Exhibit 10.1

                              MANAGEMENT AGREEMENT

THIS  AGREEMENT  effective  as of the 8th day of  August,  2005 (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:

            DAVID WARKENTIN,  of 20580 Powell Ave. Maple Ridge, B.C.
            V2X 3G1

            (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:

DEFINITIONS

In this Agreement, the following terms have the meaning as ascribed below:

"Acquisition"  means an  acquisition  of  substantially  all of  SmarTire  or of
substantially  all assets of  SmarTire by a party not an  Affiliate  of SmarTire
prior to completion of the acquisition;

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                                      -2-


"Affiliate" means a director,  officer,  wholly or partially owned subsidiary or
10% or greater  shareholder of SmarTire,  or a company controlled by such person
or any party acting in conjunction with such person;

"Hostile  Takeover" means a Takeover that the directors of SmarTire recommend to
shareholders to reject in a management circular;

"Merger" means a merger by SmarTire with a corporation that was not an Affiliate
prior to completion of the merger;

"Takeover"  means a  successful  tender  offer  (as that term is  determined  by
reference to the United States Securities  Exchange Act of 1934) or takeover bid
(as that term is defined in the Securities Act (British Columbia)) that has been
made by a party who was not an Affiliate  prior to the  completion of the tender
offer or takeover;

"Termination Date" has the meaning set out in section 7.3 of this Agreement.

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 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.

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                                      -3-


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, COMMISSION, BONUSES AND BENEFITS

2.1 Salary  and  Commission.  In  consideration  of the  Manager  providing  the
services  referred to herein,  the  Company  agrees to pay the  Manager:  (a) an
annual base salary (the "Annual Base Salary") of one hundred and thirty thousand
Canadian dollars  (CDN$130,000) less applicable  deductions,  payable bi-weekly,
subject to increase as from time to time  approved by the Board of  Directors of
the Company; and (b) sales commissions calculated and payable in accordance with
Schedule "B" attached hereto.

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  Payment  in Cash or Shares.  All  payments  payable  by the  Company to the
Manager,  including the Annual Base Salary,  commissions  and  reimbursement  of
expenses under Section 4.1 hereof, may be payable in cash or, at the election of
the Manager, with approval by the Company's Compensation Committee,  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 5 day average closing price (for the 5 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.
The Manager hereby agrees that upon his election to receive Remuneration Shares,
he has waived his right under the Employment  Standards Act (British  Columbia),
R.S.B.C. 1996, c. 113, as amended, to receive such compensation in cash.

2.4 Registration of Remuneration  Shares. To ensure that any Remuneration Shares
issued to the Manager under paragraph 2.3 of this Agreement are freely tradable,
the Company shall register with the SEC any Remuneration  Shares issued. Upon or
as soon as is  practical  after the  issuance of the  Remuneration  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.

2.5 Incentive Stock Options. The Company hereby agrees to grant to the Manager a
total of Two million  (2,000,000) stock options (the "Options"),  each entitling
the Manager to purchase  one common  share in the  capital of the  Company.  The
Options will be granted  pursuant to a stock option agreement to be entered into
between the Company and the  Manager as at the  Effective  Date  pursuant to the
Company's  2004  Stock  Incentive  Plan  (Non-U.S.),  and will be subject to the
following terms and conditions:

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                                      -4-


      (a)   the  Options  will vest over two years upon  issuance at an exercise
            price per share,  which price is hereby  acknowledged by the parties
            to be equal to the greater of $0.16 per share and the closing  price
            of a share  of the  Company's  common  stock  the day  prior  to the
            Effective Date; and

      (b)   Fifty  percent of the  Options  granted  will vest one year from the
            date of the  option  agreement  and  fifty  percent  of the  Options
            granted will vest two years from the date of the option agreement.

      (c)   the Options will terminate,  to the extent not previously exercised,
            at 5:00  p.m.  (Vancouver  time)  five  years  after the date of the
            agreement.

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 Compensation Committee.

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 one month (1) of
submission by the Manager of vouchers, bills or receipts for such expenses.

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 "C" attached hereto and
incorporated hereinafter by this reference.

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                                      -5-


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 three (3) months of the  effective  date
of this Agreement,  the Company shall have no further obligations.  In the event
of  termination  for any reason other than for just cause after three months and
within six (6) months of the effective date of this Agreement,  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 three (3) months from the date of
termination  or (b) pay three (3)  months'  salary  under  Clause 2.1 in lieu of
notice. In the event of termination for any reason other than for just cause six
(6) months after the effective  date of this  Agreement,  but within twelve (12)
months of the effective date of this Agreement, 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 six (6) months from the date of  termination  or (b) pay
six (6)  months'  salary  under  Clause 2.1 in lieu of  notice.  In the event of
termination  for any reason  other than for just cause  twelve (12) months after
the effective date of this Agreement,  but within twenty-four (24) months of the
effective date of this Agreement,  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 nine (9) months from the date of termination or (b) pay nine
(9)  months'  salary  under  Clause  2.1 in  lieu of  notice.  In the  event  of
termination  for any reason  other than for just cause  twenty-four  (24) months
after the effective date of this  Agreement,  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 twelve (12) months from the date of  termination  or (b)
pay twelve (12) months' salary under Clause 2.1 in lieu of notice. The date that
is the last date to which the Manager is entitled to receive salary and benefits
(notwithstanding  that the  Company may pay salary in lieu) under this clause is
the  "Termination  Date". Any stock options that have been granted but that have
not yet vested shall immediately terminate,  and vested options may be exercised
for a period of 30 days only after the final payment.

<PAGE>
                                      -6-


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.

7.7 In the  event of  termination  of this  Agreement  by  either  party for any
reason,  commissions  pursuant to Schedule B or any other commissions payable by
the  Company to the  Manager as a result of sales made by the  Company  shall be
paid on sales  completed  up to the last day of the  Manager's  actual full time
employment with the Company,  and the Manager shall have no claim to commissions
of any kind for sales made by the Company from that date forward.

7.8  Notwithstanding  anything  else in this  Agreement,  in the event  that the
employment of the Manager under the Agreement is terminated within eighteen (18)
months of an Acquisition,  a Hostile Takeover or a Merger and the termination is
without cause, the Company,  at its option,  will either (a) continue to pay the
salary under the  Agreement and provide the benefits  under the Agreement  until
the Termination  Date or (b) pay upon  termination an amount equal to the salary
payable to the Termination  Date 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 of  termination  provisions  under  section  7.3,  and may be
exercised for a period of 30 days only after the final payment."

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.

<PAGE>
                                      -7-


9     CLOSING

9.1 Closing Date. This Agreement shall be effective as of August 8, 2005.

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  Company's  Compensation
            Committee.

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:

            David Warkentin
            20580 Powell Ave.
            Maple Ridge, B.C.
            V2X 3G1

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.

<PAGE>
                                      -8-


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.

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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                                      -9-


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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                                      -10-


IN WITNESS  WHEREOF,  the parties  hereto have executed this Agreement as of the
3rd day of August, 2005.

SMARTIRE SYSTEMS INC.


Per:  /s/ Al Kozak
      ----------------------------------
      Authorized Signatory

SIGNED by DAVID WARKENTIN in the presence of:     ) /s/ David Warkentin
                                                  )
                                                  )
/s/ Melanie Freres                                )
----------------------------------------          )
                                                  )
Melanie Freres                                    )
----------------------------------------          )
Name                                              )
                                                  )
#205-2264 Elgin Ave. Port Coquitlam               )
----------------------------------------          )
Address                                           )
                                                  )
Chartered Accountant                              )
----------------------------------------          )
Occupation
<PAGE>

                                  SCHEDULE "A"

GENERAL

Reporting to the President,  the VP Sales and Marketing will be responsible  for
the  co-ordination  and  execution  of the sales  and  marketing  components  of
SmarTire's   business  plan.  Through  the  provision  of  leadership,   vision,
creativity  and  motivation,  the VP Sales and Marketing will ensure the company
meets the strategic sales and profit objectives of the organization.

SPECIFIC RESPONSIBILITIES

--------------------------------------------------------------------------------

Development of the Sales and Marketing Team

The VP Sales  and  Marketing  will be  responsible  for  building  the sales and
marketing team that is required to achieve SmarTire's business objectives.

1.0   Sales and Marketing Plan

Formulates and recommends the Sales and Marketing Plan component of the SmarTire
business  plan.  This  Plan  will set out  goals  and  objectives  for  sales to
distributors,  OEM accounts,  and strategic  customers,  targeted new customers,
promotional  plans,  incentive plans for the sales team, and market  development
and launch plans for new products.

Prepares  a  quarterly   analysis  of  progress  in  achieving  the   objectives
established  in the Plan,  sets out the rationale  for variances and  recommends
modifications to the Plan for the remainder of the year.

2.0   Leadership

Provides strong leadership to the sales team to capitalize on the full potential
of this  critical  resource.  Stimulates,  motivates  and  provides  guidance to
individuals in the  realization  of the company's  objectives.  Understands  the
complex sale and the strategic selling process and provides leadership to assist
in the closing of new accounts.  Has good interpersonal  skills for working with
customers and motivating the sales and marketing team.

3.0   Organization & Management of Employees

Develops  and  maintains  an  effective  organization  structure  that  reflects
operational needs and prescribes the responsibilities of staff as they relate to
the accomplishment of the objectives established in the Strategic Plan.

Ensures the  development of a strong,  effective  corporate  sales and marketing
team  that  works as a  cohesive  unit in the  effective  implementation  of the
Company's Strategic Plan.

Implements  progressive sales and marketing policies and incentive programs that
meet the needs of employees,  and enable the  organization to attract and retain
staff.

Motivates the sales and marketing teams, and rewards excellence.

4.0   External Relationships

Develops and maintains  positive and productive  relationships with existing and
potential clients.  Develops an extremely high profile in communities by meeting
with the major players in the industry, speaking at conferences and establishing
a network with industry movers.

5.0   Internal Relationships/Working With Peers

The VP Sales and Marketing  establishes him or herself as a respected  member of
the management  team working  closely with members the senior  management  team.
Works  particularly  close  with  strategic  accounts,  targeting  accounts  and
launching new products.

<PAGE>
                                       -2-


6.0   Trends in the Industry

Maintains  familiarity with developments in tire pressure monitoring and related
application technologies,  competitive products and services, in order to ensure
SMARTIRE has the best  possible  information  with which to address and consider
emerging opportunities and trends.

7.0   Financial Responsibility, Accountability

Develops  the  business  plan  with  the  senior   management   team  and  takes
responsibility  for the  achievement  of  revenue  goals,  expense  and  capital
expenditure budgets.

PERFORMANCE CRITERIA

--------------------------------------------------------------------------------

The performance of the VP shall be considered excellent when

1.0   The VP has  demonstrated his ability to develop sales and marketing goals,
      and  budgets  consistent  with  the  corporate  plan to  provide  value to
      shareholders and stakeholders, in a timely manner.
2.0   The sales goals are met, substantially, on a regular basis.
3.0   The VP has integrated him or herself into the senior  management team, and
      works well with his peers and supervisor.
4.0   Has provided  leadership,  empowerment,  and  direction to create a highly
      motivated sales team.

<PAGE>

                                  SCHEDULE "B"

                 SMARTIRE COMMISSION PLAN- VP Sales & Marketing

The  commission  plan for the Manager is based totally on the Company's  revenue
plan for the fiscal year 2006  commencing  August 1. The  Revenue  Goal for 2006
will be agreed to by the entire senior management group by August 31, 2005.

CALCULATION OF COMMISSIONS

At  the  end  of  each  quarter,  the  commission  is  calculated  based  on the
achievement of the quarterly goals as per the tables below.  Commission  payable
is  expressed  as a percentage  of the base salary  earned in the  quarter.  The
Company  will  make an  assessment  of the  commissions  owing at the end of the
quarter,  and may at its discretion,  advance  commissions in lieu of payment by
the customer.

Commission schedule:

------------------------------ ---------------------
 *Attainment of Revenue Goal    Commission Payable
------------------------------ ---------------------
            0-50%                      10%
------------------------------ ---------------------
           51-60%                      15%
------------------------------ ---------------------
          61% - 70%                    20%
------------------------------ ---------------------
         >70% - 80%                    30%
------------------------------ ---------------------
         >80% - 90%                    40%
------------------------------ ---------------------
         >90% - 100%                   50%
------------------------------ ---------------------
        >100% - 120%                   60%
------------------------------ ---------------------
         >120%-140%                    70%
------------------------------ ---------------------
         >140%-160%                    80%
------------------------------ ---------------------
         >160%-180%                    90%
------------------------------ ---------------------
         >180%-200%                    100%
------------------------------ ---------------------

PAYMENT OF COMMISSIONS

Commissions  will be  calculated  at the end of each  quarter  -  October  31st,
January 31st, April 30th, and July 31st.

Although the  commission  is based on the sales earned in a particular  quarter,
the  commission is also subject to the Company  receiving the cash for the sales
earned in that  particular  quarter.  In order to not delay the  payment  of the
commission in a particular quarter, once the Accounting department has completed
their quarter-end reporting, the commission will be calculated and every attempt
will be made to pay 50% of it on the next payroll,  while the remaining 50% will
be held back to ensure that the Company  receives  the cash for sales  earned in
that quarter.  The Accounting  department will review the  outstanding  accounts
receivable at the end of each month, and when 90% of the accounts receivable has
been  received,  or at the  discretion of the CFO, the balance of the commission
will be paid on the next  payroll.  Any bad debts will be charged  against total
sales for the quarter.  If all of the cash is not received,  the commission will
be recalculated for the quarter and if repayment of commission is necessary,  it
will be deducted from the next commission and/or from the next payroll.

<PAGE>
                                       -2-


Commission payments will be subject to regular payroll deductions.

If an employee leaves the Company before the end of a quarter,  they will not be
entitled to any commission.

DURATION OF COMMISSION PLAN

This plan has been approved for Fiscal year 2006 only.

EXAMPLE

a)    Annual Salary = $100,000
      Q1 - Target revenue = $200,000
      Q1 - Actual revenue = $150,000

      Attainment of revenue goal = 150,000 / 200,000 x 100% = 75%
      Commission payable = 10% x $25,000 (Q1 salary) = $2,500

b)    Assuming (a) above, and:

      Q2 - Target revenue = $200,000
      Q2 - Actual revenue = $280,000

      Attainment of revenue goal = 280,000 / 200,000 x 100 = 140%
      Commission payable = 65% x $25,000 (Q2 salary) = $16,250

<PAGE>

                                  SCHEDULE "C"

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

<PAGE>
                                       -2-


      (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.

      (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.