YA GLOBAL INVESTMENTS, L.P. Jersey City, New Jersey 07092
Exhibit 10.109
YA
GLOBAL INVESTMENTS, L.P.
000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx
Xxxx, Xxx Xxxxxx 00000
November
7, 2007
00000
Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxxxx Xxxxxxxx X0X 0X0
ATTN: Xxxx
Xxxxxxxxxxx, Chief Financial Officer
Dear
Xx.
Xxxxxxxxxxx:
This
letter sets forth our agreement
regarding the debt owed by SmarTire Systems, Inc. (“SmarTire” or the “Company”)
to YA Global Investments, L.P. (f/k/a Cornell Capital Partners,
L.P.). (hereinafter, “YA”).As of November 7, 2007,
that debt (not including accrued interest, fees, and other expenses owing)
(referred to, together, as the “Existing Debentures”) is as
follows:
|
Date
of Instrument:
|
Issuer:
|
Outstanding
Principal:
|
|
March
22, 2005
|
SmarTire
|
$3,085,440
in Convertible Preferred Stock
|
|
May
20, 2005
|
SmarTire
|
$1,420,000
|
|
June
23, 2005
|
SmarTire
|
$9,770,000
|
|
January
23, 2007
|
SmarTire
|
$684,000
|
|
February
9, 2007
|
SmarTire
|
$334,000
|
|
Xxxxx
0, 0000
|
XxxxXxxx
|
$782,000
|
|
April
27, 2007
|
SmarTire
|
$1,150,000
|
|
August
20, 2007
|
SmarTire
|
$350,000
|
|
1.
|
The
certain registration
statements required to be filed by the Company with the SEC and
declared
effective by the SEC on or before specified deadlines, all as required
by
the terms of three parties acknowledge that the Securities and
Exchange Commission (the “SEC”) has not declared effective Registration
Rights Agreements between the Company and YA dated March 22, 2005,
May 20,
2005 and June 23, 2005 respectively (the “RRAs”).
Subject to the
terms of a
waiver dated May 24, 2007, the RRAs require that the Company pay
damages (the Damages”) to YA because
these registration
statements have not been declared
effective.
|
|
2.
|
YA
hereby agrees (i) to extend the Maturity Date of (a) the convertible
preferred stock issued by the Company to YA with issue date March
22, 2005
(the “March 2005 Convertible Preferred”) and (b) the May 5, 2005,
debenture (the “May 2005 Debenture”), issued by the
Company held by YA as well as the due date for any periodic
payments due under either of the March 2005 Convertible Preferred
or the
May 2005 Debenture to January 1, 2008 and (ii) to permanently waive
its
right to the Damages whether now or hereafter accrued. The
waiver of YA’s right to the Damages shall extend only to these three RRAs
and not to any of the other Existing Agreements (as hereinafter
defined).
The extension of the maturity date shall apply only to the March
2005
Convertible Preferred and the May 2005 Debenture, and not to any
of the
other Existing Debentures. As modified herein, the Existing
Debentures and Existing Agreements remain in full force and effect.
|
|
3.
|
YA
hereby agree to modify the final sentence of the Standby Equity
Distribution Agreement dated December 30, 2005 (the “SEDA”) between the
Company and YA, to read as follows: “The Investor acknowledges
that it shall pay any and all withholding taxes, interest and penalties
assessed in connection with the transactions contemplated by this
Agreement.”
|
|
4.
|
All
amounts owed, as set forth above, together with any fees, costs,
expenses
and other charges now or hereafter payable by the Company to YA
(including, without limitation, the amounts referenced in the table
above)
under the Existing Debentures are unconditionally owing by the
Company to
YA, without offset, setoff, defense or counterclaim of any kind,
nature or
description whatsoever except as set forth in this
Agreement. The Company further acknowledges, confirms and
agrees that (a) all agreements between SmarTire and YA (the
“Existing Agreements”) have been duly executed and delivered by the
Company to YA, and each is in full force and effect as of the date
hereof;
(b) the agreements and obligations of SmarTire contained in the
Existing Agreements, as amended by this Agreement, constitute the
legal,
valid and binding obligations of SmarTire, enforceable against
it in
accordance with their respective terms, and the Company has no
valid
defense to the enforcement of such obligations; and (c) YA is and
shall be entitled to the rights, remedies and benefits provided
for in the
Existing Agreements and applicable law, without offset, setoff,
defense or
counterclaim of any kind, nature or descriptions
whatsoever.
|
|
5.
|
In
exchange for the consideration described in paragraphs
numbered
1- 3, above, and except as otherwise set forth in this Agreement,
SmarTire does hereby RELEASE AND FOREVER DISCHARGE YA and its subsidiaries
and its respective affiliates, parents, joint ventures, officers,
directors, shareholders, interest holders, members, managers, employees,
consultants, representatives, successors and assigns, heirs, executors
and
administrators (collectively, “Buyer Parties”) from all causes of
action, suits, debts, claims and demands whatsoever known or unknown,
at
law, in equity or otherwise, which the Company had, now has, or
hereafter
may have, arising from or relating in any way to the Company’s status as a
debtor of YA on or prior to the date hereof, any agreement between
SmarTire and YA entered into prior to the date hereof, any claims
for
reasonable attorneys’ fees and costs, and including, without limitation,
any claims relating to fees, penalties, liquidated damages, and
indemnification for losses, liabilities and expenses; provided,
however,
that this release shall not extend to YA’s obligation to pay all
withholding taxes, interest and penalties on withholding taxes
as set
forth in the SEDA as modified herein. This release is effective
without regard to the legal nature of the claims raised and without
regard
to whether any such claims are based upon tort, equity, or implied
or
express contract. It is expressly understood and agreed that this
release shall operate as a clear and unequivocal waiver by SmarTire
of any
such claim whatsoever.
|
If
the
foregoing correctly sets forth the terms of our agreement, please sign this
letter on the line provided below, whereupon it will constitute a binding
agreement among us.
Sincerely,
YA
GLOBAL INVESTMENTS,
L.P.
By:
Yorkville Advisors,
LLC
Its: General
Partner
By:
/s/Xxxxx Xxxxx
Name: Xxxxx
Xxxxx
Title: Managing
Member
ACCEPTED
AND AGREED:
By: /s/Xxxx
Xxxxxxxxxxx
Name:
Xxxx Xxxxxxxxxxx
Title:
Chief Financial Officer
