Document:

EXHIBIT 10.21

                          SOURCE CODE ESCROW AGREEMENT

THIS AGREEMENT is made effective this 15th day of April, 2003

AMONG:

          IMAGIS  TECHNOLOGIES  INC., a British Columbia company with its office
          at 1670 - 1075 West Georgia Street, Vancouver, B.C. V6E 3C9

          ("Imagis")

AND:

          ALTAF  NAZERALI,  businessman,  of 1300 - 1075  West  Georgia  Street,
          Vancouver, B.C. V6E 3C9

          ("Nazerali")

AND:

          LML&S  SERVICES INC., a British  Columbia  company with its registered
          office at 1500 - 1055 West Georgia Street, P.O. Box 11117,  Vancouver,
          B.C. V6E 4N7

          ("Escrow Agent")

WHEREAS:

(A)  Pursuant to an amended  and  restated  loan  agreement  between  Imagis and
Nazerali  dated April 15, 2003 (the  "Amended  and  Restated  Loan  Agreement"),
Nazerali has agreed to lend a maximum  credit amount of Cdn.  $500,000 to Imagis
to assist in its cash flow management and general working capital;

(B) Pursuant to a general security  agreement  between Imagis and Nazerali dated
April 15, 2003 (the "General  Security  Agreement"),  Imagis has agreed to grant
security  over  all its  present  and  after-acquired  persona  property  and an
uncrystalized  floating charge on land subject only to permitted encumbrances as
set out therein; and

(C) As a condition  of entering  into the Amended and Restated  Loan  Agreement,
Nazerali  requires that Imagis deposit  certain source codes,  together with the
licence agreement dated April 15, 2003 (the "Licence Agreement") with the Escrow
Agent, to be held and released in accordance with the terms of this Agreement;

WITNESSES that in consideration of the mutual covenants and agreements contained
in this  Agreement and in the Amended and Restated Loan  Agreement,  the Parties
agree as follows:

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                                     - 2 -

                                     PART 1

                    DEFINITIONS, INTERPRETATION AND SCHEDULES

Definitions

1.1 In this Agreement,  except as otherwise expressly provided or as the context
otherwise requires,

     (a)  "Agreement"  means this Escrow  Agreement and the  schedules  attached
     hereto, as may be supplemented or amended from time to time and in effect;

     (b) "Amended and Restated Loan Agreement" has the meaning ascribed to it in
     Recital A;

     (c) "Business Day" means a day that is not a Saturday,  Sunday or statutory
     holiday in Vancouver, British Columbia;

     (d) "Claim" has the meaning ascribed to it in ss.3.7;

     (e) "Deposit Notice" has the meaning ascribed to it in ss.2.5;

     (f) "Dispute" has the meaning ascribed to it in ss.5.1;

     (g) "Effective  Date" means the effective date of this Agreement  being the
     date first above written;

     (h) "Executive Officer" has the meaning ascribed to it in ss.5.2;

     (i) "Force  Majeure"  means any event or occurrence  beyond the  reasonable
     control  of  a  Party  which  prevents  such  Party  from   performing  its
     obligations under this Agreement including an act of God, government order,
     strike,  lockout  or other  industrial  disturbance,  war,  terrorist  act,
     blockade,  insurrection,  riot, earthquake,  typhoon,  hurricane,  flood or
     other natural disaster;

     (j) "General Security  Agreement" has the meaning ascribed to it in Recital
     (B);

     (k) "Liabilities" has the meaning ascribed to it in ss.3.7;

     (l) "Licence Agreement" has the meaning ascribed to it in Recital (C);

     (m) "Notice" has the meaning ascribed to it in ss.6.2;

     (n) "Party" means a Person that is a party to this Agreement;

     (o) "Person" means any individual,  company, body corporate,  firm, limited
     or unlimited  liability  company,  partnership,  syndicate,  joint venture,
     society,  association,  trust,  unincorporated  organisation  or government
     authority,  or  any  trustee,   executor,   administrator  or  other  legal
     representative thereof;

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                                     - 3 -

     (p) "Rules" has the meaning ascribed to it in ss.5.4;

     (q) "Source  Codes" means all source codes  described in Schedule A and all
     Updates;

     (r)  "Tangible  Media" means any  document,  magnetic  tape,  disk or other
     physical medium containing the Source Codes; and

     (s) "Update" means any modification,  update, enhancement, change, deletion
     or new release of the Source Codes made by the Licensor.

Interpretation

1.2 In this Agreement, except as otherwise expressly provided,

     (a) the  headings are for  convenience  only and do not form a part of this
     Agreement  and are not  intended to  interpret,  define or limit the scope,
     extent or intent of this Agreement or any provision hereof;

     (b) whenever  required by context,  a word  importing the masculine  gender
     includes the feminine or neuter gender and a word in the singular  includes
     the plural and vice versa;

     (c) a  reference  to a Part means a Part of this  Agreement  and the symbol
     "ss."  followed  by a number or letter or some  combination  of numbers and
     letters  refers to the provision of this  Agreement so  designated  and the
     words "hereof", "hereto", "herein" and "hereunder" refer to the entirety of
     this Agreement rather than any particular Part or section;

     (d) a  reference  to a  statute  includes  all  regulations  made  pursuant
     thereto, all amendments to the statute or regulations in force from time to
     time and any statute or  regulations  that  supplement  or  supersede  such
     statute or regulations;

     (e) a reference  to a  corporate  entity  includes  any  successor  to that
     entity;

     (f) a reference to currency means Canadian currency;

     (g) a reference to "approval", "authorization", "notice" or "consent" means
     written approval,  authorization,  notice or consent not to be unreasonably
     withheld or delayed;

     (h) the words "including" and "include", when following a general statement
     or term, are not to be construed as limiting the general  statement or term
     to any  specific  item or matter set forth or to similar  items or matters,
     but rather as  permitting  the  general  statement  or term to refer to all
     other  items or matters  that could  reasonably  fall  within its  broadest
     possible scope; and

     (i) an  accounting  term  not  otherwise  defined  herein  has the  meaning
     assigned to it, and every  calculation  to be made hereunder is to be made,
     in  accordance  with Canadian  Generally  Accepted  Accounting  Principles,
     applied on a consistent basis.

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                                     - 4 -

Schedules

1.3 Schedule A attached to this Agreement is incorporated into this Agreement by
reference and forms a part hereof:

                                     PART 2

                             ESTABLISHMENT OF ESCROW

Appointment of Escrow Agent

2.1 Imagis and Nazerali  hereby appoint the Escrow Agent to act as escrow agent,
and the Escrow Agent agrees to such appointment, on the terms and conditions set
forth in this Agreement.  Imagis and Nazerali  acknowledge that the Escrow Agent
has not, as of the date of signing this Agreement,  reviewed any other agreement
related hereto other than the Amended and Restated Loan  Agreement,  the Licence
Agreement and this  Agreement.  Imagis and Nazerali will jointly cause copies of
any other  relevant  agreement to be  delivered to the Escrow Agent  immediately
following the execution and delivery of this Agreement.

Initial Deposit to Escrow

2.2 Concurrently with the execution and delivery of this Agreement,  Imagis will
deposit with the Escrow Agent one copy of each of the Source Codes together with
the Licence  Agreement.  Unless and until Imagis makes such initial deposit with
the Escrow Agent, the Escrow Agent will have no obligation under this Agreement.

Additional Deposits to Escrow

2.3 Upon the commercial release of an Update,  Imagis will promptly deposit with
the Escrow  Agent one copy of each the updated  version of the Source Codes that
incorporates such Update  identifying the source code which is replaced thereby.
Upon  receipt of such  updated  Source  Codes,  the Escrow  Agent will return or
destroy the previously held version of the Source Codes.

Identification of Deposits

2.4 Prior to  delivering  each deposit of the Source Codes to the Escrow  Agent,
Imagis will  conspicuously  label for  identification  each Tangible Media to be
deposited with the Escrow Agent.

Notification of Deposits

2.5 Together with each deposit of the Source Codes to the Escrow  Agent,  Imagis
will  deliver to the Escrow  Agent and  Nazerali a written  statement  ("Deposit
Notice")  describing  each item and the quantity of such item being deposited to
escrow and  certifying  that each such item has been  inspected by Imagis and is
complete and accurate.

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                                     - 5 -

Inspection and Acceptance of Deposits

2.6 Upon receipt of a deposit of the Source Codes, the Escrow Agent will conduct
a deposit inspection by visually matching the labelling of the Tangible Media to
the item  descriptions  and quantity  listed in the Deposit  Notice.  The Escrow
Agent will note any  discrepancies  between the labelling of the Tangible  Media
and the item  descriptions or quantity on the Deposit Notice,  date and sign the
Deposit  Notice and deliver a copy  thereof to Imagis and  Nazerali.  Imagis and
Nazerali  will be  solely  responsible  for  remedying  or  addressing  any such
discrepancies  with  respect  to any  deposit of the  Source  Codes.  The Escrow
Agent's  acceptance  of a deposit of the Source Codes occurs upon its signing of
the respective Deposit Notice.

Verification of Deposits

2.7 Other than the inspection  referred to in ss.2.6, the Escrow Agent will have
no obligation to verify the completeness,  accuracy,  sufficiency,  correctness,
genuineness,  validity or quality of the deposited  Source Codes.  Nazerali will
have the right,  at any time during the term of this  Agreement  and at his sole
expense,  to have any deposit of the Source  Codes  verified  by an  independent
third  party.  Nazerali  will  notify  Imagis and the  Escrow  Agent of any such
request  for  verification,  which  must  be  conducted  at the  Escrow  Agent's
premises, and Imagis will have the right to be present at the verification.

Title to Source Codes

2.8 The Parties acknowledge and agree that title to the Source Codes will remain
at all times with Imagis.

No Encumbrance

2.9 Under no circumstance  will Nazerali or Imagis be entitled to make any claim
for,  or  otherwise  request a  release  of,  the  Source  Codes or the  Licence
Agreement  from escrow for any reason other than as expressly  set forth herein,
the Amended and Restated Loan Agreement and the General  Security  Agreement and
each of Imagis  and  Nazerali  hereby  waives  and  disclaims  any rights it may
otherwise  have  under  statute,  at  law or in  equity  to  any  lien,  charge,
encumbrance  or setoff in  respect  of the  escrowed  Source  Codes and  Licence
Agreement for any reason, cause or circumstance.

Restriction

2.10 The  Source  Codes  will not be sold,  assigned,  hypothecated,  alienated,
released  from  escrow,  transferred  within  escrow or dealt with in any manner
whatsoever  except  pursuant to the terms and conditions of this Agreement or as
agreed to in writing by each Party.

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                                     - 6 -

                                     PART 3

                                  ESCROW AGENT

Source Codes Held in Escrow

3.1 The Source Codes and the Licence  Agreement  deposited with the Escrow Agent
will  be held  in  escrow  by the  Escrow  Agent.  Except  as  provided  in this
Agreement,  the Escrow Agent will not disclose,  make available,  release or use
the Source Codes or the Licence Agreement.

Legal Requirement to Disclose

3.2 If the Escrow  Agent is  required by  applicable  law,  regulation  or legal
process to disclose,  make  available or release the Source Codes or the Licence
Agreement,  the Escrow Agent will immediately  notify Imagis and Nazerali unless
prohibited  by law.  The Escrow  Agent will not be  required to disobey any such
requirement.  It will be the  responsibility of Imagis and Nazerali to challenge
any such requirement;  provided,  however,  that the Escrow Agent does not waive
its rights to present its position with respect to any such requirement.

Right to Copy Deposited Materials

3.3 The Escrow Agent,  at Imagis' and  Nazerali's  expense,  may copy the Source
Codes  held in  escrow as  reasonably  necessary  to  comply  with the terms and
conditions of this  Agreement.  The Escrow Agent will  duplicate all  copyright,
nondisclosure and other proprietary notices and titles contained on the Tangible
Media  onto any  copies  made by the  Escrow  Agent.  Imagis  will  provide  all
instructions necessary to duplicate the Source Codes, including the hardware and
software required,  together with each deposit of the Source Codes to the Escrow
Agent.

Terms and Conditions

3.4 The Escrow Agent accepts its duties and obligations  under this Agreement on
the following terms and conditions:

     (a) the  Escrow  Agent  will not be  responsible  or liable  in any  manner
     whatsoever  for  the  completeness,  accuracy,  sufficiency,   correctness,
     genuineness  or validity of any of the Source Codes or other item deposited
     with it (other than ensuring that  documents  required by this Agreement to
     be signed have been  signed,  but  provided  that the Escrow Agent shall be
     entitled to assume the genuineness of all signatures);

     (b) the Escrow Agent may rely upon any notice, request, statement,  waiver,
     consent, receipt, certificate or any paper or document furnished to it, and
     executed  with or without seal by either of Imagis or Nazerali or any other
     Person, not only as to its due execution and the validity and effectiveness
     of its  provisions  but  also  as to the  truth  and  acceptability  of any
     information therein contained, and the Escrow Agent will not be required to
     determine the  authenticity of signatures or the power and authority of any
     signatory to execute any document;

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                                     - 7 -

     (c) the  Escrow  Agent may  engage  such  professional  advisers  and legal
     counsel as it  determines  to be  necessary or advisable in order to fulfil
     its obligations under this Agreement;

     (d) the Escrow  Agent will not be  required  to make any  determination  or
     decision  with respect to the validity of any claim made by any Party or of
     any denial thereof but will be entitled to rely  conclusively  on the terms
     hereof and the  Amended  and  Restated  Loan  Agreement  and the  documents
     tendered  to it in  accordance  with the terms  hereof and the  Amended and
     Restated Loan Agreement;

     (e) the duties and  obligations  of the Escrow Agent  hereunder  are purely
     ministerial in nature and the Escrow Agent will not be liable for any error
     of  judgement,  or for any act done or step  taken or omitted by it in good
     faith,  or for any mistake of fact or law, or for anything  which it may do
     or  refrain  from  doing  in  connection  herewith,   except  for  its  own
     negligence, wilful default or dishonesty;

     (f) upon the Escrow  Agent's  delivery of the Source  Codes and the Licence
     Agreement to Imagis or Nazerali in accordance  with the  provisions of this
     Escrow  Agreement,  the Escrow Agent will be automatically  and immediately
     released from all duties and obligations  under this Agreement to any Party
     and to any other  Person  with  respect to any of the  Source  Codes or the
     Licence Agreement held in escrow under this Agreement;

     (g) the  Escrow  Agent may,  if the  Escrow  Agent  deems it  necessary  or
     desirable,  seek advice and  directions  from the Supreme  Court of British
     Columbia with respect to its duties and obligations hereunder; and

     (h) the duties and  obligations  of the Escrow Agent  hereunder will at all
     times be  subject  to the  orders  or  directions  of a court of  competent
     jurisdiction in the Province of British Columbia.

Consents and Waivers

3.5 Escrow Agent will have no duties except as expressly  set forth herein,  and
will not be bound by any notice of a claim or demand with  respect  thereto,  or
any  waiver,  modification,   amendment,   termination  or  rescission  of  this
Agreement,  unless  received by it in writing,  and  executed by both Imagis and
Nazerali,  and, if Escrow Agent's duties,  obligations or liabilities herein are
affected, unless it gives its written consent thereto.

Interpleader

3.6 The Escrow Agent may, at any time,  give notice to Imagis and Nazerali  that
the Escrow Agent is terminating its duties and obligations hereunder, and

     (a) at any time more than 30 days after it gives such notice; and

     (b)  before  Imagis and  Nazerali  jointly  direct  the Escrow  Agent as to
     delivery of the Source Codes and the Licence Agreement in its possession to
     some other Person,

<PAGE>

                                     - 8 -

     may deliver the Source Codes and the Licence Agreement in its possession to
     the  Supreme  Court of British  Columbia  by way of  interpleader  and will
     thereupon be released of its duties and obligations  hereunder.  Imagis and
     Nazerali  agree that in no event will the Escrow  Agent be held  liable for
     any failure to deliver all or a portion of the Source Codes and the Licence
     Agreement during the period referred to in ss.3.6(a).

Indemnity

3.7 Imagis and Nazerali will jointly and  severally  indemnify and save harmless
the Escrow  Agent from and against any and all actions,  suits,  investigations,
proceedings  or claims of every kind (each a "Claim") and any and all  expenses,
losses, damages or liabilities, including reasonable attorney's fees and charges
incidental  thereto  (collectively   "Liabilities")  as  and  when  incurred  or
sustained,  and the  reasonable  fees and  expenses  incurred by Escrow Agent in
investigating  or defending a Claim to which it may become  subject or otherwise
involved in any capacity  insofar as such Claims or Liabilities  arise out of or
are based,  directly or indirectly,  upon the Escrow Agent's  performance of its
duties and obligations hereunder,  except to the extent that the Escrow Agent is
guilty of negligence,  wilful  default or dishonesty in the  performance of such
duties and obligations.

Fees and Expenses

3.8 Imagis  will  reimburse  the Escrow  Agent of any and all fees and  expenses
incurred in connection with the performance of its duties  hereunder,  including
but not limited to fees and expenses incurred pursuant to ss.3.6.

Escrow Agent's Counsel

3.9 Each of the  parties  confirms  that it is aware that the Escrow  Agent is a
corporation  that is  controlled  and  directed by Lang  Michener  which acts as
counsel to Imagis.  The Escrow Agent may retain Lang  Michener as counsel in the
event of any dispute hereunder.

                                     PART 4

                               RELEASE FROM ESCROW

Release of Source Codes and Licence Agreement

4.1 Subject to ss.3.2,  the Escrow  Agent will only release the Source Codes and
the  Licence  Agreement  held by it in  escrow to  Nazerali  and  discharge  its
obligations  hereunder  if

     (a) Imagis  delivers a notice to the Escrow  Agent  instructing  the Escrow
     Agent to release the Source Codes and the Licence Agreement to Nazerali, or

     (b) Nazerali delivers a notice to the Escrow Agent

          (i)  requesting  the Escrow  Agent to release the Source Codes and the
          Licence Agreement to Nazerali,

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                                     - 9 -

          (ii) undertaking that the Source Codes released by the Escrow Agent to
          Nazerali will be used only as permitted under the terms and conditions
          of the Licence Agreement, and

          (iii)  certifying  that  Nazerali  is  not  in  breach  of  any of its
          obligations under the Amended and Restated Loan Agreement and that one
          or more of the  following  circumstances  exists  and  specifying  the
          particulars of such circumstances:

               (A)  pursuant  to the terms and  conditions  of the  Amended  and
               Restated  Loan  Agreement,  Nazerali  is  entitled to receive the
               Source  Codes  and the  Licence  Agreement  held in escrow by the
               Escrow Agent;

               (B) an order has been made or a  resolution  has been passed or a
               petition   has  been  filed  by  Imagis   for  its   liquidation,
               dissolution or winding-up;

               (C) an execution, sequestration or any other process of any court
               has  become  enforceable   against  Imagis  or  any  distress  or
               analogous  process has been levied upon any material  part of its
               property,  assets or  undertaking  and the  process  has not been
               stayed  or   otherwise   suspended   by  a  court  of   competent
               jurisdiction  within  30 days  and has  had,  or  could  have,  a
               material  adverse effect on the business or condition,  financial
               or otherwise, of Imagis;

               (D) Imagis has committed an act of bankruptcy, made an assignment
               or bulk sale of its assets, been adjudged or declared bankrupt or
               made an assignment  for the benefit of creditors,  consented to a
               proposal or similar  action under any  bankruptcy  or  insolvency
               legislation  applicable  to it,  commenced  any other  proceeding
               relating   to   it   under   any   reorganization,   arrangement,
               readjustment  of debt,  dissolution or liquidation law or statute
               of any  jurisdiction  whether  now or  hereafter  in  effect,  or
               consented to any such proceeding; or

               (E) a  custodian,  liquidator,  receiver,  receiver  and manager,
               receiver-manager, trustee or any other Person with similar powers
               has been  appointed for Imagis or in respect of any material part
               of its property or assets and has not been  discharged  within 30
               days after the  appointment  and before any action has been taken
               in  respect  of such  property  or  assets  that  has,  or  will,
               materially affect the rights of the parties thereto.

Delivery Pursuant to Imagis Request

4.2 Upon receipt of the notice  described in  ss.4.1(a),  the Escrow Agent will,
within 10 days, deliver the Source Codes and the Licence Agreement held by it in
escrow to Nazerali in accordance with such notice.

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                                     - 10 -

Imagis Notice

4.3 Upon receipt of the notice  described in  ss.4.1(b),  the Escrow Agent will,
within 10 days, deliver a copy of such notice to Imagis.  Imagis will, within 20
days after the date it  receives a copy of such  notice  from the Escrow  Agent,
notify both the Escrow Agent and Nazerali of

     (a)  Imagis'  consent to the  release of the Source  Codes and the  Licence
     Agreement to Nazerali, or

     (b) Imagis'  objection  to the release of the Source  Codes and the Licence
     Agreement  to  Nazerali,  specifying  the  particulars  of such  objection,

provided, however, that if Imagis fails to deliver any such notice to the Escrow
Agent and Nazerali within the stipulated  time period,  Imagis will be deemed to
have  consented to the release of the Source Codes and the Licence  Agreement to
Nazerali.

Delivery Pursuant to Imagis Consent

4.4 Upon receipt of the notice  described in ss.4.3(a) or Imagis being deemed to
have  consented to the release of the Source Codes and the Licence  Agreement to
Nazerali as described in ss.4.3,  the Escrow Agent will, within 10 days, deliver
the Source Codes and the Licence Agreement held by it in escrow to Nazerali.

Imagis Objection

4.5 Upon receipt of the notice described in ss.4.3(b),  Imagis and Nazerali will
settle the matter in  accordance  with Part 5 and the Escrow Agent will continue
to hold the Source Codes and the Licence  Agreement  in escrow  until  otherwise
directed by a written  direction  executed by both Imagis and  Nazerali or by an
award or decision of an arbitrator  pursuant to ss.5.4.  Imagis may, at any time
either during or prior to the commencement of settlement  procedures pursuant to
Part 5, notify the Escrow Agent that Imagis has withdrawn  its objection  notice
described in ss.4.3(b).  Upon receipt of such withdrawal notice the Escrow Agent
will, within 10 days, deliver the Source Codes and the Licence Agreement held by
it in escrow to Nazerali.

Joint Direction

4.6  Notwithstanding  any  other  provision  of this Part 4, but  subject  to an
applicable  award or decision of an  arbitrator  pursuant to ss.5.4,  the Escrow
Agent may act in accordance with a written direction executed by both Imagis and
Nazerali  amending the procedures set forth in this Part 4 or the Escrow Agent's
duties under this Agreement.

Right to Use Following Release

4.7 Upon  release of the Source  Codes and the  Licence  Agreement  pursuant  to
ss.4.4  and  ss.4.5,  Nazerali  will have the right to use the  Source  Codes in
accordance with the Licence Agreement.

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                                     - 11 -

Export Restrictions

4.8 Imagis and Nazerali are jointly and  severally  responsible  for and warrant
compliance with all applicable laws,  rules and  regulations,  including but not
limited to customs  laws,  import,  export,  and re-export  laws and  government
regulations of any country from or to which the Source Codes may be delivered or
released in accordance with the provisions of this Agreement.

                                     PART 5

                               DISPUTE RESOLUTION

Initiation of Process

5.1 If, at any time, there is a dispute, controversy or claim (each a "Dispute")
between  Imagis  and  Nazerali  with  respect to any  matter  arising  out of or
relating to this  Agreement,  including a matter  described in ss.4.5,  then the
Party that wishes to initiate a  resolution  of the Dispute  must give notice to
the other Party outlining the nature of the Dispute and the resolution  proposed
by the claimant  and  requiring  that such Dispute be resolved  pursuant to this
Part 5.

Referral to Executive Officers

5.2 If notice  is given  pursuant  to  ss.5.1,  Imagis  and  Nazerali  will each
designate one of its senior officers (each an "Executive  Officer") forthwith to
undertake  good faith  discussions  with the other Party with a view to settling
the Dispute.

Officers' Decision Binding

5.3 A resolution  reached by such Executive Officers and communicated by them in
writing to each Party will be binding on the Parties and will be implemented.

Submission to Arbitration

5.4 If a Dispute is not resolved  between Imagis and Nazerali within 30 days (or
such longer period as is agreed to by such Parties in writing) after the date of
the notice  pursuant to ss.5.1,  at any time  during the six months  immediately
following  the  expiration  of such 30 day (or longer)  period,  both Imagis and
Nazerali  will be  entitled  to refer the  Dispute  to  arbitration  by a single
arbitrator  in  accordance  with the domestic  arbitration  rules of the British
Columbia  International  Commercial Arbitration Centre (the "Rules") as modified
by the provisions herein.

Place of Arbitration

5.5 The  arbitration  will take  place in the  English  language  in  Vancouver,
British Columbia.

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                                     - 12 -

Acceptance and Implementation

5.6 Each  Party  will  accept as final and  binding  and  proceed  in good faith
diligently to implement the award or decision of the arbitrator.

Legal Proceedings

5.7 A legal  proceeding  commenced  by a Party in respect of an issue or Dispute
that may be arbitrated under this Agreement

     (a) will be  stayed  until  the time  during  which an  arbitration  may be
     initiated has expired or, if an arbitration is initiated, a decision on the
     arbitration is delivered or the  arbitration  process has otherwise  ended,
     and

     (b) will be discontinued  following the award or decision of the arbitrator
     on the arbitration  unless the award or decision  concludes the arbitration
     and the Dispute remains unresolved.

                                     PART 6

                               GENERAL PROVISIONS

Governing Law

6.1  This  Agreement  will be  exclusively  governed  by,  and  interpreted  and
construed in  accordance  with,  the laws  prevailing in the Province of British
Columbia and the Parties irrevocably and unconditionally attorn to the exclusive
jurisdiction of the courts of British  Columbia and all courts having  appellate
jurisdiction thereover.

Notice

6.2 Every  notice,  request,  demand or direction  (each a "Notice") to be given
pursuant  to this  Agreement  must be in writing and must be  delivered  by hand
(e.g.  Federal Express or other reputable  courier service) or sent by facsimile
transmission or other similar form of written  transmission by electronic means,
in each case addressed as follows:

     (a)  If to Imagis, at:

          Imagis Technologies Inc.
          1630 - 1075 West Georgia Street
          Vancouver, B.C.  V6E 3C9

          Telecopier:  (604) 684-9314
          Attention:  Mr. Wayne N. Smith, CFO

<PAGE>

                                     - 13 -

     (b)  If to Nazerali, at:

          c/o IPM International Portfolio Management Inc.
          1300 - 1075 West Georgia Street
          Vancouver, B.C.  V6E 3C9

          Telecopier:  (604) 684-4601
          Attention:  Altaf Nazerali

     (c)  If to the Escrow Agent, at:

          LML&S Services Inc.
          1500 - 1055 West Georgia Street
          P.O. Box 11117 Vancouver, B. C., Canada
          V6E 4N7

          Telecopier:  (604) 685-7084
          Attention:  Leo Raffin

or to such other address or transmission  receiving  station in British Columbia
as specified by a Party by Notice to the other Parties.  Any Notice delivered by
hand or sent by facsimile  transmission will be deemed conclusively to have been
effectively given on the day Notice was delivered or sent as aforesaid if it was
delivered  or sent on a day that was a Business Day at the place of the intended
recipient,  or on the next day that is a  Business  Day at such  place if it was
delivered or sent on a day that was not a Business Day at such place.

Time of Essence

6.3 Time is of the  essence in the  performance  of each  obligation  under this
Agreement.

Termination and Discharge of Escrow Agent

6.4 This Agreement will terminate and the Escrow Agent will be discharged of its
obligations in any of the following circumstances:

     (a) the Source Codes and the Licence  Agreement  are  properly  released in
     accordance with Part 4;

     (b) this  Agreement  is  terminated  by the  Escrow  Agent  underss.3.6  or
     jointly,  by Imagis  and  Nazerali  and the  Source  Codes and the  Licence
     Agreement, if any, are safely in the hands of the new appointee; or

     (c) the  destruction or corruption of the Source Codes, if any, as a result
     of Force Majeure.

<PAGE>

                                     - 14 -

Force Majeure

6.5 No Party  will be  liable to any other  Party  for  default  or delay in the
performance of its  obligations  under this Agreement to the extent such default
or delay is caused by an occurrence of Force Majeure.

Entire Agreement

6.6 This  Agreement,  the Licence  Agreement  and the Amended and Restated  Loan
Agreement  constitute  the entire  agreement  between  Imagis and Nazerali,  and
supersedes every previous agreement,  communication,  expectation,  negotiation,
representation  or understanding,  whether oral or written,  express or implied,
statutory or otherwise among the Parties,  with respect to the subject matter of
this  Agreement.  The  Escrow  Agent is not a party to, and is not bound by, any
provisions  which may be evidenced by, or arise out of, any agreement other than
as set forth in the express provisions of this Agreement.

Waiver and Consent

6.7 No delay or failure  by a Party to  exercise  any of its  rights  under this
Agreement constitutes a waiver of any such right. No consent or waiver,  express
or implied,  by a Party to, or of any breach or default by another Party of, any
or all of its  obligations  under this Agreement will,

     (a) be valid  unless it is in writing  and stated to be a consent or waiver
     pursuant to this ss.6.7,

     (b) be relied upon as a consent to or waiver of any other breach or default
     of the same or any other obligation,

     (c) constitute a general waiver under this Agreement, or

     (d) eliminate or modify the need for a specific  consent or waiver pursuant
     to this ss.6.7 in any other or subsequent instance.

Severability

6.8 If any provision of this Agreement is at any time  unenforceable  or invalid
for any reason,  it will be severable  from the remainder of this Agreement and,
in its application at that time, this Agreement will be construed as though such
provision was not contained herein and the remainder will continue in full force
and effect and be construed as if this  Agreement had been executed  without the
invalid or unenforceable provision.

Amendments

6.9 This Agreement may not be amended except in writing signed by each Party.

<PAGE>

                                     - 15 -

Further Assurances

6.10 Each Party will  execute  and deliver  such  further  agreements  and other
documents  and do such  further  acts and  things as  another  Party  reasonably
requests to  evidence,  carry out or give full force and effect to the intent of
this Agreement.

No Agency

6.11 Each Party is an independent contractor and nothing herein will, or will be
deemed to, create any  employer/employee,  agency,  partnership or joint venture
relationship  among the Parties or to give any Party any right or  authority  to
act as the agent of,  assume or create any  obligation on behalf of or to pledge
the credit of any other Party.

Assignment

6.12 This Agreement and the individual rights and obligations  hereunder may not
be  transferred  or  assigned  in  whole  or in part by any  Party,  whether  by
contract,  operation  of law or  otherwise,  without  the  consent of each other
Party,  and any purported  transfer or  assignment  without such consent will be
null and void.  Nothing in this  ss.6.12 will be deemed to limit or restrict the
Escrow Agent's rights under ss.3.6.

Enurement

6.13 This Agreement and the  provisions  hereof will enure to the benefit of and
be binding  upon the  Parties  and their  respective  successors  and  permitted
assigns.

Survival

6.14 All rights and  obligations of the Parties  occurring  before the effective
date of termination of this Agreement and all rights and  obligations  expressly
stated to  continue  after,  or accrue as a result of, the  termination  of this
Agreement  are  separate  and  distinct  rights and  obligations  binding on the
Parties, will survive its termination and will continue in full force and effect
and nothing  herein  will  affect the  enforceability  of such  provisions.  For
greater certainty,  the premature  termination of this Agreement will not affect
the rights and obligations of any Party under ss.2.9,  ss.2.10,  ss.3.7,  ss.3.6
and Part 6.

<PAGE>

                                     - 16 -

Counterparts

6.15 This Agreement may be executed in any number of  counterparts,  in original
form or by facsimile, each of which will together, for all purposes,  constitute
one and the same  instrument,  binding  on the  Parties,  and each of which will
together be deemed to be an original,  notwithstanding  that each Party is not a
signatory to the same counterpart.

IN WITNESS  WHEREOF this  Agreement  has been  executed by the Parties as of the
Effective Date.

Signed, Sealed and Delivered by ALTAF     )
NAZERALI in the presence of:              )
                                          )
Signed "Roy Trivett"                      )
------------------------------------      ) Signed "Altaf Nazerali"
Witness (Signature)                       ) -----------------------------------
                                          ) ALTAF NAZERALI
Roy Trivett                               )
------------------------------------      )
Name (please print)                       )
                                          )
2683 Country Woods Drive                  )
------------------------------------      )
Address                                   )
                                          )
Surrey, B.C.                              )
------------------------------------      )
City, Province                            )
                                          )
Businessman                               )
------------------------------------      )
Occupation                                )

IMAGIS TECHNOLOGIES INC.

Per:  Signed "Wayne Smith"
    ----------------------------
      Authorized Signatory

LML&S SERVICES INC.

Per:  Signed "David Ross"
    ----------------------------
      Authorized Signatory

<PAGE>

                                   SCHEDULE A
                                       to
                                ESCROW AGREEMENT

                                  Source Codes

1.   The source  codes  pertaining  to all  software  originally  engineered  by
     Imagis, including but without limiting the generality of the foregoing, the
     software known as:

     (a)  Computerized Arrest and Booking Systems ("CABS"); and

     (b)  Image Detection and Biometric Facial Recognition Software ("ID-2000").

2.   The source codes pertaining to the Intacta code.EXHIBIT 4.2

                           FOURTH AMENDMENT AGREEMENT

     FOURTH  AMENDMENT  AGREEMENT,  dated as of March 31, 2003 (this  "Amendment
Agreement"),  to the Amended and Restated Credit Agreement,  dated as of May 14,
2001, as amended to date (and as the same may be further  amended,  supplemented
or  modified  from  time to time in  accordance  with  its  terms,  the  "Credit
Agreement"),  among Microtek Medical Holdings,  Inc., formerly known as Isolyser
Company,  Inc.,  a Georgia  corporation  ("MMH") and Microtek  Medical,  Inc., a
Delaware  corporation  ("Microtek",  together with MMH,  each a "Borrower"  and,
jointly  and  severally,  the  "Borrowers"),  the  lenders  named  therein  (the
"Lenders"),  the guarantors named therein (the  "Guarantors") and JPMorgan Chase
Bank, formerly known as The Chase Manhattan Bank, as agent (the "Agent") for the
Lenders.  Terms used  herein and not  otherwise  defined  herein  shall have the
meanings attributed thereto in the Credit Agreement.

     WHEREAS,  the Borrowers have requested and the Lenders have agreed to amend
the Credit Agreement as described herein.

     NOW, THEREFORE, for valuable consideration,  the receipt and sufficiency of
which is hereby  acknowledged,  and subject to the fulfillment of the conditions
set forth below, the parties hereto agree as follows:

     SECTION 1. AMENDMENT TO CREDIT AGREEMENT.

     1.1  Section 7.07 of the Credit Agreement is hereby amended in its entirety
          to read as follows:

          "SECTION 7.07.  Capital  Expenditures.  Permit the aggregate amount of
          payments made for capital  expenditures  including  Capitalized  Lease
          Obligations and Indebtedness  secured by Liens permitted under Section
          7.01(e) hereof, to exceed (i) $3,000,000 for the Fiscal Year ending on
          December 31, 2003,  and (ii)  $2,500,000 for the Fiscal Year ending on
          December 31, 2004, and each Fiscal Year thereafter."

     1.2  Section 7.09 of the Credit Agreement is hereby amended in its entirety
          to read as follows:

          "SECTION  7.09  EBITDA.  Permit  EBITDA  of the  Borrowers  and  their
          subsidiaries  on a  Consolidated  basis to be less than (i) $8,000,000
          for the four quarter  periods  ending on March 31, 2003,  and June 30,
          2003,  (ii) $9,000,000 for the four quarter period ending on September
          30, 2003,  (iii)  $10,000,000  for the four quarter  period  ending on
          December  31,  2003 and  each  four  quarter  period  thereafter.  For
          purposes hereof,  EBITDA shall mean for the applicable  period the sum
          of Net Income, depreciation and amortization, federal, state and local
          income  taxes and  interest  expense  for such  period,  computed  and
          calculated in accordance with GAAP."

<PAGE>

     SECTION 2. CONDITIONS PRECEDENT.

     This  Amendment  Agreement  shall become  effective  upon the execution and
delivery of counterparts  hereof by the parties listed below and the fulfillment
of the following conditions:

     (a)  All  representations  and  warranties   contained  in  this  Amendment
Agreement or otherwise made in writing to the Agent in connection herewith shall
be true and correct.

     (b) No unwaived event has occurred and is continuing  which  constitutes an
Event of Default under the Credit Agreement or would constitute such an Event of
Default but for the requirement that notice be given or time elapse or both.

     (c) The Agent shall have received an amendment fee in the amount of $3,500.

     (d) The Agent shall have  received  such other  documents as the Lenders or
the Agent or the Agent's counsel shall reasonably deem necessary.

     SECTION 3. MISCELLANEOUS.

     3.1  Each   Borrower  and  each   Guarantor   reaffirms  and  restates  the
representations  and warranties set forth in Article IV of the Credit  Agreement
and all such  representations  and  warranties  shall be true and correct on the
date  hereof  with the same force and effect as if made on such date,  except as
they may specifically refer to an earlier date. Each Borrower and each Guarantor
represents and warrants (which  representations and warranties shall survive the
execution and delivery hereof) to the Agent that:

     (a) It has the corporate power and authority to execute,  deliver and carry
out the terms and  provisions of this Amendment  Agreement and the  transactions
contemplated  hereby and has taken or caused to be taken all necessary corporate
action to authorize the  execution,  delivery and  performance of this Amendment
Agreement and the transactions contemplated hereby;

     (b)  No  consent  of  any  other  person  (including,  without  limitation,
shareholders or creditors of any Borrower or any  Guarantor),  and no action of,
or filing  with any  governmental  or public  body or  authority  is required to
authorize,  or is otherwise required in connection with the execution,  delivery
and performance of this Amendment Agreement;

     (c) This Amendment Agreement has been duly executed and delivered on behalf
of  each  Borrower  and  each  Guarantor  by  a  duly  authorized  officer,  and
constitutes  a legal,  valid and binding  obligation  of each  Borrower and each
Guarantor  enforceable  in  accordance  with its terms,  subject to  bankruptcy,
reorganization,  insolvency,  moratorium  and other  similar laws  affecting the
enforcement  of  creditors'  rights  generally  and  the  exercise  of  judicial
discretion in accordance with general principles of equity;

                                       2
<PAGE>

     (d) The execution,  delivery and  performance  of this Amendment  Agreement
will not violate any law,  statute or regulation,  or any order or decree of any
court or governmental instrumentality, or conflict with, or result in the breach
of, or constitute a default under any contractual  obligation of any Borrower or
any Guarantor; and

     (e) As of the date hereof there exists no Default or Event of Default.

     By its  signature  below,  each Borrower and each  Guarantor  agree that it
shall  constitute  an Event of Default if any  representation  or warranty  made
above should be false or misleading in any material respect.

     3.2 Upon presentation of its invoice,  the Borrowers  covenant and agree to
pay in full all legal fees charged, and all costs and expenses incurred, by Kaye
Scholer  LLP,  counsel  to  the  Agent,  in  connection  with  the  transactions
contemplated  under this Agreement and  instruments  in connection  herewith and
therewith.

     3.3 Each  Borrower  and each  Guarantor  confirms in favor of the Agent and
each Lender that it agrees that it has no defense,  offset, claim,  counterclaim
or recoupment  with respect to any of its  obligations or liabilities  under the
Credit  Agreement or any other Loan  Document  and that nothing  herein shall be
deemed to be a waiver of any  covenant  or  agreement  contained  in the  Credit
Agreement,  and except as herein  expressly  amended,  the Credit  Agreement and
other Loan  Documents  are each ratified and confirmed in all respects and shall
remain in full force and effect in accordance with their respective terms.

     3.4 All  references to the Credit  Agreement in the Credit  Agreement,  the
Loan Documents and the other documents and instruments  delivered pursuant to or
in connection  therewith shall mean such agreement as amended hereby and as each
may in the future be amended,  restated,  supplemented  or modified from time to
time.

     3.5  This  Amendment  Agreement  may  be  executed  by the  parties  hereto
individually or in combination, in one or more counterparts, each of which shall
be an original  and all of which shall  constitute  one and the same  agreement.
Delivery of an executed  counterpart of a signature page by telecopier  shall be
effective as delivery of a manually executed counterpart.

     3.6 THIS  AMENDMENT  AGREEMENT  SHALL BE  GOVERNED  BY, AND  CONSTRUED  AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     3.7 The parties  hereto shall,  at any time and from time to time following
the execution of this Amendment Agreement,  execute and deliver all such further
instruments  and take all such further action as may be reasonably  necessary or
appropriate in order to carry out the provisions of this Amendment Agreement.

                                       3
<PAGE>

                                     MICROTEK MEDICAL HOLDINGS, INC.,
                                     formerly known as ISOLYSER COMPANY, INC.

                                     By:  /s/ Dan R. Lee
                                        ----------------------------------------
                                     Name:    Dan R. Lee
                                        ----------------------------------------
                                     Title:   CEO, President
                                        ----------------------------------------

                                     MICROTEK MEDICAL, INC.

                                     By:  /s/ Dan R. Lee
                                        ----------------------------------------
                                     Name:    Dan R. Lee
                                        ----------------------------------------
                                     Title:   CEO, President
                                        ----------------------------------------

                                     ISOLYSER - MSI, INC., formerly known as
                                     MEDSURG INDUSTRIES, INC., as Guarantor

                                     By:  /s/ Dan R. Lee
                                        ----------------------------------------
                                     Name:    Dan R. Lee
                                        ----------------------------------------
                                     Title:   CEO, President
                                        ----------------------------------------

                                     JPMORGAN CHASE BANK, formerly known as
                                     THE CHASE MANHATTAN BANK, as Agent and
                                     as Lender

                                     By:  /s/ Donna M. DiForio
                                        ----------------------------------------
                                     Name:    Donna M. DiForio
                                        ----------------------------------------
                                     Title:   Vice President
                                        ----------------------------------------

                                       4

1614459v1

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