SMARTIRE SYSTEMS INC.
AND
VANSCO ELECTRONICS LP
AGREEMENT FOR ELECTRONIC MANUFACTURING SERVICES
This Manufacturing Agreement ("Agreement") is entered into on November 16, 2005
(the "Effective Date") by and between SmarTire Systems Inc. ("SmarTire"), a
Yukon Territory corporation, with its principal place of business at 000-00000
Xxxxxx Xxxxx, Xxxxxxxx, XX, Xxxxxx X0X 0X0 and Vansco Electronics LP ("Vansco"),
a Manitoba limited partnership having its principal office at 0000 Xxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxx, Xxxxxx X0X 0X0 (together, the "Parties").
Whereas;
o Vansco is in the business of providing manufacturing services that
include the custom manufacture of electronic printed circuit board
assemblies and/or box level assemblies; and,
o SmarTire is in the business of providing to its automotive and
transportation industry customers technically-advanced sensing and
control systems that are assembled from custom-manufactured
electronic printed circuit boards and/or system level assemblies;
and,
o The parties desire to establish the terms and conditions that will
apply to SmarTire's purchase of certain electronic printed circuit
board assemblies and/or system level assemblies manufactured by
Vansco for SmarTire.
In consideration of the foregoing and the agreements contained herein, SmarTire
and Vansco hereby agree as follows:
1. Definitions
1.1. "Acknowledgement" is Vansco's written confirmation that it has
accepted the terms of the Purchase Order from SmarTire.
1.2. "Approved Supplier List" shall mean the list of suppliers specified
by SmarTire to be used to supply Inventory listed on the bills of
materials included with the Specifications.
1.3. "Confidential Information" shall have the meaning ascribed thereto
in Section 35.1 hereof.
1.4. "Delivery Date" shall mean a date for which delivery of a Product
is requested in a SmarTire Purchase Order or is otherwise mutually
established by the Parties.
1.5. "Engineering Change Order" or "ECO" shall mean the document that
details a change in the Specifications and/or design of a Product.
1.6. "Excess Inventory" shall mean those items of Inventory ordered for
SmarTire which are in Vansco's or its subcontractors' possession and
which quantities exceed SmarTire Purchase Order requirements on a
referenced date and/or termination.
1.7. "Forecast" shall have the meaning ascribed thereto in Section 7
hereof.
1.8. "Intellectual Property Rights" shall mean all rights held by each
party in its Products and/or Confidential Information, including,
but not limited to each Party's patent rights, copyrights, trademark
rights, trade secret rights, mask work rights and other intellectual
property and proprietary rights anywhere in the world.
1.9. "Inventory" shall mean raw materials, supplies, and components that
comprise Products pursuant to this Agreement.
1.10. "Non-cancelable Non-Returnable Inventory" or "NCNR Inventory" shall
mean (i) Inventory listed on the bills of materials that are to be
procured from suppliers that will not accept returns or
cancellations once such Inventory is ordered or (ii) Inventory that
may not be returned because the right of return has expired.
1.11. "Premium Charge" shall mean the charges, in excess of the agreed to
price for a Product, associated with an increase in quantity for
such Product in respect of a given Purchase Order.
1.12. "Product" shall mean the PCB Assemblies and/or Box Assemblies
manufactured by Vansco for SmarTire.
1.13. "Purchase Order" shall mean the SmarTire written authorization
to manufacture, test and deliver Products to SmarTire or such
other destination as designated on the Purchase Order such
Purchase Order to be accepted by Vansco by its delivery of an
Acknowledgment to SmarTire in accordance with the terms set forth
in Section 8 hereof. The Purchase Order shall stipulate the
Product(s), Specifications, Engineering Change and/or Revision
level, quantity, pricing, and requested Delivery Date(s).
1.14. "Specifications" shall mean the written specifications for the
manufacture and testing of the Product including, without
limitation, the current revision number, Approved Supplier List,
bills of material, control plans, inspection instructions, work
instructions, schematics, test instructions, and assembly drawings.
1.15. "SmarTire Property" shall have the meaning ascribed thereto in
Section 27 hereof
1.16. "Term" shall have the meaning ascribed thereto in Section 28
hereof.
2. Responsibilities of Vansco
During the Term, Vansco shall:
2.1. Purchase Inventory from approved suppliers in accordance with
Forecasts provided by SmarTire, and;
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2.2. Manufacture and test the Products in accordance with the
Specifications and Purchase Orders provided by SmarTire and accepted
by Vansco pursuant to an Acknowledgment, and;
2.3. Use its commercially reasonable efforts to ensure 100% on-time
delivery in accordance with the specified and agreed to dates
contained in the Purchase Order, and;
2.4. Maintain compliance with ISO/TS16949, ISO14001, and ISO9001
certification and processes based on where the Products are
manufactured during the Term.
2.5. Utilize its own equipment or SmarTire Property to provide the
services described herein, and;
2.6. Ship the complete Products to the destinations specified in the
Purchase Order.
2.7. Provide, review and participate with SmarTire to ensure optimal
manufacturing processes and materials are used to produce the most
competitive cost of manufacturing the Products.
3. Responsibilities of SmarTire
During the Term, SmarTire shall:
3.1. Provide Vansco with a 6 month or longer, rolling Forecast to enable
Vansco to plan the effective purchase of materials to meet such
Forecasts, and;
3.2. Provide Vansco with Purchase Orders for the manufacture and test of
the Products, and;
3.3. Provide Vansco with the Specifications, Technical Support and
SmarTire Property as required to facilitate the manufacture and test
of the Products.
3.4. Provide payment to Vansco for their manufacturing and test services
provided under this Agreement.
4. Supply Agreements
Vansco and SmarTire will use commercially reasonable efforts to develop
cooperative supply agreements with selected suppliers to ensure that the
component pricing, quality, warranty and delivery schedules are optimized. The
selected suppliers will be identified in separate supply agreements.
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5. License to Manufacture
During the Term and subject to the terms and conditions of this Agreement,
SmarTire grants Vansco a non-transferable, non-assignable, non-exclusive,
royalty-free limited license, to use the Specifications, software and functional
test systems provided by SmarTire solely for the manufacture and testing of the
Products in accordance with the terms and conditions of this Agreement
("Licensed Rights").
6. OEM Customers
Please refer to the OEM Customers set forth in Exhibit D of this agreement.
7. Forecasting
During the Term, SmarTire shall deliver to Vansco in writing, on a rolling
monthly basis, a six (6) month (or longer), forecast, specifying the anticipated
number of Products to be manufactured in each month (a "Forecast"). SmarTire
shall issue each succeeding month's Forecast by the 10th calendar day of each
month, or the next business day if the 10th day is a holiday or weekend. This
Forecast shall serve as the authority of Vansco to plan the purchases of
Inventory required to meet the deliveries specified on the Purchase Orders
subject to the following:
7.1. Vansco shall work with suppliers of the Inventory components to
minimize the cost of these components based on yearly forecast
volumes, and;
7.2. Vansco shall use commercially reasonable efforts to negotiate
favorable terms and delivery schedules with its suppliers and to
minimize the impact of Excess Inventory.
8. Purchase Orders.
During the Term, SmarTire shall provide Vansco with Purchase Orders in
accordance with the following:
8.1. Purchase Orders shall be provided to cover SmarTire's requirements
for the Products for the next three (3) months on a rolling monthly
basis, and;
8.2. The Purchase Orders shall contain SmarTire's required date for
receipt of the Product at the destination stated in the Purchase
Order. Vansco shall provide an Acknowledgement to SmarTire
confirming the acceptance of the Purchase order and its terms
including price and delivery. If Vansco, despite its commercially
reasonable efforts, does not believe that it can meet the scheduled
delivery it shall negotiate the best delivery times possible, and
SmarTire shall issue a revised Purchase Order to Vansco for
Acceptance. The Purchase Order shall be deemed accepted by Vansco
unless it is rejected in writing within five (5) business days of
submission by SmarTire.
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8.3. The terms and conditions of this Agreement will prevail over any
terms contained in any SmarTire Purchase Order, Acknowledgment,
invoice or any other document that is not clearly an amendment to
this Agreement signed by both Parties.
8.4. SmarTire may not cancel any Purchase Orders or re-schedule the
quantity of Products and/or Delivery Date within thirty (30)
calendar days of the scheduled Delivery Date. SmarTire may delay all
or any portions of the scheduled Product delivery upon written
notification to Vansco on the following schedule:
(a) From thirty-one (31) to sixty (60) calendar days prior to the
scheduled Delivery Date, SmarTire may reschedule out not more
than fifty percent (50%) of the quantity of Product to be
shipped up to thirty (30) calendar days of the scheduled
Delivery Date. The balance of the rescheduled Products must be
shipped within thirty (30) days of the rescheduled Delivery
Date.
(b) From sixty-one (61) to ninety (90) calendar days prior to the
scheduled Delivery Date, SmarTire may reschedule out up to one
hundred percent (100%) of the quantity of Product to be
shipped up to ninety (90) calendar days of the scheduled
Delivery Date.
(c) In the event that SmarTire desires to increase quantities of
Products scheduled for delivery beyond thirty (30) calendar
days of the scheduled Delivery Date; Vansco will use its
commercially reasonable efforts to accommodate the desired
increases. Each of the foregoing may be subject to a Premium
Charge to be determined on a case-by-case basis, and subject
to SmarTire's prior written approval.
8.5. Cancellation
SmarTire may cancel any order, more than ninety (90) calendar days
from the scheduled Delivery Date upon written notification to
Vansco. Upon written notice from SmarTire, Vansco shall use its
commercially reasonable efforts to:
(a) Return Inventory for the cancelled order to the suppliers or
otherwise utilize any such Inventory. In the event Vansco
cannot return Inventory to the suppliers, or cannot otherwise
utilize or cancel future orders, SmarTire shall pay;
i) Vansco's cost of all Inventories that are in Vansco' or
its subcontractor's possession as of the cancellation
date and are not returnable to the suppliers and
SmarTire shall have title to those Inventories or,
ii) The supplier's restocking fees, if any, up to 20% of the
cost of the Inventories for Inventories returned to the
suppliers.
(b) Cancel Vansco's order for such Inventory. SmarTire is not
obligated to pay Vansco for Inventories that are returned or
materials that are cancelled at no cost to Vansco.
Vansco shall provide SmarTire with documentation to support all such charges.
SmarTire authorizes Vansco to xxxx any such costs within sixty (60) calendar
days of SmarTire's notification of cancellation. Inventories that become
unusable because of a SmarTire ECO shall be treated in a like manner as
Inventories that become unusable because of cancellation, as noted above.
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SmarTire may cancel delivery of Products with written notice at least ninety
(90) calendar days prior to the scheduled Delivery Date without cost or penalty,
except for inventories on the Minimum Order Quantity List, NCNR Inventory List,
and Long Lead Time Lists, which shall be treated in similar manner as
Inventories that become unusable because of cancellation. Vansco shall provide
SmarTire with documentation to support all such charges.
9. Delivery
9.1. Vansco shall use its commercially reasonable efforts to meet the
shipping dates provided in the accepted Purchase Orders. Delivery of
Products that do not meet the acknowledged Delivery Dates or
Specifications due to Vansco's efforts will require a written
corrective action to SmarTire outlining a plan for correction and
the elimination of recurrence.
9.2. If the delays are due the responsibility of SmarTire, then:
a) The Purchase Order shall be amended with a revised agreed to
Delivery Date and there will be no penalty exercised against
Vansco under the supplier rating system.
9.3. Delivery of Products shall be to the destination provided on the
Purchase Order. In the event that the Products are shipped to
SmarTire's facility in Richmond, the FOB point shall be Vansco plant
of manufacture. In the event that the destination is to a different
end location, SmarTire and Vansco shall agree on appropriate
shipping insurance, custom charges, duties, taxes or other expenses
relating to transportation and delivery, all of which shall be for
the sole account of SmarTire.
9.4. Title to all Products shall pass to SmarTire upon delivery to the
destination specified in the Purchase Order.
10. Acceptance
Please refer to the Warranty Agreement set forth in Exhibit C of this agreement.
11. End Customer Acceptance
Please refer to the Warranty Agreement set forth in Exhibit C of this agreement.
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12. Inspection by SmarTire
Upon request by SmarTire, from time to time, and with at least two (2) business
days' notice and during normal business hours, Vansco will grant access to its
manufacturing facilities and records to SmarTire inspectors as provided herein.
Vansco shall allow such inspectors to inspect the manufacturing and quality
control, testing operations, compliance procedures and records relating to the
Products, as well as Inventory levels to ensure that Vansco can meet SmarTire's
future orders for Products, and is otherwise satisfying its obligations under
this Agreement. Vansco shall promptly implement corrective action to remedy
deficiencies identified by SmarTire during such inspections or in order to
comply with the Specifications and this Agreement.
13. Inspection by SmarTire's End Customer
Any request from a SmarTire End Customer shall be processed through SmarTire
with a written request to Vansco. Vansco shall grant access to its manufacturing
facilities and records, etc., as set forth in Section 12, above.
14. Electronic Interface
Vansco will use its commercially reasonable efforts to provide SmarTire
information electronically on manufacturing scheduling and delivery requirements
on an as needed basis.
15. Engineering Change Order Or ECO
An ECO is required when the form, fit, or function of the design of the Product
and/or Specifications are affected. Vansco agrees to promptly implement any
change in the Specifications or the design of a Product reasonably requested by
SmarTire pursuant to an ECO. Vansco shall provide a written response in the form
of an "Engineering Change Analysis" form to SmarTire, within five (5) business
days of receipt of an ECO, if such changes affect the per-unit price and/or
delivery of a Product. SmarTire shall respond with a written acceptance in the
form of a Purchase Order or rejection of the Vansco "Engineering Change
Analysis" form within three (3) business days of receipt thereof.
16. Repair
SmarTire may authorize Vansco to perform repair work on out-of-warranty
Products. Prices for this rework must be approved in writing by SmarTire and
authorized by a Purchase Order. Prices for this repair shall be determined on a
case by case basis. Vansco warrants that repaired out-of-warranty Products shall
be of good material and free of workmanship defects, for a period of ninety (90)
days after delivery to SmarTire's designated location.
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17. Price
Price for the Products shall be as set forth in Exhibit A of this Agreement,
which may change by mutual agreement in writing of the Parties hereto, provided
that:
a) SmarTire is provided with 30 days' minimum notice, or;
b) In the case where Vansco and SmarTire have mutually agreed to a
price for a specific customer contract, no price change shall be
allowed without SmarTire's consent, and the customer's consent to
such price change.
18. Cost Reduction
Vansco will use commercially reasonable efforts to implement a cost reduction
strategy to reduce product price by 3% year on year. Cost reductions based on
collaborative efforts will be equally shared by the parties. It is agreed by the
parties that the optimum manner in achieving cost reduction is bilateral
information sharing in relation to costs associated with materials, labor,
equipment, and manufacturing processes.
Meetings will be held at least twice per year to review documented current costs
and to discuss recommendations to reduce manufacturing costs and improvements to
supply agreements (material costs).
19. Payment
The terms of payment are NET 30 from the date of the invoice sent to SmarTire at
its principal place of business.
20. Testing Failures
SmarTire agrees to pay Vansco for assemblies or Products that are manufactured
according to the Specifications, which nevertheless experience testing failure,
despite the reasonable efforts of the Parties and after fifteen (15) minutes'
engineering debug time per board, to resolve such failures. Vansco will maintain
a list of such Products that identifies each Product and describes the mode at
which it failed. This listing is to be reviewed and reconciled, at least
monthly, by the Parties. In the event of such failures, both parties shall
provide their commercially reasonable efforts to analyze the parts that have not
passed test and take corrective actions to avoid excessive scrap situations.
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21. Production Part Approval
Vansco will provide all necessary advanced product quality planning
documentation and samples to SmarTire for successful PPAP submission to SmarTire
OEM Customers. This includes, but is not limited to process capability studies,
process failure mode effects analysis, internal/external test reports, and
process qualifications.
It is a requirement of Vansco to have its internal laboratory either accredited
to or meet the intent of ISO 17025 should this lab be providing test results to
customers for PPAP submission.
22. Vansco Warranty
Please refer to the Warranty Agreement set forth in Exhibit C of this agreement.
23. SmarTire Warranty
Please refer to the Warranty Agreement set forth in Exhibit C of this agreement.
24. Return of Products Under Warranty
Please refer to the Warranty Agreement set forth in Exhibit C of this agreement.
25. New Products
The Parties acknowledge and agree that SmarTire may from time to time request,
in writing, the manufacture and testing of prototypes, pre-production units,
test units or other similar products ("Odd Units") and Vansco shall manufacture
and test the Odd Units in conformance to the Specifications and upon SmarTire's
written request. Vansco assumes no liability, except for workmanship defects,
for or obligation for any failure of the Odd Units due to:
i) fixtures, designs or instructions produced or supplied by
SmarTire,
ii) consigned Inventory
iii) components or other equipment from any vendor on the Approved
Vendor List or
iv) printed circuit boards or any other SmarTire designated
components that are manufactured pursuant to SmarTire's
specifications.
Vansco agrees to use commercially reasonable efforts to provide SmarTire with
guidance in relation to manufacturing processes for the design and development
of new products. This may include, but not be limited to, changes to processes
to provide lean manufacturing to achieve cost targets. This guidance may also be
provided for existing Product to achieve cost reduction as indicated in section
18.
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26. Excess Inventory
Vansco shall identify any Excess Inventory as a result of end-of-life of
manufacturing product, or an ECO as indicated in Section 15. The Excess
Inventory report will also include NCNR Inventory purchased for Product based on
SmarTire Purchase Orders or Forecasts as indicated in Sections 7 and 8. SmarTire
will provide payment to Vansco within 30 days' written notice of Excess
Inventory and SmarTire shall then own the Excess Inventory.
27. SmarTire Property
Any tooling and/or equipment supplied by SmarTire ("SmarTire Property") or
developed or procured by Vansco at SmarTire's expense, shall remain the property
of SmarTire and shall:
(i) be clearly marked or tagged as the property of SmarTire,
(ii) be and remain personal property, and not become a fixture to real
property,
(iii) be subject to inspection by SmarTire at any time,
(iv) be used only in filling Purchase Orders from SmarTire,
(v) be kept free by Vansco of liens and encumbrances indicating Vansco as the
debtor,
(vi) not be modified in any manner by Vansco without the prior written approval
of SmarTire and shall be maintained by Vansco in accordance with
SmarTire's Maintenance Procedures.
SmarTire shall retain all rights, title and interest in the SmarTire Property,
and Vansco agrees to treat and maintain the SmarTire Property with the same
degree of care as Vansco uses with respect to its own valuable equipment. Vansco
shall bear all risk of loss or damage to SmarTire Property until it is returned
to SmarTire, normal wear and tear excepted. Upon SmarTire's request, Vansco
shall deliver all SmarTire Property to SmarTire in good condition, normal wear
and tear excepted, without cost to SmarTire (exclusive of freight costs);
SmarTire shall determine the manner and procedure for returning the SmarTire
Property, and shall pay the corresponding freight costs. Vansco waives any legal
or equitable right it may have to withhold SmarTire Property, and Vansco agrees
to execute all documents, or instruments evidencing SmarTire's ownership of the
SmarTire Property as SmarTire may from time to time request. Such SmarTire
Property is listed on Exhibit B, which shall be revised as required.
28. Term
Unless terminated pursuant to Section 29 or this Section 28, this Agreement
shall commence upon the Effective Date and shall continue for a period of thirty
six (36) months (the "Term"). The Term may be terminated by a Party upon
providing the other Party with one hundred and twenty (120) calendar days'
written notice of termination, with or without cause.
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29. Termination
This Agreement may be immediately terminated by either Party for cause, by
written notice, upon the occurrence of any of the following events.
(a) If the other party ceases to do business, or otherwise terminates
its business operations; or
(b) If the other party breaches any material provision of this Agreement
and fails to cure such breach within sixty (60) calendar days of
written notice describing the breach. The failure of Vansco to meet
on-time deliveries will be considered as a material breech of this
Agreement and provide grounds for termination by SmarTire, if in
SmarTire's sole opinion, Vansco has not provided SmarTire with
corrective action to eliminate future occurrences; or
(c) If the other party becomes insolvent or seeks protection under any
bankruptcy, receivership, trust deed, creditors arrangement,
composition or comparable proceeding, or if any such proceeding is
instituted against the other.
If this agreement is terminated based on subsection (c) then section 6 "OEM
Customers" will survive provided that the requirements of section 6 are
fulfilled.
30. Effect of Termination
Upon termination of this Agreement, the obligations of either Party that exist
pursuant to Sections 6, 8.4, 8.5, 19, 22 to 24 inclusive, 26, 27, 31 to 36
inclusive, 38 and 44 will survive in accordance with their terms.
Notwithstanding the foregoing, Vansco shall continue to fulfill, subject to the
terms of this Agreement, all Purchase Orders and ECO's accepted by it prior to
the effective date of termination. Remedies for all breaches hereunder shall
also survive termination of this Agreement.
31. Liability Limitation
As the sole remedy and liability for any breach of the representations and
warranties in Section 23, SmarTire agrees to indemnify Vansco and hold Vansco
harmless from and against any and all claims, losses, liabilities, damages,
expenses and costs (including reasonable attorney's fees and court costs)
awarded against Vansco, that result from a breach of any of these
representations and warranties or incurred in the settlement or avoidance of any
such claim. This indemnity shall not apply if (i) Vansco fails to give SmarTire
reasonable notice of any such claim or threatened claim and such failure
materially prejudices SmarTire, or (ii) SmarTire is not given the opportunity to
participate in the defense or settlement or (iii) Vansco does not provide
reasonable assistance to SmarTire for the defense and settlement of the claim.
Furthermore, if SmarTire assumes such control, the legal fees and litigation
expenses of the attorneys it designates to assume control of the litigation
shall be for the sole account of SmarTire.
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32. Relationship of Parties
Vansco and SmarTire shall be deemed to be independent contractors, and this
Agreement does not create a general agency, joint venture, partnership,
employment relationship, or franchise between Vansco and SmarTire. Each Party
assumes full responsibility for the actions and negligence of its employees,
agents or other personnel assigned to perform work pursuant to this Agreement
regardless of their place of work, and shall be solely responsible for payment
of salary, including withholding of federal and state income taxes, social
security, workers' compensation and the like.
33. Ownership
33.1. All Intellectual Property provided by SmarTire to Vansco relating to
the manufacturing of the 200.0101 Commercial Transmitter, HP under
this Agreement shall be the sole property of SmarTire.
33.2. All Intellectual Property provided by Vansco to SmarTire relating to
the manufacturing the 200.0153 J1939 Receiver Module developed under
this agreement shall be the sole property of Vansco unless SmarTire
exercises its rights related to Manufacturing of the Receiver Module
as indicated in the Development Agreement dated 12-September-2003.
34. Dispute Resolution
34.1. Binding Arbitration
Except as to any claims arising under Section 35 (Confidentiality) as to
which equitable relief would be the appropriate remedy, any controversy or
claim between the Parties hereto arising out of this Agreement shall be
settled by binding arbitration in accordance with the rules of the British
Columbia International Commercial Arbitration (BCICAC) in effect as of the
Effective Date, or alternatively, any other mutually acceptable method of
alternative dispute resolution. The arbitration shall be conducted in
Vancouver, British Columbia, before an arbitrator from the BCICAC or such
other arbitration service as the parties may, by mutual agreement, select.
In the event of a disagreement as to the selection of an arbitrator, the
BCICAC or such other arbitration service as the parties have, by mutual
agreement, selected shall select the arbitrator. The arbitration award
will be final and binding and may be enforced in any court of competent
jurisdiction. Each party shall pay one-half (1/2) of the cost of
arbitration.
34.2. Attorney's Fees.
The substantially prevailing Party in any legal action or proceeding to
enforce this Agreement shall be entitled to reasonable attorneys' fees,
costs and expenses except that, as provided in 32, each party shall pay
one-half (1/2) the cost of arbitration incurred in connection with such
proceeding or the enforcement of the Agreement, in addition to any other
relief to which such prevailing party may be entitled.
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35. Confidentiality
35.1. SmarTire Confidential Information.
Information of SmarTire including, but not limited to, trade secrets,
know-how, inventions (whether patentable or not), ideas, improvements,
materials, data, specifications, drawings, processes, results, and
formulae and all other business, technical and financial information
("Confidential Information") shall be the confidential information of
SmarTire. In particular, but without limitation, the Specifications,
software, functional test systems, testing processes and Product
components delivered to Vansco by SmarTire shall be the Confidential
Information of SmarTire. Vansco shall, at all times, both during the Term
and for a period of two (2) years after any termination of this Agreement,
keep in confidence as a fiduciary all of SmarTire's Confidential
Information received by it. Vansco shall not use the Confidential
Information of SmarTire other than as expressly permitted under the terms
of this Agreement or by a separate written agreement. Vansco shall take
reasonable steps to prevent unauthorized disclosure or use of SmarTire's
Confidential Information and to prevent it from falling into the public
domain or into the possession of unauthorized persons. Vansco shall not
disclose Confidential Information of SmarTire to any person or entity
other than its officers, employees, consultants and subsidiaries who need
access to such Confidential Information in order to perform its
obligations under this Agreement and who have entered into written
confidentiality agreements which protect the Confidential Information of
SmarTire.
35.2. Exception to Confidential Information
Information that is in or (through no improper action or inaction of
Vansco or any affiliate, agent or employee) enters the public domain shall
not be Confidential Information hereunder. Without granting any right or
license, the Parties agree that the obligations set forth in Section 35.1
above, shall not apply to the extent that Confidential Information
includes information which (i) was rightfully in its possession or known
by it prior to receipt from the disclosing Party, or (ii) was rightfully
disclosed to it by another person without restriction, or (iii) developed
independently by either Party without use of the other Party's
Confidential Information, or (iv) is disclosed pursuant to the requirement
of a court, or other governmental body, provided the receiving Party
provides notice of such court order to the disclosing Party to enable the
disclosing Party to seek a protective order or otherwise prevent or
restrict such disclosure.
36. Equitable Relief
Each party acknowledges and agrees that due to the unique nature of the
Confidential Information, there can be no adequate remedy at law for any breach
of the obligations under Section 35 and that such breach may allow Vansco or
third Parties to unfairly compete with SmarTire resulting in irreparable harm to
SmarTire. Therefore, upon any such breach or threat of breach, SmarTire shall be
entitled to appropriate equitable relief in addition to whatever remedies it has
at law. Vansco agrees to notify SmarTire in writing immediately upon learning of
any unauthorized release or breach of its obligation of nondisclosure hereunder.
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37. Force Majeure
Neither Party shall be liable for its failure to perform any obligations under
this Agreement if such performance is prevented or delayed due to fires, floods,
earthquakes, wars, military or police actions, Acts of God, governmental laws or
regulations or any other similar circumstance beyond the control of the Parties.
38. Governing Law
This Agreement shall in all respects be governed by and constructed in
accordance with the laws of the Province of British Columbia, Canada. The
remedies set forth in this Agreement are cumulative and not exclusive and are in
addition to any other rights and remedies in law or equity which might be
available to the parties.
39. Assignability
Vansco shall not assign its rights or delegate its obligations under this
Agreement, in whole or in part, including by operation of law, without
SmarTire's prior written consent, provided however, that Vansco may assign this
Agreement to an affiliate or to a related entity.
40. Amendment and Waiver
Except as otherwise expressly provided herein, any provision of this Agreement
may be amended and the observance of any provision of this Agreement may be
waived (either generally or in any particular instance and either retroactively
or prospectively) only with the written consent of an officer of each Party.
However, it is the intention of the Parties that this Agreement be controlling
over additional or different terms of any Purchase Order, confirmation, invoice
or similar document, even if accepted in writing by both Parties.
41. Notice
Notices under this Agreement shall be sufficient only if personally delivered by
a major rapid delivery courier service or mailed by certified or registered
mail, return receipt requested to a Party at its address first set forth herein
or as amended by notice pursuant to this subsection. If not received sooner,
notice by mail shall be deemed received five (5) days after deposit in the
Canadian mail.
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42. No Waiver
No waiver of any term or condition of this Agreement will be valid or binding on
either Party unless the same will have been mutually assented to in writing by
an officer of each Party. The failure of either Party to enforce at any time any
of the provisions of the Agreement, or the failure to require at any time
performance by the other Party of any of the provisions of this Agreement, will
in no way be construed to be a present or future waiver of such provisions, nor
in any way affect the ability of either Party to enforce each and every such
provision thereafter.
43. Severability
If any provision of this Agreement is held to be illegal or unenforceable, that
provision shall be limited or eliminated to the minimum necessary so that this
Agreement shall otherwise remain in full force and effect and enforceable.
44. Entire Agreement
THIS AGREEMENT, INCLUDING THE SCHEDULES, SETS FORTH THE ENTIRE AGREEMENT AND
UNDERSTANDING OF THE PARTIES RELATING TO THE SUBJECT MATTER HEREIN AND
SUPERSEDES ALL PRIOR DISCUSSIONS BETWEEN THEM.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
SMARTIRE SYSTEMS INC. VANSCO ELECTRONICS LP, by its
general partner, VANSCO
ELECTRONICS GENERAL PARTNER
INC.
Signature: /s/ Xx Xxxxx Signature: /s/ Xxxxx Xxxxxxx
------------- ------------------
Print Name: Xx Xxxxx Print Name: Xxxxx Xxxxxxx
Title: President/CEO Title: Vice President, Sales
and Marketing
Date: November 16, 2005 Date: November 16, 2005
