Exhibit 10.4

                          REGISTRATION RIGHTS AGREEMENT

         This  Registration  Rights  Agreement  (this  "Agreement")  is made and
entered  into as of May 28, 2004,  by and between  Pacific  Biometrics,  Inc., a
Delaware  corporation  (the  "Company"),  and  Laurus  Master  Fund,  Ltd.  (the
"Purchaser").

         This Agreement is made pursuant to the Securities  Purchase  Agreement,
dated as of the date hereof,  by and between the  Purchaser and the Company (the
"Securities  Purchase  Agreement"),  and  pursuant to the Note and the  Warrants
referred to therein.

         The Company and the Purchaser hereby agree as follows:

1.       Definitions.  Capitalized  terms used and not otherwise  defined herein
that are defined in the Securities  Purchase  Agreement  shall have the meanings
given  such  terms  in the  Securities  Purchase  Agreement.  As  used  in  this
Agreement, the following terms shall have the following meanings:

         "Commission" means the Securities and Exchange Commission.

         "Common  Stock" means shares of the Company's  common stock,  par value
$0.01 per share.

         "Effectiveness Date" means October 1, 2004 .

         "Effectiveness  Period"  shall  have the  meaning  set forth in Section
2(a).

         "Exchange Act" means the  Securities  Exchange Act of 1934, as amended,
and any successor statute.


         "Filing  Date"  means,  with  respect  to  the  Registration  Statement
required  to be filed  hereunder,  a date no later  than  July 3,  2004 and with
respect  to  shares  of  Common  Stock  issuable  to the  Holder  as a result of
adjustments  to the Fixed  Conversion  Price made pursuant to Section 3.4 of the
Secured  Convertible  Term Note or Section 4 of the Warrant or otherwise,  sixty
(60) days after the  occurrence  such event or the date of the adjustment of the
Fixed Conversion Price.


         "Holder" or "Holders"  means the Purchaser or any of its  affiliates or
transferees to the extent any of them hold Registrable Securities.

         "Indemnified Party" shall have the meaning set forth in Section 5(c).

         "Indemnifying Party" shall have the meaning set forth in Section 5(c).

         "Note" has the meaning set forth in the Securities Purchase Agreement.

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         "Proceeding" means an action, claim, suit,  investigation or proceeding
(including,  without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

         "Prospectus"   means  the  prospectus   included  in  the  Registration
Statement  (including,  without  limitation,  a  prospectus  that  includes  any
information  previously  omitted from a prospectus filed as part of an effective
registration  statement  in  reliance  upon  Rule  430A  promulgated  under  the
Securities Act), as amended or supplemented by any prospectus  supplement,  with
respect  to  the  terms  of  the  offering  of any  portion  of the  Registrable
Securities covered by the Registration  Statement,  and all other amendments and
supplements to the  Prospectus,  including  post-effective  amendments,  and all
material  incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

         "Registrable Securities" means the shares of Common Stock issuable upon
the conversion of the Note and exercise of the Warrants.

         "Registration  Statement" means each registration statement required to
be filed hereunder, including the Prospectus, amendments and supplements to such
registration   statement  or  Prospectus,   including  pre-  and  post-effective
amendments,  all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.

         "Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule or regulation  hereafter adopted by the Commission having substantially the
same effect as such Rule.

         "Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule or regulation  hereafter adopted by the Commission having substantially the
same effect as such Rule.

         "Rule 424" means Rule 424 promulgated by the Commission pursuant to the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule or regulation  hereafter adopted by the Commission having substantially the
same effect as such Rule.

         "Securities Act" means the Securities Act of 1933, as amended,  and any
successor statute.

         "Securities Purchase Agreement" means the agreement between the parties
hereto calling for the issuance by the Company of $2,500,000 of convertible Note
plus Warrants.

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         "Trading  Market"  means  any of the NASD OTC  Bulletin  Board,  NASDAQ
SmallCap Market,  the Nasdaq National Market, the American Stock Exchange or the
New York Stock Exchange.

         "Warrants" means the Common Stock purchase  warrants issued pursuant to
the Securities Purchase Agreement.

2.       Registration.

     (a)  On or prior to the Filing Date the Company shall prepare and file with
          the  Commission a  Registration  Statement  covering  the  Registrable
          Securities  for an offering to be made on a continuous  basis pursuant
          to Rule 415. The Registration  Statement shall be on Form SB-2 (except
          if the  Company  is not then  eligible  to  register  for  resale  the
          Registrable  Securities on Form SB-2, in which case such  registration
          shall be on another  appropriate  form in  accordance  herewith).  The
          Company shall cause the Registration Statement to become effective and
          remain  effective  as  provided  herein.  The  Company  shall  use its
          reasonable  commercial efforts to cause the Registration  Statement to
          be declared effective under the Securities Act as promptly as possible
          after  the  filing  thereof,  but in  any  event  no  later  than  the
          Effectiveness  Date. The Company shall use its  reasonable  commercial
          efforts  to keep the  Registration  Statement  continuously  effective
          under the  Securities  Act until the date which is the earlier date of
          (i) when all  Registrable  Securities  have been sold or (ii) when all
          Registrable  Securities may be sold immediately  without  registration
          under the Securities Act and without volume  restrictions  pursuant to
          Rule 144(k), as determined by the counsel to the Company pursuant to a
          written opinion letter to such effect, addressed and acceptable to the
          Company's  transfer  agent and the  affected  Holders or (iii) May 28,
          2007 (the "Effectiveness Period").

     (b)  If:  (i) the  Registration  Statement  is not filed on or prior to the
          Filing Date; (ii) the Registration Statement is not declared effective
          by  the  Commission  by  the  Effectiveness   Date;  (iii)  after  the
          Registration  Statement  is filed with and  declared  effective by the
          Commission,  the  Registration  Statement  ceases to be effective  (by
          suspension or otherwise) as to all Registrable  Securities to which it
          is  required  to relate  at any time  prior to the  expiration  of the
          Effectiveness  Period  (without  being  succeeded  immediately  by  an
          additional  registration statement filed and declared effective) for a
          period of time which shall exceed 30 days in the aggregate per year or
          more than 20  consecutive  calendar  days  (defined as a period of 365
          days  commencing  on the date the  Registration  Statement is declared
          effective);  or (iv) the Common  Stock is not listed or quoted,  or is
          suspended from trading on any Trading Market for a period of three (3)
          consecutive  Trading Days  (provided  the Company  shall not have been
          able to cure such  trading  suspension  within  30 days of the  notice
          thereof or list the Common Stock on another Trading Market); (any such
          failure or breach being referred to as an "Event," and for purposes of
          clause  (i) or (ii)  the  date on  which  such  Event  occurs,  or for
          purposes of clause (iii) the date which such 30 day or 20  consecutive
          day period (as the case may be) is exceeded, or for purposes of clause
          (iv) the date on which such three (3) Trading Day period is  exceeded,
          being referred to as "Event Date"), then until the applicable Event is

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          cured,  the  Company  shall pay to each  Holder an amount in cash,  as
          liquidated  damages  and not as a  penalty,  equal to one and one half
          percent (1.50%) for each thirty (30) day period  (prorated for partial
          periods)  on a daily  basis of the  original  principal  amount of the
          Note.  While such Event  continues,  such liquidated  damages shall be
          paid not less often than each thirty (30) days. Any unpaid  liquidated
          damages  as of the date  when an Event has been  cured by the  Company
          shall be paid within three (3) days  following  the date on which such
          Event has been cured by the Company.

     (c)  Within three  business  days of the  Effectiveness  Date,  the Company
          shall cause its counsel to issue an opinion  substantially in the form
          attached  hereto as Exhibit A, to the transfer  agent stating that the
          shares are subject to an effective  registration  statement and can be
          reissued  free of  restrictive  legend upon notice of a sale by Laurus
          and  confirmation  by Laurus that it has complied with the  prospectus
          delivery  requirements,  provided that the Company has not advised the
          transfer  agent  orally  or in  writing  that  the  opinion  has  been
          withdrawn. Copies of the blanket opinion required by this Section 2(c)
          shall be delivered to Laurus within the time frame set forth above.


3.       Registration Procedures. If and whenever the Company is required by the
provisions hereof to effect the registration of any Registrable Securities under
the Securities Act, the Company will, as expeditiously as possible:

     (a)  prepare and file with the Commission the  Registration  Statement with
          respect  to  such  Registrable  Securities,  respond  as  promptly  as
          possible to any comments  received  from the  Commission,  and use its
          best efforts to cause the Registration  Statement to become and remain
          effective  for the  Effectiveness  Period with  respect  thereto,  and
          promptly provide to the Purchaser copies of all filings and Commission
          letters of comment relating thereto;

     (b)  prepare and file with the Commission  such  amendments and supplements
          to the  Registration  Statement and the Prospectus  used in connection
          therewith  as may be necessary  to comply with the  provisions  of the
          Securities  Act with  respect to the  disposition  of all  Registrable
          Securities  covered  by the  Registration  Statement  and to keep such
          Registration   Statement   effective   until  the  expiration  of  the
          Effectiveness Period;

     (c)  furnish to the  Purchaser  such  number of copies of the  Registration
          Statement  and  the  Prospectus   included  therein   (including  each
          preliminary  Prospectus)  as the Purchaser  reasonably  may request to
          facilitate  the  public  sale  or   disposition  of  the   Registrable
          Securities covered by the Registration Statement;

     (d)  use its  commercially  reasonable  efforts to  register or qualify the
          Purchaser's   Registrable   Securities  covered  by  the  Registration

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          Statement   under  the   securities   or  "blue   sky"  laws  of  such
          jurisdictions within the United States as the Purchaser may reasonably
          request,  provided,  however,  that the Company shall not for any such
          purpose be required  to qualify  generally  to transact  business as a
          foreign  corporation in any jurisdiction  where it is not so qualified
          or to consent to general service of process in any such jurisdiction;

     (e)  list the Registrable  Securities covered by the Registration Statement
          with any securities  exchange on which the Common Stock of the Company
          is then listed;

     (f)  immediately  notify  the  Purchaser  at any  time  when  a  Prospectus
          relating thereto is required to be delivered under the Securities Act,
          of the  happening of any event of which the Company has knowledge as a
          result  of  which  the  Prospectus   contained  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
          light of the circumstances then existing; and

     (g)  make  available  for  inspection  by the  Purchaser  and any attorney,
          accountant  or other agent  retained by the  Purchaser,  all  publicly
          available,  non-confidential  financial and other  records,  pertinent
          corporate  documents  and  properties  of the  Company,  and cause the
          Company's  officers,  directors  and  employees to supply all publicly
          available,  non-confidential  information  reasonably requested by the
          attorney, accountant or agent of the Purchaser.



          It shall be a condition  precedent to the obligation of the Company to
          take  any  action  pursuant  to  this  Section  with  respect  to  the
          Registrable  Securities of Purchaser that  Purchaser  shall furnish to
          the  Company  such  information   regarding  itself,  the  Registrable
          Securities  held by it, and the intended method of disposition of such
          securities  as shall be  required to effect the  registration  of such
          Purchaser's Registrable Securities.

4.       Registration   Expenses.   All  expenses   relating  to  the  Company's
compliance  with Sections 2 and 3 hereof,  including,  without  limitation,  all
registration  and filing fees,  printing  expenses,  fees and  disbursements  of
counsel and independent  public  accountants for the Company,  fees and expenses
(including  reasonable  counsel fees) incurred in connection with complying with
state securities or "blue sky" laws, fees of the NASD,  transfer taxes,  fees of
transfer  agents and  registrars,  fees of, and  disbursements  incurred by, one
counsel for the Holders (to the extent such counsel is required due to Company's
failure to meet any of its  obligations  hereunder),  are  called  "Registration
Expenses".  All  selling  commissions  applicable  to the  sale  of  Registrable
Securities,  including any fees and  disbursements of any special counsel to the
Holders  beyond those included in  Registration  Expenses,  are called  "Selling
Expenses." The Company shall only be responsible for all Registration  Expenses.
Selling Expenses shall be for the account of the Holder.

<PAGE>

5.       Indemnification.

     (a)  In the event of a registration of any Registrable Securities under the
          Securities Act pursuant to this Agreement,  the Company will indemnify
          and hold harmless the Purchaser, and its officers,  directors and each
          other person, if any, who controls the Purchaser within the meaning of
          the  Securities   Act,   against  any  losses,   claims,   damages  or
          liabilities, joint or several, to which the Purchaser, or such persons
          may become subject under the  Securities Act or otherwise,  insofar as
          such losses,  claims,  damages or  liabilities  (or actions in respect
          thereof)  arise  out of or are  based  upon any  untrue  statement  or
          alleged  untrue  statement  of  any  material  fact  contained  in any
          Registration  Statement under which such  Registrable  Securities were
          registered  under the Securities Act pursuant to this  Agreement,  any
          preliminary  Prospectus or final Prospectus  contained therein, or any
          amendment or supplement thereof, or arise out of or are based upon 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, and will reimburse the Purchaser, and each such person for
          any reasonable legal or other expenses  incurred by them in connection
          with  investigating  or  defending  any  such  loss,  claim,   damage,
          liability or action;  provided,  however, that the Company will not be
          liable  in any such  case if and to the  extent  that  any such  loss,
          claim,  damage or  liability  arises out of or is based upon an untrue
          statement or alleged untrue  statement or omission or alleged omission
          so made in conformity  with  information  furnished by or on behalf of
          the  Purchaser or any such person in writing  specifically  for use in
          any such document.

     (b)  In the event of a registration of the Registrable Securities under the
          Securities  Act  pursuant  to  this  Agreement,   the  Purchaser  will
          indemnify and hold harmless the Company,  and its officers,  directors
          and each other  person,  if any, who  controls the Company  within the
          meaning of the Securities Act, against all losses,  claims, damages or
          liabilities,  joint or several,  to which the Company or such  persons
          may become subject under the  Securities Act or otherwise,  insofar as
          such losses,  claims,  damages or  liabilities  (or actions in respect
          thereof)  arise  out of or are  based  upon any  untrue  statement  or
          alleged  untrue  statement of any material fact which was furnished in
          writing by the Purchaser to the Company expressly for use in (and such
          information is contained in) the  Registration  Statement  under which
          such  Registrable  Securities were registered under the Securities Act
          pursuant  to this  Agreement,  any  preliminary  Prospectus  or  final
          Prospectus  contained therein, or any amendment or supplement thereof,
          or arise out of or are based upon 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,  and will
          reimburse the Company and each such person for any reasonable legal or
          other expenses  incurred by them in connection with  investigating  or
          defending any such loss, claim, damage, liability or action, provided,
          however,  that the  Purchaser  will be  liable in any such case if and
          only to the extent  that any such  loss,  claim,  damage or  liability

<PAGE>

          arises out of or is based upon an untrue  statement or alleged  untrue
          statement or omission or alleged  omission so made in conformity  with
          information furnished in writing to the Company by or on behalf of the
          Purchaser  specifically for use in any such document.  Notwithstanding
          the provisions of this paragraph,  the Purchaser shall not be required
          to  indemnify  any  person or  entity  in excess of the  amount of the
          aggregate  net  proceeds  received  by the  Purchaser  in  respect  of
          Registrable  Securities in connection with any such registration under
          the Securities Act.

     (c)  Promptly  after receipt by a party  entitled to claim  indemnification
          hereunder (an  "Indemnified  Party") of notice of the  commencement of
          any  action,   such   Indemnified   Party   shall,   if  a  claim  for
          indemnification  in  respect  thereof  is to be made  against  a party
          hereto obligated to indemnify such Indemnified Party (an "Indemnifying
          Party"),  notify the Indemnifying  Party in writing  thereof,  but the
          omission so to notify the Indemnifying Party shall not relieve it from
          any liability which it may have to such  Indemnified  Party other than
          under this Section  5(c) and shall only relieve it from any  liability
          which it may have to such Indemnified Party under this Section 5(c) if
          and to the  extent  the  Indemnifying  Party  is  prejudiced  by  such
          omission.  In case  any  such  action  shall be  brought  against  any
          Indemnified  Party and it shall notify the  Indemnifying  Party of the
          commencement  thereof,  the  Indemnifying  Party  shall be entitled to
          participate  in and,  to the  extent  it shall  wish,  to  assume  and
          undertake  the  defense  thereof  with  counsel  satisfactory  to such
          Indemnified  Party,  and, after notice from the Indemnifying  Party to
          such Indemnified  Party of its election so to assume and undertake the
          defense thereof,  the  Indemnifying  Party shall not be liable to such
          Indemnified  Party  under  this  Section  5(c) for any legal  expenses
          subsequently incurred by such Indemnified Party in connection with the
          defense  thereof;  if the  Indemnified  Party retains its own counsel,
          then the Indemnified  Party shall pay all fees,  costs and expenses of
          such counsel,  provided,  however, that, if the defendants in any such
          action include both the indemnified  party and the Indemnifying  Party
          and the Indemnified  Party shall have reasonably  concluded that there
          may be reasonable defenses available to it which are different from or
          additional  to those  available  to the  Indemnifying  Party or if the
          interests  of  the  Indemnified  Party  reasonably  may be  deemed  to
          conflict with the interests of the Indemnifying Party, the Indemnified
          Party  shall  have the right to select  one  separate  counsel  and to
          assume such legal defenses and otherwise to participate in the defense
          of such action, with the reasonable expenses and fees of such separate
          counsel  and  other  expenses  related  to  such  participation  to be
          reimbursed by the Indemnifying Party as incurred.

     (d)  In order to provide for just and equitable  contribution  in the event
          of  joint  liability  under  the  Securities  Act in any case in which
          either (i) the  Purchaser,  or any  officer,  director or  controlling
          person of the Purchaser, makes a claim for indemnification pursuant to
          this  Section  5 but it is  judicially  determined  (by the entry of a
          final judgment or decree by a court of competent  jurisdiction and the
          expiration  of time to  appeal  or the  denial  of the  last  right of
          appeal)  that such  indemnification  may not be  enforced in such case
          notwithstanding   the  fact  that  this   Section   5   provides   for

<PAGE>

          indemnification   in  such  case,  or  (ii)  contribution   under  the
          Securities  Act may be required on the part of the  Purchaser  or such
          officer,   director  or   controlling   person  of  the  Purchaser  in
          circumstances for which indemnification is provided under this Section
          5; then,  and in each such case,  the Company and the  Purchaser  will
          contribute to the aggregate losses,  claims, damages or liabilities to
          which they may be subject  (after  contribution  from  others) in such
          proportion so that the Purchaser is  responsible  only for the portion
          represented  by the percentage  that the public  offering price of its
          securities  offered by the Registration  Statement bears to the public
          offering  price  of  all  securities   offered  by  such  Registration
          Statement,  provided,  however,  that,  in  any  such  case,  (A)  the
          Purchaser  will not be required to contribute  any amount in excess of
          the  public  offering  price  of all  such  securities  offered  by it
          pursuant to such Registration  Statement;  and (B) no person or entity
          guilty of fraudulent  misrepresentation (within the meaning of Section
          10(f) of the Act) will be entitled to contribution  from any person or
          entity who was not guilty of such fraudulent misrepresentation.


6.       Miscellaneous.

     (a)  Remedies.  In the event of a breach by the Company or by a Holder,  of
          any of their respective obligations under this Agreement,  each Holder
          or the Company,  as the case may be, in addition to being  entitled to
          exercise all rights granted by law and under this Agreement, including
          recovery of damages,  will be entitled to specific  performance of its
          rights under this Agreement.

     (b)  No Piggyback on  Registrations.  Except as and to the extent specified
          in Schedule  7(b) hereto,  neither the Company nor any of its security
          holders (other than the Holders in such capacity  pursuant hereto) may
          include securities of the Company in any Registration  Statement other
          than the Registrable  Securities,  and the Company shall not after the
          date  hereof  enter into any  agreement  providing  any such right for
          inclusion  of  shares  in  the  Registration  Statement  to any of its
          security  holders.  Except as and to the extent  specified in Schedule
          7(b) hereto, the Company has not previously entered into any agreement
          granting any registration rights with respect to any of its securities
          to any Person that have not been fully satisfied.

     (c)  Compliance.  Each Holder covenants and agrees that it will comply with
          the  prospectus  delivery   requirements  of  the  Securities  Act  as
          applicable to it in connection  with sales of  Registrable  Securities
          pursuant to the Registration Statement.

     (d)  Discontinued  Disposition.  Each Holder agrees by its  acquisition  of
          such  Registrable  Securities  that, upon receipt of a notice from the
          Company  of the  occurrence  of a  Discontinuation  Event (as  defined
          below),  such Holder will  forthwith  discontinue  disposition of such
          Registrable  Securities  under the applicable  Registration  Statement
          until  such  Holder's  receipt  of  the  copies  of  the  supplemented
          Prospectus  and/or  amended  Registration  Statement  or  until  it is

<PAGE>

          advised in writing  (the  "Advice") by the Company that the use of the
          applicable  Prospectus  may be  resumed,  and,  in  either  case,  has
          received  copies of any  additional or  supplemental  filings that are
          incorporated  or  deemed  to be  incorporated  by  reference  in  such
          Prospectus  or  Registration   Statement.   The  Company  may  provide
          appropriate  stop orders to enforce the provisions of this  paragraph.
          For purposes of this Section  7(d),  a  "Discontinuation  Event" shall
          mean (i) when the Commission  notifies the Company  whether there will
          be  a  "review"  of  such  Registration  Statement  and  whenever  the
          Commission  comments in writing on such  Registration  Statement  (the
          Company shall provide true and complete copies thereof and all written
          responses  thereto to each of the  Holders);  (ii) any  request by the
          Commission  or any other Federal or state  governmental  authority for
          amendments or supplements to such Registration Statement or Prospectus
          or for additional information; (iii) the issuance by the Commission of
          any stop  order  suspending  the  effectiveness  of such  Registration
          Statement  covering any or all of the  Registrable  Securities  or the
          initiation of any  Proceedings  for that purpose;  (iv) the receipt by
          the Company of any notification  with respect to the suspension of the
          qualification   or  exemption  from   qualification   of  any  of  the
          Registrable Securities for sale in any jurisdiction, or the initiation
          or  threatening  of any  Proceeding  for such purpose;  and/or (v) the
          occurrence  of any event or passage  of time that makes the  financial
          statements  included in such  Registration  Statement  ineligible  for
          inclusion therein or any statement made in such Registration Statement
          or   Prospectus  or  any  document   incorporated   or  deemed  to  be
          incorporated  therein by reference  untrue in any material  respect or
          that requires any revisions to such Registration Statement, Prospectus
          or other documents so that, in the case of such Registration Statement
          or  Prospectus,  as the case may be, it will not  contain  any  untrue
          statement  of a  material  fact or omit to  state  any  material  fact
          required  to be stated  therein or  necessary  to make the  statements
          therein, in light of the circumstances under which they were made, not
          misleading.

     (e)  Piggy-Back  Registrations.  If at any time  during  the  Effectiveness
          Period there is not an effective  Registration  Statement covering all
          of the  Registrable  Securities  and the Company  shall  determine  to
          prepare and file with the Commission a registration statement relating
          to an offering  for its own account or the account of others under the
          Securities Act of any of its equity securities, other than on Form S-4
          or Form S-8 (each as promulgated  under the  Securities  Act) or their
          then equivalents  relating to equity securities to be issued solely in
          connection  with any  acquisition  of any entity or business or equity
          securities  issuable in connection with stock option or other employee
          benefit  plans,  then the Company  shall send to each  Holder  written
          notice of such determination and, if within fifteen days after receipt
          of such  notice,  any such  Holder  shall so request in  writing,  the
          Company shall include in such  registration  statement all or any part
          of such  Registrable  Securities such holder requests to be registered
          to the extent the  Company  may do so without  violating  registration
          rights of others which exist as of the date of this Agreement, subject
          to  customary  underwriter  cutbacks  applicable  to  all  holders  of
          registration  rights and subject to obtaining any required the consent
          of  any  selling   stockholder(s)   to  such   inclusion   under  such
          registration statement.

<PAGE>

     (f)  The  Company  will  at  all  times  have  authorized  and  reserved  a
          sufficient number of shares of Common Stock for the full conversion of
          the Note and exercise of the Warrants.

     (g)  Amendments and Waivers.  The provisions of this  Agreement,  including
          the  provisions  of this  sentence,  may not be  amended,  modified or
          supplemented,   and  waivers  or  consents  to  departures   from  the
          provisions  hereof  may not be  given,  unless  the  same  shall be in
          writing  and  signed  by the  Company  and  the  Holders  of the  then
          outstanding Registrable  Securities.  Notwithstanding the foregoing, a
          waiver or consent to depart from the provisions hereof with respect to
          a matter that relates exclusively to the rights of certain Holders and
          that  does not  directly  or  indirectly  affect  the  rights of other
          Holders  may be  given  by  Holders  of at  least  a  majority  of the
          Registrable  Securities  to which  such  waiver  or  consent  relates;
          provided,  however,  that the  provisions  of this sentence may not be
          amended,  modified,  or  supplemented  except in  accordance  with the
          provisions of the immediately preceding sentence.

     (h)  Notices.  Any notice or request  hereunder may be given to the Company
          or the Purchaser at the respective addresses set forth below or as may
          hereafter be specified in a notice  designated  as a change of address
          under this  Section  7(h).  Any notice or request  hereunder  shall be
          given by registered or certified mail, return receipt requested,  hand
          delivery,  overnight mail, Federal Express or other national overnight
          next day carrier  (collectively,  "Courier") or telecopy (confirmed by
          mail).  Notices  and  requests  shall be, in the case of those by hand
          delivery,  deemed to have been  given when  delivered  to any party to
          whom it is addressed,  in the case of those by mail or overnight mail,
          deemed to have been given three (3) business  days after the date when
          deposited in the mail or with the overnight mail carrier,  in the case
          of a Courier,  the next business day following  timely delivery of the
          package  with  the  Courier,  and,  in the  case of a  telecopy,  when
          confirmed. The address for such notices and communications shall be as
          follows:

          If to the Company:             Pacific Biometrics, Inc.
                                         220 West Harrison Street
                                         Seattle, WA 98119

                                         Attention:  Chief Executive  Officer
                                         Facsimile:  (206) 298-9838

<PAGE>

                                         with a copy to:
                                         Carincross & Hemplemann, P.S.
                                         254 Second Avenue #500
                                         Seattle, WA  98104

                                         Attention:  Tim Woodland, Esq.
                                         Facsimile:  (206) 587-2308

          If to a Purchaser:             To the address set forth under such
                                         Purchaser name on the signature pages
                                         hereto.

          If to any other Person who
          is then the registered Holder: To the address of such Holder as it
                                         appears in the stock transfer books of
                                         the Company

          or such other  address as may be  designated  in writing  hereafter in
          accordance with this Section 7(g) by such Person.

     (i)  Successors and Assigns.  This Agreement  shall inure to the benefit of
          and be binding upon the  successors  and permitted  assigns of each of
          the parties and shall inure to the benefit of each Holder. The Company
          may not assign its rights or obligations  hereunder  without the prior
          written  consent  of  each  Holder.   Each  Holder  may  assign  their
          respective  rights  hereunder  in the  manner  and to the  Persons  as
          permitted under the Note .

     (j)  Execution  and  Counterparts.  This  Agreement  may be executed in any
          number of counterparts, each of which when so executed shall be deemed
          to be an original and, all of which taken  together  shall  constitute
          one and the  same  Agreement.  In the  event  that  any  signature  is
          delivered by facsimile  transmission,  such  signature  shall create a
          valid binding  obligation  of the party  executing (or on whose behalf
          such signature is executed) the same with the same force and effect as
          if such facsimile signature were the original thereof.

     (k)  Governing Law. All questions  concerning the  construction,  validity,
          enforcement and  interpretation of this Agreement shall be governed by
          and construed and enforced in accordance with the internal laws of the
          State of New York,  without  regard to the  principles of conflicts of
          law thereof.  Each party agrees that all  Proceedings  concerning  the
          interpretations,   enforcement   and   defense  of  the   transactions
          contemplated by this Agreement  shall be commenced  exclusively in the
          state and federal courts  sitting in the City of New York,  Borough of
          Manhattan.  Each  party  hereto  hereby  irrevocably  submits  to  the
          exclusive  jurisdiction of the state and federal courts sitting in the
          City of New York,  Borough of Manhattan  for the  adjudication  of any
          dispute  hereunder or in connection  herewith or with any  transaction
          contemplated  hereby  or  discussed  herein,  and  hereby  irrevocably
          waives, and agrees not to assert in any Proceeding,  any claim that it
          is not personally  subject to the jurisdiction of any such court, that
          such  Proceeding  is improper.  Each party hereto  hereby  irrevocably
          waives  personal  service of process  and  consents  to process  being
          served in any such Proceeding by mailing a copy thereof via registered
          or certified mail or overnight delivery (with evidence of delivery) to

<PAGE>

          such  party at the  address  in effect  for  notices  to it under this
          Agreement  and agrees  that such  service  shall  constitute  good and
          sufficient  service of process and notice thereof.  Nothing  contained
          herein shall be deemed to limit in any way any right to serve  process
          in any manner  permitted by law. Each party hereto hereby  irrevocably
          waives, to the fullest extent permitted by applicable law, any and all
          right to  trial  by jury in any  legal  proceeding  arising  out of or
          relating to this Agreement or the transactions contemplated hereby. If
          either party shall  commence a Proceeding to enforce any provisions of
          a Transaction  Document,  then the prevailing party in such Proceeding
          shall be  reimbursed by the other party for its  reasonable  attorneys
          fees and other costs and  expenses  incurred  with the  investigation,
          preparation and prosecution of such Proceeding.

     (l)  Cumulative  Remedies.  The remedies provided herein are cumulative and
          not exclusive of any remedies provided by law.

     (m)  Severability.  If any term, provision, covenant or restriction of this
          Agreement is held by a court of competent  jurisdiction to be invalid,
          illegal,   void  or   unenforceable,   the  remainder  of  the  terms,
          provisions,  covenants and  restrictions set forth herein shall remain
          in full force and effect and shall in no way be affected,  impaired or
          invalidated, and the parties hereto shall use their reasonable efforts
          to find  and  employ  an  alternative  means  to  achieve  the same or
          substantially  the same  result  as that  contemplated  by such  term,
          provision,  covenant  or  restriction.  It is  hereby  stipulated  and
          declared  to be the  intention  of the  parties  that they  would have
          executed the remaining terms,  provisions,  covenants and restrictions
          without including any of such that may be hereafter  declared invalid,
          illegal, void or unenforceable.

     (n)  Headings.  The  headings  in this  Agreement  are for  convenience  of
          reference  only and shall not limit or  otherwise  affect the  meaning
          hereof.

                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
                             SIGNATURE PAGE FOLLOWS]

<PAGE>

         IN WITNESS WHEREOF,  the parties have executed this Registration Rights
Agreement as of the date first written above.

PACIFIC BIOMETRICS, INC.                  LAURUS MASTER FUND, LTD.


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

                                              Address for Notices:

                                              825 Third Avenue - 14th Floor
                                              New York, NY  10022
                                              Attention:   Eugene Grin
                                              Facsimile:   212-541-4434


<PAGE>

                                    EXHIBIT A

                              [____________, 200__]

[Continental Stock Transfer
   & Trust Company
Two Broadway
New York, NY  10004
Attn:  William Seegraber]

Re:      Pacific Biometrics, Inc. Registration Statement on Form SB-2
         ------------------------------------------------------------

Ladies and Gentlemen:

         As counsel  to[company name] , a Delaware  corporation (the "Company"),
we have been  requested  to render  our  opinion to you in  connection  with the
resale by the  individuals or entitles listed on Schedule A attached hereto (the
"Selling Stockholders"), of an aggregate of [amount]shares (the "Shares") of the
Company's Common Stock.

         A Registration Statement on Form SB-2 under the Securities Act of 1933,
as amended  (the  "Act"),  with respect to the resale of the Shares was declared
effective by the Securities and Exchange  Commission on [date].  Enclosed is the
Prospectus  dated [date].  We  understand  that the Shares are to be offered and
sold in the manner described in the Prospectus.

         Based upon the foregoing,  upon request by the Selling  Stockholders at
any time while the registration  statement remains effective,  it is our opinion
that  the  Shares  have  been  registered  for  resale  under  the  Act  and new
certificates evidencing the Shares upon their transfer or re-registration by the
Selling  Stockholders may be issued without  restrictive  legend. We will advise
you if the registration  statement is not available or effective at any point in
the future.

                                                     Very truly yours,


                                                     [Company counsel]
<PAGE>


                                   Schedule A

Selling Stockholder                                                   Shares
                                                                   Being Offered
-------------------                                                -------------