<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 23, 1998
REGISTRATION NO. 33-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
SMARTIRE SYSTEMS INC. (FORMERLY UNICOMM SIGNAL INC.)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
British Columbia, Canada Not Applicable
---------------------------- -----------------------------
(State or other jurisdiction (I.R.S. Employee I.D. Number)
of incorporation or organization)
</TABLE>
150-13151 VANIER PLACE, RICHMOND, BRITISH COLUMBIA, V6V 2J1
-----------------------------------------------------------
(Address of Principal Executive Office, including Zip Code)
1998 STOCK INCENTIVE PLAN (U.S.)
1998 STOCK INCENTIVE PLAN (NON-U.S.)
------------------------------------
(Full title of the agreement)
(604) 276-9884
----------------------------------
(Telephone number, including area code, of agent for service)
COPIES TO:
DAVID L. FICKSMAN, ESQ.
LOEB & LOEB LLP
1000 WILSHIRE BOULEVARD, SUITE 1800
LOS ANGELES, CALIFORNIA 90017
(213) 688-3698
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================
Proposed maximum Proposed maximum Amount of
Title of securities Amount to be offering price aggregate offering registration
to be registered registered(1) per unit(2) price fee
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 900,000 $4.94 $4,443,750 $1,235.36
=========================================================================================================
</TABLE>
(1) DETERMINED PURSUANT TO RULE 457(H).
(2) ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE
PURSUANT TO RULE 457(C) AND (H), BASED ON THE AVERAGE OF THE HIGH AND LOW
PRICES ON NOVEMBER 17, 1998.
<PAGE> 2
PROSPECTUS FOR RESALES
The material which follows, up to but not including the page
beginning Part II of this Registration Statement, constitutes a prospectus,
prepared on Form S-3, in accordance with General Instruction C to Form S-8, to
be used in connection with resales of securities acquired under the 1998 Stock
Incentive Plan (U.S.) and 1998 Stock Incentive Plan (Non- U.S.) by affiliates of
SmarTire Systems, Inc., as defined in Rule 405 under the Securities Act of 1933,
as amended.
PROSPECTUS
SMARTIRE SYSTEMS INC.
COMMON STOCK
This Prospectus relates to shares of Common Stock of SmarTire
Systems Inc. (the "Company") which may be offered from time to time by the
people named under "Selling Security Holders" in the over the counter market,
where the Company's Common Stock currently is traded, or on securities
exchanges, through automated quotation systems or in other markets where the
Common Stock may be traded, or in negotiated transactions, at prices and on
terms then available. The respective Selling Security Holders will pay any
brokerage fees or commissions relating to sales by them. See "Method of Sale."
The Company will receive no part of the proceeds of any such sales. The
principal executive office of the Company is located at 150-13151 Vanier Place,
Richmond, British Columbia, V6V 2J1.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS
THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
No person has been authorized to give any information or to make
any representations not contained in this Prospectus. Any information or
representation not contained herein must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell
any of the securities covered by this Prospectus by the Company in any state to
any person to whom it is unlawful for the Company to make such offer. Neither
the delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company since the date hereof or since the dates as of which
information has been incorporated herein.
2
<PAGE> 3
The expenses of preparing and filing the Registration Statement of
which this Prospectus is a party are being borne by the Company.
------------------------
The date of this Prospectus is November __, 1998
3
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information.........................................................4
Incorporation by Reference....................................................4
Selling Security Holders......................................................5
Method of Sale................................................................5
SEC Position Regarding Indemnification........................................5
</TABLE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, and in accordance with that Act files reports
and other information with the Securities and Exchange Commission. All reports,
proxy statements and other information filed with the Securities and Exchange
Commission by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: 7 World
Trade Center, New York, New York 10048, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511 and 11th floor, 5670 Wilshire Boulevard, Los
Angeles, California 90036. Copies of that material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a web site
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission. The address of
such site is (http://www.sec.gov)
INCORPORATION BY REFERENCE
The Company incorporates by reference into this Prospectus (a) the
Company's Registration on Form 10-SB, as amended (b) the Company's Annual Report
on Form 10-KSB for the fiscal year ended July 31, 1998 (c) all documents filed
by the Company pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 since July 31, 1998, and (d) the description of the Company's Common
Stock included in its registration statement under Section 12 of the Securities
Exchange Act of 1934 relating to the Common Stock, including any amendment or
report filed for the purpose of updating such description. All documents
subsequently filed by the Company pursuant to Sections 13(a), 14(c), 14 and
15(d) of the Securities Exchange Act of 1934, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, will be deemed
to be incorporated by reference in this Registration Statement and to be part of
it from the date of filing such documents. Copies of all documents which are
incorporated by reference will be provided without charge to anyone to whom this
prospectus is delivered upon a written or oral request to SmarTire Systems Inc.,
150-13151 Vanier Place, Richmond, British Columbia, V6V 2J1, Attention:
Corporate Secretary, telephone number (604) 276-9884.
4
<PAGE> 5
SELLING SECURITY HOLDERS
The Prospectus relates to possible sales by officers and directors
of the Company of shares of Common Stock purchased by them through the exercise
of options or shares of the Company's Common Stock granted to them under the
Company's 1998 Stock Incentive Plan (U.S.) and 1998 Stock Incentive Plan
(Non-U.S.) (collectively, the "Stock Plans"). The names of those Selling
Securities Holders are not known by the Company at this time and will be
provided by the Company, along with the number of shares of Common Stock owned
by each of them and the number of shares to be resold, in a supplement to this
Prospectus pursuant to General Instruction C(3) to Form S-8 and Rule 424(b)
under the Securities Act of 1933.
METHOD OF SALE
The Company anticipates that any sales of the shares offered by
this Prospectus by Selling Security Holders will be made to the public in the
over the counter market where the Company's Common Stock currently is traded or
on securities exchanges, through automated quotation systems or in other markets
where the Company's Common Stock may be traded, or in negotiated transactions.
The Company anticipates that sales will be at prices current when the sales take
place. Sales may involve payment of brokers' commissions by Selling Security
Holders. Sales may also be made pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Act") without delivery of this
Prospectus. There is no present plan of distribution.
SEC POSITION REGARDING INDEMNIFICATION
The Company's Articles provide for indemnification of officers and
directors.
Insofar as indemnification for liabilities arising under the Act
might be permitted to directors, officers or persons controlling the Company
under the provisions described above, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in that Act and is therefore unenforceable.
5
<PAGE> 6
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents of SmarTire Systems Inc. (the "Company")
previously filed with the Securities and Exchange Commission (the "Commission")
by the Company are incorporated into this Registration Statement by reference:
(a) The Company's Registration Statement on Form 10-SB, as
amended;
(b) The Company's Annual Report on Form 10-KSB for the fiscal
year ended July 31, 1998; and
(c) The description of the Company's common stock contained in
the Company's registration statement filed with the Commission under Section 12
of the Securities Exchange Act of 1934, as amended, including any amendment or
report filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the filing of a post-effective amendment which indicates that
all shares offered hereunder have been sold or deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
No description of the class of securities to be offered is
required under this item because the class of securities to be offered is
registered under Section 12 of the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
No such interests.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles provide, among other things, that, subject
to the Company Act (British Columbia), the Company will indemnify each and every
director, secretary or assistant secretary and each and every former director,
secretary or assistant secretary of the Company against all reasonable losses,
costs, charges and expenses properly incurred, including any amount paid to
settle an action or satisfy a judgment in a civil, criminal or administrative
action or proceeding by reason of his having been a director or secretary or
assistant secretary of the Company, if: (a) he acted honestly and in good faith,
6
<PAGE> 7
with a view to the best interests of the company; and (b) he had reasonable
grounds for believing his conduct was lawful.
The Company's Articles further provide that the Company may, if
permitted by law, indemnify any person who serves or has served as a director,
officer, employee or agent of the Company, or of any corporation of which the
Company is a shareholder. Further, the Company is authorized by its Articles to
purchase and maintain insurance for the benefit of any person who is or was
serving as a director, officer, employee or agent of the Company or of any
corporation of which the Company is a shareholder, against any liability which
may be incurred by him in that capacity.
Under Section 128 of the Company Act (British Columbia), any
indemnity provided by the Company to the following persons is subject to court
approval:
(a) a director or former director of the Company;
(b) a director or former director of any corporation
of which the Company is or was a shareholder;
(c) the heirs and personal representatives of any
person mentioned in paragraph (a) or (b);
(d) an officer or former officer of the Company or of
a corporation of which the Company is or was a
shareholder.
The Company may indemnify such person against all reasonable
costs, charges and expenses, including an amount paid to settle an action or
satisfy a judgment, including an amount paid to settle an action or satisfy a
judgment in a civil, criminal or administrative action or proceeding to which
the person is made a party because of being or having been a director or
officer, including an action brought by the Company or corporation.
Indemnification is only possible under Section 128 of the Company Act (British
Columbia) if: (a) the person acting honestly and in good faith with a view to
the best interests of the corporation of which the person is or was a director
or officer; and (b) in the case of a criminal or administrative action or
proceeding, the person had reasonable grounds for believing that the person's
conduct was lawful.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
7
<PAGE> 8
ITEM 8. EXHIBITS.
The following is a complete list of exhibits filed as a part of
this Registration Statement, which Exhibits are incorporated herein.
4.1 1998 Stock Incentive Plan (U.S.)
4.2 1998 Stock Incentive Plan (Non-U.S.)
5.1 Opinion of Clark Wilson (including consent)
23.1 Consent of KPMG
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(a) For purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act, that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
8
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Richmond, British Columbia, on November 18, 1998.
SmarTire Systems Inc.
By: /s/ Robert Rudman
------------------------------------
Name: Robert Rudman, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Robert Rudman President and Director November 18, 1998
- --------------------------
Robert Rudman
/s/Kevin Carlson Chief Financial Officer November 18, 1998
- -------------------------- (principal financial officer
Kevin Carlson and principal accounting
officer)
/s/Joseph Merback Director November 18, 1998
- --------------------------
Joseph Merback
/s/John I. Bolegoh Director November 18, 1998
- --------------------------
John I. Bolegoh
/s/Lawrence Becerra Director November 18, 1998
- --------------------------
Lawrence Becerra
/s/Mark Desmarais Director November 18, 1998
- --------------------------
Mark Desmarais
/s/Kenneth Morgan Director November 18, 1998
- --------------------------
Kenneth Morgan
</TABLE>
9
<PAGE> 10
/s/Bernard Pinsky Director November 18, 1998
- --------------------------
Bernard Pinsky
10
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
4.1 1998 Stock Incentive Plan (U.S.) 12
4.2 1998 Stock Incentive Plan (Non-U.S.) 30
5.1 Opinion of Clark Wilson (including consent) 42
23.1 Consent of KPMG 44
</TABLE>
11
<PAGE> 1
Exhibit 4.1
SMARTIRE SYSTEMS INC.
1998 STOCK INCENTIVE PLAN (U.S.)
1. PURPOSE
The purpose of this 1998 U.S. Stock Incentive Plan of SmarTire Systems Inc. (the
"Company") is to advance the interests of the Company by encouraging Eligible
Employees (as herein defined) to acquire shares of the Company, thereby
increasing their proprietary interest in the Company, encouraging them to remain
associated with the Company and furnish them with additional incentive to
advance the interests of the Company in the conduct of their affairs.
This Plan is specifically designed for Eligible Employees of the Company who are
residents of the United States and/or subject to taxation in the United States,
although Awards under this Plan may be issued to other Eligible Employees.
2. DEFINITIONS
As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or a Committee of the Board
duly appointed by the Board as the Administrator hereof;
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the
Exchange Act.
(c) "Applicable Laws" means the legal requirements relating to the
administration of stock incentive plans, if any, under
applicable provisions of federal securities laws, state
corporate and securities laws, the Code, the rules of any
applicable stock exchange or national market system, and the
rules of any foreign jurisdiction applicable to Awards granted
to residents therein.
(d) "Award" means the grant of an Option, SAR, Restricted Stock or
other right or benefit under the Plan.
(e) "Award Agreement" means the written agreement evidencing the
grant of an Award executed by the Company and the Grantee,
including any amendments thereto.
(f) "Board" means the Board of Directors of the Company.
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<PAGE> 2
(g) "Cause" means, with respect to the termination by the Company
or a Related Entity of the Grantee's Continuous Service, that
such termination is for `Cause' as such term is expressly
defined in a then-effective written agreement between the
Grantee and the Company or such Related Entity, or in the
absence of such then-effective written agreement and
definition, is based on, in the determination of the
Administrator, the Grantee's:
(i) refusal or failure to act in accordance with any
specific, lawful direction or order of the Company or
a Related Entity;
(ii) unfitness or unavailability for service or
unsatisfactory performance (other than as a result of
Disability);
(iii) performance of any act or failure to perform any act
in bad faith and to the detriment of the Company or a
Related Entity;
(iv) dishonesty, intentional misconduct or material breach
of any agreement with the Company or a Related
Entity; or
(v) commission of a crime involving dishonesty, breach of
trust, or physical or emotional harm to any person.
(h) "Change in Control" means a change in ownership or control of
the Company effected through either of the following
transactions:
(i) the direct or indirect acquisition by any person or
related group of persons (other than an acquisition
from or by the Company or by a Company- sponsored
employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under
common control with, the Company) of beneficial
ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than
fifty percent (50%) of the total combined voting
power of the Company's outstanding securities
pursuant to a tender or exchange offer made directly
to the Company's shareholders which a majority of the
Continuing Directors who are not Affiliates or
Associates of the offeror do not recommend such
shareholders accept, or
(ii) a change in the composition of the Board over a
period of thirty-six (36) months or less such that a
majority of the Board members (rounded up to the next
whole number) ceases, by reason of one or more
contested elections for Board membership, to be
comprised of individuals who are Continuing
Directors.
(i) "Code" means the U.S. Internal Revenue Code of 1986, as
amended.
13
<PAGE> 3
(j) "Committee" means any committee appointed by the Board to
administer the Plan.
(k) "Common Stock" means the common stock of the Company.
(l) "Company" means SmarTire Systems Inc., a British Columbia
company.
(m) "Consultant" means any person (other than an Employee or,
solely with respect to rendering services in such person's
capacity as a Director) who is engaged by the Company or any
Related Entity to render consulting or advisory services to
the Company or such Related Entity.
(n) "Continuing Directors" means members of the Board who either
(i) have been Board members continuously for a period of at
least thirty-six (36) months or (ii) have been Board members
for less than thirty-six (36) months and were elected or
nominated for election as Board members by at least a majority
of the Board members described in clause (i) who were still in
office at the time such election or nomination was approved by
the Board.
(o) "Continuous Service" means that the provision of services to
the Company or a Related Entity in any capacity of Employee,
Director or Consultant, is not interrupted or terminated.
Continuous Service shall not be considered interrupted in the
case of (i) any approved leave of absence, (ii) transfers
between locations of the Company or among the Company, any
Related Entity, or any successor, in any capacity of Employee,
Director or Consultant, or (iii) any change in status as long
as the individual remains in the service of the Company or a
Related Entity in any capacity of Employee, Director or
Consultant (except as otherwise provided in the Award
Agreement). An approved leave of absence shall include sick
leave, military leave, or any other authorized personal leave.
For purposes of Options, no such leave may exceed ninety (90)
days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract.
(p) "Corporate Transaction" means any of the following
transactions:
(i) a merger or consolidation in which the Company is not
the surviving entity, except for a transaction the
principal purpose of which is to change the
jurisdiction in which the Company is organized;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company
(including the capital stock of the Company's
subsidiary corporations) in connection with the
complete liquidation or dissolution of the Company;
or
14
<PAGE> 4
(iii) any reverse merger in which the Company is the
surviving entity but in which securities possessing
more than fifty percent (50%) of the total combined
voting power of the Company's outstanding securities
are transferred to a person or persons different from
those who held such securities immediately prior to
such merger.
(q) "Covered Employee" means an Employee who is a "covered
employee" under Section 162(m)(3) of the Code.
(r) "Director" means a member of the Board or the board of
directors of any Related Entity.
(s) "Disability" means that a Grantee is unable to carry out the
responsibilities and functions of the position held by the
Grantee by reason of any medically determinable physical or
mental impairment. A Grantee will not be considered to have
incurred a Disability unless he or she furnishes proof of such
impairment sufficient to satisfy the Administrator in its
discretion.
(t) "Eligible Employee" means any person who is an Officer, a
Director, an Employee or a Consultant.
(u) "Employee" means any person, including an Officer or Director,
who is a full-time or part-time employee of the Company or any
Related Entity.
(v) "Exchange Act" means the U.S. Securities Exchange Act of 1934,
as amended.
(w) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) Where there exists a public market for the Common
Stock, the Fair Market Value shall be (A) the closing
price for a Share for the last market trading day
prior to the time of the determination (or, if no
closing price was reported on that date, on the last
trading date on which a closing price was reported)
on the stock exchange determined by the Administrator
to be the primary market for the Common Stock or the
Nasdaq National Market, whichever is applicable or
(B) if the Common Stock is not traded on any such
exchange or national market system, the average of
the closing bid and asked prices of a Share on the
Nasdaq Small Cap Market for the day prior to the time
of the determination (or, if no such prices were
reported on that date, on the last date on which such
prices were reported), in each case, as reported in
The Wall Street Journal or such other source as the
Administrator deems reliable; or
15
<PAGE> 5
(ii) In the absence of an established market for the
Common Stock of the type described in
paragraph2.(w)(i), above, the Fair Market Value
thereof shall be determined by the Administrator in
good faith.
(x) "Grantee" means an Eligible Employee who receives an Award
pursuant to an Award Agreement under the Plan.
(y) "Incentive Stock Option" means an Option within the meaning of
Section 422 of the Code.
(z) "Insider" means:
(i) a Director or Senior Officer of the Company;
(ii) a Director or Senior Officer of a person that is
itself an Insider or Subsidiary of the Company;
(iii) a person that has:
A. direct or indirect beneficial ownership of,
B. control or direction over, or
C. a combination of direct or indirect
beneficial ownership of and control or
direction over
securities of the Company carrying more than 10% of
the voting rights attached to all the Company's
outstanding voting securities, excluding, for the
purpose of the calculation of the percentage held,
any securities held by the person as underwriter in
the course of a distribution, or
(iv) the Company itself, if it has purchased, redeemed or
otherwise acquired any securities of its own issue,
for so long as it continues to hold those securities.
(aa) "Non-Qualified Stock Option" means an Option which is not an
Incentive Stock Option.
(bb) "Officer" means a person who is an officer, including a Senior
Officer, of the Company or a Related Entity within the meaning
of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(cc) "Option" means an option to purchase Shares pursuant to an
Award Agreement granted under the Plan.
16
<PAGE> 6
(dd) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(ee) "Performance - Based Compensation" means compensation
qualifying as "performance-based compensation" under Section
162(m) of the Code.
(ff) "Performance Shares" means Shares or an Award denominated in
Shares which may be earned in whole or in part upon attainment
of performance criteria established by the Administrator.
(gg) "Performance Units" means an Award which may be earned in
whole or in part upon attainment of performance criteria
established by the Administrator and which may be settled for
cash, Shares or other securities or a combination of cash,
Shares or other securities as established by the
Administrator.
(hh) "Plan" means this 1998 Stock Incentive Plan.
(ii) "Related Entity" means any Parent, Subsidiary and any
business, corporation, partnership, limited liability company
or other entity in which the Company, a Parent or a Subsidiary
holds a substantial ownership interest, directly or
indirectly.
(jj) "Restricted Stock" means Shares issued under the Plan to the
Grantee for such consideration, if any, and subject to such
restrictions on transfer, rights of first refusal, repurchase
provisions, forfeiture provisions, and other terms and
conditions as established by the Administrator.
(kk) "SAR" means a stock appreciation right entitling the Grantee
to Shares or cash compensation, as established by the
Administrator, measured by appreciation in the value of Common
Stock.
(ll) "Senior Officer" means:
(i) the chair or vice chair of the Board, the president,
a vice-president, the secretary, the treasurer or the
general manager of the Company;
(ii) any individual who performs functions for a person
similar to those normally performed by an individual
occupying any office specified in paragraph 2.(ll)(i)
above, and
(iii) the five (5) highest paid employees of the Company,
including any individual referred to in paragraph
2.(ll)(i) or 2.(ll)(ii) and excluding a commissioned
salesperson who does not act in a managerial
capacity.
(mm) "Share" means a share of the Common Stock.
17
<PAGE> 7
(nn) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
(oo) "Related Entity Disposition" means the sale, distribution or
other disposition by the Company of all or substantially all
of the Company's interests in any Related Entity effected by a
sale, merger or consolidation or other transaction involving
that Related Entity or the sale of all or substantially all of
the assets of that Related Entity.
3. STOCK SUBJECT TO THE PLAN
Subject to the provisions of Section 10, below, the maximum aggregate number of
Shares which may be issued pursuant to all Awards (including Options) is 300,000
Shares. The Shares to be issued pursuant to Awards may be authorized, but
unissued, or reacquired Common Stock.
Any Shares covered by an Award (or portion of an Award) which is forfeited or
cancelled, expires or is settled in cash, shall be deemed not to have been
issued for purposes of determining the maximum aggregate number of Shares which
may be issued under the Plan. Shares that actually have been issued under the
Plan pursuant to an Award shall not be returned to the Plan and shall not become
available for future issuance under the Plan, except that if Shares are
forfeited or repurchased by the Company at their original purchase price, such
Shares shall become available for future grant under the Plan.
No Insider of the Company is eligible to receive an Award where:
(a) Insiders are not Directors or Senior Officers of the Company
and receiving Options as Consultants of the Company;
(b) any Award, together with all of the Company's other previously
established or proposed Awards could result at any time in:
(i) the number of Shares reserved for issuance pursuant
to Options granted to Insiders exceeding 10% of the
outstanding issue of Common Stock; or
(ii) the issuance to Insiders, within a one year period of
a number of Shares exceeding 10% of the outstanding
issue of the Common Stock;
provided, however, that this restriction on the eligibility of Insiders to
receive an Award will cease to apply if it is no longer required under any
Applicable Laws.
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<PAGE> 8
4. ADMINISTRATION
(a) Plan Administrator
(i) Administration with Respect to Eligible Employees.
With respect to grants of Awards to Eligible
Employees, the Plan shall be administered by (A) the
Board or (B) a Committee designated by the Board,
which Committee shall be constituted in such a manner
as to satisfy the Applicable Laws. Once appointed,
such Committee shall continue to serve in its
designated capacity until otherwise directed by the
Board.
(ii) Administration With Respect to Covered Employees.
Notwithstanding the foregoing, grants of Awards to
any Covered Employee intended to qualify as
Performance-Based Compensation shall be made only by
a Committee (or subcommittee of a Committee) which is
comprised solely of two or more Directors eligible to
serve on a committee making Awards qualifying as
Performance-Based Compensation. In the case of such
Awards granted to Covered Employees, references to
the "Administrator" or to a "Committee" shall be
deemed to be references to such Committee or
subcommittee.
(iii) Administration Errors. In the event an Award is
granted in a manner inconsistent with the provisions
of this subsection 4.(a), such Award shall be
presumptively valid as of its grant date to the
extent permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to Applicable Laws and
the provisions of the Plan (including any other powers given
to the Administrator hereunder), and except as otherwise
provided by the Board, the Administrator shall have the
authority, in its discretion:
(i) to select the Eligible Employees to whom Awards may
be granted from time to time hereunder;
(ii) to determine whether and to what extent Awards are
granted hereunder;
(iii) to determine the number of Shares or the amount of
other consideration to be covered by each Award
granted hereunder;
(iv) to approve forms of Award Agreements for use under
the Plan;
(v) to determine the terms and conditions of any Award
granted hereunder;
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<PAGE> 9
(vi) to amend the terms of any outstanding Award granted
under the Plan, including a reduction in the exercise
price (or base amount on which appreciation is
measured) of any Award to reflect a reduction in the
Fair Market Value of the Common Stock since the grant
date of the Award, provided that any amendment that
would adversely affect the Grantee's rights under an
outstanding Award shall not be made without the
Grantee's written consent;
(vii) the Administrator shall have the right to suspend the
right of a holder to exercise all or part of a stock
option for any reason that the Administrator
considers in the best interest of the Company;
(viii) to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of
applicable foreign jurisdictions and to afford
Grantees favourable treatment under such laws;
provided, however, that no Award shall be granted
under any such additional terms, conditions, rules or
procedures with terms or conditions which are
inconsistent with the provisions of the Plan; and
(ix) to take such other action, not inconsistent with the
terms of the Plan, as the Administrator deems
appropriate.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall
be conclusive and binding on all persons.
5. ELIGIBILITY
Options and Awards other than Options may be granted to Eligible Employees. An
Eligible Employee who has been granted an Award may, if otherwise eligible, be
granted additional Awards.
6. TERMS AND CONDITIONS OF AWARDS
(a) Type of Awards. The Administrator is authorized under the
Plan to award any type of arrangement to an Eligible Employee
that is not inconsistent with the provisions of the Plan and
that by its terms involves or might involve the issuance of
(i) Shares, (ii) an Option, (iii) a SAR or similar right with
a fixed or variable price related to the Fair Market Value of
the Shares and with an exercise or conversion privilege
related to the passage of time, the occurrence of one or more
events, or the satisfaction of performance criteria or other
conditions, or (iv) any other security with the value derived
from the value of the Shares. Such awards include, without
limitation, Options, SARs, sales or bonuses of Restricted
Stock, Performance Units or Performance Shares, and an Award
may consist of one such security or benefit, or two (2) or
more of them in any combination or alternative.
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<PAGE> 10
(b) Designation of Award. Each Award shall be designated in the
Award Agreement. In the case of an Option, the Option shall be
designated as either an Incentive Stock Option or a
Non-Qualified Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market
Value of Shares subject to Options designated as Incentive
Stock Options which become exercisable for the first time by a
Grantee during any calendar year (under all plans of the
Company or any Parent or Subsidiary) exceeds $100,000, such
excess Options, to the extent of the Shares covered thereby in
excess of the foregoing limitation, shall be treated as
Non-Qualified Stock Options. For this purpose, Options shall
be taken into account in the order in which they were granted,
and the Fair Market Value of the Shares shall be determined as
of the date the Option with respect to such Shares is granted.
(c) Conditions of Award. Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms, and
conditions of each Award including, but not limited to, the
Award vesting schedule, repurchase provisions, rights of first
refusal, forfeiture provisions, form of payment (cash, Shares,
or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria.
The performance criteria established by the Administrator may
be based on any one of, or combination of, increase in share
price, earnings per share, total shareholder return, return on
equity, return on assets, return on investment, net operating
income, cash flow, revenue, economic value added, personal
management objectives, or other measures of performance
selected by the Administrator. Partial achievement of the
specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the
Award Agreement.
(d) Acquisitions and Other Transactions. The Administrator may
issue Awards under the Plan in settlement, assumption or
substitution for, outstanding awards or obligations to grant
future awards in connection with the Company or a Related
Entity acquiring another entity, an interest in another entity
or an additional interest in a Related Entity whether by
merger, stock purchase, asset purchase or other form of
transaction.
(e) Deferral of Award Payment. The Administrator may establish
one or more programs under the Plan to permit selected
Grantees the opportunity to elect to defer receipt of
consideration upon exercise of an Award, satisfaction of
performance criteria, or other event that absent the election
would entitle the Grantee to payment or receipt of Shares or
other consideration under an Award. The Administrator may
establish the election procedures, the timing of such
elections, the mechanisms for payments of, and accrual of
interest or other earnings, if any, on amounts, Shares or
other consideration so deferred, and such other terms,
conditions, rules and procedures that the Administrator deems
advisable for the administration of any such deferral program.
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<PAGE> 11
(f) Award Exchange Programs. The Administrator may establish one
or more programs under the Plan to permit selected Grantees to
exchange an Award under the Plan for one or more other types
of Awards under the Plan on such terms and conditions as
determined by the Administrator from time to time.
(g) Separate Programs. The Administrator may establish one or more
separate programs under the Plan for the purpose of issuing
particular forms of Awards to one or more classes of Grantees
on such terms and conditions as determined by the
Administrator from time to time.
(h) Individual Option and SAR Limit. The maximum number of Shares
with respect to which Options and SARs may be granted to any
Employee in any fiscal year of the Company shall be 300,000
Shares. The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company's
capitalization pursuant to Section 10, below.
(i) Early Exercise. The Award Agreement may, but need not, include
a provision whereby the Grantee may elect at any time while an
Eligible Employee to exercise any part or all of the Award
prior to full vesting of the Award. Any unvested Shares
received pursuant to such exercise may be subject to a
repurchase right in favour of the Company or a Related Entity
or to any other restriction the Administrator determines to be
appropriate.
(j) Term of Award. The term of each Award shall be the term
stated in the Award Agreement, provided, however, that the
term of an Option shall be no more than ten (10) years from
the date of grant thereof. However, in the case of an
Incentive Stock Option granted to a Grantee who, at the time
the Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof
or such shorter term as may be provided in the Award
Agreement.
(k) Transferability of Awards. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of the
Grantee, only by the Grantee; provided, however, that the
Grantee may designate a beneficiary of the Grantee's Option in
the event of the Grantee's death on a beneficiary designation
form provided by the Administrator. Other Awards shall be
transferable to the extent provided in the Award Agreement.
(l) Time of Granting Awards. The date of grant of an Award shall
for all purposes be the date on which the Administrator makes
the determination to grant such Award, or such other date as
is determined by the Administrator. Notice of the grant
determination shall be given to each Employee, Director or
Consultant to
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<PAGE> 12
whom an Award is so granted within a reasonable time after the
date of such grant.
7. AWARD EXERCISE OR PURCHASE PRICE, CONSIDERATION, TAXES AND
RELOAD OPTIONS
(a) Exercise or Purchase Price. The exercise or purchase price, if
any, for an Award shall be as follows:
(i) In the case of an Incentive Stock Option:
A. granted to an Eligible Employee who, at the
time of the grant of such Option owns stock
representing more than ten percent (10%) of
the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the
per Share exercise price shall be not less
than one hundred ten percent (110%) of the
Fair Market Value per Share on the date of
grant; or
B. granted to any Eligible Employee other than
an Eligible Employee described in the
preceding paragraph, the per Share exercise
price shall be not less than one hundred
percent (100%) of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Non-Qualified Stock Option, the per
Share exercise price shall be not less than one
hundred percent (100%) of the Fair Market Value per
Share on the date of grant unless otherwise
determined by the Administrator.
(iii) In the case of Awards intended to qualify as
Performance-Based Compensation, the exercise or
purchase price, if any, shall be not less than one
hundred percent (100%) of the Fair Market Value per
Share on the date of grant.
(iv) In the case of other Awards, such price as is
determined by the Administrator.
(b) Consideration. Subject to Applicable Laws, the consideration
to be paid for the Shares to be issued upon exercise or
purchase of an Award including the method of payment, shall be
determined by the Administrator (and, in the case of an
Option, shall be determined at the time of grant). In addition
to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as
consideration for Shares issued under the Plan the following:
(i) cash;
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<PAGE> 13
(ii) check;
(iii) surrender of Shares or delivery of a properly
executed form of attestation of ownership of Shares
as the Administrator may require (including
withholding of Shares otherwise deliverable upon
exercise of the Award) which have a Fair Market Value
on the date of surrender or attestation equal to the
aggregate exercise price of the Shares as to which
said Award shall be exercised (but only to the extent
that such exercise of the Award would not result in
an accounting compensation charge with respect to the
Shares used to pay the exercise price unless
otherwise determined by the Administrator); or
(iv) any combination of the foregoing methods of payment.
(c) Taxes. No Shares shall be delivered under the Plan to any
Grantee or other person until such Grantee or other person has
made arrangements acceptable to the Administrator for the
satisfaction of any foreign, federal, state, or local income
and employment tax withholding obligations, including, without
limitation, obligations incident to the receipt of Shares or
the disqualifying disposition of Shares received on exercise
of an Option. Upon exercise of an Award, the Company shall
withhold or collect from Grantee an amount sufficient to
satisfy such tax obligations.
(d) Reload Options. In the event the exercise price or tax
withholding of an Option is satisfied by the Company or the
Grantee's employer withholding Shares otherwise deliverable to
the Grantee, the Administrator may issue the Grantee an
additional Option, with terms identical to the Award Agreement
under which the Option was exercised, but at an exercise price
as determined by the Administrator in accordance with the
Plan.
8. EXERCISE OF AWARD
(a) Procedure for Exercise; Rights as a Shareholder.
(i) Any Award granted hereunder shall be exercisable at
such times and under such conditions as determined by
the Administrator under the terms of the Plan and
specified in the Award Agreement.
(ii) An Award shall be deemed to be exercised when written
notice of such exercise has been given to the Company
in accordance with the terms of the Award by the
person entitled to exercise the Award and full
payment for the Shares with respect to which the
Award is received by the Company. Until the issuance
(as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent
of the
24
<PAGE> 14
Company) of the stock certificate evidencing such
Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with
respect to Shares subject to an Award,
notwithstanding the exercise of an Option or other
Award. The Company shall issue (or cause to be
issued) such stock certificate promptly upon exercise
of the Award. No adjustment will be made for a
dividend or other right for which the record date is
prior to the date the stock certificate is issued,
except as provided in the Award Agreement or Section
10, below.
(b) Exercise of Award Following Termination of Continuous Service.
(i) An Award may not be exercised after the termination
date of such Award set forth in the Award Agreement
and may be exercised following the termination of a
Grantee's Continuous Service only to the extent
provided in the Award Agreement.
(ii) Where the Award Agreement permits a Grantee to
exercise an Award following the termination of the
Grantee's Continuous Service for a specified period,
the Award shall terminate to the extent not exercised
on the last day of the specified period or the last
day of the original term of the Award, whichever
occurs first.
(iii) Any Award designated as an Incentive Stock Option to
the extent not exercised within the time permitted by
law for the exercise of Incentive Stock Options
following the termination of a Grantee's Continuous
Service shall convert automatically to a
Non-Qualified Stock Option and thereafter shall be
exercisable as such to the extent exercisable by its
terms for the period specified in the Award
Agreement.
(c) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Award previously
granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Grantee
at the time that such offer is made.
9. CONDITIONS UPON ISSUANCE OF SHARES
(a) Shares shall not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and
delivery of such Shares pursuant thereto shall comply with all
Applicable Laws, and shall be further subject to the approval
of counsel for the Company with respect to such compliance.
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<PAGE> 15
(b) As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and
warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion
of counsel for the Company, such a representation is required
by any Applicable Laws.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
Subject to any required action by the shareholders of the Company, the number of
Shares covered by each outstanding Award, and the number of Shares which have
been authorized for issuance under the Plan but as to which no Awards have yet
been granted or which have been returned to the Plan, the exercise or purchase
price of each such outstanding Award, as well as any other terms that the
Administrator determines require adjustment shall be proportionately adjusted
for (i) any increase or decrease in the number of issued Shares resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Shares, (ii) any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the
Company, or (iii) as the Administrator may determine in its discretion, any
other reorganization transaction with respect to Common Stock to which Section
424(a) of the Code applies; provided, however that conversion of any convertible
securities of the Company shall not be deemed to have been effected without
receipt of consideration. Such adjustment shall be made by the Administrator and
its determination shall be final, binding and conclusive. Except as the
Administrator determines, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of Shares subject to an Award.
11. CORPORATE TRANSACTIONS/CHANGES IN CONTROL/RELATED ENTITY
DISPOSITIONS
Except as may be provided in an Award Agreement:
(a) The Administrator shall have the authority, exercisable either
in advance of any actual or anticipated Corporate Transaction,
Change in Control or Related Entity Disposition or at the time
of an actual Corporate Transaction, Change in Control or
Related Entity Disposition and exercisable at the time of the
grant of an Award under the Plan or any time while an Award
remains outstanding, to provide for the full automatic vesting
and exercisability of one or more outstanding unvested Awards
under the Plan and the release from restrictions on transfer
and repurchase or forfeiture rights of such Awards in
connection with a Corporate Transaction, Change in Control or
Related Entity Disposition, on such terms and conditions as
the Administrator may specify. The Administrator also shall
have the authority to condition any such Award vesting and
exercisability or release from such limitations upon the
subsequent termination of the Continuous Service of the
Grantee within a specified period following the effective date
of the Corporate Transaction, Change in Control or Related
Entity Disposition. The Administrator
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<PAGE> 16
may provide that any Awards so vested or released from such
limitations in connection with a Change in Control or Related
Entity Disposition, shall remain fully exercisable until the
expiration or sooner termination of the Award. Effective upon
the consummation of a Corporate Transaction, all outstanding
Awards under the Plan shall terminate unless assumed by the
successor company or its parent.
(b) The portion of any Option accelerated under this Section 11 in
connection with a Corporate Transaction, Change in Control or
Related Entity Disposition shall remain exercisable as an
Incentive Stock Option under the Code only to the extent the
$100,000 dollar limitation of Section 422(d) of the Code is
not exceeded. To the extent such dollar limitation is
exceeded, the accelerated excess portion of such Option shall
be exercisable as a Non-Qualified Stock Option.
12. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective upon the earlier to occur of its adoption by the
Board or its approval by the shareholders of the Company. It shall continue in
effect for a term of ten (10) years unless sooner terminated. Subject to Section
17, below, and Applicable Laws, Awards may be granted under the Plan upon its
becoming effective.
13. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
(a) The Board may at any time amend, suspend or terminate the
Plan. To the extent necessary to comply with Applicable Laws,
the Company shall obtain shareholder approval of any Plan
amendment in such a manner and to such a degree as required.
(b) No Award may be granted during any suspension of the Plan or
after termination of the Plan.
(c) Any amendment, suspension or termination of the Plan
(including termination of the Plan under Section13.(a), above)
shall not affect Awards already granted, and such Awards shall
remain in full force and effect as if the Plan had not been
amended, suspended or terminated, unless mutually agreed
otherwise between the Grantee and the Administrator, which
agreement must be in writing and signed by the Grantee and the
Company.
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14. RESERVATION OF SHARES
(a) The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
(b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed
by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall
not have been obtained.
15. NO EFFECT ON TERMS OF EMPLOYMENT/CONSULTING RELATIONSHIP
The Plan shall not confer upon any Grantee any right with respect to the
Grantee's Continuous Service, nor shall it interfere in any way with his or her
right or the Company's right to terminate the Grantee's Continuous Service at
any time, with or without cause.
16. NO EFFECT ON RETIREMENT AND OTHER BENEFIT PLANS
Except as specifically provided in a retirement or other benefit plan of the
Company or a Related Entity, Awards shall not be deemed compensation for
purposes of computing benefits or contributions under any retirement plan of the
Company or a Related Entity, and shall not affect any benefits under any other
benefit plan of any kind or any benefit plan subsequently instituted under which
the availability or amount of benefits is related to level of compensation. The
Plan is not a "Retirement-Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.
17. SHAREHOLDER APPROVAL
The Plan shall be subject to the Plan's approval by the shareholders of the
Company within twelve (12) months from the date the Plan is adopted by the
Company's Board of Directors. Such shareholder approval shall be obtained in the
degree and manner required under Applicable Laws. The Administrator may grant
Awards under the Plan prior to approval by the shareholders, but until such
approval is obtained, no such Award shall be exercisable. In the event that
shareholder approval is not obtained within the twelve (12) month period
provided above, all Awards previously granted under the Plan shall be cancelled
and of no force or effect.
18. GOVERNING LAW
The Plan shall be governed by the laws of the Province of British Columbia and
the laws of Canada applicable therein; provided, however, that any Award
Agreement may provide by its
28
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terms that it shall be governed by the laws of any other jurisdiction as may be
deemed appropriate by the parties thereto.
29
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Exhibit 4.2
SMARTIRE SYSTEMS INC.
1998 STOCK INCENTIVE PLAN (NON-U.S.)
1. PURPOSE
The purpose of this 1998 Non-U.S. Stock Incentive Plan of SmarTire Systems Inc.
(the "Company") is to advance the interests of the Company by encouraging
Eligible Employees (as herein defined) to acquire shares of the Company, thereby
increasing their proprietary interest in the Company, encouraging them to remain
associated with the Company and furnish them with additional incentive to
advance the interests of the Company in the conduct of their affairs.
This Plan is specifically designed for Eligible Employees of the Company who are
not residents of the United States and/or subject to taxation in the United
States, although Awards under this Plan may be issued to other Eligible
Employees.
2. DEFINITIONS
As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or a Committee of the Board
duly appointed by the Board as the Administrator hereof;
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in the Securities Act.
(c) "Applicable Laws" means the legal requirements relating to the
administration of stock incentive plans, if any, under
applicable provisions of federal securities laws, state
corporate and securities laws, the Securities Act, the rules
of any applicable stock exchange or national market system,
and the rules of any foreign jurisdiction applicable to Awards
granted to residents therein.
(d) "Award" means the grant of an Option, SAR, Restricted Stock or
other right or benefit under the Plan.
(e) "Award Agreement" means the written agreement evidencing the
grant of an Award executed by the Company and the Grantee,
including any amendments thereto.
(f) "Board" means the Board of Directors of the Company.
(g) "Cause" means, with respect to the termination by the Company
or a Related Entity of the Grantee's Continuous Service, that
such termination is for `Cause' as such term is expressly
defined in a then-effective written agreement between the
Grantee and the Company or such Related Entity, or in the
absence of such then-effective written agreement and
definition, is based on, in the determination of the
Administrator, the Grantee's:
(i) refusal or failure to act in accordance with any
specific, lawful direction or order of the Company or
a Related Entity;
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<PAGE> 2
(ii) unfitness or unavailability for service or
unsatisfactory performance (other than as a result of
Disability);
(iii) performance of any act or failure to perform any act
in bad faith and to the detriment of the Company or a
Related Entity;
(iv) dishonesty, intentional misconduct or material breach
of any agreement with the Company or a Related
Entity; or
(v) commission of a crime involving dishonesty, breach of
trust, or physical or emotional harm to any person.
(h) "Change in Control" means a change in ownership or control of
the Company effected through either of the following
transactions:
(i) the direct or indirect acquisition by any person or
related group of persons (other than an acquisition
from or by the Company or by a Company-sponsored
employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under
common control with, the Company) of beneficial
ownership of securities possessing more than fifty
percent (50%) of the total combined voting power of
the Company's outstanding securities pursuant to a
tender or exchange offer made directly to the
Company's shareholders which a majority of the
Continuing Directors who are not Affiliates or
Associates of the offeror do not recommend such
shareholders accept, or
(ii) a change in the composition of the Board over a
period of thirty-six (36) months or less such that a
majority of the Board members (rounded up to the next
whole number) ceases, by reason of one or more
contested elections for Board membership, to be
comprised of individuals who are Continuing
Directors.
(i) "Committee" means any committee appointed by the Board to
administer the Plan.
(j) "Common Stock" means the common stock of the Company.
(k) "Company" means SmarTire Systems Inc., a British Columbia
company.
(l) "Consultant" means any person (other than an Employee or,
solely with respect to rendering services in such person's
capacity as a Director) who is engaged by the Company or any
Related Entity to render consulting or advisory services to
the Company or such Related Entity.
(m) "Continuing Directors" means members of the Board who either
(i) have been Board members continuously for a period of at
least thirty-six (36) months or (ii) have been Board members
for less than thirty-six (36) months and were elected or
nominated for election as Board members by at least a majority
of the Board members described in clause (i) who were still in
office at the time such election or nomination was approved by
the Board.
(n) "Continuous Service" means that the provision of services to
the Company or a Related Entity in any capacity of Employee,
Director or Consultant, is not interrupted or terminated.
Continuous Service shall not be considered interrupted in the
case of (i) any approved
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<PAGE> 3
leave of absence, (ii) transfers between locations of the
Company or among the Company, any Related Entity, or any
successor, in any capacity of Employee, Director or
Consultant, or (iii) any change in status as long as the
individual remains in the service of the Company or a Related
Entity in any capacity of Employee, Director or Consultant
(except as otherwise provided in the Award Agreement). An
approved leave of absence shall include sick leave, military
leave, or any other authorized personal leave. For purposes of
Options, no such leave may exceed ninety (90) days, unless
reemployment upon expiration of such leave is guaranteed by
statute or contract.
(o) "Corporate Transaction" means any of the following
transactions:
(i) a merger or consolidation in which the Company is not
the surviving entity, except for a transaction the
principal purpose of which is to change the
jurisdiction in which the Company is organized;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company
(including the capital stock of the Company's
subsidiary corporations) in connection with the
complete liquidation or dissolution of the Company;
or
(iii) any reverse merger in which the Company is the
surviving entity but in which securities possessing
more than fifty percent (50%) of the total combined
voting power of the Company's outstanding securities
are transferred to a person or persons different from
those who held such securities immediately prior to
such merger.
(p) "Director" means a member of the Board or the board of
directors of any Related Entity.
(q) "Disability" means that a Grantee is unable to carry out the
responsibilities and functions of the position held by the
Grantee by reason of any medically determinable physical or
mental impairment. A Grantee will not be considered to have
incurred a Disability unless he or she furnishes proof of such
impairment sufficient to satisfy the Administrator in its
discretion.
(i) "Eligible Employee" means any person who is an Officer, a
Director, an Employee or a Consultant.
(r) "Employee" means any person, including an Officer or Director,
who is a full-time or part- time employee of the Company or
any Related Entity.
(s) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) Where there exists a public market for the Common
Stock, the Fair Market Value shall be (A) the closing
price for a Share for the last market trading day
prior to the time of the determination (or, if no
closing price was reported on that date, on the last
trading date on which a closing price was reported)
on the stock exchange determined by the Administrator
to be the primary market for the Common Stock or the
Nasdaq National Market, whichever is applicable or
(B) if the Common Stock is not traded on any such
exchange or national market system, the average of
the closing bid and asked prices of a Share on the
Nasdaq Small Cap Market for the day prior to the time
of the determination (or,
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<PAGE> 4
if no such prices were reported on that date, on the
last date on which such prices were reported), in
each case, as reported in The Wall Street Journal or
such other source as the Administrator deems
reliable; or
(ii) In the absence of an established market for the
Common Stock of the type described in 2.(s)(i),
above, the Fair Market Value thereof shall be
determined by the Administrator in good faith.
(t) "Grantee" means an Eligible Employee who receives an Award
pursuant to an Award Agreement under the Plan.
(u) "Insider" means:
(i) a Director or Senior Officer of the Company;
(ii) a Director or Senior Officer of a person that is
itself an Insider or Subsidiary of the Company;
(iii) a person that has:
A. direct or indirect beneficial ownership of,
B. control or direction over, or
C. a combination of direct or indirect
beneficial ownership of and control or
direction over
securities of the Company carrying more than 10% of
the voting rights attached to all the Company's
outstanding voting securities, excluding, for the
purpose of the calculation of the percentage held,
any securities held by the person as underwriter in
the course of a distribution, or
(iv) the Company itself, if it has purchased, redeemed or
otherwise acquired any securities of its own issue,
for so long as it continues to hold those securities.
(v) "Officer" means a person who is an officer, including a Senior
Officer, of the Company or a Related Entity within the meaning
prescribed to under the Securities Act and the rules and
regulations promulgated thereunder.
(w) "Option" means an option to purchase Shares pursuant to an
Award Agreement granted under the Plan.
(x) "Parent" means a "parent corporation", whether now or
hereafter existing, which holds a majority of the voting
shares of the Company.
(y) "Performance Shares" means Shares or an Award denominated in
Shares which may be earned in whole or in part upon attainment
of performance criteria established by the Administrator.
(z) "Performance Units" means an Award which may be earned in
whole or in part upon attainment of performance criteria
established by the Administrator and which may be settled for
cash, Shares or other securities or a combination of cash,
Shares or other securities as established by the
Administrator.
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<PAGE> 5
(aa) "Plan" means this 1998 Stock Incentive Plan.
(bb) "Related Entity" means any Parent, Subsidiary and any
business, corporation, partnership, limited liability company
or other entity in which the Company, a Parent or a Subsidiary
holds a substantial ownership interest, directly or
indirectly.
(cc) "Restricted Stock" means Shares issued under the Plan to the
Grantee for such consideration, if any, and subject to such
restrictions on transfer, rights of first refusal, repurchase
provisions, forfeiture provisions, and other terms and
conditions as established by the Administrator.
(dd) "SAR" means a stock appreciation right entitling the Grantee
to Shares or cash compensation, as established by the
Administrator, measured by appreciation in the value of Common
Stock.
(ee) "Securities Act" means the British Columbia Securities Act,
R.S.B.C. 1996, as amended.
(ff) "Senior Officer" means:
(i) the chair or vice chair of the Board, the president,
a vice-president, the secretary, the treasurer or the
general manager of the Company;
(ii) any individual who performs functions for a person
similar to those normally performed by an individual
occupying any office specified in paragraph 2.(ff)(i)
above, and
(iii) the five (5) highest paid employees of the Company,
including any individual referred to in paragraph
2.(ff)(i) or 2.(ff)(ii) and excluding a commissioned
salesperson who does not act in a managerial
capacity.
(gg) "Share" means a share of the Common Stock.
(hh) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as determined by British Columbia
corporate law.
(ii) "Related Entity Disposition" means the sale, distribution or
other disposition by the Company of all or substantially all
of the Company's interests in any Related Entity effected by a
sale, merger or consolidation or other transaction involving
that Related Entity or the sale of all or substantially all of
the assets of that Related Entity.
3. STOCK SUBJECT TO THE PLAN
Subject to the provisions of Section 10 below, the maximum aggregate number of
Shares which may be issued pursuant to all Awards (including Options) is 600,000
Shares. The Shares to be issued pursuant to Awards may be authorized, but
unissued, or reacquired Common Stock.
Any Shares covered by an Award (or portion of an Award) which is forfeited or
cancelled, expires or is settled in cash, shall be deemed not to have been
issued for purposes of determining the maximum aggregate number of Shares which
may be issued under the Plan. Shares that actually have been issued
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<PAGE> 6
under the Plan pursuant to an Award shall not be returned to the Plan and shall
not become available for future issuance under the Plan, except that if Shares
are forfeited or repurchased by the Company at their original purchase price,
such Shares shall become available for future grant under the Plan.
No Insider of the Company is eligible to receive an Award where:
(a) Insiders are not Directors or Senior Officers of the Company
and receiving Options as Consultants of the Company;
(b) any Award, together with all of the Company's other previously
established or proposed Awards could result at any time in:
(i) the number of Shares reserved for issuance pursuant
to Options granted to Insiders exceeding 10% of the
outstanding issue of Common Stock; or
(ii) the issuance to Insiders, within a one year period of
a number of Shares exceeding 10% of the outstanding
issue of the Common Stock;
provided, however, that this restriction on the eligibility of Insiders to
receive an Award will cease to apply if it is no longer required under any
Applicable Laws.
4. ADMINISTRATION
(a) Plan Administrator
(i) Administration with Respect to Eligible Employees.
With respect to grants of Awards to Eligible
Employees, the Plan shall be administered by (A) the
Board or (B) a Committee designated by the Board,
which Committee shall be constituted in such a manner
as to satisfy the Applicable Laws. Once appointed,
such Committee shall continue to serve in its
designated capacity until otherwise directed by the
Board.
(ii) Administration Errors. In the event an Award is
granted in a manner inconsistent with the provisions
of this subsection 4.(a), such Award shall be
presumptively valid as of its grant date to the
extent permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to Applicable Laws and
the provisions of the Plan (including any other powers given
to the Administrator hereunder), and except as otherwise
provided by the Board, the Administrator shall have the
authority, in its discretion:
(i) to select the Eligible Employees to whom Awards may
be granted from time to time hereunder;
(ii) to determine whether and to what extent Awards are
granted hereunder;
(iii) to determine the number of Shares or the amount of
other consideration to be covered by each Award
granted hereunder;
(iv) to approve forms of Award Agreements for use under
the Plan;
(v) to determine the terms and conditions of any Award
granted hereunder;
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<PAGE> 7
(vi) to amend the terms of any outstanding Award granted
under the Plan, including a reduction in the exercise
price (or base amount on which appreciation is
measured) of any Award to reflect a reduction in the
Fair Market Value of the Common Stock since the grant
date of the Award, provided that any amendment that
would adversely affect the Grantee's rights under an
outstanding Award shall not be made without the
Grantee's written consent;
(vii) the Administrator shall have the right to suspend the
right of a holder to exercise all or part of a stock
option for any reason that the Administrator
considers in the best interest of the Company;
(viii) to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of
applicable foreign jurisdictions and to afford
Grantees favourable treatment under such laws;
provided, however, that no Award shall be granted
under any such additional terms, conditions, rules or
procedures with terms or conditions which are
inconsistent with the provisions of the Plan; and
(ix) to take such other action, not inconsistent with the
terms of the Plan, as the Administrator deems
appropriate.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall
be conclusive and binding on all persons.
5. ELIGIBILITY
Options and Awards other than Options may be granted to Eligible Employees. An
Eligible Employee who has been granted an Award may, if otherwise eligible, be
granted additional Awards.
6. TERMS AND CONDITIONS OF AWARDS
(a) Type of Awards. The Administrator is authorized under the
Plan to award any type of arrangement to an Eligible Employee
that is not inconsistent with the provisions of the Plan and
that by its terms involves or might involve the issuance of
(i) Shares, (ii) an Option, (iii) a SAR or similar right with
a fixed or variable price related to the Fair Market Value of
the Shares and with an exercise or conversion privilege
related to the passage of time, the occurrence of one or more
events, or the satisfaction of performance criteria or other
conditions, or (iv) any other security with the value derived
from the value of the Shares. Such awards include, without
limitation, Options, SARs, sales or bonuses of Restricted
Stock, Performance Units or Performance Shares, and an Award
may consist of one such security or benefit, or two (2) or
more of them in any combination or alternative.
(b) Designation of Award. Each Award shall be designated in the
Award Agreement.
(c) Conditions of Award. Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms, and
conditions of each Award including, but not limited to, the
Award vesting schedule, repurchase provisions, rights of first
refusal, forfeiture provisions, form of payment (cash, Shares,
or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria.
The performance criteria established by the Administrator may
be based on any one of, or combination of, increase in share
price, earnings per share, total shareholder return, return on
equity, return on assets, return on investment, net operating
income, cash flow, revenue,
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<PAGE> 8
economic value added, personal management objectives, or other
measures of performance selected by the Administrator. Partial
achievement of the specified criteria may result in a payment
or vesting corresponding to the degree of achievement as
specified in the Award Agreement.
(d) Acquisitions and Other Transactions. The Administrator may
issue Awards under the Plan in settlement, assumption or
substitution for, outstanding awards or obligations to grant
future awards in connection with the Company or a Related
Entity acquiring another entity, an interest in another entity
or an additional interest in a Related Entity whether by
merger, stock purchase, asset purchase or other form of
transaction.
(e) Deferral of Award Payment. The Administrator may establish
one or more programs under the Plan to permit selected
Grantees the opportunity to elect to defer receipt of
consideration upon exercise of an Award, satisfaction of
performance criteria, or other event that absent the election
would entitle the Grantee to payment or receipt of Shares or
other consideration under an Award. The Administrator may
establish the election procedures, the timing of such
elections, the mechanisms for payments of, and accrual of
interest or other earnings, if any, on amounts, Shares or
other consideration so deferred, and such other terms,
conditions, rules and procedures that the Administrator deems
advisable for the administration of any such deferral program.
(f) Award Exchange Programs. The Administrator may establish one
or more programs under the Plan to permit selected Grantees to
exchange an Award under the Plan for one or more other types
of Awards under the Plan on such terms and conditions as
determined by the Administrator from time to time.
(g) Separate Programs. The Administrator may establish one or more
separate programs under the Plan for the purpose of issuing
particular forms of Awards to one or more classes of Grantees
on such terms and conditions as determined by the
Administrator from time to time.
(h) Individual Option and SAR Limit. The maximum number of Shares
with respect to which Options and SARs may be granted to any
Employee in any fiscal year of the Company shall be 300,000
Shares. The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company's
capitalization pursuant to Section 10, below.
(i) Early Exercise. The Award Agreement may, but need not, include
a provision whereby the Grantee may elect at any time while an
Eligible Employee to exercise any part or all of the Award
prior to full vesting of the Award. Any unvested Shares
received pursuant to such exercise may be subject to a
repurchase right in favour of the Company or a Related Entity
or to any other restriction the Administrator determines to be
appropriate.
(j) Term of Award. The term of each Award shall be the term stated
in the Award Agreement, provided, however, that the term of an
Option shall be no more than ten (10) years from the date of
grant thereof.
(k) Transferability of Awards. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of the
Grantee, only by the Grantee; provided, however, that the
Grantee may designate a beneficiary of the Grantee's Option in
the event of the Grantee's death on a beneficiary designation
form provided by the
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<PAGE> 9
Administrator. Other Awards shall be transferable to the
extent provided in the Award Agreement.
(l) Time of Granting Awards. The date of grant of an Award shall
for all purposes be the date on which the Administrator makes
the determination to grant such Award, or such other date as
is determined by the Administrator. Notice of the grant
determination shall be given to each Employee, Director or
Consultant to whom an Award is so granted within a reasonable
time after the date of such grant.
7. AWARD EXERCISE OR PURCHASE PRICE, CONSIDERATION, TAXES AND RELOAD
OPTIONS
(a) Exercise or Purchase Price. The exercise or purchase price, if
any, for an Award shall be as determined by the Administrator
in compliance with the Applicable Laws.
(b) Consideration. Subject to Applicable Laws, the consideration
to be paid for the Shares to be issued upon exercise or
purchase of an Award including the method of payment, shall be
determined by the Administrator (and, in the case of an
Option, shall be determined at the time of grant). In addition
to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as
consideration for Shares issued under the Plan the following:
(i) cash;
(ii) check;
(iii) surrender of Shares or delivery of a properly
executed form of attestation of ownership of Shares
as the Administrator may require (including
withholding of Shares otherwise deliverable upon
exercise of the Award) which have a Fair Market Value
on the date of surrender or attestation equal to the
aggregate exercise price of the Shares as to which
said Award shall be exercised (but only to the extent
that such exercise of the Award would not result in
an accounting compensation charge with respect to the
Shares used to pay the exercise price unless
otherwise determined by the Administrator); or
(iv) any combination of the foregoing methods of payment.
(c) Taxes. No Shares shall be delivered under the Plan to any
Grantee or other person until such Grantee or other person has
made arrangements acceptable to the Administrator for the
satisfaction of any foreign, federal, state, or local income
and employment tax withholding obligations, including, without
limitation, obligations incident to the receipt of Shares or
the disqualifying disposition of Shares received on exercise
of an Option. Upon exercise of an Award, the Company shall
withhold or collect from Grantee an amount sufficient to
satisfy such tax obligations.
(d) Reload Options. In the event the exercise price or tax
withholding of an Option is satisfied by the Company or the
Grantee's employer withholding Shares otherwise deliverable to
the Grantee, the Administrator may issue the Grantee an
additional Option, with terms identical to the Award Agreement
under which the Option was exercised, but at an exercise price
as determined by the Administrator in accordance with the
Plan.
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<PAGE> 10
8. EXERCISE OF AWARD
(a) Procedure for Exercise; Rights as a Shareholder.
(i) Any Award granted hereunder shall be exercisable at
such times and under such conditions as determined by
the Administrator under the terms of the Plan and
specified in the Award Agreement.
(ii) An Award shall be deemed to be exercised when written
notice of such exercise has been given to the Company
in accordance with the terms of the Award by the
person entitled to exercise the Award and full
payment for the Shares with respect to which the
Award is received by the Company. Until the issuance
(as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent
of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with
respect to Shares subject to an Award,
notwithstanding the exercise of an Option or other
Award. The Company shall issue (or cause to be
issued) such stock certificate promptly upon exercise
of the Award. No adjustment will be made for a
dividend or other right for which the record date is
prior to the date the stock certificate is issued,
except as provided in the Award Agreement or Section
10, below.
(b) Exercise of Award Following Termination of Continuous Service.
(i) An Award may not be exercised after the termination
date of such Award set forth in the Award Agreement
and may be exercised following the termination of a
Grantee's Continuous Service only to the extent
provided in the Award Agreement.
(ii) Where the Award Agreement permits a Grantee to
exercise an Award following the termination of the
Grantee's Continuous Service for a specified period,
the Award shall terminate to the extent not exercised
on the last day of the specified period or the last
day of the original term of the Award, whichever
occurs first.
(c) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Award previously
granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Grantee
at the time that such offer is made.
9. CONDITIONS UPON ISSUANCE OF SHARES
(a) Shares shall not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and
delivery of such Shares pursuant thereto shall comply with all
Applicable Laws, and shall be further subject to the approval
of counsel for the Company with respect to such compliance.
(b) As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and
warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion
of counsel for the Company, such a representation is required
by any Applicable Laws.
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<PAGE> 11
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
Subject to any required action by the shareholders of the Company, the number of
Shares covered by each outstanding Award, and the number of Shares which have
been authorized for issuance under the Plan but as to which no Awards have yet
been granted or which have been returned to the Plan, the exercise or purchase
price of each such outstanding Award, as well as any other terms that the
Administrator determines require adjustment shall be proportionately adjusted
for (i) any increase or decrease in the number of issued Shares resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Shares, (ii) any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the
Company, or (iii) as the Administrator may determine in its discretion, any
other reorganization transaction with respect to Common Stock; provided, however
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration. Such adjustment shall
be made by the Administrator and its determination shall be final, binding and
conclusive. Except as the Administrator determines, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason hereof shall be made
with respect to, the number or price of Shares subject to an Award.
11. CORPORATE TRANSACTIONS/CHANGES IN CONTROL/RELATED ENTITY DISPOSITIONS
Except as may be provided in an Award Agreement the Administrator shall have the
authority, exercisable either in advance of any actual or anticipated Corporate
Transaction, Change in Control or Related Entity Disposition or at the time of
an actual Corporate Transaction, Change in Control or Related Entity Disposition
and exercisable at the time of the grant of an Award under the Plan or any time
while an Award remains outstanding, to provide for the full automatic vesting
and exercisability of one or more outstanding unvested Awards under the Plan and
the release from restrictions on transfer and repurchase or forfeiture rights of
such Awards in connection with a Corporate Transaction, Change in Control or
Related Entity Disposition, on such terms and conditions as the Administrator
may specify. The Administrator also shall have the authority to condition any
such Award vesting and exercisability or release from such limitations upon the
subsequent termination of the Continuous Service of the Grantee within a
specified period following the effective date of the Corporate Transaction,
Change in Control or Related Entity Disposition. The Administrator may provide
that any Awards so vested or released from such limitations in connection with a
Change in Control or Related Entity Disposition, shall remain fully exercisable
until the expiration or sooner termination of the Award. Effective upon the
consummation of a Corporate Transaction, all outstanding Awards under the Plan
shall terminate unless assumed by the successor company or its parent.
12. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective upon the earlier to occur of its adoption by the
Board or its approval by the shareholders of the Company. It shall continue in
effect for a term of ten (10) years unless sooner terminated. Subject to Section
17, below, and Applicable Laws, Awards may be granted under the Plan upon its
becoming effective.
13. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
(a) The Board may at any time amend, suspend or terminate the
Plan. To the extent necessary to comply with Applicable Laws,
the Company shall obtain shareholder approval of any Plan
amendment in such a manner and to such a degree as required.
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<PAGE> 12
(b) No Award may be granted during any suspension of the Plan or
after termination of the Plan.
(c) Any amendment, suspension or termination of the Plan
(including termination of the Plan under Section 13.(a),
above) shall not affect Awards already granted, and such
Awards shall remain in full force and effect as if the Plan
had not been amended, suspended or terminated, unless mutually
agreed otherwise between the Grantee and the Administrator,
which agreement must be in writing and signed by the Grantee
and the Company.
14. RESERVATION OF SHARES
(a) The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
(b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed
by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall
not have been obtained.
15. NO EFFECT ON TERMS OF EMPLOYMENT/CONSULTING RELATIONSHIP
The Plan shall not confer upon any Grantee any right with respect to the
Grantee's Continuous Service, nor shall it interfere in any way with his or her
right or the Company's right to terminate the Grantee's Continuous Service at
any time, with or without cause.
16. NO EFFECT ON RETIREMENT AND OTHER BENEFIT PLANS
Except as specifically provided in a retirement or other benefit plan of the
Company or a Related Entity, Awards shall not be deemed compensation for
purposes of computing benefits or contributions under any retirement plan of the
Company or a Related Entity, and shall not affect any benefits under any other
benefit plan of any kind or any benefit plan subsequently instituted under which
the availability or amount of benefits is related to level of compensation.
17. SHAREHOLDER APPROVAL
The Plan shall be subject to the Plan's approval by the shareholders of the
Company within twelve (12) months from the date the Plan is adopted by the
Company's Board of Directors. Such shareholder approval shall be obtained in the
degree and manner required under Applicable Laws. The Administrator may grant
Awards under the Plan prior to approval by the shareholders, but until such
approval is obtained, no such Award shall be exercisable. In the event that
shareholder approval is not obtained within the twelve (12) month period
provided above, all Awards previously granted under the Plan shall be cancelled
and of no force or effect.
18. GOVERNING LAW
The Plan shall be governed by the laws of the Province of British Columbia and
the laws of Canada applicable therein; provided, however, that any Award
Agreement may provide by its terms that it shall be governed by the laws of any
other jurisdiction as may be deemed appropriate by the parties thereto.
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Exhibit 5.1
Email Address: [email protected]
[CLARK, WILSON LETTERHEAD]
Our File No.: 14672-1
November 18, 1998
SmarTire Systems Inc.
150 - 13151 Vanier Place
Richmond, British Columbia
V6V 2J1
Dear Sirs:
Re: Registration Statement on Form S-8
We are counsel to SmarTire Systems Inc. (the "Company"), a
British Columbia corporation, and have assisted in the preparation of the
Company's 1998 Stock Incentive Plan (U.S.) and 1998 Stock Incentive Plan
(Non-U.S.) (each, a "Plan") which are the subject of a Registration Statement of
the Company on Form S-8 (the "Registration Statement") covering 900,000 common
shares (the "Shares") in the capital of the Company granted or issuable pursuant
to the exercise of options issued or to be issued under the Plans.
We have examined originals or copies, certified or otherwise
identified to our satisfaction of the resolutions of the directors of the
Company with respect to the matters herein. We have also examined such statutes
and public and corporate records of the Company, and have considered such
questions of law as we have deemed relevant and necessary as a basis for the
opinion expressed herein. We have for the purposes of this opinion assumed the
genuineness of all signatures examined by us, the authenticity of all documents
and records submitted to us as originals and the conformity to all original
documents of all documents submitted to us as certified, photostatic or
facsimile copies.
Based upon and subject to the foregoing, and subject to the
qualifications hereinafter expressed, we are of the opinion that each Share to
be issued and sold by the Company pursuant to the Registration Statement will
be, when sold and paid for pursuant to the terms of the applicable Plan, validly
issued, fully paid and non-assessable.
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<PAGE> 2
We are barristers and solicitors qualified to practice law in
the Province of British Columbia. Our opinion expressed above is limited to the
present laws of the Province of British Columbia and of the federal laws of
Canada applicable therein. This opinion is being furnished solely in connection
with the filing of the Registration Statement with the Securities and Exchange
Commission, and we hereby consent to the use of this opinion as an exhibit to
the Registration Statement. This opinion may not be relied upon, used by or
distributed to any person or entity for any other purpose without our prior
written consent.
Yours truly,
/s/ Clark, Wilson
CLARK, WILSON
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Exhibit 23.1
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
We consent to incorporation by reference in the registration statement on Form
S-8 of our report dated October 7, 1998, relating to the consolidated balance
sheets of SmarTire Systems Inc. as at July 31, 1998 and 1997 and the
consolidated statements of loss and deficit and changes in financial position
for the years then ended, which report appears in the July 31, 1998 annual
report on Form 10-KSB of SmarTire Systems Inc.
"KPMG LLP"
KPMG LLP
Richmond, British Columbia
November 13, 1998
44
