| **Date                  of Instrument:** | **Issuer:**                                  | **Security**                                                                      | **Outstanding                  Principal:** |
|------------------------------------------|----------------------------------------------|-----------------------------------------------------------------------------------|---------------------------------------------|
|  December                  30, 2005 |  SmarTire                  Systems Inc. |  Amended                  and RestatedConvertible                  Debenture |  $19,774,500                           |
|                                     |                                         |                                                                              |                                        |

| 1.   | Pursuant                  to the terms of a certain Registration Rights Agreement (the “RRA”) to                  which the undersigned was a party, the Company was required to                  file and                  have declared effective with the Securities Exchange Commission                  a                  registration statement to register for resale the shares of Common                  Stock                  of the Company underlying the Amended and Restated Convertible                  Debenture                  referenced above.  The Company is in default of its obligations                  under the RRA and is required to pay damages to the undersigned                  under the                  RRA for, among other things, the failure to obtain effectiveness                  of such                  registration statement for the Common Stock underlying the Amended                  and                  Restated Convertible Debenture referenced above (the “RRA Damages”). The                  undersigned hereby agrees  to permanently waive its right to the                  RRA Damages. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | All                  amounts owed under the Amended and Restated Convertible Debenture                  referenced above, including all interest, fees, costs, expenses                  and other                  charges now or hereafter payable by the Company to the undersigned                  under                  the Amended and Restated Convertible Debenture are unconditionally                  owing                  by the Company to the undersigned, without offset, setoff, defense                  or                  counterclaim of any kind, nature or description whatsoever.  The                  Company further acknowledges, confirms and agrees that (a) all                  agreements between SmarTire and the undersigned (the “Existing                  Agreements”) have been duly executed and delivered by the Company to                  the undersigned, and each is in full force and effect as of the                  date                  hereof; (b) the agreements and obligations of SmarTire contained in                  the Existing Agreements constitute the legal, valid and binding                  obligations of SmarTire, enforceable against it in accordance with                  their                  respective terms, and the Company has no valid defense to the enforcement                  of such obligations; and (c)  the undersigned is and shall be                  entitled to the rights, remedies and benefits provided for in the                  Existing                  Agreements and applicable law, without offset, setoff, defense                  or                  counterclaim of any kind, nature or descriptions                  whatsoever. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**STAROME        INVESTMENTS        LIMITED**

*/s/Matthew        Hoffman*

**ACCEPTED        AND AGREED:**

**SMARTIRE        SYSTEMS, INC.**

*/s/Jeff        Finkelstein*