TESI 8-K
Titan Environmental Solutions Inc. (TESI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of registrant under any of the following provisions:
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Material Contracts
Subscription Agreements
Between March 5, 2025 and March 7, 2025, Titan Environmental Solutions Inc., a Nevada corporation (the “Company”), consummated the transactions contemplated by Subscription Agreements dated February 21, 2025 (the “Subscription Agreements”), pursuant to which the Company offered to certain accredited investors up to 850,000 shares of its Series C Convertible Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock”), for a purchase price of $2.00 per share. Each of the five purchasers of shares of Series C Preferred Stock is an accredited investor and is a stockholder of and lender to the Company. The purchasers included Frank Celli, a director of the Company. The purchasers subscribed to purchase an aggregate of 500,000 shares of Series C Preferred Stock for an aggregate purchase price of $1,000,000. The proceeds of the offering will be used by the Company for working capital and the payment of outstanding payables.
The Subscription Agreements provide that it is the intention of the Company and each purchaser that the purchase price for the shares of Series C Preferred Stock be an amount equal to the lesser of (i) $2.00 per share and (ii) the quotient of (a) the product of (x) the price per share at which the shares of the Company’s Common Stock, par value $0.0001 per share (the “Common Stock”), is sold by the Company in its planned public offering (the “Public Offering”) of shares of Common Stock on the terms set forth in the Company’s pending Registration Statement on Form S-1 (Registration No. 333-275136), multiplied by (y) 40, divided by (b) 100, assuming a reverse stock split of the Common Stock at a ratio of 1:100 to take place at or prior to the closing of the Public Offering, with corresponding adjustment to be made if the actual ratio implemented by the Company is different (such quotient, the “Alternate Price”). If the Alternate Price is less than $2.00, then the Company has agreed to issue to each purchaser of Series C Preferred Stock within five business days of the date of the closing of the Public Offering a number of additional shares of Series C Preferred Stock equal to the difference between (A) the number of shares of Series C Preferred Stock that could have been purchased in the offering with the purchaser’s subscription amount, as set forth in the purchaser’s Subscription Agreement, at a purchase price per share equal to the Alternate Price, less (B) the number of shares of Series C Preferred Stock previously issued to such purchaser under the Subscription Agreement.
The Subscription Agreements also grant to the purchasers of shares of Series C Preferred Stock, among other rights, the right to participate in certain subsequent offerings of securities by the Company and the right to exchange their shares of Series C Preferred Stock for the securities issued in certain subsequent offerings of securities by the Company.
Description of the Series C Preferred Stock
On March 6, 2025, the Company filed a Certificate of Designation of the Preferences of Preferred Stock (the “Certificate of Designation”) pursuant to which it authorized the issuance of up to 6.5 million shares of Series C Preferred Stock and created the terms of the Series C Preferred Stock. The principal terms of the Series C Preferred Stock are summarized below.
Conversion Rights. Each share of Series C Preferred Stock has a stated value of $2.40 and is convertible into a number of shares of Common Stock equal to (x) the stated value of the Series C Preferred Stock being converted plus all accrued but unpaid dividends, divided by (y) $0.05 per share (the “Conversion Price”); provided, however, that holders of Series C Preferred will not be able to convert shares of Series C Preferred Stock and receive shares of Common Stock upon such conversion to the extent that after giving effect to such issuance, the holder and such holder’s affiliates would beneficially own in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of the shares of Common Stock issuable upon conversion of the applicable shares of Series C Preferred Stock (the “Beneficial Ownership Limitation”). The Conversion Price is subject to adjustment for stock splits, stock combinations and the like of the Common Stock and in the event of an issuance of Common Stock at a price per share lower than the Conversion Price then in effect, subject to an exception for certain exempt issuances.
Voting Rights. Except as required by law or as specifically provided in the Company’s articles of incorporation, the holders of Series C Preferred Stock are not entitled to vote, as a separate class or otherwise, on any matter presented to the stockholders of the Company for their action; provided, however, that such holders will be entitled, on the same basis as holders of Common Stock, to receive notice of such action or meeting. However, as long as any shares of Series C Preferred are outstanding, the Company may not, without the affirmative vote of the holders of a majority of the then-outstanding shares of the Series C Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series C Preferred Stock, (b) amend its articles of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series C Preferred Stock, (c) increase the number of authorized shares of Series C Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.
Dividend Rights. Holders of Series C Preferred Stock are entitled to receive dividends on shares of Series C Preferred Stock equal (on an as-if-converted-to-Common-Stock basis disregarding for such purpose any conversion limitations) 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; provided, however, that if a dividend is to be paid in Common Stock, a holder of Series C Preferred Stock will not be entitled to receive such stock dividend payment to the extent such payment would cause the Common Stock beneficial ownership percentage of such holder to exceed the Beneficial Ownership Limitation and the portion of such stock dividend payment that would exceed the Beneficial Ownership Limitation will be held in abeyance for the benefit of such holder until such time or times, if ever, as its right thereto would not result in such holder and its affiliates exceeding the Beneficial Ownership Limitation, at which time or times such holder will be issued such unpaid stock dividend payment to the same extent as if there had been no such limitation.
Liquidation Rights. Upon the liquidation or dissolution of the Company, the holders of Series C Preferred Stock will be entitled to receive out of the assets of the Company, whether capital or surplus, the same amount that a holder of Common Stock would receive if the Series C Preferred Stock were fully converted (disregarding for such purposes any conversion limitations) to Common Stock, which such amounts following will be paid pari passu with all holders of Common Stock.
The foregoing description of the Subscription Agreements and the terms of the Series C Preferred Stock is a summary only and is qualified in its entirety by reference to the text of the form of Subscription Agreement and the Certificate of Designation, which are included as Exhibit 10.1 and Exhibit 3.1 to this Current Report on Form 8-K, respectively, and are incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 of this Current Report on Form 8-K regarding the issuance of the shares of Series C Preferred Stock by the Company pursuant to the Subscription Agreements and the shares of Common Stock issuable upon conversion of the Series C Preferred Stock is incorporated herein by reference. The securities issued pursuant to the Subscription Agreements were issued by the Company in reliance upon the exemptions from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Rule 506(b) of Regulation D promulgated thereunder, and similar exemptions under applicable state laws, and intends to issue any shares of Common Stock issuable upon conversion of the Series C Preferred Stock pursuant to the same exemption. The purchasers of the Series C Preferred Stock are each an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act. This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall such securities be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares contain a legend stating the same.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
The information set forth in Item 1.01 of this Current Report on Form 10-K relating to the filing of the Certificate of Designation and the terms of the Series C Preferred Stock is incorporated by reference herein in its entirety.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit | Description | |
| 3.1 | Certificate of Designation of the Preferences of Series C Convertible Preferred Stock of Titan Environmental Solutions, Inc. | |
| 10.1 | Form of Subscription Agreement | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: March 12, 2025 | TITAN ENVIRONMENTAL SOLUTIONS INC. | |
| By: | /s/ Glen Miller | |
| Glen Miller | ||
| Chief Executive Officer | ||
Exhibit 3.1
CERTIFICATE OF DESIGNATION
OF
THE PREFERENCES OF PREFERRED STOCK
OF
TITAN ENVIRONMENTAL SOLUTIONS INC.
The undersigned, Glen Miller, certifies that:
A. He is the Chief Executive Officer and Secretary of Titan Environmental Solutions Inc., a corporation organized and existing under the laws of the State of Nevada (the “Corporation”);
B. The Articles of Incorporation of the Corporation, as amended through the date hereof (the “Articles of Incorporation”), authorizes a class of stock designated as Preferred Stock, with a par value of $0.0001 per share (the “Preferred Stock”), comprising Twenty Five Million (25,000,000) shares, and provides that the board of directors of the Corporation (“Board of Directors”) shall fix the designation and number of shares of each series of the Preferred Stock and may determine the rights, preferences, privileges and restrictions granted to and imposed upon any wholly unissued series of the Preferred Stock;
C. The Board of Directors believes it to be in the best interests of the Corporation to create a new series of preferred stock consisting of six million five hundred thousand (6,500,000) shares and designated as the “Series C Convertible Preferred Stock” having certain rights, preferences, privileges, restrictions and other matters relating to the Series C Convertible Preferred Stock as set forth in this Certificate of Designation; and
D. Pursuant to the authority granted by the Articles of Incorporation, the Board of Directors has duly adopted the recitals and resolutions set out below:
WHEREAS, the Articles of Incorporation authorize the issuance of up to 25,000,000 shares of Preferred Stock in one or more series, and expressly authorizes the Board of Directors, subject to limitations prescribed by law or by the Articles of Incorporation, to provide, out of the unissued Preferred Stock, for one or more series of Preferred Stock, and, with respect to each such series, to establish and fix the number of shares to be included in any series of preferred stock and the designation, rights, preferences, privileges, and restrictions of the shares of such series; and
WHEREAS, the Corporation has not issued any shares of Series C Convertible Preferred Stock, and the Board of Directors desires to establish and fix the number of shares to be included in the Series C Convertible Preferred Stock and to determine the designation, rights, preferences, privileges, and restrictions of the shares of such new series.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issue of the Series C Convertible Preferred Stock and does hereby, in this Certificate of Designation of Preferences of Preferred Stock (the “Certificate of Designation”), establish and fix and herein state and express the number of shares, designation, rights, preferences, privileges, and restrictions of such series of Preferred Stock as follows:
TERMS OF SERIES C CONVERTIBLE PREFERRED STOCK
Section 1. Definitions. For the purposes hereof, the following terms 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” has the meaning set forth in Section 7(e)(i).
“Base Conversion Price” has the meaning set forth in Section 7(b).
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”, or any other similar orders or restrictions, or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally are open for use by customers on such day.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the Corporation’s common stock, par value $0.0001 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 Subsidiary which would entitle the holder thereof at any time to acquire shares of 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 Date” has the meaning set forth in Section 6(a).
“Conversion Price” means, with respect to each share of Series C Preferred, an amount equal to $0.05, subject to adjustment pursuant to Section 7.
“Conversion Rate” has the meaning set forth in Section 6(a).
“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series C Preferred in accordance with the terms hereof.
“Dilutive Issuance” has the meaning set forth in Section 7(b).
“Dilutive Issuance Notice” has the meaning set forth in Section 7(b).
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“Distribution” has the meaning set forth in Section 7(d).
“DTC” has the meaning set forth in Section 6(b)(i).
“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers, directors, advisors or independent contractors of the Corporation pursuant to any stock or option plan duly adopted for such purpose, (b) shares of Common Stock, warrants or options to advisors or independent contractors of the Corporation for compensatory purposes, (c) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the Original Issue Date, provided that such securities have not been amended since the Original Issue Date to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities, and (d) securities issued pursuant to acquisitions or any other strategic transactions approved by the Board of Directors, provided that any such issuance shall not include a transaction in which the Corporation is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.
“Fundamental Transaction” has the meaning set forth in Section 7(e)(i).
“Liquidation” has the meaning set forth in Section 5.
“Liquidation Preference” has the meaning set forth in Section 5.
“Notice of Conversion” has the meaning set forth in Section 6(a).
“Original Issue Date” means the date of the first issuance of any shares of the Series C Preferred, regardless of the number of transfers of any particular shares of Series C Preferred and regardless of the number of certificates which may be issued to evidence such Series C Preferred.
“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.
“Purchase Rights” has the meaning set forth in Section 7(c).
“Securities” means the Series C Preferred and the Underlying Shares.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Series C Holder” has the meaning set forth in Section 2.
“Series C Preferred” has the meaning set forth in Section 2.
“Share Delivery Date” has the meaning set forth in Section 6(b)(i).
“Stated Value” shall mean $2.40 per share, subject to adjustment for stock splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations, subdivisions or other similar events occurring after the Original Issue Date with respect to the Series C Preferred.
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“Stock Dividend Payment” has the meaning set forth in Section 3.
“Subsidiary” means any Person that is, directly or indirectly, controlled by the Corporation, whether now existing or that may be formed from time to time after the date of the Certificate of Designation.
“Successor Entity” has the meaning set forth in Section 7(e)(iv).
“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 American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
“Transfer Agent” means Equity Stock Transfer, the current transfer agent of the Corporation, with a mailing address of 237 West 37th Street, Suite 602, New York, NY 10018, and a facsimile number of (347) 584-3644, and any successor transfer agent of the Corporation.
“Underlying Shares” means the shares of Common Stock issued and issuable upon conversion of the Series C Preferred.
Section 2. Designation, Amount and Par Value. The series of preferred stock designated herein is Series C Convertible Preferred Stock (the “Series C Preferred”) and the number of shares so designated is six million five hundred thousand (6,500,000) (which shall not be subject to increase without the written consent of all of the holders of the Series C Preferred (each, a “Series C Holder” and collectively, the “Series C Holders”)). Each share of Series C Preferred has a par value of $0.0001 per share.
Section 3. Dividends. Except for stock dividends or distributions for which adjustments are to be made pursuant to Section 7, Series C Holders are entitled to receive, and the Corporation shall pay, dividends on shares of Series C Preferred equal (on an as-if-converted-to-Common-Stock basis disregarding for such purpose any conversion limitations hereunder) 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; provided, however, that if a dividend is to be paid in Common Stock (a “Stock Dividend Payment”), the Corporation shall give each Series C Holder notice no less than five (5) Trading Days prior to the payment of the dividend that the payment would be a Stock Dividend Payment, and if the Series C Holder notifies the Corporation that such Stock Dividend Payment would cause its ownership to be in excess of the Beneficial Ownership Limitation, then the Series C Holder shall not be entitled to receive such Stock Dividend Payment to the extent such payment would exceed the Beneficial Ownership Limitation (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Stock Dividend Payment (and beneficial ownership) to the extent of any such excess) and the portion of such Stock Dividend Payment that would exceed the Beneficial Ownership Limitation shall be held in abeyance for the benefit of the Series C Holder until such time or times, if ever, as its right thereto would not result in the Series C Holder and its affiliates exceeding the Beneficial Ownership Limitation, at which time or times the Series C Holder shall be issued such unpaid Stock Dividend Payment to the same extent as if there had been no such limitation). No other dividends shall be paid on shares of Series C Preferred. The Corporation shall not pay any dividends on the Common Stock unless the Corporation simultaneously complies with this provision.
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Section 4. Voting Rights. Except as required by law or as specifically provided herein, the Series C Holders shall not be entitled to vote, as a separate class or otherwise, on any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of the Corporation (or by written consent of stockholders in lieu of meeting); provided, however, that Series C Holders shall be entitled, on the same basis as holders of Common Stock, to receive notice of such action or meeting. However, as long as any shares of Series C Preferred are outstanding, the Corporation shall not, without the affirmative vote of the Series C Holders of a majority of the then-outstanding shares of the Series C Preferred (a) alter or change adversely the powers, preferences or rights given to the Series C Preferred or alter or amend this Certificate of Designation, (b) amend its articles of incorporation or other charter documents in any manner that adversely affects any rights of the Series C Holders, (c) increase the number of authorized shares of Series C Preferred, or (d) enter into any agreement with respect to any of the foregoing. Notwithstanding anything herein to the contrary, the voting rights of each Series C Holder shall be subject to the Beneficial Ownership Limitation contained in Section 6(c).
Section 5. Liquidation. The Series C Holders shall be entitled to receive out of the assets of the Corporation, whether capital or surplus, the same amount that a holder of Common Stock would receive if the Series C Preferred were fully converted (disregarding for such purposes any conversion limitations hereunder) to Common Stock, which such amounts following the Liquidation Preference shall be paid pari passu with all holders of Common Stock. The Corporation shall mail written notice of any such Liquidation to each Series C Holder not less than thirty (30) days prior to the payment date stated therein.
Section 6. Conversion.
(a) Conversions at Option of Series C Holder. Subject to the Beneficial Ownership Limitation, each share of Series C Preferred shall be convertible, at any time and from time to time from and after the Original Issue Date, at the option of the Series C Holder thereof, into fully paid and nonassessable share of Common Stock at the Conversion Rate (as defined below). The number of Conversion Shares issuable upon conversion of each share of Series C Preferred pursuant this Section 6 shall be determined by dividing the Stated Value by the Conversion Price (the “Conversion Rate”). Series C 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 Series C Preferred to be converted, the number of shares of Series C Preferred owned prior to the conversion at issue, the number of shares of Series C Preferred 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 Series C Holder delivers by e-mail 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 Series C Preferred, a Series C Holder shall not be required to surrender the certificate(s) representing the shares of Series C Preferred to the Corporation unless all of the shares of Series C Preferred represented thereby are so converted, in which case such Series C Holder shall deliver the certificate representing such shares of Series C Preferred promptly following the Conversion Date at issue. Shares of Series C Preferred converted into Common Stock shall be canceled and shall not be reissued.
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(b) Mechanics of Conversion.
(i) Delivery of Conversion Shares Upon Conversion. Not later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) after each Conversion Date (the “Share Delivery Date”), the Corporation shall deliver, or cause to be delivered, to the converting Series C Holder (A) the number of Conversion Shares being acquired upon the conversion of the Series C Preferred, and (B) a bank check in the amount of accrued and unpaid dividends, if any. The Corporation shall use its best efforts to deliver the Conversion Shares required to be delivered by the Corporation under this Section 6 electronically either (x) electronically through the Depository Trust Company or another established clearing corporation performing similar functions (“DTC”), or (y), if the Corporation is not participating in DTC, the Corporation shall cause the book entry issuance, or issue and deliver (via reputable overnight courier) to the address as specified in the Notice of Conversion, a certificate, registered in the name of the Series C Holder or its designee, for the number of shares of Common Stock to which the Series C Holder is entitled pursuant to such conversion. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Corporation’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Conversion.
(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 Series C Holder by the Share Delivery Date, the Series C 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 Series C Holder any original Series C Preferred certificate delivered to the Corporation and the Series C Holder shall promptly return to the Corporation the Conversion Shares issued to such Series C Holder pursuant to the rescinded Notice of Conversion.
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(iii) Obligation Absolute. The Corporation’s obligation to issue and deliver the Conversion Shares upon conversion of Series C Preferred in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Series C 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 Series C Holder or any other Person of any obligation to the Corporation or any violation or alleged violation of law by such Series C Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Series C 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 Series C Holder. In the event a Series C Holder shall elect to convert any or all of its Series C Preferred, the Corporation may not refuse conversion based on any claim that such Series C Holder or anyone associated or Affiliated with such Series C Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Series C Holder, restraining and/or enjoining conversion of all or part of the Series C Preferred of such Series C Holder shall have been sought and obtained, and the Corporation posts a surety bond for the benefit of such Series C Holder in the amount of 150% of the closing sale price as of such time of determination of the shares of Common Stock underlying such Series C Preferred (without regard to any limitation on conversion set forth herein) 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 Series C 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 Series C Holder such Conversion Shares pursuant to Section 6(b)(i) by the applicable Share Delivery Date applicable to such conversion, the Corporation shall pay to such Series C Holder, in cash, as liquidated damages and not as a penalty, an amount equal to 2% of the product of (A) the sum of the number of shares of Common Stock not issued to such Series C Holder on or prior to such Share Delivery Date and to which such Series C Holder is entitled, and (B) any trading price of the Common Stock selected by such Series C Holder in writing as in effect at any time during the period beginning on the date of the delivery by such Series C Holder to the Corporation of the applicable Notice of Conversion and ending on such Share Delivery Date. Nothing herein shall limit a Series C Holder’s right to pursue actual damages for the Corporation’s failure to deliver Conversion Shares within the period specified herein and such Series C 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 Series C Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
(iv) Compensation for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion. In addition to any other rights available to the Series C Holder, if the Corporation fails for any reason to deliver to a Series C Holder the applicable Conversion Shares by the Share Delivery Date pursuant to Section 6(b)(i), and if after such Share Delivery Date such Series C Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Series C Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by such Series C Holder of the Conversion Shares which such Series C 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 Series C Holder (in addition to any other remedies available to or elected by such Series C Holder) the amount, if any, by which (x) such Series C 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 Series C 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 Series C Holder, either reissue (if surrendered) the shares of Series C Preferred equal to the number of shares of Series C Preferred submitted for conversion (in which case, such conversion shall be deemed rescinded) or deliver to such Series C 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(b)(i). For example, if a Series C 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 Series C Preferred 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 Series C Holder $1,000. The Series C Holder shall provide the Corporation written notice indicating the amounts payable to such Series C 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 Series C 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 Series C Preferred as required pursuant to the terms hereof.
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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 Series C Preferred as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Series C Holder (and the other holders of the Series C Preferred), not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions of Section 7) upon the conversion of the then outstanding shares of Series C Preferred. 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 Series C Preferred. In lieu of any fractional share of Common Stock otherwise issuable in respect of any conversion of the Series C Preferred, the Corporation shall pay an amount in cash (computed to the nearest cent) equal to such fraction of a share of Common Stock multiplied by the average of the closing bid prices of the Common Stock for the five (5) consecutive Trading Days immediately preceding the applicable conversion of the Series C Preferred. If more than one share of the Series C Preferred is surrendered for conversion at one time by or for the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of the Series C Preferred so surrendered. Notwithstanding anything to the contrary contained herein, but consistent with the provisions of this subsection with respect to fractional Conversion Shares, nothing shall prevent any Series C Holder from converting fractional shares of Series C Preferred.
(vii) Transfer Taxes and Expenses. The issuance of Conversion Shares on conversion of Series C Preferred shall be made without charge to any Series C 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 Series C Holder of such shares of Series C Preferred, 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 has paid to the Corporation the amount of such tax or has 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 DTC (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.
| - 8 - |
(c) Conversion Limitation. The Corporation shall not affect any conversion of the Series C Preferred, and a Series C Holder shall not have the right to convert shares of Series C Preferred, to the extent that after giving effect to the proposed conversion, the Series C Holder (together with the Series C Holder’s affiliates and any persons acting as a group together with the Series C Holder or any of the Holder’s affiliates) would beneficially own in excess of the Beneficial Ownership Limitation. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Series C Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of the Series C Preferred 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 Series C Preferred owned by the Series C 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 beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 6(c), 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(c) applies, the determination of whether any share of Series C Preferred is convertible shall be in the sole discretion of the Series C Holder, and the submission of a notice of conversion shall be deemed to be the Series C Holder’s determination of whether the share of Series C Preferred may be converted, in each case subject to the Beneficial Ownership Limitation. For purposes of this Section 6(c), in determining the number of outstanding shares of Common Stock, the Series C 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 SEC, 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 Series C Holder, the Corporation shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. The “Beneficial Ownership Limitation” shall be 4.99% 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 Series C Preferred held by the Series C Holder. The Series C 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(c), 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 the Series C Preferred held by the Series C Holder and the Beneficial Ownership Limitation provisions of this Section 6(c) 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. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 6(c) 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 Section 6(c) shall apply to a successor Series C Holder.
| - 9 - |
Section 7. Certain Adjustments.
(a) Stock Dividends and Stock Splits. If the Corporation, at any time while any Series C Preferred are 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 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 dividends on, the Series C Preferred), (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) Subsequent Equity Sales. If, at any time while any Series C Preferred are outstanding, the Corporation or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 7(b) in respect of an Exempt Issuance. The Corporation shall notify the Series C Holders in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 7(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Corporation provides a Dilutive Issuance Notice pursuant to this Section 7(b), upon the occurrence of any Dilutive Issuance, the Series C Holders are entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether the Series C Holder accurately refers to the Base Conversion Price in the Notice of Conversion.
| - 10 - |
(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 Series C Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Series C Holder could have acquired if the Series C Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Series C Holder’s Series C Preferred (without regard to any limitations on conversion hereof) 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.
(d) Pro Rata Distributions. During such time as any Series C Preferred 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 grant or distribution of cash, stock or other securities, including Common Stock Equivalents, 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 the Series C Preferred, then, in each such case, each Series C Holder will be entitled to participate in such Distribution to the same extent that the Series C Holder would have participated therein if such Series C Holder had held the number of shares of Common Stock acquirable upon complete conversion of the Series C Preferred (without regard to any limitations on conversion hereof) 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.
(e) Fundamental Transaction.
(i) If, at any time while any Series C Preferred is outstanding, (A) the Corporation, directly or indirectly, in one or more related transactions, effects any merger or consolidation of the Corporation with or into another Person, (B) 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, (C) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) that has been accepted by the holders of 50% or more of the outstanding Common Stock is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property, (D) 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 (E) 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 or group of Persons whereby such other Person or group of Persons 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 the Series C Preferred, the Series C Holder has 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, 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 receivable as a result of such Fundamental Transaction (the “Alternate Consideration”) by a holder of the number of shares of Common Stock for which Series C Preferred is convertible immediately prior to such Fundamental Transaction.
| - 11 - |
(ii) 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 Series C Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of Series C Preferred following such Fundamental Transaction.
(iii) 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 Series C Holders new preferred stock consistent with the foregoing provisions and evidencing the Series C Holders’ right to convert such preferred stock into Alternate Consideration.
(iv) 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 pursuant to written agreements in form and substance reasonably satisfactory to the Series C Holders and approved by the Series C Holders (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of any Series C Holder of Series C Preferred, deliver to any Series C Holder, in exchange for Series C Preferred, a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Series C Preferred 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 Series C Preferred (without regard to any limitations on the conversion of the Series C Preferred) prior to such Fundamental Transaction, and which is reasonably satisfactory in form and substance to such Series C Holder.
(v) Upon the occurrence of any such Fundamental Transaction, the Successor Entity (A) shall succeed to, and be substituted for the Corporation (so that from and after the date of such Fundamental Transaction the provisions of this Certificate of Designation referring to the “Corporation” shall refer instead to the Successor Entity), (B) may exercise every right and power of the Corporation, and (C) shall assume all of the obligations of the Corporation under this Certificate of Designation with the same effect as if such Successor Entity had been named as the Corporation herein.
| - 12 - |
(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 Series C Holders.
(i) Notice of Certain Adjustments. Whenever an adjustment is made pursuant to any provision of this Section 7, the Corporation shall promptly deliver to each Series C Holder, by email, a notice setting forth a brief statement of such adjustment and the facts requiring such adjustment.
(ii) Notice to Allow Conversion by Series C Holder. If (A) the Corporation declares a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Corporation declares a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Corporation authorizes 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 is 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 authorizes the voluntary or involuntary dissolution, liquidation, or winding-up of the affairs of the Corporation, then, in each case, the Corporation shall, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, (I) cause to be filed at each office or agency maintained for the purpose of conversion of the Series C Preferred, and (II) cause to be delivered by email to each Series C Holder at its last email address as it appears on the stock books of the Corporation, 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 (z) the date as of which it is expected that holders of the Common Stock of record are 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 Subsidiary, the Corporation shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
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(iii) The Series C Holder shall remain entitled to convert the Series C Preferred 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. Miscellaneous.
(a) Notices. Any and all notices or other communications or deliveries to be provided by the Series C Holders hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by e-mail attachment, or sent by a nationally recognized overnight courier service, addressed to the Corporation, at 300 E. Long Lake Road, Suite 100A, Bloomfield Hills, Michigan 48304, email at [email protected] or at such other physical address or e-mail address as the Corporation may specify for such purposes by notice to the Series C 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 e-mail attachment, or sent by a nationally recognized overnight courier service addressed to each Series C Holder at the e-mail address, or address of such Series C Holder appearing on the books of the Corporation. Any notice or other communication or deliveries hereunder are deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section 8 prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication is delivered via e-mail attachment at the e-mail address set forth in this Section 8 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.
(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 Series C Preferred at the time, place, and rate, and in the coin or currency, herein prescribed.
(c) Lost or Mutilated Series C Preferred Certificate. If a Series C Holder’s Series C Preferred certificate is 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 Series C Preferred 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 (which shall not include the posting of any bond).
(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 Nevada, without regard to the principles of conflict of laws thereof. The Corporation and each Series C Holder 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 the Corporation or any Series C Holder commences 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 Series C 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 Series C Holder. The failure of the Corporation or a Series C 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 Series C 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 Series C Holder must be in writing.
(f) Severability. If any provision of this Certificate of Designation is determined to be 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, this Certificate of Designation shall nevertheless remain applicable to all other Persons and circumstances.
(g) Next Business Day. Whenever any payment or other obligation hereunder is 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. If any shares of Series C Preferred 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 C Convertible Preferred Stock.
The undersigned declares, under penalty of perjury under the laws of the State of Nevada, that the matters set forth in this Certificate of Designation are true and correct to the knowledge of the undersigned. The undersigned hereby signs this Certificate of Designation on March 6, 2025.
| /s/ Glen Miller | |
| Glen Miller, President | |
| /s/ Michael Jansen | |
| Michael Jansen, Secretary |
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NOTICE OF CONVERSION
(To be Executed by the Registered Series C Holder in order to Convert Shares of Series C Preferred)
The undersigned hereby elects to convert the number of shares of Series C Convertible Preferred indicated below into shares of common stock, par value $0.0001 per share (the “Common Stock”), of Titan Environmental Solutions Inc. a Nevada 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. No fee will be charged to the Series C Holder for any conversion, except for any such transfer taxes.
Conversion calculations:
Date to Effect Conversion: __________________________________________________________________
Number of shares of Series C Convertible Preferred owned prior to Conversion: __________________________
Number of shares of Series C Convertible Preferred to be Converted: __________________________________
Number of shares of Common Stock to be Issued: _________________________________________________
Number of shares of Series C Convertible Preferred subsequent to Conversion: ___________________________
| Address for Delivery: | |||
| SERIES C HOLDER | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit 10.1
SUBSCRIPTION AGREEMENT
in connection with
Titan Environmental Solutions, Inc.
875,000 Shares
Series C Convertible Preferred Stock
February 21, 2025
INSTRUCTIONS TO SUBSCRIPTION AGREEMENT
NAME OF SUBSCRIBER: ____________________________________________________________
SECURITIES OFFERED: Up to 875,000 shares of Series C Convertible Preferred Stock, par value $0.0001 per share, of Titan Environmental Solutions, Inc., a Nevada corporation (the “Company”).
| To: | Titan Environmental Solutions, Inc. | ||
| 300 E. Long Lake Road, Suite 100A | |||
| Bloomfield Hills, Michigan 48304 | |||
| Attention: | Glen Miller | ||
| Chief Executive Officer | |||
IMPORTANT INSTRUCTIONS FOR COMPLETION:
| 1. | COMPLETE YOUR NAME ABOVE; and |
| 2. | PROVIDE THE NUMBER OF SHARES TO BE PURCHASED AND ALL INFORMATION REQUESTED ON PAGES 11 AND 12, AND COMPLETE THE INVESTOR QUESTIONNAIRE ATTACHED AS ANNEX A; and |
| 3. | SIGN THE AGREEMENT IN THE APPROPRIATE PLACE ON PAGE 11 AND IN THE APPROPRIATE PLACES ON PAGE A-4 OF ANNEX A; and |
| 4. | WIRE TRANSFER PAYMENT PURSUANT TO PARAGRAPH 7 BELOW; and |
| 5. | EMAIL A COPY OF YOUR PHOTO IDENTIFICATION (FOR EXAMPLE, IN THE CASE OF AN INDIVIDUAL, AN UNEXPIRED GOVERNMENT ISSUED IDENTIFICATION EVIDENCING NATIONALITY OR RESIDENCE AND BEARING A PHOTOGRAPH OR SIMILAR SAFEGUARD OR, IN THE CASE OF A CORPORATION OR OTHER ENTITY, CORPORATE OR OTHER ORGANIZATIONAL DOCUMENTS AND EVIDENCE THAT THE PERSON SIGNING HAS FULL AUTHORITY TO EXECUTE AND DELIVER THIS AGREEMENT ON BEHALF OF THE ENTITY) TO [email protected]; and |
| 6. | PLEASE EXECUTE THIS SUBSCRIPTION AGREEMENT VIA DOCUSIGN OR DELIVER THE ORIGINAL SUBSCRIPTION AGREEMENT TO THE FOLLOWING ADDRESS: |
| Titan Environmental Solutions, Inc. | |||
| 300 E. Long Lake Road, Suite 100A | |||
| Bloomfield Hills, Michigan 48304 | |||
| Attention: | Glen Miller | ||
| Chief Executive Officer | |||
| E-Mail: [email protected] | |||
| i |
| 7. | WIRE TRANSFER PAYMENT TO THE COMPANY AS FOLLOWS: |
| Bank Name: | Wells Fargo Bank | ||
| Bank Address: | 296 116th Avenue NE, Ste A2 | ||
| Bellevue, WA, 98004 | |||
| Phone: (425) 462-5517 | |||
| Domestic Wire Routing/ABA: | 121000248 | ||
| Bank Transit ABA Routing Number: | 125008547 (for ACH) | ||
| International Wire Swift/BICt: | WFBIUS6S | ||
| Beneficiary Account Name: | Titan Environmental Solutions, Inc. | ||
| Beneficiary Account Number: | 7271752771 (Checking) | ||
| Beneficiary Address: | 300 E. Long Lake Road, Suite 100A | ||
| Bloomfield Hills, Michigan 48304 |
| ii |
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the “Agreement”) is executed by the undersigned (the “Subscriber”) in connection with the offering (the “Offering”) by Titan Environmental Solutions, Inc., a Nevada corporation (the “Company”), of up to 875,000 shares (the “Shares”) of Series C Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), of the Company at a purchase price of $2.00 per share. The terms of the Series C Preferred Stock are set forth in the Certificate of Designation of the Preferences of the Series C Convertible Preferred Stock set forth in Addendum A attached hereto (the “Certificate of Designation”).
SECTION 1
| 1.1 | Subscription. The Subscriber, intending to be legally bound, hereby irrevocably subscribes for and agrees to purchase the number of Shares indicated on Page 11 hereof, on the terms and conditions described herein. |
| 1.2 | Purchase. The Subscriber understands and acknowledges that the purchase price to be remitted to the Company for the purchase of the Shares shall be $2.00 per Share with a minimum subscription amount of $250,000. |
| 1.3 | Payment for Purchase. PAYMENT FOR THE SHARES SHALL BE BY WIRE TRANSFER pursuant to the instructions below. Please execute this Agreement using DocuSign or an original executed copy of this Agreement should be mailed to the Company at 300 E. Long Lake Road, Suite 100A, Bloomfield Hills, Michigan 48304 Attention: Glen Miller, or e-mailed to the Company at [email protected]. |
Wire transfer payment shall be made as follows:
| Bank Name: | Wells Fargo Bank | ||
| Bank Address: | 296 116th Avenue NE, Ste A2 | ||
| Bellevue, WA, 98004 | |||
| Phone: (425) 462-5517 | |||
| Domestic Wire Routing/ABA: | 121000248 | ||
| Bank Transit ABA Routing Number: | 125008547 (for ACH) | ||
| International Wire Swift/BICt: | WFBIUS6S | ||
| Beneficiary Account Name: | Titan Environmental Solutions, Inc. | ||
| Beneficiary Account Number: | 7271752771 (Checking) | ||
| Beneficiary Address: | 300 E. Long Lake Road, Suite 100A | ||
| Bloomfield Hills, Michigan 48304 |
SECTION 2
| 2. | Acceptance or Rejection. |
| (a) | The Subscriber understands and agrees that the Company reserves the right to reject this subscription for Shares in whole or in part in any order, if, in its reasonable judgment, it deems such action in the best interest of the Company, notwithstanding prior receipt by the Subscriber of notice of acceptance of the Subscriber’s subscription. | |
| (b) | In the event of rejection of this subscription, or in the event the sale of the Shares is not consummated by the Company for any reason (in which event this Agreement shall be deemed to be rejected), this Agreement and any other agreement entered into between the Subscriber and the Company relating to this subscription shall thereafter have no force or effect and the Company shall promptly return or cause to be returned to the Subscriber the purchase price remitted to the Company by the Subscriber in exchange for the Shares. |
SECTION 3
| 3. | Subscriber Representations and Warranties. The Subscriber hereby acknowledges, represents and warrants to, and agrees with, the Company and its affiliates as follows as of the effective date of this Agreement: |
| (a) | The Subscriber is acquiring the Shares for the Subscriber’s own account as principal, not as a nominee or agent, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof in whole or in part. Further, the Subscriber does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Shares. | |
| (b) | The Subscriber acknowledges the Subscriber’s understanding that the offering and sale of the Shares is intended to be exempt from registration under the Securities Act by virtue of Section 3(b) of the Securities Act of 1933, as amended (the “Securities Act”), and the provisions of Regulation D promulgated thereunder (“Regulation D”). In furtherance thereof, the Subscriber represents and warrants to and agrees with the Company and its affiliates as follows: |
| (i) | The Subscriber realizes that the basis for the Regulation D exemption may not be present, if, notwithstanding such representations, the Subscriber has in mind merely acquiring any of the Shares for a fixed or determinable period in the future, or for a market rise, or for sale if the market does not rise. The Subscriber does not have any such intentions; | |
| (ii) | The Subscriber has the financial ability to bear the economic risk of the Subscriber’s investment, has adequate means for providing for the Subscriber’s current needs and personal contingencies and has no need for liquidity with respect to the Subscriber’s investment in the Company; and | |
| (iii) | The Subscriber has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the prospective investment. If other than an individual, the Subscriber also represents it has not been organized for the purpose of acquiring the Shares. |
| 2 |
| (c) | The Subscriber represents and warrants to the Company as follows: |
| (i) | The Subscriber is 21 years of age or over; if a corporation, trust, company, partnership, unincorporated association or other entity, such Subscriber is authorized, empowered, and qualified to execute and deliver this Agreement and other transaction documents to which such Subscriber is a party and to purchase and hold the Shares pursuant hereto; and | |
| (ii) | The Subscriber understands that the net proceeds to the Company from the sale of the Shares will be used to pay certain outstanding payables of the Company and for working capital purposes; and | |
| (iii) | The Subscriber has been given the opportunity for a reasonable time prior to the date hereof to (a) review the risk factors relating to the Company and its business set forth in the Company’s registration statement on Form S-1 (Registration No. 333-275136) (the “Registration Statement”), (b) review the Certificate of Designation of Series C Convertible Preferred Stock set forth in Addendum A hereto and (c) to ask questions of, and receive answers from, the Company or its representatives concerning the terms and conditions of the Offering, and other matters pertaining to this investment, and has been given the opportunity for a reasonable time prior to the date hereof to obtain such additional information in connection with the Company in order for the Subscriber to evaluate the merits and risks of purchase of the Shares to the extent the Company possesses such information or can acquire it without unreasonable effort or expense; and | |
| (iv) | The Subscriber is not relying upon any oral representation or oral information in connection with the offering of the Shares; and | |
| (v) | The Subscriber has determined that the Shares are a suitable investment for the Subscriber and that at this time the Subscriber can bear a complete loss of the Subscriber’s investment; and | |
| (vi) | The Subscriber is not relying on the Company or its affiliates with respect to economic considerations involved in this investment; and | |
| (vii) | The Subscriber realizes that it may not be able to resell readily any of the Shares purchased hereunder, or the shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), issuable upon conversion of such Shares, because (A) there may only be a limited market, if any exists, for any of the Shares or such shares of Common Stock and (B) none of the Shares or the shares of Common Stock issuable upon conversion of the Shares has been registered under the “blue sky” laws; and | |
| (viii) | The Subscriber understands that the Company has the absolute right to refuse to consent to the transfer or assignment of the Shares or the shares of Common Stock issuable upon conversion of the Shares if such transfer or assignment does not comply with applicable state and federal securities laws; and |
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| (ix) | No representations or warranties have been made to the Subscriber by the Company, or any officer, employee, agent, affiliate or subsidiary of the Company, other than the representations of the Company in this Agreement; and | |
| (x) | Any information which the Subscriber has heretofore furnished to the Company with respect to the Subscriber’s financial position and business experience is correct and complete as of the date of this Agreement; and |
The foregoing representations, warranties and agreements shall survive the sale of the Shares and acceptance by the Company of the Subscriber’s subscription for a period not to exceed one year.
| (d) | The Subscriber hereby represents that none of the “Bad Actor” disqualifying events described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”) is applicable to the Subscriber or any of its Rule 506(d) Related Parties (as defined below), except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable. The Subscriber hereby agrees that it shall notify the Company promptly in writing in the event a Disqualification Event becomes applicable to the Subscriber or any of its Rule 506(d) Related Parties, except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable. For purposes of this paragraph (d), “Rule 506(d) Related Party” shall mean a person or entity that is a beneficial owner of the Subscriber’s securities for purposes of Rule 506(d) of the Act. | |
| (e) | Confidential Treatment. |
| (i) | The Subscriber acknowledges that it may receive Confidential Information (as defined below) of significant value to the Company in connection with the purchase and ownership of the Shares. The Subscriber shall at all times keep documents or other materials containing Confidential Information in a secure place, shall not use the Confidential Information for any purpose other than the evaluation of its investment in the Company, except as otherwise agreed to in a writing signed by the Company, and shall not disclose any of the Confidential Information in any manner whatsoever, in whole or in part, to any person for any reason or purpose whatsoever except (A) if such Subscriber is required by a court of competent jurisdiction to so disclose after notice has been given to the Company and the Company has had an opportunity to oppose such disclosure or seek a protective order to the extent practicable, or (B) to employees, attorneys and representatives of such Subscriber, if any, who need to know such information in connection with such Subscriber’s investment in the Company (“Necessary Agents”), provided that the Subscriber shall have informed each such Necessary Agent of the confidential nature of such information and obtained their agreement (the “Necessary Agent Confidentiality Agreement”) to hold all Confidential Information in strict confidence and not to use it for any purpose other than as permitted hereunder and shall ensure the performance by each Necessary Agent of such Necessary Agent Confidentiality Agreement. | |
| (ii) | “Confidential Information” means any and all information provided to the Subscriber by or on behalf of the Company in connection with the purchase and ownership of the Shares or otherwise, except for information that the Subscriber can establish (A) is generally known to the public other than as a result of the breach by the Subscriber or any Affiliate of the Subscriber of an obligation of confidentiality to the Company, (B) was known by the Subscriber (as evidenced by written records) prior to its receipt by the Subscriber from the Company or (C) was disclosed to the Subscriber by a third party under no obligation of confidence. |
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| (f) | Anti-Terrorism and Money Laundering Activities. |
| (i) | The Subscriber acknowledges that the Company is required by U.S. Federal law to obtain, verify and record information that identifies each person or entity who subscribes to purchase the Shares. The Subscriber acknowledges and agrees that it will furnish to the Company upon request a copy of the Subscriber’s identifying documents that will assist the Company to properly identify the Subscriber as required by U.S. Federal law. Such documents may include, without limitation, in the case of an individual, the Subscriber’s driver’s license, passport or other appropriate identifying documents or, in the case of a corporation, partnership or other entity, evidence of the authority of the person executing this Agreement on behalf of such entity that such person has full authority to execute and deliver this Agreement on behalf of such entity and otherwise to act on behalf of such entity in connection with such entity’s subscription for the Shares. | |
| (ii) | The Subscriber is not an individual, corporation, partnership, joint venture, association, joint stock company, trust, trustee, estate, company, unincorporated organization, real estate investment trust, government or any agency or political subdivision thereof, or any other form of entity (collectively, a “Person”) with whom a United States citizen, entity organized under the laws of the United States or its territories or entity having its principal place of business within the United States or any of its territories (collectively, a “U.S. Person”), is prohibited from transacting business of the type contemplated by this Agreement, whether such prohibition arises under United States law, regulation, executive orders and lists published by the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) (including those executive orders and lists published by OFAC with respect to Persons that have been designated by executive order or by the sanction regulations of OFAC as Persons with whom U.S. Persons may not transact business or must limit their interactions to types approved by OFAC, such Persons, “Specially Designated Nationals and Blocked Persons”) or otherwise. Neither the Subscriber nor any Person who owns an interest in the Subscriber is a Person with whom a U.S. Person, including a United States financial institution as defined in 31 U.S.C. 5312, as periodically amended, is prohibited from transacting business of the type contemplated by this Agreement, whether such prohibition arises under United States law, regulation, executive orders and lists published by OFAC (including those executive orders and lists published by OFAC with respect to Specially Designated Nationals and Blocked Persons) or otherwise. |
SECTION 4
The Company represents and warrants to the Subscriber as follows:
| 4.1 | Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has all requisite power and authority to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on the business or properties of the Company and its subsidiaries taken as a whole. To its knowledge, the Company is not the subject of any pending or threatened investigation or administrative or legal proceeding by the Internal Revenue Service, the taxing authorities of any state or local jurisdiction, the Securities and Exchange Commission or the securities agency or commission of any state or local jurisdiction that has not been disclosed. |
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| 4.2 | Authorization. All corporate action on the part of the Company and its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder and the authorization, issuance (or reservation for issuance) and delivery of the Shares being sold hereunder, and the shares of Common Stock issuable upon conversion of such Shares, have been taken, and this Agreement constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms. |
| 4.3 | Valid Issuance of Shares. The Shares, when issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, and the shares of Common Stock issuable upon conversion of such Shares, when issued, sold and delivered in accordance with the terms of the Shares upon the valid conversion of the Shares in accordance with the terms thereof, will be validly issued, and, based in part upon the representations of the Subscriber in this Agreement, will be issued in compliance with all applicable U.S. federal and state securities laws. |
| 4.4 | Selling Efforts in Regard to this Transaction. The Offering is not part of a plan or scheme to evade the registration provisions of the Securities Act. Neither the Company nor any person or entity acting on behalf of the Company has offered or sold any of the Shares to be issued pursuant to this Agreement by any form of general solicitation or general advertising. The Company has offered the Shares for sale only to each Subscriber in this Offering and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act. |
| 4.5 | No Conflicts. The execution and delivery of this Agreement and the consummation of the issuance of the Shares and the transactions contemplated by this Agreement do not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under, the Company’s certificate of incorporation and bylaws, or any indenture, mortgage, deed of trust or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, or any existing applicable decree, judgment or order of any court, Federal or State regulatory body, administrative agency or other governmental body having jurisdiction over the Company or any of its properties or assets. |
| 4.6 | Compliance with Laws. As of the date hereof, the conduct of the business of the Company complies in all material respects with all material statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable thereto. The Company has not received notice of any alleged violation of any statute, law, regulations, ordinance, rule, judgment, order or decree from any governmental authority. The Company shall comply with all applicable securities laws, including without limitation those under Regulation D, with respect to the sale of the Shares. |
| 4.7 | Litigation. Except as disclosed in the Registration Statement, there is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending or, to the knowledge of the Company, threatened, against or affecting the Company, or any of its properties, which could reasonably be expected to result in any material adverse change in the business, financial condition or results of operations of the Company, or which could reasonably be expected to materially and adversely affect the properties or assets of the Company. |
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SECTION 5
| 5.1 | Make Whole Issuance of Additional Shares. It is the intention of the Company and the Subscriber that the purchase price for the Shares subscribed for hereunder be an amount equal to the lesser of (i) $2.00 per share and (ii) the quotient of (a) the product of (x) the price per share at which the Common Stock is sold by the Company in its public offering of shares of Common Stock on the terms set forth in the Registration Statement (the “Public Offering”), multiplied by (y) 40, divided by (b) 100, assuming a reverse stock split at a ratio of 1:100 to take place at or prior to the closing of the Public Offering, with corresponding adjustment to be made if the actual ratio implemented by the Company is different (such quotient, the “Alternate Price”). If the Alternate Price is less than $2.00, then the Company shall issue to the Subscriber within five (5) business days of the date of the closing of the Public Offering a number of additional Shares equal to the difference between (A) the number of Shares that could have been purchased in this offering with the Subscriber’s subscription amount, as set forth on the signature page hereof, at a purchase price per Share equal to the Alternate Price, less (B) the number of Shares to be issued to the Subscriber hereunder. |
| 5.2 | Additional Securities Issuances. So long as any of the Shares subscribed for hereunder remain outstanding, without the prior written consent of the Subscriber, the Company shall not issue any indebtedness for money borrowed or Common Stock Equivalents (as defined in the Certificate of Designation) that has a variable conversion rate or enter into any transaction for merchant cash advances. |
| 5.3 | Participation in Future Financing. |
| (a) | From the date hereof until the date that is the later of (i) the date on which no Shares subscribed for hereunder are outstanding and (ii) the 18-month anniversary of the Original Issue Date (as defined in the Certificate of Designation), upon any issuance by the Company or any of its Subsidiaries of Common Stock, Common Stock Equivalents for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”), the Subscriber shall have the right to participate in such Subsequent Financing in an amount up to an amount equal to the Subscriber’s Subscription Amount, or if the amount of the Subsequent Financing is less than the aggregate subscription amounts of all of the subscribers for Shares, the Subscriber’s Pro Rata Portion (as defined below) (such amount, the “Participation Maximum”), on the same terms, conditions and price provided for in the Subsequent Financing. | |
| (b) | At least three (3) Trading Days (as defined in the Certificate of Designation) prior to the closing of the Subsequent Financing, the Company shall deliver to the Subscriber a written notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask the Subscriber if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”). Upon the request of the Subscriber, and only upon a request by the Subscriber, for a Subsequent Financing Notice, the Company shall promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to the Subscriber. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment. |
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| (c) | If the Subscriber desires to participate in such Subsequent Financing, the Subscriber must provide written notice to the Company by not later than 5:30 p.m. (New York City time) on the second (2nd) Trading Day after the Subscriber has received the Pre-Notice that the Subscriber is willing to participate in the Subsequent Financing, the amount of the Subscriber’s participation, and representing and warranting that the Subscriber has such funds ready, willing and available for investment on the terms set forth in the Subsequent Financing Notice. If the Company receives no such notice from the Subscriber as of such second (2nd) Trading Day, the Subscriber shall be deemed to have notified the Company that it does not elect to participate. | |
| (d) | If by 5:30 p.m. (New York City time) on the second (2nd) Trading Day after all of the eligible purchasers of Shares have received the Pre-Notice, notifications by the Subscriber and such other eligible purchasers of Shares of their willingness to participate in the Subsequent Financing (or to cause their designees to participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may consummate the remaining portion of such Subsequent Financing on the terms set forth in the Subsequent Financing Notice. | |
| (e) | If by 5:30 p.m. (New York City time) on the second (2nd) Trading Day after all of the eligible purchasers of Shares have received the Pre-Notice, the Company receives responses to a Subsequent Financing Notice from such eligible purchasers seeking to purchase more than the aggregate amount of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the Participation Maximum. “Pro Rata Portion” means the ratio of (x) the subscription amount of Shares purchased by a purchaser of Shares participating under this Section 5.3 and (y) the sum of the aggregate subscription amounts of Shares purchased by all eligible purchasers of Shares participating under this Section 5.3. | |
| (f) | The Company must provide the Subscriber with a second Subsequent Financing Notice, and the Subscriber will again have the right of participation set forth above in this Section 5.3, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within sixty (60) Trading Days after the date of the initial Subsequent Financing Notice. | |
| (g) | The Company and the Subscriber agree that if the Subscriber elects to participate in the Subsequent Financing, the transaction documents related to the Subsequent Financing shall not include any term or provision whereby the Subscriber shall be required to agree to any restrictions on trading as to any of the Shares purchased hereunder, or any shares of Common Stock underlying such Shares, or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written consent of the Subscriber. | |
| (h) | Notwithstanding anything to the contrary in this Section 5.3 and unless otherwise agreed to by the Subscriber, the Company shall either confirm in writing to the Subscriber that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that the Subscriber will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery of the Subsequent Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction with respect to the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received by the Subscriber, such transaction shall be deemed to have been abandoned and the Subscriber shall not be deemed to be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries. | |
| (i) | Notwithstanding the foregoing, this Section 5.3 shall not apply in respect of an Exempt Issuance (as defined in the Certificate of Designation) or the offering of Common Stock contemplated by the Registration Statement. |
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| 5.4 | Exchange Right. Notwithstanding anything herein to the contrary, if the Company or any of its Subsidiaries consummates any Subsequent Placement (other than with respect to an Exempt Issuance), and the Subscriber elects in writing to the Company to participate in such Subsequent Placement, the Subscriber may, at the option of the Subscriber as elected in writing to the Company, exchange all, or any part, of the Shares subscribed for hereunder into the securities in such Subsequent Placement (with the aggregate amount of such securities to be issued in such exchange equal to such aggregate Stated Amount (as defined in the Certificate of Designation) of the Shares to be exchanged; provided, however, that if any such exchange of Shares of the Subscriber or of any other subscriber for Shares would cause the Company to be in violation of any of the rules or regulations of any stock exchange on which the Common Stock is then listed, the Company shall not be required to effect any such exchange of Shares for the securities in such Subsequent Placement. For purposes of this Section 5.4, the term “Subsequent Placement” means any direct, or indirect, issuance, offer, sale, grant of any option or right to purchase, or other disposition of (or announcement of any issuance, offer, sale, grant of any option or right to purchase or other disposition of) any equity security or any equity-linked or related security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act), any convertible securities, any debt, any preferred stock or any purchase rights) by the Company or any of its Subsidiaries. |
| 5.5 | Indemnity. (a) The Subscriber agrees to indemnify and hold harmless the Company, its officers and directors, employees and its affiliates and each other person, if any, who controls any thereof, against any loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any false representation or warranty or breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or in any other document furnished by the Subscriber to any of the foregoing in connection with this transaction. |
| (b) | The Company agrees to indemnify and hold harmless the Subscriber, its officers and directors, employees and its affiliates and each other person, if any, who controls any thereof, against any loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any false representation or warranty or breach or failure by the Company to comply with any covenant or agreement made by the Company herein or in any other document furnished by the Company to any of the foregoing in connection with this transaction. |
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| 5.6 | Modification. Neither this Agreement nor any provisions hereof shall be waived, amended, modified, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, amendment, modification, discharge or termination is sought. |
| 5.7 | Notices. Any notices, consents or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered and received: (i) upon receipt when delivered personally; (ii) upon receipt when sent by email (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one business day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses for such communications shall be as set forth on the signature page hereto. |
| 5.8 | Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature or signature delivered by e-mail in a “.pdf” format data file, including any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com, www.echosign.adobe.com, etc., shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original signature. |
| 5.9 | Binding Effect. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives and assigns. If the Subscriber is more than one person, the obligation of the Subscriber shall be joint and several and the agreements, representations, warranties and acknowledgments herein contained shall be deemed to be made by and be binding upon each such person and his heirs, executors, administrators and successors. |
| 5.10 | Entire Agreement. The Exhibit and Addendums attached hereto are hereby incorporated herein by reference. This Agreement together with the Annex, Exhibit, and Addendums contains the entire agreement of the parties and there are no representations, covenants or other agreements except as stated or referred to herein. |
| 5.11 | Assignability. This Agreement is not transferable or assignable by the Subscriber except as may be provided herein. |
| 5.12 | Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. |
| 5.13 | Amendments. The provisions of this Agreement may be amended at any time and from time to time, and particular provisions of this Agreement may be waived, with and only with an agreement or consent in writing signed by the Company and the Subscriber. |
| 5.14 | Neutral Gender. The use in this Agreement of words in the male, female or neutral gender are for convenience only and shall not affect or control any provisions of this Agreement. |
| 5.15 | Captions. The Section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. |
[Remainder of page intentionally left blank]
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SIGNATURE PAGE
By execution and delivery of this signature page, the Subscriber is (a) agreeing to become a Subscriber for the number of Shares set forth below, (b) acknowledging that the Subscriber has read the representations and warranties in Section 3 of this Subscription Agreement, and (c) hereby representing that the statements contained in Section 3 of this Subscription Agreement are complete and accurate with respect to the Subscriber as a subscriber for the Shares.
| A. | SUBSCRIPTION: |
Number of Shares: 125,000 X $2.00 = $250,000.
| B. | TITLE: |
PLEASE GIVE THE EXACT AND COMPLETE NAME IN WHICH TITLE TO THE SHARES ARE TO BE HELD:
| C. | MANNER IN WHICH TITLE IS TO BE HELD (Please check One): |
| 1. | ☐ | Individual | 7. | ☐ | Trust/Estate/Pension or Profit Sharing Plan, and Date Opened: _________________ | |
| 2. | ☐ | Joint Tenants with Rights of Survivorship | 8. | ☐ | As a Custodian for _____________________________ UGMA ____________ (State) | |
| 3. | ☐ | Community Property | 9. | ☐ | Married with Separate Property | |
| 4. | ☐ | Tenants in Common | 10. | ☐ | Keogh | |
| 5. | ☐ | Corporation/Partnership | 11. | ☐ | Tenants by the Entirety | |
| 6. | ☐ | IRA | 12. | ☐ | Other _________________ |
| D. | ACCREDITED INVESTOR REPRESENTATION: |
Subscriber must complete and sign the Accredited Investor Questionnaire attached as Annex A to this Agreement.
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IN WITNESS WHEREOF, the Subscriber has executed this Agreement effective as of February ____, 2025.
Signature: ______________________________ Signature: ______________________________
Name: _________________________________ Name: _________________________________
Title (if applicable) __________________________________________________________________________
Street Address: __________________________________________________________________________
City: ________________________________ State: _________________ Zip: __________________
Telephone: __________________________________________________________________________
Email Address: _______________________________________________________________________
Social Security or Federal Tax ID No:
__________________________________________________________________________
***DO NOT WRITE BELOW DOTTED LINE***
ACCEPTED ON BEHALF OF THE COMPANY:
Titan Environmental Solutions, Inc.
| By: | No. of Shares: ________________ | ||
| Name: | Glen Miller | ||
| Title: | Chief Executive Officer |
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Annex A
ACCREDITED INVESTOR QUESTIONNAIRE
| A | APPLICABLE TO INDIVIDUALS ONLY. Please review the following categories concerning your possible financial condition as an “accredited investor” (within the meaning of Rule 501 of Regulation D) and check the box(es) of the categories applicable to you. If the Subscriber is more than one individual, each individual must check the applicable box(es), indicating to which individual it applies. The Subscriber must check at least one box below to be considered an “accredited investor.” If the Subscriber is purchasing jointly with his or her spouse or spousal equivalent, one box may be checked for the couple as a whole. References to “the Company” are references to Titan Environmental Solutions, Inc., a Nevada corporation. |
| ☐ | Individual with Net Worth In Excess of $1.0 Million. A natural person (not an entity) whose net worth, or joint net worth with his or her spouse or spousal equivalent1, at the time of purchase exceeds $1,000,000. (Explanation: In calculating your net worth, you must exclude the value of your primary residence. This means you must exclude both the equity in your primary residence and any mortgage or other debt secured by your primary residence up to the fair market value of your primary residence; provided, however, that any indebtedness secured by your primary residence that (i) you have incurred in the 60 day period prior to the date hereof or (ii) is in excess of the fair market value of your primary residence should be considered a liability and deducted from your aggregate net worth. In calculating your net worth, you may include your equity in personal property and real estate (excluding your primary residence), cash, short-term investments, stock and securities. Your inclusion of equity in personal property and real estate (excluding your primary residence) should be based on the fair market value of such property less debt secured by such property. Joint net worth can be the aggregate net worth of the investor and spouse or spousal equivalent; assets need not be held jointly to be included in the calculation. Securities need not be purchased jointly.) | |
| ☐ | Individual with a $200,000 Individual Annual Income. A natural person (not an entity) who had an individual income of more than $200,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year. | |
| ☐ | Individual with a $300,000 Joint Annual Income. A natural person (not an entity) who had joint income with his or her spouse or spousal equivalent in excess of $300,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year. | |
| ☐ | Individual with Professional Certification. A natural person holding in good standing one or more of the following professional certifications or designations or credentials (check all that apply): |
| ☐ | Licensed General Securities Representative (Series 7); | |
| ☐ | Licensed Investment Adviser Representative (Series 65); or | |
| ☐ | Licensed Private Securities Offerings Representative (Series 82). |
1“Spousal equivalent” means a cohabitant occupying a relationship generally equivalent to that of a spouse.
| Annex A-1 |
| ☐ | Knowledgeable Employee. A natural person who is (i) an executive officer, director, trustee, general partner, advisory board member, or person serving in a similar capacity, of the Company or an affiliated person that manages the investment activities of the Company (an “Affiliated Management Person”) of the Company; or (ii) an employee of the Company or an Affiliated Management Person of the Company (other than an employee performing solely clerical, secretarial or administrative functions with regard to such company or its investments) who, in connection with his or her regular functions or duties, participates in the investment activities of the Company, provided that such employee has been performing such functions and duties for or on behalf of the Company or the Affiliated Management Person of the Company, or substantially similar functions or duties for or on behalf of another company for at least 12 months. | |
| ☐ | Executive Officer or Director. A natural person who is an executive officer or director of the Company. |
| B. | APPLICABLE TO CORPORATIONS, PARTNERSHIPS AND OTHER ENTITIES ONLY: |
The Subscriber is an accredited investor because the Subscriber falls within at least one of the following categories (Check all appropriate boxes):
| ☐ | Corporations or Partnerships. A corporation, partnership, or similar entity that has at least $5,000,000 of assets and was not formed for the specific purpose of acquiring an equity interest in the Company. | |
| ☐ | Massachusetts or Similar Business Trust. A Massachusetts or similar business trust that has at least $5,000,000 of assets and was not formed for the specific purpose of acquiring an equity interest in the Company. | |
| ☐ | Non-Profit Entity. An organization described in section 501(c)(3) of the Internal Revenue Code, as amended, that has at least $5,000,000 of assets and was not formed for the specific purpose of acquiring an equity interest in the Company. | |
| ☐ | ERISA Employee Benefit Plan. An employee benefit plan within the meaning of Title I of the ERISA Act that either: (i) has a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser and such plan fiduciary makes the investment decisions for the plan; (ii) has total assets in excess of $5,000,000; or (iii) is self-directed solely by persons that are accredited investors and make the investment decisions for the benefit plan. | |
| ☐ | Government Benefit Plan. A plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000. |
| Annex A-2 |
| ☐ | Other Institutional Investor (check one). |
| ☐ | A bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; | |
| ☐ | A broker-dealer registered under the Securities Exchange Act of 1934, as amended; | |
| ☐ | An insurance company, as defined in Section 2(a)(13) of the Securities Act; | |
| ☐ | An investment company registered under the Investment Company Act of 1940. | |
| ☐ | A “business development company,” as defined in Section 2(a)(48) of the Investment Company Act of 1940; | |
| ☐ | A small business investment company licensed under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended; or | |
| ☐ | A “private business development company” as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended. |
| ☐ | Sophisticated Trust. Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person who has the knowledge and experience in financial and business matters to enable the person to evaluate the merits and risks of the prospective investment. | |
| ☐ | Entity Owned Entirely By Accredited Investors. A corporation, partnership, private investment company or similar entity each of whose equity owners is a natural person who is an accredited investor. (If this category is checked, please also check the additional category or categories under which each natural person qualifies as an accredited investor.) | |
| ☐ | Family Office or Family Client. A “family office” or “family client” each as defined in Rule 202(a)(11)(G)-1 of the Investment Advisers Act of 1940 (i) with assets under management in excess of $5,000,000, (ii) that is not formed for the specific purpose of acquiring the securities offered, and (iii) whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment and, in the case of a family client, such family client is a client of a family office meeting the above requirements and the investment in The Company is directed by such family office. | |
| ☐ | Other Entity. Any entity, of a type not listed above, not formed for the specific purpose of acquiring the securities offered, that has total assets in excess of $5,000,000. |
Subscriber(s):
| Signature of Subscriber | Signature of Co- Subscriber (if any) | |
| Print Name of Subscriber | Print Name of Co- Subscriber |
| Annex A-3 |