Employment Agreement ("Agreement") dated as of October 14, 1996 between Pacific Biometrics, Inc., a
Delaware corporation (the "Company"), and Paul G. Kanan (the "Executive").
The Company hereby employs Executive, and Executive accepts employment with the Company, upon the
following terms and conditions:
1.1 (a) Employment. The Company hereby employs Executive, and Executive agrees to serve, as the President
and Chief Executive Officer of the Company during the Term of this Agreement. Subject to the Board of
Directors of the Company, the Executive shall actively manage, and have responsibility for and supervision over,
the business activities and affairs of the Company, and he shall, manage, supervise and direct its and their officers,
employees and agents. The Executive agrees to devote his full business time and attention and best efforts to the
affairs of the Company during the Term of this Agreement.
(b) Board of Directors. The Company agrees that during the Term it will use its best efforts to cause the
Executive to be nominated and elected to the Company's Board of Directors.
1.2 Term. The employment of the Executive by the Company under the terms and conditions of this Agreement
will commence on the date hereof and continue until October 13, 1998 (the "Term") unless terminated sooner in
accordance with the provisions of Article IV.
2.1 (a) Annual Salary. During the Term the Company shall pay to the Executive an annual salary of $180,000
(the "Base Salary"), payable in equal installments every two weeks. Executive shall be entitled to an annual
performance based increase in the Base Salary as determined by the Board of Directors or compensation
(b) Bonus. After the first anniversary of this Agreement, Executive may be awarded an annual incentive bonus in
such amount as may be deemed appropriate by the Board of Directors or compensation committee thereof.
(c) Stock Options. In connection