NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE
UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
SERIES A COMMON STOCK PURCHASE WARRANT
T3 MOTION, INC.
| Warrant
Shares: 1,298,701 |
Initial
Exercise Date: March ___, 2008
|
THIS
SERIES A COMMON STOCK PURCHASE WARRANT (the “
Warrant
”) certifies that, for value received, Vision
Opportunity Master Fund, Ltd. (the “ Holder
”) is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set
forth, at any time on or after the date hereof (the “
Initial Exercise
Date ”) and on or prior to the close of business
on the five year anniversary of the Initial Exercise Date (the
“ Termination
Date ”) but not thereafter, to subscribe for and
purchase from T3 Motion, Inc., a Delaware corporation (the
“ Company
”), up to 1,298,701 shares (the “ Warrant
Shares ”) of Common Stock. The
purchase price of one share of Common Stock under this Warrant
shall be equal to the Exercise Price, as defined in Section
2(b).
Section 1
.
Definitions
. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the “ Purchase
Agreement ”), dated March ___, 2008, among the Company
and the purchasers signatory thereto.
Section 2
.
Exercise
.
a)
Exercise of
Warrant . Exercise of the purchase rights
represented by this Warrant may be made, in whole or in part,
at any time or times on or after the Initial Exercise Date and
on or before the Termination Date by delivery to the Company
(or such other office or agency of the Company as it may
designate by notice in writing to the registered Holder at the
address of the Holder appearing on the books of
the
Company)
of a duly executed facsimile copy of the Notice of Exercise Form
annexed hereto; and, within 3 Business Days of the date said Notice
of Exercise is delivered to the Company, the Company shall have
received payment of the aggregate Exercise Price of the
shares thereby purchased by wire transfer or cashier’s check
drawn on a United States bank. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within 3
Business Days of the date the final Notice of Exercise is delivered
to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant
Shares available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares
purchased. The Holder and the Company shall maintain
records showing the number of Warrant Shares purchased and the date
of such purchases. The Company shall deliver any
objection to any Notice of Exercise Form within 1 Business Day of
receipt of such notice. In the event of any dispute or
discrepancy, the records of the Holder shall be controlling and
determinative in the absence of manifest error. The Holder and any assignee,
by acceptance of this Warrant, acknowledge and agree that, by
reason of the provisions of this paragraph, following the purchase
of a portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be
less than the amount stated on the face hereof.
b)
Exercise
Price . The exercise price per share of the
Common Stock under this Warrant shall be $1.08, subject to
adjustment hereunder (the “ Exercise
Price ”).
c)
Cashless
Exercise . If at any time after the earlier
of (i) the one year anniversary of the date of the Purchase
Agreement and (ii) the one year from the Reporting Date (if,
and only if, the Company actually becomes an Exchange Act
reporting company), there is no effective Registration
Statement registering, or no current prospectus available for,
the resale of the Warrant Shares by the Holder, then this
Warrant may also be exercised at such time by means of a
“cashless exercise” in which the Holder shall be
entitled to receive a certificate for the number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)]
by (A), where:
|
(A)
= the VWAP on the Business Day immediately preceding the date of
the delivery of the Notice of Exercise;
|
| |
|
(B)
= the Exercise Price of this Warrant, as adjusted; and
|
| |
| (X) =
the number of Warrant Shares issuable upon exercise of this Warrant
in accordance with the terms of this Warrant by means of a cash
exercise rather than a cashless exercise |
d)
Exercise
Limitations . The Company shall not effect any exercise
of this Warrant, and a Holder shall not have the right to
exercise any portion of this Warrant,
pursuant
to Section 2 or otherwise, to the extent that after giving effect
to such issuance after exercise as set forth on the applicable
Notice of Exercise, the Holder (together with the Holder’s
Affiliates, and any other person or entity acting as a group
together with the Holder or any of the Holder’s Affiliates),
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates shall include the number of shares
of Common Stock issuable upon exercise of this Warrant with respect
to which such determination is being made, but shall exclude the
number of shares of Common Stock which would be issuable upon (A)
exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates and (B)
exercise or conversion of the unexercised or nonconverted portion
of any other securities of the Company (including, without
limitation, any other Common Stock Equivalents) 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 2(d), beneficial ownership
shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder,
it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance
with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance
therewith. To the extent that the limitation
contained in this Section 2(d) applies, the determination of
whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates) and of
which portion of this Warrant is exercisable shall be in the sole
discretion of the Holder, and the submission of a Notice of
Exercise shall be deemed to be the Holder’s determination of
whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates) and of
which portion of this Warrant is exercisable, in each case subject
to the Beneficial Ownership Limitation, and the Company shall have
no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to
any group status as contemplated above shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this
Section 2(d), in determining the number of outstanding shares of
Common Stock, a Holder may rely on the number of outstanding shares
of Common Stock as reflected in (A) the Company’s most recent
periodic or annual report, as the case may be, (B) a more recent
public announcement by the Company or (C) any other notice by the
Company or the Transfer Agent setting forth the number of shares of
Common Stock outstanding. Upon the written or oral request of
a Holder, the Company shall within two Business Days confirm orally
and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including
this Warrant, by the Holder or its Affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported. The “ Beneficial Ownership
Limitation ” shall be 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 exercise of this
Warrant. The Holder, upon not less than 61 days’
prior notice to the Company (unless there are less than 61 days
remaining until
the
Termination Date, in which case such notice period shall be one day
less than the number of days remaining until the Termination Date),
may waive the Beneficial Ownership Limitation provisions of this
Section 2(d). Any such waiver will not be effective
until the 61st day after such notice is delivered to the Company
(or such shorter period described in the previous sentence if there
are less than 61 days remaining until the Termination
Date). The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 2(d) to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor
holder of this Warrant.
e)
Mechanics of
Exercise .
i.
Delivery of
Certificates Upon Exercise . Certificates
for shares purchased hereunder shall be transmitted by the
Transfer Agent to the Holder by crediting the account of the
Holder’s prime broker with the Depository Trust Company
through its Deposit Withdrawal Agent Commission (“
DWAC
”) system if the Company is then a participant in such
system and either (A) there is an effective Registration
Statement permitting the resale of the Warrant Shares by the
Holder or (B) the shares are eligible for resale without
volume or manner-of-sale limitations pursuant to Rule 144, and
otherwise by physical delivery to the address specified by the
Holder in the Notice of Exercise within 7 Business Days from
the delivery to the Company of the Notice of Exercise Form,
surrender of this Warrant (if required) and payment of the
aggregate Exercise Price as set forth above (the “
Warrant Share
Delivery Date ”). This Warrant shall
be deemed to have been exercised on the date the Exercise
Price is received by the Company. The Warrant
Shares shall be deemed to have been issued, and Holder or any
other person so designated to be named therein shall be deemed
to have become a holder of record of such shares for all
purposes, as of the date the Warrant has been exercised by
payment to the Company of the Exercise Price (or by cashless
exercise, if permitted) and all taxes required to be paid by
the Holder, if any, pursuant to Section 2(e)(vi) prior to the
issuance of such shares, have been paid.
ii.
Delivery of New
Warrants Upon Exercise . If this Warrant
shall have been exercised in part, the Company shall, at the
request of a Holder and upon surrender of this Warrant
certificate, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a
new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which
new Warrant shall in all other respects be identical with this
Warrant.
iii.
Rescission
Rights . If the Company fails to cause the
Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to
Section 2(e)(i) by the Warrant Share Delivery Date, then, the
Holder will have the right to rescind such
exercise.
iv.
Compensation for
Buy-In on Failure to Timely Deliver Certificates Upon
Exercise . In addition to any other rights
available to the Holder, if the Company fails to cause the
Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to an
exercise on or before the Warrant Share Delivery Date, and if
after such date the Holder is required by its broker to
purchase (in an open market transaction or otherwise) or the
Holder’s brokerage firm otherwise purchases, shares of
Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated
receiving upon such exercise (a “ Buy-In
”), then the Company shall (A) pay in cash to the Holder
the amount by which (x) the Holder’s total purchase
price (including brokerage commissions, if any) for the shares
of Common Stock so purchased exceeds (y) the amount obtained
by multiplying (1) the number of Warrant Shares that the
Company was required to deliver to the Holder in connection
with the exercise at issue times (2) the price at which the
sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either
reinstate the portion of the Warrant and equivalent number of
Warrant Shares for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock
that would have been issued had the Company timely complied
with its exercise and delivery obligations
hereunder. For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to cover
a Buy-In with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving rise to such
purchase obligation of $10,000, under clause (A) of the
immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in
respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss. Nothing herein
shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates
representing shares of Common Stock upon exercise of the
Warrant as required pursuant to the terms hereof.
v.
No
Fractional Shares or Scrip . No fractional
shares or scrip representing fractional shares shall be issued
upon the exercise of this Warrant. As to any
fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall, at its
election, either pay a cash adjustment in respect of such
final fraction in an amount equal
to such fraction multiplied by the Exercise Price or round up
to the next whole share.
vi.
Charges, Taxes
and Expenses . Issuance of certificates for
Warrant Shares shall be made without charge to the Holder for
any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such
certificates shall be issued in the name of the Holder or in
such name or names as may be directed by the Holder;
provided
, however ,
that in the event certificates for Warrant Shares are to be
issued in a name other than the name of the Holder, this
Warrant when surrendered for exercise shall be accompanied by
the Assignment Form attached hereto duly executed by the
Holder and the Company may require, as a condition thereto,
the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
vii.
Closing of
Books . The Company will not close its
stockholder books or records in any manner which prevents the
timely exercise of this Warrant, pursuant to the terms
hereof.
Section 3
.
Certain
Adjustments .
a)
Stock Dividends
and Splits . If the Company, at any time while this
Warrant is outstanding: (i) pays a stock dividend or otherwise
make a distribution or distributions on shares of its Common
Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by
the Company upon exercise of this Warrant), (ii) subdivides
outstanding shares of Common Stock into a larger number of
shares, (iii) combines (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller
number of shares or (iv) issues by reclassification of shares
of the Common Stock any shares of capital stock of the
Company, then in each case
