RESTATED DEBENTURE AMENDMENT AND CONVERSION AGREEMENT
Exhibit 10.65
This Restated Debenture Amendment and Conversion Agreement (the “Agreement”), dated as
of the 31st day of March, 2011, is made and entered into by and among T3 Motion, Inc., a Delaware
corporation (the “Company”), and Vision Opportunity Master Fund Ltd. (the “Investor”).
WHEREAS, on December 30, 2009, the Company issued to the Investor a 10% Senior Secured
Convertible Debenture in the principal amount of $3,500,000 (the “Debenture”); and
WHEREAS, the Debenture, as extended by an amendment thereto dated as of December 31, 2010, is
due and payable, together with accrued interest, on March 31, 2011 (the “Maturity Date”); and
WHEREAS, the Company has filed a Registration Statement on Form S-1, File Number 333-171163
(the “Registration Statement”) relating to an underwritten public offering (the “Public Offering”)
of units (“units”), each unit comprised of (i) one share of the Company’s
common stock, par value $0.001 per share (the “Common Stock”), one Class H common stock
purchase warrant (the “Class H Warrants”) and one Class I common stock purchase warrant (the “Class
I Warrants”); and
WHEREAS, it is a condition to the underwriters’ obligation to purchase the Units in the Public
Offering that the outstanding indebtedness evidenced by the Debentures be converted into units
substantially identical to the Units (the “Vision Units”) at a conversion price equal to the per
Unit public offering price (the “Conversion Price”); and
WHEREAS, the Company and the Investors believe it is in their mutual best interest that the
conversion of the Debenture (the “Conversion”) be effected on the terms and subject to the
conditions set forth in this Agreement and, in furtherance thereof, desire to amend the Debenture.
NOW, THEREFORE, in consideration of the covenants and agreements set forth herein, and for
other good and valuable consideration, and sufficiency of which are hereby acknowledged and
intending to be legally bound hereby the parties agree as follows:
1. Maturity Date. The Maturity Date is hereby extended to June 30, 2011.
2. Conversion Provisions. On the Closing Date (as defined in Section 3 below) Section
4 of the Debenture will be deleted in its entirety. At the Closing (as defined in Section 3
below), the Company shall issue to the Investor Vision Units, each comprised of (i) one share of
Common Stock (the “Vision Shares”), (ii) one warrant substantially identical to the Class H
Warrants (the “Vision H Warrants”) and (iii) one warrant substantially identical to the Class I
Warrants (the “Vision I Warrants” and, together with the Vision H Warrants, the “Vision Warrants”)
in consideration for the cancellation by the Investor of $3,500,000.00 principal amount of the
Debenture and accrued interest thereon. The number of Vision Units shall equal the total amount of
principal and interest accrued through the date of the Closing divided by the Conversion Price;
provided, however, that the Company shall pay cash in lieu of any fractional Vision Units that
would otherwise be issuable upon the Conversion.
3. Closing. If, and only if, the closing of the Public Offering occurs on or prior to
5:00 p.m. eastern time on the Maturity Date, the closing of the Conversion (the “Closing”) shall
take place at the offices of Loeb and Loeb LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, or such
other place to be specified by the Company and the Investor on the date of, and simultaneously
with, the closing of the Public Offering (the “Closing Date”).
4. Representations and Warranties of the Company. The Company hereby represents and
warrants to the Investor as follows:
(a) Due Authorization. The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and the Registration Rights Agreement
attached as Appendix A hereto (collectively, the “Conversion Agreements”) and the Conversion
Agreements have been duly authorized and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by the Investor, constitutes legal, valid
and binding agreements of the Company enforceable against the Company in accordance with their
respective terms, except as rights to indemnity and contribution may be limited by state or federal
securities laws or the public policy underlying
such laws, except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights
generally and except as enforceability may be subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at law).
(b) Issuance of Vision Units; Reservation of Common Stock. The Vision Shares, Vision
H Warrants and Vision I Warrants comprising the Vision Units are duly authorized and, when issued
and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and
nonassessable, free and clear of all liens and shall not be subject to preemptive or similar rights
of stockholders other than those which have been exercised or waived prior to the Closing Date.
The shares of common stock issuable upon exercise of the Vision Warrants (the “Warrant Shares”)
have been duly authorized and, when issued in accordance with the terms of the Vision Warrants will
be duly and validly issued, fully paid and nonassessable, free and clear of all Liens and shall not
be subject to preemptive or similar rights of stockholders other than those which have been
exercised or waived prior to the Closing Date or which have been expressly entered into by Vision
prior to the Closing Date. Assuming the accuracy of the representations and warranties of the
Investor in this Agreement, the Vision Shares and Vision Warrants comprising the Vision Units will
be issued in compliance with all applicable federal and state securities laws. As of the Closing
Date, the Company shall have reserved from its duly authorized capital stock the number of shares
of common stock issuable upon exercise of the Vision Warrants and so long as any of the Vision
Warrants are outstanding, take all action necessary to reserve and keep available out of its
authorized and unissued capital stock, solely for the purpose of effecting the exercise of the
Vision Warrants, 100% of the number of shares of Common Stock issuable upon exercise of the Vision
Warrants.
(c) Non-Contravention. The execution and delivery of the Conversion Agreements, the
issuance and sale of the Vision Shares and Vision Warrants by the Company under this Agreement and
the consummation of the transactions contemplated hereby and thereby will not (A) conflict with or
constitute a violation of, or default (with the passage of time or otherwise) under, (i) any bond,
debenture, note or other evidence of indebtedness, or any
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material lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which
the Company or its wholly-owned subsidiary, T3 Motion, Ltd. (the “Subsidiary”) is a party or by
which the Company, the Subsidiary or any of their property is bound, where such conflict, violation
or default is likely to result in a Material Adverse Effect, (ii) the charter, by-laws or other
organizational documents of the Company or the Subsidiary, or (iii) any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration panel or authority
binding upon the Company or the Subsidiary or any of their property, where such conflict, violation
or default is likely to result in a Material Adverse Effect, or (B) result in the creation or
imposition of any Lien upon any of the material properties or assets of the Company or the
Subsidiary or an acceleration of indebtedness pursuant to any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or any indenture,
mortgage, deed of trust or any other agreement or instrument to which the Company or the Subsidiary
is a party or by which the Company or the Subsidiary is bound or to which any of the property or
assets of the Company or the Subsidiary is subject. No consent, approval, authorization or other
order of, or registration, qualification or filing with, any regulatory body, administrative
agency, or other governmental body in the United States is required for the execution, delivery and
performance of the Conversion Agreements, the valid
issuance and sale of the Shares, other than such as have been made or obtained. “Material
Adverse Effect” shall mean any of (a) a material and adverse effect on the legality, validity or
enforceability of this Agreement, the schedules and exhibits attached hereto, and any other
documents or agreements executed in connection with the transactions contemplated hereunder, (b) a
material and adverse effect on the results of operations, assets, business or financial condition
of the Company and the Subsidiary, taken as a whole, or (c) any adverse impairment to the Company’s
ability to perform in any material respect on a timely basis its obligations under the Conversion
Agreements.
5. Representations and Warranties of the Investor. The Investor hereby represents and
warrants to the Company as follows:
(a) Organization; Authority. The Investor is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization with full
right, corporate or partnership power and authority to enter into and to consummate the
transactions contemplated by the Conversion Agreements and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of the Conversion Agreements and performance
by the Investor of the transactions contemplated by the Conversion Agreements have been duly
authorized by all necessary corporate or similar action on the part of the Investor. Each
Conversion Agreement to which it is a party has been duly executed by the Investor, and when
delivered by the Investor in accordance with the terms hereof, will constitute the valid and
legally binding obligation of the Investor, enforceable against it 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.
(b) Own Account. The Investor understands that the Vision Units are “restricted
securities” and have not been registered under the Securities Act or any applicable
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state
securities law and is converting the Debenture into the Vision Units as principal for its own
account and not with a view to or for distributing or reselling such Vision Units or any part
thereof in violation of the Securities Act or any applicable state securities law, has no present
intention of distributing any of such Vision Units in violation of the Securities Act or any
applicable state securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Vision Units (this
representation and warranty not limiting the Investor’s right to sell the Vision Units pursuant to
any registration statement or otherwise in compliance with applicable federal and state securities
laws) in violation of the Securities Act or any applicable state securities law. The Investor is
acquiring the Vision Units hereunder in the ordinary course of its business.
(c) Investor Status. At the time the Investor was offered the Vision Units, it was,
and as of the date hereof it is, and on the Closing Date it will be either: (i) an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act
or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. The
Investor is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.
(d) Experience of the Investor. The Investor, either alone or together with its
representatives, has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the prospective conversion of the
Debenture into Vision Units, and has so evaluated the merits and risks of such investment. The
Investor is able to bear the economic risk of an investment in the Vision Units and, at the present
time, is able to afford a complete loss of such investment.
6. Conditions to the Investor’s Conversion Obligation. The obligation of the Investor
hereunder to consummate the Conversion at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these conditions are for the
Investor’s sole benefit and may be waived by the Investor at any time in its sole discretion by
providing the Company with prior written notice thereof:
(a) Issuance of Securities. The Company shall have delivered to the Investor
certificates representing the Vision Shares, the Vision H Warrants and the Vision I Warrants,
together with an executed copy of the Warrant Agency Agreement between the Company and its transfer
agent (or other warrant agent agreeable to the Company and the Underwriters) governing the Vision
Warrants.
(b) Registration Rights. The Company shall have delivered to the Investor (i) a duly
executed copy of the Registration Rights Agreement, the form of which is attached to this Agreement
as Appendix A, and (ii) a draft of the Registration Statement on Form S-3 covering the resale of
the Vision Shares, the Vision Warrants and the Warrant Shares.
(c) Representations and Warranties. The representations and warranties of the Company
set forth in Section 4 of this Agreement shall be true and correct in all material respects (except
for those representations and warranties that are qualified by materiality or Material Adverse
Effect, which shall be true and correct in all respects) as of the date when made and as of the
Closing Date as though made at that time (except for representations and warranties that speak as
of a specific date) and the Company shall have performed, satisfied and complied
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in all material
respects with the covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing Date.
(d) Performance. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by it at or prior to the Closing.
(e) Officer’s Certificate. The Company shall have delivered to the Investor a
certificate, dated as of the Closing Date and signed by its Chief Executive Officer or its
President certifying to the fulfillment of the conditions specified in Sections 5(c) and (d) in a
form reasonably acceptable to the Investor.
(f) Public Offering. The Registration Statement shall have been declared effective by
the Securities and Exchange Commission and the securities issued in the Public Offering shall have
commenced trading on the NYSE Amex, LLC.
(g) Representations and Warranties to the Underwriters. The representations and
warranties of the Company contained in Section 1 of the form of Underwriting Agreement filed as
Exhibit 1.1 to the Registration Statement shall be true and correct in all material respects.
(h) Negative Covenant Agreement. The Company shall have delivered to the Investor a
Negative Covenant Agreement substantially in the form filed as Exhibit 10.64 to the Registration
Statement granting the Investor the rights described in the Registration Statement.
7. Transfer Restrictions.
(a) Compliance with Laws. Notwithstanding any other provision of this Section 6, the
Investor covenants that the Vision Shares, the Vision Warrants and the Warrant Shares
(collectively, the “Securities”) may be disposed of only pursuant to an effective registration
statement under, and in compliance with the requirements of, the Securities Act of 1933, as amended
(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 compliance with any applicable
state, federal or foreign securities laws. In connection with any transfer of the Securities other
than (i) pursuant to an effective registration statement, (ii) to the Company, or (iii) pursuant to
Rule 144 (provided that the Investor provides the Company with reasonable assurances (in the form
of seller and broker representation letters) that the Securities may be sold pursuant to such
rule), the Company may require the transferor thereof to provide to the Company, at the
transferor’s expense, an opinion of counsel selected by the transferor and reasonably acceptable to
the Company, the form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such transferred
Securities under the Securities Act.
(b) Legends. Certificates evidencing the Securities shall bear any legend as required
by the “blue sky” laws of any state and a restrictive legend in substantially the following form,
until such time as they are not required under Section 6(c) or applicable law:
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[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE
BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED] UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) 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 OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE
144 UNDER SAID ACT. NO REPRESENTATION IS MADE BY THE ISSUER AS TO THE AVAILABILITY OF THE
EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALES OF THESE SECURITIES.
(c) Removal of Legends. The restrictive legend set forth in Section 6(b) above shall
be removed and the Company shall issue or shall cause its transfer agent to issue a certificate
without such restrictive legend or any other restrictive legend to the holder of the applicable
Securities upon which it is stamped or issue to such holder by electronic delivery at the
applicable balance account at the Depository Trust Company (“DTC”), if (i) such Securities are
registered for resale under the Securities Act (provided that, if the Investor is selling pursuant
to the effective registration statement registering the Securities for resale, the Investor agrees
to only sell such Securities during such time that such registration statement is effective and not
withdrawn or suspended, and only as permitted by such registration statement), (ii) such Securities
are sold or transferred pursuant to Rule 144 (if the transferor is not an “affiliate” of the
Company, as such term is defined in the Securities Act), or (iii) such Securities are eligible for
sale under Rule 144, without the requirement for the Company to be in compliance with the current
public information required under Rule 144 as to such securities and without volume or
manner-of-sale restrictions. Certificates for Securities subject to legend removal hereunder may
be transmitted to the Investor by crediting the account of the Investor’s prime broker with DTC as
directed by the Investor.
(d) Acknowledgement. The Investor acknowledges its primary responsibilities under the
Securities Act and accordingly will not sell or otherwise transfer the Vision Shares, the Warrants
or the Warrant Shares or any interest therein without complying with the requirements of the
Securities Act. Except as otherwise provided below, while a registration statement covering the
Securities remains effective, the Investor may sell the Securities in accordance with the plan of
distribution contained in such registration statement and if it does so it will comply therewith
and with the related prospectus delivery requirements unless an exemption therefrom is available.
Both the Company and its transfer agent, and their respective directors, officers, employees and
agents, may rely on this Section 6(d).
8. Notices. All notices, requests, consents and other communications hereunder shall
be in writing, shall be mailed (A) if within domestic United States by first-class registered or
certified airmail, or nationally recognized overnight express courier, postage prepaid, or by
facsimile, or (B) if delivered from outside the United States, by International Federal Express or
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facsimile, and shall be deemed given (i) if delivered by first-class registered or certified mail
domestic, three business days after so mailed, (ii) if delivered by nationally recognized overnight
carrier, one (1) business day after so mailed, (iii) if delivered by International Federal Express,
two (2) business days after so mailed, (iv) if delivered by facsimile, upon electric confirmation
of receipt and shall be delivered as addressed as follows:
if to the Company, to:
T3 Motion, Inc.
0000 Xxxxxx Xxxxxx, Xxxxxxxx X
Xxxxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
Phone: (000) 000-0000
Telecopy: (000) 000-0000
0000 Xxxxxx Xxxxxx, Xxxxxxxx X
Xxxxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
Phone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
LKP Global Law LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxx
Phone: (000) 000-0000
Telecopy: (000) 000-0000
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxx
Phone: (000) 000-0000
Telecopy: (000) 000-0000
if to the Investor, to:
Vision Opportunity Master Fund, Ltd.
00 X 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxx
Phone: (000) 000-0000
Telecopy:
00 X 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxx
Phone: (000) 000-0000
Telecopy:
with a copy to:
Loeb and Loeb LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx
Phone: (000) 000-0000
Telecopy: (000) 000-0000
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx
Phone: (000) 000-0000
Telecopy: (000) 000-0000
9. Legal Fees and Expenses. The Company shall pay its own fees and expenses and shall
pay the reasonable and documented fees and expenses the Investor’s legal counsel in connection with
the Conversion Agreements and the transactions contemplated hereby and thereby.
10. Amendments; Existing Terms. This Agreement shall not be modified, amended or
terminated without the written consent of all of the parties hereto. Except as amended herein, the
Debenture remains in full force.
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11. Further Assurances. Each of the parties hereto shall use its reasonable best
efforts to do all things necessary and advisable to make effective the transaction contemplated
hereby and shall cooperate and take such action as may be reasonably requested by the other party
in order in carry out fully the provisions and purposes of this Agreement and the transactions
contemplated thereby.
12. Counterparts. This Agreement may be executed in one or more counterparts
(including by facsimile) each of which shall be deemed to be an original, or which together shall
constitute one in the same instrument.
13. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to principles of conflicts of law.
14. Entire Agreement. This Agreement sets forth the entire agreement of the parties
with respect to the subject matter hereof and specifically supersedes the Debenture Amendment and
Conversion Agreement between the parties dated as of March 31, 2011.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above..
| T3 MOTION, INC. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| VISION OPPORTUNITY MASTER FUND LTD. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
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