Document:

exv10w33

EXHIBIT 10.33

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, 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 UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144
OR RULE 144A UNDER SAID ACT.

10% CONVERTIBLE NOTE

			
	 	 	 
	 
	 	February 23, 2009
	 	 	 
	Up to $1,000,000
	 	Irvine, California
	 	 	 

     FOR VALUE RECEIVED, T3 Motion, Inc. (the “Maker”), promises to pay to the order of Ki Nam, at
the offices of T3 Motion, Inc. (the “Payee”, which term includes any subsequent holder hereof), or
at such other place as the Payee may designate, the principal sum of the amount set forth on
Schedule 1 as adjusted from time to time but no greater than One Million Dollars ($1,000,000.00),
together with interest on the unpaid principal balance of this Note from time to time outstanding.
The unpaid principal balance hereof from time to time outstanding shall bear interest at the rate
of 10% per annum. Subject to the terms and conditions hereof, all principal and interest due
hereunder shall be paid in one payment on the one-year anniversary of this Note unless otherwise
prepaid or delayed pursuant to the other terms of this Note.

     1. Payment; Principal.

          (a) Interest. Interest on this Note shall be computed on the basis of a year of 365
days for the actual number of days elapsed. All payments by the Maker under this Note shall be in
immediately available funds. Notwithstanding any other provision of this Note to the contrary, the
payment of any principal, interest or other obligation owing under this Note shall be deferred
until the Maker closes an equity or debt financing (or series of financings) of at least $10
million in gross proceeds. This deferral shall apply even if the Maker has suffered an “Event of
Default” as described herein.

          (b) Additional Principal. Maker may notify the Payee in writing that Maker wishes to
borrow additional funds from the Payee pursuant to this Note. The Payee shall have the sole option
of making such loan. Any additional funds shall increase the principal amount due under this Note
and shall be evidenced by adjusting the balance schedule set forth on Schedule 1 (“Balance
Schedule”) accordingly. Payee shall deliver the Balance Schedule to Maker so that it may be
updated.

     2. Events of Default. This Note shall become immediately due and payable without
demand upon the occurrence at any time of any of the following events of default (individually, “an
Event of Default” and collectively, “Events of Default”):

	 	(a)	 	default in the payment or performance of this or any other
liability or obligation of the Maker to the Payee, including the payment when
due of any principal, premium or interest under this Note; provided that there
shall be no default

 

 

	 	 	 	under this subsection (a) if Ki Nam is the Chief Executive Officer, the
Marker’s Board of Directors has authorized such payment and the Maker has
funds to make such payment;
	 
	 	(b)	 	the Maker shall have become insolvent or shall
generally not pay its debts as they mature or shall apply for, shall
consent to, or shall acquiesce in the appointment of a custodian,
trustee or receiver for the Maker or for a substantial part of the
property thereof or, in the absence of such application, consent or
acquiescence, a custodian, trustee or receiver shall be appointed for
the Maker or for a substantial part of the property thereof and such
appointment is not terminated or dismissed within thirty (30) days
after the appointment;
	 
	 	(c)	 	the liquidation, termination of existence or
dissolution of the Maker;
	 
	 	(d)	 	the institution against the Maker or any endorser or
guarantor of this Note of any proceedings under the United States
Bankruptcy Code or any other federal or state bankruptcy,
reorganization, receivership, insolvency or other similar law
affecting the rights of creditors generally, which proceeding is not
dismissed within thirty (30) days of filing; or
	 
	 	(e)	 	the institution by the Maker or any endorser or
guarantor of this Note of any proceedings under the United States
Bankruptcy Code or any other federal or state bankruptcy,
reorganization, receivership, insolvency or other similar law
affecting the rights of creditors generally or the making by the Maker
or any endorser or guarantor of this Note of a composition or an
assignment or trust mortgage for the benefit of creditors.

     Upon the happening of any Event of Default, this Note shall bear interest until paid in full
at an annual rate which is two (2) percentage points above the rate per year specified in the first
paragraph of this Note. In no event shall any interest charged, collected or reserved under this
Note exceed the maximum rate then permitted by applicable law and if any such payment is paid by
the Maker, then such excess sum shall be credited by the holder as a payment of principal.

     3. Conversion Right. Maker shall notify Payee whenever it conducts an Equity
Financing Offer. During the pendency of an Equity Financing Offer but prior to the earlier of (i)
the closing of the securities pursuant to the Equity Financing Offer or (ii) withdrawal of such
Equity Financing Offer to the applicable offerees, the Payee shall be entitled to convert any
portion of the outstanding and unpaid Conversion Amount (as defined below) into “Units” of Maker’s
securities at the Conversion Rate (as defined below).

          (a) “Conversion Rate” means the number of Units issuable upon conversion of any Conversion
Amount determined by dividing (x) such Conversion Amount by (y) the Conversion Price.

          (b) “Conversion Amount” means the portion of the principal and interest of the Note to be
converted, redeemed or otherwise with respect to which this determination is being made.

          (c) “Conversion Price” means $1.65 per Unit.

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          (d) “Unit” shall mean one validly issued, fully paid and non-assessable Share and Warrant to
purchase one Share at $2.00 per Share.

          (e) “Equity Financing Offer” means Maker’s offer to sell its Common Stock and Common Stock
Equivalents to potential third parties; provided that, Equity Financing Offer does not include any
offers to employees, officers, directors, or consultants which are pursuant to a stock incentive
plan or otherwise compensatory in nature; or offers in connection with acquisitions,
non-convertible loans, licenses, or other transactions in which the primary purpose is not to raise
capital for Maker.

          (f) “Common Stock Equivalents” means any securities of the Maker 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.

     4. Mechanics of Conversion. To convert any Conversion Amount into Units on any date
(a “Conversion Date”), the Payee shall (A) transmit by facsimile (or otherwise deliver), for
receipt on or prior to 5:00 p.m., Pacific Time, on such date, a copy of an executed notice of
conversion (the “Conversion Notice”) to the Maker and (B) surrender this Note to a common carrier
for delivery to the Maker as soon as practicable on or following such date (or an indemnification
undertaking with respect to this Note in the case of its loss, theft or destruction). The Maker
shall transmit by facsimile a confirmation of receipt of such Conversion Notice to the Payee and
the Maker’s transfer agent, (the “Transfer Agent”). The Transfer Agent shall issue and deliver to
the address as specified in the Conversion Notice, a certificate or certificates, registered in the
name of the Payee or its designee, for the number of shares of Common Stock to which the Payee
shall be entitled. The Maker shall issue and deliver to the address as specified in the Conversion
Notice, a certificate or certificates, registered in the name of the Payee or its designee, for the
number of shares to which the Payee shall be entitled. If the outstanding Principal of this Note
is greater than the Principal portion of the Conversion Amount being converted, then the Maker
shall as soon as practicable and in no event later than ten (10) business days after receipt of
this Note, update the Balance Schedule to reflect the new outstanding Principal. The Person or
Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note
shall be treated for all purposes as the record holder or holders of such shares of Common Stock on
the Conversion Date.

     5. Legend. All securities issued pursuant to the conversion shall bear a legend that
reads:

THE SECURITIES EVIDENCED BY THIS CERTIFICATE 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 OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

     6 Adjustment.

          (a) Capitalization Changes. If the Maker at any time on or after the date of this
Note subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion
Price and warrant exercise price in effect immediately prior to such subdivision will be
proportionately reduced. If the Maker at any time on or after the Closing Date combines (by
combination, reverse stock split or otherwise) one or more classes of its outstanding shares of
Common Stock into a smaller number of

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shares, the Conversion Price and warrant exercise price in effect immediately prior to such
combination will be proportionately increased.

          (b) Subsequent Financings. From the date hereof until the Note is satisfied, if in
connection with an issuance of Common Stock or Common Stock Equivalents for cash consideration
(“Subsequent Financing”), the Maker shall issue any Common Stock or Common Stock Equivalents
entitling any person or entity to acquire shares of Common Stock at an effective price per share
less than the Conversion Price (subject to reverse and forward stock splits and the like), the
Maker shall decrease the Conversion Price with respect to the shares of Common Stock to the
“Discounted Price” (as defined below). The term “Discounted Price” shall mean the Conversion
Price reduced by multiplying the then current Conversion Price by a fraction, the numerator of
which is the number of shares of Common Stock issued and outstanding immediately prior to the
Subsequent Financing plus the number of shares of Common Stock which the offering price for such
Subsequent Financing would purchase at the then Conversion Price, and the denominator of which
shall be the sum of the number of shares of Common Stock issued and outstanding immediately prior
to the Subsequent Financing plus the number of shares of Common Stock so issued or issuable in
connection with the Subsequent Financing. The sale of Common Stock Equivalents shall be deemed to
have occurred at the time of the issuance of the Common Stock Equivalents and the Discounted Price
covered thereby shall also include the actual exercise or conversion price thereof at the time of
the conversion or exercise (in addition to the consideration per share of Common Stock underlying
the Common Stock Equivalents received by the Maker upon such sale or issuance of the Common Stock
Equivalents). Notwithstanding anything to the contrary herein, this Section not apply in respect
of an “Exempt Issuance.” An “Exempt Issuance” means (a) shares of Common Stock or options to
employees, consultants, officers or directors of the Maker pursuant to any stock or option plan,
(b) securities upon the exercise or exchange of or conversion of any securities exercisable or
exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of
this Agreement, (c) shares issuable to institutional Payees to the Maker 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 Maker.

     7. Set-off. All payments by the Maker under this Note shall be made without set-off
or counterclaim and be free and clear and without any deduction or withholding for any taxes or
fees of any nature whatever, unless the obligation to make such deduction or withholding is imposed
by law. The Maker shall pay and save the holder harmless from all liabilities with respect to or
resulting from any delay or omission to make any such deduction or withholding required by law.

     8. Payment Priority. Whenever any amount is paid under this Note, all or part of the
amount paid may be applied to principal, premium or interest in such order and manner as shall be
determined by the Payee in its sole discretion. The Maker agrees to pay on demand all costs of
collection, including reasonable attorneys’ fees, incurred by the Payee in enforcing the
obligations of the Maker under this Note.

     9. Indemnification. The Maker shall indemnify and hold the Payee harmless from and
against any and all claims, losses and liabilities (including reasonable attorneys’ fees) growing
out of or resulting from this Note and the security interest hereby created (including enforcement
of this Note) or the Maker’s actions pursuant hereto, except claims, losses or liabilities
resulting from the Payee’s gross negligence or willful misconduct. Any liability of the Maker to
indemnify and hold the Payee harmless pursuant to the preceding sentence shall be part of the
obligations secured by the security interest. The obligations of the Maker under this paragraph
shall survive any termination of this Note.

     10. Waiver. No delay or omission on the part of the holder in exercising any right
under this Note shall operate as a waiver of such right or of any other right of such holder, nor
shall any delay,

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omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other
right on any future occasion. The Maker and every endorser or guarantor of this Note regardless of
the time, order or place of signing waives presentment, demand, protest and notices of every kind
and assents to any extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral, and to the addition or release of any other party
or person primarily or secondarily liable.

     11. Prepayment. This Note may, at the option of the Maker, be prepaid in whole or in
part at any time or from time to time, without premium or penalty.

     12. Amendment. None of the terms or provisions of this Note may be excluded, modified
or amended except by a written instrument duly executed by the Payee expressly referring to this
Note and setting forth the provision so excluded, modified or amended.

     13. Currency. All references herein to “$” or “dollars” refer to United States
dollars, and all payments due hereunder shall be payable in lawful currency of the United States.

     14. Governing Law. The validity, construction and enforceability of this Note shall
be governed by the internal laws of the State of California, without giving effect to conflict of
laws principles thereof.

	 	 	 	 	 
	 	T3 MOTION, INC.

 	 
	 	By:  	 	 
	 	Name:  	Ki Nam 	 
	 	Title:  	Chief Executive Officer 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	 	 
	 	Name:  	Kelly J. Anderson 	 
	 	Title:  	Chief Financial Officer 	 
	 

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Schedule 1

BALANCE SCHEDULE

The 10% Convertible Note due on February 23, 2009 in the amount set forth on this Schedule 1 is
issued by T3 Motion, Inc., a Delaware corporation. This Schedule reflects loans from Holder and
payments and loan conversion made under the above referenced Note.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Aggregate	 	 
	 	 	 	 	 	 	Principal	 	 
	 	 	 	 	 	 	Amount	 	 
	 	 	 	 	 	 	Remaining	 	 
	 	 	Date of	 	 	 	Subsequent to	 	 
	Type of	 	Loan/Payment/	 	 	 	Loan/ Payment/	 	 
	Transaction:	 	Conversion	 	Amount of	 	Conversion	 	 
	(L) Loan	 	(or for first entry,	 	Loan/	 	(or original	 	 
	(P) Payment	 	Original Issue	 	Payment /	 	Principal	 	 
	(C) Conversion	 	Date)	 	Conversion	 	Amount)	 	Company Attest
	 
	 	 	 	 	 	 	 	 

- 6 -exv10w34

EXHIBIT 10.34

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

SERIES E COMMON STOCK PURCHASE WARRANT

T3 MOTION, INC.

			
	 	 	 
	Warrant Shares:                     
	 	Initial Issuance Date: February 23, 2009     

          THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,
Ki Nam (the “Holder”) is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the
“Initial Issuance Date”) and on or prior to the close of business on the five year
anniversary of the Initial Issuance Date (the “Termination Date”) but not thereafter, to
subscribe for and purchase from T3 Motion, Inc., a Delaware corporation (the “Company”), up
to 303,030 shares (the “Warrant Shares”) of Common Stock. The purchase price of one share
of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section
2(b).

     Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities Purchase Agreement (the
“Purchase Agreement”), dated February 23, 2009, among the Company and the purchasers
signatory thereto.

     Section 2. Exercise.

     a) Exercise of Warrant. Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the Initial
Issuance Date and on or before the Termination Date by delivery to the Company (or such
other office or agency of the Company as it may designate by notice in writing to the
registered Holder at the address of the Holder appearing on the books of the Company) of a
duly executed facsimile copy of the Notice of Exercise Form annexed hereto; and, within 3
Business Days of the date said Notice of Exercise is delivered to the Company, the Company
shall have received payment of the aggregate Exercise Price of

1

 

the shares thereby purchased by wire transfer or cashier’s check drawn on a United
States bank. Notwithstanding anything herein to the contrary, the Holder shall not be
required to physically surrender this Warrant to the Company until the Holder has purchased
all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in
which case, the Holder shall surrender this Warrant to the Company for cancellation within 3
Business Days of the date the final Notice of Exercise is delivered to the Company. Partial
exercises of this Warrant resulting in purchases of a portion of the total number of Warrant
Shares available hereunder shall have the effect of lowering the outstanding number of
Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant
Shares purchased. The Holder and the Company shall maintain records showing the number of
Warrant Shares purchased and the date of such purchases. The Company shall deliver any
objection to any Notice of Exercise Form within 1 Business Day of receipt of such notice.
In the event of any dispute or discrepancy, the records of the Holder shall be controlling
and determinative in the absence of manifest error. The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this
paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number
of Warrant Shares available for purchase hereunder at any given time may be less than the
amount stated on the face hereof.

     b) Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be $2.00, subject to adjustment hereunder (the “Exercise Price”).

     c) Cashless Exercise. If at any time after the 18-month anniversary of the
date of the Purchase Agreement, there is no effective Registration Statement registering, or
no current prospectus available for, the resale of the Warrant Shares by the Holder, then,
subject to board approval, this Warrant may also be exercised at such time by means of a
“cashless exercise” in which the Holder shall be entitled to receive a certificate for the
number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A),
where:

	 	(A)	 = 	the VWAP on the Business Day immediately preceding the date
of the delivery of the Notice of Exercise;
	 
	 	(B)	 = 	the Exercise Price of this Warrant, as adjusted; and
	 
	 	(X)	 = 	the number of Warrant Shares issuable upon exercise of this
Warrant in accordance with the terms of this Warrant by means of a cash
exercise rather than a cashless exercise.

     d) Reserved.

     e) Mechanics of Exercise.

     i. Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the Transfer Agent to the

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Holder by crediting the account of the Holder’s prime broker with the
Depository Trust Company through its Deposit Withdrawal Agent Commission
(“DWAC”) system if the Company is then a participant in such system
and either (A) there is an effective Registration Statement permitting the
resale of the Warrant Shares by the Holder or (B) the shares are eligible
for resale without volume or manner-of-sale limitations pursuant to Rule
144, and otherwise by physical delivery to the address specified by the
Holder in the Notice of Exercise within 7 Business Days from the delivery to
the Company of the Notice of Exercise Form, surrender of this Warrant (if
required) and payment of the aggregate Exercise Price as set forth above
(the “Warrant Share Delivery Date”). This Warrant shall be deemed
to have been exercised on the date the Exercise Price is received by the
Company. The Warrant Shares shall be deemed to have been issued, and Holder
or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the
date the Warrant has been exercised by payment to the Company of the
Exercise Price (or by cashless exercise, if permitted) and all taxes
required to be paid by the Holder, if any, pursuant to Section 2(e)(vi)
prior to the issuance of such shares, have been paid.

     ii. Delivery of New Warrants Upon Exercise. If this Warrant
shall have been exercised in part, the Company shall, at the request of a
Holder and upon surrender of this Warrant certificate, at the time of
delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase
the unpurchased Warrant Shares called for by this Warrant, which new Warrant
shall in all other respects be identical with this Warrant.

     iii. Reserved.

     iv. Reserved.

     v. No Fractional Shares or Scrip. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of
this Warrant. As to any fraction of a share which Holder would otherwise be
entitled to purchase upon such exercise, the Company shall, at its election,
either pay a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Exercise Price or round up to the
next whole share.

     vi. Charges, Taxes and Expenses. Issuance of certificates for
Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company,
and such certificates shall be issued in the name of the Holder

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or in such name or names as may be directed by the Holder;
provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder and the Company
may require, as a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.

     vii. Closing of Books. The Company will not close its
stockholder books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.

     Section 3. Certain Adjustments.

          a) Stock Dividends and Splits. If the Company, at any time while this Warrant
is outstanding: (i) pays a stock dividend or otherwise make a distribution or distributions
on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, (iii) combines (including
by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding immediately after such
event and the number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain
unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective
immediately after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or re-classification.

          b) Reserved.

          c) Reserved.

          d) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to Holders of the
Warrants) evidences of its indebtedness or assets (including cash and cash dividends) or
rights or warrants to subscribe for or purchase any security other than the Common Stock
(which shall be subject to Section 3(b)), then in each such case the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by a fraction
of which the denominator shall be the VWAP determined as of the record date mentioned above,
and of which the numerator shall be such VWAP on such record date less the then

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per share fair market value at such record date of the portion of such assets or
evidence of indebtedness so distributed applicable to one outstanding share of the Common
Stock as determined by the Board of Directors in good faith. In either case the adjustments
shall be described in a statement provided to the Holder of the portion of assets or
evidences of indebtedness so distributed or such subscription rights applicable to one share
of Common Stock. Such adjustment shall be made whenever any such distribution is made and
shall become effective immediately after the record date mentioned above.

          e) Fundamental Transaction. If, at any time while this Warrant is outstanding,
(i) the Company effects any merger or consolidation of the Company with or into another
Person, (ii) the Company effects any sale of all or substantially all of its assets in one
or a series of related transactions, (iii) any tender offer or exchange offer (whether by
the Company or another Person) is completed pursuant to which holders of Common Stock are
permitted to tender or exchange their shares for other securities, cash or property or (iv)
the Company effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or exchanged for
other securities, cash or property (each a “Fundamental Transaction”), then, upon
any subsequent exercise of this Warrant, the Holder shall have the right to receive, for
each Warrant Share that would have been issuable upon such exercise immediately prior to the
occurrence of such Fundamental Transaction, the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”) receivable as a
result of such merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such
event. For purposes of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common Stock are given any choice
as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction.

          f) Calculations. All calculations under this Section 3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this
Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

          g) Notice to Holder.

     i. Adjustment to Exercise Price. Whenever the Exercise Price is
adjusted pursuant to any provision of this Section 3, the Company shall
promptly mail to the Holder a notice setting forth the Exercise Price after

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such adjustment and setting forth a brief statement of the facts
requiring such adjustment.

     ii. Notice to Allow Exercise by Holder. If (A) the Company
shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock, (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants
to subscribe for or purchase any shares of capital stock of any class or of
any rights, (D) the approval of any stockholders of the Company shall be
required in connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Company, then, in each case, the Company shall cause to be
mailed to the Holder at its last address as it shall appear upon the Warrant
Register of the Company, at least 3 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be
taken, the date as of which the holders of the Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to
become effective or close, and the date as of which it is expected that
holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale,
transfer or share exchange; provided that the failure to mail such notice or
any defect therein or in the mailing thereof shall not affect the validity
of the corporate action required to be specified in such notice. The Holder
is entitled to exercise this Warrant during the period commencing on the
date of such notice to the effective date of the event triggering such
notice.

     h) Other Adjustment. In the event that the Company fails to consummate a
“Qualified Financing” (as defined below) on or before April 30, 2009, the Exercise Price
hereunder shall be reduced to equal the lesser of (i) the then effective Exercise Price and
(ii) $1.65 (subject to adjustment for forward and reverse stock splits, stock dividends,
recapitalizations and the like that occur after the date of the Purchase Agreement). For
clarity, the Exercise Price can only be adjusted downward pursuant to this Section 3(h). As
used herein, “Qualified Financing” means an issuance by the Company of Common Stock
and/or Common Stock Equivalents in an equity financing transaction that occurs after the
date of this Warrant and before April 30, 2009 with net cash proceeds to the Company of at
least $6,000,000.

6

 

     Section 4. Transfer of Warrant.

     a) Transferability. Subject to compliance with any applicable securities laws
and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of
the Purchase Agreement, this Warrant and all rights hereunder (including, without
limitation, any registration rights unless inclusion of such transferee would require filing
a post-effective amendment) are transferable, in whole or in part, upon surrender of this
Warrant at the principal office of the Company or its designated agent, together with a
written assignment of this Warrant substantially in the form attached hereto duly executed
by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. The assignee shall also agree to all terms of the
Transaction Documents as applicable. Upon such surrender and, if required, such payment,
the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee
or assignees, as applicable, and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The
Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.

     b) New Warrants. This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a written
notice specifying the names and denominations in which new Warrants are to be issued, signed
by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any
transfer which may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges
shall be dated the original Issue Date and shall be identical with this Warrant except as to
the number of Warrant Shares issuable pursuant thereto.

     c) Warrant Register. The Company shall register this Warrant, upon records to
be maintained by the Company for that purpose (the “Warrant Register”), in the name
of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any
exercise hereof or any distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.

     d) Transfer Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant shall not be
either (i) registered pursuant to an effective registration statement under the Securities
Act and under applicable state securities or blue sky laws or (ii) eligible for resale
without volume or manner-of-sale restrictions pursuant to Rule 144, the Company may require,
as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as
the case may be, comply with the provisions of the Purchase Agreement.

     Section 5. Miscellaneous.

7

 

     a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the
Holder to any voting rights or other rights as a stockholder of the Company prior to the
exercise hereof as set forth in Section 2(e)(i).

     b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate relating to the
Warrant Shares, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it (which, in the case of the Warrant, shall not include the
posting of any bond), and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or
stock certificate.

     c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein shall not be
a Business Day, then, such action may be taken or such right may be exercised on the next
succeeding Business Day.

     d) Authorized Shares.

     The Company covenants that, during the period the Warrant is outstanding, it
will reserve from its authorized and unissued Common Stock the greater of the
Required Minimum and a sufficient number of shares to provide for the issuance of
the Warrant Shares upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant Shares
upon the exercise of the purchase rights under this Warrant. The Company will take
all such reasonable action as may be necessary to assure that such Warrant Shares
may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which the Common Stock
may be listed. The Company covenants that all Warrant Shares which may be issued
upon the exercise of the purchase rights represented by this Warrant will, upon
exercise of the purchase rights represented by this Warrant, be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges created by the Company in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).

     Except and to the extent as waived or consented to by the Holder, the Company
shall not by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be necessary or

8

 

appropriate to protect the rights of Holder as set forth in this Warrant
against impairment. Without limiting the generality of the foregoing, the Company
will (i) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (ii)
take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the
exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof, as may be, necessary to enable the Company to perform its
obligations under this Warrant.

     Before taking any action which would result in an adjustment in the number of
Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

     e) Jurisdiction. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance with the
provisions of the Purchase Agreement.

     f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered, will have restrictions upon resale imposed
by state and federal securities laws.

     g) Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of such right
or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that
all rights hereunder terminate on the Termination Date. If the Company willfully and
knowingly fails to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

     h) Notices. Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company shall be delivered in accordance with the
notice provisions of the Purchase Agreement to the addresses of the Company and Holder set
forth in the Purchase Agreement, respectively.

     i) Limitation of Liability. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of Holder, shall give rise to any liability
of Holder for the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the Company.

9

 

     j) Remedies. The Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific performance of
its rights under this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the provisions of
this Warrant and hereby agrees to waive and not to assert the defense in any action for
specific performance that a remedy at law would be adequate.

     k) Successors and Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of and be binding
upon the successors of the Company and the successors and permitted assigns of Holder. The
provisions of this Warrant are intended to be for the benefit of all Holders from time to
time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

     l) Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and Holders holding Warrants at least equal
to 67% of the Warrant Shares issuable upon exercise of all then outstanding Warrants.

     m) Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of this Warrant.

     n) Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Pages Follow)

10

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized as of the date first above indicated.

	 	 	 	 	 
	 	T3 MOTION, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Kelly J. Anderson 	 
	 	 	Title:  	Chief Financial Officer 	 

11

 

	 	 	 	 	 

NOTICE OF EXERCISE

TO: T3 MOTION, INC.

          (1) The undersigned hereby elects to purchase                      Warrant Shares of the Company pursuant
to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of
the exercise price in full, together with all applicable transfer taxes, if any.

          (2) Payment shall take the form of (check applicable box):

o in lawful money of the United States; or

o [if permitted] the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection 2(c), to
exercise this Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth in subsection
2(c).

          (3) Please issue a certificate or certificates representing said Warrant Shares in the name of
the undersigned or in such other name as is specified below:

      

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery
of a certificate to:

      

      

      

          (4) Accredited Investor. The undersigned is an “accredited investor” as defined in
Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

	 	 	 
	Name of Investing Entity:
	 	 
	 

	 	 

	 	 	 
	Signature of Authorized Signatory of Investing Entity:
	 	 
	 

	 	 

	 	 	 
	Name of Authorized Signatory:
	 	 
	 

	 	 

	 	 	 
	Title of Authorized Signatory:
	 	 
	 

	 	 

	 	 	 
	Date:
	 	 
	 

	 	 

 

 

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

          FOR VALUE RECEIVED, [___] all of or [                    ] shares of the foregoing Warrant and all rights
evidenced thereby are hereby assigned to

                                                             whose address is

                                                        
                
                                                .

                                         
                              
                                                 

Dated:                     ,                 
    

	 	 	 	 	 	 	 
	 

	 	Holder’s Signature:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Holder’s Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 

Signature Guaranteed:                                                             

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change whatsoever, and must be
guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign the foregoing
Warrant.

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