Exhibit 4.1


 


EXHIBIT A-1


 


magnegas
corporation


 


CERTIFICATE
OF DESIGNATION OF PREFERENCES, 


RIGHTS AND
LIMITATIONS


OF


SERIES D-1
CONVERTIBLE PREFERRED STOCK


 


PURSUANT
TO SECTION 151 OF THE 


Delaware
GENERAL CORPORATION LAW


 


The
undersigned, __________ and ____________, do hereby certify that:


 


1.
They are the President and Secretary, respectively, of MagneGas Corporation, a Delaware corporation (the “Corporation”).


 


2.
The Corporation is authorized to issue 10,000,000 shares of preferred stock, _____ of which have been issued.


 


3.
The following resolutions were duly adopted by the board of directors of the Corporation (the “Board of Directors”):


 


WHEREAS,
the certificate of incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, consisting
of 10,000,000 shares, $0.001 par value per share, issuable from time to time in one or more series;


 


WHEREAS,
the Board of Directors is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms
of redemption and liquidation preferences of any wholly unissued series of preferred stock and the number of shares constituting
any series and the designation thereof, of any of them; and


 


WHEREAS,
it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions
and other matters relating to a series of the preferred stock, which shall consist of, except as otherwise set forth in the Purchase
Agreement, up to 1,060 shares of the preferred stock which the Corporation has the authority to issue, as follows:


 


NOW,
THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of preferred stock for
cash or exchange of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions
and other matters relating to such series of preferred stock as follows:


 




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TERMS OF
PREFERRED STOCK


 


Section
1.          Definitions. For the purposes hereof, the following terms
shall have the following meanings:


 


“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.


 


“Alternate
Consideration” shall have the meaning set forth in Section 7(e).


 


“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 6(d).


 


“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action
to close.


 


“Buy-In”
shall have the meaning set forth in Section 6(c)(iv).


 


“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1 of the Purchase Agreement.


 


“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto and all conditions precedent to (i) each Holder’s obligations to pay the Subscription Amount and (ii) the
Corporation’s obligations to deliver the Securities have been satisfied or waived.


 


“Commission”
means the United States Securities and Exchange Commission.


 


“Common
Stock” means the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities
into which such securities may hereafter be reclassified or changed.


 


“Common
Stock Equivalents” means any securities of the Corporation or the Subsidiaries which would entitle the holder thereof
to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.


 


“Conversion
Amount” means the sum of the Stated Value at issue.


 


“Conversion
Date” shall have the meaning set forth in Section 6(a).


 




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“Conversion
Price” shall have the meaning set forth in Section 6(b).


 


“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in
accordance with the terms hereof.


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


 


“Fundamental
Transaction” shall have the meaning set forth in Section 7(e).


 


“GAAP”
means United States generally accepted accounting principles.


 


“Holder”
shall have the meaning given such term in Section 2.


 


“Issuable
Maximum” shall have the meaning set forth in Section 6(e).


 


“Junior
Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities
which are explicitly senior or pari passu to the Preferred Stock in dividend rights or liquidation preference.


 


“Liquidation”
shall have the meaning set forth in Section 5.


 


“New
York Courts” shall have the meaning set forth in Section 9(d).


 


“Notice
of Conversion” shall have the meaning set forth in Section 6(a).


 


“Original
Issue Date” means the date of the first issuance of any shares of the Preferred Stock regardless of the number of transfers
of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence such
Preferred Stock.


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


“Preferred
Stock” shall have the meaning set forth in Section 2.


 


“Purchase
Agreement” means the Securities Purchase Agreement, dated as of the Original Issue Date, among the Corporation and the
original Holders, as amended, modified or supplemented from time to time in accordance with its terms.


 


“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the
Corporation and the original holders of the Series D-2 Preferred Stock, in the form of Exhibit B attached to the Purchase
Agreement


 




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“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.


 


“Securities”
means the Shares, the Preferred Stock, the Conversion Shares, the Warrants and the Warrant Shares.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


“Series
D-2 Certificate of Designation” means the Series D-2 Certificate of Designation filed by the Corporation with the Secretary
of the State of Delaware.


 


“Series
D-2 Preferred Stock” means the Series D-2 Convertible Preferred Stock issued pursuant to the Purchase Agreement.


 


“Share
Delivery Date” shall have the meaning set forth in Section 6(c).


 


“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market
(or any successor entity) from the shareholders of the Corporation with respect to the transactions contemplated by the Transaction
Documents, including the issuance of all of the Shares, the Conversion Shares and the shares of Common Stock underlying the Series
D-2 Preferred Stock in excess of 19.99% of the issued and outstanding Common Stock on the Closing Date.


 


“Shares”
means the shares of Common Stock issued or issuable to each Purchaser pursuant to the Purchase Agreement.


 


“Stated
Value” shall have the meaning set forth in Section 2, as the same may be increased pursuant to Section 3.


 


“Subscription
Amount” shall mean, as to each Holder, the aggregate amount to be paid for the Preferred Stock, Shares and Warrants
purchased pursuant to the Purchase Agreement as specified below such Holder’s name on the signature page of the Purchase
Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.


 


“Subsidiary”
means any subsidiary of the Corporation as set forth on Schedule 3.1(a) of the Purchase Agreement and shall, where applicable,
also include any direct or indirect subsidiary of the Corporation formed or acquired after the date of the Purchase Agreement.


 




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“Successor
Entity” shall have the meaning set forth in Section 7(e).


 


“Trading
Day” means a day on which the principal Trading Market is open for business.


 


“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).


 


“Transaction
Documents” means this Certificate of Designation, the Series D-2 Certificate of Designation, the Purchase Agreement,
the Warrants, the Registration Rights Agreement, the Voting Agreement, all exhibits and schedules thereto and hereto and any other
documents or agreements executed in connection with the transactions contemplated pursuant to the Purchase Agreement.


 


“Transfer
Agent” means Corporate Stock Transfer, the current transfer agent of the Corporation, with a mailing address of 3200
Cherry Creek Drive South, Suite 430, Denver, CO 80209 and any successor transfer agent of the Corporation.


 


“Voting
Agreement” means the written agreement, in the form of Exhibit E attached to the Purchase Agreement, of all of
the officers, directors and stockholders holding more than 10% of the issued and outstanding shares of Common Stock on the date
of the Purchase Agreement to vote all Common Stock over which such Persons have voting control as of the record date for the meeting
of stockholders of the Corporation, amounting to, in the aggregate, at least 50.1% of the issued and outstanding Common Stock.


 


“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Holder at the Closing in accordance with Section 2.2(a)
of the Purchase Agreement, which Warrants shall be exercisable 6 months from the date of issuance and have a term of exercise
equal to 5 years from the initial exercise date, in the form of Exhibit C attached to the Purchase Agreement.


 


“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.


 


Section
2.          Designation, Amount and Par Value. The series of preferred
stock shall be designated as its Series D-1 Convertible Preferred Stock (the “Preferred Stock”) and the number
of shares so designated shall be up to 1,060 (which shall not be subject to increase without the written consent of all of the
holders of the Preferred Stock (each, a “Holder” and collectively, the “Holders”)). Each
share of Preferred Stock shall have a par value of $____ per share and a stated value equal to $1,000, subject to increase set
forth in Section 3 below (the “Stated Value”).


 




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Section
3.          Dividends. Except for stock dividends or distributions
for which adjustments are to be made pursuant to Section 7, Holders shall be entitled to receive, and the Corporation shall pay,
dividends on shares of Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends
actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends
shall be paid on shares of Preferred Stock.


 


Section
4.          Voting Rights. Except as otherwise provided herein or
as otherwise required by law, the Preferred Stock shall have no voting rights. However, as long as any shares of Preferred Stock
are outstanding, the Corporation shall not, without the affirmative vote of the Holders of 67% of the then outstanding shares
of the Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Preferred Stock or alter
or amend this Certificate of Designation or (b) enter into any agreement with respect to any of the foregoing.


 


Section
5.          Liquidation. Upon any liquidation, dissolution or winding-up
of the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall be entitled to receive
out of the assets, whether capital or surplus, of the Corporation an amount equal to the Stated Value, plus any accrued and unpaid
dividends thereon and any other fees or liquidated damages then due and owing thereon under this Certificate of Designation, for
each share of Preferred Stock before any distribution or payment shall be made to the holders of any Junior Securities, and if
the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the
Holders shall be ratably distributed among the Holders and the holders of the Series D-2 Preferred Stock in accordance with the
respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. The Corporation shall
mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.


 




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Section
6.          Conversion.


 


a)
          Conversions at Option of Holder. Each share of Preferred Stock
shall be convertible, at any time and from time to time from and after the Original Issue Date at the option of the Holder thereof,
into that number of shares of Common Stock (subject to the limitations set forth in Section 6(d) and Section 6(e)) determined
by dividing the Stated Value of such share of Preferred Stock by the Conversion Price. Holders shall effect conversions by providing
the Corporation with the form of conversion notice attached hereto as Annex A (a “Notice of Conversion”).
Each Notice of Conversion shall specify the number of shares of Preferred Stock to be converted, the number of shares of Preferred
Stock owned prior to the conversion at issue, the number of shares of Preferred Stock owned subsequent to the conversion at issue
and the date on which such conversion is to be effected, which date may not be prior to the date the applicable Holder delivers
by facsimile such Notice of Conversion to the Corporation (such date, the “Conversion Date”). If no Conversion
Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Corporation
is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other
type of guarantee or notarization) of any Notice of Conversion form be required. The calculations and entries set forth
in the Notice of Conversion shall control in the absence of manifest or mathematical error. To effect conversions of shares of
Preferred Stock, a Holder shall not be required to surrender the certificate(s) representing the shares of Preferred Stock to
the Corporation unless all of the shares of Preferred Stock represented thereby are so converted, in which case such Holder shall
deliver the certificate representing such shares of Preferred Stock promptly following the Conversion Date at issue. Shares of
Preferred Stock converted into Common Stock or redeemed in accordance with the terms hereof shall be canceled and shall not be
reissued.


 


b)
          Conversion Price. The conversion price for the Preferred Stock
shall equal $1.00, subject to adjustment herein (the “Conversion Price”).


 


c)
          Mechanics of Conversion


 


i.            Delivery
of Conversion Shares Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share
Delivery Date”), the Corporation shall deliver, or cause to be delivered, to the converting Holder the number of Conversion
Shares being acquired upon the conversion of the Preferred Stock which shall be free of restrictive legends and trading restrictions
The Corporation shall deliver the Conversion Shares required to be delivered by the Corporation under this Section 6 electronically
through the Depository Trust Company or another established clearing corporation performing similar functions.


 


ii.         Failure
to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or
as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the
Corporation at any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event the Corporation
shall promptly return to the Holder any original Preferred Stock certificate delivered to the Corporation and the Holder shall
promptly return to the Corporation the Conversion Shares issued to such Holder pursuant to the rescinded Conversion Notice.


 




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iii.         Obligation
Absolute; Partial Liquidated Damages. The Corporation’s obligation to issue and deliver the Conversion Shares upon conversion
of Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction
by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against
any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach
or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation
of law by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation
of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided, however,
that such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such
Holder. In the event a Holder shall elect to convert any or all of the Stated Value of its Preferred Stock, the Corporation may
not refuse conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged
in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining
and/or enjoining conversion of all or part of the Preferred Stock of such Holder shall have been sought and obtained, and the
Corporation posts a surety bond for the benefit of such Holder in the amount of 150% of the Stated Value of Preferred Stock which
is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying
dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of such injunction,
the Corporation shall issue Conversion Shares and, if applicable, cash, upon a properly noticed conversion. If the Corporation
fails to deliver to a Holder such Conversion Shares pursuant to Section 6(c)(i) on the second Trading Day after the Share Delivery
Date applicable to such conversion, the Corporation shall pay to such Holder, in cash, as liquidated damages and not as a penalty,
for each $5,000 of Stated Value of Preferred Stock being converted, $50 per Trading Day (increasing to $100 per Trading Day on
the third Trading Day and increasing to $200 per Trading Day on the sixth Trading Day after such damages begin to accrue) for
each Trading Day after such second Trading Day after the Share Delivery Date until such Conversion Shares are delivered or Holder
rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare a Triggering Event
pursuant to Section 10 hereof for the Corporation’s failure to deliver Conversion Shares within the period specified herein
and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit a Holder
from seeking to enforce damages pursuant to any other Section hereof or under applicable law.


 




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iv.         Compensation
for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion. In addition to any other rights available to the
Holder, if the Corporation fails for any reason to deliver to a Holder the applicable Conversion Shares by the Share Delivery
Date pursuant to Section 6(c)(i), and if after such Share Delivery Date such Holder is required by its brokerage firm to purchase
(in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock
to deliver in satisfaction of a sale by such Holder of the Conversion Shares which such Holder was entitled to receive upon the
conversion relating to such Share Delivery Date (a “Buy-In”), then the Corporation shall (A) pay in cash to
such Holder (in addition to any other remedies available to or elected by such Holder) the amount, if any, by which (x) such Holder’s
total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that such Holder was entitled to receive from the conversion at issue multiplied by
(2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage
commissions) and (B) at the option of such Holder, either reissue (if surrendered) the shares of Preferred Stock equal to the
number of shares of Preferred Stock submitted for conversion (in which case, such conversion shall be deemed rescinded) or deliver
to such Holder the number of shares of Common Stock that would have been issued if the Corporation had timely complied with its
delivery requirements under Section 6(c)(i). For example, if a Holder purchases shares of Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Preferred Stock with respect to which
the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was
a total of $10,000 under clause (A) of the immediately preceding sentence, the Corporation shall be required to pay such Holder
$1,000. The Holder shall provide the Corporation written notice indicating the amounts payable to such Holder in respect of the
Buy-In and, upon request of the Corporation, evidence of the amount of such loss. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Corporation’s failure to timely deliver the Conversion Shares upon
conversion of the shares of Preferred Stock as required pursuant to the terms hereof.


 


v.           Reservation
of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of
its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Preferred Stock, free
from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders
of the Preferred Stock), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and
conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 7)
upon the conversion of the then outstanding shares of Preferred Stock. The Corporation covenants that all shares of Common Stock
that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.


 


vi.         Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Preferred
Stock. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Corporation
shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Conversion Price or round up to the next whole share.


 




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vii.         Transfer
Taxes and Expenses. The issuance of Conversion Shares on conversion of this Preferred Stock shall be made without charge to
any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion
Shares, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holders of such shares
of Preferred Stock and the Corporation shall not be required to issue or deliver such Conversion Shares unless or until the Person
or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established
to the satisfaction of the Corporation that such tax has been paid. The Corporation shall pay all Transfer Agent fees required
for same-day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.


 


d)
          Beneficial Ownership Limitation. The Corporation shall
not effect any conversion of the Preferred Stock, and a Holder shall not have the right to convert any portion of the Preferred
Stock, to the extent that, after giving effect to the conversion set forth on the applicable Notice of Conversion, such Holder
(together with such Holder’s Affiliates, and any Persons acting as a group together with such Holder or any of such Holder’s
Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of
the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall include
the number of shares of Common Stock issuable upon conversion of the Preferred Stock with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining,
unconverted Stated Value of Preferred Stock beneficially owned by such Holder or any of its Affiliates and (ii) exercise or conversion
of the unexercised or unconverted portion of any other securities of the Corporation subject to a limitation on conversion or
exercise analogous to the limitation contained herein (including, without limitation, the Preferred Stock or the Warrants) beneficially
owned by such Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section
6(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. To the extent that the limitation contained in this Section 6(d) applies, the determination of whether
the Preferred Stock is convertible (in relation to other securities owned by such Holder together with any Affiliates) and of
how many shares of Preferred Stock are convertible shall be in the sole discretion of such Holder, and the submission of a Notice
of Conversion shall be deemed to be such Holder’s determination of whether the shares of Preferred Stock may be converted
(in relation to other securities owned by such Holder together with any Affiliates) and how many shares of the Preferred Stock
are convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, each
Holder will be deemed to represent to the Corporation each time it delivers a Notice of Conversion that such Notice of Conversion
has not violated the restrictions set forth in this paragraph and the Corporation shall have no obligation to verify or confirm
the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 6(d), in determining the number of outstanding shares of Common Stock, a Holder may rely
on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Corporation’s
most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by
the Corporation or (iii) a more recent written notice by the Corporation or the Transfer Agent setting forth the number of shares
of Common Stock outstanding.  Upon the written or oral request of a Holder, the Corporation shall within two Trading Days
confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding.  In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the
Corporation, including the Preferred Stock, by such Holder or its Affiliates since the date as of which such number of outstanding
shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon
conversion of Preferred Stock held by the applicable Holder. A Holder, upon not less than 61 days’ prior notice to the Corporation,
may increase or decrease the Beneficial Ownership Limitation provisions of this Section 6(d) applicable to its Preferred Stock
provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Preferred Stock held by the
Holder and the provisions of this Section 6(d) shall continue to apply. Any such increase or decrease will not be effective until
the 61st day after such notice is delivered to the Corporation and shall only apply to such Holder and no other Holder.
The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this Section 6(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a successor holder of Preferred Stock.


 




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e)
          Issuance Limitations. Notwithstanding anything herein to the
contrary, if the Corporation has not obtained Shareholder Approval, then the Corporation may not issue, upon conversion of the
Preferred Stock, a number of shares of Common Stock which, when aggregated with any shares of Common Stock issued on or after
the Original Issue Date and prior to such Conversion Date (i) in connection with any conversion of Preferred Stock issued pursuant
to the Purchase Agreement, (ii) with any conversion of Series D-2 Preferred Stock issued pursuant to the Purchase Agreement, (iii)
in connection with the Shares issued pursuant to the Purchase Agreement, and (iv) in connection with the exercise of any warrants
issued to any registered broker-dealer as a fee in connection with the issuance of the Securities pursuant to the Purchase Agreement,
would exceed _______1 shares of Common Stock (subject to adjustment for forward and reverse stock splits, recapitalizations
and the like) (such number of shares, the “Issuable Maximum”). Each Holder shall be entitled to a portion of
the Issuable Maximum equal to the quotient obtained by dividing (x) the original Stated Value of such Holder’s Preferred
Stock by (y) the aggregate Stated Value of all Preferred Stock issued on the Original Issue Date to all Holders. In addition,
each Holder may allocate its pro-rata portion of the Issuable Maximum among Preferred Stock and Series D-2 Preferred Stock held
by it in its sole discretion. Such portion shall be adjusted upward ratably in the event a Holder no longer holds any Preferred
Stock or Series D-2 Preferred Stock and the amount of shares issued to such Holder pursuant to such Holder’s Preferred Stock
and Series D-2 Preferred Stock was less than such Holder’s pro-rata share of the Issuable Maximum. For avoidance of doubt,
unless and until any required Shareholder Approval is obtained and effective, warrants issued to any registered broker-dealer
as a fee in connection with the Securities issued pursuant to the Purchase Agreement as described in clause (iii) above shall
provide that such warrants shall not be allocated any portion of the Issuable Maximum and shall be unexercisable unless and until
such Shareholder Approval is obtained and effective.


 






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Section
7.          Certain Adjustments.


 


a)
          Stock Dividends and Stock Splits. If the Corporation, at any
time while this Preferred Stock is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable
in shares of Common Stock on shares of Common Stock or any other Common Stock Equivalents (which, for avoidance of doubt, shall
not include any shares of Common Stock issued by the Corporation upon conversion of, or payment of a dividend on, this Preferred
Stock), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of
a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues, in the event of a reclassification
of shares of the Common Stock, any shares of capital stock of the Corporation, then the Conversion Price shall be multiplied by
a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation)
outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to this Section 7(a) shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or re-classification.


 


b)
           [Reserved].


 





 



1 19.99% of the number
of shares of Common Stock outstanding on the Trading Day immediately preceding the date of the Purchase Agreement.


 




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c)
          Subsequent Rights Offerings. In addition to any adjustments
pursuant to Section 7(a) above, if at any time the Corporation grants, issues or sells any Common Stock Equivalents or rights
to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock
(the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete conversion of such Holder’s Preferred Stock (without regard to any limitations on exercise
hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the
extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial
ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent
shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding
the Beneficial Ownership Limitation).


 


d)
          Pro Rata Distributions. Subject to Section 3, during such time
as this Preferred Stock is outstanding, if the Corporation declares or makes any dividend or other distribution of its assets
(or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without
limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification,
corporate rearrangement, scheme of arrangement or other similar transaction) (a "Distribution"), at any time
after the issuance of this Preferred Stock, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock
acquirable upon complete Conversion of this Preferred Stock (without regard to any limitations on Conversion hereof, including
without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution,
or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the
participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any
such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled
to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of
such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder
until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).


 




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e)
          Fundamental Transaction. If, at any time while this Preferred
Stock is outstanding, (i) the Corporation, directly or indirectly, in one or more related transactions effects any merger or consolidation
of the Corporation with or into another Person, (ii) the Corporation, directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related
transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another
Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Corporation,
directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of
the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged
for other securities, cash or property, or (v) the Corporation, directly or indirectly, in one or more related transactions consummates
a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares
of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination)
(each a “Fundamental Transaction”), then, upon any subsequent conversion of this Preferred Stock, the Holder
shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior
to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 6(d) and Section 6(e) on the conversion
of this Preferred Stock), the number of shares of Common Stock of the successor or acquiring corporation or of the Corporation,
if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable
as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Preferred Stock
is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 6(d) and Section
6(e) on the conversion of this Preferred Stock). For purposes of any such conversion, the determination of the Conversion Price
shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable
in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation shall apportion the Conversion Price
among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion
of this Preferred Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions,
any successor to the Corporation or surviving entity in such Fundamental Transaction shall file a new Certificate of Designation
with the same terms and conditions and issue to the Holders new preferred stock consistent with the foregoing provisions and evidencing
the Holders’ right to convert such preferred stock into Alternate Consideration. The Corporation shall cause any successor
entity in a Fundamental Transaction in which the Corporation is not the survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Corporation under this Certificate of Designation and the other Transaction Documents
(as defined in the Purchase Agreement) in accordance with the provisions of this Section 7(e) pursuant to written agreements in
form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the holder of this Preferred Stock, deliver to the Holder in exchange for
this Preferred Stock a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance
to this Preferred Stock which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or
its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Preferred Stock
(without regard to any limitations on the conversion of this Preferred Stock) prior to such Fundamental Transaction, and with
a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Preferred
Stock immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and
substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Certificate of Designation
and the other Transaction Documents referring to the “Corporation” shall refer instead to the Successor Entity), and
may exercise every right and power of the Corporation and shall assume all of the obligations of the Corporation under this Certificate
of Designation and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Corporation
herein.


 




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f)         Calculations.
All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.


 


g)
          Notice to the Holders.


 


i.            Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation
shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.


 




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ii.         Notice
to Allow Conversion by Holder. If (A) the Corporation shall declare a dividend (or any other distribution in whatever form)
on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Corporation shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Corporation
is a party, any sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share exchange
whereby the Common Stock is converted into other securities, cash or property or (E) the Corporation shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, then, in each case, the Corporation shall
cause to be filed at each office or agency maintained for the purpose of conversion of this Preferred Stock, and shall cause to
be delivered to each Holder at its last address as it shall appear upon the stock books of the Corporation, at least twenty (20)
calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer
or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common
Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such
notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding
the Corporation or any of the Subsidiaries, the Corporation shall simultaneously file such notice with the Commission pursuant
to a Current Report on Form 8-K. The Holder shall remain entitled to convert the Conversion Amount of this Preferred Stock (or
any part hereof) during the 20-day period commencing on the date of such notice through the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.


 


Section
8.          [RESERVED].


 


Section
9.          Miscellaneous.


 


a)
          Notices. Any and all notices or other communications or deliveries
to be provided by the Holders hereunder including, without limitation, any Notice of Conversion, shall be in writing and delivered
personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Corporation, at the address
set forth above Attention: _________________, facsimile number _______________, or such other facsimile number or address
as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section 11. Any and
all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered
personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile
number or address of such Holder appearing on the books of the Corporation, or if no such facsimile number or address appears
on the books of the Corporation, at the principal place of business of such Holder, as set forth in the Purchase Agreement. Any
notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section prior to 5:30 p.m.
(New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number set forth in this Section on a day that is not a Trading Day or later than 5:30
p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.


 




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b)
         Absolute Obligation. Except as expressly provided herein, no provision
of this Certificate of Designation shall alter or impair the obligation of the Corporation, which is absolute and unconditional,
to pay liquidated damages, accrued dividends and accrued interest, as applicable, on the shares of Preferred Stock at the time,
place, and rate, and in the coin or currency, herein prescribed.


 


c)
          Lost or Mutilated Preferred Stock Certificate. If a Holder’s
Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange
and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or
destroyed certificate, a new certificate for the shares of Preferred Stock so mutilated, lost, stolen or destroyed, but only upon
receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership hereof reasonably satisfactory
to the Corporation.


 


d)
          Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Certificate of Designation shall be governed by and construed and enforced in accordance
with the internal laws of the State of Delaware, without regard to the principles of conflict of laws thereof. Each party agrees
that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the
Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan
(the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the
New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives,
and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of
such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect
for notices to it under this Certificate of Designation and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Certificate of Designation
or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this
Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed by the other party for
its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action
or proceeding.


 




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e)
          Waiver. Any waiver by the Corporation or a Holder of a breach
of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of
such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders. The
failure of the Corporation or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or
more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist
upon strict adherence to that term or any other term of this Certificate of Designation on any other occasion. Any waiver by the
Corporation or a Holder must be in writing.


 


f)            Severability.
If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation
shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable
to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates
the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the
maximum rate of interest permitted under applicable law.


 


g)
          Next Business Day. Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.


 


h)           Headings.
The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall
not be deemed to limit or affect any of the provisions hereof.


 


i)            Status
of Converted or Redeemed Preferred Stock. Shares of Preferred Stock may only be issued pursuant to the Purchase Agreement.
If any shares of Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares shall resume the status
of authorized but unissued shares of preferred stock and shall no longer be designated as Series D-1 Convertible Preferred Stock.


 


*********************


 




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RESOLVED, FURTHER,
that the Chairman, the president or any vice-president,    and the secretary or any assistant secretary, of the Corporation be and
they hereby are authorized and directed to prepare and file this Certificate of Designation of Preferences, Rights and Limitations
in accordance with the foregoing resolution and the provisions of Delaware law.


 


IN
WITNESS WHEREOF, the undersigned have executed this Certificate this ___ day of _____ 2014.


 


	 	 	 
	Name:	 	Name:
	Title:	 	Title:


 




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ANNEX A


 


NOTICE OF CONVERSION


 


(To
be Executed by the Registered Holder in order to Convert Shares of Preferred Stock)


 


The undersigned
hereby elects to convert the number of shares of Series D-1 Convertible Preferred Stock indicated below into shares of common
stock, par value $0.001 per share (the “Common Stock”), of MagneGas Corporation, a Delaware corporation (the
“Corporation”), according to the conditions hereof, as of the date written below. If shares of Common Stock
are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as may be required by the Corporation in accordance
with the Purchase Agreement. No fee will be charged to the Holders for any conversion, except for any such transfer taxes.


 


Conversion
calculations:


 


Date
to Effect Conversion: _____________________________________________


 


Number
of shares of Preferred Stock owned prior to Conversion: _______________


 


Number
of shares of Preferred Stock to be Converted: ________________________


 


Stated
Value of shares of Preferred Stock to be Converted: ____________________


 


Number
of shares of Common Stock to be Issued: ___________________________


 


Applicable
Conversion Price:____________________________________________


 


Number
of shares of Preferred Stock subsequent to Conversion: ________________


 


Address
for Delivery: ______________________


or


DWAC
Instructions:


Broker
no: _________


Account
no: ___________


 


	 	[HOLDER]
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:


 




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