PACIFIC BIOMETRICS, INC. AND CERTAIN OF ITS SUBSIDIARIES
                            MASTER SECURITY AGREEMENT



To:      Laurus Master Fund, Ltd.
         c/o Ironshore Corporate Services, Ltd.
         P.O. Box 1234 G.T
         Queensgate House
         South Church Street
         Grand Cayman, Cayman Islands

Date: May 28, 2004

To Whom It May Concern:

1.       To secure  the  payment  of all  Obligations  (as  hereafter  defined),
PACIFIC BIOMETRICS,  INC., a Delaware  corporation (the "Company"),  each of the
other  undersigned  parties (other than Laurus Master Fund, Ltd,  "Laurus")) and
each other entity that is required to enter into this Master Security  Agreement
(each an "Assignor"  and,  collectively,  the  "Assignors")  hereby  assigns and
grants to Laurus a continuing security interest in all of the following property
now owned or at any time  hereafter  acquired by any  Assignor,  or in which any
Assignor  now have or at any time in the future may acquire any right,  title or
interest (the  "Collateral"):  all cash,  cash  equivalents,  accounts,  deposit
accounts,  inventory,  equipment,  goods,  documents,   instruments  (including,
without  limitation,  promissory notes),  contract rights,  general  intangibles
(including,  without  limitation,  payment  intangibles and an absolute right to
license  on terms no less  favorable  than  those  current  in effect  among our
affiliates),   chattel  paper,  supporting   obligations,   investment  property
(including,  without  limitation,  all equity  interests owned by any Assignor),
letter-of-credit  rights,  trademarks,   trademark  applications,   tradestyles,
patents,  patent  applications,  copyrights,  copyright  applications  and other
intellectual  property in which any Assignor  now have or hereafter  may acquire
any right,  title or interest,  all proceeds  and products  thereof  (including,
without  limitation,  proceeds of insurance) and all  additions,  accessions and
substitutions thereto or therefor. Notwithstanding the foregoing, the Collateral
shall not  include  any of such  property  that is subject on the date hereof to
certain  outstanding   security  interests  (and  the  related  UCC-1  financing
statements  relating  thereto)  granted  by any  Assignor  to third  parties  in
connection with certain equipment  financed by Transamerica  Technology  Finance
Corporation  (as successor to  Transamerica  Business  Credit  Corp.),  Franklin
Funding , Inc. or Roche  Diagnostics  Corp.,  or any successor  thereto.  In the
event any Assignor  wishes to finance the  acquisition in the ordinary course of
business of any hereafter acquired equipment and have obtained a commitment from
a financing  source to finance such  equipment  from an  unrelated  third party,
Laurus agrees to release its security interest on such hereafter acquired

<PAGE>

equipment so financed by such third party financing source. In addition, so long
as no Event of Default  hereunder shall have occurred and be continuing, Laurus'
security interest in the assets of  PBI Technology Inc., whether now existing or
hereafter arising (the "PBI Technology Assets") shall be  automatically released
from the  Collateral granted to  Laurus upon (i) the Company obtaining financing
in excess of  $1,000,000 to be  secured by such  PBI Technology Assets  (ii) the
Company entering into a definitive strategic joint venture arrangement where the
PBI Technology  Assets  are contributed  to the  venture or  (iii)  the  Company
entering into one or more bona fide licensing agreements with unaffiliated third
parties, which shall be on  commercially reasonable terms and which provides for
either  (a) up front  payments and  royalties which  based on such third party's
projected sales, would reasonably be expected to produce, in the aggregate, more
than $1,000,000  in gross revenue, or (b)  a grant of  security interest  in the
licensed  technology  to the  third party  licensee.  Upon the  occurrence of an
event  specified in clauses (i), (ii) and (iii) above, Laurus  hereby authorizes
the Company to file the appropriate financing statements to effect such release.
Except as otherwise defined herein, all capitalized terms used herein shall have
the meaning provided such terms in the Securities Purchase Agreement referred to
below.

2.       The term "Obligations" as used herein shall mean and include all debts,
liabilities and obligations  owing by each Assignor to Laurus arising under, out
of, or in connection with: (i) that certain Securities  Purchase Agreement dated
as of the date hereof by and  between  the  Company and Laurus (the  "Securities
Purchase  Agreement")  and  (ii)  the  Related  Agreements  referred  to in  the
Securities Purchase  Agreement,  as each may be amended,  modified,  restated or
supplemented  from  time to time,  are  collectively  referred  to herein as the
"Documents"),  and in connection  with any documents,  instruments or agreements
relating to or executed  in  connection  with the  Documents  or any  documents,
instruments  or agreements  referred to therein or otherwise,  and in connection
with any other  indebtedness,  obligations  or  liabilities  of any  Assignor to
Laurus,  whether  now  existing  or  hereafter  arising,   direct  or  indirect,
liquidated or unliquidated,  absolute or contingent,  due or not due and whether
under,  pursuant to or evidenced by a note, agreement,  guaranty,  instrument or
otherwise, in each case, irrespective of the genuineness,  validity,  regularity
or enforceability of such  Obligations,  or of any instrument  evidencing any of
the  Obligations or of any collateral  therefor or of the existence or extent of
such collateral, and irrespective of the allowability, allowance or disallowance
of any or all of the  Obligations  in  any  case  commenced  by or  against  any
Assignor  under Title 11, United  States Code,  including,  without  limitation,
obligations or indebtedness of each Assignor for post-petition  interest,  fees,
costs and charges that would have accrued or been added to the  Obligations  but
for the  commencement  of such case,  provided,  however,  upon the  irrevocable
payment in full of all  obligations  and liabilities of the Company with respect
to the Note,  this  Agreement  shall  terminate  and be of no  further  force or
effect. Laurus hereby agrees to file the appropriate financing statements and to
take such other  reasonable  action  required  to effect  such  termination  and
release promptly after receipt of such payment.

3.       Each Assignor  hereby  jointly and severally  represents,  warrants and
covenants to Laurus that:

     (a)  it is a corporation  validly existing,  in good standing and organized
          under the respective  laws of its  jurisdiction  of  organization  set
          forth on Schedule A, and each Assignor will provide Laurus thirty (30)
          days'  prior  written  notice of any  change in any of its  respective
          jurisdiction of organization;

     (b)  its  legal  name is as set  forth  in its  respective  Certificate  of
          Incorporation  or other  organizational  document (as  applicable)  as

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<PAGE>

          amended through the date hereof and as set forth on Schedule A, and it
          will  provide  Laurus  thirty (30) days' prior  written  notice of any
          change in its legal name;

     (c)  its  organizational  identification  number (if  applicable) is as set
          forth on Schedule A hereto,  and it will  provide  Laurus  thirty (30)
          days' prior written notice of any change in any of its  organizational
          identification number;

     (d)  Subject  to  the  Assignors'   disclosures  on  Schedule  4.9  of  the
          Securities Purchase Agreement it is the lawful owner of the respective
          Collateral  and it has the sole  right to  grant a  security  interest
          therein and will defend the Collateral  against all claims and demands
          of all persons and entities;

     (e)  Subject  to  the  Assignors'   disclosures  on  Schedule  4.9  of  the
          Securities Purchase Agreement,  it will keep its respective Collateral
          free and clear of all  attachments,  levies,  taxes,  liens,  security
          interests and encumbrances of every kind and nature  ("Encumbrances"),
          except (i) Encumbrances securing the Obligations and (ii) Encumbrances
          expressly  subordinate  to the  security  interests  granted to Laurus
          herein,  and (iii) to the  extent  said  Encumbrance  does not  secure
          indebtedness  in excess of $75,000 and such  Encumbrance is removed or
          otherwise released within ten (10) days of the creation thereof;

     (f)  it will,  at its and the other  Assignors  joint and several  cost and
          expense keep the Collateral in good state of repair (ordinary wear and
          tear  excepted)  and will not  waste or  destroy  the same or any part
          thereof other than ordinary course  discarding of items no longer used
          or useful in its or such other Assignors' business;

     (g)  it will not without  Laurus' prior written  consent,  sell,  exchange,
          lease or otherwise  dispose of the Collateral,  whether by sale, lease
          or  otherwise,  except  for the sale of  inventory,  or  licensing  of
          technology in the ordinary  course of business and for the disposition
          or transfer in the ordinary  course of business during any fiscal year
          of obsolete  and worn-out  equipment or equipment no longer  necessary
          for its ongoing  needs,  having an aggregate  fair market value of not
          more than $25,000 and only to the extent that:

               (i)  the  proceeds  of any such  disposition  are used to acquire
                    replacement  Collateral  which is subject  to Laurus'  first
                    priority perfected  security interest,  or are used to repay
                    Obligations or to pay general corporate expenses; and

               (ii) following  the  occurrence  of an  Event  of  Default  which
                    continues  to exist the  proceeds  of which are  remitted to
                    Laurus to be held as cash collateral for the Obligations;

     (h)  it will  insure or cause the  Collateral  to be insured as provided in
          the Securities  Purchase  Agreement.  If any such Assignor fails to do
          so,  Laurus may procure such  insurance  and the cost thereof shall be
          promptly reimbursed by the Assignors, jointly and severally, and shall
          constitute Obligations;

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<PAGE>

     (i)  it will at all  reasonable  times and  reasonable  prior notice during
          normal  business  hours allow Laurus or Laurus'  representatives  free
          access to and the right of inspection of the Collateral;

     (j)  such Assignor  (jointly and severally with each other Assignor) hereby
          indemnifies  and saves Laurus harmless from all loss,  costs,  damage,
          liability and/or expense,  including reasonable  attorneys' fees, that
          Laurus  may  sustain  or  incur to  enforce  payment,  performance  or
          fulfillment  of any of the  Obligations  and/or in the  enforcement of
          this Master Security Agreement or in the prosecution or defense of any
          action or proceeding either against Laurus or any Assignor  concerning
          any matter growing out of or in connection  with this Master  Security
          Agreement,  and/or any of the Obligations and/or any of the Collateral
          except to the extent caused by Laurus' own gross negligence or willful
          misconduct  (as determined by a court of competent  jurisdiction  in a
          final and nonappealable decision).

4.       The  occurrence  of any of the  following  events or  conditions  shall
constitute an "Event of Default" under this Master Security Agreement:

     (a)  Company  shall  (i)  apply  for,  consent  to,  or suffer to exist the
          appointment of, or the taking of possession by, a receiver, custodian,
          trustee,  liquidator  or  other  fiduciary  of  itself  or of all or a
          substantial part of its property,  (ii) make a general  assignment for
          the benefit of creditors,  (iii)  commence a voluntary  case under any
          state or federal bankruptcy laws (as now or hereafter in effect), (iv)
          be adjudicated a bankrupt or insolvent, (v) file a petition seeking to
          take  advantage of any other law  providing for the relief of debtors,
          (vi) acquiesce to, or fail to have dismissed,  within sixty (60) days,
          any  petition  filed  against  it in any  involuntary  case under such
          bankruptcy laws, or (vii) take any action for the purpose of effecting
          any of the foregoing;

     (b)  the Company shall repudiate,  purport to revoke or fail to perform any
          or all of its obligations  under any Note (after passage of applicable
          cure period, if any); or

     (c)  an Event of Default  under and as defined in any  Document  shall have
          occurred and be continuing beyond any applicable grace period. .

5.       Upon the occurrence of any Event of Default and at any time thereafter,
Laurus may declare all Obligations  immediately due and payable and Laurus shall
have the remedies of a secured party provided in the Uniform  Commercial Code as
in effect in the State of New York,  this  Agreement and other  applicable  law.
Upon the occurrence of any Event of Default and at any time  thereafter,  Laurus
will have the right to take  possession of the  Collateral  and to maintain such
possession  on our premises or to remove the  Collateral  or any part thereof to
such other  premises as Laurus may desire.  Upon  Laurus'  request,  each of the
Assignors  shall  assemble or cause the  Collateral  to be assembled and make it
available to Laurus at a place  designated  by Laurus.  If any  notification  of
intended disposition of any Collateral is required by law, such notification, if
mailed,  shall be deemed  properly and  reasonably  given if mailed at least ten
(10) days before such  disposition,  postage prepaid,  addressed to any Assignor
either at such  Assignor's  address shown herein or at any address  appearing on
Laurus' records for such Assignor. Any proceeds of any disposition of any of the

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<PAGE>

Collateral  shall be  applied  by  Laurus  to the  payment  of all  expenses  in
connection with the sale of the Collateral, including reasonable attorneys' fees
and other  legal  expenses  and  disbursements  and the  reasonable  expense  of
retaking, holding, preparing for sale, selling, and the like, and any balance of
such proceeds may be applied by Laurus toward the payment of the  Obligations in
such order of application as Laurus may elect, and each Assignor shall be liable
for any deficiency. Laurus shall pay any surplus to the Company or as a court of
competent jurisdiction shall direct.

6.       If any Assignor  defaults in the  performance  or fulfillment of any of
the terms,  conditions,  promises,  covenants,  provisions or warranties on such
Assignor's  part to be performed  or fulfilled  under or pursuant to this Master
Security  Agreement,  Laurus  may,  at its option  without  waiving its right to
enforce this Master Security Agreement according to its terms, immediately or at
any time  thereafter and without notice to any Assignor,  perform or fulfill the
same or cause the  performance or  fulfillment  of the same for each  Assignor's
joint and several  account and at each Assignor's  joint and several  reasonable
cost and  expense,  and the  cost  and  expense  thereof  (including  reasonable
attorneys'  fees)  shall be added to the  Obligations  and shall be  payable  on
demand with interest thereon at the highest rate permitted by law.

7.       Each Assignor appoints Laurus,  any of Laurus'  officers,  employees or
any other person or entity whom Laurus may designate as its respective attorney,
with power to  execute  such  documents  in each of our behalf and to supply any
omitted  information and correct patent errors in any documents  executed by any
Assignor or on any Assignor's behalf; to file financing  statements against each
respective  Assignor covering the Collateral (and, in connection with the filing
of any such financing statements, describe the Collateral as "all assets and all
personal  property,  whether  now  owned  and/or  hereafter  acquired"  (or  any
substantially  similar variation thereof));  to sign each respective  Assignor's
name on public  records;  and to do all other  things  Laurus deem  necessary to
carry out this Master  Security  Agreement.  Each Assignor  hereby  ratifies and
approves all acts of the attorney  and neither  Laurus nor the attorney  will be
liable for any acts of commission or omission,  nor for any error of judgment or
mistake of fact or law other than gross  negligence  or willful  misconduct  (as
determined by a court of competent  jurisdiction  in a final and  non-appealable
decision).  This power being coupled with an interest, is irrevocable so long as
any Obligations remains unpaid.

8.       No delay or failure on Laurus' part in exercising any right,  privilege
or option  hereunder  shall  operate as a waiver of such or of any other  right,
privilege,  remedy or option,  and no waiver  whatever  shall be valid unless in
writing,  signed by Laurus and then only to the extent therein set forth, and no
waiver by Laurus of any default  shall  operate as a waiver of any other default
or of  the  same  default  on a  future  occasion.  Laurus'  books  and  records
containing  entries  with  respect to the  Obligations  shall be  admissible  in
evidence in any action or  proceeding,  shall be binding upon each  Assignor for
the purpose of  establishing  the items  therein set forth and shall  constitute
prima facie  proof  thereof.  Laurus  shall have the right to enforce any one or
more  of  the  remedies  available  to  Laurus,  successively,   alternately  or
concurrently.  Each Assignor  agrees to join with Laurus in executing  financing
statements or other instruments to the extent required by the Uniform Commercial
Code in form  satisfactory  to Laurus and in executing  such other  documents or
instruments  as may be required or deemed  necessary  by Laurus for  purposes of
affecting or continuing Laurus' security interest in the Collateral.

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<PAGE>

9.       This Master  Security  Agreement  shall be governed by and construed in
accordance  with the laws of the  State of New  York and  cannot  be  terminated
orally. All of the rights, remedies,  options, privileges and elections given to
Laurus  hereunder shall inure to the benefit of Laurus'  successors and assigns.
The term  "Laurus" as herein used shall include  Laurus,  any parent of Laurus',
any of Laurus'  subsidiaries and any co-subsidiaries of Laurus' parent,  whether
now existing or hereafter created or acquired, and all of the terms, conditions,
promises, covenants,  provisions and warranties of this Agreement shall inure to
the  benefit  of each of the  foregoing,  and  shall  bind the  representatives,
successors  and assigns of each  Assignor.  Laurus and each Assignor  hereby (a)
waive  any and all  right  to  trial  by jury  in  litigation  relating  to this
Agreement and the transactions  contemplated hereby and each Assignor agrees not
to assert any  counterclaim in such  litigation,  (b) submit to the nonexclusive
jurisdiction  of any New York State court  sitting in the borough of  Manhattan,
the city of New York and (c) waive any  objection  Laurus or each  Assignor  may
have as to the bringing or maintaining of such action with any such court.

10.      All notices from Laurus to any Assignor shall be sufficiently  given if
mailed or delivered to such Assignor's address set forth below.



                                         Very truly yours,

                                         PACIFIC BIOMETRICS, INC.



                                         By: /s/ Ronald R. Helm
                                            ---------------------------------

                                         Name:  Ronald Helm

                                         Title:  Chief Executive Officer

                                         Address:    220 West Harrison Street
                                                     Seattle, WA  98119



                                         BIOQUANT, INC.



                                         By: /s/ Ronald R. Helm
                                            ---------------------------------

                                         Name:  Ronald Helm

                                         Title:  Chief Executive Officer

                                         Address:    220 West Harrison Street
                                                     Seattle, WA  98119




                                       6
<PAGE>

                                         PACIFIC BIOMETRICS, INC.

                                         (Washington State Lab)



                                         By: /s/ Ronald R. Helm
                                            ---------------------------------

                                         Name:  Ronald Helm

                                         Title:  Chief Executive Officer

                                         Address:    220 West Harrison Street
                                                     Seattle, WA  98119



                                         PBI TECHNOLOGY, INC.



                                         By: /s/ Ronald R. Helm
                                            ---------------------------------

                                         Name:  Ronald Helm

                                         Title:  Chief Executive Officer

                                         Address:    220 West Harrison Street
                                                     Seattle, WA  98119



                                         ACKNOWLEDGED:



                                         LAURUS MASTER FUND, LTD.



                                         By: /s/
                                            ---------------------------------

                                         Name: Eugene Grin

                                         Title: Director




                                       7
<PAGE>

                                   SCHEDULE A


           Entity              Jurisdiction of     Organization Identification
                                 Organization                 Number
--------------------------------------------------------------------------------
  Pacific Biometrics, Inc.         Delaware
--------------------------------------------------------------------------------
 Pacific Biometrics, Inc.         Washington
   (Washington State Lab)
--------------------------------------------------------------------------------
    PBI Technology, Inc.          Washington
--------------------------------------------------------------------------------
       BioQuant, Inc.              Michigan
--------------------------------------------------------------------------------

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