) with respect to the rights of the
      holders of the Series B Preferred Shares after the reorganization, merger,
      consolidation or sale to the end that the provisions of this
      subsection (e)(v) (including adjustment of the Conversion Price then in
      effect and the number of shares purchasable upon conversion of the Series B
      Preferred Shares) shall be applicable after that event and be as nearly
      equivalent as may be practicable.

     

    (f) No
      Impairment.
      The
      Company will not, by amendment of its Certificate of Incorporation, or through
      any reorganization, transfer of assets, consolidation, merger, dissolution,
      issue or sale of securities or any other voluntary action, avoid or seek to
      avoid the observance or performance of any of the terms to be observed or
      performed hereunder by the Company but will at all times in good faith assist
      in
      the carrying out of all the provisions of this Section 3
      of this
      Certificate and in the taking of all such action as may be necessary or
      appropriate in order to protect the conversion rights of the holders of the
      Series B Preferred Shares against impairment

     

    (g) Status
      of Converted Stock.
      In the
      event any Series B Preferred Shares shall be converted pursuant to Section 3
      of this
      Certificate, the shares so converted shall be canceled and shall not be reissued
      as Series B Preferred Shares.

     

    4. Reservation
      of Authorized Shares.
      The
      Company shall, so long as any of the Series B Preferred Shares are outstanding,
      take all action necessary to reserve and keep available out of its authorized
      and unissued Common Stock, solely for the purpose of effecting the conversion
      of
      the Series B Preferred Shares, 100% of such number of shares of Common Stock
      as
      shall from time to time be sufficient to effect the conversion of all of the
      Series B Preferred Shares then outstanding.

    
      
         

      

      
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    5. Series
      B Preferred Rank.
      The
      Series B Preferred Shares shall, with respect to all preferences as to
      distributions and payments upon the liquidation, dissolution and winding up
      of
      the Company, rank senior and prior to the Common Stock and pari passu with
      the
      Series A Preferred Shares.

     

    6. Liquidation,
      Dissolution, Winding-Up. In
      the
      event of any liquidation, dissolution or winding up of the Company, whether
      voluntary or involuntary, the holders of the Series B Preferred Shares shall
      be
      entitled to receive out of the assets of the Company, legally available for
      distribution therefrom (the “Liquidation
      Funds”),
      (i)
      before any amount shall be paid to the holders Common Stock and (ii) pari passu
      with the liquidation preference of the Series A Preferred Stock, an amount
      per
      Series B Preferred Share equal to $1.00 per Series B Preferred Share
(as
      adjusted for any stock dividend, stock split, combination or other similar
      recapitalization affecting such shares in the manner provided in Section 3(e)
      of this
      Certificate for the adjustment of the Conversion Price) plus
      all
      dividends, if any, which have accrued or are payable under Section 8
      hereof,
      but have not been paid in cash and received by the holders of the Series B
      Preferred Shares, up to and including the date full payment is tendered to
      the
      holder of such Series B Preferred Share with respect to such Liquidation
      (collectively, the “Preferred
      Liquidation Payment”);
      provided,
      however,
      if the
      Liquidation Funds are insufficient to pay, issue or deliver the full amount
      due
      to the holders of Series B Preferred Shares and the Series A Preferred Shares
      as
      provided herein, then each holder of Series B Preferred Shares and Series A
      Preferred Shares shall receive prior to any payment to any other holder of
      securities of the Company, a percentage of the Liquidation Funds equal to the
      full amount of Liquidation Funds payable to such holder as a liquidation
      preference, in accordance with this Certificate, as a percentage of the full
      amount of Liquidation Funds payable to all holders of Series B Preferred Shares
      and Series A Preferred Shares then outstanding. No holder of Series B Preferred
      Shares shall be entitled to receive any amounts with respect thereto upon any
      Liquidation other than the amounts provided for herein; provided that a holder
      of Series B Preferred Shares shall be entitled to all amounts previously accrued
      with respect to amounts owed hereunder. 

     

    7. Dividends;
      Participation. The
      Company shall pay cash dividends at the rate of 12% of the Stated Value per
      share per annum payable quarterly on December 31, March 31, June 30 and
      September 30, out of funds legally available for the payment of dividends.
      If
      funds are not legally available for the payment of dividends, any unpaid amounts
      shall accrue and be paid at the next dividend payment date until all accrued
      but
      unpaid dividends are paid in full. Dividends on the Series B Preferred Shares
      shall be calculated on the basis of a 360-day year, and shall accrue daily
      commencing on the date of issuance of the Series B Preferred Shares. The holders
      of the Series B Preferred Shares shall not be entitled to any other dividends
      with respect to their Series B Preferred Shares.

     

    8.
      Vote
      to Issue, or Change the Terms of, Series B Preferred Shares.
      The
      affirmative vote of the holders of not less than a majority of the then
      outstanding Series B Preferred Shares at a meeting duly called for such purpose
      or the written consent without a meeting of the holders of not less than a
      majority of the then outstanding Series B Preferred Shares shall be required
      for
      any amendment to this Certificate or the Certificate of Incorporation or the
      Company’s By-Laws which would in any way directly and/or indirectly amend,
      alter, change, repeal or otherwise adversely affect any of the powers,
      designations, preferences and rights of the Series B Preferred Shares.

    
      
         

      

      
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    9.
      Lost
      or Stolen Certificates.
      Upon
      receipt by the Company of evidence reasonably satisfactory to the Company of
      the
      loss, theft, destruction or mutilation of any Series B Preferred Stock
      Certificates representing the Series B Preferred Shares, and, in the case of
      loss, theft or destruction, of any indemnification undertaking by the holder
      to
      the Company in customary form and, in the case of mutilation, upon surrender
      and
      cancellation of the Series B Preferred Stock Certificate(s), the Company shall
      execute and deliver new Series B Preferred Stock Certificate(s) of like tenor
      and date.

     

    10.
      Company’s
      Right to Redeem.

     

    (a) At
      any time and from time to time on or after the date that is twenty-four (24)
      months following the date of the Original Issuance Date the Company may, in
      its
      sole discretion, by written notice to the holders of the then outstanding Series
      B Preferred Shares (the “Company
      Redemption Notice”),
      redeem all, or such lesser portion of the Series B Preferred Shares as the
      Company Redemption Notice shall so indicate, at a redemption price (the
“Redemption
      Price”)
      equal
      to the Preferred Liquidation Payment, plus all accrued but unpaid dividends
      through the date the Series B Preferred Shares are redeemed (the “Company
      Redemption Date”).
      Such
      Company Redemption Notice shall be sent not less than ten (10) business days
      prior to the proposed Company Redemption Date and shall disclose the Company
      Redemption Date, the Redemption Price, the mechanics of redemption including
      how
      the Company will pay the Redemption Price on the Company Redemption Date and
      the
      holders’ right to convert the Series B Preferred Shares into Common Stock, as
      provided in Section
      3(a)
      of this
      Certificate.

     

    (b) On
      each Company Redemption Date, the Company shall pay the Redemption Price by
      cash
      or bank check to the order of the person whose name appears on the certificate
      or certificates of the Series B Preferred Shares to be redeemed in the manner
      and at the place designated, and thereupon each surrendered certificate shall
      be
      cancelled.

     

    (c) From
      and after each Company Redemption Date, unless there shall have been a default
      in payment of the Redemption Price, in which case all rights shall survive
      until
      so paid, all rights of the holders of Series B Preferred Shares whose shares
      the
      Company has requested to be redeemed (except the right to receive the Redemption
      Price subsequent to the Company Redemption Date upon surrender of their
      certificate or certificates) shall cease with respect to such Series B Preferred
      Shares so redeemed, and such Series B Preferred Shares so redeemed shall not
      thereafter be transferred on the books of the Company or be deemed to be
      outstanding for any purpose whatsoever.

    
      
         

      

      
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    11.
      Holder’s
      Right to Require Redemption.

     

    (a) Holders
      of Series B Preferred Shares shall have the right, at their option, to require
      the Company to redeem all or a portion of such holder’s Series B Preferred
      Shares at any time and from time to time after the earlier to occur of the
      following: 

     

    (i) the
      date that is twenty-four (24) months after the Original Issue Date;

     

    (ii) such
      holder’s retirement from the Company; or

     

    (iii) such
      holder’s voting power in the Company falls below 50.1% or there is otherwise a
      Change in Control.

     

    (b) The
      foregoing notwithstanding, holders of Series B Preferred Shares shall have
      the
      right at their option to require the Company to redeem all or a portion of
      such
      holder’s Series B Preferred Shares during the period after the date of a Company
      Conversion Notice and prior to the Company Conversion Date, in the event the
      Company, pursuant to Section
      3(b)
      of this
      Certificate, sends to the holders of the Series B Preferred Shares a Company
      Conversion Notice requiring the conversion of the Series B Preferred Shares
      as a
      result of a Change of Control (which
      notwithstanding anything to the contrary provided herein or elsewhere shall
      be
      an event specified in Section
      12(i), (ii), (iii) or (iv) of this Certificate.

     

    (c) In
      order to exercise the redemption rights provided herein, the holders of the
      Series B Preferred Shares shall send a written notice to the Company (a
“Redemption
      Request”),
      requesting that the Company redeem the Series B Preferred Shares and setting
      forth the basis for such Redemption Request. The Company shall no later than
      thirty (30) days following the date of each and all such Redemption Requests
      redeem all, or such lesser portion of the Series B Preferred Shares requested
      to
      be redeemed in the Redemption Request at the Redemption Price.

     

    (d) On
      the date of redemption by the Company of the Series B Preferred Shares, the
      Company shall pay the Redemption Price to each holder requesting redemption
      by
      cash or bank check to the order of the person whose name appears on the
      certificate or certificates of the Series B Preferred Shares to be redeemed
      in
      the manner and at the place designated, and thereupon each surrendered
      certificate shall be cancelled.

     

    (e) From
      and after each Redemption Date, unless there shall have been a default in
      payment of the Redemption Price, in which case all rights shall survive until
      so
      paid, all rights of the holders of Series B Preferred Shares whose shares the
      holder has requested to be redeemed (except the right to receive the Redemption
      Price subsequent to the Redemption Date upon surrender of their certificate
      or
      certificates) shall cease with respect to such Series B Preferred Shares so
      redeemed, and such Series B Preferred Shares so redeemed shall not thereafter
      be
      transferred on the books of the Company or be deemed to be outstanding for
      any
      purpose whatsoever.

     

    12.
      Change
      of Control.
      For
      purposes of this Certificate, the term “Change
      of Control”
shall
      mean any of the following events: 

    
      
         

      

      
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    (i) an
      acquisition by any individual, entity or group (within the meaning of Section
      13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended
      (the “Exchange
      Act”))
      (a
      "Person")
      of
      beneficial ownership (within the meaning of Rule
      13d-3
      promulgated under the Exchange Act) of more than 50% of either (1) the then
      outstanding shares of Common Stock (the "Outstanding
      Company Common Stock")
      or (2)
      the combined voting power of the then outstanding voting securities of the
      Company entitled to vote generally in the election of directors (the
      "Outstanding
      Company Voting Securities");
      excluding, however, the following: (1) any acquisition by the Company; (2)
      any
      acquisition by any employee benefit plan (or related trust) sponsored or
      maintained by the Company or any corporation controlled by the Company; (3)
      an
      acquisition by Chris Wood and/or any affiliate, assignee and/or transferee
      of
      Mr. Wood (a “Wood
      Party”);
      or
      (4) any acquisition by any Person pursuant to a transaction which complies
      with
      clauses (1), (2) and (3) of subsection (iii) of this Section
      12;
      or

    

    (ii) Within
      any period of twenty-four (24) consecutive months, a change in the composition
      of the Board such that the individuals who, immediately prior to such period,
      constituted the Board (such Board shall be hereinafter referred to as the
      "Incumbent
      Board")
      cease
      for any reason to constitute at least a majority of the Board; provided,
      however,
      for
      purposes of this Section
      12,
      that
      any individual who becomes a member of the Board during such period, whose
      election, or nomination for election by the Company's stockholders, was approved
      by a vote of at least a majority of those individuals who are members of the
      Board and who were also members of the Incumbent Board (or deemed to be such
      pursuant to this proviso) shall be considered as though such individual were
      a
      member of the Incumbent Board; but, provided further, that any such individual
      whose initial assumption of office occurs as a result of either an actual or
      threatened election contest (as such terms are used in Rule 14a-11 of Regulation
      14A promulgated under the Exchange Act) or other actual or threatened
      solicitation of proxies or consents by or on behalf of a Person other than
      the
      Board shall not be so considered as a member of the Incumbent Board; and further
      provided, however, that the provisions of this Section 12(ii) shall not
      constitute a Change in Control if after a change in the composition of the
      Board, Chris Wood remains a member of the Board; or

    

    (iii) The
      approval by the stockholders of the Company of a reorganization, merger or
      consolidation or sale or other disposition of all or substantially all of the
      assets of the Company ("Corporate
      Transaction"),
      excluding, however, such a Corporate Transaction, pursuant to which (1) all
      or
      substantially all of the individuals and entities who are the beneficial owners,
      respectively, of the Outstanding Company Common Stock and Outstanding Company
      Voting Securities immediately prior to such Corporate Transaction will
      beneficially own, directly or indirectly, more than 50% of, respectively, the
      outstanding shares of Common Stock, and the combined voting power of the then
      outstanding voting securities entitled to vote generally in the election of
      directors, as the case may be, of the corporation resulting from such Corporate
      Transaction (including, without limitation, a corporation which as a result
      of
      such transaction owns the Company or all or substantially all of the Company's
      assets, either directly or through one or more subsidiaries) in substantially
      the same proportions as their ownership, immediately prior to such Corporate
      Transaction, of the Outstanding Company Common Stock and Outstanding Company
      Voting Securities, as the case may be, and (2) individuals who were members
      of
      the Board immediately prior to the approval by the stockholders of the Company
      of such Corporate Transaction will constitute at least a majority of the members
      of the board of directors of the corporation resulting from such Corporate
      Transaction; or

    
      
         

      

      
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    (iv) The
      approval by the stockholders of the Company of a complete liquidation or
      dissolution of the Company, other than pursuant to a transaction which would
      comply with clauses (1) and (2) of subsection (iii) of this Section
      12,
      assuming for this purpose that such transaction were a Corporate
      Transaction.

    

    13.
      Notice.
      Any
      notice or other communication required or permitted to be given hereunder will
      be in writing and will be mailed by certified mail, return receipt requested,
      or
      delivered against receipt to the party to whom it is to be given (a) if to
      the
      Company, at Wako Express (HK) Co. Ltd., Units 1301-3 & 11-12 Tower 1 Ever
      Gain Plaza, 88 Container Port Road, Kwai Chung, N.T. Hong Kong, SAR. Kong,
      Attention: President and Chief Executive Officer, or (b) if to the holder(s)
      of
      Series B Preferred Shares, at c/o Wako Express (HK) Co. Ltd., Units 1301-3
&
11-12 Tower 1 Ever Gain Plaza, 88 Container Port Road, Kwai Chung, N.T. Hong
      Kong, SAR. (or, in either case, to such other address as the party will have
      furnished in writing to the other person. Any notice or other communication
      given by certified mail will be deemed given at the time of certification
      thereof, except for a notice changing a party’s address which will be deemed
      given at the time of receipt thereof.

     

    [Signature
      page follows]

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Certificate of Designations to be signed by Christopher
      Wood, its Chief Executive Officer, this 27 day of June, 2008.

     

    
      	 	
              WAKO
                LOGISTICS GROUP, INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	
              /s/
                Christopher Wood

            
	 	 	
              Name:
                Christopher Wood

            
	 	 	
              Title:
                Chief Executive Officer

            

    

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    

    EXHIBIT
      A

     

    WLG
      INC.

     

    CONVERSION
      NOTICE

    

     

    Reference
      is made to the Certificate of Designations, Preferences and Rights of
      Series B Convertible Preferred Stock of WLG Inc. (the “Certificate
      of Designation”).
      In
      accordance with and pursuant to the Certificate of Designation, the undersigned
      hereby elects to convert the number of shares of Series B Convertible
      Preferred Stock, par value $.001 per share (the “Series
      B Preferred Shares”),
      of
      WLG Inc., a Delaware corporation (the “Company”),
      indicated below into shares of common stock, par value $.001 per share (the
      “Common
      Stock”),
      of
      the Company, as of the date specified below.

     

    Date
      of
      Conversion:
      ______________________________________________________________

     

    Number
      of
      Series B Preferred Shares to be converted:
      _____________________________________

     

    Number
      of
      shares of Common Stock to be received:
      _______________________________________

     

    Please
      deliver the Common Stock into which the Series B Preferred Shares are being
      converted to the following address:

     

    ______________________________________________________________

    
       

      ______________________________________________________________

    

     

    ______________________________________________________________

     

    ______________________________________________________________CONVERSION
      AGREEMENT

     

    THIS
      CONVERSION AGREEMENT (the
      “Agreement”)
      is
      entered into on this 30th
      day of
      June, 2008 (the “Effective
      Date”),
      by
      and between WLG Inc., a Delaware corporation (the “Company”),
      and
      Christopher Wood, with respect to the conversion into equity by Mr. Wood, of
      certain outstanding Loans (as defined below) previously made by Mr. Wood to
      the
      Company.

     

    RECITALS

     

    A. Mr.
      Wood
      has made loans to the Company of U.S. $1,700,000 (the “Loans”).

     

    B. The
      Company requested Mr. Wood and Mr. Wood agreed to convert the principal amount
      of such Loans into 1,700,000 shares of the Company’s 12% Series B Convertible
      Preferred Stock (the “B
      Shares”),
      which
      B Shares have the terms set forth in the Certificate of Designations,
      Preferences and Rights of Series B Convertible Preferred Stock of WLG Inc.,
      annexed hereto as Exhibit
      1
      (the
“Certificate
      of Designations”).

     

    AGREEMENT

     

    NOW,
      THEREFORE,
      in
      consideration of the foregoing facts, the mutual promises of the parties
      contained herein and 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. Conversion
      of Loans.
      Not
      later than ten (10) days following the date that the Certificate of Designations
      is accepted for filing with the Secretary of State of the State of Delaware,
      the
      Company will cause to be delivered to Mr. Wood one or more certificates
      representing the B Shares into which the $1,700,000 of Loans shall be converted
      pursuant to this Agreement. The Company agrees to file immediately upon
      execution of this Agreement by the parties hereto, the Certificate of
      Designations.

     

    2. Representations
      and Warranties of the Company.
      The
      Company hereby represents and warrants to Mr. Wood that it has taken all
      necessary corporate action to authorize the execution and delivery of this
      Agreement, and that this Agreement, once executed and delivered, will upon
      the
      Effective Date be a valid and binding agreement of the Company enforceable
      against the Company in accordance with its terms. The B Shares, when issued
      in
      exchange for the Loans, shall be duly authorized, validly issued and fully
      paid
      and non-assessable shares of capital stock of the Company; Mr. Wood will acquire
      good title to the B Shares free and clear of all liens, claims, security
      interests, covenants, restrictions, preemptive rights, or other encumbrances
      of
      any kind.

     

    3. Representations
      and Warranties of Mr. Wood.
      Mr.
      Wood represents and warrants to the Company that he has the authority to execute
      this Agreement, and that this Agreement, once executed and delivered, will
      upon
      the Effective Date be a valid and binding agreement of Mr. Wood enforceable
      against Mr. Wood in accordance with its terms. In addition, Mr. Wood represents
      and warrants to the Company that he:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (a) acknowledges
      and understands that an investment in the B Shares represents a speculative
      investment involving a high degree of risk;

     

    (b) is
      acquiring the B Shares for his own account and not for resale and can bear
      the
      economic risk of an investment in the B Shares for an indefinite period of
      time;

     

    (c) acknowledges
      and understands that the issuance to him of the B Shares will not be registered
      under the Securities Act of 1933, as amended (the “Act”),
      or
      any state securities laws and, as a result, certificates representing the B
      Shares and the shares of Common Stock issuable upon the conversion of the B
      Shares (the “Conversion
      Shares”),
      will
      contain a legend, substantially stating that they have not been registered
      under
      the Act or any State securities laws, and that neither the Conversion Shares
      nor
      the B Shares (collectively, the “Securities”)
      may be
      transferred in the absence of either (i) an opinion of counsel satisfactory
      to
      the Company that such proposed transfer may be made lawfully without the
      registration under the Act and applicable state securities laws, or (ii)
      registration of such Securities with respect to the subject
      transfer;

     

    (d) is
      an
“accredited investor,” as that term is defined in Rule 501(a) under the
      Act;

     

    (e)
       acknowledges
      and understands that the Company will rely on his representations and warranties
      contained herein for purposes of claiming an exemption from the registration
      requirements under the Act and state securities laws; and

     

    (f) has
      reviewed and fully understands the Certificate of Designations.

     

    5. Jurisdiction,
      Etc.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York without regard to the conflicts of laws principles
      thereof. The parties hereto hereby irrevocably agree that any suit or proceeding
      arising directly and/or indirectly pursuant to or under this Agreement, shall
      be
      brought solely in a federal or state court located in the City, County and
      State
      of New York. By its execution hereof, the parties hereby covenant and
      irrevocably submit to the in personam
      jurisdiction of the federal and state courts located in the City, County and
      State of New York and agree that any process in any such action may be served
      upon any of them personally, or by certified mail or registered mail upon them
      or their agent, return receipt requested, with the same full force and effect
      as
      if personally served upon them in New York City. The parties hereto expressly
      and irrevocably waive any claim that any such jurisdiction is not a convenient
      forum for any such suit or proceeding and any defense or lack of in
      personam
      jurisdiction with respect thereto. In the event of any such action or
      proceeding, the party prevailing therein shall be entitled to payment from
      the
      other party hereto of its reasonable counsel fees and
      disbursements.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    6. General
      Provisions.
      This
      Agreement constitutes the entire agreement of the parties with respect to its
      subject matter, and all agreements and understandings among the parties with
      respect to its subject matter are embodied and expressed herein. This Agreement
      may be modified, amended, waived or revoked only in a writing signed by all
      parties. This Agreement may be executed in one or more counterparts and by
      facsimile, each of which shall be enforceable against the party actually
      executing such counterparts and all of which together shall constitute one
      instrument. This Agreement may not be assigned or otherwise transferred without
      the prior express written consent of the other party hereto. The rights, duties
      and obligations set forth herein shall inure to the benefit of and be binding
      upon any and all predecessors, successors and permitted assigns of the parties
      hereto.

     

    

     

    [Remainder
      of page intentionally left blank]

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      this
      Agreement has been duly executed as of the date first written
      above.

     

     

    
      	 	 	 
	 	WLG INC.:
	 
 	 
 	 
 
	 	By:  	/s/ Christopher
              Wood
	 	
              
Christopher
              Wood, Chief Executive Officer
	 	 
	 	 
	 	 
	 	/s/ Christopher Wood 
	 	
              
Christopher
              Wood, for
              himself

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