Document:

Exhibit 4.1

                             SMARTIRE SYSTEMS, INC.
                         (A Yukon Territory corporation)

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                             SUBSCRIPTION DOCUMENTS

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                                      Name of Subscriber: ______________________

                                      Subscriber Number: _______________________

<PAGE>

                           INSTRUCTIONS TO SUBSCRIBERS

         Persons  wishing to subscribe  for a 5% Secured  Convertible  Debenture
(the  "Debenture") from SmarTire  Systems,  Inc., a Yukon Territory  corporation
(the "Company),  are required to complete the documents in this package.  In the
event that the  shareholders  of the  Company do not  approve  and  increase  it
authorized shares capital at the Company's Annual General Meeting that will take
place on December 10, 2004, the Company has committed to redeem the  Convertible
Debenture  plus a 5%  penalty  within 90 days  from the date of the  Convertible
Debenture.

         Please comply with the following instructions:

         1. Please complete and sign the  Subscription  Agreement and Accredited
Investor Suitability  Questionnaire provided to you. In those cases in which the
securities will be held in joint ownership, all parties must sign.

         2. Your check or wire transfer in the amount of the  investment  should
be made payable to the Escrow Agent as follows:  Clark,  Wilson, as escrow agent
for  SmarTire  Systems,  Inc." All wire  transfers  should be sent to the Escrow
Agent in  accordance  with the wire  transfer  instructions  attached  hereto as
Exhibit "A."

                SPECIAL SUBSCRIPTION INSTRUCTIONS AND CERTIFICATE
               FOR CORPORATION, PARTNERSHIP AND TRUST SUBSCRIBERS

         If the Subscriber is a corporation, partnership, trust or other entity,
the following additional  instructions must be followed.  Information additional
to that requested below may also be required in some cases.

         1.  Corporations,  partnerships  and trusts must have the  Subscription
Agreement  completed and executed by the authorized  corporate officer,  general
partner  or  trustee  who is making  the  investment  decision  on behalf of the
corporation, partnership or trust.

         2.  Corporations,  partnerships  and trusts must provide the  following
information:

                  (a)  Corporations  must  attach  a  copy  of  their  currently
effective Articles of Incorporation.

                  (b)  Partnerships  must  attach  a  copy  of  their  currently
effective partnership  agreement,  including the date of formation and a list of
all the partners.

                  (c) Trusts  must  attach a copy of their  currently  effective
trust instrument authorizing investments by trustee.

         The  authorized  corporate  officer,  general  partner or trustee  must
complete, date, and sign the Certificate set forth on page 9 hereof.

                                       1
<PAGE>

                             SUBSCRIPTION AGREEMENT

           Name(s) of Subscriber(s):        Total Subscription Price:

           --------------------------

           --------------------------       $-----------------

Gentlemen:

         1. SUBSCRIPTION.  The undersigned (the  "Subscriber"),  intending to be
legally  bound,  hereby  irrevocably  subscribes for and agrees to purchase from
SmarTire Systems, Inc., a Yukon Territory corporation (the "Corporation"),  a 5%
Secured  Convertible  Debenture (the  "Debenture")  in the principal  amount set
forth above in accordance  with the terms of this  Subscription  Agreement  (the
"Subscription Agreement").

         2.  SUBSCRIPTION   INSTRUMENTS.   The  Subscriber  hereby  tenders  the
following materials (the "Subscription Materials"),  all of which have been duly
completed and executed by the Subscriber:

                  a. A check  or  wire  transfer,  in the  amount  of the  total
subscription  price,  made payable to  SICHENZIA  ROSS  FRIEDMAN  FERENCE LLP as
escrow agent for SmarTire  Systems,  Inc." All wire transfers  should be sent to
SICHENZIA  ROSS  FRIEDMAN  FERENCE  LLP in  accordance  with the  wire  transfer
instructions attached hereto as Exhibit "A.";

                  b. One copy of this Subscription Agreement; and

                  c.   One   copy  of  the   Accredited   Investor   Suitability
Questionnaire.

         3. ACCEPTANCE OR REJECTION OF SUBSCRIPTION.  The Subscriber understands
and agrees that:

                  a. The Corporation in its sole  discretion  reserves the right
to accept or reject this or any other subscription,  in whole or in part, and in
any order.

                  b. If this  subscription is accepted,  the proceeds  delivered
herewith  shall  be used to  admit  the  subscribers  whose  subscriptions  were
accepted by the Corporation;

                  c.  If  this   subscription  is  rejected,   the  Subscription
Documents  and  the  subscription   funds  will  be  promptly  returned  to  the
Subscriber. No interest will be paid on any subscription funds; and

                  d.  Upon  acceptance  of  this   Subscription   Agreement  and
execution by the Corporation of a Debenture for the Subscriber,  Clark,  Wilson,
as escrow agent to the Corporation,  is irrevocably instructed and authorized to
deliver all the subscription funds to the Corporation.

         4. REPRESENTATIONS AND WARRANTIES. The Subscriber hereby represents and
warrants to the Corporation as follows:

                  a. The  Subscriber  understands  the  business  in  which  the
Corporation  will be engaged and has such  knowledge and experience in financial
and business matters that he is capable of evaluating the merits and risks of an
investment in the  Corporation and making an informed  investment  decision with
respect thereto. He has obtained  sufficient  information to evaluate the merits
and  risks  of the  investment  and to  make  such a  decision.  The  Subscriber
acknowledges  that he has received and read a copy of the  Confidential  Summary
Private Offering  Memorandum (the  "Memorandum")  dated October ___, 2004, along
with all exhibits  thereto and has had an  opportunity  to review the Memorandum
with his advisors;

                                       2
<PAGE>

                  b. The  Subscriber  and his  attorneys,  investment  advisors,
business  advisors,  tax advisors and accountants have had sufficient  access to
all  documents  and records  pertaining  to the  Corporation  and this  proposed
investment  in the  securities.  Additionally,  the  Subscriber  and  all of his
advisors  have  had  the  opportunity  to  ask  questions  and  receive  answers
concerning the terms and conditions of the offering and other matters pertaining
to  this  investment,   and  all  such  questions  have  been  answered  to  the
satisfaction of the Subscriber.  The Subscriber and all of his advisors have had
an  opportunity  to obtain  any  additional  information  which the  Corporation
possesses,  or can acquire without unreasonable effort or expense,  necessary to
verify the accuracy of the information furnished to the Subscriber, if any;

                  c. The  Subscriber (i) has adequate means of providing for his
current needs and possible  personal  contingencies  and those of his family, if
applicable,  in the same  manner as he would have been able to provide  prior to
making the investment in the securities,  (ii) has no need for liquidity in this
investment,  (iii) is aware of and able to bear the risks of this investment for
an  indefinite  period of time and (iv) is  presently  able to afford a complete
loss of such investment;

                  d.  The  Subscriber  recognizes  that  an  investment  in  the
securities  involves  significant  risks,  including,  without  limitation,  the
potential loss of the Subscriber's entire investment;

                  e. The Subscriber understands that none of the securities have
been  registered  under the Securities Act of 1933, as amended (the  "Securities
Act"), or the securities laws of any state in reliance upon exemptions therefrom
for private  offerings.  The Subscriber  understands that the securities must be
held indefinitely  unless the sale thereof is subsequently  registered under the
Securities  Act and applicable  state  securities  laws or exemptions  from such
registration  are  available.   All  certificates  evidencing  the  Subscriber's
ownership of the securities  will bear a legend stating that the securities have
not been registered  under the Securities Act or state  securities laws and they
may not be  resold  unless  they are  registered  under the  Securities  Act and
applicable state securities laws or exempt therefrom.

                  f.  The  securities  are  being   purchased   solely  for  the
Subscriber's  account for investment and not for the account of any other person
and not with a view to or for  distribution,  assignment or resale in connection
with any  distribution  within the meaning of the  Securities  Act, and no other
person has a direct or  indirect  beneficial  interest in such  securities.  The
Subscriber  represents  that he has no agreement,  understanding,  commitment or
other arrangement with any person and no present intention to sell,  transfer or
assign any securities;

                  g. The Subscriber  realizes that he may not be able to sell or
dispose  of any of the  securities  and that no  market of any kind  (public  or
private) may be available for any of the securities. In addition, the Subscriber
understands  that his  right to  transfer  the  securities  will be  subject  to
restrictions contained in applicable Federal and state securities laws;

                  h. All  information  which the  Subscriber has provided to the
Corporation  concerning  himself,  his  financial  position and his knowledge of
financial  and business  matters,  including all  information  contained in this
Subscription  Agreement, is correct and complete as of the date set forth on the
signature  page  hereof,  and if there  should  be any  adverse  change  in such
information  prior  to his  subscription  being  accepted,  he will  immediately
provide the Corporation with such information;

                  i. The Subscriber's  principal  residence (if subscriber is an
individual) or principal  business  address,  as applicable,  is in the State of
_______________,  and the  Subscriber  has no  present  intention  to move  such
residence or principal business address, as applicable, from such State;

                  j. Neither the  Subscriber nor any of his advisors are relying
on any financial  projections in connection  with  determining  the merits of an
investment in the securities.  The Subscriber  understands and acknowledges that
no   representations   concerning  the  accuracy  of  information  or  financial
projections,  if  any,  are  being  made  and he and  all of his  advisors  have
completely  disregarded  such information or financial  projections,  if any, in
determining whether to invest in the securities;

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<PAGE>

                  k. The Subscriber  understands that the Corporation may at any
time,  in its sole  discretion,  arrange  for the offer  and sale of  additional
shares of its  capital  stock to current  or  additional  shareholders,  at such
prices and in such amounts as it, in its sole discretion, may determine to be in
the best interests of the Corporation;

                  l. The  Subscriber is unaware of, is in no way relying on, and
did not become  aware of the offering of the  securities  through or as a result
of, any form of general solicitation or general advertising,  including, without
limitation, any article, notice,  advertisement or other communication published
in any  newspaper,  magazine or similar  media or broadcast  over  television or
radio,  in connection  with the offering and sale of the  securities  and is not
subscribing  for  securities  and did not become  aware of the  offering  of the
securities  through  or as a result  of any  seminar  or  meeting  to which  the
Subscriber was invited by, or any  solicitation  of a subscription  by, a person
not  previously  known to the  Subscriber  in  connection  with  investments  in
securities generally;

                  m. The Subscriber has taken no action which would give rise to
any claim by any person for  brokerage  commissions,  finders'  fees or the like
relating to this Agreement or the transactions contemplated hereby; and

                  n. The Subscriber has significant prior investment experience,
including  investment  in  securities  traded on the  Over-the-Counter  Bulletin
Board.  The  Subscriber is  knowledgeable  about  investment  considerations  in
development  stage  companies.   The  investment  is  a  suitable  one  for  the
Subscriber.

         5. The  Subscriber  understands  and agrees that this  subscription  is
subject to the following terms and conditions:

                  a. This  subscription  is  irrevocable  and the  execution and
delivery  of this  Agreement  will  not  constitute  an  agreement  between  the
Subscriber  and the  Corporation  until this  Agreement has been accepted by the
Corporation;

                  b.  The  Corporation  can,  in it sole  discretion,  reject  a
subscription  as  soon  as  practicable   after  receipt  of  the   Subscriber's
subscription.  The Subscriber will be promptly notified by the Corporation as to
whether his subscription has been accepted. If the Subscriber's  subscription is
not  accepted,  his check or wire  transfer  amount  (less any  applicable  bank
charges) will be returned  promptly and all of his  obligations  hereunder shall
terminate; and

                  c. This subscription is not transferable or assignable, either
before  or  after  acceptance  hereof  by the  Corporation,  and the  securities
issuable on account of this subscription will only be issued in the name of, and
delivered to, the Subscriber.

         6.  The   representations,   warranties  and  agreements  made  by  the
Subscriber herein have been made with the intent that they be relied upon by the
Corporation for purposes of the Offering.  The Subscriber  further undertakes to
notify the Corporation  immediately of any change in any information supplied by
the  Subscriber.  If more  than one  person  is  signing  this  Agreement,  each
representation,   warranty   and   agreement   shall  be  a  joint  and  several
representation, warranty and agreement of each such Subscriber.

         7. The  Subscriber  unconditionally  agrees to  indemnify  and hold the
Corporation, its officers, directors,  employees, agents and shareholders or any
other  person who may be deemed to  control  the  Corporation,  and any of their
counsel and accountants,  harmless from any loss,  liability,  claim,  damage or
expense  (including,  without  limitation,  any and  all  expenses  incurred  in
investigating,  preparing  or  defending  against any  litigation  commenced  or
threatened),  arising out of the inaccuracy of any of the  Subscriber's,  or his
attorney's or agent's representations, warranties or statements or the breach of
any of the agreements contained herein.

         8. This  Agreement  and the rights of the  parties  hereunder  shall be
governed by and construed in accordance with the laws of the Province of British
Columbia,  without regard to its conflicts of law principles. All parties hereto
(i) agree that any legal suit,  action or proceeding  arising out of or relating
to this Agreement shall be instituted  only in a federal or provincial  court in
the Province of British Columbia, (ii) waive any objection which they may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
as described in this Section 8, and (iii) irrevocably submit to the jurisdiction

                                       4
<PAGE>

of any federal or state court in the  Province of British  Columbia in any suit,
action or proceeding, but such consent shall not constitute a general appearance
or be available to any other person who is not a party to this Agreement.

         9.  SUBSCRIPTION.  The  Subscriber  hereby  subscribes for an aggregate
price of $____________ and has provided a check or wire transfer for that amount
payable to "SmarTire Systems, Inc."

TYPE OF OWNERSHIP:

Please check one:

_______________     Individual (One signature required)

_______________     Joint tenants with rights of survivorship (All parties must
                    sign)

_______________     Tenants by the Entirety (Both parties must sign)

_______________     Tenants in common  (All parties must sign)

_______________     Corporation (Authorized officer must sign)

_______________     Other Entity (Specify type) (Authorized party must sign)

                     EXACT REGISTRATION NAME(S) FOR SHARE(S)

                                       5
<PAGE>

                     SIGNATURE PAGE FOR INDIVIDUAL INVESTORS

         IN WITNESS WHEREOF, the Subscriber,  intending to be legally bound, has
executed  this  Subscription  Agreement  as of the  ___ of  ____________,  2004.
INVESTOR

                                   Signature:
                                              --------------------------
                                   Print Name:
                                               -------------------------

                                   INVESTOR

                                   Signature:
                                              --------------------------
                                   Print Name:
                                               -------------------------

                                       6
<PAGE>

                     SIGNATURE PAGE FOR CORPORATE INVESTORS

         IN WITNESS WHEREOF, the Subscriber,  intending to be legally bound, has
executed this Subscription Agreement as of the ___ day of _____________, 2004.

                                    ------------------------------------------
                                    Name of Corporation

                                    By:
                                        --------------------------------------
                                        Signature of authorized representative

                                    Title:
                                           -----------------------------------
                                           Title of authorized representative

                    SIGNATURE PAGE FOR PARTNERSHIP INVESTORS

         IN WITNESS WHEREOF, the Subscriber,  intending to be legally bound, has
executed this Subscription Agreement as of the ___ day of ____________, 2004.

                          ------------------------------------------------------
                          Name of Partnership

                          By:
                              --------------------------------------------------
                              Signature of general partner

                          Title:
                                 -----------------------------------------------
                                 Title of additional general partner if required

                                       7
<PAGE>

                       SIGNATURE PAGE FOR TRUST INVESTORS

         IN WITNESS WHEREOF, the Subscriber,  intending to be legally bound, has
executed this Subscription Agreement as of the ___ day of ____________, 2004.

                                  ----------------------------------------------
                                  Name of Trust

                                  By:
                                      ------------------------------------------
                                      Signature of Trustee

                                  Title:
                                         ---------------------------------------
                                         Title of additional Trustee if required

                                       8
<PAGE>

           CERTIFICATE FOR CORPORATE, PARTNERSHIP OR TRUST SUBSCRIBER

         The Subscriber,  an authorized  officer,  trustee or general partner of
_____________________________________________, hereby certifies that:

         (a) The Subscriber  has been duly formed and is validly  existing under
the laws of the State of  ____________,  with full power and authority to invest
in _____________, a ______________ corporation; and

         (b) The Subscriber's  Subscription  Agreement has been duly and validly
authorized,  executed and  delivered on behalf of the  Subscriber  and, upon the
Corporation's  acceptance of the  Subscriber's  subscription,  the  Subscription
Agreement will constitute the valid,  binding and  enforceable  agreement of the
Subscriber.

                                   ---------------------------------------------
                                   Name of Subscriber

                                   ---------------------------------------------
                                   Signature of an authorized corporate officer,
                                   general partner or trustee

------------------------           ---------------------------------------------
Date                               Title

                                       9
<PAGE>

                                   ACCEPTANCE

         SMARTIRE  SYSTEMS,  INC. HEREBY ACCEPTS THE  SUBSCRIPTION  CONTAINED IN
THIS SUBSCRIPTION AGREEMENT.

                                       SMARTIRE SYSTEMS, INC.

                                       By:
                                           ------------------------------
                                       Name:
                                             ----------------------------
                                       Its:
                                            -----------------------------
                                       Date:
                                             ----------------------------

                                       10
<PAGE>

                                   EXHIBIT "A"

                                WIRE INSTRUCTIONS

TO:                    CLARK, WILSON, AS ESCROW AGENT FOR SmarTire Systems, Inc.

ACCOUNT NUMBER:

ABA ROUTING NUMBER:

SWIFT CODE:

BANK:

FOR FURTHER CREDIT TO:

ACCOUNT NAME:

U.S. TRUST ACCOUNT NO.:

TRANSIT NO.:

BANK CODE:

                                      A-1

<PAGE>

================================================================================

                             SmarTire Systems, Inc.

                  ACCREDITED INVESTOR SUITABILITY QUESTIONNAIRE

================================================================================

         Instructions.  This Accredited Investor Suitability  Questionnaire must
be completed  by each person who has  indicated  an interest in  purchasing  the
securities. The purpose of this Accredited Investor Suitability Questionnaire is
to permit the  Corporation  to determine  whether each such person meets certain
standards imposed by Federal and state securities laws.

         If the answer to any question is "None" or "Not Applicable,"  please so
state.

         Please  complete,  sign,  date  and  return  this  Accredited  Investor
Suitability  Questionnaire  to the  Corporation.  Should  there be any  material
change  in  the  information   contained  herein  prior  to  acceptance  by  the
Corporation  of your  subscription  for the  securities,  you  must  notify  the
Corporation or its authorized representative immediately.

                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

                                       1
<PAGE>

                  ACCREDITED INVESTOR SUITABILITY QUESTIONNAIRE

THIS  QUESTIONNAIRE IS TO BE COMPLETED AND DELIVERED TO SmarTire  Systems,  Inc.
(THE "CORPORATION") PRIOR TO THE PURCHASE OF SECURITIES FROM THE CORPORATION.

INSTRUCTIONS:

If the answer to any question is "None" or "Not Applicable," please so state.

Your answers will, at all times,  be kept strictly  confidential;  however,  you
agree that the Corporation may present this  Questionnaire to such persons as it
deems  appropriate  in order to ensure that the offer and sale of  securities to
you will not result in violation of the exemption  from  registration  under the
Securities  Act of 1933,  as amended (the  "Act"),  and the  securities  laws of
certain states.  The  representations  contained herein are being relied upon by
the Corporation in connection with this offering.

                         (PRINT OR TYPE YOUR RESPONSES)

1.       Name:    ______________________________________________________________

         Date of birth or year of organization: ________________________________

2.       Home address or, if other than an individual, principal office address:

         -----------------------------------------------------------------------

         -----------------------------------------------------------------------

3.       I am subscribing for  $________________________________________________

4.*      Employer:                  ____________________________________________

         Nature of business:        ____________________________________________

         Position:                  ____________________________________________

         Nature of duties:          ____________________________________________

         Business address:          ____________________________________________

         Business telephone number: ____________________________________________

         *This question is to be answered if the investor is an individual.

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<PAGE>

5.       In the case of any individual investor, I am an Accredited Investor (as
         defined in Rule 501 of Regulation D promulgated  under the Act) because
         I certify that (check all appropriate descriptions that apply):

          (a)    _____     I am a natural person whose  individual net worth, or
                           joint   net   worth   with   my    spouse,    exceeds
                           $1,000,000.(1)

          (b)    _____     I am a  natural  person  who  had  individual  income
                           exceeding  $200,000  in 2002  and  2003  and I have a
                           reasonable  expectation  of reaching  the same income
                           level in 2004.(2)

          (c)    _____     I am a natural  person who had joint  income  with my
                           spouse exceeding $300,000 in 2002 and 2003 and I have
                           a reasonable  expectation of reaching the same income
                           level in 2004, as defined above.

          (d)    _____     I  am  a  director  or   executive   officer  of  the
                           Corporation.  (Executive officer means the president;
                           any vice president in charge of a principal  business
                           unit,   division   or   function,   such  as   sales,
                           administration  or  finance;  or any other  person or
                           persons   who   perform(s)   similar    policy-making
                           functions for the Corporation).

6.        In the case of any  partnership,  corporation,  trust and other entity
          investor, the Subscriber certifies that (check one):

          (a)(3) _____     Each equity  owner of the  investor is an  Accredited
                           Investor because:

                           (i)      The  equity  owner  of  the  investor  is  a
                                    natural person who had an individual  income
                                    (exclusive of any income attributable to his
                                    or her  spouse)  in excess of  $200,000  (or
                                    joint  income  with  that of his  spouse  in
                                    excess of $300,000) in each of 2002 and 2003
                                    and  reasonably and fully expects to have an
                                    individual  income in excess of $200,000 (or
                                    joint  income  with  that of his  spouse  in
                                    excess  of  $300,000)  in 2004.  "Individual
                                    income" is defined in item 5(b) above;

----------
(1)  For purposes of this item, "individual net worth" means the excess of total
     assets at  fair-market  value,  including  home and personal  property (and
     including property owned by a spouse), over total liabilities.

(2)  For purposes of this  questionnaire,  "individual  income" means individual
     annual adjusted gross income,  as reported for federal income tax purposes,
     plus (i) the amount of any tax-exempt  interest income  received;  (ii) the
     amount of losses  claimed as a limited  partner  in a limited  partnership;
     (iii) any deduction claimed for depletion;  (iv) amounts  contributed to an
     IRA or Keogh  retirement  plan;  (v) alimony  paid;  and (vi) any amount by
     which income from  long-term  capital gains has been reduced in arriving at
     adjusted  gross income  pursuant to the  provisions  of Section 1202 of the
     Internal Revenue Code of 1986, as amended.

(3)  An investor  initiating  this paragraph must provide a  questionnaire  from
     each of its equity owners.  If the investor is a trust,  only a trust which
     is revocable and which may be amended at the sole discretion of its grantor
     is eligible to qualify as an accredited  investor under this item 6(a). The
     grantors  of the trust are deemed to be the equity  owners of the trust and
     each grantor must provide a questionnaire.

                                       3
<PAGE>

                           (ii)     The equity owner is a natural person who has
                                    an "individual  net worth" (or who, with his
                                    or her spouse, has a combined individual net
                                    worth) in excess of $1,000,000.  "Individual
                                    net worth" is defined in item 5(a) above;

                           (iii)    The equity  owner is a director or executive
                                    officer of the Corporation;

                           (iv)     The  equity  owner is  either  (a) a bank as
                                    defined  in  Section   3(a)(2)  of  the  Act
                                    whether   acting   in  its   individual   or
                                    fiduciary capacity; (b) an insurance company
                                    as defined in Section  2(13) of the Act; (c)
                                    an investment  company  registered under the
                                    Investment Company Act of 1940 or a business
                                    development  company  as  defined in Section
                                    2(a)(48) of that Act;  (d) a Small  Business
                                    Administration  under Section  301(c) or (d)
                                    of  the  Small  Business  Investment  Act of
                                    1958; or (e) an employee-benefit plan within
                                    the  meaning  of  Title  I of  the  Employee
                                    Retirement  Income  Security Act of 1974, if
                                    the  investment  decision  is made by a plan
                                    fiduciary,  as defined  in Section  3(21) of
                                    such  Act,  which  such  plan  fiduciary  is
                                    either  a  bank,   insurance   company,   or
                                    registered  investment  adviser,  or if  the
                                    employee-benefit  plan has  total  assets in
                                    excess of $5,000,000; or

                           (v)      The  equity  owner  is  a  private  business
                                    development  company  as  defined in Section
                                    202(a)(22) of the Investment Advisers Act of
                                    1940.

          (b)    _____     That the  investor is either (i) a bank as defined in
                           Section  3(a)(2)  of the Act  whether  acting  in its
                           individual or fiduciary  capacity;  (ii) an insurance
                           company as defined in Section 2(13) of the Act; (iii)
                           an investment company registered under the Investment
                           Company Act of 1940 or a business development company
                           as defined in Section  2(a)(48)  of such Act;  (iv) a
                           Small Business  Investment Company licensed by the U.
                           S. Small Business Administration under Section 301(c)
                           or (d) of the Small Business  Investment Act of 1958;
                           or (v) an employee-benefit plan within the meaning of
                           the Employee  Retirement Income Security Act of 1974,
                           if  the  investment   decision  is  made  by  a  plan
                           fiduciary,  as defined in Section  3(21) of such Act,
                           and the plan  fiduciary  is either a bank,  insurance
                           company or registered  investment  adviser, or if the
                           employee-benefit  plan has total  assets in excess of
                           $5,000,000.

          (c)    _____     That the investor is a private  business  development
                           company  as  defined  in  Section  202(a)(22)  of the
                           Investment Advisers Act of 1940.

          (d)    _____     That the  investor is an  organization  described  in
                           Section  501(c)(3)  of the  Internal  Revenue Code of
                           1986, as amended, not formed for the specific purpose
                           of  acquiring  the   securities   with  total  assets
                           exceeding $5,000,000.

          (e)    _____     That the investor is a corporation,  Massachusetts or
                           similar business trust or partnership, not formed for
                           the  specific  purpose of acquiring  the  securities,
                           with total assets exceeding $5,000,000.

          (f)    _____     That the  investor  is a trust,  not  formed  for the
                           specific  purpose of acquiring the  securities,  with
                           total assets exceeding  $5,000,000 and whose purchase
                           is directed by a  "sophisticated  person," as defined
                           in Rule 506(b)(2)(ii) of Regulation D.

                 THE REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

                                        4
<PAGE>

                     U.S. ACCREDITED INVESTOR QUESTIONNAIRE

All  capitalized  terms  herein,  unless  otherwise  defined,  have the meanings
ascribed  thereto in the  Subscription  Agreement.

1. The Purchaser  covenants, represents and warrants to the Company that:

         (a)      the Purchaser is a non-Canadian Person;

         (b)      the Purchaser has such  knowledge and  experience in financial
                  and business matters as to be capable of evaluating the merits
                  and  risks  of the  transactions  detailed  in the  Securities
                  Purchase Agreement and it is able to bear the economic risk of
                  loss arising from such transactions;

         (c)      the  Purchaser is acquiring  the  Convertible  Debentures  for
                  investment  only and not with a view to resale or distribution
                  and, in particular,  it has no intention to distribute  either
                  directly or indirectly  any of the  Convertible  Debentures in
                  the United States or to U.S. Persons; provided,  however, that
                  the  Purchaser  may sell or  otherwise  dispose  of any of the
                  Convertible   Debentures  pursuant  to  registration   thereof
                  pursuant to the Securities Act of 1933 (the "Securities  Act")
                  and any applicable state or provincial  securities laws unless
                  an exemption from such registration  requirements is available
                  or registration is not required pursuant to Regulation S under
                  the Securities Act or  registration  is otherwise not required
                  under this Securities;

         (d)      the  Purchaser   satisfies  one  or  more  of  the  categories
                  indicated below (please check the appropriate box):

         [ ]      Category 1: An organization  described in Section 501(c)(3) of
                  the United  States  Internal  Revenue Code, a  corporation,  a
                  Massachusetts  or similar  business trust or partnership,  not
                  formed for the specific  purpose of acquiring the  Securities,
                  with total assets in excess of US $5,000,000;

         [ ]      Category 2: A natural person whose  individual  net worth,  or
                  joint net  worth  with that  person's  spouse,  on the date of
                  purchase exceeds US $1,000,000;

         [ ]      Category 3: A natural  person who had an individual  income in
                  excess of US $200,000 in each of the two most recent  years or
                  joint  income  with  that  person's  spouse  in  excess  of US
                  $300,000  in  each  of  those  years  and  has  a   reasonable
                  expectation  of reaching  the same income level in the current
                  year;

         [ ]      Category 4: A "bank" as defined under Section (3)(a)(2) of the
                  Securities  Act or  savings  and  loan  association  or  other
                  institution as defined in Section 3(a)(5)(A) of the Securities
                  Act acting in its individual or fiduciary  capacity;  a broker
                  dealer  registered  pursuant  to Section 15 of the  Securities
                  Exchange Act of 1934 (United States);  an insurance company as
                  defined in Section 2(13) of the Securities  Act; an investment
                  company  registered  under the Investment  Company Act of 1940
                  (United States) or a business  development  company as defined
                  in Section  2(a)(48) of such Act; a Small Business  Investment
                  Company  licensed by the U.S.  Small  Business  Administration
                  under Section 301(c) or (d) of the Small  Business  Investment
                  Act of 1958  (United  States);  a plan  with  total  assets in
                  excess of $5,000,000  established and maintained by a state, a
                  political subdivision thereof, or an agency or instrumentality
                  of a state or a political subdivision thereof, for the benefit
                  of its employees;  an employee benefit plan within the meaning
                  of the Employee Retirement Income Security Act of 1974 (United
                  States)  whose  investment   decisions  are  made  by  a  plan
                  fiduciary,  as defined in Section 3(21) of such Act,  which is
                  either a bank, savings and loan association, insurance company
                  or registered  investment  adviser, or if the employee benefit
                  plan has  total  assets  in  excess  of  $5,000,000,  or, if a
                  self-directed plan, whose investment decisions are made solely
                  by persons that are accredited investors;

         [ ]      Category 5: A private business  development company as defined
                  in Section  202(a)(22) of the Investment  Advisers Act of 1940
                  (United States);

         [ ]      Category 6: A director or executive officer of the Company;

         [ ]      Category 7: A trust with total assets in excess of $5,000,000,
                  not  formed  for  the  specific   purpose  of  acquiring   the
                  Securities,  whose  purchase is  directed  by a  sophisticated
                  person as described in Rule 506(b)(2)(ii) under the Securities
                  Act; or

         [ ]      Category  8: An  entity  in  which  all of the  equity  owners
                  satisfy  the  requirements  of one or  more  of the  foregoing
                  categories; and

                                        5
<PAGE>

         (e)      the Purchaser is not  acquiring the  Securities as a result of
                  any  form  of  general  solicitation  or  general  advertising
                  including   advertisements,   articles,   notices   or   other
                  communications published in any newspaper, magazine or similar
                  media or broadcast over radio,  or television,  or any seminar
                  or  meeting  whose  attendees  have been  invited  by  general
                  solicitation or general advertising.

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of ______
__, 2004.

[PURCHASER]

By:
    -----------------------
Name:
Title:

                             SIGNATURE PAGE FOLLOWS

                                       6
<PAGE>

The  Subscriber  certifies that the foregoing  responses are true,  complete and
accurate to the best of the  Subscriber's  knowledge and belief.  The Subscriber
will provide such further  information as may be requested by the Corporation to
verify this  response.  The  Subscriber  will notify the  Corporation in writing
regarding  any  material  change to this  response  prior to the  closing of the
purchase of all securities from the Corporation.  Absent such notification,  the
issuance of  securities in the name of the  Subscriber  shall be deemed to be an
automatic  affirmation  by the  Subscriber  of the  truth  and  accuracy  of the
statements and information set forth above.

---------------------           -----------------------------------------------
Date                            Type or Print Name of Prospective Investor

                                -----------------------------------------------
                                Signature of Prospective Investor or Authorized
                                Signatory of Entity Investor, as applicable

                                -----------------------------------------------
                                Title of Authorized Signatory of Entity Investor
                                (if applicable)

                                       7Exhibit 4.2

IN THE EVENT THAT THE  SHAREHOLDERS OF THE COMPANY DO NOT APPROVE AN INCREASE IN
ITS AUTHORIZED  SHARE CAPITAL AT THE COMPANY'S  ANNUAL GENERAL MEETING THAT WILL
TAKE PLACE ON  DECEMBER  10,  2004,  THE  COMPANY  HAS  COMMITTED  TO REDEEM THE
CONVERTIBLE  DEBENTURE  PLUS A 5%  PENALTY  WITHIN  90 DAYS FROM THE DATE OF THE
DEBENTURE.

EVEN THOUGH THE  COMPANY HAS  RESERVED  30 MILLION  SHARES FOR  INVESTORS  TO BE
UTILIZED UPON CONVERSION OF THE CONVERTIBLE  DEBENTURES,  A PRICE DECLINE IN THE
COMPANY'S SHARES WOULD RESULT IN THE COMPANY HAVING  INSUFFICIENT SHARES FOR THE
CONVERSION OF YOUR CONVERTIBLE DEBENTURE.

THERE IS A RISK THAT THE  COMPANY  WILL NOT BE ABLE TO REDDEM  YOUR  CONVERTIBLE
DEBENTURE AS COMMITTED AS THE COMPANY  CURRENTLY DOES NOT HAVE SUFFICIENT  FUNDS
TO REDEEM YOUR  CONVERTIBLE  DEBENTURE  AND IT IS UNLIKELY THAT IS WILL GENERATE
SUFFICIENT CASH FROM OPERATIONS TO REDEEM YOUR CONVERTIBLE  DEBENTURE.  AS SUCH,
IF REQUIRED TO REDEEM YOUR CONVERTIBLE  DEBENTURE,  THE COMPANY WILL BE REQUIRED
TO  RAISE  ADDITIONAL  CAPITAL  TO  FUND  THE  REDEMPTION  OF  YOUR  CONVERTIBLE
DEBENTURE.

NEITHER  THIS  DEBENTURE  NOR  THE  SECURITIES  INTO  WHICH  THIS  DEBENTURE  IS
CONVERTIBLE  HAVE BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") OR ANY STATE  SECURITIES  LAWS AND NEITHER  THIS  DEBENTURE  NOR ANY
INTEREST THEREIN NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE MAY
BE OFFERED, SOLD, TRANSFERRED,  PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN  EFFECTIVE  REGISTRATION  STATEMENT  UNDER  SUCH ACT AND  SUCH  LAWS OR AN
EXEMPTION FROM  REGISTRATION  UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY, IS AVAILABLE.

                        5% SECURED CONVERTIBLE DEBENTURE

$________                                                      December 15, 2004

         FOR  VALUE  RECEIVED,   SMARTIRE  SYSTEMS,   INC.,  a  Yukon  Territory
corporation (the "Company"), hereby promises to pay to ____________________ (the
"Holder") having an address at _______________________, two years after the date
hereof,  or earlier upon  prepayment of this Debenture as provided  herein,  the
principal sum of  _______________  Dollars  ($__________),  together with simple
interest  (computed on the basis of a 360-day year of twelve  30-day  months) on
the unpaid balance at the rate of five percent (5%) per annum  beginning six (6)

<PAGE>

months from the date of the last closing of this  Offering in arrears  until the
principal hereof shall have been paid.

         The Company shall pay interest  semi-annually in arrears  beginning six
(6) months from the date of the last  closing of this  Offering and the last day
of every  subsequent  sixth  (6)  month of each  year  that any  portion  of the
principal balance is unpaid.

         All payments of principal  and interest  shall be made to the Holder in
lawful  currency of the United  States of America to the address set forth above
or such other address as to which the Holder shall notify the Company in writing
ten (10) days  prior to the due date of any  payment or upon any  prepayment  of
this Debenture as provided herein.

         Subject to and in compliance  with the  provisions  hereof,  the Holder
may, at its option,  convert  all or any  portion of the  outstanding  principal
balance of this Debenture, and all or any portion of the interest accrued hereon
to such date,  into shares of common stock of the  Company,  par value $.01 (the
"Common  Stock") at a conversion  price (the  "Conversion  Price")  equal to the
lesser of 80% of the lowest closing prices of the Common Stock for the 5 trading
days  preceding the date on which the notice of conversion is sent via facsimile
to the Company or 120% of the closing bid price of the Common  Stock as reported
by Bloomberg,  L.P. for the OTC Bulletin  Board for the trading day  immediately
preceding  the date that the  Holder's  funds are  released  from  escrow by the
escrow agent to the Company.  The Holder hereof shall  communicate its intention
to convert all or any portion of the principal  amount of this Debenture and all
or any portion of interest  accrued through such conversion date by surrendering
this  Debenture,  with the Form of Notice of  Election  to Convert  attached  as
EXHIBIT "A" hereto duly completed and signed,  to the Company at its address for
notice set forth elsewhere herein.

         The  Holder  shall  not be  entitled  to  convert  such  amount  of the
Debenture in  connection  with such number of shares of Common Stock which would
be in excess of the sum of (i) the number of shares of Common Stock beneficially
owned by the Holder and its affiliates on a conversion date, and (ii) the number
of shares of Common Stock  issuable upon the  conversion of the Debenture  which
would result in  beneficial  ownership by the Holder and its  affiliates of more
than  4.99% of the  outstanding  shares of common  stock of the  Company on such
conversion date. For purposes of the preceding  sentence,  beneficial  ownership
shall be  determined  in accordance  with Section  13(d) of the  Securities  and
Exchange Act of 1934, as amended,  and Regulation 13d-3  thereunder.  Subject to
the foregoing,  the Holder shall not be limited to aggregate conversions of only
4.99% and aggregate  conversions by the Holder may exceed 4.99%.  The Holder may
void the  conversion  limitation  described in this paragraph upon and effective
after 61 days prior written notice to the Company. The Holder may allocate which
of the equity of the Company  deemed  beneficially  owned by the Holder shall be
included in the 4.99%  amount  described  in this  paragraph  and which shall be
allocated to the excess above 4.99%.

         The  Company  may,  at its  option,  redeem  all or any  portion of the
Debentures with 3 business days advanced notice.

         If the Holder elects to convert less than the entire  principal  amount
of this  Debenture  and  interest  accrued to the date of such  conversion,  the
Company  shall issue or cause to be issued and  delivered to the Holder,  at its

                                       2
<PAGE>

expense,  a new Debenture  evidencing  the  outstanding  amount of principal due
hereunder  after giving effect to the amount  applied to the  conversion,  which
such Debenture shall, except as to the principal amount thereof, be identical to
this Debenture in all respects.

         If the Company,  at any time while this Debenture is outstanding  shall
(a) pay a stock dividend or otherwise make a distribution  or  distributions  on
shares of its Common Stock or any other equity or equity  equivalent  securities
payable in shares of Common Stock,  (b) subdivide  outstanding  shares of Common
Stock into a larger number of shares,  (c) combine  (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares,
or (d) issue by  reclassification  of shares of the  Common  Stock any shares of
capital  stock of the Company,  then the  Conversion  Price shall be adjusted to
offset any of the  aforementioned.  Any adjustment made pursuant to this Section
shall become effective  immediately  after the record date for the determination
of  stockholders  entitled to receive such  dividend or  distribution  and shall
become  effective  immediately  after  the  effective  date  in  the  case  of a
subdivision, combination or re-classification.

         If the  Company  shall  (i)  fail to make a  payment  of  principal  or
interest  when due; or (ii) make an  assignment  for the  benefit of  creditors,
files a petition in bankruptcy, be adjudicated insolvent or bankrupt, suffers an
order for relief  under any  federal  bankruptcy  law,  petition or apply to any
tribunal for the  appointment  of a  custodian,  receiver or any trustee for the
Company or any substantial part of its assets,  or (iii) commence any proceeding
under  any  bankruptcy,  reorganization,   arrangement,  readjustment  of  debt,
dissolution or  liquidation  law or statue of any  jurisdiction,  whether now or
hereafter in effect;  or (iv) have been filed any such petition or  application,
or any such  proceeding  shall have been  commenced  against the Company,  which
remains  undismissed,  unstayed or unbonded  for a period of thirty (30) days or
more;  or (v) by any act or  omission  shall  indicate  consent  to,  approve or
acquiescence in any such petition,  application or proceeding or the appointment
of a custodian,  receiver or any trustee for all or any substantial  part of its
properties,  or (vi) allow such custodianship,  receivership,  or trusteeship to
continue undischarged,  unstayed or unbonded for a period of thirty (30) days or
more, or (vii) violate any term or provision of this  Debenture  then and in any
such event, the outstanding  principal  amount of this Debenture,  together with
all accrued and unpaid interest thereon, shall be and become immediately due and
payable.

         All notices and other communications  provided for herein shall be sent
by certified mail,  return receipt  requested,  or by personal  delivery or by a
nationally  recognized  overnight courier to the Holder or the Company, at their
respective  addresses as set forth herein,  or to such other address as to which
either  party  may  advise  the other by notice  given in  accordance  with this
provision. All such notices shall be deemed given upon the earlier of receipt or
within five (5) business days of mailing if receipt is refused.

         Notwithstanding  any other provision of this Debenture,  interest under
this  Debenture  shall not exceed the maximum rate  permitted by law; and if any
amount is paid under this  Debenture as interest in excess of such maximum rate,
then the  amount so paid will not  constitute  interest  but will  constitute  a
prepayment on account of the principal amount of this Debenture.  If at any time
the  interest  rate under this  Debenture  would,  but for the  provision of the

                                       3
<PAGE>

preceding  sentence,  exceed  the  maximum  rate  permitted  by  law,  then  the
outstanding  principal  balance of this Debenture shall, on demand by the Holder
of this Debenture, become and be due and payable.

         All payments under this Debenture  shall be made without  deduction for
any taxes of any nature now or hereafter imposed.

         The  provisions  of this  Debenture  shall in all respects be construed
according to, and the rights and  liabilities of the parties hereto and shall in
all respects be governed by, the laws of the Province of British Columbia.  This
Debenture  shall be deemed a  contract  made under the laws of the  Province  of
British  Columbia  to be  fully  performed  therein,  and the  validity  of this
Debenture and all rights and liabilities hereunder shall be determined under the
laws of said  Province  without  reference to the  conflicts of laws  provisions
thereof.  For purposes of any proceeding  involving this Debenture,  the Company
and the Holder hereby submit to the exclusive  jurisdiction of the courts of the
Province of British Columbia and of Canada having jurisdiction, and agree not to
raise and waive any  objection  to or  defense  based upon the venue of any such
court or based upon forum non conveniens.

         In the event this  Debenture  is placed in the hands of an attorney for
collection or for enforcement or protection of the security, or if Holder incurs
any costs incident to the collection of the indebtedness evidenced hereby or the
enforcement  or protection of the security,  the Company agrees to pay to Holder
all reasonable  attorneys'  fees so incurred,  all court and other costs and the
reasonable costs of any other collection  efforts,  including all costs incurred
in collecting  any judgment and in any appellate or bankruptcy  proceeding.  The
Company agrees to pay any  documentary  stamp taxes,  intangible  taxes or other
taxes which may now or hereafter  apply to this Debenture or any payment made in
respect of this Debenture.

         No delay or omission  on the part of the Holder in the  exercise of any
right  hereunder  shall  operate as a waiver of such right or of any other right
under this Debenture. A waiver by the Holder of any right or remedy conferred to
it hereunder  on any one occasion  shall not be construed as a bar to, or waiver
of, any such right and/or remedy as to any future occasion.  The Company and all
persons now or hereafter  becoming obligated or liable for the payment hereof do
jointly and severally waive demand,  notice of non-payment,  protest,  notice of
dishonor and presentment.  No failure to accelerate the  indebtedness  evidenced
hereby by reason of default hereunder,  acceptance of a past-due  installment or
other indulgences granted from time to time, shall be construed as a novation of
this Debenture or as a waiver of such right of  acceleration  or of the right of
the Holder  thereafter to insist upon strict  compliance  with the terms of this
Debenture or to prevent the exercise of such right of  acceleration or any other
right granted hereunder or by applicable law.

         This Debenture may be amended only by a written instrument  executed by
the Company and the Holder.

         THE COMPANY HEREBY KNOWINGLY,  VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHT WHICH IT MAY HAVE TO A TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION BASED HEREON,  OR ARISING OUT OF, UNDER OR IN ANY WAY  CONNECTED  WITH

                                       4
<PAGE>

THE  DEALINGS  BETWEEN  THE  HOLDER  AND THE  COMPANY,  THIS  DEBENTURE,  OR ANY
DOCUMENTS EXECUTED IN CONNECTION HEREWITH,  OR ANY COURSE OF CONDUCT,  COURSE OF
DEALING,  STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR
THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER  ARISING,  AND WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE HOLDERS EXTENDING THE LOAN EVIDENCED BY THIS DEBENTURE.

                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGE FOLLOWS

                                       5
<PAGE>

         IN WITNESS WHEREOF,  SMARTIRE SYSTEMS,  INC. has caused this 5% Secured
Convertible  Debenture to be executed in its  corporate  name by its  President,
thereunto duly authorized.

Dated:   December 15, 2004

                                                    THE COMPANY:

                                                    SMARTIRE SYSTEMS, INC.

                                                    By: /s/Robert Rudman
                                                        -----------------------

                                                    HOLDER:

                                                    ---------------------------

                                       5
<PAGE>

                                   EXHIBIT "A"

                              NOTICE OF CONVERSION

(To be Executed by the Holder
in order to Convert this Debenture)

The  undersigned  hereby  elects to convert the attached 5% Secured  Convertible
Debenture into shares of common stock, par value $.01 (the "Common  Stock"),  of
SmarTire Systems, Inc. (the "Company") according to the conditions hereof, as of
the date written below. If shares are to be issued in the name of a person other
than the  undersigned,  the undersigned will pay all transfer taxes payable with
respect  thereto and is delivering  herewith such  certificates  and opinions as
reasonably  requested  by the Company in  accordance  therewith.  No fee will be
charged to the holder for any  conversion,  except for such transfer  taxes,  if
any.

Conversion calculations:        ---------------------------------------
                                Date to Effect Conversion

                                ---------------------------------------
                                Principal Amount of Debenture to be Converted

                                Payment of Interest in Kind   |_| Yes
                                                              |_| No

                                    If yes, $ _______   of Interest Accrued on
                                                        Account of Conversion at
                                                        Issue

                                ---------------------------------------
                                Number of shares of Common Stock to be Issued

                                ---------------------------------------
                                Applicable Conversion Price

                                ---------------------------------------
                                Signature

                                ---------------------------------------
                                Name

                                ---------------------------------------
                                Address

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