Document:

SECURITY AGREEMENT

         THIS SECURITY AGREEMENT (this "Agreement") is dated as of March 31,
2003 between IQ Biometrix, Inc., a Delaware corporation ("Borrower"), and the
undersigned (the "Lenders").

                                    RECITALS

         WHEREAS, the Lenders have agreed to make available to Borrower loans
totaling up to $400,000.00 pursuant to certain 10% Convertible Debentures, dated
as of an even date herewith, between the Lenders and the Borrower, as amended
from time to time (the "Debentures"). Capitalized terms used herein without
definitions shall have the meanings given to them in the Debentures; and

         WHEREAS, in connection with the transactions contemplated by the
Debentures, Borrower has agreed to grant a security interest in its assets to
the Lenders, upon and subject to the terms, provisions and conditions set forth
herein.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and the Lenders agree as
follows:
1.       DEFINITIONS.

         As used in this Agreement, the following terms shall have the following
meaning:

         "Account Debtor" shall mean any Person who is or who may become
obligated under, with respect to or on account of an Account.

         "Accounts" shall mean all of Borrower's currently existing and
hereafter arising accounts, as defined in the UCC, including any contract rights
to payment arising out of the sale or lease of goods or the rendition of
services by Borrower, irrespective of whether earned by performance, and any and
all credit insurance, guarantees or security therefor.

         "Collateral" shall mean all current and hereafter acquired personal
property of Borrower, including all insurance relating thereto, and including
all Accounts, Deposit Accounts, Equipment, General Intangibles, Inventory and
Negotiable Collateral, and any and all proceeds, as defined in the UCC, thereof.

         "Deposit Accounts" shall mean all deposit accounts, as defined in the
UCC, now or hereafter held in Borrower's name.

         "Equipment" shall mean all of Borrower's present and hereafter acquired
machinery, machine tools, motors, computers, equipment, furniture, furnishings,
fixtures, vehicles (including

<PAGE>

motor vehicles and trailers), tools, parts, goods, wherever located, including
all attachments, accessories, accessions, replacements, substitutions, additions
and improvements to any of the foregoing.

         "General Intangibles" shall mean all of Borrower's present and future
general intangibles and other personal property (including contract rights,
rights arising under common law, statutes or regulations, chooses or other
things in action, goodwill, patents, trade names, trade secrets, trademarks,
service marks, copyrights, blueprints, drawings, purchase orders, customer
lists, monies due or recoverable from pension funds, route lists, rights to
payment, and other rights under any royalty or licensing agreements,
infringement claims, computer programs, information contained on computer disks
or tapes, literature, reports, catalogs, deposit accounts, insurance premium
rebates, tax refunds and tax refund claims), other than goods, Accounts and
Negotiable Collateral.

         "Inventory" shall mean all present and future inventory in which
Borrower has any interest, including goods held for sale or lease or to be
furnished under a contract of service and all of Borrower's present and future
raw materials, work in process, finished goods and packing and shipping
materials, wherever located.

         "Majority in Interest" shall mean the Lenders holding more than fifty
percent (50%) of the principal amount of the Debentures.

          "Negotiable Collateral" shall mean all of Borrower's present and
future letters of credit, letter of credit rights, notes, drafts, instruments,
investment property, securities (including the shares of capital stock or other
equity or membership interests of United States subsidiaries of Borrower),
documents, personal property leases (wherein Borrower is the lessor) and chattel
paper. (Any terms used in the preceding sentence that are defined in the UCC
shall have the meanings set forth therein.).

         "Permitted Liens" means the following types of liens:
(i)      the security interests granted pursuant to this Agreement;
(ii) the security interest of a bank or similar institution on accounts
receivable and Inventories; (iii) liens for taxes assessments or governmental
charges or claims (a) for amounts not yet overdue or (b) for amounts that are
overdue and that (in the case of any such amounts overdue for a period in excess
of five days) are being contested in good faith by appropriate proceedings, so
long as (A) such reserves or other appropriate provisions, if any, as shall be
required by generally accepted accounting principles shall have been made for
any such contested amounts and (B) in the case of a lien with respect to any
portion of the Collateral, such contest proceedings conclusively operate to stay
the sale of any portion of the Collateral on account of such lien; (iv) liens
incurred or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social security
or to secure the performance of tenders, statutory obligations, bids, leases,
government contracts, trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of borrowed
money), so long as no foreclosure, sale or similar proceedings have been
commenced with respect to any portion of the Collateral on account thereof; (v)
any attachment or judgment lien not constituting an Event of Default; (vi)
leases or subleases granted to third parties and not interfering in any material
respect with the ordinary conduct of the business of Borrower; (vii) liens in
favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods; (viii)
liens upon any equipment acquired or held by Borrower to secure the purchase
price of such equipment or indebtedness incurred solely for the purpose of
financing the acquisition of such equipment, so long as such lien extends only
to the equipment financed, and any accessions, replacements, substitutions and
proceeds (including insurance proceeds) thereof or thereto; and (ix) liens which
constitute rights of setoff of a customary nature or banker's liens, whether
arising by law or by contract.

         "UCC" shall mean the Uniform Commercial Code, as in effect from time to
time, of the State of California or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection of security interests.
2.       CREATION OF SECURITY INTEREST; COLLATERAL.
2.1 Grant of Security Interest. Borrower hereby pledges and grants to the
Lenders, equal and ratably without priority over one another, a first priority
continuing security interest in all Collateral in order to secure prompt payment
and performance of:
(a) all debts, liabilities and obligations of Borrower to the Lenders, now
existing or hereafter incurred, arising out of or related to the Debentures and
this Agreement; (b) any and all other obligations of Borrower to the Lenders,
direct or indirect, whether or not secured, and whether now existing or
hereafter incurred.

         The debts, obligations and liabilities described in the above clauses
(a) and (b) above are herein referred to as the "Obligations." The Lenders'
security interest in the Collateral shall attach to all Collateral without
further action on the part of the Lenders or Borrower.
2.2 Transfer of Collateral. Anything contained in this Agreement or any other
Loan Document to the contrary notwithstanding, Borrower shall not dispose of any
item or portion of the Collateral without the prior written consent of a
Majority in Interest of the Lenders, other than (a) the sale of Inventory to
buyers in the ordinary course of business, (b) the non-exclusive license of
General Intangibles in the ordinary course of business, (c) the sale of worn-out
or surplus Equipment, (d) dispositions of leased equipment pursuant to and in
accordance with the terms of the leases relating to such equipment and (e) other
dispositions in an amount not to exceed $50,000 during any twelve-month period.
Notwithstanding the foregoing, payments in the ordinary course of business on
obligations incurred by the Borrower or its subsidiaries shall not constitute a
disposition. 2.3 Negotiable Collateral. At any time that an Event of Default has
occurred and is continuing, in the event that any Collateral is evidenced by or
consists of Negotiable Collateral, Borrower will, immediately upon request of
the Lenders, endorse and deliver physical possession of such Negotiable
Collateral to the Lenders. 2.4 Collection of Accounts, General Intangibles and
Negotiable Collateral. License/Sale of Collateral. At any time that an Event of
Default has occurred and is continuing, the Lenders or the Lenders' designee may
(a) notify customers or any Account Debtors of Borrower that the Accounts,
General Intangibles or Negotiable Collateral have been assigned to the Lenders
(if applicable) or that the Lenders has a security interest therein; (b) collect
the Accounts, General Intangibles and Negotiable Collateral directly and charge
the collection costs and expenses to the account of the Borrower and treat the
same as a Loan hereunder; (c) prepare for license or sale, advertise for license
or sale, and license or sell (in the manner provided for herein) the Collateral
and the Lenders are hereby granted a license or other right, solely pursuant to
the provisions of this Section 2.4, to use, without charge, Borrower's
intellectual property as it pertains to the Collateral, in completing production
of, advertising for license or sale, and licensing or selling any Collateral
and, in connection with the Lenders' exercise of its rights under this Section
2.4, Borrower's rights under all Collateral shall inure to the Lenders' benefit;
and (d) license or sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrower's premises) as the Lenders
determine is commercially reasonable, and apply any proceeds to the Loan
obligations in whatever manner or order the Lenders deem appropriate. The
Lenders may disclaim any warranties in connection therewith.
2.5 Delivery of Additional Documentation Required. At any time upon the request
of the Lenders, Borrower shall at its sole expense execute and deliver to the
Lenders all financing statements, continuation financing statements, fixture
filings, security agreements, pledges, assignments, control agreements,
endorsements of certificates of title, applications for title, affidavits,
reports, notices, schedules of accounts, letters of authority and all other
documents that the Lenders reasonably may request, in form satisfactory to the
Lenders, to perfect and continue perfected the Lenders' security interest in the
Collateral, and in order to fully consummate all of the transactions
contemplated hereby.
2.6 Power of Attorney. Borrower hereby irrevocably makes, constitutes and
appoints the Lenders (and any of the Lenders' officers, employees or agents
designated by the Lenders) as Borrower's true and lawful attorney in fact, with
power to (a) if Borrower refuses to, or fails timely to execute and deliver any
of the documents described in Section 2.5, sign the name of Borrower to any of
the documents described in Section 2.5, (b) subject to the rights of holders of
Subordinate Liens, at any time that an Event of Default has occurred and is
continuing, (i) sign Borrower's name on any invoice or bill of lading relating
to any Account, drafts against Account Debtors, schedules and assignments of
Accounts, verifications of Accounts, and notices to Account Debtors, (ii) send
requests for verification of Accounts, (iii) endorse Borrower's name on any
Collateral in the possession of the Lenders, (iv) notify the post office
authorities to change the address for delivery of Borrower's mail to an address
designated by the Lenders, to receive and open all mail addressed to Borrower,
and to retain all mail relating to the Collateral and forward all other mail to
Borrower, (v) make, settle and adjust all claims under Borrower's policies of
insurance and make all determinations and decisions with respect to such
policies of insurance and (vi) settle and adjust disputes and claims in respect
of the Accounts directly with Account Debtors, for amounts and upon terms that
the Lenders determine to be reasonable, and the Lenders may cause to be executed
and delivered any documents and releases that the Lenders determine to be
necessary. The appointment of the Lenders as Borrower's attorney, and each and
every one of the Lenders' rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully paid and performed and
the Lenders' obligations to extend credit under the Debenture have terminated.
2.7 Right to Inspect. The Lenders (through any of their officers, employees or
agents) shall have the right, from time to time hereafter, during regular
business hours and upon reasonable prior notice, to inspect any of Borrower's
books and records and to check, test and appraise the Collateral in order to
verify Borrower's financial condition or the amount, quality, value, condition
of or any other matter relating to the Collateral. 3. TITLE; PERMITTED LIENS.

         Borrower represents and warrants and agrees that, other than Permitted
Liens, Borrower is or will be lawfully possessed and the sole owner of its
property, free and clear of any mortgage, pledge or other secured debt and, all
such property is free and clear of any lien or encumbrance of any kind or
character, legal or equitable, other than Permitted Liens.
4. LOCATION OF COLLATERAL.

         Borrower represents and warrants to the Lenders that: (a) Exhibit A is
a correct and complete list of the location of Borrower's chief executive
office, the location of its books and records, the locations of the Collateral,
and the locations of all of its other places of business; and (b) Exhibit A
correctly identifies any of such facilities and locations that are not owned by
Borrower and sets forth the names of the owners and lessors or sublessors of
such facilities and locations. Borrower covenants and agrees that it will not
(i) maintain any Collateral at any location other than those locations listed
for Borrower on Exhibit A, (ii) otherwise change or add to any of such
locations, or (iii) change the location of its principal office from the
location identified in Exhibit A, unless it gives the Lenders at least 30 days'
prior written notice thereof and executes any and all financing statements and
other documents that the Lenders reasonably request in connection therewith.
Without limiting the foregoing, Borrower represents that all of its Inventory
(other than Inventory in transit) is, and covenants that all of its Inventory
will be, located either (A) on premises owned by Borrower, (B) on premises
leased by Borrower, provided that the Lenders have received an executed landlord
waiver from the landlord of such premises in form and substance satisfactory to
the Lenders or (C) in a warehouse or with a bailee, provided that the Lenders
have received an executed bailee letter in form and substance satisfactory to
the Lenders.
5. NAME; JURISDICTION OF ORGANIZATION.

         Borrower represents and warrants that (a) it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, (b) is qualified to do business and is in good standing in all
jurisdictions in which the failure to be so qualified will have a material
adverse effect on the conduct of its business, (c) has all requisite corporate
power and authority to own and operate its properties and carry on its business
as now conducted or presently proposed to be conducted, and (d) its exact legal
name is as set forth on the first page hereof. Borrower shall not change its
name or reorganize itself under the laws of any jurisdiction other than the
jurisdiction in which it is organized as of the date hereof or change its type
of entity without providing prior written notice to the Lenders.
6.       ACCOUNTS.
6.1 Validity. Borrower hereby represents and warrants, with respect to its
Accounts, that: (a) each existing Account represents, and each future Account
will represent, a bona fide sale or lease and delivery of goods by Borrower, or
rendition of services by Borrower, in the ordinary course of Borrower's
business; (b) each existing Account is, and each future Account will be, for a
liquidated amount payable by the Account Debtor thereon on the terms set forth
in the invoice therefor or in the schedule thereof delivered to the Lenders,
without any offset, deduction, defense, or counterclaim except those known to
Borrower and disclosed to the Lenders pursuant to this Agreement; (c) each copy
of an invoice delivered to the Lenders by Borrower will be a genuine copy of the
original invoice sent to the Account Debtor named therein; and (d) all goods
described in any invoice representing a sale of goods will have been delivered
to the Account Debtor and all services of Borrower described in each invoice
will have been performed.
6.2 Certain Actions. Borrower shall not re-date any invoice or sale or make
sales on extended dating beyond that customary in Borrower's business or extend
or modify any Account. If Borrower becomes aware of any matter adversely
affecting the collectibility of any Account involving an amount greater than
$50,000, including information regarding the Account Debtor's creditworthiness,
Borrower will promptly so advise the Lenders. 6.3 Disputes: Allowances. Upon
request of the Lenders, Borrower shall notify the Lenders promptly of all
disputes and claims in excess of $25,000 with any Account Debtor, and agrees to
settle, contest, or adjust such dispute or claim at no expense to the Lenders.
No discount, credit or allowance shall be granted to any Account Debtor, except
for discounts, credits and allowances made or given in the ordinary course of
Borrower's business when no Event of Default exists hereunder.

         Upon the occurrence of any Event of Default, the Lenders, in addition
to availing themselves of any remedies conferred upon them by law or equity or
by the terms of the Debentures or this Agreement, may pursue any available
remedy under the UCC.

<PAGE>

7. RIGHT TO CURE.

         In the Event of Default, so long as such Event of Default is
continuing, the Lenders, in their discretion, pay any amount or do any act
required of Borrower hereunder in order to preserve, protect, maintain or
enforce the Obligations, the Collateral or the Lenders' liens therein, and which
Borrower fails to pay or do, including payment of any judgment against Borrower,
any insurance premium, any warehouse charge, any finishing or processing charge,
any landlord's or bailee's claim, and any other lien upon or with respect to the
Collateral. All payments that the Lenders make under this Section 7 and all
out-of-pocket costs and expenses that the Lenders pay or incur in connection
with any action taken by it hereunder shall be charged to Borrower. Any payment
made or other action taken by the Lenders under this Section 7 shall be without
prejudice to any right to assert the occurrence of an Event of Default hereunder
and to proceed thereafter as herein provided. 8. LENDERS' RIGHTS, DUTIES AND
LIABILITIES.
8.1 No Impairment of Obligations. Borrower assumes all responsibility and
liability arising from or relating to the use, license, sale or other
disposition of the Collateral. The Obligations shall not be affected by any
failure of the Lenders to take any steps to perfect the Lenders' liens or to
collect or realize upon the Collateral, nor shall loss of or damage to the
Collateral release Borrower from any of the Obligations. 8.2 Borrower Remains
Liable. Anything herein to the contrary notwithstanding, Borrower shall remain
liable under each of its contracts and each of its licenses to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder. The Lenders shall not have any obligation or liability under any
contract or license by reason of or arising out of this Agreement or the
granting herein of a lien thereon or the receipt by the Lenders of any payment
relating to any contract or license pursuant hereto. The Lenders shall not be
required or obligated in any manner to perform or fulfill any of the obligations
of Borrower under or pursuant to any contract or license, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any contract or license, or to present or file any claims, or to take any action
to collect or enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times. 9.
INDEMNIFICATION.

         In any suit, proceeding or action brought by the Lenders relating to
the Debenture, this Agreement, the Warrants, any related documents, or
Collateral for any sum owing with respect thereto or to enforce any rights or
claims with respect thereto, Borrower will save, indemnify and keep the Lenders
harmless from and against all expense (including reasonable attorneys' fees and
expenses), loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the Account
Debtor or other individual or entity obligated on the Collateral, arising out of
a breach by Borrower of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to, or in favor of, such
obligor or its successors from Borrower, except in the case of the Lenders, to
the extent such expense, loss, or damage is attributable solely to the gross
negligence or willful misconduct of the Lenders as finally determined by a court
of competent jurisdiction. All such obligations of Borrower shall be and remain
enforceable against and only against Borrower and shall not be enforceable
against the Lenders.
10.      MISCELLANEOUS.
10.1 Additional Acts. Borrower shall, upon request, execute and deliver such
further instruments and documents and do such further acts and things as may be
reasonably required to provide to the Lenders the evidence of and security for
the Obligations as well as the perfection of the Lenders' security interest in
the Collateral and its priority against all other parties.
10.2 Amendment: Waiver; Approval. This Agreement shall not be amended, modified
or supplemented without the written agreement of Borrower and the Lenders at the
time of such amendment, modification or supplement. No waiver of any provision
of this Agreement shall be effective unless set forth in writing signed by the
party making such waiver, and any such waiver shall be effective only to the
extent therein set forth. Failure by the Lenders to insist upon full and prompt
performance of any provisions of this Agreement, or to take action upon the
occurrence of any Event of Default, shall not constitute a waiver of any rights
of the Lenders, and the Lenders may at any time thereafter exercise all
available rights and remedies with respect to such Event of Default. Receipt by
the Lenders of any instrument or document shall not constitute or be deemed to
be an approval thereof.
10.3 Entire Agreement. This Agreement, the Debentures and related documents
constitute the entire agreement and understanding among the Borrower and the
Lenders, and supersede any prior agreement and understanding relating to the
subject matter of this Agreement; provided, however, that notwithstanding the
foregoing, this Agreement shall supersede any previous security agreement, or
security interest or pledge, given by Borrower to secure any or all of the
Obligations.
10.4 Notice. Any notice which any party hereto gives to any other party
hereunder shall be in accordance with the provisions of the Debenture relating
thereto. 10.5 Benefit; Assignment. The rights, powers and remedies of the
Lenders and Borrower under this Agreement shall inure to their respective
benefits and to the benefit of their respective successors and permitted
assigns. The rights and obligations of either Borrower or the Lenders under this
Agreement may not be assigned and any purported assignment by one party shall be
null and void without prior written approval of the other party. 10.6 Governing
Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of California, as applied to agreements among residents made
and to be performed entirely within the State of California.
10.7 Headings. The titles and headings of the articles, sections and paragraphs
of this Agreement have been inserted as a matter of convenience of reference
only and shall not control or affect the meaning or construction of any of the
terms or provisions of this Agreement.
10.8 No Partnership or Joint Venture. The Lenders, by executing and performing
this Agreement (or any of the loan documents), shall not become a partner or
joint venturer with Borrower or any of its respective associates or affiliates
and all inspections herein provided for are for the sole benefit of the Lenders.
10.9 Time is of the Essence. Time is of the essence for the payment of all
amounts due the Lenders under the loan documents and performance and observance
by Borrower of each covenant, agreement, provision and term of the loan
documents.
10.10 Invalid Provisions. In the event any one or more of the provisions
contained in this Agreement or in any of the other loan documents shall for any
reason be held to be invalid, illegal or unenforceable in any respect by a court
of competent jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement or any other Loan Document, and
this Agreement and the other Loan Document shall be construed as if such
invalid, illegal or unenforceable provision had never been in the Loan
documents. 10.11 Acts Prohibited Under Law. Notwithstanding anything herein
contained to the contrary, the Lenders will not be required to make any
disbursement or perform any other act under this Agreement if, as a result
thereof, the Lenders will violate any law, statute, ordinance, rule, regulation
or judicial decision applicable thereto. The Lenders shall use their reasonable
efforts to promptly notify Borrower of the Lenders' inability to make such
disbursement or perform such act due to such violation.
10.12 Counterparts. This Agreement and the other Loan documents may be executed
in counterparts, and all said counterparts when taken together shall constitute
one and the same Agreement. 10.13 No Third Party Beneficiary. This Agreement and
the other Loan documents are only for the benefit of the parties hereto and
thereto and their permitted successors and assigns. No other person or entity
shall be entitled to rely on any matter set forth herein or therein or shall
gain any rights herein whether by subrogation or otherwise without the prior
written consent of such parties.

                                                        ***

<PAGE>

                      SIGNATURE PAGE OF SECURITY AGREEMENT

         IN WITNESS WHEREOF, this Security Agreement has been entered into as of
the date first written above.

                                       BORROWER:

                                       IQ BIOMETRIX, INC.
                                       a Delaware corporation

                                       By:
                                       -----------------------------------------
                                       William Scigliano, President

                                       LENDERS:

                                       By:
                                       -----------------------------------------

                                       Its:
                                       -----------------------------------------

<PAGE>

                                    Exhibit A

                           List of Collateral Location

                             Virginia and TennesseeTHIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
         NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
         THE SECURITIES LAWS OF ANY STATE. THEY MAY NOT BE SOLD, OFFERED FOR
         SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT (i) AN
         EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF
         COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT
         REGISTRATION IS NOT REQUIRED, (iii) RECEIPT OF A NO-ACTION LETTER FROM
         THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING
         WITH THE PROVISIONS OF SECTION 7 OF THIS WARRANT.

                               IQ BIOMETRIX, INC.

                        WARRANT TO PURCHASE COMMON STOCK

         THIS CERTIFIES THAT, for value received pursuant to that certain
Debenture of even date herewith (the "Debenture"), the undersigned and its
assigns (collectively, the "Holder") are entitled to subscribe for and purchase
up to that number of shares derived from the calculations set forth in Section
1.2 of the Debenture (as adjusted pursuant to Section 3 hereof, the "Shares") of
the fully paid and nonassessable Common Stock of IQ Biometrix, Inc. (the
"Company"), at the price of $0.20 per share (such price and such other price as
shall result, from time to time, from the adjustments specified in Section 3
hereof is herein referred to as the "Warrant Price"), subject to the provisions
and upon the terms and conditions hereinafter set forth. The term "Warrant" as
used herein, shall include this Warrant and any warrants issued upon transfer or
partial exercise of this Warrant unless the context clearly requires otherwise.
1. Term. The purchase right represented by this Warrant is exercisable, in whole
or in part, for five years from the date of the issuance of this Warrant (the
"Expiration Date"). 2. Method of Exercise; Payment; Issuance of New Warrant.
(a) Subject to Section 1 hereof, the purchase right represented by this Warrant
may be exercised by the Holder the surrender of this Warrant (with the notice of
exercise substantially in the form attached hereto as Exhibit A duly completed
and executed) at the principal office of the Company and by the payment to the
Company, either: (i) by certified or bank check, or by wire transfer to an
account designated by the Company in an amount equal to the then applicable
Warrant Price multiplied by the number of Shares then being purchased, (ii) by
the delivery of that number of shares of Common Stock having a value equal to
the Warrant Price, which shares may be the Shares underlying the Warrant, or
(iii) by the net exercise method set forth below in Section 2(b). If, in any
event, this Warrant has not been exercised on the Expiration Date, then the
Company shall, without further action by the Holder, exercise any unexercised
Shares by net exercise in accordance with Sections 2(b) throughand 2(d) below.

(b) Net Exercise; Procedure.

                           (i) In addition to and without limiting the rights of
the Holder under the terms of this
Warrant, but only to the extent this Warrant has not otherwise been exercised,
the Holder shall have the right to convert this Warrant or any portion thereof
(the "Conversion Right") into shares of Common Stock as provided in this Section
2(b) at any time or from time to time during the term of this Warrant. Upon
exercise of the Conversion Right with respect to a particular number of shares
subject to this Warrant (the "Converted Warrant Shares"), the Company shall
deliver to the Holder (without payment by the Holder of any exercise price or
any cash or other consideration) (X) that number of shares of fully paid and
nonassessable Common Stock equal to the quotient obtained by dividing the value
of this Warrant (or the specified portion hereof) on the Conversion Date (as
defined in subsection (d) hereof), which value shall be determined by
subtracting (A) the aggregate Warrant Price of the Converted Warrant Shares
immediately prior to the exercise of the Conversion Right from (B) the value of
the Converted Warrant Shares issuable upon exercise of this Warrant (or the
specified portion hereof) on the Conversion Date (as herein defined) by (Y) the
Fair Market Value of one share of Common Stock as determined in accordance with
Section 2(c) below.

                  Expressed as a formula, such conversion shall be computed as
follows:

         X =  B - A
            ---------
                   Y
                           Where:

                           X = the number of shares of Common Stock that may be
                               issued to Holder

                           Y =  the Fair Market Value of one share of Common
                               Stock as of the Conversion Date

                           A = the aggregate Warrant Price (i.e., Converted
                               Warrant Shares x Warrant Price)

                           B = the Fair Market Value of all Converted Warrant
                               Shares

         No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
Holder an amount in cash equal to the value of the resulting fractional share on
the Conversion Date (as hereinafter defined).

                           (c) Determination of Fair Market Value. For purposes
of this Section 2, the "Fair
Market Value" of a share of Common Stock as of the Conversion Date shall mean:

                           (i) If traded on a securities exchange, the fair
market value per share of the Common
Stock shall be deemed to be the average of the closing prices of the Common
Stock on such exchange over the five (5) day period ending one (1) business day
prior to the Conversion Date;

                           (ii) If traded over-the-counter, the fair market
value per share of the Common Stock
shall be deemed to be the average of the closing bid prices of the Common Stock
over the five (5) day period ending one (1) business day prior to the Conversion
Date; and

                           (iii) If there is no public market for the Common
Stock, then fair market value per
share shall be the value per share determined in good faith by the Company (by
action of its Board of Directors) for the issuance of Incentive Stock Options as
of the Conversion Date.

                  (d) Holder of Record; Certificates. The person or persons in
whose name(s) any certificate(s) representing the Shares shall be issuable upon
exercise of this Warrant shall be deemed to have become the holder(s) of record
of, and shall be treated for all purposes as the record holder(s) of the Shares
represented thereby (and such Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised (the "Conversion Date"). In the event of any exercise of
the rights represented by this Warrant, certificates for the shares of stock so
purchased shall be delivered to the Holder hereof as soon as practicable and, if
requested by the Holder, the Company shall cause its transfer agent to deliver
the certificate representing Shares issued upon exercise of this Warrant to a
broker or other person (as directed by the Holder exercising this Warrant)
within the time period required to settle any trade made by the Holder after
exercise of this Warrant.
3. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:
(a) Reclassification or Merger. In case of any reclassification or change of
securities of the class issuable upon exercise of this Warrant (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or in case of any
merger of the Company with or into another corporation (other than a merger with
another corporation in which the Company is the acquiring and the surviving
corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Warrant), or in case of
any sale of all or substantially all of the assets of the Company, the Company,
or such successor or purchasing corporation, as the case may be, shall duly
execute and deliver to the Holder a new Warrant (in form and substance
satisfactory to the Holder), or the Company shall make appropriate provision
without the issuance of a new Warrant, so that the Holder shall have the right
to receive upon exercise of this Warrant, at a total purchase price not to
exceed that payable upon the exercise of the unexercised portion of this
Warrant, and in lieu of the shares of Common Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change or
merger by a holder of the number of shares of Common Stock then purchasable
under this Warrant. Such new Warrant shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 3. The provisions of this subparagraph (a) shall similarly apply to
successive reclassifications, changes, mergers and transfers.
(b) Subdivisions, Combinations and Stock Dividends. If the Company shall at any
time prior to the expiration of this Warrant subdivide its outstanding shares of
Common Stock, by split-up or otherwise, or combine its outstanding shares of
Common Stock, or issue additional shares of its Common Stock as a dividend on
its Common Stock, the number of Shares issuable on the exercise of this Warrant
shall forthwith be proportionately increased in the case of a subdivision or
stock dividend, or proportionately decreased in the case of a combination.
Appropriate adjustments shall also be made to the purchase price payable per
share, but the aggregate purchase price payable for the total number of Shares
purchasable under this Warrant (as adjusted) shall remain the same. 4. Notice of
Adjustments. Whenever the Warrant Price or the number of Shares purchasable
hereunder shall be adjusted pursuant to Section 3 hereof, the Company shall make
a certificate setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the Adjusted Warrant Price and the number of Shares
purchasable hereunder after giving effect to such adjustment, and shall cause
copies of such certificate to be mailed (without regard to Section 10 hereof, by
first class mail, postage prepaid) to the Holder at such Holder's last known
address.
5. Fractional Shares. No fractional shares of Common Stock will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor based on the fair market value of
the Common Stock on the date of exercise.
6. Compliance with Securities Act; Disposition of Warrant or Shares of Common
Stock.
(a) Investment Only. The Holder understands that the Company is issuing this
Warrant to Holder in reliance upon Holder's representation to the Company, which
by Holder's acceptance of this Warrant Holder hereby confirms, that the Warrant
and the Common Stock issuable upon conversion thereof (collectively, the
"Securities") are being acquired for investment for Holder's own account, not as
a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that Holder has no present intention of selling, granting any
participation in, or otherwise distributing the same. By accepting this Warrant,
Holder further represents that Holder does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.
(b) Disclosure of Information. Holder has received and reviewed information
about the Company and has had an opportunity to discuss the Company' business,
management and financial affairs with its management. Holder understands and
acknowledges that such discussions, as well as any written information issued by
the Company, (i) were intended to describe the aspects of the Company's business
and prospects which the Company believes to be material, but were not
necessarily an exhaustive description, and (ii) may have contained
forward-looking statements involving known and unknown risks and uncertainties
which may cause the Company's actual results in future periods or plans for
future periods to differ materially from what was anticipated and that no
representations or warranties were or are being made with respect to any such
forward-looking statements or the probability of achieving any of the results
projected in any of such forward-looking statements.
(c) Investment Experience. Holder acknowledges that it is able to fend for
itself, can bear the economic risk of its investment and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Securities.
(d) Accredited Investor. Holder is an "accredited investor" within the meaning
of SEC Rule 501 of Regulation D, as now in effect and shall submit to the
Company such further assurances of such status as may be reasonably requested by
the Company.
(e) Restricted Securities.
(1) Current Limitation. Holder understands that the Securities it is receiving
are currently characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such Securities may be resold without registration under
the Securities Act of 1933 only in certain limited circumstances. In this
connection, the Holder represents that it is familiar with SEC Rule 144, as now
in effect, and understands the resale limitations imposed thereby and by the
Act.

                           (2) Registration of Warrant Shares. IQB is currently
preparing a form SB-2 for
filling with the Securities and Exchange Commission. The Shares of Common Stock
issuable upon the exercise of this Warrant shall be included for registration in
such filing. While acting in a commercially reasonable fashion, IQB shall
promptly after the Closing (as defined in the Debenture), file such form for
registration and use its commercially reasonable efforts to effect such
registration (including, without limitation, filing post-effective amendments,
appropriate qualifications under applicable blue sky or other state securities
laws, and appropriate compliance with the Securities Act), of the Shares. The
term "registration" shall refer to a registration effected by preparing and
filing a registration statement in compliance with the Securities Act and
applicable rules and regulations thereunder with the Securities and Exchange
Commission, and the declaration or ordering of the effectiveness of such
registration statement.
(f) Legends. This Warrant and all Shares issued upon exercise of this Warrant
(unless registered under the Act and any applicable state securities laws) shall
be stamped or imprinted with a legend in substantially the form appearing at the
top of this Warrant. Said legend(s) shall be removed by the Company, upon the
written request of a Holder, at such time as the restrictions on the transfer of
the applicable security shall have terminated. (g) Disposition of Warrant or
Shares. With respect to any offer, sale or other disposition of this Warrant or
any Shares acquired pursuant to the exercise of this Warrant prior to
registration of such Warrant or Shares, the Holder agrees to give written notice
to the Company prior thereto, describing briefly the manner thereof, together
with a written opinion of such Holder's counsel, or other evidence satisfactory
to the Company, to the effect that such offer, sale or other disposition may be
effected without registration or qualification (under the Act as then in effect
or any federal or state securities law then in effect) of this Warrant or the
Shares and indicating whether or not under the Act certificates for this Warrant
or the Shares to be sold or otherwise disposed of require any restrictive legend
as to applicable restrictions on transferability in order to ensure compliance
with such law. Upon receiving such written notice and reasonably satisfactory
opinion or other evidence, the Company, as promptly as practicable but no later
than fifteen (15) days after receipt of the written notice, shall notify such
Holder that such Holder may sell or otherwise dispose of this Warrant or such
Shares, all in accordance with the terms of the notice delivered to the Company.
If a determination has been made pursuant to this Section 6(g) that the opinion
of counsel for the Holder or other evidence is not reasonably satisfactory to
the Company, the Company shall so notify the Holder promptly with details
thereof after such determination has been made. Notwithstanding the foregoing,
this Warrant or such Shares may, as to such federal laws, be offered, sold or
otherwise disposed of in accordance with Rule 144 or 144A under the Act,
provided that the Company shall have been furnished with such information as the
Company may reasonably request to provide a reasonable assurance that the
provisions of Rule 144 or 144A have been satisfied. Each certificate
representing this Warrant or the Shares thus transferred (except a transfer
pursuant to Rule 144 or 144A) shall bear a legend as to the applicable
restrictions on transferability in order to ensure compliance with such laws,
unless in the aforesaid opinion of counsel for the Holder, such legend is not
required in order to ensure compliance with such laws. The Company may issue
stop transfer instructions to its transfer agent in connection with such
restrictions.
(h) Applicability of Restrictions. Neither any restrictions of any legend
described in this Warrant nor the requirements of Section 6(g) above shall apply
to any transfer or grant of a security interest in this Warrant (or the Common
Stock obtainable upon exercise thereof) or any part hereof (i) to a partner of
the Holder if the Holder is a partnership or to a member of the Holder if the
Holder is a limited liability company, (ii) to a partnership of which the Holder
is a partner or a limited liability company of which the Holder is a member, or
(iii) to any affiliate of the Holder if the Holder is a corporation; provided,
however, in any such transfer, if applicable, the transferee shall on the
Company's request agree in writing to be bound by the terms of this Warrant as
if an original Holder hereof.

                  (i) Registration of Shares. While acting in a commercially
reasonable fashion, IQB shall promptly after the Issue Date (as defined in the
Debenture), file for registration and use its commercially reasonable efforts to
effect such registration (including, without limitation, filing post-effective
amendments, appropriate qualifications under applicable blue sky or other state
securities laws, and appropriate compliance with the Securities Act) the Common
Stock issuable upon the exercise of this Warrant. The term "registration" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder with the Securities and Exchange Commission, and the
declaration or ordering of the effectiveness of such registration statement.

7. Rights as Shareholders; Information. No Holder of this Warrant, as such,
shall be entitled to vote or receive dividends or be deemed the Holder of Common
Stock or any other securities which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder of this Warrant, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to receive
notice of meetings, or to receive dividends or subscription rights or otherwise
until this Warrant shall have been exercised and the Shares purchasable upon the
exercise hereof shall have become deliverable, as provided herein.
Notwithstanding the foregoing, the Company will transmit to the Holder of this
Warrant such information, documents and reports as are generally distributed to
the holders of any class or series of the securities of the Company concurrently
with the distribution thereof to the shareholders.
8. Notification of Merger. The Company shall provide the Holder with at least
twenty (20) days' written notice prior to the closing thereof of the terms and
conditions of any of the following transactions: (i) the sale, lease, exchange,
conveyance or other disposition of all or substantially all of the Company's
property or business, or (ii) its merger into or consolidation with any other
corporation (other than a wholly-owned subsidiary of the Company), or (iii) any
transaction (including a merger or other reorganization) or series of related
transactions, in which more than 50% of the voting power of the Company is
disposed of.
9. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought. 10.
Notices. Any notice, request, communication or other document required or
permitted to be given or delivered to the Holder or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid, to
each such Holder at its address as shown on the books of the Company or to the
Company at the address indicated therefor on the signature page of this Warrant.
11. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Shares issuable upon the exercise or conversion of
this Warrant shall survive the exercise, conversion and termination of this
Warrant and all of the covenants and agreements of the Company shall inure to
the benefit of the successors and assigns of the holder hereof.
12. Lost Warrants or Stock Certificates. The Company covenants to the Holder
that, upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant or any stock certificate
and, in the case of any such loss, theft or destruction, upon receipt of an
indemnity reasonably satisfactory to the Company, or in the case of any such
mutilation upon surrender and cancellation of such Warrant or stock certificate,
the Company will make and deliver a new Warrant or stock certificate, of like
tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock
certificate.
13. Descriptive Headings. The descriptive headings of the several paragraphs of
this Warrant are inserted for convenience only and do not constitute a part of
this Warrant. The language in this Warrant shall be construed as to its fair
meaning without regard to which party drafted this Warrant.
14. Governing Law. This Warrant shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of California, with reference to conflict of laws principles. 15. Survival of
Representations, Warranties and Agreements. All representations and warranties
of the Holder contained herein shall survive the date of issuance of this
Warrant, the exercise or conversion of this Warrant (or any part hereof) or the
termination or expiration of rights hereunder. All agreements of the Company and
the Holder hereof contained herein shall survive indefinitely until, by their
respective terms, they are no longer operative. 16. Remedies. In case any one or
more of the covenants and agreements contained in this Warrant shall have been
breached, the Holders hereof (in the case of a breach by the Company), or the
Company (in the case of a breach by a Holder), may proceed to protect and
enforce their or its rights either by suit in equity and/or by action at law,
including, but not limited to, an action for damages as a result of any such
breach and/or an action for specific performance of any such covenant or
agreement contained in this Warrant.
17. No Impairment of Rights. The Company will not, by amendment of its
certificate of incorporation or through any other means, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder of this Warrant against impairment. 18. Severability.
Whenever possible, each provision of this Warrant shall be interpreted in such a
manner as to be valid, legal and enforceable under all applicable laws and
regulations. If, however, any provision of this Warrant shall be invalid,
illegal or unenforceable under any such law or regulation in any jurisdiction,
it shall, as to such jurisdiction, be deemed modified to conform to the minimum
requirements of such law or regulation, or, if for any reason it is not deemed
to be so modified, it shall be invalid, illegal or unenforceable only to the
extent of such invalidity, illegality or limitation on enforceability without
affecting the remaining provisions of this Warrant or the validity, legality or
enforceability of such provision in any other jurisdiction. 19. Entire
Agreement. This Warrant and the Purchase Agreement constitute the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.

                    [The Remainder of this Page is Intentionally Blank]

<PAGE>

Date of issuance: __________________

                               IQ Biometrix, Inc.

                               By:
                               -------------------------------------------------

                               Title:
                               -------------------------------------------------

                               Address:

                               Holder

                               By:
                               -------------------------------------------------

                               Title:
                               -------------------------------------------------

                               Address:

              [Signature Page to Warrant to Purchase Common Stock]

<PAGE>

                                    EXHIBIT A

                               NOTICE OF EXERCISE

To:  IQ Biometrix, Inc. (the "Company")

         1. The undersigned hereby elects to purchase ___________ shares of
Common Stock of the Company pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full.

         2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:

                                     (Name)

                                    (Address)

         3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares,
all except as in compliance with applicable securities laws.

                                   (Signature)

(Date)

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