T3 MOTION, INC.

 

AMENDMENT AND WAIVER AGREEMENT

 

THIS AMENDMENT AND WAIVER AGREEMENT (this “Amendment”) to (i) the Securities
Purchase Agreement (the “Purchase Agreement”) dated as of November 26, 2012, by
and between T3 Motion, Inc., a Delaware corporation (the “Company”) and the
Purchasers, (ii) the Security Agreement (“Security Agreement”) dated as of
November 26, 2012, (iii) each of the Subsidiary Guarantees dated as of November
26, 2012 (the “Subsidiary Guarantees”) and (iv) each of the Senior Secured
Convertible Debentures due November 27, 2013, (the “Debentures”) is dated as of
March 4, 2013, between the Company and the Purchasers. Capitalized terms used,
but not defined, herein, shall have the meanings ascribed to such terms in the
Purchase Agreement, as amended by this Amendment.

 

RECITALS

 

WHEREAS, the Company and the Purchasers are parties to the Transaction
Documents;

 

WHEREAS, the Company has negotiated the terms of a factoring agreement (the
“Factoring Transaction”) with certain Second Closing Purchasers (“Factor”);

 

WHEREAS, as a condition to entering into the Factoring Transaction, Factor is
requiring that the priority of payment set forth in the Security Agreement
provide the Factor with priority payment rights to any proceeds from the sale of
Collateral (as defined in the Security Agreement) subject to a security interest
in the Factoring Transaction;

 

WHEREAS, the Company desires to issue and sell to certain Purchasers (the
“Second Closing Purchasers”), and the Second Closing Purchasers, severally and
not jointly, desire to purchase from the Company in a second closing (the
“Second Closing”), additional Debentures in the aggregate principal amount of up
to $646,750 (the “Additional Debentures”) and additional Warrants (the
“Additional Warrants”) on substantially the same terms, prices and conditions as
those set forth in the Debentures and Warrants issued pursuant to the Purchase
Agreement; and

 

WHEREAS, the Company and the Purchasers desire to amend and/or waive certain
provisions of the Purchase Agreement, the Security Agreement, the Subsidiary
Guarantees and the Debentures to provide for, among other things, the Factoring
Transaction and the Second Closing.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties, intending to be legally bound,
hereby agree as follows:

 

1.          Amendments to Purchase Agreement.

 

(a)          Closing Dates. The definition of “Closing Dates” in Section 1 of
the Purchase Agreement is hereby deleted in its entirety and the following new
definition shall be substituted in lieu thereof:

  

"Closing Dates" means, collectively, the dates of the First Closing, the Second
Closing and the Subsequent Closing(s).

 

 

 

 

(b)          Debentures. The definition of “Debentures” in Section 1 of the
Purchase Agreement is hereby deleted in its entirety and the following new
definition shall be substituted in lieu thereof:

 

“Debentures” means (i) the Senior Secured Convertible Debentures due, subject to
the terms therein, 12 months from their date of issuance, issued by the Company
to the Purchasers hereunder, in the form of Exhibit A attached hereto and (ii)
the Additional Debentures, as applicable.

 

(c)          Transaction Documents. The definition of “Transaction Documents” in
Section 1 of the Purchase Agreement is hereby deleted in its entirety and the
following new definition shall be substituted in lieu thereof:

 

"Transaction Documents" means, this Agreement, the Debentures, the Additional
Debentures, the Warrants, the Additional Warrants, the Security Agreement, the
Subsidiary Guarantees, the Escrow Agreement, the Lock-Up Agreement, the Voting
Agreement, the Amendment Agreement, all exhibits and schedules thereto and
hereto and any other documents or agreements executed in connection with the
transactions contemplated hereunder.

 

(d)          Warrants. The definition of “Warrants” in Section 1 of the Purchase
Agreement is hereby deleted in its entirety and the following new definition
shall be substituted in lieu thereof:

 

“Warrants” means (i) the Common Stock purchase warrants delivered to the
Purchasers at the applicable Closing in accordance with Section 2.2(a) hereof,
which Warrants shall be exercisable immediately and have a term of exercise
equal to five years, in the form of Exhibit C attached hereto and (ii) the
Additional Warrants, as applicable.

 

(e)          Second Closing. Section 1 of the Purchase Agreement is hereby
amended to add the following definition:

 

“Second Closing” shall have the meaning ascribed to such term in the Amendment
Agreement.

 

(f)          Amendment Agreement. Section 1 of the Purchase Agreement is hereby
amended to add the following definition:

 

“Amendment Agreement” means the Amendment and Waiver Agreement to this
Agreement, the Security Agreement, the Subsidiary Guarantees and the Debentures
dated as of March [●], 2013, between the Company and the Purchasers.

 

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(g)          Additional Debentures. Section 1 of the Purchase Agreement is
hereby amended to add the following definition:

 

“Additional Debentures” shall have the meaning ascribed to such term in the
Amendment Agreement.

 

(h)          Additional Warrants. Section 1 of the Purchase Agreement is hereby
amended to add the following definition:

 

“Additional Warrants” shall have the meaning ascribed to such term in the
Amendment Agreement.

 

(i)          Use of Proceeds. Section 4.9 of the Purchase Agreement is hereby
deleted in its entirety and the following new Section 4.9 shall be substituted
in lieu thereof:

 

Except as set forth on Schedule 4.9 attached hereto, the Company shall use the
net proceeds from the sale of the Securities hereunder for working capital
purposes and shall not use such proceeds: (a) for the satisfaction of any
portion of the Company’s debt (other than payment of trade payables in the
ordinary course of the Company’s business and prior practices), (b) for the
redemption of any Common Stock or Common Stock Equivalents, (c) for the
settlement of any outstanding litigation or (d) in violation of FCPA or OFAC
regulations.

 

(j)          Signature Page. The signature pages to the Purchase Agreement held
by the Second Closing Purchasers shall be substituted with the signature page in
the form attached as Exhibit A hereto.

 

2.          Amendments to Security Agreement.

 

(a)          Preamble. The preamble to the Security Agreement is hereby deleted
in its entirety and the following new preamble shall be substituted in lieu
thereof:

 

This SECURITY AGREEMENT, dated as of November 26, 2012 (this “Agreement”), is
among T3 Motion, Inc., a Delaware corporation (the “Company”), all of the
Subsidiaries of the Company (such subsidiaries, the “Guarantors” and together
with the Company, the “Debtors”) and the holders of the Company’s Senior Secured
Convertible Debentures due November 27, 2013, in the aggregate principal amount
of $5,000,000.00 (each such Debenture being pari passu with all other Debentures
for purposes of the application of proceeds pursuant to Section 9 of this
Agreement) (collectively, the “Debentures”) signatory hereto, their endorsees,
transferees and assigns (collectively, the “Secured Parties”).

 

3.          Amendments to Debentures.

 

(a)          Permitted Indebtedness. The definition of “Permitted Indebtedness”
in Section 1 of each of the Debentures is hereby deleted in its entirety and the
following new definition shall be substituted in lieu thereof:

  

“Permitted Indebtedness” means (a) the indebtedness evidenced by the Debentures,
(b) the Indebtedness existing on the Original Issue Date and set forth on
Schedule 3.1(aa) attached to the Purchase Agreement, (c) lease obligations and
purchase money indebtedness of up to $150,000, in the aggregate, incurred in
connection with the acquisition of capital assets and lease obligations with
respect to newly acquired or leased assets and (d) the Factoring Transaction.

 

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4.          Waivers.

 

(a)          Purchase Agreement Waiver. Solely with respect to the Second
Closing, each Purchaser hereby waives any rights that it may have under Sections
2.2 (Deliveries), 4.12 (Participation in Future Financing), 4.13(b) (Subsequent
Equity Sales), 4.14 (Equal Treatment of Purchasers) and 4.17 (Most Favored
Nation Provision) of the Purchase Agreement, including the notice provisions
thereof.

 

(b)          Subsidiary Guarantees Waiver. Solely with respect to the Second
Closing and the Factoring Transaction, each Purchaser hereby waives any rights
it may have under Sections 4(b)(i) and 4(b)(ii) of each of the Subsidiary
Guarantees, including the notice provisions thereof.

 

(c)          Debenture Waiver. Solely with respect to the Second Closing and the
Factoring Transaction, each Purchaser hereby waives any rights that it may have
under Sections 7(a), 7(b) and 7(k) of each of the Debentures, including the
notice provisions thereof.

 

5.          Second Closing. On the date of the Second Closing, upon the terms
and subject to the conditions set forth herein, substantially concurrent with
the execution and delivery of this Amendment by the parties hereto, the Company
agrees to sell, and the Purchasers, severally and not jointly, agree to
purchase, up to an aggregate of $646,750 in principal amount of the Additional
Debentures and Additional Warrants. At the Second Closing, each Second Closing
Purchaser shall deliver to the Escrow Agent, via wire transfer or a certified
check, immediately available funds equal to such Purchaser’s Second Closing
Subscription Amount as set forth on the signature page for such Second Closing
executed by such Second Closing Purchaser, and the Company shall deliver to each
Second Closing Purchaser its respective Additional Debenture and Additional
Warrant. Upon satisfaction of the conditions set forth in Section 6, the Second
Closing shall occur at the offices of EGS or such other location as the parties
shall mutually agree.

 

6.          Second Closing Conditions.

 

(a)          The obligations of the Company to effect the amendments set forth
in Sections 1, 2 and 3 of this Amendment and to consummate the Second Closing
pursuant to Section 5 of this Amendment are subject to each of the following
conditions being met:

 

(i)          The Second Closing Purchaser’s shall have delivered their
respective Second Closing Subscription Amount as to the Second Closing by wire
transfer;

 

(ii)          the accuracy in all material respects on such Closing Date of the
representations and warranties of the Purchasers contained herein (unless as of
a specific date therein in which case they shall be accurate as of such date);

 

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(iii)          The Second Closing Purchasers shall have performed and complied
with all covenants, agreements, obligations and conditions contained in this
Amendment that are required to be performed or complied with by them on or
before the Second Closing.

 

(b)          The respective obligations of the Second Closing Purchasers
hereunder in connection with the Second Closing are subject to each of the
following conditions being met:

 

(i)          the delivery by the Company of the Additional Debentures and
Additional Warrants;

 

(ii)          the accuracy in all material respects when made and on such
Closing Date of the representations and warranties of the Company contained
herein (unless as of a specific date therein);

 

(iii)          all obligations, covenants and agreements of the Company required
to be performed at or prior to the Second Closing Date shall have been
performed;

 

(iv)          there shall have been no Material Adverse Effect with respect to
the Company since the date hereof; and

 

(v)          from the date hereof to the Second Closing Date, trading in the
Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market and, at any time prior to such Closing Date, trading in
securities generally as reported by Bloomberg L.P. shall not have been suspended
or limited, or minimum prices shall not have been established on securities
whose trades are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States or New York
State authorities nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of such Purchaser, makes
it impracticable or inadvisable to purchase the Securities at the Second Closing
Date.

 

8.          Event of Default. Each Purchaser hereby agrees that neither the
Company’s entry into this Agreement nor the Factoring Transaction shall
constitute an Event of Default, as such term is defined in each of the
Debentures.

 

9.          Public Disclosure. The Company shall, on or before 9:30 am ET on the
Trading Day following the date hereof, issue a Current Report on Form 8-K,
reasonably acceptable to the Purchasers, disclosing the material terms of the
transactions contemplated hereby, and shall attach this Amendment thereto. The
Company shall consult with the Purchasers in issuing any other press releases
with respect to the transactions contemplated hereby.

 

10.          Expenses. At the Second Closing, the Company agrees to reimburse
Alpha Capital Anstalt (“Alpha”) for its legal fees and expenses, up to a maximum
of $10,000.00. Except as set forth in the foregoing sentence, each party shall
pay the fees and expenses of its own advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Amendment.

 

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11.          Ratification. Except as expressly amended hereby, all of the terms,
provisions and conditions of each of the Purchase Agreement, the Security
Agreement, the Subsidiary Guarantees and the Debentures are hereby ratified and
confirmed in all respects by each party hereto and, except as expressly amended
hereby, are, and hereafter shall continue, in full force and effect.

 

12.          Entire Agreement. This Amendment, the Purchase Agreement, the
Security Agreement, the Subsidiary Guarantees and the Debentures, constitute the
entire agreement of the parties with respect to the subject matter hereof and
supersede all prior and contemporaneous agreements and understandings, both
written and oral, between the parties with respect thereto.

 

13.          Conflicting Terms. In the event of any inconsistency or conflict
between the Purchase Agreement, the Security Agreement, the Subsidiary
Guarantees or the Debentures and this Amendment, the terms, conditions and
provisions of this Amendment shall govern and control.

 

14.          Amendments. No amendment, supplement, modification or waiver of
this Amendment shall be binding unless executed in writing by the Company and
the Purchasers holding at least 51% in interest of the Securities then
outstanding or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought.

 

15.          Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract. Each party shall be entitled
to rely on a facsimile signature of any other party hereunder as if it were an
original.

 

16.          Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction.

 

17.          Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed this Amendment and Waiver
Agreement on the day and year first above written.

 

  T3 MOTION, INC.           By:         Name:       Title:  

 

Signature Page to Amendment and Waiver Agreement

 

 

IN WITNESS WHEREOF, IN WITNESS WHEREOF, the parties have executed this Amendment
and Waiver Agreement on the day and year first above written.

 

Name of Purchaser: ________________________________________________________

 

Signature of Authorized Signatory of Purchaser:
__________________________________

 

Name of Authorized Signatory:
____________________________________________________

 

Title of Authorized Signatory:
_____________________________________________________

 

Email Address of Authorized Signatory:
_____________________________________________

 

Facsimile Number of Authorized Signatory:
__________________________________________

 

Address for Notice of Purchaser:

  

Signature Page to Amendment and Waiver Agreement

 

 

Exhibit A

 

Second Closing Signature Page

 

[PURCHASER SIGNATURE PAGES TO TTTM SECURITIES PURCHASE AGREEMENT]

  

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

  

Name of Purchaser:
___________________________________________________________________________

  

Signature of Authorized Signatory of Purchaser:
_____________________________________________________

  

Name of Authorized Signatory:
_______________________________________________________________________

  

Title of Authorized Signatory:
________________________________________________________________________

  

Email Address of Authorized Signatory:
________________________________________________________________

  

Facsimile Number of Authorized Signatory:
_____________________________________________________________

  

Address for Notice to Purchaser:

 

 

Address for Delivery of Securities to Purchaser (if not same as address for
notice):

 

 

Subscription Amount: ____________________

 

First Closing Subscription Amount: _______________________ 

Second Closing Subscription Amount: _______________________

Aggregate Subsequent Closing Subscription Amounts: _____________________ 

First Closing Warrant Shares: ________________________

Second Closing Warrant Shares: _______________________

Aggregate Subsequent Warrant Shares: _______________________

 

EIN Number: ______________________________