Document:

Unassociated Document

    AKEENA
SOLAR, INC.

    CERTIFICATE
OF DESIGNATION OF PREFERENCES,

    RIGHTS
AND LIMITATIONS

    OF

    SERIES
A CONVERTIBLE PREFERRED STOCK

    

    PURSUANT
TO SECTION 151 OF THE

    DELAWARE
GENERAL CORPORATION LAW

    

            The
undersigned, Barry Cinnamon and Gary Effren, do hereby certify
that:

    

                    1.
They are the President and Chief Financial Officer, respectively, of Akeena
Solar, Inc., a Delaware corporation (the “Corporation”).

    

                    2.
The Corporation is authorized to issue 1,000,000 shares of preferred stock, par
value $0.001, of which no shares have previously 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 1,000,000 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 2,000 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:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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.

    

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

    

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

    

    “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).

    

    “Change of Control
Transaction” means the occurrence after the date hereof of any of
(a) an acquisition after the date hereof by an individual or legal entity
or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital
stock of the Corporation, by contract or otherwise) of in excess of 45% of the
voting securities of the Corporation (other than by means of conversion or
exercise of Preferred Stock and the Securities issued together with the
Preferred Stock), (b) the Corporation merges into or consolidates with any other
Person, or any Person merges into or consolidates with the Corporation and,
after giving effect to such transaction, the stockholders of the Corporation
immediately prior to such transaction own less than 55% of the aggregate voting
power of the Corporation or the successor entity of such transaction, (c) the
Corporation sells or transfers all or substantially all of its assets to another
Person and the stockholders of the Corporation immediately prior to such
transaction own less than 55% of the aggregate voting power of the acquiring
entity immediately after the transaction, (d) a replacement at one time or
within a one year period of more than one-half of the members of the Board of
Directors which is not approved by a majority of those individuals who are
members of the Board of Directors on the Original Issue Date (or by those
individuals who are serving as members of the Board of Directors on any date
whose nomination to the Board of Directors was approved by a majority of the
members of the Board of Directors who are members on the Original Issue Date),
or (e) the execution by the Corporation of an agreement to which the
Corporation  is a party or by which it is bound, providing for any of
the events set forth in clauses (a) through (d) above.

    

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

    
      
         

      

      
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    “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 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.

    

    “Floor Price” shall
have the meaning set forth in Section 6(a).

    

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

    

    “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 8(d).

    

    “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.

    
      
         

      

      
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    “Purchase Agreement”
means the Securities Purchase Agreement, dated February 26, 2009, among the
Corporation and the original Holders, as amended, modified or supplemented from
time to time in accordance with its terms.

    

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

    

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

    

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

    

    “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 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 and shall, where applicable, also include any
direct or indirect subsidiary of the Corporation formed or acquired after the
date of the Purchase Agreement.

     

    “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 Alternext, 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 Purchase Agreement,
the Warrants, 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
Empire Stock Transfer Inc., the current transfer agent of the Corporation with a
mailing address of Empire Stock Transfer Inc. and a facsimile number of (702)
974-1444, and any successor transfer agent of the Corporation.

     

    “Underlying Shares”
means the shares of Common Stock issued and issuable upon conversion of the
Preferred Stock, upon exercise of the Warrants and issued and issuable in lieu
of the cash payment of interest on the Preferred Stock in accordance with the
terms of this Certificate of Designation.

     

    
      
         

      

      
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    “VWAP” means, for any
Trading Day, the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
the daily volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on the Trading Market on which the Common Stock is
then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from
9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the
OTC Bulletin Board is not a Trading Market, the volume weighted average price of
the Common Stock for such date (or the nearest preceding date) on the OTC
Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading
on the OTC Bulletin Board and if prices for the Common Stock are then reported
in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by the Holders of a majority in
interest of the Securities then outstanding and reasonably acceptable to the
Corporation, the fees and expenses of which shall be paid by the Corporation, in
each case rounded to the nearest whole cent.

    

    “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.

     

    “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 A
Convertible Preferred Stock (the “Preferred Stock”) and
the number of shares so designated shall be 2,000 (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 $0.001 per share and a stated
value equal to $1,000 (the “Stated
Value”).

    

    Section
3.                 Other Securities. So
long as any Preferred Stock shall remain outstanding, neither the Corporation
nor any Subsidiary thereof shall redeem, purchase or otherwise acquire directly
or indirectly any Junior Securities, other than shares of Common Stock
repurchased or otherwise acquired from employees of the Corporation in
connection with terminations of service to the Corporation.  So long
as any Preferred Stock shall remain outstanding, neither the Corporation nor any
Subsidiary thereof shall directly or indirectly pay or declare any dividend or
make any distribution upon, nor shall any distribution be made in respect of,
any Junior Securities, nor shall any monies be set aside for or applied to the
purchase or redemption (through a sinking fund or otherwise) of any Junior
Securities or shares pari passu with the
Preferred Stock.

    
      
         

      

      
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    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 a majority 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, (b)
authorize or create any class of stock ranking as to dividends, redemption or
distribution of assets upon a Liquidation (as defined in Section 5) senior to,
or otherwise pari passu with, the
Preferred Stock, (c) amend its certificate of incorporation or other charter
documents in any manner that adversely affects any rights of the Holders, (d)
increase the number of authorized shares of Preferred Stock, or (e) 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 $232 for each share of Preferred
Stock (the “Liquidation
Preference”) 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 in
accordance with the respective amounts that would be payable on such shares if
all amounts payable thereon were paid in full.  The Liquidation
Preference per share of Preferred Stock shall be reduced by $0.86 for each share
of Common Stock issued pursuant to Section 6(a).  A Change of Control
Transaction shall not be deemed a Liquidation.  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.

    

    Section
6.                 Conversion.

    

    a)           Automatic Conversion.
On the Original Issue Date and on each Trading Day thereafter until the 76th Trading
Day following the Original Issue Date (an “Automatic Conversion
Date”), a fraction of each share of the Preferred Stock will
automatically convert proportionally and pro-rata among the Holders into shares
of Common Stock if the VWAP on any Trading Day commencing with and including
March 2, 2009 (an “Automatic Conversion
Price”) is less than the lesser of (i) $1.12, subject to adjustment
for reverse and forward stock splits and the like, and (ii) the lowest VWAP
pursuant to which shares were previously issued under this Section 6(a); provided, however, that in no
event shall the Automatic Conversion Price be less than $0.86, subject to
adjustment for reverse and forward stock splits and the like.  The
aggregate number of shares of Common Stock issuable upon conversion of the
Preferred Stock on an Automatic Conversion Date shall be equal to (a) the number
of shares of Preferred Stock outstanding multiplied by the Stated Value divided
by the applicable Automatic Conversion Price (as defined above) less
(b) the aggregate number of Shares issued at the Closing pursuant to the
Purchase Agreement less (c) the shares of Common Stock previously issued
pursuant to this Section 6(a).  On the 76th Trading
Day following the Original Issue Date, the Preferred Stock not previously
converted shall be deemed cancelled (provided that the Holders will retain the
rights and remedies to receive any shares of Common Stock issuable under this
Section 6(a) and not previously received).  For purposes of
clarification, in the event that, prior to the 76th Trading
Day following the Original Issue Date, the VWAP on any Trading Day during such
period is $0.86 or less (subject to adjustment for reverse and forward stock
splits and the like), all 2,000 issued shares of Preferred Stock shall have been
converted into 539,867 shares of Common Stock, in the aggregate (subject to
adjustment for reverse and forward stock splits and the like) and upon issuance
thereof, the Preferred Stock shall be deemed cancelled.  For every
share of Common Stock issued pursuant to this Section 6(a), 1/269.9335 of each
share of Preferred Stock shall be fully converted and deemed
cancelled.

     

    
      
         

      

      
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    b)           [RESERVED]

    

    c)           [RESERVED]

    

    d)           Mechanics of
Conversion

    

    i.           Delivery of Certificate Upon
Conversion. Within two Trading Days of an Automatic Conversion Date (the
“Share Delivery
Date”), the Corporation shall deliver, or cause to be delivered, to the
Holder a certificate or certificates representing the Conversion Shares issuable
hereunder, free and clear of all legends. The Corporation shall deliver any
certificate or certificates 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.          [RESERVED]

    

    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.  The Corporation
may not refuse to issue shares of Common Stock to a Holder hereunder 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 then current aggregate
Liquidation Preference of the shares of Preferred Stock which are 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.  If the Corporation fails to deliver to a Holder such
certificate or certificates on the second Trading Day after the Share Delivery
Date, the Corporation shall pay to such Holder, in cash, as liquidated damages
and not as a penalty, for each $1,000 of Liquidation Preference value of
Preferred Stock being converted, $10 per Trading Day (increasing to $20 per
Trading Day on the third after such damages begin to accrue) for each Trading
Day after such third Trading Day after the Share Delivery Date until such
certificates are delivered.  Nothing herein shall limit a Holder’s
right to pursue actual damages 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 Certificates 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 certificate or certificates by the
Share Delivery Date, 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 hereunder (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
hereunder 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 hereunder. 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 the shares of Common Stock required to be delivered to Holder on an
Automatic Conversion Date 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
certificates representing shares of Common Stock upon conversion of the shares
of Preferred Stock as required pursuant to the terms
hereof.  Notwithstanding anything contained herein to the contrary, if
the Company is required to make payment in respect of a Buy-In for the failure
to timely deliver certificates hereunder and, if the Company has previously paid
such Holder liquidated damages under Section 6(d)(iii) in respect of the
certificates resulting in such Buy-In prior to such Buy-In, such amounts paid
under Section 6(d)(iii) shall be deducted from the amount to be paid in respect
of such certificates pursuant to this Section 6(d)(iv)).

    
      
         

      

      
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    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 and, shall be registered for public
resale.

    

    vi.         Fractional Shares. No
fractional shares of Common Stock 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 round up to the next whole
share.

    

    vii.        Transfer
Taxes.  The issuance of certificates for shares of the Common
Stock 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 certificates, 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 certificate 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
certificates 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.

    
      
         

      

      
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Section
7.                 Notice to the
Holders.  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.

    

                    Section
8.                 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: Chief Financial Officer
and General Counsel, facsimile number 408-395-7979, 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
8.  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 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.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    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 A Preferred
Stock.

    

    

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

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    RESOLVED, FURTHER, that the Chief
Executive Officer, the President, or any vice-president, and the Chief Financial
Officer, 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 3rd day of
March 2009.

     

    
      
        	 	 	 	 	 
	
                /s/
      Barry Cinnamon

              	 	 	
                /s/
      Gary Effren

              	 
	
                Name:
      Barry Cinnamon

              	 	 	
                Name:
      Gary Effren

              	 
	
                Title:Chief
      Financial Officer

              	 	 	
                Title:
      Chief Financial OfficerUnassociated Document

    FORM
OF $0.90 WARRANT

    (Common
Stock Offering)

     

    THIS
WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
THESE SECURITIES OR (2) THERE IS AN OPINION OF COUNSEL, SATISFACTORY TO THE
CORPORATION, THAT AN EXEMPTION THEREFROM IS AVAILABLE.

     

    NEW
GENERATION BIOFUELS HOLDINGS, INC.

    WARRANT

    TO
PURCHASE COMMON STOCK

     

    Issue
Date: __________, 2009

    

    THIS WARRANT IS TO CERTIFY
THAT, (the “Purchaser”), is entitled to purchase from New Generation
Biofuels Holdings, Inc., a Florida corporation (the “Company”), ________ shares
of the Company’s common stock, par value $.001 per share (the “Common Stock”), at
the Exercise Price (as defined below).

    

    Section
1. Certain Definitions.

    

    As used
in this Warrant, unless the context otherwise requires:

    

    “Exercise Price” shall
mean $0.90 per share, as adjusted from time to time pursuant to Section 3
hereof.

     

    “Securities Act” shall
mean the Securities Act of 1933, as amended.

     

    “Warrant” shall mean
this Warrant and all additional or new warrants issued upon division or
combination of, or in substitution for, this Warrant. All such additional or new
warrants shall at all times be identical as to terms and conditions and date,
except as to the number of shares of Warrant Stock for which they may be
exercised.

     

    “Warrantholder” shall
mean the Purchaser, as the initial holder of this Warrant, and its nominees,
successors or assigns, including any subsequent holder of this Warrant to whom
it has been legally transferred.

     

    “Warrant Stock” shall
mean the shares of the Company’s Common Stock purchasable by the holder of this
Warrant upon the exercise of this Warrant.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
2. Exercise of Warrant.

     

    (a) At
any time after the six month anniversary of the Issue Date but prior to the
fifth anniversary of the Issue Date (the “Expiration Date”),
the Purchaser may at any time and from time to time exercise this Warrant, in
whole or in part.

     

    (b) (i)
The Warrantholder shall exercise this Warrant by means of delivering to the
Company at its office identified in Section 14 hereof (i)
a written notice of exercise, including the number of shares of Warrant Stock to
be delivered pursuant to such exercise, (ii) this Warrant and (iii) payment
equal to the Exercise Price in accordance with Section 2(b)(ii). In
the event that any exercise shall not be for all shares of Warrant Stock
purchasable hereunder, a new Warrant registered in the name of the
Warrantholder, of like tenor to this Warrant and for the remaining shares of
Warrant Stock purchasable hereunder, shall be delivered to the Warrantholder
within ten (10) days after any such exercise. Such notice of exercise shall be
in the Subscription Form set out at the end of this Warrant.

     

     
(ii) The Warrantholder shall pay the Exercise Price to the Company either by
cash, certified check to the order of the Company or wire transfer to an account
specified by the Company.  At any time after the six month anniversary
of the Issue Date, in addition to the method of payment set forth in the
immediately preceding sentence and in lieu of any cash payment required thereby,
this Warrant may also be exercised at such time by means of a “cashless
exercise” in which the Warrantholder shall be entitled to receive a certificate
for the number of shares of Warrant Stock computed using the following
formula:

     

    X = Y (A-B)

    A

    

    Where    (X)
=  the number of shares of Warrant Stock to be issued to the
Warrantholder;

     

    (Y)
=  the number of shares of Warrant Stock issuable upon exercise of this
Warrant in accordance with the terms of this Warrant by means of a cash exercise
rather than a cashless exercise;

     

    (A)
=  the Market Price (as defined below); and

     

    (B)
=  the Exercise Price of this Warrant, as adjusted from time to
time.

     

    Solely
for the purposes of this paragraph, Market Price shall be calculated as of the
Trading Day (defined for this purpose as any day on which the equity securities
markets are generally open for trading) immediately preceding the date which the
subscription form attached hereto is deemed to have been sent to the Company
pursuant to Section
14 hereof (such preceding date, the “Valuation Date”). As
used herein, the phrase “Market Price” shall
mean (i) if the Warrant Stock is listed or admitted for trading on a national
securities exchange, an automated quotation system or the Over the Counter
Bulletin Board, the last reported sale price per share of the Warrant Stock on
the Valuation Date, or, in case no such reported sale takes place on such day or
is reported, then the average of the last reported per share bid and ask prices
for shares of the Warrant Stock on such date (or if such bid and ask prices are
not available on such date, the most recent preceding date), in either case as
officially reported by such securities exchange, quotation system or Bulletin
Board on which the Common Stock is listed or admitted to trading, (ii) if not so
listed or admitted for trading, the fair market value of a share of the Warrant
Stock as determined by the Company’s board of directors in good faith, or (iii)
if such exercise is in connection with a merger or consolidation of the Company
in which the Company is not the survivor or in which the Warrant Stock is
exchanged for cash or other securities or a sale of all or substantially all of
the assets of the Company (collectively, a “Sale”), the implied
price per share of the Warrant Stock resulting from such Sale.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    (c) Upon
exercise of this Warrant and delivery of the Subscription Form with proper
payment relating thereto, the Company shall cause to be executed and delivered
to the Warrantholder a certificate or certificates representing the aggregate
number of fully-paid and nonassessable shares of Warrant Stock issuable upon
such exercise.

     

    (d) All
shares of Warrant Stock issuable upon the exercise of this Warrant in accordance
with the terms hereof will not be registered with the SEC and will not be
transferable or resalable by any subscribers except as permitted pursuant to
registration or exemption under the Securities Act.  Rule 144 provides
that all non-affiliates who have held restricted securities of an SEC-reporting
company for at least six months and have not had an affiliate relationship with
the issuer during the preceding three months may sell their securities without
restriction or limitation, other than that the issuer must be in compliance with
the rule’s current public information requirements during the six months
following satisfaction of the six-month holding period
requirement.  It also provides that all non-affiliates who have held
restricted shares of an SEC-reporting company for more than one year, may freely
sell the securities without regard to any Rule 144 conditions.  The
Company will undertake all reasonable efforts to comply with Rule 144’s current
information requirement, including compliance with the filing and reporting
requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, (the “Exchange Act”).

     

    (e) The
stock certificate or certificates for Warrant Stock to be delivered in
accordance with this Section 2 shall be in
such denominations as may be specified in said notice of exercise and shall be
registered in the name of the Warrantholder or such other name or names as shall
be designated in said notice. Such certificate or certificates shall be deemed
to have been issued and the Warrantholder or any other person so designated to
be named therein shall be deemed to have become the holder of record of such
shares, including to the extent permitted by law the right to vote such shares
or to consent or to receive notice as shareholders, as of the time said notice
is delivered to the Company as aforesaid.

     

    (f) The
Company shall pay all expenses payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2; provided, however, that the
Warrantholder shall be responsible for all transfer taxes resulting from the
fact that any certificate issued in respect of Warrant Stock is not in the name
of the Warrantholder.

     

    (g) All
shares of Warrant Stock issuable upon the exercise of this Warrant in accordance
with the terms hereof shall be validly issued, fully paid and nonassessable, and
free from all liens and other encumbrances thereon, other than liens or other
encumbrances created by the Warrantholder or restrictions upon transfer under
federal or state securities laws.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    (h) In no
event shall any fractional share of Warrant Stock of the Company be issued upon
any exercise of this Warrant. If, upon any exercise of this Warrant, the
Warrantholder would, except as provided in this paragraph, be entitled to
receive a fractional share of Warrant Stock, then the Company shall deliver in
cash to such holder an amount equal to such fractional interest.

     

    Section
3. Adjustment of Exercise Price and Warrant Stock.

     

    (a) If,
at any time prior to the Expiration Date, the number of outstanding shares of
Common Stock is (i) increased by a stock dividend payable in shares of Warrant
Stock or by a subdivision or split-up of shares of Common Stock, or (ii)
decreased by a combination of shares of Common Stock, then, following the record
date fixed for the determination of holders of Common Stock entitled to receive
the benefits of such stock dividend, subdivision, split-up, or combination, the
Exercise Price shall be adjusted to a new amount equal to the product of (A) the
Exercise Price in effect on such record date, and (B) the quotient obtained by
dividing (x) the number of shares of Warrant Stock into which this Warrant would
be exercisable on such record date (without giving effect to the event referred
to in the foregoing clause (i) or (ii)), by (y) the number of shares of Warrant
Stock which would be outstanding immediately after the event referred to in the
foregoing clause (i) or (ii), if this Warrant had been exercised immediately
prior to such record date.

     

    (b) Upon
each adjustment of the Exercise Price as provided in Section 3(a),
the Warrantholder shall thereafter be entitled to subscribe for and purchase, at
the Exercise Price resulting from such adjustment, the number of shares of
Warrant Stock equal to the product of (i) the number of shares of Warrant Stock
into which this Warrant would be exercisable prior to such adjustment and (ii)
the quotient obtained by dividing (A) the Exercise Price existing prior to such
adjustment by (B) the new Exercise Price resulting from such
adjustment.

     

    (c) If,
at any time prior to 15 months after the Closing Date, the Company issues any
Additional Warrants with an Additional Warrant Exercise Price or Options with an
Option Exercise Price less than the Exercise Price of this Warrant on the date
of and immediately prior to such issuance, then the Exercise Price of this
Warrant shall be reduced, concurrently with the issuance of such Additional
Warrants or Options, to the Additional Warrant Exercise Price at which such
Additional Warrants have been issued or the Option Exercise Price at which such
Options have been issued, as the case may be.

     

    The
following definitions shall apply to this section:

    

    “Additional Warrants”
shall mean warrants to subscribe for, purchase or otherwise acquire Common Stock
or Convertible Securities, which warrants are issued by the Company in a
Financing Transaction.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    

    “Additional Warrant Exercise
Price” shall mean, for any Additional Warrants, the price per share at
which Common Stock is issuable upon exercise of such Additional Warrants,
determined by dividing (i) the aggregate amount of consideration payable to
the Company upon the exercise of such Additional Warrants, plus the total
amount, if any, received or receivable by the Company as consideration for
granting such Additional Warrants, plus, in the case of Additional Warrants
which relate to Convertible Securities, the aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof into Common Stock, by
(ii) the total number of shares of Common Stock issuable upon the exercise
of such Additional Warrants or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Additional Warrants
(and in the case where more than one security is issued for a specified
aggregate consideration, the consideration allocable to the Additional Warrants
shall be reasonably determined by the Board of Directors of the
Company).

    

    “Closing Date” shall
mean the date of the initial closing of the Company’s private placement of
common stock and warrants in March 2009.

    

    “Convertible
Securities” shall mean evidence of indebtedness, preferred stock or other
securities directly or indirectly convertible into or exchangeable for Common
Stock.

     

    “Employee Awards”
shall mean the grant of shares of Common Stock or Convertible Securities (either
restricted or unrestricted), options to subscribe for, purchase or otherwise
acquire Common Stock or Convertible Securities, or other equity or equity-like
rights granted or issued by the Company to employees, officers or directors of,
or consultants or advisors to, the Company or any subsidiary pursuant to a plan
or other arrangement adopted by the Board of Directors of the Company,
contemplating (in the case of grants with an exercise price) that such grants
generally would be made with exercise prices at least equal to fair market value
as determined by the Board of Directors of the Company or the compensation or
other committee thereof.

    

    “Financing
Transaction” shall mean a transaction commenced after the 2009 Common
Stock Issue Date which provides financing to the Company in the amount of
$1,000,000 or more in cash, excluding transactions in which (i) the only
investors have, or following such transaction will have, substantive business
relationships with the Company other than the ownership of securities of the
Company or its subsidiaries, and (ii) the consideration received by the Company
does not consist solely of cash.  For the avoidance of doubt,
transactions such as joint ventures, arrangements with the licensor of our
proprietary technology, arrangements with customers or suppliers, acquisitions
of property, loan transactions with commercial lenders, Shares Acquired from an
Affiliate/Partner and the like where raising financing is not the primary
purpose of the transaction (as evidenced by a reasonable determination of the
Board of Directors of the Company) shall not be considered Financing
Transactions.

    

    “Option Exercise
Price” shall mean, for any Options, the price per share for which Common
Stock is issuable upon exercise of such Options, determined by dividing
(i) the aggregate amount of consideration payable to the Company upon the
exercise of such Options, plus the total amount, if any, received or receivable
by the Company as consideration for the granting of such Options, plus, in the
case of Options which relate to Convertible Securities, the aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof into Common
Stock, by (ii) the total number of shares of Common Stock issuable upon the
exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options (and in the
case where more than one security is issued for a specified aggregate
consideration, the consideration allocable to the Options shall be reasonably
determined by the Board of Directors of the Company).

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    

    “Options” shall mean
shall mean options to subscribe for, purchase or otherwise acquire Common Stock
or Convertible Securities granted or issued by the Company in a Financing
Transaction, but excluding Employee Awards.

    

    “Shares Acquired from
Affiliate/Partner” means (i)  shares which were acquired from any
affiliate of the Corporation (which for this purpose shall include any holder of
10% or more of the Common Stock or other voting stock of the Corporation) or any
strategic partner of the Corporation, or (ii) an equivalent number of
shares of Common Stock issued or reserved for issuance where either all or part
of the proceeds of such shares are used to acquire shares from any affiliate or
any strategic partner of the Corporation or an equivalent number of treasury
shares acquired from any affiliate or any strategic partner of the Corporation
are retired substantially concurrently with or as an offset to such issuance or
reservation of Common Stock.

    

    Section
4. Division and Combination.

     

    This
Warrant may be divided or combined with other Warrants upon presentation at the
aforesaid office of the Company, together with a written notice specifying the
names and denominations in which new Warrants are to be issued, signed by the
Warrantholder or its agent or attorney. The Company shall pay all expenses in
connection with the preparation, issue and delivery of Warrants under this Section 4. The
Company agrees to maintain at its aforesaid office books for the registration of
the Warrants.

     

    Section
5. Reclassification, Etc.

     

    In case
of any reclassification or change of the outstanding Warrant Stock of the
Company (other than as a result of a subdivision, combination or stock
dividend), or in case of any consolidation of the Company with, or merger of the
Company into, another corporation or other business organization (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification or change of the outstanding
Common Stock of the Company) at any time prior to the Expiration Date, then, as
a condition of such reclassification, reorganization, change, consolidation or
merger, lawful provision shall be made, and duly executed documents evidencing
the same from the Company or its successor shall be delivered to the
Warrantholder, so that the Warrantholder shall have the right prior to the
Expiration Date to purchase, at a total price not to exceed that payable upon
the exercise of this Warrant, the kind and amount of shares of stock and other
securities and property receivable upon such reclassification, reorganization,
change, consolidation or merger by a holder of the number of shares of Warrant
Stock of the Company which might have been purchased by the Warrantholder
immediately prior to such reclassification, reorganization, change,
consolidation or merger, and in any such case appropriate provisions shall be
made with respect to the rights and interest of the Warrantholder to the end
that the provisions hereof (including provisions for the adjustment of the
Exercise Price and of the number of shares purchasable upon exercise of this
Warrant) shall thereafter be applicable in relation to any shares of stock and
other securities and property thereafter deliverable upon exercise
hereof.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    Section
6. Reservation and Authorization of Capital Stock.

     

    The
Company shall, at all times on and after the date hereof, reserve and keep
available for issuance such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of all
outstanding Warrants.

     

    Section
7. Rights of Shareholders.

     

    Nothing
contained herein shall be construed to confer upon the holder of this Warrant,
as such, any of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
stock, change of par value or change of stock to no par value, consolidation,
merger, conveyance, or otherwise) or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise until the Warrant shall
have been exercised and the certificates representing the Warrant Stock shall
have been issued, as provided herein.

     

    Section
8. Stock and Warrant Books.

     

    The
Company will not at any time, except upon dissolution, liquidation or winding
up, close its stock books or warrant books so as to result in preventing or
delaying the exercise of any Warrant.

     

    Section
9. Limitation of Liability.

     

    No
provisions hereof, in the absence of affirmative action by the Warrantholder to
purchase Warrant Stock hereunder, shall give rise to any liability of the
Warrantholder to pay the Exercise Price or as a shareholder of the Company
(whether such liability is asserted by the Company or creditors of the
Company).

     

    Section
10. Transfer

     

    This
Warrant may be transferred only upon the written consent of the Company, which
approval shall not be unreasonably withheld or delayed. Any Warrants issued upon
the transfer of this Warrant shall be numbered and shall be registered in a
Warrant Register as they are issued. The Company shall be entitled to treat the
registered holder of any Warrant on the Warrant Register as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to, or interest in, such Warrant on the part of any other person,
and shall not be liable for any registration of transfer of Warrants that are
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or
with the knowledge of such facts that its participation therein amounts to bad
faith. This Warrant shall be transferable only on the books of the Company upon
delivery thereof duly endorsed by the Holder or by his duly authorized attorney
or representative, or accompanied by proper evidence of succession, assignment,
or authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian, or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder
thereof, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate a like amount, upon surrender to
the Company or its duly authorized agent. Notwithstanding the foregoing, the
Company shall have no obligation to cause Warrants to be transferred on its
books to any person if, in the opinion of counsel to the Company, such transfer
does not comply with the provisions of the Securities Act and the rules and
regulations thereunder.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    Section
11. Investment Representations; Restrictions on Warrant Stock.

     

    The
Warrantholder, by accepting this Warrant, covenants and agrees that, at the time
of exercise hereof, and at the time of any proposed transfer of Warrant Stock
acquired upon exercise hereof, unless a current registration statement under the
Securities Act shall be in effect with respect to the Warrant Stock to be issued
upon exercise of this Warrant, such Warrantholder will deliver to the Company a
written statement that the securities acquired by the Warrantholder upon
exercise hereof are for the account of the Warrantholder or are being held by
the Warrantholder as trustee, investment manager, investment advisor or as any
other fiduciary for the account of the beneficial owner or owners for investment
and are not acquired with a view to, or for sale in connection with, any
distribution thereof (or any portion thereof) and with no present intention (at
any such time) of offering and distributing such securities (or any portion
thereof). The Warrantholder agrees that certificates representing Warrant Stock
may bear a legend substantially as follows:

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT IS IN
EFFECT AS TO THESE SECURITIES OR (2) THERE IS AN OPINION OF COUNSEL,
SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS
AVAILABLE.

     

    Section
12. Loss, Destruction of Warrant Certificates.

     

    Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity and/or security satisfactory to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company will make and deliver, in lieu of such lost,
stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of shares of
Warrant Stock.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    Section
13. Amendments.

     

    The terms
of this Warrant may be amended, and the observance of any term herein may be
waived, but only with the written consent of the Company and the
Warrantholder.

     

    Section
14. Notices Generally.

     

    Any
notice, request, consent, other communication or delivery pursuant to the
provisions hereof shall be in writing and shall be sent by one of the following
means: (i) by registered or certified first class mail, postage prepaid, return
receipt requested; (ii) by facsimile transmission with confirmation of receipt;
(iii) by overnight courier service; or (iv) by personal delivery, and shall be
properly addressed to the Warrantholder at the last known address or facsimile
number appearing on the books of the Company, or, except as herein otherwise
expressly provided, to the Company at its principal executive office at New
Generation Biofuels Holdings, Inc., 1000 Primera Boulevard, Suite 3110, Lake
Mary, Florida 32746, (Fax: (321) 257-1794), Attention: Cary J. Claiborne, Chief
Financial Officer, or such other address or facsimile number as shall have been
furnished to the party giving or making such notice, demand or
delivery.

     

    Section
15. Successors and Assigns.

     

    This
Warrant shall bind and inure to the benefit of and be enforceable by the parties
hereto and their respective permitted successors and assigns.

     

    Section
16. Governing Law.

     

    In all
respects, including all matters of construction, validity and performance, this
Warrant and the obligations arising hereunder shall be governed by, and
construed and enforced in accordance with, the laws of the State of Florida
applicable to contracts made and performed in such State.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    IN WITNESS WHEREOF, the
Company has caused this Warrant to be signed in its name by its duly authorized
officer as of the date first written above.

     

    
      
        	 	NEW GENERATION
      BIOFUELS HOLDINGS, INC.	 
	 	 	 
	 	 	 	 
	 	
                By:
      

              	 	 

      

    

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    SUBSCRIPTION
FORM

     

    (to be
executed only upon exercise of Warrant)

    

    
      	
              To: 

            	
              New
      Generation Biofuels Holdings, Inc.

            

    

    1000 Primera Boulevard, Suite
3110

    Lake Mary, Florida 32746

    Attn: Cary J. Claiborne, Chief
Financial Officer

    

    or such other address notified by the
Company to the Holder.

    

    (1) The undersigned hereby elects to
purchase _______ shares of Warrant Stock of the Company pursuant to the terms of
the attached Warrant, and tenders herewith payment of the exercise price in
full, together with all applicable transfer taxes, if any.

    

    (2) Payment shall take the form of
(check applicable box):

    

    [  ]   in lawful money
of the United States; or

    

    [  ]   the cancellation
of such number of shares of Warrant Stock as is necessary, in accordance with
the formula set forth in subsection 2(b), to exercise this Warrant with respect
to the shares of Warrant Stock set forth above pursuant to the cashless exercise
procedure set forth in subsection 2(b).

    

    (3) Please issue a certificate or
certificates representing said shares of Warrant Stock in the name of the
undersigned or in such other name as is specified below:

     

    
      
        

      

       

    

    The
shares of Warrant Stock shall be delivered to the following:

     

    
      

    

    
      

      

    

    
      
 

    (4) Accredited Investor.
The undersigned is an “accredited investor” as defined in Regulation D
promulgated under the Securities Act of 1933, as amended.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    [SIGNATURE
OF HOLDER]

     

    
      	Name of Investing
      Entity:
	 	 
	Signature of Authorized
      Signatory of Investing Entity:
	 	 
	

              Name
      of Authorized Signatory:

            
	 	 
	

              Title
      of Authorized Signatory:

            
	 	 

    

     

    
      	Date:  	 

    

     

     

    
      
        
        

      

      
        -2-

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