Document:

EX-10.1

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATES. THE SECURITIES OFFERED HEREBY ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THIS OFFERING HAS NOT BEEN REVIEWED OR APPROVED, NOR
HAS THE ACCURACY OR ADEQUACY OF THE INFORMATION SET FORTH HEREIN BEEN PASSED UPON, BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES OR OTHER REGULATORY AUTHORITY. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

PACIFIC BIOMETRICS, INC.

SUBSCRIPTION AGREEMENT

(2006 Private Offering)

This Subscription Agreement (“Agreement”) is executed and delivered as of the date set
forth on the “Subscription Accepted” page hereof, and is by and between Pacific Biometrics, Inc., a
Delaware corporation (the “Company”), and the undersigned subscriber
(“Subscriber”). This offering shall close on March 8, 2006 (the “Closing”).

The Company is authorized to offer for sale to qualified subscribers up to Five Million
Dollars ($5,000,000) (the “Total Offering”) of the Company’s securities to be sold in
“Units.” At the Company’s sole discretion, the Company may sell up to 110% of the Total
Offering.

Each Unit shall consist of the following securities:

a. One hundred (100) shares of the Company’s common stock (the “Shares”), at a price
equal to $1.35 per share; and

b. One (1) common stock purchase warrant entitling the holder to purchase 30 shares of the
Company’s common stock (the “Investor Warrants”). The Investor Warrants shall have
a term of five and one-half (51/2) years from the date of issuance (the “Expiration Date”)
shall be exercisable at any time beginning from the date that is six months from the date of
issuance until the Expiration Date at a price equal to $1.60 per share and otherwise shall have the
terms set forth in the form of Investor Warrant attached to this Agreement as Exhibit A.

The Company has engaged Midtown Partners & Co., LLC, a licensed broker/dealer
(“Broker”), as placement agent to assist the Company in offering the Units pursuant to the
terms of this Offering.

1

AGREEMENT

1. Subscription for Units; Acceptance.

(a) Subject to the terms and conditions of this Agreement, Subscriber hereby irrevocably
subscribes to purchase the number of Units for an aggregate purchase price set forth on the
Signature Page of this Agreement. Payment of the purchase price shall be paid by wire transfer to:

	 	 	 	 	 
	Bank:
	 	Wells Fargo Bank N.A.

	 
	 	1012 Swarthmore Avenue
	 
	 	Pacific Palisades, California 90272

	 
	 	 	(310) 550-2800	 
	ABA Routing:
	 	 	121-000-248	 
	Account No:
	 	 	201-817-485-4	 
	Account Name:
	 	The Baum Law Firm PC

	 
	 	Client Trust Account

	 
	 	The Baum Law Firm

	 
	 	580 2nd Street, Suite 102
	 
	 	Encinitas, California 92024

	 
	 	Tel: (760) 230-2300 x205

	 
	 	Fax: (760) 230-2305

	 
	 	To confirm your wire: 800-225-5935

(b) Subscriber understands that this Agreement is not binding upon the Company until the
Company accepts it, which acceptance is at the sole discretion of the Company and is to be
evidenced by the Company’s execution of this Agreement where indicated. Subscriber understands
that the Company may, in its sole discretion, reduce the number of Securities subscribed for under
this Agreement by any amount and to any extent, whether or not pro rata reductions are made of any
other investor’s subscription. This Agreement shall be null and void if the Company does not
accept it. Subscriber understands that Subscriber is not entitled to cancel, terminate or revoke
this Agreement.

2. Representations of Subscriber and the Company

2.1 Representations of Subscriber. In order to induce the Company to accept this
subscription, Subscriber hereby represents and warrants to, and covenants with, the Company as
follows:

(a) Authorization. Subscriber has full power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. If Subscriber is an entity, this
Agreement has been duly authorized by all necessary actions of the board of directors,
shareholders, partners, trustees, or other duly authorized acting body or person on the part of the
Subscriber, and has been duly executed by an authorized officer or representative of the
Subscriber. This Agreement is a legal, valid, and binding obligation of Subscriber enforceable
against Subscriber in accordance with its terms.

(b) Public Filings. Subscriber has reviewed copies of the Company’s most recent
filings with the Securities and Exchange Commission (“Commission”), including,
specifically, the Company’s annual report on Form 10-KSB for the fiscal year ended June 30, 2005
and the quarterly reports on Form 10-QSB for the quarters ended December 31, 2005 and September 30,
2005, the Company’s current reports on Form 8-K, and the Company’s registration statements on Form
SB-2 (collectively, the “Public Filings”). Copies of all of these Public Filings are
available at the SEC’s website at www.sec.gov.

(c) Risk Factors. SUBSCRIBER IS AWARE THAT AN INVESTMENT IN THE UNITS INVOLVES
SUBSTANTIAL RISKS. SUBSCRIBER HAS REVIEWED AND UNDERSTANDS THE RISK FACTORS CONTAINED IN THE
PUBLIC FILINGS, INCLUDING THOSE CONTAINED IN THE COMPANY’S REGISTRATION STATEMENTS ON FORM SB-2.

(d) Due Diligence. Subscriber has been solely responsible for his, her or its own due
diligence investigation of the Company and its business, and analysis of the merits and risks of
the investment in the Units, and is not relying on anyone else’s analysis or investigation of the
Company, its business or the merits and risks of the Units. Subscriber has had the opportunity to
ask questions of and to receive answers from the Company and its executive officers concerning the
Units and the affairs and prospects of the Company in general and desires no further information
pertaining to the Company. All such questions, if any, have been answered to the full satisfaction
of Subscriber. Except as expressly set forth in this Agreement, no representations or warranties
have been made to Subscriber by the Company or by any agent, employee, or affiliate of the Company,
and in entering into this transaction Subscriber is not relying upon any information, other than
contained in the Public Filings.

(e) Securities Law Representations and Warranties. Subscriber has been advised that
the Securities are not being registered under the Securities Act of 1933, as amended (the “1933
Act”), or applicable state securities laws, but are being offered and sold pursuant to
exemptions from such laws, and that the Company’s reliance upon such exemptions based, in part, on
Subscriber’s representations and warranties contained herein. Subscriber acknowledges the Company
reliance on these representations.

(f) Purchase Entirely for Own Account. Subscriber is acquiring the Units solely for
investment and not with a view to any offering, sale or distribution of any part thereof.
Subscriber has no present intention of selling, granting participation in, or otherwise
distributing the Units, subject, however, to any requirement of law that the disposition of
Subscriber’s property shall at all times be within Subscriber’s control. Subscriber does not have
any contract, understanding, agreement, or arrangement with any person to sell, transfer, or grant
participation to such person, or to any third person, with respect to the Units or any portion
thereof. Subscriber realizes that the basis for the exemptions from relevant securities laws may
not be present if, notwithstanding such representations, Subscriber currently has in mind merely
acquiring the Units for a fixed or determinable period in the future, or for a market rise, or for
sale if the market does not rise. Subscriber does not have any such present intention.

(g) Sophistication. Subscriber has such knowledge and expertise in financial and
business matters that Subscriber is capable of evaluating the merits and risks involved in an
investment in the Units.

(h) Suitability; Ability to Bear Risk. The investment in the Units is suitable for
Subscriber based upon its investment objectives and financial needs. Subscriber has adequate means
and net worth for providing for its current financial needs and contingencies and has no need for
liquidity of investment with respect to the Units. Subscriber’s overall commitment to investments
that are illiquid or not readily marketable is not disproportionate to its net worth, and
investment in the Units will not cause such overall commitment to become excessive. Subscriber is
able to bear the substantial economic risks of an investment in the Units for an indefinite period
of time, and can afford a complete loss of this investment.

(i) Professional Advice. Subscriber has been encouraged to consult his or her own
financial advisor, legal counsel and tax accountant concerning this investment, including any tax
implications. Subscriber has obtained, to the extent he, she or it deems necessary, personal
professional advice with respect to the risks inherent in an investment in the common stock and the
suitability of such investment in light of the Subscriber’s personal financial condition and
investment needs. Unless the Subscriber has otherwise advised the Company in writing, the
Subscriber did not employ the services of a purchaser representative, as defined in Regulation D
under the 1933 Act, in connection with this investment.

(j) Restricted Securities. Subscriber understands that: (i) the Units have not been
and are not being registered under the 1933 Act or state securities laws, but are being offered and
sold pursuant to exemptions from such laws; (ii) the Units are and will be classified as
“restricted securities”, as defined under the 1933 Act; (iii) the Units may not be sold or
otherwise transferred unless they have been first registered under the 1933 Act and applicable
state securities laws, or unless exemptions from such registration provisions are available with
respect to said resale or transfer; (iv) the Company is under no obligation to register the Units
under the 1933 Act or any state securities laws, or to take any action to make any exemption from
any such registration provisions available; (v) the Units and the shares of Common Stock issuable
upon exercise of the Investor Warrants will bear a legend to the effect that the transfer of the
securities represented thereby is subject to the provisions hereof and will have stop-transfer
instructions placed with the transfer agent.

(k) Further Limitations on Disposition. Subscriber understands and agrees that
Subscriber will not sell or otherwise transfer any of the Units, or any interest therein, unless
and until (i) the Units shall have first been registered under the 1933 Act and applicable state
securities laws, or (ii) Subscriber shall have notified the Company of the proposed disposition and
Subscriber shall have delivered to the Company, at the expense of Subscriber, a written opinion of
counsel (which counsel and opinion (in form and substance) shall be reasonably satisfactory to the
Company), to the effect that the proposed sale or transfer is exempt from the registration
provisions of the 1933 Act and all applicable state securities laws.

(l) Residency. Subscriber represents and warrants that the Subscriber is a bona fide
resident of, and is domiciled in, the state so designated on the signature page hereto, and that
the Units are being purchased solely for the beneficial interest of the Subscriber and not as
nominee for, or on behalf of, or for the beneficial interest of, or with the intention to transfer
to, any other person, trust, or organization.

(m) Trading Restrictions. Subscriber and each of its affiliates represents and
warrants that the Subscriber and their affiliates will not actively trade in the Company’s common
stock prior to the announcement of the Closing of the Offering.

(n) No Market Manipulation. No Subscriber has taken, and will not take, directly or
indirectly, any action designed to, or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of the common stock to facilitate the sale or resale of
the common stock or affect the price at which the common stock may be issued or resold.

(o) Correctness of Representations. Each Subscriber represents as to such Subscriber
that the foregoing representations and warranties are true and correct as of the date hereof and,
unless a Subscriber otherwise notifies the Company prior to the Closing of the Offering shall be
true and correct as of the Closing of the Offering.

(p) Survival. The foregoing representations and warranties shall survive the Closing
Date for a period of two years.

2.2 Representations of the Company. The Company represents and warrants to and
agrees with each Subscriber that:

(a) Due Incorporation. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power to own its properties and to carry on its business as presently
conducted. The Company is duly qualified as a foreign corporation to do business and is in good
standing in each jurisdiction where the nature of the business conducted or property owned by it
makes such qualification necessary, other than those jurisdictions in which the failure to so
qualify would not have a Material Adverse Effect. For purposes of this Agreement, a “Material
Adverse Effect” shall mean a material adverse effect on the financial condition, results of
operations, properties or business of the Company and its Subsidiaries taken as a whole.

(b) Outstanding Stock. All issued and outstanding shares of capital stock of the
Company has been duly authorized and validly issued and are fully paid and nonassessable.

(c) Authority; Enforceability. This Agreement and any other agreements delivered
together with this Agreement or in connection herewith (collectively “Transaction
Documents”) have been duly authorized, executed and delivered by the Company and are valid and
binding agreements enforceable in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors’ rights generally and to general principles of equity. The Company has
full corporate power and authority necessary to enter into and deliver the Transaction Documents
and to perform its obligations hereunder.

(d) Consents. No consent, approval, authorization or order of any court, governmental
agency or body or arbitrator having jurisdiction over the Company nor the Company’s shareholders is
required for the execution by the Company of the Transaction Documents and compliance and
performance by the Company of its obligations under the Transaction Documents, including, without
limitation, the issuance and sale of the Units.

(e) No Violation or Conflict. Assuming the representations and warranties of the
Subscribers are true and correct, neither the issuance and sale of the Units nor the performance of
the Company’s obligations under the Transaction Documents will:

(i) violate, conflict with, result in a breach of, or constitute a default (or an event which
with the giving of notice or the lapse of time or both would be reasonably likely to constitute a
default) under (A) the certificate of incorporation or bylaws of the Company, (B) to the Company’s
knowledge, any decree, judgment, order, law, treaty, rule, regulation or determination applicable
to the Company of any court, governmental agency or body, or arbitrator having jurisdiction over
the Company or over the properties or assets of the Company, or (C) the terms of any bond,
debenture, note or any other evidence of indebtedness, or any agreement, stock option or other
similar plan, indenture, lease, mortgage, deed of trust or other instrument to which the Company is
a party, by which the Company is bound, or to which any of the properties of the Company is
subject, in each case except for any violation, conflict, breach, or default of which would not
have a Material Adverse Effect; or

(ii) result in the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company except as described herein; or

(iii) result in the activation of any anti-dilution rights or a reset or repricing of any debt
or security instrument of any other creditor or equity holder of the Company, nor result in the
acceleration of the due date of any obligation of the Company; or

(iv) result in the activation of any piggy-back registration rights of any person or entity
holding securities of the Company or having the right to receive securities of the Company.

(f) The Common Stock and Investor Warrants. The securities upon issuance:

(i) are, or will be, free and clear of any security interests, liens, claims or other
encumbrances created by the Company, subject to restrictions upon transfer under the 1933 Act and
any applicable state securities laws;

(ii) have been, or will be, duly and validly authorized and on the date of issuance of the
common stock and upon exercise of the Investor Warrants and will be duly and validly issued, fully
paid and nonassessable or if registered pursuant to the 1933 Act, and resold pursuant to an
effective registration statement will be free trading and unrestricted);

(iii) will not have been issued or sold in violation of any preemptive or other similar rights
of the holders of any securities of the Company;

(iv) will not subject the holders thereof to personal liability by reason of being such
holders; and

(v) assuming the representations warranties of the Subscribers are true and correct, will not
result in a violation of Section 5 under the 1933 Act.

(g) Litigation. There is no pending or, to the best knowledge of the Company,
threatened action, suit, proceeding or investigation before any court, governmental agency or body,
or arbitrator having jurisdiction over the Company that would affect the execution by the Company
or the performance by the Company of its obligations under the Transaction Documents. There is no
pending or, to the best knowledge of the Company, basis for or threatened action, suit, proceeding
or investigation before any court, governmental agency or body, or arbitrator having jurisdiction
over the Company which litigation if adversely determined would have a Material Adverse Effect.

(h) Reporting Company. The Company is a publicly-held company subject to reporting
obligations pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the
“1934 Act”) and has a class of common shares registered pursuant to Section 12(g) of the
1934 Act. Pursuant to the provisions of the 1934 Act, the Company has filed all reports and other
materials required to be filed hereunder with the Commission during the preceding twelve months.

(i) No Market Manipulation. The Company and its Affiliates have not taken, and will
not take, directly or indirectly, any action designed to, or that might reasonably be expected to,
cause or result in stabilization or manipulation of the price of the common stock to facilitate the
sale or resale of common stock or affect the price at which the common stock may be issued or
resold.

(j) Information Concerning the Company. The Public Filings contain all material
information relating to the Company and its operations and financial condition as of their
respective dates which information is required to be disclosed therein. Since the date of the
financial statements included in the Public Filings, there has been no Material Adverse Event
relating to the Company’s business, financial condition or affairs not publicly disclosed in the
Public Filings.

(k) Stop Transfer. The Company will not issue any stop transfer order or other order
impeding the sale, resale or delivery of any of the Securities, except as may be required by any
applicable federal or state securities laws and unless contemporaneous notice of such instruction
is given to the Subscriber.

(l) Defaults. The Company is not in violation of its certificate of incorporation or
bylaws. The Company is (i) not in default under or in violation of any other material agreement or
instrument to which it is a party or by which it or any of its properties are bound or affected,
which default or violation would have a Material Adverse Effect, (ii) not in default with respect
to any order of any court, arbitrator or governmental body or subject to or party to any order of
any court or governmental authority arising out of any action, suit or proceeding under any statute
or other law respecting antitrust, monopoly, restraint of trade, unfair competition or similar
matters, or (iii) to the Company’s knowledge not in violation of any statute, rule or regulation of
any governmental authority which violation would have a Material Adverse Effect.

(m) No Integrated Offering. Neither the Company, nor to the Company’s knowledge any
person acting on its behalf, has directly or indirectly made any offers or sales of any security or
solicited any offers to buy any security under circumstances that would cause the offer of the
Units pursuant to this Agreement to be integrated with prior offerings by the Company for purposes
of the 1933 Act or any applicable stockholder approval provisions. Nor will the Company take any
action or steps that would cause the offer or issuance of the Units to be integrated with other
offerings. The Company will not conduct any offering other than the transactions contemplated
hereby that will be integrated with the offer or issuance of the Securities.

(n) No General Solicitation. Neither the Company, nor to the Company’s knowledge any
person acting on its behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.

(o) Listing. The common stock is quoted on the OTC Bulletin Board. The Company has
not received any oral or written notice that the common stock is not eligible nor will become
ineligible for quotation on the OTC Bulletin Board nor that the common stock does not meet all
requirements for the continuation of such quotation and the Company satisfies all the requirements
for the continued quotation of the common stock on the OTC Bulletin Board.

(p) No Undisclosed Liabilities. The Company has no liabilities or obligations which
are material, individually or in the aggregate, which are not disclosed in the Public Filings other
than those incurred in the ordinary course of the Company’s businesses since December 31, 2005, or
those which, individually or in the aggregate, would not reasonably be expected to have a Material
Adverse Effect.

(q) No Undisclosed Events or Circumstances. Since December 31, 2005, no material
event or circumstance has occurred or exists with respect to the Company or its businesses,
properties, operations or financial condition, that, under applicable law, rule or regulation,
requires public disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly announced or disclosed in the Public Filings.

(r) Investment Company. Neither the Company nor any Affiliate is an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.

(s) Correctness of Representations. The Company represents that the foregoing
representations and warranties are true and correct as of the date hereof in all material respects,
and, unless the Company otherwise notifies the Subscribers prior to the Closing, shall be true and
correct in all material respects as of the Closing Date.

(t) Survival. The foregoing representations and warranties shall survive the Closing
for a period of two years.

3. Accredited Investor Representation. Subscriber is familiar with the term
“accredited investor” and its use in connection with private placements of securities under
applicable federal and state laws. Accordingly, Subscriber represents and warrants that it is an
accredited investor as defined in Rule 501(a) under the Securities Act and pursuant to the
provisions of state securities laws applicable to Subscriber providing for an exemption from
registration or qualification of the offer and sale of the Securities. Subscriber is concurrently
delivering to the Company its signed “Accredited Investor Certificate” included hereto immediately
following the signature page.

4. Confidentiality. Subscriber acknowledges and agrees that all information disclosed
by the Company to Subscriber in this Subscription Agreement or any document provided to Subscriber
by the Company in connection with this Offering that is not already disclosed in the Public Filings
filed with the Commission shall be considered confidential information of the Company (the
“Confidential Information”). Subscriber shall not, without the prior written approval of
the Company, use for Subscriber’s own benefit, publish or otherwise disclose to others, or permit
the use by others for their benefit or to the detriment of the Company, any of the Confidential
Information.

5. Registration Rights. Subscriber shall be entitled to the following registration
rights:

5.1 Definitions

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

(b) The term “Registrable Securities” means (i) the shares of common stock issued to
all Subscribers in the Offering, the shares of Common Stock issuable on exercise of the Investor
Warrants issued to the to all Subscribers in the Offering, and the shares of common stock issuable
on exercise of the Placement Agent Common Stock Purchase Warrants (the “Broker’s Warrants”)
issuable to the Broker, and (ii) any other shares of common stock of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the
Common Stock; provided, however, that the foregoing definitions of Registrable
Securities shall exclude in all cases any Registrable Securities sold by a person in a transaction
in which his or her rights under this Agreement are not assigned. Notwithstanding the foregoing,
such Common Stock or other securities shall only be treated as Registrable Securities if and so
long as they have not been (A) sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof
so that all transfer restrictions, and restrictive legends with respect thereto, if any, are
removed upon the consummation of such sale, including pursuant to Rule 144 under the Securities
Act;

(c) The term “Holder” means any person owning or having the right to acquire
Registrable Securities;

5.2 Registration and Liquidated Damages. Within 30 days after Closing of the Offering
(the “Filing Date”), the Company shall prepare and file with the Commission a registration
statement on Form SB-2 covering the Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415. The Company shall use its reasonable best efforts to cause
the registration statement to be declared effective under the Securities Act within 90 days after
the Closing of the Offering (or within 150 days after the Closing of the Offering if the
registration statement receives a review by the Commission) (the “Effectiveness Date”). If
the registration statement is not declared effective within 90 days of the Closing of the Offering
or within 150 days of the Closing of the Offering if the registration statement receives a review
by the Commission, the Company shall pay to each Holder an amount in cash, as “Liquidated Damages”
and not as a penalty, equal to one percent (1.0%) of the amount invested by such Holder in the
Offering, and, until the registration statement is declared effective by the Commission the Company
shall continue to pay such 1.0% liquidated damages for each 30-day period thereafter, up to a
maximum liquidated damages amount of not more than 9% of the amount invested by each Holder in the
Offering. The Liquidated Damages must be paid within ten (10) days after the end of each thirty
30-day period or shorter part thereof for which Liquidated Damages are payable. In the event a
Registration Statement is filed by the Filing Date but is withdrawn prior to being declared
effective by the Commission, then such Registration Statement will be deemed to have not been
filed. Notwithstanding the foregoing, the Company shall not be liable to the Subscriber under this
Section for any events or delays occurring as a consequence of the acts or omissions of the
Subscriber contrary to the obligations undertaken by Subscriber in this Agreement.

5.3 Registration Procedures. When the Company is required by this Agreement to effect
the registration of any Registrable Securities under the 1933 Act, the Company will, as
expeditiously as possible:

(a) subject to the timelines provided in this Agreement, prepare and file with the Commission
a registration statement with respect to such securities and use its reasonable best efforts to
cause such registration statement to become and remain effective for the period of the distribution
contemplated thereby (determined as herein provided), promptly provide to the holders of the
Registrable Securities copies of all filings and Commission letters of comment and notify
Subscribers by e-mail on or before 3:00 PM EST on the next business day that the Company receives
notice that (i) the Commission has no comments or no further comments on the Registration
Statement, and (ii) the registration statement has been declared effective;

(b) prepare and file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to keep such
registration statement effective until such registration statement has been effective for a period
of two (2) years, and comply with the provisions of the 1933 Act with respect to the disposition of
all of the Registrable Securities covered by such registration statement in accordance with the
Subscriber’s intended method of disposition set forth in such registration statement for such
period;

(c) furnish to the Subscriber, at the Company’s expense, such number of copies of the
registration statement and the prospectus included therein (including each preliminary prospectus)
as such persons reasonably may request in order to facilitate the public sale or their disposition
of the securities covered by such registration statement;

(d) if applicable, list the Registrable Securities covered by such registration statement with
any securities exchange on which the Common Stock of the Company is then listed;

(e) immediately notify the Subscriber when a prospectus relating thereto is required to be
delivered under the 1933 Act, of the happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in light of the
circumstances then existing; and

5.4 Expenses. The Company shall bear and pay all expenses incurred in connection with
the registration of Registrable Securities pursuant to Section 5.2, including all registration and
filing fees, fees and disbursements of counsel and independent public accountants for the Company,
fees and expenses (including reasonable counsel fees) incurred in connection with complying with
state securities or “blue sky” laws, fees of the NASD, fees of transfer agents and registrars
(collectively, “Registration Expenses”). All selling commissions applicable to the sale of
Registrable Securities, including any fees and disbursements of any counsel or other advisers to
the Holders (collectively, “Selling Expenses”) shall be borne by and for the account of
each the Holder.

5.5 Delay of Registration. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result of any controversy
that might arise with respect to the interpretation or implementation of this Section 5.

5.6 Indemnification

(a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder,
the partners, members, officers, directors and shareholders of each Holder and each person, if any,
who controls such Holder within the meaning of the Securities Act or the Securities Exchange Act of
1934, as amended (the “Exchange Act”), against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements, omissions or
violations (collectively a “Violation”): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities
law; provided, however, that the indemnity agreement contained in this
subsection 5.6(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the extent that it arises out of or
is based upon a Violation which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any such indemnified person.

(b) To the extent permitted by law, each Holder severally but not jointly will indemnify and
hold harmless the Company, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company within the meaning of the
Act, any other Holder selling securities in such registration statement and any controlling person
of any such other Holder, against any losses, claims, damages, or liabilities (joint or several) to
which any of the foregoing persons may become subject, under the Securities Act, the Exchange Act
or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such registration; and
each such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this subsection 5.6(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection 5.6(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall not be unreasonably withheld;
provided, that, in no event shall any indemnity under this subsection 5.6(b) exceed the net
proceeds from the offering received by such Holder, except in the case of willful fraud by such
Holder.

5.7 No Assignment of Registration Rights. The rights to cause the Company to register
the Registrable Securities pursuant to this Section 5 may not be assigned to any party without the
express written consent of the Company.

5.8 Discontinued Disposition. Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the occurrence of a
Discontinuation Event (as defined below), such Holder will promptly discontinue disposition of such
Registrable Securities under the registration statement until such Holder’s receipt of the copies
of the supplemented prospectus and/or amended registration statement or until it is advised in
writing (the “Advice”) by the Company that the use of the applicable prospectus may be
resumed. The Company may provide appropriate stop orders to enforce the provisions of this
paragraph. For purposes of this Section, a “Discontinuation Event” shall mean (i) when the
Commission notifies the Company whether there will be a “review” of such registration statement and
whenever the Commission comments in writing on such registration statement, (ii) any request by the
Commission or any other Federal or state governmental authority for amendments or supplements to
such registration statement or prospectus or for additional information, (iii) the issuance by the
Commission of any stop order suspending the effectiveness of such registration statement covering
any or all of the Registrable Securities or the initiation of any proceedings for that purpose,
(iv) the receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the registrable securities for sale in any
jurisdiction, or the initiation or threatening of any proceeding for such purpose; and/or (v) the
occurrence of any event or passage of time that makes the financial statements included in such
registration statement ineligible for inclusion therein or any statement made in such registration
statement or prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such registration
statement, prospectus or other documents so that, in the case of such registration statement or
prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading.

5.9 Amendment or Modification of Registration Rights. The rights granted to Holder
pursuant to this Section may not be amended or modified without the written consent of the Company
and Holders of a majority of the Registrable Securities. Any amendment approved pursuant to the
terms of this Section 5.9 shall be binding on, and enforceable against, all Holders.

6. Broker’s Fees. Pursuant to the terms of a separate agreement between the Company
and the Broker, Subscriber acknowledges that the Company has agreed to pay the Broker the following
fees pursuant to the Offering:

a. A cash sales commission equal to 8% of the gross proceeds raised in the Offering,

b. Broker’s Warrants to purchase such number of shares of the common stock of the Company
equal to 8% of the aggregate number of shares of common stock sold in the Offering. Each Broker’s
Warrant shall have a term of seven (7) years and an exercise price equal to $1.60, and

c. Legal Fee and Due Diligence Fees not to exceed $15,000.

7. Indemnification. Subscriber shall indemnify and hold harmless the Company, its
officers, directors and agents from and against any and all losses, damages, liabilities, costs,
and expenses which it may sustain or incur in connection with the breach by Subscriber of any
representation, warranty, or covenant made by Subscriber.

8. Assignment. Neither this Agreement nor any of the rights of Subscriber may be
transferred or assigned by Subscriber.

9. Notices. All notices or other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally or mailed by certified or
registered mail, return receipt requested, postage prepaid, and if to Subscriber, at the
Subscriber’s address set forth below, and if to the Company, to the Company’s address set forth on
page 1 hereof, or to such other address as the Company or Subscriber shall have designated to the
other by like notice.

10. Restrictive Legends. Subscriber acknowledges that the Units will bear a legend to
the effect that the Units are “restricted securities” and that transfer of the securities
represented thereby is subject to the provisions hereof, and stop-transfer instructions will be
placed with the transfer agent for the Securities.

For Residents of All States:

THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT, OR THE SECURITIES
LAWS OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SHARES ARE SUBJECT TO RESTRICTION
ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER
SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SHARES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED
UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE MEMORANDUM.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

Arizona Residents Only:

THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES LAWS OF ARIZONA AND MAY NOT BE
TRANSFERRED OR SOLD BY A PURCHASER THEREOF EXCEPT IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER THE SECURITIES LAWS OF ARIZONA OR PURSUANT TO AN EFFECTIVE REGISTRATION
THEREUNDER.

11. Miscellaneous. This Agreement: (i) may only be modified by a written instrument
executed by Subscriber and the Company; (ii) sets forth the entire agreement of Subscriber and the
Company with respect to the subject matter hereof; (iii) shall be governed by the laws of the State
of Delaware; and (iv) shall inure to the benefit of, and be binding upon the Company and Subscriber
and its respective heirs, legal representatives, successors, and assignees.

12. Obligation to Update. The information provided by Subscriber is correct and
complete as of the date hereof. Subscriber understands the significance to the Company of the
foregoing representations, and they are made with the intention that the Company will rely upon
them. If there should be any material change in such information prior to the subscription being
accepted, the Subscriber agrees to immediately provide the Company with such information.

13. Most Favored Nations Provision. If at any time during the period commencing upon
the Closing and ending upon the date which is eighteen (18) months from the Effectiveness Date, the
Company consummates any private equity or equity-linked financing resulting in the issuance of
shares of common stock or securities convertible into or exercisable for shares of common stock to
any person or entity at a price per share or exercise price per share less than $1.35 (the “New
Financing”), on the closing date of the New Financing, the Subscriber shall have the right to
exchange any remaining Shares purchased by the Subscriber in this Offering for the securities
offered in the New Financing. For the purpose of the exchange, the common stock offered by the
Subscriber in exchange for the securities offered in the New Financing, shall be valued at $1.35
per share.

For purposes of this Section, a New Financing include only equity financings, and shall not include
any shares of common stock, or securities convertible into or exercisable for shares of common
stock, issued or issuable: (i) in connection with any stock split, combination, dividend or
recapitalization; (ii) pursuant to options, warrants, or other rights to acquire Company common
stock outstanding on the date hereof as disclosed in the Public Filings; (iii) pursuant to
securities that may be issued under any Company equity compensation arrangement, including stock
options and/or stock granted under the Company’s stock option plan, for Company’s officers,
directors, employees, consultants and advisors pursuant to arrangements, plans or contracts
approved by the Company’s board of directors; (iv) upon conversion or exchange of any preferred
stock of the Company outstanding on the date hereof; (v) in connection with acquisition
transactions approved by the Company’s board of directors, including any merger, consolidation, or
purchase or sale of stock or assets; or (vi) to any strategic partners, lenders, lessors and
licensees, provided that such issuances are for a primary purpose other than equity financing and
such issuances have been approved by the Company’s board of directors.

14. Press Release. The Company shall file a press release within one business day and
a Form 8-K within 4 business days in of the Closing of the Offering.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

2

SIGNATURE PAGE

Amount of Investment:  $     

No. of Units:      ($    per Unit)

	 	 	 	 	 	 	 
	Entity as Subscriber	 	Individual as Subscriber
	
 
	 	 	 	X
	 	

	 
	 	 	 	 	 	 
	Print name as should appear
	 	 	 	Print name as should appear
	 
	 	 	 	 	 	 
	in Company records
	 	 	 	in Company records
	 
	 	 	 	 	 	 
	By:

	 	 	 	X
	 	

	 
	 	 	 	 	 	 
	
 
	 	Signature
	 	 	 	Signature
	 
	 	 	 	 	 	 
	
 
	 	 	 	X
	 	

	 
	 	 	 	 	 	 
	
 
	 	Print Name and Title of Person Signing
	 	 	 	Joint Subscriber Signature

	 	 	 
	 
	 	 
	
 
	 	Date:     , 2006
	 
	 	 
	
 
	 	Address:
	
 
	 	 

Telephone:

Facsimile:

EIN or SSN:

Ownership. Title to the Securities to be held in one of the following manners, as marked:

o Individual or Separate Property (if community property state, spouse must sign Spousal
Consent)

	 	 	 
	o

o

o

	 	Joint Tenants with Right of Survivorship (both parties must sign)

Tenants in Common (each party must sign)

Community Property (spouse must sign Spousal Consent)

o Individual Retirement Account (“IRA”)/HR-10 (“Keogh”)/Other:      

	 	 	 
	o	 	Trust (exact name of trustee must be indicated)
	o

	 	Other (specify)     
	
 
	 	 

	 	**	 	If a partnership or corporation, please include a copy of the partnership agreement and
certificate authorizing investment or certified corporate resolution or other document
authorizing this investment, and a certificate of incumbency of officers. If a custodian,
trustee or agent, please include the trust, agency or other agreement and certificate
authorizing investment.

ACCEPTANCE OF SUBSCRIPTION

The foregoing subscription is hereby accepted this _______ day of __________________, 2006.

PACIFIC BIOMETRICS, INC.

By:

Ronald R. Helm, Chief Executive Officer

3

ACCREDITED INVESTOR CERTIFICATE -[all Investors must sign]

The undersigned is providing this Accredited Investor Certificate to Pacific Biometrics,
Inc., a Delaware corporation (the “Company”), in connection with the offering and sale of
Units (each Unit consisting of five shares of Company common stock and a stock purchase warrant to
purchase one additional share of common stock). The representations in this Certificate are in
addition to the representation and warranties as set forth in Section 3 of the Subscription
Agreement, and the Company is entitled to rely on this Certificate.

The undersigned hereby represents and warrants to the Company that it is an “accredited
investor” (within the meaning of Rule 501 of Regulation D promulgated under the Securities Act
of 1933), as follows:

Please initial and complete each of the applicable categories described below

	 	 	 
	 	 	Category
	o

	 	A natural person who had an individual income in excess of $200,000 in each of the two most recent years (or joint

income with that person’s spouse in excess of $300,000 in each of those years) and who reasonably expects to reach the

same income level in the current year; or
	 
	 	 
	o

	 	A natural person whose individual net worth (or joint net worth with that person’s spouse), exceeds $1,000,000. For

purposes of this Certificate, “net worth” means the excess of total assets at fair market value over total

liabilities; or
	 
	 	 
	o

	 	A corporation with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units; or
	 
	 	 
	o

	 	A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units, whose

purchase is directed by a person with such knowledge and experience in financial and business matters that he or she

is capable of evaluating the merits and risks of the proposed investment; or
	 
	 	 
	o

	 	A partnership, Massachusetts or similar trust, or organization described in Section 501(c)(3) of the Internal Revenue

Code, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units; or
	 
	 	 
	o

	 	A bank as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined

in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; or
	 
	 	 
	o

	 	A broker or dealer registered pursuant to Section 15 of the Securities and Exchange Act of 1934; or
	 
	 	 
	o

	 	An insurance company as defined in section 2(13) of the Securities Act; or
	 
	 	 
	o

	 	An investment company registered under the Investment Company Act of 1940 or a Business Development Company as defined

in section 2(a)(48) of that Act; or
	 
	 	 
	o

	 	A Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of

the Small Business Investment Act of 1958; or
	 
	 	 
	o

	 	An Employee Benefit Plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974

(“ERISA”), (A) if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is

either a bank, savings and loan association, insurance company or registered investment adviser, or (B) if the

Employee Benefit Plan has total assets in excess of $5,000,000 or (C) if a self-directed plan, with investment

decisions made solely by persons that are accredited investors;
	 
	 	 
	o

	 	an entity in which all of the equity owners are accredited investors as set forth above.

DATED as of the      day of      , 2006.

	 	 	 	 	 
	INVESTOR NAME:
	 	 	—	 
	Authorized Signature:
	 	 	—	 
	Printed Name of Person Signing:____________________________________________________________________

	Capacity/Title of Signatory:
	 	 	—	 

4

Exhibit A

FORM OF INVESTOR COMMON STOCK PURCHASE WARRANT

5EX-10.2

THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND THE COMMON SHARES
ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO PACIFIC BIOMETRICS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

PACIFIC BIOMETRICS, INC.

COMMON STOCK PURCHASE WARRANT

(2006 Private Offering)

	 	 	 	 	 
	Warrant Number.....................................
	 	 	W-2006A-____	 
	Issue Date..............................................
	 	March 8, 2006

	First Exercise Date.................................
	 	September 8, 2006

	Expiration Date.......................................
	 	September 8, 2011

	Name of Warrant Holder...........................
	 	 	 	 
	Right to Purchase the following number of shares
of Common Stock of Pacific Biometrics, Inc.
(subject to adjustment as provided
herein).................................
	 	 	—	 
	Purchase Price per Share.............................
	 	$	1.60	 
	 
	 	 	 	 

PACIFIC BIOMETRICS, INC., a corporation organized under the laws of the State of Delaware (the
“Company”), hereby certifies that, for value received, the Warrant Holder identified above,
or its assigns (the “Holder”), is entitled, subject to the terms set forth below, to
purchase from the Company at any time beginning from the date that is six (6) months after the
Issue Date set for above until 5:00 p.m., E.S.T on the Expiration Date set forth above, (the
“Expiration Date”), up to the number of fully paid and nonassessable shares of Common
Stock set forth above, at the per share purchase price set forth above. The aforedescribed
purchase price per share, as adjusted from time to time as herein provided, is referred to herein
as the “Purchase Price.” The number and character of such shares of Common Stock and the
Purchase Price are subject to adjustment as provided herein. The Company may reduce the Purchase
Price without the consent of the Holder. Capitalized terms used and not otherwise defined herein
shall have the meanings set forth in that certain Subscription Agreement (the “Subscription
Agreement”), dated March 3, 2006, entered into by the Company and certain Subscribers.

As used herein the following terms, unless the context otherwise requires, have the following
respective meanings:

(a) The term “Company” shall mean Pacific Biometrics, Inc. and any corporation which
shall succeed or assume the obligations of Pacific Biometrics, Inc. hereunder.

(b) The term “Common Stock” means (a) the Company’s Common Stock, $.01 par value per
share, as authorized on the date of the Subscription Agreement, and (b) any other securities into
which or for which any of the securities described in (a) may be converted or exchanged pursuant to
a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

(c) The term “Other Securities” refers to any stock (other than Common Stock) and
other securities of the Company or any other person (corporate or otherwise) which the holder of
the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of
the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or
shall have been issued in exchange for or in replacement of Common Stock or Other Securities
pursuant to Section 5 or otherwise.

(d) The term “Warrant Shares” shall mean the Common Stock issuable upon exercise of
this Warrant.

1. Exercise of Warrant.

1.1. Number of Shares Issuable upon Exercise. From and after the Issue Date through
and including the Expiration Date, the Holder hereof shall be entitled to receive, upon exercise of
this Warrant in whole in accordance with the terms of subsection 1.2 or upon exercise of this
Warrant in part in accordance with subsection 1.3, shares of Common Stock of the Company, subject
to adjustment pursuant to Section 4.

1.2. Full Exercise. This Warrant may be exercised in full by the Holder hereof by
delivery of an original or facsimile copy of the form of subscription attached as Exhibit A
hereto (the “Subscription Form”) duly executed by such Holder and surrender of the original
Warrant within four (4) days of exercise, to the Company at its principal office or at the office
of its Warrant Agent (as provided hereinafter), accompanied by payment, in cash, wire transfer or
by certified or official bank check payable to the order of the Company, in the amount obtained by
multiplying the number of shares of Common Stock for which this Warrant is then exercisable by the
Purchase Price then in effect.

1.3. Partial Exercise. This Warrant may be exercised in part (but not for a
fractional share) by surrender of this Warrant in the manner and at the place provided in
subsection 1.2 except that the amount payable by the Holder on such partial exercise shall be the
amount obtained by multiplying (a) the number of whole shares of Common Stock designated by the
Holder in the Subscription Form by (b) the Purchase Price then in effect. On any such partial
exercise, the Company, at its expense, will forthwith issue and deliver to or upon the order of the
Holder hereof a new Warrant of like tenor, in the name of the Holder hereof or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may request, the whole number of shares of
Common Stock for which such Warrant may still be exercised.

1.4. Fair Market Value. Fair Market Value of a share of Common Stock as of a
particular date (the “Determination Date”) shall mean:

(a) If the Company’s Common Stock is traded on an exchange or is quoted on the National
Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”’”), National Market
System, the NASDAQ SmallCap Market, the American Stock Exchange, LLC, then the closing or last sale
price, respectively, reported for the last business day immediately preceding the Determination
Date;

(b) If the Company’s Common Stock is not traded on an exchange or on the NASDAQ National
Market System, the NASDAQ SmallCap Market or the American Stock Exchange, Inc., but is traded in
the over-the-counter market or Pink Sheets, then the average of the closing bid and ask prices
reported for the last business day immediately preceding the Determination Date;

(c) Except as provided in clause (d) below, if the Company’s Common Stock is not publicly
traded, then as the Holder and the Company agree, or in the absence of such an agreement, by
arbitration in accordance with the rules then standing of the American Arbitration Association,
before a single arbitrator to be chosen from a panel of persons qualified by education and training
to pass on the matter to be decided; or

(d) If the Determination Date is the date of a liquidation, dissolution or winding up, or any
event deemed to be a liquidation, dissolution or winding up pursuant to the Company’s charter, then
all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the
event of such liquidation, dissolution or winding up, plus all other amounts to be payable per
share in respect of the Common Stock in liquidation under the charter, assuming for the purposes of
this clause (d) that all of the shares of Common Stock then issuable upon exercise of all of the
Warrants are outstanding at the Determination Date.

1.5. Company Acknowledgment. The Company will, at the time of the exercise of the
Warrant, upon the request of the Holder hereof acknowledge in writing its continuing obligation to
afford to such Holder any rights to which such Holder shall continue to be entitled after such
exercise in accordance with the provisions of this Warrant. If the Holder shall fail to make any
such request, such failure shall not affect the continuing obligation of the Company to afford to
such Holder any such rights.

1.6. Trustee for Warrant Holders. In the event that a bank or trust company shall have
been appointed as trustee for the Holder of the Warrants pursuant to Subsection 3.2, such bank or
trust company shall have all the powers and duties of a warrant agent (as hereinafter described)
and shall accept, in its own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may
be, on exercise of this Warrant pursuant to this Section 1.

1.7 Delivery of Stock Certificates, etc. on Exercise. The Company agrees that the
shares of Common Stock purchased upon exercise of this Warrant shall be deemed to be issued to the
Holder hereof as the record owner of such shares as of the close of business on the date on which
this Warrant shall have been surrendered and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any event within four (4)
business days thereafter, the Company at its expense (including the payment by it of any applicable
issue taxes) will cause to be issued in the name of and delivered to the Holder hereof, or as such
Holder (upon payment by such Holder of any applicable transfer taxes) may direct in compliance with
applicable securities laws, a certificate or certificates for the number of duly and validly
issued, fully paid and nonassessable shares of Common Stock (or Other Securities) to which such
Holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such
Holder would otherwise be entitled, cash equal to such fraction multiplied by the then Fair Market
Value of one full share of Common Stock, together with any other stock or other securities and
property (including cash, where applicable) to which such Holder is entitled upon such exercise
pursuant to Section 1 or otherwise.

2. [Intentionally Omitted]

3. Adjustment for Reorganization, Consolidation, Merger, etc.

3.1. Reorganization, Consolidation, Merger, etc. In case at any time or from time to
time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other
person or (c) transfer all or substantially all of its properties or assets to any other person
under any plan or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and adequate provision shall
be made by the Company whereby the Holder of this Warrant, on the exercise hereof as provided in
Section 1, at any time after the consummation of such reorganization, consolidation or merger or
the effective date of such dissolution, as the case may be, shall receive, in lieu of the Common
Stock (or Other Securities) issuable on such exercise prior to such consummation or such effective
date, the stock and other securities and property (including cash) to which such Holder would have
been entitled upon such consummation or in connection with such dissolution, as the case may be, if
such Holder had so exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4.

3.2. Dissolution. In the event of any dissolution of the Company following the
transfer of all or substantially all of its properties or assets, the Company, prior to such
dissolution, shall at its expense deliver or cause to be delivered the stock and other securities
and property (including cash, where applicable) receivable by the Holder of the Warrants after the
effective date of such dissolution pursuant to this Section 3 to a bank or trust company (a
“Trustee”) having its principal office in New York, NY, as trustee for the Holder of the Warrants.

3.3. Continuation of Terms. Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this Section 3, this Warrant
shall continue in full force and effect and the terms hereof shall be applicable to the Other
Securities and property receivable on the exercise of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any Other Securities,
including, in the case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have expressly assumed the
terms of this Warrant as provided in Section 4. In the event this Warrant does not continue in
full force and effect after the consummation of the transaction described in this Section 3, then
only in such event will the Company’s securities and property (including cash, where applicable)
receivable by the Holder of the Warrants be delivered to the Trustee as contemplated by
Section 3.2.

4. Extraordinary Events Regarding Common Stock. In the event that the Company shall
(a) issue additional shares of the Common Stock as a dividend or other distribution on outstanding
Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding
shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and the denominator of which
shall be the number of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as
so adjusted, shall be readjusted in the same manner upon the happening of any successive event or
events described herein in this Section 4. The number of shares of Common Stock that the Holder of
this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be adjusted to a number determined by multiplying the number of shares of Common
Stock that would otherwise (but for the provisions of this Section 4) be issuable on such exercise
by a fraction of which (a) the numerator is the Purchase Price that would otherwise (but for the
provisions of this Section 4) be in effect, and (b) the denominator is the Purchase Price in effect
on the date of such exercise.

5. Certificate as to Adjustments. In each case of any adjustment or readjustment in
the shares of Common Stock (or Other Securities) issuable on the exercise of the Warrants, the
Company at its expense will promptly cause its Chief Financial Officer or other appropriate
designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and
prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based, including a statement of (a) the consideration
received or receivable by the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of
Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Purchase
Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in
effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as
provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the
Holder of the Warrant and any Warrant Agent of the Company (appointed pursuant to Section 11
hereof).

6. Reservation of Stock, etc. Issuable on Exercise of Warrant; No Rights as
Shareholder. The Company will at all times reserve and keep available, solely for issuance
and delivery on the exercise of the Warrants, all shares of Common Stock (or Other Securities) from
time to time issuable on the exercise of the Warrant. This Warrant shall not entitle Holder to any
voting rights or any other rights as a stockholder of the Company, or to any other rights
whatsoever except the rights stated herein; and no dividend or interest shall be payable or shall
accrue in respect of this Warrant or the shares purchasable hereunder unless, and until, and except
to the extent that, this Warrant shall be exercised.

7. Assignment; Exchange of Warrant. Subject to compliance with applicable securities
laws, this Warrant, and the rights evidenced hereby, may be transferred by any registered holder
hereof (a “Transferor”). On the surrender for exchange of this Warrant, with the
Transferor’s endorsement in the form of Exhibit B attached hereto (the “Transferor
Endorsement Form”) and together with an opinion of counsel reasonably satisfactory to the
Company that the transfer of this Warrant will be in compliance with applicable securities laws,
the Company at its expense, twice, only, but with payment by the Transferor of any applicable
transfer taxes, will issue and deliver to or on the order of the Transferor thereof a new Warrant
or Warrants of like tenor, in the name of the Transferor and/or the transferee(s) specified in such
Transferor Endorsement Form (each a “Transferee”), calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock called for on the face or faces of the
Warrant so surrendered by the Transferor. No such transfers shall result in a public distribution
of the Warrant.

8. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such
loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation,
on surrender and cancellation of this Warrant, the Company at its expense, twice only, will execute
and deliver, in lieu thereof, a new Warrant of like tenor.

9. Registration Rights. The Holder of this Warrant has been granted certain
registration rights by the Company. These registration rights are set forth in the Subscription
Agreement. The terms of the Subscription Agreement are incorporated herein by this reference.

10. [Intentionally Omitted]

11. Warrant Agent. The Company may, by written notice to the Holder of the Warrant,
appoint an agent (a “Warrant Agent”) for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant
to Section 7, and replacing this Warrant pursuant to Section 8, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such
office by such Warrant Agent.

12. Transfer on the Company’s Books. Until this Warrant is transferred on the books
of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for
all purposes, notwithstanding any notice to the contrary.

13. Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless otherwise specified
herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below
or to such other address as such party shall have specified most recently by written notice. Any
notice or other communication required or permitted to be given hereunder shall be deemed effective
(a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if delivered on a
business day during normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second business day following the
date of mailing by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for such communications
shall be:

(i) if to the Company: Pacific Biometrics, Inc.

220 West Harrison Street

Seattle, Washington 98119

	 	 	 	Attention: Chief Executive Officer

	 	 	 	Tel:
(206) 298-0068

	 	 	 	Fax:
(206) 298-9838

	 	(ii)	 	if to the Holder: to the name, address and
telecopy number set forth on the front page of this Warrant.

with a copy to:

The Baum Law Firm

580 2nd Street, Suite 102

Encinitas, CA 92024

Tel: (760) 230-2300

Fax: (760) 230-2305

14. Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be
construed and enforced in accordance with and governed by the laws of Delaware. The headings in
this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof. The invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.

IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above.

PACIFIC BIOMETRICS, INC.

     

By:

Its:

1

Exhibit A

NOTICE OF EXERCISE

(to be signed only on exercise of Warrant)

TO: PACIFIC BIOMETRICS, INC.

The undersigned, pursuant to the provisions set forth in the attached Warrant
(No.     ), hereby irrevocably elects to purchase      shares of the
Common Stock covered by such Warrant.

The undersigned herewith makes payment of the full purchase price for such shares at the price per
share provided for in such Warrant, which is $     in lawful money of the United States
(payable in cash, wire transfer or by certified or official bank check payable to the order of the
Company).

The undersigned requests that the certificates for such shares be issued in the name of, and
delivered to

     

whose address is
     
     

Number of Shares of Common Stock Beneficially Owned on the date of exercise:      

The undersigned represents and warrants that all offers and sales by the undersigned of the
securities issuable upon exercise of the within Warrant shall be made pursuant to registration of
the Common Stock under the Securities Act of 1933, as amended (the “Securities Act”), or pursuant
to an exemption from registration under the Securities Act.

	 	 	 
	Dated:     

	 	(Signature must conform to name of holder

as specified on the face of the Warrant)

(Address)

2

Exhibit B

FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of Warrant)

For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named
below under the heading “Transferees” the right represented by the within Warrant to purchase the
percentage and number of shares of Common Stock of PACIFIC BIOMETRICS, INC. to which the within
Warrant relates specified under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to
transfer its respective right on the books of PACIFIC BIOMETRICS, INC. with full power of
substitution in the premises.

	 	 	 	 	 
	Transferees

	 	Percentage Transferred
	 	Number Transferred
	 

	 	 
	 	 

	 	 	 
	Dated:      ,      

Signed in the presence of:

(Name)

ACCEPTED AND AGREED:

[TRANSFEREE]

(Name)

	 	

(Signature must conform to name

of holder as specified on the

face of the warrant)

(address)

(address)
	 
	 	 

3

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