INVESTOR RIGHTS AGREEMENT
INVESTOR RIGHTS AGREEMENT (this " Agreement "), dated as
of December 31, 2007, by and among T3 Motion, Inc., a Delaware
corporation (the " Company "), and
Immersive Media Corp., an Alberta, Canada corporation ("
Purchaser
").
WHEREAS:
A. In
connection with the Securities Purchase Agreement by and among
the parties hereto dated December __, 2007 (the " Securities Purchase
Agreement "), the Company, has agreed, upon the terms
and subject to the conditions set forth in the Securities
Purchase Agreement, to issue and sell to Purchaser among other
things (i) shares (the " Common Shares ")
of the Company's common stock, $0.001 par value per share
(the " Common Stock "),
and (ii) warrants (the " Warrants "), which
will be exercisable to purchase shares of Common Stock (as
exercised collectively, the " Warrant Shares
").
B.
To induce the
Purchaser to execute and deliver the Securities Purchase Agreement,
the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute
(collectively, the " 1933
Act "), and
applicable state securities laws .
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and each of the Purchaser hereby agree as
follows:
1.
Definitions
.
Capitalized
terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Securities Purchase
Agreement. As used in this Agreement, the following
terms shall have the following meanings:
a. "
Business
Day " means any day other than Saturday, Sunday or any
other day on which commercial banks in the State of California
are authorized or required by law to remain
closed.
b. "
Closing
Date " shall have the meaning set forth in the
Securities Purchase Agreement.
c. "
Effective
Date " means the date the Registration Statement has
been declared effective by the SEC.
d. "
Effectiveness
Deadline " means, with respect to the First
Registration Statement, the date which is 90 days after the
Filing Date of the First Registration Statement, or if there
is a review of such Registration Statement by the SEC, 150
days after the Filing Date of the First Registration
Statement; and with respect to the Second Registration
Statement, the date which is 90 days after the Filing Date of
the Second Registration Statement, or if there is a review of
such Registration Statement by the SEC, 150 days after the
Filing Date of the Second Registration Statement.
INVESTORS RIGHTS AGREEMENT
e. "
Filing
Date " means the date the applicable Registration
Statement has been filed with the SEC.
f. "
Filing
Deadline " means, with respect to the First
Registration Statement, 45 days after the date
hereof and, if necessary, with respect to the Second
Registration Statement, 30 days after the SEC shall permit the
registration of the remaining Registrable Securities under
Rule 415.
g. "
Investor " means a
Purchaser or any transferee or assignee thereof to whom a
Purchaser assigns its rights under this Agreement and who
agrees to become bound by the provisions of this Agreement in
accordance with Section 9 and any transferee or assignee
thereof to whom a transferee or assignee assigns its rights
under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section
9.
h. "
Person
" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department
or agency thereof.
i. "
register ," "
registered ," and
" registration "
refer to a registration effected by preparing and filing one
or more Registration Statements (as defined below) in
compliance with the 1933 Act and pursuant to Rule 415 and the
declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.
j. "
Registrable
Securities " means (i) the Common Shares,
(ii) the Warrant Shares issued or issuable upon exercise
of the Warrants, and (iii) any shares of capital stock of the
Company issued or issuable with respect to the Warrant Shares
and the Warrants as a result of any stock split, stock
dividend, recapitalization, exchange or similar event or
otherwise.
k. "
Registration
Statement " means the registration statement or
registration statements of the Company filed under the 1933
Act covering the Registrable Securities.
l. "
Required
Registration Amount " for the Registration Statement
means the sum of (i) 100% of the Common Shares issued as of
the Business Day immediately preceding the applicable date of
determination, and (ii) 100% the number of Warrant Shares
issued and issuable pursuant to the Warrants as of the
Business Day immediately preceding the applicable date of
determination; provided, however, that the 100% of the number
of the Common Shares shall be reduced to the extent necessary
in the event the SEC will not declare the Registration
Statement effective without such reduction.
INVESTORS RIGHTS AGREEMENT
m. "
Rule
415 " means Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a
continuous or delayed basis.
n. "
SEC "
means the United States Securities and Exchange
Commission.
2.
Registration
.
a.
Mandatory
Registration .
(1)
First
Registration Statement . The Company shall
prepare, and, as soon as practicable but in no event later
than the Filing Deadline, file with the SEC under the 1933
Act, a Registration Statement on Form S-1 or Form S-3 covering
the resale of all of the Registrable Securities. In
the event that Form S-1 or Form S-3 is unavailable for such a
registration, the Company shall use such other form as is
available for such a registration on another appropriate form
reasonably acceptable to the Investors.
(2)
Second
Registration Statement . In the event that the SEC has
limited the number of shares that may be registered pursuant
to Rule 415 under the First Registration Statement, the
Company shall prepare, and, as soon as practicable but in no
event later than the Filing Deadline, file with the SEC the
Registration Statement on Form S-1 or Form S-3 covering the
resale of the balance of the Required Registration
Amount. In the event that Form S-1 or Form S-3 is
unavailable for such a registration, the Company shall use
such other form as is available for such a registration on
another appropriate form reasonably acceptable to the
Investors.
(3) The
Company shall use its best efforts to have the Registration
Statement declared effective by the SEC as soon as
practicable, but in no event later than the Effectiveness
Deadline. The Company shall cause such Registration
Statement to remain at all times effective for a period of 24
months from the date of effectiveness of such Registration
Statement (“ Termination Date
”), and shall file and maintain the effectiveness of
such further Registration Statements, in accordance with the
terms hereof, as may be required to ensure that a Registration
Statement covering all Registrable Securities previously
registered on the Registration Statement that is subject to
the Termination Date and not otherwise eligible to be sold
under Rule 144(k) or any successor provision, is at all times
effective under the 1933 Act until the date that is six years
from the Closing Date.
b.
Piggyback
Registration . After the date hereof, if the
Company proposes to register (including for this purpose a
registration statement effected by the Company for
stockholders ) any of its stock or other securities under the
1933 Act (other than a registration relating solely to the
sale of securities to participants in a Company employee stock
or similar plan on Form S-8 and an exchange registration on
Form S-4) and all of the Registrable Securities are not then
subject to effective or filed registration
statements, the Company shall, at such time,
promptly give each holder of Registrable Securities written
notice of such registration. Upon the written
request of each holder of Registrable Securities given within
twenty (20) days after mailing of such notice by the Company,
the Company shall, cause in such registration to be
registered
under the 1933 Act all of the Registrable Securities that each
such holder has requested to be
registered.
INVESTORS RIGHTS AGREEMENT
3.
Related
Obligations .
At
such time as the Company is obligated to file a Registration
Statement with the SEC pursuant to Section 2(a), the Company
will use its best efforts to effect the registration of the
Registrable Securities in accordance with the intended method
of disposition thereof and, pursuant thereto, the Company
shall have the following obligations:
a. The
Company shall submit to the SEC, within two (2) Business Days
after the Company learns that no review of a particular
Registration Statement will be made by the staff of the SEC or
that the staff has no further comments on a particular
Registration Statement, as the case may be, a request for
acceleration of effectiveness of such Registration Statement
to a time and date not later than 48 hours after the
submission of such request. The Company shall
provide notice in accordance herewith to each holder of
Registrable Securities of the effectiveness of the
Registration Statement. Subject to Section 2(a)(3),
the Company shall keep each Registration Statement effective
under the 1933 Act at all times until the earlier of (i) the
date as of which the Investors may sell all of the Registrable
Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or any successor thereto)
promulgated under the 1933 Act or (ii) the date on which the
Investors shall have sold all of the Registrable Securities
covered by such Registration Statement (the " Registration
Period "). The Company shall ensure that
each Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or
necessary to make the statements therein (in the case of
prospectuses, in the light of the circumstances in which they
were made) not misleading.
b. The
Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection
with such Registration Statement, which prospectus is to be
filed pursuant to Rule 424 promulgated under the 1933 Act, as
may be necessary to keep such Registration Statement effective
at all times during the Registration Period, and, during such
period, comply with the provisions of the 1933 Act with
respect to the disposition of all Registrable Securities of
the Company covered by such Registration Statement until such
time as all of such Registrable Securities shall have been
disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in
such Registration Statement.
c. Upon
reasonable request, provide copies to and permit counsel
designated by the Investors to review each Registration
Statement and all amendments and supplements thereto prior to
their filing with the SEC and not file any document to which
such counsel reasonably objects.
d. Upon
reasonable request, the Company shall furnish to the Investors
and their legal counsel, without charge, (i) copies of any
correspondence from the SEC or the staff of the SEC to the
Company or its representatives relating to any Registration
Statement, (ii) promptly
after the same is prepared and filed with the SEC, such
reasonable number of copies of any Registration Statement and
any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, as
may be requested by an Investor, and all exhibits and (iii)
upon the effectiveness of any Registration Statement, one copy
of the prospectus included in such Registration Statement and
all amendments and supplements thereto.
INVESTORS RIGHTS AGREEMENT
e. Upon
request, the Company shall furnish to each Investor whose
Registrable Securities are included in any Registration
Statement, without charge, (i) promptly after the same is
prepared and filed with the SEC, such reasonable number of
copies of such Registration Statement and any amendment(s)
thereto, including financial statements and schedules, all
documents incorporated therein by reference, as may be
requested by an Investor, all exhibits and each preliminary
prospectus and (ii) such other documents, including
copies of any preliminary or final prospectus, as such
Investor may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities owned
by such Investor.
f. The
Company shall notify each Investor in writing of the happening
of any event, as promptly as practicable after becoming aware
of such event, as a result of which the prospectus included in
a Registration Statement, as then in effect, includes an
untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading (provided that in
no event shall such notice contain any material, non-public
information), and, promptly prepare and file a supplement or
amendment to such Registration Statement to correct such
untrue statement or omission.
g. The
Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification
of any of the Registrable Securities for sale in any
jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the
earliest possible moment and to notify each Investor who holds
Registrable Securities being sold of the issuance of such
order and the resolution thereof or its receipt of actual
notice of the initiation or threat of any proceeding for such
purpose. The Company shall provide a transfer agent
and registrar for all Registrable Securities registered
pursuant to a Registration Statement and a CUSIP number for
all such Registrable Securities, in each case not later than
the Effective Date.
h. The
Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent
applicable, facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing
the Registrable Securities to be offered pursuant to a
Registration Statement and enable such certificates to be in
such denominations or amounts, as the case may be, as the
Investors may reasonably request and registered in such names
as the Investors may request.
i. The
Company shall use its best efforts to cause the Registrable
Securities covered by a Registration Statement to be
registered with, qualified under or approved by such other
governmental agencies or authorities, including, without
limitation, under applicable state and provincial securities
laws, as may be necessary to consummate the disposition
of such Registrable Securities; provided, that, the Company
shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified, subject
the Company to any material tax in any such jurisdiction where
it is not then so subject or file a general consent to service
of process in any such jurisdiction.
INVESTORS RIGHTS AGREEMENT
j. The
Company shall otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC in connection
with any registration hereunder, and make available to its
security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve
months beginning with the first day of the Company’s
first full calendar quarter after the effective date of the
Registration Statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the 1933 Act and Rule 158
thereunder.
k. Notwithstanding
anything to the contrary herein, at any time after the
Effective Date, for not more than 45 consecutive days or for a
total of not more than 60 days in any twelve (12) month
period, the Company may delay the disclosure of material,
non-public information concerning the Company (A) the
disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company and its
outside legal counsel, in the best interest of the Company
and, in the opinion of counsel to the Company, otherwise
required or (B) to the extent the Company is required to file
a post-effective amendment to the Registration Statement (a "
Grace
Period "); provided, that the Company shall
promptly (a) notify the Investors in writing of the existence
of (but in no event, without the prior written consent of a
Investor, shall the Company disclose to such Investor any of
the facts or circumstances regarding) material non-public
information giving rise to a Grace Period, (b) advise the
Investors in writing to cease all sales under the Registration
Statement until the end of the Grace Period and (c) use
commercially reasonable efforts to terminate a Grace Period as
promptly as practicable.
l. The
Company shall cause all Registrable Securities registered
pursuant to the Registration Statement to be listed on each
securities exchange, if any, on which similar securities
issued by the Company are then listed.
m. The
Company shall permit any holder of Registrable Securities
which holder, in its reasonable judgment, might be deemed to
be an underwriter or a controlling person of the Company, to
participate in the preparation of the Registration Statement
and to require the insertion therein of material, furnished to
the Company in writing, which in the reasonable judgment of
such holder and its counsel should be included so long as such
material is reasonably acceptable to the Company.
4.
Obligations of
the Investors .
a. At
least four (4) Business Days prior to the first anticipated
filing date of a Registration Statement, the Company shall
notify each Investor in writing of the information the Company
requires from each such Investor if such Investor elects to
have any of such Investor's Registrable Securities included in
such Registration Statement. It shall be a
condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor
that such Investor shall
furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall
be reasonably required to effect the effectiveness of the
registration of such Registrable Securiti
