SETTLEMENT AGREEMENT
This Settlement Agreement (the "Agreement") is made as of the 3rd day of March, 2003.
BETWEEN:
SMARTIRE SYSTEMS INC., a company duly incorporated pursuant to the laws of the Province of British Columbia, having an officer and principal place of business at 150 - 00000 Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
("SmarTire")
OF THE FIRST PART
AND:
TRW Automotive U.S. LLC, a limited liability company duly organized pursuant to the laws of the State of Delaware, acting on behalf of its Automotive Electronics Group, North America, 00000 Xxxxxxxx Xx., Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
("TRW Automotive")
OF THE SECOND PART
WHEREAS:
- Pursuant to a Termination Agreement dated effective August 31, 2001 (the "Termination Agreement"), SmarTire issued to TRW Inc., a corporation pursuant to the laws of the State of Ohio and now known as Northrop Grumman Space & Mission Systems Corp. ("TRW"), a Secured Promissory Note dated August 31, 2001 for the payment of $2,800,000 US (the "Promissory Note").
- In support of the Promissory Note, SmarTire granted to TRW a General Security Agreement dated August 31, 2001 (the "GSA") which was registered at the Personal Property Registry ("PPR") in British Columbia under Base Registration #9646747 (the "PPR Registration").
- SmarTire (U.S.A.) Inc., a subsidiary of SmarTire, guaranteed the indebtedness of SmarTire to TRW pursuant to a Guaranty dated August 31, 2001 (the "Guaranty").
- SmarTire and TRW entered into a License Agreement dated August 31, 2001 whereby TRW granted to SmarTire a perpetual, royalty-free, non-exclusive, worldwide right under certain TRW patents to use certain licensed products (the "License Agreement").
- TRW has assigned its interest in the Promissory Note, the GSA and the Guaranty, and its interest in and obligations under the License Agreement, to TRW Automotive.
NOW, THEREFORE, in consideration of the mutual covenants and premises contained herein, the parties agree as follows:
1. TRW Automotive represents and warrants to SmarTire that TRW has assigned to TRW Automotive all of its right, title and interest in and to the TRW Patents (as defined in Section 1.3 of the License Agreement).
2. TRW Automotive agrees to accept, as full and final payment of all amounts due and owing pursuant to or arising out of the Promissory Note, the amount of $850,000 US (the "Settlement Amount").
3. Upon receipt of the Settlement Amount, TRW Automotive agrees to cancel the Promissory Note and to return the original Promissory Note to SmarTire.
4. Contingent upon receipt of the Settlement Amount, TRW Automotive hereby releases and discharges all security granted by SmarTire or it subsidiaries in support of the Promissory Note.
5. SmarTire's solicitors, Clark, Wilson, are hereby irrevocably authorized to discharge the PPR Registration upon SmarTire providing Xxxxx, Xxxxxx with evidence that the Settlement Amount has been forwarded to TRW Automotive.
6. TRW Automotive and SmarTire agree that notwithstanding section 5.2 of the License Agreement, the license granted to SmarTire under the License Agreement is in full force and effect and the License Agreement in good standing; and further, upon payment of the Settlement Amount, SmarTire will be deemed not to have breached any of its obligations pursuant to the Termination Agreement or any agreement referenced therein.
7. In all other respects, the Termination Agreement and License Agreement will remain unchanged.
8. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio. The provisions of this Agreement are severable and the invalidity of one or more of the provisions herein shall not have any effect on the validity or enforceability of any other provision.
9. This Agreement may be executed in two or more counterparts (including facsimile counterparts), each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
10. This Agreement is expressly conditioned upon SmarTire's delivery to TRW Automotive, on or before March 7, 2003, a bank or certified check payable to TRW Automotive U.S. LLC in the full amount of the Settlement Amount.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date first written.
TRW AUTOMOTIVE U.S. LLC
Per: /s/ Xxxxxx Xxxxx
Authorized Signatory
Title: Vice President Operations OSS
Per: /s/ Xxxxxx Xxxxxx
Authorized Signatory
Title: President and CEO
