<PAGE>
                                                                   EXHIBIT 10.27

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE
OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

                            PACIFIC BIOMETRICS, INC.

                          Common Stock Purchase Warrant

DATE OF ISSUANCE:  MAY 28, 2004                 NUMBER OF SHARES: 181,818 SHARES
                                                         (subject to adjustment)

      PACIFIC BIOMETRICS, INC., a Delaware corporation (the "COMPANY"), for
value received, hereby certifies that SOURCE CAPITAL GROUP, INC., or its
registered assigns (the "HOLDER"), is entitled, subject to the terms set forth
below, to purchase from the Company up to 181,818 shares of Company common
stock, $.01 par value per share (the "COMMON STOCK"), at an exercise price of
$1.25 per share on the terms and conditions set forth herein. The number of
shares of Common Stock issuable upon exercise of this Warrant, and the exercise
price per share, each as adjusted from time to time pursuant to the provisions
of this Warrant, are hereinafter referred to as the "WARRANT STOCK" and the
"EXERCISE PRICE," respectively. This Warrant is granted to Holder pursuant to
the terms of that certain engagement agreement between the Company and Holder in
connection with the Company's debt financing with Laurus Master Funds, Ltd., in
which the Company issued a convertible promissory note, dated May 28, 2004, to
Laurus in the aggregate principal amount of $2.5 million (the "NOTE").

      1. VESTING AND EXERCISABILITY OF WARRANT. This Warrant shall be
exercisable only as and to the extent that principal and accrued interest under
the Note is converted into shares of Common Stock. From time to time, as
principal and accrued interest under the Note is converted into Common Stock,
this Warrant shall vest and be exercisable into a cumulative number of shares
(less any number of shares previously exercised hereunder) equal to the quotient
obtained by dividing (a) 8% of the dollar amount of any principal and interest
under the Note converted into Common Stock, by (b) $1.10. Only whole shares
shall be issuable hereunder; accordingly, in the event any such calculation
results in a fraction, this Warrant shall be exercisable only for such whole
number of shares. By way of example, if $100,000.00 of principal and interest
under the Note is converted into Common Stock, the foregoing calculation would
result in 7,547.17, and accordingly this Warrant would be exercisable only for
7,547 shares. For any amount of principal and interest under the Note that is
paid or settled in cash or otherwise, and that is not converted into Common
Stock, no shares underlying this Warrant shall vest and become exercisable.
There are no assurances as to the amount, if any, of principal and interest
under the Note that will be converted into Common Stock, or as to the number of
shares hereunder that will vest and become exercisable. In no event shall the
maximum number of shares exercisable under this Warrant exceed 181,818 shares
(subject to adjustment pursuant to Section 6 below).

      2. MANNER OF EXERCISE; NET EXERCISE.

            (a) This Warrant may be exercised in whole or in part by delivering
to the Company at its principal place of business (i) this Warrant, (ii) the
form of Election to Purchase attached hereto as EXHIBIT A duly completed and
executed by Holder, and (iii) cash, wire transfer, or bank check payable to the
Company, in the amount of the Exercise Price multiplied by the number of shares
for which this

<PAGE>

Warrant is being exercised (the "PURCHASE PRICE"). Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the day on which this Warrant shall have been surrendered to the Company as
provided herein or at such later date as may be specified in the executed form
of Election to Purchase.

            (b) Notwithstanding the cash payment provisions set forth above,
Holder may elect to exercise this Warrant by converting this Warrant into shares
of Warrant Stock by delivering this Warrant and the Notice of Net Issuance
Exercise attached hereto as EXHIBIT B duly completed and executed by the Holder
to the Company at its principal place of business, in which case the Company
shall issue to the Holder the number of shares of Warrant Stock determined as
follows:

                                 X = (A - B) x C
                                     -----------
                                        A

Where:      X  =   the number of shares of Warrant Stock issuable upon net
                   issuance exercise pursuant to the provisions of this
                   Section 2(b).

            A  =   the Fair Market Value (as defined below) of one share of
                   Warrant Stock on the date of net issuance exercise.

            B  =   the Exercise Price for one share of Warrant Stock under
                   this Warrant.

            C  =   the number of shares of Warrant Stock as to which this
                   Warrant is exercised.

      For purposes of the above calculation, the Fair Market Value of a share of
Warrant Stock shall be determined in good faith by the Board of Directors of the
Company; provided, however, that if a public market for the Warrant Stock exists
at the time of such exercise, then such Fair Market Value shall be deemed to be
equal to(i) the average of the closing bid and asked prices of the Warrant Stock
as quoted in the Over-the-Counter Market Summary or (ii) the last reported sale
price of the Warrant Stock or the closing price quoted on the Nasdaq National or
SmallCap Market System or on any exchange on which the Warrant Stock is then
listed, whichever is applicable, for the five trading days prior to the date of
exercise of this Warrant.

      If the foregoing calculation results in a negative number, then no shares
of Warrant Stock shall be issued upon net issuance exercise pursuant to this
Section 2(b). Upon net issuance exercise in accordance with this Section 2(b),
the Holder shall be entitled to receive from the Company a stock certificate in
proper form representing the number of shares of Warrant Stock determined in
accordance with the foregoing. Upon any such net issuance exercise, the number
of shares of Warrant Stock purchasable upon subsequent exercise of this Warrant
shall be reduced by the number of shares of Warrant Stock with respect to which
this Warrant was exercised in the net issuance exercise.

      3. DELIVERY OF STOCK CERTIFICATE. As soon as practicable after the
exercise of this Warrant, in full or in part, and in any event within 10 days
thereafter, the Company at its expense will cause to be issued in the name of
and deliver to the Holder (a) a certificate or certificates for the number of
fully paid and nonassessable shares of Warrant Stock to which Holder shall be
entitled upon such exercise and (b) if applicable, a new Warrant of like tenor
to purchase up to that number of shares of Warrant Stock, if any, not previously
exercised by Holder. Holder shall for all purposes be deemed to have become the
holder of record of such shares of Warrant Stock on the date on which this
Warrant was properly exercised in accordance with Section 2, irrespective of the
date of delivery of the certificate or certificates representing the Warrant
Stock; provided that, if the date of such exercise is a date when the stock
transfer books of

<PAGE>

the Company are closed, such person shall be deemed to have become the holder of
record of such shares of Warrant Stock at the close of business on the next
succeeding date on which the stock transfer books are open.

      4. RESERVATION OF WARRANT STOCK. The Company covenants and agrees that the
Company will at all times have authorized and reserved a sufficient number of
shares of Common Stock to provide for the exercise of the rights represented by
this Warrant.

      5. TERMINATION. To the extent not earlier exercised, the Warrant evidenced
hereby shall be void and of no effect and all rights hereunder shall cease upon
the earlier of (a) 5:00 p.m. Pacific Time on May 28, 2009, or (b) the closing of
any merger, consolidation or other reorganization of the Company with or into
any other corporation or other business entity, or the sale of all or
substantially all of its assets, or the liquidation or dissolution of the
Company (each, a "TRANSACTION"). The Company shall provide Holder with written
notice not less than 10 days prior to the closing of any proposed Transaction.
All restrictions set forth herein on the shares of Warrant Stock issued upon
exercise of any rights hereunder shall survive such exercise and expiration of
the rights granted hereunder.

      6. ADJUSTMENTS TO WARRANT. In case the Company shall issue any shares of
Common Stock as a stock dividend or subdivide the number of outstanding shares
of Common Stock into a greater number of shares, then, in either of such cases,
the Exercise Price in effect at the time of such action shall be proportionately
reduced and the number of shares of Warrant Stock at that time purchasable
pursuant to this Warrant shall be proportionately increased; and, conversely, in
the event the Company shall contract the number of outstanding shares of Common
Stock by combining such shares into a smaller number of shares, then, in such
case, the Exercise Price in effect at the time of such action shall be
proportionately increased and the number of shares of Warrant Stock at that time
purchasable pursuant to this Warrant shall be proportionately decreased. Any
calculations of adjustments shall be made to the nearest cent or to the nearest
one whole share, as the case may be.

      7. RESTRICTIONS ON TRANSFER. Neither this Warrant nor the Warrant Stock
have been registered under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), or any applicable state law, and no interest therein may be
sold, distributed, assigned, offered, pledged or otherwise transferred unless
(a) there is an effective registration statement under such Act and applicable
state securities laws covering any such transaction involving said securities,
(b) the Company receives an opinion of legal counsel for Holder (concurred in by
legal counsel for the Company) stating that such transaction is exempt from
registration, or (c) the Company otherwise satisfies itself that such
transaction is exempt from registration.

      8. LEGEND. A legend setting forth or referring to the restrictions stated
in Section 7 shall be placed on this Warrant, any replacement hereof and any
certificates representing Warrant Stock, and a stop transfer restriction or
order shall be placed on the books of the Company and with any transfer agents
against this Warrant and shares of Warrant Stock until they may be legally sold
or otherwise transferred.

      9. FRACTIONAL SHARES. No fractional shares shall be issued upon the
exercise of the Warrant. In lieu of fractional shares, the Company shall round
the number of shares to be issued upon exercise of this Warrant to the nearest
whole share.

      10. HOLDER AS OWNER. Unless this Warrant is transferred or assigned, the
Company may deem and treat the Holder at all times as the absolute owner of the
Warrant evidenced hereby for all purposes regardless of any notice to the
contrary.

<PAGE>

      11. NO RIGHTS AS SHAREHOLDER. This Warrant shall not entitle Holder to any
voting rights or any other rights as a shareholder of the Company, or to any
other rights whatsoever except the rights stated herein; and no dividend or
interest shall be payable or shall accrue in respect of this Warrant or the
shares purchasable hereunder unless, and until, and except to the extent that,
this Warrant shall be exercised.

      12. PIGGYBACK REGISTRATION RIGHTS. Holder shall be entitled to certain
piggyback registration rights with respect to the Warrant Stock as set forth on
the attached EXHIBIT C.

      13. EXCHANGE OR DESTRUCTION OF WARRANT. This Warrant is exchangeable,
without expense to Holder and upon delivery hereof to the Company, for Warrants
of different denominations entitling Holder to purchase shares of Warrant Stock
equal in total number and identical in type to the shares of Warrant Stock
covered by this Warrant. In addition, upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon receipt of an affidavit and indemnity reasonably satisfactory
to the Company, or in the case of any such mutilation upon surrender and
cancellation of such Warrant, the Company at its expense will make and deliver a
new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant.

      14. NOTICES. Unless otherwise provided, any notice, request or other
document required or permitted to be given or delivered to Holder hereof or the
Company shall be given in writing and shall be deemed effectively given (a) upon
personal delivery to the party to be notified, (b) upon confirmation of receipt
by fax by the party to be notified, or (c) upon receipt if delivered by prepaid
overnight delivery, courier service or registered or certified mail addressed,
(i) if to Holder, to the address of Holder most recently furnished in writing to
the Company and (ii) if to the Company, to the address set forth below, or in
either case at such other address as such party may designate by five days'
advance written notice to the other party given in the foregoing manner.

      15. SUCCESSORS AND ASSIGNS. The terms and provisions of this Warrant shall
be binding upon the Company and Holder and their respective successors and
assigns, subject at all times to the restrictions set forth herein.

      16. APPLICABLE LAW. The validity, interpretation and performance of this
Warrant shall be governed by the laws of the State of Washington.

      EXECUTED as of the day and year first above written.


                                       PACIFIC BIOMETRICS, INC.


                                       By: /s/ Ronald R. Helm
                                           ----------------------------------
                                           Ronald R. Helm,
                                           Chief Executive Officer

                                       Address:    220 West Harrison St.
                                                   Seattle, WA 98119



<PAGE>


                   EXHIBIT A TO COMMON STOCK PURCHASE WARRANT

                              ELECTION TO PURCHASE

Pacific Biometrics, Inc.
220 West Harrison St.
Seattle, WA 98119
Attention:  Corporate Secretary


      The undersigned hereby irrevocably elects to purchase __________ shares of
Common Stock of Pacific Biometrics, Inc., a Delaware corporation (the
"COMPANY"), issuable upon the exercise of the attached Warrant, and requests
that certificates for such shares be issued in the name of and delivered to the
undersigned at the address stated below. If said number of shares shall not be
all the shares which may be purchased pursuant to the attached Warrant, the
Company shall issue a new Warrant to the Holder evidencing the right of the
Holder to purchase the balance of such shares under terms identical to the
attached Warrant.

      The undersigned hereby agrees with and represents to the Company that such
shares of Common Stock are acquired for investment and not with a view to, or
for sale in connection with, any distribution or public offering thereof within
the meaning of the Securities Act of 1933, as amended, and that the undersigned
has no present intention of distributing or reselling such shares. The
undersigned acknowledges and agrees that the exercise of the attached Warrant
and the issuance and transfer of the Common Stock to be purchased are subject to
Sections 7 and 8 of the attached Warrant.

      Payment enclosed in the amount of:         $_________________

      Dated:  ______________, 200__

      Name of Holder of Warrant (please print):  _______________________________

      Address:                                   _______________________________
                                                 _______________________________
                                                 _______________________________

      Signature:                                 _______________________________


                   Exhibit A to Common Stock Purchase Warrant

<PAGE>


                   EXHIBIT B TO COMMON STOCK PURCHASE WARRANT

                         NOTICE OF NET ISSUANCE EXERCISE

Pacific Biometrics, Inc.
220 West Harrison St.
Seattle, WA 98119
Attention:  Corporate Secretary


      The undersigned hereby irrevocably elects to convert ______ % of the
attached Warrant into such number of shares of Common Stock of Pacific
Biometrics, Inc. (the "Company") as is determined pursuant to Section 2(b) of
the attached Warrant. The undersigned requests that certificates for such net
issuance shares be issued in the name of and delivered to the undersigned, at
the address stated below. If the Holder does not elect to convert this entire
Warrant, the Company shall issue a new Warrant to the Holder evidencing the
Holder's right to purchase the remaining portion of shares under terms identical
to the attached Warrant.

      The undersigned hereby agrees with and represents to the Company that such
shares of Common Stock are acquired for investment and not with a view to, or
for sale in connection with, any distribution or public offering thereof within
the meaning of the Securities Act of 1933, as amended, and that the undersigned
has no present intention of distributing or reselling such shares. The
undersigned acknowledges and agrees that the exercise of the attached Warrant
and the issuance and transfer of the Common Stock to be purchased are subject to
Sections 7 and 8 of the attached Warrant.

      Dated: ______________, 200__

      Name of holder of Warrant:       _______________________________
                                       (please print)

      Address:                         _______________________________
                                       _______________________________
                                       _______________________________

      Signature:                       _______________________________


                   Exhibit B to Common Stock Purchase Warrant
<PAGE>


                   EXHIBIT C TO COMMON STOCK PURCHASE WARRANT

                          PIGGYBACK REGISTRATION RIGHTS

1.    Registration Rights. Holder shall be entitled to the following
      registration rights:

      1.1 Definitions

            (a) The terms "register," "registered," and "registration" refer to
a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration or ordering of effectiveness of such
registration statement or document;

            (b) The term "Registrable Securities" means (i) the shares of Common
Stock issued on exercise of the common stock purchase warrant by the Holder, and
(ii) any other shares of Common Stock of the Company issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, the Common Stock; provided, however, that the foregoing
definitions of Registrable Securities shall exclude in all cases any Registrable
Securities sold by a person in a transaction in which his or her rights
hereunder are not assigned. Notwithstanding the foregoing, such Common Stock or
other securities shall only be treated as Registrable Securities if and so long
as they have not been (A) sold to or through a broker or dealer or underwriter
in a public distribution or a public securities transaction, or (B) sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act under Section 4(1) thereof so that all transfer restrictions,
and restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale;

            (c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities;

            (d) The term "Holder" means any person owning or having the right to
acquire Registrable Securities;

            (e) The term "SEC" means the Securities and Exchange Commission.

      1.2 Piggy Back Registration Rights. If the Company proposes to register
(including for this purpose a registration effected by the Company for
shareholders other than the Holders) any of its stock or other securities under
the Securities Act in connection with the public offering of such securities
solely for cash (other than a registration relating solely to the sale of
securities to participants in a Company stock plan or a transaction covered by
Rule 145 under the Securities Act, a registration in which the only stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered, or any registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities, as the
case may be), the Company shall, at such time, promptly give Holder written
notice of such registration. Upon the written request of Holder, as the case may
be, given within 20 days after mailing of such notice by the Company in
accordance with Section 14 of the Warrant, the Company shall, subject to the
provisions of Section 1.5, cause to be registered under the Securities Act all
of the Registrable Securities, as the case may be, that such Holder has
requested to be registered.

<PAGE>

      1.3 Obligations of the Company. Whenever required under this Section 1 to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:

            (a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and to keep such registration
statement continuously effective for a period of 120 days following its initial
effective date.

            (b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.

            (c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.

            (d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions where it has not already
done so.

            (e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.

            (f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.

            (g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.

            (h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.

            (i) Use its best efforts to furnish, at the request of any Holder
requesting registration of Registrable Securities, as the case may be, on the
date that such Registrable Securities are delivered to the underwriters for sale
in connection with a registration pursuant to this Section, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public

<PAGE>

offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities, and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.

      1.4 Expenses. All expenses other than underwriting discounts and
commissions incurred in connection with registration pursuant to this Section,
including the registration, filing, and qualification fees, printers' and
accounting fees, fees and disbursements of counsel for the Company shall be
borne by the Company. In addition, each Holder shall be bear and pay all legal
fees and expenses incurred by legal counsel selected by such Holder in
connection with the review of such registration statement, filing or
qualification of the Registrable Securities.

      1.5 Underwriting Requirements. In connection with any offering involving
an underwriting of shares of the Company's capital stock, the Company shall not
be required to include any of the Holders' securities in such underwriting
unless they accept the terms of the underwriting as agreed upon between the
Company and the underwriters selected by it (or by other persons entitled to
select the underwriters), and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Company.

      1.6 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section.

      1.7 Indemnification

            (a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, members, officers, directors and
shareholders of each Holder, any underwriter (as defined in the Securities Act)
for such Holder, and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law; and the Company will pay to
each such indemnified person, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 1.7(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished expressly for use in connection
with such registration by any such indemnified person.

            (b) To the extent permitted by law, each selling Holder severally
but not jointly will indemnify and hold harmless the Company, each of its
directors, each of its officers who has

<PAGE>

signed the registration statement, each person, if any, who controls the Company
within the meaning of the Securities Act, any underwriter, any other selling
security holder in such registration statement and any controlling person of any
such underwriter or other Holder, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing persons may become
subject, under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection 1.7(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
1.7(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided, that,
in no event shall any indemnity under this subsection 1.7(b) exceed the net
proceeds from the offering received by such Holder, except in the case of
willful fraud by such Holder.

      1.8. No Assignment. The rights to cause the Company to register the
Registrable Securities pursuant hereto may not be assigned to any party without
the express written consent of the Company.

      1.9 Termination of Registration Rights. No Holder shall be entitled to
exercise any right provided for in this Section 1 after the earlier of (i) May
28, 2009, or (ii) such time as Rule 144 or another similar exemption under the
Securities Act is available for the sale of all of such Holder's Registrable
Securities during a three-month period without registration.

      1.10 Amendment or Modification of Registration Rights. The rights granted
to Holder hereunder may not be amended or modified without the written consent
of the Company and Holders of a majority of the then outstanding Registrable
Securities. Any amendment approved pursuant to the terms of this Section 1.10
shall be binding on, and enforceable against, all other Holders.