Exhibit 10.4

 

CONFIDENTIAL

 

SUPPLEMENT TO
SECURITIES PURCHASE AGREEMENT

 

 

THIS SUPPLEMENT TO SECURITIES PURCHASE AGREEMENT (this “Supplement”), dated on
and as of the latest date set forth on the signature page hereto (the “Effective
Date”), by and between BIO-key International, Inc., a Delaware corporation (the
“Company”), and the purchaser identified on the signature page hereof
(“Purchaser”); with the persons identified in Section 3 hereof as intended third
party beneficiaries hereof.

 

R E C I T A L S:

 

WHEREAS, the Company and Purchaser are entering into that certain Securities
Purchase Agreement of even date herewith pursuant to which Purchaser agrees to
purchase and the Company agrees to sell Units in an Offering, on the terms and
conditions set forth therein (the “Securities Purchase Agreement”);

 

WHEREAS, the parties wish to provide for certain anti-dilution rights in favor
of Purchaser in the event that the Company issues certain securities prior to
the nine-month anniversary of the Effective Date at a price less than the
Purchaser Price, as same may be further adjusted; and

 

WHEREAS, purchasers of the Units in the Offering are intended third party
beneficiaries of the rights granted Purchaser in this Supplement.

 

NOW, THEREFORE, in consideration of the premises hereof and the agreements set
forth herein below, the parties hereto hereby agree as follows:

 

1.     Anti-Dilution. If at any time within nine (9) months from the Effective
Date the Company sells or issues any shares of Common Stock or Common Stock
Equivalents (other than sales or issuances to directors, officers, employees or
independent contractors in the ordinary course of business for compensation
purposes and stock splits and stock dividends payable in respect of the Common
Stock) having a purchase, exercise or conversion price per share of Common Stock
less than the Purchase Price (appropriately adjusted to account for any stock
split, stock dividend or similar change affecting the Common Stock) (such price
per share, as amended by reason of any adjustment or adjustments hereunder, the
“Per Share Price”) (any such issuance is referred to herein as an “Additional
Issuance”), then in such event the Per Share Price shall automatically be
reduced to a price (calculated to the nearest one-hundredth of a cent)
determined in accordance with the following formula, and the Company shall issue
to Purchaser concurrently with such Additional Issuance a number of additional
validly issued, fully paid and nonassessable shares of Common Stock such that
the aggregate number of shares of Common Stock issued to Purchaser pursuant to
the Securities Purchase Agreement, as supplemented by this Supplement, shall
equal the result obtained by dividing Purchaser’s Aggregate Purchase Price by
the Per Share Price:

 

CP2 = CP1* (A + B) ÷ (A + C).

  

 
1

--------------------------------------------------------------------------------

 

 

For purposes of the foregoing formula, the following definitions shall apply:

 

(a)     “CP2” shall mean the Per Share Price in effect immediately after such
Additional Issuance;

 

(b)     “CP1” shall mean the Per Share Price in effect immediately prior to such
Additional Issuance;

 

(c)     “A” shall mean the number of shares of Common Stock outstanding
immediately prior to such Additional Issuance (treating for this purpose as
outstanding all shares of Common Stock issuable upon exercise of any rights,
options or warrants to subscribe for, purchase or otherwise acquire Common Stock
outstanding immediately prior to such Additional Issuance);

 

(d)     “B” shall mean the number of shares of Common Stock that would have been
issued if the Additional Issuance had been made at a price per share equal to
CP1 (determined by dividing the aggregate consideration received by the Company
in respect of such issue by CP1); and

 

(e)     “C” shall mean the number of such shares of Common Stock issued in the
Additional Issuance.

 

For purposes of this Section 1, “Common Stock Equivalents” means any securities
of the Company which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock. For the avoidance of doubt, no additional Warrants shall
be issued to Purchaser and no adjustment, amendment or modification of any kind
shall be made to the Warrants as a result of the application of this Section 1.

 

2.     Registration Rights. The shares of Common Stock, if any, issued hereunder
shall not be subject to the Registration Rights Agreement of even date herewith
between the Purchaser and the Company.

 

3.     Third Party Beneficiaries. All purchasers of in the Offering, including
those that purchased Units in connection with the Closing conducted on October
25, 2013 (the “Prior Purchasers”), are deemed to be intended third party
beneficiaries of the anti-dilution rights provided in Section 1 above. The
Company shall promptly deliver notice to the Prior Purchasers of the rights to
which they are entitled hereunder.

 

4.     Defined Terms. Capitalized terms not otherwise defined in this Supplement
shall have the meanings ascribed to them in the Securities Purchase Agreement.

 

5.     No Additional Modification. The Securities Purchase Agreement shall not
be modified by this Supplement in any respect except as expressly set forth
herein.

  

 
2

--------------------------------------------------------------------------------

 

 

6.     Counterparts. This Supplement may be executed in one or more counterparts
and delivered electronically, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same instrument.

 

[SIGNATURES ON FOLLOWING PAGE]

 

 
3

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, intending to be legally bound, the parties hereto have
caused this Agreement to be executed as of the date set forth below.

 

 

 

 

 

 

 

Date: ____________________, 2013

PURCHASER

 

 

 

               

 

 

 

 

 

BIO-KEY INTERNATIONAL, INC.  

 

 

Date:____________________, 2013 By       Name:       Title  

 

 

4