DEBT EXCHANGE AGREEMENT

DEBT EXCHANGE AGREEMENT (this " Agreement "), dated as of December 7, 2005, by and between NEW GENERATION HOLDINGS, INC. , a Delaware corporation (“ NGH ”), NEW GENERATION PLASTIC, INC ., a Delaware corporation wholly owned by NGH (" NGP ") and JACQUES MOT , the Chief Executive Officer of NGH (" JM ").

WHEREAS , NGH is indebted to JM in the amount of $753,304.27 representing fees owed to JM under his Consulting Agreement with the Company (the " JM Agreement ") through December 31, 2004 (the “ NGH Debt ”);

WHEREAS , NGP is indebted to NGH in the amount of $3,978,682.18 (the “ NGP Debt ”);

WHEREAS, NGH had been dormant with no business activities for more than two (2) years;

WHEREAS, through the efforts of JM, the Company has survived and raised additional funds in an effort to revive its dormant plastic business through NGP;

WHEREAS , in order to recognize the significant efforts of JM in attempting to revive the Company's business and continue to retain his services, the parties desire to reward JM with an increased equity stake in the Company by exchanging the NGH Debt owed to JM for a Convertible Promissory Note in the original principal amount of the NGH Debt which note shall be convertible into shares of NGH or NGP Preferred Stock, upon the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE , in consideration of the premises and the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1.       EXCHANGE OF DEBT .   The parties agree that, upon the execution and delivery of this Agreement, NGH will issue JM a Convertible Promissory Note substantially in the form of Exhibit A attached hereto in the amount of NGH Debt (the " Convertible Note "). The Convertible Note shall be convertible, at the option of JM, into shares of Series A Preferred Stock of either: (i) NGH at a conversion price of $1.507 per share; or (ii) NGP at a conversion price of $1.507 per share subject to the conditions set forth in Section 2 below. In the event that JM elects to convert the Convertible Note into shares of NGH Preferred Stock the NGH Debt owed to JM shall be deemed satisfied in full with no further obligation from NGH to JM. In the event that JM elects to convert the Convertible Note into shares of NGP Preferred Stock the NGP Debt owed to NGH and the NGH Debt owed to JM shall each be deemed satisfied in full with no further obligation from NGH to JM and no further obligation from NGP to NGH. Upon execution of this Agreement and issuance of the Convertible Note, JM shall return the JM Note (or an affidavit of loss in lieu thereof) to NGH for cancellation. Nothing contained herein shall affect JM's right to receive additional fees under the JM Agreement that become due following the date of this Agreement.

2.       CONDITIONS . 

JM's option to convert principal and interest under the Convertible Note into shares of NGP Preferred Stock pursuant to Section 1 shall be subject to the satisfaction of the following conditions:

            (i)      The stockholders of NGH shall have approved the "spinoff" of NGP to the shareholders of NGH on or before June 30, 2006; and

(ii)      NGP shall have become a reporting company under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”).

3.       REPRESENTATIONS AND WARRANTIES OF THE PARTIES; COVENANTS .  

(a)      NGP represents and warrants that the NGP Debt owed to NGH is a valid debt, not subject to offset or counterclaim of any nature. NGH represents and warrants that the NGH Debt owed to JM is a valid debt not subject to offset or counterclaim of any nature. NGH represents and warrants that this Agreement has been duly authorized by its Board of Directors, including its Independent Director, and that this Agreement is binding and enforceable against it in accordance with its terms. Following execution of this Agreement, NGH shall seek stockholder approval of the “spinoff” of NGP once NGH is current in its Exchange Act filings. NGP represents and warrants that this Agreement has been duly authorized by its Board of Directors, including its Independent Director, and by its stockholders. In addition, NGP represents and warrants that the shares of NGP Preferred Stock issuable to JM upon the conversion of the Convertible Promissory Note will be fully paid, validly issued and non-assessable. JM represents that this Agreement is binding and enforceable against him in accordance with its terms.

(b)      NGH and NGP each covenant and agree that promptly following a request by JM, such company shall file documents or instruments necessary or appropriate to adopt Preferred Stock terms substantially in the form of Exhibit B attached hereto. NGH covenants and agrees to submit this Agreement to its stockholders for ratification at its next stockholders meeting. In the event that either NGH or NGP proposes to register any of its securities under the Securities Act of 1933, as amended, whether for its own account or for the account of holders of its securities (except with respect to registration statements on Forms S-4, S-8 or any successor or similar form or “Rule 145” transactions), the Company shall provide JM with prior written notice and JM shall have the right to include any shares of Common Stock underlying Preferred Stock issued pursuant to this Agreement and/or the Convertible Note in such registration; provided, however, if any particular registration to be effected by NGH or NGP shall be, in whole or in part, an underwritten public offering of Common Stock for the account of NGH or NGP, as applicable, the number of shares of JM's Common Stock to be included in such an underwriting may be reduced pro rata among JM, the Company and/or the other holders of NGH or NGP Common Stock requesting inclusion in such registration and if, and to the extent that the managing underwriter shall be of the opinion that the inclusion of all of the shares requested to be included in such underwriting by JM would materially and adversely affect the marketing of the Common Stock to be sold by the Company under such registration statement.

4.       LAW APPLICABLE .   This Agreement shall be governed by and construed pursuant to the laws of Delaware without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

5.       SEVERABILITY . If any provision of this Agreement shall be held to be invalid or unenforceable, and is not reformed by a court of competent jurisdiction, such invalidity or unenforceability shall attach only to such provision and shall not in any way affect or render invalid or unenforceable any other provision of this Agreement, and this Agreement shall be carried out as if such invalid or unenforceable provision were not contained herein.

6.       NO WAIVER . A waiver of any breach or violation of any term, provision or covenant contained herein shall not be deemed a continuing waiver or a waiver of any future or past breach or violation. No oral waiver shall be binding.

7.       ENTIRE AGREEMENT; AMENDMENT . This Agreement constitutes the entire agreement between the parties and supersedes all prior understandings or agreements, whether written or oral, with respect to the subject matter hereof. No amendment or modification of this Agreement shall be valid unless it is in writing and signed by each party.

8.       COUNTERPARTS . This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument and it shall not be necessary in making proof of this agreement to account for all such counterparts.

NEW GENERATION HOLDINGS, INC.

By:  /s/ Jacques Mot

Name: Jacques Mot

Title:   President and CEO

Section II.   Preferred Stock .    The designation of the series of Preferred Stock created hereby is Series A Preferred Stock and the number of shares constituting such series is One Million (1,000,000) (the " Series A Preferred Stock " or the " Preferred Stock "). The powers, privileges, preferences, rights, restrictions of, and other matters relating to the Series A Preferred Stock, are as follows:

1.       Dividends .

When and as declared by the Corporation’s Board of Directors and to the extent permitted under the General Corporation Law of Delaware, the Corporation shall be obligated to pay preferential dividends to the holders of the Series A Preferred Stock prior and in preference to Common Stock as provided in this Section II.1. Dividends on each share of the Series A Preferred Stock (a “ Series A Share ”) shall accrue at the rate of 8% per annum, compounded quarterly, on the sum of the Series A Liquidation Preference thereof plus all accumulated and unpaid dividends thereon from and including the Date of Issuance of such Series A Share to and including the first to occur of (i) the date on which the Series A Liquidation Preference of such Series A Share, plus all accrued and unpaid dividends thereon, is paid to the holder thereof in connection with the liquidation of the Corporation, (ii) the date on which such Series A Share is converted into shares of Common Stock hereunder or (iii) the date on which such Series A Share is otherwise acquired by the Corporation. Such dividends shall accrue whether or not they have been declared and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends, and such dividends shall be cumulative such that all accrued and unpaid dividends shall be fully paid or declared with funds irrevocably set apart for payment before any dividends, distributions, redemptions or other payments may be made with respect to any Common Stock.

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

Except as otherwise provided herein, if at any time the Corporation pays less than the total amount of dividends then accrued with respect to the Series A Preferred, such payment shall be distributed, pro rata among the holders of Series A Preferred based upon the preferences set forth in Section II.1(a) above and based upon the aggregate accrued but unpaid dividends on the Shares held by each such holder.

In the event that the Corporation declares or pays any dividends upon the Common Stock (whether payable in cash, securities or other property) other than dividends payable solely in shares of Common Stock, the Corporation shall also declare and pay to the holders of the Series A Preferred Stock at the same time that it declares and pays such dividends to the holders of the Common Stock, the dividends which would have been declared and paid with respect to the Common Stock issuable upon conversion of the Series A Preferred Stock had all of the outstanding Series A Preferred Stock been converted immediately prior to the record date for such dividend, or if no record date is fixed, the date as of which the record holders of Common Stock entitled to such dividends are to be determined.

2.       Liquidation Preference .

(a)      In the event of any liquidation, dissolutio