SECURITIES PURCHASE
AGREEMENT
This Securities
Purchase Agreement (this “ Agreement ”) is dated
as of February 23, 2009, between T3 Motion, Inc., a Delaware
corporation (the “ Company ”), and Ki Nam (the
“ Purchaser ”).
WHEREAS, Ki Nam is
the Chief Executive Officer of the Company and has advanced
$490,000 in proceeds to the Company to date for which he has not
been already reimbursed and up to an additional $510,000 during the
next 12 months, or until the Company closes up to $10,000,000
in equity financing, whichever is less.
(“Advances”);
WHEREAS, subject
to the terms and conditions set forth in this Agreement and
pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the “ Securities Act ”), and
Rule 506 promulgated thereunder, the Company desires to issue,
sell and deliver to Purchaser securities of the Company as more
fully described in this Agreement in consideration of such
Advances;
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and
Purchaser agree as follows:
1.1
Definitions . In addition to the terms defined elsewhere in
this Agreement: (a) capitalized terms that are not otherwise
defined herein have the meanings given to such terms in the Notes
(as defined herein), and (b) the following terms have the
meanings set forth in this Section 1.1:
“
Action ” shall have the meaning ascribed to such term
in Section 3.1(j).
“
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 under the
Securities Act.
“ Board
of Directors ” means the board of directors of the
Company.
“
Business Day ” means any day except Saturday, Sunday,
any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of California
are authorized or required by law or other governmental action to
close.
“
Closing ” means the closing of the purchase and sale
of the Securities pursuant to Section 2.1.
“ Closing
Date ” means the Trading Day when all of the Transaction
Documents have been executed and delivered by the applicable
parties thereto.
“
Commission ” means the United States Securities and
Exchange Commission.
“ Common
Stock ” means the common stock of the Company, par value
$0.001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed
into.
“ Common
Stock Equivalents ” means any securities of the Company
or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation,
any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or
exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
“
Conversion Price ” shall have the meaning ascribed to
such term in the Notes.
“
Notes ” means the 10% Convertible Notes due, subject
to the terms therein, 12 months from their date of issuance, issued
by the Company to the Purchaser hereunder, in the form of
Exhibit A attached hereto.
“
Exchange Act ” means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder.
“
GAAP ” shall have the meaning ascribed to such term in
Section 3.1(h).
“ Maximum
Rate ” shall have the meaning ascribed to such term in
Section 5.17.
“
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.
“ Pro
Rata Portion ” shall have the meaning ascribed to such
term in Section 4.12(e).
“
Proceeding ” means an action, claim, suit,
investigation or proceeding (including, without limitation, an
informal investigation or partial proceeding, such as a
deposition), whether commenced or threatened.
“
Required Approvals ” shall have the meaning ascribed
to such term in Section 3.1(e).
“
Rule 144 ” means Rule 144 promulgated by the
Commission pursuant to the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same
effect as such Rule.
“ SEC
Reports ” shall have the meaning ascribed to such term in
Section 3.1(h).
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“
Securities ” means the Notes, the Warrants, the
Warrant Shares and the Underlying Shares.
“
Securities Act ” means the Securities Act of 1933, as
amended, and the rules and regulations promulgated
thereunder.
“
Subscription Amount ” means, as to Purchaser, the
aggregate amount to be paid for Notes and Warrants purchased
hereunder as specified below the Purchaser’s name on the
signature page of this Agreement and next to the heading
“Subscription Amount,” in United States dollars and in
immediately available funds.
“
Subsidiary ” means any subsidiary of the Company as
set forth on Schedule 3.1(a) and shall, where applicable,
also include any direct or indirect subsidiary of the Company
formed or acquired after the date hereof.
“ To the
knowledge of the Company ” means the actual knowledge of
the management of the Company.
“ Trading
Day ” means a day on which the principal Trading Market
is open for trading.
“ Trading
Market ” means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date
in question: the American Stock Exchange, the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
the New York Stock Exchange or the OTC Bulletin Board.
“
Transaction Documents ” means this Agreement, the
Notes, the Warrants, and all exhibits and schedules thereto and
hereto and any other documents or agreements executed in connection
with the transactions contemplated hereunder.
“
Transfer Agent ” means Securities Transfer
Corporation, the current transfer agent of the Company, with a
mailing address of 2591 Dallas Parkway, Suite 102, Frisco,
Texas 75034 and a facsimile number of 469-633-0088, and any
successor transfer agent of the Company.
“
Underlying Shares ” means the shares of Common Stock
issued and issuable upon conversion or redemption of the Notes and
upon exercise of the Warrants and issued and issuable in lieu of
the cash payment of interest on the Notes in accordance with the
terms of the Notes.
“
Warrants ” means, collectively, the Series E
Common Stock purchase warrants delivered to the Purchaser at the
Closing or a Subsequent Closing in accordance with Section 2.2(a)
hereof, which Warrants shall be exercisable immediately and have a
term of exercise equal to 5 years, in the form of
Exhibit C attached hereto.
“ Warrant
Shares ” means the shares of Common Stock issuable upon
exercise of the Warrants.
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ARTICLE II.
PURCHASE AND SALE
2.1 Closing
. On the Closing Date, upon the terms and subject to the conditions
set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company
agrees to sell, and the Purchaser, severally and not jointly, agree
to purchase, up to an aggregate of $1,000,000 in principal amount
of the Note. The Company and Purchaser agree that the Subscription
Amount has already been delivered to the Company. The Company shall
deliver to Purchaser its respective Note and a Warrant, as
determined pursuant to Section 2.2(a), and the Company and
Purchaser shall deliver the other items set forth in Section 2.2
deliverable at the Closing. The Closing shall occur at the offices
of the Company or such other location as the parties shall mutually
agree.
(a) On or prior to
the Closing Date, the Company shall deliver or cause to be
delivered to Purchaser the following:
(i) this Agreement
duly executed by the Company;
(ii) a Note with a
principal amount equal to the Purchaser’s Subscription
Amount, registered in the name of the Purchaser; and
(iii) a Warrant
registered in the name of the Purchaser to purchase up to 303,030
shares of Common Stock per each $1 million of the
Purchaser’s Subscription Amount (pro-rata for lesser amounts,
e.g., 151,515 shares of Common Stock per each $500,000), with an
exercise price equal to $2.00, subject to adjustment
therein.
(b) On or prior to
the Closing Date, Purchaser shall deliver or cause to be delivered
to the Company the following:
(i) this Agreement
duly executed by the Purchaser;
(ii) the
Purchaser’s Subscription Amount by wire transfer to the
account as specified in writing by the Company.
2.3 Subsequent
Closings . Provided there is no Event of Default under this
Agreement, the Company may notify the Purchaser in writing at any
time after 30 days from the Closing Date that the Company
wishes to borrow additional funds (“Additional Loan”).
The Purchaser shall have the sole option of making the Additional
Loan. The Additional Loan shall be evidenced by updating the
Balance Schedule of the Note to reflect the increased principal
amount. Purchaser shall deliver the Balance Schedule of the Note to
the Company so that the Company may update the Balance Schedule to
reflect the increased amount of the principal. On each date of the
closing of a subsequent loan (“Subsequent Closing
Date”), upon the terms and subject to the conditions set
forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company
agrees to sell, and the Purchaser agrees to
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purchase, that
amount requested by the Company but up to an aggregate of
$1,000,000 in principal amount of the Note (“Subsequent
Closing”). The Purchaser shall pay the Subscription Amount
via certified check or wire transfer. The Company shall deliver to
Purchaser its Warrant, as determined below, and the Company and
Purchaser shall deliver the other items set forth below at the
subsequent Closing. The subsequent Closing shall occur at the
offices of the Company or such other location as the parties shall
mutually agree.
2.4 Deliveries
at Subsequent Closing .
(a) On or prior to
the Subsequent Closing Date, the Company shall deliver or cause to
be delivered to Purchaser the following:
(i) an updated
Balance Schedule to reflect the increased amount of principal due
under the Note; and
(ii) a Warrant
registered in the name of the Purchaser to purchase up to 303,030
shares of Common Stock per each $1 million of the
Purchaser’s Subscription Amount (pro-rata for lesser amounts,
e.g., 151,515 shares of Common Stock per each $500,000), with an
exercise price equal to $2.00, subject to adjustment
therein.
(b) On or prior to
the Closing Date, Purchaser shall deliver or cause to be delivered
to the Company the Purchaser’s Subscription Amount by wire
transfer to the account as specified in writing by the
Company.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1
Representations and Warranties of the Company . Except as
set forth in the Disclosure Schedules, which Disclosure Schedules
shall be deemed a part hereof and shall qualify any representation
or otherwise made herein to the extent of the disclosure contained
in the corresponding section of the Disclosure Schedules, the
Company hereby makes the following representations and warranties
to Purchaser:
(a)
Organization and Qualification . The Company is an entity
duly incorporated or otherwise organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite
power and authority to own and use its properties and assets and to
carry on its business as currently conducted.
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(b)
Authorization; Enforcement . The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action
is required by the Company, the Board of Directors or the
Company’s stockholders in connection therewith other than in
connection with the Required Approvals. Each Transaction Document
has been (or upon delivery will have been) duly executed by the
Company and, when delivered in accordance with the terms hereof and
thereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except: (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by
applicable law.
(c) No
Conflicts . The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the other transactions contemplated hereby and thereby
do not and will not: (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other
organizational or charter documents, (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time
or both would become a default) under, result in the creation of
any Lien upon any of the properties or assets of the Company or any
Subsidiary, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) subject to the
Required Approvals, conflict with or result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsi
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