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
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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
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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
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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
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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 Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.
INVESTORS
RIGHTS AGREEMENT
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b. Each
Investor, by such Investor's acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investor's election to
exclude all of such Investor's Registrable Securities from such Registration
Statement.
c. Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(f) or 3(g), such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
prospectus or receipt of notice that no supplement or amendment is
required.
d. Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it or an exemption therefrom in
connection with sales of Registrable Securities pursuant to the Registration
Statement.
5. Expenses of
Registration.
All
expenses, other than underwriting discounts and commissions, incurred in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
legal counsel for the Company shall be paid by the Company.
6. Indemnification.
In the
event any Registrable Securities are included in a Registration Statement under
this Agreement:
INVESTORS
RIGHTS AGREEMENT
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a. To the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend each Investor, the directors, officers, members,
partners, employees, agents, representatives of, and each Person, if any, who
controls any Investor within the meaning of the 1933 Act or the 1934 Act (each,
an "Indemnified
Person"), against any losses, claims, damages, liabilities, judgments,
fines, penalties, charges, costs, reasonable attorneys' fees, amounts paid in
settlement or expenses, joint or several, (collectively, "Claims")
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified
Damages"), to which any of them may become subject insofar as such Claims
(or actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any
untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable Securities are
offered ("Blue
Sky Filing"), or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in the light of the circumstances under which the statements therein
were made, not misleading, (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement or (iv) any violation of this Agreement (the matters in
the foregoing clauses (i) through (iv) being, collectively, "Violations"). Subject
to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly
as such expenses are incurred and are due and payable, for any legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section
6(a): (i) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
for such Indemnified Person expressly for use in connection with the preparation
of the Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company pursuant to
Section 3(e) and (ii) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld or delayed. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Investors pursuant to Section
9.
b. In
connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified
Party"), against any Claim or Indemnified Damages to which any of them
may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as
such Claim or Indemnified Damages arise out of or are based upon any Violation,
in each case to the extent, and only to the extent, that such Violation occurs
in reliance upon and in conformity with written information furnished to the
Company by such Investor expressly for use in connection with such Registration
Statement, including without limitation material required to be inserted
pursuant to Section 3(m) ; and, subject to Section 6(c), such Investor will
reimburse any legal or other expenses reasonably incurred by an Indemnified
Party in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Investor, which consent shall not be
unreasonably withheld or delayed; provided, further, however, that the Investor
shall be liable under this Section 6(b) for only that amount of a Claim or
Indemnified Damages as does not exceed the gross proceeds to such Investor as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented.
INVESTORS
RIGHTS AGREEMENT
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c. Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own legal counsel with the fees and expenses
of not more than one legal counsel for such Indemnified Person or Indemnified
Party to be paid by the indemnifying party, if, in the reasonable opinion of
legal counsel retained by the indemnifying party, the representation by such
legal counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or potential differing
interests between such Indemnified Person or Indemnified Party and any other
party represented by such legal counsel in such proceeding. In the
case of an Indemnified Person, legal counsel referred to in the immediately
preceding sentence shall be selected by the Investors holding at least a
majority in
interest of the Registrable Securities (“Required
Holders”) included in the Registration Statement to which the Claim
relates. The Indemnified Party or Indemnified Person shall cooperate
fully with the indemnifying party in connection with any negotiation or defense
of any such action or Claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the Indemnified Party
or Indemnified Person which relates to such action or Claim. The
indemnifying party shall keep the Indemnified Party or Indemnified Person
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party
shall be liable for any settlement of any action, claim or proceeding effected
without its prior written consent, provided, however, that the indemnifying
party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written
consent of the Indemnified Party or Indemnified Person, consent to entry of any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such Claim or litigation, and such settlement shall not include any
admission as to fault on the part of the Indemnified Party. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall not relieve such indemnifying party of any liability to
the Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
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RIGHTS AGREEMENT
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d. The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.
e. The
indemnity agreements contained herein shall be in addition to (i) any
cause of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
7. Contribution.
To the
extent any indemnification by an Indemnifying Party is prohibited or limited by
law, the Indemnifying Party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no
Person involved in the sale of Registrable Securities which Person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) in connection with such sale shall be entitled to contribution from any
Person involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities pursuant to such
Registration Statement.
8. Reports Under the 1934
Act.
With a
view to making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act ("Rule
144"), Rule 144A promulgated under the 1933 Act ("Rule 144A") or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration, following
effectiveness of the Registration Statement, the Company agrees to:
a. at
all times, make and keep public information available, as those terms are
understood and defined in Rule 144;
b. file
with, or furnish to, the SEC all reports and other documents required to be
filed or furnished by the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements and the filing or furnishing of
such reports and other documents is required in order to sell securities
pursuant to Rule 144, Rule 144A or any other
rule or regulation of the SEC allowing it to sell any such securities without
registration; and
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RIGHTS AGREEMENT
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c. so
long as an Investor owns any Registrable Securities, furnish to such Investor
forthwith upon reasonable request: a written statement by the Company
as to its compliance with the reporting requirements of Rule 144, and of the
1934 Act (at any time after it has become subject to such reporting
requirements); unless it is available on XXXXX, a copy of the most recent annual
or quarterly report of the Company filed with the SEC; and unless they are
available on XXXXX, such other reports and documents as an Investor may
reasonably request in connection with availing itself of any rule or regulation
of the SEC allowing it to sell any such securities without
registration.
9. Assignment of Registration
Rights.
Prior to
the initial declaration by the SEC of the effectiveness of the applicable
Registration Statement, the rights under this Agreement shall be automatically
assignable by the Investors to any transferee of all or any portion of such
Investor's Registrable Securities if: (i) the Investor agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment; (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned; (iii) immediately
following such transfer or assignment the further disposition of such securities
by the transferee or assignee is restricted under the 1933 Act or applicable
state securities laws; (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein; and (v) such transfer shall have been made in accordance with
the applicable requirements of the Securities Purchase Agreement.
10. Amendment of Registration
Rights.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Investors
holding a majority of the Registrable Securities, calculated on an as converted
basis. Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon each Investor and the Company. No
such amendment shall be effective to the extent that it applies to less than all
of the holders of the Registrable Securities.
11. Participation in Future
Financing.
a. From
the date hereof until the date that is the 18 month anniversary of the Effective
Date, upon any issuance by the Company or any of its Subsidiaries (as such term
is defined in the Securities Purchase Agreement) of Common Stock or warrants,
options, or convertible debt (“Common Stock Equivalents”) for
cash consideration (a “Subsequent Financing”), the
Purchaser shall have the right to participate in up to an amount of the Subsequent
Financing equal to that percentage of the Subsequent Financing (the “Participation Maximum”) equal
to the Purchaser’s percentage ownership of the Common Stock, calculated as of
any determination date assuming the conversion of all Registrable Securities, on
the same terms, conditions and price provided for in the Subsequent
Financing.
INVESTORS
RIGHTS AGREEMENT
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b. At
least 15 Business Days prior to the closing of the Subsequent Financing, the
Company shall deliver to the Purchaser a written notice of its intention to
effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice
shall ask such Purchaser if it wants to review the details of such financing
(such additional notice, a “Subsequent Financing
Notice”). Upon the request of a Purchaser, and only upon a
request by such Purchaser, for a Subsequent Financing Notice, the Company shall
promptly, but no later than 10 Business Days after such request, deliver a
Subsequent Financing Notice to such Purchaser. 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.
c. Any
Purchaser desiring to participate in such Subsequent Financing must provide
written notice to the Company by not later than 5:30 p.m. (Calgary time) on the
5th
Business Day after the Purchaser has received the Pre-Notice that the Purchaser
is willing to participate in the Subsequent Financing, the amount of the
Purchaser’s participation, and that the Purchaser has such funds ready, willing,
and available for investment on the terms set forth in the Subsequent Financing
Notice. If the Company receives no notice from a Purchaser as of such
5th
Business Day, such Purchaser shall be deemed to have notified the Company that
it does not elect to participate.
d. If
by 5:30 p.m. (Calgary time) on the 5th
Business Day after the Purchaser has received the Pre-Notice,
notifications by the Purchaser of its 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 effect the remaining portion of such proposed Subsequent Financing
on the terms and with the Persons set forth in the Subsequent Financing
Notice.
e. The
Company must provide the Purchaser with a second Subsequent Financing Notice,
and the Purchaser will again have the right of participation set forth above in
this Section 11, 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 40 Business Days after the date of the
initial Subsequent Financing Notice.
f. Notwithstanding
the foregoing, this Section 11 shall not apply in respect of (i) an Exempt
Issuance, or (ii) an underwritten public offering of Common Stock. “Exempt Issuance” means the
issuance of (a) shares of Common Stock or options to employees, consultants,
officers or directors of the Company pursuant to any stock or option plan duly
adopted for such purpose by a majority of the non-employee members of the Board
of Directors of the Company or a majority of the members of a committee of
non-employee directors
of the Company established for such purpose, (b) 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 date of this Agreement, provided that such
securities have not been amended since the date of this Agreement to increase
the number of such securities or to decrease the exercise, exchange or
conversion price of such securities, (c) shares issuable to institutional
lenders to the Company in connection with a loan transaction, and (d) securities
issued pursuant to acquisitions or strategic transactions approved by a majority
of the disinterested directors of the Company, provided that any such issuance
shall only be to a Person which is, itself or through its subsidiaries, an
operating company in a business synergistic with the business of the Company and
in which the Company receives benefits in addition to the investment of funds,
but shall not include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities.
INVESTORS
RIGHTS AGREEMENT
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12. Miscellaneous.
a. A
Person is deemed to be a holder of Registrable Securities whenever such Person
owns or is deemed to own of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the such
record owner of such Registrable Securities.
b. Any
notices, consents, waivers 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: (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (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 and facsimile numbers for such
communications shall as set forth in Section 8(f) of the Securities Purchase
Agreement, or to such other address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
c. Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.
d. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of California without regard to the conflict of law principles
thereof. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of California located in Los
Angeles County and the United States District Court for the Central District of
California for the purpose of any suit, action, proceeding or judgment relating
to or arising out of this Agreement and the transactions contemplated
hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this
Agreement. Each of the parties hereto irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to the
laying of venue in such court. Each party hereto irrevocably waives
any objection to the laying of venue of any such suit, action or proceeding
brought in such courts and irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum. EACH OF THE
PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION
WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.
INVESTORS
RIGHTS AGREEMENT
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e. This
Agreement, the other Transaction Documents (as defined in the Securities
Purchase Agreement) and the instruments referenced herein and therein constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties
or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the other Transaction Documents and the
instruments referenced herein and therein supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
f. Subject
to the requirements of Section 9, this Agreement shall inure to the benefit of
and be binding upon the permitted successors and assigns of each of the parties
hereto.
g. The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
h. This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
i. Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
j. All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Required Holders.
INVESTORS
RIGHTS AGREEMENT
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k. The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict construction will
be applied against any party.
l. This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
* * * * *
*
INVESTORS
RIGHTS AGREEMENT
-15-
IN WITNESS WHEREOF, the
Purchaser and the Company have caused their respective signature page to this
Investor Rights agreement to be duly executed as of the date first written
above.
| COMPANY: | |||
| T3 MOTION, INC. | |||
|
|
By:
|
/s/ | |
| Ki Nam | |||
| Chief Executive Officer | |||
| PURCHASER: | |||
| IMMERSIVE MEDIA CORP. | |||
|
|
By:
|
/s/ | |
| Name | |||
| Chief Executive Officer | |||
INVESTORS
RIGHTS AGREEMENT
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