IMAGE INNOVATIONS HOLDINGS INC
LOAN AGREEMENT DATED SEPTEMBER 30, 2004
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>exhibit10-1.htm
<DESCRIPTION>LOAN AGREEMENT DATED SEPTEMBER 30, 2004
<TEXT>
<!DOCTYPE HTML PUBLIC "exhibit10-1">


<HTML>
<HEAD>
   <TITLE>Filed by Automated Filing Services Inc. (604) 609-0244 - Image Innovations Holdings Inc. -  Exhibit 10.1</TITLE>
   <META name="HandheldFriendly" content="true">
</HEAD>

<BODY bgcolor="#FFFFFF" style="font-size: 10pt;">
<A name="page_1"></A>
<hr noshade align="center" width="100%" size=3 color="black">
<P align="center"> <B>LOAN AGREEMENT</B></P>
<P align="justify"> THIS AGREEMENT dated as of September 30, 2004</P>
<P align="justify"> BETWEEN: </P>
<blockquote>
  <blockquote>
    <p align="justify"> <B>IMAGE INNOVATIONS HOLDINGS INC.</B>, a Nevada corporation
      having an office at 1109 - 100 Park Royal South, West Vancouver, British
      Columbia, V7T 1A2</p>
    <p align="justify"> (the "Borrower")</p>
  </blockquote>
</blockquote>
<P align="justify"> AND:</P>
<blockquote>
  <blockquote>
    <p align="justify"> <B>H.E. CAPITAL S.A.</B>, a corporation having an office
      at Casa del Sol, MJ19 Paseo Marino, Perla Marina, Sosua, Dominican Republic</p>
    <p align="justify"> (the "Lender")</p>
  </blockquote>
</blockquote>
<P align="justify"> WITNESSES THAT WHEREAS the Borrower has requested and the
  Lender has agreed to provide the Borrower with a secured non-revolving loan
  up to the aggregate principal amount of $5,000,000 (United States funds) for
  general working capital purposes on the terms and conditions set forth herein;</P>
<P align="justify"> THEREFORE, in consideration of the premises and the mutual
  covenants and agreements hereinafter set forth, the parties hereto covenant
  and agree each with the other as follows:</P>
<P align="justify"> 1.0&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B><U>INTERPRETATION</U></B></P>
<P align="justify"> 1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Definitions</U></P>
<div style="margin-left:5%">
  <p align="justify">In this Agreement, unless there is something in the subject
    matter or context inconsistent therewith: </p>
  <p align="justify"> "<u>Agreement</u>" means this agreement as amended and in
    effect from time to time;</p>
  <p align="justify"> "<u>Date of Advance</u>" means September 30, 2004, whether
    that date is before or after the date of execution of this Agreement or the
    date on which the Loan proceeds are actually advanced to the Borrower;</p>
  <p align="justify"> "<u>Event of Default</u>" has the meaning ascribed thereto
    in Clause 8.1;</p>
  <p align="justify"> "<u>General Assignment Agreement</u>" means an agreement
    in form satisfactory to the Lender pursuant to which the Borrower assigns
    to the Lender all accounts receivable of the Borrower, including insurance
    proceeds;</p>
  <p align="justify"> "<u>Interest Rate</u>" means nine percent (9%) per annum;</p>
  <p align="justify"> "<u>Lender Priority Agreements</u>" means one or more priority
    agreements in form satisfactory to the Lender evidencing the priority of the
    security interests contained in or created by the Security Documents over
    any and all other security interests in the property, assets and undertaking
    of the Borrower;</p>
  <p align="justify"> "<u>Loan</u>" means the secured non-revolving loan in the
    principal amount of $5,000,000 (United States funds) (or such greater amount
    as may be agreed in writing by the Lender from time to time) to be </p>
</div>
<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">


<A name="page_2"></A>
<div style="margin-left:5%">
  <p align="justify"> made by the Lender to the Borrower pursuant to this Agreement;</p>
  <p align="justify"> "<u>Person</u>" includes a corporation, an individual, a
    partnership, a joint venture, a trust, an unincorporated organization, and
    a government or any department or agency thereof;</p>
  <p align="justify"> "<u>Permitted Encumbrances</u>" means any security existing
    at the date of this Agreement and registered against the assets of the Borrower;</p>
  <p align="justify"> "<u>Postponement Agreements</u>" means postponement agreements
    in forms satisfactory to the Lender pursuant to which the Borrower and each
    director and officer of the Borrower postpones the payment of any indebtedness
    of the Borrower to any of them to the payment by the Borrower of its indebtedness
    to the Lender;</p>
  <p align="justify"> "<u>Promissory Note</u>" means a promissory note in form
    satisfactory to the Lender evidencing each advance in respect of the Loan,
    to be issued by the Borrower in favor of the Lender;</p>
  <p align="justify"> "<u>Security Agreement</u>" means one or more general security
    agreements in forms satisfactory to the Lender, to be made by the Borrower
    in favor of the Lender as security for all present and future indebtedness
    of the Borrower to the Lender and creating a general security interest in
    all of the Borrower's present and after-acquired personal property, as amended
    and in effect from time to time; </p>
  <p align="justify"> "<u>Security Documents</u>" means, collectively, the Security
    Agreement, the Promissory Note, the General Assignment Agreement, all Lender
    Priority Agreements, all Postponement Agreements, and such other documents
    and instruments as may be requested by the Lender from time to time to better
    secure payment of the Loan and accrued interest thereon.</div>
<P> 1.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Governing Law</U></P>
<P align="justify"> This Agreement shall be governed by and be construed in accordance
  with the laws of the Province of British Columbia and Canadian federal laws
  applicable in the Province of British Columbia, and notwithstanding the jurisdictions
  of incorporation of the Borrower and the Lender, the parties hereto irrevocably
  attorn to the jurisdiction of the courts of the Province of British Columbia.</P>
<P align="justify"> 1.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Severability</U></P>
<P align="justify"> If any covenant, obligation or agreement contained herein
  or the application thereof to any person or circumstance shall, to any extent,
  be invalid or unenforceable, the remainder or this Agreement or the application
  of such covenant, obligation or agreement to such person or circumstance other
  than those to which it is held invalid or unenforceable, shall not be affected
  thereby and each covenant, obligation and agreement contained herein shall be
  separately valid and enforceable to the fullest extent permitted by law.</P>
<P align="justify"> 1.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Gender</U></P>
<P align="justify"> Wherever the singular or masculine or neuter is used throughout
  this Agreement the same shall be construed as meaning the plural or feminine
  or body corporate when the context or the parties hereto may require.</P>
<P align="justify"> 1.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Currency</U></P>
<P align="justify"> Any amounts expressed in United States funds in this Agreement
  must, together with interest accrued thereon, be repaid in United States funds.</P>
<P> 1.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Schedules</U></P>
<P align="center"> 2</P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">


<A name="page_3"></A>

<P>
Each Schedule to this Agreement forms part hereof.</P>
<P> 2.0&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B><U>LOAN</U></B></P>
<P> 2.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Amount and Purpose of Loan</U></P>
<P>
Subject to the terms and conditions hereof, the Lender will lend to the Borrower the principal amount of up to $5,000,000 (United States funds) for use by or on behalf of the Borrower for general working capital purposes approved by the Lender.</P>
<P> 2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Availability of the Loan</U></P>
<P>
The Loan proceeds will be advanced by the Lender to the Borrower in whole or in part from time to time as may reasonably be required by the Borrower for its legitimate business purposes, subject to execution and delivery of such of the Security
Documents as the Lender may require, and subject to satisfaction of all conditions precedent set forth herein.</P>
<P> 2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Principal</U></P>
<P>
The principal balance of the Loan, together with all unpaid interest thereon, shall become due and payable and shall be paid in full forthwith upon demand made therefor by the Lender.</P>
<P> 2.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Interest</U></P>
<P>
The Borrower will pay interest on the amount of the Loan outstanding from time to time both before and after each of demand, default and judgement, in accordance with the following provisions:</P>
<TABLE style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
  <TR>
    <TD nowrap valign=top width=5%>&nbsp;</TD>
    <TD nowrap valign=top width=5%>(a) </TD>
    <TD> <div align="justify">the Loan will bear interest at the Interest Rate;
      </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">interest will accrue from day to day on the basis
        of a year of 365 or 366 days, as the case may be; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (c)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">interest will be payable when demand is made for
        payment of the Loan; and </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (d)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">if the Borrower fails to make any payment of interest
        when due, the Borrower will pay compound interest thereon computed on
        the last banking day of each month until paid. </div></TD>
  </TR>
</TABLE>
<P> 2.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Place of Payment</U></P>
<P align="justify"> All payments to be made by the Borrower to the Lender hereunder
  will be made to the Lender at its address first set forth above or at such other
  place as the Lender may advise the Borrower from time to time in writing.</P>
<P align="justify"> 2.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Prepayment</U></P>
<P align="justify"> The Borrower shall have the right to prepay the principal
  balance of the Loan in whole or in part, together with any and all other monies
  due hereunder, without penalty or bonus at any time.</P>
<P> 2.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Acceleration</U></P>
<P align="center"> 3</P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">


<A name="page_4"></A>

<P align="justify"> At the sole option of the Lender, the principal balance of
  the Loan together with all accrued and unpaid interest thereon and all other
  monies due hereunder shall become immediately due and payable upon the occurrence
  of an Event of Default.</P>
<P align="justify"> 3.0&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B><U>LIABILITY</U></B></P>
<P align="justify"> 3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Lender May Grant Extensions</U></P>
<P align="justify"> No obligation, liability or undertaking whatsoever of the
  Borrower, and no security whatsoever given by the Borrower hereunder or under
  any agreement, document or instrument delivered in connection with the Loan,
  shall be limited or affected by the granting of time, renewals, extensions,
  releases or discharges by the Lender to the Borrower.</P>
<P align="justify"> 3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Exhaustion of Remedies</U></P>
<P align="justify"> The Lender shall not be bound to exhaust recourse against
  the Borrower prior to being entitled to payment from the Borrower.</P>
<P align="justify"> 3.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Prohibition</U></P>
<P align="justify"> Until all sums owing to the Lender by the Borrower under this
  Agreement have been paid in full, the Borrower shall not, without the prior
  written consent of the Lender, be entitled to, or assert or claim to have the
  benefit of, any right of set-off or counterclaim against the Lender.</P>
<P align="justify"> 4.0&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B><U>COVENANTS OF THE BORROWER</U></B></P>
<P align="justify"> 4.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>General Covenants</U></P>
<P align="justify"> The Borrower hereby covenants and agrees with the Lender that
  so long as the Loan or any part thereof remains outstanding, the Borrower will:</P>
<TABLE style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
  <TR>
    <TD nowrap valign=top width=5%>&nbsp;</TD>
    <TD nowrap valign=top width=5%>(a) </TD>
    <TD> <div align="justify">duly and punctually pay or cause to be paid to the
        Lender all amounts required to be paid to it pursuant to this Agreement
        on the day, at the place, in the monies and in the manner set forth herein;
      </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">duly observe and perform each and all of its covenants
        and agreements as set forth in this Agreement and in the Security Documents;
      </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (c)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">use the proceeds of the Loan only for the purposes
        specified in clause 2.1; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (d)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">at all times maintain its corporate existence and
        carry on and conduct its businesses in a proper and efficient manner and
        will keep or caused to be kept proper books of account and will submit
        to the Lender within 140 days after the close of each fiscal year annual
        audited financial statements for such year and within 60 days of the completion
        of each quarter fiscal year unaudited financial statements in respect
        of such quarter; and </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (e)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">provide the Lender, within five (5) days of any
        written request from the Lender, with a full and complete list setting
        out all of the jurisdictions in which the Borrower carries on business
        and the jurisdictions in which "Collateral", as defined in the Security
        Agreement, is located. </div></TD>
  </TR>
</TABLE>
<P> 4.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Negative Covenants</U></P>
<P align="center"> 4</P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">


<A name="page_5"></A>

<P align="justify"> The Borrower covenants and agrees that so long as the Loan
  or any part thereof remains outstanding, the Borrower will not, without the
  prior written consent of the Lender:</P>
<TABLE style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
  <TR>
    <TD nowrap valign=top width=5%>&nbsp;</TD>
    <TD nowrap valign=top width=5%>(a) </TD>
    <TD> <div align="justify">declare or pay or set aside for payment any dividend
        or otherwise make distribution with respect to its shares, or voluntarily
        purchase, redeem, acquire or retire any shares of any class; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">lend money to or invest money in any person, whether
        by way of loan, acquisition of shares, acquisition of debt obligations
        or in any other manner whatsoever except in the ordinary course of business;
      </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (c)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">guarantee or otherwise become surety for or upon
        the obligations of others except in the ordinary course of business; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (d)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">commence or in anyway become involved in, whether
        directly or indirectly or in conjunction with any other person, any new
        businesses not reasonably related to the current business of the Borrower.
      </div></TD>
  </TR>
</TABLE>
<P> 5.0&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B><U>REPRESENTATIONS AND WARRANTIES</U></B></P>
<P> 5.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Borrower's Representations and Warranties</U></P>
<P align="justify"> The Borrower represents and warrants to the Lender as follows,
  which representations and warranties shall survive the execution and delivery
  of this Agreement and all instruments and agreements delivered pursuant hereto,
  and the advance of the Loan:</P>
<TABLE style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
  <TR>
    <TD nowrap valign=top width=5%>&nbsp;</TD>
    <TD nowrap valign=top width=5%>(a) </TD>
    <TD> <div align="justify">the Borrower has full power, authority, capacity
        and legal right to enter into and to perform this Agreement and all instruments
        and agreements delivered pursuant hereto; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">the execution, delivery and performance of this
        Agreement and all instruments and agreements delivered pursuant hereto,
        have been duly authorized by all necessary corporate action on the part
        of the Borrower and will not violate any provision of the Borrower's constating
        documents or any agreement to which it is a party, and this Agreement
        and those Security Documents to which the Borrower is party constitute
        legal, valid and binding obligations of the Borrower enforceable against
        the Borrower in accordance with their respective terms except as limited
        by applicable bankruptcy, insolvency, reorganization or other laws of
        general application relating to or affecting the enforcement of creditors'
        rights and rules or laws concerning equitable remedies. </div></TD>
  </TR>
</TABLE>
<P> 5.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Lender's Representations and Warranties</U></P>
<P align="justify"> The Lender represents and warrants to the Borrower as follows,
  which representations and warranties shall survive the execution and delivery
  of this Agreement and all instruments and agreements delivered pursuant hereto,
  and the advance of the Loan:</P>
<TABLE style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
  <TR>
    <TD nowrap valign=top width=5%>&nbsp;</TD>
    <TD nowrap valign=top width=5%>(a) </TD>
    <TD> <div align="justify">the Lender has full power, authority, capacity and
        legal right to enter into and to perform its obligations under this Agreement
        and all instruments and agreements delivered pursuant hereto; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">the execution, delivery and performance of this
        Agreement and all instruments and agreements delivered pursuant hereto,
        have been duly authorized by all necessary corporate action on the part
        of the Lender and will not violate any provision of the Lender's constating
        documents or any agreement to which it is party. </div></TD>
  </TR>
</TABLE>
<p align="center">5</p>
<hr noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">
<a name="page_6"></a>
<P>6.0&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B><U>SECURITY</U></B></P>
<P> 6.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Delivery</U></P>
<P>
As security for, <U>inter</U> <U>alia,</U> repayment of the Loan and payment of interest thereon, the Borrower shall deliver or cause to be delivered to the Lender, duly executed by the Borrower:</P>
<TABLE style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
  <TR>
    <TD nowrap valign=top width=5%>&nbsp;</TD>
    <TD nowrap valign=top width=5%>(a) </TD>
    <TD> <div align="justify">a Promissory Note; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">a Security Agreement; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (c)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">such Lender Priority Agreements as may be required
        from time to time by the Lender; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (d)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">such Postponement Agreements as may be required
        from time to time by the Lender; and </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (e)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">such further and other documents and instruments
        as the Lender may require from time to time to better secure the payment
        of the Loan, provided, however, that any such documents and instruments
        shall be consistent with the provisions of this Agreement. </div></TD>
  </TR>
</TABLE>
<P align="justify"> 6.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Lender may register
  any or all Security Documents at any time and in any jurisdiction, against any
  or all assets of the Borrower, without the consent of or notice to the Borrower.</P>
<P align="justify"> 7.0&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B><U>CONDITIONS</U></B></P>
<P align="justify"> <U>Conditions Precedent to Obligations of Lender</U></P>
<P align="justify"> 7.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The obligation of the Lender
  to advance the Loan or any part thereof is subject to the fulfillment of each
  of the following conditions precedent:</P>
<TABLE style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
  <TR>
    <TD nowrap valign=top width=5%>(a) </TD>
    <TD> <div align="justify">the representations and warranties contained herein
        and in any related agreements made in favor of the Lender shall be true
        and correct on and as at the Date of Advance; </div></TD>
  </TR>
  <TR>
    <TD colspan=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">the Borrower shall have issued, executed and delivered
        to the Lender, or caused to be issued, executed and delivered to the Lender,
        each of the Security Documents and such other documents and instruments
        as the Lender may reasonably require; </div></TD>
  </TR>
  <TR>
    <TD colspan=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top> (c)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">the Security Agreement and any other registerable
        Security Documents, or notice thereof, shall have been registered or recorded
        in all offices of public record in British Columbia and elsewhere necessary
        to maintain the validity and priority thereof subject to no prior liens,
        encumbrances or security interests save and except for Permitted Encumbrances
        as defined therein, provided that the Lender undertakes to file the appropriate
        UCC-1 Forms in the states which such filing is required, including the
        States of Nevada and Delaware. Until such time as the UCC-1 Forms are
        filed, the Lender understands that the security interests created have
        not been perfected; </div></TD>
  </TR>
  <TR>
    <TD colspan=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top> (d)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">the Lender shall have received certified copies
        of such resolutions of the directors of the Borrower authorizing the transactions
        contemplated herein as the Lender shall reasonably request; and </div></TD>
  </TR>
  <TR>
    <TD colspan=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top> (e)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">the Borrower and the Lender shall have obtained
        any and all consents, approvals or authorizations and made such filings
        as may be required in connection with the valid issue, execution, delivery
        and performance of this Agreement and the Security Documents. </div></TD>
  </TR>
</TABLE>
<P align="justify"> The foregoing conditions precedent are for the sole benefit
  of the Lender and may be waived in full or in part by the Lender at any time.</P>
<P align="center"> 6</P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">
<A name="page_7"></A>
<P> 8.0&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B><U>DEFAULT</U></B></P>
<P> 8.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Events of Default</U></P>
<P align="justify"> The Borrower shall be in default under this Agreement, unless
  waived in writing by the Lender, in any of the following circumstances (each
  of which is herein called an "Event of Default"):</P>
<TABLE style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
  <TR>
    <TD nowrap valign=top width=5%>&nbsp;</TD>
    <TD nowrap valign=top width=5%>(a) </TD>
    <TD> <div align="justify">if the Borrower fails to pay the Loan or any interest
        thereon forthwith upon demand for payment being made; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">if the Borrower defaults in the performance or observance
        of any other term, condition or covenant contained herein or in the Security
        Documents or in any other agreement between the Lender and the Borrower
        and such default is not remedied within thirty (30) days' notice from
        the Lender to the Borrower specifying such default; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (c)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">if any representation, warranty or statement made
        in this Agreement, the Security Documents or any certificate or other
        document delivered to the Lender pursuant to this Agreement is untrue
        or incorrect in any material respect; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (d)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">the Borrower declares itself to be insolvent or
        admits in writing its inability to pay its debts generally as they become
        due, or makes an assignment for the benefit of its creditors, is declared
        bankrupt, makes or files a notice of intention to make a proposal or otherwise
        takes advantage of provisions for relief under the <U>Bankruptcy and Insolvency
        Act</U>, the <U>Companies Creditors' Arrangement Act </U>or similar legislation
        in any jurisdiction (including "Chapter 11" in the United States), or
        makes an authorized assignment; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (e)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">a receiver, receiver and manager or receiver-manager
        of all or any part of the assets of the Borrower is appointed; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (f)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">an order is made or an effective resolution is passed
        for winding-up the Borrower; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (g)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">the Borrower proposes to dispose of all or substantially
        all of its assets and undertaking or ceases or threatens to cease to carry
        on all or a substantial part of its business; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (h)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">an order of execution in excess of $10,000 against
        the assets of the Borrower or any part thereof remains unsatisfied for
        a period of 10 days; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (i)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">without the prior written consent of the Lender,
        the Borrower creates or permits to exist any security interest in, charge,
        encumbrance, lien on or claim against any assets of the Borrower which
        ranks or could in any event rank in priority to or pari passu with any
        of the security interests created by the Security Documents, save and
        except for Permitted Encumbrances (as defined therein); </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (j)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">if, without the prior written consent of the Lender,
        there is any change or modification to any of the material terms of the
        Permitted Encumbrances other than a reduction of the obligations of the
        Borrower in respect thereof; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (k)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">the holder of any other security interest, charge,
        encumbrance, lien or claim against any of the assets of the Borrower does
        anything to enforce or realize on such security interest, charge, encumbrance,
        lien or claim; </div></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD valign=top nowrap>&nbsp;</TD>
    <TD height="31" valign=top nowrap> (l)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">the Borrower enters into an amalgamation, merger,
        share exchange or other arrangement or compromise with any other person,
        or issues any securities other than common shares without par value; or
      </div></TD>
  </TR>
</TABLE>
<P align="center"> 7</P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">
<A name="page_8"></A> <br>
<TABLE style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
  <TR>
    <TD width="5%" valign=top nowrap>&nbsp;</TD>
    <TD width="5%" valign=top nowrap> (m)&nbsp; &nbsp; &nbsp; </TD>
    <TD> <div align="justify">the Borrower fails to deliver to the Lender, forthwith
        after the advance of Loan proceeds, any Security Documents not delivered
        prior to the advance of the Loan proceeds, it being hereby acknowledged
        by the Borrower that if the Loan proceeds are advanced prior to execution,
        delivery and registration of all Security Documents, the Borrower will
        have a continuing obligation to use its own best efforts to have such
        Security Documents executed, delivered and, where appropriate, registered.
      </div></TD>
  </TR>
</TABLE>
<P> 8.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Waiver not to Affect Subsequent Breach</U></P>
<P align="justify"> The Lender may waive non-performance, default or any breach
  by the Borrower hereunder. No waiver shall extend to a subsequent non-performance,
  breach or default, whether or not the same as or similar to the non-performance,
  breach or default waived. No act or omission of the Lender shall extend to or
  be taken in any manner whatsoever to affect any subsequent breach or default
  of the Borrower or the rights of the Lender resulting therefrom. Any such waiver
  must be in writing and signed by the Lender to be effective. Notwithstanding
  any other provision of this Agreement, it is acknowledged and agreed by the
  Borrower that if Lender advances Loan proceeds prior to satisfaction of each
  of the conditions precedent set forth in clause 7.1, such conditions will not
  be or be deemed to have been waived, but will become covenants to be performed
  by the Borrower forthwith following the advance of Loan proceeds without further
  notice from the Lender or action on the part of the Lender, and any failure
  on the part of the Borrower to perform such obligations will be deemed to be
  an Event of Default for the purposes of clause 8.1(m) .</P>
<P align="justify"> 9.0&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B>GENERAL</B></P>
<P align="justify"> 9.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Proof of Indebtedness</U></P>
<P align="justify"> The records of the Lender as to the amount outstanding hereunder,
  or as to payment of any money payable hereunder or any part thereof being in
  default or of any demand for payment having been made shall be prima facie proof
  of such fact.</P>
<P align="justify"> 9.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Waiver or Modification</U></P>
<P align="justify"> No failure or delay on the part of the Lender in exercise
  of any power or rights hereunder shall operate as a waiver thereof, nor shall
  any single or partial exercise of such right or power preclude any other right
  or power hereunder. No amendment, modification or waiver of any condition of
  this Agreement or consent to any departure by the Borrower therefrom shall in
  any event be effective unless the same shall be in writing signed by the Lender
  and nothing contained in this Agreement may be varied, modified, abrogated,
  altered or compromised except by written agreement of all parties.</P>
<P align="justify"> 9.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Time of Essence</U></P>
<P align="justify"> Time shall be of the essence hereof.</P>
<P align="justify"> 9.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Expenses</U></P>
<P align="justify"> The Borrower shall be liable to pay and will pay, forthwith
  upon a request for same, all costs, charges and expenses (including legal fees
  and disbursements on a solicitor and own client basis) paid or incurred at any
  time or from time to time by the Lender for or in respect of the negotiation
  of the terms and conditions of the Loan, the preparation of this Agreement and
  the Security Documents, the carrying out of any and all actions contemplated
  by this Agreement and the Security Documents, and for and in respect of any
  and all acts, actions and proceedings (including legal proceedings) for the
  exercise, enforcement or preservation of </P>
<P align="center"> 8</P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">


<A name="page_9"></A>

<P align="justify"> any of its rights, remedies or recourse hereunder and under
  the Security Documents or the payment or other satisfaction of the Loan.</P>
<P align="justify"> 9.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Assignment</U></P>
<P align="justify"> The Borrower shall have no right to assign or transfer its
  rights hereunder without the prior written consent of the Lender. The Lender
  may assign or transfer any or all of its rights or interest hereunder or under
  the Security Agreements without the prior written consent of the Borrower, provided
  that no such assignment shall be effective against the Borrower until the Lender
  gives notice of such Assignment to the Borrower.</P>
<P align="justify"> 9.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Appropriation of Monies
  Received</U></P>
<P align="justify"> The Lender may upon the occurrence and during the continuance
  of an Event of Default appropriate any monies received by it from the Borrower
  or from any security held by the Lender in or toward payment of such of the
  obligations of the Borrower as the Lender may see fit.</P>
<P align="justify"> 9.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Non-Merger</U></P>
<P align="justify"> The taking of any action or dealing whatsoever by the Lender
  in respect of the Borrower or any security held by the Lender shall not operate
  as a merger of any of the obligations of the Borrower to the Lender or in any
  way suspend payment or affect or prejudice the rights, remedies and powers,
  legal or equitable, which the Lender may have in connection with such obligations,
  and the surrender, cancellation dealing with the said security or any part thereof
  shall not release or affect the obligations of the Borrower or prejudice any
  other part of the said security.</P>
<P align="justify"> 9.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Notices</U></P>
<P align="justify"> Any demand, request, notice or consent to be given under this
  Agreement shall be in writing and shall be given by delivering or telecopying
  the same addressed to the addresses of the parties first set out above or such
  other addresses as may be given in writing by one party to the other. Any such
  demand, request, notice or consent sent as aforesaid shall be deemed to have
  been received by the party to whom it is addressed upon delivery, if delivered,
  and when transmitted, if sent by telecopier or other like medium of transmission
  and actually received.</P>
<P align="justify"> 9.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Further Assurances</U></P>
<P align="justify"> Each of the parties hereto hereby covenants and agrees to
  execute such further and other documents and instruments and to do such further
  and other things as may be necessary to implement and carry out the intent of
  this Agreement.</P>
<P align="justify"> 9.10&nbsp;&nbsp;&nbsp;&nbsp; <U>Entire Agreement</U></P>
<P align="justify"> The provisions herein contained constitute the entire agreement
  between the parties and supersede all previous communications, representations
  and agreements whether verbal or written between the parties with respect to
  the subject matter hereof.</P>
<P align="center"> 9</P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">


<A name="page_10"></A>

<P>
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day first set forth above. </P>
<TABLE width="100%" border="2" cellpadding="3" cellspacing="0" bordercolor="#000000" style="font-size:10pt;border-color:black;border-collapse:collapse;">
  <TR valign="top">
    <TD width=50% align=left> <B>IMAGE INNOVATIONS HOLDINGS INC.</B>&nbsp; <br>
      &nbsp; <br>
      <u>\s\ Derick Sinclair&nbsp; </u><br> Derick Sinclair&nbsp; <br> Authorized Signatory&nbsp;
    </TD>
    <TD width=50% align=left><B>H.E. CAPITAL S.A.</B>&nbsp; <br>
      &nbsp; <br>
      <u>\s\ Richard Smith&nbsp; </u><br>
      Richard Smith&nbsp; <br>
      Authorized Signatory&nbsp; </TD>
  </TR>
</TABLE>
<BR>
<P align="center">
10</P>

<hr noshade align="center" width="100%" size=5 color="Black">
</BODY>

</HTML>


</TEXT>
</DOCUMENT>
