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                                                                   EXHIBIT 10.16


                              MANAGEMENT AGREEMENT


THIS AGREEMENT effective as of the 3rd day of January, 2001 (the "Effective
Date").

BETWEEN:

               SMARTIRE SYSTEMS INC., a company duly incorporated pursuant to
               the laws of the Province of British Columbia, having an office at
               150 - 13151 Vanier Place, Richmond, British Columbia, V6V 2J1

               (hereinafter referred to as the "Company")

                                                               OF THE FIRST PART

AND:

               ERWIN BARTZ, businessman, of 21 Arrow-wood Place, Port Moody,
               British Columbia V3H 4E9

               (hereinafter referred to as the "Manager")

                                                              OF THE SECOND PART

RECITALS

WHEREAS the Company has requested the assistance of the Manager in providing
certain management services to the Company, as hereinafter described;

WHEREAS the Manager has agreed to provide such assistance and services to the
Company in accordance with the terms and conditions herein set forth;

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants set forth below, the parties hereto agree as follows:

1                     DUTIES AND DEVOTION OF TIME

1.1                   Duties. During the term of this Agreement the Manager
shall be responsible for the duties contained in Schedule "A" attached hereto
and incorporated herein by this reference (the "Duties").

1.2                   Devotion of Time. The parties hereto acknowledge and agree
that the work of the Manager is and shall be of such a nature that regular hours
may not be sufficient and

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                                      -2-


occasions may arise whereby the Manager shall be required to work more than
eight (8) hours per day and/or five (5) days per week. The Manager agrees that
the consideration set forth herein shall be in full and complete satisfaction
for such work and services, regardless of when and where such work and services
are performed. The Manager further releases the Company from any claims for
overtime pay or other such compensation which may accrue to the Manager.
Notwithstanding the foregoing, the Company agrees that so long as the Manager
properly discharges his duties hereunder, the Manager may devote the remainder
of his time and attention to other non-competing business and personal pursuits.

1.3                   Business Opportunities the Property of the Company. The
Manager agrees to communicate immediately to the Company all business
opportunities, inventions and improvements in the nature of the business of the
Company which, during the term of this Agreement, the Manager may conceive, make
or discover, become aware of, directly or indirectly, or have presented to him
in any manner which relates in any way to the Company, either as it is now or as
it may develop, and such business opportunities, inventions or improvements
shall become the exclusive property of the Company without any obligation on the
part of the Company to make any payments therefor in addition to the salary and
benefits herein described to the Manager.

1.4                   No Personal Use. The Manager shall not use any of the work
the Manager shall perform for the Company for any personal purposes without
first obtaining the prior written consent of the Company.

2                     SALARY, BONUSES AND BENEFITS

2.1                   Salary. In consideration of the Manager providing the
services referred to herein, the Company agrees to pay the Manager an annual
base salary (the "Annual Base Salary") of one hundred fifty thousand dollars
($150,000) less applicable deductions, payable bi-weekly, plus incentive
compensation as set out below, subject to increase as from time to time approved
by the Board of Directors of the Company.

2.2                   Benefits. The Company shall provide, maintain and pay for:

        (a)    medical, dental for the Manager and his immediate family as is
               provided by the Company's medical services plan or an equivalent
               plan; and

        (b)    such extended health and other benefits for the Manager and his
               immediate family as are provided to employees of the Company,
               subject to the eligibility of the Manager.

2.3                   Incentive Compensation Plan. The Manager shall be entitled
to participate in the EVA based incentive compensation plan which could result
in an annual bonus that would be payable in common shares of the Company.

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                                      -3-


2.4                   Payment in Cash or Shares. All payments payable by the
Company to the Manager, including the Annual Base Salary and reimbursement of
expenses under Section 4.1 hereof, shall be payable in cash or, at the election
of the Manager, and subject to the approval of the regulatory authorities, such
will be paid in whole or in part in common shares in the capital stock of the
Company ("Remuneration Shares"), issued at the 10 day average closing price (for
the 10 days prior to the Manager's election) of the Company's common shares on
any stock exchange or quotation system upon which the Company's common shares
are listed for trading.

2.5                   Registration of Performance Bonus Shares. To ensure that
any shares issued to the Manager under paragraph 2.4 of this Agreement are
freely tradable, the Company shall register with the SEC any such shares issued.
Upon or as soon as is practical after the issuance of such shares, the Company
shall file a form S-8 or other appropriate form with the United States
Securities and Exchange Commission (the "SEC) to effect registration.

2.6                   Incentive Stock Options. Upon execution of this Agreement,
the Company will issue an incentive stock option agreement for the right for the
Manager to purchase up to seventy five thousand (75,000) common shares in the
capital of the Company, with options to acquire up to twenty five thousand
(25,000) common shares vesting on execution of the Stock Option Agreement which
grants the options and on each of the first and second anniversaries of such
Agreement, all subject to regulatory approval. The options will be issued in
accordance with the plan text.

3                     VACATION

3.1                   Entitlement to Vacation. The Company acknowledges that the
Manager shall be entitled to an annual vacation of four (4) weeks. The Manager
shall use his best efforts to ensure that such vacation is arranged with the
Company in advance such that his vacation does not unduly affect the operations
of the Company.

3.2                   Increase in Vacation. The period set out in Section 3.1
above may be increased from time to time as mutually agreed to by the Manager
and the Company's Board of Directors.

4                     REIMBURSEMENT OF EXPENSES

4.1                   Reimbursement of Expenses. The Manager shall be reimbursed
for all reasonable out-of-pocket expenses incurred by the Manager in or about
the execution of the Duties contained herein, including without limiting the
generality of the foregoing, all reasonable travel and promotional expenses
payable or incurred by the Manager in connection with the Duties under this
Agreement. All payments and reimbursements shall be made within two (2) weeks of
submission by the Manager of vouchers, bills or receipts for such expenses.


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5                     CONFIDENTIAL INFORMATION

5.1                   Confidential Information. The Manager shall not, either
during the term of this Agreement or under the provisions of Section 5.3,
without specific consent in writing, disclose or reveal in any manner whatsoever
to any other person, firm or corporation, nor will he use, directly or
indirectly, for any purpose other than the purposes of the Company, the private
affairs of the Company or any confidential information which he may acquire
during the term of this Agreement with relation to the business and affairs of
the directors and shareholders of the Company, unless the Manager is ordered to
do so by a court of competent jurisdiction or unless required by any statutory
authority.

5.2                   Non-Disclosure Provisions. The foregoing provision shall
be subject to the further non-disclosure provisions contained in Schedule "B"
attached hereto and incorporated hereinafter by this reference.

5.3                   Provisions Survive Termination. The provisions of this
section shall survive the termination of this Agreement for a period of three
years.

6                     TERM

6.1                   Term. This Agreement shall remain in effect until
terminated in accordance with any of the provisions contained in this Agreement.

7                     TERMINATION

7.1                   Termination by Manager. Notwithstanding any other
provision contained herein, the parties hereto agree that the Manager may
terminate this Agreement, with or without cause, by giving ninety (90) days'
written notice of such intention to terminate.

7.2                   Resignation or Cessation of Duties. In the event that the
Manager ceases to perform all of the Duties contained herein, other than by
reason of the Manager's death or disability, or if the Manager resigns
unilaterally and on his own initiative from all of his positions this Agreement
shall be deemed to be terminated by the Manager as of the date of such cessation
of Duties or such resignation, and the Company shall have no further obligations
under Section 2 hereof.

7.3                   Termination by Company. The Company may terminate this
agreement at any time for just cause without further obligation. In the event of
termination for any reason other than for just cause within ninety (90) days of
commencing employment, the Company, at its option, will either (a) continue to
pay the salary under Clause 2.1 and provide benefits under Clauses 2.2 until
twelve (12) weeks from the date of termination or (b) pay twelve (12) weeks'
salary under Clause 2.1 in lieu of notice. In the event of termination for any
reason other than for just cause upon completion of ninety (90) days of
employment, the Company, at its option, will either (a) continue to pay the
salary under Clause 2.1 and provide the benefits under Clauses 2.2 until one

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                                      -5-


year from the date of termination or (b) pay one year's salary under Clause 2.1
in lieu of notice. Any stock options that have been granted but that have not
yet vested shall immediately vest at the date of the final payment, and may be
exercised for a period of 30 days only after the final payment.

7.4                   Death. In the event of the death of the Manager during the
term of this Agreement, this Agreement shall be terminated as of the date of
such death, and the Manager's spouse, if living, or surviving children shall be
entitled to the termination allowance stated in Section 7.3 hereof.

7.5                   Disability. In the event that the Manager will during the
term of this Agreement by reason of illness or mental or physical disability or
incapacity be prevented from or incapable of performing the Duties hereunder,
then the Manager shall be entitled to receive the remuneration provided for
herein at the rate specified hereinbefore for the period during which such
illness, disability or incapacity will continue, but not exceeding six (6)
successive months. If such illness, disability or incapacity continues or will
continue for a period longer than six (6) successive months, then this Agreement
may, at the option of the Directors of the Company, forthwith be terminated, and
the Manager shall be entitled to the termination allowance stated in Section 7.3
hereof.

7.6                   Termination Payments. Any payments made by the Company to
the Manager upon the termination of this Agreement shall be made in cash, or, if
the Company does not have available funds, in equal monthly cash instalments
over one year, or in Remuneration Shares, or in a combination of cash and
Remuneration Shares, subject to regulatory approval. All payments required to be
made by the Company to the Manager pursuant to Section 7 hereof shall be made in
full.

8                     RIGHTS AND OBLIGATIONS UPON TERMINATION

8.1                   Rights and Obligations. Upon termination of this
Agreement, the Manager shall deliver up to the Company all documents, papers,
plans, materials and other property of or relating to the affairs of the
Company, other than the Manager's personal papers in regard to his role in the
Company, which may then be in the Manager's possession or under his control.

9                     CLOSING

9.1                   Closing Date. This Agreement shall be effective as of
January 3, 2001.

9.2                   Conditions of Closing. The parties hereto agree that it
shall be a condition of the execution of this Agreement that prior to or
contemporaneously with the execution of this Agreement:

        (a)    this Agreement shall be approved by the Board of Directors of the
               Company.

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                                      -6-


10                    NOTICES AND REQUESTS

10.1                  Notices and Requests. All notices and requests in
connection with this Agreement shall be deemed given as of the day they are
received either by messenger, delivery service, or mailed by registered or
certified mail with postage prepaid and return receipt requested and addressed
as follows:

        (a)    if to the Company:

               SmarTire Systems Inc.
               150 - 13151 Vanier Place
               Richmond, British Columbia
               V6V 2J1

               with a copy to:

               CLARK, WILSON
               Suite 800-885 West Georgia Street
               Vancouver, British Columbia
               V6C 3H1
               Attention:  Bernard Pinsky

               (b)    If to the Manager:

               Erwin Bartz
               21 Arrow-wood Place
               Port Moody, British Columbia
               V3H 4E9

or to such other address as the party to receive notice or request so designates
by written notice to the others.

11                    INDEPENDENT PARTIES

11.1                  Independent Parties. This Agreement is intended solely as
a management services agreement and no partnership, agency, joint venture,
distributorship or other form of agreement is intended.

12                    AGREEMENT VOLUNTARY AND EQUITABLE

12.1                  Agreement Voluntary. The parties acknowledge and declare
that in executing this Agreement they are each relying wholly on their own
judgement and knowledge and have not been influenced to any extent whatsoever by
any representations or statements made by or on behalf of any other party
regarding any matters dealt with herein or incidental thereto.

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                                      -7-


12.2                  Agreement Equitable. The parties further acknowledge and
declare that they each have carefully considered and understand the provisions
contained herein, including, but without limiting the generality of the
foregoing, the Manager's rights upon termination and the restrictions on the
Manager after termination and agree that the said provisions are mutually fair
and equitable, and that they executed this Agreement voluntarily and of their
own free will.

13                    CONTRACT NON-ASSIGNABLE; INUREMENT

13.1                  Contract Non-Assignable. This Agreement and all other
rights, benefits and privileges contained herein may not be assigned by the
Manager.

13.2                  Inurement. The rights, benefits and privileges contained
herein, including without limitation the benefits of Sections 2 and 7 hereof,
shall inure to the benefit of and be binding upon the respective parties hereto,
their heirs, executors, administrators and successors.

14                    ENTIRE AGREEMENT

14.1                  Entire Agreement. This Agreement represents the entire
Agreement between the parties and supersedes any and all prior agreements and
understandings, whether written or oral, among the parties. The Manager
acknowledges that he was not induced to enter into this Agreement by any
representation, warranty, promise or other statement, except as contained
herein.

14.2                  Previous Agreements Cancelled. Save and except for the
express provisions of this Agreement, any and all previous agreements, written
or oral, between the parties hereto or on their behalf relating to the services
of the Manager for the Company are hereby terminated and cancelled and each of
the parties hereby releases and further discharges the other of and from all
manner of actions, causes of action, claims and demands whatsoever under or in
respect of any such agreements.

15                    WAIVER

15.1                  Waiver. No consent or waiver, express or implied, by
either party to or of any breach or default by the other party in the
performance by the other of its or his obligations herein shall be deemed or
construed to be a consent or waiver to or of any breach or default of the same
or any other obligation of such party. Failure on the part of either party to
complain of any act or failure to act, or to declare the other party in default
irrespective of how long such failure continues, shall not constitute a waiver
by such party of its or his rights herein or of the right to then or
subsequently declare a default.

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16                    SEVERABILITY

16.1                  Severability. If any provision contained herein is
determined to be void or unenforceable in whole or in part, it is to that extent
deemed omitted. The remaining provisions shall not be affected in any way.

17                    AMENDMENT

17.1                  Amendment. This Agreement shall not be amended or
otherwise modified except by a written notice of even date herewith or
subsequent hereto signed by both parties.

18                    HEADINGS

18.1                  Headings. The headings of the sections and subsections
herein are for convenience only and shall not control or affect the meaning or
construction of any provisions of this Agreement.

19                    GOVERNING LAW

19.1                  Governing Law. This Agreement shall be construed under and
governed by the laws of the Province of British Columbia and the laws of Canada
applicable therein.

20                    EXECUTION

20.1                  Execution in Several Counterparts. This Agreement may be
executed by facsimile and in several counterparts, each of which shall be deemed
to be an original and all of which shall together constitute one and the same
instrument.


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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
15th day of December, 2000.

SMARTIRE SYSTEMS INC.

Per:  /s/ Kevin A. Carlson
      ---------------------
      Authorized Signatory


SIGNED by ERWIN BARTZ in the presence    )
of:                                      )
                                         )
Lisa Maglieri                            )
Name                                     )
409 E. 10th Street                       )
Address                                  )      /s/ ERWIN BARTZ
North Vancouver, BC                      )      ---------------
                                         )      ERWIN BARTZ
Human Resources Manager                  )
Occupation                               )
                                         )


This is page 9 of Agreement dated above for reference the 3rd day of January,
2001.

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                                  SCHEDULE "A"

                                MANAGER'S DUTIES


1.      To create value for the Company's shareholders by leading the
development of new tire monitoring products and technologies for the Company.

2.      The Manager shall be appointed as the Director, Technical Operations of
the Company, and the Manager shall faithfully, honestly and diligently serve the
Company and each of the Company's subsidiaries.

3.      The Manager shall be responsible for the management and direction of the
Company toward its primary technological objectives based on long term product
and profitability goals. The Manager shall be responsible for the management and
direction of the Engineering Department resources and activities including
manufacturing, cost containment, product review, design, and research and
development functions. The Manager shall be responsible for the development and
market qualification of new products and development of new technologies for
tire monitoring applications, as the senior management of the Company deems
appropriate. The Manager shall be responsible for developing the company's
intellectual property in the fields of tire monitoring through proper
documentation of new and developed technology including patent descriptions and
filings. The Manager shall report to the Chief Financial Officer and Managing
Director of the Company.

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                                  SCHEDULE "B"

                            NON-DISCLOSURE PROVISIONS

1.      CONFIDENTIAL INFORMATION AND MATERIALS

        (a)    "Confidential Information" shall mean, for the purposes of this
               Agreement, non-public information which the Company designates as
               being confidential or which, under the circumstances surrounding
               disclosure ought reasonably to be treated as confidential.
               Confidential Information includes, without limitation,
               information, whether written, oral or communicated by any other
               means, relating to released or unreleased Company software or
               hardware products, the marketing or promotion of any product of
               the Company, the Company's business policies or practices, and
               information received from others which the Company is obliged to
               treat as confidential. Confidential Information disclosed to the
               Manager by any subsidiary and/or agents of the Company is covered
               by this Agreement.

        (b)    Confidential Information shall not include that information
               defined as Confidential Information hereinabove which the Manager
               can exclusively establish:

               (i)    is or subsequently becomes publicly available without
                      breach of any obligation of confidentiality owed to the
                      Company;

               (ii)   became known to the Manager prior to disclosure by the
                      Company to the Manager;

               (iii)  became known to the Manager from a source other than the
                      Company other than by the breach of any obligations of
                      confidentiality owed to the Company; or

               (iv)   is independently developed by the Manager.

        (c)    Confidential Materials shall include all tangible materials
               containing Confidential Information, including, without
               limitation, written or printed documents and computer disks or
               tapes, whether machine or user readable.

2.      RESTRICTIONS

        (a)    The Manager shall not disclose any Confidential Information to
               third parties for a period of three (3) years following the
               termination of this Agreement, except as provided herein.
               However, the Manager may disclose Confidential Information during
               bona fide execution of the Duties or in accordance with judicial
               or other governmental order, provided that the Manager shall give
               reasonable notice to the

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                                      -2-


               Company prior to such disclosure and shall comply with any
               applicable protective order or equivalent.

        (b)    The Manager shall take reasonable security precautions, at least
               as great as the precautions he takes to protect his own
               confidential information, to keep confidential the Confidential
               Information, as defined hereinabove.

        (c)    Confidential Information and Materials may be disclosed,
               reproduced, summarized or distributed only in pursuance of the
               business relationship of the Manager with the Company, and only
               as provided hereunder.

3.      RIGHTS AND REMEDIES

        (a)    The Manager shall notify the Company immediately upon discovery
               of any unauthorized use or disclosure of Confidential Information
               or Materials, or any other breach of this Agreement by the
               Manager, and shall co-operate with the Company in every
               reasonable manner to aid the Company to regain possession of said
               Confidential Information or Materials and prevent all such
               further unauthorized use.

        (b)    The Manager shall return all originals, copies, reproductions and
               summaries of or relating to the Confidential Information at the
               request of the Company or, at the option of the Company, certify
               destruction of the same.

        (c)    The parties hereto recognize that a breach by the Manager of any
               of the provisions contained herein would result in damages to the
               Company and that the Company could not be compensated adequately
               for such damages by monetary award. Accordingly, the Manager
               agrees that in the event of any such breach, in addition to all
               other remedies available to the Company at law or in equity, the
               Company shall be entitled as a matter of right to apply to a
               court of competent jurisdiction for such relief by way of
               restraining order, injunction, decree or otherwise, as may be
               appropriate to ensure compliance with the provisions of this
               Agreement.

4.      MISCELLANEOUS

        (a)    All Confidential Information and Materials are and shall remain
               the property of the Company. By disclosing information to the
               Manager, the Company does not grant any express or implied right
               to the Manager to or under any and all patents, copyrights,
               trademarks, or trade secret information belonging to the Company.

        (b)    All obligations created herein shall survive change or
               termination of any and all business relationships between the
               parties for a period of three years after such termination.

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        (c)    The Company may from time to time request suggestions, feedback
               or other information from the Manager on Confidential Information
               or on released or unreleased software belonging to the Company.
               Any suggestions, feedback or other disclosures made by the
               Manager are and shall be entirely voluntary on the part of the
               Manager and shall not create any obligations on the part of the
               Company or a confidential agreement between the Manager and the
               Company. Instead, the Company shall be free to disclose and use
               any suggestions, feedback or other information from the Manager
               as the Company sees fit, entirely without obligation of any kind
               whatsoever to the Manager.