Document:

<PAGE>   1

                                                                    EXHIBIT 10.2
                              MANAGEMENT AGREEMENT

THIS AGREEMENT effective as of the 1st day of August, 1999 (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:

                SHAWN LAMMERS, businessman, of 84 - 7955 122nd Street, Surrey,
                British Columbia V3W 4T4

                (hereinafter referred to as the "Manager")

                                                              OF THE SECOND PART

RECITALS

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

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

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

1 DUTIES AND DEVOTION OF TIME

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

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

<PAGE>   2

                                      - 2 -

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

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

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

2 SALARY, BONUSES AND BENEFITS

2.1 Salary. In consideration of the Manager providing the services referred to
herein, the Company agrees to pay the Manager an annual base salary (the "Annual
Base Salary") of one hundred twenty thousand dollars ($120,000) less applicable
deductions, payable bi-weekly, plus incentive compensation as set out below,
subject to increase as from time to time approved by the Board of Directors of
the Company.

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

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

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

2.3 Incentive Compensation and Stock Options. Within one hundred twenty (120)
days of the Effective Date, the Company's Board of Directors will approve and
implement an incentive compensation plan for the senior management of the
Company and its subsidiaries, including therein a policy regarding the granting
of stock options. The Manger will participate in that plan when approved and
implemented by the Company's Board of Directors.

<PAGE>   3

                                      - 3 -

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

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

3 VACATION

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

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

4 REIMBURSEMENT OF EXPENSES

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

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.

<PAGE>   4

                                      - 4 -

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

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

6 TERM

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

7 TERMINATION

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

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

7.3 Termination by Company. The Company may terminate this agreement at any time
for just cause without further obligation. In the event of termination for any
reason other than for just cause, the Company, at its option, will either (a)
continue to pay the salary under Clause 2.1 and provide the benefits under
Clauses 2.2 until one year from the date of termination or (b) pay one year's
salary under Clause 2.1 in lieu of notice. Any stock options that have been
granted but that have not yet vested shall immediately vest at the date of the
final payment, and may be exercised for a period of 30 days only after the final
payment.

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

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

<PAGE>   5

                                     - 5 -

than six (6) successive months, then this Agreement may, at the option of the
Directors of the Company, forthwith be terminated, and the Manager shall be
entitled to the termination allowance stated in Section 7.3 hereof.

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

8 RIGHTS AND OBLIGATIONS UPON TERMINATION

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

9 CLOSING

9.1 Closing Date. This Agreement shall be effective as of August 1, 1999.

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

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

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:

<PAGE>   6

                                     - 6 -

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

        (b) If to the Manager:

        Shawn Lammers
        84 - 7955 122nd Street
        Surrey, British Columbia
        V3W 4T4

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.

<PAGE>   7

                                     - 7 -

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.

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.

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                                     - 8 -

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 30
day of November, 1999.

SMARTIRE SYSTEM INC.

Per:  /s/   ROBERT RUDMAN
    -----------------------------------
          Authorized Signatory

SIGNED by SHAWN LAMMERS in the )
presence of:                   )
            /s/ KEVIN CARLSON  )
                               )
    KEVIN CARLSON              )
------------------------------ )
Name                           )
  c/o/ SMARTIRE SYSTEMS INC.   )              /s/  SHAWN LAMMERS
------------------------------ )             -----------------------------------
Address                        )             SHAWN LAMMERS
   RICHMOND, B.C.              )
------------------------------ )
    BUSINESSMAN                )
------------------------------ )
Occupation                     )

This is page 8 of Agreement dated above for reference the 1st day of August,
1999.

<PAGE>   9

                                  SCHEDULE "A"

                                MANAGER'S DUTIES

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

2. The Manager shall be appointed as the Vice President of Engineering of the
Company, and the Manager shall faithfully, honestly and diligently serve the
Company and each of the Company's subsidiaries.

3. The Manager shall be responsible for the management of the advanced
engineering group performing development and market qualification of new
products and development of new technologies for tire monitoring, brake
monitoring and light monitoring applications as the senior management of the
Company deems appropriate. The Manager shall be responsible for developing the
company's intellectual property in the fields of tire monitoring, brake
monitoring and light monitoring through proper documentation of new and
developed technology including patent descriptions and filings. The Manager
shall report to the President and Chief Operating Officer of the Company.

<PAGE>   10

                                  SCHEDULE "B"

                            NON-DISCLOSURE PROVISIONS

1. CONFIDENTIAL INFORMATION AND MATERIALS

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

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

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

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

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

                (iv)    is independently developed by the Manager.

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

2. RESTRICTIONS

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

<PAGE>   11

                                      - 2 -

                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.

<PAGE>   12

                                     - 3 -

        (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.<PAGE>   1
                                                                    EXHIBIT 10.3

                              MANAGEMENT AGREEMENT

THIS AGREEMENT effective as of the 1st day of August, 1999 (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:

        ROBERT RUDMAN, businessman, of 40 - 5740 Garrison Road,
        Richmond, British Columbia V7C 5E7

        (hereinafter referred to as the "Manager")

                                                              OF THE SECOND PART

RECITALS

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

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

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

1               DUTIES AND DEVOTION OF TIME

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

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

<PAGE>   2
                                      - 2 -

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

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

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

2               SALARY, BONUSES AND BENEFITS

2.1             Salary. In consideration of the Manager providing the services
referred to herein, the Company agrees to pay the Manager an annual base salary
(the "Annual Base Salary") of two hundred seventy three thousand dollars
($273,000) less applicable deductions, thirty seven thousand five hundred
dollars ($37,500) of which shall be payable on the date of signing this
Agreement, with the balance payable bi-weekly, plus incentive compensation as
set out below, subject to increase as from time to time approved by the Board of
Directors of the Company.

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

        (a)     medical and dental insurance 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 senior management employees
                of the Company, subject to the eligibility of the Manager.

2.3             Incentive Compensation and Stock Options. Within one hundred
twenty (120) days of the Effective Date, the Company's Board of Directors will
approve and implement

<PAGE>   3
                                      - 3 -

an incentive compensation plan for the senior management of the Company and its
subsidiaries, including therein a policy regarding the granting of stock
options. The Manager will participate as a member of the Board of Directors in
approving that plan and will participate in that plan when approved and
implemented by the Company's Board of Directors.

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

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

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. The Company further agrees to pay to the Manager on the date of
signing this Agreement sixty five thousand eight hundred fifty one dollars and
forty cents ($65,851.40) less applicable deductions, that amount being in lieu
of all accrued vacation days owing to the Manager as of July 31, 1999.

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

4               REIMBURSEMENT OF EXPENSES

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

<PAGE>   4
                                      - 4 -

5               CONFIDENTIAL INFORMATION

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

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

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

6               TERM

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

7               TERMINATION

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

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

7.3             Termination by Company. The Company may terminate this agreement
at any time for just cause without further obligation. In the event of
termination for any reason other than for just cause, the Company, at its
option, will either (a) continue to pay the salary under Clause 2.1 and provide
the benefits under Clauses 2.2 until one year from the date of termination or
(b) pay one year's salary under Clause 2.1 in lieu of notice. Any stock options
that have been granted but that have not yet vested shall immediately vest at
the date of the final payment, and may be exercised for a period of 30 days only
after the final payment.

<PAGE>   5
                                      - 5 -

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, shall be entitled to the termination
allowance stated in Section 7.3 hereof.

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

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

8               RIGHTS AND OBLIGATIONS UPON TERMINATION

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

9               CLOSING

9.1             Closing Date. This Agreement shall be effective as of August 1,
1999.

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

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

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:

<PAGE>   6
                                      - 6 -

        (a)     if to the Company:

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

                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:

                Robert Rudman
                40 - 5740 Garrison Road
                Richmond, British Columbia
                V7C 5E7

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.

<PAGE>   7
                                      - 7 -

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 and the Manager's continuation as a director of the
Company, 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.

<PAGE>   8
                                      - 8 -

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
26th day of November, 1999.

SMARTIRE SYSTEMS INC.

Per: /s/ KEVIN CARLSON
     -------------------------------
        Authorized Signatory

SIGNED by ROBERT RUDMAN in the presence of:

/s/ W.A. PAGE
-------------------------------    )
Name                               )
                                   )
W.A. PAGE                          )         /s/ ROBERT RUDMAN
-------------------------------    )         -----------------------------
Address                            )         ROBERT RUDMAN
                                   )
31 EATON PLACE, CONDON             )
-------------------------------    )
                                   )
Businessman                        )
-------------------------------    )
Occupation                         )

This is page 8 of Agreement dated above for reference the 1st day of August,
1999.

<PAGE>   9
                                   SCHEDULE"A"
                                MANAGER'S DUTIES

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.

<PAGE>   10
                                  SCHEDULE "B"
                            NON-DISCLOSURE PROVISIONS

1.      CONFIDENTIAL INFORMATION AND MATERIALS

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

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

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

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

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

                (iv)    is independently developed by the Manager.

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

2.      RESTRICTIONS

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

<PAGE>   11
                                      - 2 -

                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.

<PAGE>   12
                                      - 3 -

        (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.

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