Document:

EX-10.2 Investor Registration Rights Agreement - TAIB, B.S.C. and Certain Wealth

    Exhibit 10.2

      Execution
        Copy

       

       

      INVESTOR
        REGISTRATION RIGHTS AGREEMENT

       

      THIS
        REGISTRATION RIGHTS AGREEMENT
        (this
“Agreement”),
        dated
        as of October 31, 2006, by and among SMARTIRE
        SYSTEMS, INC.,
        a
        corporation organized and existing under the laws of the Yukon
        Territory (the “Company”),
        and
        the undersigned investors listed on Schedule I attached hereto (each, an
“Investor”
and
        collectively, the “Investors”).

       

      WHEREAS:

       

      A. In
        connection with the Securities Purchase Agreement by and among the parties
        hereto of even date herewith (the “Securities
        Purchase Agreement”),
        the
        Company has agreed, upon the terms and subject to the conditions of the
        Securities Purchase Agreement, to issue and sell to the Investors secured
        convertible debentures (the “Convertible
        Debentures”)
        which
        shall be convertible into that number of shares of the Company’s common stock,
        no par value per share (the “Common
        Stock”),
        pursuant to the terms of the Securities Purchase Agreement for an aggregate
        purchase price of up to One Million Two Hundred Thousand
        Dollars ($1,200,000). Capitalized terms not defined herein shall have the
        meaning ascribed to them in the Securities Purchase Agreement.

       

      B. To
        induce
        the Investors to execute and deliver the Securities Purchase Agreement, the
        Company has agreed to provide certain registration rights under the Securities
        Act of 1933, as amended, and the rules and regulations there under, or any
        similar successor statute (collectively, the “Securities
        Act”),
        and
        applicable state securities laws.

       

      NOW,
        THEREFORE,
        in
        consideration of the premises and the mutual covenants contained herein and
        other good and valuable consideration, the receipt and sufficiency of which
        are
        hereby acknowledged, the Company and the Investors hereby agree as
        follows:

       

      1.  DEFINITIONS.

       

      As
        used
        in this Agreement, the following terms shall have the following
        meanings:

       

      (a)  “Person”
means
        a
        corporation, a limited liability company, an association, a partnership,
        an
        organization, a business, an individual, a governmental or political subdivision
        thereof or a governmental agency.

       

      (b)  “Register,”
        “registered,”
and
        “registration”
refer
        to a registration effected by preparing and filing one or more Registration
        Statements (as defined below) in compliance with the Securities Act and pursuant
        to Rule 415 under the Securities Act or any successor rule providing for
        offering securities on a continuous or delayed basis (“Rule
        415”),
        and
        the declaration or ordering of effectiveness of such Registration Statement(s)
        by the United States Securities and Exchange Commission (the “SEC”).

       

      (c)  “Registrable
        Securities”
means
        the shares of Common Stock issuable to the Investors upon conversion of the
        Convertible Debentures pursuant to the Securities Purchase
        Agreement.

       

      (d)  “Registration
        Statement”
means
        a
        registration statement under the Securities Act which covers the Registrable
        Securities.

       

      2.  REGISTRATION.

       

      (a)  Subject
        to the terms and conditions of this Agreement, the Company shall prepare
        and
        file, no later than thirty (30) days from the date hereof (the “Scheduled
        Filing Deadline”),
        with
        the SEC a registration statement on Form S-1 or SB-2 (or, if the Company
        is then
        eligible, on Form S-3) under the Securities Act (the “Initial
        Registration Statement”)
        for
        the resale by the Investors of the Registrable Securities, which includes
        at
        least one hundred fifty million (150,000,000) shares of Common Stock to be
        issued upon conversion of the Convertible Debentures. The Company shall cause
        the Registration Statement to remain effective until all of the Registrable
        Securities have been sold. Prior to the filing of the Registration Statement
        with the SEC, the Company shall furnish a copy of the Initial Registration
        Statement to the Investors for their review and comment. The Investors shall
        furnish comments on the Initial Registration Statement to the Company within
        twenty-four (24) hours of the receipt thereof from the Company.

       

      (b)  Effectiveness
        of the Initial Registration Statement.
        The
        Company shall use its best efforts (i) to have the Initial Registration
        Statement declared effective by the SEC no later than ninety (90) days from
        the
        date hereof (the “Scheduled
        Effective Deadline”)
        and
        (ii) to ensure that the Initial Registration Statement and any subsequent
        Registration Statement remains in effect until all of the Registrable Securities
        have been sold, subject to the terms and conditions of this
        Agreement.

       

      (c)  Failure
        to File or Obtain Effectiveness of the Registration Statement.
        In the
        event the Registration Statement is not filed by the Scheduled Filing Deadline
        or is not declared effective by the SEC on or before the Scheduled Effective
        Date, as the direct result of the Company’s failure to use its best efforts
        under Section 2(b) above, or if after the Registration Statement has been
        declared effective by the SEC, sales cannot be made pursuant to the Registration
        Statement as the direct result of the Company’s failure to use its best efforts
        under Section 2(b) above (whether because of a failure to keep the Registration
        Statement effective, failure to disclose such information as is necessary
        for
        sales to be made pursuant to the Registration Statement, failure to register
        sufficient shares of Common Stock or otherwise) then as partial relief for
        the
        damages to any holder of Registrable Securities by reason of any such delay
        in
        or reduction of its ability to sell the underlying shares of Common Stock
        (which
        remedy shall not be exclusive of any other remedies at law or in equity),
        the
        Company will pay as liquidated damages (the “Liquidated
        Damages”)
        to the
        holder, at the holder’s option, either a cash amount or shares of the Company’s
        Common Stock within three (3) business days, after demand therefore, equal
        to
        two percent (2%) of the liquidated value of the Convertible Debentures
        outstanding as Liquidated Damages for each thirty (30) day period after the
        Scheduled Filing Deadline or the Scheduled Effective Date as the case may
        be.
        Notwithstanding anything herein to the contrary, in no event shall Liquidated
        Damages exceed twenty percent (20%) of the aggregate Purchase Price for all
        Investors.

       

      (d)  Liquidated
        Damages.
        The
        Company and the Investor hereto acknowledge and agree that the sums payable
        under subsection 2(c) above shall constitute liquidated damages and not
        penalties and are in addition to all other rights of the Investor, including
        the
        right to call a default. The parties further acknowledge that (i) the amount
        of
        loss or damages likely to be incurred is incapable or is difficult to precisely
        estimate, (ii) the amounts specified in such subsections bear a reasonable
        relationship to, and are not plainly or grossly disproportionate to, the
        probable loss likely to be incurred in connection with any failure by the
        Company to obtain or maintain the effectiveness of a Registration Statement,
        (iii) one of the reasons for the Company and the Investor reaching an agreement
        as to such amounts was the uncertainty and cost of litigation regarding the
        question of actual damages, and (iv) the Company and the Investor are
        sophisticated business parties and have been represented by sophisticated
        and
        able legal counsel and negotiated this Agreement at arm’s length. 

       

      3.  RELATED
        OBLIGATIONS.

       

      (a)  The
        Company shall keep the Registration Statement effective pursuant to
        Rule 415 at all times until the date on which the Investor shall have sold
        all the Registrable Securities covered by such Registration Statement (the
        “Registration
        Period”),
        which
        Registration Statement (including any amendments or supplements thereto and
        prospectuses contained therein) shall not contain any untrue statement of
        a
        material fact or omit to state a material fact required to be stated therein,
        or
        necessary to make the statements therein, in light of the circumstances in
        which
        they were made, not misleading.

       

      (b)  The
        Company shall prepare and file with the SEC such amendments (including
        post-effective amendments) and supplements to a Registration Statement and
        the
        prospectus used in connection with such Registration Statement, which prospectus
        is to be filed pursuant to Rule 424 promulgated under the Securities Act,
        as may
        be necessary to keep such Registration Statement effective at all times during
        the Registration Period, and, during such period, comply with the provisions
        of
        the Securities Act with respect to the disposition of all Registrable Securities
        of the Company covered by such Registration Statement until such time as
        all of
        such Registrable Securities shall have been disposed of in accordance with
        the
        intended methods of disposition by the seller or sellers thereof as set forth
        in
        such Registration Statement. In the case of amendments and supplements to
        a
        Registration Statement which are required to be filed pursuant to this Agreement
        (including pursuant to this Section 3(b)) by reason of the Company’s filing a
        report on Form 10-KSB, Form 10-QSB or Form 8-K or any analogous report under
        the
        Securities Exchange Act of 1934, as amended (the “Exchange
        Act”),
        the
        Company shall incorporate such report by reference into the Registration
        Statement, if applicable, or shall file such amendments or supplements with
        the
        SEC on the same day on which the Exchange Act report is filed which created
        the
        requirement for the Company to amend or supplement the Registration Statement.
        

       

      (c)  The
        Company shall furnish to each Investor whose Registrable Securities are included
        in any Registration Statement, without charge, (i) at least one (1) copy
        of such
        Registration Statement as declared effective by the SEC and any amendment(s)
        thereto, including financial statements and schedules, all documents
        incorporated therein by reference, all exhibits and each preliminary prospectus,
        (ii) one (1) copy of the final prospectus included in such Registration
        Statement and all amendments and supplements thereto (or such other number
        of
        copies as such Investor may reasonably request) and (iii) such other documents
        as such Investor may reasonably request from time to time in order to facilitate
        the disposition of the Registrable Securities owned by such
        Investor.

       

      (d)  The
        Company shall use its reasonable best efforts to (i) register and qualify
        the
        Registrable Securities covered by a Registration Statement under such other
        securities or “blue sky” laws of such jurisdictions in the United States as any
        Investor reasonably requests, (ii) prepare and file in those jurisdictions,
        such amendments (including post-effective amendments) and supplements to
        such
        registrations and qualifications as may be necessary to maintain the
        effectiveness thereof during the Registration Period, (iii) take such other
        actions as may be necessary to maintain such registrations and qualifications
        in
        effect at all times during the Registration Period, and (iv) take all other
        actions reasonably necessary or advisable to qualify the Registrable Securities
        for sale in such jurisdictions; provided, however, that the Company shall
        not be
        required in connection therewith or as a condition thereto to (w) make any
        change to its articles of incorporation or by-laws, (x) qualify to do business
        in any jurisdiction where it would not otherwise be required to qualify but
        for
        this Section 3(d), (y) subject itself to general taxation in any such
        jurisdiction, or (z) file a general consent to service of process in any
        such
        jurisdiction. The Company shall promptly notify each Investor who holds
        Registrable Securities of the receipt by the Company of any notification
        with
        respect to the suspension of the registration or qualification of any of
        the
        Registrable Securities for sale under the securities or “blue sky” laws of any
        jurisdiction in the United States or its receipt of actual notice of the
        initiation or threat of any proceeding for such purpose.

       

      (e)  As
        promptly as practicable after becoming aware of such event or development,
        the
        Company shall notify each Investor in writing of the happening of any event
        as a
        result of which the prospectus included in a Registration Statement, as then
        in
        effect, includes an untrue statement of a material fact or omission to state
        a
        material fact required to be stated therein or necessary to make the statements
        therein, in light of the circumstances under which they were made, not
        misleading (provided that in no event shall such notice contain any material,
        nonpublic information), and promptly prepare a supplement or amendment to
        such
        Registration Statement to correct such untrue statement or omission, and
        deliver
        one (1) copy of such supplement or amendment to each Investor. The Company
        shall
        also promptly notify each Investor in writing (i) when a prospectus or any
        prospectus supplement or post-effective amendment has been filed, and when
        a
        Registration Statement or any post-effective amendment has become effective
        (notification of such effectiveness shall be delivered to each Investor by
        facsimile on the same day of such effectiveness), (ii) of any request by
        the SEC
        for amendments or supplements to a Registration Statement or related prospectus
        or related information, and (iii) of the Company’s reasonable determination
        that a post-effective amendment to a Registration Statement would be
        appropriate.

       

      (f)  The
        Company shall use its best efforts to prevent the issuance of any stop order
        or
        other suspension of effectiveness of a Registration Statement, or the suspension
        of the qualification of any of the Registrable Securities for sale in any
        jurisdiction within the United States of America and, if such an order or
        suspension is issued, to obtain the withdrawal of such order or suspension
        at
        the earliest possible moment and to notify each Investor who holds Registrable
        Securities being sold of the issuance of such order and the resolution thereof
        or its receipt of actual notice of the initiation or threat of any proceeding
        for such purpose.

       

      (g)  The
        Company shall make available for inspection by (i) any Investor and
        (ii) one (1) firm of accountants or other agents retained by the Investors
        (collectively, the “Inspectors”)
        all
        pertinent financial and other records, and pertinent corporate documents
        and
        properties of the Company (collectively, the “Records”),
        as
        shall be reasonably deemed necessary by each Inspector, and cause the Company’s
        officers, directors and employees to supply all information which any Inspector
        may reasonably request; provided, however, that each Inspector shall agree,
        and
        each Investor hereby agrees, to hold in strict confidence and shall not make
        any
        disclosure (except to an Investor) or use any Record or other information
        which
        the Company determines in good faith to be confidential, and of which
        determination the Inspectors are so notified, unless (a) the disclosure of
        such
        Records is necessary to avoid or correct a misstatement or omission in any
        Registration Statement or is otherwise required under the Securities Act,
        (b)
        the release of such Records is ordered pursuant to a final, non-appealable
        subpoena or order from a court or government body of competent jurisdiction,
        or
        (c) the information in such Records has been made generally available to
        the
        public other than by disclosure in violation of this or any other agreement
        of
        which the Inspector and the Investor has knowledge. Each Investor agrees
        that it
        shall, upon learning that disclosure of such Records is sought in or by a
        court
        or governmental body of competent jurisdiction or through other means, give
        prompt notice to the Company and allow the Company, at its expense, to undertake
        appropriate action to prevent disclosure of, or to obtain a protective order
        for, the Records deemed confidential.

       

      (h)  The
        Company shall hold in confidence and not make any disclosure of information
        concerning an Investor provided to the Company unless (i) disclosure of such
        information is necessary to comply with federal or state securities laws,
        (ii)
        the disclosure of such information is necessary to avoid or correct a
        misstatement or omission in any Registration Statement, (iii) the release
        of
        such information is ordered pursuant to a subpoena or other final,
        non-appealable order from a court or governmental body of competent
        jurisdiction, or (iv) such information has been made generally available
        to the
        public other than by disclosure in violation of this Agreement or any other
        agreement. The Company agrees that it shall, upon learning that disclosure
        of
        such information concerning an Investor is sought in or by a court or
        governmental body of competent jurisdiction or through other means, give
        prompt
        written notice to such Investor and allow such Investor, at the Investor’s
        expense, to undertake appropriate action to prevent disclosure of, or to
        obtain
        a protective order for, such information.

       

      (i)  The
        Company shall use its best efforts either to cause all the Registrable
        Securities covered by a Registration Statement (i) to be listed on each
        securities exchange on which securities of the same class or series issued
        by
        the Company are then listed, if any, if the listing of such Registrable
        Securities is then permitted under the rules of such exchange or (ii) the
        inclusion for quotation on the National Association of Securities Dealers,
        Inc.
        OTC Bulletin Board for such Registrable Securities. The Company shall pay
        all
        fees and expenses in connection with satisfying its obligation under this
        Section 3(i).

       

      (j)  The
        Company shall cooperate with the Investors who hold Registrable Securities
        being
        offered and, to the extent applicable, to facilitate the timely preparation
        and
        delivery of certificates (not bearing any restrictive legend) representing
        the
        Registrable Securities to be offered pursuant to a Registration Statement
        and
        enable such certificates to be in such denominations or amounts, as the case
        may
        be, as the Investors may reasonably request and registered in such names
        as the
        Investors may request.

       

      (k)  The
        Company shall use its reasonable best efforts to cause the Registrable
        Securities covered by the applicable Registration Statement to be registered
        with or approved by such other governmental agencies or authorities as may
        be
        necessary to consummate the disposition of such Registrable
        Securities.

       

      (l)  The
        Company shall otherwise use its reasonable best efforts to comply with all
        applicable rules and regulations of the SEC in connection with any registration
        hereunder.

       

      (m)  Within
        two (2) business days after a Registration Statement which covers Registrable
        Securities is declared effective by the SEC, the Company shall deliver, and
        shall cause legal counsel for the Company to deliver, to the transfer agent
        for
        such Registrable Securities (with copies to the Investors whose Registrable
        Securities are included in such Registration Statement) confirmation that
        such
        Registration Statement has been declared effective by the SEC in the form
        attached hereto as Exhibit
        A.

       

      (n)  The
        Company shall take all other reasonable actions necessary to expedite and
        facilitate disposition by the Investors of Registrable Securities pursuant
        to a
        Registration Statement.

       

      4.  OBLIGATIONS
        OF THE INVESTORS.

       

      Each
        Investor agrees that, upon receipt of any notice from the Company of the
        happening of any event of the kind described in Section 3(f) or the first
        sentence of 3(e), such Investor will immediately discontinue disposition
        of
        Registrable Securities pursuant to any Registration Statement(s) covering
        such
        Registrable Securities until such Investor’s receipt of the copies of the
        supplemented or amended prospectus contemplated by Section 3(e) or receipt
        of
        notice that no supplement or amendment is required. Notwithstanding anything
        to
        the contrary, the Company shall cause its transfer agent to deliver unlegended
        certificates for shares of Common Stock to a transferee of an Investor in
        accordance with the terms of the Securities Purchase Agreement in connection
        with any sale of Registrable Securities with respect to which an Investor
        has
        entered into a contract for sale prior to the Investor’s receipt of a notice
        from the Company of the happening of any event of the kind described in Section
        3(f) or the first sentence of 3(e) and for which the Investor has not yet
        settled.

       

      5.  EXPENSES
        OF REGISTRATION.

       

      All
        expenses incurred in connection with registrations, filings or qualifications
        pursuant to Sections 2 and 3, including, without limitation, all registration,
        listing and qualifications fees, printers, legal and accounting fees shall
        be
        paid by the Company. 

       

      6.  INDEMNIFICATION.

       

      With
        respect to Registrable Securities which are included in a Registration Statement
        under this Agreement:

       

      (a)  To
        the
        fullest extent permitted by law, the Company will, and hereby does, indemnify,
        hold harmless and defend each Investor, the directors, officers, partners,
        employees, agents, representatives of, and each Person, if any, who controls
        any
        Investor within the meaning of the Securities Act or the Exchange Act (each,
        an
“Indemnified
        Person”),
        against any losses, claims, damages, liabilities, judgments, fines, penalties,
        charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
        expenses, joint or several (collectively, “Claims”)
        incurred in investigating, preparing or defending any action, claim, suit,
        inquiry, proceeding, investigation or appeal taken from the foregoing by
        or
        before any court or governmental, administrative or other regulatory agency,
        body or the SEC, whether pending or threatened, whether or not an indemnified
        party is or may be a party thereto (“Indemnified
        Damages”),
        to
        which any of them may become subject insofar as such Claims (or actions or
        proceedings, whether commenced or threatened, in respect thereof) arise out
        of
        or are based upon: (i) any untrue statement or alleged untrue statement of
        a
        material fact in a Registration Statement or any post-effective amendment
        thereto or in any filing made in connection with the qualification of the
        offering under the securities or other “blue sky” laws of any jurisdiction in
        which Registrable Securities are offered (“Blue
        Sky Filing”),
        or
        the omission or alleged omission to state a material fact required to be
        stated
        therein or necessary to make the statements therein not misleading; (ii)
        any
        untrue statement or alleged untrue statement of a material fact contained
        in any
        final prospectus (as amended or supplemented, if the Company files any amendment
        thereof or supplement thereto with the SEC) or the omission or alleged omission
        to state therein any material fact necessary to make the statements made
        therein, in light of the circumstances under which the statements therein
        were
        made, not misleading; or (iii) any violation or alleged violation by the
        Company
        of the Securities Act, the Exchange Act, any other law, including, without
        limitation, any state securities law, or any rule or regulation there under
        relating to the offer or sale of the Registrable Securities pursuant to a
        Registration Statement (the matters in the foregoing clauses (i) through
        (iii)
        being, collectively, “Violations”).
        The
        Company shall reimburse the Investors and each such controlling person promptly
        as such expenses are incurred and are due and payable, for any legal fees
        or
        disbursements or other reasonable expenses incurred by them in connection
        with
        investigating or defending any such Claim. Notwithstanding anything to the
        contrary contained herein, the indemnification agreement contained in this
        Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising
        out of or based upon a Violation which occurs in reliance upon and in conformity
        with information furnished in writing to the Company by such Indemnified
        Person
        expressly for use in connection with the preparation of the Registration
        Statement or any such amendment thereof or supplement thereto; (y) shall
        not be
        available to the extent such Claim is based on a failure of the Investor
        to
        deliver or to cause to be delivered the prospectus made available by the
        Company, if such prospectus was timely made available by the Company pursuant
        to
        Section 3(c); and (z) shall not apply to amounts paid in settlement of any
        Claim if such settlement is effected without the prior written consent of
        the
        Company, which consent shall not be unreasonably withheld. Such indemnity
        shall
        remain in full force and effect regardless of any investigation made by or
        on
        behalf of the Indemnified Person and shall survive the transfer of the
        Registrable Securities by the Investors pursuant to Section 9
        hereof.

       

      (b)  In
        connection with a Registration Statement, each Investor agrees to severally
        and
        not jointly indemnify, hold harmless and defend, to the same extent and in
        the
        same manner as is set forth in Section 6(a), the Company, each of its directors,
        each of its officers, employees, representatives, or agents and each Person,
        if
        any, who controls the Company within the meaning of the Securities Act or
        the
        Exchange Act (each an “Indemnified
        Party”),
        against any Claim or Indemnified Damages to which any of them may become
        subject, under the Securities Act, the Exchange Act or otherwise, insofar
        as
        such Claim or Indemnified Damages arise out of or is based upon any Violation,
        in each case to the extent, and only to the extent, that such Violation occurs
        in reliance upon and in conformity with written information furnished to
        the
        Company by such Investor expressly for use in connection with such Registration
        Statement; and, subject to Section 6(d), such Investor will reimburse any
        legal
        or other expenses reasonably incurred by them in connection with investigating
        or defending any such Claim; provided, however, that the indemnity agreement
        contained in this Section 6(b) and the agreement with respect to contribution
        contained in Section 7 shall not apply to amounts paid in settlement of any
        Claim if such settlement is effected without the prior written consent of
        such
        Investor, which consent shall not be unreasonably withheld; provided, further,
        however, that the Investor shall be liable under this Section 6(b) for only
        that
        amount of a Claim or Indemnified Damages as does not exceed the net proceeds
        to
        such Investor as a result of the sale of Registrable Securities pursuant
        to such
        Registration Statement. Such indemnity shall remain in full force and effect
        regardless of any investigation made by or on behalf of such Indemnified
        Party
        and shall survive the transfer of the Registrable Securities by the Investors
        pursuant to Section 9. Notwithstanding anything to the contrary contained
        herein, the indemnification agreement contained in this Section 6(b) with
        respect to any prospectus shall not inure to the benefit of any Indemnified
        Party if the untrue statement or omission of material fact contained in the
        prospectus was corrected and such new prospectus was delivered to each Investor
        prior to such Investor’s use of the prospectus to which the Claim
        relates.

       

      (c)  Promptly
        after receipt by an Indemnified Person or Indemnified Party under this Section
        6
        of notice of the commencement of any action or proceeding (including any
        governmental action or proceeding) involving a Claim, such Indemnified Person
        or
        Indemnified Party shall, if a Claim in respect thereof is to be made against
        any
        indemnifying party under this Section 6, deliver to the indemnifying party
        a
        written notice of the commencement thereof, and the indemnifying party shall
        have the right to participate in, and, to the extent the indemnifying party
        so
        desires, jointly with any other indemnifying party similarly noticed, to
        assume
        control of the defense thereof with counsel mutually satisfactory to the
        indemnifying party and the Indemnified Person or the Indemnified Party, as
        the
        case may be; provided, however, that an Indemnified Person or Indemnified
        Party
        shall have the right to retain its own counsel with the fees and expenses
        of not
        more than one (1) counsel for such Indemnified Person or Indemnified Party
        to be
        paid by the indemnifying party, if, in the reasonable opinion of counsel
        retained by the indemnifying party, the representation by such counsel of
        the
        Indemnified Person or Indemnified Party and the indemnifying party would
        be
        inappropriate due to actual or potential differing interests between such
        Indemnified Person or Indemnified Party and any other party represented by
        such
        counsel in such proceeding. The Indemnified Party or Indemnified Person shall
        cooperate fully with the indemnifying party in connection with any negotiation
        or defense of any such action or claim by the indemnifying party and shall
        furnish to the indemnifying party all information reasonably available to
        the
        Indemnified Party or Indemnified Person which relates to such action or claim.
        The indemnifying party shall keep the Indemnified Party or Indemnified Person
        fully apprised at all times as to the status of the defense or any settlement
        negotiations with respect thereto. No indemnifying party shall be liable
        for any
        settlement of any action, claim or proceeding effected without its prior
        written
        consent; provided, however, that the indemnifying party shall not unreasonably
        withhold, delay or condition its consent. No indemnifying party shall, without
        the prior written consent of the Indemnified Party or Indemnified Person,
        consent to entry of any judgment or enter into any settlement or other
        compromise which does not include as an unconditional term thereof the giving
        by
        the claimant or plaintiff to such Indemnified Party or Indemnified Person
        of a
        release from all liability in respect to such claim or litigation. Following
        indemnification as provided for hereunder, the indemnifying party shall be
        subrogated to all rights of the Indemnified Party or Indemnified Person with
        respect to all third parties, firms or corporations relating to the matter
        for
        which indemnification has been made. The failure to deliver written notice
        to
        the indemnifying party within a reasonable time of the commencement of any
        such
        action shall not relieve such indemnifying party of any liability to the
        Indemnified Person or Indemnified Party under this Section 6, except to the
        extent that the indemnifying party is prejudiced in its ability to defend
        such
        action.

       

      (d)  The
        indemnification required by this Section 6 shall be made by periodic payments
        of
        the amount thereof during the course of the investigation or defense, as
        and
        when bills are received or Indemnified Damages are incurred.

       

      (e)  The
        indemnity agreements contained herein shall be in addition to (i) any cause
        of action or similar right of the Indemnified Party or Indemnified Person
        against the indemnifying party or others, and (ii) any liabilities the
        indemnifying party may be subject to pursuant to the law.

       

      7.  REPORTS
        UNDER THE EXCHANGE ACT.

       

      With
        a
        view to making available to the Investors the benefits of Rule 144 promulgated
        under the Securities Act or any similar rule or regulation of the SEC that
        may
        at any time permit the Investors to sell securities of the Company to the
        public
        without registration (“Rule
        144”)
        the
        Company agrees to:

       

      (a)  make
        and
        keep public information available, as those terms are understood and defined
        in
        Rule 144;

       

      (b)  file
        with
        the SEC in a timely manner all reports and other documents required of the
        Company under the Securities Act and the Exchange Act so long as the Company
        remains subject to such requirements (it being understood that nothing herein
        shall limit the Company’s obligations under Section 4(c) of the Securities
        Purchase Agreement) and the filing of such reports and other documents as
        are
        required by the applicable provisions of Rule 144; and

       

      (c)  furnish
        to each Investor so long as such Investor owns Registrable Securities, promptly
        upon request, (i) a written statement by the Company that it has complied
        with
        the reporting requirements of Rule 144, the Securities Act and the Exchange
        Act,
        (ii) a copy of the most recent annual or quarterly report of the Company
        and
        such other reports and documents so filed by the Company, and (iii) such
        other
        information as may be reasonably requested to permit the Investors to sell
        such
        securities pursuant to Rule 144 without registration.

       

      8.  AMENDMENT
        OF REGISTRATION RIGHTS.

       

      Provisions
        of this Agreement may be amended and the observance thereof may be waived
        (either generally or in a particular instance and either retroactively or
        prospectively), only with the written consent of the Company and Investors
        who
        then hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
        or waiver effected in accordance with this Section 8 shall be binding upon
        each Investor and the Company. No such amendment shall be effective to the
        extent that it applies to fewer than all of the holders of the Registrable
        Securities. No consideration shall be offered or paid to any Person to amend
        or
        consent to a waiver or modification of any provision of any of this Agreement
        unless the same consideration also is offered to all of the parties to this
        Agreement.

       

      9.  MISCELLANEOUS.

       

      (a)  A
        Person
        is deemed to be a holder of Registrable Securities whenever such Person owns
        or
        is deemed to own of record such Registrable Securities or owns the right
        to
        receive the Registrable Securities. If the Company receives conflicting
        instructions, notices or elections from two (2) or more Persons with respect
        to
        the same Registrable Securities, the Company shall act upon the basis of
        instructions, notice or election received from the registered owner of such
        Registrable Securities.

       

      (b)  Any
        notices, consents, waivers or other communications required or permitted
        to be
        given under the terms of this Agreement must be in writing and will be deemed
        to
        have been delivered: (i) upon receipt, when delivered personally; (ii) upon
        receipt, when sent by facsimile (provided confirmation of transmission is
        mechanically or electronically generated and kept on file by the sending
        party);
        or (iii) one (1) business day after deposit with a nationally recognized
        overnight delivery service, in each case properly addressed to the party
        to
        receive the same. The addresses and facsimile numbers for such communications
        shall be:

       

      
        	
                If
                  to the Company, to:

              	
                Smartire
                  Systems Inc.

              
	 	
                Richmond
                  Corporate Centre

              
	 	
                Suite
                  150-13151 Vanier Place 

              
	 	
                Richmond,
                  British Columbia

              
	 	
                Canada
                  V6V 2J1

              
	 	
                Attention: Jeff
                  Finkelstein 

              
	 	
                Telephone: (604)
                  276-9884

              
	 	
                Facsimile: (604)
                  276-2353

              
	 	
                 

              
	
                With
                  Copy to:

              	
                200
                  Park Avenue

              
	 	
                New
                  York, NY 10166

              
	 	
                Attention:
                  Michael Helsel, Esq.

              
	 	
                Telephone:
                  (212) 801-9200

              
	 	
                Facsimile:
                  (212) 801-6400

              

      

      

       

      If
        to an
        Investor, to its address and facsimile number on the Schedule of Investors
        attached hereto, with copies to such Investor’s representatives as set forth on
        the Schedule of Investors or to such other address and/or facsimile number
        and/or to the attention of such other person as the recipient party has
        specified by written notice given to each other party five (5) days prior
        to the
        effectiveness of such change. Written confirmation of receipt (A) given by
        the
        recipient of such notice, consent, waiver or other communication, (B)
        mechanically or electronically generated by the sender’s facsimile machine
        containing the time, date, recipient facsimile number and an image of the
        first
        page of such transmission or (C) provided by a courier or overnight courier
        service shall be rebuttable evidence of personal service, receipt by facsimile
        or receipt from a nationally recognized overnight delivery service in accordance
        with clause (i), (ii) or (iii) above, respectively.

       

      (c)  Failure
        of any party to exercise any right or remedy under this Agreement or otherwise,
        or delay by a party in exercising such right or remedy, shall not operate
        as a
        waiver thereof.

       

      (d)  The
        laws
        of the State of New Jersey shall govern all issues concerning the relative
        rights of the Company and the Investors as its stockholders. All other questions
        concerning the construction, validity, enforcement and interpretation of
        this
        Agreement shall be governed by the internal laws of the State of New Jersey,
        without giving effect to any choice of law or conflict of law provision or
        rule
        (whether of the State of New Jersey or any other jurisdiction) that would
        cause
        the application of the laws of any jurisdiction other than the State of New
        Jersey. Each party hereby irrevocably submits to the non-exclusive jurisdiction
        of the Superior Courts of the State of New Jersey, sitting in Hudson County,
        New
        Jersey and federal courts for the District of New Jersey sitting Newark,
        New
        Jersey, for the adjudication of any dispute hereunder or in connection herewith
        or with any transaction contemplated hereby or discussed herein, and hereby
        irrevocably waives, and agrees not to assert in any suit, action or proceeding,
        any claim that it is not personally subject to the jurisdiction of any such
        court, that such suit, action or proceeding is brought in an inconvenient
        forum
        or that the venue of such suit, action or proceeding is improper. Each party
        hereby irrevocably waives personal service of process and consents to process
        being served in any such suit, action or proceeding by mailing a copy thereof
        to
        such party at the address for such notices to it under this Agreement and
        agrees
        that such service shall constitute good and sufficient service of process
        and
        notice thereof. Nothing contained herein shall be deemed to limit in any
        way any
        right to serve process in any manner permitted by law. If any provision of
        this
        Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
        or unenforceability shall not affect the validity or enforceability of the
        remainder of this Agreement in that jurisdiction or the validity or
        enforceability of any provision of this Agreement in any other jurisdiction.
        EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
        TO
        REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
        CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
        CONTEMPLATED HEREBY.

       

      (e)  This
        Agreement, the Irrevocable Transfer Agent Instructions, the Securities Purchase
        Agreement and related documents including the Convertible Debenture constitute
        the entire agreement among the parties hereto with respect to the subject
        matter
        hereof and thereof. There are no restrictions, promises, warranties or
        undertakings, other than those set forth or referred to herein and therein.
        This
        Agreement, the Irrevocable Transfer Agent Instructions, the Securities Purchase
        Agreement and related documents including the Convertible Debenture, and
        the
        Security Agreement supersede all prior agreements and understandings among
        the
        parties hereto with respect to the subject matter hereof and
        thereof.

       

      (f)  This
        Agreement shall inure to the benefit of and be binding upon the permitted
        successors and assigns of each of the parties hereto.

       

      (g)  The
        headings in this Agreement are for convenience of reference only and shall
        not
        limit or otherwise affect the meaning hereof.

       

      (h)  This
        Agreement may be executed in identical counterparts, each of which shall
        be
        deemed an original but all of which shall constitute one and the same agreement.
        This Agreement, once executed by a party, may be delivered to the other party
        hereto by facsimile transmission of a copy of this Agreement bearing the
        signature of the party so delivering this Agreement.

       

      (i)  Each
        party shall do and perform, or cause to be done and performed, all such further
        acts and things, and shall execute and deliver all such other agreements,
        certificates, instruments and documents, as the other party may reasonably
        request in order to carry out the intent and accomplish the purposes of this
        Agreement and the consummation of the transactions contemplated
        hereby.

       

      The
        language used in this Agreement will be deemed to be the language chosen
        by the
        parties to express their mutual intent and no rules of strict construction
        will
        be applied against any party.

       

      (j)  This
        Agreement is intended for the benefit of the parties hereto and their respective
        permitted successors and assigns, and is not for the benefit of, nor may
        any
        provision hereof be enforced by, any other Person.

       

      

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

      

      
        
          13

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      IN
        WITNESS WHEREOF,
        the
        parties have caused this Investor Registration Rights Agreement to be duly
        executed as of day and year first above written.

       

      
        	 	
                COMPANY:

              
	 	
                SMARTIRE
                  SYSTEMS INC.

              
	 	 
	 	
                By:     
                  /s/ Jeff Finkelstein      

              
	 	
                Name: 
                  Jeff Finkelstein 

              
	 	
                Title: 
                  Chief Financial Officer

              
	 	 

      

      

      

      

      

      
        
          
             

            

             

            

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

      

       

      SCHEDULE
        I

       

       

      SCHEDULE
        OF INVESTORS

       

      

      
        	
                Name

              	
                Signature

              	
                Address/Facsimile
                  

                Number
                  of Investors

              
	 	 	 
	 	 	 
	
                TAIB
                  Bank, B.S.C. (c)

              	
                By: /s/
                  Larry Chaleff 

              	
                450
                  Park Ave. - Suite 1902

              
	
                c/o
                  TAIB Securities, Inc.

              	
                Name:
                  Larry Chaleff 

              	
                New
                  York, NY 10022

              
	 	 	
                Attention:
                  Larry Chaleff

              
	 	 	
                Facsimile: (212)
                  832-7122 

              
	 	 	 
	
                Certain
                  Wealth, Ltd.

              	
                By:
                  /s/ Larry Chaleff     

              	
                450
                  Park Ave. - Suite 1902

              
	
                c/o
                  TAIB Securities, Inc.

              	
                Name:
                  Larry Chaleff 

              	
                New
                  York, NY 10022

              
	 	 	
                Attention:
                  Larry Chaleff

              
	 	 	
                Facsimile: (212)
                  832-7122 

              
	 	 	 
	 	 	 
	 	 	 
	 	 	 

      

      

      

      

      

      

      
        
          
            

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

      

      EXHIBIT
        A

       

      FORM
        OF NOTICE OF EFFECTIVENESS

       

       

      OF
        REGISTRATION STATEMENT

       

      

      Attention: 

      

      
        	 	
                Re:

              	
                SMARTIRE
                  SYSTEMS INC.

              

      

      

      Ladies
        and Gentlemen:

      

      We
        are
        counsel to Smartire Systems Inc., a corporation organized and existing under
        the
        laws of the Yukon Territory  (the “Company”),
        and
        have represented the Company in connection with that certain Securities Purchase
        Agreement (the “Securities
        Purchase Agreement”)
        entered into by and among the Company and the investors named therein
        (collectively, the “Investors”)
        pursuant to which the Company issued to the Investors shares of its Common
        Stock, no par value (the “Common
        Stock”).
        Pursuant to the Purchase Agreement, the Company also has entered into a
        Registration Rights Agreement with the Investors (the “Investor
        Registration Rights Agreement”)
        pursuant to which the Company agreed, among other things, to register the
        Registrable Securities (as defined in the Registration Rights Agreement)
        under
        the Securities Act of 1933, as amended (the “Securities
        Act”).
        In
        connection with the Company’s obligations under the Registration Rights
        Agreement, on ____________ ____, the Company filed a Registration Statement
        on
        Form ________ (File No. 333-_____________) (the “Registration
        Statement”)
        with
        the Securities and Exchange SEC (the “SEC”)
        relating to the Registrable Securities which names each of the Investors
        as a
        selling stockholder there under.

       

      In
        connection with the foregoing, we advise you that a member of the SEC’s staff
        has advised us by telephone that the SEC has entered an order declaring the
        Registration Statement effective under the Securities Act at [ENTER
        TIME OF EFFECTIVENESS]
        on
[ENTER
        DATE OF EFFECTIVENESS]
        and we
        have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that
        any stop order suspending its effectiveness has been issued or that any
        proceedings for that purpose are pending before, or threatened by, the SEC
        and
        the Registrable Securities are available for resale under the Securities
        Act
        pursuant to the Registration Statement.

       

      Very
        truly yours,

      

      [Law
        Firm]

      

      By:      

      

      cc: [LIST
        NAMES OF INVESTORS]Filed by Automated Filing Services Inc. (604) 609-0244 - Skyflyer Inc. - Exhibit 10.1

 

 

 

Loan Agreement

 

 

Dast GmbH, Wegberg

- referred to as “Lender” below

-

 

grants

 

Skyflyer Technology GmbH, Wegberg

- referred to as “Borrower” below

 

a loan according to the following provisions.

1. Loan amount; loan term; purpose

	 	a) 	
      The amount of the loan is Euro 10,000.00.

	 	 	 
	 	b) 	
      Both parties may cancel the loan by giving one months
      notice at the end of the month. Cancellation must be in writing.

	 	 	 
	 	c) 	
      The term of the loan ends on August 1,
  2007.

2. Interest rate

The interest rate on the loan shall be 7 % per annum.

3. Interest and principal loan payments

	 	a) 	
      After cancellation the loan is repayable in one full
      amount.

	 	 	 
	 	b) 	
      The Borrower is entitled to repay the loan amount early
      in one full amount or in partial repayments. Any partial payments are
      first applied to the interest.

4. Payment method

The Borrower shall see to it that any payments under the loan
agreement shall be transferred into the Lender’s known account on the due
dates.

5. Other

	 	a) 	
      Subsidiary agreements or amendments to this contract must
      be made in writing or confirmed in writing by the Lenders. This contract
      contains all of the written and verbal agreements made between the Lender
      and the Borrower.

	 	 	 
	 	b) 	
      This contract is governed by the laws of the Federal
      Republic of Germany.

	 	 	 
	 	c) 	
      The Lender’s headquarters is the place of fulfillment of
      all payments.

	 	d) 	
      The invalidity of individual contract provisions shall
      not affect the validity of the remaining contract.

	 	 	 
	 	e) 	
      The Lender is entitled to assign the loan for refinancing
      purposes.

	 	 	 
	 	f) 	
      The Borrower is obligated to submit any information
      required by the Lender for the business relationship, upon request
      (submission of annual financial statements; other documents to disclose
      the financial situation).

 

 

Wegberg, December 8, 2006

 

 

	 	 	Skyflyer Technology
      GmbH
	 	 	 
	/s/ Dieter Wagels	 	/s/ Manfred Sappok
	 	 	 
	Place, Date, Lender 	 	Place, Date, Borrower

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]