**SOFTWARE ASSETS SALE AND ASSIGNMENT AGREEMENT**

THIS SOFTWARE ASSETS SALE AND ASSIGNMENT AGREEMENT (the"Agreement") made the 31 st day of October, 2001 (the "Effective Date").

BETWEEN:

IMAGIS TECHNOLOGIES INC., a British Columbia companyhaving an address at Suite 1300, 1075 West Georgia Street, Vancouver, BritishColumbia, Canada V6E 3C9, (Fax No. (604) 684-4601)

(herein "Imagis")

OF THE FIRST PART

AND:

API TECHNOLOGIES, LLC a Wisconsin limited liabilitycompany having its head office at 200 Doty Street, Suite 202, Green Bay,Wisconsin, USA 54301, (Fax No. (920) 437-7585)

(herein "API")

OF THE SECOND PART

WITNESSES THAT WHEREAS:

A.     Imagis is the owner of acomputer software program marketed by Imagis under the trademark Casino-ID (the"Program", as defined further in Section 1, below), which is used to catalogueand process data and imagery to identify individuals, for use as a securitydevice and application in the gaming industry;

B.     Pursuant to the terms of thatcertain Business Partner Agreement (the "BPA") between the parties datedJanuary 9, 2001 and attached hereto as **Exhibit A, the partiesagreed, among other things, that API would act as a non-exclusive reseller ofthe Program, as well as other specified computer software programs of Imagis,for the purpose of reselling such software programs to API's customers;
C.     API wishes to acquire fromImagis and Imagis wishes to sell to API all ownership rights in and to theProgram with respect to the market segment as specified herein and inconsequence thereof the parties also wish to amend the BPA in accordance withthe terms specified herein and

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agree to certain other covenants in respect to the Programand related software applications developed by Imagis.

NOW THEREFORE in consideration of the above Recitals, themutual covenants and agreements set out herein and other good and valuableconsideration, the receipt and sufficiency of which is hereby acknowledged byboth of the parties, the parties hereby agree as follows:
**1.     DEFINITIONS
1.1     Wherever used in thisAgreement and unless otherwise expressly specified, the following words or termswill have the following meanings:

(a)     "Affiliate" means, withrespect to any party, any other party that directly, and/or indirectly throughone or more intermediaries, controls, is controlled by, or is under commoncontrol with such party;

(b)     "Agreement" means thisSoftware Assets Sale and Assignment Agreement, including all Exhibits andSchedules appended hereto and all addenda agreed to from time to time;

(c)     "consent" means expressprior written consent, such consent not to be unreasonably delayed orwithheld;

(d)     "Contracts" all contracts,agreements, purchase orders, sales orders of or for Imagis relating to theProgram, including but not limited to, those identified on Schedule1(d);

(e)     "Effective Date" means thedate first set out above;
(f)     "Good Will" all goodwill andgoing concern value of the Program;
(g)     "Gross Revenues" means themonies paid by end-users to API and/or its distributors and sub-distributors, asapplicable, in consideration of: (i) licenses to use the Program; (ii)sub-licences to use ID-2000, excluding only applicable sales, use or other taxesin respect of such licenses, sub-licences and other commercialisation; 

(h)     "ID-2000" means theproprietary facial recognition computer software program owned by Imagis andmarketed under that trade-mark;
(i)     "including" means including,without limiting the generality of the preceding statement;

(j)     "Loss" means any liability,damage, claim, cost and expense (including reasonable attorneys', accountants',expert and other professional fees and costs);

(k)     "Market" means the gamingindustry, including casinos, card rooms, horse tracks, dog tracks, cruise ships,casino cruises and adjacent and supporting complexes

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(such as parking structures and hotels, provided such parkingstructures and/or hotels are contiguous to any of the foregoing listed gamingfacilities), but expressly excludes any law enforcement applications of theProgram and any such hotel that is not contiguous to any of the foregoing listedgaming facilities);

(1)     "Modifications" means allerror-corrections, bug fixes, enhancements, improvements, new features, newfunctions and other modifications to the Program;

(m)     "Non-Compete Term" means theTerm and any renewal term, as further described and extended in Section 3.6,below;

(n)     "Program" all software(including object and source code, and machine readable and listing form),documentation (including internal documentation, documentation made available tocustomers and training materials), flow charts, source code notes, test routinesand information, in whatever form, and all revisions, release levels, inputdata, routines, data bases and report layouts and formats, record file layouts,diagrams, functional specifications and narrative descriptions and versions ofthe foregoing, used on or with the casino surveillance software application,commonly known as "Casino-ID," as developed by or for Imagis and/or offered forsale or license by Imagis, or in the possession of Imagis;
(o)     "Proprietary Rights" allpatents, patent applications, copyrights, trade secrets, trade marks, tradenames, and other proprietary rights based, in whole or in  part, or included inor covering the Program, the Related Assets, the Good Will or any portionthereof, including any rights Imagis now or in the future may have to pursueinfringement claims against third parties relative to the misappropriation oruse of the Program, Related Assets and/or Good Will in any jurisdictionwhatsoever;

(p)     "Purchase Price" means thesum of $305,000.00 (U.S. Funds), net of any applicable taxes as furtherdescribed in Section 2.2, below;

(q)     "Related Assets" means allraw materials, work in process, inventories, sales literature, promotionalliterature, catalogues and similar marketing materials of Imagis, all quotes,proposals, orders, invoices, customer information  including customer lists,records, correspondence and files), supplier information  (including supplierlists, records, correspondence and files), blueprints,  specifications, designs,drawings and other operating data of Imagis related to the Program andProprietary Rights;

(r)     "Software Assets" means theContracts, Goodwill, Program, Proprietary Rights and Related Assets;
(s)     "Term" means the period ofthree (3) years from the date that Imagis receives the Purchase Price in fulland includes any renewal thereof;

(t)     "Territory" means the entireworld (including land, sea and air); and

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(u)     "Transfer Date" means thedate when API pays the balance of the Purchase Price in accordance with Section2.3, below.
**2.     SALE AND ASSIGNMENT OF THE SOFTWAREASSETS
2.1     **Sale and Assignment ofSoftware Assets.**Subject to the terms and conditions herein, Imagis willsell, assign and deliver to API and API will purchase and accept from Imagis,all of Imagis' rights , title and interest in and to the Software Assets. APIwill not use, reproduce, translate, sell, license, sublicense, rent, lend,lease, communicate by telecommunication, distribute or otherwise commercializethe Program or make Modifications to the Program, otherwise than as set forthexpressly herein.

2.2     **Purchase Price.**The Purchase Price will be paid by API to Imagis in the following manner:

(a)     $150,000 will be paidimmediately upon the earlier of execution and delivery of this Agreement by APIor October 31, 2001; and

(b)     $155,000 will be paid viawire transfer to a banking institution designated by Imagis on the date Imagisshall have completed the knowledge transfer and physical delivery of theSoftware Assets to API's designee(s) in accordance with the terms and conditionsof Section 2.3, below ,which shall in no event occur later than November 30,2001.
Both such payments will be made in US funds by way of bankdraft from a financial institution in the United States or Canada reasonablyapproved by Imagis or by way of wire transfer to a financial institutiondesignated by Imagis. The Purchase Price is net of all applicable sales, valueadded, goods and services, excise, withholding and other taxes, all of whichtaxes imposed by the United States, any of its states or other governmentalunits which API shall pay when due, and all of which taxes imposed by Canada,any Canadian province or other governmental unit Imagis shall pay when due.

2.3     **Transfer of SoftwareAssets.** During November 2001, designees of API shall arrive at Imagis'offices in Vancouver, British Columbia to facilitate the physical transfer ofthe Software Assets to API. This transfer process shall include educating API'sdesignees on all aspects concerning the operation, functionality andapplications of the Program so as to provide API with the ability to gain theknowledge necessary to further develop, exploit, market and sell the SoftwareAssets for API's own use and benefit within the Market. The knowledge transferprocess shall last no more than five (5) business days and Imagis agrees toconsult with API's designees to complete the knowledge transfer process. Inaddition, Imagis shall permit API's designees to observe and participate in theintegration of ID-2000 for ten (10) additional business days so as to furtherAPI's understanding of the functionality, application and interface betweenID-2000 and the Program. API shall pay for all travel, lodging and relatedexpenses incurred by its designees. At the conclusion of the knowledge transferperiod, Imagis shall complete physical delivery of the Software Assets to APIand API and Imagis will sign the closing certificate attached hereto as**Exhibit 2.3and a Bill of Sale and such other documents which arenecessary to complete the transactions contemplated herein. Concurrently withthe physical
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delivery of the Program to API's designees, API shallcomplete a wire transfer of $155,000.00 to Imagis' designated bank account.

2.4     **Failure to PayPurchase Price.**If API fails to make any payment of the Purchase Pricein full when due, Imagis will have, in its sole discretion, the right toterminate this Agreement and its further obligations hereunder, immediately uponprovision of written notice of such intention to API and API's failure to makethe requisite payment within two (2) business days of the written demand byImagis. In such event, Imagis' obligations under this Agreement will beterminated and this Agreement will be null and void and of no further force andeffect, provided that Imagis shall return to API all monies previously paid toit under this Agreement by API prior to the date of such termination, less thesum of $10,000.00, which Imagis shall retain as liquidated damages in full andfinal satisfaction of any claims Imagis may have as a result of API's failure tocomplete the transactions contemplated in this Agreement. In such event, APIshall make no use of any Software Assets of Imagis, or information providedduring the knowledge transfer process by Imagis to API, and will promptly returnto Imagis all deliverables provided by Imagis to API.

2.5     **Non-Assignment ofID-2000.**Except as set forth expressly herein, API acknowledges that itis not obtaining, under this Agreement or otherwise, any ownership rights toID-2000 that are in addition to those already set forth in Section 3.8, below,and that ID-2000 remains the exclusive property of Imagis.

2.6     **Assumption ofContracts.**API shall have the right to assume the Contracts, subject toits confirmation of the terms and conditions therein, which shall be reasonablysatisfactory to API. Notwithstanding the foregoing, API shall not assume anyliability with respect to the Contracts which exists or accrues prior to thedate API shall have notified Imagis of API's desire to assume the Contracts. Insuch event, Imagis shall assign all of its right, title and interest in and tothe Contracts to API. Imagis agrees and acknowledges that notwithstanding suchassignment or any other term or condition of this Agreement, API has not assumedand Imagis shall remain liable for and discharge promptly when due allliabilities, costs, expenses, losses, damages or other expenses relating to theSoftware Assets which exist or have accrued prior to or as of the TransferDate.
**3.     COVENANTS
3.1     **Royalty Payments toImagis.**During the Term and provided Imagis is not in default of anyterm, condition or covenant of this Agreement, and further subject to Section3.2 below, API will pay the following royalties to Imagis:

(a)     20% of the Gross Revenues inrespect of the Program (not to exceed U.S. $2,500.00 per location as furtherdescribed on Schedule 3.1 attached hereto);

(b)     40% of the Gross Revenues inrespect of ID-2000, when ID-2000 is licensed in combination with the Program(not to exceed $5,000.00per location as described further in **Schedule3.1 attached hereto); and
(c)     the sum of $1,000.00 peryear per API customer that receives support services from API or itsdistributors or sub-distributors, as applicable, for ID-2000.

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API will, within ten (10) business days of the end of eachmonth during the Term, deliver to Imagis a detailed, written summary setting outdetails of API's commercialisation and support of the Program and ID-2000 duringthe preceding calendar month, including a calculation of the Gross Revenues forsuch month and, if applicable, a cheque payable to Imagis in the amount of theroyalties payable, as calculated above, for such month.

3.2     **Minimum RoyaltyPayments Due Imagis. Regardless of the license, sub-license or otherfees charged by API or any API distributor or sub-distributor, as applicable,to any particular end user for the Program and/or ID-2000 or the allocation ofsuch fees between the Program and ID-2000, the minimum royalty payable to Imagisby API as a result of any such license, sub-license or other commercialisationof the Program and/or ID-2000 to an end user will be the greater of theroyalties described in **Schedule 3.1 or
(a)     in the case of Program,$2,000.00; and

(b)     in the case of ID-2000,$4,000.00.

3.3     **Sale of Program.**If during the Term API sells all of its rights, title and interest in and tothe Program, transfers and otherwise makes any disposition of all of its rightsto the Program or any portion thereof to a third party (any such sale,conveyance or other disposition of the Program collectively referred to as an"Asset Disposition"), API will promptly report the details of such AssetDisposition to Imagis and the purchaser/assignee of the Program shall as acondition of such purchase and/or assignment continue to pay all royaltypayments due under this Agreement to Imagis. In addition, API shall pay Imagisa percentage of the purchase price or the fair market value of any other formof consideration (collectively the "Asset Disposition Consideration") APIreceives as a result of an Asset Disposition as follows:

(a)     if the Asset Dispositionoccurs during months 1-12 of the Term, API shall pay Imagis twenty percent (20%)of the Asset Disposition Consideration in excess of the Purchase Price;

(b)     if the Asset Dispositionoccurs during months 13-24 of the Term, API shall pay Imagis ten percent (10%)of the Asset Disposition Consideration in excess of the Purchase Price; and

(c)     if the Asset Dispositionoccurs during months 25-36 of the Term, API shall pay Imagis five percent (5%)of the Asset Disposition Consideration in excess of the Purchase Price.

3.4     **Audit Rights. During the Term and to ensure API's compliance with its obligations in thisSection 3, Imagis will be entitled to review and/or audit the records and booksof account of API in relation to the Program and ID-2000, upon provision of ten(10) days written notice to API of such intent, but not more than four (4)separate occasions during the Term. API will make all such books and records ofaccounts available to Imagis during API's regular business hours at API'saddress first set out above. If, as a result of such review or audit Imagisdiscovers that API has underpaid any amount properly owing to Imagis hereunderby more than 5%, then in addition to any other rights, remedies of Imagis, APIwill immediately pay Imagis the amount
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of any such shortfall and will immediately reimburse Imagisfor the cost of any such review or audit. If the underpayment is less than 5%.API will immediately pay Imagis the shortfall. If the audit reveals anoverpayment by API, Imagis shall credit the overpayment to API. API agrees tokeep all of its books and records of account relating to this Agreement,complete, accurate and up-to-date at all times during the Term.

3.5     **Interest Penalty.**In addition to any other right or remedy of Imagis hereunder, if any amountowing to Imagis hereunder is not received by Imagis at the time that it isproperly due, API will pay interest on such delinquent amount at the rate of18% per annum calculated from the date such payment was due until the date suchpayment is made in full.

3.6     **Term, Renewal andTermination.**The Term will automatically renew for successive periods ofone (1) year each unless, at least 30 days prior to the end of the Term or anyrenewal thereof, either party notifies the other party of its intention toterminate the Agreement; provided, however, that the covenants and agreements inSection 6.1 and 6.2 shall survive for a period of two (2) years (the "ExtendedNon-Compete Term") following any such termination of this Agreement by Imagis,subject to the payment of not less than $50,000.00 in royalties by API to Imagisduring each twelve (12) month period of the Extended Non-Compete Term inaccordance with the terms and conditions of Sections 3.1 and 3.2, above. (i.e.,Imagis shall receive the greater of the royalties due in accordance withSections 3.1 and 3.2, above or $100,000.00 in aggregate royalties during theExtended Non-Compete Term). Either party may terminate this Agreement uponcommission by the other party of a material breach of this Agreement;provide , however, the breaching party shall not be deemed to bein default until it has been given written notice thereof and, if such breach iscapable of cure, has so cured or commenced and continued reasonable measures tocure said breach within sixty (60) days following receipt of such notification.Where noted, the obligations of the parties under this Agreement shall surviveexpiration or termination of this Agreement in accordance with the survivalperiods referenced therein.

3.7     **Modifications.**API will be the owner of any Modifications that it creates (including anyadditional biometric appliations API may develop in respect to the Program),provided that such Modifications will only be used with the Program for theMarket in the Territory, as specified in Section 2.1, herein during theTerm.

3.8     **License Grant andContinued Use of ID-2000. Subject to the terms and conditions set forthin this Agreement, Imagis hereby grants to API a perpetual, nonexclusive,nontransferable license to use, modify, improve and exploit ID-2000 for therequirements of the Program. In addition, Imagis will furnish to API within areasonable time after it makes any available to its customers one (1) copy ofany new release, enhancement, modification, correction or update to ID-2000, inobject code form, which is published and generally made commercially availableby Imagis during the Term. Throughout the Term, API shall only use ID-2000 toadd facial recognition capabilities to the Program.
3.9     **Ownership of WorkProduct.**Technical data, evaluations, reports, and other work, andproducts generated by or furnished by either party hereunder shall remain theproperty of the party who has primarily developed such work product, subject tothe restrictions and noncompete covenants set forth in this Agreement. Anytools, methodologies, processes or
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technologies created or adapted by either party in itsbusiness generally shall be and remain that party's sole property.
**4.     ADDENDUM TO THE BPA
4.1     **Effectiveness ofBPA.**The BPA remains in full force and effect and unamended except asspecified herein. In addition, API and Imagis shall enter into the Memorandum ofUnderstanding attached hereto as **Exhibit 4.1.**
4.2     **Amendment toBPA The BPA is amended, effective October 31, 2001, by deleting therequirement that API pay any royalties (other than those specified herein) toImagis with respect to the Program and by adjusting, effective October 31, 2001,the royalty rate payable by API with respect to ID-2000 in accordance withSection 3.1 (b) herein. Sections 7, 9, 10, 11, 12, 14, 15, 16, 17, 18, 20, 21and 22 of Appendix "D" to the BPA are hereby deleted, effective as of theEffective Date.
4.3     **Further Training andConsultation.**From and after the Transfer Date, except for the trainingand delivery of Modifications of ID-2000 as specified herein and the limitedphone and e-mail assistance described below, Imagis will have no otherobligation to provide any further maintenance, support, installation, training,conversion or other services to API or its customers, distributors, resellers orany other party, with respect to the Program, including the programmingnecessary to maintain the interface of the Program with ID-2000 and anyobligation to create Modifications. API will be responsible for all suchservices itself. Imagis will, however, continue to be responsible to supportID-2000 in accordance with the BPA, subject to its receipt of the support feesspecified in Section 3.1 herein. Imagis will provide training on the source codefor ID-2000 (the "Source Code") to API's designated developers at Imagis'development centre in Victoria, British Columbia at such time as the partiesagree to, acting reasonably. There will be no charge to API for such training,however API will be responsible for all travel, accommodation and relatedexpenses of its personnel incurred in attending such training. In addition,Imagis will respond by telephone or e-mail to reasonably limited queries aboutthe Source Code, received from API during the Term by not more than two (2)contact persons of API at any such time during the first three (3) months of theTerm.

4.4     **Intellectual PropertyRegistration Or Prosecution.**Following the Effective Date and providedAPI is not in default under this Agreement, Imagis shall reasonably assist andcooperate with API to secure copyright, patent or other intellectual propertyregistrations for the Software Assets or with respect to any action APIinitiates to protect its rights in and to the Software Assets; provided,however, in no event shall such assistance involve more than two (2) businessdays of consultation from Imagis personnel, subject in all cases toavailability. API shall reimburse Imagis for any actual out-of-pocket expensesImagis may incur in respect to this Section 4.4, provided that Imagis shalladvise API in advance that it expects to incur any such expense to allow API todetermine whether it intends to incur such an expense.

4.5     **Business Leads AndTransition.**Throughout the Term, Imagis shall promptly forward to APIall sales lead and inquiries Imagis receives with respect to the Program. APIshall establish internal procedures to ensure that it promptly responds to anysuch sales leads. For a period of ninety (90) days following the Transfer Date,Imagis shall include a statement on its

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website announcing API's acquisition of the Software Assetsand provide a link to the website API shall develop to ensure the transition ofall Goodwill related to the Software Assets to API.

5.     REPRESENTATIONS/WARRANTIES 
5.1     **Representations and Warranties ofImagis. Imagis represents and warrants to API as follows as of theexecution of this Agreement and as of the Transfer Date
     5.1.1     **Standing**. Imagis is a corporation duly organised, validly existingand in good standing under the laws of British Columbia, and is duly qualifiedto do business in Canada and the United States and has full power and authorityto carry on its current business and to own, use and sell its assets, includingthe Software Assets.

     5.1.2     **Execution of Agreement**. The execution and delivery of thisAgreement to API and the carrying out of the provisions hereof have been dulyauthorized by the Board of Directors of Imagis, and Imagis shall furnish to APIduly certified copies of the authorizing resolutions of Imagis' Board ofDirectors approving the transactions described herein within sixty (60) days ofthe Effective Date.

     5.1.3     **Contracts, Licenses, Permits and Approvals.**With theexception of the purchase and maintenance agreements described on Schedule1(d) attached hereto, Imagis has no presently existing contracts orcommitments in any way relating to the Software Assets.

     5.1.4     **Compliance**. Neither the execution and delivery of this Agreement,nor any instrument or Agreement to be delivered by Imagis to API pursuant tothis Agreement, nor the compliance with the terms and provisions thereof, byImagis, will result in the breach of any applicable statute or regulationpromulgated thereunder or any administrative or court order or decree, nor willsuch compliance conflict with, or result in the breach of, any of the terms,conditions or provisions of the certificate of incorporation or bylaws ofImagis, as amended, or any agreement or other instrument to which Imagis is aparty, or by which Imagis is or may be bound, or constitute an event of defaultor default thereunder or with the lapse of time or the giving of notice or bothconstitute an event of default thereunder.

     5.1.5      **Litigation There is no suit or action, or legal,administrative, arbitration or other proceeding or governmental investigationaffecting the Program, Related Assets, Goodwill or Proprietary Rights pending,or to the best knowledge and belief of Imagis, threatened against Imagis whichmaterially or adversely affects the business of Imagis relating to the Program,Related Assets, Proprietary Rights or Good Will. Imagis further represents andwarrants that there is no outstanding judgement, decree or order against Imagisthat affects Imagis or the Program, Related Assets, Proprietary Rights or GoodWill in any way.
     5.1.6     **Effect of Agreement**. The terms and conditions of this Agreement andall other instruments and agreements to be delivered by Imagis to API pursuantto the terms and conditions of this Agreement are valid, binding and enforceableagainst Imagis in accordance with their terms, subject only to the applicablebankruptcy, moratorium and other laws generally affecting the rights andremedies of creditors.

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     5.1.7     **Intellectual Property Rights Issues.**
(a)     Imagis owns or has the rightto use, modify, exploit, market and sell the Software Assets as is necessary tothe conduct of its business. Imagis' rights in the Software Assets are free andclear of any liens, encumbrances, restrictions, or legal or equitable claims ofothers. Imagis has filed no registrations or applications to protect itscopyright, patent, trademark, trade secret or any other intellectual propertyrights, but has otherwise taken appropriate measures to protect the secrecy,confidentiality and value of the Software Assets.

(b)     Imagis has clear andunencumbered title to the Software Assets and such title has not been challengedor threatened by others. No rights or licenses to use the Software Assets havebeen granted or acquired by Imagis except those listed at **Schedule 1(d).**
(c)     There have been (i) noclaims or assertions made by others that Imagis has infringed any rights ofothers by virtue of its use, exploitation, marketing or sale of the SoftwareAssets and (ii) the use, exploitation, marketing or sale of the Software Assetsby Imagis has not and does not infringe upon the rights or claims of any otherparty as of the Transfer Date. Imagis has not received notice of, and has noknowledge of, any infringement or allegation of infringement of the SoftwareAssets by others.

(d)     All rights of Imagis in andto the Software Assets and ID-2000 are transferable or licensable (as applicableto ID-2000) to API as contemplated herein without any consent or other approvalby any third party, and Imagis is not subject to any judgment, order, writ,injunction or decree of any court or any Federal, state, local or othergovernmental agency or instrumentality, domestic or foreign, or any arbitrator.The use, exploitation, marketing and/or sale of the Software Assets by API ascontemplated herein after the Effective Date and the manner and geographic areasin which it is currently conducted by Imagis will not and does not presentlyinterfere with or infringe upon any copyright, patent, trademark, trade secretor any asserted rights of others with respect to the current functions,applications, trade dress or packaging of any products.
(e)     Imagis is not subject to anyjudgment, order, writ, injunction or decree of any court or any Federal, state,local or other governmental agency or instrumentality, domestic or foreign, orany arbitrator, or has entered into or is a party to any contract whichrestricts or impairs the use of the Software Assets. Imagis has all right, titleand interest necessary for the non-infringing publication, reproduction,preparation of derivative works, distribution, public performance, publicdisplay and importation of the Software Assets. No Canadian filing or recordingfees, stamp or transfer taxes or other fees, costs or taxes of any kind will bepayable by API in connection with the consummation of the transactionscontemplated hereby.

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(f)     Imagis shall deliver API onthe Transfer Date all information in its possession in the nature of know-how,trade secrets or proprietary information related to the Software Assets whichprovides Imagis with an advantage over competitors who do not know or use it,including source codes, formulae, patterns, molds, tooling, inventions,industrial models, processes, designs, devices, compilations of information,copyrightable material and technical information, if any, relating to theSoftware Assets (the "Technical Information"). All TechnicalInformation:

(i)     Is owned solely andexclusively by Imagis and Imagis is solely responsible for the development ofsuch Technical Information;
(ii)     Is fully and completelydocumented and in condition for conveyance to and readily usable by API; and
(iii)     Has been continuouslymaintained in confidence by taking reasonable precautions to protect the secrecyof all Technical Information and prevent disclosure to unauthorized parties.

All Technical Information and any copies thereof shall bedelivered to API at the Transfer Date. Imagis has no knowledge of any violationof any trade secret rights or copyrights with respect to such TechnicalInformation.

Imagis has all necessary right, title and interest to theSoftware Assets and Technical Information. With respect to the SoftwareAssets:

(i)     All software documentationis current, accurate and sufficient in detail and content to identify andexplain the nature thereof, and to allow its full and proper use by API withoutreliance on the special knowledge or memory of others;
(ii)     No proprietary rights inthe Software Assets has been transferred, whether by sale, assignment orlicense, or have been lost for any reason; and 

(iii)     Any copies of the Programare in Imagis' possession and control.
     5.1.8      **Absence of Defects. Imagis has no knowledge of any majordefects, bugs or other materially adverse conditions affecting the fitness andutility of the Program.
     5.1.9      **Full Disclosure.**No representation or warranty by Imagis inthis Agreement or any document provided hereunder contains or will contain anyuntrue statement or omissions or will omit to state any material fact necessaryto make the statements contained herein or therein not misleading. Allrepresentations and warranties made by Imagis in this Agreement and anydocuments provided hereunder shall be true and correct as of the Transfer Datewith the same force and effect as if they had been made on and as of suchdate.

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5.2     **Representations andWarranties of API.**API represents and warrants to Imagis as follows asof the Effective Date and as of the Transfer Date:
     5.2.1     **Standing.**API is a limited liability company duly organized,validly existing and in good standing under the laws of the State of Wiscosin,and is duly qualified to do business in the State of Wisconsin and and has fullpower and authority to carry on its current business and to own, use and sellits assets.

     5.2.2     **Execution of Agreement.**The execution and delivery of thisAgreement to Imagis and the carrying out of the provisions hereof have been dulyauthorized by the sole member of API and at the Transfer Date, API shall furnishto Imagis duly certified copies of the authorizing resolutions of API's solemember approving the transactions described herein.

     5.2.3     **Compliance.**Neither the execution and delivery of thisAgreement, nor any instrument or agreement to be delivered by API to Imagispursuant to this Agreement, nor the compliance with the terms and provisionsthereof, by API, will result in the breach of any applicable statute orregulation promulgated thereunder or any administrative or court order ordecree, nor will such compliance conflict with, or result in the breach of, anyof the terms, conditions or provisions of the certificate of incorporation orbylaws of API, as amended, or any agreement or other instrument to which API isa party, or by which API is or may be bound, or constitute an event of defaultor default thereunder or with the lapse of time or the giving of notice or bothconstitute an event of default thereunder.

     5.2.4     **Litigation.**There is no suit or action, or legal,administrative, arbitration or other proceeding or governmental investigationaffecting API pending, or to the best knowledge and belief of API, threatenedagainst API materially or adversely affects the business of API. API furtherrepresents and warrants that there is no outstanding judgment, decree or orderagainst API that impacts API's ability to complete the transactions describedherein.

     5.2.5     **Effect of Agreement.**The terms and conditions of thisAgreement and all other instruments and agreements be delivered by API to Imagispursuant to the terms and conditions of this Agreement are valid, binding andenforceable against API in accordance with their terms, subject only to theapplicable bankruptcy, moratorium and other laws generally affecting the rightsand remedies of creditors.

     5.2.6     **Full Disclosure.**No representation or warranty by API inthis Agreement or any document provided hereunder contains or will contain anyuntrue statement or omissions or will omit to state any material fact necessaryto make the statements contained herein or there not misleading. Allrepresentations and warranties made by API in this Agreement and any documentsprovided hereunder shall be true and correct as of the Transfer Date with thesame force and effect as if they had been made on and as of such date.

5.3     **Survival ofRepresentations and Warranties.**The representations and warranties ofthe parties as stated above in this Section 5 shall survive for the Term.
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6.     **NON-COMPETITION COVENANTS.
6.1     **Non-CompeteCovenants.**During the Non-Compete Term, and provided that API is notmaterially in breach of any of its covenants or obligations beyond theapplicable cure period after having received a written notice from Imagisdescribing the breach, Imagis will not anywhere in the Territory, whether forits own account or for the account of any other person, firm, corporation orother organization, develop, modify, consult on, sell, license, distribute orotherwise commercialise any software program, application or device similar tothe Program in the Market and will not develop, modify, consult on, sell,market, license or otherwise commercialise any software program, application ordevice with similar functionality(s) to the Program for commercial use in theMarket. Imagis further agrees not to anywhere in the Territory, whether for itsown account or for the account of any other person, firm, corporation or otherorganization, develop, consult or assist any party, either directly orindirectly, regarding the development, maintenance, operation or administrationof a software application, program or other device similar to the Program foruse in the Market.

6.2     **Non-InterferenceCovenant.** Imagis further covenants and agrees that during the NonCompeteTerm, neither Imagis nor any Affiliate of Imagis will, directly or indirectly,for whatever reason, whether for its own account or for the account of any otherperson, firm, corporation or other organization, interfere with the existing orpotential contracts or relationships of API with any person, firm, corporationor other organization in the Market.

6.3     **Injunctive Relief.**Imagis specifically recognizes that any breach of Section 6.1 orSection 6.2 will cause irreparable injury to API and that actual damagesmay be difficult to ascertain, and, in any event, may be inadequate. Accordingly(and without limiting the availability of legal or equitable, includinginjunctive, remedies under any other provisions of this Agreement), Imagisagrees that in the event of any such breach, API will be entitled to injunctiverelief in addition to such other legal and equitable remedies that may beavailable. Imagis recognizes that the time and geographic limitations inSection 6.1 and Section 6.2 are reasonable and properly requiredfor the protection of API and in the event that such limitation or absence isdeemed to be unreasonable by a court of competent jurisdiction, Imagis agreesand submits to the imposition of such a limitation as the court deemsreasonable.

7.     **INDEMNITIES/LIMITATIONOF LIABILITY.**
7.1     **Indemnification byImagis.**Notwithstanding any investigation by API, Imagis shall indemnifyand hold API harmless from and against any and all Losses suffered or incurredby API which result from or arise out of:

(a)     the material inaccuracy orbreach of any representation or warranty made by Imagis herein or in anycertificate delivered pursuant hereto;

(b)     all debts, liabilities andobligations of Imagis of any nature, whether accrued, absolute, contingent, orknown or unknown on the date hereof, existing or arising on or resulting fromevents which occurred or failed to occur on, before or after the date hereof, tothe extent not specifically assumed by API hereunder; or

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(c)     the failure by Imagis tomaterially comply with any covenant or agreement of Imagis set forth herein orin any document, instrument or certificate delivered hereunder.

7.2     **Indemnification byAPI.**API shall indemnify and hold Imagis harmless from and against anyand all Losses suffered or incurred by Imagis which result from or arise outof:

(a)     the material inaccuracy orbreach of any representation or warranty made by API herein or in anycertificate delivered pursuant hereto; and

(b)     the failure by API tomaterially comply with any covenant or agreement of API set forth herein or inany document, instrument or certificate delivered hereunder.

Except with respect to the expressed representations andwarranties of Imagis herein, the Program is sold to API as is and where is, withno warranties, representations or conditions whatsoever. Except with respect tothe expressed representations and warranties of Imagis herein, Imagis disclaimsall warranties, representations and conditions, express, implied, statutory andotherwise, in respect of the Program, including all implied warranties andconditions of merchantability, durability and fitness for purpose.

7.3     **ConsequentialDamages.**EXCLUDING (i) ANY CLAIMS ARISING FROM THE FRAUDULENT ORINTENTIONAL ACTS OF THE PARTIES (ii) ANY CLAIMS RELATED TO THE INFRINGMENT BYTHE PROGRAM OF ANY INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY ARISINGWITHIN ONE (1) YEAR OF THIS AGREEMENT OR (iii) ANY CLAIMS ARISING UNDER SECTIONS5.1.2, 5.1.6, 5.17(B), 5.2.2 OR 5.2.4 HEREOF, NEITHER PARTY WILL BE LIABLE TOTHE OTHER FOR ANY INDIRECT, SPECIAL, PUNITIVE, INCIDENTAL OR CONSEQUENTIALDAMAGES OR DAMAGES FOR PURE ECONOMIC LOSS, INCLUDING DAMAGES FOR LOSS OFBUSINESS, REVENUE OR PROFIT, LOSS OF DATA, FAILURE TO REALIZE ANTICIPATEDSAVINGS OR CLAIMS OF THIRD PARTIES EVEN IF EITHER PARTY IS ADVISED OF THEPOSSIBILITY OF SUCH DAMAGES. WITH RESPECT TO THE EXCEPTIONS APPLICABLE TO THEEXCLUSION OF CONSEQUENTIAL DAMAGES DESCRIBED IN SUBSECTIONS (ii) and (iii)ABOVE, A CAP OF $600,000.00 SHALL APPLY IN ANY EVENT TO THE DAMAGES OR CLAIMSAPI MAY RECOVER AGAINST IMAGIS.

7.4     **Limitation OfLiability Related To Program.**EXCLUDING (i) ANY CLAIMS ARISING FROMFRAUDULENT OR INTENTIONAL ACTS OF IMAGIS, (ii) ANY CLAIMS ARISING FROM THEINFRINGEMENT BY THE PROGRAM OF ANY INTELLECTUAL PROPERTY RIGHTS OF ANY THIRDPARTY ARISING WITHIN ONE (1) YEAR OF THIS AGREEMENT OR (iii) ANY CLAIMS ARISINGUNDER SECTIONS 5.1.2, 5.1.6 OR 5.17(B), HEREOF, IMAGIS' TOTAL AGGREGATELIABILITY TO API IN RESPECT OF THE PROGRAM, ANY SERVICES PROVIDED HEREUNDER WILLNOT EXCEED THE TOTAL OF ALL MONIES ACTUALLY PAID TO IMAGIS BY API UNDER THISAGREEMENT, REGARDLESS OF THE CAUSE OF ACTION (EXCEPT AS EXCLUDED AT THE STARTOF THIS SECTION), INCLUDING BREACH OF CONTRACT (INCLUDING FUNDAMENTAL BREACH),TORT (INCLUDING NEGLIGENCE), ANY

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INFRINGEMENT CLAIMS RELATD TO THE PROGRAM OR STRICTLIABILITY. WITH RESPECT TO THE EXCEPTIONS APPLICABLE TO THE LIMITATION OFLIABILITY DESCRIBED IN SUBSECTIONS (ii) and (iii) ABOVE, A CAP OF $600,000.00SHALL APPLY IN ANY EVENT TO THE DAMAGES OR CLAIMS API MAY RECOVER AGAINST IMAGISRELATED TO THE PROGRAM.

7.5     **Additional Indemnityby Imagis. Imagis will indemnify and hold harmless API from and againstLosses incurred by API as the result of any cause of action related to theinfringement by the Program of another party's intellectual property rights tothe extent such award is based in whole or in part upon an infringement by theProgram, in the form it existed at the time the Source Code was delivered toAPI, provided that API notifies Imagis of such proceeding promptly after APIreceives notice thereof, Imagis has sole control over the defense and settlementof the proceeding, API provides such assistance in the defense and settlement ofthe proceeding as Imagis may reasonably request (and at Imagis' sole cost andexpense) and API reasonably complies with any settlement or Court order made inconnection with such proceeding.
Imagis will have no obligation under this Section 7.5 to theextent that the Program infringes upon any such rights as a result ofModifications not made by Imagis or for the use or distribution of the Programin combination with programs or items not furnished by Imagis, if suchinfringement would not have occurred from the use or distribution of theProgram, in the form it existed at the time the Source Code was delivered toAPI, alone, or if such infringement arises as a result of Imagis's compliancewith API's designs or specifications or if the alleged infringement could havebeen avoided by the use of a different version of the Program made available toAPI by Imagis.

7.6     **Additional Indemnityby API.**API will indemnify and save harmless Imagis from and against allcost, loss and expense, including reasonable legal fees and disbursementsinvoiced to Imagis, arising as a result of any claim by a third party againstImagis based on such third party's use of or inability to use the Program fromand after the Transfer Date, provided API or its agents sold or licensed theProgram to such third party. API will remove all references to Imagis from itsproprietary notices on the Program and any boot up screens, marketing,advertising and packaging for the Program, but not from any such materials inrespect of ID-2000.

7.7     **Survival of Indemnily Obligations.**The indemnity obligations of the parties as stated above in this Section 7shall survive for the Term, plus two (2) years thereafter.

8.     **OFFSET RIGHTS.
EITHER PARTY (THE "OFFSETTING PARTY") MAY ASSERT AN OFFSETAGAINST ANY PAYMENT OWED PURSUANT TO THIS AGREEMENT EQUAL TO SUCH AMOUNT AS THEOTHER PARTY SHALL OWE THE OFFSETTING PARTY PURSUANT TO THE TERMS AND CONDITIONSOF THIS AGREEMENT.

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9.     **GENERAL**
9.1     **Amendment.**Except as herein otherwise provided, no subsequent alteration, amendment,change, or addition to this Agreement will be binding upon the parties heretounless reduced to writing and signed by the parties.

9.2     **Limited Rights ofAssigment.**Except in the case of any sale of substantially all of thestock, or assets of a party or the merger or other similar business combination,this Agreement and the rights, duties, and obligations of either party hereunderwill not be assigned by either party hereto without the consent of the otherparty. For the purpose of this Agreement an assignment includes a change invoting control of a party.

9.3     **Entire Agreement.**This Agreement is the entire agreement of the parties with respect of theparties with respect to the subject matter herein. There are no representations,warranties, collateral agreements, or conditions except as herein specified.

9.4     **Binding**. ThisAgreement will enure to the benefit of and be binding upon the parties and theirrespective successors and permitted assigns.

9.5     **FurtherCooperation.**The parties will execute and deliver all such furtherdocuments, do or cause to be done all such further acts and things, and giveall such further assurances as may be necessary to give full effect to theprovisions and intent of this Agreement.

9.6     **Governing Law.**This Agreement will be governed by and construed in accordance with the lawsof the State of Wisconsin, excluding its conflict of law rules.

9.7     **Notice**. Anynotice required or permitted to be given to any of the parties to this Agreementwill be in writing and may only be given personally (including by courier) or byelectronic facsimile transmission to the address of such party first abovestated or such other address as any party may specify by notice in writing tothe other parties and any such notice will be deemed to have been given andreceived by the party to whom it was addressed if by facsimile transmission, onsuccessful transmission, or, if delivered, on delivery.

9.8     **Time**. Time isof the essence of this Agreement.

9.9     **Forum; Consent ToJurisdiction.**Any disputes, controversies, differences, claims ordemands which the parties are unable to resolve by informal negotiations withinthirty (30) days after either party requests such negotiations,, shall besubmitted to and resolved by binding arbitration under the procedures,jurisdiction and rules of the American Arbitration Association applicable tocommercial disputes and venued in Chicago, Cook County, Illinois.Notwithstanding the provisions hereof, either party may seek appropriatepreliminary injunctive relief pending the commencement of arbitration of thedisputed matters. In any action to enforce or interpret any agreement, covenant,indemnity or other obligation arising under this Agreement, the non-prevailingparty shall pay to the prevailing party its reasonable attorneys fees and costs.The prevailing party will be determined by the court, arbitrator or arbitrationpanel before whom the action was brought based upon an assessment of whichparty's major arguments or positions could fairly be said to have prevailed. Anyattorneys fees

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and other costs and expenses incurred by the prevailing partyenforcing the judgment under this Agreement shall be recoverable separately fromand in addition to any other amount included in such judgment in favor of theprevailing party.

9.10     **Counterparts.**This Agreement may be executed in several counterparts, each of which willbe deemed to be an original and all of which will together constitute one andthe same instrument.

9.11     **Execution.**Delivery of an executed copy of this Agreement by electronic facsimiletransmission or other means of electronic communication capable of producing aprinted copy will be deemed to be execution and delivery of this Agreement as ofthe Effective Date.

9.12     **Currency.**Unless otherwise provided, all dollar amounts referred to in this Agreementare in lawful money of the United States.

9.13     **Waiver.**Either party may at any time and from time to time waive in whole or inpart the benefit to it of any provision in this Agreement or any default by theother party, but any waiver on any occasion will be deemed not to be a waiver ofthat provision thereafter or of any subsequent default or a waiver of any otherprovision or default.

9.14     **Non-CumulativeRemedies.**The remedies to which any party hereto may resort arecumulative and not exclusive of any other remedies allowed by law or equity towhich such party may be entitled, and such party will be entitled to pursue anyand all of its remedies concurrently, consecutively, and alternatively.

9.15     **Severability.**If any covenant or other provision of this Agreement is invalid, illegal, orincapable of being enforced by reason of any rule of law or public policy, thensuch covenant or other provision will be severed from and will not affect anyother covenant or other provision of this Agreement, and this Agreement will beconstrued as if such invalid, illegal, or unenforceable covenant or provisionhad never been contained in this Agreement. All other covenants and provisionsof this Agreement will, nevertheless, remain in full force and effect and nocovenant or provision will be deemed dependent upon any other covenant orprovision unless so expressed herein.

9.16     **No Joint Venture.**The relationship of the parties is that of independent contractors and notthat of partnership, joint venture, franchise, agency or employment.

9.17     **No PublicAnnouncement. Neither party will make any public announcement regardingthe terms of this Agreement without the consent of the other party.
IN WITNESS WHEREOF the parties hereto have executed anddelivered this Agreement to have effect from and after the Effective Date.

{SIGNATURE PAGE TO FOLLOW}

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**IMAGIS TECHNOLOGIES INC.**
Per:  "signed"        Iain Drummond, Its President& CEO
**API TECHNOLOGIES LLC**
Per:  "signed"        Dennis Nelson, Its SoleMember

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**SCHEDULE "A"

LIST OF SOURCE CODE FILES TO BE DELIVERED
**To be provided in accordance with Section 2.3**
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**SCHEDULE 1(d)**
1     A purchase and maintenanceagreement with Gateway Casinos of Burnaby, British Columbia

2     A purchase and maintenanceagreement with S and B Corporation of Seoul, Korea

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**EXHIBIT 2.3
**CLOSING CERTIFICATE****API TECHNOLOGIES, LLC., a Wisconsin limited liabilitycompany ("API") and IMAGIS TECHNOLOGIES, INC., a British Columbia company("Imagis"), each hereby acknowledge that it has satisfied all of therequirements and conditions precedent to closing the transaction pursuant to theSoftware Assets Sale and Assignment Agreement dated October 31, 2001 (the"Agreement"), and each does hereby certify that, as of the date of signing ofthe Agreement and the date of executing this Satisfaction Certification:

(a)     The representations andwarranties contained in the Agreement are true and correct in all materialrespects; and

(b)     All covenants, agreements,schedules and exhibits required under the Agreement to be performed, compliedwith or delivered at or prior to the date hereof have been fully performed,complied with and delivered.

Capitalized terms used herein and not otherwise defined herein shall have themeanings assigned to such terms in the Agreement.

Dated this 1st day of November, 2001.
**IMAGIS TECHNOLOGIES INC.**
Per: "signed"        Iain Drummond
**API TECHNOLOGIES, LLC**
Per:  "signed"        Dennis Nelson, Its SoleMember

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**SCHEDULE 3.1
**Example No. 1:**  Assuming the licenserevenues for the Program received by API of $25,000.00 or more the GrossRevenues API shall pay Imagis as follows:
Casino ID Gross Revenue = 20% x $12,500.00 = $2,500.00

ID-2000 = 40% x $12,500.00 = $5,000.00

**Example No. 2:**  Assuming the licenserevenues for the Program received by API of $20,000.00 or lower API shall payImagis as follows:
Casino ID Gross Revenue = 20% x $10,000.00 = $2,000.00

ID-2000 = 40% x $10,000.00 = $4,000.00

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**EXHIBIT 4.1

API TECHNOLOGIES, LLCMEMORANDUM OF UNDERSTANDING**
This Memorandum of Understanding ("MOU") is made and enteredinto on the date indicated below, (the "Effective Date") by and between APITechnologies, LLC ("API") having its principal place of business at 205 DotyStreet, Suite 202, Green Bay, WI 54301 and IMAGIS Technologies Inc. ("IMAGIS"),having its principal place of business at Suite 1300, 1075 West Georgia Street,Vancouver BC, Canada V6E 3C9, and
**WITNESSETH:**
**WHEREAS,** API and IMAGIS are Business Partners as perthe Business Partner Agreement signed January 2, 2001, and;

**WHEREAS,** API and IMAGIS have contemporaneouslyherewith entered into that certain Software Assets Purchase and AssignmentAgreement (the "Acquisition Agreement") wherein API shall purchase from andImagis shall sell and assign to API a software program and related assets (the"Software Assets") used to catalogue and process data and imagery to identifyindividuals for use as a security device and application in the gaming industry(the "Gaming Industry") and;

**WHEREAS,** API wishes to negotiate with IMAGIS as toother uses of the Software Assets being purchased,

**NOW, THEREFORE,** in consideration for the execution ofthe Acquisition Agreement, and other good and valuable consideration, theparties hereto do hereby agree as follows:

1.     To open and continuediscussions on the topic of API's right to use the core product code beingpurchased as part of Casino-ID for other applications and other industries.

2.     The use of this code would befor products other than those currently developed by or under development byIMAGIS.

3.     The products developed by APIusing this code will not be marketed into the Law Enforcement market in whichIMAGIS is currently involved.

4.     These discussions will beginwithin fifteen (15) days after the completion of the transactions contemplatedin the Acquisition Agreement and be completed within ninety (90) daysthereafter. The parties agree to exert their

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best, reasonable efforts to consummate a definitive andbinding agreement on the subject matter herein within the foregoing timeperiod.

Signed for and on behalf of:  
API Technologies, LLC
IMAGIS Technologies Inc.
Signature: "signed"
Signature: "signed"
Denis Nelson
Iain Drummond
Its Sole Member
President & CEO
November 1, 2001
November 1, 2001**********************************************