exv10w3



 





EXHIBIT 10.3



Portions of this document have been
redacted pursuant to a Request for Confidential Treatment. Redacted
portions are indicated with the notation “****”



SUPPLY AGREEMENT



THIS AGREEMENT dated the 24th day of September, 2002.


BETWEEN:



			
	 	(1)	SmarTire Systems Inc. (hereafter “SmarTire”), a corporation
incorporated under the laws of British Columbia whose registered
office is at the Suite 150, 13151 Vanier Place, Richmond, British
Columbia, Canada, V6V 2J1




			
	 	and




			
	 	(2)	Pirelli Pneumatici S.p.A. (hereafter “Pirelli”), a company
incorporated under the laws of Italy whose registered office is at
Viale F. Testi 250, Milan, Italy



WHEREAS:



			
	 	(A)	SmarTire has developed tire pressure monitoring systems for
monitoring tire pressure and temperature in automobiles, trucks and
motorcycles;




			
	 	(B)	Pirelli wishes to purchase the aforesaid tire pressure monitoring
systems from SmarTire and re-sell these Products through its
distribution channels in Europe and other countries;




			
	 	(C)	SmarTire and Pirelli wish to enter into the Agreement defined
hereinafter on the terms and conditions set out in this Agreement.



NOW, THEREFORE, in consideration of the premises and the mutual Agreements
herein contained, the parties hereto agree as follows:


1.   INTERPRETATION



In this Agreement, including the Schedules, the following words and expressions
shall bear the following meanings:



	 	 	 
	“Affiliate”	 	
Shall mean any entity or person which is directly or indirectly
controlled by a Party or which directly or indirectly controls said Party
or is under common control with said Party, whereby control means



 






 




	 	 	 
	 	 	
ownership of more than 50% of the par value of
the issued equity share capital or of more than
50% of the shares entitling the holders to vote
for the election of directors or persons
performing similar functions, or right by any
other means to elect or appoint directors or
persons performing similar functions, who have a
majority vote.
	 	 	 
	“Current Exchange Rate”	 	
The exchange rate between US dollars and Euro
dollars as quoted by the “European Central bank
(ECB) in Frankfurt (cp. Reuters page “ECB 37”)
	 	 	 
	“Exchange Rate”	 	
The exchange rate at the time that this Agreement
is signed by both parties which is 1USD =
1.00Euro.
	 	 	 
	“Parts”	 	
Parts are individual components of a Product. An
example of a Part is a tyre transmitter.
	 	 	 
	“Products”	 	
The Products identified in Schedule A, Products
Identification, attached hereto and an integral
part hereof, and in conformance with the technical
and quality requirements set forth in Schedule B,
Specifications and Quality of the Products,
attached hereto and an integral part hereof.
	 	 	 
	“First Level Training”	 	
Training that SmarTire shall provide to the
Pirelli’s trainers in each country who are
responsible for providing the training the
installation and dealers in that country.
	 	 	 
	“Second Level Training”	 	
Training that Pirelli will provide to the
individual dealers and outlets in each country.
	 	 	 
	“Trademarks”	 	
The trademarks “Pirelli” and “Pirelli logo” in the
graphic form as indicated in Schedule C, attached
hereto and an integral part hereof, registered or
under registration during the term of this
Agreement in the class or classes covering the
Products.



2.   SCOPE OF THE AGREEMENT – PARTIES’ COMMITMENT



SmarTire and Pirelli shall have the following commitments:


SmarTire shall:




			
	 	a)	Manufacture, sell and deliver to Pirelli and Pirelli shall
accept and pay for the
Products in accordance with the terms and conditions setforth herein,
and



 






 









			
	 	b)	Provide First Level Training to Pirelli for the proper
installation and operation of the Products, and,
	 
	 	c)	Provide second level support to Pirelli as required to
support Pirelli’s sales and marketing efforts.



Pirelli shall:



			
	 	a)	Provide forecasts and orders for the Products from a single
central logistics facility as set forth in this Agreement,
	 
	 	b)	Sell and market the Products, and,
	 
	 	c)	Provide Second Level Training to the actual individuals who
will be selling and installing the Products.



3.   PRODUCT QUALITY and SPECIFICATIONS



SmarTire shall manufacture the Products in a proper and workmanlike manner and
in accordance with the technical and quality requirements detailed in Schedule
B: Specifications and Quality of the Products.


Without prejudice to liability provided hereinafter, Pirelli may inspect the
Products and/or perform any Tests on the Products after receipt, notify
SmarTire in writing of any failures to comply with the Specifications set forth
in Schedule B that may be apparent upon such inspection or found in performing
quality tests and reject the non conforming Products.


The inspections referred to herein shall not in any way exempt or otherwise
affect the obligations of SmarTire as per this Agreement.


4.   WARRANTIES and RECALL



Pirelli and SmarTire will co-operate to ensure that each Product’s owner’s
manual contains a limitation of liability and warranty statement, subject to
the applicable laws, and, in particular, clarifies that:



			
	 	•	the Product is a monitoring system only and is not to be intended
for use as a safety device.



SmarTire warrants that all Products shall be new, unused, in conformity with
the specifications, as set forth in Schedule B and shall be without
manufacturing or materials defects which render them unsuitable for the use for
which are intended, and shall not be lacking in any qualities essential for
such use (“Defects”). The term of SmarTire’s warranty to Pirelli shall be for
 ****  from the date of sale to the end-user of the Product, or if that
date is unknown from the date of receipt of the Product by the Pirelli’s
retailer.


 






 


For any Products, which under conditions of normal use and service fail to
conform to the warranty set forth above within the warranty period, Pirelli
shall be entitled to replacement or financial credit or to any other remedy
provided for as a matter of the applicable law, if any. The warranty provision
stated above shall apply only if the defective parts are returned to SmarTire,
if available to Pirelli and/or to the Pirelli’s retailer, and the defect is not
due to the fact that the Products have been improperly damaged by the owner, in
breach of the instructions given by the Owner’s Manual.


In the event Pirelli rejects any Products, SmarTire shall, upon the request of
Pirelli and without prejudice to any other of Pirelli’s remedies under this
Agreement or any applicable law, take one of the following actions:



			
	 	i)	replace, without delay, the non-conforming Products with
conforming Products at SmarTire’s expense (method and date of
delivery of replacements to be mutually agreed upon between the
parties hereto), or
	 
	 	ii)	reimburse Pirelli an amount equal to that actually paid
by Pirelli for the rejected Products.



SmarTire shall be responsible for damages however and to whoever caused by
Defects of the Products, for any damages directly or indirectly resulting from
the Defects.


SmarTire shall hold harmless and indemnify Pirelli and all Pirelli Affiliates
from and against any claim, demand or action undertaken or even merely
threatened by third persons or parties, including the sellers or the end-users
of the Products for damages, reimbursements or related indemnities allegedly
caused by or resulting from Defects in the Products.


SmarTire shall defend, indemnify and hold harmless Pirelli and/or any other
Pirelli Affiliate, their distributors and/or dealers from and against any and
all losses, damages, costs and expenses which they may incur for the Products,
due to any failure of the Products to conform to the Specifications and/or due
to defect(s) or alleged defect(s) in materials or workmanship of Products.
These costs and expenses shall include but not be limited to costs of replacing
and/or repairing the defective Product and any other costs (including, without
limitation, defense costs and reasonable attorneys fees and expenses) arising
out of claims for product liability on the basis of the defective Products,
including the settlement of such claims and expenses, if any, associated with
such Defects. In no event shall either Pirelli or SmarTire be responsible for
indirect or consequential damages. All claims for defective Products shall be
made in writing by Pirelli to SmarTire within two (2) months of the defective
Products becoming known to Pirelli.


If Pirelli, after sending notice that is duly documented by Pirelli and having
subsequent discussions with SmarTire, reasonably consider it proper to conduct
recall campaigns or any similar activities due to any materials and/or
workmanship of Products and/or non-conforming of Products to the Specifications
or if such a recall is mandated by any applicable laws, SmarTire shall bear and
reimburse Pirelli for all costs to repair or


 






 




replacement of Products and expenses directly associated with such campaigns or
similar activities, and possible notification to owners and/or users of
vehicles. In the event that a recall has occurred Pirelli and SmarTire shall
negotiate in good faith the sharing of costs additional to the repair or
replacement associated with such a campaign, being understood that SmarTire
will reimburse Pirelli for any indemnification mandatorily due by the
manufacturer/seller of the Products as a matter of the applicable law to any
third parties, as a consequence or in relation to Defects of the Products.


5.   TRADEMARKS



SmarTire acknowledges without reservation that Pirelli S.p.A (“PSPA”), who has
granted Pirelli the right to use the Trademarks in several fields, including
tyres, is the sole owner of the Trademarks.


SmarTire shall label the Products for supply to Pirelli and/or its designated
Affiliates with the Labels bearing the Trademarks in the graphic form indicated
in Schedule C and in the manner setforth in Schedule D, attached hereto and an
integral part hereof (“Labeled Products”). In affixing the Trademarks on said
Products for supply to Pirelli and/or its designated Affiliates pursuant to
this Article 5, SmarTire shall use only the labels bearing the Trademarks which
are provided to it by Pirelli (“Labels”). SmarTire shall not, directly or
indirectly, reproduce either the Labels or the Trademarks for any reason
whatsoever.


Labeled Products shall be delivered solely to Pirelli and SmarTire shall not,
directly or indirectly, sell, use or make use of Labels or Labeled Products for
any purposes other than the supply of said Products to Pirelli.


SmarTire shall not, directly or indirectly, make any use of the Trademarks or
Labels nor any combination of words together with the Trademarks, except as
specifically provided for herein for the supply of Products to Pirelli.
SmarTire expressly acknowledges that neither this Agreement nor its use of the
Trademarks or Labels hereunder shall by implication or otherwise create any
right, license, title or interest in or to said Trademarks on SmarTire’s behalf
and that SmarTire will not seek to take any advantage arising out of any
circumstances of law or fact to claim rights on the Trademarks.


SmarTire acknowledges (i) the exclusive right, title and interest of PIRELLI
and/or PSPA in and to the Trademarks, and shall not at any time do or cause to
be done any act or thing contesting or in any way impairing or tending to
impair any part of such right, title and interest, or indicating in any manner
that SmarTire has any ownership in such trademarks or interest therein and (ii)
that any use of the Trademarks by SmarTire pursuant to this Agreement shall
inure to the exclusive benefit of PSPA.


 






 


6.   INDUSTRIAL PROPERTY RIGHTS



SmarTire warrants that no third party patent, copyright or other intellectual
or proprietary rights will be infringed by the purchase, possession or use of
the Products and/or any parts thereof by Pirelli and its Affiliates, and their
respective distributors, dealers and customers.


Notwithstanding any other provision of this Agreement, SmarTire shall defend,
indemnify and hold harmless Pirelli and its Affiliates, and their
distributors, dealers and customers from all losses, damages, costs and
expenses resulting from any actual or alleged infringement of any third party
patent, copyright or other proprietary interest by reason of the purchase,
possession or use of the Products or any part thereof; provided that Pirelli
and/or its Affiliates or their respective distributors, dealers and customers
(a) promptly notify SmarTire in writing of any claim or lawsuit against Pirelli
and/or its Affiliates for which SmarTire may at its own expense conduct all
negotiations for the settlement of the same, and any litigation that may arise
therefrom, (b) upon SmarTire request, provide SmarTire’ with all reasonable
assistance and information for the purpose of contesting any such claim or
action and shall be repaid all reasonable expenses it incurs in said regard and
(c) shall not, unless and until SmarTire shall have failed to take over the
conduct of the negotiations or litigation, make any admission which might be
prejudicial thereto.


Pirelli shall defend, indemnify and hold harmless SmarTire from all losses,
damages, costs and expenses resulting from any actual or alleged infringement
of any third party’s trademark by reason of SmarTire’s use of the Trademark
pursuant to the terms of this Agreement; provided that SmarTire and/or their
distributors and dealers promptly notify Pirelli in writing of any claim or
lawsuit against SmarTire and/or their distributors and dealers, transmit to
Pirelli all documents and information SmarTire and/or their distributors and
dealers has on the claim or lawsuit, cooperate fully in Pirelli’s defense of
such claim or lawsuit and allow Pirelli full authority to settle or otherwise
dispose of same.


7.   TITLE



SmarTire hereby warrants that title to any Products delivered to Pirelli under
this Agreement shall be good and free from any security interest or other lien
or encumbrance.


8.   PRODUCT PRICING



The prices for the Products are detailed in Schedule E, Prices


Prices shall be FOB Didcot, Oxon, U.K. (SmarTire UK).


Pirelli shall pay for all shipping costs as provided in Schedule F if Pirelli
will use the Shipping service provided by SmarTire.


 






 


Prices shall remain firm until end-February 2003.


For the following periods either Party shall have the right to request
adjustments to the Prices, subject to 90 days written notice, in the event that:



		
	a)	The exchange rate US.$ vs € has fluctuated 3.5% or more up or down than
the Exchange Rate calculated according to the yearly average exchange rate
of the “European Central Bank (ECB) in Frankfurt (cp. Reuters page
“ECB 37”).
	 
	b)	An event has occurred which affects the manufacturing cost of the
Product.
	 
	c)	A competitive product has been introduced to the market place that
affects the ability of Pirelli and of its resellers to successfully market
the Product.



In case no agreement is achieved by the Parties on the new prices, within
30-day from the relevant request, either Parties will be entitled to early terminate this
Agreement, being agreed that nothing shall be due by the terminating Party to the other
as a consequence or as a result of such a termination.


Notwithstanding the foregoing, in the event that SmarTire is unable to produce
the Products at either the last quoted price, or at a price desired by Pirelli,
SmarTire shall make the technical information required to build the Product
available to a third party of Pirelli’s choice under a manufacturing license.


In the event that Pirelli exercises the right to have the Product
manufactured by a third party, SmarTire shall receive a license fee of 6% of the cost that the third
party produces the product for Pirelli.


9.   PAYMENT TERMS



Payment for SmarTire Products shall be
 ****  from the date of the invoice for
Products shipped to Pirelli.


10.   LOGISTICS



At the beginning of each month, Pirelli shall provide an order for the quantity
of Products that it requires, and a rolling forecast for the next 6 months.
Pirelli shall only be responsible for accepting delivery of Products placed by
purchase order, and shall bear no obligation to accept products that have been
built according the forecast. Pirelli shall place their first order on or
before October 15, 2002.


Pirelli shall order Products from SmarTire in accordance with the process
outlined in Schedule F, Logistics.


The order sizes shall be in multiples of the minimum order size of 125 Product
(equivalent to 1 Pallet) as described in Schedule F.


 






 


11.   TERM OF AGREEMENT



The commencement date for this Agreement shall be October 15th, 2002 and this
Agreement shall remain in effect until to December 31st, 2003, at which date,
this Agreement shall expire without further notice.


This Agreement may be terminated by mutual consent of both Parties.


In the event of termination or expiration of the agreement, other than for
breech, Pirelli shall be obligated to take receipt of, and make payment for,
any outstanding orders placed with SmarTire, or, upon agreement by both
parties, reach a mutually acceptable agreement to cover the costs of any such
orders or work in progress at SmarTire.


12.   TERMINATION



This Agreement may be terminated in accordance with the following:



		
	12.1	By the party which is not in breach of its obligation if:



Either party has committed a material breach of its obligations hereunder and
failing to remedy the same within 30 days of being required so to do by it by
the other party (provided that if the party in breach is diligently attempting
to cure such breach but has been unable to do so, and provided the party in
breach continues to diligently attempt to cure such breach, the time to cure
such breach will be extended for an additional 30 days), or failing or
neglecting to comply with any reasonable instructions given pursuant to this
Agreement, or being guilty of fraud or gross negligence; or:


The other party declares itself bankrupt or a resolution is passed for the
winding-up of the other party (other than a winding-up for the purposes of a
reconstruction or amalgamation of the other party).



		
	12.2	Without prejudice to any other damages or relief available at law or
equity, Pirelli shall have the right to immediately terminate this
Agreement with written communication to SmarTire in the event that
SmarTire:




			
	 	a.	makes use of any of the Trademarks, Labels or Labeled Products in
any manner other than as expressly provided for herein or agreed to by
the Parties in writing, or




			
	 	b.	breaches its obligations of confidentiality pursuant to Article
20.



 






 







13.   CONSEQUENCES OF EXPIRATION OR TERMINATION



Upon expiration or early termination of this Agreement for any reason
whatsoever, SmarTire shall immediately discontinue use of the Trademarks and
return to Pirelli all Labels and any other items bearing the Trademarks, and
all rights to use said Trademarks shall immediately cease. In the event the
Agreement is terminated due SmarTire’s breach of its obligations hereunder
pursuant to Article 13 and Pirelli does not intend to purchase all or part of
any remaining Products labeled with the Trademarks as provided herein, without
prejudice to any other remedies available to Pirelli at law or equity,
SmarTire shall at its own expense immediately remove and return to Pirelli the
Labels and/or any other sign of the Trademarks from Products not purchased by
Pirelli.


Expiration or termination of this Agreement for whatsoever reason shall not
relieve either party from due performance of all obligations, which, by their
nature, continue after the expiration or termination of this Agreement,
including but not limited to, obligations relating to Warranty, Recall and
Product Liability under Article 4, prohibitions under Article 19, Industrial
Property Rights under Article 6 and maintenance of secrecy under Article 21
hereof.


14.   ASSIGNMENT



Neither the benefit nor the burden of this Agreement shall be assignable by
either of the parties without the express written permission of the other
party.
Notwithstanding the above it is hereby agreed that Pirelli shall have the right
to assign its rights and obligations under this Agreement in whole or in part
to any Affiliate without having obtained the prior written consent of SmarTire
or may transfer or assign this Agreement in whole or in part as part of a sale
or transfer of that part of the Pirelli Group business to which this Agreement
applies or may assign or transfer this Agreement in whole or in part as part of
a corporate restructuring of the PIRELLI Group.


15.   COSTS



Each party shall bear its own costs in connection with this Agreement.


16.   NOTICES


Any notice to be given under or for the purposes of this Agreement shall:



		
	16.1	Be in writing and shall be deemed properly served or given if left at or
sent by facsimile machine or telex or by first class registered or
recorded delivery prepaid post or express or other fast prepaid postal
service to the respective address given herein of the party to be served
or to such other address as may be notified in writing for the purpose or
to any address at which proceedings may be served on such party;



 






 








		
	16.2	Any such notice shall be deemed to be served at the time when the same is
left
at the address of the party to be served or, if sent by facsimile machine
or telex, at the opening of business in the place of receipt on the day
after the date of dispatch or, if sent by post, on the third business day
following the day of posting.




		
		Notices to SmarTire shall be delivered to:

Chief Operating Officer

SmarTire Systems Inc.

Suite 150, 13151 Vanier Place

British Columbia, Canada

V6V 2J1

Fax: 604-276-2353



17.   INSURANCE



SmarTire shall provide for Pirelli to be listed as an additional insured under
its product liability insurance, against liability for damages to Pirelli and
its Affiliates, their distributors and/or dealers and to third parties for any
death or personal injury and loss of or damage to any physical property arising
out of the Products manufactured and shall deliver to Pirelli certificates of
insurance evidencing such insurance coverage. The certificates obtained by
SmarTire shall name Pirelli as an additional insured and stipulate that not
less than ten (10) days notice will be given to Pirelli prior to termination or
reduction of the limits of the coverage.


18.   PROHIBITIONS



SmarTire may not sub-contract the manufacture of the Products subject to this
Agreement to any other party, without the prior written consent of Pirelli,
which shall not be unreasonably withheld.


19.   FORCE MAJEURE



If, by reason of any Force Majeure Event (as hereinafter defined), a party
shall be unable to carry out any of its obligations (other than the payment of
monetary amounts due) under this Agreement and that party gives the other party
prompt written notice thereof, then any such obligations shall be suspended to
the extent made necessary by reason of such Force Majeure Event during its
continuance, provided that such party attempts to eliminate, insofar as is
reasonably possible, the effect of such force majeure with all reasonable
dispatch. The term “Force Majeure Event” shall mean any cause (other than mere
shortage of funds) beyond the reasonable control of a party, including, by way
of illustration and not limitation, acts of God, flood, fire, explosion, storm,
acts of public enemies, insurrection, war, national emergency, riots, strikes,
labor disputes, disturbances, lockouts, labor or material shortages, breakdown
of or damage to plants or equipment or facilities, failure of a unique supplier
to supply necessary materials or equipment or labor in a timely manner
(including warranty replacements), destruction of


 






 




property, embargoes, boycotts, governmental legislation or regulations, orders
or acts of civil or military authorities, governmental acts, or orders of
courts or administrative agencies.


Should the impossibility to perform this Agreement exceed a five (5) month
period, the non-delayed party shall have the right to terminate this Agreement
with the other party and the provisions of Article 14 shall apply.


If the Agreement is terminated in accordance with this article neither party
will be entitled to compensation for loss of business or goodwill or any other
damages, except for what is described under Article 4.


20.   CONFIDENTIALITY



Each party shall (i) maintain confidential and not disclose to any third party
the existence of and the terms and conditions of this Agreement (“Confidential
Information”) and (ii) shall exercise the same degree of care to safeguard the
confidentiality of such Confidential Information as it would exercise in
protecting the confidentiality of similar property of its own, with no less
than reasonable care. Neither party shall issue any press release or make a
public announcement relating in any way whatsoever to this Agreement, its
existence or content without the prior written consent of the other Party
(which consent shall not be unreasonably withheld or delayed) unless required
by law or the rules of an applicable stock exchange or over-the-counter market.


If a press release or announcement of this Agreement is required by law or the
rules of an applicable stock exchange or over-the-counter market, the parties
shall consult with each other in advance as to the contents and timing.


The obligations of the Parties as set forth in this Article 21 shall survive
the expiration or earlier termination of this Agreement for a period of 12
months from said expiration or early termination.


21.   WAIVER



No waiver by a party to this Agreement of any default of the other party in the
performance of any part of this Agreement shall apply to or be deemed a waiver
of any other default hereunder. Similarly, no waiver by a party of any terms
and conditions hereunder shall operate thereafter as a waiver of the same or
any other terms and conditions.


22.   GOVERNING LAW AND JURISDICTION




		
	22.1	This Agreement shall be governed by and construed in accordance with the
laws of France, without regard to the conflict of laws provisions thereof.



 






 








		
	22.2	Any dispute which may arise in connection with this Agreement shall be
finally
settled under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce by three arbitrators appointed in
accordance with those rules. The arbitration procedure shall be in
English language and shall take place in Paris.



23.   APPENDICES



Appendices A through F attached hereto are incorporated herein and made a part
of this Agreement to the same effect as if set forth herein in full.


24.   ENTIRE AGREEMENT AND MODIFICATION



This Agreement and any attachments or exhibits hereto and thereto, constitutes
the entire Agreement among the parties pertaining to the subject matter hereof,
and any and all other written or oral agreements existing between the parties
are expressly canceled and of no further force or effect. Any amendments or
other modifications of this Agreement must be in writing and signed by duly
authorized officers of each party. No Person not a party to this Agreement
shall be entitled or be deemed to be entitled to any benefits or rights
hereunder, nor be authorized or entitled to enforce any rights, claims or
remedies hereunder or by reason hereof.


25.   INDEPENDENT CONTRACTOR



This Agreement does not create a principal to agent, employer to employee,
partnership, joint venture, or any other relationship except that of
independent contractor between Pirelli and SmarTire.


26.   HEADINGS



The section headings contained in this Agreement are inserted for convenience
only and shall not affect in any way the meaning or interpretation of this
Agreement.


27.   SEVERABILITY



Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall be ineffective in such jurisdiction to the extent of such
prohibition or unenforceability, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. If any provision of this Agreement shall be held or
deemed to be or shall be inoperative or unenforceable as applied in any
particular case because it conflicts with any other provision or provisions
hereof or any Law, or for any other reason, such circumstances shall not have
the effect of rendering the provision in question inoperative or unenforceable
in any other case or circumstance, or of rendering any other provisions herein
contained invalid, inoperative or unenforceable to any extent whatsoever.


 






 


28.   REMEDIES CUMULATIVE



The parties recognize that various of the rights of the parties under this
Agreement are unique and, accordingly, the parties shall, in addition to such
other remedies as may be available to them at law or in equity, have the right
to enforce their respective rights hereunder, by actions for injunctive relief
and specific performance to the extent permitted by law.


IN WITNESS WHEREOF, both parties have caused this Agreement to be executed by
their duly authorized representatives the day and year first above written.



	 	 	 
	
SmarTire Systems Inc.
	 	Pirelli Pneumatici S.p.A.
	 
	 
	
                    /s/  Robert Rudman



	 	                    /s/  Francesco Festa



	 
	
                    Robert Rudman



	 	                    Francesco Festa



                            Name
	 
	
                    President & C.E.O.



	 	 



                            Title
	 
	 	 	 
	 
	 	 	 
	 
	
                    /s/  Al Kozak



	 	 



	 
	
                    Al Kozak



	 	 



                            Name
	 
	
                    Chief Operating Officer



	 	 



                            Title




 









 



Schedule A: Products identification



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Optional SmarTire	 	Optional Pirelli	 	 	 	 
	Ref.	 	SmarTire system	 	Pirelli system	 	spare part	 	spare part	 	Designation	 	Product Description
	
	 	
	 	
	 	
	 	
	 	
	 	

	Car 0	 	 	110.0404	 	 	xxxxx	 	 	 	 	 	 	 	 	 	FFD plug-in system	 	FFD plug-in kit + basic kit

	 	 	 	 	 	110.0414	 	 	xxxxx	 	 	 	 	 	 	 	 	 	FFD remote system	 	FFD remote kit + basic kit

	 	 	 	 	 	 	 	 	 	 	 	 	 	110.0104	 	 	 	9118500	 	 	Basic kit	 	Receiver (1) + Strap mount sensor (4) + Power cord (1) + Strap (4)+
Installation kit(1)
	 	 	 	 	 	 	 	 	 	 	 	 	 	110.0400	 	 	 	9118600	 	 	FFD plug-in kit	 	FFD plug-in (1) + User’manual (1)

	 	 	 	 	 	 	 	 	 	 	 	 	 	110.0401	 	 	 	9118700	 	 	FFD remote kit	 	FFD remote(1) + User’manual (1) + FFD Remote cable (1)
	 	 	 	 	 	 	 	 	 	 	 	 	 	069.0001	 	 	 	9118800	 	 	Installation kit	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	200.0090	 	 	 	9118900	 	 	Receiver	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	200.0100	 	 	 	9119000	 	 	Strap mount sensor	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	260.0089	 	 	 	9119100	 	 	Power cord	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	260.0096	 	 	 	9119200	 	 	FFD remote cable	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	264.0115	 	 	 	9119300	 	 	Strap	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	710.0004	 	 	 	9119500	 	 	User's manual	 	 

	Bike 0	 	 	110.0212	 	 	xxxxx	 	 	 	 	 	 	 	 	 	Bike waterproof system	 	Dual LED display (1)+basic kit (1)

	 	 	 	 	 	 	 	 	 	 	 	 	 	200.0083	 	 	xxxxx	 	Dual LED	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	069.0008	 	 	 	9118800	 	 	Installation kit	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	200.0098	 	 	xxxxx	 	Waterproof receiver	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	200.0100	 	 	 	9119000	 	 	Strap mount sensor	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	264.0115	 	 	 	9119300	 	 	Strap	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	710.0010	 	 	xxxxx	 	User's manual	 	 










	xxxxx:	 	To be added


 






 






Schedule B: Specifications and Quality of the Products


Component Specifications





Software Specifications






	 	 	 
	Receiver software	 	
Display Software



 






 



Schedule C: Trademarks “Pirelli” and “Pirelli logo”





 






 


Schedule D: Labeled Products





 






 


Schedule E: Prices



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Optional Pirelli	 	 	 	 	 	 	 	Price
	Ref.	 	spare part	 	Designation	 	Product Description	 	(Euros
	
	 	
	 	
	 	
	 	

	Car 0	 	 	 	 	 	FFD plug-in system	 	FFD plug-in kit + basic kit
	 	 	****	 
	 	 	 	 	 	 	 	 	FFD remote system	 	FFD remote kit + basic kit
	 	 	****	 
	 	 	 	 	 	9118500	 	 	Basic kit	 	Receiver (1) + Strap mount sensor (4) + Power cord
	 	 	****	 
	 	 	 	 	 	 	 	 	 	 	 	 	(1) + Strap (4) + Installation kit (1)
	 	 	 	 
	 	 	 	 	 	9118600	 	 	FFD plug-in kit	 	FFD plug-in (1) + User’manual (1)
	 	 	****	 
	 	 	 	 	 	9118700	 	 	FFD remote kit	 	FFD remote(1) + User’manual (1) + FFD Remote cable (1)
	 	 	****	 
	 	 	 	 	 	9118800	 	 	Installation kit	 	 
	 	 	****	 
	 	 	 	 	 	9118900	 	 	Receiver	 	 
	 	 	****	 
	 	 	 	 	 	9119000	 	 	Strap mount sensor	 	 
	 	 	****	 
	 	 	 	 	 	9119100	 	 	Power cord	 	 
	 	 	****	 
	 	 	 	 	 	9119200	 	 	FFD remote cable	 	 
	 	 	****	 
	 	 	 	 	 	9119300	 	 	Strap	 	 
	 	 	****	 
	 	 	 	 	 	9119500	 	 	User's manual	 	 
	 	To be added
	Bike 0	 	 	 	 	 	Bike waterproof system	 	Dual LED display (1)+basic kit (1)
	 	 	****	 
	 	 	 	 	xxxxx	 	Basic kit	 	Waterproof receiver (1)+Strap mount sensor (2)+ Power
	 	 	****	 
	 	 	 	 	 	 	 	 	 	 	 	 	cord (1) + Strap (2) + Installation kit (1)
	 	 	 	 
	 	 	 	 	 	9118800	 	 	Installation kit	 	 
	 	 	****	 
	 	 	 	 	xxxxx	 	Waterproof receiver	 	 
	 	 	****	 
	 	 	 	 	 	9119000	 	 	Strap mount sensor	 	 
	 	 	****	 
	 	 	 	 	 	9119100	 	 	Power cord	 	 
	 	 	****	 
	 	 	 	 	 	9119300	 	 	Strap	 	 
	 	 	****	 
	 	 	 	 	xxxxx	 	User's manual	 	 
	 	To be added




 






 



Schedule F: Logistics


F.1: QUANTITY


SmarTire shall provide the Products in the quantity requested by Pirelli
throughout the validity of the Agreement.


Pirelli will provide a 6 months rolling forecast each month with the first
month represented as a firm purchase order and months two and three as
forecasts; months 4 to 6 as pure info.


Pirelli will undertake to purchase a maximum
n° of 5,000 Products within end -
February 2003.


Pirelli does not undertake neither to purchase further minimum volumes of
Products during the validity of this Agreement, nor to create any expectations
in respect thereof.


F.2: FLOW





 






 


F.3: FREIGHT


SmarTire are responsible for all freight costs inter-company, All Pirelli costs
are based on ex-works Didcot, Oxon, U.K. with the associated freight costs
subject to euro pallet volumes below.


Based on a euro pallet container holding either 125 systems 450 FFD/R’s the PER
PALLET rate for shipments to the logistic centre near Milan are as follows:-


1 – 7 pallets ****


8 – 16 pallets **** per pallet


16> pallets **** per pallet