GENERAL TERMS AND CONDITIONS
OF POLYWHEELS MANUFACTURING LTD. ("PWM")

1. ACCEPTANCE:

Seller has read and understands this contract and agrees that Seller's written acceptance or commencement of any work or services under this contract shall constitute Seller's acceptance of these terms and conditions only.

2. SHIPPING AND BILLING:

Seller agrees: (a) to properly pack, mark and ship goods in accordance with the requirements of PWM, the involved carriers, and, if applicable, the country of destination; (b) to route shipments in accordance with PWM's instructions; (c) to make no charge for handling, packaging, storage or transportation of goods, unless otherwise stated as an item on this contract; (d) to provide with each shipment packing slips with PWM's contract and/or release number and date of shipment marked thereon; (e) to properly mark each package with a label/tag according to PWM's instructions; (f) to promptly forward the original bill of lading or other shipping receipt for each shipment in accordance with PWM's instructions. Seller will include on bills of lading or other shipping receipts correct classification identification of the goods shipped in accordance with PWM's instructions and the carrier's requirements. The marks on each package and identification of the goods on packing slips, bills of lading and invoices (when required) shall be sufficient to enable PWM to easily identify the goods purchased.

Seller agrees to accept payment based upon PWM's Evaluated Receipt Record. PWM may withhold payment pending receipt of evidence, in such form and detail as PWM may direct, of the absence of any liens, encumbrances and claims on the goods or services under this contract.

Seller agrees to comply with the requirements of NAFTA in relation to merchandise shipped to Canada from a country which is party to NAFTA (other than Canada), including without limitation the following requirements: (a) any merchandise shipped from the United States or Mexico (or any other country which becomes a party to NAFTA) shall be accompanied by a NAFTA Certificate of Origin or where appropriate a letter stating that the merchandise does not qualify under NAFTA with a list of related products; (b) where possible a blanket NAFTA Certificate of Origin shall be obtained, with an expiry date of December 31 of the year in which the merchandise is to be shipped; (c) NAFTA Certificates of Origin shall be renewed by December 15th of the year prior to the year to which they relate and shall be faxed to PWM's Customs department not later than such date each year; and (d) additional costs or duties incurred by PWM as a result of a NAFTA Certificate of Origin being invalid, incorrectly completed or not delivered in a timely manner shall be charged by PWM to the Seller.

3. DELIVERY SCHEDULES:

100% on time delivery is of the essence. All deliveries shall be made both in quantities and at times specified in PWM's delivery schedules. PWM shall not be required to make payment for goods delivered to PWM that are in excess of quantities specified in PWM's delivery schedules. PWM may change the rate of scheduled shipments or direct temporary suspension of scheduled shipments, neither of which
shall entitle Seller to a modification of the price for goods or services covered by this contract. Where quantities and/or delivery schedules are not specified, Seller shall deliver goods in such quantities and times as PWM may direct in subsequent releases.

4. PREMIUM SHIPMENTS:

If Seller's acts or omissions result in Seller's failure to meet PWM's delivery requirements and PWM requires a more expeditious method of transportation for the goods than the transportation method originally specified by PWM, Seller shall ship the goods as expeditiously as possible at Seller's sole expense. All Suppliers are required to report to Polywheels any premium freight expenses.

5. CHANGES:

PWM reserves the right at any time to direct changes, or cause Seller to make changes, to drawings and specifications of the goods or to otherwise change the scope of the work covered by this contract including work with respect to such matters as inspection, testing or quality control, and Seller agrees to promptly make such changes. Any difference in price or time for performance resulting from such changes shall be equitably adjusted by PWM after receipt of documentation. Any changes to this contract shall be made in accordance with paragraph 31.

6. SUPPLIER QUALITY AND DEVELOPMENT; INSPECTION:

Seller agrees to participate in PWM's supplier quality and development program(s) and to comply with all quality requirements and procedures specified by PWM, as revised from time to time. Quality System Requirements for suppliers whose product/service could have an effect on the end product will be certified in one or any combination of the following ISO9000, QS-9000 or TS16949. In addition, PWM shall have the right to enter Seller's facility at reasonable times to inspect the facility, goods, materials and any property of PWM covered by this contract. PWM's inspection of the goods, whether during manufacture, prior to delivery or within a reasonable time after delivery, shall not constitute acceptance of any work-in-process or finished goods.

7. NONCONFORMING GOODS:

Seller acknowledges that PWM will not perform incoming inspections of the goods, and waives any rights to require PWM to conduct such inspections. To the extent PWM rejects goods as nonconforming, the quantities under this contract will automatically be reduced unless PWM otherwise notifies Seller. Seller will not replace quantities so reduced without a new contract or schedule from PWM. Nonconforming goods will be held by PWM in accordance with Seller's instructions at Seller's risk. Seller's failure to provide written instructions within 10 days, or such shorter period as may be commercially reasonable under the circumstances, after notice of nonconformity shall entitle PWM, at PWM's option, to charge Seller for storage and handling or to dispose of the goods without liability to Seller. Payment for nonconforming goods shall not constitute an acceptance of them, limit or impair PWM's right to assert any legal or equitable remedy, or relieve Seller's responsibility for latent defects.

8. FORCE MAJEURE:

Any delay or failure of either party to perform its obligations shall be excused if Seller is unable to produce, sell or deliver, or PWM is unable to accept delivery, buy or use the goods or services covered by this contract, as the result of an event or occurrence beyond the reasonable control of the party and without its fault or negligence, including, but not limited to, acts of God, actions by any governmental authority (whether valid or invalid), fires, floods, windstorms, explosions, riots, natural disasters, wars, sabotage, labour problems (including lockouts, strikes and slowdowns), inability to obtain power, material, labour equipment or transportation, or court injunction or order; provided that written notice of such delay (including the anticipated duration of the delay) shall be given by the affected party to the other party as soon as possible after the event or occurrence (but in no event more than 10 days thereafter). During the period of such delay or failure to perform by Seller, PWM, at its option, may purchase goods and services from other sources and reduce its schedules to Seller by such quantities, without liability to Seller, or have Seller provide the goods and services from other sources in quantities and at times requested by PWM, and at the price set forth in this contract. In addition, Seller, at its expense, shall take such actions as are necessary to ensure the supply of goods and services to PWM for a period of at least 30 days during any anticipated labour disruption or resulting from the expiration of Seller's labour contract(s). If requested by PWM, Seller shall, within 10 days, provide adequate assurances that the delay shall not exceed 30 days. If the delay lasts more than 30 days or Seller does not provide adequate assurance that the delay will cease within 30 days, PWM may immediately terminate this contract without liability.

9. WARRANTY:

Seller warrants/guarantees that the goods covered by this contract will conform to the specifications, drawings, samples or descriptions furnished to or by PWM, and will be merchantable, of good material and workmanship and free from defect. In addition, Seller acknowledges that Seller knows of PWM's intended use and warrants/guarantees that all goods covered by this contract that have been selected, designed, manufactured or assembled by Seller based upon PWM's stated use will be fit and sufficient for the particular purposes intended by PWM. The warranty period shall be that provided by applicable law, except that if PWM offers a longer warranty to its customers for goods installed on vehicles, such longer period shall apply.

10. INGREDIENTS DISCLOSURE; SPECIAL WARNINGS AND INSTRUCTIONS:

Seller shall promptly furnish to PWM in such form and detail in accordance with Workplace Hazardous Materials Information System (WHMIS) regulations: (a) a list of all ingredients in the goods; (b) the amount of all ingredients; (c) information concerning any changes in or additions to such ingredients; and (d) Material Safety Data Sheet (MSDS). Prior to and with the shipment of the goods, Seller agrees to furnish to PWM sufficient warning and notice in writing (including appropriate labels on the goods, containers and packing) of any hazardous material that is an ingredient or a part of any of the goods, together with such special handling instructions as may be necessary to advise carriers, PWM, and their respective employees of how to exercise that measure of care and precaution that will best prevent bodily injury or property damage in the handling, transportation, processing, use or disposal of the goods, containers and packing shipped to PWM.

11. INSOLVENCY:

PWM may immediately terminate this contract without liability to Seller in any of the following or any other comparable events: (a) insolvency of Seller; (b) filing of a voluntary petition in bankruptcy by Seller; (c) filing of any involuntary petition in bankruptcy against Seller; (d) appointment of a receiver or trustee for Seller; or (e) execution of an assignment for the benefit of creditors by Seller, provided that such petition, appointment or assignment is not vacated or nullified within 15 days of such event. Seller shall reimburse PWM for all costs incurred by PWM in connection with any of the foregoing, including, but not limited to, all legal or other professional fees.

12. TERMINATION FOR BREACH OR NONPERFORMANCE; SALE OF ASSETS OR CHANGE IN CONTROL:

PWM reserves the right to terminate all or any part of this contract, without liability to Seller, if Seller: (a) repudiates or breaches any of the terms of this contract, including Seller's warranties; (b) fails to perform services or deliver goods as specified by PWM; (c) fails to make progress so as to endanger timely and proper completion of services or delivery of goods; and does not correct such failure or breach within 10 days (or such shorter period of time if commercially reasonable under the circumstances) after receipt of written notice from PWM specifying such failure or breach. In addition, PWM may terminate this contract upon giving at least 60 days notice to Seller, without liability to Seller, if Seller (i) sells, or offers to sell, a material portion of its assets, or (ii) sells or exchanges, or offers to sell or exchange, or causes to be sold or exchanged, a sufficient amount of its stock that effects a change in the control of Seller.

13. TERMINATION FOR CONVENIENCE:

In addition to any other rights of PWM to terminate this contract, PWM may, at its option, immediately terminate all or any part of this contract, at any time and for any reason, by giving written notice to Seller. Upon such termination, PWM shall pay to Seller the following amounts without duplication: (a) the contract price for all goods or services that have been completed in accordance with this contract and not previously paid for; not to exceed 3 weeks of released reqirements from the date of cancelation (FAB) and (b) the actual costs of work-in-process and raw materials incurred by Seller in furnishing the goods or services under this contract to the extent such costs are reasonable in amount and are properly allocable or apportionable under generally accepted accounting principles to the terminated portion of this contract; not to exceed 3 weeks over and above FAB authorisation (RAW); less however, the sum of the reasonable value or cost (whichever is higher) of any goods or materials used or sold by Seller with PWM's written consent, and the cost of any damaged or destroyed goods or material. PWM will make no payments for finished goods, services, work-in-process or raw materials fabricated or procured by Seller in amounts in excess of those authorized in delivery releases nor for any undelivered goods that are in Seller's standard stock or that are readily marketable. Payments made under this paragraph shall not exceed the aggregate price payable by PWM for finished goods or services that would be produced or performed by Seller under delivery or release schedules outstanding at the date of termination. Except as provided in this paragraph, PWM shall not be liable for and shall not be required to make payments to Seller, directly or on account of claims by Seller's subcontractors, for loss of anticipated profit, unabsorbed overhead, interest on claims, product development and engineering costs, facilities and equipment rearrangement costs or rental, unamortized depreciation costs, or general and administrative burden charges from termination of this contract. Within 60 days from the effective date of termination, Seller shall submit a comprehensive termination claim to PWM, with sufficient supporting data to permit PWM's audit, and shall thereafter promptly furnish such supplemental and supporting information as PWM shall request. PWM or its agents shall have the right to audit and examine all books, records, facilities, work, material, inventories and other items relating to any termination claim of Seller.

14. INTELLECTUAL PROPERTY:

Seller agrees: (a) to defend, hold harmless and indemnify PWM, its successors and customers against any claims of infringement (including patent, trademark, copyright, industrial design right, or other proprietary right, or misuse or misappropriation of trade secret) and resulting damages and expenses (including legal and other professional fees) arising in any way in relation to the goods or services contracted, including such claims where Seller has provided only part of the goods or services; Seller expressly waives any claim against PWM that such infringement arose out of compliance with PWM's specification; (b) that PWM or PWM's subcontractor has the right to repair, reconstruct, or rebuild the specific goods delivered under this contract without payment of any royalty to Seller; (c) that parts manufactured based on PWM's drawings and/or specifications may not be used for its own use or sold to third parties without PWM's express written authorization; and (d) to the extent that this contract is issued for the creation of copyrightable works, the works shall be considered "works made for hire;" to the extent that the works do not qualify as "works made for hire," Seller hereby assigns to PWM all right, title and interest in all copyrights and moral rights therein.

15. TECHNICAL INFORMATION DISCLOSED TO BUYER:

Seller agrees not to assert any claim (other than a claim for patent infringement) with respect to any technical information that Seller shall have disclosed or may hereafter disclose to PWM in connection with the goods or services covered by this contract.

16. INDEMNIFICATION:

If Seller performs any work on PWM's premises or utilizes the property of PWM, whether on or off PWM's premises, Seller shall indemnify and hold PWM harmless from and against any liability, claims, demands or expenses (including legal and other professional fees) for damages to the property of or injuries (including death) to PWM, its employees or any other person arising from or in connection with Seller's performance of work or use of PWM's property, except for such liability, claim, or demand arising out of the sole negligence of Buyer.

17. INSURANCE:

Seller shall maintain insurance in amounts acceptable to PWM, naming PWM as an additional insured and covering general liability, public liability, product liability, product recall, complete operation, contractor liability, automobile liability insurance as will adequately protect PWM against such damages, liabilities, claims, losses and expenses (including legal fees). Seller agrees to submit certificates of insurance, evidencing it's insurance coverage when requested by PWM. Seller's furnishing of certificates of insurance or purchase of insurance shall not release Seller of its obligations or liabilities under this contract.

18. SELLER'S PROPERTY:

Unless otherwise agreed to by PWM, Seller, at its expense, shall furnish, keep in good condition, and replace when necessary all machinery, equipment, tools, jigs, dies, gauges, fixtures, molds, patterns and other items ("Seller's Property") necessary for the production of the goods. The cost of changes to Seller's Property necessary to make design and specification changes authorized by PWM shall be paid for by PWM. Seller shall insure Seller's Property with full fire and extended coverage insurance for its replacement value. Seller grants PWM an irrevocable option to take possession of and title to Seller's Property that is special for the production of the goods upon payment to Seller of its net book value (Seller's orginal cost less Seller's Capital Cost Allowance) less any amounts that PWM has previously paid to Seller for the cost of such items; provided, however, that this option shall not apply if Seller's Property is used to produce goods that are the standard stock of Seller or if a substantial quantity of like goods are being sold by Seller to others.

19. PWM'S PROPERTY:

All supplies, materials, tools, jigs, dies, gauges, fixtures, molds, patterns, equipment and other items furnished by PWM, either directly or indirectly, to Seller to perform this contract, or for which Seller has been reimbursed by PWM, shall be and remain the property of PWM and held by Seller on a bailment basis ("PWM's Property"). Seller shall bear the risk of loss of and damage to PWM's Property. PWM's Property shall at all times be properly housed and maintained by Seller, at its expense; shall not be used by Seller for any purpose other than the performance of this contract; shall be deemed to be personalty; shall be conspicuously marked by Seller as the property of PWM; shall not be commingled with the property of Seller or with that of a third person; and shall not be moved from Seller's premises without PWM's prior written approval. PWM shall have the right to enter Seller's premises at all reasonable times to inspect such property and Seller's records with respect thereto. Upon the request of PWM, PWM's Property shall be immediately released to PWM or delivered to PWM by Seller, either (i) F.O.B. transport equipment at Seller's plant, properly packed and marked in accordance with the requirements of the carrier selected by PWM to transport such property, or (ii) to any location designated by PWM, in which event PWM shall pay to Seller the reasonable costs of delivering such property to such location. When permitted by law, Seller waives any lien or other rights that Seller might otherwise have on any of PWM's Property for work performed on such property or otherwise.

20. SERVICE AND REPLACEMENT PARTS:

Seller will sell to PWM goods necessary for it to fulfill its current model service and replacement parts requirements at the price(s) set forth in this contract. If the goods are systems or modules, Seller will sell the components or parts that comprise the system or module at price(s) that shall not, in the aggregate, exceed the price of the system or module less assembly costs. During the 15 year period after PWM completes current model purchases, Seller will sell goods to PWM to fulfill PWM's past model service and replacement parts requirements. Unless otherwise agreed to by PWM, the price(s) during the first 3 years of this period shall be those in effect at the conclusion of current model purchases. For the remainder of this period, the price(s) for goods shall be as agreed to by the parties. When requested by PWM, Seller shall make service literature and other materials available at no additional charge to support PWM's service part sales activities.

21. REMEDIES:

The rights and remedies reserved to PWM in this contract shall be cumulative with, and additional to, all other or further remedies provided in law or equity. Without limiting the foregoing, should any goods fail to conform to the warranties set forth in paragraph 9, PWM shall notify Seller and Seller shall, if requested by PWM, reimburse PWM for any incidental and consequential damages caused by such nonconforming goods, including, but not limited to, costs, expenses and losses incurred by PWM (a) in inspecting, sorting, repairing or replacing such nonconforming goods; (b) resulting from production interruptions; (c) conducting recall campaigns or other corrective service actions; and (d) claims for personal injury (including death) or property damage caused by such nonconforming goods.

22. CUSTOMS; EXPORT CONTROLS:

Credits or benefits resulting or arising from this contract, including trade credits, export credits or the refund of duties, taxes or fees, shall belong to PWM. Seller shall provide all information necessary (including written documentation and electronic transaction records) to permit PWM to receive such benefits or credits, as well as to fulfill its customs related obligations, origin marking or labeling requirements and local content origin requirements, if any. Export licenses or authorizations necessary for the export of the goods shall be the responsibility of Seller unless otherwise indicated in this contract, in which event Seller shall provide such information as may be necessary to enable PWM to obtain such licenses or authorization(s). Seller shall undertake such arrangements as necessary for the goods to be covered by any duty deferral or free trade zone program(s) of the country of import.

23. SETOFF/RECOUPMENT:

In addition to any right of setoff or recoupment provided by law, all amounts due to Seller shall be considered net of indebtedness of Seller and its affiliates/subsidiaries to PWM and its affiliates/subsidiaries; and PWM shall have the right to setoff against or to recoup from any amounts due to Seller and its affiliates/subsidiaries from PWM and its affiliates/subsidiaries.

24. NO ADVERTISING:

Seller shall not, without first obtaining the written consent of PWM, in any manner advertise or publish the fact that Seller has contracted to furnish PWM the goods or services covered by this contract, or use any trademarks or trade names of PWM in Seller's advertising or promotional materials.

25. COMPLIANCE WITH LAWS:

Seller, and any goods or services supplied by Seller, shall comply with all applicable laws, rules, regulations, orders, conventions, ordinances or standards of the country(ies) of destination or that relate to the manufacture, labeling, transportation, importation, exportation, licensing, approval or certification of the goods or services, including, but not limited to, those relating to environmental matters, wages, hours and conditions of employment, subcontractor selection, discrimination, occupational health/safety and motor vehicle safety. At PWM's request, Seller shall certify in writing its compliance with the foregoing. Seller shall indemnify and hold PWM harmless from and against any liability claims, demands or expenses (including legal or other professional fees) arising from or relating to Seller's noncompliance.

26. NO IMPLIED WAIVER:

The failure of either party at any time to require performance by the other party of any provision of this contract shall in no way affect the right to require such performance at any time thereafter, nor shall the waiver of either party of a breach of any provision of this contract constitute a waiver of any succeeding breach of the same or any other provision.

27. NON-ASSIGNMENT:

Unless otherwise specifically prohibited by applicable law, Seller may not assign or delegate its rights or obligations under this contract without PWM's prior written consent.

28. RELATIONSHIP OF PARTIES:

Seller and PWM are independent contracting parties and nothing in this contract shall make either party the agent or legal representative of the other for any purpose whatsoever, nor does it grant either party any authority to assume or to create any obligation on behalf of or in the name of the other.

29. GOVERNING LAW; JURISDICTION:

This contract is to be construed according to the laws of the country (and state/province, if applicable) from which this contract is issued as shown by the address of PWM, excluding the provisions of the United Nations Convention on Contracts for the International Sale of Goods and any conflict of law provisions that would require application of another choice of law. Any action or proceedings by PWM against Seller may be brought by PWM in any court(s) having jurisdiction over Seller or, at PWM's option, in the court(s) having jurisdiction over PWM's location, in which event Seller consents to jurisdiction and service of process in accordance with applicable procedures. Any actions or proceedings by Seller against PWM may be brought by Seller only in the court(s) having jurisdiction over the location of PWM from which this contract is issued.

30. SEVERABILITY:

If any term(s) of this contract is invalid or unenforceable under any statute, regulation, ordinance, executive order or other rule of law, such term(s) shall be deemed reformed or deleted, as the case may be, but only to the extent necessary to comply with such statute, regulation, ordinance, order or rule, and the remaining provisions of this contract shall remain in full force and effect.

31. ENTIRE AGREEMENT:

This contract, together with the attachments, exhibits, supplements or other terms of PWM specifically referenced in this contract, constitutes the entire agreement between Seller and PWM with respect to the matters contained in this contract and supersedes all prior oral or written representations and agreements. This contract may only be modified by a contract amendment in writing issued by PWM.

POLYWHEELS MANUFACTURING LTD.
1455 North Service Rd. East,
Oakville, ON., Canada L6H 1A7

TEL: (905) 815-0600
FAX: (905) 815-0155

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