EXHIBIT 10.3
THIS AGREEMENT RELATES TO AN OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION
TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT").
NONE OF THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE BEEN REGISTERED
UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO
REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED
STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S UNDER THE 1933 ACT, 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.
ADVISORY FEE PAYMENT AND SUBSCRIPTION AGREEMENT
This ADVISORY FEE PAYMENT AND SUBSCRIPTION AGREEMENT (the
"Agreement") is made as of the 12th day of February, 2002, by and between
SmarTire Systems Inc. ("SmarTire"), a company formed under the laws of British
Columbia, and Seraph Capital AG ("Seraph Capital"), a corporation formed under
the laws of Switzerland.
RECITALS
WHEREAS:
A. The parties have entered into an Advisory Agreement dated as of September 15,
2001 (the "Advisory Agreement"), pursuant to which Seraph Capital 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 Seraph Capital three year warrants (the
"Warrants") to purchase common shares in the capital of SmarTire (the "Warrant
Shares") equal in number to seven percent (7%) of the total number of common
shares in the capital of SmarTire purchased by investors (the "Investors")
introduced to SmarTire by Seraph Capital; and
B. Investors have agreed to subscribe for a total of 160,000 common shares in
the capital of SmarTire.
NOW, THEREFORE, the parties hereto agree as follows:
1. ISSUANCE OF THE WARRANTS
1.1 In consideration for the Services provided to SmarTire under the Advisory
Agreement, SmarTire hereby grants to Seraph Capital 11,200 Warrants, each
entitling Seraph Capital to purchase one Warrant Share at an exercise price of
U.S. $1.75 per Warrant Share until 4:30 p.m. (Vancouver time) on that day that
is three years following the date hereof, at which time any unexercised Warrants
will expire.
1.2 SmarTire agrees to issue to Seraph Capital a certificate representing the
Warrants, in the form attached as Appendix I hereto, as soon as practicable
following delivery by Seraph Capital to SmarTire of two fully-executed copies of
this Agreement.
1.3 The Warrants and the Warrant Shares are sometimes collectively referred to
in this Agreement as the "Securities".
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2. ACKNOWLEDGEMENTS OF SERAPH CAPITAL
2.1 Seraph Capital 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) Seraph Capital 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 Seraph Capital, Seraph
Capital 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) there are risks associated with an investment in the Securities, as
more fully described in certain information forming part of the
Public Record;
(h) SmarTire has advised Seraph Capital that SmarTire is relying on an
exemption from the requirements to provide Seraph Capital 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 Seraph Capital;
(i) Seraph Capital has not acquired the Securities as a result of, and
will not itself engage in, any "directed selling efforts" (as
defined in Regulation S under the 0000 Xxx) in the United States in
respect of any of the Securities which would include any activities
undertaken for the purpose of, or that could reasonably be expected
to have the effect of, conditioning the market in the United States
for the resale of any of the Warrant Shares; provided, however, that
Seraph Capital may sell or otherwise dispose of any of the Warrant
Shares pursuant to registration of any of the Warrant Shares under
the 1933 Act and any applicable state securities laws or under an
exemption from such registration requirements;
(j) Seraph Capital and Seraph Capital'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;
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(k) the books and records of SmarTire were available upon reasonable
notice for inspection, subject to certain confidentiality
restrictions, by Seraph Capital 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 Seraph Capital,
Seraph Capital's attorney and/or advisor(s);
(l) Seraph Capital 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 Seraph Capital contained herein or in any document
furnished by Seraph Capital to SmarTire in connection herewith being
untrue in any material respect or any breach or failure by Seraph
Capital to comply with any covenant or agreement made by Seraph
Capital to SmarTire in connection therewith;
(m) none of the Securities are listed on any stock exchange or automated
dealer quotation system and no representation has been made to
Seraph Capital 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;
(n) 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);
(o) offers and sales of any of the Securities prior to the expiration of
a period of FORTY DAYS 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;
(p) there are additional restrictions on Seraph Capital's ability to
resell the Securities under the B.C. Act and Multilateral Instrument
45-102 adopted by the British Columbia Securities Commission;
(q) 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;
(r) the statutory and regulatory basis for the exemption claimed for the
offer Securities, although in technical compliance with Regulation
S, would not be available if the offering is part of a plan or
scheme to evade the registration provisions of the 1933 Act; and
(s) Seraph Capital has been advised to consult Seraph Capital'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:
(i) any applicable laws of Switzerland in connection with the
distribution of the Securities hereunder, and
(ii) applicable resale restrictions.
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3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SERAPH CAPITAL
(a) Seraph Capital hereby represents and warrants to and covenants with
SmarTire (which representations, warranties and covenants shall
survive the Closing) that:
(b) Seraph Capital is resident in Switzerland, and is neither a U.S.
Person nor a resident of British Columbia;
(c) Seraph Capital is or will be acquiring the Securities as principal
for its own account, for investment only and not with a view to
resale or distribution, and, in particular:
(i) no other person has a direct or indirect beneficial interest
in such Securities;
(ii) Seraph Capital is not and will not be acquiring the Securities
for the account or benefit of, directly or indirectly, any
U.S. Person or any resident of British Columbia; and
(iii) it has no intention to distribute either directly or
indirectly any of the Securities in the United States or to
U.S. Persons;
(d) Seraph Capital is outside the United States when receiving and
executing this Agreement;
(e) Seraph Capital has the legal capacity and competence to enter into
and execute this Agreement and to take all actions required pursuant
hereto, it 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 Seraph Capital;
(f) the entering into of this Agreement and the transactions
contemplated hereby do not and will not result in the violation of
any of the terms and provisions of any law applicable to, or the
constating documents of, Seraph Capital or of any material
agreement, written or oral, to which Seraph Capital may be a party
or by which Seraph Capital is or may be bound;
(g) Seraph Capital has duly executed and delivered this Agreement and it
constitutes a valid and binding agreement of Seraph Capital
enforceable against Seraph Capital;
(h) Seraph Capital is not an underwriter of, or dealer in, the common
shares of SmarTire, nor is Seraph Capital participating, pursuant to
a contractual agreement or otherwise, in the distribution of the
Securities;
(i) Seraph Capital (i) is able to fend for itself in the Subscription;
(ii) has such knowledge and experience in business matters as to be
capable of evaluating the merits and risks of its prospective
investment in the Shares; and (iii) has the ability to bear the
economic risks of its prospective investment and can afford the
complete loss of such investment;
(j) Seraph Capital is not aware of any advertisement of any of the
Securities; and
(k) no person has made to Seraph Capital 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.
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4.1 ACKNOWLEDGEMENT AND WAIVER
Seraph Capital has acknowledged that the decision to purchase the Shares was
solely made on the basis of publicly available information contained in the
Public Record. Seraph Capital hereby waives, to the fullest extent permitted by
law, any rights of withdrawal, rescission or compensation for damages to which
Seraph Capital might be entitled in connection with the distribution of any of
the Securities.
5.1 LEGENDING OF SUBJECT SECURITIES
Seraph Capital hereby acknowledges that that upon the issuance thereof, and
until such time as the same is no longer required under the applicable
securities laws and regulations, the certificates representing any of the
Securities will bear legends in substantially the following forms:
"THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO
ARE NOT U.S. PERSONS (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 TO WHICH THIS CERTIFICATE RELATES HAVE
BEEN REGISTERED UNDER 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, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN)
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT 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.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE [THE DATE THAT IS FOUR
MONTHS AND A DAY AFTER THE ISSUE DATE OF THE SHARES]
5.2 Seraph Capital 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.
6.1 COSTS
6.1 Seraph Capital acknowledges and agrees that all costs and expenses incurred
by Seraph Capital (including any fees and disbursements of any special counsel
retained by Seraph Capital) relating to the acquisition of the Securities shall
be borne by Seraph Capital.
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. Seraph Capital 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 Seraph Capital pursuant hereto.
9. ASSIGNMENT
9.1 This Agreement is not transferable or assignable.
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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.
SMARTIRE SYSTEMS INC. SERAPH CAPITAL AG
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxxx Xxxxxx
----------------------------------- ----------------------------------
Xxxxx X. Xxxxxxx, Managing Director Authorized Signatory
and CFO
THIS IS PAGE 6 OF THE ADVISORY FEE PAYMENT AND SUBSCRIPTION AGREEMENT BETWEEN
SMARTIRE SYSTEMS INC. AND SERAPH CAPITAL AG
APPENDIX 1
FORM OF WARRANT CERTIFICATE
THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT
U.S. PERSONS (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 TO WHICH THIS CERTIFICATE RELATES HAVE BEEN REGISTERED UNDER 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, DIRECTLY OR INDIRECTLY, TO U.S.
PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT 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.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES
SHALL NOT TRADE THE SECURITIES BEFORE [THE DATE THAT IS FOUR MONTHS AND A DAY
AFTER THE ISSUE DATE OF THE SHARES]
THESE WARRANTS WILL EXPIRE AND BECOME NULL AND VOID
AT 4:30 P.M. (VANCOUVER TIME) ON _______________, 2005.
SHARE PURCHASE WARRANTS
TO PURCHASE COMMON SHARES OF
SMARTIRE SYSTEMS INC.
incorporated in the Province of British Columbia
THIS IS TO CERTIFY THAT SERAPH CAPITAL AG, (the "Holder") of
Xxxxxxxxxxxx 00, XX-0000 Xxx, Xxxxxxxxxxx, has the right to purchase, upon and
subject to the terms and conditions hereinafter referred to, up to
________________________________ fully paid and non-assessable common shares
(the "Shares") in the capital of SmarTire Systems Inc. (hereinafter called the
"Company") on or before 4:30 p.m. (Vancouver time) on ____________________, 2004
(the "Expiry Date") at a price of US$ o per Share.
1. ONE (1) WARRANT AND U.S.$ o ARE REQUIRED TO PURCHASE ONE SHARE.
THIS CERTIFICATE REPRESENTS __________________________ WARRANTS.
2. These Warrants are issued subject to the Terms and Conditions
attached to the Warrants issued by SmarTire (the "Terms and
Conditions") attached hereto as Appendix "A" and the Warrant Holder
may exercise the right to purchase Shares only in accordance with
those Terms and Conditions.
3. Nothing contained herein or in the Terms and Conditions will confer
any right upon the Holder hereof or any other person to subscribe
for or purchase any Shares at any time subsequent to the Expiry
Date, and from and after such time, this Warrant and all rights
hereunder will be void and of no value.
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IN WITNESS WHEREOF SmarTire has executed this Warrant
Certificate this ______ day of ___________________, 2002.
SMARTIRE SYSTEMS INC.
Per:
-------------------------------------------
Xxxxx X. Xxxxxxx, Managing Director and CFO
PLEASE NOTE THAT ALL SHARE CERTIFICATES MUST BE LEGENDED AS FOLLOWS DURING THE
CURRENCY OF APPLICABLE HOLD PERIODS:
"THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO
ARE NOT U.S. PERSONS (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 TO WHICH THIS CERTIFICATE RELATES HAVE
BEEN REGISTERED UNDER 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, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN)
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT 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.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE [THE DATE THAT IS FOUR
MONTHS AND A DAY AFTER THE ISSUE DATE OF THE SHARES]"
APPENDIX "A"
TERMS AND CONDITIONS dated ___________________, 2002, attached to the Warrants
issued by SmarTire Systems Inc.
1. INTERPRETATION
1.1 Definitions
In these Terms and Conditions, unless there is something in the subject matter
or context inconsistent therewith:
(a) "Company" means SmarTire Systems Inc. until a successor corporation
will have become such 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 SmarTire as an entirety to any other
corporation and thereafter "Company" will mean such successor
corporation;
(b) "Company's Auditors" means an independent firm of accountants duly
appointed as auditors of SmarTire;
(c) "Director" means a director of SmarTire for the time being, and
reference, without more, to action by the directors means action by
the directors of SmarTire as a Board, or whenever duly empowered,
action by an executive committee of the Board;
(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) "shares" means the common shares in the capital of SmarTire as
constituted at the date hereof and any shares resulting from any
subdivision or consolidation of the shares;
(g) "Warrant Holders" or "Holders" means the holders of the Warrants;
and
(h) "Warrants" means the warrants of SmarTire issued and presently
authorized and for the time being outstanding.
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.
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2. ISSUE OF WARRANTS
2.1 Additional Warrants
SmarTire may at any time and from time to time issue additional warrants or
grant options or similar rights to purchase shares of its capital stock.
2.2 Warrant to Rank Pari-Passu
All Warrants and additional warrants, options or similar rights to purchase
shares from time to time issued or granted by SmarTire, will rank pari-passu
whatever may be the actual dates of issue or grant thereof, or of the dates of
the certificates by which they are evidenced.
2.3 Issue in Substitution for Mutilated Lost, Destroyed or Stolen
Warrant Certificates
(a) In case a Warrant Certificate becomes mutilated, lost, destroyed or
stolen, the Company, at its discretion, may issue and deliver a new
Warrant Certificate 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 Certificate, or in lieu of,
and in substitution for such lost, destroyed or stolen Warrant
Certificate and the substituted Warrant Certificate 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 Certificate 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
Certificate 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.
2.4 Warrant Holder Not a Shareholder
The holding of a Warrant will not constitute the Holder thereof a shareholder of
SmarTire, nor entitle him to any right or interest in respect thereof except as
in the Warrant expressly provided.
3. NOTICE
3.1 Notice to Warrant Holders
Any notice required or permitted to be given to the Holders will be in writing
and may be given by prepaid registered post, electronic facsimile transmission
or other means of electronic communication capable of producing a printed copy
to the address of the Holder appearing on the Holder's Warrant or to such other
address as any Holder may specify by notice in writing to SmarTire, and any such
notice will be deemed to have been given and received by the Holder to whom it
was addressed if mailed, on the third day following the mailing thereof, if by
facsimile or other electronic communication, on successful transmission, or, if
delivered, on delivery; but if at the time of mailing or between the time of
mailing and the third business day thereafter there is a strike, lockout, or
other labour disturbance affecting postal service, then the notice will not be
effectively given until actually delivered.
3.2 Notice to SmarTire
Any notice required or permitted to be given to SmarTire will be in writing and
may be given by prepaid registered post, electronic facsimile transmission or
other means of electronic communication capable of producing a printed copy to
the address of SmarTire set forth below or such other address as SmarTire may
specify by notice in writing to the Holder, and any such notice will be deemed
to have been given and received by SmarTire to whom it was addressed if mailed,
on the third day following the mailing thereof, if by facsimile or other
electronic
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communication, on successful transmission, or, if delivered, on delivery; but if
at the time or mailing or between the time of mailing and the third business day
thereafter there is a strike, lockout, or other labour disturbance affecting
postal service, then the notice will not be effectively given until actually
delivered:
SmarTire Systems Inc.
00000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Attention: Chief Financial Officer
Fax No.: (000) 000-0000
4. EXERCISE OF WARRANTS
4.1 Method of Exercise of Warrants
The right to purchase shares conferred by the Warrants may be exercised by the
Holder surrendering the Warrant Certificate representing same, with a duly
completed and executed subscription in the form attached hereto and a bank draft
or certified cheque payable to or to the order Company, at par, in Vancouver,
British Columbia, for the purchase price applicable at the time of surrender in
respect of the shares subscribed for in lawful money of the United States of
America, to SmarTire at the address set forth in, or from time to time specified
by SmarTire pursuant to, Section 3.2.
4.2 Effect of Exercise of Warrants
(a) Upon surrender and payment as aforesaid the 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
shares on the date of such surrender and payment, and such shares
will be issued at the subscription price in effect on the date of
such surrender and payment.
(b) Within ten business days after surrender and payment as aforesaid,
SmarTire will forthwith cause to be delivered to the person or
persons in whose name or names the 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 shares
not exceeding those which the Warrant Holder is entitled to purchase
pursuant to the Warrant surrendered.
4.3 Subscription for Less Than Entitlement
The Holder of any Warrant may subscribe for and purchase a number of shares less
than the number which he is entitled to purchase pursuant to the surrendered
Warrant. In the event of any purchase of a number of common shares less than the
number which can be purchased 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 shares which he was entitled to purchase pursuant
to the surrendered Warrant and which were not then purchased.
4.4 Warrants for Fractions of Shares
To the extent that the Holder of any Warrant 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.
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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 be void
and of no effect.
4.6 Time of Essence
Time will be of the essence hereof.
4.7 Subscription Price
One (1) Warrant and US$ o are required to subscribe for each Share during the
term of the Warrants.
4.8 Adjustment of Exercise Price
(a) The exercise price and 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:
(i) If and whenever the shares at any time outstanding are
subdivided into a greater or consolidated into a lesser number
of shares the exercise price will be decreased or increased
proportionately as the case may be; upon any such subdivision
or consolidation the number of shares deliverable upon the
exercise of the Warrants will be increased or decreased
proportionately as the case may be.
(ii) In case of any capital reorganization or of any
reclassification of the capital of SmarTire or in the case of
the consolidation, merger or amalgamation of SmarTire with or
into any other Company (hereinafter collectively referred to
as a "Reorganization"), each Warrant will after such
Reorganization confer the right to purchase the number of
shares or other securities of SmarTire (or of SmarTire's
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.
In any such case, if necessary, appropriate adjustments will
be made in the application of the provisions of this Article
Four relating to the rights and interest thereafter of the
Holders of the Warrants so that the provisions of this Article
Four will be made applicable as nearly as reasonably possible
to any shares or other securities deliverable after the
Reorganization on the exercise of the Warrants.
The subdivision or consolidation of shares at any time
outstanding into a greater or lesser number of shares (whether
with or without par value) will not be deemed to be a
Reorganization for the purposes of this clause 4.8(a)(ii).
(b) The adjustments provided for in this Section 4.8 are cumulative and
will become effective immediately after the record date or, if no
record date is fixed, the effective date of the event which results
in such adjustments.
4.9 Determination of Adjustments
If any questions will at any time arise with respect to the exercise price or
any adjustment provided for in Section 4.8, such questions will be conclusively
determined by SmarTire's Auditors, or, if they decline to so act any other firm
of chartered accountants, in Vancouver, British Columbia that SmarTire may
designate and who will have access to all appropriate records and such
determination will be binding upon SmarTire and the Holders of the Warrants.
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5. COVENANTS BY SMARTIRE
5.1 Reservation of Shares
SmarTire will reserve and there will remain unissued out of its authorized
capital a sufficient number of shares to satisfy the rights of purchase 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 shares
which they are or may be entitled to purchase pursuant thereto and hereto.
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 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 SmarTire for the issue of shares
pursuant to any Warrant or on any covenant, agreement, representation or
warranty by SmarTire herein contained or in the Warrant.
7. MODIFICATION OF TERMS, MERGER, SUCCESSORS
7.1 Modification of Terms and Conditions for Certain Purposes
From time to time SmarTire may, subject to the provisions of these presents,
modify the Terms and Conditions hereof, for the purpose of correction or
rectification of any ambiguities, defective provisions, errors or omissions
herein.
7.2 Warrants Transferable
The Warrants and all rights attached to them are transferable or assignable at
the sole discretion of the Warrant Holder, subject to applicable securities laws
and regulatory requirements. SmarTire will refuse to register and will not
otherwise recognize any transfer of the Warrants 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, or in a
transaction not subject to, the registration requirements of the 1933 Act.
DATED as of the date first above written in these Terms and Conditions.
SMARTIRE SYSTEMS INC.
By:
--------------------------------------------
Xxxxx X. Xxxxxxx, Managing Director and CFO
FORM OF SUBSCRIPTION
TO: SmarTire Systems Inc.
00000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
The undersigned Holder of the within Warrants hereby subscribes for common
shares (the "Shares") of SmarTire Systems Inc. (the "Company") pursuant to the
within Warrants at U.S.$ o per Share on the terms specified in the said
Warrants. This subscription is accompanied by a certified cheque or bank draft
payable to or to the order of SmarTire for the whole amount of the purchase
price of the Shares.
The undersigned hereby directs that the Shares be registered as follows:
NAME(S) IN FULL ADDRESS(ES) NUMBER OF SHARES
________________________ ________________________________ __________________
________________________ ________________________________ __________________
________________________ ________________________________ __________________
TOTAL: __________________
(Please print full name in which share certificates are to be issued, stating
whether Mr., Mrs. or Miss is applicable).
DATED this _______ day of _________________________ , _____.
In the presence of:
____________________________________ ______________________________________
Signature of Witness Signature of Warrant Holder
Please print below your name and address in full.
Name (Mr./Mrs./Miss) _____________________________________________________
Address _____________________________________________________
_____________________________________________________
INSTRUCTIONS FOR SUBSCRIPTION
The signature to the subscription must correspond in every particular with the
name written upon the face of the Warrant without alteration or enlargement or
any change whatever. If there is more than one subscriber, all must sign.
In the case of persons signing by agent or attorney or by personal
representative(s), the authority of such agent, attorney or representative(s) to
sign must be proven to the satisfaction of SmarTire.
If the Warrant certificate and the form of subscription are being forwarded by
mail, registered mail must be employed.
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AGREEMENTS OF THE WARRANT HOLDER
ARTICLE 1
REPRESENTATIONS, WARRANTIES AND COVENANTS
1.1 By executing this Subscription, the Warrant Holder hereby covenants,
represents and warrants to and with SmarTire that:
(a) the Warrant Holder, is legally competent to execute this Subscription, to
take all actions required pursuant hereto, and the execution and delivery
of this Subscription by the Warrant Holder has been duly and validly
authorized;
(b) the Warrant Holder is purchasing the Shares as a principal (and not as an
agent) for investment purposes only with no intention or view to reselling
or distributing any portion or beneficial interest in the Shares;
provided, however, that the Warrant Holder may sell or otherwise dispose
of any of the Shares pursuant to registration of any of the Shares
pursuant to the United States Securities Act of 1933 (the "1933 Act") and
any applicable state securities laws or under an exemption from such
registration requirements and as otherwise provided herein;
(c) the Warrant Holder is not an underwriter of, or dealer in, the common
shares of SmarTire, nor is the Warrant Holder participating, pursuant to a
contractual agreement or otherwise, in the distribution of the Shares; and
(d) the Warrant Holder is familiar with the aims and objectives of SmarTire
and is aware of the risk and other characteristics of its investment in
the Shares.
ARTICLE 2
ACKNOWLEDGEMENTS OF THE WARRANT HOLDER
2.1 The Warrant Holder acknowledges and agrees that:
(a) none of the 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 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) none of the Shares are listed on any stock exchange or automated dealer
quotation system and no representation has been made to the Warrant Holder
that any of the Shares 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;
(c) the decision to execute this Subscription and purchase the Shares agreed
to be purchased 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 Securities and Exchange Commission (the "SEC") and
in compliance, or intended compliance, with applicable securities
legislation. If SmarTire has presented a business plan to the Warrant
Holder, the Warrant Holder acknowledges that the business plan may not be
achieved or be achievable;
(d) the Warrant Holder has been advised by SmarTire that the Warrant Holder
should consult its own legal adviser before disposing of all or any part
of any Shares that may be issued to the Warrant Holder pursuant to this
Subscription to avoid breach of applicable Legislation;
- 3 -
(e) no person has made to the Warrant Holder any written or oral
representations:
(i) that any person will resell or repurchase the Shares;
(ii) that any person will refund the exercise price for the Shares; or
(iii) as to the future price or value of the Shares;
(f) neither the SEC nor any other securities commission or similar regulatory
authority has reviewed or passed on the merits of the Shares;
(g) the Warrant Holder understands and agrees that offers and sales of any of
the Shares prior to the expiration of the applicable hold period (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;
(h) the Warrant Holder understands and agrees not to engage in any hedging
transactions involving any of the Shares unless such transactions are in
compliance with the provisions of the 1933 Act; and
(i) the Warrant Holder acknowledges that it will not be acquiring the Shares
as a result of, and will not itself engage in, any "directed selling
efforts" (as defined in Regulation S under the 0000 Xxx) in the United
States in respect of any of the Shares which would include any activities
undertaken for the purpose of, or that could reasonably be expected to
have the effect of, conditioning the market in the United States for the
resale of any of the Shares; provided, however, that the Warrant Holder
may sell or otherwise dispose of any of the Shares pursuant to
registration of any of the Shares pursuant to the 1933 Act and any
applicable state securities laws or under an exemption from such
registration requirements; and
(j) the Warrant Holder is acquiring the Shares pursuant to an exemption from
the registration and prospectus requirements of the securities legislation
(the "Legislation") in all jurisdictions relevant to this Subscription. As
a consequence, the Warrant Holder acknowledges and agrees that:
(k) the Warrant Holder will not be entitled to use most of the civil remedies
available under the Legislation;
(i) the Warrant Holder will not receive information that would otherwise
be required to be provided to him or her pursuant to the
Legislation;
(ii) prior to issuing any Shares to the Warrant Holder, SmarTire may
require the Warrant Holder to complete, sign and return to SmarTire
as soon as possible, on request by SmarTire, any such documents,
questionnaires, notices and undertakings as SmarTire may in its sole
discretion deem appropriate to ensure compliance with applicable
law, and with the rules and policies of the relevant regulatory
authorities and stock exchanges; and
(iii) the issuance and sale of the Shares to the Warrant Holder will not
be completed if it would be unlawful.
- 4 -
ARTICLE 3
LEGENDING OF SUBJECT SECURITIES
3.1 The Warrant Holder hereby acknowledges that that upon the issuance thereof,
and until such time as the same is no longer required, the certificates
representing any of the Shares will bear such legend(s) as shall be required
under applicable securities laws and regulations.
