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                                                                    EXHIBIT 10.1

                            PACIFIC BIOMETRICS, INC.

                            1996 STOCK INCENTIVE PLAN
               (as amended August 28, 1997 and September 17, 2003)

SECTION 1.        Purpose

         The purpose of the Pacific Biometrics, Inc. 1996 Stock Incentive Plan
(the "Plan") is to enable Pacific Biometrics, Inc. (the "Company") and its
subsidiaries (as defined below) to provide employees, officers, directors,
consultants and advisors the opportunity to acquire a proprietary interest in
the Company and to benefit from the appreciation in the value of its common
shares and thereby to enhance the ability of the Company to attract and retain
employees and other persons of exceptional ability who, by their participation
in the Plan, will have a greater incentive to contribute to the Company's
long-term success and growth. For purposes of the Plan, a "subsidiary" means any
subsidiary corporation as defined in Section 424(f) of the Internal Revenue Code
of 1986, as amended, (the "Code").

SECTION 2.        Types of Awards

         2.1      Awards under the Plan may be in the form of (i) incentive
stock options or non-qualified stock options ("Stock Options"); (ii) Stock
Appreciation Rights; (iii) Restricted Stock; (iv) Performance Shares; (v) Loans;
and/or (vi) Tax Offset Payments.

         2.2      An eligible person may be granted one or more types of awards,
which may be independent or granted in tandem. If two awards are granted in
tandem the grantee may exercise (or otherwise receive the benefit of) one award
only to the extent he or she relinquishes the tandem award.

SECTION 3.        Administration

         3.1      The Plan shall be administered by the Compensation Committee
of the Company's Board of Directors (the "Board") or such other committee of
directors as the Board shall designate (the "Committee"), which shall consist of
not less than two disinterested persons (as such term is defined in Rule 16b-3
under the Securities Exchange Act of 1934 (the "Act") or any successor rule) who
shall serve at the pleasure of the Board. In addition, from and after the first
meeting of the stockholders of the Company occurring after December 31, 1999 at
which directors are to be elected, all members of the Committee shall be
"outside directors" within the contemplation of Section 162(m)(4)(C)(i) of the
Code. The President of the Company shall also be a member of the Committee,
ex-officio, whether or not he is otherwise eligible to be a member of the
Committee. The Committee shall be appointed annually by the Board, which may at
any time and from time to time remove any members of the Committee, with or
without cause, appoint additional members to the Committee and fill vacancies,
however caused, in the Committee. A majority of the members of the Committee
shall constitute a quorum. All determinations of the Committee shall be made by
a majority of its members present at a meeting duly called and held except that
the Committee may delegate to any one of its members the authority of the
Committee with respect to the grant of Options to persons who shall not be
officers and/or directors of the Company and who are not, and in the judgment of
the Committee may not be reasonably expected to become, a "covered employee"
within the meaning of Section 162(m)(3) of the Code. Any decision or
determination of the Committee reduced to writing and signed by all of the
members of the Committee (or by the member of the Committee to whom authority
has been delegated) shall be fully as effective as if it had been made at a
meeting duly called and held.

         3.2      The Committee shall have the authority to grant awards to
eligible persons under the Plan; to adopt, alter and repeal such administrative
rules, guidelines and practices governing the Plan as it shall deem advisable;
to interpret the terms and provisions of the Plan and any award granted under
the Plan; and to otherwise supervise the administration of the Plan. In
particular, and without limiting its authority and powers, the Committee shall
have the authority:

                  (a)      to determine whether and to what extent any award or
combination of awards will be granted hereunder, including whether any awards
will be granted in tandem with each other;

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                  (b)      to select the persons to whom awards will be granted;

                  (c)      to determine the number of shares of the common stock
of the Company (the "Stock") to be covered by each award granted hereunder;

                  (d)      to determine the terms and conditions of any award
 granted hereunder, including, but not limited to, any vesting or other
restrictions based on performance and such other factors as the Committee may
determine, and to determine whether the terms and conditions of the award are
satisfied;

                  (e)      to determine the treatment of awards upon an
employee's retirement, disability, death, termination for cause or other
termination of employment;

                  (f)      to determine pursuant to a formula or otherwise the
Fair Market Value of the Stock on a given date; Fair Market Value shall mean the
value of one (1) share of Common Stock, determined as follows:

                           (i) If the Common Stock is not listed or admitted to
trading on a stock exchange, the last sale price of the Common Stock in the
over-the-counter market on the date of valuation, or,

                           (ii) If the Common Stock is then listed or admitted
to trading on any stock exchange, the closing sale price on the date of
valuation on the principal stock exchange on which the Common Stock is then
listed or admitted to trading. If no closing sale price is quoted on such day,
or if no sale takes place on such day on such principal exchange, as the case
may be, then the closing sale price on the over-the-counter market or the
closing sale price of the Common Stock on such exchange on the next preceding
day on which a sale occurred or closing sale price was reported, as the case may
be, shall be the Fair Market Value. During such times as there is not a market
price available, the Fair Market Value shall be determined by the Board or the
Committee in good faith, which determination shall be conclusive and binding on
all interested parties.

                  (g)      to determine whether the amount of any dividends
declared with respect to the number of shares covered by an award (i) will be
paid to the holder currently or (ii) will be deferred and deemed to be
reinvested or (iii) will otherwise be credited to such holder, or that the
holder has no rights with respect to such dividends;

                  (h)      to determine whether to what extent, and under what
circumstances Stock and other amounts payable with respect to an award will be
deferred either automatically or at the election of a holder, including
providing for and determining the amount (if any) of deemed earnings on any
deferred amount during any deferral period;

                  (i)      to provide that the shares of Stock received as a
result of an award shall be subject to a right of first refusal, pursuant to
which the holder shall be required to offer to the Company any shares that the
holder wishes to sell, subject to such terms and conditions as the Committee may
specify;

                  (j)      to amend the terms of any award, prospectively or
retroactively; provided, however, that no amendment shall impair the rights of
the award holder without his or her consent;

                  (k)      to substitute new Stock Options for previously
granted Stock Options, or for options granted under other plans, in each case
including previously granted options having higher option prices; and

                  (l)      to allow an option holder to exercise his or her
option prior to its expiration and pay for the acquired shares with currently
owned shares, while at the same time receiving replacement options, at the then
current market price, for the same remaining term as the option exercised, or
pay for the acquired shares with a portion of the acquired shares.

         3.3      All determinations made by the Committee pursuant to the
provisions of the Plan shall be final and binding on all persons, including the
Company and Plan participants.

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         3.4      The Committee may from time to time delegate to one or more
officers of the Company any or all of its authority granted hereunder except
with respect to awards granted to persons subject to Section 16 of the Act. The
Committee shall specify the maximum number of shares that the officer or
officers to whom such authority is delegated may award.

SECTION 4.        Stock Subject to Plan

         4.1      The total number of shares of Stock reserved and available for
distribution under the Plan shall be 1,800,000 (subject to further adjustment as
provided below). Such shares may consist of authorized but unissued shares or
treasury shares. The exercise of a Stock Appreciation Right for cash, the
payment of any other award in cash shall not count against this share limit.

         4.2      To the extent an option terminates without having been
exercised, or an award terminates without the holder having received payment of
the award, or shares awarded are forfeited, the shares subject to such award
shall again be available for distribution in connection with future awards under
the Plan. At no time will the number of shares issued under the Plan plus the
number of shares covered by outstanding awards under the Plan exceed the number
of shares authorized under the Plan.

         4.3      In the event of any merger, reorganization, consolidation,
sale of substantially all assets, recapitalization, Stock dividend, Stock split,
spin-off, split-up, split-off, distribution of assets or other change in
corporate structure affecting the Stock, a substitution or adjustment, as may be
determined to be appropriate by the Committee in its sole discretion, shall be
made in the aggregate number of shares reserved for issuance under the Plan, the
number of shares subject to outstanding awards and the amounts to be paid by
employees or the Company, as the case may be, with respect to outstanding
awards.

SECTION 5.        Eligibility

         Officers, directors, employees, consultants and advisors of the Company
or a subsidiary are eligible to be granted awards under the Plan (the
"Participants"). The Participants under the Plan shall be selected from time to
time by the Committee, in its sole discretion, from among those eligible
Participants.

SECTION 6.        Stock Options

         6.1      The Stock Options awarded under the Plan may be of two types:
(i) Incentive Stock Options within the meaning of Section 422 of the Code or any
successor provision thereto; and (ii) Non-Incentive Stock Options. To the extent
that any Stock Option does not qualify as an Incentive Stock Option, it shall
constitute a Non-Qualified Stock Option.

         6.2      Subject to the following provisions, Stock Options awarded
under the Plan shall be in such form and shall have such terms and conditions as
the Committee may determine:

                  (a)      Option Price. The option exercise price per share of
Stock purchasable under a Stock Option shall be determined by the Committee.
Each Option shall state the Exercise Price, which price shall be 100% of the
Fair Market Value on the date of grant in the case of incentive stock options,
provided, however, that, in the case of a Participant who owns more than 10% of
the total combined voting power of the Common Stock at the time an Option which
is an incentive stock option is granted to him, the initial per share option
price shall not be less than 110% of the Fair Market Value of a share of the
Common Stock on the date of grant. The aggregate Fair Market Value of the shares
of the Common Stock for which any Participant may be granted incentive stock
options which are exercisable for the first time in any calendar year (whether
under the terms of the Plan or any other stock option plan of the Company) shall
not exceed $100,000. In the case of non-incentive stock options, the exercise
price shall not be less than 85% of the Fair Market Value on the date of the
grant; provided, however, that, in the case of a non-incentive stock option
granted to a person who is, or in the judgment of the Committee may reasonably
be expected to become, a "covered employee" within the meaning of Section
162(m)(3) of the Code, and in the case of non-employee director's options, the
initial per share option price shall not be less than the Fair Market Value of
the Common Stock on the date of grant.

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                  (b)      Option Term. The term of each Stock Option shall be
fixed by the Committee. All Options under this Plan expire not later than the
tenth (10th) anniversary of the date of grant.

                  (c)      Exercisability. Stock Options shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Committee. If the Committee provides that any Stock Option is
exercisable only in installments, the Committee may waive such installment
exercise provisions at any time in whole or in part.

                  (d)      Method of Exercise. Stock Options may be exercised in
whole or in part at any time during the option period by giving written notice
of exercise to the Company specifying the number of shares to be purchased,
accompanied by payment of the purchase price. Payment of the purchase price
shall be made in such manner as the Committee may provide in the award, which
may include cash (including cash equivalents), delivery of shares of Stock
already owned by the optionee or subject to awards hereunder, through the
delivery of irrevocable instructions to a broker to deliver promptly to the
Company an amount equal to the purchase price, or by any other manner permitted
by law and determined by the Committee, or any combination of the foregoing. The
Committee may provide that all or part of the shares received upon the exercise
of a Stock Option which are paid for using Restricted Stock or Performance
Shares shall be restricted or deferred in accordance with the original terms of
the award in question. The Committee shall determine acceptable methods for
providing notice of exercise for tendering shares of Stock and for delivery of
irrevocable instructions to a broker and may impose such limitations and
prohibitions on the use of Stock or irrevocable instructions to a broker to
exercise as it deems appropriate.

                  (e)      No Shareholder Rights. An optionee shall have neither
rights to dividends or other rights of a shareholder with respect to shares
subject to a Stock Option until the optionee has given written notice of
exercise and has paid for such shares.

                  (f)      Surrender Rights. The Committee may provide that
options may be surrendered for cash upon any terms and conditions set by the
Committee.

                  (g)      Non-transferability. No Stock Option shall be
transferable by the optionee other than by will or by the laws of descent and
distribution. During the optionee's lifetime, all Stock Options shall be
exercisable only by the optionee.

                  (h)      Termination of Employment. If an optionee's
employment with the Company or a subsidiary terminates by reason of death,
disability, retirement, voluntary or involuntary termination or otherwise, the
Stock Option shall be exercisable to the extent determined by the Committee. The
Committee may provide that, notwithstanding the option term fixed pursuant to
Section 6.2(b), a Stock Option which is outstanding on the date of an optionee's
death shall remain outstanding for an additional period after the date of such
death.

         6.3      (a)      Notwithstanding the provisions of Section 6.2, no
Incentive Stock Option shall (i) have an option price which is less than 100% of
the Fair Market Value of the Stock on the date of the award of the Stock Option,
(ii) be exercisable more than ten years after the date such Incentive Stock
Option is awarded or (iii) be awarded more than ten years after the effective
date of the Plan. No Incentive Stock Option shall be granted to an employee who,
at the time the option is granted, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or of its
subsidiary, unless the option price, at the time of the award, is at least 110%
of the Fair Market Value of the stock subject to the option and such option is
not exercisable after the expiration of five years from the date of the award.

                  (b)      The initial per share option price of any option
which is a Non-Incentive Stock Option shall not be less than 85% of the Fair
Market Value of a share of the Common Stock on the date of the grant; provided,
however, that, in the case of a Non-Incentive Stock Option granted to a person
who is, or in the judgment of the Committee may reasonably be expected to
become, a "covered employee" within the meaning of Section 162(m)(3) of the
Code, the initial per share option price shall not be less than the Fair Market
Value of a share of the Common Stock on the date of grant.

         6.4      (a)      The aggregate Fair Market Value on the date of grant
of the shares of the Common Stock for which any Participant may be granted
Incentive Stock Options which are exercisable for the first time in any

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calendar year (whether under the terms of the Plan or any other stock option
plan of the Company) shall not exceed $100,000.

                  (b)      No Participant shall, during any fiscal year of the
Company, be granted Options to purchase more than 1,000,000 shares of the Common
Stock.

SECTION 7.        Stock Appreciation Rights

         7.1      A Stock Appreciation Right shall entitle the holder thereof to
receive payment of an amount, in cash, shares of Stock or a combination thereof,
as determined by the Committee, equal in value to the excess of the Fair Market
Value of the shares as to which the award is granted on the date of exercise
over an amount specified by the Committee. Any such award shall be in such form
and shall have such terms and conditions as the Committee may determine.

         7.2      The Committee may provide that a Stock Appreciation Right may
be exercised only within the 60-day period following occurrence of a Change of
Control (as defined in Section 15.2). The Committee may also provide that in the
event of a Change of Control the amount to be paid upon the exercise of a Stock
Appreciation Right shall be based on the Change of Control Price (as defined in
Section 15.3).

SECTION 8.        Restricted Stock

         Subject to the following provisions, all awards of Restricted Stock
shall be in such form and shall have such terms and conditions as the Committee
may determine:

                  (a)      The Restricted Stock award shall specify the number
of shares of Restricted Stock to be awarded, the price, if any, to be paid by
the recipient of the Restricted Stock and the date or dates on which, or the
conditions upon the satisfaction of which, the Restricted Stock will vest. The
vesting of Restricted Stock may be conditioned upon the completion of a
specified period of service with the Company or a subsidiary, upon the
attainment of specified performance goals or upon such other criteria as the
Committee may determine.

                  (b)      Stock certificates representing the Restricted Stock
awarded to a Participant shall be registered in the Participant's name, but the
Committee may direct that such certificates shall be held by the Company on
behalf of the Participant. Except as may be permitted by the Committee, no share
of Restricted Stock may be sold, transferred, assigned, pledged or otherwise
encumbered by the Participant until such share has vested in accordance with the
terms of the Restricted Stock award. At the time Restricted Stock vests, a
certificate for such vested shares shall be delivered to the Participant (or his
or her designated beneficiary in the event of death), free of all restrictions.

                  (c)      The Committee may provide that the Participant shall
have the right to vote or receive dividends on Restricted Stock. The Committee
may provide that Stock received as a dividend on, or in connection with a stock
split of Restricted Stock, shall be subject to the same restrictions as the
Restricted Stock.

                  (d)      Except as may be provided by the Committee, in the
event of a Participant's termination of employment before all of his or her
Restricted Stock has vested, or in the event any conditions to the vesting of
Restricted Stock have not been satisfied prior to any deadline for the
satisfaction of such conditions set forth in the award, the shares of Restricted
Stock which have not vested shall be forfeited, and the Committee may provide
that (i) any purchase price paid by the Participant shall be returned to the
Participant or (ii) a cash payment equal to the Restricted Stock's Fair Market
Value on the date of forfeiture, if lower, shall be paid to the Participant.

                  (e)      The Committee may waive, in whole or in part, any or
all of the conditions to receipt of, or restrictions with respect to, any or all
of the Participant's Restricted Stock.

SECTION 9.        Performance Share Awards

         Subject to the following provisions, all awards of Performance Shares
shall be in such form and shall have such terms and conditions as the Committee
may determined:

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                  (a)      The Performance Shares award shall specify the number
of Performance Shares to be awarded to any Participant and the duration of the
period (the "Performance Period") after which, and the terms pursuant to which,
the Performance Shares will be issued to the Participant. The Committee may
condition the award of Performance Shares, or receipt of Stock or cash at the
end of the Performance Period, upon the attainment of specified performance
goals or such other criteria as the Committee may determine.

                  (b)      Except as may be permitted by the Committee,
Performance Share awards may not be sold, assigned, transferred, pledged or
otherwise encumbered during the Performance Period.

                  (c)      At the expiration of the Performance Period, the
Participant (or his or her designated beneficiary in the event of death) shall
receive (i) certificates for the number of shares of Stock equal to the number
of shares covered by the Performance Share award, (ii) cash equal to the fair
market value of such Stock or (iii) a combination of shares and cash, as the
Committee may determine.

                  (d)      Except as may be provided by the Committee, in the
event of a Participant's termination of employment before the end of the
Performance Period, his or her Performance Share award shall be forfeited.

                  (e)      The Committee may waive, in whole or in part, any or
all of the conditions to receipt of, or restrictions with respect to, Stock or
cash under a Performance Share award.

SECTION 10.       Loans

         The Committee may provide that the Company shall make, or arrange for,
a loan or loans to an employee with respect to the exercise of any Stock Option
awarded under the Plan, with respect to the payment of the purchase price, if
any, of any Restricted Stock awarded hereunder, or with respect to any taxes
arising from an award hereunder; provided, however, that the Company shall not
loan to an employee more than the excess of the purchase or exercise price of an
award (together with the amount of any taxes arising from such award) over the
par value of any shares of Stock awarded. The Committee shall have full
authority to decide whether a loan will be made hereunder and to determine the
amount, term and provisions of any such loan, including the interest rate to be
charged, whether the loan will be with or without recourse against the borrower,
any security for the loan, the terms on which the loan is to be repaid and the
conditions, if any, under which the loan may be forgiven.

SECTION 11.       Tax Offset Payments

         The Committee may provide for a Tax Offset Payment by the Company to
the employee in an amount specified by the Committee, which shall not exceed the
amount necessary to pay the federal, state, local and other taxes payable with
respect to any award and receipt of the Tax Offset Payment, assuming the
employee is taxed at the maximum tax rate applicable to such income. The Tax
Offset Payment may be paid in cash, Stock or a combination thereof, as
determined by the Committee.

SECTION 12.       Purchase for Investment

         12.1     Unless the shares to be issued upon the exercise of an Option
by a Participant shall be registered prior to the issuance thereof under the
Securities Act of 1933, as amended, such Participant will, as a condition of the
Company's obligation to issue such shares, be required to give a representation
in writing that he or she is acquiring such shares for his or her own account as
an investment and not with a view to, or for sale in connection with, the
distribution of any thereof.

SECTION 13.       Tax Withholding

         13.1     Each Participant shall, no later than the date as of which the
value of an award first becomes includable in the Participant's gross income for
applicable tax purposes, pay to the Company, or make arrangements satisfactory
to the Committee regarding payment of, any federal, state, local or other taxes
of any kind required by law to be withheld with respect to the award. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements, and the Company (and, where applicable, any subsidiary), shall,
to the extent

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permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the Participant.

         13.2     To the extent permitted by the Committee, and subject to such
terms and conditions as the Committee may provide, a Participant may irrevocably
elect to have the withholding tax obligation, or any additional tax obligation
with respect to any awards hereunder, satisfied by (i) having the Company
withhold shares of Stock otherwise deliverable to the Participant with respect
to the award or (ii) delivering to the Company, shares of unrestricted Stock.

         13.3     In the event of the death of a Participant, a condition of
exercising any Option shall be the delivery to the Company of such tax waivers
and other documents as the Committee shall determine.

SECTION 14.       Amendments and Termination

         The Board may discontinue the Plan at any time and may amend it from
time to time. No amendment or discontinuation of the Plan shall adversely affect
any award previously granted without the Participant's written consent.
Amendments may be made without shareholder approval except as required to
satisfy Rule 16b-3 under the Act (or any successor rule), Section 162(m) of the
Code or other regulatory requirements. The Plan will terminate no later than
July 9, 2006.

SECTION 15.       Change of Control

         15.1     In the event of a Change of Control, unless otherwise
determined by the Committee at the time of grant or by amendment (with the
holder's consent) of such grant:

                  (a)      all outstanding Stock Options and all outstanding
Stock Appreciation Rights awarded under the Plan shall become fully exercisable
and vested;

                  (b)      the restrictions and deferral limitations applicable
to any outstanding Restricted Stock and Deferred Stock awards under the Plan
shall lapse and such shares and awards shall be deemed fully vested; and

                  (c)      to the extent the cash payment of any award is based
on the Fair Market Value of Stock, such Fair Market Value shall be the Change of
Control Price.

         15.2     A "Change of Control" shall be deemed to occur on:

                  (a)      The date that any person or group deemed a person
under Sections 3(a)(9) and 13(d)(3) of the Act, other than the Company and its
subsidiaries as determined immediately prior to that date, in a transaction or
series of transactions has become the beneficial owner, directly or indirectly
(with beneficial ownership determined as provided in Rule 13d-3, or any
successor rule, under such Act) of 20% or more of the outstanding securities of
the Company having the right under ordinary circumstances to vote at an election
of the Board;

                  (b)      the date on which one-half or more of the members of
the Board shall consist of persons other than Current Directors (for these
purposes, a "Current Director" shall mean any member of the Board as of the
effective date of the Plan and any successor of a Current Director whose
nomination or election has been approved by a majority of the Current Directors
then on the Board); or

                  (c)      the date of approval by the shareholders of the
Company of an agreement providing for (A) the merger or consolidation of the
Company with another corporation where the shareholders of the Company,
immediately prior to the merger or consolidation, would not beneficially own,
immediately after the merger or consolidation, shares entitling such
shareholders to 50% or more of all votes (without consideration of the rights of
any class of stock to elect directors by a separate class vote) to which all
shareholders of the corporation issuing cash or securities in the merger or
consolidation would be entitled in the election of directors or where the
members of the Board, immediately prior to the merger or consolidation, would
not, immediately after the merger or consolidation, constitute a majority of the
Board of Directors of the corporation issuing cash or securities in the merger
or consolidation or (B) the sale or other disposition of all or substantially
all the assets of the Company.

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         15.3     "Change of Control Price" means the highest price per share
paid for the Company's Stock in any transaction reported on any national stock
exchange or in the over-the-counter market, or paid or offered in any
transaction related to a Change of Control at any time during the 90-day period
ending with the Change of Control. Notwithstanding the foregoing sentence, in
the case of Stock Appreciation Rights granted in tandem with Incentive Stock
Options, the Change of Control Price shall be the highest price paid on the date
on which the Stock Appreciation Right is exercised.

         15.4     In the event that the Committee determines that, in connection
with the acquisition by the Company or a Subsidiary of another corporation which
will become a Subsidiary or division of the Company (such corporation being
hereafter referred to as an "Acquired Subsidiary"), Options may be granted
hereunder to employees and other personnel of an Acquired Subsidiary in exchange
for then outstanding options to purchase securities of the Acquired Subsidiary.
Such Options may be granted at such option prices, may be exercisable
immediately or at any time or times either in whole or in part, and may contain
such other provisions not inconsistent with the Plan, or the requirements set
forth in Section 14 hereof that certain amendments to the Plan be approved by
the stockholders of the Company, as the Committee, in its discretion, shall deem
appropriate at the time of the granting of such Options.

SECTION 16.       General Provisions

         16.1     Each award under the Plan shall be subject to the requirement
that, if at any time the Committee shall determine that (i) the listing,
registration or qualification of the Stock subject to the award or related
thereto upon any securities exchange or under any state or federal law, or (ii)
the consent or approval of any government regulatory body or (iii) an agreement
by the recipient of an award with respect to the disposition of Stock, is
necessary or desirable (in connection with any requirement or interpretation of
any federal or state securities law, rule or regulation) as a condition of, or
in connection with, the granting of such award or the issuance, purchase or
delivery of Stock thereunder, such award shall not be granted or exercised, in
whole or in part, unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Committee.

         16.2     Nothing set forth in this Plan shall prevent the Board from
adopting other or additional compensation arrangements. Neither the adoption of
the Plan nor any award hereunder shall confer upon any Participant or employee
of the Company, or of a subsidiary, any right to continued employment.

         16.3     Determinations by the Committee under the Plan relating to the
form, amount and terms and conditions of awards need not be uniform, and may be
made selectively among persons who receive or are eligible to receive awards
under the Plan, whether or not such persons are similarly situated.

         16.4     No member of the Board or the Committee, nor any officer or
employee of the Company acting on behalf of the Board or the Committee, shall be
personally liable for any action, determination or interpretation taken or made
with respect to the Plan, and all members of the Board or the Committee and all
officers or employees of the Company acting on their behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company in respect
of any such action, determination or interpretation.

SECTION 17.       Effective Date of Plan

         The Plan became effective upon approval by the Company's shareholders
on July 9, 1996.

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                                                                    EXHIBIT 10.2

                         PART-TIME EMPLOYMENT AGREEMENT

         THIS PART-TIME EMPLOYMENT AGREEMENT ("Agreement"), dated this 1st day
of April, 2001, as amended, is entered into by and between PACIFIC BIOMETRICS,
INC., a Washington corporation (the "Company"), and Elizabeth T. Leary
("Employee"). For good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:

         1.       Employment.

                  1.1      Engagement. The Company will employ Elizabeth T.
Leary and she will accept employment with the Company for the Term (as defined
in Section 2.1 of this Agreement), subject to and in accordance with the
provisions of this Agreement.

                  1.2      Duties. During the Term, Employee will serve the
Company in the capacity of Chief Scientific Officer and shall perform such
duties as the Company's President shall reasonably direct. It is understood that
from time to time the Company's President may assign Employee additional duties
and that Employee's responsibilities may be modified, reduced or expanded at any
time by the Company to accommodate the Company's needs.

         2.       Term and Termination.

                  2.1      Commencement. This Agreement shall be for a term
commencing as of the date first above written and ending pursuant to Section
2.2, 2.3, or 2.4 below (the "Term").

                  2.2      Termination. The Term will terminate upon the first
of the following to occur: (a) the Company's termination of Employee's
employment pursuant to Section 2.3 or 2.4; (b) Employee's termination of her
employment pursuant to Section 2.5; (c) the death of Employee; or (d) the
disability of Employee resulting from injury, illness or disease, whether of a
mental or physical nature, which substantially impairs or prevents Employee from
performing satisfactorily Employee's duties and obligations under this Agreement
for a period of three months or longer.

                  2.3      Termination Without Cause. The Company may at any
time terminate Employee's employment, without cause, by giving Employee written
notice of the same at least thirty (30) days prior to the effective date of such
termination.

                  2.4      Termination for Cause. The Company may terminate
Employee for cause without advance notice. The term "cause" shall include, but
not be limited to the following: (a) violation by Employee of any statutory or
common law duty of loyalty or fiduciary duty to the Company; (c) Refusal or
continued failure to perform Employee's duties to the satisfaction of the
Company; or (d) Personal or professional conduct of Employee which, in the
reasonable and good faith judgment of the Board of Directors of the Company,
injures or tends to injure the reputation of the Company or otherwise adversely
affects the interests of the Company such conduct may include, but is not
limited to, dishonesty, chronic absenteeism, alcoholism, drug addiction, and
conviction of a felony or misdemeanor involving moral turpitude.

                  2.5      Termination by Employee. Employee may at any time
terminate her employment for any reason by giving the Company written notice of
the same at least thirty (30) days prior to the effective date of such
termination. If Employee provides such notice, Company may, at its option,
relieve Employee of all work responsibilities, provided that Company continues
to provide the compensation that comes due to Employee within thirty (30) days
after receipt of Employee's notice.

         3.       Compensation.

                  3.1      Salary. For services rendered by Employee commencing
April 1, 2001, the Company shall pay Employee an annual base salary of Sixty
Thousand Dollars ($60,000.00) for a base of 1056 hours per year,

                                      -1-

<PAGE>
calculated monthly as 88 hours paid at a monthly rate of Five Thousand Dollars
($5,000.00). Additional hours per month will be paid at a rate of $60/hour. The
Company shall pay such salary in equal semi-monthly payments, or pursuant to the
Company's normal payroll policy, as modified from time to time.

                  3.2      Sales Commission - will be calculated as listed below

                  A.       New customers - defined as those whom Pacific
                           Biometrics has not provided any services in the last
                           twelve months. Three percent (3%) based on net sales.
                           Calculated quarterly, paid net 30 days.

                  B.       New business with existing customers - defined as
                           those whom Pacific Biometrics has provided services
                           in the last twelve months. Two percent (2%) based on
                           net sales. Calculated quarterly, paid net 30 days.

                  C.       Term of commission paid to employee will expire at
                           completion of the study, not at the expiration of the
                           employment agreement.

                  D.       A report will be provided monthly by the employee
                           listing the sales leads and contacts for the purpose
                           of qualifying as a new or existing customer.

                  3.3      GRANTS and SUBCONTRACTS - two percent of net monthly
receipts. Calculated quarterly, paid net 30 days.

                  3.4      Benefits. The Company shall provide no benefits to
the part-time employee. Employer will pay employer portion of Social Security,
Medicare, State Unemployment and Federal Unemployment Taxes.

                  3.5      Expenses. During the Term, the Company will reimburse
Employee for reasonable business-related expenses as appropriate for her
position and in accordance with the established policies of the Company.
Employee shall maintain such records as will be necessary to enable the Company
to properly deduct such items as business expenses when computing the Company's
taxes. All expenses in excess of $500.00 must be approved in advance by the
Company's President.

                  3.6      Withholding and Offset. Payment of salary and any
other amounts to Employee will be subject to such withholding and offset as may
be provided by applicable law (e.g., for income tax purposes) or consented to by
Employee.

         4.       Confidentiality.

                  4.1      Confidential Information. In the course of Employee-s
employment with Company, Employee will have access to certain Confidential
Information. Employee will use and disclose Confidential Information solely for
the purposes for which it is provided and will take reasonable precautions to
prevent any unauthorized use or disclosure of the same. Employee will not use or
disclose any Confidential Information (a) other than as required in the course
of Employee's employment with Company, (b) for Employee's own personal gain, or
(c) in any manner contrary to best interests of Company.

                  4.2      Proprietary Information of Others. Employee will not
use in the course of Employee's employment with Company, or disclose or
otherwise make available to Company any information, documents or other items
which Employee may have received from any other person (e.g., a prior employer)
and which Employee is prohibited from so using, disclosing or making available
(e.g., by reason of any contract, court order, law or obligation by which
Employee is bound).

                  4.3      Work Product. All Work Product which Employee
conceives, develops or first reduces to practice, either alone or with others,
during the Term or within six (6) months after the end of the Term, will be the
sold and exclusive property of Company, together with any and all related
Intellectual Property Rights. The

                                      -2-

<PAGE>

foregoing applies to all Work Product which relates to Employee's performance
of services under this Agreement, Company's Field of Business or Company's
actual or demonstrably anticipated research or development and whether or not
such Work Products are conceived, developed or first reduced to practice during
normal business hours or with the use of any equipment, supplies, facilities,
personnel, Confidential Information or other resource of Company. For the
purposes of interpreting this Agreement, the definition of the term Intellectual
Property shall include, but shall not be limited to any patent, copyright, trade
name, or trademark.

                  4.4      Disclosure and Protection of Work Products. Employee
will disclose all Work Products new to the Company, promptly and in writing. At
Company's request and at Company's expense, Employee will assist Company or its
designee in efforts to protect such Word Products. Such assistance may include,
but is not necessarily limited to the following: (a) making application in the
United States and in foreign countries for a patent or copyright on any Work
Products specified by Company; (b) executing documents of assignment to Company
or its designee of all Employee's right, title and interest in and to any Work
Product and related to Intellectual Property rights; and (c) taking such
additional action (including, but not limited to, the execution and delivery of
documents) to perfect, evidence or vest in Company or its designee all rights,
title and interest in and to any Work Product and any related Intellectual
Property Right.

                  4.5      Excluded Work Product. If Employee and Company agree
to exclude any Work Product from the application of this Agreement (e.g., any
Work Products conceived, developed or first reduced to practice by Employee
prior to Employee's first employment with Company), a list of such Work Products
has been signed by both Employee and Company and is attached to this Agreement.
If no such list is attached, Employee represents and warrants that there are no
such Work Products.

                  4.6      Materials. All Materials and related Intellectual
Property Rights will be the sole and exclusive property of Company, whether or
not such Materials are marked with any Intellectual Property Right notice of
Company or Employee. All such Materials authored, made, conceived or developed
by Employee or made available to Employee (or any copies or extracts thereof)
will be held by Employee in trust solely for the benefit of Company. Employee
will use such Materials only as required in the course of Employee's employment
with Company or as otherwise authorized in writing by Company.

                  4.7      Notice. This Agreement does not apply to any
invention for which no equipment, supplies, facility or trade secret information
of Company was used, and which was developed entirely on Employee's own time,
unless: (a) the invention relates (i) directly to the Company or (ii) to
Company's actual or demonstrable anticipated research or development; or (b) the
invention results from any work performed by Employee for Company.

         5.       Non competition and Non solicitation.

                  5.1      Non competition. During the time that the Consultant
is employed by the Corporation, Consultant agrees not to affiliate in any
material role, including affiliation as an employee, consultant, agent or
contractor, with any business enterprise which competes directly in the same
product as the Corporation, nor will employee promote or become a shareholder,
partner or owner in any other enterprise which competes directly in the same
market as the Corporation. The Corporate will, by definition, be in a market if
it currently sells products in that market, or is developing products for sale
in that market.

                  5.2      Non solicitation. During the Term and for a period of
one (1) year after the end of the Term, Employee will not directly or indirectly
solicit or entice any of the following to cease, terminate, or reduce any
relationship with Company or to divert any business from Company: (a) any
Employee, employee, consultant or representative of Company; (b) any contractor
or supplier of Company; (c) any customer or client of Company; or (d) any
prospective customer or client from whom Employee solicited business within the
last year of the Term. Further, Employee will not directly or indirectly
disclose the names, addresses, telephone numbers, compensation, or arrangements
between Company and any person or entity described in (a), (b), or (c) above to
any competitor of Company.

                                      -3-

<PAGE>

         6.       Damage

                  6.1      Injunction. The Company and Employee agree that if
the Employee, violates any provision of Section 5 or Section 6.2, the Company
shall be entitled to an injunction to prevent continued breaches, which
breaches, Employee agrees, would cause irreparable harm to the Company.

                  6.2      Liquidated Damages. If Employee violates any part of
Section 5 or Section 6.2, the Company shall be entitled to receive from
Employee, as liquidation damages and not as a penalty (both the Company and
Employee realizing the difficulty of establishing the amount of actual damages
incurred by the Company as a result of such a breach), an amount equal to
seventy-five percent (75%) of the gross revenues received by Employee from sales
during the year after termination, to any customer of the Company or which were
effected plus reasonable attorneys' fees and costs incurred in enforcing the
terms of this Agreement, it being agreed that such damages constitute a
reasonable forecast of the damages that the Company will incur.

                  That if Employee violates Section 6.1 of this Agreement, the
Company shall be entitled to receive from Employee, as liquidation damages and
not as a penalty (both the Company and Employee realizing the difficulty of
establishing the amount of actual damages incurred by the Company as a result of
such a breach), an amount to the greater of (i) seventy-five percent (75%) of
Employee's gross annual salary during the year after termination; or (ii)
seventy-five percent (75%) of the Employee's gross annual salary received from
Company during the last year of employment; in either event, plus reasonable
attorneys' fees and costs incurred in enforcing the terms of this Agreement, it
being agreed that such damages constitute a reasonable forecast of the damage
that the Company will incur.

         7.       Survival. Sections 4, 5, and 6, together with all other
provisions of this Agreement that may reasonably be interpreted or construed to
survive any termination of the Term, will survive any termination of the Term
and Agreement.

         8.       Miscellaneous.

                  8.1      Notices. Any notice, request, instruction, demand or
other document or instrument required or permitted to be given under this
Agreement by any party to the other shall be in writing and delivered personally
or sent by registered or certified mail. The day on which such communication is
so personally delivered, or if given by mail, the date it is mailed, postage
prepaid, shall be deemed its effective date. Notices shall be addresses as
follows, except that either party may changes its or his address for purposes of
this section by advance written notice to the other party:

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

If to Employee:               Elizabeth T. Leary
                              175252 13th Ave. NW
                              Shoreline, WA 98177

                  8.2      Entire Agreement. This Agreement signed by the
President of the Company, Allan G. Cochrane and the employee, Elizabeth T.
Leary, contains the entire agreement between parties relating to its subject
matter and supersedes all previous oral and written agreements between the
parties. No modification of this Agreement shall be valid unless in writing and
signed by the President of the Company and Employee.

                  8.3      Section Headings. The headings and titles to sections
of this Agreement are for convenience of reference only and shall in no way
restrict or affect or be of any weight in interpretation of, the provisions of
any such section of this Agreement.

                                      -4-

<PAGE>

                  8.4      Governing Law and Venue. This Agreement shall be
construed in accordance with and governed by the laws of the State of Washington
and the venue for any action arising out of this Agreement shall be in King
County, Washington.

                  8.5      Attorneys' Fees. Should litigation arise concerning
this Agreement, the prevailing party shall be entitled to its or her attorneys'
fees and court costs in addition to any other relief that may be awarded.

                  8.6      No Assignment. Employee's obligations under this
Agreement are personal, and may not be assigned, delegated, sold or otherwise
transferred by her, except as Company may consent in writing.

                  8.7      Equitable Relief. Employee acknowledges that: the
provisions of Section 5 and 6 are essential to the Company; the Company would
not enter into this Agreement if it did not include such provisions; the damages
sustained by the company as a result of any breach of such provisions cannot be
adequately remedied by damages; and in addition to any other right or remedy
that the Company may have (e.g., under this Agreement, by law or otherwise), the
Company will be entitled to injunctive and other equitable relief to prevent or
curtail any breach of any such provisions.

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

                                        PACIFIC BIOMETRICS, INC.

                                        By:  /s/ Allan Cochrane
                                             -----------------------------------
                                        Its: Contract Manager

                                        ELIZABETH T. LEARY

                                        /s/ Elizabeth T. Leary
                                        ----------------------------------------

                                      -5-

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