**Exhibit 10.87**

 

**EXECUTION COPY**

 

THIS WARRANT AND THE SHARES OF COMMON STOCKISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANTAND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BESOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVEREGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLESTATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TOBIO-KEY INTERNATIONAL, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Right toPurchase up to 8,000,000 Shares of Common Stock of**BIO-key International, Inc.******(subject to adjustment asprovided herein)

 

**COMMONSTOCK PURCHASE WARRANT**

** **
| No. | Issue  Date: December     , 2009 |
|-----|-----------------------------------------------------------|

 

BIO-KEY INTERNATIONAL, INC., a corporation organizedunder the laws of the State of Delaware (“**BIO-key**”),hereby certifies that, for value received, SILKROAD EQUITY, LLC, or assigns(the “**Holder**”), is entitled, subject to the termsset forth below, to purchase from the Company (as defined herein) from andafter the Issue Date of this Warrant and at any time or from time to timebefore 5:00 p.m., New York time, through the close of business the fifthanniversary of the date hereof (the “**Expiration Date**”),up to Eight Million (8,000,000) fully paid and nonassessable shares (the “**Initial Number**” of Warrant Shares) of Common Stock (asdefined below) at the applicable Exercise Price per share (as definedbelow).  The number and character of suchshares of Common Stock and the applicable Exercise Price per share are subjectto adjustment as provided herein.

 

As used herein the following terms, unless thecontext otherwise requires, have the following respective meanings:

 

(a)                                  The term “**Company**”shall include BIO-key and any corporation which shall succeed, or assume theobligations of, BIO-key hereunder.

 

(b)                                 The term “**Common Stock**”includes (i) the Company’s Common Stock, par value $0.0001 per share; and (ii) anyother securities into which or for which any of the securities described in (a) maybe converted or exchanged pursuant to a plan of recapitalization,reorganization, merger, sale of assets or otherwise.

 

(c)                                  The term “**OtherSecurities**” refers to any capital stock (other than Common Stock)and other securities of the Company or any other person (corporate orotherwise) which the holder of the Warrant at any time shall be entitled toreceive, or shall have received, on the exercise of the Warrant, in lieu of orin addition to Common Stock, or which at any time shall be issuable or shallhave been issued in exchange for or in replacement of Common Stock or OtherSecurities pursuant to Section 4 or otherwise.

 

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(d)                                 The term “**ExercisePrice**” means the Initial Price, as adjusted from time to time asprovided herein.

 

(e)                                  The term “**InitialPrice**” means $0.30 per share.

 

1.                                       **Exercise of Warrant**.

 

1.1                                 **Number of Shares Issuableupon Exercise**.  From and after the date hereof through andincluding the Expiration Date, the Holder shall be entitled to receive, uponexercise of this Warrant in whole or in part, by delivery of an original or faxcopy of an exercise notice in the form attached hereto as Exhibit A (the “**Exercise Notice**”), shares of Common Stock of the Company,subject to adjustment pursuant to Section 4.

 

1.2                                 **Company Acknowledgment**. The Company will, at the time of the exercise of the Warrant, upon therequest of the holder hereof acknowledge in writing its continuing obligationto afford to such holder any rights to which such holder shall continue to beentitled after such exercise in accordance with the provisions of this Warrant.If the holder shall fail to make any such request, such failure shall notaffect the continuing obligation of the Company to afford to such holder any suchrights.

 

2.                                       **Procedure for Exercise**.

 

2.1                                 **Delivery of StockCertificates, Etc., on Exercise**.  The Companyagrees that the shares of Common Stock purchased upon exercise of this Warrantshall be deemed to be issued to the Holder as the record owner of such sharesas of the close of business on the date on which this Warrant shall have beensurrendered and payment made for such shares in accordance herewith.  As soon as practicable after the exercise ofthis Warrant in full or in part, and in any event within three (3) businessdays thereafter, the Company at its expense (including the payment by it of anyapplicable issue taxes) will cause to be issued in the name of and delivered tothe Holder, or as such Holder (upon payment by such Holder of any applicabletransfer taxes) may direct in compliance with applicable securities laws, acertificate or certificates for the number of duly and validly issued, fullypaid and nonassessable shares of Common Stock (or Other Securities) to whichsuch Holder shall be entitled on such exercise, plus, in lieu of any fractionalshare to which such holder would otherwise be entitled, cash equal to suchfraction multiplied by the then Fair Market Value (as defined below) of onefull share, together with any other stock or other securities and property(including cash, where applicable) to which such Holder is entitled upon suchexercise pursuant to Section 1 or otherwise.  For purposes hereof, the “**Fair Market Value**” of a share of Common Stock as of aparticular date (the “**Determination Date**”)shall mean:

 

(a)                                  If the Company’s Common Stock is tradedon the NYSE Amex Equities exchange or another national exchange or isquoted on the Global or Capital Market of The NASDAQ Stock Market, Inc.(“**Nasdaq**”), then the closing or last sale price, respectively,reported for the last business day immediately preceding the DeterminationDate.

 

(b)                                 If the Company’s Common Stock is nottraded on the NYSE Amex Equities exchange or another national exchange oron the Nasdaq, but is traded on the FINRA

 

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OTC Bulletin Board, then the mean of the average ofthe closing bid and asked prices reported for the last business day immediatelypreceding the Determination Date.

 

(c)                                  Except as provided in clause (d) below,if the Company’s Common Stock is not publicly traded, then as the Holder andthe Company agree or in the absence of agreement by arbitration in accordancewith the rules then in effect of the American Arbitration Association,before a single arbitrator to be chosen from a panel of persons qualified byeducation and training to pass on the matter to be decided.

 

(d)                                 If the Determination Date is the date ofa liquidation, dissolution or winding up, or any event deemed to be aliquidation, dissolution or winding up pursuant to the Company’s certificate ofincorporation, then all amounts to be payable per share to holders of theCommon Stock pursuant to the charter in the event of such liquidation,dissolution or winding up, plus all other amounts to be payable per share inrespect of the Common Stock in liquidation under the charter, assuming for thepurposes of this clause (d) that all of the shares of Common Stock thenissuable upon exercise of the Warrant are outstanding at the DeterminationDate.

 

2.2                                 **Exercise**. Payment may be made in cash or by certified or official bank checkpayable to the order of the Company or by wire transfer in an amount equal tothe applicable aggregate Exercise Price for the number of shares of CommonStock specified in such Exercise Notice (as such exercise number shall beadjusted to reflect any adjustment in the total number of shares of CommonStock issuable to the Holder per the terms of this Warrant) and the Holdershall thereupon be entitled to receive the number of duly authorized, validlyissued, fully-paid and non-assessable shares of Common Stock (or OtherSecurities) determined as provided herein.

 

3.                                       **Effect of Reorganization,Etc**.

 

3.1                                 **Reorganization,Consolidation, Merger, Etc**.  In case atany time or from time to time, the Company shall (a) effect areorganization, (b) consolidate with or merge into any other person, or (c) transferall or substantially all of its properties or assets to any other person underany plan or arrangement contemplating the dissolution of the Company, then, ineach such case, as a condition to the consummation of such a transaction,proper and adequate provision shall be made by the Company whereby the Holderof this Warrant, on the exercise hereof as provided in Section 1 at anytime after the consummation of such reorganization, consolidation or merger orthe effective date of such dissolution, as the case may be, shall receive, inlieu of the Common Stock (or Other Securities) issuable on such exercise priorto such consummation or such effective date, the stock and other securities andproperty (including cash) to which such Holder would have been entitled uponsuch consummation or in connection with such dissolution, as the case may be,if such Holder had so exercised this Warrant, immediately prior thereto, allsubject to further adjustment thereafter as provided in Section 4.

 

3.2                                 **Dissolution**. In the event of any dissolution of the Company following the transfer ofall or substantially all of its properties or assets, the Company, concurrentlywith any distributions made to holders of its Common Stock, shall at itsexpense deliver or cause to be delivered to the Holder the stock and othersecurities and property (including cash, where applicable) receivable by theHolder of the Warrant pursuant to Section 3.1, or, if the Holder

 

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shall so instruct the Company, to a bank or trustcompany specified by the Holder and having its principal office in New York, NYas trustee for the Holder of the Warrant (the “**Trustee**”).

 

3.3                                 **Continuation of Terms**. Upon any reorganization, consolidation, merger or transfer (and anydissolution following any transfer) referred to in this Section 3, thisWarrant shall continue in full force and effect and the terms hereof shall beapplicable to the shares of stock and other securities and property receivableon the exercise of this Warrant after the consummation of such reorganization,consolidation or merger or the effective date of dissolution following any suchtransfer, as the case may be, and shall be binding upon the issuer of any suchstock or other securities, including, in the case of any such transfer, theperson acquiring all or substantially all of the properties or assets of theCompany, whether or not such person shall have expressly assumed the terms ofthis Warrant as provided in Section 4. In the event this Warrant does not continue in full force and effectafter the consummation of the transactions described in this Section 3,then the Company’s securities and property (including cash, where applicable)receivable by the Holders of the Warrant will be delivered to Holder or theTrustee as contemplated by Section 3.2.

 

4.                                       **Certificate as toAdjustments**.  In each case of any adjustment orreadjustment in the shares of Common Stock (or Other Securities) issuable onthe exercise of the Warrant, the Company at its expense will promptly cause itsChief Financial Officer or other appropriate designee to compute suchadjustment or readjustment in accordance with the terms of the Warrant andprepare a certificate setting forth such adjustment or readjustment and showingin detail the facts upon which such adjustment or readjustment is based,including a statement of (a) the consideration received or receivable bythe Company for any additional shares of Common Stock (or Other Securities)issued or sold or deemed to have been issued or sold, (b) the number ofshares of Common Stock (or Other Securities) outstanding or deemed to beoutstanding, and (c) the Exercise Price and the number of shares of CommonStock to be received upon exercise of this Warrant, in effect immediately priorto such adjustment or readjustment and as adjusted or readjusted as provided inthis Warrant.  The Company will forthwithmail a copy of each such certificate to the holder of the Warrant and anyWarrant agent of the Company (appointed pursuant to Section 9 hereof).

 

5.                                       **Reservation of StockIssuable on Exercise of Warrant**.  The Companywill at all times reserve and keep available, solely for issuance and deliveryon the exercise of the Warrant, shares of Common Stock (or Other Securities)from time to time issuable on the exercise of the Warrant.

 

6.                                       **Investment Representations**. In connection with the Holder’s acquisition of this Warrant, the Holderhereby represents and warrants to the Company as follows:

 

(a)                                  The Holder is acquiring this Warrant forits own account for investment only, and not with a view to, or for sale inconnection with, any distribution of this Warrant in violation of theSecurities Act of 1933, as amended (the “**Securities Act**”),any rule or regulation under the Securities Act, or any state, foreign orother securities laws.

 

(b)                                 The Holder acknowledges that aninvestment in thisWarrant involves a high degree of risk.

 

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(c)                                  The Holder is able to protect its owninterest in the transactions contemplated hereby, can bear the economic risk ofthis investment (including possible complete loss of such investment) for anindefinite period of time and has such knowledge and experience in financial orbusiness matters such that he is capable of evaluating the merits and risks ofthe investment in thisWarrant.

 

(d)                                 The Holder understands that this Warrant has not been registeredunder the SecuritiesAct or under the securities laws of any jurisdiction, by reason ofreliance upon certain exemptions, and that the reliance of the Company on suchexemptions is predicated upon the accuracy of the representations and warrantiescontained herein.

 

(e)                                  The Holder has had the opportunity toask questions of and receive answers from representatives of the Company and toobtain additional information, documents and records relating to the Company,its business and the investment contemplated hereby.

 

(f)                                    The Holder understands that this Warrant is characterized as a “restrictedsecurity” under the federal securities laws inasmuch as it has been acquired ina transaction not involving a public offering and that under such laws andapplicable regulations (and under other applicable securities laws) such Securities may not be transferred orresold without registration under the Securities Act or other applicable laws orpursuant to a valid exemption from registration under the Securities Act andsuch laws.  The Holder understands thatthe Company requires an opinion of counsel satisfactory to the Company thatregistration is not required as a condition to any transfer where this Warrant is not being registered.

 

(g)                                 The Holder understands that theCompany will be under no obligation to register this Warrant under the Securities Act (orany other applicable securities laws).

 

(h)                                 The Holder is familiar with Securitiesand Exchange Commission Rule 144 and understands the resale limitationsimposed thereby and by theSecurities Act; and

 

(i)                                     The Holder is an “Accredited Investor”pursuant to Rule 501 of Regulation D under the Securities Act.

 

7.                                       **Assignment; Exchange ofWarrant**.  This Warrant may not be transferred orassigned unless and until the $4,000,000 Guaranteed Secured Promissory Note,dated December     , 2009 issued by InterAct911 MobileSystems, Inc. to BIO-key has been paid in full and cancelled.  Subject to the foregoing sentence andcompliance with applicable securities laws, this Warrant, and the rightsevidenced hereby, may be transferred by any registered holder hereof (a “**Transferor**”) in whole or in part.  On the surrender for exchange of thisWarrant, with the Transferor’s endorsement in the form of Exhibit Battached hereto (the “**Transferor****Endorsement Form**”) and together with evidence reasonablysatisfactory to the Company demonstrating compliance with applicable securitieslaws, which shall include, without limitation, the provision of a legal opinionfrom the Transferor’s counsel (at the Company’s expense) that such transfer isexempt from the registration requirements of applicable securities laws, andwith payment by the Transferor of any applicable transfer taxes) will issue anddeliver to or on the order of the Transferor thereof a new Warrant of liketenor, in the name of the Transferor and/or the transferee(s) specified insuch Transferor Endorsement Form (each a

 

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“**Transferee**”),calling in the aggregate on the face or faces thereof for the number of sharesof Common Stock called for on the face or faces of the Warrant so surrenderedby the Transferor.

 

8.                                       **Replacement of Warrant**. On receipt of evidence reasonably satisfactory to the Company of theloss, theft, destruction or mutilation of this Warrant and, in the case of anysuch loss, theft or destruction of this Warrant, on delivery of an indemnityagreement or security reasonably satisfactory in form and amount to the Companyor, in the case of any such mutilation, on surrender and cancellation of thisWarrant, the Company at its expense will execute and deliver, in lieu thereof,a new Warrant of like tenor.

 

9.                                       **Warrant Agent**. The Company may, by written notice to the each Holder of the Warrant,appoint an agent for the purpose of issuing Common Stock (or Other Securities)on the exercise of this Warrant pursuant to Section 1, exchanging thisWarrant pursuant to Section 7, and replacing this Warrant pursuant to Section 8,or any of the foregoing, and thereafter any such issuance, exchange orreplacement, as the case may be, shall be made at such office by such agent.

 

10.                                 **Transfer on the Company’sBooks**.  Until this Warrant is transferred on thebooks of the Company, the Company may treat the registered holder hereof as theabsolute owner hereof for all purposes, notwithstanding any notice to thecontrary.

 

11.                                 **Notices, Etc**. All notices and other communications from the Company to the Holder ofthis Warrant shall be mailed by first class registered or certified mail,postage prepaid, at such address as may have been furnished to the Company inwriting by such Holder or, until any such Holder furnishes to the Company anaddress, then to, and at the address of, the last Holder of this Warrant whohas so furnished an address to the Company.

 

12.                                 **Miscellaneous**. This Warrant and any term hereof may be changed, waived, discharged orterminated only by an instrument in writing signed by the party against whichenforcement of such change, waiver, discharge or termination is sought. ThisWarrant shall be governed by and construed in accordance with the laws of Stateof Delaware without regard to principles of conflicts of laws.  The prevailing party shall be entitled torecover from the other party its reasonable attorney’s fees and costs.  In the event that any provision of thisWarrant is invalid or unenforceable under any applicable statute or rule oflaw, then such provision shall be deemed inoperative to the extent that it mayconflict therewith and shall be deemed modified to conform with such statute orrule of law.  Any such provisionwhich may prove invalid or unenforceable under any law shall not affect thevalidity or enforceability of any other provision of this Warrant.  The headings in this Warrant are for purposesof reference only, and shall not limit or otherwise affect any of the termshereof.  The invalidity orunenforceability of any provision hereof shall in no way affect the validity orenforceability of any other provision hereof.

 

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IN WITNESS WHEREOF, each of the undersigned hasexecuted this Warrant as of the date first written above.

 
|                      | BIO-KEY  INTERNATIONAL, INC. |
|---------------------------|------------------------------|
|                      |                         |
|                      | By:                          |   |
|                      | Name:                        |   |
|                      | Title:                       |   |
|                      |                         |
|                      |                         |
| Acknowledged  and agreed: |                         |
|                      |                         |
| SILKROAD  EQUITY, LLC     |                         |
|                      |                         |
| By:                       |                         |   |   |
| Name:                     |                         |   |   |
| Title:                    |                         |   |   |

 

**SIGNATUREPAGE TO WARRANT**

 

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** **

**EXHIBIT A**

** **

**FORM OFSUBSCRIPTION**

** **

(To Be SignedOnly On Exercise Of Warrant)

 

TO:                            BIO-key International, Inc.

 

Attention:                                         Chief Financial Officer

 

The undersigned, pursuant to the provisions set forthin the attached Warrant (No.        ),hereby irrevocably elects to purchase (check applicable box) shares of theCommon Stock covered by such Warrant.

 

The undersigned herewith makes payment of the fullExercise Price for such shares at the price per share provided for in suchWarrant, which is $                      in lawful money of the United States.

 

The undersigned requests that the certificates forsuch shares be issued in the name of, and delivered to                                                                                             whose address is                                                                                                                                                       .

 

The undersigned represents and warrants that alloffers and sales by the undersigned of the securities issuable upon exercise ofthe within Warrant shall be made pursuant to registration of the Common Stockunder the Securities Act of 1933, as amended (the “**SecuritiesAct**”) or pursuant to an exemption from registration under theSecurities Act.

 
| Dated: |   |                                                                                |   |
|--------|--------|-------------------------------------------------------------------------------------|--------|
|   |   | (Signature  must conform to name of holder as specified on the face of the Warrant) |
|   |   | Address:                                                                            |   |
|   |   |                                                                                |

 

A-1

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**EXHIBIT B**

** **

**FORM OFTRANSFEROR ENDORSEMENT**

** **

(To Be SignedOnly On Transfer Of Warrant)

 

For value received, the undersigned hereby sells,assigns, and transfers unto the person(s) named below under the heading “**Transferees**” the right represented by the within Warrant topurchase the percentage and number of shares of Common Stock of BIO-keyInternational, Inc.  into which thewithin Warrant relates specified under the headings “Percentage Transferred”and “**Number Transferred**,” respectively,opposite the name(s) of such person(s) and appoints each such personAttorney to transfer its respective right on the books of BIO-key International, Inc.  with full power of substitution in thepremises.

 

| **Transferees** | ** ** | **Address** | ** ** | **Percentage  Transferred** | ** ** | **Number  Transferred** |
|-----------------|------------|-------------|------------|-----------------------------|------------|-------------------------|
|            |       |        |       |                        |       |                    |
|            |       |        |       |                        |       |                    |
|            |       |        |       |                        |       |                    |

 

 
| Dated:               |   |                                                                                |   |
|----------------------|--------|-------------------------------------------------------------------------------------|--------|
|                 |   | (Signature  must conform to name of holder as specified on the face of the Warrant) |
|                 |   | Address:                                                                            |   |
|                 |   |                                                                                |
|                 |   |                                                                                |
|                 |   | SIGNED  IN THE PRESENCE OF:                                                         |
|                 |   |                                                                                |
|                 |   |                                                                                |
|                 |   |                                                                                |
|                 |   | (Name)                                                                              |
|                 |   |
| ACCEPTED AND AGREED: |   |
| [TRANSFEREE]         |   |
|                 |   |
|                 |   |
| (Name)               |   |

 

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