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                                                                   EXHIBIT 10.11

                        RELEASE AND SETTLEMENT AGREEMENT


THIS AGREEMENT made as of the 4th day of June, 1999.

BETWEEN:

                  SMARTIRE SYSTEMS INC., a company duly incorporated pursuant to
                  the laws of the Province of British Columbia, having an office
                  at 150 - 13151 Vanier Place, Richmond, British Columbia, V6V
                  2J1

                  (the "Company")

                                                               OF THE FIRST PART

AND:

                  JOSEPH MERBACK, businessman, of 27725 Winding Way, Malibu,
                  California, 90265

                  ("Merback")



WHEREAS:

A. Merback is a director and an employee of the Company and Smartire USA Inc.
and has rendered certain management services (the "Services") to the Company and
its subsidiaries pursuant to a Management Agreement, dated February 1, 1998, as
amended (the "Management Agreement"), and has accordingly acquired and is in
possession of certain confidential information (the "Confidential Information")
regarding the Company, its subsidiaries and their respective businesses;

B. Merback has agreed to resign as a director and an employee of the Company and
of Smartire USA Inc. and to release the Company and its subsidiaries from all
claims and issues that he now may have or which may arise against the Company
and/or its subsidiaries in connection with the Services and the positions held
by him with the Company and its subsidiaries, in consideration for the Company
allotting and issuing to Merback 100,000 common shares (the "Shares") in the
capital of the Company;


NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and of the covenants and agreements set out herein, the parties hereto covenant
and agree as follows:


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1. ALLOTMENT AND ISSUANCE OF SHARES

1.1 The Company will allot and issue to Merback, or to another nominee as
directed by Merback, the Shares as full and final payment of the Services and
Merback will accept the Shares as full and final payment of the Services. The
Shares will be issued within ten (10) days of the execution of this Agreement
and will be delivered to Merback. Merback will pay any tax liability accruing
to him as a result of the issuance of the Shares.

1.2 The Company hereby agrees to take the necessary steps to register (the
"Registration"), as soon as reasonably practicable after the issuance of the
Shares, the Shares with the Securities and Exchange Commission (the "SEC") on
Form S-8 if Merback directs that the Shares be registered in his name or in the
name of a nominee, if the Shares issued such nominee are eligible for
registration on Form S-8. Otherwise, the Company agrees to add registration of
the Shares to any other share registration that it may file with the SEC during
the year.

1.3 Merback acknowledges that the Shares will be subject to a one year hold
period, commencing from the date of issuance of the Shares, unless the Shares
are registered with the SEC prior to the expiration of such hold period. The
Shares may be subject to additional "affiliate" restrictions under U.S.
securities laws.


2. CONFIDENTIAL INFORMATION

2.1 "Confidential Information" shall mean, for the purposes of this Agreement,
non-public information regarding the Company, its subsidiaries, their respective
businesses and management which, under the circumstances, ought reasonably to be
treated as confidential.

2.2 Within ten (10) days of the execution of this Agreement, Merback shall
return all originals, copies, reproductions and summaries of or relating to the
Confidential Information to the Company.

2.3 Merback hereby agrees, at any time before or after the execution of this
Agreement, that he has not and will not disclose any Confidential Information to
third parties except as provided herein. Merback may disclose Confidential
Information in accordance with judicial or other governmental order, provided
that he shall give reasonable notice to the Company prior to such disclosure and
shall comply with any applicable protective order or equivalent.

2.4 Merback hereby agrees, at any time after the execution of this Agreement,
that he will not utilize, in anyway whatsoever, the Confidential Information.


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3. RESIGNATION, REMUNERATION AND TERMINATION OF STOCK OPTIONS

3.1 Merback agrees to resign, effective June 4, 1999, from his position as a
director of the Company.

3.2 Upon Registration of the Shares, Merback agrees to immediately resign from
all other positions held by him with the Company and its subsidiaries (the
"Resignations").

3.3 Merback acknowledges and agrees that all remuneration and compensation
payable to him by the Company and its subsidiaries will be suspended immediately
upon issuance of the Shares.

3.4 Merback acknowledges and consents to the immediate cancellation of any and
all incentive stock options (the "Options") he may hold in the capital of any of
the Company or its subsidiaries.

3.5 Merback hereby appoints the President of the Company as his attorney with
power to execute any and all Resignations, upon the Registration, any documents
regarding cancellation of the Options and any other documents necessary to give
effect to this Agreement.


4. RELEASE OF THE COMPANY

4.1 Merback hereby agrees that, upon delivery to him of the Shares by the
Company in accordance with the provisions of this Agreement, all claims in
connection with the Services will be fully satisfied and extinguished and
Merback will remise, release and forever discharge the Company, its subsidiaries
and any of their respective directors, officers and employees from any and all
manner of actions, causes of action, suits, debts, sums of money, due accounts,
dues, bonds, covenants, contracts, claims, demands, damages, costs, expenses and
any and all legal obligations of any and every kind and nature whatsoever, at
law or in equity or under any statute, whether known or unknown, suspected or
unsuspected and which Merback had or may now have or which he hereafter may have
for or by reason of any matter, cause or thing and, in particular, but without
limitation, for or by reason of any matter, cause or thing which has been or may
be sustained in consequence of Merback's relationship with the Company and its
subsidiaries as a director, officer, consultant, agent, employee or shareholder
or pursuant to the Management Agreement.

4.2 Merback acknowledges that in making this Agreement he has been advised and
has had an opportunity to obtain independent legal advice, he has exercised his
own independent judgment and he has not been influenced to any extent whatsoever
by any representations, statements or conduct of any description whatever on the
part of any other parties to this Agreement.

4.3 The Company will continue to provide directors and officers liability
insurance for Merback, for the period for which he was a director of the Company
and Smartire USA Inc., for a minimum of five years.


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5. GENERAL

5.1 Except as herein otherwise provided, no subsequent alteration, amendment,
change or addition to this Agreement will be binding upon the parties hereto
unless reduced to writing and signed by the parties.

5.2 This Agreement will enure to the benefit of and be binding upon the parties
and their respective heirs, executors, administrators, successors, and assigns.

5.3 The parties will execute and deliver all such further documents, do or cause
to be done all such further acts and things, and give all such further
assurances as may be necessary to give full effect to the provisions and intent
of this Agreement.

5.4 This Agreement will be governed by and construed in accordance with the law
of British Columbia.

5.5 Any notice required or permitted to be given under this Agreement will be in
writing and may be given by delivering, sending by electronic facsimile
transmission or other means of electronic communication capable of producing a
printed copy, or sending by prepaid registered mail posted in Canada and the
United States, the notice to the addresses set forth on the first page of this
agreement (or to such other address or facsimile number as any party may specify
by notice in writing to another party). Any notice delivered or sent by
electronic facsimile transmission or other means of electronic communication
capable of producing a printed copy on a business day will be deemed
conclusively to have been effectively given on the day the notice was delivered,
or the transmission was sent successfully, as the case may be. Any notice sent
by prepaid registered mail will be deemed conclusively to have been effectively
given on the third business day after posting; but if at the time of posting or
between the time of posting and the third business day thereafter there is a
strike, lockout, or other labour disturbance affecting postal service, then the
notice will not be effectively given until actually delivered.

5.6 Time is of the essence of this Agreement.

5.7 This Agreement may be executed in several counterparts, each of which will
be deemed to be an original and all of which will together constitute one and
the same instrument.

5.8 The provisions herein contained constitute the entire agreement between the
parties and supersede all previous understandings, communications,
representations and agreements, whether written or verbal, between the parties
with respect to the subject matter of this Agreement.

5.9 In this Agreement, wherever the singular or masculine is used the same will
be deemed to include the plural, feminine or body politic or corporate and also
the successors and assigns of the parties hereto and each of them where the
context of the parties so require.


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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.


SMARTIRE SYSTEMS INC.

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


EXECUTED by JOSEPH MERBACK in the presence of:   )
                                                 )
--------------------------------------           )
Signature                                        )
                                                 )
WILLIAM A. PAGE                                  )
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Print Name                                       )    /s/ JOSEPH MERBACK
                                                 )    --------------------------
31 EATON PLACE                                   )    JOSEPH MERBACK
LONDON SWIX 8BP ENGLAND                          )
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Address                                          )
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                                                 )
BUSINESSMAN                                      )
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Occupation                                       )