MARKETING AND DISTRIBUTION AGREEMENT
This MARKETING AND DISTRIBUTION AGREEMENT is made and entered into as
of the date of last signature below, by and between XXXX CORPORATION, a Virginia
corporation, through its Heavy Vehicle Technology and Systems Group; and
SMARTIRE SYSTEMS INC., a Yukon corporation.
WHEREAS, XXXX is a leading Tier I supplier in the design and
manufacture of commercial vehicle drive train components for medium and heavy
duty vehicles for sale to original equipment manufacturers and associated
original equipment service and the independent aftermarket;
WHEREAS, SMARTIRE is a Tier I and Tier II supplier engaged in the
design and manufacture of wireless sensing systems and associated components for
medium and heavy duty vehicles;
WHEREAS, the Parties desire to enter into an agreement pursuant to
which XXXX would market, sell, and distribute SMARTIRE products for use in
VEHICLES, both independently and through ROAD RANGER (defined below); and
WHEREAS, SMARTIRE's tire monitoring system is based on a "wireless
gateway" concept that may be compatible with other sensing opportunities for
other products, and the PARTIES may wish to co-develop further products in the
future.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the PARTIES hereby agree as follows:
1. DEFINITIONS
"AGREEMENT" means this Marketing and Distribution Agreement.
"COMPONENTS" means components supplied by SMARTIRE as part of a SYSTEM,
whether now existing or developed during the term of this AGREEMENT. References
to COMPONENTS include, where appropriate, the entire SYSTEM.
"CONFIDENTIAL INFORMATION" means all nonpublic information disclosed by
either PARTY to the other, whether before or after the date of this AGREEMENT,
which relates to the design, production, marketing, distribution, or sale of
COMPONENTS.
"CUSTOMERS" means OEMs, fleets and INDEPENDENT DISTRIBUTORS.
"XXXX" means the Heavy Vehicle Technology and Systems Group of Xxxx
Corporation, a Virginia corporation.
"DISCOVERIES" means all ideas, concepts, creations, developments,
enhancements, modifications, know-how, techniques, business methods, other
methods, procedures, processes, notes, drawings, compositions, computer
programs, product formulations, source codes, layout designs, works of
authorship, copyrights (whether registered or unregistered), improvements,
processes, apparatuses, formulations, inventions and discoveries and physical
embodiments thereof, whether patentable or not, with respect to COMPONENTS or
SYSTEMS.
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"INDEPENDENT DISTRIBUTOR" means aftermarket distributors not under the
direct or indirect control of an OEM.
"LOSS" is defined in Section 9.5
"NOTICE" means formal notice in accordance with Section 13.
"OEM" means an original equipment manufacturer, which manufactures
POWER UNITS and/or TRAILERS, including its dealers and distributors.
"PARTY" means XXXX or SMARTIRE. "PARTIES" means both XXXX and SMARTIRE.
"PERSON" means any individual or entity.
"POWER UNIT" means a Class 4 through Class 8 truck, bus, motorhome, or
tractor (excluding agricultural tractors).
"ROAD RANGER" means DANA's Road Ranger marketing alliance with Xxxxx
Corporation.
"SMARTIRE" means SmarTire Systems Inc., a Yukon corporation.
"SYSTEM" means any wireless sensor system developed by SMARTIRE, using
a wireless gateway, sensors, and other COMPONENTS for tire pressure monitoring
and other remote sensor tasks, whether now existing or developed during the term
of this AGREEMENT.
"TERRITORY" means the United States of America, Canada, Mexico,
Australia, and New Zealand.
"TRAILER" means a highway trailer, dolly and chassis designed for use
with a POWER UNIT.
"VEHICLE" means a POWER UNIT or TRAILER.
2. SCOPE OF RELATIONSHIP
2.1. SMARTIRE hereby grants to XXXX, directly or through ROAD RANGER, the
non-exclusive right to market, sell, and distribute COMPONENTS to
CUSTOMERS in the TERRITORY for use in POWER UNITS and TRAILERS.
2.2. As of the date of this AGREEMENT, SMARTIRE represents and XXXX
acknowledges SMARTIRE's representation that that SMARTIRE has
previously entered into agreements with third parties related to the
marketing, sale and distribution of COMPONENTS within the TERRITORY,
which agreements may be extended from time to time, which SMARTIRE may
only generally describe, as set for in Exhibit A, pursuant to
SMARTIRE's confidentiality obligations. Provided that XXXX shall be in
compliance with this AGREEMENT in all material respects specifically
using reasonable commercial efforts to meet the mutually agreed sales
targets as set forth elsewhere herein, during the term of this
AGREEMENT, SMARTIRE will not: (i) except as permitted in current
agreements described in Exhibit A, the term of which may be extended,
sell directly any COMPONENTS to any new CUSTOMERS in the TERRITORY; or
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(ii) grant rights related to the marketing, sale and distribution of
COMPONENTS in the TERRITORY to any other third party. SMARTIRE may
request a waiver of DANA's right to market and sell to a particular OEM
in the TERRITORY by giving XXXX NOTICE. If XXXX does not affirm by
NOTICE to SMARTIRE, within ten business (10) days after receipt of such
NOTICE, DANA's intention to market and sell to such OEM, then XXXX will
be deemed to have waived its right to market and sell to such OEM.
2.3. Notwithstanding Section 2.1, SMARTIRE may continue to provide
COMPONENTS directly to CUSTOMERS in the TERRITORY under existing part
numbers, purchase orders and contracts. Subject to mutual agreement
between Xxxx and SmarTire, the parties may agree to transfer these
contracts to Xxxx providing that the customer is in agreement with this
transfer, and that mutual pricing terms between Xxxx and SmarTire can
be established. These agreements shall not be transferred to a third
party.
2.4. SMARTIRE hereby grants to XXXX the nonexclusive right to market, sell,
and distribute COMPONENTS to CUSTOMERS outside the TERRITORY, or for
use other than in POWER UNITS and TRAILERS; provided that XXXX shall
give NOTICE to SMARTIRE of its intention and if SMARTIRE does not
advise XXXX of its rejection of the request within ten business (10)
days after receipt of such NOTICE, XXXX xxx exercise its rights to the
extent of the NOTICE and of this AGREEMENT.
2.5. SMARTIRE shall negotiate in good faith with XXXX prior to granting to
any other PERSON nonexclusive or exclusive rights to market, sell, or
distribute COMPONENTS to CUSTOMERS outside the TERRITORY, or for use in
vehicles other than POWER UNITS and TRAILERS.
2.6. At the request of either PARTY, SMARTIRE and XXXX shall negotiate in
good faith regarding the expansion of the TERRITORY and/or of the
markets within the TERRITORY.
2.7. Throughout the term of this AGREEMENT, XXXX shall not market, sell, or
distribute any system for wireless tire pressure monitoring other than
the SYSTEMS. This covenant shall not affect in any way DANA's tire
pressure control business.
2.8. Throughout the term of this AGREEMENT, SMARTIRE shall not design,
develop, manufacture, or sell, any tire pressure control system.
2.9. The PARTIES acknowledge and agree that money damages may be inadequate
to compensate a PARTY for any breach of Section 2.7 or 2.8. Therefore,
in the event of any actual or threatened breach of Section 2.7 or 2.8,
in addition to any other remedies that may be available at law or in
equity, the aggrieved PARTY shall be entitled to appropriate temporary
and/or permanent injunctive relief.
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3. SMARTIRE'S AND DANA'S OBLIGATIONS
3.1. SMARTIRE shall design, develop, manufacture and sell to XXXX, and XXXX
shall purchase from SMARTIRE, one hundred percent (100%) of DANA's
requirements for COMPONENTS for CUSTOMERS in the TERRITORY during the
term of this AGREEMENT. The COMPONENTS shall be supplied by SMARTIRE to
XXXX in compliance with all specifications as agreed between the
PARTIES.
3.2. SMARTIRE shall make reasonable commercial efforts, on a timely basis,
to assure that all COMPONENTS are competitive with similar products,
and to assure its suppliers are competitive, taking into consideration
all relevant factors including, but not limited to, design, technology,
performance, features, quality, reliability, service, delivery, and
cost.
3.3. SMARTIRE shall use reasonable commercial efforts to assure that it has
(or its suppliers have) adequate production capacities to meet the
estimated annual requirements provided by XXXX. Any estimates are for
planning purposes only, and are not obligations to purchase COMPONENTS.
3.4. SMARTIRE shall provide technical and application support to XXXX and
the CUSTOMERS as agreed between SMARTIRE and XXXX from time to time.
Such support shall be at SMARTIRE's or CUSTOMER's expense as agreed.
SMARTIRE shall keep XXXX informed of any environmental or vehicle
installation issues that may affect performance of the SYSTEM or
COMPONENTS of which SMARTIRE is, or should, through the exercise of
reasonable diligence, becomes aware.
3.5. SMARTIRE shall provide reasonable amounts of training to DANA's sales
and service technicians and to CUSTOMERS as agreed between SMARTIRE and
XXXX from time to time.
3.6. SMARTIRE shall provide prototypes and reasonable quantities of
production samples of COMPONENTS to XXXX free of charge as agreed on a
case by case basis to facilitate DANA's sale of the COMPONENTS.
3.7. XXXX shall use reasonable commercial efforts to actively market and
sell COMPONENTS to CUSTOMERS and INDEPENDENT DISTRIBUTORS in the
TERRITORY, and obtain the highest practical market penetration
throughout the TERRITORY.
3.8. The PARTIES will consult each other regularly, at least twice annually
or as mutually agreed, to review market developments, discuss proposed
amendments to this AGREEMENT, and to address new opportunities outside
the TERRITORY, CUSTOMER needs, competing products, production planning,
COMPONENT developments, COMPONENTS and SYSTEMS developments, COMPONENTS
and SYSTEMS costs, product performance, warranty, competitiveness,
sales targets, promotions, advertising campaigns, sales and service
actions. One of these meetings will be held annually in September.
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3.9. XXXX and SMARTIRE shall mutually agree on monthly, quarterly and/or
annual sales targets to be achieved by XXXX. At any time, if XXXX fails
to meet the mutually agreed sales targets, the parties shall meet to
discuss the reasons for such failure and mutually develop a corrective
action plan which shall provide for no less than two (2) quarters for
XXXX to achieve the sales targets. During such a period, SmarTire shall
be able to provide increased sales support to the Customers to assist
in the attainment of the targets, and Xxxx shall provide SmarTire with
any relevant customer information required to assist in this process.
Provided XXXX shall be meeting its obligations set forth in Section
3.7, the failure of XXXX to achieve such sales targets will not, by
itself, be considered grounds for termination of this AGREEMENT. XXXX
shall provide SMARTIRE with timely sales reports listing all current
sales prospects and opportunities for the COMPONENTS and participate in
conference calls with SMARTIRE to discuss goals and plans to achieve
the highest sales reasonably possible. XXXX shall, at SMARTIRE's
reasonable request, provide any information relating to the actual sale
of COMPONENTS including e-mails, status reports, sales plans,
proposals, or related items.
3.10. If XXXX fails to meet it sales targets despite having participated in a
corrective action plan and having met its obligations set forth in
Section 3.7, following the second year of the AGREEMENT, XXXX xxx, on
sixty (60) days prior written notice in advance of any annual AGREEMENT
anniversary date, advise SMARTIRE of DANA's intention to terminate the
AGREEMENT without cause.
3.11. SMARTIRE will own, develop and provide technical and training materials
and, at CUSTOMERS' or INDEPENDENT DISTRIBUTORS' expense, provide
marketing and technical counsel to CUSTOMERS and INDEPENDENT
DISTRIBUTORS to assist with the application and installation of
retrofit SYSTEMS.
3.12. XXXX will own, develop and provide reasonable and customary amounts of
marketing and sales materials for the SYSTEMS and COMPONENTS. At
SMARTIRE's option, SMARTIRE may develop or fund additional marketing
and sales materials.
3.13. In order to assure mutual success, SMARTIRE shall furnish to XXXX any
relevant technical and commercial information regarding COMPONENTS and
SYSTEMS, including market leads and competitive market knowledge, which
might come into SMARTIRE's possession, except through agreements or
relationships described in Exhibit A.
3.14. Each Party shall, in connection with its performance hereunder, comply
with all applicable, rules, and regulations.
4. BRANDING AND TRADEMARKS
4.1. XXXX has the right to market, sell, and distribute COMPONENTS under a
brand owned by XXXX; provided, however, that COMPONENT packaging will
identify SMARTIRE as the manufacturer of the COMPONENTS.
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4.2. Subject to the provisions of this AGREEMENT, XXXX grants to SMARTIRE
for the term of this AGREEMENT a non-exclusive license to use the trade
names, trademarks, logo marks and other similar markings of XXXX as
provided by XXXX from time to time or other marks that XXXX xxx
identify from time to time in writing to SMARTIRE ("XXXX XXXXX") on
COMPONENTS and packaging for COMPONENTS that it sells to XXXX so long
as COMPONENTS are manufactured and distributed in accordance with the
standards, specifications and instructions established and approved by
XXXX. SMARTIRE may not use the XXXX XXXXX on COMPONENTS or packaging
for COMPONENTS sold to third parties outside of this AGREEMENT.
4.3. Upon expiration or termination of this AGREEMENT, SMARTIRE agrees to
discontinue the use of the XXXX XXXXX or any xxxx confusingly similar
thereto immediately, not to attempt to register or to use any
trademark, service xxxx, trade name, logo, trade dress, or other
similar marking that in the opinion of XXXX is confusingly similar to
any XXXX XXXXX. SMARTIRE agrees that it will destroy all materials
bearing the XXXX XXXXX or remove the XXXX XXXXX from web sites and
other electronic media.
4.4. XXXX shall have the right, at reasonable times and upon reasonable
prior notice, to (a) inspect samples of SMARTIRE's finished COMPONENTS,
packaging, labels or advertising bearing the XXXX XXXXX at a mutually
agreeable location, or (b) receive, at SMARTIRE's expense, reasonable
quantities of samples of SMARTIRE's finished COMPONENTS, packaging,
labels or advertising bearing the XXXX XXXXX for the purpose of
determining that they are of the proper quality. SMARTIRE shall change
all COMPONENTS, packaging, labels or advertising bearing the XXXX XXXXX
that are not approved by XXXX.
4.5. Subject to the provisions of this AGREEMENT, SMARTIRE grants to XXXX
for the term of this AGREEMENT a non-exclusive license to use the trade
names, trademarks, logo marks and other similar markings of SMARTIRE as
provided by SMARTIRE or other marks that SMARTIRE may identify from
time to time in writing to XXXX ("SMARTIRE MARKS") on printed material,
including but not limited to technical materials, brochures, catalogs,
instruction manuals, advertising, and marketing materials related to
COMPONENTS and SYSTEMS.
4.6. Upon expiration or termination of this AGREEMENT, XXXX agrees to
discontinue the use of the SMARTIRE MARKS or any xxxx confusingly
similar thereto immediately, not to attempt to register or to use any
trademark, service xxxx, trade name, logo, trade dress, or other
similar marking that in the opinion of SMARTIRE is confusingly similar
to any SMARTIRE MARKS. XXXX agrees that it will destroy all materials
bearing the SMARTIRE MARKS or remove the SMARTIRE MARKS from web sites
and other electronic media, except that XXXX xxx use printed materials
until COMPONENTS in inventory are sold or returned for credit.
4.7. SMARTIRE shall have the right, at reasonable times and upon reasonable
prior notice, to (a) inspect samples of DANA's packaging, labels or
advertising bearing the SMARTIRE MARKS at a mutually agreeable
location, or (b) receive, at DANA's expense, reasonable quantities of
samples of DANA's packaging, labels or advertising bearing the SMARTIRE
MARKS for the purpose of determining that they meet quality standards
and proper use of SMARTIRE MARKS previously defined by SMARTIRE. XXXX
shall change all packaging, labels or advertising bearing the SMARTIRE
MARKS in a manner not previously approved by SMARTIRE.
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5. PURCHASE ORDERS AND FORECASTS
5.1. XXXX shall issue biweekly shipping releases by direct computer order
entry, specifying the quantities of COMPONENTS, delivery date and
delivery location. Each such release will indicate an twelve (12) week
rolling estimate of weekly volumes, the last ten (10) weeks of which
are forecasts for planning purposes and the first two (2) weeks' volume
requirements shall be a firm commitment. The firm orders submitted by
XXXX shall be effective after confirmation by SMARTIRE. SMARTIRE will
use its best efforts to provide such confirmation within one (1)
business day after receipt of the order. On specific long lead
components (greater than six months lead time), XXXX will develop a one
year forecast. SMARTIRE shall provide a list of long lead components
for DANA's acknowledgement. Requests for additions or changes to this
list shall be submitted to XXXX for approval in writing and include an
estimate of the associated costs and lead times by component.
5.2. At any time, XXXX xxx place an emergency order for COMPONENTS with
SMARTIRE. SMARTIRE shall make reasonable efforts to accept such orders
and notify XXXX within one (1) business day after receipt of the
emergency order if it accepts the order. Any incremental costs required
to fulfill such emergency order shall be borne by XXXX unless the need
for the emergency order is created by SMARTIRE.
5.3. In addition to the foregoing, XXXX shall, twice annually in the first
(1st) and third (3rd) quarter of each year give SMARTIRE a good faith
estimate of its COMPONENT purchases during the next applicable year.
These estimates are for planning purposes only, and are not obligations
to purchase COMPONENTS.
5.4. If any COMPONENTS are delivered in excess of volumes ordered or in
advance of schedule, XXXX xxx return them at SMARTIRE's expense or
retain them and invoice SMARTIRE for any resulting handling and storage
costs. XXXX will not process invoices for COMPONENTS shipped in advance
of schedule until the scheduled delivery date. XXXX xxx change
scheduled deliveries at any time by written notice to SMARTIRE and will
reimburse SMARTIRE for reasonable, documented, unavoidable incremental
costs incurred by SMARTIRE due to such changes. If SMARTIRE fails to
deliver any shipment of COMPONENTS in accordance with DANA's
instructions, XXXX xxx, at its option, cancel the shipment, accept
partial or delayed delivery.
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6. PRICES AND PAYMENT CONDITIONS
6.1. SMARTIRE shall give XXXX NOTICE of its price for each COMPONENT at the
time of execution of this AGREEMENT or, for new COMPONENTS, as soon as
the price is determined. SMARTIRE may change these prices upon ninety
(90) days NOTICE to XXXX; provided, however, that SMARTIRE shall honor
the old price with respect to any binding commitments XXXX has made to
a CUSTOMER prior to receiving NOTICE of the price change. All prices
shall be stated in United States dollars.
6.2. SMARTIRE warrants that its prices to XXXX for the COMPONENTS are and
will remain no less favorable than its prices to other customers for
the same or comparable goods in comparable quantities and in comparable
terms of sale.
6.3. XXXX shall xxxx up SMARTIRE prices (excluding any shipping, duties,
handling, packaging or dunnage charges) by an amount solely determined
by XXXX for resale to CUSTOMERS.
6.4. Where specific opportunities or pricing issues arise with existing or
potential CUSTOMERS, the PARTIES shall negotiate, on a case by case
basis, in good faith a suitable pricing structure between XXXX and
SMARTIRE to meet the CUSTOMERS' request.
6.5. SMARTIRE shall invoice XXXX in United States dollars on a regular basis
upon delivery of COMPONENTS. Payment terms from XXXX are net on the
sixty-second (62nd) day following the date of invoice. All PRODUCTS
shall be sold Delivery Duty Paid to the delivery point, which may be a
CUSTOMER location or XXXX facility. As such, SMARTIRE is liable for
paying all costs of transport, insurance, duties and brokerage fees to
the delivery point. Title and risk of loss shall pass at the delivery
point.
6.6. Without limiting any other remedies available to XXXX, XXXX has the
right to offset, against amounts due to SMARTIRE, any amounts due and
payable from SMARTIRE to XXXX under this AGREEMENT.
6.7. All other terms and conditions of the sale of COMPONENTS to XXXX shall
be in accordance with the terms and conditions of DANA'S purchase order
as set forth in Exhibit C. To the extent that the terms and conditions
of such order are inconsistent with or contradictory to the express
terms of this AGREEMENT, the terms of this AGREEMENT shall govern
without modification by the provisions contained in such order or sales
terms.
7. CONFIDENTIALITY
The following terms govern the confidentiality of information disclosed by
either PARTY ("DISCLOSING PARTY") to the other PARTY ("RECEIVING PARTY"):
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7.1. RECEIVING PARTY shall restrict access to and disclosure of the
CONFIDENTIAL INFORMATION to its affiliates and suppliers and their
respective directors, officers, employees, and agents who have a need
to know the CONFIDENTIAL INFORMATION. RECEIVING PARTY shall not
disclose CONFIDENTIAL INFORMATION, directly or indirectly, to any other
PERSON. RECEIVING PARTY shall not use CONFIDENTIAL INFORMATION to
reproduce, redesign, reverse engineer, or manufacture products or
equipment of DISCLOSING PARTY, to perform services relating to the
products or equipment of DISCLOSING PARTY, or for its own benefit,
except as expressly provided in this AGREEMENT.
7.2. RECEIVING PARTY may only use DISCLOSING PARTY's CONFIDENTIAL
INFORMATION in accordance with the purpose of this AGREEMENT. No other
rights or licenses are granted to either PARTY in the CONFIDENTIAL
INFORMATION.
7.3. RECEIVING PARTY shall use at least the same high degree of care, but no
less than a reasonable degree of care, to avoid inadvertent disclosure
or unpermitted use of DISCLOSING PARTY's CONFIDENTIAL INFORMATION which
it employs with respect to its own proprietary or CONFIDENTIAL
INFORMATION and that it does not wish to have disseminated, published
or disclosed.
7.4. There shall be no restrictions under this AGREEMENT with respect to any
portion of the CONFIDENTIAL INFORMATION, which RECEIVING PARTY can
establish through documentary evidence:
a. was known to RECEIVING PARTY at the time of its disclosure to
RECEIVING PARTY;
b. was or becomes publicly known through no fault, wrongful act
or omission of RECEIVING PARTY;
c. was received by RECEIVING PARTY from a third party, without
solicitation, such third party having a bona fide right to do
so, and not having any confidential relationship or obligation
to DISCLOSING PARTY, and without breach of the restrictions
contained in this AGREEMENT;
d. was independently developed by RECEIVING PARTY without access
to DISCLOSING PARTY's CONFIDENTIAL INFORMATION or a breach of
this AGREEMENT;
e. was approved for release in writing by DISCLOSING PARTY; or
f. was required by law, court order or governmental agency to be
disclosed. In such cases, RECEIVING PARTY shall immediately
notify DISCLOSING PARTY that production or disclosure has been
ordered, and to take all reasonable steps and cooperate with
DISCLOSING PARTY to limit disclosure of the CONFIDENTIAL
INFORMATION.
7.5. CONFIDENTIAL INFORMATION shall not be deemed to be in the public domain
merely because any part of such CONFIDENTIAL INFORMATION is embodied in
general disclosures or because individual features, components or
combinations thereof are now or become known to the public. All
CONFIDENTIAL INFORMATION delivered by DISCLOSING PARTY to RECEIVING
PARTY pursuant to this AGREEMENT shall be and remain the property of
DISCLOSING PARTY unless otherwise provided herein.
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7.6. The PARTIES do not seek the confidential information or trade secrets
of any third party, and the PARTIES shall not use in the performance of
this AGREEMENT or disclose to the other PARTY such confidential
information or trade secrets.
7.7. In any judicial proceeding, it will be presumed that matters which are
designated as Confidential or Proprietary constitute CONFIDENTIAL
INFORMATION, and that RECEIVING PARTY will bear the burden of proving
such matters or information are unrestricted pursuant to Section 7.4.
7.8. RECEIVING PARTY is liable for any breach of this Section 7 by all
PERSONS to whom it has disclosed CONFIDENTIAL INFORMATION.
7.9. Upon the expiration or termination of this AGREEMENT, each PARTY shall
return or destroy and certify the destruction of the other PARTY's
CONFIDENTIAL INFORMATION within thirty (30) days of such request.
Counsel for each PARTY is entitled to keep one copy in a confidential
file as evidence of the disclosure.
8. QUALITY ASSURANCE, PRODUCT APPLICATIONS and PACKAGING
8.1. SMARTIRE or its suppliers shall manufacture or assemble COMPONENTS
according to its normal quality assurance procedures and TSI6949
standards so as to ensure COMPONENTS' conformity with the applicable
engineering drawings and specifications. SMARTIRE shall submit to XXXX
a written summary of its quality assurance plan and, prior to
initiating the supply of COMPONENTS to XXXX, shall furnish inspection
data to show adherence to such plan.
8.2. Prior to making any subsequent modifications to its manufacturing
process or quality system, SMARTIRE shall furnish to XXXX a written
summary of its revised quality assurance plan, together with the
applicable inspection data.
8.3. Any changes to COMPONENTS or their specifications are subject to the
prior written agreement of the PARTIES and, if required, the CUSTOMER.
8.4. At DANA'S request, SMARTIRE shall provide ongoing evidence of
conformance to SMARTIRE'S quality assurance plan and TSI6949 standards
in the form of a certification from SMARTIRE'S quality department.
SMARTIRE shall also permit XXXX or its designee at reasonable times and
on reasonable notice to audit SMARTIRE'S quality assurance procedure
and review pertinent inspection records at the manufacturing and
assembly locations of SMARTIRE and its suppliers. The PARTIES agree to
work toward the objective of SMARTIRE becoming a qualified supplier
pursuant to DANA'S supplier quality requirements.
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8.5. SMARTIRE shall develop approval guidelines for acceptable applications
and installations of COMPONENTS with regard to wheel installation and
signal integrity within 60 days after validation of any COMPONENTS and
may revise the same from time to time to reflect COMPONENT
modifications, COMPONENT packaging modification or additional COMPONENT
configurations, upon agreement by the PARTIES.
8.6. XXXX shall approve COMPONENT applications and installations which are
within the limits of the guidelines referred to in Section 8.5. In
those cases where an application or installation does not conform to
the standard conditions, XXXX shall request SMARTIRE'S assistance and
SMARTIRE will respond to such request by approving or disapproving the
proposed application within ten (10) days.
8.7. The engineering departments of SMARTIRE and XXXX shall maintain
information on approved applications and installations of COMPONENTS.
XXXX shall be responsible for the communications of CUSTOMER and
applications and installation approval or disapproval to its CUSTOMERS.
XXXX shall promptly notify SMARTIRE regarding such communications.
8.8. The PARTIES will mutually agree upon COMPONENT packaging prior to
initial deliveries.
9. WARRANTY & LIABILITY
9.1. SMARTIRE shall provide XXXX with SMARTIRE's express warranty with
respect to the SYSTEMS and COMPONENTS, a copy of which is attached as
Exhibit B and made an integral part hereof. XXXX shall pass the
aforesaid SMARTIRE warranty on to its CUSTOMERS, and SMARTIRE shall
fully honor this warranty. SMARTIRE shall have no obligation to honor
any warranty obligations--with respect to the SYSTEMS and
COMPONENTS--which are in addition to those obligations set forth on
Exhibit B, except to the extent that XXXX and SMARTIRE shall previously
have agreed otherwise.
9.2. Decisions on warranty claims made against XXXX for COMPONENTS shall be
made by XXXX in its reasonable discretion. XXXX shall use reasonable
commercial efforts to justify all such warranty claims. If SMARTIRE
disagrees with DANA'S decisions on these warranty claims, the PARTIES
shall negotiate an agreeable settlement within a reasonable period.
XXXX shall provide SMARTIRE with adequate written documentation in
support of all warranty claims for COMPONENTS that are submitted to
SMARTIRE by XXXX. XXXX will invoice SMARTIRE at quarterly intervals for
all warranty payments made by XXXX against COMPONENTS and payment will
be made by SMARTIRE within thirty (30) days of determination of
settlement.
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9.3. If a recall, service campaign or similar action is required by law or
regulation, or if any such action is ordered by any governmental agency
with respect to COMPONENTS, then to the extent permitted by law or
regulation, the PARTIES shall negotiate in good faith to determine the
corrective actions to be taken, the costs of which shall be borne by
the PARTIES in proportion to their respective responsibility for the
alleged defect.
9.4. SMARTIRE shall be liable to XXXX hereunder for: (a) the replacement of
all defective COMPONENTS; and (b) reimbursement for reasonable
removal/installation costs, as well as for all other reasonable costs
incurred by XXXX or its customers to perform the corrective action,
excluding internal handling and administrative costs and any xxxx-up
normally accruing to XXXX or its customer in the distribution of
service parts.
9.5. Each PARTY shall defend (as provided in Section 9.6 below), indemnify
and save harmless the other PARTY, its directors, officers and
employees and agents, from any and all actual and alleged costs,
expenses, claims, suits, damages and liabilities (collectively "LOSS")
based upon injury or death to persons or damaged property, to the
extent such LOSS is caused by or arises out of or in connection with a
claim, suit or proceeding brought by a third party based on a) any
negligent or wrongful act or omission of the other PARTY, its supplier,
or their respective employees, agents or representatives in the
performance of this AGREEMENT; and b) in the case of SMARTIRE to XXXX,
any defects in the design, material and/or workmanship of COMPONENTS.
9.6. Where the cause of the LOSS is the negligence, fault or other breach of
duty of both XXXX and SMARTIRE or a third party's, the liability
therefor shall be allocated, reallocated or prorated, as the case may
be, between the PARTIES hereto and any other party bearing
responsibility in accordance with their percentage of negligence, fault
or other breach of duty in causing such LOSS and the liability of the
indemnifying PARTY proportionately reduced. Each PARTY shall notify the
other within fifteen (15) days after receipt of knowledge of any
accident involving COMPONENTS and shall fully cooperate with the other
in the investigation and determination of the cause of any such
accident. The furnishing of information and investigation by a PARTY
shall in no manner constitute or be construed as an assumption of
liability by such party. The foregoing indemnification obligations in
Sections 9.5 and 9.6 are conditioned upon the indemnified PARTY
promptly notifying the indemnifying PARTY in writing of the claim, suit
or proceeding for which the indemnifying PARTY is obligated under these
Sections, the indemnified PARTY cooperating with, assisting and
providing information to, the indemnifying PARTY as reasonably required
and at the indemnifying PARTY's expense, and granting the indemnifying
PARTY the exclusive right to defend or settle such claim, suit or
proceeding.
9.7. SUBJECT TO THE INDEMNIFICATION OR WARRANTY OBLIGATIONS, IMPOSED UPON
EACH PARTY PURSUANT TO THIS AGREEMENT, IN NO EVENT SHALL THE LIABILITY
OF EITHER PARTY OR THEIR RESPECTIVE SUBSIDIARIES, EMPLOYEES, DIRECTORS
OR OFFICERS, TO THE OTHER PARTY PURSUANT TO THIS CONTRACT, WHETHER
ARISING IN CONTRACT OR IN TORT, OR ANY OTHER LEGAL THEORY (BUT
EXCLUDING WILLFUL MISCONDUCT) BE THE GREATER OF IN AGGREGATE (i) THE
AMOUNT PAID BY XXXX TO SMARTIRE IN THE TWELVE (12) MONTHS PRECEDING THE
CLAIM OR CIRCUMSTANCES FIRST GIVING RISE TO THE EVENT OR (ii) THREE
MILLION DOLLARS ($3,000,000).
-12-
EACH PARTY HEREBY RELEASES THE OTHER PARTY AND ITS SUBSIDIARIES,
EMPLOYEES, DIRECTORS AND OFFICERS FROM ANY LIABILITY IN EXCESS OF SUCH
AMOUNT. THIS SECTION SHALL PREVAIL AND TAKE PRECEDENCE OVER ANY
CONFLICTING OR INCONSISTENT PROVISIONS IN THE CONTRACT. NOTHING IN THIS
AGREEMENT SHALL LIMIT EITHER PARTY'S LIABILITY TO THE OTHER PARTY FOR
BODILY INJURY OR DEATH CAUSED BY THE INDEMNIFYING PARTY'S NEGLIGENCE.
THIS LIMITATION OF LIABILITY IS CUMULATIVE AND NOT PER-INCIDENT (I.E.,
THE EXISTENCE OF TWO OR MORE CLAIMS WILL NOT ENLARGE THIS LIMIT.)
NOTWITHSTANDING THE FOREGOING, IF EITHER PARTY IS SUED BY A THIRD PARTY
IN ANY COURT FOR DAMAGES FOR REASON OF THE ACTS OR OMISSIONS OF THE
OTHER PARTY INCLUDING BUT NOT LIMITED TO CLAIMS RELATED TO WARRANTY,
INTELLECTUAL PROPERTY INFRINGEMENT OR PRODUCTS LIABILITY, TO THE EXTENT
SUCH LAWSUIT RELATES TO THE ACTS OR OMISSIONS OF THE OTHER PARTY, SUCH
OTHER PARTY SHALL DEFEND SUCH ACTION (OR CAUSE THE SAME TO BE DEFENDED)
AT ITS OWN EXPENSE AND SHALL PAY AND DISCHARGE ANY JUDGMENT THAT MAY BE
RENDERED IN SUCH ACTION. IF SUCH OTHER PARTY FAILS OR NEGLECTS TO SO
DEFEND IN SAID ACTION, THE PARTY SUED MAY DEFEND THE SAME AND ANY
EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES, WHICH IT MAY PAY OR
INCUR IN DEFENDING SAID ACTION AND THE AMOUNT OF ANY JUDGMENT WHICH IT
MAY BE REQUIRED TO PAY SHALL BE REIMBURSABLE BY THE OTHER PARTY TO THE
EXTENT SUCH LAWSUIT RELATES TO THE ACTS OR OMISSIONS OF THE OTHER
PARTY.
SMARTIRE shall maintain product liability insurance, with coverage
amounts no less than USD $25,000,000, with a reputable insurer, which
policy shall name XXXX as an additional insured.
9.8. Each PARTY represents and warrants that it has the right to enter into
this AGREEMENT, and that entry into this AGREEMENT will not result in
the breach or violation of or constitute default under any other
AGREEMENT, statute, court order, judgment, rule or regulation, court,
regulatory authority or government body to which the such PARTY is a
party or bound.
-13-
9.9. Each PARTY represents and warrants that it will not make any agreements
or assignments with or in favor of any third party, which would
conflict with or render it unable to comply with its obligations
hereunder.
9.10. Except for liability arising out of or in connection with death or
bodily injury, the tort of deceit or where it is not otherwise
permissible under applicable law to exclude liability, in no event
shall either PARTY, its respective affiliates, officers, directors,
employees, agents or suppliers be liable for any special, incidental,
indirect or consequential damages, or lost revenue, lost profits, or
lost or damaged data, whether arising in contract, tort (including
negligence), or otherwise, even if such PARTY has been informed of the
possibility thereof. Notwithstanding the foregoing, damages arising out
of or in connection with amounts owing under the express obligations
under Section 9.5, Section 9.7, third paragraph and Section 10.5, shall
not be considered consequential in nature regardless of their form or
origin.
9.11. This Section 9 shall survive the expiration and/or termination of this
AGREEMENT.
10. INTELLECTUAL PROPERTY MATTERS
10.1. All DISCOVERIES authored, made, conceived or reduced to practice by
XXXX or for XXXX by a third party for DANA's benefit, prior to this
AGREEMENT, will remain the property of XXXX. All DISCOVERIES authored,
made, conceived or reduced to practice from time to time solely by XXXX
or solely for XXXX by a third party for DANA's benefit, during the term
this AGREEMENT and after its termination will remain the property of
XXXX.
10.2. All DISCOVERIES authored, made, conceived or reduced to practice by
SMARTIRE or for SMARTIRE by a third party for SMARTIRE'S benefit, prior
this AGREEMENT, will remain the property of SMARTIRE. All DISCOVERIES
authored, made, conceived or reduced to practice from time to time
solely by SMARTIRE or solely for SMARTIRE by a third party for
SMARTIRE'S benefit, during the term of this AGREEMENT and after its
termination will remain the property of SMARTIRE.
10.3. The PARTIES anticipate that they may engage in one or more joint
product development or co-development projects in the future involving
the PARTIES and potentially one or more CUSTOMERS. Prior to commencing
any such project, the PARTIES and any participating CUSTOMERS will
negotiate in good faith and enter into a comprehensive joint
development agreement for such project.
10.4. SMARTIRE represents and warrants that all COMPONENTS it furnishes
hereunder are free of encumbrances or claims, that SMARTIRE has the
right to convey ownership of COMPONENTS to XXXX.
-14-
10.5. Subject to the following provisions of this Section, SMARTIRE shall, at
its own expense, indemnify, hold harmless, defend or at its option
settle any claim, suit or proceeding brought against XXXX or CUSTOMER
which is based on an allegation that any COMPONENTS or any components
thereof sold and supplied to XXXX under this AGREEMENT constitute an
infringement of a patent issued within the TERRITORY, design right, or
copyright, constitutes a misuse or misappropriation of proprietary
information, or violates another form of intellectual property
("CLAIM"). This obligation shall be effective only if SMARTIRE is
notified promptly in writing and given authority, information and
assistance (including, without limitation, making available to SMARTIRE
such documents and witnesses as are within the control of XXXX, at
DANA'S expense) for the defense of such claim, suit or proceeding.
SMARTIRE shall pay all damages (compensatory or punitive), attorney
fees, and costs awarded in such suit or proceeding so defended or
payable as a result of any settlement which SMARTIRE enters into. If
any COMPONENTS or any components thereof furnished hereunder become the
subject of any CLAIM and a settlement or an adjudication establishes
that such COMPONENTS or components thereof do in fact infringe such a
patent, design right, or copyright, constitutes a misuse or
misappropriation of proprietary information, or violates another form
of intellectual property or if the use or sale of such COMPONENTS or
components thereof is enjoined, SMARTIRE shall, at its own expense,
either:
a. procure for XXXX and CUSTOMERS the right to continue using
such COMPONENTS or components thereof;
b. replace such COMPONENTS or components thereof with
non-infringing COMPONENTS or components thereof reasonably
acceptable to XXXX and CUSTOMERS; or
c. modify such COMPONENTS or components thereof in a manner
reasonably acceptable to XXXX and CUSTOMERS so such COMPONENTS
or components thereof become non-infringing.
Notwithstanding the foregoing, SMARTIRE shall have no liability for a CLAIM
arising from:
a) the combination, operation, or use of a COMPONENT supplied
under this Agreement with any product, device, or software not
supplied by or through SMARTIRE to the extent the CLAIM is
based on the combination;
b) the alteration or modification of any COMPONENTS except as
authorized by SMARTIRE;
c) SMARTIRE's compliance with DANA's designs, specifications, or
instructions; and,
d) XXXX or CUSTOMER's use of the COMPONENT after SMARTIRE has
informed XXXX of modifications or changes in the COMPONENTS
required to avoid such a CLAIM if the alleged infringement
would have been avoided by implementation of SMARTIRE's
recommended modifications or changes where such modifications
or changes have been provided to XXXX at no additional charge.
-15-
This Section 10.5 states the entire liability of SMARTIRE to XXXX with respect
to infringement of design right or copyright that constitutes a misuse or
misappropriation of proprietary information, constitutes any competition, or
violates another form of intellectual property, by any COMPONENTS or any
components thereof. TO THE EXTENT PERMITTED BY LAW, THIS INDEMNITY OBLIGATION
AND REMEDY ARE GIVEN TO XXXX AND ITS CUSTOMERS SOLELY FOR THEIR RESPECTIVE
BENEFIT AND IN LIEU OF, AND SMARTIRE DISCLAIMS, ALL WARRANTIES, CONDITIONS AND
OTHER TERMS OF NON-INFRINGEMENT WITH RESPECT TO ANY COMPONENT.
11. TERM AND TERMINATION
11.1. This AGREEMENT shall remain in effect for a term of seven (7) years
from the effective date as of the date of last signature below, at
which time this AGREEMENT shall be continue indefinitely until
terminated by either PARTY, upon one (1) year's NOTICE to the other
PARTY.
11.2. Either PARTY may terminate this AGREEMENT immediately upon NOTICE to
the other PARTY upon the occurrence of one of the following events:
a. the failure or refusal of the other PARTY for a period of
ninety (90) days after NOTICE to perform fully and promptly
its obligations under this AGREEMENT.
b. either PARTY defaults or breaches any material provision of
this AGREEMENT and does not remedy the default or breach
within thirty (30) days after NOTICE by the other PARTY.
c. the commencement of any proceeding by or against either PARTY
or its property under any law dealing with bankruptcy,
insolvency, receivership or other relief of debtors.
d. the insolvency or dissolution of either PARTY.
e. by the other PARTY, if the maximum amount payable by one PARTY
to the other PARTY, in the limitation of liability set forth
in paragraph 1 of Section 9.7, has been exhausted.
11.3. If XXXX has failed to make any payments, unless a reasonable dispute
exists and the PARTIES are negotiating a resolution with respect to
such invoice, when due, SMARTIRE may terminate this AGREEMENT upon
thirty (30) days written notice to XXXX.
11.4. If SMARTIRE is (i) in breach of this AGREEMENT, (ii) ceases to carry on
business as a going concern; (iii) becomes or may become the object of
the institution of voluntary or involuntary proceedings in bankruptcy
or liquidation; (iv) a receiver or similar officer is appointed with
respect to the whole or a substantial part of its assets; or (v) an
event similar to any of the foregoing occurs under applicable law, and
-16-
fails or refuses to supply COMPONENTS to XXXX as required under this
AGREEMENT, provided that XXXX shall not be in breach of this AGREEMENT,
then XXXX shall have the right to manufacture, have manufactured, or
acquire from SMARTIRE's suppliers, substitutes for COMPONENTS for the
sole purpose of XXXX continuing to supply its then current CUSTOMERS
with COMPONENTS. In such case, XXXX shall have the right to utilize
SMARTIRE's intellectual property rights, DISCOVERIES and CONFIDENTIAL
INFORMATION for such purposes, subject to the terms of this Agreement,
and XXXX shall pay SMARTIRE a reasonable royalty to SMARTIRE for use of
its intellectual property rights. SMARTIRE shall not obstruct DANA's
efforts or ability to find and qualify alternate supplier(s) of
substitute products. This Section does not xxxxx XXXX the right to
develop the SYSTEMS or COMPONENTS including adding new or enhanced
functionality. The rights of XXXX under this Section shall survive the
termination of this AGREEMENT for one (1) year; provided, however, that
if DANA's contractual commitment as at the date of SMARTIRE's failure
or refusal to supply COMPONENTS to XXXX to supply COMPONENTS to any
CUSTOMER is longer, the rights of XXXX under this Section shall survive
the termination of this AGREEMENT with respect to such CUSTOMER only
for the length of DANA's contractual commitment.
11.5. Except with respect to injunctive relief sought by either PARTY where
appropriate, in the event of a dispute between the PARTIES, the PARTIES
shall use the following procedure prior to either PARTY pursuing other
available remedies.
a. Meeting. A meeting shall be held promptly between the PARTIES,
attended by individuals with decision-making authority
regarding the dispute, to attempt in good faith to negotiate a
resolution of the dispute.
b. If the PARTIES have not succeeded in negotiating a resolution
of the dispute within sixty (60) days after the first meeting,
they shall submit the dispute to mediation in accordance with
the Mediation of Business Disputes Model Procedure of the
Center for Public Resources.
c. Mediation. The PARTIES will jointly appoint a mutually
acceptable mediator, seeking assistance in such regard from
the CPR International Institute for Conflict Prevention and
Resolution if they have been unable to agree upon such
appointment within twenty (20) days after one PARTY has given
the other NOTICE of its intent to invoke mediation.
d. Participation. The PARTIES shall participate in good faith in
the mediation and negotiations related thereto for a minimum
period of thirty (30) days after the initial meeting with the
mediator. If the PARTIES are not successful in resolving the
dispute through the mediation, then either PARTY may pursue
other available remedies. Sections 11.4 and 11.5 shall survive
the expiration or other termination of this AGREEMENT.
-17-
12. SEVERABILITY AND FORCE MAJEURE
12.1. All provisions of this AGREEMENT are intended to be in conformance with
applicable laws and regulations binding on the PARTIES and to which
each of them are subject, and each PARTY hereby undertakes to take all
necessary measures to comply with all such laws and regulations and to
ensure that this AGREEMENT remains valid at all times. Any provisions
of this AGREEMENT which may be in conflict with such laws and
regulations shall be so modified, in an amendment to this AGREEMENT to
be agreed between the PARTIES, so as to conform to such laws and
regulations.Neither PARTY shall be liable for damages for delay in or
prevention of its performance arising out of causes beyond its
reasonable control, including, but not limited to, acts of God or of
the public enemy, acts of any government in its sovereign capacity,
fires, floods, epidemics, and strikes or other labor disputes. If
either PARTY's performance in meeting an agreed shipping date is
delayed due to continuing causes covered by this Section, the shipping
date shall be extended only for the period during which they continue
to exist. Delay in performance by either PARTY shall be excused under
this Section only if the PARTY whose performance is delayed gives
NOTICE of the delay to the other PARTY promptly and in no event more
than fifteen (15) days after the event causing the delay.
13. NOTICES, AMENDMENTS, ASSIGNMENT, NO AGENCY & GOVERNING LAW
13.1. All notices, requests, consents and other communications hereunder
shall be deemed to have been duly given hereunder if in writing and,
upon receipt when delivered by hand or sent by courier, facsimile
transmission or telex, or three (3) calendar days after being mailed by
first class mail, postage prepaid, in each case addressed as follows:
If given to DANA, to: Copy to:
Vice President, Marketing and Planning Xxxx Corporation
Commercial Vehicle Systems Group 0000 Xxxx Xxxxxx
Xxxx Corporation P.O. Box 1000
0000 Xxx Xxxxxx Xxxxx Xxxxxx, XX 00000-0000
Xxxxxxxxx, XX 00000 Attn: General Counsel
Fax: 000.000.0000 Fax: 000.000.0000
If given to SMARTIRE, to:
President and CEO
SMARTIRE SYSTEMS INC.
Xxxxx 000, 00000 Xxxxxx Xxxxx
Xxxxxxxx, XX Xxxxxx X0X 0X0
Fax: 000.000.0000
or such other persons or addresses as the addressee PARTY may have
previously designated in writing by NOTICE to the other PARTY, and such
notice or communication shall be deemed to have been given as of the
date so delivered or mailed.
-18-
13.2. This AGREEMENT, including the Exhibits hereto, sets forth the entire
understanding of XXXX and SMARTIRE with respect to the matters covered
and supersedes all prior agreements, representations and
understandings, whether oral or written, between them as to the subject
matter herein. Any amendments, waivers, or modifications of this
AGREEMENT, or of any exhibit hereto, shall be valid only when they have
been reduced to writing and duly signed by the PARTIES. The terms of
this Section shall not be deemed to have been waived by oral agreement,
course of performance or by any other means other than a written
agreement expressly providing for such waiver.
13.3. Neither PARTY may assign this AGREEMENT without the prior written
consent of the other PARTY.
13.4. No Agency. This AGREEMENT does not create any agency, partnership,
joint venture, or franchise relationship. No employee of either PARTY
shall be or become, or shall be deemed to be or become, an employee of
the other PARTY by virtue of the existence or implementation of this
Agreement. Each PARTY hereto is an independent contractor. Neither
PARTY has the right or authority to, and shall not, assume or create
any obligation of any nature whatsoever on behalf of the other PARTY or
bind the other PARTY in any respect whatsoever.
13.5. This AGREEMENT shall in all respects be interpreted, construed and
governed by and in accordance with the laws of the State of Ohio and
the United States of America, without regard to the conflict of laws
provisions thereof. The United Nations Convention on Contracts for the
International Sale of Goods shall not govern this AGREEMENT.
-19-
IN WITNESS WHEREOF, the PARTIES hereto have executed this AGREEMENT as of the
date of last signature below.
XXXX CORPORATION
By /s/ Xxxxx Xxxxxxx By /s/ Xxxxx Salpizio
------------------------------------------ ----------------------------
Xxxxx Xxxxxxx Xxxxx Salpizio
Vice President Sales, Marketing and Planning
Commercial Vehicle Systems Group
Date: October 12, 2005
---------------------------------------
SMARTIRE SYSTEMS INC.
By /s/ Xx Xxxxx
------------------------------------------
Xx Xxxxx
President and CEO
Date: September 23, 2005
---------------------------------------
-20-
EXHIBIT A
SMARTIRE CONTRACTUAL RELATIONSHIPS
--------------------- ---------------- ------------------------------------------- -----------------------------------
Third Party Territory Market Segments Comments
--------------------- ---------------- ------------------------------------------- -----------------------------------
Company A United States o OEM and Aftermarket for Current market focus is RV and
recreational vehicles towed vehicles. In some cases
o OEM and Aftermarket for they may equip Class 1-3 trucks
passenger cars that tow other vehicles or small
o OEM and Aftermarket for towed trailers.
vehicles
o OEM and Aftermarket for
commercial vehicles
o OEM and Aftermarket for buses
--------------------- ---------------- ------------------------------------------- -----------------------------------
Company B North America o OEM Customer SmarTire direct account
o OEM Aftermarket service centers
--------------------- ---------------- ------------------------------------------- -----------------------------------
Company C North America o OEM Customer SmarTire direct account
o OEM and Aftermarket service
centers
--------------------- ---------------- ------------------------------------------- -----------------------------------
Company D North America o OEM and Aftermarket for Internet/on-line sales normally
passenger cars to individual customers or
o OEM and Aftermarket for vehicle users.
motorcycles
o OEM and Aftermarket for
recreational vehicles
o OEM and Aftermarket for trucks
--------------------- ---------------- ------------------------------------------- -----------------------------------
Company E North America o OEM and Aftermarket for Internet/on-line sales normally
passenger cars to individual customers or
o OEM and Aftermarket for vehicle users. Virtually all
motorcycles sales are to vehicle owners.
o OEM and Aftermarket for Truck systems are typically Class
recreational vehicles 1-3.
o OEM and Aftermarket for trucks
--------------------- ---------------- ------------------------------------------- -----------------------------------
Company F United States o OEM and Aftermarket for Sells to aftermarket and some
recreational vehicles select RV OEMs. Works closely
with RV manufacturer to retrofit
units in aftermarket.
--------------------- ---------------- ------------------------------------------- -----------------------------------
Company G United States o Light trucks and trucks Second stage company that
retrofits commercial vehicles for
military and specialty markets.
--------------------- ---------------- ------------------------------------------- -----------------------------------
Company H Mexico o Bus aftermarket
--------------------- ---------------- ------------------------------------------- -----------------------------------
Company I Australia o OEM and aftermarket Passcar May possibly sell to Class 1-3
o Aftermarket Motorcycle trucks.
--------------------- ---------------- ------------------------------------------- -----------------------------------
Various small United States o Varied market segments These organizations do not have
companies formal agreements with SmarTire
and all have sales less than $15K
per year.
--------------------- ---------------- ------------------------------------------- -----------------------------------
-00-
XXXXXXX X
XXXXXXXX XXXXXXXX
[SMARTIRE LOGO]
Original Equipment Commercial Vehicles
North America (Canada and USA)
Warranty Statement
Subject to the conditions stated herein, SmarTire Systems Ltd. ("SmarTire")
warrants to Original Equipment Manufacturer ("OEM") that the parts, components
and assemblies sold as original equipment or service parts, ("Product") will,
when properly installed on commercial vehicles approved for such purpose,
conform to Product specifications and will be free from defects in design,
material and workmanship under normal use and service for the applicable
warranty period as described in the Warranty Period section of this statement.
SmarTire assumes no responsibility, in the absence of its written approval, for
the selection of Product for specific applications that have not been approved.
Commercial vehicles include Class 3 to 8 Trucks (Rigid Truck and Tractor),
Commercial Trailers, Bus and Recreational Vehicles.
Warranty Period
The term of SmarTire's warranty to OEM shall be for three years or 300,000 miles
of vehicle use, whichever comes first, for original equipment parts and one year
unlimited miles for service parts:
(a) Warranty coverage for Product furnished as original equipment
commences on the vehicle in-service date.
(b) Warranty coverage for Product furnished as service parts commences
on the date of retail sale.
Remedy
For Products sold as Original Equipment production parts, SmarTire shall
reimburse (a) the cost of parts and labor (subject to pre-established dealer
retail prices and posted labor rates subject to attached labor hour guidelines)
to replace the Product.
For Products sold as Original Equipment service parts, SmarTire shall reimburse
(a) the cost of parts only (subject to pre-established dealer retail prices) to
replace the Product.
SmarTire's obligation to satisfy a warranty claim is subject to the following
conditions:
SMARTIRE/XXXX CONFIDENTIAL September 2005
-22-
(a) all such claims must be submitted to SmarTire no later than ninety
(90) days from the date of the failure occurrence and shall be
supported by satisfactory evidence in respect of the conditions
stated herein;
(b) if requested by SmarTire, the Product involved shall be returned,
freight collect, to SmarTire Systems Inc. for examination; and
(c) SmarTire's examination of the Product must disclose to its
satisfaction that none of the Warranty Exclusions described herein
apply. In all cases, SmarTire shall make the final determination as
to the warrantability of the Product.
Products replaced under warranty are covered hereunder by the remaining portion
of the original warranty period or 12 months whichever is longer.
General Limits and Exclusions
SmarTire must provide documented and signed off installation approval for the
specified OEM application for this warranty to be in effect.
Coverage is not provided for the following failures or expenses:
(a) Towing.
(b) Downtime, lodging, meals, and travel time or transportation.
(c) Troubleshooting / Diagnostics - except where allowed as indicated in
the OEM and SmarTire approved guidelines
(d) Freight for expedited or rush parts shipments. Parts will be shipped
by the most economical means possible.
(e) Non-genuine replacement parts void the component warranty when used
to make a repair.
(f) Component damage due to failure of other chassis components.
(g) Parts and labor markup in excess of OEM and SmarTire approved
guidelines.
(h) Undefined or unidentifiable miscellaneous changes.
(i) Failures due to product mis-application or SmarTire unapproved
application.
(j) Failures due to unapproved alterations or modifications to the
vehicle or the SmarTire component.
(k) Failures caused by improper installation or improper prior repair
including damage to Product by tire removal or installation.
(l) Miscellaneous shop supplies and/or fees.
(m) Corrosion and rust.
(n) Tires
(o) Failures due to dirt, snow, or ice build-up.
(p) Accident, damage, negligence, abuse or misuse
Claims Procedure
Warranty claims may be made to the OEM through an authorized dealer, per your
OEM warranty procedures. Please refer to stated warranty coverage for your
specific OEM.
Claims submitted must:
(a) be for verifiable defects in material or workmanship.
SMARTIRE/XXXX CONFIDENTIAL September 2005
-23-
(b) be submitted within ninety (90) days from the date on which the
failure occurred.
(c) provide the following information on or with the OEM claim:
1. Complete Vehicle Identification Number, model and vehicle
type, tire and rim description
2. Date in service
3. Model and serial number of failed component(s)
4. Itemized SmarTire part numbers and dealer parts prices
5. Description of complaint, failure, fault code(s), dealer test
results, cause, correction (repair)
6. Date of failure and mileage at time of failure
7. Hourly labor rate and number of labor hours requested
8. OEM published labor code and hours
In the event the OEM rejects Product or makes a claim under this warranty,
SmarTire may request the return of the Product and SmarTire will issue the OEM a
return material authorization (RMA) number.
If requested by SmarTire, the Product shall be returned, freight collect, to
Attention: Customer Service
SmarTire Systems Inc.
Xxxxx 000, 00000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx, X0X 0X0
for examination. All returned Products shall become SmarTire's property.
SmarTire's determination of warranty coverage shall be final in all cases.
SmarTire reserves the right to reject a warranty claim for any or all of the
following reasons:
a. Original claim was filed after ninety (90) days from the date of
failure
b. Failure occurred beyond applicable warranty period
c. Claim information is insufficient
d. Product was not returned for inspection as requested
e. Product inspection does not substantiate claim or indicate a failure
Policy / Goodwill:
If OEM agrees to reimburse customer from Product failure due to non-conforming
material or workmanship beyond the standard warranty period in order to maintain
good will and customer satisfaction, SmarTire agrees to negotiate in good faith
with OEM regarding the reimbursement of OEM for these expenses on a case-by-case
basis. All Policy / Goodwill must be approved by SmarTire Systems Inc.
Warranty Disclaimer
SMARTIRE'S EXPRESS WARRANTY AND PURCHASER'S REMEDIES THEREUNDER ARE EXCLUSIVE
AND GIVEN IN PLACE OF (a) ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY,
SMARTIRE/XXXX CONFIDENTIAL September 2005
-24-
WHETHER WRITTEN OR ORAL, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE, OR IMPLIED WARRANTY ARISING
FROM PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, AND (b) ALL OTHER
OBLIGATIONS, LIABILITIES, RIGHTS, CLAIMS OR REMEDIES, INCLUDING ANY RIGHT IN
CONTRACT, TORT, EXTRA-CONTRACTUALLY, STRICT LIABILITY OR ANY RIGHT ARISING FROM
SMARTIRE'S NEGLIGENCE, ACTUAL OR IMPUTED.
Limitation of Liability
SMARTIRE'S OBLIGATIONS AND PURCHASER'S REMEDIES UNDER SMARTIRE'S EXPRESS
WARRANTY ARE LIMITED TO SMARTIRE'S CHOICE OF REPAIR OR REPLACEMENT AND EXCLUDE
LIABILITY FOR INCIDENTAL, SPECIAL, CONSEQUENTIAL OR ANY OTHER DAMAGES,
INCLUDING, WITHOUT LIMITATION, REPLACEMENT COSTS, ECONOMIC LOSS, LOST REVENUE,
LOST PROFITS, OR LOSS OF USE OR DAMAGE TO OTHER PROPERTY.
PRODUCTS ARE CONSIDERED TO BE MONITORING DEVICES, AND ARE NOT TO BE CONSIDERED
AS SAFETY DEVICES.
Effective Date
This warranty shall become effective October 1, 2005, and applies only to
Product sold in the United States and Canada. This warranty supersedes all past
warranties expressed by SmarTire and may not be changed, altered or modified in
any way except in writing by SmarTire.
Part Return Requirements
Be sure the parts are properly identified.
a. Clearly print the RMA number on the xxxx of lading and shipping
container.
b. If parts for more than one claim are shipped all together, list all
claim numbers on the xxxx of lading or provide a detailed packing
list. This will ensure proof of shipment for a specific claim if the
parts are lost.
c. When shipping parts for several different claims together, do not
mix the parts in the same container, box, etc. This could cause
confusion in performing a failure analysis, a delay in claim
processing, and possible rejection of the claim.
d. Package the parts carefully to avoid shipping damage which could
distort or mask the true cause of the failure.
e. Return all parts collect, per SmarTire approved carrier and to the
correct designated location. Failure to return requested parts to
designated SmarTire location may result in rejection of the claim.
f. Parts lost from broken boxes, damaged shipping containers,
negligence in packaging, or returned without proper claim
identification, may result in no reimbursement for the parts not
received and shall be the responsibility of the dealer.
SMARTIRE/XXXX CONFIDENTIAL September 2005
-25-
g. Corrosion or rust that prevents proper inspection, or prevents
identification of the primary failure, may result in a rejected
claim.
h. Rejected / Non-SmarTire Parts will be returned to dealer at dealer's
expense.
Labor Hour Guidelines
This section contains a recently revised schedule of various labor hours allowed
for performing warrantable repairs. The hours listed are the maximum amounts
which will be paid on a warranty claim. To insure a better understanding of its
content, please have all personnel involved in warranty, read the section
thoroughly.
These guidelines reflect replacement times only. Components for this product are
not serviceable or rebuildable.
Allowed Time (Hours)
Diagnostics 0.5
Replacement of Sensor and Strap in Tire 0.5
Replacement of Receiver 0.5
Replacement of Strap Only 0.5
Replacement of Display 0.75
Replacement of Antenna 1
Replacement of Display Cable 0.5
Reprogramming of System 0.5
SMARTIRE/XXXX CONFIDENTIAL September 2005
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EXHIBIT C
ORDER TERMS AND CONDITIONS
1. CONTRACT. Notwithstanding the terms and conditions on any purchase order
("Order") issued by XXXX pursuant to this AGREEMENT, the terms of this AGREEMENT
including this Exhibit B shall govern with respect to DANA's purchase of
COMPONENTS from SMARTIRE. No additional or different terms proposed by XXXX on
any Order or by SMARTIRE in its acknowledgement shall be binding upon the
parties. The terms of this AGREEMENT shall apply, regardless of any additional
or conflicting terms on any Order, acknowledgement or otherwise submitted by
either party, and any such additional or conflicting terms are deemed rejected
by the other party. Captions in these Terms are for convenience only. For the
purposes of this Exhibit, Seller shall mean SMARTIRE; Goods shall mean
COMPONENTS.
2. ASSIGNMENT. Seller may not assign or subcontract this Order or any of its
rights or obligations hereunder, other than the right to assign any amount due
which shall be freely assignable, without Dana's prior written consent and any
purported assignment in violation of this provision will be void.
3. PACKING AND SHIPMENT. Seller will pack and ship the Goods in accordance with
Dana's instructions, furnish all shipping documents required by Xxxx, and
plainly xxxx Xxxx'x name and the Order number on all packages and documents.
4. INSPECTIONS. Xxxx xxx inspect and/or test the Goods at any time, at its own
expense, and Seller will make its premises available for this purpose and
provide any necessary assistance at no charge. However, no inspections or tests
by Xxxx will relieve Seller of any of its obligations hereunder relating to the
Goods. If Xxxx finds any Goods to be defective or not in conformity with its
specifications or requirements, it may return them for a refund of the purchase
price, or require Seller to repair or replace them.
5. HAZARDOUS MATERIALS. Seller warrants that it will properly classify,
describe, package, xxxx, label and provide any necessary Material Safety Data
Sheets for the Goods and will pack and ship them in compliance with all
applicable hazardous materials laws, regulations, ordinances and orders.
6. SPECIAL TOOLING. All dies, jigs, fixtures, drawings, molds, patterns,
templates, gages and the like that Xxxx provides to Seller or pays Seller to
make or buy for use in performing this Order (collectively, "Tooling") are at
all times the personal property of Xxxx or Dana's customer, as the case may be.
Xxxx will not be obligated to pay for such Tooling, if applicable, until Seller
has provided Xxxx with an itemized list and adequate cost records for the same
and Xxxx has accepted the Tooling or the first run of Goods manufactured or
assembled therewith. If Seller fails to provide adequate cost records, Xxxx will
be not be obligated to pay more than the fair market value of the Tooling,
regardless of the Tooling purchase price set out in the Order. While the Tooling
is in its possession or custody, Seller will be responsible for any loss or
damage to the Tooling and for all taxes, assessments, and similar charges levied
with respect to or on it. Seller will label the Tooling in accordance with
Dana's instructions to permit accurate identification and will segregate it from
other tooling in Seller's possession to the extent practicable. At its own
expense, Seller will repair and maintain the Tooling, keep it in good working
condition, and replace it when necessary for any reason, including normal wear
and tear. Seller will use the Tooling exclusively to produce
SMARTIRE/XXXX CONFIDENTIAL September 2005
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Goods for Xxxx hereunder and for no other purpose. Upon expiration,
cancellation, or termination of this Order, Seller will hold the Tooling and any
operation sheets, process data, or other information necessary to show its use,
at no charge, pending receipt of Dana's instructions about its removal or
disposition, which will be at Dana's expense. Seller acknowledges that Xxxx or
Dana's customer, as the case may be, has title to and all rights in the Tooling,
all accessories and attachments thereto, all substitutes and replacements
therefor and all proceeds therefrom. Seller authorizes Xxxx or Dana's customer,
as applicable, or their agents, on Seller's behalf and as its attorney-in-fact,
to prepare, sign and file such Uniform Commercial Code financing statements and
amendments thereto and similar documents as they deem necessary to evidence
their ownership of the Tooling.
7. TRADE CREDITS, COUNTRY OF ORIGIN. All trade credits, export credits, customs
drawbacks, tax and fee rebates and the like relating to this Order will belong
to Xxxx. Seller will cooperate with Xxxx in obtaining these benefits and
credits. Seller will xxxxxxx Xxxx and its designees with such documentation
establishing the country of origin and value of the Goods as Xxxx xxx request,
including, as applicable, affidavits of manufacture and NAFTA certificates of
origin.
8. INSURANCE. Seller will maintain, at its own expense, the following minimum
insurance coverages with insurers satisfactory to Xxxx: (i) statutory workers'
compensation; (ii) employer's liability in the amount of U.S. $5 million; (iii)
commercial general liability (including products/completed operations and
contractual liability coverage) in the amount of $5 million bodily injury or
property damage per occurrence; and (iv) automotive liability (covering owned,
non-owned, and hired vehicles) in the amount of $5 million bodily injury or
property damage per accident. Such coverages can be provided under primary
and/or excess policies. In addition, where applicable, Seller will maintain all
risk property coverage (including transit) and theft coverage for Goods, whether
or not owned by Xxxx, which have been ordered hereunder and which are in the
care, custody, or control of Seller, its agents, or contractors, and any other
insurance coverages that Xxxx xxxxx appropriate. On the acceptance of this Order
and each subsequent renewal of its insurance coverages, Seller will xxxxxxx Xxxx
with certificates of insurance evidencing such coverages, naming Xxxx as an
additional insured where deemed appropriate by Xxxx, and requiring written
notice to Xxxx at least 15 days prior to the cancellation, reduction or
non-renewal of coverage. Compliance with these provisions will not relieve
Seller of its defense and indemnity obligations under Paragraph 19. These
obligations will survive the expiration or cancellation of this Order to the
extent necessary to cover acts or events arising in connection with the
performance of the Order.
9. ALLOCATION. If Seller is unable, at any time, to supply the entire quantity
of Goods ordered by Xxxx, Seller will meet all of Dana's requirements before
making any allocation among its other customers under Section 2-615 of the
Uniform Commercial Code or the equivalent.
10. TERMINATION. Xxxx xxx terminate this Order for convenience at any time by
fifteen (15) business days written notice to Seller. On termination, Xxxx will
be liable to Seller solely for unpaid invoices for conforming Goods previously
shipped and for Seller's reasonable, documented costs of raw materials,
work-in-process and finished Goods that cannot be canceled without penalty or
sold in the general trade, not to exceed the volumes specified in this Order (if
a spot Order) or in any open releases hereunder (if a blanket Order) and payable
only after Dana's receipt of the same.
SMARTIRE/XXXX CONFIDENTIAL September 2005
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11. CANCELLATION. Xxxx xxx cancel this Order without liability or further
obligation hereunder by 15 business days' written notice to Seller if Seller
breaches any provision, term or condition of the Order (or Xxxx anticipates such
breach); provided, that the cancellation will be void if Seller cures the breach
(or provides assurances of performance acceptable to Xxxx) within the 15-day
notice period. Xxxx xxx cancel this Order immediately by written notice to
Seller without liability or further obligation hereunder (i) if Seller fails or
refuses to xxxxxxx Xxxx promptly with such information and assurances as Xxxx
xxx request, from time to time, about Seller's financial and operating
conditions and ability to supply Goods under this Order, and (ii) to the extent
permitted by law, in the event of Seller's insolvency, the filing of a voluntary
or involuntary petition in bankruptcy by or against Seller, the appointment of a
receiver or trustee for Seller, Seller's execution of an assignment for the
benefit of creditors, or a comparable event.
12. BINDING EFFECT. This Order will be binding on the parties and their
respective agents, subcontractors, successors and permitted assigns.
SMARTIRE/XXXX CONFIDENTIAL September 2005
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