Exhibit 10.83
THIS DIRECTION 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 DIRECTION 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.
To: | SmarTire Systems Inc.
13151 Vanier Place
Suite 150
Richmond, British Columbia
Canada V6V 2J1 |
D I R E C T I O N
WHEREAS:
A. West Sussex Trading, Inc. ("West Sussex Trading") is a party to that certain Advisory Agreement (the "Advisory Agreement") with SmarTire Systems Inc. ("SmarTire") dated as of September 4, 2002, 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 (the "Funds"), and, in part 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 equal in number to eight percent (8%) of the total number of common shares in the capital of SmarTire purchased by certain investors; and
B. West Sussex Trading and SmarTire have entered into an Advisory Fee Payment and Subscription Agreement (the "Subscription Agreement") dated as of the 25th day of July, 2003 pursuant to which West Sussex Trading, in part consideration for the Services provided to SmarTire under the Advisory Agreement, is entitled to receive Warrants to acquire up to 224,000 shares of common stock (the "Warrant Shares"), which are exercisable at an exercise price of U.S.$0.10 per Share until 5:00 p.m. (Vancouver time) on July 24, 2008; and
C. West Sussex Trading has assigned its rights under the Subscription Agreement with respect to Seventy Four Thousand Six Hundred and Sixty-Seven (74,667) Warrants toLawrence M. Becerra (the "Assignee").
SMARTIRE IS HEREBY DIRECTED to issue Seventy Four Thousand Six Hundred and Sixty-Seven (74,667) Warrants to the Assignee pursuant to the Subscription Agreement.
DATED at London as of the 28th day of July, 2003.
WEST SUSSEX TRADING, INC.
By: /s/ Lawrence Becerra
Authorized Signatory
AGREEMENTS OF THE ASSIGNEE
The undersigned Assignee hereby acknowledges and agrees that:
(a) the Warrants and the Shares will be issued pursuant to exemptions from the registration and prospectus requirements of the securities legislation in all jurisdictions relevant to the Subscription Agreement; and
(b) as a consequence, SmarTire must take such steps as it, in its sole discretion, deems appropriate to ensure compliance with such legislation, and with the rules and policies of the relevant regulatory authorities and stock exchanges, including, without limitation, obtaining from the Assignee certain representations, warranties and covenants.
Therefore, in consideration of the foregoing, the Assignee hereby agrees as follows:
1.Questionnaire
1.1 The Assignee agrees to execute and deliver to SmarTire together with a fully executed copy of this Direction, a BC Accredited Investor Questionnaire in the form attached as Appendix 1.
2.Acknowledgements ofthe Assignee
2.1 The Assignee acknowledges and agrees that:
(a) none of the Warrants or the Warrant Shares (collectively, the "Securities") 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) the Assignee 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 Direction 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) no securities commission or similar regulatory authority has reviewed or passed on the merits of the Securities;
(e) there is no government or other insurance covering the Securities;
(f) there are risks associated with an investment in the Securities, as more fully described in certain information forming part of the Public Record;
(g) SmarTire has advised the Assignee that SmarTire is relying on an exemption from the requirements to provide the Assignee with a prospectus and to sell the Securities through a person registered to sell securities under theSecurities 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 the Assignee;
(h) the Assignee 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 1933 Act) 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 Shares; provided, however, that the Assignee may sell or otherwise dispose of any of the Shares pursuant to registration of any of the Shares under the 1933 Act and any applicable state securities laws or under an exemption from such registration requirements;
(i) the Assignee and the Assignee'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;
(j) SmarTire is entitled to rely on the representations and warranties and the statements and answers of the Assignee contained in the Direction and in the Questionnaire;
(k) the Assignee 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 the Assignee contained herein or in any document furnished by the Assignee to SmarTire in connection herewith (including, without limitation, the Questionnaire) being untrue in any material respect or any breach or failure by the Assignee to comply with any covenant or agreement made by the Assignee 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 the Assignee 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 quoted on the OTC Bulletin Board;
(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 Distribution Compliance Period (as defined herein);
(n) 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 "Distribution Compliance 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 Distribution Compliance Period shall be made only in compliance with the registration provisions of the 1933 Act or an exemption therefrom;
(o) the Assignee acknowledges that the Distribution Compliance Period is the minimum period during which SmarTire must take steps to restrict resale of the Securities pursuant to Rule 904 of Regulation S, and that the Assignee, being an affiliate of SmarTire:
(i) will be subject to volume and manner of sale restrictions if he wishes to avail himself of the safe harbor for resale of any Securities under Rule 144 promulgated under the 1933 Act; or, if not,
(ii) any Securities resold by the Assignee to a purchaser of Securities may in certain circumstances constitute "Restricted Securities" in the hands of such purchaser for the purposes of Rule 144;
(p) there are additional restrictions on the Assignee's ability to resell the Securities under the B.C. Act and Multilateral Instrument 45-102 adopted by the British Columbia Securities Commission and it is the Assignee's responsibility to determine and comply with all applicable resale restrictions before selling any of the Securities;
(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) the Assignee has been advised to consult the Assignee'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 the Assignee's jurisdiction of residence in connection with the distribution of the Securities hereunder, and
(ii) applicable resale restrictions.
3.Representations, Warranties and Covenants of the Assignee
3.1 The Assignee hereby represents and warrants to and covenants with SmarTire (which representations, warranties and covenants shall survive the Closing) that:
(a) the Assignee is neither a U.S. Person nor a resident of British Columbia;
(b) the Assignee 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) the Assignee 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;
(c) the Assignee is outside the United States when receiving and executing this Direction;
(d) the Assignee has the legal capacity and competence to enter into and execute this Direction 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 Direction on behalf of the Assignee;
(e) the Assignee understands and agrees that SmarTire and others will rely upon the truth and accuracy of the acknowledgements, representations and agreements contained in this Direction and the Questionnaire, and agrees that if any of such acknowledgements, representations and warranties are no longer accurate or have been breached, the Assignee shall promptly notify SmarTire;
(f) by executing the Questionnaire, the Assignee is representing that he is an "Accredited Investor" as such term is defined in Multilateral Instrument 45-103 adopted by the British Columbia Securities Commission;
(g) the entering into of this Direction 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 the Assignee or of any material agreement, written or oral, to which the Assignee may be a party or by which the Assignee is or may be bound;
(h) the Assignee has duly executed and delivered this Direction and it constitutes a valid and binding agreement of the Assignee enforceable against the Assignee;
(i) the Assignee is not an underwriter of, or dealer in, the common shares of SmarTire, nor is the Assignee participating, pursuant to a contractual agreement or otherwise, in the distribution of the Securities;
(j) the Assignee (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;
(k) the Assignee is not aware of any advertisement of any of the Securities; and
(l) no person has made to the Assignee 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.
4.Acknowledgement and Waiver
4.1 The Assignee has acknowledged that the decision to acquire the Securities was solely made on the basis of publicly available information contained in the Public Record. the Assignee hereby waives, to the fullest extent permitted by law, any rights of withdrawal, rescission or compensation for damages to which the Assignee might be entitled in connection with the distribution of any of the Securities.
5.Legending of Subject Securities
5.1 The Assignee 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.
The Assignee 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 Direction.
6.Costs
6.1 The Assignee acknowledges and agrees that all costs and expenses incurred by the Assignee (including any fees and disbursements of any special counsel retained by the Assignee) relating to the acquisition of the Securities shall be borne by the Assignee.
7.Governing Law
7.1 This Direction is governed by the laws of the Province of British Columbia and the federal laws of Canada applicable therein. The Assignee irrevocably attorns to the jurisdiction of the courts of the Province of British Columbia.
8.Survival
8.1 This Direction, 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 the Assignee pursuant hereto.
9.Assignment
9.1 This Direction is not transferable or assignable.
10.Counterparts and Electronic Means
10. This Direction 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 Direction 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 Direction as of the date first above written.
11.Severability
11.1 The invalidity or unenforceability of any particular provision of this Direction shall not affect or limit the validity or enforceability of the remaining provisions of this Direction.
IN WITNESS WHEREOF the undersigned has duly executed this Direction as of the 28th day of July, 2003.
SIGNED, SEALED and DELIVERED byLAWRENCE M. BECERRA in the presence of:
/s/ Suzanna Lorenz
Signature
Susanna Lorenz
Print Name
32 Meadowbank
Address
Primrose Hill, London NW3 3AY, England
N/A
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/s/ Lawrence M. Becerra
LAWRENCE M. BECERRA
32 Meadowbank, Primrose Hill
Address of Assignee
London NW3 3AY, England
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APPENDIX 1
MULTILATERAL INSTRUMENT 45-103
ACCREDITED INVESTOR QUESTIONNAIRE
The purpose of this Questionnaire is to assure SmarTire Systems Inc. (the "Company") that the undersigned (the "Subscriber") will meet certain requirements for the registration and prospectus exemptions provided for under Multilateral Instrument 45-103 ("MI 45-103"), as adopted by the securities regulators in Alberta, British Columbia, Manitoba, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island and Saskatchewan (each, a "local jurisdiction"), in respect of a proposed private placement of securities by the Company (the "Transaction"). The Company will rely on the information contained in this Questionnaire for the purposes of such determination.
The undersigned Subscriber covenants, represents and warrants to the Company that:
1. the Subscriber has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the Transaction and the Subscriber is able to bear the economic risk of loss arising from such Transaction;
2. the Subscriber satisfies one or more of the categories of "accredited investor" (as that term is defined in MI 45-103) indicated below (please check the appropriate box):
(a) | [ ] | a Canadian financial institution, or an authorized foreign bank listed in Schedule III of theBank Act (Canada); |
(b) | [ ] | the Business Development Bank of Canada incorporated under theBusiness Development Bank Act (Canada); |
(c) | [ ] | an association under theCooperative Credit Associations Act (Canada) located in Canada, or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act; |
(d) | [ ] | a subsidiary of any person or company referred to in paragraphs 2(a) to 2(c), where the person or company owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary; |
(e) | [ ] | a person or company registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a limited market dealer registered under theSecurities Act (Ontario) or theSecurities Act (Newfoundland and Labrador); |
(f) | [ ] | an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada, as a representative of a person or company registered under the securities legislation of a jurisdiction of Canada, as a representative of a person or company referred to in paragraph 2(e); |
(g) | [ ] | the government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly-owned entity of the government of Canada or a jurisdiction of Canada; |
(h) | [ ] | a municipality, public board or commission in Canada; |
(i) | [ ] | a national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government; |
(j) | [ ] | a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada; |
(k) | [ ] | an individual who beneficially owns, or who together with a spouse beneficially owns, financial assets (defined in MI 45-103 to mean cash and securities) having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds CDN$1,000,000; |
(l) | [ ] | an individual whose net income before taxes exceeded CDN$200,000 in each of the two most recent years or whose net income before taxes combined with that of a spouse exceeded CDN$300,000 in each of those years and who, in either case, has a reasonable expectation of exceeding that net income level in the current year; |
(m) | [ ] | a person or company, other than a mutual fund or non-redeemable investment fund, that had net assets of at least CDN$5,000,000 and, unless the person is an individual, that amount is shown on its most recently prepared financial statements; |
(n) | [ ] | a mutual fund or non-redeemable investment fund that, in the local jurisdiction, distributes its securities only to persons or companies that are accredited investors; |
(o) | [ ] | a mutual fund or non-redeemable investment fund that, in the local jurisdiction, is distributing or has distributed its securities under one or more prospectuses for which the regulator has issued receipts; |
(p) | [ ] | a trust company or trust corporation registered or authorized to carry on business under theTrust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, trading as a trustee or agent on behalf of a fully-managed account; |
(q) | [ ] | a person or company trading as agent on behalf of a fully-managed account if that person or company is registered or authorized to carry on business under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction as a portfolio manager or under an equivalent category of adviser or is exempt from registration as a portfolio manager or the equivalent category of adviser; |
(r) | [ ] | a registered charity under theIncome Tax Act (Canada) that, in regard to the Transaction, has obtained advice from an "eligible adviser" (as defined in MI 45-103) or other adviser registered to provide advice on the securities being traded; |
(s) | [ ] | an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs 2(a) through 2(e) and paragraph 2(j) in form and function; or |
(t) | [ ] | a person or company in respect of which all of the owners of interests (except the voting securities required by law to be owned by directors), direct or indirect, legal or beneficial, are persons or companies that are accredited investors. |
The Subscriber acknowledges and agrees that the Subscriber may be required by the Company to provide such additional documentation as may be reasonably required by the Company and its legal counsel in determining the Subscriber's eligibility to acquire the Shares under relevant Legislation.
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the 28th day of July, 2003.
If a Corporation, Partnership or Other Entity: | | If an Individual: |
| | /s/ Lawrence Becerra |
Print or Type Name of Entity | | Signature |
| | Lawrence M. Becerra |
Signature of Authorized Signatory | | Print or Type Name |
| | |
Signature of Authorized Signatory | | |
| | |
Type of Entity | | |
