STOCK REDEMPTION
AGREEMENT
This Stock Redemption Agreement (the
“ Agreement ”) is made as of September 1,
2009 (the “ Effective Date ”), by and between
Pacific Biometrics, Inc., a Delaware corporation (the “
Company ”), and Terry M. Giles, an individual residing
in the State of Texas (“ Seller ”).
RECITALS
A. Seller desires to tender for
redemption, and the Company desires to redeem from Seller, on the
terms and conditions provided in this Agreement, all right, title
and interest in 2,391,906 shares (the “ Shares
”) of common stock of the Company owned by Seller (the
“ Redemption ”).
B. Concurrently with this
Redemption, the Company is entering into a $4 million loan
agreement with Seller (the “ Loan ”).
AGREEMENT
In consideration of the mutual
covenants, agreements, representations, warranties and conditions
herein contained, the parties hereby agree as follows:
1. Redemption of
Shares . Subject to the terms and conditions of this
Agreement, the Company hereby agrees to redeem from Seller, and
Seller agrees to tender for redemption by the Company, all of such
Seller’s right, title and interest in the Shares, free of any
lien, security interest, encumbrance, charge or claim of any party.
The Redemption shall be effective as of the Effective Date, and
shall occur immediately upon closing of the Loan. Seller shall take
all further actions and execute any and all additional
documentation requested by the Company to evidence the Redemption
and transfer of the Shares to the Company.
2. Redemption
Price . The price per Share redeemed shall be $0.70 (the
“ Redemption Price ”).
3. Delivery of Share
Certificates and Payment .
(a) Share
Certificates . On or prior to the Effective Date, Seller
shall deliver to the Company a share certificate or certificates
representing the Shares (each, a “ Certificate
”) together with a signed stock power in the form provided by
the Company’s transfer agent. If any Certificate shall have
been lost, stolen or destroyed, in lieu of delivering such
Certificate Seller shall deliver an affidavit setting forth the
claimed loss, theft or destruction and shall provide the Company
with a reasonable indemnity against any claim that may be made
against the Company with respect to such Certificate. Upon
Redemption, the Certificates representing the Shares will become
treasury shares in the Company, as issued but not outstanding
shares of common stock of the Company.
(b) Payment .
Upon Seller’s delivery of the Certificates or affidavit as
provided in Section 3(a), the Company shall pay the Redemption
Price to Seller for the Shares, in cash or by check or wire
transfer, or by netting out the Redemption Price from the Loan
proceeds.
4. Representations and
Warranties of Seller . Seller represents and warrants to
the Company that:
(a) Seller is the sole record
and beneficial owner of the Shares and holds the Shares free and
clear of all liens, security interests, claims, charges and
encumbrances of any kind. The Shares are not subject to options,
warrants, contracts or agreements of any kind.
(b) Seller has the full and
unrestricted legal right, power and authority to enter into and to
perform this Agreement. This Agreement constitutes Seller’s
valid and binding obligation, enforceable against Seller in
accordance with its terms.
(c) The execution, delivery and
performance of this Agreement and the other agreements contemplated
herein will not conflict with any provision of, or constitute a
breach of or default under, any agreement, indenture or other
instrument to which Seller is a party or by which Seller or any of
Seller’s property is bound or affected.
(d) Seller has received all the
information that Seller considers necessary or appropriate to be
able to evaluate the risks and merits of the transaction
contemplated under this Agreement and to reach an informed and
knowledgeable decision whether to tender the Shares for redemption
by the Company. Seller has reviewed the Company’s reports and
other filings made with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended (the “
Exchange Act ”), required to be filed through the date
hereof (the “ Reports ”). Seller has also
reviewed the Supplemental Disclosure provided by the Company, dated
as of August 6, 2009. Seller has been afforded the opportunity
to ask questions and receive answers from the Company regarding its
business and financial condition and other matters deemed necessary
to Seller, and all such questions, if any, have been answered to
Seller’s full satisfaction.
(e) Seller acknowledges and
agrees that the Company has not made any represe
