Precise Biometrics — AGM Information 2011

Mar 28, 2011

ANNUAL GENERAL MEETING IN PRECISE BIOMETRICS AB (publ)

Welcome to attend Precise Biometrics' Annual General Meeting to be held at 4 p.m. on Wednesday April 27, 2011, at Precise Biometrics premises in Lund, Sweden. Registration for the Meeting will start at 3 p.m.

A. PARTICIPATION

Shareholders who wish to attend the Annual General Meeting must:

• i) be recorded in the share register maintained by Euroclear Sweden AB, as of Tuesday April 19, 2011; and
• ii) notify the company of their intent to attend the Meeting at the address Precise Biometrics AB (publ), Box 798, SE‐220 07 LUND, Sweden; by telephone +46 46 31 11 34; by telefax +46 46 31 11 01 or by e‐mail: investor@precisebiometrics.com by latest at 4 p.m, Tuesday April 19, 2011. When giving notice of attendance, the shareholder shall state name, personal identity or corporate registration number, address and telephone number. A proxy form is available on the company website www.precisebiometrics.com and will be sent by mail to shareholders informing the company of their address. Proxy and representative of a legal entity shall submit papers of authorization prior to the Annual General Meeting.

In order to be able to vote at the Meeting, shareholders with nominee‐registered shares must have the shares temporarily owner‐registered with Euroclear Sweden AB. Such registration must be made as of Tuesday April 19, 2011 at the latest and should be requested well ahead of time.

B. AGENDA

Proposal for Agenda

1.	Opening of the Meeting.
2.	Election of Chairman of the Meeting.
3.	Preparation and approval of the voting list.
4.	Approval of the agenda.
5.	Election of one or two persons to approve the minutes.
6.	Determination whether the Meeting has been duly convened.
7.	The Managing Director's report.
8.	Presentation of
	(a) the Annual Report and the Auditor's Report and the Consolidated Financial
	Statements and the Group Auditor's Report; and

(b) the statement by the Auditor on the compliance with the guidelines for remuneration to management applicable since the last Annual General Meeting.

1. Resolutions regarding (a) the adoption of the Statement of Income and the Balance Sheet and the Consolidated Statement of Income and the Consolidated Balance Sheet, as per December 31, 2010; (b) the appropriation of the company's loss according to the adopted Balance Sheet; and (c) the discharge from liability of the Board and the Managing Director. 10. Determination of the number of members of the Board. 11. Determination of fees to the members of the Board. 12. Election of members and Chairman of the Board. 13. Determination of guidelines for remuneration to management. 14. Resolution regarding the authorization of the Board to resolve upon new issue of shares and/or convertibles with a deviation from the shareholders' preferential rights. 15. Resolution regarding change in the articles of association. 16. Resolution of the decision of the Board to a new share issue with preferential rights for the shareholders.

2. 1. Resolution regarding an incentive program to management by the issuance of warrants.
3. 1. Closing the Meeting.

Draft resolutions

Proposal for election of Chairman of the Meeting (item 2)

At the Annual General Meeting 2010, it was resolved that a Nomination Committee shall be appointed during the third quarter annually and consist of the Chairman of the Board and one representative for each of the three major shareholders in the company as per August 31 each year. If any of these shareholders would refrain from its right to appoint a representative, or if a member would leave the Nomination Committee before the work is completed, such right shall be transferred to the shareholder which, after these shareholders, has the largest shareholding.

The Nomination Committee before the Annual General Meeting 2011, consisting of Kerstin Stenberg (Swedbank Robur), Per Bernhult (Stockpicker Asset Management AB), Uno Johnsson (HJ Byggkonsulter AB) and the chairman of the board Lisa Thorsted (convenor), has proposed Lisa Thorsted as chairman of the Annual Meeting.

Proposal for appropriation of loss (item 9b)

The Board proposes that the statutory reserve be reduced by SEK 2,951,310 to cover the accumulated loss and that no dividend be declared for the financial year 2010.

Proposal regarding election of members and Chairman of the Board and fees (items 10‐12) The Nomination Committee has proposed the following:

The number of board members shall be five, with no deputy members. The Nomination Committee proposes re‐election of the board members Marc Chatel, Torbjörn Clementz, Eva Maria Matell, Lisa Thorsted and Lena Widin Klasén for the period up to and including the Annual General Meeting 2012. Lisa Thorsted is to be appointed Chairman of the Board.

Fees to the Board of Directors up to and including the Annual General Meeting 2012 shall amount to a total of SEK 630,000, to be distributed among the board members as follows: the Chairman of the Board shall, as before, receive SEK 210,000 and each of the other members who are not employed with the company shall, as before, receive SEK 105,000.

On the Annual General Meeting in 2008 the accounting firm Öhrlings Pricewaterhouse Coopers, Stockholm was elected auditor of the company for a period of four years. The chartered accountant Eva Carlsvi is auditor in charge. The Auditor's fees are paid as per invoice.

Proposal regarding guidelines for remuneration to management (item 13)

The proposal of the Board principally entails that the Annual General Meeting shall determine guidelines for remuneration to management implying that levels of remuneration and other employment terms shall be in accordance with the market. A fixed salary will be paid for sound work. In addition to this, members of management may also obtain a variable salary, which shall be based on the Group result and on individual goals. The variable part of the salary shall amount to a maximum of 50 % of the fixed salary for the Managing Director and 30 % of the fixed salary for the other members of management. Remuneration can also be paid by way of stock options or other share‐based incentive programs.

At termination of employment, the mutual notice period shall amount to 6 months for the Managing Director, and 3‐6 months for the other members of management. The Managing Director may be entitled to redundancy payment amounting to a maximum of 12 monthly salaries if the employment is terminated by the company. Other members of management shall not be entitled to redundancy payment.

The retirement age for all members of management shall be 65 years. The pension premium shall be calculated in accordance with predetermined steps based on age and salary and shall amount to a maximum of 25 % of the fixed salary.

The proposal entails a level of remuneration which principally corresponds to that of the previous year.

Proposal for the authorisation of the Board of Directors to resolve on a new issue of shares (item 14)

The Board of Directors proposes the Annual General Meeting to authorise the Board of Directors to decide, on one or several occasions, on an issue of shares and/or convertible bonds. Such an issue may entail a deviation from the shareholders' preferential rights to subscribe for new shares and/or convertible bonds and also entail that payment of the new shares and/or convertible bonds may be made in cash or by consideration in kind or by right of set‐off. The issue may result in an aggregate increase in the share capital – at full conversion by the application of the conversion rate applicable at the time of issue – by a maximum of SEK 5,400,000, by the issue of maximum 13,500,000 shares and/or convertible bonds to be converted into 13,500,000 shares. Full exercise of the authorisation and full conversion is equivalent to a dilution of 10 % of the present share capital and votes. The Board shall be entitled to establish remaining conditions of the issue, including the issue price, which however shall be established based on prevailing conditions on the market. The purpose of the authorisation and the reason for the deviation from the shareholders' preferential rights is to enable the company to effect payment of company

acquisitions by the company's own shares and/or convertible bonds and to obtain capital contributions from new owners that are strategically important.

Resolution regarding amendments of the articles of association (item 15)

The Board of Directors proposes that the company's share capital limits shall, following amendment to the articles of association, be amended from a minimum of SEK 14,200,000 and a maximum of SEK 56,800,000 to a minimum of SEK 40,000,000 and a maximum of SEK 160,000,000. The Board of Directors further proposes that the minimum and maximum number of shares in the articles of association shall be amended from a minimum of 35,500,000 and maximum of 142,000,000 to a minimum of 100,000,000 and a maximum of 400,000,000, whereby Sections 4 and 5 of the articles of association shall be worded as follows:

"§ 5 The number of shares shall amount to a minimum of 100,000,000 and a maximum of 400,000,000."

Resolution according to the Board of Director's proposal must be supported by at least two thirds of the votes cast as well as the shares represented at the Annual General Meeting.

Approval of the decision by the Board of Directors to issue new shares with preferential rights to the company's shareholders (item 16)

The Board of Directors proposes that the Meeting approves of the resolution of the Board of Directors of 25 March 2011 to increase the company's share capital by a maximum of SEK 21,593,728 by issue of a maximum of 53,984,320 new shares at a subscription price of SEK 1.00. The shareholders will have preferential rights to subscribe for the shares, whereby five (5) existing shares will entitle to subscription for two (2) new shares. In the event that all shares are not subscribed for on basis of subscription rights, allocation of shares shall be made within the scope of the maximum amount of the share issue, at which the Board of Directors shall allocate the shares primarily to those who have subscribed for shares on basis of subscription rights, pro rata in relation to their subscription on the basis of subscription rights, secondarily to those who have declared their interest to subscribe for shares without subscription rights, pro rata in relation to their declared interest and last to guarantors in proportion to their guarantee undertakings.

Record day for determination of shareholders entitled to participate in the preferential rights issue shall be May 3, 2011. Subscription for the new shares shall be made during the subscription period as from May 5 up to and including May 20, 2011, or such later date as decided by the Board of Directors. Subscription on basis of subscription rights shall be made by simultaneous cash payment. Subscription without subscription rights shall be made on a separate subscription list and be paid in cash within three (3) banking days from when the Board of Directors' resolution on allocation has been sent to the subscriber, or such later date as decided by the Board of Directors. The new shares will entitle to dividend on the first record day for dividend that takes place after the issue of new shares has been registered by the Swedish Companies Registration Office (Sw: Bolagsverket).

The resolution is conditional upon that the Annual General Meeting resolves on amendment to the articles of association under item 15 on the agenda.

^"§ 4 The share capital shall comprise a minimum of SEK 40,000,000 and a maximum of SEK 160,000,000."

Proposal for an incentive program to management and key‐employees by the issue of warrants (item 17)

The proposal of the Board of Directors principally entails that the Annual General Meeting resolves on an issue of maximum 7.1 million warrants entitling to subscription for the equivalent number of shares in Precise Biometrics AB. The issue shall be directed to the wholly‐owned subsidiary Precise Biometrics Services AB for the purpose of transferring them onwards to management employees. The warrants shall be issued to the subsidiary free of charge. Subscription for the warrants shall be made by July 1, 2011 at the latest.

The reason for the deviation from the shareholders' preferential rights is that the Board of Directors is of the opinion that an incentive program which offers new management team the opportunity to take part in an increase in value of the company will enhance the commitment and motivation of the employees to work for a favourable financial development of the company. An incentive program is expected to improve the possibilities to recruit and retain competent employees.

Precise Biometrics Services shall, against payment, on one or several occasions, transfer warrants to management employees within the Group in Sweden. The transfer of all warrants shall be made at market value at the time of transfer, which shall be established by Örhlings PricewaterhouseCoopers by the application of the Black & Scholes valuation method.

The Board of Directors of Precise Biometrics AB shall be entitled to decide on the allotment of warrants to management employees within the Group in accordance with the following guidelines:

Position	Number of Warrants
Thomas Marschall (CEO)	maximum 1,600,000
Management team	maximum 2,400,000
Other employees	maximum 3,100,000

The first allotment is scheduled to take place in July, 2011. Warrants remaining after the first allotment may thereafter be allotted to future management employees at a market value, applicable from time to time, according the allotment principles stated above.

Subscription for shares in Precise Biometrics AB by virtue of the warrants may be effected from as from January 1, 2014 up to and including June 30, 2014. The subscription price shall be equivalent to 220 % of the average of the calculated average of the highest and lowest payment price quoted every trading day as from May 2, 2011 up to and including May 13, 2011 on the official stock exchange list of the Nasdaq OMX Nordic.

At full subscription of the proposed issue, and full exercise of the warrants, the share capital may be increased by a total of maximum SEK 2,840,000, which is equivalent to a dilution of approximately 5.3 %.

The incentive program will not entail any considerable costs. Therefore, no measures to secure the program have been taken.

The proposal of the Board has been prepared by the Board of Directors. Board members will not be allotted warrants.

The proposal of the Board of Directors is subject to the resolution of the Annual General Meeting being supported by shareholders representing at least nine tenths of both the votes cast and the shares represented at the Annual General Meeting.

C. AVAILABLE DOCUMENTS

The Annual Report and the Auditor's Report, the statement by the Auditor on the compliance with the guidelines for remuneration to management applicable since the previous Annual General Meeting and the complete proposals of the Board of Directors according to items 13‐17 will be available to the shareholders at the company and on its website www.precisebiometrics.com as from 6 April 2011. Copies of the documents will also be sent to shareholders who so request and state their address, and will be available at the Annual General Meeting.

D. NUMBER OF SHARES AND VOTES IN THE COMPANY

As per the date of this notice, the total number of shares and votes in the company amounts to 134,960,800. All shares are of the same class.

E. INFORMATION AT THE ANNUAL GENERAL MEETING

The Board of Directors and the Managing Director shall, if any shareholder so requests, and if the Board of Directors considers that this can be done without significant harm for the company, give information on circumstances that can affect the judgement of an item on the agenda, circumstances that can affect the assessment of the financial situation of the company or its subsidiaries and the company's relationship with another group company.

Lund in March 2011 The Board of Directors PRECISE BIOMETRICS AB (publ)