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 B COMMON STOCK PURCHASE WARRANT
T3 MOTION, INC.
| Warrant
Shares: 1,298,701 |
Initial
Exercise Date: March ___, 2008 |
THIS
SERIES B 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 $1.77, 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 the
