Exhibit 10.32
REGULATION D SUBSCRIPTION AGREEMENT
AND INVESTMENT REPRESENTATION

SECTION I

Subscription.     The undersigned, intending to be legally bound, hereby
irrevocably subscribes for and agrees to purchase from NuGen Holdings, Inc., a
Delaware corporation (the "Company") in a transaction exempt from the
registration requirements of the Securities Act of 1933, as amended (the
“Securities Act”) for the number of shares of Series B Convertible Preferred
Stock and Warrants. The terms of the Series B Convertible Preferred Stock and
Warrants are more fully described in the Certificate of Designation of the
Preferred Stock and Warrant Agreement attached hereto as Exhibits A and B,
respectively.

The Company is offering up to a maximum of 13,888,889 shares of Preferred Stock
at a purchase price of $0.18 per share of Preferred Stock and 2,777,778
Warrants; the investor is to receive Warrants equal to 20% of the number of
shares of Preferred Stock purchased. The investor understands that there is no
minimum and therefore the Company will have immediate use of the funds invested.

The undersigned understands that the securities are being offered and issued by
the Company in a transaction exempt from the registration requirements of the
Securities Act.

For purposes of this agreement, the Series B Convertible Preferred Stock shall
be referred to as the “Preferred Stock”, the shares of common stock of the
Company issued upon due conversion of the Preferred Stock in accordance with the
terms thereof shall be referred to as the “Converted Shares” and the shares of
common stock of the Company issued upon due conversion of the Warrants shall be
referred to as the “Warrant Shares”. The Preferred Stock, Warrants, Converted
Shares and Warrant Shares shall hereinafter be referred to collectively as the
“Shares”.

For the avoidance of doubt, the Warrant shall be exercisable for shares of
common stock of the Company as described therein and the dividend payable with
respect to issued and outstanding shares of Preferred Stock as described in the
Certificate of Designation shall be independent and have absolutely nothing to
do with the Warrant or the Warrant Shares.

SECTION II

Purchase Price. Simultaneous with the execution and delivery by the undersigned
of this Agreement, the undersigned is delivering $_____________ to the Company
in consideration for _____ shares of Preferred Stock and ______ Warrants. The
undersigned further understands and acknowledges that this subscription is
irrevocable.

 
 

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Payment has been made simultaneous herewith by either (i) wire transfer or (ii)
by check payable to NuGen Holdings, Inc. The wire transfer instructions are as
follows:

Name of Bank:
Bank of Texas
Account Name:
NuGen Holdings, Inc.
Bank Address;
1401 McKinney, Houston, TX
Account
8092216236
ABA
111014325

If the undersigned has paid by check, the undersigned has sent a check by
overnight mail to:
NuGen Holdings, Inc.
c/o North Point Consultants, Inc.
2004 Polk Street
Hollywood, FL 33020
Attention: Alan Pritzker

SECTION III

Investor Representations and Warranties. The undersigned hereby acknowledges,
represents and warrants to, and agrees with, the Company and its affiliates as
follows:

(a)          Investment Purposes. The undersigned is acquiring the Shares for
his own account as principal, not as a nominee or agent, for investment purposes
only, and not with a view to, or for, resale, distribution or fractionalization
thereof in whole or in part in any transactions that would be in violation of
the Securities Act or any state securities or "blue-sky" laws. No other person
has a direct or indirect beneficial interest in, and the undersigned does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to, the Shares or any part of the Shares for which the undersigned
is subscribing that would be in violation of the Securities Act or any state
securities or "blue-sky" laws.

 
 

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(b)         Sale, Assignment or Transfer. The undersigned has been advised by
the Company that the Shares have not been registered under the Securities Act,
that the Preferred Stock will be issued on the basis of the statutory exemption
provided by Section 4(2) of the Securities Act or Regulation D promulgated
thereunder, or both, relating to transactions by an issuer not involving any
public offering and under similar exemptions under certain state securities
laws, that this transaction has not been reviewed by, passed on or submitted to
any federal or state agency or self-regulatory organization where an exemption
is being relied upon, and that the Company’s reliance thereon is based in part
upon the representations made by the undersigned in this Agreement. In
particular, the undersigned agrees that no sale, assignment or transfer of any
of the Shares shall be valid or effective, and the Company shall not be required
to give any effect to such a sale, assignment or transfer, unless the sale, (i)
is registered under the Securities Act, or (ii) such Shares are sold, assigned
or transferred in accordance with all the requirements and limitations of Rule
144 under the Securities Act, if applicable, or (iii) is otherwise exempt from
registration under the Securities Act. The undersigned further understands that
an opinion of counsel and other documents may be required to transfer the
Shares. The undersigned acknowledges that any certificate or other evidence of
ownership of the Shares shall bear a restrictive legend substantially the same
as the one set forth in Section III(k) of this Agreement.

(c)          Authority. The undersigned has full power and authority to enter
into this Agreement, the execution and delivery of this Agreement has been duly
authorized, if applicable, and this Agreement constitutes a valid and legally
binding obligation of the undersigned.

(d)         No General Solicitation. The undersigned is not subscribing for the
Shares as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or
broadcast over television or radio; or presented at any seminar or similar
gathering; or any solicitation of a subscription by a person, other than Company
personnel, previously not known to the undersigned.

(e) Investment Experience. The undersigned, or the undersigned’s professional
advisors, has such knowledge and experience in finance, securities, taxation,
investments and other business matters as to evaluate investments of the kind
described in this Agreement. By reason of the business and financial experience
of the undersigned or his professional advisors (who are not affiliated with or
compensated in any way by the Company or any of its affiliates or selling
agents), the undersigned or his advisors can protect his own interests in
connection with the transactions described in this Agreement. The undersigned is
able to afford the loss of his entire investment in the Shares.

(f)          Exemption from Registration. The undersigned acknowledges his
understanding that the offering and sale of the Shares is intended to be exempt
from registration under the Securities Act. In furtherance thereof, in addition
to the other representations and warranties of the undersigned made herein, the
undersigned further represents and warrants to and agrees with the Company and
its affiliates as follows:

(1)           The undersigned has the financial ability to bear the economic
risk of his investment, has adequate means for providing for his current needs
and personal contingencies and has no need for liquidity with respect to his
investment in the Company; and
 

 
 

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(2)           The undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
prospective investment in the Shares. The undersigned also represents it has not
been organized for the purpose of acquiring the Shares; and

(3)           The undersigned has been provided an opportunity for a reasonable
period of time prior to the date hereof to obtain additional information
concerning the offering of the Shares, the Company and all other information to
the extent the Company possesses such information or can acquire it without
unreasonable effort or expense.

(4)           The undersigned understands that the Shares are not being
registered under the Securities Act, or the securities laws of any state in
reliance upon exemptions therefrom for private offerings. The undersigned
understands that the Shares must be held indefinitely unless the sale thereof is
subsequently registered under the Securities Act and applicable state securities
laws or exemptions from such registration are available. All certificates
evidencing the undersigned Shares will bear a legend stating that the Shares
have not been registered under the Securities Act or state securities laws and
they may not be resold unless they are registered under the Securities Act and
applicable state securities laws or exempt therefrom.

Notwithstanding anything contained herein to the contrary, the undersigned will
be entitled to registration rights as provided for in the Certificate of
Designation of the Preferred Stock.

(g)          Economic Considerations. The undersigned is not relying on the
Company, or its affiliates or agents with respect to economic considerations
involved in this investment. The undersigned has relied solely on its own
advisors.

(h)          No Other Company Representations. No representations or warranties
have been made to the undersigned by the Company, or any officer, employee,
agent, affiliate or subsidiary of the Company, other than the representations of
the Company contained herein, and in subscribing for Shares the undersigned is
not relying upon any representations other than those contained herein.

(i)           Accredited Investor. The undersigned is an “Accredited Investor”
as that term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act, and as specifically indicated in Exhibit C to this Agreement.
 
(j)           State Residency.      The undersigned’s principal residence (if
subscriber is an individual) or principal business address, as applicable, is in
the state indicated on the signature page, and the undersigned has no present
intention to move such residence or principal business address, as applicable,
from such State.

 
 

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(k)           Legend.       Each certificate representing the Shares shall be
endorsed with the following legend, in addition to any other legend required to
be placed thereon by applicable federal or state securities laws:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR WITHOUT AN EXEMPTION THEREFROM OR AN OPINION OF COUNSEL IN
A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933.”

The undersigned consents to the Company making a notation on its records or
giving instructions to any transfer agent of the Company in order to implement
the restrictions on transfer of the Shares set forth in this Section

(l)           Potential Loss of Investment. The undersigned understands that an
investment in the Shares is a speculative investment which involves a high
degree of risk and the potential loss of his entire investment. The undersigned
has received and reviewed all the filings made by the Company with the
Securities and Exchange Commission ("SEC"). The undersigned understands and
acknowledges that as a result thereof, he may lose his entire investment in the
Company.

(m)          Investment Commitment. The undersigned's overall commitment to
investments which are not readily marketable is not disproportionate to the
undersigned's net worth, and an investment in the Shares will not cause such
overall commitment to become excessive.

(n)          Receipt of Information. The undersigned has received all documents,
records, books and other information pertaining to the undersigned’s investment
in the Company that has been requested by the undersigned.

(o)          No Reliance. Other than as set forth herein, the undersigned is not
relying upon any other information, representation or warranty by the Company or
any officer, director, stockholder, agent or representative of the Company in
determining to invest in the Shares. The undersigned has consulted, to the
extent deemed appropriate by the undersigned, with the undersigned’s own
advisers as to the financial, tax, legal and related matters concerning an
investment in the Shares and on that basis believes that his or its investment
in the Shares is suitable and appropriate for the undersigned.
 
 
 

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(p)          No Governmental Review. The undersigned is aware that no federal or
state agency has (i) made any finding or determination as to the fairness of
this investment, (ii) made any recommendation or endorsement of the Shares or
the Company, or (iii) guaranteed or insured any investment in the Shares or any
investment made by the Company.

(q)          Price of Shares. The undersigned understands that the price of the
Shares offered hereby was determined by the Company without reference to the
assets or book value of the Company. The undersigned further understands that
there is a substantial risk of further dilution of his or its investment in the
Company.

SECTION IV

Company’s Representations and Warranties. The Company represents and warrants to
the undersigned as follows:

(a)           Organization of the Company. The Company is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Delaware.

(b)          Authority. (i) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and to
issue the Shares; (ii) the execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action and no
further consent or authorization of the Company or its Board of Directors or
stockholders is required; and (iii) this Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.

(c)           Exemption from Registration; Valid Issuances. The sale and
issuance of the Shares, in accordance with the terms and on the bases of the
representations and warranties of the undersigned set forth herein, may and
shall be properly issued by the Company to the undersigned pursuant to any
applicable federal or state law. When issued and paid for as herein provided,
the Shares shall be duly and validly issued, fully paid, and non-assessable.
Neither the sales of the Shares pursuant to, nor the Company's performance of
its obligations under, this Agreement shall result in the creation or imposition
of any liens, charges, claims or other encumbrances upon the Shares or any of
the assets of the Company. The Shares shall not subject the undersigned to
personal liability by reason of the ownership thereof.
 
 
 

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(d)           No General Solicitation or Advertising in Regard to this
Transaction. Neither the Company nor any of its affiliates nor any person acting
on its or their behalf (a) has conducted or will conduct any general
solicitation (as that term is used in Rule 502(c) of Regulation D) or general
advertising with respect to any of the Shares, or (b) made any offers or sales
of any security or solicited any offers to buy any security under any
circumstances that would require registration of the Common Stock under the
Securities Act.

SECTION V
 
5.1          Indemnity. The undersigned agrees to indemnify and hold harmless
the Company, its officers and directors, employees and its affiliates and their
respective successors and assigns and each other person, if any, who controls
any thereof, against any loss, liability, claim, damage and expense whatsoever
(including, but not limited to, any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any litigation
commenced or threatened or any claim whatsoever) arising out of or based upon
any false representation or warranty or breach or failure by the undersigned to
comply with any covenant or agreement made by the undersigned herein or in any
other document furnished by the undersigned to any of the foregoing in
connection with this transaction.

5.2          Modification. Neither this Agreement nor any provisions hereof
shall be modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is
sought.

5.3          Notices. Any notice, demand or other communication which any party
hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (a) deposited, postage prepaid, in a United
States mail letter box, registered or certified mail, return receipt requested,
addressed to such address as may be given herein, (b) delivered personally at
such address, (c) upon the expiration of twenty four (24) hours after
transmission, if sent by facsimile if a confirmation of transmission is produced
by the sending machine (and a copy of each facsimile promptly shall be sent by
ordinary mail), (d) upon the expiration of twenty four (24) hours after
transmission, if sent by email if a confirmation of transmission is produced by
the sending computer (and a copy of each email transmission promptly shall be
sent by ordinary mail) or (e) on the third business day, if sent by overnight
recognized courier, in each case to the parties at their respective addresses
set forth below their signatures to this Agreement (or at such other address for
a party as shall be specified by like notice; provided that the notices of a
change of address shall be effective only upon receipt thereof).

5.4          Counterparts. This Agreement may be executed through the use of
separate signature pages or in any number of counterparts and by facsimile, and
each of such counterparts shall, for all purposes, constitute one agreement
binding on all parties, notwithstanding that all parties are not signatories to
the same counterpart. Signatures may be facsimiles.
 
 
 

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5.5          Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and assigns. If the
undersigned is more than one person, the obligation of the undersigned shall be
joint and several and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made by and be binding
upon each such person and his heirs, executors, administrators and successors.

5.6          Entire Agreement. This Agreement and the documents referenced
herein contain the entire agreement of the parties and there are no
representations, covenants or other agreements except as stated or referred to
herein and therein.

5.7          Assignability. This Agreement is not transferable or assignable by
the undersigned.

5.8          Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
conflicts of law principles. EACH PARTY HERETO WAIVES TRIAL BY JURY IN ANY
ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT.

5.9          Pronouns. The use herein of the masculine pronouns "him" or "his"
or similar terms shall be deemed to include the feminine and neuter genders as
well and the use herein of the singular pronoun shall be deemed to include the
plural as well.

5.10        Further Assurances. Upon request from time to time, the undersigned
shall execute and deliver all documents and do all other acts that may be
necessary or desirable, in the reasonable opinion of the Company or its counsel,
to effect the subscription for the Shares in accordance herewith.

 
 
 

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SIGNATURE PAGE
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year this subscription has been accepted by the Company as set forth
below.
 
Number of Shares
   
Subscribed For:
 
Print Name of Subscriber
     
   
  
   

By:
   
 
(Signature of Subscriber or
 
Authorized Signatory)
   
Address:
   
     
   
   
Telephone:
   
   
Fax:
   

   
Social Security Number or other
Taxpayer Identification Number

If the Shares will be held as joint tenants, tenants in common, or community
property, please complete the following:
 
   
Print name of spouse or other co-subscriber
 
   
Signature of spouse or other co-subscriber
 
   
Print manner in which Shares will be held

   
Social Security Number or other
Taxpayer Identification Number

 
If the Shares have been purchased through a broker or other intermediary, please
identify such entity:
 

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ACCEPTANCE OF SUBSCRIPTION

   
 
Name of Subscriber
 

 
ACCEPTED BY:

 
NuGen Holdings, Inc.
 
By:
   
 
Name:
 
Title:

Date:                                          , 2011

Accepted for                                                      Number of
Series B Preferred Shares
 
 
 

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Exhibit A
 
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES B CONVERTIBLE PREFERRED STOCK
OF
NUGEN HOLDINGS, INC.
 
NUGEN HOLDINGS, INC., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the “Corporation”), DOES HEREBY
CERTIFY THAT:
 
A.           Pursuant to authority conferred upon the Board of Directors of the
Corporation (the “Board”) by Article FOURTH of the Certificate of Incorporation
of the Corporation (the “Certificate of Incorporation”) and pursuant to the
provisions of §151 of the General Corporation Law of the State of Delaware, the
Board adopted and approved the following resolution providing for the
designations, preferences and relative, participating, optional and other
rights, and the qualifications, limitations and restrictions of the Series B
Convertible Preferred Stock.
 
B.           The Certificate of Incorporation provides for two classes of
shares, common stock, $.001 par value per share (the “Common Stock”), and
preferred stock, $.001 par value per share (the “Preferred Stock”).
 
C.           The Board is authorized by the Certificate of Incorporation to
provide for the issuance of the shares of Preferred Stock in series and, by
filing a certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in such series
and to fix the designations, preferences and rights of the shares of each such
series and the qualifications, limitations and restrictions thereof.
 
 
 

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NOW, THEREFORE, BE IT RESOLVED, that the Board deems it advisable to, and hereby
does, designate a Series B Convertible Preferred Stock and fixes and determines
the rights, preferences, qualifications, limitations and restrictions relating
to such Preferred Stock as follows:
 
5.
Designation and Amount. The shares of such series of Preferred Stock shall be
designated Series B Preferred Stock (the “Series B Preferred Stock”). The number
of shares constituting Series B Preferred Stock shall be 14,645,000. No other
shares of preferred stock shall be designated as Series B Preferred Stock

6.
Dividends.

(a) Commencing on the Original Issuance Date (as defined in Section 9 below),
cumulative dividends (“Series B Dividends”) shall accrue on each share of Series
B Preferred Stock, at the rate of $0.0054 per annum (accrued daily, from but not
including the next preceding Dividend Payment Date (as defined in Section 2 (b)
below), or, in the case of the first Dividend Payment Date, from the Original
Issuance Date, to and including the respective Dividend Payment Date, on a
30/360 basis).

(b) The Series B Dividends shall be payable annually, with the first payment due
on July1,2012“Dividend Payment Date”), or if such day is not a Business Day (as
defined in Section 9 below), on the next succeeding Business Day and on the
Business Day immediately preceding the Mandatory Conversion Date (as defined in
Section 7 below). Series B Dividends shall be payable only in shares of Series B
Preferred Stock (a “PIK Dividend”). Fractional shares of Series B Preferred
Stock may be issued in connection with any PIK Dividend so that exact payment
can be made to each holder of Series B Preferred Stock of all accrued and unpaid
dividends that are payable on any Dividend Payment Date in respect of such
holder’s shares of Series B Preferred Stock, provided that any such fractional
shares shall be rounded to the nearest one-hundredth of a share. All shares
(including any fractional shares) of Series B Preferred Stock issued pursuant to
a PIK Dividend will thereupon be duly authorized, validly issued, fully paid and
non-assessable. Dividends with respect to such additional shares of Series B
Preferred Stock issued as a PIK Dividend shall (a) be due and payable on each
Dividend Payment Date following the payment date on which such PIK Dividend was
declared (or accrued, if not declared and paid on a Dividend Payment Date) and
(b) accrue at the rate set forth in this Section 2 commencing on the day
immediately following the Dividend Payment Date on which such PIK Dividends were
due and payable (regardless of whether the PIK Dividend was declared or whether
the shares of Series B Preferred Stock constituting the PIK Dividends were
actually issued).The Series B Dividends shall accrue and accumulate 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.

(c) Series B Dividends shall be declared and paid pro rata per share.
 
 
 

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7.
Liquidation Preference.

(a)           In the event of any liquidation, dissolution or winding up of the
Corporation (a “Liquidation Event”), no distribution shall be made to holders of
shares of capital stock of the Corporation ranking junior to the Series B
Preferred Stock upon liquidation, dissolution or winding up of the Corporation,
including the Common Stock (as defined in Section 9 below), unless, prior
thereto, the holders of shares of Series B Preferred Stock shall have received
an amount per share equal to $0.18 (the “Liquidation Amount”) per share plus any
accrued or declared and unpaid dividends owed to holders of shares of the Series
B Preferred Stock.

(b) The holders of the Series B Preferred Stock shall be entitled to receive on
a pari passu basis with any other series of stock in parity with the Series B
Preferred Stock distributions out of the assets legally available for such
distributions, including without limitation, the outstanding Series B Preferred
Stock. In the event the assets of the Corporation are insufficient to pay the
amounts owed to holders of Series B Preferred Stock and any other parity stock
upon liquidation, all available assets shall be paid ratably to the holders of
Series B Preferred Stock and any parity stock, on a pari passu basis in
accordance with their respective liquidation preferences, and the holders of
Common Stock and any other junior stock shall receive nothing. The holders of
the Series B Preferred Stock shall be junior to and subordinate to the holders
of the Series A Preferred Stock upon the exercise of the Option Agreement dated
March 8, 2011.

8.
Voting Rights.

(a)           Except as otherwise provided in this Certificate of Designation or
in the Certificate of Incorporation (the “Certificate of Incorporation”), of the
Corporation, as expressly required by law or as provided herein, a holder of
Series B Preferred Stock shall be entitled to a number of votes per share equal
to the number of whole shares of Common Stock into which such Series B Preferred
Stock is convertible, subject to adjustment as set forth in Section 6 below, as
of the record date for the determination of stockholders entitled to vote and to
notice of any stockholders’ meeting in accordance with the By-laws (the
“By-laws”) of the Corporation. Fractional votes shall not be permitted and any
fractional voting rights resulting from the above formula (after aggregating all
shares of Series B Preferred Stock held by each holder) shall be rounded to the
nearest whole number (with one-half being rounded upward).

(b)           Except as otherwise provided in this Certificate of Designation or
in the Certificate of Incorporation or as expressly required by law, the holders
of Series B Preferred Stock and the holders of Common Stock shall vote together
as a single class on all matters presented to stockholders, and not as separate
classes. The holders of Series B Preferred Stock shall vote on an as converted
basis.

(c)           The Corporation shall not effect, or agree to effect, any
amendment of this Certificate of Designation without the consent of the holder
or holders of at least two-thirds of the shares of Series B Preferred Stock then
outstanding.
 
 
 

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(d)          Meetings of the Series B Holders shall be held whenever called in
the manner required by the laws of the State of Delaware for purposes as to
which there are special statutory provisions, and for other purposes whenever
called by resolution of the Board of Directors, or by the President, or by the
holders of fifty one (51%) of the outstanding shares of the Series B Holders.
Any such meetings of stockholders may be held at the principal business office
of the Corporation or at such other place or places, either within or without
the State of Delaware, as may be specified in the notice thereof. Notice of a
special meeting also shall state the purpose or purposes for which the meeting
is called. A copy of the notice of any meeting shall be delivered personally or
shall be mailed, not less than ten (10), nor more than sixty (60) days, before
the date of the meeting, to each stockholder of record entitled to vote at the
meeting. If there is a need for an emergency meeting of the stockholders, notice
may be provided to the stockholders no later than 48 hours prior to the start of
such meeting. At any and all meetings of the Series B Holders there must be
present, either in person or by proxy, at least twenty five percent (25%) of the
issued and outstanding shares of the Series B Holders entitled to vote at said
meeting. Any action of the Series B Holders may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed, in person or by proxy, by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted in person or by proxy. Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing, but who were entitled to vote on the matter.
 
5.             Conversion.

(a)           The holder of any shares of Series B Preferred Stock shall have
the right, at such holder’s option, at any time or from time to time, to convert
such shares into Common Stock, in a conversion ratio of one share of Common
Stock for each share of Series B Preferred Stock, subject to adjustment as set
forth in Section 5 below, for each share of Series B Preferred Stock to be
converted (such conversion ratio in effect from time to time, the “Conversion
Ratio”).

(b)           The holder of any shares of Series B Preferred Stock may exercise
the conversion rights set forth herein by delivering to the Corporation or any
transfer agent of the Corporation for the Series B Preferred Stock as may be
designated by the Corporation, the certificate or certificates for the shares to
be converted, duly endorsed or assigned in blank to the Corporation (if required
by it) (or such holder shall notify the Corporation or any transfer agent that
such certificate(s) have been lost, stolen or destroyed and shall execute an
agreement reasonably satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection therewith), accompanied
by written notice stating that the holder elects to convert such shares and
stating the name or names (with address) in which the certificate or
certificates for the shares of Common Stock are to be issued. Conversion shall
be deemed to have been effected on the date when the aforesaid delivery is made
or on the Mandatory Conversion Date as provided below in Section 7.
 
 
 

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(c)           As promptly as practicable thereafter, the Corporation shall issue
and deliver to or upon the written order of such holder, to the place designated
by such holder, a certificate to which such holder is entitled. The person in
whose name the certificate or certificates for Common Stock are to be issued
shall be deemed to have become a Common Stock holder of record on the applicable
Conversion Date. The Corporation shall not close its books against the transfer
of shares of Series B Preferred Stock in any manner that would interfere with
the timely conversion of any shares of Series B Preferred Stock. Upon conversion
of only a portion of the number of shares covered by a certificate representing
shares of Series B Preferred Stock surrendered for conversion, the Corporation
shall issue and deliver to or upon the written order of the holder of the
certificate so surrendered for conversion, at the expense of the Corporation, a
new certificate covering the number of shares of the Series B Preferred Stock
representing the unconverted portion of the certificate so surrendered.

(d)          No fractional shares of Common Stock or scrip shall be issued upon
conversion of shares of Series B Preferred Stock. If more than one share of
Series B Preferred Stock shall be surrendered, or deemed surrendered, pursuant
to subsection (c) above, for conversion at any one time by the same holder, the
number of full shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of such Series B
Preferred Stock so surrendered. Any fractional share which would otherwise be
issuable upon conversion of any shares of Series B Preferred Stock (after
aggregating all shares of Series B Preferred Stock held by each holder) shall be
rounded to the nearest whole number (with one-half being rounded upward).

(e)           The Corporation shall reserve, free from preemptive rights, out of
its authorized but unissued shares of Common Stock solely for the purpose of
effecting the conversion of the shares of Series B Preferred Stock sufficient
shares to provide for the conversion of all outstanding shares of Series B
Preferred Stock.

(f)           All shares of Common Stock which may be issued in connection with
the conversion provisions set forth herein will, upon issuance by the
Corporation, be validly issued, fully paid and nonassessable, with no personal
liability attaching to the ownership thereof, and free from all taxes, liens or
charges with respect thereto.

(g)          Each holder of shares of Series B Preferred Stock shall be entitled
to receive written notice from the Corporation, by overnight delivery or first
class mail, postage prepaid, addressed to such holder at the last address of
such holder as shown by the records of the Corporation, of any proposed dividend
or distribution, liquidation, dissolution or winding up of the Corporation, or
any Business Combination (as defined in Section 9 below), at least ten (10) days
prior to the date on which any such event is scheduled to occur, and, at any
time prior to, or conditioned upon the consummation of and to occur immediately
prior to, such liquidation, dissolution or winding up or Business Combination,
to convert any or all of such holder’s shares of Series B Preferred Stock into
shares of Common Stock pursuant to this Section 5. The notice of any such event
shall at a minimum specify the consideration to be received by stockholders in
such event in the aggregate, the consideration to be received on a per share
basis by the holders of Common Stock and the consideration to be received on a
per share basis by the holders of Series B Preferred Stock.
 
 
 

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6.            Conversion Adjustment.

(a)          In the event the Corporation shall, at any time after the issuance
of any share of Series B Preferred Stock, declare or pay any dividend or make
any distribution on Common Stock payable in shares of Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, then in each such case the Conversion Ratio shall be adjusted, so
that the holder of any shares of Series B Preferred Stock shall be entitled to
receive upon conversion thereof the number of shares of Common Stock or other
securities or property that such holder would have owned or have been entitled
to receive upon the happening of such event had such Series B Preferred Stock
been converted immediately prior to the relevant record date or, if there is no
such record date, the effective date of such event.

(b)          The “Conversion Price” shall initially be $0.18 and shall be
adjusted from time to time as provided in this subsection (b). If the Conversion
Ratio shall be adjusted pursuant to subsection (a) above, then in each such
case, a corresponding adjustment shall be made to the Conversion Price in
accordance with the following formula:
P           =           Po x Ro
                                                                           R
 
where:
 
P =          the adjusted Conversion Price in effect immediately following such
adjustment.
 
Po =         the Conversion Price in effect immediately prior to such
adjustment.
 
Ro =         the Conversion Ratio in effect immediately prior to the adjustment.
 
R =          the Conversion Ratio in effect immediately following the
adjustment.
 
(c)           The provisions of this Section 6 shall be applied successively
each time there shall occur any event for which an adjustment is required to be
made pursuant to subsection (a) above.

(d)           Subject to the restrictions contained in Section 8(a)(iv) below,
in the event the Corporation shall, at any time after the issuance of any share
of Series B Preferred Stock, declare or pay any dividend or make any
distribution on Common Stock payable in securities or other property of the
Corporation other than shares of Common Stock or cash, in which dividend or
distribution the holders of Series B Preferred Stock do not otherwise
participate, then provision shall be made so that the holders of Series B
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of such securities of
the Corporation or value of such other property that they would have received
had their Series B Preferred Stock been converted into Common Stock on the date
of such event and had they thereafter, during the period from the date of such
event to and including the conversion date, retained such securities and other
property receivable by them as aforesaid during such period, giving application
during such period to all adjustments called for herein.

 
 

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(e)           Upon a Business Combination (as defined below), each share of
Series B Preferred Stock shall remain outstanding and shall thereafter be
convertible into, or shall be converted into a security which shall be
convertible into, the kind and amount of securities or other property to which a
holder of the number of shares of Common Stock of the Corporation deliverable
upon conversion of such share of Series B Preferred Stock immediately prior to
such Business Combination would have been entitled upon such Business
Combination, all subject to further adjustment as provided herein and in the
Certificate of Incorporation.

7.            Mandatory Conversion.
All shares of the Series B Preferred Stock then outstanding on December 31, 2012
(the "Mandatory Conversion Date") shall become convertible into shares of Common
Stock as provided above. On and after such date, all rights and preferences of
the outstanding Series B Preferred Stock shall automatically have no further
force and effect and the holder of Series B Preferred Stock shall surrender the
certificate evidencing such shares to the Corporation. On or after such date,
notwithstanding that the certificates evidencing any Series B Preferred Stock
shall not have been surrendered, such shares shall no longer be deemed
outstanding and all rights whatsoever with respect to such shares shall
terminate.

8.            Piggyback Registration Rights.
If at any time the Corporation shall determine to file with the Securities and
Exchange Commission (the "SEC") a Registration Statement relating to an offering
for its own account or the account of others of any of its equity securities
(other than on Form S-4 or Form S-8 or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with stock option or
other employee benefit plans and other than the Form S-1 currently subject to
the SEC review), the Corporation shall send to each Registered Holder written
notice of such determination and, if within three (3) days after the date of
such notice, such Holder shall so request in writing, the Company shall include
in such Registration Statement all or any part of the Registerable Securities
(as defined in Section 9) such Holder requests to be registered, except that if,
in connection with any underwritten public offering for the account of the
Corporation the managing underwriter(s) thereof shall impose a limitation on the
number of shares of Common Stock which may be included in the Registration
Statement because, in such underwriter(s)’ judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then the
Corporation shall be obligated to include in such Registration Statement only
such limited portion of the Registerable Securities with respect to which such
Registered Holder has requested inclusion hereunder as the underwriter shall
permit. Any exclusion of Registerable Securities shall be made pro rata among
the Registerable Holders seeking to include Registerable Securities in
proportion to the number of Registerable Securities sought to be included by
such Holders. If an offering in connection with which a Holder is entitled to
registration under this Section 8 is an underwritten offering, then each Holder
whose Registerable Securities are included in such Registration Statement shall,
unless otherwise agreed by the Corporation, offer and sell such Registerable
Securities in an underwritten offering using the same underwriter or
underwriters and on the same terms and conditions as other shares of Common
Stock included in such underwritten offering.

 
 

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9.            Definitions. For purposes of this Certificate of Designation, the
following terms shall have the following definitions:

Business Day. The term “Business Day” shall mean any day, other than a Saturday
or Sunday or a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.

Business Combination. The term “Business Combination” shall mean (x) a merger,
share exchange or consolidation of the Corporation with any other corporation or
entity; (y) the sale, lease, exchange, mortgage, pledge, transfer or other
disposition or encumbrance, whether in one transaction or a series of
transactions, by the Corporation of all or substantially all of the
Corporation’s assets; or (z) any agreement, contract or other arrangement
providing for any of the foregoing transactions.

Common Stock. The term “Common Stock” shall mean the common stock of the
Corporation, par value $0.001 per share, or any other security or property as
the aforesaid common stock shall be converted into or exchanged for in any
merger, consolidation, combination, recapitalization, share exchange or other
similar or successive business transactions occurring after the date hereof,
provided that as a condition of any such transaction, the holder of each share
of Series B Preferred Stock shall have the right thereafter to convert such
share into the kind and amount of shares of securities and property receivable
upon such event by a holder of the number of shares of Common Stock into which
such share of Series B Preferred Stock might have been converted immediately
prior to such event, all subject to further adjustment as provided herein and in
the Certificate of Incorporation, and appropriate provisions shall be made with
respect to the rights and interests of such holder to the end that the
adjustments and other provisions hereof and thereof shall thereafter be
applicable, as nearly as may be, in relation to any shares of securities or
property thereafter deliverable upon the exercise of such conversion rights.

Original Issuance Date. The term “Original Issuance Date” shall mean the date
the shares of Series B Preferred Stock are issued to the holder thereof.

Registered Holder. The term “Registered Holder” shall mean, at any time, the
holder of record of shares of Series B Preferred Stock.

Registerable Securities. The term “Registerable Securities” shall mean the
shares of Common Stock the Registered Holder shall be entitled to receive from
the Company upon conversion of the Series B Preferred Stock then held by such
Holder.

10.          No Impairment. The Corporation shall not enter into any contract,
agreement or other legally enforceable arrangement which shall have the effect
of impairing in any material respect the rights, powers or preferences of the
holders of the Series B Preferred Stock granted pursuant to this Certificate of
Designation, without the consent of the holders of not less than two-thirds of
the outstanding shares of Series B Preferred Stock.
 
 

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[SIGNATURE PAGE FOLLOWS]
 
 
 

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IN WITNESS WHEREOF, the undersigned has executed this Certificate this __th day
of March, 2011.
 
NUGEN HOLDINGS, INC.
 
By:
   
Name:
 
Title:
 

 
 

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EXHIBIT B

 
WARRANT
 
[date]
 
______ Shares

WARRANT TO PURCHASE COMMON STOCK

VOID AFTER 5:30 P.M., EASTERN

TIME ON THE EXPIRATION DATE

THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND
MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT
COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.

FOR VALUE RECEIVED, NuGen Holdings, Inc., a Delaware corporation (the
“Company”), hereby agrees to sell upon the terms and on the conditions
hereinafter set forth, but no later than 5:30 p.m., Eastern Time, on the
Expiration Date (as hereinafter defined) to _______ (the “Holder”), under the
terms as hereinafter set forth, _______ (______) fully paid and non-assessable
shares of the Company’s Common Stock (the “Warrant Stock”), at a purchase price
of eighteen cents ($0.18) per share (the “Warrant Price”), pursuant to this
warrant (this “Warrant”). The number of shares of Warrant Stock to be so issued
and Warrant Price are subject to adjustment in certain events as hereinafter set
forth.
 
Exercise of Warrant.
The Holder may exercise this Warrant according to its terms by (i) surrendering
this Warrant, properly endorsed, to the Company at the address set forth in
Section 10, (ii) the subscription form attached hereto having then been duly
executed by the Holder (the “Form of Exercise”), and (iii) payment of the
purchase price being made to the Company for the number of shares of the Warrant
Stock specified in the subscription form, or as otherwise provided in this
Warrant, prior to 5:30 p.m., Eastern Time, on the date which is two years after
the date hereof (the “Expiration Date”). Such exercise shall be effected by the
surrender of the Warrant, together with a duly executed copy of the Form of
Exercise, to Company at its principal office and the payment to the Company of
an amount equal to the aggregate Warrant Price for the number of shares of
Warrant Stock being purchased in cash, certified check or wire transfer.

This Warrant may be exercised in whole or in part so long as any exercise in
part hereof would not involve the issuance of fractional shares of Warrant
Stock. If exercised in part, the Company shall deliver to the Holder a new
Warrant, identical in form, in the name of the Holder, evidencing the right to
purchase the number of shares of Warrant Stock as to which this Warrant has not
been exercised, which new Warrant shall be signed by the Chairman, Chief
Executive Officer or President and the Secretary or Assistant Secretary of the
Company. The term Warrant as used herein shall include any subsequent Warrant
issued as provided herein.
 
 

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No fractional shares or scrip representing fractional shares shall be issued
upon the exercise of this Warrant. The Company shall pay cash in lieu of
fractions with respect to the Warrants based upon the fair market value of such
fractional shares of Common Stock (which shall be the closing price of such
shares on the exchange or market on which the Common Stock is then traded) at
the time of exercise of this Warrant.

In the event of any exercise of the rights represented by this Warrant, a
certificate or certificates for the Warrant Stock so purchased, registered in
the name of the Holder, shall be delivered to the Holder within a reasonable
time after such rights shall have been so exercised. The person or entity in
whose name any certificate for the Warrant Stock is issued upon exercise of the
rights represented by this Warrant shall for all purposes be deemed to have
become the holder of record of such shares immediately prior to the close of
business on the date on which the Warrant was surrendered and payment of the
Warrant Price and any applicable taxes was made, irrespective of the date of
delivery of such certificate, except that, if the date of such surrender and
payment is a date when the stock transfer books of the Company are closed, such
person shall be deemed to have become the holder of such shares at the opening
of business on the next succeeding date on which the stock transfer books are
open. The Company shall pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of shares of Common
Stock on exercise of this Warrant.

Disposition of Warrant Stock and Warrant.

The Holder hereby acknowledges that this Warrant and any Warrant Stock purchased
pursuant hereto are, as of the date hereof, not registered: (i) under the
Securities Act of 1933, as amended (the “Act”), on the ground that the issuance
of this Warrant is exempt from registration under Section 4(2) of the Act as not
involving any public offering or (ii) under any applicable state securities law
because the issuance of this Warrant does not involve any public offering; and
that the Company’s reliance on the Section 4(2) exemption of the Act and under
applicable state securities laws is predicated in part on the representations
hereby made to the Company by the Holder that it is acquiring this Warrant and
will acquire the Warrant Stock for investment for its own account, with no
present intention of dividing its participation with others or reselling or
otherwise distributing the same, subject, nevertheless, to any requirement of
law that the disposition of its property shall at all times be within its
control.

The Holder hereby agrees that it will not sell or transfer all or any part of
this Warrant and/or Warrant Stock unless and until it shall first have given
notice to the Company describing such sale or transfer and furnished to the
Company either (i) an opinion, reasonably satisfactory to counsel for the
Company, of counsel (skilled in securities matters, selected by the Holder and
reasonably satisfactory to the Company) to the effect that the proposed sale or
transfer may be made without registration under the Act and without registration
or qualification under any state law, or (ii) an interpretative letter from the
Securities and Exchange Commission to the effect that no enforcement action will
be recommended if the proposed sale or transfer is made without registration
under the Act.
 
 
 

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If, at the time of issuance of the shares issuable upon exercise of this
Warrant, no registration statement is in effect with respect to such shares
under applicable provisions of the Act, the Company may at its election require
that the Holder provide the Company with written reconfirmation of the Holder’s
investment intent and that any stock certificate delivered to the Holder of a
surrendered Warrant shall bear legends reading substantially as follows:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF
THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”
 
In addition, so long as the foregoing legend may remain on any stock certificate
delivered to the Holder, the Company may maintain appropriate “stop transfer”
orders with respect to such certificates and the shares represented thereby on
its books and records and with those to whom it may delegate registrar and
transfer functions.
 
Reservation of Shares. The Company hereby agrees that at all times there shall
be reserved for issuance upon the exercise of this Warrant such number of shares
of its Common Stock as shall be required for issuance upon exercise of this
Warrant. The Company further agrees that all shares which may be issued upon the
exercise of the rights represented by this Warrant will be duly authorized and
will, upon issuance and against payment of the exercise price, be validly
issued, fully paid and non-assessable, free from all taxes, liens, charges and
preemptive rights with respect to the issuance thereof, other than taxes, if
any, in respect of any transfer occurring contemporaneously with such issuance
and other than transfer restrictions imposed by federal and state securities
laws.

Exchange, Transfer or Assignment of Warrant. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
hereof to the Company or at the office of its stock transfer agent, if any, for
other Warrants of different denominations, entitling the Holder or Holders
thereof to purchase in the aggregate the same number of shares of Common Stock
purchasable hereunder. Upon surrender of this Warrant to the Company or at the
office of its stock transfer agent, if any, with the Assignment Form annexed
hereto duly executed and funds sufficient to pay any transfer tax, the Company
shall, without charge, execute and deliver a new Warrant in the name of the
assignee named in such instrument of assignment and this Warrant shall promptly
be canceled. This Warrant may be divided or combined with other Warrants that
carry the same rights upon presentation hereof at the office of the Company or
at the office of its stock transfer agent, if any, together with a written
notice specifying the names and denominations in which new Warrants are to be
issued and signed by the Holder hereof.

Loss, Theft, Destruction or Mutilation. Upon receipt by the Company of evidence
satisfactory to it, in the exercise of its reasonable discretion, of the
ownership and the loss, theft, destruction or mutilation of this Warrant and, in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to
the Company and, in the case of mutilation, upon surrender and cancellation
thereof, the Company will execute and deliver in lieu thereof, without expense
to the Holder, a new Warrant of like tenor dated the date hereof.

 
 

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Warrant Holder Not a Stockholder. The Holder of this Warrant, as such, shall not
be entitled by reason of this Warrant to any rights whatsoever as a stockholder
of the Company.

Notices. Any notice required or contemplated by this Warrant shall be deemed to
have been duly given if transmitted by registered or certified mail, return
receipt requested, or nationally recognized overnight delivery service, to the
Company at its principal executive offices, or to the Holder at the name and
address set forth in the Warrant Register maintained by the Company.

Choice of Law. THIS WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

Jurisdiction and Venue. The parties hereby irrevocably consent to the in
personam jurisdiction and venue of the courts of the State of New York and of
any federal court located in such State in connection with any action or
proceeding arising out of or relating to this Warrant. EACH PARTY HERETO WAIVES
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS WARRANT.

IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its
behalf, in its corporate name and by its duly authorized officer, as of this __
day of _____, 2011.
 

NUGEN HOLDINGS, INC.  
By:
   
Name:
 
Title:
 

 
 
 

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FORM OF EXERCISE
 
(to be executed by the registered holder hereof)

 
The undersigned hereby exercises the right to purchase _________ shares of
common stock (“Common Stock”), of __________ evidenced by the within Warrant
Certificate for a Warrant Price of $______ per share and herewith makes payment
of the purchase price in full of (i) $__________ in cash. Kindly issue
certificates for shares of Common Stock (and for the unexercised balance of the
Warrants evidenced by the within Warrant Certificate, if any) in accordance with
the instructions given below.
 
Dated:____________________ , 201_ .

   
 
Instructions for registration of stock

 
   
Name (Please Print)

Social Security or other identifying Number:

Address:__________________________________
                        City/State and Zip Code

Instructions for registration of certificate representing the unexercised
balance of Warrants (if any)

   
Name (Please Print)

 
Social Security or other identifying Number: ___________

Address:____________________________________
                      City, State and Zip Code
 
 
 

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 Exhibit C
 
ACCREDITED INVESTOR STATUS
 
The undersigned subscriber represents that it is an Accredited Investor on the
basis that it is (check one):
 
_____(i) A bank as defined in Section 3(a)(2) of the Act, or a savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the Act,
whether acting in its individual or fiduciary capacity; a broker or dealer
registered pursuant to Section 15 of the Securities Exchange Act of 1934; an
insurance company as defined in Section 2(13) of the Act; an investment company
registered under the Investment Company Act of 1940 (the “Investment Company
Act”) or a business development company as defined in Section 2(a)(48) of the
Investment Company Act; a Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; a plan established and maintained by a state, its
political subdivisions or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; an employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974 (“ERISA”), if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA,
which is either a bank, savings and loan association, insurance company, or
registered investment advisor, or if the employee benefit plan has total assets
in excess of $5,000,000 or, if a self-directed plan, with investment decisions
made solely by persons that are accredited investors.
 
_____(ii) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
 
_____(iii) An organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
 
_____(iv) A director or executive officer of the Company.
 
_____(v) A natural person whose individual net worth, or joint net worth with
that person’s spouse, at the time of his or her purchase exceeds $1,000,000.
 
_____(vi) A natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person’s spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year.
 
_____(vii) A trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) (i.e., a
person who has such knowledge and experience in financial and business matters
that he is capable of evaluating the merits and risks of the prospective
investment).
 
 
 

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_____(viii) An entity in which all of the equity owners are accredited
investors. (If this alternative is checked, the Subscriber must identify each
equity owner and provide statements signed by each demonstrating how each is
qualified as an accredited investor. Further, the Subscriber represents that it
has made such investigation as is reasonably necessary in order to verify the
accuracy of this alternative.)
 
 
 

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Schedule

Subscriber's Name
 
Number of Series B
Preferred Shares
   
Number of 
Warrants
   
Purchase 
Price
 
Charles Lyons & Adrienne Lyons
    277,778       55,556     $ 50,000  
Stephen Najarian
    138,889       27,778     $ 25,000  
Stephen McKnight
    100,000       20,000     $ 18,000  

 
 
 

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