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 150-13151
Vanier Place, Richmond, BC, Canada V6V 2J1 and Vansco Electronics LP ("Vansco"),
a Manitoba  limited  partnership  having its  principal  office at 1305 Clarence
Avenue, Winnipeg, Manitoba, Canada R3T 1T4 (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.

<PAGE>

      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;


                                      -2-
<PAGE>
      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.


                                      -3-

<PAGE>

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.

                                      -4-
<PAGE>

      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 bill 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.

                                      -5-
<PAGE>

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.

                                      -6-
<PAGE>

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.

                                      -7-
<PAGE>


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.

                                      -8-
<PAGE>

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.

                                      -9-
<PAGE>


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.

                                      -10-
<PAGE>

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.

                                      -11-
<PAGE>

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.

                                      -12-
<PAGE>

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.

                                      -13-
<PAGE>

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.

                                      -14-
<PAGE>

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/ Al Kozak                            Signature: /s/ Andre Granger
          -------------                                      ------------------
Print Name: Al Kozak                               Print Name: Andre Granger

Title: President/CEO                               Title: Vice President, Sales
                                                          and Marketing

Date: November 16, 2005                            Date: November 16, 2005