SECURITIES EXCHANGE AGREEMENT
Exhibit 10.6
THIS SECURITIES EXCHANGE AGREEMENT (the “Agreement”), dated as of December 30, 2009,
is entered into by and among T3 Motion, Inc., a Delaware corporation (the “Company”), and
the persons identified as “Holders” on the signature pages hereto (the “Holders”).
WHEREAS, the Company issued certain 10% Secured Convertible Debentures (the “December
Debentures”) with an aggregate principal value of $2,200,000 due December 30, 2009 to the
Holders; and
WHEREAS, the Company issued certain 10% Secured Convertible Debentures (“May
Debentures” and collectively with the December Debentures, the “Debentures”), with an
aggregate principal value of $600,000 due May 28, 2010 to the Holders; and
WHEREAS, the Company issued certain Class A, B, C, D, E and F Warrants (the
“Warrants”) to the Holders in the amounts, and with issuance dates, as set forth in
Schedule A attached hereto; and
WHEREAS, pursuant to Section 4.18 the certain Securities Purchase Agreement dated on or about
March 24, 2008 by and among the Company and the Holders, the Company is obligated to issue a
certain number of shares of the Company’s common stock, par value $0.001 per share, (the
“Common Stock”) to the Holders (the “Common Stock Obligation”); and
WHEREAS, the Company and the Holders have agreed to: (i) exchange the Debentures and Warrants
for Preferred Stock (as defined below) and Class F Warrants (as defined below) and (ii) satisfy the
Common Stock Obligation for the consideration granted by the Company to the Holders as set forth
hereunder.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, each Holder hereby agrees as follows:
1. Definitions.
“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a Person, as
such terms are used in and construed under Rule 405 under the Securities Act.
“Certificate of Designation” means the Certificate of Designation to be filed
prior to the Closing by the Company with the Secretary of State of Delaware, in the form of
Exhibit A attached hereto.
“Class F Warrants” means, collectively, the Class F Common Stock purchase
warrants delivered to the Holders at the Closing in accordance with Section 3(a) hereof.
“Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto.
“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock.
“Conversion Price” shall have the meaning ascribed to such term in the
Certificate of Designation.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.
“Lock-Up Agreement” means the Lock-Up Agreement, dated as of the date hereof,
by and among the Company and Ki Nam, the Chief Executive Officer of the Company, in the form
of Exhibit B attached hereto.
“Material Adverse Effect” shall have the meaning assigned to such term in
Section 4(b).
“Person” means an individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint stock
company, government (or an agency or subdivision thereof) or other entity of any kind.
“Preferred Stock” means the Company’s Series A Convertible Preferred Stock
issued hereunder having the rights, preferences and privileges set forth in the Certificate
of Designation, in the form of Exhibit A hereto.
“Required Minimum” means, as of any date, the maximum aggregate number of
shares of Common Stock then issued or potentially issuable in the future pursuant to the
Transaction Documents, including any Underlying Shares issuable upon conversion in full of
all Preferred Stock (including Underlying Shares issuable as payment of interest on the
Preferred Stock), ignoring any conversion or exercise limits set forth therein, and assuming
that the Conversion Price is at all times on and after the date of determination 75% of the
then Conversion Price on the Trading Day immediately prior to the date of determination.
“Stockholders Agreement” means the Stockholders Agreement dated as of this date
by Vision, Ki Nam and the Company attached as an exhibit as Exhibit C.
“Subsidiary” means any subsidiary of the Company as set forth on Schedule
4(a) and shall, where applicable, also include any direct or indirect subsidiary of the
Company formed or acquired after the date hereof.
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“Trading Day” means a day on which the principal Trading Market is open for
trading.
“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the American Stock Exchange,
the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange or the OTC Bulletin Board.
“Transaction Documents” means this Agreement, the Certificate of Designation,
the Lock-Up Agreement, the Stockholders Agreement, all schedules and exhibits thereto and
hereto and any other documents or agreements executed in connection with the transactions
contemplated hereunder.
“Underlying Shares” means the shares of Common Stock issued and issuable upon
conversion or redemption of the Preferred Stock and issued and issuable in lieu of the cash
payment of dividends on the Preferred Stock in accordance with the terms of the Certificate
of Designation.
“Vision” means Vision Opportunity Master Fund, Ltd. and Vision Capital
Advantage Fund, L.P.
2. Waiver. Subject to the terms and conditions hereunder, each Holder hereby waives
its right to exercise or enforce its rights under the Debentures and Warrants.
3. Agreements.
(a) Exchanged Debentures. The Company hereby agrees to issue to each Holder
3,055,000 shares of Preferred Stock and Class F Warrants to purchase 6,110,000 shares at
$0.70 per share (which, rather than being delivered to Holder will be immediately exchanged
for Preferred Stock as described below), issued and delivered in exchange for delivery and
cancellation of the Debentures. Each Holder acknowledges and agrees that upon the issuance
and acceptance of the certificate evidencing its Preferred Stock and Class F Warrants issued
pursuant to this Section, the original certificates evidencing its Debentures will be deemed
cancelled.
(b) Exchanged Warrants. The Company hereby agrees to issue to each
Holder 2,263,750 shares of Preferred Stock issued in exchange for delivery and cancellation
for the 10,972,770 Warrants held by or owed to the Vision Parties. Each Holder acknowledges
and agrees that upon the issuance and acceptance of the certificate evidencing its Preferred
Stock issued pursuant to this Section, the original certificates evidencing the Warrants
will be deemed cancelled.
(c) Filing of Certificate of Designation. The Company hereby agrees to
file the Certificate of Designation with the Secretary of State of Delaware prior to the
Closing Date. The Company shall provide written evidence of the filing of the Certificate
of Designation with the Secretary of State of Delaware at or prior to the Closing Date.
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(d) Lock-Up Agreement. The Company hereby agrees to enter into the
Lock-Up Agreement with and Ki Nam, the Chief Executive Officer of the Company. The Company
shall provide each Holder with a copy of the fully-executed Lock-Up Agreement on the Closing
Date.
(e) Satisfaction of Common Stock Obligation. The Company hereby agrees to
issue 4,051,948 shares of Preferred Stock to the Holders to satisfy the Common Stock
Obligation.
(f) Stockholders Agreement. The Company and Vision, as Holders, hereby
agree to enter into the Stockholders Agreement.
4. Representations and Warranties. The Company hereby makes to the Holders the
following representations and warranties:
(a) Subsidiaries. All of the direct and indirect subsidiaries of the Company
are set forth on Schedule 4(a). The Company owns, directly or indirectly, all of
the capital stock or other equity interests of each Subsidiary free and clear of any Liens,
and all of the issued and outstanding shares of capital stock of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
(b) Organization and Qualification. The Company and each of the Subsidiaries
is an entity duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization (as applicable),
with the requisite power and authority to own and use its properties and assets and to carry
on its business as currently conducted. Neither the Company nor any Subsidiary is in
violation or default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the Company and
the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not have or
reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results
of operations, assets, business, prospects or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its obligations under
any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”)
and no Proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
(c) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement by the Company and the consummation by it of
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the transactions contemplated hereby have been duly authorized by all necessary action
on the part of the Company and no further action is required by the Company, its board of
directors or its stockholders in connection therewith. This Agreement has been duly
executed by the Company and, when delivered in accordance with the terms hereof will
constitute the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by
applicable law.
(d) No Conflicts. The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated hereby do
not and will not: (i) conflict with or violate any provision of the Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, result in the creation of any
Lien upon any of the properties or assets of the Company or any Subsidiary, or give to
others any rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any material agreement, credit facility, debt or other
material instrument (evidencing a Company or Subsidiary debt or otherwise) or other material
understanding to which the Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected, or (iii) conflict with or
result in a violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected
to result in a Material Adverse Effect.
(e) Equal Consideration. Except as otherwise set forth herein, no
consideration has been offered or paid to any person to amend or consent to a waiver,
modification, forbearance or otherwise of any provision of any of the Transaction Documents.
(f) Issuance of the Preferred Stock and Class F Warrants. The Preferred Stock
and Class F Warrants are duly authorized and, when issued and paid for in accordance with
the applicable Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents. The Underlying Shares, when issued in
accordance with the terms of the Transaction Documents, will be validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents. The Company has
reserved from its duly authorized capital stock a number of shares of Common Stock for
issuance of the Underlying Shares at least equal to the Required Minimum on the date hereof.
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(g) Capitalization. The capitalization of the Company is as set forth on
Schedule 4(g), which Schedule 4(g) shall also include the number of shares
of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the
date hereof. The Company has not issued any capital stock since its most recently filed
periodic report under the Exchange Act, other than pursuant to the exercise of employee
stock options under the Company’s stock option plans, the issuance of shares of Common Stock
to employees pursuant to the Company’s employee stock purchase plans and pursuant to the
conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the
most recently filed periodic report under the Exchange Act. No Person has any right of
first refusal, preemptive right, right of participation, or any similar right to participate
in the transactions contemplated by the Transaction Documents. Except as a result of the
issuance of the Preferred Stock and Class F Warrants, there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire any shares of
Common Stock, or contracts, commitments, understandings or arrangements by which the Company
or any Subsidiary is or may become bound to issue additional shares of Common Stock or
Common Stock Equivalents. The issuance of the Preferred Stock and Class F Warrants will not
obligate the Company to issue shares of Common Stock or other securities to any Person
(other than the Holders) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under any of such securities.
All of the outstanding shares of capital stock of the Company are validly issued, fully paid
and nonassessable, have been issued in compliance with all federal and state securities
laws, and none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase securities. No further approval or
authorization of any stockholder, the Board of Directors or others is required for the
issuance of the Preferred Stock and Class F Warrants. There are no stockholders agreements,
voting agreements or other similar agreements with respect to the Company’s capital stock to
which the Company is a party or, to the knowledge of the Company, between or among any of
the Company’s stockholders.
(h) Rights, Obligations and Covenants of the Holders with Respect to the Underlying
Shares. Except as set forth in this Agreement, the Certificate of Designation and the
Class F Warrants, the rights, obligations and covenants of the Holders with respect to the
“Underlying Shares” (as defined in this Agreement) shall be identical, to the rights,
obligations and covenants of the Holders and the Company with respect to the “Underlying
Shares” (as defined under that certain Securities Purchase
Agreement dated May 28, 2009 among the
Company and the investors signatory thereto, as amended to date).
(i) Holding Period for Preferred Stock and Class F Warrants. Pursuant to Rule
144, the holding period of the Preferred Stock and Class F Warrants (and Underlying Shares
issuable upon conversion or cashless exercise thereof) shall tack back to the original issue
date of the Debentures and Warrants. The Company agrees not to take a position contrary to
this Section 4(f). The Company agrees to take all actions, including, without limitation,
the issuance by its legal counsel of any necessary legal opinions (which may be satisfied
pursuant to Section 5), necessary to issue to the
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Preferred Stock and Class F Warrants (and Underlying Shares issuable upon conversion and
cashless exercise thereof) without restriction and not containing any restrictive legend
without the need for any action by the Holder. The Company is not subject to Rule 144(i).
5. Legal Opinion. The Company hereby agrees to cause its legal counsel to issue a
legal opinion to the undersigned Holders, substantially in the form of Exhibit D
attached hereto.
6. Miscellaneous.
(a) In addition, the respective obligations and agreements of the Holders hereunder are
subject to the following conditions being met: (a) the accuracy in all material respects of
the representations and warranties of the Company contained herein (except for those
representations and warranties that are qualified by materiality or Material Adverse Effect,
which shall be true and correct in all respects) and (b) the performance by the Company of
all if its obligations, covenants and agreements required to be performed hereunder. Except
as expressly set forth above, all of the terms and conditions of the Transaction Documents
shall continue in full force and effect after the execution of this Agreement and shall not
be in any way changed, modified or superseded by the terms set forth herein. The Company
shall, within 2 Trading Days of the date hereof, issue a Current Report on Form 8-K
disclosing the material terms of the transactions contemplated hereby, and shall attach this
Agreement and all other related agreements thereto, including, without limitation, the
Certificate of Designation and Class F Warrants (the “8-K Filing”). From and after
the filing of the 8-K Filing with the Commission, the Holder shall not be in possession of
any material, nonpublic information received from the Company, any of its Subsidiaries or
any of their respective officers, directors, employees or agents, that is not disclosed in
the 8-K Filing. The Company shall consult with the Holders in issuing any other press
releases with respect to the transactions contemplated hereby.
(b) This Agreement may be executed in two or more counterparts and by facsimile
signature or otherwise, and each of such counterparts shall be deemed an original and all of
such counterparts together shall constitute one and the same agreement.
(c) The Company has elected to provide all Holders with the same terms and form of
agreement for the convenience of the Company and not because it was required or requested to
do so by the Holders. The obligations of each Holder under this Agreement, and any
Transaction Document are several and not joint with the obligations of any other Holder, and
no Holder shall be responsible in any way for the performance or non-performance of the
obligations of any other Holder under this Agreement or any Transaction Document. Nothing
contained herein or in any Transaction Document, and no action taken by any Holder pursuant
thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Holders are in any way
acting in concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement or the Transaction
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Documents. Each Holder shall be entitled to independently protect and enforce its
rights, including without limitation, the rights arising out of this Agreement or out of the
other Transaction Documents, and it shall not be necessary for any other Holder to be joined
as an additional party in any proceeding for such purpose. Each Holder has been represented
by its own separate legal counsel in their review and negotiation of this Agreement and the
Transaction Documents.
(d) If any provision of this Agreement is prohibited by law or otherwise determined to
be invalid or unenforceable by a court of competent jurisdiction, the provision that would
otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the remaining provisions
of this Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and
the prohibited nature, invalidity or unenforceability of the provision(s) in question does
not substantially impair the respective expectations or reciprocal obligations of the
parties or the practical realization of the benefits that would otherwise be conferred upon
the parties. The parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or unenforceable
provision(s).
(f) This Agreement shall be governed by and interpreted in accordance with laws of the
State of New York, excluding its choice of law rules. The parties hereto hereby waive the
right to a jury trial in any litigation resulting from or related to this Agreement. The
parties hereto consent to exclusive jurisdiction and venue in the federal courts sitting in
the southern district of New York, unless no federal subject matter jurisdiction exists, in
which case the parties hereto consent to exclusive jurisdiction and venue in the New York
state courts in the borough of Manhattan, New York. Each party waives all defenses of lack
of personal jurisdiction and forum non conveniens. Process may be served on any party
hereto in the manner authorized by applicable law or court rule.
***********************
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IN WITNESS WHEREOF, this Agreement is executed as of the date first set forth above.
| T3 MOTION, INC. | ||||||
| By: | /s/ Ki Nam | |||||
| Name: Ki Nam | ||||||
| Title: Chief Executive Officer | ||||||
[signature page(s) of Holders to follow]
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THE HOLDERS THEREUNDER
| Name of Holder: | Vision Opportunity Master Fund, Ltd. | |||||
| By: | /s/ Xxxx Xxxxxxxx | |||||
| Name: | Xxxx Xxxxxxxx | |||||
| Title: | Director | |||||
| Principal Amount of Debentures: | $2,298,114.00 (Accrued Interest $205,811.00) | |||||
| Warrants: | 8,827,715 | |||||
THE HOLDERS THEREUNDER
| Name of Holder: | Vision Capital Advantage Fund, L.P. | |||||
| By: | /s/ Xxxx Xxxxxxxx | |||||
| Name: | Xxxx Xxxxxxxx | |||||
| Title: | Authorized Signatory | |||||
| Principal Amount of Debentures: | $501,866.00 (Accrued Interest $50,189.00) | |||||
| Warrants: | 2,145,055 | |||||
Schedule A
List of Warrants
| Exchange Allocation of | ||||||||||||||||||||||||||||
| Current Allocation | Preferred Stock | |||||||||||||||||||||||||||
| Warrant | VOMF | VCAF | Totals | VOMF | VCAF | Totals | ||||||||||||||||||||||
A |
1,002,428 | 296,273 | 1,298,701 | 206,806 | 61,124 | 267,930 | ||||||||||||||||||||||
B |
1,002,428 | 296,273 | 1,298,701 | 206,806 | 61,124 | 267,930 | ||||||||||||||||||||||
C |
1,002,428 | 296,273 | 1,298,701 | 206,806 | 61,124 | 267,930 | ||||||||||||||||||||||
D |
514,580 | 152,087 | 666,667 | 106,161 | 31,377 | 137,538 | ||||||||||||||||||||||
E |
300,000 | 300,000 | 61,893 | 0 | 61,893 | |||||||||||||||||||||||
F |
5,005,851 | 1,104,149 | 6,110,000 | 1,032,732 | 227,797 | 1,260,529 | ||||||||||||||||||||||
Totals |
8,827,715 | 2,145,055 | 10,972,770 | 1,821,203 | 442,546 | 2,263,750 | ||||||||||||||||||||||
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