Dealer and Supply Agreement

Confidential

Chu Chang International Ltd.

Exhibit 10.1

DEALER AND SUPPLY AGREEMENT

 

THIS AGREEMENT

dated the 3rd day of June, 2004.

 SMARTIRE SYSTEMS INC. CONTRACT REFERENCE NUMBER: PP043.

 BETWEEN:

 Beijing Boom Technology Co. Ltd. ("Distributor"), a company incorporated under
the laws of Peoples Republic of China whose registered office is located at
Guangming Tower, Liangmaqiao Road, Chaoyang District, Beijing.

 And

 Chu Chang International Ltd., (Dealer) a company incorporated under the laws of
Taiwan, Republic of China and whose registered office is located at #12, 146
Lane, Dah-Fu Road, South Section Taichung City, Taiwan, ROC.

And

SmarTire Systems Inc, (Supplier) a company incorporated under the laws of the
Yukon Territory with offices 13151 Vanier Place, Richmond, BC, V6V 2J1.

  WHEREAS:

 (i) Beijing Boom is the Master Distributor (Distributor) of the Supplier's
products in Taiwan and;

(ii) Chu Chang International Ltd. (Dealer) operates a import/trading company in
Taiwan, Republic of China and plans to purchase production quantities of
SmarTire for Bus (Product) from the Supplier, and ;

(iii) The Supplier manufacturers and designs Tire Pressure Monitoring Systems
(TPMS) for vehicles, and;

(iv) The Distributor and the Dealer wish to enter into this Dealer and Supply
Agreement, and;

(v) The Supplier will receive orders directly from the Dealer for Product and
ship it from its facilities on the terms and conditions set forth below.

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Dealer and Supply Agreement

Confidential

Chu Chang International Ltd.

 

In consideration of the promises and the mutual agreements contained in this
Agreement, the parties agree as follows:

SmarTire Product

The Dealer Agrees to purchase 18,200 complete SmarTire for Bus TPMS systems
(Product) over a 13 month period starting from the commencement date of this
Agreement. The individual Product configuration is comprised of the following
components:

 1 - Remote Full Function Display
1 - Receiver
7 - Transmitters
7 - Straps
1 - Antenna

Spares Inventory

The Supplier recommends that the Dealer purchase a spares inventory equal to 1%
of the total number of Transmitters included in the 18,200 systems (1260
Transmitters).

This Spares Inventory may be used to configure vehicles with more than 6 wheels
or to cover non-warranty Transmitter replacement. The Supplier estimates that
the Dealer will need 180 LF initiators & 180 Dealer Programming Tools that the
Dealer would sell to it's customers as a service tool for use when changing
Transmitters in tires.

As an added feature and at no cost to the Dealer, the Supplier is providing
software and hardware that is used to program Transmitters to an individual
receiver. This software will make it easy to program Transmitters for any
vehicle configuration and to allow the Supplier to deliver the Product to the
Dealer in bulk packaging.

The Dealer agrees to provide a computer (minimum WIN 98) and hand held scanner
(Intermec 1470 ) for the exclusive purpose of programming Transmitters and
Receivers.

Terms and Conditions

Product

The Supplier agrees to provide the Dealer with 18,200 units of 7 wheel Product
plus an additional 1260 Transmitters for spares support. In addition, the
Supplier

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Dealer and Supply Agreement

Confidential

Chu Chang International Ltd.

 

recommends that the Dealer purchase 180 LF initiators & 180 Dealer Programming
Tools. The price list is attached as Exhibit A Price List.

Payment

This is a non-cancelable contract. Product is paid for by a wire transfer for
the first shipment of 200 units for June 2004 and balance by Irrevocable Letter
of Credit (ILOC) for the total amount of the Dealer's 12 month (July 2004 to
June 2005) commitment. The Supplier will draw down payment for Product upon
presentation of Proof of Shipping, and Commercial Invoice. Product is shipped
FOB Vancouver, Taxes and freight extra.

Terms

Upon execution of this Agreement:

 * The Dealer becomes the Distributors exclusive SmarTire for Bus dealer in
   Taiwan for 13 months (June 1, 2004 to July 31, 2005) with a contractual
   commitment of 18,200 units.
 * The Dealer is required to meet an annual minimum of 18,200 units in order to
   maintain its exclusivity for "SmarTire for Bus" product in Taiwan.
 * Distributor or its agents may not sell SmarTire for Bus in Taiwan during this
   exclusivity period without the express and written permission of the Supplier
 * The Dealer becomes Distributor's dealer with no restriction on the selling
   price of product
 * The Distributor provides a marketing fund equal to 3% of net sales made by
   the Dealer. Payment terms of this fund to be agreed to by the Distributor and
   the Dealer.
 * The Dealer places orders directly with the Supplier and makes payment
   directly to the Supplier. Orders placed outside of this quotation may be
   priced at different rates based on volume.
 * The Supplier provides training to the Dealer when first 200 units are
   shipped. Distributor pays for flight to Taiwan; the Dealer pays for in
   country expenses.
 * The Supplier will provide the Dealer a warranty depot as follows:
    * The Supplier to provide:
       * 20 Receivers
       * 50 Transmitters
       * 50 Straps

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Dealer and Supply Agreement

Confidential

Chu Chang International Ltd.

 

 * 10 Antenna
 * 20 Remote Full Function Displays

 * The Dealer uses product from Warranty Depot to solve warranty related issues.
   Note: Sensor breakage during installation is not typically a warranty issue
 * The Dealer reports Warranty Depot usage monthly and ships defective product
   to the Supplier quarterly
 * The Supplier replenishes Warranty Depot quarterly or at such time as is
   necessary.

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Dealer and Supply Agreement

Confidential

Chu Chang International Ltd.

 

AS WITNESS the duly authorised representatives of the parties hereto:

SIGNED by Jamie Cai duly authorised for and on behalf of Beijing Boom
Technologies Inc. :

/s/ Jamie Cai

Date June 14, 2004

)
)
)
)
 

  

SIGNED by Zhn-Shen Lee duly authorised for and on behalf of the CCIL:

/s/ Zhn-Hsen Lee

Date June 14, 2004

)
)
)
)
 

  

SIGNED by Robert Rudman duly authorised for and on behalf of the SmarTire
Systems Inc:

/s/ Robert Rudman

Date June 14, 2004

)
)
)
)
 

6

Dealer and Supply Agreement

Confidential

Chu Chang International Ltd.

Exhibit B: Price List

Product

Description

Price Per
Unit

Number of
Units

Total Price

xxx.xxx.xxx

7 wheel SmarTire for Bus TPMS C/W 1 - Remote Full Function Display

1 - Receiver

7 - Transmitters

7 - Straps

1 - Antenna

$350.00

200

$70,000

xxx.xxx.xxx

7 wheel SmarTire for Bus TPMS C/W 1 - Remote Full Function Display

1 - Receiver

7 - Transmitters

7 - Straps

1 - Antenna

$275.00

18000

$4,950,000

 

 

 

 

 

Spares Support

 

 

 

 

101.9050

50 pack bulk High Pressure Transmitters

$971.00

25

$24,275.00

101.9051

50 pack bulk Straps

$91.00

25

$2,275.00

 

 

 

 

 

Options

 

 

 

 

090.0006

LF Initiators

$94.91

180

$17,083.80

090.0007

Dealer Programming Tool

$94.91

180

$17,083.80