Exhibit
10.86


 


EXECUTION COPY


 


INTERACT911 MOBILE SYSTEMS, INC.


 


GUARANTEED
SECURED PROMISSORY NOTE


 


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR QUALIFIED UNDER ANY OTHER APPLICABLE SECURITIES
LAWS.  THIS NOTE MAY NOT BE
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE MAKER IS SATISFIED
THAT SUCH DISPOSITION DOES NOT VIOLATE APPLICABLE SECURITIES LAWS.  ANY TRANSFEREE OF THIS NOTE SHALL BE BOUND BY
THE PROVISIONS OF THE ASSET PURCHASE AGREEMENT, DATED AUGUST       ,
2009, AMONG MAKER AND PAYEE, COPIES OF WHICH ARE ON FILE AT THE OFFICE OF
MAKER.


 


	
  $4,000,000

  	
  December     , 2009

  
	
   

  	
  Winston-Salem, North Carolina

  



 


FOR VALUE RECEIVED, the undersigned, InterAct911
Mobile Systems, Inc., a Delaware corporation (“Maker”),
promises to pay to the order of BIO-key International, Inc., a Delaware
corporation (“Payee”), its successors and
assigns, the principal sum of Four Million Dollars ($4,000,000) in three annual
installments, as follows:  (1) One
Million Three Hundred Thirty-Four Thousand Dollars ($1,334,000) on the first
anniversary of the date hereof, (2) One Million Three Hundred Thirty-Three
Thousand Dollars ($1,333,000) on the second anniversary of the date hereof, and
(3) One Million Three Hundred Thirty-Three Thousand Dollars ($1,333,000)
on the third anniversary of the date hereof, together with interest from the
date hereof on the principal sum from time to time outstanding at the rate
provided for below.


 


The principal amount of this Note shall bear
interest at a rate per annum equal to six percent (6%), compounded
annually.  Interest shall be payable
quarterly in arrears in cash on January 1, April 1, July 1 and October 1
of each year, commencing January 1, 2010. 
All payments hereunder shall be applied first to accrued interest and
then to the unpaid principal balance hereof in the inverse order of maturity.


 


This Note may be prepaid in whole or in part at any
time without premium or penalty.  Partial
prepayments shall be applied to unpaid installments of principal to become due
hereunder in the inverse order of their maturity.  All amounts not paid when due under this Note
shall bear interest until paid at a rate of twelve percent (12%) per year or
the maximum rate allowed by law, whichever is less.  Such interest shall be immediately due and
payable.


 


This Note is issued pursuant to, and is entitled to
the benefits of and subject to the terms and provisions of, that certain Asset
Purchase Agreement, dated as of August 13, 2009 (as amended, restated,
supplemented or otherwise modified from time to time, the “Asset
Purchase Agreement”) by and between Maker and Payee.  All capitalized terms used herein without
definition shall have the meanings given to them in the Asset Purchase
Agreement.  This Note is secured by the
IP Security Agreement.


 


For purposes of this Note, an “Event of
Default” shall be deemed to have occurred if:


 

















 


(a)           Maker
shall fail to pay any installment of principal or interest due to Payee
hereunder within three (3) Business Days of the date due;


 


(b)           a
Change of Control occurs;


 


(c)           Maker
shall (i) have entered involuntarily against it an order for relief under
the United States Bankruptcy Code, as amended, (ii) not pay, or admit in
writing its inability to pay, its debts generally as they become due, (iii) make
a general assignment for the benefit of creditors, (iv) apply for, seek,
consent to or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial part of its
property, (v) institute any proceeding seeking to have entered against it
an order for relief under the United States Bankruptcy Code, as amended, to
adjudicate it insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (vi) take any action
authorizing of any matter described in parts (c)(i) through (c)(v) above,
or (vii) fail to contest in good faith any appointment or proceeding
described in part (d) below;


 


(d)           a
custodian, receiver, trustee, examiner, liquidator or similar official shall be
appointed for Maker, or any substantial part of any of its property, or a
proceeding described in part (c)(v) above shall be instituted against
Maker;


 


(e)           Maker
shall be dissolved or liquidated;


 


(f)            Maker
shall complete an underwritten public offering of its securities under the
Securities Act of 1933, as amended;


 


(g)           Maker
shall receive proceeds from equity capital financings after the date hereof
that collectively exceed Twenty Million Dollars ($20,000,000); or


 


(h)           this
Note or any of the documents contemplated hereby shall for any reason not be or
shall cease to be in full force and effect or are declared to be null and void,
or the Note shall for any reason fail to create a valid and perfected first
priority lien in favor of the Payee in the Collateral (as defined in the IP
Security Agreement) purported to be covered by the IP Security Agreement except
as expressly permitted by the terms thereof, or Maker takes any action for the
purpose of terminating, repudiating or rescinding the Note or any document executed
in connection herewith by it or any of its obligations hereunder or thereunder.


 


As used herein, “Change of Control” means (i) any merger, consolidation,
share exchange, business combination, issuance of securities, acquisition of
securities, tender offer, exchange offer or other similar transaction (A) in
which Maker is a constituent corporation, (B) in which a Person or “group”
(as defined in the Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder) of Persons directly or indirectly acquires beneficial or record
ownership of securities representing more than 50% of the outstanding voting
securities of Maker, or (C) in which Maker issues securities representing
more than 50% of the outstanding securities of any class of voting securities
of Maker or (ii) any sale, lease, exchange, transfer, license, acquisition


 


2

















 


or disposition of any assets
that constitute more than 50% of the assets of Maker on a consolidated basis.


 


Upon the occurrence of an Event of Default, Payee
may, at its option, upon written notice to Maker, declare the entire amount of
unpaid principal of this Note, together with any accrued and unpaid interest
thereon, immediately due and payable; provided, that if an Event of
Default of the type described in parts (b), (c) or (d) above has
occurred, the entire amount of unpaid principal of this Note, together with any
accrued and unpaid interest thereon, shall become immediately due and payable
without any action on the part of Payee, and Maker shall immediately pay to
Payee all amounts due and payable with respect to such outstanding principal
amount, together with all accrued interest thereon.  No remedy herein conferred upon Payee is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.


 


If this Note is not paid at maturity, whether by
acceleration or otherwise, Maker shall pay all costs and expenses of collection
and enforcement, including court costs and reasonable attorneys’ fees.


 


Payments of principal and interest on this Note
shall be made in such coin or currency of the United States of America as of
the time of payment shall be legal tender for public and private debts and
shall be made to Payee at 33349 Highway 138, Wall, New Jersey 07719 or at such
other place as the holder hereof may from time to time in writing direct.


 


All notices, claims, demands and other
communications given or delivered under this Note shall be in writing and shall
be delivered in accordance with the Asset Purchase Agreement.


 


This Note may not be negotiated, transferred,
pledged or assigned by Payee without the written consent of Maker, which
consent shall not be unreasonably withheld or delayed.


 


Each party signing or endorsing this Note waives
presentment, demand, protest, notice of dishonor and all other demands and
notices in connection with the delivery acceptance, performance or enforcement
of this Note to the extent permitted by applicable law.


 


Upon receipt of evidence satisfactory to the Maker
of the loss, theft, destruction or mutilation of this Note and, in the case of
any such loss, theft or destruction, upon delivery of indemnity reasonably
satisfactory to the Maker, or in case of such mutilation, upon surrender and
cancellation of this Note, the Maker will issue a new note, of like tenor, in
lieu, and dated the date, of such lost, stolen, destroyed or mutilated Note.


 


This Note shall be governed by the laws of the State
of Delaware.


 


3

















 


IN WITNESS WHEREOF, the undersigned has caused this
Note to be executed as of the date first written above.


 


	
   

  	
  InterAct911 Mobile Systems, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Secretary

  	
   

  



 


SIGNATURE
PAGE TO PROMISSORY NOTE


 

















 


GUARANTY


 


FOR VALUE RECEIVED, each of InterAct911 Corporation,
a Delaware corporation, and SilkRoad Equity LLC, a Delaware limited liability
company (each a “Guarantor”), hereby irrevocably
and unconditionally guarantees to the holder of the Note upon which this
Guaranty is endorsed, the due and punctual payment of the principal of and
interest (including any additional interest required to be paid according to
the terms of said Note) on this Note as well as all costs and expenses of
collection and enforcement, when and as the same shall become due and payable,
all in accordance with the terms of the Note.


 


Each Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Note; the absence of any action to enforce the same; any
waiver or consent by the holder of the Note with respect to any provisions
thereof; any dispute, claim, counterclaim, defense or other right which the
Guarantor may have to assert against the Payee; or any other circumstance which
might otherwise constitute a legal or equitable discharge or defense of a
guarantor.  Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Maker, any right to require a
proceeding first against the Maker, protest, notice and all demands whatsoever and
covenants that this Guaranty will not be discharged, except by complete
performance of the obligations contained in the Note and in this Guaranty.


 


Each Guarantor hereby certifies and warrants that
all acts, conditions and things required to be done and performed and to have
happened precedent to the creation and issuance of this Guaranty to constitute
the same, the valid, binding and enforceable obligation of the Guarantor have
been done and performed in due compliance with all applicable laws.  This Guaranty shall be governed by and
construed in accordance with the laws of the State of Delaware.


 


IN WITNESS WHEREOF, each of the undersigned has
caused this Guaranty to be executed as of the         
day of December, 2009 in its name by a person thereunto duly authorized.


 


	
   

  	
   

  	
  InterAct911
  Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Secretary

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SilkRoad
  Equity, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


SIGNATURE
PAGE TO GUARANTY