EXHIBIT 10.26
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT, dated as of March 30, 2004 (this "Amendment"), is
entered into by and between BIO-KEY INTERNATIONAL, INC., a Minnesota corporation
with headquarters located at 0000 Xxxxxxxxx Xxxxxx, Xxxxx Xx. 000, Xxxxx,
Xxxxxxxxx 00000 (the "Company"), and THE SHAAR FUND, LTD. (the "Investor").
W I T N E S S E T H:
WHEREAS, the Company and the Investor are parties to that certain
Securities Exchange Agreement ("Exchange Agreement") and that certain
Registration Rights Agreement ("Rights Agreement"), each dated March 3, 2004.
The Rights Agreement and the Exchange Agreement are hereinafter sometimes
referred to as the "Agreements"; and
WHEREAS, the Investor is the record and beneficial owner of all of the
issued and outstanding shares of the Company's Series B 9% Convertible Preferred
Stock ("Series B Shares"), each with a liquidation preference of $100; and
WHEREAS, the Company and the Investor desire to modify the Agreements to
include the exchange of the Series B Shares, together with all accrued and
unpaid dividends thereon and all accrued and unpaid interest on such dividends,
having an aggregate value of $525,668, for 5,257 shares of the Company's Series
C 7% Convertible Preferred Stock ("Series C Shares") at the purchase price of
$100 per share.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investor
desire to modify the Agreements as follows:
1. Terms used herein but not otherwise defined shall have the meanings
ascribed to such terms in the Exchange Agreement and the Rights Agreement, as
the case may be.
2. The definition of Exchanged Securities in Section 1(vii) of the
Exchange Agreement is hereby deleted in its entirety and replaced with the
following:
"(vii) "Exchanged Securities" means (x) the Notes together with
all accrued and unpaid interest thereon in the aggregate amount of Six Million
Five Hundred Thousand Thirteen Dollars and Eighty Nine Cents ($6,500,013.89) and
(y) the Series B Shares, together with all accrued and unpaid dividends thereon
and all accrued and unpaid interest on such dividends, having an aggregate value
of $525,668, to be surrendered by the Investor pursuant to this Agreement."
3. The definition of Series C Shares in Section 1(xii) of the Exchange
Agreement is hereby deleted in its entirety and replaced with the following:
"(xii) "Series C Shares" mean the Seventy Thousand Two Hundred
Fifty Seven (70,257) shares of the Company's Series C 7% Convertible Preferred
Stock to be issued to the Investor pursuant to this Agreement, in exchange for
the Exchanged Securities, at the per share purchase price of $100.00."
4. The words "Sixty Five Thousand ($65,000)" in the first sentence of
Section 2 of the Exchange Agreement are deleted and replaced with "Seventy
Thousand Two Hundred Fifty Seven (70,257)."
5. The definition of Registrable Securities in Section 1(d) of the
Rights Agreement is hereby deleted in its entirety and replaced with the
following:
"(d) "Registrable Securities" means the Common Stock issued or
issuable (i) upon conversion of the Series C Shares, (ii) upon exercise of Four
Million (4,000,000) warrants expiring November 26, 2006, (iii)
upon exercise of One Hundred and Thirty One Thousand, Two Hundred and Fifty
(131,250) warrants expiring June 30, 2004, (iv) upon exercise of Sixty Seven
Thousand Five Hundred (67,500) warrants expiring March 16, 2005 and (v) upon
conversion of the shares of Series C 7% Convertible Preferred Stock issued upon
conversion of that certain Secured Note in the principal amount of up to
$2,125,000.00, dated March 3, 2004. "Registrable Securities" shall also include
shares of Common Stock issued as dividends on such Registrable Securities, or
upon any stock split, or in connection with a combination of shares,
recapitalization, merger, consolidation or reorganization or otherwise."
6. Except as modified by this Amendment, all of the terms and
provisions of the Agreements shall remain in full force and effect and this
Amendment shall be interpreted and governed in the manner set forth in the
Agreements.
7. This Amendment may be executed in counterparts, all of which when
taken together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof.
IN WITNESS WHEREOF, this Amendment has been duly executed by the Investor
and the Company by one of their respective officers thereunto duly authorized as
of the date first above written.
THE SHAAR FUND, LTD.
By:
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Name:
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Title:
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BIO-KEY INTERNATIONAL, INC.
By:
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Name:
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Title:
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