AMENDMENT NO. 1 TO SECURITY AGREEMENT
Exhibit
10.93
AMENDMENT
NO. 1
This
AMENDMENT NO. 1 TO SECURITY AGREEMENT (this
“Amendment”), is made effective as of April 27, 2007
(the “Effective Date”), by and
between SMARTIRE SYSTEMS, INC., a British Columbia corporation
with its principal place of business located at Suite #150 - 13151 Vanier
Place,
Richmond, BC V6V 2J1, British Columbia, Canada (the “Debtor”)
and the parties listed on Schedule I attached hereto (each a “Secured
Party” and, collectively, the “Secured Parties”) with
reference to the following recitals:
A. Secured
Party and the Company entered into that certain Security Agreement, dated
January 23, 2007 (the “Master
Agreement”).
B. Contemporaneously
with the execution of this Amendment, Xentenial Holdings Limited (the
“Investor”) and the Company are entering into a
securities purchase agreement (the “SPA”) pursuant to
which the Company shall issue and sell to the Investors additional secured
convertible debentures (the “Additional Convertible
Debentures”) which shall be convertible into that number of shares
(the “Additional Conversion Shares”) of the Company’s
Common Stock.
C. To
induce the Investor to execute and deliver the SPA, and to induce the other
Secured Parties to consent to the transaction contemplated by the SPA, the
Company has agreed to amend the Master Agreement to provide certain amendments
to the Master Agreement to specifically include the Additional Convertible
Debentures as part of the “Obligations” as defined in the Master Agreement and
to include certain accounts receivable as part of the “Pledged Property” under
the Master Agreement.
FOR
GOOD
AND VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
acknowledged, Investor and the Company agree as follows:
1. Convertible
Debentures. The Definition of the term “Convertible Debentures”
as used in the Master Agreement shall hereinafter include the Additional
Convertible Debentures.
2. Obligations
Secured. The definition of the term “Obligations” as used in the
Master Agreement shall include all the obligations of the Debtor to the Secured
Party under the Additional Convertible Debentures.
3. Permitted
Liens. Section 6.2(k) of the Master Agreement shall be deleted in
its entirety to remove any security interest granted to a Factor from the
definition of Permitted Liens.
4. Pledged
Property. Exhibit A of the Master Agreement shall be removed and
replaced with the Amended Exhibit A attached hereto.
5. PPSA
Filing. Simultaneously with the execution and delivery of this
Amendment, the Debtor shall make, execute, acknowledge, file, record and
deliver
to the Secured Parties any documents reasonably requested by the Secured
Parties, acting reasonably, to amend their respective security interests
in the
Pledged Property in the Personal Property Registry maintained under the Personal
Property Security Act (British Columbia) (the
“PPSA(BC)”). Simultaneously with the execution and delivery of this
Agreement, the Debtor shall make, execute, acknowledge and deliver to the
Secured Parties such documents and instruments, including, without limitation,
financing statements, certificates, affidavits and forms as may, in the Secured
Parties’ reasonable judgment, be necessary to effectuate, complete or perfect,
or to continue and preserve, or amend, the security interest of the Secured
Parties in the Pledged Property, and each Secured Party shall hold such
documents and instruments as secured party, subject to the terms and conditions
contained herein.
6. Definitions. Capitalized
terms not otherwise defined herein shall have the meaning ascribed to them
under
the Master Agreement, and if not defined in the Master Agreement shall have
the
meaning ascribed to them in the Operating Agreement.
7. Non-Impairment. Except
as expressly modified herein, the Master Agreement shall continue in full
force
and effect, and the parties hereby reinstate and reaffirm the Master Agreement
as modified herein.
8. Inconsistencies. In
the event of any inconsistency, ambiguity or conflict between the terms and
provisions of this Amendment and the terms and provisions of the Master
Agreement, the terms and provisions of this Amendment shall
control.
9. Counterparts. This
Amendment may be executed in any number of counterparts, each of which when
executed will be deemed an original and all of which, taken together, well
be
deemed to be one and the same instrument.
REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
IN
WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
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COMPANY:
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By: /s/
Xxxx Xxxxxxxxxxx
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Name: Xxxx
Xxxxxxxxxxx
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Title: Chief
Financial Officer
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SECURED
PARTY:
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CORNELL
CAPITAL PARTNERS, L.P.
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By: Yorkville
Advisors, LLC
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Its: Investment
Manager
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By: /s/
Xxxx Xxxxxx
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Name: Xxxx
Xxxxxx
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Title:
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SECURED
PARTY:
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XENTENIAL
HOLDINGS LIMITED
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By: /s/
Xxxx Xxxxxx
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Name: Xxxx
Xxxxxx
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Title:
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SECURED
PARTY:
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STAROME
INVESTMENTS LIMITED
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By: /s/
Xxxxxxx Xxxxx
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Name: Xxxxxxx
Xxxxx
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Title: Director
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SECURED
PARTY:
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STARAIM
ENTERPRISES LIMITED
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By:
/s/ Xxxx Xxxxxx
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Name:
Xxxx Xxxxxx
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Title:
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SCHEDULE
I
NAME
OF SECURED PARTIES AND
CONVERTIBLE
DEBENTURES ISSUED TO EACH SECURED PARTY
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SECURED
PARTY
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CONVERTIBLE
DEBENTURE
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Cornell
Capital Partners, LP
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5%
convertible debenture issued on May 20, 2005 in the original principal
amount of $1,500,000, as amended.
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Starome
Investments Limited
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10%
convertible debenture issued on December 30, 2005 in the original
principal amount of $20 Million.
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Xentenial
Holdings Limited
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10%
convertible debenture issued on December 30, 2005 in the original
principal amount of $8 Million.
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10%
convertible debenture issued on January 23, 2007 in the original
principal
amount of $684,000.
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10%
convertible debenture issued on February 9, 2007 in the original
principal
amount of $334,000.
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10%
convertible debenture issued on March 2, 2007 in the original principal
amount of $782,000.
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10%
convertible debenture issued on April 24, 2007 in the original
principal
amount of $1,150,000.
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Staraim
Enterprises Limited
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10%
convertible debenture issued on December 30, 2005 in the original
principal amount of $2.0 Million.
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AMENDED EXHIBIT
A
DEFINITION
OF PLEDGED PROPERTY
AMENDED
EXHIBIT A
DEFINITION
OF PLEDGED PROPERTY
For
the
purpose of securing prompt and complete payment and performance by the
Company
of all of the Obligations, subject to Section 2 below, the Company
unconditionally and irrevocably hereby grants to the Secured Party a continuing
security interest in and to, and lien upon, the following Pledged Property
of
the Company:
1.
(a) all
goods of the Company, including, without limitation, machinery, equipment,
furniture, furnishings, fixtures, signs, lights, tools, parts, supplies
and
motor vehicles of every kind and description, now or hereafter owned by
the
Company or in which the Company may have or may hereafter acquire any interest,
and all replacements, additions, accessions, substitutions and proceeds
thereof,
arising from the sale or disposition thereof, and where applicable, the
proceeds
of insurance and of any tort claims involving any of the foregoing;
(b) subject
to Section 2 below, all inventory of the Company, including, but not limited
to,
all goods, wares, merchandise, parts, supplies, finished products, other
tangible personal property, including such inventory as is temporarily
out of
Company’s custody or possession and including any returns upon any accounts or
other proceeds, including insurance proceeds, resulting from the sale or
disposition of any of the foregoing;
(c) all
contract rights and general intangibles of the Company, including, without
limitation, goodwill, trademarks, trade styles, trade names, leasehold
interests, partnership or joint venture interests, patents and patent
applications, copyrights, deposit accounts whether now owned or hereafter
created;
(d) all
documents, warehouse receipts, instruments and chattel paper of the Company
whether now owned or hereafter created;
(e) all
accounts and other receivables, instruments or other forms of obligations
and
rights to payment of the Company (herein collectively referred to as
“Accounts”), together with the proceeds thereof, all goods represented by
such Accounts and all such goods that may be returned by the Company’s
customers, and all proceeds of any insurance thereon, and all guarantees,
securities and liens which the Company may hold for the payment of any
such
Accounts including, without limitation, all rights of stoppage in transit,
replevin and reclamation and as an unpaid vendor and/or lienor;
(f) to
the extent assignable, all of the Company’s rights under all present and future
authorizations, permits, licenses and franchises issued or granted in connection
with the operations of any of its facilities;
(g) all
equity interests, securities or other instruments in other companies, including,
without limitation, any subsidiaries, investments or other entities (whether
or
not controlled); and
(h) all
products and proceeds (including, without limitation, insurance proceeds)
from
the above-described Pledged Property.
2. Notwithstanding
the forgoing, for greater certainty, Pledged Property does not include
any of
the following:
(a) any
and all equipment, and any and all proceeds arising from the disposition
thereof, identified as:
(i)
Selective spray coater, Camalot 4398” under lease to Foreseeson Technology Inc.
subject to a purchase option in the lease agreement that provides that
Foreseeson, following the 12th month of the term (which is February 1,
2007),
Foreseeson shall have the option to purchase the equipment at a price of
$37,044.
(ii)
M4L
Plasma Etching Machine held at Vansco Electronics (Morton) located at 0000
Xxxxx
Xxxx Xxxxxx, Xxxxxx, XX 00000.
(iii)
Novolas Laser Welding Machine held at Vansco Electronics (Morton) located
at
0000 Xxxxx Xxxx Xxxxxx, Xxxxxx, XX 00000.
