AMENDMENT NO. 1 TO SUBORDINATED SECURED PROMISSORY NOTE
Exhibit 10.2
AMENDMENT NO. 1 TO
SUBORDINATED SECURED PROMISSORY NOTE
SUBORDINATED SECURED PROMISSORY NOTE
This
Amendment No. 1 to Subordinated Secured Promissory Note (the
“Amendment”) is entered into
by and among BlO-key International, Inc., a Delaware corporation
(“BIO-key”), Public Safety Group,
Inc., a Delaware corporation (“PSG” and, together
with BlO-key, the “Makers”), and Aether Systems,
Inc., a Delaware corporation (“Aether”), and is effective as of the 23rd day of January, 2006.
WHEREAS, the Makers issued a Subordinated Secured Convertible Note to Aether on September
30, 2004 in the aggregate original principal amount of $6,884,588 (the
“Note”; all capitalized terms
used herein without definition shall have the meanings set forth in the Note)
WHEREAS, the Makers have received consent to amend the Note from Laurus Master Fund, Ltd.
(“Laurus”) as required by Section 5.3 of that certain Intercreditor Agreement by and among Laurus,
Aether, BlO-key and PSG dated as of September 30, 2004; and
WHEREAS, the parties now wish to amend the Note as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual promises set forth herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Maximum
Principal Amount. The Note is hereby amended by deleting all
references therein to “$6,884,588”, and replacing them with “$7,884,588”.
2. Interest
Payments. No interest shall accrue on the Note following the date of
this Amendment with respect to amounts in excess of $6,884,588, unless and only to the
extent that BlO-key receives payment from Aether pursuant to paragraph 2 of the letter
agreement dated as of January 23, 2006 by and between BlO-key
and Aether (the “Letter
Agreement”).
3. Extension of Xxxxxxxx XX.
(a) If Aether, in its sole discretion, agrees to extend the Xxxxxxxx XX beyond
December 31, 2006 and to extend the payment date under the Note to correspond to such extension,
then BlO-key hereby agrees to pay Aether a letter of credit fee equal to 2% of the amount of the
Xxxxxxxx XX (the “LC Extension Fee”), which shall be payable on the effective date of such
extension by Aether. If Aether should decide to extend the Xxxxxxxx XX for more than six months
(either in a single extension or as a result of multiple extensions), an additional LC Extension
Fee will be due and payable on each six-month anniversary of such extension period following
December 31, 2006, and each LC Extension Fee shall be deemed earned when due and shall not be
subject to any pro-ration or reduction if the Xxxxxxxx XX or the Note is terminated, expires, is
drawn upon or is reduced in amount any time prior to six months following the date of payment of an
LC Extension Fee. For the avoidance of doubt, the LC Extension Fee shall be in addition to, and not
in lieu of, the
Xxxxxxxx Fees. Notwithstanding anything to the contrary in this paragraph 3(a), if (i) BIO-key
is able to reduce the amount outstanding under the Xxxxxxxx XX by at least fifty-percent (50%) as
of September 30, 2006 and (ii) BlO-key has timely made all payments required under the Note and the
Sublease in accordance with the terms of such agreements, the initial LC Extension Fee shall be
equal to 1% of the amount of the Xxxxxxxx XX (the “Reduced LC Extension Fee
”). If BlO-key
qualifies for the Reduced LC Extension Fee and if Aether should decide to extend the Xxxxxxxx XX
for more than six months (either in a single extension or as a result of multiple extensions),
BlO-key will be required to pay the full LC Extension Fee on each six-month anniversary of such
extension period following December 31, 2006.
(b) If Aether, in its sole discretion, agrees to extend the Xxxxxxxx XX beyond
December 31, 2006, the termination date of the Note shall be automatically extended to such
date that is thirty (30) days following the extended expiration date of the Xxxxxxxx XX. In
the
case of multiple extensions of the Xxxxxxxx XX by Aether, the termination date of the Note
shall automatically be extended to such date that is thirty (30) days following such extended
expiration date of the Xxxxxxxx XX.
(c) In no event shall the Note terminate less than thirty (30) days after the
expiration of the Xxxxxxxx XX.
4. No
Other Amendments. Except as expressly set forth in this Amendment, no
other term or provision of the Note is hereby amended or affected in any way, and the Note
shall remain in full force and effect after the date hereof.
5. Governing
Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles of conflicts
of laws.
6. Facsimile
Signatures; Counterparts. This Amendment may be executed by
facsimile signatures and in any number of counterparts, each of which shall be an original,
but
all of which together shall constitute one instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as a sealed instrument as
of the date set forth in the first paragraph hereof.
| BIO-KEY INTERNATIONAL, INC. | ||||||
| By: /s/ Xxxxxx X. Xxxxxxxxx | ||||||
| Name: Xxxxxx X. Xxxxxxxxx | ||||||
| Title: Chairman | ||||||
| PUBLIC SAFETY GROUP, INC. | ||||||
| By: /s/ Xxxxxx X. Xxxxxxxxx | ||||||
| Name: Xxxxxx X. Xxxxxxxxx | ||||||
| Title: | ||||||
| AETHER SYSTEMS, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
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