NON NEGOTIABLE PROMISSORY NOTE
                         ------------------------------


                                NOVEMBER 16, 2004

JERSEY CITY, NEW JERSEY                                            $250,000.00

FOR VALUE RECEIVED, the undersigned, SMARTIRE SYSTEMS INC., a Yukon Corporation,
with a principal  office  located at Suite 150 -13151  Vanier  Place,  Richmond,
British  Columbia,  Canada  V6V 2J1 (the  "Company"),  promises  to pay  CORNELL
CAPITAL  PARTNERS,  LP (the  "Holder") at 101 Hudson  Street - Suite 3606 Jersey
City,  New Jersey 07302 or other address as the Holder shall specify in writing,
the  principal  sum of TWO  HUNDRED  FIFTY  THOUSAND  (U.S.)  DOLLARS AND 00/100
($250,000.00),  together  with  interest  thereon at the rate of twelve  percent
(12%) per annum and will be payable pursuant to the following terms:

1. AMOUNT OF NOTE. The face amount of this Non Negotiable  Promissory Note (this
"Note")  plus  interest at the rate of twelve  percent  (12%) per annum shall be
payable to the Holder within thirty (30) days from the date hereof.

2. WAIVER AND  CONSENT.  To the fullest  extent  permitted  by law and except as
otherwise  provided  herein,  the Company waives demand,  presentment,  protest,
notice of dishonor,  suit against or joinder of any other person,  and all other
requirements necessary to charge or hold the Company liable with respect to this
Note.

3. COSTS,  INDEMNITIES  AND EXPENSES.  The Company  agrees to pay all reasonable
fees and costs incurred by the Holder in collecting or securing or attempting to
collect or secure this Note, including reasonable  attorneys' fees and expenses,
whether or not involving litigation and/or appellate or bankruptcy  proceedings.
The Company agrees to pay any documentary stamp taxes, intangible taxes or other
taxes  which  may now or  hereafter  apply to this Note or any  payment  made in
respect of this Note,  and the Company  agrees to indemnify  and hold the Holder
harmless from and against any  liability,  costs,  attorneys'  fees,  penalties,
interest  or expenses  relating  to any such taxes,  as and when the same may be
incurred.

4. EVENT OF DEFAULT.  Upon an Event of Default (as  defined  below),  the entire
principal  balance and accrued  interest  outstanding  under this Note,  and all
other  obligations of the Company under this Note,  shall be immediately due and
payable  without any action on the part of the Holder,  and the Holder  shall be
entitled to seek and institute  any and all remedies  available to it. No remedy
conferred  under this Note upon the Holder is  intended to be  exclusive  of any
other  remedy  available  to the  Holder,  pursuant to the terms of this Note or
otherwise.  No single or partial  exercise by the Holder of any right,  power or
remedy  hereunder  shall  preclude any other or further  exercise  thereof.  The
failure  of the  Holder  to  exercise  any right or  remedy  under  this Note or
otherwise,  or delay in exercising such right or remedy,  shall not operate as a
waiver thereof.  An "Event of Default" shall be deemed to have occurred upon the
occurrence of any of the  following:  (i) the Company should fail for any reason

<PAGE>

or for no reason to make  payment  of the  outstanding  principal  balance  plus
accrued interest  pursuant to this Note within the time prescribed herein or the
Company  fails to satisfy any other  obligation  or  requirement  of the Company
under this Note; or (ii) any proceedings under any bankruptcy laws of the United
States  of  America  or  under  any  insolvency,  reorganization,  receivership,
readjustment of debt, dissolution,  liquidation or any similar law or statute of
any  jurisdiction  now or hereinafter in effect (whether in law or at equity) is
filed by or against the Company or for all or any part of its property.

5. MAXIMUM  INTEREST  RATE.  In no event shall any agreed to or actual  interest
charged,  reserved or taken by the Holder as consideration  for this Note exceed
the limits imposed by New Jersey law. In the event that the interest  provisions
of this Note shall result at any time or for any reason in an effective  rate of
interest  that exceeds the maximum  interest rate  permitted by applicable  law,
then without further agreement or notice the obligation to be fulfilled shall be
automatically  reduced  to such  limit and all sums  received  by the  Holder in
excess of those lawfully  collectible  as interest shall be applied  against the
principal of this Note immediately  upon the Holder's receipt thereof,  with the
same force and effect as though the Company  had  specifically  designated  such
extra  sums to be so applied  to  principal  and the Holder had agreed to accept
such extra payment(s) as a premium-free prepayment or prepayments.

6.  CANCELLATION  OF  NOTE.  Upon the  repayment  by the  Company  of all of its
obligations  hereunder to the Holder,  including,  without limitation,  the face
amount  of this  Note,  plus  accrued  but  unpaid  interest,  the  indebtedness
evidenced hereby shall be deemed canceled and paid in full.  Except as otherwise
required  by law or by the  provisions  of this Note,  payments  received by the
Holder hereunder shall be applied first against  expenses and indemnities,  next
against  interest accrued on this Note, and next in reduction of the outstanding
principal balance of this Note.

7.  SEVERABILITY.  If any provision of this Note is, for any reason,  invalid or
unenforceable,  the remaining provisions of this Note will nevertheless be valid
and enforceable and will remain in full force and effect.  Any provision of this
Note that is held invalid or unenforceable by a court of competent  jurisdiction
will be deemed modified to the extent necessary to make it valid and enforceable
and as so modified will remain in full force and effect.

8. AMENDMENT AND WAIVER.  This Note is non negotiable and may be amended, or any
provision of this Note may be waived, provided that any such amendment or waiver
will be binding on a party hereto only if such  amendment or waiver is set forth
in a writing executed by the parties hereto. The waiver by any such party hereto
of a breach of any provision of this Note shall not operate or be construed as a
waiver of any other breach.

9. SUCCESSORS.  Except as otherwise  provided  herein,  this Note shall bind and
inure to the  benefit  of and be  enforceable  by the  parties  hereto and their
permitted successors and assigns.

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<PAGE>

10.  ASSIGNMENT.  This Note shall not be directly or  indirectly  assignable  or
delegable by the Company.

11. NO STRICT CONSTRUCTION.  The language used in this Note will be deemed to be
the language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction will be applied against any party.

12.  FURTHER  ASSURANCES.  Each party hereto will execute all documents and take
such  other  actions  as the other  party  may  reasonably  request  in order to
consummate the  transactions  provided for herein and to accomplish the purposes
of this Note.

13.  NOTICES,   CONSENTS,   ETC.  Any  notices,   consents,   waivers  or  other
communications  required or permitted to be given under the terms hereof must be
in writing and will be deemed to have been  delivered:  (i) upon  receipt,  when
delivered  personally;  (ii)  upon  receipt,  when sent by  facsimile  (provided
confirmation of transmission  is  mechanically or  electronically  generated and
kept on file by the sending  party);  or (iii) one (1) trading day after deposit
with a nationally  recognized  overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile  numbers
for such communications shall be:

<TABLE>
<CAPTION>
<S>                                                     <C>
------------------------------------------------------- -----------------------------------------------------------
If to the Company:                                      SmarTire Systems Inc.
------------------------------------------------------- -----------------------------------------------------------
                                                        Suite 150-13151 Vanier Place
------------------------------------------------------- -----------------------------------------------------------
                                                        Richmond, British Columbia
------------------------------------------------------- -----------------------------------------------------------
                                                        Canada, V6V 2J1
------------------------------------------------------- -----------------------------------------------------------
                                                        Attention:    Robert V. Rudman, President
------------------------------------------------------- -----------------------------------------------------------
                                                        Telephone:    (604) 276-9884
------------------------------------------------------- -----------------------------------------------------------
                                                        Facsimile:    (604) 276-2353
------------------------------------------------------- -----------------------------------------------------------

------------------------------------------------------- -----------------------------------------------------------
With Copies to:                                         Sichenzia Ross Friedman Ference LLP
------------------------------------------------------- -----------------------------------------------------------
                                                        1065 Avenue of the Americas
------------------------------------------------------- -----------------------------------------------------------
                                                        New York, NY 10018
------------------------------------------------------- -----------------------------------------------------------
                                                        Attention:    Gregory Sichenzia, Esq.
------------------------------------------------------- -----------------------------------------------------------
                                                                      Darrin M. Ocasio, Esq.
------------------------------------------------------- -----------------------------------------------------------
                                                        Telephone:    (212) 981-6768
------------------------------------------------------- -----------------------------------------------------------
                                                        Facsimile:    (212) 930-9725
------------------------------------------------------- -----------------------------------------------------------
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
<S>                                                     <C>
------------------------------------------------------- -----------------------------------------------------------
If to Holder:                                           Cornell Capital Partners, LP
------------------------------------------------------- -----------------------------------------------------------
                                                        101 Hudson Street - Suite 3606
------------------------------------------------------- -----------------------------------------------------------
                                                        Jersey City, New Jersey 07302
------------------------------------------------------- -----------------------------------------------------------
                                                        Attention:    Mark Angelo
------------------------------------------------------- -----------------------------------------------------------
                                                        Telephone:    (201) 985-8300
------------------------------------------------------- -----------------------------------------------------------
                                                        Facsimile:    (201) 985-8266
------------------------------------------------------- -----------------------------------------------------------

------------------------------------------------------- -----------------------------------------------------------
With Copies to:                                         David Gonzalez, Esq.
------------------------------------------------------- -----------------------------------------------------------
                                                        101 Hudson Street - Suite 3606
------------------------------------------------------- -----------------------------------------------------------
                                                        Jersey City, New Jersey 07302
------------------------------------------------------- -----------------------------------------------------------
                                                        Telephone:    (201) 985-8300
------------------------------------------------------- -----------------------------------------------------------
                                                        Facsimile:    (201) 985-8266
------------------------------------------------------- -----------------------------------------------------------
</TABLE>


or at such other address and/or facsimile number and/or to the attention of such
other person as the  recipient  party has  specified by written  notice given to
each other  party  three (3)  trading  days prior to the  effectiveness  of such
change.  Written  confirmation  of receipt  (A) given by the  recipient  of such
notice,   consent,   waiver  or  other   communication,   (B)   mechanically  or
electronically  generated by the sender's facsimile machine containing the time,
date,  recipient  facsimile  number  and an  image  of the  first  page  of such
transmission  or (C)  provided by a  nationally  recognized  overnight  delivery
service, shall be rebuttable evidence of personal service,  receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

14. REMEDIES,  OTHER  OBLIGATIONS,  BREACHES AND INJUNCTIVE RELIEF. The Holder's
remedies  provided in this Note shall be cumulative and in addition to all other
remedies available to the Holder under this Note, at law or in equity (including
a decree of specific  performance and/or other injunctive  relief), no remedy of
the Holder  contained  herein  shall be deemed a waiver of  compliance  with the
provisions  giving  rise to such  remedy  and  nothing  herein  shall  limit the
Holder's right to pursue actual damages for any failure by the Company to comply
with the terms of this Note or the Security Agreement. Every right and remedy of
the Holder  under any document  executed in  connection  with this  transaction,
including  but not  limited  to this Note and the  Security  Agreement  or under
applicable  law may be exercised from time to time and as often as may be deemed
expedient  by the Holder.  The Company  acknowledges  that a breach by it of its
obligations  hereunder  will cause  irreparable  harm to the Holder and that the
remedy at law for any such  breach  may be  inadequate.  The  Company  therefore
agrees that,  in the event of any such breach or threatened  breach,  the Holder
shall be entitled, in addition to all other available remedies, to an injunction
restraining  any breach,  and  specific  performance  without the  necessity  of
showing economic loss and without any bond or other security being required.

15.  GOVERNING LAW;  JURISDICTION.  All questions  concerning the  construction,
validity,  enforcement and interpretation of this Agreement shall be governed by
the  internal  laws of the State of New  Jersey,  without  giving  effect to any
choice of law or conflict of law  provision or rule (whether of the State of New
Jersey or any other  jurisdictions) that would cause the application of the laws
of any  jurisdictions  other than the State of New  Jersey.  Each  party  hereby
irrevocably submits to the exclusive  jurisdiction of the Superior Courts of the
State of New Jersey,  sitting in the city of Jersey  City,  Hudson  County,  New
Jersey and the Federal  District Court for the District of New Jersey sitting in
Newark,  New  Jersey,  for  the  adjudication  of any  dispute  hereunder  or in
connection herewith or therewith, or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding,  any claim that it is not personally  subject to the

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<PAGE>

jurisdiction of any such court,  that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby  irrevocably waives personal service of process and
consents  to process  being  served in any such suit,  action or  proceeding  by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.

16. NO INCONSISTENT AGREEMENTS.  None of the parties hereto will hereafter enter
into any agreement which is inconsistent  with the rights granted to the parties
in this Note.

17. THIRD PARTIES.  Nothing herein  expressed or implied is intended or shall be
construed to confer upon or give to any person or entity, other than the parties
to this Note and their respective permitted successor and assigns, any rights or
remedies under or by reason of this Note.

18. WAIVER OF JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THE HOLDER TO LOAN TO THE
COMPANY THE MONIES  HEREUNDER,  THE COMPANY  HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND
ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION.

19. ENTIRE AGREEMENT. This Note (including the recitals hereto) and the Security
Agreement set forth the entire  understanding of the parties with respect to the
subject  matter  hereof,  and shall not be  modified  or  affected by any offer,
proposal, statement or representation, oral or written, made by or for any party
in connection with the negotiation of the terms hereof, and may be modified only
by instruments signed by all of the parties hereto.




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<PAGE>

IN WITNESS  WHEREOF,  this Note is  executed by the  undersigned  as of the date
hereof.


                                      CORNELL CAPITAL PARTNERS, LP

                                      By: Yorkville Advisors, LLC
                                      Its:General Partner

                                      By: /s/ Mark Angelo
                                      Name:   Mark Angelo
                                      Its:President and Portfolio Manager


                                      COMPANY:
                                      SMARTIRE SYSTEMS INC.

                                      By: /s/Robert V. Rudman
                                      Name:  Robert V. Rudman
                                      Title: President


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