Exhibit
10.1

    


    SmarTire
Systems, Inc.

    Post-Closing
Shell Recommended Wind-Down Plan

    December
3, 2008

    


    


    Transaction
Background

    


    SmarTire
Systems, Inc. (“SmarTire”) is currently in the final stages of negotiating the
sale of all of its tire pressure monitoring business operations through the sale
of it assets and certain of its liabilities to Bendix CVS Canada, Inc.
(“Bendix”).  SmarTire is currently an OTCBB-listed
company.  Because the transaction is structured as an asset sale, the
SmarTire OTCCB shell company will continue to exist after the asset
sale.

    


    As a
condition to the sale transaction, SmarTire must receive shareholder approval of
the transaction within 90 days of closing.  YA Global Investments,
L.P. (“YA Global”), or one or more of its affiliates, will acquire a 67%
ownership interest in SmarTire immediately prior to closing, for the purpose of
securing the vote at the special shareholder meeting that will be
held.

    


    SmarTire
will retain, subject to the security interests held by YA Global and Prentice
Capital, or their respective affiliates (collectively, the “Secured Lenders”),
the following rights and assets after closing:

    


    
      	
               
      

            	
              ·

            	
              Rights
      to any future payments from Bendix under the asset purchase agreement,
      including the earn-out specified in the asset purchase
      agreement.  The earn-out is based on a percentage of future
      revenue from SmarTire’s tire pressure monitoring system business being
      sold and is forecast to generate the amounts set forth on Schedule 1
      attached hereto.

            


    

    


    
      	
               
      

            	
              ·

            	
              Rights
      to certain assets excluded from the sale including tax refunds, insurance
      refunds, cash on hand, and the right to litigate SmarTire’s patents no.
      5,231,872 and 5,335,540

            


    

    


    This
document outlines a recommended wind-down plan and budget of SmarTire after the
completion of the asset sale.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    Recommended Wind-Down
Plan

    


    Current
management of SmarTire recommends the following wind-down plan for the SmarTire
after the closing:

    


    
      	
               
      

            	
              ·

            	
              SmarTire
      will complete its audit and file its 10-KSB for the year ended July 31,
      2008 no later than December 31, 2008.  Completion of the audit
      and 10-KSB is a requirement to file the proxy statement in the following
      bullet point.

            


    

    
      	
               
      

            	
              ·

            	
              By
      January 8, 2009, SmarTire will file a proxy statement to hold a special
      meeting of shareholders to vote on the approval of the asset
      sale.  The anticipated timeline of the proxy filing meeting is
      as follows:

            


    

    
      	
               
      

            	
              o

            	
              January
      5, 2009 – file preliminary proxy
statement

            


    

    
      	
               
      

            	
              o

            	
              February
      2, 2009 – print proxy statement (this assumes SEC review of preliminary
      proxy statement and time for company to respond and
  refile)

            


    

    
      	
               
      

            	
              o

            	
              February
      6, 2009 – mail proxy statement

            


    

    
      	
               
      

            	
              o

            	
              March
      9, 2009 – meeting date

            


    

    
      	
               
      

            	
              o

            	
              This
      timeline could be delayed by multiple SEC comment letters and
      responses.  The company will use best efforts to clear any
      comment as thoroughly and quickly as possible, but it cannot predict the
      timing are number of comment
letters.

            


    

    
      	
               
      

            	
              ·

            	
              Current
      board members will remain on the board until the special meeting of
      shareholders (subject to their agreement to do so), will resign after the
      shareholder meeting and, if possible, appoint a replacement acceptable to
      the Secured Lenders

            


    

    
      	
               
      

            	
              ·

            	
              Dave
      Warkentin will be terminated as CEO at closing but will remain as a
      director until the special meeting of shareholders, and will remain
      available to assist as necessary to complete the
  meeting

            


    

    
      	
               
      

            	
              ·

            	
              David
      Dodge will continue as CFO under his current contract until the special
      meeting of shareholders completed

            


    

    
      	
               
      

            	
              ·

            	
              SmarTire
      will file its 2008 tax returns for all subsidiaries by March 31,
      2009

            


    

    
      	
               
      

            	
              ·

            	
              SmarTire
      will attempt to collect any tax, insurance, or other refunds, as
      applicable

            


    

    
      	
               
      

            	
              ·

            	
              SmarTire
      will communicate with its unsecured creditors, as
  required

            


    

    
      	
               
      

            	
              ·

            	
              Subject
      to the consent of the Secured Lenders with respect to any litigation
      expenses, to pursue licensing and/or litigation relating to patent rights
      retained by SmarTire

            


    

    
      	
               
      

            	
              ·

            	
              Based
      on the above plan, SmarTire is expected to be in a position to cease
      operations by March 31, 2009.  This timeline is subject to
      change based on delays in SEC approval of the proxy statement, and other
      regulatory matters that may arise.

            


    

    


    Budget

    


    The
operating budget for SmarTire is attached as Schedule 2, and is exclusive of (a)
revenue streams from patent litigation, (b) payment of patent litigation
expenses, and (c) payment to unsecured creditors.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      SmarTire
Systems, Inc.

      Budget
for Shell Company Post-Sale - Revised

      All
amounts in USD

       

      
        
          	 
      	 	
                  Dec-08

                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
      	 	
                  Funds
      req'd

                	 	 	
                  Not
      req'd

                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
      	 	
                  at
      closing

                	 	 	
                  at
      closing

                	 	 	
                  Jan-09

                	 	 	
                  Feb-09

                	 	 	
                  Mar-09

                	 	 	
                  Apr-09

                	 	 	
                  May-09

                	 	 	
                  Jun-09

                	 	 	
                  Jul-09

                	 	 	
                  Aug-09

                	 	 	
                  Sep-09

                	 	 	
                  Oct-09

                	 	 	
                  Nov-09

                	 	 	
                  Dec-09

                	 
	
                  Shareholder
      meeting

                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Proxy
      service - prior unpaid balance

                	 	 	21,589	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	
                  Proxy
      service - current s/h list and mailing

                	 	 	25,000	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	
                  Transfer
      Agent - registered s/h list

                	 	 	1,000	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	
                  Printing
      costs (est. 9,000 positions)

                	 	 	20,000	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	
                  Other

                	 	 	5,000	 	 	 	-	 	 	 	-	 	 	 	2,500	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	 
      	 	 	72,589	 	 	 	-	 	 	 	-	 	 	 	2,500	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Personnel
      Costs

                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Severance
      costs

                	 	 	395,943	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	
                  Patent
      Litigation/mgmt fee

                	 	 	3,500	 	 	 	-	 	 	 	3,500	 	 	 	3,500	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	
                  CFO/Administrator/mgmt
      fee

                	 	 	10,000	 	 	 	-	 	 	 	8,000	 	 	 	6,000	 	 	 	2,000	 	 	 	2,000	 	 	 	2,000	 	 	 	2,000	 	 	 	2,000	 	 	 	2,000	 	 	 	2,000	 	 	 	2,000	 	 	 	2,000	 	 	 	2,000	 
	
                  Staff
      accountant

                	 	 	2,500	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	
                  Travel/phone/expenses

                	 	 	500	 	 	 	-	 	 	 	500	 	 	 	500	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 
	
                  D&O
      Insurance

                	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	40,000	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	
                  Board
      of director fees

                	 	 	2,500	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	 
      	 	 	414,943	 	 	 	-	 	 	 	12,000	 	 	 	10,000	 	 	 	2,100	 	 	 	2,100	 	 	 	2,100	 	 	 	2,100	 	 	 	42,100	 	 	 	2,100	 	 	 	2,100	 	 	 	2,100	 	 	 	2,100	 	 	 	2,100	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Public
      Company Costs

                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Auditors
      - complete 2008 audit and 10-K

                	 	 	75,000	 	 	 	-	 	 	 	25,000	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	 
      	 	 	75,000	 	 	 	-	 	 	 	25,000	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Other
      costs

                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Tax
      preparation

                	 	 	-	 	 	 	4,109	 	 	 	10,000	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	
                  Grace
      Advisory

                	 	 	30,000	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	
                  Postage
      and courier

                	 	 	-	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 
	
                  Transfer
      Agent

                	 	 	-	 	 	 	1,000	 	 	 	500	 	 	 	500	 	 	 	500	 	 	 	500	 	 	 	500	 	 	 	500	 	 	 	500	 	 	 	500	 	 	 	500	 	 	 	500	 	 	 	500	 	 	 	500	 
	
                  Corporate
      Attorneys

                	 	 	15,000	 	 	 	10,000	 	 	 	7,000	 	 	 	7,000	 	 	 	1,000	 	 	 	1,000	 	 	 	1,000	 	 	 	1,000	 	 	 	1,000	 	 	 	1,000	 	 	 	1,000	 	 	 	1,000	 	 	 	1,000	 	 	 	1,000	 
	
                  M&A
      Attorneys-US

                	 	 	60,000	 	 	 	 	 	 	 	10,000	 	 	 	10,000	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	
                  M&A
      Attorneys-Canada

                	 	 	20,000	 	 	 	 	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	
                  PO
      Box/mail forwarding

                	 	 	-	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 	 	 	100	 
	
                  Reserve
      for other issues

                	 	 	75,000	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	 
      	 	 	200,000	 	 	 	15,509	 	 	 	27,900	 	 	 	17,900	 	 	 	1,900	 	 	 	1,900	 	 	 	1,900	 	 	 	1,900	 	 	 	1,900	 	 	 	1,900	 	 	 	1,900	 	 	 	1,900	 	 	 	1,900	 	 	 	1,900	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Funding
      required - by month

                	 	 	762,532	 	 	 	15,509	 	 	 	64,900	 	 	 	30,400	 	 	 	4,000	 	 	 	4,000	 	 	 	4,000	 	 	 	4,000	 	 	 	44,000	 	 	 	4,000	 	 	 	4,000	 	 	 	4,000	 	 	 	4,000	 	 	 	4,000	 


        

         

        
          
            	
                    Total
      projected expenses

                  	 	 	953,341	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Less
      projected cash on hand at closing

                  	 	 	-	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Net
      funding required

                  	 	 	953,341