Exhibit 10.34
ADVISORY AGREEMENT
THIS AGREEMENT, dated as of the 4th day of September 2002, is between
SmarTire Systems Inc. whose business address is 00000 Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0, and facsimile is 0.000.000.0000, and
West Sussex Trading, Inc. (hereinafter the "Advisor") whose business address is
00 Xxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000 and facsimile is
0.000.000.0000. This Agreement replaces and supersedes the prior Advisory
Agreement dated August 17, 2001 between SmarTire and the Advisor.
1. ADVISORY SERVICES. Subject to the terms and conditions set forth
herein, the Advisor hereby agrees to act as an advisor in raising new equity
and/or debt financing (hereafter "Funds") for SmarTire Systems Inc. and its
affiliates (hereinafter "SmarTire"). It is understood and agreed that Funds may
take the form of investments in conventional debt, convertible debt, secured
debt, participating debt, warrants, equity, preferred equity, lines of credit,
letters of credit or the like. The Advisor agrees to seek out the person(s),
partnership(s), corporation(s), or other entity(ies) or group(s) satisfactory to
SmarTire (hereinafter "Investor(s)"), who would be interested in entering into
the Transaction(s) with SmarTire, as well as such other consultants or
professionals as may be necessary or appropriate to assist SmarTire, in
effecting the Transaction(s). As used in this Agreement, a "Transaction" shall
mean the payment of Funds to SmarTire as investments in the form or forms listed
above, or in any other similar investment. SmarTire shall have the absolute
right to refuse to consummate a Transaction with any Investor(s) for any reason
or for no reason.
2. INDEPENDENT CONTRACTOR STATUS. In rendering advisory services
hereunder, the Advisor shall act solely as an independent contractor, and this
Agreement shall not be construed to create any employee/employer relationship
between the Advisor and SmarTire. The Advisor shall not be empowered to act for
or bind SmarTire to any third parties.
3. SMARTIRE INFORMATION PROCEDURE. The Advisor will disclose to SmarTire
the Investor(s) whom the Advisor wishes to contact as the potential source(s) of
Funds for SmarTire prior to introducing the SmarTire information package to the
Investor(s). SmarTire shall make available sufficient information in suitable
format to permit the Advisor to introduce SmarTire effectively to the
Investor(s) for the purpose of raising Funds. If requested by SmarTire, the
Advisor will only furnish such information to the Investor(s) after the
Investor(s) has signed a confidentiality agreement satisfactory in form and
substance to SmarTire.
4. TERM. The initial term of this Agreement shall commence on the date
hereof, and continue for a period of one hundred and eighty (180) days
hereafter. Thereafter, this Agreement shall renew automatically for successive
terms of ninety (90) days unless either party shall give notice of termination
in writing to the other party at least ten (10) days before a renewal date. In
any event, SmarTire shall remain liable to compensate the Advisor as provided in
paragraphs 5 and 6 below.
5. COMPENSATION.
(a) SmarTire agrees to pay to the Advisor a cash fee equal to eight per
cent (8%) of all Funds received by SmarTire from the Investor(s) introduced to
SmarTire by the Advisor. SmarTire will pay the cash fee to the Advisor by wire
transfer to its designated bank account within 48 hours of receipt of Funds.
(b) In the event that Funds are received by SmarTire from the Investor(s)
in installments, the cash fee will be paid pro rata to the Advisor within 48
hours of each date that Funds are received by SmarTire.
(c) In the event that the Advisor shall become entitled to cash fees under
the terms of this Agreement, SmarTire shall pay such cash fees within 48 hours
of the date that Funds are received by SmarTire from the Investor(s) for a
period of three years from the date of this Agreement notwithstanding the
earlier termination of this Agreement.
(d) SmarTire shall be obligated to pay success fees only to the extent
that such transactions are actually closed and Funds made available to
SmarTire. If all or a portion of the consideration paid in a Transaction is
other than cash, then the value of such non-cash consideration shall be the
fair market value thereof on the date that such Transaction is consummated, as
agreed to in good faith between the parties.
(e) In addition to the cash fee compensation detailed in paragraph 5 (a-d)
above, at the closing of the Transaction(s), SmarTire will issue to the Advisor
or its assigns, warrants (the "Warrants") to purchase 8% of the amount of
Securities issued to purchasers. The exercise price of the Warrants shall be
equal to the price at which common equity of the Company is issued (or in the
event of a convertible security, the conversion price or exercise price into
common equity on the closing date). The Warrants shall be exercisable after the
date of issuance and shall expire five years after the date of issuance, unless
otherwise extended by the Company. The Warrants shall include weighted average
anti-dilution protection (subject to exceptions for any shares issuable pursuant
to options or other convertible securities outstanding on the date first written
above, as well as for options or other stock-based compensation or incentives
that may reasonably be granted to directors, officers and employees pursuant to
stock incentive plans), a cashless exercise provision (subject to any
limitations imposed by applicable corporate laws) and shall be non-redeemable.
The Warrants shall also include piggyback registration rights. Notwithstanding
the foregoing, the compensation payable under this section may be paid in
SmarTire common shares, subject to mutual agreement between the Advisor and
SmarTire.
6. REIMBURSEMENT OF EXPENSES. In addition to the fees described in
paragraph 5 (a-e) above, SmarTire agrees to reimburse the Advisor, monthly, for
all reasonable out-of-pocket expenses incurred in connection with the Advisor
providing services under this Agreement, subject to a maximum of $12,500. All
expenses in excess of $2,000.00 shall be pre-approved by SmarTire.
7. PROPRIETARY INFORMATION. The Advisor understands and acknowledges
that at all times both during and after the term of its Advisory Agreement with
SmarTire, the Advisor will keep in strictest confidence and trust all
proprietary information belonging to SmarTire, and it will not use or disclose
any such proprietary information without the written consent of SmarTire except
as required by a court of law or as may be necessary in the ordinary course of
performing its duties as Advisor to SmarTire; provided however, that the term
"proprietary information" shall not include any information which is in the
public domain.
8. ASSIGNMENT. This Agreement and the rights and obligations of the
parties hereto shall bind and inure to the benefit of any successor or
successors of SmarTire by reorganization, merger, consolidation or otherwise
and any assignee of all or substantially all of its business and properties.
The Advisor shall have the right to assign its rights under this Agreement to
any person(s) or entity(ies) as specified in writing with notice of assignment
sent to SmarTire by mail and/or facsimile.
9. NOTICES. Any notice which a party is required or may desire to give
pursuant to this Agreement shall be given by personal delivery, facsimile, or
registered or certified mail, return receipt requested, addressed to the
Advisor at the business address of the Advisor above, or addressed to SmarTire
at its registered address above, or at such other place as either party may
from time to time designate in writing. The date of personal delivery or the
date of mailing or sending by facsimile of any such notice shall be deemed to
be the date of delivery thereof.
10. GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with the internal substantive laws of the
Commonwealth of Massachusetts, U.S.A.
11. COUNTERPARTS. This Agreement may be executed in counterparts and by
facsimile signature, any one of which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as if
an instrument under seal, on the date first above written.
WEST SUSSEX TRADING, INC.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, Director
SMARTIRE SYSTEMS INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Chairman and CEO
