DEF 14C 1 wgldef14c081606.txt THE WORLD GOLF LEAGUE DEF 14C SCHEDULE 14C INFORMATION Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934 Check the appropriate box: / / Preliminary Information Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2)) /X/ Definitive Information Statement THE WORLD GOLF LEAGUE, INC. --------------------------- (Name of Registrant As Specified In Its Charter) Payment of Filing Fee (Check the appropriate box): /X/ No fee required / / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11 (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: THE WORLD GOLF LEAGUE, INC. 963 Helmsley Court, Unit 107 Lake Mary, Florida 32746 NOTICE OF SPECIAL MEETING OF STOCKHOLDERS To be held on August 16, 2006 To the stockholders of The World Golf League, Inc.: Notice is hereby given of a special meeting of shareholders of The World Golf League, Inc. (the "Company" or "World Golf") to be held on August 16, 2006 at 9:00 A.M. E.S.T. at the Company's office at 963 Helmsley Court, Unit 107, Lake Mary, Florida 32746, for the following purposes: 1. To amend the Company's certificate of incorporation to change the Company's name from "The World Golf League, Inc." to "WGL Entertainment Holdings, Inc.", and to increase the number of shares of common stock that we are authorized to issue to Ten Billion (10,000,000,000) shares of common stock, reauthorize the par value of $.001 per share of common stock ("Common Stock"), and reauthorize 10,000,000 shares of "blank check" preferred stock, par value $.001 per share ("Preferred Stock"). 2. To authorize our Board of Directors to amend our Certificate of Incorporation to affect a reverse split of our outstanding Common Stock in a ratio between 1:20 and 1:100, without further approval of our stockholders, upon a determination by our Board of Directors that such a reverse stock split is in the best interests of our company and our stockholders. 3. To ratify the adoption of the Company's 2006 Stock Incentive Plan; 4. To ratify the appointment of Malone & Bailey, PC, as our independent registered public accounting firm for the fiscal year ending December 31, 2006; and 5. To transact such other business as may properly come before the Meeting and any adjournment or postponement thereof. Common stockholders of record on the close of business on July 14, 2006 are entitled to notice of the meeting. All stockholders are cordially invited to attend the meeting in person, however the majority shareholder does not need your vote to effect the changes above. By Order of the Board of Directors, /s/ Michael S. Pagnano ------------------------- Michael S. Pagnano Director July 25, 2006 --------------- THE WORLD GOLF LEAGUE, INC. 963 Helmsley Court, Unit 107 Lake Mary, Florida 32746 INFORMATION STATEMENT July 25, 2006 This Information Statement is furnished by the Board of Directors of The World Golf League, Inc. (the "Company" and "World Golf") to provide notice of a Special Meeting of Stockholders of the Company which will be held on August 16, 2006 at 9:00 A.M. E.S.T. at the Company's corporate offices at 963 Helmsley Court, Unit 107, Lake Mary, Florida 32746 (the "Meeting"). The record date for determining stockholders entitled to receive this Information Statement has been established as the close of business on July 14, 2006 (the "Record Date"). This Information Statement will be first mailed on or about July 26, 2006 to stockholders of record at the close of business on the Record Date. As of the Record Date, there were 2,499,994,293 shares of the Company's Common Stock outstanding and 10,000,000 shares of the Company's preferred stock outstanding. The holders of all outstanding shares of Common Stock are entitled to one vote per share of Common Stock registered in their names on the books of the Company at the close of business on the Record Date the holders of all outstanding shares of preferred stock are entitled to 300 votes per share of preferred stock registered into their names on the books of the Company at the close of business on the Record Date. The presence at the special meeting of the holders of a majority of the outstanding shares of stock entitled to vote at the special meeting are necessary to constitute a quorum. The Board of Directors is not aware of any matters that are expected to come before the special meeting other than the matters referred to in this Information Statement. The matters scheduled to come before the special meeting require the approval of a majority of the votes cast at the special meeting. Our Chief Executive Officer and Director, Michael S. Pagnano (our "Majority Shareholder"), beneficially owned 40,662,518 shares of common stock (which amount includes 37,219,368 shares of common stock held individually by Mr. Pagnano and 3,443,150 shares of common stock held by Mr. Pagnano's wife, which he holds shared voting control over), or 1.6% of our outstanding common stock and 10,000,000 shares of preferred stock representing 100% of our outstanding preferred stock as of the Record Date, which preferred stock ownership allows him to vote an amount equal to 3,000,000,000 shares of common stock, and provides him the ability, along with his common stock ownership, to vote in aggregate 3,040,662,518 voting shares or 55.3% of our voting shares, based on 5,499,994,293 total voting shares outstanding as of the Record Date (which number includes 2,499,994,293 shares of common stock and an aggregate of 3,000,000,000 shares which the preferred stock is able to vote), and will therefore be able to approve the matters presented in this Information Statement. The Company is not soliciting your vote as the Majority Shareholder already has the vote in hand. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. PROPOSAL NO. 1. TO APPROVE A PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY FROM "THE WORLD GOLF LEAGUE, INC." TO "WGL ENTERTAINMENT HOLDINGS, INC." AND TO INCREASE THE NUMBER OF OUR AUTHORIZED SHARES OF COMMON STOCK TO 10,000,000,000 SHARES. WHAT IS THE MAJORITY SHAREHOLDER APPROVING? Our Majority Shareholder will approve an amendment to our Certificate of Incorporation to change the name of the Company from "The World Golf League, Inc." to "WGL Entertainment Holdings, Inc." (the "Amendment"). The Amendment will also reflect an increase in the number of authorized shares of our common stock from Two Billion Five Hundred Thousand (2,500,000,000) shares to Ten Billion (10,000,000,000) shares of common stock and will reauthorize the par value of $0.001 per share, Ten Million (10,000,000) shares of preferred stock and the par value of $0.001 per share of our preferred stock. The text of the proposed amendment to our Certificate of Incorporation is included in Appendix A attached hereto. Once the Amendment is approved by the Majority Shareholder at the Meeting, the Amendment will be filed with the Delaware Secretary of State to provide that the Company's name be changed to WGL Entertainment Holdings, Inc. and Article I of the Company's Certificate of Incorporation will be amended to read as follows: "FIRST: The name of the Corporation is WGL Entertainment Holdings, Inc." The Amendment will also reflect the increase in authorized shares of common stock, and Article Four of the Company's Certificate of Incorporation will be amended to read as follows: "FOURTH: The total number of shares of stock which this corporation is authorized to issue is: The Corporation's capitalization will be Ten Billion Ten Million (10,010,000,000) shares, consisting of Ten Billion (10,000,000,000) shares of common stock, par value $.001 per share ("Common Stock"), and Ten Million (10,000,000) shares of preferred stock, par value $.001 per share ("Preferred Stock"). The Board of Directors of the Corporation is hereby granted the power to authorize by resolution, duly adopted from time to time, the issuance of any or all of the preferred stock in any number of classes or series within such classes and to set all terms of such preferred stock of any class or series, including, without limitation, its powers, preferences, rights, privileges, qualifications, restrictions and/or limitations. The powers, preference, rights, privileges, qualifications, restrictions and limitations of each class or series of the preferred stock, if any, may differ from those of any and all other classes or other series at any time outstanding. Any shares of any one series of preferred stock shall be identical in all respects with all other shares of such series, except that shares of any one series issued at different times may differ as to the dates from which dividends thereof shall be cumulative." WHAT IS THE PURPOSE OF THE AMENDMENT? The reasons for the Amendment are to change our corporate name from The World Golf League, Inc. to WGL Entertainment Holdings, Inc. (the "Name Change") and to authorize a greater number of authorized but unissued shares of common stock to provide enhanced flexibility in the event the Board of Directors determines that it is necessary or appropriate to raise additional capital through the sale of securities, to acquire other companies or their businesses or assets, to establish strategic relationships with corporate partners, or to attract or to retain and motivate key employees and to allow a sufficient number of authorized but unissued shares of common stock to allow DLC Capital Group, LLC, the ability to convert its outstanding Convertible Notes (the "Convertible Debentures") and exercise Warrants into shares of our common stock. Additionally, the Amendment will re-authorize Ten Million (10,000,000) shares of Preferred Stock and state that the Board of Directors of the Company is granted the power to authorize by resolution, duly adopted from time to time, the issuance of any or all of the preferred stock in any number of classes or series within such classes and to set all terms of such preferred stock of any class or series, including, without limitation, its powers, preferences, rights, privileges, qualifications, restrictions and/or limitations. The powers, preference, rights, privileges, qualifications, restrictions and limitations of each class or series of the preferred stock, if any, may differ from those of any and all other classes or other series at any time outstanding. Any shares of any one series of preferred stock shall be identical in all respects with all other shares of such series, except that shares of any one series issued at different times may differ as to the dates from which dividends thereof shall be cumulative. The Company entered into a Securities Purchase Agreement with DLC Capital Group, LLC ("DLC"), dated as of May 18, 2006 (the "Closing" and the "Purchase Agreement") whereby it agreed to sell an aggregate of $400,000 in Convertible Debentures ("Convertible Debenture") and up to 700,000,000 warrants to purchase shares of our common stock at an exercise price of $0.004 ("Stock Purchase Warrants" or "Warrants"). At the Closing, the Company sold DLC a Convertible Debenture in the principal amount of one hundred and forty five thousand dollars ($145,000) (the "Note") and a Stock Purchase Warrant to purchase an aggregate of 253,750,000 shares of our common stock at an exercise price of $0.004 per share. We also granted DLC registration rights to the shares the Note is convertible into; the shares the Warrant is exercisable for pursuant to a Registration Rights Agreement, and the shares of common stock issuable upon the conversion of the additional notes and additional warrants we agreed to sell to DLC as described below, pursuant to a Registration Rights Agreement (the "Registration Agreement"). Additionally, DLC agreed that upon the filing of a Registration Statement covering the Note, it would purchase additional Notes (the "Filing Notes") in the aggregate principal amount of fifty-five thousand dollars ($55,000) and additional warrants (the "Filing Warrants") to purchase an aggregate of 96,250,000 pre-Reverse Stock Split shares of Common Stock, with the closing of such purchase to occur within five (5) days of the filing date of the Registration Statement and to purchase additional notes (the "Effectiveness Notes" and, collectively with the Filing Notes, the "Additional Notes") in the aggregate principal amount of two hundred thousand dollars ($200,000) and additional warrants (the "Effectiveness Warrants" and, collectively with the Filing Warrants, the "Additional Warrants") to purchase an aggregate of 350,000,000 shares of Common Stock upon the effectiveness of the Registration Statement, with the closing of such purchase to occur within five (5) days of the date the Registration Statement is declared effective by the Commission. The Convertible Debentures sold in May 2006 are currently convertible into shares of our common stock at the lesser of (i) $0.15 per share ("Fixed Conversion Price"), (ii) seventy percent (70%) of the average of the five (5) lowest volume weighted average price ("VWAPs") trading days of our common stock during the 20 most recent completed trading days of the common stock on the OTCBB, prior to the date of conversion, (iii) seventy percent (70%) of the VWAP of our common stock for the most recent completed trading day prior to conversion, or (iv) seventy percent (70%) of the most recent closing bid price of our common stock prior to the conversion. Notwithstanding the foregoing, in the event that the conversion price in effect is less than $0.001 (the "Minimum Conversion Price"), then DLC shall not be entitled to convert any portion of the Convertible Debentures, unless we waive such Minimum Conversion Price. The Directors believe that the Name Change is in the best interests of the Company because the new name reflects the shift in the focus of the Company's business away from golf leagues to golf entertainment. The Directors believe that the increase in our authorized shares of common stock is in the best interests of the Company, since the Company currently has only approximately 5,707 shares of authorized but unissued shares of common stock, which amount does not allow for a sufficient number of shares to be issued to DLC in connection with the conversion of its Convertible Debentures and Warrants. The Company intends to file the Amendment promptly after the Majority Shareholder approves the Amendment, at which time the Company will also change its name and stock symbol on the Over-The-Counter Bulletin Board. WHAT RIGHTS AND PREFERENCES WILL OUR COMMON STOCK AND PREFERRED STOCK HAVE SUBSEQUENT TO THE AMENDMENT? COMMON STOCK Holders of shares of common stock are entitled to one vote per share on each matter submitted to a vote of shareholders. In the event of liquidation, holders of common stock are entitled to share pro rata in the distribution of assets remaining after payment of liabilities, if any. Holders of common stock have no cumulative voting rights, and, accordingly, the holders of a majority of the outstanding shares have he ability to elect all of the Directors. Holders of common stock have no preemptive or other rights to subscribe for shares. Holders of common stock are entitled to such dividends as may be declared by the Board of Directors out of funds legally available therefore. The outstanding shares of common stock are validly issued, fully paid and non-assessable. PREFERRED STOCK The Amendment will re-authorize the issuance of up to 10,000,000 shares of preferred stock, par value of $0.001 per share. We currently have 10,000,000 shares of preferred stock outstanding and therefore will not be able to issue any additional shares of preferred stock; however, if additional shares of preferred stock are authorized in the future, and/or if any of our currently outstanding preferred stock is cancelled, the issuance of additional shares of preferred stock could adversely affect the rights of the holders of common stock and, therefore, reduce the value of our common stock. It is not possible to state the actual effect of the issuance of any additional shares of preferred stock on the rights of holders of the common stock until the Board of Directors determines the specific rights of the holders of the preferred stock; however, these effects may include: o Restricting dividends on the common stock; o Super-majority voting rights diluting the voting power of the common stock; o Conversion rights that enable preferred shares to be converted into a large number of shares of common stock; o Impairing the liquidation rights of the common stock; and/or o Delaying or preventing a change in control of the company without further action by the stockholders. WHAT VOTE IS REQUIRED FOR APPROVAL? Our Majority Shareholder will approve the Amendment of our Certificate of Incorporation to affect the Amendment. Therefore, no further shareholder approval is required or sought. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION. [Remainder of page left intentionally blank.] PROPOSAL NO. 3 TO AUTHORIZE OUR BOARD OF DIRECTORS TO AMEND OUR CERTIFICATE OF INCORPORATION TO AFFECT A REVERSE SPLIT OF OUR OUTSTANDING COMMON STOCK IN A RATIO BETWEEN 1:20 AND 1:100, WITHOUT FURTHER APPROVAL OF OUR STOCKHOLDERS. WHAT IS THE MAJORITY SHAREHOLDER APPROVING? Our Majority Shareholder will approve an amendment of our Certificate of Incorporation to affect a proposed reverse split of our issued and outstanding common stock in a ratio between 1:20 and 1:100 at any time after our Meeting (the "Reverse Stock Split"). Our Board of Directors believes that, because it is not possible to predict market conditions at the time the Reverse Stock Split is to be affected, it would be in the best interests of the stockholders if the board were able to determine, within specified limits approved in advance by our stockholders, the appropriate Reverse Stock Split ratio. The proposed Reverse Stock Split would combine a whole number of outstanding shares of our common stock into one share of common stock, thus reducing the number of outstanding shares without any corresponding change in our par value or market capitalization. As a result, the number of shares of our common stock owned by each stockholder would be reduced in the same proportion as the reduction in the total number of shares outstanding, so that the percentage of the outstanding shares owned by each stockholder would remain unchanged. After approval by our Majority Shareholder, our Board of Directors, without further approval, will subsequently have the authority, in its sole discretion, to determine whether or not to proceed with a reverse split of our issued and outstanding common stock in a ratio between 1:20 and 1:100 at any time before our annual meeting in 2006. If the Board of Directors determines, based on factors such as prevailing market and other relevant conditions and circumstances and the trading prices of our common stock at that time, that the Reverse Stock Split is in our best interests and in the best interests of our stockholders, it will, in its sole discretion, select the Reverse Stock Split in a ratio between 1:20 and 1:100. Following such determination, our Board of Directors will effect the Reverse Stock Split by directing management to file an amendment to our Certificate of Incorporation with the Delaware Secretary of State at such time as the board has determined is appropriate to effect the Reverse Stock Split. The Reverse Stock Split will become effective at the time specified in the amendment to our Certificate of Incorporation after its filing with the Delaware Secretary of State, which we refer to as the "Effective Time". The text of the proposed amendment to our Certificate of Incorporation is subject to modification to include such changes as may be required by the office of the Delaware Secretary of State or as our Board of Directors deems necessary and advisable to affect the Reverse Stock Split. Our Board of Directors reserves the right, even after approval by our Majority Shareholders, to forego or postpone the filing of the amendment to our Certificate of Incorporation if it determines such action is not in our best interests or the best interests of our stockholders. If the Reverse Stock Split is not implemented by our Board of Directors and effected by the date of our annual meeting for the fiscal year ended 2006, this Proposal 3 will be deemed abandoned, without any further effect. In this case, our Board of Directors will again seek stockholder approval at a future date for a Reverse Stock Split if it deems a Reverse Stock Split to be advisable at that time. HOW WILL A REVERSE STOCK SPLIT AFFECT MY RIGHTS? The completion of the Reverse Stock Split will not affect any stockholder's proportionate equity interest in our Company, except for the effect of rounding up fractional shares to a whole share. For example, a stockholder who owns a number of shares that prior to the Reverse Stock Split represented one percent of the outstanding shares of the Company would continue to own one percent of our outstanding shares after the Reverse Stock Split. However, the Reverse Stock Split will have the effect of increasing the number of shares available for future issuance because of the reduction in the number of shares that will be outstanding after giving effect to the Reverse Stock Split. Also, because the Reverse Stock Split will result in fewer shares of our common stock outstanding, the per share income/(loss), per share book value and other "per share" calculations in our quarterly and annual financial statements will be increased. Potential Disadvantages of the Reverse Stock Split -------------------------------------------------------- Reduced Market Capitalization. While we expect that the reduction in our outstanding shares of common stock will increase the market price of our common stock, we cannot assure you that the Reverse Stock Split will increase the market price of our common stock by a factor equal to the Reverse Stock Split itself (from between 20 and 100, depending on what ratio our Board of Directors believes is in our best interests), or that such Reverse Stock Split, will result in any permanent increase in the market price of our common stock, which can be dependent upon many factors, including our business and financial performance and prospects. Should the market price of our common stock decline after the Reverse Stock Split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the Reverse Stock Split. In some cases the stock price of companies that have effected Reverse Stock Splits has subsequently declined back to pre-reverse split levels. Accordingly, we cannot assure you that the market price of our common stock immediately after the effective date of the Reverse Stock Split will be maintained for any period of time or that the ratio of post- and pre-split shares will remain the same after the Reverse Stock Split is effected, or that the Reverse Stock Split will not have an adverse effect on our stock price due to the reduced number of shares outstanding thereafter. A Reverse Stock Split is often viewed negatively by the market and, consequently, can lead to a decrease in our overall market capitalization. If the per share price does not increase proportionately as a result of the Reverse Stock Split, then our overall market capitalization will be reduced. Increased Transaction Costs. The number of shares held by each individual stockholder will be reduced if the Reverse Stock Split is implemented. This will increase the number of stockholders who hold less than a "round lot," or 100 shares. Typically, the transaction costs to stockholders selling "odd lots" are higher on a per share basis. Consequently, the Reverse Stock Split could increase the transaction costs to existing stockholders in the event they wish to sell all or a portion of their shares. Liquidity. Although our Board of Directors believes that the decrease in the number of shares of our common stock outstanding as a consequence of the Reverse Stock Split and the anticipated increase in the price of our common stock could encourage interest in our common stock and possibly promote greater liquidity for our stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the Reverse Stock Split. Authorized Shares; Future Financings. Upon effectiveness of the Reverse Stock Split, the number of authorized shares of common stock that are not issued or outstanding would increase. As a result, we will have an increased number of authorized but unissued shares of common stock which we may issue in financings or otherwise. If we issue additional shares, the ownership interests of our current stockholders may be diluted. No Fractional Shares ---------------------- In the event a stockholder would have received a fractional share of common stock following the Reverse Stock Split, the Company will round up fractional shares to the nearest whole share. For example, a stockholder with 99 shares would receive 1 share of our common stock following a 1:100 Reverse Stock Split. Effect of Reverse Stock Split on Voting Rights Associated with our Outstanding -------------------------------------------------------------------------------- Preferred Stock ---------------- Each share of outstanding preferred stock has the right to vote a number of voting shares equivalent to 300 shares of common stock. The preferred stock does not contain any provisions for adjustment of that amount in the event of a forward or reverse stock split. As a result, Michael S. Pagnano, the Company's Chief Executive Officer and Director, as well as the Company's Majority Shareholder, will continue to be able to vote 3,000,000,000 shares of preferred stock in connection with his beneficial ownership of 10,000,000 shares of our preferred stock. Because our total outstanding shares of common stock will be reduced by a ratio of between 20 and 100 following the Reverse Stock Split, Mr. Pagnano's voting control over the Company will increase as the total number of outstanding shares of common stock decreases. Effect of Reverse Stock Split on Convertible Debentures and Warrants ----------------------------------------------------------------------------- MAY 2006 CONVERTIBLE DEBENTURES AND WARRANTS The Convertible Debentures sold in May 2006 are currently convertible into shares of our common stock at the lesser of (i) $0.15 per share ("Fixed Conversion Price"), (ii) seventy percent (70%) of the average of the five (5) lowest volume weighted average price ("VWAPs") trading days of our common stock during the 20 most recent completed trading days of the common stock on the OTCBB, prior to the date of conversion, (iii) seventy percent (70%) of the VWAP of our common stock for the most recent completed trading day prior to conversion, or (iv) seventy percent (70%) of the most recent closing bid price of our common stock prior to the conversion. Notwithstanding the foregoing, in the event that the conversion price in effect is less than $0.001 (the "Minimum Conversion Price"), then DLC shall not be entitled to convert any portion of the Convertible Debentures, unless we waive such Minimum Conversion Price. As a result of the Reverse Stock Split, the Fixed Conversion Price of the Convertible Debentures sold in May 2006 will increase to between $3.00 and $15.00 per share, depending on the exact ratio of the Reverse Stock Split affected by our Board of Directors. The Company owes $190,000 in Convertible Debentures to DLC in connection with the May 2006 funding as of the date of this Information Statement. In connection with the Purchase Agreement, we sold DLC a Warrant to purchase up to 253,750,000 fully paid and nonassessable shares of our common stock, at an exercise price per share equal to $0.004 (the "Exercise Price"). The Warrant is exercisable at any time or from time to time before 6:00 p.m., New York, New York time on the third (3rd) anniversary of the date of issuance of the Warrant, May 18, 2009 (the "Exercise Period"). The additional Warrants described above to be issued subsequent to the Closing will have the same terms and conditions as the Warrant issued on the Closing, and such Warrants will be exercisable until the third anniversary of their issuance date. As a result of the Reverse Stock Split, the Exercise Price of the Warrant will increase to between $0.08 and $0.40 per share and the number of shares the Warrant is exercisable into will decrease to between 12,687,500 25,375,000 shares, depending on the exact ratio of the Reverse Stock Split affected by our Board of Directors. DLC has not exercised the Warrant into any shares of common stock as of the date of this Information Statement. OCTOBER 2005 CONVERTIBLE DEBENTURES AND WARRANTS Additionally, we entered into a Securities Purchase Agreement to sell DLC an aggregate of (i) $700,000 in convertible debentures and (ii) warrants to buy 200,000,000 shares of our common stock on October 13, 2005, which debentures bear interest at 8%, mature two years from the date of issuance, and are convertible into shares of our common stock, at the selling stockholder's option. The convertible debentures are convertible into the number of our shares of common stock equal to the principal amount of the debentures divided by the conversion price. The conversion price for the convertible debentures is the lesser of (i) $0.25 (the "Conversion Price"); (ii) seventy percent of the of the average of the five lowest volume weighted average prices during the twenty trading days prior to the conversion or (iii) seventy percent of the of the volume weighted average on the trading day prior to conversion. As a result of the Reverse Stock Split, the Conversion price of the October 2005 convertible debentures will increase to between $5.00 and $25.00 per share, depending on the exact ratio of the Reverse Stock Split affected by our Board of Directors. We currently have approximately $268,930 which remains to be paid to DLC under the October 2005 debentures. DLC has previously exercised all of its October 2005 warrants and as a result, the Golden Gate warrants will not be affected by the Reverse Stock Split. JUNE 2004 CONVERTIBLE DEBENTURES AND WARRANTS -------------------------------------------------- We entered into a Securities Purchase Agreement with Golden Gate Investors, Inc. ("Golden Gate"), on June 4, 2004 for the sale of (i) $250,000 in convertible debentures and (ii) warrants to buy 2,500,000 shares of our common stock. The debentures matured on June 4, 2006, however, and $147,000 of the debentures remain outstanding as of the filing of this Information Statement and are currently accruing interest at the rate of 7% per annum. We hope to repay the June 2004 debentures with funds raised from the sale of additional Convertible Debentures to DLC. Golden Gate has previously exercised all of their warrants. No Appraisal Rights --------------------- Under the Delaware General Corporation Law and our Certificate of Incorporation and amended bylaws, you are not entitled to appraisal rights with respect to the Reverse Stock Split. HOW WILL I EXCHANGE MY STOCK CERTIFICATES OR RECEIVE PAYMENT FOR FRACTIONAL SHARES? Exchange of Stock Certificates --------------------------------- Promptly after the Effective Time, you will be notified that the Reverse Stock Split has been effected. Our stock transfer agent, Registrar and Transfer Company, whom we refer to as the "Exchange Agent", will implement the exchange of stock certificates representing outstanding shares of common stock. You will be asked to surrender to the Exchange Agent certificates representing your pre-split shares in exchange for certificates representing your post-split shares in accordance with the procedures to be set forth in a letter of transmittal which we will send to you. You will not receive a new stock certificate representing your post-split shares until you surrender your outstanding certificate(s) representing your pre-split shares, together with the properly completed and executed letter of transmittal to the Exchange Agent. We will round fractional shares up to the nearest whole share. PLEASE DO NOT DESTROY ANY STOCK CERTIFICATE OR SUBMIT ANY OF YOUR CERTIFICATES UNTIL YOU ARE REQUESTED TO DO SO. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT? The federal income tax consequences of the Reverse Stock Split to our stockholders and to us are based on the Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury Regulations promulgated under the Code, judicial authority and current administrative rulings and practices of the United States Internal Revenue Service (the "Service"). Changes to the laws could alter the tax consequences, possibly with retroactive effect. We have not sought and will not seek an opinion of counsel or a ruling from the Service regarding the federal income tax consequences of the proposed Reverse Stock Split. WE URGE STOCKHOLDERS TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR CONSEQUENCES TO THEM. We will not recognize any gain or loss as a result of the Reverse Stock Split. WHAT VOTE IS REQUIRED FOR APPROVAL? Our Majority Shareholder will approve an Amendment to our Certificate of Incorporation to affect a proposed Reverse Stock Split of our issued and outstanding common stock in a ratio between 1:20 and 1:100. Therefore, no further shareholder approval is required or sought. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION. [Remainder of page left intentionally blank.] PROPOSAL NO. 3 RATIFY THE COMPANY'S 2006 STOCK INCENTIVE PLAN WHAT ARE THE MAJORITY SHAREHOLDERS RATIFYING? On July 11, 2006, the Company's Board of Directors adopted, subject to the approval of our majority shareholders, the Company's 2006 Stock Incentive Plan (the "Plan") in a form substantially similar to the attached Appendix B. At the special meeting, our Majority Shareholders will ratify the adoption of the Plan. The following is a summary of the material features of the Plan: WHAT IS THE PURPOSE OF THE PLAN? The Plan is intended to secure for the Company the benefits arising from ownership of the Company's common stock by the employees, officers, Directors and consultants of the Company, all of whom are and will be responsible for the Company's future growth. The Plan is designed to help attract and retain for the Company, personnel of superior ability for positions of exceptional responsibility, to reward employees, officers, Directors and consultants for their services to the Company and to motivate such individuals through added incentives to further contribute to the success of the Company. WHO IS ELIGIBLE TO PARTICIPATE IN THE PLAN? The Plan will provide an opportunity for any employee, officer, Director or consultant of the Company, except for instances where services are in connection with the offer or sale of securities in a capital-raising transaction, or they directly or indirectly promote or maintain a market for the Company's securities, subject to any other limitations provided by federal or state securities laws, to receive (i) incentive stock options (to eligible employees only); (ii) nonqualified stock options; (iii) restricted stock; (iv) stock awards; (v) shares in performance of services; or (vi) any combination of the foregoing. In making such determinations, the Board of Directors may take into account the nature of the services rendered by such person, his or her present and potential contribution to the Company's success, and such other factors as the Board of Directors in its discretion shall deem relevant. WHO WILL ADMINISTER THE PLAN? The Plan shall be administered by the Board of Directors of the Company. The Board shall have the exclusive right to interpret and construe the Plan, to select the eligible persons who shall receive an award, and to act in all matters pertaining to the grant of an award and the determination and interpretation of the provisions of the related award agreement, including, without limitation, the determination of the number of shares subject to stock options and the option period(s) and option price(s) thereof, the number of shares of restricted stock or shares subject to stock awards or performance shares subject to an award, the vesting periods (if any) and the form, terms, conditions and duration of each award, and any amendment thereof consistent with the provisions of the Plan. HOW MUCH COMMON STOCK IS SUBJECT TO THE PLAN? Subject to adjustment in connection with the payment of a stock dividend, a stock split or subdivision or combination of the shares of Common Stock, or a reorganization or reclassification of the Company's common stock, the maximum aggregate number of shares of common stock which may be issued pursuant to awards under the Plan is Five Hundred Million (500,000,000) shares, which will be decreased to Five Million (5,000,000) shares after the Reverse Stock Split is affected . Such shares of Common Stock shall be made available from the authorized and unissued shares of the Company. WHAT IS THE EXERCISE PRICE AND EXPIRATION DATE OF OPTIONS AND AWARDS UNDER THE PLAN? The Board of Directors, in its sole discretion, shall determine the exercise price of any Options granted under the Plan which exercise price shall be set forth in the agreement evidencing the Option, provided however that a no time shall the exercise price be less than the $0.001 par value per share of the Company's common stock. Additionally, the Board of Directors has sole discretion over the authorization of any stock awards. WHAT EQUITABLE ADJUSTMENTS WILL BE MADE IN THE EVENT OF CERTAIN CORPORATE TRANSACTIONS? Upon the occurrence of: (i) the adoption of a plan of merger or consolidation of the Company with any other corporation or association as a result of which the holders of the voting capital stock of the Company as a group would receive less than 50% of the voting capital stock of the surviving or resulting corporation; (ii) the approval by the Board of Directors of an agreement providing for the sale or transfer (other than as security for obligations of the Company) of substantially all the assets of the Company; or (iii) in the absence of a prior expression of approval by the Board of Directors, the acquisition of more than 20% of the Company's voting capital stock by any person within the meaning of Rule 13d-3 under the Act (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company); and unless otherwise provided in the award agreement with respect to a particular award, all outstanding stock options shall become immediately exercisable in full, subject to any appropriate adjustments, and shall remain exercisable for the remaining option period, regardless of any provision in the related award agreement limiting the ability to exercise such stock option or any portion thereof for any length of time. All outstanding performance shares with respect to which the applicable performance period has not been completed shall be paid out as soon as practicable; and all outstanding shares of restricted stock with respect to which the restrictions have not lapsed shall be deemed vested, and all such restrictions shall be deemed lapsed and the restriction period ended. Additionally, after the merger of one or more corporations into the Company, any merger of the Company into another corporation, any consolidation of the Company and one or more corporations, or any other corporate reorganization of any form involving the Company as a party thereto and involving any exchange, conversion, adjustment or other modification of the outstanding shares of the common stock, each participant shall, at no additional cost, be entitled, upon any exercise of such participant's stock option, to receive, in lieu of the number of shares as to which such stock option shall then be so exercised, the number and class of shares of stock or other securities or such other property to which such participant would have been entitled to pursuant to the terms of the agreement of merger or consolidation or reorganization, if at the time of such merger or consolidation or reorganization, such participant had been a holder of record of a number of shares of common stock equal to the number of shares as to which such stock option shall then be so exercised. WHAT HAPPENS TO OPTIONS UPON TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIPS? The incentive stock options shall lapse and cease to be exercisable upon a the termination of service of an employee or director as defined in the Plan, or within such period following a termination of service as shall have been determined by the Board and set forth in the related award agreement; provided, further, that such period shall not exceed the period of time ending on the date three (3) months following a termination of service. MAY THE PLAN BE MODIFIED, AMENDED OR TERMINATED? The Board of Directors may adopt, establish, amend and rescind such rules, regulations and procedures as it may deem appropriate for the proper administration of the Plan, make all other determinations which are, in the Board's judgment, necessary or desirable for the proper administration of the Plan, amend the Plan or a stock award as provided in Article XI of the Plan, and/or terminate or suspend the Plan as provided in Article XI. The description of the Plan is qualified in all respects by the actual provisions of the Plan, which is attached to this information statement as Appendix B. IS THE COMPANY ASKING FOR MY PROXY? Our Majority Shareholder will ratify the adoption of the 2006 Stock Incentive Plan covering Five Hundred Million (500,000,000) shares of our Common Stock, which will be reduced to Five Million (5,000,000) shares after the Reverse Stock Split is affected. Therefore, the Company is not asking for your proxy, and the Company requests that you do not send a proxy, as no further shareholder approval is either required or sought. A MAJORITY OF THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR RATIFYING THE COMPANY'S 2006 STOCK INCENTIVE PLAN. [Remainder of page left intentionally blank.] PROPOSAL 4: RATIFICATION OF THE APPOINTMENT OF MALONE & BAILEY, PC, AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors has appointed the firm of Malone & Bailey, PC as the independent registered public accounting firm of the Company for the year ending December 31, 2006, subject to ratification of the appointment by the Company's stockholders. A representative of Malone & Bailey is not expected to attend the special meeting. The Company does not have an audit committee. Effective February 22, 2006, the client auditor relationship between The World Golf League, Inc. (the "Company") and Pender Newkirk & Company, Certified Public Accountants, ("Pender Newkirk") ceased as the former accountant was dismissed. Effective February 22, 2005, the Company engaged Malone & Bailey, PC, Certified Public Accountants ("Malone") as its principal independent public accountant for the fiscal year ended December 31, 2005. The decision to change accountants was recommended and approved by the Company's Board of Directors effective February 22, 2006. Pender Newkirk's interim period reports on the financial statements of the Company, including the interim period up to and including the date the relationship with Pender Newkirk ceased, did not contain any adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles except for concerns about the Company's ability to continue as a going concern. In connection with interim period reports, including the interim period up to and including the date the relationship with Pender Newkirk ceased, there were no disagreements between Pender Newkirk and the Company on a matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of Pender Newkirk would have caused Pender Newkirk to make reference to the subject matter of the disagreement in connection with its report on the Company's financial statements. There have been no reportable events as provided in Item 304(a)(iv)(B) of Regulation S-B during the Company's fiscal year ended December 31, 2004 and December 31, 2003, and any later interim period, including the interim period up to and including the date the relationship with Pender Newkirk ceased. The Company has authorized Pender Newkirk to respond fully to any inquiries of any new auditors hired by the Company relating to their engagement as the Company's independent accountant. The Company has requested that Pender Newkirk review the disclosure and Pender Newkirk has been provided an opportunity to furnish the Company with a letter addressed to the Commission containing any new information, clarification of the Company's expression of its views, or the respect in which it does not agree with the statements made by the Company herein. Such letter is filed as an exhibit to this Report. The Company has not previously consulted with Malone regarding either (i) the application of accounting principles to a specific completed or contemplated transaction; (ii) the type of audit opinion that might be rendered on the Company's financial statements; or (iii) a reportable event (as provided in Item 304(a)(iv)(B) of Regulation S-B) during the Company's fiscal years ended December 31, 2004 and December 31, 2003, and any later interim period, including the interim period up to and including the date the relationship with Pender Newkirk ceased. Malone has reviewed the disclosure required by Item 304 (a) before it was filed with the Commission and has been provided an opportunity to furnish the Company with a letter addressed to the Commission containing any new information, clarification of the Company's expression of its views, or the respects in which it does not agree with the statements made by the Company in response to Item 304 (a). Malone did not furnish a letter to the Commission. REVIEW OF THE COMPANY'S AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005 The Board of Directors met and held discussions with management and the independent auditors. Management represented to the Board of Directors that the Company's consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States, and the Board of Directors reviewed and discussed the consolidated financial statements with management and the independent auditors. The Board of Directors also discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61 (Codification of Statements on Auditing Standards, AU 380), as amended. In addition, the Board of Directors discussed with the independent auditors the auditors' independence from the Company and its management, and the independent auditors provided to the Board of Directors the written disclosures and letter required by the Independence Standards Board Standard No. 1 (Independence Discussions With Audit Committees). The Board of Directors discussed with the Company's internal and independent auditors the overall scope and plans for their respective audits. The Board of Directors met with the internal and independent auditors, with and without management present, to discuss the results of their examinations, the evaluation of the Company's internal controls, and the overall quality of the Company's financial reporting. Based on the reviews and discussions referred to above, the Board of Directors approved the audited financial statements be included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2005, for filing with the Securities and Exchange Commission. AUDIT FEES The aggregate fees billed by our auditors, for professional services rendered for the audit of the Company's annual financial statements for the years ended December 31, 2005 and 2004, and for the reviews of the financial statements included in the Company's Quarterly Reports on Form 10-QSB during the fiscal years were $69,577 and $25,500, respectively. AUDIT-RELATED FEES Our independent registered public accounting firm did not bill the Company for any other audit-related work during fiscal years ended December 31, 2005 or 2004. TAX FEES Our independent registered public accounting firm did not bill the Company for tax related work during fiscal years ended December 31, 2005 or 2004. ALL OTHER FEES Our independent registered public accounting firm did not bill the Company for other services during fiscal years ended December 31, 2005 or 2004. REQUIRED VOTE The ratification of the appointment of Malone & Bailey, PC, as the Company's independent registered accounting firm for the fiscal year ending December 31, 2006, requires the affirmative vote of the holders of a majority of the shares of the Company's common stock. The Majority Shareholder will approve the appointment of Malone & Bailey, PC, at the Meeting, and as a result, no other shareholder action is requested or required. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF MALONE & BAILEY, PC AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2006. [Remainder of page left intentionally blank.] OTHER MATTERS The Board of Directors does not intend to bring any other matters before the special meeting of shareholders and has not been informed that any other matters are to be presented by others. INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE ACTED UPON (a) No officer or director of the Company has any substantial interest in the matters to be acted upon, other than his role as an officer or director of the Company, other than in connection with the granting of certain stock options. (b) No director of the Company has informed the Company that he intends to oppose the action taken by the Company set forth in this information statement. PROPOSALS BY SECURITY HOLDERS No security holder has requested the Company to include any proposals in this information statement. COMPANY CONTACT INFORMATION All inquires regarding our Company should be addressed to our Company's principal executive office: THE WORLD GOLF LEAGUE, INC. 963 Helmsley Court, Unit 107 Lake Mary, Florida 32746 Attention: Michael S. Pagnano, President and Chief Executive Officer By Order of the Board of Directors /s/ Michael S. Pagnano ------------------------- Michael S. Pagnano Director July 25, 2006 --------------- EXHIBIT A CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF THE WORLD GOLF LEAGUE, INC. The undersigned, President of The World Golf League, Inc. (the "Corporation"), does hereby certify as follows: FIRST: The name of the corporation is: THE WORLD GOLF LEAGUE, INC. SECOND: The Certificate of Incorporation of the Corporation is hereby amended by replacing Article First, in its entirety, with the following: :FIRST: The name of the corporation is: "WGL ENTERTAINMENT HOLDINGS, INC." THIRD: The Certificate of Incorporation of the Corporation is hereby amended by replacing Article Fourth, in its entirety, with the following: "FOURTH: The total number of shares of stock which this corporation is authorized to issue is: The Corporation's capitalization will be Ten Billion Ten Million (10,010,000,000) shares, consisting of Ten Billion (10,000,000,000) shares of common stock, par value $.001 per share ("Common Stock"), and Ten Million (10,000,000) shares of preferred stock, par value $.001 per share ("Preferred Stock"). The Board of Directors of the Corporation is hereby granted the power to authorize by resolution, duly adopted from time to time, the issuance of any or all of the preferred stock in any number of classes or series within such classes and to set all terms of such preferred stock of any class or series, including, without limitation, its powers, preferences, rights, privileges, qualifications, restrictions and/or limitations. The powers, preference, rights, privileges, qualifications, restrictions and limitations of each class or series of the preferred stock, if any, may differ from those of any and all other classes or other series at any time outstanding. Any shares of any one series of preferred stock shall be identical in all respects with all other shares of such series, except that shares of any one series issued at different times may differ as to the dates from which dividends thereof shall be cumulative." FOURTH: The foregoing Amendment to the Certificate of Incorporation was authorized by the Board of Directors and duly adopted by vote of the holders of in excess of fifty percent (50%) of the Company's outstanding stock entitled to vote thereon in accordance with Section 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be hereunto affixed and this Certificate of Amendment of the Corporation's Certificate of Incorporation, as amended, to be signed by Michael S. Pagnano, its Chief Executive Officer, this day of , 2006. -------- ------------ THE WORLD GOLF LEAGUE, INC. --------------------------- Michael S. Pagnano Chief Executive Officer APPENDIX B THE WORLD GOLF LEAGUE, INC. 2006 STOCK INCENTIVE PLAN ARTICLE I -- PREAMBLE 1.1 This 2006 Stock Incentive Plan of The World Golf League, Inc. is intended to secure for the Company and its Affiliates the benefits arising from ownership of the Company's Common Stock by the Employees, Officers, Directors and Consultants of the Company and its Affiliates, all of whom are and will be responsible for the Company's future growth. The Plan is designed to help attract and retain for the Company and its Affiliates personnel of superior ability for positions of exceptional responsibility, to reward Employees, Officers, Directors and Consultants for their services and to motivate such individuals through added incentives to further contribute to the success of the Company and its Affiliates. With respect to persons subject to Section 16 of the Act, transactions under this Plan are intended to satisfy the requirements of Rule 16b-3 of the Act. 1.2 Awards under the Plan may be made to an Eligible Person in the form of (i) Incentive Stock Options (to Eligible Employees only); (ii) Nonqualified Stock Options; (iii) Restricted Stock; (iv) Stock Awards; (v) Performance Shares; or (vi) any combination of the foregoing. 1.3 The Company's Board of Directors adopted the Plan on July 11, 2006. The Plan shall be effective July 11, 2006 (the "Effective Date"), subject to approval by the shareholders of the Company to the extent necessary to satisfy the requirements of the Code, the Act, or other applicable federal or state law. Unless sooner terminated as provided elsewhere in this Plan, this Plan shall terminate upon the close of business on the day next preceding the tenth (10th) anniversary of the Effective Date. Award Agreements outstanding on such date shall continue to have force and effect in accordance with the provisions thereof. 1.4 The Plan shall be governed by, and construed in accordance with, the laws of the State of Texas (except its choice-of-law provisions). 1.5 Capitalized terms shall have the meaning provided in Article II unless otherwise provided in this Plan or any related Award Agreement. ARTICLE II -- DEFINITIONS DEFINITIONS. Except where the context otherwise indicates, the following definitions apply: 2.1 "Act" means the Securities Exchange Act of 1934, as now in effect or as hereafter amended. 2.2 "Affiliate" means any parent corporation or subsidiary corporation of the Company, whether now or hereinafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code. 2.3 "Award" means an award granted to a Participant in accordance with the provisions of the Plan, including, but not limited to, Stock Options, Restricted Stock, Stock Awards, Performance Shares, or any combination of the foregoing. 2.4 "Award Agreement" means the separate written agreement evidencing each Award granted to a Participant under the Plan. 2.5 "Board of Directors" or "Board" means the Board of Directors of the Company, as constituted from time to time. 2.7 "Change of Control" means (i) the adoption of a plan of merger or consolidation of the Company with any other corporation or association as a result of which the holders of the voting capital stock of the Company as a group would receive less than 50% of the voting capital stock of the surviving or resulting corporation; (ii) the approval by the Board of Directors of an agreement providing for the sale or transfer (other than as security for obligations of the Company) of substantially all the assets of the Company; or (iii) in the absence of a prior expression of approval by the Board of Directors, the acquisition of more than 20% of the Company's voting capital stock by any person within the meaning of Rule 13d-3 under the Act (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company). 2.8 "Code" means the Internal Revenue Code of 1986, as amended, and the regulations and interpretations promulgated thereunder. 2.9 "Committee" means a committee of two or more members of the Board appointed by the Board in accordance with Section 3.2 of the Plan. 2.10 "Common Stock" means the Company's common stock. 2.11 "Company" means The World Golf League, Inc., a Nevada corporation. 2.12. "Consultant" means any person, including an advisor engaged by the Company or an Affiliate to render bona fide consulting or advisory services to the Company or an Affiliate, other than as an Employee, Director or Non-Employee Director. 2.13 "Director" means a member of the Board of Directors of the Company. 2.14 "Disability" means the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code. 2.15 "Effective Date" shall be the date set forth in Section 1.3 of the Plan. 2.16 "Eligible Employee" means an Eligible Person who is an Employee of the Company or any Affiliate. 2.17 "Eligible Person" means any Employee, Officer, Director, Non-Employee Director or Consultant of the Company or any Affiliate, except for instances where services are in connection with the offer or sale of securities in a capital-raising transaction, or they directly or indirectly promote or maintain a market for the Company's securities, subject to any other limitations as may be provided by the Code, the Act, or the Board. In making such determinations, the Board may take into account the nature of the services rendered by such person, his or her present and potential contribution to the Company's success, and such other factors as the Board in its discretion shall deem relevant. 2.19 "Employee" means an individual who is a common-law employee of the Company or an Affiliate including employment as an Officer. Mere service as a Director or payment of a director's fee by the Company or an Affiliate shall not be sufficient to constitute "employment" by the Company or an Affiliate. 2.20 "ERISA" means the Employee Retirement Income Security Act of 1974, as now in effect or as hereafter amended. 2.21 "Fair Market Value" means: (a) for purposes of an Incentive Stock Option, if there is a market for the Company's stock, on a stock exchange or in an over-the-counter market, or otherwise, the Fair Market Value shall be the mean between the highest and lowest quoted selling prices on the valuation date of the Incentive Stock Option, or if there were no sales of the Company's Common Stock on the valuation date, the Fair Market Value shall be the weighted average of the means between the highest and lowest sales on the nearest date before and the nearest date after the valuation date. If a valuation pursuant to this paragraph is not available, the appropriate method described in Section 20.2031-2 of the Treasury Regulations adopted under the Code shall be used for the Fair Market Value, and (b) for all other purposes, the mean between the highest and lowest quoted selling prices of the Common Stock (if actual sales price information on such trading day is not available, the mean between the bona fide bid and asked prices on such trading day shall be used) on the trading day immediately prior to the date on which a determination is being made pursuant to this Section 2.21 (the "Mean Selling Price"), as reported by the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), or if the Common Stock is not traded on NASDAQ, the Mean Selling Price in the over-the-counter market; provided, however, that if the Common Stock is listed on a stock exchange, the Fair Market Value shall be the Mean Selling Price on such exchange; and, provided further, that if the Common Stock is not quoted or listed by any organization, the fair value of the Common Stock, as determined by the Board, whose determination shall be conclusive, shall be used. In no event shall the Fair Market Value of any share of Common Stock be less than its par value. 2.22 "Grant Date" means, as to any Award, the latest of: (a) the date on which the Board authorizes the grant of the Award; or (b) the date the Participant receiving the Award becomes an Employee or a Director of the Company or its Affiliate, to the extent employment status is a condition of the grant or a requirement of the Code or the Act; or (c) such other date (later than the dates described in (a) and (b) above) as the Board may designate and as set forth in the Participant's Award Agreement. 2.23 "Immediate Family" means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include adoptive relationships. 2.24 "Incentive Stock Option" means a Stock Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and is granted under Article IV of the Plan and designated as an Incentive Stock Option in a Participant's Award Agreement. 2.25 "Non-Employee Director" shall have the meaning set forth in Rule 16b-3 under the Act. 2.26 "Nonqualified Stock Option" means a Stock Option not intended to qualify as an Incentive Stock Option and is not so designated in the Participant's Award Agreement. 2.27 "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Act. 2.28 "Option Period" means the period during which a Stock Option may be exercised from time to time, as established by the Board and set forth in the Award Agreement for each Participant who is granted a Stock Option. 2.29 "Option Price" means the purchase price for a share of Common Stock subject to purchase pursuant to a Stock Option, as established by the Board and set forth in the Award Agreement for each Participant who is granted a Stock Option. 2.30 "Outside Director" means a Director who either (i) is not a current employee of the Company or an "affiliated corporation" (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated corporation" receiving compensation for prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company or an "affiliated corporation" at any time and is not currently receiving direct or indirect remuneration from the Company or an "affiliated corporation" for services in any capacity other than as a Director or (ii) is otherwise considered an "outside director" for purposes of Section 162(m) of the Code. 2.31 "Participant" means an Eligible Person to whom an Award has been granted and who has entered into an Award Agreement evidencing the Award or, if applicable, such other person who holds an outstanding Award. 2.32 "Performance Objectives" shall have the meaning set forth in Article IX of the Plan. 2.33 "Performance Period" shall have the meaning set forth in Article IX of the Plan. 2.34 "Performance Share" means an Award under Article IX of the Plan of a unit valued by reference to the Common Stock, the payout of which is subject to achievement of such Performance Objectives, measured during one or more Performance Periods, as the Board, in its sole discretion, shall establish at the time of such Award and set forth in a Participant's Award Agreement. 2.35 "Plan" means this The World Golf League, Inc. 2006 Stock Incentive Plan, as it may be amended from time to time. 2.36 "Reporting Person" means a person required to file reports under Section 16(a) of the Act. 2.37 "Restricted Stock" means an Award under Article VII of the Plan of shares of Common Stock that are at the time of the Award subject to restrictions or limitations as to the Participant's ability to sell, transfer, pledge or assign such shares, which restrictions or limitations may lapse separately or in combination at such time or times, in installments or otherwise, as the Board, in its sole discretion, shall determine at the time of such Award and set forth in a Participant's Award Agreement. 2.38 "Restriction Period" means the period commencing on the Grant Date with respect to such shares of Restricted Stock and ending on such date as the Board, in its sole discretion, shall establish and set forth in a Participant's Award Agreement. 2.39 "Retirement" means retirement as determined under procedures established by the Board or in any Award, as set forth in a Participant's Award Agreement. 2.40 "Rule 16b-3" means Rule 16b-3 promulgated under the Act or any successor to Rule 16b-3, as in effect from time to time. Those provisions of the Plan which make express reference to Rule 16b-3, or which are required in order for certain option transactions to qualify for exemption under Rule 16b-3, shall apply only to a Reporting Person. 2.41 "Stock Award" means an Award of shares of Common Stock under Article VIII of the Plan. 2.42 "Stock Option" means an Award under Article IV or Article V of the Plan of an option to purchase Common Stock. A Stock Option may be either an Incentive Stock Option or a Nonqualified Stock Option. 2.43 "Ten Percent Stockholder" means an individual who owns (or is deemed to own pursuant to Section 424(d) of the Code), at the time of grant, stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any of its Affiliates. 2.44 "Termination of Service" means (i) in the case of an Eligible Employee, the discontinuance of employment of such Participant with the Company or its Subsidiaries for any reason other than a transfer to another member of the group consisting of the Company and its Affiliates and (ii) in the case of a Director who is not an Employee of the Company or any Affiliate, the date such Participant ceases to serve as a Director. The determination of whether a Participant has discontinued service shall be made by the Board in its sole discretion. In determining whether a Termination of Service has occurred, the Board may provide that service as a Consultant or service with a business enterprise in which the Company has a significant ownership interest shall be treated as employment with the Company. ARTICLE III - ADMINISTRATION 3.1 The Plan shall be administered by the Board of Directors of the Company. The Board shall have the exclusive right to interpret and construe the Plan, to select the Eligible Persons who shall receive an Award, and to act in all matters pertaining to the grant of an Award and the determination and interpretation of the provisions of the related Award Agreement, including, without limitation, the determination of the number of shares subject to Stock Options and the Option Period(s) and Option Price(s) thereof, the number of shares of Restricted Stock or shares subject to Stock Awards or Performance Shares subject to an Award, the vesting periods (if any) and the form, terms, conditions and duration of each Award, and any amendment thereof consistent with the provisions of the Plan. The Board may adopt, establish, amend and rescind such rules, regulations and procedures as it may deem appropriate for the proper administration of the Plan, make all other determinations which are, in the Board's judgment, necessary or desirable for the proper administration of the Plan, amend the Plan or a Stock Award as provided in Article XI, and terminate or suspend the Plan as provided in Article XI. All acts, determinations and decisions of the Board made or taken pursuant to the Plan or with respect to any questions arising in connection with the administration and interpretation of the Plan or any Award Agreement, including the severability of any and all of the provisions thereof, shall be conclusive, final and binding upon all persons. 3.2 The Board may, to the full extent permitted by and consistent with applicable law and the Company's Bylaws, and subject to Subparagraph 3.2(b) hereinbelow, delegate any or all of its powers with respect to the administration of the Plan to a Committee consisting of not fewer than two members of the Board each of whom shall qualify (at the time of appointment to the Committee and during all periods of service on the Committee) in all respects as a Non-Employee Director and as an Outside Director. (a) If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in the Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not consistent with the provisions of the Plan, as may be adopted from time to time by the Board. (b) The Board may abolish the Committee at any time and reassume all powers and authority previously delegated to the Committee. (c) In addition to, and not in limitation of, the right of any Committee so designated by the Board to administer this Plan to grant Awards to Eligible Persons under this Plan, the full Board of Directors may from time to time grant Awards to Eligible Persons pursuant to the terms and conditions of this Plan, subject to the requirements of the Code, Rule 16b-3 under the Act or any other applicable law, rule or regulation. In connection with any such grants, the Board of Directors shall have all of the power and authority of the Committee to determine the Eligible Persons to whom such Awards shall be granted and the other terms and conditions of such Awards. 3.3 Without limiting the provisions of this Article III, and subject to the provisions of Article X, the Board is authorized to take such action as it determines to be necessary or advisable, and fair and equitable to Participants and to the Company, with respect to an outstanding Award in the event of a Change of Control as described in Article X or other similar event. Such action may include, but shall not be limited to, establishing, amending or waiving the form, terms, conditions and duration of an Award and the related Award Agreement, so as to provide for earlier, later, extended or additional times for exercise or payments, differing methods for calculating payments, alternate forms and amounts of payment, an accelerated release of restrictions or other modifications. The Board may take such actions pursuant to this Section 3.3 by adopting rules and regulations of general applicability to all Participants or to certain categories of Participants, by including, amending or waiving terms and conditions in an Award and the related Award Agreement, or by taking action with respect to individual Participants from time to time. 3.4 Subject to the provisions of Section 3.9, the maximum aggregate number of shares of Common Stock which may be issued pursuant to Awards under the Plan shall be Five Hundred Million (500,000,000) shares. Such shares of Common Stock shall be made available from authorized and unissued shares of the Company. (a) For all purposes under the Plan, each Performance Share awarded shall be counted as one share of Common Stock subject to an Award. (b) If, for any reason, any shares of Common Stock (including shares of Common Stock subject to Performance Shares) that have been awarded or are subject to issuance or purchase pursuant to Awards outstanding under the Plan are not delivered or purchased, or are reacquired by the Company, for any reason, including but not limited to a forfeiture of Restricted Stock or failure to earn Performance Shares or the termination, expiration or cancellation of a Stock Option, or any other termination of an Award without payment being made in the form of shares of Common Stock (whether or not Restricted Stock), such shares of Common Stock shall not be charged against the aggregate number of shares of Common Stock available for Award under the Plan and shall again be available for Awards under the Plan. In no event, however, may Common Stock that is surrendered or withheld to pay the exercise price of a Stock Option or to satisfy tax withholding requirements be available for future grants under the Plan. (c) The foregoing subsections (a) and (b) of this Section 3.4 shall be subject to any limitations provided by the Code or by Rule 16b-3 under the Act or by any other applicable law, rule or regulation. 3.5 Each Award granted under the Plan shall be evidenced by a written Award Agreement, which shall be subject to and shall incorporate (by reference or otherwise) the applicable terms and conditions of the Plan and shall include any other terms and conditions (not inconsistent with the Plan) required by the Board. 3.6 The Company shall not be required to issue or deliver any certificates for shares of Common Stock under the Plan prior to: (a) any required approval of the Plan by the shareholders of the Company; and (b) the completion of any registration or qualification of such shares of Common Stock under any federal or state law, or any ruling or regulation of any governmental body that the Company shall, in its sole discretion, determine to be necessary or advisable. 3.7 The Board may require any Participant acquiring shares of Common Stock pursuant to any Award under the Plan to represent to and agree with the Company in writing that such person is acquiring the shares of Common Stock for investment purposes and without a view to resale or distribution thereof. Shares of Common Stock issued and delivered under the Plan shall also be subject to such stop-transfer orders and other restrictions as the Board may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed and any applicable federal or state laws, and the Board may cause a legend or legends to be placed on the certificate or certificates representing any such shares to make appropriate reference to any such restrictions. In making such determination, the Board may rely upon an opinion of counsel for the Company. 3.8 Except as otherwise expressly provided in the Plan or in an Award Agreement with respect to an Award, no Participant shall have any right as a shareholder of the Company with respect to any shares of Common Stock subject to such Participant's Award except to the extent that, and until, one or more certificates representing such shares of Common Stock shall have been delivered to the Participant. No shares shall be required to be issued, and no certificates shall be required to be delivered, under the Plan unless and until all of the terms and conditions applicable to such Award shall have, in the sole discretion of the Board, been satisfied in full and any restrictions shall have lapsed in full, and unless and until all of the requirements of law and of all regulatory bodies having jurisdiction over the offer and sale, or issuance and delivery, of the shares shall have been fully complied with. 3.9 The total amount of shares with respect to which Awards may be granted under the Plan and rights of outstanding Awards (both as to the number of shares subject to the outstanding Awards and the Option Price(s) or other purchase price(s) of such shares, as applicable) shall be appropriately adjusted for any increase or decrease in the number of outstanding shares of Common Stock of the Company resulting from payment of a stock dividend on the Common Stock, a stock split or subdivision or combination of shares of the Common Stock, or a reorganization or reclassification of the Common Stock, or any other change in the structure of shares of the Common Stock. The foregoing adjustments and the manner of application of the foregoing provisions shall be determined by the Board in its sole discretion. Any such adjustment may provide for the elimination of any fractional shares which might otherwise become subject to an Award. All adjustments made as the result of the foregoing in respect of each Incentive Stock Option shall be made so that such Incentive Stock Option shall continue to be an Incentive Stock Option, as defined in Section 422 of the Code. 3.10 No director or person acting pursuant to authority delegated by the Board shall be liable for any action or determination under the Plan made in good faith. The members of the Board shall be entitled to indemnification by the Company in the manner and to the extent set forth in the Company's Certificate of Incorporation, as amended, Bylaws or as otherwise provided from time to time regarding indemnification of Directors. 3.11 The Board shall be authorized to make adjustments in any performance based criteria or in the other terms and conditions of outstanding Awards in recognition of unusual or nonrecurring events affecting the Company (or any Affiliate, if applicable) or its financial statements or changes in applicable laws, regulations or accounting principles. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement in the manner and to the extent it shall deem necessary or desirable to reflect any such adjustment. In the event the Company (or any Affiliate, if applicable) shall assume outstanding employee benefit awards or the right or obligation to make future such awards in connection with the acquisition of another corporation or business entity, the Board may, in its sole discretion, make such adjustments in the terms of outstanding Awards under the Plan as it shall deem appropriate. 3.12 Subject to the express provisions of the Plan, the Board shall have full power and authority to determine whether, to what extent and under what circumstances any outstanding Award shall be terminated, canceled, forfeited or suspended. Notwithstanding the foregoing or any other provision of the Plan or an Award Agreement, all Awards to any Participant that are subject to any restriction or have not been earned or exercised in full by the Participant shall be terminated and canceled if the Participant is terminated for cause, as determined by the Board in its sole discretion. ARTICLE IV -- INCENTIVE STOCK OPTIONS 4.1 The Board, in its sole discretion, may from time to time on or after the Effective Date grant Incentive Stock Options to Eligible Employees, subject to the provisions of this Article IV and Articles III and VI and subject to the following conditions: (a) Incentive Stock Options shall be granted only to Eligible Employees, each of whom may be granted one or more of such Incentive Stock Options at such time or times determined by the Board. (b) The Option Price per share of Common Stock for an Incentive Stock Option shall be set in the Award Agreement, but shall not be less than (i) one hundred percent (100%) of the Fair Market Value of the Common Stock at the Grant Date, or (ii) in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, one hundred ten percent (110%) of the Fair Market Value of the Common Stock at the Grant Date. (c) An Incentive Stock Option may be exercised in full or in part from time to time within ten (10) years from the Grant Date, or such shorter period as may be specified by the Board as the Option Period and set forth in the Award Agreement; provided, however, that, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, such period shall not exceed five (5) years from the Grant Date; and further, provided that, in any event, the Incentive Stock Option shall lapse and cease to be exercisable upon a Termination of Service or within such period following a Termination of Service as shall have been determined by the Board and set forth in the related Award Agreement; and provided, further, that such period shall not exceed the period of time ending on the date three (3) months following a Termination of Service, unless employment shall have terminated: (i) as a result of Disability, in which event such period shall not exceed the period of time ending on the date twelve (12) months following a Termination of Service; or (ii) as a result of death, or if death shall have occurred following a Termination of Service (other than as a result of Disability) and during the period that the Incentive Stock Option was still exercisable, in which event such period may not exceed the period of time ending on the earlier of the date twelve (12) months after the date of death; and provided, further, that such period following a Termination of Service or death shall in no event extend beyond the original Option Period of the Incentive Stock Option. (d) The aggregate Fair Market Value of the shares of Common Stock with respect to which any Incentive Stock Options (whether under this Plan or any other plan established by the Company) are first exercisable during any calendar year by any Eligible Employee shall not exceed one hundred thousand dollars ($100,000), determined based on the Fair Market Value(s) of such shares as of their respective Grant Dates; provided, however, that to the extent permitted under Section 422 of the Code, if the aggregate Fair Market Values of the shares of Common Stock with respect to which Stock Options intended to be Incentive Stock Options are first exercisable by any Eligible Employee during any calendar year (whether such Stock Options are granted under this Plan or any other plan established by the Company) exceed one hundred thousand dollars ($100,000), the Stock Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonqualified Stock Options. (e) No Incentive Stock Options may be granted more than ten (10) years from the Effective Date. (f) The Award Agreement for each Incentive Stock Option shall provide that the Participant shall notify the Company if such Participant sells or otherwise transfers any shares of Common Stock acquired upon exercise of the Incentive Stock Option within two (2) years of the Grant Date of such Incentive Stock Option or within one (1) year of the date such shares were acquired upon the exercise of such Incentive Stock Option. 4.2 Subject to the limitations of Section 3.4, the maximum aggregate number of shares of Common Stock subject to Incentive Stock Option Awards shall be the maximum aggregate number of shares available for Awards under the Plan. 4.3 The Board may provide for any other terms and conditions which it determines should be imposed for an Incentive Stock Option to qualify under Section 422 of the Code, as well as any other terms and conditions not inconsistent with this Article IV or Articles III or VI, as determined in its sole discretion and set forth in the Award Agreement for such Incentive Stock Option. 4.4 Each provision of this Article IV and of each Incentive Stock Option granted hereunder shall be construed in accordance with the provisions of Section 422 of the Code, and any provision hereof that cannot be so construed shall be disregarded. ARTICLE V -- NONQUALIFIED STOCK OPTIONS 5.1 The Board, in its sole discretion, may from time to time on or after the Effective Date grant Nonqualified Stock Options to Eligible Persons, subject to the provisions of this Article V and Articles III and VI and subject to the following conditions: (a) Nonqualified Stock Options may be granted to any Eligible Person, each of whom may be granted one or more of such Nonqualified Stock Options, at such time or times determined by the Board. (b) The Option Price per share of Common Stock for a Nonqualified Stock Option shall be set in the Award Agreement and may be less than one hundred percent (100%) of the Fair Market Value of the Common Stock at the Grant Date; provided, however, that the exercise price of each Nonqualified Stock Option granted under the Plan shall in no event be less than the par value per share of the Company's Common Stock. (c) A Nonqualified Stock Option may be exercised in full or in part from time to time within the Option Period specified by the Board and set forth in the Award Agreement; provided, however, that, in any event, the Nonqualified Stock Option shall lapse and cease to be exercisable upon a Termination of Service or within such period following a Termination of Service as shall have been determined by the Board and set forth in the related Award Agreement. 5.2 The Board may provide for any other terms and conditions for a Nonqualified Stock Option not inconsistent with this Article V or Articles III or VI, as determined in its sole discretion and set forth in the Award Agreement for such Nonqualified Stock Option. ARTICLE VI -- INCIDENTS OF STOCK OPTIONS 6.1 Each Stock Option shall be granted subject to such terms and conditions, if any, not inconsistent with this Plan, as shall be determined by the Board and set forth in the related Award Agreement, including any provisions as to continued employment as consideration for the grant or exercise of such Stock Option and any provisions which may be advisable to comply with applicable laws, regulations or rulings of any governmental authority. 6.2 Except as hereinafter described, a Stock Option shall not be transferable by the Participant other than by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the Participant only by the Participant or the Participant's guardian or legal representative. In the event of the death of a Participant, any unexercised Stock Options may be exercised to the extent otherwise provided herein or in such Participant's Award Agreement by the executor or personal representative of such Participant's estate or by any person who acquired the right to exercise such Stock Options by bequest under the Participant's will or by inheritance. The Board, in its sole discretion, may at any time permit a Participant to transfer a Nonqualified Stock Option for no consideration to or for the benefit of one or more members of the Participant's Immediate Family (including, without limitation, to a trust for the benefit of the Participant and/or one or more members of such Participant's Immediate Family or a corporation, partnership or limited liability company established and controlled by the Participant and/or one or more members of such Participant's Immediate Family), subject to such limits as the Board may establish. The transferee of such Nonqualified Stock Option shall remain subject to all terms and conditions applicable to such Nonqualified Stock Option prior to such transfer. The foregoing right to transfer the Nonqualified Stock Option, if granted by the Board shall apply to the right to consent to amendments to the Award Agreement. 6.3 Shares of Common Stock purchased upon exercise of a Stock Option shall be paid for in such amounts, at such times and upon such terms as shall be determined by the Board, subject to limitations set forth in the Stock Option Award Agreement. The Board may, in its sole discretion, permit the exercise of a Stock Option by payment in cash or by tendering shares of Common Stock (either by actual delivery of such shares or by attestation), or any combination thereof, as determined by the Board. In the sole discretion of the Board, payment in shares of Common Stock also may be made with shares received upon the exercise or partial exercise of the Stock Option, whether or not involving a series of exercises or partial exercises and whether or not share certificates for such shares surrendered have been delivered to the Participant. The Board also may, in its sole discretion, permit the payment of the exercise price of a Stock Option by the voluntary surrender of all or a portion of the Stock Option. Shares of Common Stock previously held by the Participant and surrendered in payment of the Option Price of a Stock Option shall be valued for such purpose at the Fair Market Value thereof on the date the Stock Option is exercised. 6.4 The holder of a Stock Option shall have no rights as a shareholder with respect to any shares covered by the Stock Option (including, without limitation, any voting rights, the right to inspect or receive the Company's balance sheets or financial statements or any rights to receive dividends or non-cash distributions with respect to such shares) until such time as the holder has exercised the Stock Option and then only with respect to the number of shares which are the subject of the exercise. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 6.5 The Board may permit the voluntary surrender of all or a portion of any Stock Option granted under the Plan to be conditioned upon the granting to the Participant of a new Stock Option for the same or a different number of shares of Common Stock as the Stock Option surrendered, or may require such voluntary surrender as a condition precedent to a grant of a new Stock Option to such Participant. Subject to the provisions of the Plan, such new Stock Option shall be exercisable at such Option Price, during such Option Period and on such other terms and conditions as are specified by the Board at the time the new Stock Option is granted. Upon surrender, the Stock Options surrendered shall be canceled and the shares of Common Stock previously subject to them shall be available for the grant of other Stock Options. 6.6 The Board may at any time offer to purchase a Participant's outstanding Stock Option for a payment equal to the value of such Stock Option payable in cash, shares of Common Stock or Restricted Stock or other property upon surrender of the Participant's Stock Option, based on such terms and conditions as the Board shall establish and communicate to the Participant at the time that such offer is made. 6.7 The Board shall have the discretion, exercisable either at the time the Award is granted or at the time the Participant discontinues employment, to establish as a provision applicable to the exercise of one or more Stock Options that, during a limited period of exercisability following a Termination of Service, the Stock Option may be exercised not only with respect to the number of shares of Common Stock for which it is exercisable at the time of the Termination of Service but also with respect to one or more subsequent installments for which the Stock Option would have become exercisable had the Termination of Service not occurred. ARTICLE VII -- RESTRICTED STOCK 7.1 The Board, in its sole discretion, may from time to time on or after the Effective Date award shares of Restricted Stock to Eligible Persons as a reward for past service and an incentive for the performance of future services that will contribute materially to the successful operation of the Company an its Affiliates, subject to the terms and conditions set forth in this Article VII. 7.2 The Board shall determine the terms and conditions of any Award of Restricted Stock, which shall be set forth in the related Award Agreement, including without limitation: (a) the purchase price, if any, to be paid for such Restricted Stock, which may be zero, subject to such minimum consideration as may be required by applicable law; (b) the duration of the Restriction Period or Restriction Periods with respect to such Restricted Stock and whether any events may accelerate or delay the end of such Restriction Period(s); (c) the circumstances upon which the restrictions or limitations shall lapse, and whether such restrictions or limitations shall lapse as to all shares of Restricted Stock at the end of the Restriction Period or as to a portion of the shares of Restricted Stock in installments during the Restriction Period by means of one or more vesting schedules; (d) whether such Restricted Stock is subject to repurchase by the Company or to a right of first refusal at a predetermined price or if the Restricted Stock may be forfeited entirely under certain conditions; (e) whether any performance goals may apply to a Restriction Period to shorten or lengthen such period; and (f) whether dividends and other distributions with respect to such Restricted Stock are to be paid currently to the Participant or withheld by the Company for the account of the Participant. 7.3 Awards of Restricted Stock must be accepted within a period of thirty (30) days after the Grant Date (or such shorter or longer period as the Board may specify at such time) by executing an Award Agreement with respect to such Restricted Stock and tendering the purchase price, if any. A prospective recipient of an Award of Restricted Stock shall not have any rights with respect to such Award, unless such recipient has executed an Award Agreement with respect to such Restricted Stock, has delivered a fully executed copy thereof to the Board and has otherwise complied with the applicable terms and conditions of such Award. 7.4 In the sole discretion of the Board and as set forth in the Award Agreement for an Award of Restricted Stock, all shares of Restricted Stock held by a Participant and still subject to restrictions shall be forfeited by the Participant upon the Participant's Termination of Service and shall be reacquired, canceled and retired by the Company. Notwithstanding the foregoing, unless otherwise provided in an Award Agreement with respect to an Award of Restricted Stock, in the event of the death, Disability or Retirement of a Participant during the Restriction Period, or in other cases of special circumstances (including hardship or other special circumstances of a Participant whose employment is involuntarily terminated), the Board may elect to waive in whole or in part any remaining restrictions with respect to all or any part of such Participant's Restricted Stock, if it finds that a waiver would be appropriate. 7.5 Except as otherwise provided in this Article VII, no shares of Restricted Stock received by a Participant shall be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of during the Restriction Period. 7.6 Upon an Award of Restricted Stock to a Participant, a certificate or certificates representing the shares of such Restricted Stock will be issued to and registered in the name of the Participant. Unless otherwise determined by the Board, such certificate or certificates will be held in custody by the Company until (i) the Restriction Period expires and the restrictions or limitations lapse, in which case one or more certificates representing such shares of Restricted Stock that do not bear a restrictive legend (other than any legend as required under applicable federal or state securities laws) shall be delivered to the Participant, or (ii) a prior forfeiture by the Participant of the shares of Restricted Stock subject to such Restriction Period, in which case the Company shall cause such certificate or certificates to be canceled and the shares represented thereby to be retired, all as set forth in the Participant's Award Agreement. It shall be a condition of an Award of Restricted Stock that the Participant deliver to the Company a stock power endorsed in blank relating to the shares of Restricted Stock to be held in custody by the Company. 7.7 Except as provided in this Article VII or in the related Award Agreement, a Participant receiving an Award of shares of Restricted Stock Award shall have, with respect to such shares, all rights of a shareholder of the Company, including the right to vote the shares and the right to receive any distributions, unless and until such shares are otherwise forfeited by such Participant; provided, however, the Board may require that any cash dividends with respect to such shares of Restricted Stock be automatically reinvested in additional shares of Restricted Stock subject to the same restrictions as the underlying Award, or may require that cash dividends and other distributions on Restricted Stock be withheld by the Company or its Affiliates for the account of the Participant. The Board shall determine whether interest shall be paid on amounts withheld, the rate of any such interest, and the other terms applicable to such withheld amounts. ARTICLE VIII -- STOCK AWARDS 8.1 The Board, in its sole discretion, may from time to time on or after the Effective Date grant Stock Awards to Eligible Persons in payment of compensation that has been earned or as compensation to be earned, including without limitation compensation awarded or earned concurrently with or prior to the grant of the Stock Award, subject to the terms and conditions set forth in this Article VIII. 8.2 For the purposes of this Plan, in determining the value of a Stock Award, all shares of Common Stock subject to such Stock Award shall be set in the Award Agreement and may be less than one hundred percent (100%) of the Fair Market Value of the Common Stock at the Grant Date. 8.3 Unless otherwise determined by the Board and set forth in the related Award Agreement, shares of Common Stock subject to a Stock Award will be issued, and one or more certificates representing such shares will be delivered, to the Participant as soon as practicable following the Grant Date of such Stock Award. Upon the issuance of such shares and the delivery of one or more certificates representing such shares to the Participant, such Participant shall be and become a shareholder of the Company fully entitled to receive dividends, to vote and to exercise all other rights of a shareholder of the Company. Notwithstanding any other provision of this Plan, unless the Board expressly provides otherwise with respect to a Stock Award, as set forth in the related Award Agreement, no Stock Award shall be deemed to be an outstanding Award for purposes of the Plan. ARTICLE IX -- PERFORMANCE SHARES 9.1 The Board, in its sole discretion, may from time to time on or after the Effective Date award Performance Shares to Eligible Persons as an incentive for the performance of future services that will contribute materially to the successful operation of the Company and its Affiliates, subject to the terms and conditions set forth in this Article IX. 9.2 The Board shall determine the terms and conditions of any Award of Performance Shares, which shall be set forth in the related Award Agreement, including without limitation: (a) the purchase price, if any, to be paid for such Performance Shares, which may be zero, subject to such minimum consideration as may be required by applicable law; (b) the performance period (the "Performance Period") and/or performance objectives (the "Performance Objectives") applicable to such Awards; (c) the number of Performance Shares that shall be paid to the Participant if the applicable Performance Objectives are exceeded or met in whole or in part; and (d) the form of settlement of a Performance Share. 9.3 At any date, each Performance Share shall have a value equal to the Fair Market Value of a share of Common Stock. 9.4 Performance Periods may overlap, and Participants may participate simultaneously with respect to Performance Shares for which different Performance Periods are prescribed. 9.5 Performance Objectives may vary from Participant to Participant and between Awards and shall be based upon such performance criteria or combination of factors as the Board may deem appropriate, including, but not limited to, minimum earnings per share or return on equity. If during the course of a Performance Period there shall occur significant events which the Board expects to have a substantial effect on the applicable Performance Objectives during such period, the Board may revise such Performance Objectives. 9.6 In the sole discretion of the Board and as set forth in the Award Agreement for an Award of Performance Shares, all Performance Shares held by a Participant and not earned shall be forfeited by the Participant upon the Participant's Termination of Service. Notwithstanding the foregoing, unless otherwise provided in an Award Agreement with respect to an Award of Performance Shares, in the event of the death, Disability or Retirement of a Participant during the applicable Performance Period, or in other cases of special circumstances (including hardship or other special circumstances of a Participant whose employment is involuntarily terminated), the Board may determine to make a payment in settlement of such Performance Shares at the end of the Performance Period, based upon the extent to which the Performance Objectives were satisfied at the end of such period and pro rated for the portion of the Performance Period during which the Participant was employed by the Company or an Affiliate; provided, however, that the Board may provide for an earlier payment in settlement of such Performance Shares in such amount and under such terms and conditions as the Board deems appropriate or desirable. 9.7 The settlement of a Performance Share shall be made in cash, whole shares of Common Stock or a combination thereof and shall be made as soon as practicable after the end of the applicable Performance Period. Notwithstanding the foregoing, the Board in its sole discretion may allow a Participant to defer payment in settlement of Performance Shares on terms and conditions approved by the Board and set forth in the related Award Agreement entered into in advance of the time of receipt or constructive receipt of payment by the Participant. 9.8 Performance Shares shall not be transferable by the Participant. The Board shall have the authority to place additional restrictions on the Performance Shares including, but not limited to, restrictions on transfer of any shares of Common Stock that are delivered to a Participant in settlement of any Performance Shares. ARTICLE X -- CHANGES OF CONTROL OR OTHER FUNDAMENTAL CHANGES 10.1 Upon the occurrence of a Change of Control and unless otherwise provided in the Award Agreement with respect to a particular Award: (a) all outstanding Stock Options shall become immediately exercisable in full, subject to any appropriate adjustments in the number of shares subject to the Stock Option and the Option Price, and shall remain exercisable for the remaining Option Period, regardless of any provision in the related Award Agreement limiting the exercisability of such Stock Option or any portion thereof for any length of time; (b) all outstanding Performance Shares with respect to which the applicable Performance Period has not been completed shall be paid out as soon as practicable as follows: (i) all Performance Objectives applicable to the Award of Performance Shares shall be deemed to have been satisfied to the extent necessary to earn one hundred percent (100%) of the Performance Shares covered by the Award; (ii) the applicable Performance Period shall be deemed to have been completed upon occurrence of the Change of Control; (iii) the payment to the Participant in settlement of the Performance Shares shall be the amount determined by the Board, in its sole discretion, or in the manner stated in the Award Agreement, as multiplied by a fraction, the numerator of which is the number of full calendar months of the applicable Performance Period that have elapsed prior to occurrence of the Change of Control, and the denominator of which is the total number of months in the original Performance Period; and (iv) upon the making of any such payment, the Award Agreement as to which it relates shall be deemed terminated and of no further force and effect. (c) all outstanding shares of Restricted Stock with respect to which the restrictions have not lapsed shall be deemed vested, and all such restrictions shall be deemed lapsed and the Restriction Period ended. 10.2 Anything contained herein to the contrary notwithstanding, upon the dissolution or liquidation of the Company, each Award granted under the Plan and then outstanding shall terminate; provided, however, that following the adoption of a plan of dissolution or liquidation, and in any event prior to the effective date of such dissolution or liquidation, each such outstanding Award granted hereunder shall be exercisable in full and all restrictions shall lapse, to the extent set forth in Section 10.1(a), (b) and (c) above. 10.3 After the merger of one or more corporations into the Company or any Affiliate, any merger of the Company into another corporation, any consolidation of the Company or any Affiliate of the Company and one or more corporations, or any other corporate reorganization of any form involving the Company as a party thereto and involving any exchange, conversion, adjustment or other modification of the outstanding shares of the Common Stock, each Participant shall, at no additional cost, be entitled, upon any exercise of such Participant's Stock Option, to receive, in lieu of the number of shares as to which such Stock Option shall then be so exercised, the number and class of shares of stock or other securities or such other property to which such Participant would have been entitled to pursuant to the terms of the agreement of merger or consolidation or reorganization, if at the time of such merger or consolidation or reorganization, such Participant had been a holder of record of a number of shares of Common Stock equal to the number of shares as to which such Stock Option shall then be so exercised. Comparable rights shall accrue to each Participant in the event of successive mergers, consolidations or reorganizations of the character described above. The Board may, in its sole discretion, provide for similar adjustments upon the occurrence of such events with regard to other outstanding Awards under this Plan. The foregoing adjustments and the manner of application of the foregoing provisions shall be determined by the Board in its sole discretion. Any such adjustment may provide for the elimination of any fractional shares which might otherwise become subject to an Award. All adjustments made as the result of the foregoing in respect of each Incentive Stock Option shall be made so that such Incentive Stock Option shall continue to be an Incentive Stock Option, as defined in Section 422 of the Code. ARTICLE XI -- AMENDMENT AND TERMINATION 11.1 Subject to the provisions of Section 11.2, the Board of Directors at any time and from time to time may amend or terminate the Plan as may be necessary or desirable to implement or discontinue the Plan or any provision hereof. To the extent required by the Act or the Code, however, no amendment, without approval by the Company's shareholders, shall: (a) materially alter the group of persons eligible to participate in the Plan; (b) except as provided in Section 3.4, change the maximum aggregate number of shares of Common Stock that are available for Awards under the Plan; (c) alter the class of individuals eligible to receive an Incentive Stock Option or increase the limit on Incentive Stock Options set forth in Section 4.1(d) or the value of shares of Common Stock for which an Eligible Employee may be granted an Incentive Stock Option. 11.2 No amendment to or discontinuance of the Plan or any provision hereof by the Board of Directors or the shareholders of the Company shall, without the written consent of the Participant, adversely affect (in the sole discretion of the Board) any Award theretofore granted to such Participant under this Plan; provided, however, that the Board retains the right and power to: (a) annul any Award if the Participant is terminated for cause as determined by the Board; and (b) convert any outstanding Incentive Stock Option to a Nonqualified Stock Option. 11.3 If a Change of Control has occurred, no amendment or termination shall impair the rights of any person with respect to an outstanding Award as provided in Article X. ARTICLE XII -- MISCELLANEOUS PROVISIONS 12.1 Nothing in the Plan or any Award granted hereunder shall confer upon any Participant any right to continue in the employ of the Company or its Affiliates or to serve as a Director or shall interfere in any way with the right of the Company or its Affiliates or the shareholders of the Company, as applicable, to terminate the employment of a Participant or to release or remove a Director at any time. Unless specifically provided otherwise, no Award granted under the Plan shall be deemed salary or compensation for the purpose of computing benefits under any employee benefit plan or other arrangement of the Company or its Affiliates for the benefit of their respective employees unless the Company shall determine otherwise. No Participant shall have any claim to an Award until it is actually granted under the Plan and an Award Agreement has been executed and delivered to the Company. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall, except as otherwise provided by the Board, be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company, and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts, except as provided in Article VII with respect to Restricted Stock and except as otherwise provided by the Board. 12.2 The Plan and the grant of Awards shall be subject to all applicable federal and state laws, rules, and regulations and to such approvals by any government or regulatory agency as may be required. Any provision herein relating to compliance with Rule 16b-3 under the Act shall not be applicable with respect to participation in the Plan by Participants who are not subject to Section 16 of the Act. 12.3 The terms of the Plan shall be binding upon the Company, its successors and assigns. 12.4 Neither a Stock Option nor any other type of equity-based compensation provided for hereunder shall be transferable except as provided for in Section 6.2. In addition to the transfer restrictions otherwise contained herein, additional transfer restrictions shall apply to the extent required by federal or state securities laws. If any Participant makes such a transfer in violation hereof, any obligation hereunder of the Company to such Participant shall terminate immediately. 12.5 This Plan and all actions taken hereunder shall be governed by the laws of the State of Texas. 12.6 Each Participant exercising an Award hereunder agrees to give the Board prompt written notice of any election made by such Participant under Section 83(b) of the Code, or any similar provision thereof. 12.7 If any provision of this Plan or an Award Agreement is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award Agreement under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Board, materially altering the intent of the Plan or the Award Agreement, it shall be stricken, and the remainder of the Plan or the Award Agreement shall remain in full force and effect. 12.8 The grant of an Award pursuant to this Plan shall not affect in any way the right or power of the Company or any of its Affiliates to make adjustments, reclassification, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or to dissolve, liquidate or sell, or to transfer all or part of its business or assets. 12.9 The Plan is not subject to the provisions of ERISA or qualified under Section 401(a) of the Code. 12.10 If a Participant is required to pay to the Company an amount with respect to income and employment tax withholding obligations in connection with (i) the exercise of a Nonqualified Stock Option, (ii) certain dispositions of Common Stock acquired upon the exercise of an Incentive Stock Option, or (iii) the receipt of Common Stock pursuant to any other Award, then the issuance of Common Stock to such Participant shall not be made (or the transfer of shares by such Participant shall not be required to be effected, as applicable) unless such withholding tax or other withholding liabilities shall have been satisfied in a manner acceptable to the Company. To the extent provided by the terms of an Award Agreement, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under an Award by any of the following means (in addition to the Company's right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Award, provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (iii) delivering to the Company owned and unencumbered shares of Common Stock.