ADVISORY FEE PAYMENT AND SUBSCRIPTION AGREEMENT
Exhibit 10.82
NONE OF THE SECURITIES TO WHICH THIS AGREEMENT (THE "AGREEMENT") RELATES HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
ADVISORY FEE PAYMENT AND SUBSCRIPTION AGREEMENT
This ADVISORY FEE PAYMENT AND SUBSCRIPTION AGREEMENT (the "Agreement") is made as of the 25th day of July, 2003, by and between SmarTire Systems Inc. ("SmarTire"), whose business address is Suite 150, 00000 Xxxxxx Xxxxx, Xxxxxxxx, X.X., Xxxxxx, X0X 0X0, and West Sussex Trading, Inc. ("West Sussex Trading"), whose business address is 00 Xxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000, X.X.X.
RECITALS
WHEREAS:
A. The parties have entered into an Advisory Agreement dated as of September 4, 2002 (the "Advisory Agreement"), pursuant to which West Sussex Trading has agreed to act as a non-exclusive advisor to SmarTire in raising new equity and/or debt financing, and, in partial consideration for such services (the "Services"), SmarTire has agreed to issue to West Sussex Trading five year warrants (the "Warrants") to purchase common shares in the capital of SmarTire (the "Warrant Shares") equal in number to eight percent (8%) of the total number of common shares in the capital of SmarTire purchased by investors (the "Investors") introduced to SmarTire by West Sussex Trading; and
B. Investors have agreed to subscribe for a total of 2,800,000 common shares in the capital of SmarTire in connection with three private placements.
NOW, THEREFORE, the parties hereto agree as follows:
1.1 In consideration for the Services provided to SmarTire under the Advisory Agreement, SmarTire hereby grants to West Sussex Trading 224,000 Warrants which are exercisable at an exercise price of U.S.$0.10 per until 4:30 p.m. (Vancouver time) on that day that is five years following the date hereof, at which time any unexercised Warrants will expire.
1.2 SmarTire agrees to issue to West Sussex Trading a certificate representing the Warrants, in the form attached as Appendix 2 hereto, as soon as practicable following delivery by West Sussex Trading to SmarTire of two fully-executed copies of this Agreement and a Prospective Investor Suitability Questionnaire in the form attached as Appendix 1 (the "Questionnaire").
1.3 The Warrants and the Warrant Shares are sometimes collectively referred to in this Agreement as the "Securities".
2. Acknowledgements of West Sussex Trading
2.1 West Sussex Trading acknowledges and agrees that:
(a) none of the Warrants or the Warrant Shares have been registered under the 1933 Act, or under any state securities or "blue sky" laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Regulation S under the 1933 Act ("Regulation S"), except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act;
(b) West Sussex Trading acknowledges that SmarTire has not undertaken, and will have no obligation, to register any of the Securities under the 1933 Act;
(c) the decision to execute this Agreement and acquire the Securities hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of SmarTire, and such decision is based entirely upon a review of information (the receipt of which is hereby acknowledged) which has been filed by SmarTire with the United States Shares and Exchange Commission and in compliance, or intended compliance, with applicable securities legislation (collectively, the "Public Record");
(d) if SmarTire has presented a business plan to West Sussex Trading, West Sussex Trading acknowledges that the business plan may not be achieved or be achievable;
(e) no securities commission or similar regulatory authority has reviewed or passed on the merits of the Securities;
(f) there is no government or other insurance covering the Securities;
(g) SmarTire has advised West Sussex Trading that SmarTire is relying on an exemption from the requirements to provide West Sussex Trading with a prospectus and to sell the Securities through a person registered to sell securities under the Securities Act (British Columbia) (the "B.C. Act") and, as a consequence of acquiring the Shares pursuant to this exemption, certain protections, rights and remedies provided by the B.C. Act, including statutory rights of rescission or damages, will not be available to West Sussex Trading;
(h) West Sussex Trading and West Sussex Trading's advisor(s) have had a reasonable opportunity to ask questions of and receive answers from SmarTire in connection with the distribution of the Securities hereunder, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about SmarTire;
(i) the books and records of SmarTire were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by West Sussex Trading during reasonable business hours at its principal place of business, and all documents, records and books in connection with the distribution of the Securities hereunder have been made available for inspection by West Sussex Trading, West Sussex Trading's attorney and/or advisor(s);
(j) SmarTire is entitled to rely on the representations and warranties and the statements and answers of West Sussex Trading contained in this Agreement and in the Questionnaire;
(k) West Sussex Trading will indemnify and hold harmless SmarTire and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of West Sussex Trading contained herein or in any document furnished by West Sussex Trading to SmarTire in connection herewith (including, without limitation, the Questionnaire) being untrue in any material respect or any breach or failure by West Sussex Trading to comply with any covenant or agreement made by West Sussex Trading to SmarTire in connection therewith;
(l) none of the Securities are listed on any stock exchange or automated dealer quotation system and no representation has been made to West Sussex Trading that any of the Securities will become listed on any stock exchange or automated dealer quotation system; except that currently the common shares of SmarTire are listed for trading on the Nasdaq SmallCap Market;
(m) none of the Securities may be offered or sold to a U.S. Person or for the account or benefit of a U.S. Person (other than a distributor) prior to the end of the Restricted Period (as defined herein);
(n) offers and sales of any of the Securities prior to the expiration of a period of one year after the date of issuance of such Securities (the "Restricted Period") shall only be made in compliance with the safe harbor provisions set forth in Regulation S, pursuant to the registration provisions of the 1933 Act or an exemption therefrom, and that all offers and sales after the Restricted Period shall be made only in compliance with the registration provisions of the 1933 Act or an exemption therefrom;
(o) there are additional restrictions on West Sussex Trading's ability to resell the Securities under the B.C. Act and Multilateral Instrument 45-103 adopted by the British Columbia Securities Commission;
(p) SmarTire will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from the registration requirements of the 1933 Act; and
(q) West Sussex Trading has been advised to consult West Sussex Trading's own legal, tax and other advisors with respect to the merits and risks of an investment in the Securities and with respect to applicable resale restrictions, and it is solely responsible (and SmarTire is not in any way responsible) for compliance with applicable resale restrictions.
3.1 Representations, Warranties and Covenants of West Sussex Trading
3.1 West Sussex Trading hereby represents and warrants to and covenants with SmarTire (which representations, warranties and covenants shall survive the closing) that:
(a) West Sussex Trading is resident in the United States and is not a resident of British Columbia;
(b) West Sussex Trading has received and carefully read this Agreement;
(c) West Sussex Trading is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Agreement on behalf of West Sussex Trading;
(d) West Sussex Trading has the legal capacity and competence to enter into and execute this Agreement and to take all actions required pursuant hereto;
(e) West Sussex Trading has duly executed and delivered this Agreement and it constitutes a valid and binding agreement of West Sussex Trading enforceable against West Sussex Trading;
(f) the entering into of this Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or, if applicable, the constating documents of, West Sussex Trading, or of any agreement, written or oral, to which West Sussex Trading may be a party or by which West Sussex Trading is or may be bound;
(g) West Sussex Trading (i) has adequate net worth and means of providing for its current financial needs and possible personal contingencies, (ii) has no need for liquidity in this investment, and (iii) is able to bear the economic risks of an investment in the Securities for an indefinite period of time, and can afford the complete loss of such investment;
(h) West Sussex Trading is aware that an investment in SmarTire is speculative and involves certain risks, including the possible loss of the investment, and West Sussex Trading has carefully read and considered the matters set forth under the caption "Risk Factors" appearing in SmarTire's most recent annual report on Form 10-KSB filed with the SEC;
(i) West Sussex Trading has the requisite knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Securities and SmarTire, and West Sussex Trading is providing evidence of such knowledge and experience in these matters through the information requested in the Questionnaire;
(j) West Sussex Trading understands and agrees that SmarTire and others will rely upon the truth and accuracy of the acknowledgements, representations and agreements contained in this Agreement and the Questionnaire, and agrees that if any of such acknowledgements, representations and agreements are no longer accurate or have been breached, West Sussex Trading shall promptly notify SmarTire;
(k) all information contained in the Questionnaire is complete and accurate and may be relied upon by SmarTire, and West Sussex Trading will notify SmarTire immediately of any material change in any such information occurring prior to the closing of the purchase of the Securities;
(l) West Sussex Trading is purchasing the Securities for its own account for investment purposes only and not for the account of any other person and not for distribution, assignment or resale to others, and no other person has a direct or indirect beneficial interest in such Securities, and West Sussex Trading has not subdivided its interest in the Securities with any other person;
(m) West Sussex Trading is not an underwriter of, or dealer in, the common shares of SmarTire, nor is West Sussex Trading participating, pursuant to a contractual agreement or otherwise, in the distribution of the Securities;
(n) West Sussex Trading has made an independent examination and investigation of an investment in the Securities and SmarTire and has depended on the advice of its legal and financial advisors and agrees that SmarTire will not be responsible in anyway whatsoever for West Sussex Trading's decision to invest in the Securities and SmarTire;
(o) if West Sussex Trading is acquiring the Securities as a fiduciary or agent for one or more investor accounts, the investor accounts for which West Sussex Trading acts as a fiduciary or agent satisfy the definition of an "Accredited Investor", as the term is defined under Regulation D of the 1933 Act, and none of the investor accounts are maintained for the benefit of a resident of British Columbia;
(p) if West Sussex Trading is acquiring the Securities as a fiduciary or agent for one or more investor accounts, West Sussex Trading has sole investment discretion with respect to each such account, and West Sussex Trading has full power to make the foregoing acknowledgements, representations and agreements on behalf of such account;
(q) West Sussex Trading is not aware of any advertisement of any of the Securities and is not acquiring the Securities as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and
(r) no person has made to West Sussex Trading any written or oral representations:
(i) that any person will resell or repurchase any of the Securities;
(ii) that any person will refund the purchase price of any of the Securities; or
(iii) as to the future price or value of any of the Securities.
3.2 In this Agreement, the term "U.S. Person" shall have the meaning ascribed thereto in Regulation S and for the purpose of the Agreement includes any person in the United States.
4. Acknowledgement and Waiver
4.1 West Sussex Trading has acknowledged that the decision to purchase the Securities was solely made on the basis of publicly available information contained in the Public Record. West Sussex Trading hereby waives, to the fullest extent permitted by law, any rights of withdrawal, rescission or compensation for damages to which West Sussex Trading might be entitled in connection with the distribution of any of the Securities.
5. Legending of Subject Securities
NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
West Sussex Trading hereby acknowledges and agrees to SmarTire making a notation on its records or giving instructions to the registrar and transfer agent of SmarTire in order to implement the restrictions on transfer set forth and described in this Agreement.
6. Costs
6.1 West Sussex Trading acknowledges and agrees that all costs and expenses incurred by West Sussex Trading (including any fees and disbursements of any special counsel retained by West Sussex Trading) relating to the acquisition of the Securities shall be borne by West Sussex Trading.
7. Governing Law
7.1 This Agreement is governed by the laws of the Province of British Columbia and the federal laws of Canada applicable therein. West Sussex Trading irrevocably attorns to the jurisdiction of the courts of the Province of British Columbia.
8. Survival
8.1 This Agreement, including without limitation the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the parties hereto notwithstanding the completion of the purchase of the Shares by West Sussex Trading pursuant hereto.
9. Assignment
9.1 This Agreement is not transferable or assignable.
10. Counterparts and Electronic Means
10.1 This Agreement may be executed in several counterparts, each of which will be deemed to be an original and all of which will together constitute one and the same instrument. Delivery of an executed copy of this Agreement by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Agreement as of the date first above written.
11. Severability
11.1 The invalidity or unenforceability of any particular provision of this Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Agreement.
12. Entire Agreement
12.1 Except as expressly provided in this Agreement and in the agreements, instruments and other documents contemplated or provided for herein, this Agreement contains the entire agreement between the parties with respect to the subject matter hereof and there are no other terms, conditions, representations or warranties, whether expressed, implied, oral or written, by statute or common law, by SmarTire or by anyone else.
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of the date first above written.
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WEST SUSSEX TRADING, INC. |
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By: /s/ Xxxx Xxxxxxxxxxx |
By: |
APPENDIX 1
ACCREDITED INVESTOR QUESTIONNAIRE
All capitalized terms herein, unless otherwise defined, have the meanings ascribed thereto in the Agreement.
This Questionnaire is for use by the undersigned US person (as that term is defined Regulation S of the United States Securities Act of 1933 (the "1933 Act")) who has indicated an interest in acquiring Securities of SMARTIRE SYSTEMS INC. ("SmarTire"). The purpose of this Questionnaire is to assure SmarTire that the undersigned will meet the standards imposed by the 1933 Act and the appropriate exemptions of applicable state securities laws. SmarTire will rely on the information contained in this Questionnaire for the purposes of such determination. The Securities will not be registered under the 1933 Act in reliance upon the exemption from registration afforded by Section 3(b) and/or Section 4(2) and Regulation D of the 1933 Act. This Questionnaire is not an offer of the Securities or any other securities of SmarTire in any state other than those specifically authorized by SmarTire.
All information contained in this Questionnaire will be treated as confidential. However, by signing and returning this Questionnaire, the undersigned agrees that, if necessary, this Questionnaire may be presented to such parties as SmarTire deems appropriate to establish the availability, under the 1933 Act or applicable state securities law, of exemption from registration in connection with the sale of the Securities under the Agreement.
The undersigned covenants, represents and warrants to SmarTire that it satisfies one or more of the categories of "Accredited Investors", as defined by Regulation D promulgated under the 1933 Act, as indicated below: (Please initial in the space provide those categories, if any, of an "Accredited Investor" which the Subscriber satisfies)
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Category 1 |
An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of US $5,000,000; |
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Category 2 |
A natural person whose individual net worth, or joint net worth with that person's spouse, on the date of purchase exceeds US $1,000,000; |
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Category 3 |
A natural person who had an individual income in excess of US $200,000 in each of the two most recent years or joint income with that person's spouse in excess of US $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; |
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Category 4 |
A "bank" as defined under Section (3)(a)(2) of the 1933 Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 0000 (Xxxxxx Xxxxxx); an insurance company as defined in Section 2(13) of the 1933 Act; an investment company registered under the Investment Company Act of 1940 (United States) or a business development company as defined in Section 2(a)(48) of such Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 0000 (Xxxxxx Xxxxxx); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors; |
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Category 5 |
A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 0000 (Xxxxxx Xxxxxx); |
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Category 6 |
A director or executive officer of SmarTire; |
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Category 7 |
A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act; |
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Category 8 |
An entity in which all of the equity owners satisfy the requirements of one or more of the foregoing categories; |
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Note that the undersigned, in claiming to satisfy one of the above categories of Accredited Investor, may be required to supply SmarTire with a balance sheet, prior years' federal income tax returns or other appropriate documentation to verify and substantiate the undersigned's status as an Accredited Investor.
If the Subscriber is an entity which initialled Category 8 in reliance upon the Accredited Investor categories above, state the name, address, total personal income from all sources for the previous calendar year, and the net worth:
______________________________________________________________________________________
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The undersigned hereby certifies that the information contained in this Questionnaire is complete and accurate and the Subscriber will notify SmarTire promptly of any change in any such information. If this Questionnaire is being completed on behalf of a corporation, partnership, trust or estate, the person executing on behalf of the undersigned represents that it has the authority to execute and deliver this Questionnaire on behalf of such entity.
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the 7th day of May, 2003.
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If a Corporation, Partnership or Other Entity: |
If an Individual: |
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WEST SUSSEX TRADING, INC. _________________________________ _________________________________ |
____________________________ ____________________________ ____________________________ |
APPENDIX 2
THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). ACCORDINGLY, NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
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WARRANT CERTIFICATE |
WARRANT FOR PURCHASE OF COMMON SHARES
THIS WARRANT WILL BE VOID AND OF NO VALUE UNLESS EXERCISED WITHIN THE LIMITS HEREIN PROVIDED
THIS WARRANT IS NOT TRANSFERABLE
SMARTIRE SYSTEMS INC.
(Incorporated under the laws of the Province of British Columbia)
WARRANT CERTIFICATE NO. ___ xx WARRANTS
Each such warrant entitling the holder to purchase one (1) Common Share at the Exercise Price of US$0.10 per Common Share if exercised at or before 5:00 p.m. (Vancouver time) on July 24, 2008.
DATE OF ISSUANCE: xxx, 2003
THIS IS TO CERTIFY THAT xxx (herein called the "Holder") is entitled to acquire in the manner herein provided, subject to the restrictions herein contained, during the period commencing on the date hereof and ending at 5:00 p.m. (Vancouver time) on July 24, 2008 (the "Expiry Date"), the number of fully paid and non-assessable common shares ("Common Shares") without nominal or par value of SmarTire Systems Inc. ("the Company") as set forth above.
The Warrants are governed by the Terms and Conditions attached.
Any Common Shares issuable on exercise of the Warrants represented by this Certificate will contain the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). ACCORDINGLY, NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
THE FOLLOWING ARE THE TERMS AND CONDITIONS REFERRED TO IN THIS WARRANT:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In these Terms and Conditions, unless there is something in the subject matter or context inconsistent therewith:
(a) "Common Shares" means the common shares in the capital of the Company as constituted at the date hereof and any shares resulting from any subdivision or consolidation of the Common Shares;
(b) "Company" means SmarTire Systems Inc. or its successor corporation as a result of consolidation, amalgamation or merger with or into any other corporation or corporations, or as a result of the conveyance or transfer of all or substantially all of the properties and estates of the Company as an entirety to any other corporation and thereafter "Company" will mean such successor corporation;
(c) "Company's Auditors" means an independent firm of accountants duly appointed as Auditors of the Company;
(d) "herein", "hereby" and similar expressions refer to these Terms and Conditions as the same may be amended or modified from time to time; and the expression "Article" and "Section" followed by a number refer to the specified Article or Section of these Terms and Conditions;
(e) "person" means an individual, corporation, partnership, trustee or any unincorporated organization and words importing persons have a similar meaning;
(f) "Warrant Holder" or "Holder" means the holder of the Warrants; and
(g) "Warrants" mean the share purchase warrants issued by the Company.
1.2 Gender
Words importing the singular number include the plural and vice versa and words importing the masculine gender include the feminine and neuter genders.
1.3 Interpretation Not Affected by Headings
The division of these Terms and Conditions into Articles and Sections, and the insertion of headings are for convenience of reference only and will not affect the construction or interpretation thereof.
1.4 Applicable Law
The Warrants will be construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable thereto and will be treated in all respects as British Columbia contracts.
ARTICLE 2
ISSUE OF ADDITIONAL WARRANTS
2.1 Additional Warrants
The Company may at any time and from time to time issue additional warrants or grant options or similar rights to acquire or purchase Common Shares.
2.2 Issue in Substitution for Lost Warrants
(a) In case a Warrant becomes mutilated, lost, destroyed or stolen, the Company, at its discretion, may issue and deliver a new Warrant of like date and tenor as the one mutilated, lost, destroyed or stolen, in exchange for and in place of and upon cancellation of such mutilated Warrant, or in lieu of, and in substitution for such lost, destroyed or stolen Warrant and the substituted Warrant will be entitled to the benefit hereof and rank equally in accordance with its terms with all other Warrants issued or to be issued by the Company.
(b) The applicant for the issue of a new Warrant pursuant hereto will bear the cost of the issue thereof and in case of loss, destruction or theft furnish to the Company such evidence of ownership and of loss, destruction, or theft of the Warrant so lost, destroyed or stolen as will be satisfactory to the Company in its discretion and such applicant may also be required to furnish indemnity in amount and form satisfactory to the Company in its discretion, and will pay the reasonable charges of the Company in connection therewith.
2.3 Warrant Holder Not a Shareholder
A Warrant Holder is not a shareholder of the Company, is not entitled to any rights or interests as a shareholder of the Company and has only the rights and interests expressly provided herein.
ARTICLE 3
NOTICE
3.1 Notice to Warrant Holder
Any notice to be given to the Holder will be sent by prepaid registered post and will be deemed to have been received by the Holder on the fourth day following the mailing thereof or on the date of successful facsimile transmission or email. Any such notice will be addressed to the Holder at the address of the Holder appearing on the Holder's Warrant or to such other address as the Holder may advise the Company by notice in writing.
3.2 Notice to the Company
Any notice to be given to the Company may be delivered personally, or sent by facsimile or other means of electronic communication providing a printed copy ("Electronic Communication") or may be forwarded by first class prepaid registered mail to the addresses set forth below. Any notice delivered or sent by Electronic Communication shall be deemed to have been given and received at the time of delivery. Any notice mailed as aforesaid shall be deemed to have been given and received on expiration of 72 hours after it is posted, addressed as follows:
SmarTire Systems Inc.
00000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, X.X.
X0X 0X0
Attention: The President
Facsimile No.: (000) 000-0000
ARTICLE 4
EXERCISE OF WARRANTS
4.1 Method of Exercise of Warrants
The right to acquire Common Shares conferred by the Warrants may be exercised by the Holder of such Warrant by surrendering the Warrant Certificate representing same, together with a duly completed and executed Exercise Form in the form attached hereto to the Company at its principal office in the City of Richmond, British Columbia. The purchase price (the "Purchase Price") applicable at the time of exercise of any Warrants shall be equal to the number of Warrants exercised multiplied by the Exercise Price. The Warrant Holder may pay the Purchase Price:
(a) in cash, by delivering to the Company a bank draft or certified cheque payable to the Company at its principal office in the City of Richmond, British Columbia; or
(b) by cashless exercise, as follows:
The Warrant Holder shall surrender this Warrant Certificate to the Company together with a notice of cashless exercise, in which event the Company shall issue to the Warrant Holder the number of Warrant Shares determined as follows:
X = Y (A-B) / A
X = the number of Warrant Shares to be issued to the Warrant Holder.
Y = the number of Warrant Shares with respect to which this Warrant is being exercised.
A = the average of the closing price of the Common Shares for the five (5) Trading Days immediately prior to (but not including) the Date of Exercise.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood and acknowledged that the Warrant Shares issued in the cashless exercise transaction shall be deemed to have been acquired by the Warrant Holder, and the holding period for the Warrant Shares shall be deemed to have been commenced, on the issue date of the Warrant.
4.2 Effect of Exercise of Warrants
(a) Upon surrender and payment as aforesaid the Common Shares so subscribed for will be deemed to have been issued and such person or persons will be deemed to have become the holder or holders of record of such Common Shares on the date of such surrender.
(b) Within ten (10) business days after surrender as aforesaid, the Company will forthwith cause to be delivered to the person or persons in whose name or names the Common Shares so subscribed for are to be issued as specified in such subscription or mailed to him or them at his or their respective addresses specified in such subscription, a certificate or certificates for the appropriate number of Common Shares not exceeding those which the Warrant Holder is entitled to acquire pursuant to the Warrant surrendered.
4.3 Subscription for Less Than Entitlement
The Holder may subscribe for and acquire a number of Common Shares, less than the number which he is entitled to acquire pursuant to the surrendered Warrant. In the event of any acquisition of a number of Common Shares less than the number which can be acquired pursuant to a Warrant, the Holder thereof upon exercise thereof will in addition be entitled to receive a new Warrant in respect of the balance of the Common Shares which he was entitled to acquire pursuant to the surrendered Warrant and which were not then acquired.
4.4 Warrants for Fractions of Shares
To the extent that the Holder is entitled to receive on the exercise or partial exercise thereof a fraction of a Common Share, such right may be exercised in respect of such fraction only in combination with another Warrant or other Warrants which in the aggregate entitle the Holder to receive a whole number of such Common Shares.
4.5 Expiration of Warrants
After the expiration of the period within which a Warrant is exercisable, all rights thereunder will wholly cease and terminate and such Warrant will no longer be valid and of no effect.
4.6 Time of Essence
Time will be of the essence hereof.
4.7 Adjustments
The number of Common Shares deliverable upon the exercise of the Warrants will be subject to adjustment in the event and in the manner following:
(a) if and whenever the Common Shares at any time outstanding are subdivided into a greater or consolidated into a lesser number of Common Shares the number of Common Shares deliverable upon the exercise of the Warrants will be increased or decreased proportionately as the case may be;
(b) (i) in case of any capital reorganization or of any reclassification of the capital of the Company or in the case of the consolidation, merger or amalgamation of the Company with or into any other Company (hereinafter collectively referred to as a "Reorganization"), each Warrant will after such Reorganization confer the right to acquire the number of shares or other securities of the Company (or of the Company resulting from such Reorganization) which the Warrant Holder would have been entitled to upon Reorganization if the Warrant Holder had been a shareholder at the time of such Reorganization;
(ii) in any such case, if necessary, appropriate adjustments will be made in the application of the provisions of this Article 4 relating to the rights and interest thereafter of the holders of the Warrants so that the provisions of this Article 4 will be made applicable as nearly as reasonably possible to any shares or other securities deliverable after the Reorganization or the exercise of the Warrants;
(iii) the subdivision or consolidation of Common Shares at any time outstanding into a greater or lesser number of Common Shares (whether with or without par value) will not be deemed to be a Reorganization for the purposes of this Section 4.7 (b);
(c) the adjustments provided for in this Section 4.7 are cumulative and will become effective immediately after the record date for or, if a record date is fixed, the effective date of the event which results in such adjustments.
4.8 Determination of Adjustments
If any questions will at any time arise with respect to any adjustment provided for in Section 4.7, such question will be conclusively determined by the Company's Auditors, or, if they decline to so act any other firm of chartered accountants, in Vancouver, British Columbia, that the Company may designate and who will have access to all appropriate records and such determination will be binding upon the Company and the holders of the Warrants.
ARTICLE 5
COVENANTS BY THE COMPANY
5.1 Reservation of Shares
The Company will reserve and there will remain unissued out of its authorized capital a sufficient number of Common Shares to satisfy the rights provided for herein and in the Warrants should the holders of all the Warrants from time to time outstanding determine to exercise such rights in respect of all Common Shares which they are or may be entitled to acquire pursuant thereto and hereto.
5.2 Company may Purchase
The Company may from time to time offer to purchase and purchase, for cancellation only, any Warrants in such manner, from such persons and on such terms and conditions as it determines.
ARTICLE 6
WAIVER OF CERTAIN RIGHTS
6.1 Immunity of Shareholders, Etc.
The Warrant Holder, as part of the consideration for the issue of the Warrants, waives and releases and will not have any right, cause of action or remedy now or hereafter existing in any jurisdiction against any past, present or future incorporator, shareholder, director or officer (as such) of the Company for the issue of Common Shares pursuant to any Warrant or on any covenant, agreement, representation or warranty by the Company herein contained or in the Warrant.
ARTICLE 7
MODIFICATION OF TERMS, MERGER, SUCCESSORS
7.1 Modification of Terms and Conditions for Certain Purposes
From time to time the Company may, subject to the provisions of these Terms and Conditions, modify the Terms and Conditions hereof, for the purpose of correction or rectification of any ambiguities, defective provisions, errors or omissions herein.
7.2 Transferability
The Warrant and all rights attached to it are not transferable or assignable.
IN WITNESS WHEREOF SMARTIRE SYSTEMS INC. has caused this Warrant to be signed by its duly authorized officers under its corporate seal, and this Warrant to be dated as of the date of issuance first above written.
SIGNED BY:
Per: ______________________________
Authorized Signatory
Per: ______________________________
Authorized Signatory
Date: ______________________________
EXERCISE FORM
TO: SmarTire Systems Inc.
The undersigned holder of Warrants hereby exercises the right to acquire _____________ Common Shares without nominal or par value of SmarTire Systems Inc. (the "Company") (or such number of other securities or property to which such Warrants entitle the undersigned in lieu thereof or in addition thereto under the provisions set forth in the Warrant Certificate) according to the terms set forth in the Warrant Certificate.
Such securities or property are to be issued as follows:
Name: ___________________________
Address in Full: _______________________
______________________________________
The undersigned acknowledges that the certificates representing the Common Shares issuable hereunder shall bear such legends as may be required under applicable securities law.
DATED this ______ day of ______________________, _____.
____________________________________
Signature
____________________________________
(Print full name)
____________________________________
(Print full address)
Instructions:
The registered holder may exercise his right to acquire Common Shares by completing the above form, surrendering this Warrant Certificate and providing payment by bank draft, money order or certified check to the Company at its principal office in Richmond, British Columbia. For the protection of the holder, it would be prudent to register if forwarding by mail. Certificates for Common Shares will be delivered or mailed as soon as practicable after the exercise of the Warrants. The rights of the registered holder cease if the Warrants are not exercised prior to 5:00 p.m. (Vancouver time) on the Expiry Date
