exhibit10107.htm


    
      

      

    

    Exhibit 10.107

    
       

      SMARTIRE
        SYSTEMS INC.

       

      AND

       

      GE
        SENSING INC.

       

      AGREEMENT
        FOR SUPPLY OF RTPM PRESSURE SENSORS

       

      (Redacted
        portions of this agreement are indicated by
        "+")

       

      This
        Supply Agreement (“Agreement”) is entered into on July 23, 2007 (the
“Effective Date”) by and between SmarTire Systems Inc.
        (“SmarTire”), a British Columbia corporation, with its principal place of
        business at 150-13151 Vanier Place, Richmond, BC, Canada V6V 2J1 and GE Sensing
        Inc. (“GE”), a United States corporation having its principal office at
        1100 Technology Park Drive, Billerica, MA, United States of America
        01821(together, the “Parties”).

       

      WHEREAS

       

      
        	
                ·  

              	
                GE
                  is in the business of design and manufacture of electronic sensing
                  components that are utilized in various industries, including automotive;
                  and,

              


      

       

      
        	
                ·  

              	
                SmarTire
                  is in the business of providing to its automotive and transportation
                  industry customers technically-advanced sensing and control systems
                  that
                  are assembled from custom-manufactured electronic printed circuit
                  boards
                  and/or system level assemblies;
                  and,

              


      

       

      
        	
                ·  

              	
                The
                  parties desire to establish the terms and conditions that will
                  apply to
                  SmarTire’s purchase of RTPM Pressure Sensors designed and manufactured by
                  GE for inclusion in SmarTire
                  products.

              


      

       

      In
        consideration of the foregoing and the agreements contained herein, SmarTire
        and
        GE hereby agree as follows:

       

      1.  DEFINITIONS

       

      1.1  “Acknowledgement”
        is GE’s written confirmation that it has accepted the terms of the Purchase
        Order from SmarTire

       

      1.2  “Confidential
        Information” shall have the meaning ascribed thereto in Section 22.1
        hereof

       

      1.3  “Delivery
        Date” shall mean a date for which delivery of a Product is requested in a
        SmarTire Purchase Order or is otherwise mutually established by the
        Parties.

       

      1.4  “Excess
        Inventory” shall mean those items of Inventory ordered by SmarTire which are
        in GE’s possession and which quantities exceed SmarTire Purchase Order
        requirements on a referenced date and/or termination.

       

      1.5  “Forecast”
        shall have the meaning ascribed thereto in Section 5 hereof.

       

      1.6  “Intellectual
        Property Rights” shall mean all rights held by each party in its Products
        and/or Confidential Information, including, but not limited to each Party’s
        patent rights, copyrights, trademark rights, trade secret rights, mask work
        rights and other intellectual property and proprietary rights anywhere in
        the
        world.

       

      1.7  “Purchase
        Order” shall mean the SmarTire written authorization to deliver Components
        as designated on the Purchase Order such Purchase Order to be accepted by
        GE by
        its delivery of an Acknowledgment to SmarTire in accordance with the terms
        set
        forth in Section 6 hereof.  The Purchase Order shall stipulate the
        Component(s), Specifications, Engineering Change and/or Revision level,
        quantity, pricing, and requested Delivery Date(s) and location(s).

       

      1.8  “Specifications”
        shall mean the written specifications for the supply of the Component including,
        without limitation, the current revision number.

       

      1.9  “Term”
        shall have the meaning ascribed thereto in Section 15 hereof.

       

      2.  Responsibilities
        of GE

       

      During
        the Term, GE shall:

       

      2.1  Fabrication
        of Components in accordance with the Specifications and Purchase Orders provided
        by SmarTire and accepted by GE pursuant to an Acknowledgment, and;

       

      2.2  Use
        its
        commercially reasonable efforts to ensure 100% on-time delivery in accordance
        with the specified and agreed to dates contained in the Purchase Order,
        and;

       

      2.3  Maintain
        compliance with TS16949 certification and processes during the
        Term.

       

      2.4  Utilize
        its own equipment to provide the services described herein, and;

       

      2.5  Ship
        the
        complete Components to the destinations specified in the Purchase
        Order.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      3.  Responsibilities
        of SmarTire

       

      During
        the Term, SmarTire shall:

       

      3.1  

       

      3.2  Provide
        GE with a 12 month, rolling Forecast to enable GE to plan the effective purchase
        of materials to meet such Forecasts, and;

       

      3.3  Provide
        GE with Purchase Orders for the supply of the Components, and;

       

      3.4  Provide
        payment to GE for the supply of Components provided under this
        Agreement.

       

      4.  Forecasting

       

      During
        the Term, SmarTire shall deliver to GE in writing, on a rolling monthly basis,
        a
        twelve (12) month, Forecast, specifying the anticipated number of Components
        to
        be manufactured in each month (a “Forecast”).  SmarTire shall issue
        each succeeding month’s Forecast by the 10th calendar day of each month, or the
        next business day if the 10th day is a holiday or weekend.  This
        Forecast shall serve as the authority of GE to plan the purchases of Inventory
        required to meet the deliveries specified on the Purchase Orders subject
        to the
        following:

       

      4.1  GE
        shall
        work with suppliers of the Inventory components to minimize the cost of these
        components based on yearly Forecast volumes, and;

       

      4.2  GE
        shall
        use commercially reasonable efforts to negotiate favorable terms and delivery
        schedules with its suppliers and to minimize the impact of Excess
        Inventory.

       

      5.  Purchase
        Orders

       

      During
        the Term, SmarTire shall provide GE with Purchase Orders in accordance with
        the
        following:

       

      5.1  Purchase
        Orders shall be provided to cover SmarTire’s requirements for the Products for
        the next four (4) months on a rolling monthly basis, and;

       

      5.2  The
        Purchase Orders shall contain the issuer’s required date for receipt of the
        Product at the destination stated in the Purchase Order.  GE shall
        provide an Acknowledgement to SmarTire confirming the acceptance of the Purchase
        order and its terms including price and delivery.  If GE, despite its
        commercially reasonable efforts, does not believe that it can meet the scheduled
        delivery it shall negotiate the best delivery times possible, and SmarTire
        shall
        issue a revised Purchase Order to GE for Acceptance. The Purchase Order shall
        be
        deemed accepted by GE unless it is rejected in writing within five (5) business
        days of submission by SmarTire.

       

      5.3  The
        terms
        and conditions of this Agreement will prevail over any terms contained in
        any
        SmarTire Purchase Order, Acknowledgment, invoice or any other document that
        is
        not clearly an amendment to this Agreement signed by all three
        Parties.

       

      5.4  SmarTire
        may not cancel any Purchase Orders or re-schedule the quantity of Products
        and/or Delivery Date within + (+) calendar days of the scheduled Delivery
        Date.  SmarTire may delay all or any portions of the scheduled
        Component delivery upon written notification to GE on the following
        schedule:

       

      (a)  From
        +
        (+) to + (+) calendar days prior to the scheduled Delivery Date, SmarTire
        may
        reschedule out not more than fifty percent (50%) of the quantity of Components
        to be shipped up to + (+) calendar days of the scheduled Delivery
        Date.  The balance of the rescheduled Components must be shipped
        within + (+) days of the rescheduled Delivery Date.

       

      (b)  From
        +
        (+) to + (+) calendar days prior to the scheduled Delivery Date, SmarTire
        may
        reschedule out up to one hundred percent (100%) of the quantity of Components
        to
        be shipped up to + (+) calendar days of the scheduled Delivery
        Date.

       

      (c)  In
        the
        event that SmarTire desires to increase quantities of Components scheduled
        for
        delivery beyond thirty (30) calendar days of the scheduled Delivery Date;
        GE
        will use its commercially reasonable efforts to accommodate the desired
        increases.  Each of the foregoing may be subject to a Premium Charge
        to be determined on a case-by-case basis, and subject to SmarTire’s prior
        written approval.

       

      5.5  Cancellation

       

      (a)  SmarTire
        may cancel any order, more than + (+) calendar days from the scheduled
        Delivery Date upon written notification to GE. Upon written notice from
        SmarTire, GE shall use its commercially reasonable efforts to cancel GE’s order
        for such Inventory. Any inventory which cannot be cancelled or is on hand
        to
        fulfill the cancelled orders will be the responsibility of the Party canceling
        the order.

       

      (b)  SmarTire
        may cancel delivery of Components with written notice at least + (+) calendar
        days prior to the scheduled Delivery Date without cost or penalty.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      6.  Delivery

       

      6.1  GE
        shall
        use its commercially reasonable efforts to meet the shipping dates provided
        in
        the accepted Purchase Orders.  Delivery of Components that do not meet
        the acknowledged Delivery Dates or Specifications due to GE’s efforts will
        require a written corrective action to SmarTire outlining a plan for correction
        and the elimination of recurrence.  On-time shipment is defined as 7
        days early to 0 days late.

       

      6.2  If
        delays
        in component delivery are caused by SmarTire, then the Purchase Order shall
        be
        amended with a revised agreed to Delivery Date and there will be no penalty
        exercised against GE under the SmarTire supplier rating system.

       

      6.3  Delivery
        of Components shall be to the destination provided on the Purchase
        Order.  The FOB point shall be GE or GE contracted plant of
        manufacture.  In the event that the destination is to a different end
        location, SmarTire and GE shall agree on appropriate shipping insurance,
        custom
        charges, duties, taxes or other expenses relating to transportation and
        delivery, all of which shall be for the account of SmarTire.

       

      6.4  Title
        to
        all Components shall pass to SmarTire, upon Delivery to the destination
        specified in the Purchase Order.

       

      7.  Acceptance

       

      All
        Components supplied by GE under this Agreement shall conform to the
        Specifications.  Notwithstanding any prior inspection or payment by
        SmarTire, SmarTire may reject any portion of any shipment of Components that
        do
        not conform to the mutually agreed upon Specifications as determined by SmarTire
        or its manufacturing partner, acting reasonably, or as otherwise found to
        be
        defective.  Any Components so returned to GE shall, at GE’s option and
        expense, be credited, or replaced within ten (10) business days of receipt
        by GE
        of the rejected Component; provided that (i) SmarTire obtain a Return Material
        Authorization (“RMA”) from GE prior to returning the Components, GE shall
        provide SmarTire with a RMA promptly upon request, (ii) the Components are
        returned within ninety (90) calendar days of the date the Component was
        delivered to SmarTire or its manufacturing partner by GE, and (iii) the failure
        analysis conducted by SmarTire shall accompany the returned Component(s),
        and
        (iv) GE analysis confirms that Components do not conform to the Specifications,
        GE shall perform such analysis in a reasonable manner consistent with industry
        practice.

       

      8.  Inspection
        by SmarTire

       

      Upon
        request by SmarTire, from time to time, and with at least five (5) business
        days’ notice and during normal business hours, GE will grant access to its
        manufacturing facilities and records to SmarTire inspectors as provided
        herein.  GE shall allow such inspectors to inspect the manufacturing
        and quality control, testing operations, compliance procedures and records
        relating to the Components, as well as Inventory levels to ensure that GE
        can
        meet SmarTire’s future orders for Components, and is otherwise satisfying its
        obligations under this Agreement.  GE shall promptly implement
        corrective action to remedy deficiencies identified by SmarTire during such
        inspections or in order to comply with the Specifications and this
        Agreement.

       

      9.  Price

       

      Price
        for
        the Components shall be as set forth in Schedule A of this Agreement, which
        may
        change by mutual agreement in writing of the Parties hereto, provided that
        SmarTire are provided with sixty 60 days’ minimum notice.

       

      10.  Cost
        Reduction

       

      GE
        will
        use commercially reasonable efforts to implement a cost reduction strategy
        to
        reduce component price by + year on year.

       

      Meetings
        will be held at least twice per year to discuss recommendations to reduce
        costs
        and improvements to supply agreements.

       

      11.  Payment

       

      The
        terms
        of payment are NET 30 from the date of the invoice sent to SmarTire at their
        principal place of business.

       

      12.  GE
        Warranty.

       

      Please
        refer to the Warranty Agreement set forth in Schedule B of this
        agreement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      13.  Return
        of Products Under Warranty

       

      Please
        refer to the Warranty Agreement set forth in Schedule B of this
        agreement.

       

      14.  Term

       

      Unless
        terminated pursuant to Section 16 or this Section 15, this Agreement shall
        commence upon the Effective Date and shall continue for a period of thirty-six
        (36) months (the “Term”).  The Term may be terminated by a
        Party upon providing the other Party with one hundred and twenty (120) calendar
        days’ written notice of termination, with or without cause.

       

      15.  Termination

       

      This
        Agreement may be immediately terminated by any Party for cause, by written
        notice, upon the occurrence of any of the following events:

       

      15.1  If
        the
        other party ceases to do business, or otherwise terminates its business
        operations; or

       

      15.2  If
        the
        other party substantially breaches any material provision of this Agreement
        and
        fails to make reasonable efforts to cure such breach within sixty (60) calendar
        days of written notice describing the breach.  The repetitive failure
        of GE to meet on-time Deliveries with no demonstrated reasonable efforts
        in
        corrective action to eliminate future occurrences will be considered a material
        breech of this Agreement and provide grounds for termination by SmarTire;
        or

       

      15.3  If
        the
        other party becomes insolvent or seeks protection under any bankruptcy,
        receivership, trust deed, creditors arrangement, composition or comparable
        proceeding, or if any such proceeding is instituted against the other
        parties.

       

      16.  Effect
        of Termination

       

      Upon
        termination of this Agreement, the obligations of any of the Parties that
        exist
        pursuant to Sections 5.4, 5.5, 9, 11 to 13 inclusive, 17 to 21 inclusive,
        23,
        and 29 will survive in accordance with their terms.  Notwithstanding
        the foregoing, GE shall continue to fulfill, subject to the terms of this
        Agreement, all Purchase Orders accepted by it prior to the effective date
        of
        termination.  Remedies for all breaches hereunder shall also survive
        termination of this Agreement.

       

      17.  Liability
        Limitation

       

      17.1  As
        the
        sole remedy and liability for any breach of the representations and warranties
        by SmarTire in Section 12, SmarTire agrees to indemnify GE and hold GE harmless
        from and against any and all claims, losses, liabilities, damages, expenses
        and
        costs (including reasonable attorney’s fees and court costs) awarded against GE,
        that result from a breach of any of these representations and warranties
        or
        incurred in the settlement or avoidance of any such claim.  This
        indemnity shall not apply if (i) GE fails to give SmarTire reasonable notice
        of
        any such claim or threatened claim and such failure materially prejudices
        SmarTire, or (ii) SmarTire is not given the opportunity to participate in
        the
        defense or settlement or (iii) GE does not provide reasonable assistance
        to
        SmarTire for the defense and settlement of the claim.  Furthermore, if
        SmarTire assumes such control, the legal fees and litigation expenses of
        the
        attorneys it designates to assume control of the litigation shall be for
        the
        sole account of SmarTire.

       

      17.2  The
        total
        liability of each party, on all claims of any kind, whether in contract,
        warranty, tort (including negligence), strict liability, or otherwise, arising
        out of the performance or breach of the Contract or use of any Products or
        Services shall not exceed the price of the specific product or service which
        gives rise to the claim.  All liability under the Contract shall
        terminate upon the expiration of the applicable warranty period, provided
        that
        the party attempting to enforce the claim may enforce a claim of such liability
        accruing during the applicable warranty period by an action timely commenced
        in
        accordance with the applicable statute of limitations and/or statute of repose,
        but in no event greater than one (1) year after the expiration of such warranty
        period.

       

      17.3  In
        no
        event, whether as a result of breach of contract, warranty, tort (including
        negligence), strict liability, indemnity, or otherwise, shall any party be
        liable for loss of profit or revenues, loss of use of Products or Services
        or
        any associated equipment, interruption of business, cost of capital, cost
        of
        substitute equipment, facilities, services or replacement power, downtime
        costs,
        or for any special, consequential, incidental, indirect or exemplary
        damages.

       

      17.4  If
        SmarTire cannot obtain for GE from any subsequent purchaser(s) the protections
        specified in this Section 17, SmarTire shall indemnify, defend and hold GE
        harmless from and against any and all claims made by any subsequent purchasers
        of Products or Services against GE for loss or damage arising out of the
        performance or non-performance of Products or Services provided under the
        Contract.

       

      17.5  If
        GE
        furnishes SmarTire with advice or assistance that is not required under the
        Contract, the furnishing of such advice or assistance will not subject GE
        to any
        liability, whether in contract, indemnity, warranty, tort (including
        negligence), strict liability or otherwise.

       

      17.6  The
        provisions of this Section 17 shall prevail over any conflicting or inconsistent
        provisions contained in any of the documents comprising the Contract, except
        to
        the extent that such provisions further restrict GE’s liability.

       

      18.  Relationship
        of Parties

       

      GE
        and
        SmarTire shall be deemed to be independent contractors, and this Agreement
        does
        not create a general agency, joint venture, partnership, employment
        relationship, or franchise between GE and SmarTire.  Each Party
        assumes full responsibility for the actions and negligence of its employees,
        agents or other personnel assigned to perform work pursuant to this Agreement
        regardless of their place of work, and shall be solely responsible for payment
        of salary, including withholding of federal and state income taxes, social
        security, workers’ compensation and the like.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      19.  Dispute
        Resolution

       

      19.1  Binding
        Arbitration

       

      Except
        as
        to any claims arising under Section 20 (Confidentiality) as to which equitable
        relief would be the appropriate remedy, any controversy or claim between
        the
        Parties hereto arising out of this Agreement shall be settled by binding
        arbitration in accordance with the rules of the British Columbia International
        Commercial Arbitration (BCICAC) in effect as of the Effective Date, or
        alternatively, any other mutually acceptable method of alternative dispute
        resolution.  The arbitration shall be conducted in Vancouver, British
        Columbia, before an arbitrator from the BCICAC or such other arbitration
        service
        as the Parties may, by mutual agreement, select.  In the event of a
        disagreement as to the selection of an arbitrator, the BCICAC or such other
        arbitration service as the Parties have, by mutual agreement, selected shall
        select the arbitrator.  The arbitration award will be final and
        binding and may be enforced in any court of competent
        jurisdiction.  Each Party shall pay one-half (1/2) of the cost of
        arbitration.

       

      19.2  Attorney’s
        Fees.

       

      The
        substantially prevailing Party in any legal action or proceeding to enforce
        this
        Agreement shall be entitled to reasonable attorneys’ fees, costs and expenses
        except that, as provided in 18, each Party shall pay one-half (1/2) the cost
        of
        arbitration incurred in connection with such proceeding or the enforcement
        of
        the Agreement, in addition to any other relief to which such prevailing Party
        may be entitled.

       

      20.  Confidentiality

       

      20.1  GE
        and
        SmarTire (The Parties) Confidential Information.

       

      Information
        of each of The Parties including, but not limited to, trade secrets, know-how,
        inventions (whether patentable or not), ideas, improvements, materials, data,
        specifications, drawings, processes, results, and formulae and all other
        business, technical and financial information (“Confidential Information”) shall
        be the confidential information of such Parties.  Each of the Parties
        shall, at all times, both during the Term and for a period of two (2) years
        after any termination of this Agreement, keep in confidence as a fiduciary
        all
        of the other Parties Confidential Information received by it. Each of the
        Parties shall not use the Confidential Information other than as expressly
        permitted under the terms of this Agreement or by a separate written
        agreement.  Each of the Parties shall take reasonable steps to prevent
        unauthorized disclosure or use of Confidential Information and to prevent
        it
        from falling into the public domain or into the possession of unauthorized
        persons.  Each of the Parties shall not disclose Confidential
        Information to any person or entity other than its officers, employees,
        consultants and subsidiaries who need access to such Confidential Information
        in
        order to perform its obligations under this Agreement and who have entered
        into
        written confidentiality agreements which protect the Confidential
        Information.

       

      20.2  Exception
        to Confidential Information

       

      Information
        that is in or (through no improper action or inaction of each of the Parties
        or
        any affiliate, agent or employee) enters the public domain shall not be
        Confidential Information hereunder.  Without granting any right or
        license, The Parties agree that the obligations set forth in Section 21.1
        above,
        shall not apply to the extent that Confidential Information includes information
        which (i) was rightfully in its possession or known by it prior to receipt
        from
        the disclosing Party, or (ii) was rightfully disclosed to it by another person
        without restriction, or (iii) developed independently by either Party without
        use of the other Party’s Confidential Information, or (iv) is disclosed pursuant
        to the requirement of a court, or other governmental body, provided the
        receiving Party provides notice of such court order to the disclosing Party
        to
        enable the disclosing Party to seek a protective order or otherwise prevent
        or
        restrict such disclosure.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      21.  Equitable
        Relief

       

      All
        Parties acknowledge and agree that due to the unique nature of the Confidential
        Information, there can be no adequate remedy at law for any breach of the
        obligations under Section 20 and that such breach may allow a Party to unfairly
        compete with one or both of the other Parties resulting in irreparable
        harm.  Therefore, upon any such breach or threat of breach, the harmed
        Party shall be entitled to appropriate equitable relief in addition to whatever
        remedies it has at law.  Notification of any breach shall be in
        writing immediately upon learning of any unauthorized release or breach of
        its
        obligation of nondisclosure hereunder.

       

      22.  Force
        Majeure

       

      None
        of
        the Parties shall be liable for its failure to perform any obligations under
        this Agreement if such performance is prevented or delayed due to fires,
        floods,
        earthquakes, wars, military or police actions, Acts of God, governmental
        laws or
        regulations or any other similar circumstance beyond the control of the
        Parties.

       

      23.  Governing
        Law

       

      This
        Agreement shall in all respects be governed by and constructed in accordance
        with the laws of the Province of British Columbia, Canada.  The
        remedies set forth in this Agreement are cumulative and not exclusive and
        are in
        addition to any other rights and remedies in law or equity which might be
        available to the Parties.

       

      24.  Assignability

       

      GE
        shall
        not assign its rights or delegate its obligations under this Agreement, in
        whole
        or in part, including by operation of law, without SmarTire’s prior written
        consent.

       

      25.  Amendment
        and Waiver

       

      Except
        as
        otherwise expressly provided herein, any provision of this Agreement may
        be
        amended and the observance of any provision of this Agreement may be waived
        (either generally or in any particular instance and either retroactively
        or
        prospectively) only with the written consent of an officer of all
        Parties.  However, it is the intention of the Parties that this
        Agreement be controlling over additional or different terms of any Purchase
        Order, confirmation, invoice or similar document, even if accepted in writing
        by
        both Parties.

       

      26.  Notice

       

      Notices
        under this Agreement shall be sufficient only if personally delivered by
        a major
        rapid delivery courier service or mailed by certified or registered mail,
        return
        receipt requested to a Party at its address first set forth herein or as
        amended
        by notice pursuant to this subsection.  If not received sooner, notice
        by mail shall be deemed received ten (10) days after deposit in the Canadian
        or
        Royal mail.

       

      27.  No
        Waiver

       

      No
        waiver
        of any term or condition of this Agreement will be valid or binding on any
        of
        the Parties unless the same will have been mutually assented to in writing
        by an
        officer of all Parties.  The failure of any of the Parties to enforce
        at any time any of the provisions of the Agreement, or the failure to require
        at
        any time performance by the other Parties of any of the provisions of this
        Agreement, will in no way be construed to be a present or future waiver of
        such
        provisions, nor in any way affect the ability of any of the Parties to enforce
        each and every such provision thereafter.

       

      28.  Severability

       

      If
        any
        provision of this Agreement is held to be illegal or unenforceable, that
        provision shall be limited or eliminated to the minimum necessary so that
        this
        Agreement shall otherwise remain in full force and effect and
        enforceable.

       

      29.  Entire
        Agreement

       

      THIS
        AGREEMENT, INCLUDING THE EXHIBITS, SETS FORTH THE ENTIRE AGREEMENT AND
        UNDERSTANDING OF THE PARTIES RELATING TO THE SUBJECT MATTER HEREIN AND
        SUPERSEDES ALL PRIOR DISCUSSIONS BETWEEN THEM.

       

      IN
        WITNESS WHEREOF, the parties hereto have executed this Agreement as of
        the day and year first above written.

       

      
        	
                SMARTIRE
                  SYSTEMS INC.

                 

                 

                 

                By:
                  /s/David
                  Warkentin                                                         

                David
                  Warkentin                                                      

                President
                  and
                  CEO                                                      

                July
                  31,
                  2007                                                      

                 

              	
                GE
                  SENSING INC.

                 

                 

                 

                By: /s/David
                  Jon Hardy    

                David
                  Jon Hardy

                OM
                  Sales-Americas

                August
                  3, 2007

                 

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        A

       

      Component
        Price List

       

      
        	
                Part
                  Number

              	
                Part
                  Description

              	
                Rel/Rev

              	
                Qty*

              	
                Price**,***

              
	
                NPX-CO1782
                  (214.0010)

              	
                700
                  KPA

              	
                1-0

              	
                10K
                  – 25K

              	
                [+]

              
	
                NPX-CO1782
                  (214.0010)

              	
                700
                  KPA

              	
                1-0

              	
                25K
                  – 50K

              	
                [+]

              
	
                NPX-CO1782
                  (214.0010)

              	
                700
                  KPA

              	
                1-0

              	
                50K
                  – 100K

              	
                [+]

              
	
                NPX-CO1782
                  (214.0010)

              	
                700
                  KPA

              	
                1-0

              	
                100K
                  – 250K

              	
                [+]

              
	
                NPX-CO1782
                  (214.0010)

              	
                700
                  KPA

              	
                1-0

              	
                250K
                  – 500K

              	
                [+]

              
	
                NPX-CO1783
                  (214.0011)

              	
                1400
                  KPA

              	
                1-0

              	
                10K
                  – 25K

              	
                [+]

              
	
                NPX-CO1783
                  (214.0011)

              	
                1400
                  KPA

              	
                1-0

              	
                25K
                  – 50K

              	
                [+]

              
	
                NPX-CO1783
                  (214.0011)

              	
                1400
                  KPA

              	
                1-0

              	
                50K
                  – 100K

              	
                [+]

              
	
                NPX-CO1783
                  (214.0011)

              	
                1400
                  KPA

              	
                1-0

              	
                100K
                  – 250K

              	
                [+]

              
	
                NPX-CO1783
                  (214.0011)

              	
                1400
                  KPA

              	
                1-0

              	
                250K
                  – 500K

              	
                [+]

              
	
                NPX-CO1799
                  (214.0009)

              	
                700
                  KPA

              	
                1-0

              	
                10K
                  – 25K

              	
                [+]

              
	
                NPX-CO1799
                  (214.0009)

              	
                700
                  KPA

              	
                1-0

              	
                25K
                  – 50K

              	
                [+]

              
	
                NPX-CO1799
                  (214.0009)

              	
                700
                  KPA

              	
                1-0

              	
                50K
                  – 100K

              	
                [+]

              
	
                NPX-CO1799
                  (214.0009)

              	
                700
                  KPA

              	
                1-0

              	
                100K
                  – 250K

              	
                [+]

              
	
                NPX-CO1799
                  (214.0009)

              	
                700
                  KPA

              	
                1-0

              	
                250K
                  – 500K

              	
                 [+]

              


      

      *Quantities
        stated are annual cumulative quantities (from SmarTire) for

       

        each
        Component commencing on January, 1, 2007, and each anniversary date
        thereafter.

       

      **
        Minimum Order Quantities (MOQ) are 3400, for each Component Type listed above
        with a reel size of 850 and a maximum of 2 lots per reel.

       

      ***
        Prices are in United States Dollars (USD)

       

      


       

      Blank
        spaces contained confidential information that has been filed separately
        with
        the Securities and Exchange Commission pursuant to Rule 406 under the Securities
        Act of 1933, as amended, and 17 C.F.R. 200.80 (b) (4), and in accordance
        with
        the Staff Legal Bulletin No. 1 (with Addendum) dated February 28, 1977 (Addendum
        dated July 11, 2001) of the Commission’s Division of Corporate
        Finance.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        B

       

      Warranty
        Statement

       

      Subject
        to the conditions stated herein, GE warrants to SmarTire against defects
        in
        materials and workmanship for the GE manufactured Components listed in Schedule
        A.

       

      Subject
        to the conditions stated herein, GE warrants to SmarTire that the Components
        manufactured by GE will be free from defects in materials and workmanship,
        for
        the applicable warranty period as described in the Warranty Period section
        of
        this statement.

       

      Warranty
        Period

       

      The
        term
        of GE’s warranty to SmarTire shall be for + (+) years or + miles of vehicle use,
        whichever comes sooner.

       

      Warranty
        coverage for Component furnished shall commence on the date of shipment of
        Component from GE.

       

      Remedy

       

      The
        only
        remedy for a claim on warranty is the credit or replacement, at GE’s discretion,
        of the defective Component in accordance with the terms of this Schedule
        “B”.

       

      GE’s
        obligation to satisfy a warranty claim is subject to the following
        conditions:

       

      
        	
                (a)  

              	
                All
                  such claims must be submitted to GE no later than ninety (90) days
                  from
                  the date of the failure occurrence and shall be supported by satisfactory
                  evidence in respect of the conditions stated
                  herein;

              


      

       

      
        	
                (b)  

              	
                If
                  requested by GE, the Component involved shall be returned, freight
                  collect, to GE for examination; and

              


      

       

      
        	
                (c)  

              	
                GE’s
                  examination of the Component must disclose to its sole satisfaction
                  that
                  the warranty claim is due to material and workmanship
                  defects.  In all cases, GE shall make the final determination,
                  in its sole discretion, as to the warrantability of the Component;
                  and

              


      

       

      
        	
                (d)  

              	
                In
                  the event a field campaign is required to repair or replace a defective
                  Component Part, a mutually acceptable agreement shall be established
                  between the Parties before the campaign takes place. The agreement
                  shall
                  identify which Party is responsible for Component Parts costs,
                  labor
                  costs, shipping cost, travel time, loaner machines, and all other
                  items
                  associated with the field campaign.

              


      

       

      Claims
        Procedure

       

      Warranty
        claims may be made to GE through the following process:

       

      Claims
        submitted must:

       

      (a)           be
        for verifiable defects in design, materials and workmanship;

       

      (b)           be
        submitted within ninety (90) days from the date on which the failure occurred;
        and

       

      (c)           provide
        the following information on or with the OEM claim:

       

      (i)           Model
        and part number of failed component;

       

      (ii)           Itemized
        SmarTire part numbers;

       

      (iii)           Description
        of failure;

       

      (iv)           Date
        of failure

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      In
        the
        event SmarTire rejects Component or makes a claim under this warranty, GE
        may
        request the return of the Component and will issue SmarTire a return material
        authorization (RMA) number.

       

      If
        requested by GE, the Component shall be returned for examination by GE, freight
        collect.

       

      Note:
        Warranty returns may be directed to an alternate GE location when the RMA
        # is
        issued.

       

      GE’s
        determination of warranty coverage shall be final in all cases.

       

      GE
        reserves the right to reject a warranty claim for any or all of the following
        reasons:

       

      
        	
                (a)  

              	
                Original
                  claim was filed after ninety (90) days from the date of
                  failure;

              


      

       

      
        	
                (b)  

              	
                Failure
                  occurred beyond applicable warranty
                  period;

              


      

       

      
        	
                (c)  

              	
                Claim
                  information is insufficient;

              


      

       

      
        	
                (d)  

              	
                Component
                  was not returned for inspection as requested;
                  or

              


      

       

      
        	
                (e)  

              	
                Component
                  inspection does not substantiate claim or indicate a
                  failure

              


      

       

      Warranty
        Disclaimer

       

      GE’S
        EXPRESS WARRANTY AND SMARTIRE’S REMEDIES UNDER THIS AGREEMENT ARE EXCLUSIVE AND
        GIVEN IN LIEU OF (a) ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY,
        WHETHER WRITTEN OR ORAL, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF
        MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE, OR IMPLIED WARRANTY ARISING
        FROM PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, AND (b) ALL OTHER
        OBLIGATIONS, LIABILITIES, RIGHTS, CLAIMS OR REMEDIES, INCLUDING ANY RIGHT
        IN
        CONTRACT, NEGLIGENCE, TORT, EXTRA-CONTRACTUALLY, STRICT LIABILITY OR ANY
        RIGHT
        ARISING FROM GE’S NEGLIGENCE, ACTUAL OR IMPUTED.

       

      Limitation
        of Liability

       

      GE’S
        OBLIGATIONS AND SMARTIRE’S REMEDIES UNDER GE’S EXPRESS WARRANTY ARE LIMITED TO
        GE’s CHOICE OF CREDIT OR REPLACEMENT AND EXCLUDE LIABILITY FOR INCIDENTAL,
        SPECIAL, CONSEQUENTIAL OR ANY OTHER DAMAGES, INCLUDING, WITHOUT LIMITATION,
        ECONOMIC LOSS, LOST REVENUE, LOST PROFITS, OR LOSS OF USE, COST OF CAPITAL
        OR
        DAMAGE OR LOSS OF OTHER PROPERTY.  IN NO CASE, SHALL GE’S LIABILITY
        EXCEED THE PRICE TO SMARTIRE OF THE SPECIFIC PRODUCTS SUPPLIED BY GE GIVING
        RISE
        TO THE CAUSE OF ACTION.  IN NO EVENT SHALL GE BE OBLIGATED TO
        INDEMNIFY SMARTIRE OR ANY ULTIMATE USER OF THE PRODUCTS IN ANY MANNER WHATSOEVER
        NOR SHALL GE BE LIABLE FOR PROPERTY DAMAGE AND/OR THIRD PARTY CLAIMS HOWSOEVER
        CAUSED.

       

      Effective
        Date

       

      This
        warranty shall become effective July 21, 2006, and applies to Components
        sold to
        SmarTire as referenced in Schedule A. This warranty supersedes all past
        warranties granted by GE and may not be changed, altered or modified in any
        way
        except in writing by GE.

       

      Component
        Return Requirements

       

      Be
        sure
        the components are properly identified.

       

      
        	
                (a)  

              	
                Clearly
                  print the RMA number on the bill of lading and shipping
                  container.

              


      

       

      
        	
                (b)  

              	
                When
                  shipping components for several different claims together, do not
                  mix the
                  components in the same container, box, etc. This could cause confusion
                  in
                  performing a failure analysis, a delay in claim processing, and
                  possible
                  rejection of the claim.

              


      

       

      
        	
                (c)  

              	
                Package
                  the components carefully to avoid shipping damage, which could
                  distort or
                  mask the true cause of the failure.

              


      

       

      
        	
                (d)  

              	
                Return
                  all components collect, per GE approved carrier and to the correct
                  designated location. Failure to return requested components to
                  designated
                  GE location may result in rejection of the
                  claim.

              


      

       

      
        	
                (e)  

              	
                Components
                  lost from broken boxes, damaged shipping containers, negligence
                  in
                  packaging, or returned without proper claim identification, may
                  result in
                  no reimbursement for the components not received and shall be the
                  responsibility of SmarTire.