MANAGEMENT AGREEMENT
THIS
AGREEMENT effectively replaces the management agreement entered into on the
8th
day of
August, 2005 and is dated October 20, 2006. (the "Effective Date").
BETWEEN:
SMARTIRE
SYSTEMS INC.,
a
company duly incorporated pursuant to the laws of the Province of
British
Columbia, having an office at 150 - 13151 Xxxxxx Xxxxx, Xxxxxxxx,
Xxxxxxx
Xxxxxxxx, X0X 0X0
|
(hereinafter
referred to as the "Company")
|
OF
THE
FIRST PART
AND:
XXXXX
XXXXXXXXX, of 00000 Xxxxxx Xxx. Xxxxx Xxxxx, X.X. X0X
0X0
|
(hereinafter
referred to as the "Manager")
|
OF
THE
SECOND PART
RECITALS
WHEREAS
the Company has requested the assistance of the Manager in providing certain
management services to the Company, as hereinafter described;
WHEREAS
the Manager has agreed to provide such assistance and services to the Company
in
accordance with the terms and conditions herein set forth;
NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual covenants
set forth below, the parties hereto agree as follows:
DEFINITIONS
In
this
Agreement, the following terms have the meaning as ascribed below:
“Acquisition”
means an acquisition of substantially all of SmarTire or of substantially all
assets of SmarTire by a party not an Affiliate of SmarTire prior to completion
of the acquisition;
“Affiliate”
means a director, officer, wholly or partially owned subsidiary or 10% or
greater shareholder of SmarTire, or a company controlled by such person or
any
party acting in conjunction with such person;
“Hostile
Takeover” means a Takeover that the directors of SmarTire recommend to
shareholders to reject in a management circular;
“Merger”
means a merger by SmarTire with a corporation that was not an Affiliate prior
to
completion of the merger;
“Takeover”
means a successful tender offer (as that term is determined by reference to
the
United States Securities
Exchange Act of 1934)
or
takeover bid (as that term is defined in the Securities
Act
(British
Columbia)) that has been made by a party who was not an Affiliate prior to
the
completion of the tender offer or takeover;
“Termination
Date” has the meaning set out in section 7.3 of this Agreement.
1 DUTIES
AND DEVOTION OF TIME
1.1 Duties.
During
the term of this Agreement the Manager shall be responsible for the duties
contained in Schedule "A" attached hereto and incorporated herein by this
reference (the "Duties").
1.2 Devotion
of Time.
The
parties hereto acknowledge and agree that the work of the Manager is and shall
be of such a nature that regular hours may not be sufficient and occasions
may
arise whereby the Manager shall be required to work more than eight (8) hours
per day and/or five (5) days per week. The Manager agrees that the consideration
set forth herein shall be in full and complete satisfaction for such work and
services, regardless of when and where such work and services are performed.
The
Manager further releases the Company from any claims for overtime pay or other
such compensation which may accrue to the Manager. Notwithstanding the
foregoing, the Company agrees that so long as the Manager properly discharges
his duties hereunder, the Manager may devote the remainder of his time and
attention to other non-competing business and personal pursuits.
1.3 Business
Opportunities the Property of the Company.
The
Manager agrees to communicate immediately to the Company all business
opportunities, inventions and improvements in the nature of the business of
the
Company which, during the term of this Agreement, the Manager may conceive,
make
or discover, become aware of, directly or indirectly, or have presented to
him
in any manner which relates in any way to the Company, either as it is now
or as
it may develop, and such business opportunities, inventions or improvements
shall become the exclusive property of the Company without any obligation on
the
part of the Company to make any payments therefor in addition to the salary
and
benefits herein described to the Manager.
1.4 No
Personal Use.
The
Manager shall not use any of the work the Manager shall perform for the Company
for any personal purposes without first obtaining the prior written consent
of
the Company.
2.1 Salary
and Commission.
In
consideration of the Manager providing the services referred to herein, the
Company agrees to pay the Manager: (a) an annual base salary (the "Annual Base
Salary") of two hundred and ten thousand Canadian dollars (CDN$210,000) less
applicable deductions, payable bi-weekly, subject to increase as from time
to
time approved by the Board of Directors of the Company; and (b) sales
commissions calculated and payable in accordance with Schedule “B” for the first
quarter ended October 31, 2006 based on Xx. Xxxxxxxxx’x prior salary of
CDN$150,000 per annum as per attached hereto.
2.2 Benefits.
The
Company shall provide, maintain and pay for:
(a)
|
medical,
dental for the Manager and his immediate family as is provided by
the
Company's medical services plan or an equivalent plan;
and
|
(b)
|
such
extended health and other benefits for the Manager and his immediate
family as are provided to employees of the Company, subject to the
eligibility of the Manager.
|
2.3 Payment
in Cash or Shares.
All
payments payable by the Company to the Manager, including the Annual Base
Salary, commissions and reimbursement of expenses under Section 4.1 hereof,
may be payable in cash or, at the election of the Manager, with approval by
the
Company’s Compensation Committee, and subject to the approval of the regulatory
authorities, such will be paid in whole or in part in common shares in the
capital stock of the Company ("Remuneration Shares"), issued at the 5 day
average closing price (for the 5 days prior to the Manager's election) of the
Company's common shares on any stock exchange or quotation system upon which
the
Company's common shares are listed for trading. The Manager hereby agrees that
upon his election to receive Remuneration Shares, he has waived his right under
the Employment
Standards Act
(British
Columbia), R.S.B.C. 1996, c. 113, as amended, to receive such compensation
in
cash.
2.4 Registration
of Remuneration Shares.
To
ensure that any Remuneration
Shares
issued
to the Manager under paragraph 2.3 of this Agreement are freely tradable, the
Company shall register with the SEC any Remuneration
Shares
issued.
Upon or as soon as is practical after the issuance of the Remuneration
Shares,
the
Company shall file a form S-8 or other appropriate form with the United States
Securities and Exchange Commission (the “SEC) to effect
registration.
2.5
3 VACATION
3.2 Increase
in Vacation.
The
period set out in Section 3.1 above may be increased from time to time as
mutually agreed to by the Manager and the Company's Compensation
Committee.
4 REIMBURSEMENT
OF EXPENSES
5 CONFIDENTIAL
INFORMATION
5.1 Confidential
Information.
The
Manager shall not, either during the term of this Agreement or under the
provisions of Section 5.3, without specific consent in writing, disclose or
reveal in any manner whatsoever to any other person, firm or corporation, nor
will he use, directly or indirectly, for any purpose other than the purposes
of
the Company, the private affairs of the Company or any confidential information
which he may acquire during the term of this Agreement with relation to the
business and affairs of the directors and shareholders of the Company, unless
the Manager is ordered to do so by a court of competent jurisdiction or unless
required by any statutory authority.
5.2 Non-Disclosure
Provisions.
The
foregoing provision shall be subject to the further non-disclosure provisions
contained in Schedule "C" attached hereto and incorporated hereinafter by
this reference.
5.3 Provisions
Survive Termination.
The
provisions of this section shall survive the termination of this Agreement
for a
period of three years.
6 TERM
6.1 Term.
This
Agreement shall remain in effect until terminated in accordance with any of
the
provisions contained in this Agreement.
7.1 Termination
by Manager.
Notwithstanding any other provision contained herein, the parties hereto agree
that the Manager may terminate this Agreement, with or without cause, by giving
ninety (90) days' written notice of such intention to terminate.
7.3 Termination
by Company.
The
Company may terminate this Agreement at any time for just cause without further
obligation. In the event of termination for any reason other than for just
cause
twelve (12) months after August 8, 2005, but within twenty-four (24) months
of
the effective date of this Agreement, the Company, at its option, will either
(a) continue to pay the salary under Clause 2.1 and provide the benefits under
Clauses 2.2. until nine (9) months from the date of termination or (b) pay
nine
(9) months’ salary under Clause 2.1 in lieu of notice. In the event of
termination for any reason other than for just cause twenty-four (24) months
after August 8, 2005, the Company, at its option, will either (a) continue
to
pay the salary under Clause 2.1 and provide the benefits under Clauses 2.2
until
twelve (12) months from the date of termination or (b) pay twelve (12) months’
salary under Clause 2.1 in lieu of notice. The date that is the last date to
which the Manager is entitled to receive salary and benefits (notwithstanding
that the Company may pay salary in lieu) under this clause is the “Termination
Date”. Any stock options that have been granted but that have not yet vested
shall immediately terminate, and vested options may be exercised for a period
of
30 days only after the final payment.
7.4 Death.
In the
event of the death of the Manager during the term of this Agreement, this
Agreement shall be terminated as of the date of such death, and the Manager's
spouse, if living, or surviving children shall be entitled to the termination
allowance stated in Section 7.3 hereof.
7.5 Disability.
In the
event that the Manager will during the term of this Agreement by reason of
illness or mental or physical disability or incapacity be prevented from or
incapable of performing the Duties hereunder, then the Manager shall be entitled
to receive the remuneration provided for herein at the rate specified
hereinbefore for the period during which such illness, disability or incapacity
will continue, but not exceeding six (6) successive months. If such illness,
disability or incapacity continues or will continue for a period longer than
six
(6) successive months, then this Agreement may, at the option of the Directors
of the Company, forthwith be terminated, and the Manager shall be entitled
to
the termination allowance stated in Section 7.3 hereof.
7.6 Termination
Payments.
Any
payments made by the Company to the Manager upon the termination of this
Agreement shall be made in cash, or, if the Company does not have available
funds, in equal monthly cash instalments over one year, or in Remuneration
Shares, or in a combination of cash and Remuneration Shares, subject to
regulatory approval. All payments required to be made by the Company to the
Manager pursuant to Section 7 hereof shall be made in full.
7.7
In
the event of termination of this Agreement by either party for any reason,
commissions pursuant to Schedule B or any other commissions payable by the
Company to the Manager as a result of sales made by the Company shall be paid
on
sales completed up to the last day of the Manager’s actual full time employment
with the Company, and the Manager shall have no claim to commissions of any
kind
for sales made by the Company from that date forward.
7.8
Notwithstanding anything else in this Agreement, in the event that the
employment of the Manager under the Agreement is terminated within eighteen
(18)
months of an Acquisition, a Hostile Takeover or a Merger and the termination
is
without cause, the Company,
at its option, will either (a) continue to pay the salary under the Agreement
and provide the benefits under the Agreement until the Termination Date or
(b)
pay upon termination an amount equal to the salary payable to the Termination
Date in lieu of notice. Any stock options that have been granted but that have
not yet vested shall immediately vest at the date of the final payment of
termination provisions under section 7.3, and may be exercised for a period
of
30 days only after the final payment.”
8 RIGHTS
AND OBLIGATIONS UPON TERMINATION
8.1 Rights
and Obligations.
Upon
termination of this Agreement, the Manager shall deliver up to the Company
all
documents, papers, plans, materials and other property of or relating to the
affairs of the Company, other than the Manager's personal papers in regard
to
his role in the Company, which may then be in the Manager's possession or under
his control.
9 CLOSING
9.1 Closing
Date.
This
Agreement shall be effective as of October 20, 2006.
9.2 Conditions
of Closing.
The
parties hereto agree that it shall be a condition of the execution of this
Agreement that prior to or contemporaneously with the execution of this
Agreement:
(a)
|
this
Agreement shall be approved by the Company’s Compensation
Committee.
|
10 NOTICES
AND REQUESTS
10.1 Notices
and Requests.
All
notices and requests in connection with this Agreement shall be deemed given
as
of the day they are received either by messenger, delivery service, or mailed
by
registered or certified mail with postage prepaid and return receipt requested
and addressed as follows:
(a)
|
if
to the Company:
|
150
- 00000 Xxxxxx Xxxxx
|
Xxxxxxxx,
Xxxxxxx Xxxxxxxx
|
X0X
0X0
with
a copy to:
|
XXXXX,
XXXXXX
|
Xxxxx
000-000 Xxxx Xxxxxxx Xxxxxx
|
Xxxxxxxxx,
Xxxxxxx Xxxxxxxx
|
X0X
0X0
|
Attention:
Xxxxxxx Xxxxxx
(b)
|
If
to the Manager:
|
Xxxxx
Xxxxxxxxx
00000
Xxxxxx Xxx.
Xxxxx
Xxxxx, X.X.
X0X
0X0
or
to
such other address as the party to receive notice or request so designates
by
written notice to the others.
11 INDEPENDENT
PARTIES
11.1 Independent
Parties.
This
Agreement is intended solely as a management services agreement and no
partnership, agency, joint venture, distributorship or other form of agreement
is intended.
12 AGREEMENT
VOLUNTARY AND EQUITABLE
12.1 Agreement
Voluntary.
The
parties acknowledge and declare that in executing this Agreement they are each
relying wholly on their own judgement and knowledge and have not been influenced
to any extent whatsoever by any representations or statements made by or on
behalf of any other party regarding any matters dealt with herein or incidental
thereto.
12.2 Agreement
Equitable.
The
parties further acknowledge and declare that they each have carefully considered
and understand the provisions contained herein, including, but without limiting
the generality of the foregoing, the Manager's rights upon termination and
the
restrictions on the Manager after termination and agree that the said provisions
are mutually fair and equitable, and that they executed this Agreement
voluntarily and of their own free will.
13 CONTRACT
NON-ASSIGNABLE; INUREMENT
13.1 Contract
Non-Assignable.
This
Agreement and all other rights, benefits and privileges contained herein may
not
be assigned by the Manager.
13.2 Inurement.
The
rights, benefits and privileges contained herein, including without limitation
the benefits of Sections 2 and 7 hereof, shall inure to the benefit of and
be binding upon the respective parties hereto, their heirs, executors,
administrators and successors.
14 ENTIRE
AGREEMENT
14.1 Entire
Agreement.
This
Agreement represents the entire Agreement between the parties and supersedes
any
and all prior agreements and understandings, whether written or oral, among
the
parties, including the Management Agreement, dated August 8, 2005 (the “Original
Agreement”). The Manager acknowledges that he was not induced to enter into this
Agreement by any representation, warranty, promise or other statement, except
as
contained herein. Specifically, the Original Agreement is hereby superseded
in
full by this Agreement and all rights and obligations under the Original
Agreement are hereby terminated.
14.2 Previous
Agreements Cancelled.
Save
and except for the express provisions of this Agreement, any and all previous
agreements, written or oral, between the parties hereto or on their behalf
relating to the services of the Manager for the Company are hereby terminated
and cancelled and each of the parties hereby releases and further discharges
the
other of and from all manner of actions, causes of action, claims and demands
whatsoever under or in respect of any such agreements.
15 WAIVER
15.1 Waiver.
No
consent or waiver, express or implied, by either party to or of any breach
or
default by the other party in the performance by the other of its or his
obligations herein shall be deemed or construed to be a consent or waiver to
or
of any breach or default of the same or any other obligation of such party.
Failure on the part of either party to complain of any act or failure to act,
or
to declare the other party in default irrespective of how long such failure
continues, shall not constitute a waiver by such party of its or his rights
herein or of the right to then or subsequently declare a default.
16 SEVERABILITY
16.1 Severability.
If any
provision contained herein is determined to be void or unenforceable in whole
or
in part, it is to that extent deemed omitted. The remaining provisions shall
not
be affected in any way.
17 AMENDMENT
17.1 Amendment.
This
Agreement shall not be amended or otherwise modified except by a written notice
of even date herewith or subsequent hereto signed by both parties.
18 HEADINGS
18.1 Headings.
The
headings of the sections and subsections herein are for convenience only and
shall not control or affect the meaning or construction of any provisions of
this Agreement.
19 GOVERNING
LAW
19.1 Governing
Law.
This
Agreement shall be construed under and governed by the laws of the Province
of
British Columbia and the laws of Canada applicable therein.
20 EXECUTION
20.1 Execution
in Several Counterparts.
This
Agreement may be executed by facsimile and in several counterparts, each of
which shall be deemed to be an original and all of which shall together
constitute one and the same instrument.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the 20th day of October,
2006.
Per: __/s/Xxxx
Finkelstein_______________
Authorized
Signatory
|
|
SIGNED
by XXXXX XXXXXXXXX in the presence of:
Xxxx
Xxxxxxxxxxx
Name
Xxxxx
000 00000 Xxxxxx Xx Xxxxxxxx XX
Address
Chartered
Accountant
Occupation
|
)
/s/Xxxxx Xxxxxxxxx
)
)
)
)
)
)
)
)
|
SCHEDULE
"A"
1. The
Manager shall continue as the Chief Executive Officer of the Company, and the
Manager shall faithfully, honestly and diligently serve the Company and each
of
the Company's subsidiaries.
2. The
Manager shall be responsible for the overall activities and organizational
policies of the Company. The Manager will, in that capacity, develop, recommend
and implement, directly and through subordinates, approved annual and long-term
organizational policies and goals. The Manager shall report to the Board of
Directors of the Company.
SCHEDULE
"B"
SMARTIRE
COMMISSION PLAN
The
commission plan for the Manager is based totally on the Company’s revenue plan
for the first quarter of fiscal year 2007 commencing August 1 approved by the
board of directors.
CALCULATION
OF COMMISSIONS
The
commission is calculated based on the achievement of the quarterly goals as
per
the tables below. Commission payable is expressed as a percentage of the base
salary earned in the quarter. The Company will make an assessment of the
commissions owing at the end of the quarter, and may at its discretion, advance
commissions in lieu of payment by the customer.
Commission
schedule:
*Attainment
of Revenue Goal
|
Commission
Payable
|
|
0-50%
|
10%
|
|
51-60%
|
15%
|
|
61%
- 70%
|
20%
|
|
>70%
- 80%
|
30%
|
|
>80%
- 90%
|
40%
|
|
>90%
- 100%
|
50%
|
|
>100%
- 120%
|
60%
|
|
>120%-140%
|
70%
|
|
>140%-160%
|
80%
|
|
>160%-180%
|
90%
|
|
>180%-200%
|
100%
|
SCHEDULE
"C"
NON-DISCLOSURE
PROVISIONS
1.
|
CONFIDENTIAL
INFORMATION AND
MATERIALS
|
(a)
|
"Confidential
Information" shall mean, for the purposes of this Agreement, non-public
information which the Company designates as being confidential or
which,
under the circumstances surrounding disclosure ought reasonably to
be
treated as confidential. Confidential Information includes, without
limitation, information, whether written, oral or communicated by
any
other means, relating to released or unreleased Company software
or
hardware products, the marketing or promotion of any product of the
Company, the Company's business policies or practices, and information
received from others which the Company is obliged to treat as
confidential. Confidential Information disclosed to the Manager by
any
subsidiary and/or agents of the Company is covered by this
Agreement.
|
(b)
|
Confidential
Information shall not include that information defined as Confidential
Information hereinabove which the Manager can exclusively
establish:
|
(i)
|
is
or subsequently becomes publicly available without breach of any
obligation of confidentiality owed to the
Company;
|
(ii)
|
became
known to the Manager prior to disclosure by the Company to the
Manager;
|
(iii)
|
became
known to the Manager from a source other than the Company other than
by
the breach of any obligations of confidentiality owed to the Company;
or
|
(iv)
|
is
independently developed by the
Manager.
|
(c)
|
Confidential
Materials shall include all tangible materials containing Confidential
Information, including, without limitation, written or printed documents
and computer disks or tapes, whether machine or user
readable.
|
2.
|
RESTRICTIONS
|
(a)
|
The
Manager shall not disclose any Confidential Information to third
parties
for a period of three (3) years following the termination of this
Agreement, except as provided herein. However, the Manager may disclose
Confidential Information during bona fide execution of the Duties
or in
accordance with judicial or other governmental order, provided that
the
Manager shall give reasonable notice to the Company prior to such
disclosure and shall comply with any applicable protective order
or
equivalent.
|
(b)
|
The
Manager shall take reasonable security precautions, at least as great
as
the precautions he takes to protect his own confidential information,
to
keep confidential the Confidential Information, as defined
hereinabove.
|
(c)
|
Confidential
Information and Materials may be disclosed, reproduced, summarized
or
distributed only in pursuance of the business relationship of the
Manager
with the Company, and only as provided hereunder.
|
3.
|
RIGHTS
AND REMEDIES
|
(a)
|
The
Manager shall notify the Company immediately upon discovery of any
unauthorized use or disclosure of Confidential Information or Materials,
or any other breach of this Agreement by the Manager, and shall co-operate
with the Company in every reasonable manner to aid the Company to
regain
possession of said Confidential Information or Materials and prevent
all
such further unauthorized use.
|
(b)
|
The
Manager shall return all originals, copies, reproductions and summaries
of
or relating to the Confidential Information at the request of the
Company
or, at the option of the Company, certify destruction of the
same.
|
(c)
|
The
parties hereto recognize that a breach by the Manager of any of the
provisions contained herein would result in damages to the Company
and
that the Company could not be compensated adequately for such damages
by
monetary award. Accordingly, the Manager agrees that in the event
of any
such breach, in addition to all other remedies available to the Company
at
law or in equity, the Company shall be entitled as a matter of right
to
apply to a court of competent jurisdiction for such relief by way
of
restraining order, injunction, decree or otherwise, as may be appropriate
to ensure compliance with the provisions of this
Agreement.
|
4.
|
MISCELLANEOUS
|
(a)
|
All
Confidential Information and Materials are and shall remain the property
of the Company. By disclosing information to the Manager, the Company
does
not grant any express or implied right to the Manager to or under
any and
all patents, copyrights, trademarks, or trade secret information
belonging
to the Company.
|
(b)
|
All
obligations created herein shall survive change or termination of
any and
all business relationships between the parties for a period of three
years
after such termination.
|
(c)
|
The
Company may from time to time request suggestions, feedback or other
information from the Manager on Confidential Information or on released
or
unreleased software belonging to the Company. Any suggestions, feedback
or
other disclosures made by the Manager are and shall be entirely voluntary
on the part of the Manager and shall not create any obligations on
the
part of the Company or a confidential agreement between the Manager
and
the Company. Instead, the Company shall be free to disclose and use
any
suggestions, feedback or other information from the Manager as the
Company
sees fit, entirely without obligation of any kind whatsoever to the
Manager.
|