<PAGE>
EXHIBIT 10.23



                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT  (along with all Exhibits  attached  hereto  hereinafter
referred  to as the  "Agreement")  made  effective  as of January 3, 2003 by and
between BIO-key International,  Inc., a Minnesota corporation with its principal
place of business at 1285 Corporate  Center Drive,  Suite 175,  Eagan,  MN 55121
(the "Company"),  and Michael W. DePasquale  residing at 704 Michael Drive, Toms
River, NJ 08753 (the "Executive").

                                   WITNESSETH:

         WHEREAS,  the Company desires to secure the employment of the Executive
as Chief Executive  Officer in accordance with the provisions of this Agreement;
and

         WHEREAS,  the  Executive  desires  and is willing to be employed by the
Company in accordance herewith.

         NOW THEREFORE,  in  consideration  of the premises and mutual covenants
contained  herein,  and other good and valuable  consideration,  the receipt and
sufficiency of which is hereby  acknowledged,  and intending to be legally bound
hereby, the parties hereto agree as follows:

         1. EMPLOYMENT TERM. This Agreement shall remain in force and effect for
a term  commencing on the Effective Date hereof and expiring on the second (2nd)
anniversary  hereof  (the  "Term"),  or until  the  employment  relationship  is
terminated pursuant to Section 4 hereof.

         2. DUTIES; EXCLUSIVE SERVICES AND BEST EFFORTS.

                  (a) DUTIES. Executive shall hold the position of Chief
Executive Officer and to serve in such position in accordance with the Company's
Articles of Incorporation and subject By-Laws and in accordance with the
ultimate control of the Board of Directors of the Company. As Chief Executive
Officer, the Executive will have the responsibility for general management of
the day to day business and affairs of the Company, as well as any duties
assigned to the Executive by the Board of Directors of the Company.

                  (b) EXCLUSIVE SERVICES AND BEST EFFORTS.  The Executive agrees
to devote his best efforts,  energies and skill to the  faithful,  competent and
diligent  discharge  of the  duties  and  responsibilities  attributable  to his
position,  and to this end,  will devote his fulltime  attention to the business
and affairs of the  Company.  The  Executive  also agrees that he shall not take
personal  advantage  of  any  business   opportunities  that  arise  during  his
employment  that may benefit the Company.  All  material  facts  regarding  such
opportunities must be promptly reported to the Board of Directors of the Company
for its consideration. In addition, the Company acknowledges and agrees that the
Executive  shall be  permitted  to engage  in and  pursue  such  contemporaneous
activities  and interests as the Executive  may desire,  for personal  profit or
otherwise,  provided  such  activities  do not  interfere  with the  Executive's
performance of his duties and obligations hereunder.

<PAGE>

         3.   COMPENSATION.   On  and  after  the  commencement  of  Executive's
employment,  the  Executive  shall  receive,  for all  services  rendered to the
Company hereunder, the following:

                  (a) BASE  SALARY.  The  Executive  shall be paid a base annual
salary equal to One Hundred Fifty Thousand Dollars  ($150,000).  The Executive's
annual base salary shall be payable in equal installments in accordance with the
Company's  general salary payment  policies but no less frequently than monthly.
Executive's Base Salary may be increased  annually,  or at such other intervals,
as the Board of Directors or Compensation Committee thereof shall determine from
time to time.

                  (b)  PERFORMANCE   BONUS.  In  addition  to  Base  Salary,   a
"Performance  Bonus"  in the  amount  of up to  $150,000  shall  be  awarded  to
Executive  based on the Company  achieving the "Financial  Performance  Targets"
identified below during the year ending December 31, 2003. The Performance Bonus
shall  be paid  in  quarterly  installments  (each  a  "Quarterly  Installment")
forty-five  (45)  days  after  the  end of  the  fiscal  quarter  to  which  the
Performance Bonus relates in the amounts set forth below:

<TABLE>
<CAPTION>
<S>                                                         <C>

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

               FINANCIAL PERFORMANCE TARGET                              AMOUNT OF QUARTERLY INSTALLMENT

------------------------------------------------------------ ---------------------------------------------------------
Gross Revenue of $300,000  during  quarter ending March 31,                          $37,500
2003
------------------------------------------------------------ ---------------------------------------------------------
Gross Revenue of $400,000  during  quarter  ending June 30,                          $37,500
2003
------------------------------------------------------------ ---------------------------------------------------------
Gross Revenue of $650,000  during quarter ending  September                          $37,500
30, 2003
------------------------------------------------------------ ---------------------------------------------------------
Gross Revenue of $900,000  during quarter  ending  December                          $37,500
31, 2003
------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
In the event that the Company does not achieve the Financial  Performance Target
for the first calendar  quarter,  Executive shall be entitled to receive 100% of
the Quarterly  Installment payable with respect to the first calendar quarter in
the event that the  Company's  gross  revenue for the six months  ended June 30,
2003 equals or exceeds $700,000 or 50% of the Quarterly Installment payable with
respect to the first  calendar  quarter in the event that  either the  Company's
gross  revenue for the nine months  ended  September  30, 2003 equals or exceeds
$1,350,000 or the Company's  gross revenue for the twelve months ended  December
31, 2003 equals or exceeds  $2,250,000.  In the event that the Company  does not
achieve  the  Financial  Performance  Target  for the second  calendar  quarter,



                                        2
<PAGE>

Executive shall be entitled to receive 50% of the Quarterly  Installment payable
with  respect  to the  second  calendar  quarter  in the event  that  either the
Company's  gross revenue for the nine months ended  September 30, 2003 equals or
exceeds  $1,350,000 or the  Company's  gross revenue for the twelve months ended
December  31, 2003 equals or exceeds  $2,250,000.  In the event that the Company
does not  achieve  the  Financial  Performance  Target  for the  third  calendar
quarter, Executive shall be entitled to receive 50% of the Quarterly Installment
payable  with  respect  to the third  calendar  quarter  in the  event  that the
Company's  gross revenue for the twelve months ended December 31, 2003 equals or
exceeds $2,250,000.

     (c) STOCK OPTIONS. Executive shall be granted subject to the terms of a
stock option agreement to be entered into by the Company and Executive in
substantially the form attached hereto as Exhibit A, a stock option to purchase
580,000 shares of the Company's Common Stock. The options shall vest in equal
quarterly installments over a twenty four (24) month period.

     (d) DISCRETIONARY BONUS. In addition to the Base Salary and Performance
Bonus, a "Discretionary Bonus" may be awarded to Executive on the basis of merit
performance on an annual basis in the sole discretion of the Board of Directors
or Compensation Committee thereof in the form of options to purchase up to an
additional 500,000 shares of Common Stock of the Company at an exercise price
equal to the closing market price of the Company's Common Stock on the date of
grant; PROVIDED, HOWEVER, that the failure of the Company to provide any
Discretionary Bonus shall not give rise to any claim against the Company. The
amount, if any, and timing of any Discretionary Bonus, shall be determined by
the Company in its sole discretion.

     (e) BENEFITS. Executive shall not be eligible to participate in any of the
Company's employee welfare or health benefit plans (including, but not limited
to, life insurance, health, medical and dental plans). In lieu of participating
in any such plans, the Company shall pay Executive $1,000 per month in
accordance with the Company's general salary payment policies but no less
frequently than monthly.

     (f) VACATION. The Executive shall be eligible for four (4) weeks of paid
vacation each year of his employment hereunder. The Executive shall be permitted
to carry over and accrue unused vacation time for a period of up to two years.

     (g) EXPENSES. Subject to and in accordance with the Company's policies and
procedures, and, upon presentation of itemized accounts, the Executive shall be
reimbursed by the Company for reasonable and necessary business-related
expenses, which expenses are incurred by the Executive on behalf of the Company.

     (h) DEDUCTIONS FROM SALARY AND BENEFITS. The Company will withhold from any
salary or benefits payable to the Executive all federal, state, local, and other
taxes and other amounts as required by law, rule or regulation.

                                        3
<PAGE>

         4.  TERMINATION.  This  Agreement  may  be  terminated  by  either  the
Executive  or the Company at any time,  subject only to the  provisions  of this
Section 4.

                  (a) VOLUNTARY  TERMINATION.  If Executive  terminates  his own
employment,  the Company shall be released from any and all further  obligations
under  this  Agreement,  except  that  the  Company  shall be  obligated  to pay
Executive his salary and benefits owing to Executive  through the effective date
of termination.  Executive shall also be entitled to any  reimbursement  owed in
accordance with Section 3(h). Executive's obligations under Sections 5, 7, 8 and
9 hereof and shall  survive  the  termination  of  Executive's  employment,  and
Executive shall remain bound thereby.

                  (b) DEATH.  This Agreement  shall terminate on the date of the
Executive's death, in which event salary,  benefits,  and reimbursable  expenses
owing to the Executive  through the date of the Executive's  death shall be paid
to his estate.

                  (c) DISABILITY.  If, during the term of this Agreement, in the
opinion of the Company, the Executive,  because of physical or mental illness or
incapacity  or  disability,  shall  become  unable to  perform,  with or without
reasonable accommodation,  substantially all of the duties and services required
of him under this  Agreement  for a period one hundred  eighty (180) days during
any  twelve-month  period,  the Company  may,  upon at least ten (10) days prior
written notice given at any time after the expiration of such one hundred eighty
(180) day period,  notify the  Executive  of its  intention  to  terminate  this
Agreement as of the date set forth in the notice.  In case of such  termination,
the Executive shall be entitled to receive salary,  benefits,  and  reimbursable
expenses  owing to the Executive  through the date of  termination.  The Company
shall have no further obligation or liability to the Executive.  The Executive's
obligations  under Sections 5, 7 8 and 9 hereof shall survive the termination of
Executive's employment, and Executive shall remain bound thereby.

                  (d)  TERMINATION BY EMPLOYER FOR CAUSE.  This Agreement may be
terminated  by the Company for "Cause" at any time.  Upon such  termination  for
"Cause",  the  Company  shall be released  from any and all further  obligations
under this  Agreement,  except that the Company  shall be  obligated  to pay the
Executive his salary and benefits  owing to the Executive  through the effective
date  of  such  termination.  The  Executive  shall  also  be  entitled  to  any
reimbursement owed in accordance with Section 3(h). The Executive's  obligations
under Sections 5, 7, 8 and 9 hereof shall survive the termination of Executive's
employment, and Executive shall remain bound thereby.

                  Cause.  "Cause"  for  Termination  shall  include,  but is not
limited to, the following conduct of the Executive:

                           (i)  Breach  of  any   material   provision  of  this
Employment Agreement by the Executive
if not cured within two (2) weeks after receiving written notice thereof;

                                        4
<PAGE>

                    (ii) Misconduct as an Executive of the Company, including
               but not limited to, misappropriating funds or property of the
               Company; any attempt to obtain any personal profit from any
               transaction in which the Executive has an interest that is
               adverse to the Company or any breach of the duty of loyalty and
               fidelity to the Company; or any other material act or omission of
               the Executive which substantially impairs the Company's ability
               to conduct its ordinary business in its usual manner;

                    (iii) Material neglect or refusal to perform the duties
               assigned to the Executive pursuant to this Employment Agreement
               if not cured within two (2) weeks after receiving notice thereof;

                    (iv) Conviction of a felony or plea of guilty or nolo
               contendere to a felony;

                    (v) Acts of dishonesty or moral turpitude by the Executive
               that are detrimental to the Company or any other act or omission
               which subjects the Company or any of its affiliates to public
               disrespect, scandal, or ridicule, or that causes the Company to
               be in violation of governmental regulations that subjects the
               Company either to sanctions by governmental authority or to civil
               liability to its Executives or third parties;

                    (vi) Disclosure or use of confidential information of the
               Company, other than as specifically authorized and required in
               the performance of the Executive's duties.

                  (e) TERMINATION BY EMPLOYER WITHOUT CAUSE. Upon termination of
this  Agreement  without  Cause,  the Company shall be released from any and all
further  obligations  under this  Agreement,  except that the Executive shall be
paid his Base Salary through the date of termination  and continue to be paid in
the same  manner as before  termination,  an amount  equal to his  monthly  Base
Salary for a period of time equal to the greater of (i) six (6) months; and (ii)
that number of months  remaining until the end of the Term, if, and only if, the
Executive signs a valid general  release of all claims against the Company,  its
affiliates,  subsidiaries, officers, directors and agents, in a form provided by
the Company.  The Company  shall have no further  obligation or liability to the
Executive.  The Executive's  obligations under Sections 5, 7, 8 and 9 hereof and
shall survive the termination of the Executive's  employment,  regardless of the
circumstances  of any such  termination,  and the  Executive  shall remain bound
thereby.


                (f) TERMINATION BY MUTUAL AGREEMENT.   This  Agreement  may  be
terminated at any time by mutual agreement of the Executive and the Company.

         5. NON-COMPETITION AND BUSINESS OPPORTUNITIES.

                  (a)  NON-COMPETITION.   The  Executive  understands  that  the
Company  is  in  the  business  of  developing   and   licensing   finger  print
identification  technologies,   and  distributing  products  incorporating  such
technologies,  to original equipment  manufacturers and end users. The Executive
agrees that during the period of his  employment  hereunder  and for a period of

                                        5
<PAGE>

one (1) year  thereafter,  the Executive  will not directly or  indirectly:  (i)
market,  sell or  perform  services  such as are  offered  or  conducted  by the
Company, its affiliates and subsidiaries during the period of his employment, to
any customer or client of the Company or "Prospective Customer" or client of the
Company;  or (ii)  engage,  directly or  indirectly,  whether as principal or as
agent, officer,  director,  Executive,  consultant,  shareholder,  or otherwise,
alone or in association with any other person,  corporation or other entity,  in
any  "Competing  Business".  For the purpose of this Section  5(a)  "Prospective
Customer"  shall  mean any  person  with whom the  Company  has  engaged  in any
substantial  discussion  or  negotiation  regarding  the  use of  the  Company's
products or services.  For purposes of this Section 5(a), the term "shareholder"
shall exclude any interest  owned by Employer in a public  company to the extent
the Employer owns less than ten percent (10%) of any such company's  outstanding
common stock.  For the further  purposes of this Agreement,  the term "Competing
Business" shall mean any person,  corporation or other entity  developing and/or
licensing  finger print  identification  technologies or  distributing  products
incorporating such technologies, within the United States, to original equipment
manufacturers and end users at the time of such termination or non-renewal.  Due
to the  nature of the  markets  served and the  technology  and  products  to be
developed  and  marketed by the Company  which are intended to be available on a
national  basis,  the  restrictions  set forth in this  Section  5(a) can not be
limited to a specific geographic area within the United States.

                  (b) BUSINESS  OPPORTUNITIES.  The Executive agrees that during
the period of his  employment  hereunder,  the Executive  will not take personal
advantage  of any  business  opportunities  that are  similar  or  substantially
similar  to the  business  of the  Company.  In  addition,  all  material  facts
regarding any such business  opportunities  must be promptly and fully disclosed
by the  Executive  to the Board of Directors  as soon as the  Executive  becomes
aware of any  opportunity,  and in no event  later than  forty-eight  (48) hours
after  learning  of such  opportunity.  Business  opportunities  covered by this
Section 5(b) shall include,  but are not limited to,  opportunities  relating to
the development and licensing of finger print identification technologies or the
distribution of products  incorporating  such technologies to original equipment
manufacturers and end users.

                  (c)  NON-SOLICITATION.  The  Executive  agrees that during the
period of employment hereunder and for a period of one (1) year thereafter,  the
Executive will not request or otherwise attempt to induce or influence, directly
or indirectly,  any present  customer,  distributor or supplier,  or Prospective
Customer,  distributor or supplier,  of the Company,  or other persons sharing a
business  relationship  with the Company to cancel,  to limit or postpone  their
business  with the  Company,  or  otherwise  take  action  which might be to the
material  disadvantage  of the  Company.  The  Executive  agrees that during the
period of  employment  hereunder  and for a period  of one (1) year  thereafter,
Executive will not hire or solicit for  employment,  directly or indirectly,  or
induce or actively attempt to influence, hire or solicit, any Executive,  agent,
officer,  director,  contractor,  consultant or other business  associate of the
Company  to  terminate  his or  her  employment  or  discontinue  such  person's
consultant, contractor or other business association with the Company.

                                        6
<PAGE>

                  (d) SCOPE. The parties hereto agree that, due to the nature of
the  Company's  business,  the  duration  and scope of the  non-competition  and
non-solicitation  provisions set forth above are  reasonable.  In the event that
any court  determines  that the duration or the geographic  scope,  or both, are
unreasonable  and that such  provisions  are to that extent  unenforceable,  the
parties hereto agree that such provisions  shall remain in full force and effect
for the greatest  time period and in the greatest  area that would not render it
unenforceable.  The parties intend that the non-competition and non-solicitation
provisions herein shall be deemed to be a series of separate covenants,  one for
each and every  county of each and every  state of the United  States of America
and each and every  political  subdivision of each and every country outside the
United States of America where this  provision is intended to be effective.  The
Executive  agrees that damages are an  inadequate  remedy for any breach of such
provisions  and that the  Company,  shall,  whether  or not it is  pursuing  any
potential  remedies  at law,  be  entitled  to seek in any  court  of  competent
jurisdiction,  equitable  relief  in  the  form  of  preliminary  and  permanent
injunctions  without bond or other security upon any actual or threatened breach
of either of these competition  provisions.  If the Executive shall violate this
Section 5, the  duration of this  Section 5  automatically  shall be extended as
against  the  Executive  for a  period  equal to the  period  during  which  the
Executive  shall  have  been in  violation  of this  Section  5.  The  covenants
contained  in this  Section  5 are  deemed to be  material  and the  Company  is
entering into this Agreement relying on such covenants.

         6.  REPRESENTATIONS  AND  WARRANTIES OF THE  EXECUTIVE.  The Executive,
hereby represents and warrants to the Company as follows:  (i) The Executive has
the legal capacity and unrestricted  right to execute and deliver this Agreement
and to perform all of his obligations hereunder; (ii) the execution and delivery
of this  Agreement  by the  Executive  and the  performance  of his  obligations
hereunder  will not violate or be in conflict  with any fiduciary or other duty,
instrument,  agreement,  document,  arrangement, or other understanding to which
Executive  is a party or by which he is or may be bound or  subject;  and  (iii)
except as set forth in Exhibit B attached  hereto,  the Executive is not a party
to any instrument, agreement, document, arrangement,  including, but not limited
to,  invention  assignment  agreement,   confidential   information   agreement,
non-competition  agreement,  non-solicitation  agreement, or other understanding
with any person  (other than the Company)  requiring or  restricting  the use or
disclosure of any  confidential  information or the provision of any employment,
consulting or other services.


           7. DISCLOSURE OF INNOVATIONS; ASSIGNMENT OF OWNERSHIP OF INNOVATIONS;
PROTECTION OF CONFIDENTIAL INFORMATION. Executive hereby represents and warrants
to the Company that Executive understands that the Company is in the business of
developing  and  licensing  finger  print   identification   technologies,   and
distributing  products  incorporating such  technologies,  to original equipment
manufacturers  and end users and that  Executive  may have  access to or acquire
information  with  respect  to  Confidential  Information  (as  defined  below),
including  software,  processes  and  methods,  development  tools,  scientific,
technical and/or business innovations.

     (a) DISCLOSURE OF INNOVATIONS. Executive agrees to disclose in writing to
the Company all inventions, improvements and other innovations of any kind that


                                        7
<PAGE>

Executive may make, conceive, develop or reduce to practice, alone or jointly
with others, during the term of Executive's employment with the Company, whether
or not such inventions, improvements or other innovations are related to and
grow out of Executive's work for the Company and whether or not they are
eligible for patent, copyright, trademark, trade secret or other legal
protection ("Innovations"). Examples of Innovations shall include, but are not
limited to, discoveries, research, inventions, formulas, techniques, processes,
know-how, marketing plans, new product plans, production processes, advertising,
packaging and marketing techniques and improvements to computer hardware or
software.

     (b) ASSIGNMENT OF OWNERSHIP OF INNOVATIONS. Executive agrees that all
Innovations will be the sole and exclusive property of the Company and Executive
hereby assigns all of Executive's rights, title or interest in the Innovations
and in all related patents, copyrights, trademarks, trade secrets, rights of
priority and other proprietary rights to the Company. At the Company's request
and expense, during and after the period of Executive's employment with the
Company, Executive will assist and cooperate with the Company in all respects
and will execute documents, and, subject to Executive's reasonable availability,
give testimony and take further acts requested by the Company to obtain,
maintain, perfect and enforce for the Company patent, copyright, trademark,
trade secret and other legal protection for the Innovations. Executive hereby
appoints an authorized officer of the Company as Executive's attorney-in-fact to
execute documents on his behalf for this purpose. Executive has attached hereto
as Exhibit C a list of Innovations as of the date hereof which belong to
Executive and which are not assigned to the Company hereunder (the "Prior
Innovations"), or, if no such list is attached, Executive represents that there
are no Prior Innovations.

     (c) PROTECTION OF CONFIDENTIAL INFORMATION OF THE COMPANY. Executive
understands that Executive's work as an Executive of the Company creates a
relationship of trust and confidence between Executive and the Company. During
and after the period of Executive's employment with the Company, Executive will
not use or disclose or allow anyone else to use or disclose any "Confidential
Information" (as defined below) relating to the Company, its products, services,
suppliers or customers except as may be necessary in the performance of
Executive's work for the Company or as may be specifically authorized in advance
by appropriate officers of the Company. "Confidential Information" shall
include, but not be limited to, information consisting of research and
development, patents, trademarks and copyrights and applications thereto,
technical information, computer programs, software, methodologies, innovations,
software tools, know-how, knowledge, designs, drawings, specifications,
concepts, data, reports, processes, techniques, documentation, pricing,
marketing plans, customer and prospect lists, trade secrets, financial
information, salaries, business affairs, suppliers, profits, markets, sales
strategies, forecasts, Executive information and any other information not
available to the general public, whether written or oral, which Executive knows
or has reason to know the Company would like to treat as confidential for any
purpose, such as maintaining a competitive advantage or avoiding undesirable
publicity. Executive will keep Confidential Information secret and will not
allow any unauthorized use of the same, whether or not any document containing
it is marked as confidential. These restrictions, however, will not apply to
Confidential Information that has become known to the public generally through
no fault or breach of Executive's or that the Company regularly gives to third
parties without restriction on use or disclosure.

                                        8
<PAGE>

         8.       WORK MADE FOR HIRE.

                  (a) WORK  MADE FOR  HIRE.  Executive  further  recognizes  and
understands that  Executive's  duties at the Company may include the preparation
of materials,  including without limitation  written or graphic  materials,  and
that any such materials conceived or written by Executive shall be done as "work
made for  hire" as  defined  and used in the  Copyright  Act of 1976,  17 U.S.C.
ss.ss.  1 ET SEQ.  In the  event of  publication  of such  materials,  Executive
understands  that  since the work is a "work made for hire",  the  Company  will
solely  retain  and own  all  rights  in  said  materials,  including  right  of
copyright.  In the event  that any of such  works  shall be deemed by a court of
competent  jurisdiction  not to be a "work made for hire," this Agreement  shall
operate as an  irrevocable  assignment by Executive to the Company of all right,
title and  interest in and to such works,  including,  without  limitation,  all
worldwide  copyright  interests  therein,  in  perpetuity.  The fact  that  such
copyrightable works are created by Executive outside of the Company's facilities
or other  than  during  Executive's  working  hours with the  Company  shall not
diminish the  Company's  right with respect to such works which  otherwise  fall
within this  paragraph.  Executive  agrees to execute and deliver to the Company
such  further  instruments  or  documents  as may be requested by the Company in
order to effectuate the purposes of this paragraph.

                  (b) DISCLOSURE OF WORKS AND  INVENTIONS/ASSIGNMENT OF PATENTS.
In consideration of the promises set forth herein,  Executive agrees to disclose
promptly to the  Company,  or to such  person  whom the  Company  may  expressly
designate  for  this  specific  purpose  (its  "Designee"),  any and all  works,
inventions,   discoveries  and  improvements  authored,  conceived  or  made  by
Executive  during the  period of  employment  and  related  to the  business  or
activities of the Company, and Executive hereby assigns and agrees to assign all
of  Executive's  interest in the  foregoing  to the Company or to its  Designee.
Executive  agrees  that,  whenever  he is  requested  to do so by  the  Company,
Executive  shall  execute  any  and  all  applications,   assignments  or  other
instruments  which the  Company  shall  deem  necessary  to apply for and obtain
Letters  Patent or Copyrights of the United States or any foreign  country or to
otherwise  protect  the  Company's  interest  therein.  Such  obligations  shall
continue  beyond the  termination  or  nonrenewal of  Executive's  employment or
service with respect to any works,  inventions,  discoveries and/or improvements
that are  authored,  conceived  of, or made by  Executive  during  the period of
Executive's  employment  or  service,  and  shall be  binding  upon  Executive's
successors,   assigns,   executors,   heirs,   administrators   or  other  legal
representatives.

         9. COMPANY PROPERTY.  All records,  files,  lists,  including  computer
generated lists, drawings, documents,  software,  documents,  equipment, models,
binaries, object modules,  libraries,  source code and similar items relating to
the  Company's  business  that the  Executive  shall prepare or receive from the
Company and all  Confidential  Information  shall remain the Company's  sole and
exclusive  property  ("Company  Business  Property").  Upon  termination of this
Agreement,  the Executive  shall promptly  return to the Company all property of

                                        9
<PAGE>

the  Company  in  his  possession,  including  Company  Business  Property.  The
Executive further represents that he will not copy or cause to be copied,  print
out,  or cause to be printed  out any Company  Business  Property  other than as
specifically  authorized  and  required in the  performance  of the  Executive's
duties.  The Executive  additionally  represents  that, upon  termination of his
employment  with the  Company,  he will not  retain in his  possession  any such
Company  Business  Property;  PROVIDED,  HOWEVER,  that the  Executive  shall be
entitled to inspect,  copy and retain copies of documents in any personnel  file
relating to his employment which is maintained by the Company.

         10.  COOPERATION.  The Executive and Company agree that during the term
of Executive's  employment they shall, at the request of the other Party, render
all assistance and perform all lawful acts that each Party  considers  necessary
or advisable in connection  with any  litigation  involving  either Party or any
director, officer, Executive,  shareholder,  agent, representative,  consultant,
client, or vendor of the Company. Executive shall be entitled to all protections
afforded  officers,  agents  and  directors  under  the  Company's  Articles  of
Incorporation  and Bylaws.  The Company shall  maintain a Directors and Officers
Liability Insurance Policy.

         11.  EMPLOYMENT  DISPUTE  SETTLEMENT  PROCEDURE/WAIVER  OF RIGHTS.  The
Executive  and the Company  each agree that,  in the event  either party (or its
representatives, successors or assigns) brings an action in a court of competent
jurisdiction  relating  to the  Executive's  recruitment,  employment  with,  or
termination of employment from the Company,  each party in such action agrees to
waive  his,  her or its right to a trial by jury,  and  further  agrees  that no
demand, request or motion will be made for trial by jury.

The parties  hereto further agree that, in the event that either seeks relief in
a court of competent  jurisdiction for a dispute covered by this Agreement,  any
other  Agreement  between the  Executive and the Company or which relates to the
Executive's recruitment,  employment with, or termination of employment from the
Company, the defendant or third-party  defendant in such action may, at any time
within sixty (60) days of the service of the complaint, third-party complaint or
cross-claim  upon such party, at his, her or its option,  require all or part of
the dispute to be arbitrated by one  arbitrator in accordance  with the rules of
the  American  Arbitration  Association.  The  parties  agree that the option to
arbitrate  any dispute is governed by the Federal  Arbitration  Act. The parties
understand and agree that, if the other party  exercises his, her or its option,
any dispute  arbitrated  will be heard  solely by the  arbitrator,  and not by a
court. Judgment upon the award rendered, however, may be entered in any court of
competent  jurisdiction.  The cost of such arbitration shall be borne equally by
the parties.

This dispute resolution  agreement will cover all matters directly or indirectly
related to the Executive's recruitment,  employment or termination of employment
by the Company;  including,  but not limited to, claims  involving  laws against
discrimination  whether brought under federal and/or state law and/or local law,
and/or  claims  involving  co-Executives  but  excluding  Worker's  Compensation
Claims.  Nothing  contained  in this  Section  11 shall  limit  the right of the
Company to enforce by court injunction or other equitable relief the Executive's
obligations under Sections 5, 7, 8 and 9 hereof.

                                       10
<PAGE>


The right to a trial,  and to a trial by jury,  is of value.

          THE EXECUTIVE MAY WISH TO CONSULT AN ATTORNEY PRIOR TO SIGNING THIS
          AGREEMENT. IF SO, THE EXECUTIVE SHOULD TAKE A COPY OF THIS AGREEMENT
          WITH HIM. HOWEVER, THE EXECUTIVE WILL NOT BE OFFERED EMPLOYMENT UNTIL
          THIS AGREEMENT IS SIGNED AND RETURNED TO EMPLOYER.


         12. CHOICE OF LAW AND JURISDICTION.  This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with the laws
of the  State  of  Minnesota.  Each of the  parties  hereto  hereby  irrevocably
consents and submits to the  exclusive  jurisdiction  of the state courts of the
State of Minnesota,  and of the United States District Court for the District of
Minnesota in connection with any suit,  action,  or other proceeding  concerning
this Agreement or  enforcement  of Sections 5, 7, 8 and 9 hereof.  The Executive
waives and agrees not to assert any defense  that the court lacks  jurisdiction,
venue is improper,  inconvenient  forum or otherwise.  The Executive  waives the
right to a jury trial and agrees to accept  service of process by certified mail
at the Executive's last known address.

         13.  SUCCESSORS  AND ASSIGNS.  Neither this  Agreement,  nor any of the
Executive's rights, powers, duties or obligations hereunder,  may be assigned by
the Executive.  This Agreement shall be binding upon and inure to the benefit of
the  Executive and his heirs and legal  representatives  and the Company and its
successors.  Successors of the Company shall include,  without  limitation,  any
company or companies,  individuals,  groups, associations,  partnerships,  firm,
venture or other  entity or party  acquiring,  directly  or  indirectly,  all or
substantially   all  of  the   assets  of  the   Company,   whether  by  merger,
consolidation,  purchase,  lease or otherwise. Any such successor referred to in
this paragraph shall  thereafter be deemed "the Company" for the purpose hereof.
All covenants and restrictions upon the Executive hereunder,  including, but not
limited to Sections 5, 7, 8 and 9 hereof,  are  specifically  assignable  by the
Company.

         14. WAIVER.  Any waiver or consent from the Company with respect to any
term or  provision  of this  Agreement  or any other  aspect of the  Executive's
conduct or employment  shall be effective only in the specific  instance and for
the  specific  purpose  for which given and shall not be deemed,  regardless  of
frequency given, to be a further or continuing waiver or consent. The failure or
delay of the  Company  at any time or times to  require  performance  of,  or to
exercise  any of its  powers,  rights or  remedies  with  respect to any term or
provision of this  Agreement or any other aspect of the  Executive's  conduct or
employment in no manner (except as otherwise  expressly  provided  herein) shall
affect  the  Company's  right  at a  later  time to  enforce  any  such  term or
provision.

         15. NOTICES. All notices,  requests,  demands, and other communications
hereunder  must be in  writing  and shall be  deemed to have been duly  given if
delivered by hand or mailed within the continental United States by first class,
registered mail, return receipt requested, postage and registry fees prepaid, to
the applicable party and addressed as follows:

                                       11
<PAGE>

                  (a)      If to the Company:

                           BIO-key International, Inc.
                           1285 Corporate Center Drive, Suite 175
                           Eagan, MN 55121
                           Attn:  Board of Directors
                           With a copy to:

                           Buchanan Ingersoll Professional Corporation
                           Eleven Penn Center
                           1845 Market Street
                           Philadelphia, PA   19103
                           Attn:  Vincent A. Vietti, Esquire

                  (b)      If to the Executive:

                           Michael W. DePasquale
                           704 Michael Drive
                           Toms River, NJ 08753

         16. Construction of Agreement.

                  (a)  SEVERABILITY.  In the  event  that any one or more of the
provisions  of  this  Agreement  shall  be  held  to  be  invalid,   illegal  or
unenforceable,  the  validity,  legality  or  enforceability  of  the  remaining
provisions shall not in any way be affected or impaired thereby.

                  (b)  HEADINGS.   The  descriptive   headings  of  the  several
paragraphs of this Agreement are inserted for  convenience of reference only and
shall not constitute a part of this Agreement.

     17. ENTIRE AGREEMENT AND AMENDMENTS. This Agreement, including all Exhibits
which shall form parts hereof, contains the entire agreement of the parties
concerning the Executive's employment and all promises, representations,
understandings, arrangements and prior agreements on such subject are merged
herein and superseded hereby. The provisions of this Agreement may not be
amended, modified, repealed, waived, extended or discharged except by an
agreement in writing signed by the party against whom enforcement of any
amendment, modification, repeal, waiver, extension or discharge is sought. No
person acting other than pursuant to a resolution of the Board of Directors
shall have authority on behalf of the Company to agree to amend, modify, repeal,
waive, extend or discharge any provision of this Agreement or anything in
reference thereto or to exercise any of the Company's rights to terminate or to
fail to extend this Agreement.

                                       12
<PAGE>

     18. SURVIVAL. The Executive's obligations under Paragraphs 5, 7, 8 and 9
shall survive and continue pursuant to the terms and conditions of this
Agreement following specific termination.

     19. UNDERSTANDING. The Executive represents and agrees that he fully
understands his rights to discuss all aspects of this Agreement with his private
attorney, that to the extent he desires, he availed himself of this right, that
he has carefully read and fully understands all of the provisions of this
Agreement, that he is competent to execute this Agreement, that his decision to
execute this Agreement has not been obtained by any duress and that he freely
and voluntarily enters into this Agreement, and that he has read this document
in its entirety and fully understands the meaning, intent, and consequences of
this Agreement.

     20. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

     21. INJUNCTIVE RELIEF. The Executive hereby agrees and acknowledges that in
the event of a breach or threatened breach of this Agreement by the Executive,
the Company may suffer irreparable harm and monetary damages alone would not
adequately compensate the Company. Accordingly, the Company will therefore be
entitled to injunctive relief to enforce this Agreement.











                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                       13
<PAGE>


         IN WITNESS  WHEREOF,  the  Company  has  caused  this  Agreement  to be
executed and attested by its duly authorized officers, and the Executive has set
his hand, all as of the day and year first above written.

                               BIO-KEY INTERNATIONAL, INC.



                               By:    /S/ THOMAS J. COLATOSTI
                                     --------------------------------------
                               Name:  THOMAS J. COLATOSTI
                                     --------------------------------------
                               Title: CHAIRMAN OF THE BOARD OF DIRECTORS
                                     --------------------------------------

                               EXECUTIVE



                                       /S/ MICHAEL W. DEPASQUALE
                                      ------------------------------------
                                       Michael W. DePasquale




                                       14
<PAGE>
<TABLE>
<CAPTION>


                                    EXHIBIT B

         LIST OF PRIOR CONFIDENTIALITY AND/OR NONCOMPETITION AGREEMENTS

     COMPANY;                    DATE OF EMPLOYMENT;
 COMPANY ADDRESS             EFFECTIVE DATES OF AGREEMENT      BRIEF DESCRIPTION
--------------------------- -------------------------------  -------------------------
<S>                              <C>                            <C>

   PRISM ESOLUTIONS          FEBRUARY 2001- AUGUST 2002        CONFIDENTIALITY AND NON
   512 TOWNSHIP LINE ROAD                                      SOLICITATION AGREEMENT
   BLUE BELL, PA                                               ONE YEAR POST EMPLOYMENT
                                                               ISO 9000/14000 WEB
                                                               TECHNOLOGIES








   Date: ________________
                                                              -----------------------------------------------------
                                                              Executive's Signature


</TABLE>



<PAGE>






                                    EXHIBIT C

                               PRIOR INNOVATIONS:

                                      NONE.


<PAGE>