exhibit1093.htm


     

    
      

      

    

    Exhibit
      10.93

     

    
 

    
      AMENDMENT
        NO. 1

      TO
        SECURITY AGREEMENT

      


      This
        AMENDMENT NO. 1 TO SECURITY AGREEMENT (this
“Amendment”), is made effective as of April 27, 2007
        (the “Effective Date”), by and
        between SMARTIRE SYSTEMS, INC., a British Columbia corporation
        with its principal place of business located at Suite #150 - 13151 Vanier
        Place,
        Richmond, BC V6V 2J1, British Columbia, Canada (the “Debtor”)
        and the parties listed on Schedule I attached hereto (each a “Secured
        Party” and, collectively, the “Secured Parties”) with
        reference to the following recitals:

       

      A.           Secured
        Party and the Company entered into that certain Security Agreement, dated
        January 23, 2007 (the “Master
        Agreement”).

       

      B.           Contemporaneously
        with the execution of this Amendment, Xentenial Holdings Limited (the
“Investor”) and the Company are entering into a
        securities purchase agreement (the “SPA”) pursuant to
        which the Company shall issue and sell to the Investors additional secured
        convertible debentures (the “Additional Convertible
        Debentures”) which shall be convertible into that number of shares
        (the “Additional Conversion Shares”) of the Company’s
        Common Stock.

       

      C.           To
        induce the Investor to execute and deliver the SPA, and to induce the other
        Secured Parties to consent to the transaction contemplated by the SPA, the
        Company has agreed to amend the Master Agreement to provide certain amendments
        to the Master Agreement to specifically include the Additional Convertible
        Debentures as part of the “Obligations” as defined in the Master Agreement and
        to include certain accounts receivable as part of the “Pledged Property” under
        the Master Agreement.

       

      FOR
        GOOD
        AND VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
        acknowledged, Investor and the Company agree as follows:

       

      1.           Convertible
        Debentures.  The Definition of the term “Convertible Debentures”
as used in the Master Agreement shall hereinafter include the Additional
        Convertible Debentures.

       

      2.           Obligations
        Secured.  The definition of the term “Obligations” as used in the
        Master Agreement shall include all the obligations of the Debtor to the Secured
        Party under the Additional Convertible Debentures.

       

      3.           Permitted
        Liens.  Section 6.2(k) of the Master Agreement shall be deleted in
        its entirety to remove any security interest granted to a Factor from the
        definition of Permitted Liens.

       

      4.           Pledged
        Property.  Exhibit A of the Master Agreement shall be removed and
        replaced with the Amended Exhibit A attached hereto.

       

      5.           PPSA
        Filing.  Simultaneously with the execution and delivery of this
        Amendment, the Debtor shall make, execute, acknowledge, file, record and
        deliver
        to the Secured Parties any documents reasonably requested by the Secured
        Parties, acting reasonably, to amend their respective security interests
        in the
        Pledged Property in the Personal Property Registry maintained under the Personal
        Property Security Act (British Columbia) (the
“PPSA(BC)”).  Simultaneously with the execution and delivery of this
        Agreement, the Debtor shall make, execute, acknowledge and deliver to the
        Secured Parties such documents and instruments, including, without limitation,
        financing statements, certificates, affidavits and forms as may, in the Secured
        Parties’ reasonable judgment, be necessary to effectuate, complete or perfect,
        or to continue and preserve, or amend, the security interest of the Secured
        Parties in the Pledged Property, and each Secured Party shall hold such
        documents and instruments as secured party, subject to the terms and conditions
        contained herein.

       

      6.           Definitions.  Capitalized
        terms not otherwise defined herein shall have the meaning ascribed to them
        under
        the Master Agreement, and if not defined in the Master Agreement shall have
        the
        meaning ascribed to them in the Operating Agreement.

       

      7.           Non-Impairment.  Except
        as expressly modified herein, the Master Agreement shall continue in full
        force
        and effect, and the parties hereby reinstate and reaffirm the Master Agreement
        as modified herein.

       

      8.           Inconsistencies.  In
        the event of any inconsistency, ambiguity or conflict between the terms and
        provisions of this Amendment and the terms and provisions of the Master
        Agreement, the terms and provisions of this Amendment shall
        control.

       

      9.           Counterparts.  This
        Amendment may be executed in any number of counterparts, each of which when
        executed will be deemed an original and all of which, taken together, well
        be
        deemed to be one and the same instrument.

       

      REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      IN
        WITNESS WHEREOF, the parties hereto have executed this Amendment as of
        the date first above written.

       

      
        	 	
                COMPANY:

              
	 	
                Smartire
                  Systems Inc.

              
	 	 
	 	
                By:       /s/
                  Jeff Finkelstein

              
	 	
                Name:  Jeff
                  Finkelstein

              
	 	
                Title:    Chief
                  Financial Officer

              
	 	 
	 	
                SECURED
                  PARTY:

              
	 	
                CORNELL
                  CAPITAL PARTNERS, L.P.

              
	 	 
	 	
                By:      Yorkville
                  Advisors, LLC

              
	 	
                Its:       Investment
                  Manager

              
	 	 
	 	
                By:       /s/
                  Mark Angelo

              
	 	
                Name:  Mark
                  Angelo

              
	 	
                Title:

              
	 	 
	 	
                SECURED
                  PARTY:

              
	 	
                XENTENIAL
                  HOLDINGS LIMITED

              
	 	 
	 	
                By:       /s/
                  Mark Angelo

              
	 	
                Name:  Mark
                  Angelo

              
	 	
                Title:

              
	 	 
	 	
                SECURED
                  PARTY:

              
	 	
                STAROME
                  INVESTMENTS LIMITED

              
	 	 
	 	
                By:       /s/
                  Michael Weiss

              
	 	
                Name:  Michael
                  Weiss

              
	 	
                Title:    Director

              
	 	 
	 	
                SECURED
                  PARTY:

              
	 	
                STARAIM
                  ENTERPRISES LIMITED

              
	 	 
	 	 
	 	
                By:      
                  /s/ Mark Angelo

              
	 	
                Name: 
                  Mark Angelo

              
	 	
                Title:

              
	 	 


      

      


       

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      SCHEDULE
        I

      


       

      NAME
        OF SECURED PARTIES AND

       

      CONVERTIBLE
        DEBENTURES ISSUED TO EACH SECURED PARTY

       

      
        	
                SECURED
                  PARTY

              	
                CONVERTIBLE
                  DEBENTURE

              
	
                Cornell
                  Capital Partners, LP

              	
                5%
                  convertible debenture issued on May 20, 2005 in the original principal
                  amount of $1,500,000, as amended.

              
	 	 
	
                Starome
                  Investments Limited

              	
                10%
                  convertible debenture issued on December 30, 2005 in the original
                  principal amount of $20 Million.

              
	 	 
	
                Xentenial
                  Holdings Limited

              	
                10%
                  convertible debenture issued on December 30, 2005 in the original
                  principal amount of $8 Million.

              
	 	
                10%
                  convertible debenture issued on January 23, 2007 in the original
                  principal
                  amount of $684,000.

              
	 	
                10%
                  convertible debenture issued on February 9, 2007 in the original
                  principal
                  amount of $334,000.

              
	 	
                10%
                  convertible debenture issued on March 2, 2007 in the original principal
                  amount of $782,000.

              
	 	
                10%
                  convertible debenture issued on April 24, 2007 in the original
                  principal
                  amount of $1,150,000.

              
	 	 
	
                Staraim
                  Enterprises Limited

              	
                10%
                  convertible debenture issued on December 30, 2005 in the original
                  principal amount of $2.0 Million.

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      AMENDED EXHIBIT
        A

      


      DEFINITION
        OF PLEDGED PROPERTY

       

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        


         

        AMENDED
          EXHIBIT A

         

         

        DEFINITION
          OF PLEDGED PROPERTY

         

         

        For
          the
          purpose of securing prompt and complete payment and performance by the
          Company
          of all of the Obligations, subject to Section 2 below, the Company
          unconditionally and irrevocably hereby grants to the Secured Party a continuing
          security interest in and to, and lien upon, the following Pledged Property
          of
          the Company:

         

        1.

         

        (a)           all
          goods of the Company, including, without limitation, machinery, equipment,
          furniture, furnishings, fixtures, signs, lights, tools, parts, supplies
          and
          motor vehicles of every kind and description, now or hereafter owned by
          the
          Company or in which the Company may have or may hereafter acquire any interest,
          and all replacements, additions, accessions, substitutions and proceeds
          thereof,
          arising from the sale or disposition thereof, and where applicable, the
          proceeds
          of insurance and of any tort claims involving any of the foregoing;

         

        (b)           subject
          to Section 2 below, all inventory of the Company, including, but not limited
          to,
          all goods, wares, merchandise, parts, supplies, finished products, other
          tangible personal property, including such inventory as is temporarily
          out of
          Company’s custody or possession and including any returns upon any accounts or
          other proceeds, including insurance proceeds, resulting from the sale or
          disposition of any of the foregoing;

         

        (c)           all
          contract rights and general intangibles of the Company, including, without
          limitation, goodwill, trademarks, trade styles, trade names, leasehold
          interests, partnership or joint venture interests, patents and patent
          applications, copyrights, deposit accounts whether now owned or hereafter
          created;

         

        (d)           all
          documents, warehouse receipts, instruments and chattel paper of the Company
          whether now owned or hereafter created;

         

        (e)           all
          accounts and other receivables, instruments or other forms of obligations
          and
          rights to payment of the Company (herein collectively referred to as
“Accounts”), together with the proceeds thereof, all goods represented by
          such Accounts and all such goods that may be returned by the Company’s
          customers, and all proceeds of any insurance thereon, and all guarantees,
          securities and liens which the Company may hold for the payment of any
          such
          Accounts including, without limitation, all rights of stoppage in transit,
          replevin and reclamation and as an unpaid vendor and/or lienor;

         

        (f)           to
          the extent assignable, all of the Company’s rights under all present and future
          authorizations, permits, licenses and franchises issued or granted in connection
          with the operations of any of its facilities;

         

        (g)           all
          equity interests, securities or other instruments in other companies, including,
          without limitation, any subsidiaries, investments or other entities (whether
          or
          not controlled); and

         

        (h)           all
          products and proceeds (including, without limitation, insurance proceeds)
          from
          the above-described Pledged Property.

         

        2.           Notwithstanding
          the forgoing, for greater certainty, Pledged Property does not include
          any of
          the following:

         

        (a)           any
          and all equipment, and any and all proceeds arising from the disposition
          thereof, identified as:

         

        (i)
          Selective spray coater, Camalot 4398” under lease to Foreseeson Technology Inc.
          subject to a purchase option in the lease agreement that provides that
          Foreseeson, following the 12th month of the term (which is February 1,
          2007),
          Foreseeson shall have the option to purchase the equipment at a price of
          $37,044.

         

        (ii)
          M4L
          Plasma Etching Machine held at Vansco Electronics (Morton) located at 1651
          North
          Main Street, Morton, IL 61550.

         

        (iii)
          Novolas Laser Welding Machine held at Vansco Electronics (Morton) located
          at
          1651 North Main Street, Morton, IL 61550.