Document:

Warkentin Management Agreement

    MANAGEMENT
      AGREEMENT

    

    

    THIS
      AGREEMENT effectively replaces the management agreement entered into on the
      8th
      day of
      August, 2005 and is dated October 20, 2006. (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
                3M2

            

    

    

    

    
      	 	 	
              (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; 

    “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.

    

    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 two hundred and ten thousand Canadian dollars (CDN$210,000) 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” for the first
      quarter ended October 31, 2006 based on Mr. Warkentin’s prior salary of
      CDN$150,000 per annum as per 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   

    

    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.

    

    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
      twelve (12) months after August 8, 2005, 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 August 8, 2005, 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.

    

    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.

    

    9   CLOSING

    

    9.1   Closing
      Date.
      This
      Agreement shall be effective as of October 20, 2006.

    

    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.

    

    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, including the Management Agreement, dated August 8, 2005 (the “Original
      Agreement”). 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. Specifically, the Original Agreement is hereby superseded
      in
      full by this Agreement and all rights and obligations under the Original
      Agreement are hereby terminated.

    

    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.

    

    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.

    

    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Agreement as of the 20th day of October,
      2006.

    

    
      	
              SMARTIRE
                SYSTEMS INC.

               

              Per: __/s/Jeff
                Finkelstein_______________

              Authorized
                Signatory

               

            	 
	
              SIGNED
                by DAVID WARKENTIN in the presence of:

               

              Jeff
                Finkelstein

              Name

               

              Suite
                150 13151 Vanier Pl Richmond BC

              Address

               

              Chartered
                Accountant

              Occupation

            	
              )
                /s/David Warkentin

              )

              )

              )

              )

              )

              )

              )

              )

            
	 	 
	 	 

    

    

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
           

        

      

    

     

    

    SCHEDULE
      "A"

    

    1.  The
      Manager shall continue as the Chief Executive Officer of the Company, and the
      Manager shall faithfully, honestly and diligently serve the Company and each
      of
      the Company's subsidiaries.

    

    2.  The
      Manager shall be responsible for the overall activities and organizational
      policies of the Company. The Manager will, in that capacity, develop, recommend
      and implement, directly and through subordinates, approved annual and long-term
      organizational policies and goals. The Manager shall report to the Board of
      Directors of the Company.

    

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    SCHEDULE
      "B"

    

    SMARTIRE
      COMMISSION PLAN

    

    The
      commission plan for the Manager is based totally on the Company’s revenue plan
      for the first quarter of fiscal year 2007 commencing August 1 approved by the
      board of directors. 

    

    

    CALCULATION
      OF COMMISSIONS

    

    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%

            	 

    

    

    

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
           

        

      

    

    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.

            

    

    

    
      	 	
              (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.Filed by Automated Filing Services Inc. (604) 609-0244 - Sense Technologies Inc. - Exhibit 10.1

THIS CONSULTING AGREEMENT is effective as of the
21st day of August, 2006.

BETWEEN:

SENSE TECHNOLOGIES INC. of

#2535 North Carleton Avenue, Ste B. Grande Island Nebraska 6883

(hereinafter referred to as the
“Company”) 

OF THE FIRST PART 

AND:

DEANEEN GRAHAM,
Consultant
1645 Court Street, Denver, CO 80202

(hereinafter referred to as
"Consultant")

OF THE SECOND PART 

WHEREAS:

A. The Company is involved in the business of developing,
manufacturing and marketing of Guardian Alert® and ScopeOut® counter measure
products for vehicular back-up accidents .

B. The Company is a reporting issuer in British Columbia and
the common shares of the Company are quoted on the OTC Bulletin Board.

C. The Consultant is engaged in the business of lobbying
automobile manufacturers and government respecting automobiles, automotive
products and safety matters and has agreed to provide such services to the
Company on the terms and conditions set forth herein.

          NOW
  THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises and
  mutual covenants and conditions herein contained, the parties hereto covenant
  and agree each with the other as follows:

Duties of Consultant

1. Consultant will work in conjunction with the Company’s
management to provide the following:

	 	(a) 	 bringing about the introduction of the Company to a
        new Tier 1 automobile manufacturer in the United States of America area
        previously unavailable to the Company (the “Domestic Manufacturer”),
        for Guardian Alert® and/or ScopeOut® products hereafter referred
        to as the First Milestone;

	 	(b) 	 bringing about the introduction of the Company to one
        new automobile manufacturer anywhere in the world for Guardian Alert®
        and/or ScopeOut® products (the “Foreign Manufacturer”)
        hereafter referred to as the Second Milestone;

	 	(c) 	 bringing about the introduction of the Company to a
        member or members of the U.S. Congress for the purpose of obtaining such
        congressional member’s or members’ support for back-up accident
        countermeasure products for auto safety hereafter referred to as the Third
        Milestone ; and

	 	(d) 	 bringing about the introduction of the Company to a
        member of the Transportation Committee of the US Congress hereafter referred
        to as the Fourth Milestone .

2. Consultant agrees that it will, during the continuance of
this Agreement, provide sufficient time to the lobbying requirements of the
Company, for the performance of the said services faithfully, diligently, to the
best of her ability and in the best interests of the Company.

Term of this Agreement

3. The term of this Agreement will be for a term of one year,
commencing on August 21, 2006 subject to the earlier automatic termination upon
the achievement of each of the milestones referred to in section 1 above . 

4. Provided the Consultant is not in default hereunder and one
or more of the milestones have not been achieved , this agreement shall
automatically continue for a one (1) year term, unless the Consultant or the
Company shall give to the other party thirty (30) days notice of non-renewal, in
which case it shall terminate.

5. This Agreement may be terminated by the Consultant, without
cause, by the giving of thirty (30) days notice.

Compensation to Consultant

6. For Consultant services under this Agreement, the Company
will forthwith grant to the Consultant a Right to Purchase, exercisable for a
period of two years from the date of this Agreement to acquire up to 2,000,000
shares of the Company (the “Shares”) at an exercise price of US$0.10 per Share.
(the “Right to Purchase”).

7. In addition to the grant of the Right to Purchase, the
Company will reimburse Consultant for all expenses actually and properly
incurred by Consultant on behalf of the Company in carrying out its duties and
performing its functions under this Agreement and for all such expenses.
Consultant will furnish statements and vouchers to the Company prior to
reimbursement. Expenses exceeding $300 per month must be approved by the Company
in advance.

8. The Consultant agrees, upon full or partial exercise by
Consultant of the Right to Purchase, that the certificates representing the
Shares, will be held by the Company and released to the Consultant only in
accordance with the following:

	 	(a) 	 certificates for 500,000 Shares upon the achievement
        of the First Milestone. The First Milestone shall be deemed to have been
        reached if either Guardian Alert® and/or ScopeOut® products
        are demonstrated to company personnel of a Domestic Tier 1 Manufacturer;

	 	(b) 	 certificates for an additional 500,000 Shares upon the
        achievement of the Second Milestone. The Second Milestone shall be deemed
        to be reached if either Guardian Alert® and/or ScopeOut® products
        are demonstrated to company personnel of a Foreign Manufacturer;

	 	(c) 	 certificates for an additional 500,000 Shares upon achievement
        of the Third Milestone. The Third Milestone shall be deemed reached if
        a physical meeting involving any of the officers and key personnel of
        the Company and a member or members of the US Congress meet for the purpose
        of discussing vehicular back-up accidents and potential countermeasure
        products; and

	 	(d) 	 certificates for an additional 500,000 Shares upon the
        achievement of the Fourth Milestone. The Fourth Milestone shall be deemed
        to be reached if a physical meeting involving any officers or key personnel
        of the Company with any US Congress Transportation Committee member for
        the purpose of discussing vehicular back-up accidents and potential countermeasure
        products.

To the extent the certificates held by the Company represent a
fewer number of Shares than the number of Shares to be released on the
occurrence of any release event specified above, then such lesser number of
Shares will instead be released, and the difference between the Shares actually
released and the Shares eligible to be released will be added to the number of
Shares to be released at the next specified release event.

9. The Company agrees to diligently pursue the filing of a
registration statement in respect of the Company’s Shares issued to the
Consultant upon exercise of the Right to Purchase and to promptly notify the
Consultant of the effective date of the registration statement when known to the
Company.

10. The Consultant agrees not to exercise any of the Right to
Purchase until the registration statement is filed, and further agrees that any
exercise of the Right to Purchase is subject to the ability of the Company to
comply with applicable state securities laws. To the extent state securities
laws cannot be complied with without undue expense to the Company, the parties
hereto agree to act reasonably to provide for an alternate compensation
arrangement.

11. In the event any of the milestones are not reached and any
or all of the certificates representing the Shares have not been released on or
before two years from the date of exercise of the Right to Purchase by the
Consultant, the certificates representing the Shares not released will be
delivered to the Consultant.

Restrictions on Consultant

12. The Company is aware that Consultant provides consulting
services to other companies and the Company recognizes that these companies will
require a certain portion of Consultant’ employees’ time. The Company agrees
that Consultant may continue to provide services to such outside interests,
provided that such interests do not conflict with its duties under this
Agreement.

13. Consultant will not, except as authorized or required by
its duties, reveal or divulge to any person or companies any of the trade
secrets, secret or confidential operations, processes or dealings or any
information concerning the organization, business, finances, transactions or
other affairs of the Company or of its subsidiary which may come to its
knowledge during the term of this Agreement and will keep in complete secrecy
all confidential information entrusted to its and will not use or attempt to use
any such information in any manner which may injure or cause loss either
directly or indirectly to the Company's business or may be likely so to do. This
restriction will continue to apply after the termination of this Agreement
without limit in point of time but will cease to apply to information or
knowledge which may come into the public domain.

Reporting by Consultant

14. At least once in every month, Consultant will provide to
the President of the Company such information concerning the consulting services
provided to the Company for the previous month as the President may reasonably
require.

Termination

15. This Agreement may be terminated forthwith by the Company
without prior notice if, at any time, Consultant or the Consultant, while in the
performance of their duties:

	 	(a) 	 commits a material breach of a provision of this Agreement;

	 	(b) 	 is unable or unwilling to perform the duties under this
        Agreement;

	 	(c) 	 commits fraud or serious neglect or misconduct in the
        discharge of its or their duties hereunder; or

	 	(d) 	 becomes bankrupt or makes any arrangement or compromise
        with its creditors.

16. The Company may terminate this Agreement without cause upon
giving Consultant thirty (30) days notice and Consultant may terminate this
Agreement without cause upon giving the Company thirty (30) days notice. 

17. In the event of termination of this agreement by either
party prior to the achievement of all of the milestones , the release of all
shares and the second anniversary of this agreement, any of the Consultants
Shares held by the Company shall be delivered to the Consultant on the second
anniversary date of this agreement

18. This Agreement may not be assigned by any party except with
the written consent of the other party hereto.

General

19. Time shall be of the essence of this Agreement.

20. The parties hereto agree from time to time after the
execution hereof to make, do, execute or cause or permit to be made, done or
executed all such further and other lawful acts, deeds, things, devices and
assurances in law whatsoever as may be required to carry out the true intention
and to give full force and effect to this Agreement.

21. This Agreement embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
undertakings, whether oral or written, relative to the subject matter
hereof.

22. The following rules shall be applied in interpreting this
Agreement:

	 	(a) 	 this Agreement shall enure to the benefit of and be
        binding upon each of the parties hereto and their respective successors
        and permitted assigns;

	 	(b) 	 any reference herein to the Company or the Consultant
        shall include their heirs, executors, administrators, successors and assigns;

	 	(c) 	 if any provision of this Agreement or any part thereof
        shall be found or determined to be invalid it shall be severable from
        this Agreement and the remainder of this Agreement shall be construed
        as if such invalid provision or part has been deleted from this Agreement;

	 	(d) 	 this Agreement and all matters arising thereunder shall
        be governed by the laws of British Columbia and all disputes arising under
        this Agreement shall be referred to a court of British Columbia;

	 	(e) 	 unless otherwise indicated, all currency amounts in
        this Agreement are stated in Canadian dollars; and

	 	(f) 	 in this Agreement all reference to the singular shall
        be construed to include the plural where the context so permits, the masculine
        to include the feminine and neuter gender and where necessary a body corporate
        and vice versa.

23. Any notice required or permitted to be given under this
Agreement shall be in writing and delivered by registered mail, facsimile
transmission, courier or by hand, in each case addressed to the intended
recipient at the address set out on the first page of this Agreement. Any notice
delivered by registered mail, courier or hand will be deemed to have been given
on the day it was received. Any notice given by facsimile transmission will be
deemed to have been given upon confirmation by telephone of receipt. Any party
may give notice in writing of any change of its address. The address provided in
said notice will thereafter be deemed to be the address of the party for the
giving of notice hereunder.

24. This agreement was prepared by legal counsel for Sense
Technologies Inc. and the Consultant agrees that it has had advised to obtain,
and has had the opportunity to obtain, independent legal advice with respect to
the provisions contained herein.

25. This Agreement may be executed in counterparts which may be
delivered by facsimile. Each executed counterpart shall be deemed to be an
original and all such counterparts when read together constitute one and the
same instrument.

          IN
  WITNESS WHEREOF the parties hereto have executed this Agreement on the date
  first above written.

SENSE TECHNOLOGIES INC.

	Per: 	/s/ Bruce Schreiner 	 
	  	Authorized Signatory 	 

SIGNED, SEALED AND DELIVERED 
By Consultant in the
presence of:

	/s/ Ken
      Twaddle 	 	  
	Name of Witness 	 	  
	 	 	 
	1800 Glenarm,
      Denver CO 80202 	 	/s/ Deaneen
      Graham 
	Address 	 	DEANEEN GRAHAM 
	 	 	 
	Ken Twaddle
    	 	  
	Name

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