Exhibit 10.27
AMENDMENT NO. 1 TO
NOTE PURCHASE AGREEMENT
AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT dated October 31, 2003
(the "Amendment") by and between Bio-key International, Inc., a Minnesota
corporation (the "Company"), and The Shaar Fund, Ltd. (the "Investor").
WITNESSETH:
WHEREAS, the Company and Investor (collectively, the "Parties") are
parties to that certain Note Purchase Agreement dated January 27, 2003 (the
"Note Purchase Agreement"); and
WHEREAS, the Parties have agreed to amend the Note Purchase Agreement
to, among other things, provide additional funding to the Company.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements set forth in this Amendment and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the Parties hereby agree as follows:
1. Amendments to Note Purchase Agreement.
(a) Section 1.2(a) of the Note Purchase Agreement is hereby
amended to include the following additional language:
"Subject to the terms and conditions set forth herein, the
Investor shall loan up to Two Million Five Hundred Thousand
($2,500,000) Dollars of additional funding (the "Additional
Funding") to the Company. Investor shall provide the
Additional Funding to the Company by advancing to the Company,
subject to the conditions set forth in Sections 1(b) and 1(c)
of the Note Purchase Agreement, $300,000 on November 1, 2003
and $200,000 on the first day of each month commencing
December 1, 2003 and terminating October 1, 2004."
(b) Section 2(a) of the Note Purchase Agreement is hereby
amended to include the following additional language:
"The Additional Funding shall be evidenced by a secured
convertible promissory note (the "Additional Funding Note")
payable to the order of the Investor or its assignee, in
substantially the form attached to this Amendment as Exhibit
A."
(c) Section 7 of the Note Purchase Agreement is hereby
amended to include the following additional language:
"The Investor hereby WAIVES the application of any and all
provisions of the Prior Securities which would reduce the
conversion ratio or conversion price applicable to the Prior
Securities as a result of the issuance of the Additional
Funding Note or the issuance of shares of capital stock of the
Company upon conversion thereof, such that the forgoing
issuances shall not effect the conversion ratios or conversion
prices applicable to any of the Prior Securities."
(d) Section 10 of the Note Purchase Agreement is hereby
amended by deleting proviso (i) and deleting proviso (ii) and replacing them
with the following:
"(i) that such Additional Registration Statement shall be
required to be filed sixty (60) days after the date on which
Investor provides written notice to the Company of its demand
that the Additional Registration Statement be filed with the
SEC and shall be declared effective within two hundred and ten
(210) days after such written notice; and (ii) that such
Additional Registration Statement shall include the shares of
common stock issuable upon conversion of the Note and
Additional Funding Note and all other securities of the
Company owned by the Investor, unless such shares are covered
by a different registration statement."
2. Miscellaneous.
(a) Capitalized terms used and not defined herein shall have
the meanings assigned to them in the Note Purchase Agreement.
(b) Each of the Company and Investor represents and warrants
that its signatory hereto has the full power and authority to execute this
Amendment in the name of and on behalf of the Company or Investor, as
applicable.
(c) All terms of the Note Purchase Agreement shall remain
unaltered and in full force and effect except as modified by this Amendment.
(d) This Amendment may be delivered via facsimile and executed
in counterpart, each of which shall be deemed to be an original, and both of
which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Parties have caused this Amendment to
be duly executed as of the day, month and year first above written.
BIO-KEY INTERNATIONAL, INC.
By: /s/ Xxxx Xxxxx
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Name: Xxxx Xxxxx
Title: Chief Financial Officer
THE SHAAR FUND LTD
By: XXXXXXXX CAPITAL
MANAGEMENT, INC.
By: /s/ Xxx Xxxxxxxx
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Director
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