Document:

Exhibit 10.1

 

BEHRINGER
HARVARD OPPORTUNITY REIT I, INC.

AMENDED AND RESTATED 2004 INCENTIVE AWARD PLAN

 

AMENDED
AND RESTATED STOCK OPTION AGREEMENT

 

This Amended and Restated
Stock Option Agreement amends and restated that certain Stock Option Agreement
dated              ,
200     pursuant to which Behringer Harvard Opportunity
REIT I, Inc., a Maryland corporation (the “Company”), granted to the
optionee named below (“Optionee”) an option (this “Option”) to purchase the
total number of shares shown below of Common Stock of the Company (“Shares”) at
the exercise price per share set forth below (the “Exercise Price”), subject to
all of the terms and conditions of such Stock Option Agreement and the
Behringer Harvard Opportunity REIT I, Inc. Amended and Restated 2004
Incentive Award Plan (the “Plan”). 
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings ascribed to them in the Plan. 
The terms and conditions of the Plan are incorporated herein by
reference.

 

	
  Shares
  Subject to Option:

  	
   

  	
  5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exercise
  Price Per Share:

  	
   

  	
  $

  	
  9.10

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Expiration
  Date:

  	
   

  	
  December 31, 2012

  	
   

  
					

 

Vesting:  Shares subject to issuance under this Option
shall be eligible for exercise in accordance with the vesting schedule (and
other terms) set forth in Section 10 of this Amended and Restated Stock
Option Agreement.

 

IN WITNESS WHEREOF, this Amended
and Restated Stock Option Agreement has been executed by the Company by a duly
authorized officer as of the date specified hereon.

 

	
   

  	
  BEHRINGER
  HARVARD OPPORTUNITY REIT I, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  

 

	
  Original
  Grant Date:

  	
   

  	
   

  

 

	
   

  	
   

  	
  Type
  of Stock Option Intended:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Incentive Stock Option
  (ISO)

  
	
   

  	
   

  	
   

  
	
  XX

  	
   

  	
  Non-Qualified
  Stock Option (NQSO)

  

 

Optionee hereby acknowledges
receipt of a copy of the Plan, represents that Optionee has read and
understands the terms and provisions of the Plan, and accepts this Option
subject to all the terms and conditions of the Plan and this Amended and
Restated Stock Option Agreement. 
Optionee acknowledges that there may be adverse tax consequences upon
exercise of this Option or disposition of Shares purchased by exercise of this
Option, and that Optionee should consult a tax adviser prior to such exercise
or disposition.

 

	
   

  	
   

  
	
   

  	
  [Name
  of Optionee]

  

 

 

1.             Exercise Period of Option.  Subject to the terms and conditions of this
Amended and Restated Stock Option Agreement and the Plan, and unless otherwise
modified in writing signed by the Company and Optionee, this Option may be
exercised with respect to all of the Shares subject to this Option only in
accordance with the vesting schedule set forth in Section 10 below.

 

2.             Restrictions on Exercise.  This Option may not be exercised, unless such
exercise is in compliance with the Securities Act of 1933 and all applicable
state securities laws, as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company’s Shares may be listed at the time of exercise.  Optionee understands that the Company is
under no obligation to register, qualify or list the Shares subject to this
Option with the Securities and Exchange Commission (“SEC”), any state
securities commission or any stock exchange to effect such compliance.  Also, this Option may not be exercised within
the first six (6) months of the Grant Date noted hereon (except in
situations otherwise allowed by this Option and Section 7(e)(8)(B) of
the Fair Labor Standards Act) if the Optionee is currently, at the time of
exercise, or has been at any time within the two (2) year period immediately
preceding exercise, a non-exempt (as defined in the Fair Labor Standards Act)
employee of the Company.

 

3.             Termination of Option.

 

(a)           Termination
for Cause.  If Optionee
ceases to perform services for the Company, or any Parent or Subsidiary, for
Cause, this Option shall immediately be forfeited, along with any and all
rights or subsequent rights attached thereto, as of the Termination Date.  For this purpose, “Cause” shall be defined as
set forth in the written employment agreement between the Optionee and the
Company, or, if no such written agreement exists or if “Cause” is not defined
in such written employment agreement, “Cause” shall be defined as set forth in
the Plan, or, if not defined in the Plan, “Cause” shall mean actions or
omissions harmful to the Company as determined by the Board in its sole and
absolute discretion.

 

(b)           No Right
to Employment or Other Relationship.  Nothing in the Plan or this Amended and
Restated Stock Option Agreement shall confer on Optionee any right to continue
in the employ of, or other relationship with, the Company, or any Parent or
Subsidiary, or limit in any way the right of the Company, or any Parent or
Subsidiary, to terminate Optionee’s employment or other relationship at any
time, with or without cause.

 

4.             Manner of Exercise.

 

(a)           Exercise
Agreement.  This Option
shall be exercisable by delivery to the Company of an executed Exercise and
Stockholder Agreement (“Exercise Agreement”) in such form as may be approved or
accepted by the Company, which shall set forth Optionee’s election to exercise
this Option with respect to some or all of the Shares subject to this Option,
the number of Shares subject to this Option being purchased, and any
restrictions imposed on the Shares subject to this Option (including, without
limitation, vesting or performance-based restrictions, rights of the Company to
re-purchase Shares acquired pursuant to the exercise of an Option, voting
restrictions, investment intent restrictions, restrictions on transfer, “first
refusal” rights of the Company to purchase Shares acquired pursuant to the
exercise of an Option prior to their sale to any other person, “drag along”
rights requiring the sale of shares to a third party purchaser in certain
circumstances, “lock up” type restrictions in the case of an initial public
offering of the Company’s stock, restrictions or limitations that would be
applied to stockholders under any applicable restriction agreement among the
stockholders, and restrictions under applicable federal securities laws, under
the requirements of any stock exchange or market upon which such Shares are
then listed and/or traded, and/or under any blue sky or state securities laws
applicable to such Shares).  The Company
may modify the required Exercise Agreement at any time for any reason
consistent with the Plan.  If the
Optionee receives a hardship distribution from a Code §401(k) plan of the
Company, or any Parent or Subsidiary, this Option may not be exercised during
the six (6) month period following the hardship withdrawal (unless the
Company determines that such exercise would not jeopardize the
tax-qualification of such Code §401(k) plan).

 

(b)           Exercise
Price.  Such Exercise Agreement shall be
accompanied by full payment of the Exercise Price for the Shares being purchased.  Payment for the Shares being purchased may be
made in U.S. dollars in cash (by check), or by delivery to the Company of a
number of Shares which have been owned and completely paid for by the holder
for at least six (6) months prior to the date of exercise (i.e., “mature shares” for accounting
purposes) having an aggregate fair market value equal to the amount to be
tendered, or a combination thereof.  In
addition, this Option may be exercised through a brokerage transaction
following registration of the Shares under Section 12 of 

 

 

the Securities Exchange Act
of 1934 as permitted under the provisions of Regulation T promulgated by the
Federal Reserve Board applicable to cashless exercises.

 

(c)           Withholding
Taxes.  Prior to the issuance of Shares
upon exercise of this Option, Optionee must pay, or make adequate provision
for, any applicable federal or state withholding obligations of the
Company.  Optionee may provide for
payment of withholding taxes upon exercise of the Option by requesting that the
Company retain Shares with a Fair Market Value equal to the minimum amount of
taxes required to be withheld.  In such
case, the Company shall issue the net number of Shares to Optionee by deducting
the Shares retained from the Shares exercised.

 

(d)           Issuance
of Shares.  Provided that
such Exercise Agreement and payment are in form and substance satisfactory to
counsel for the Company, the Company shall cause the Shares purchased to be
issued in the name of Optionee or Optionee’s legal representative.  Optionee shall not be considered a
Stockholder until such time as Shares have been issued as noted on the
stockholder register of the Company.

 

5.             Notice of Disqualifying Disposition of ISO Shares.  If this Option is an ISO, and
if Optionee sells or otherwise disposes of any of the Shares acquired pursuant
to this ISO on or before the later of (a) the date two (2) years
after the Grant Date, or (b) the date one (1) year after exercise of
the ISO, with respect to the Shares to be sold or disposed, Optionee shall and
hereby agrees to immediately notify the Company in writing of such sale or
disposition.  Optionee acknowledges and
agrees that Optionee may be subject to income tax withholding by the Company on
the compensation income recognized by Optionee from any such early disposition
by payment in cash or out of the current wages or earnings payable to Optionee,
and Optionee agrees to remit same to Company upon request.  Optionee also hereby agrees that Optionee
shall include the compensation from such early disposition in the Optionee’s
gross income for federal tax purposes.

 

6.             Nontransferability of Option.  This Option may not be transferred in any
manner, other than by will or by the laws of descent and distribution.  In addition, except as expressly permitted
under the Plan for NQSOs, during Optionee’s lifetime, this Option may only be
exercised Optionee.  The terms of this
Option shall be binding upon the executor, administrators, successors and
assigns of Optionee.  However, if this
Option is a NQSO, it may be transferred to the extent allowed by the Plan.

 

7.             Tax Consequences.  Optionee understands that the grant and
exercise of this Option, and the sale of Shares obtained through the exercise
of this Option, may have tax implications that could result in adverse tax
consequences to Optionee.  Optionee
represents that Optionee has consulted with, or will consult with, his or her
tax advisor; Optionee further acknowledges that Optionee is not relying on the
Company for any tax, financial or legal advice; and it is specifically
understood by the Optionee that no representations or assurances are made as to
the qualification of this Option as an ISO or as to any particular tax
treatment with respect to the Option. Optionee also acknowledges that exercise
of an ISO option must generally occur within ninety (90) days of termination of
employment, regardless of any longer period allowed by this Amended and
Restated Stock Option Agreement.

 

8.             Interpretation.  Any dispute regarding the interpretation of
this Amended and Restated Stock Option Agreement shall be submitted to the
Board or the Committee, which shall review such dispute in accordance with the
Plan.  The resolution of such a dispute
by the Board or Committee shall be final and binding on the Company and Optionee.

 

9.             Entire Agreement and Other Matters.  The Plan and the Exercise
Agreement are incorporated herein by this reference.  Optionee acknowledges and agrees that the
granting of this Option constitutes a full accord, satisfaction and release of
all obligations or commitments made to Optionee by the Company or any of its
officers, directors, stockholders or affiliates with respect to the issuance of
any securities, or rights to acquire securities, of the Company or any of its
affiliates.  This Amended and Restated
Stock Option Agreement, the Plan and the Exercise Agreement constitute the
entire agreement of the parties hereto, and supersede all prior understandings
and agreements with respect to the subject matter hereof.  This Amended and Restated Stock Option
Agreement and the underlying Option are void ab initio
unless this Certificate has been executed by the Optionee and the Optionee has
agreed to all terms and provisions hereof.

 

10.          Vesting and Exercise of Shares.  Subject to the terms of the
Plan, this Amended and Restated Stock Option Agreement and the Exercise
Agreement, the Optionee shall be entitled to purchase, pursuant to the exercise

 

 

of this Option, the
percentage of the Shares subject to this Option shown below during the calendar
year specified below:

 

	
  Vesting Schedule:

  	
   

  
	
  Percentage Exercisable:

  	
   

  	
  Year Exercisable:

  	
   

  
	
  25%

  	
   

  	
  2010

  	
   

  
	
  25%

  	
   

  	
  2011

  	
   

  
	
  50%

  	
   

  	
  2012

  	
   

  

 

If Optionee does not
exercise such percentage of Shares exercisable during the calendar year
specified above, such percentage of the Option shall be forfeited and no longer
be exercisable.  If the above calculation
of Shares available for purchase through exercise of this Option would result
in a fraction, any fraction will be rounded to zero.  Notwithstanding the foregoing, if there a
Triggering Event (as defined below) occurs, all of the Shares subject to this
Option that have not already vested and become exercisable shall accelerate and
may be exercised only during the period from the date of the Triggering Event
through and including December 31 of the calendar year in which the
Triggering Event occurs (and may no longer be exercised according to the
vesting schedule set forth above in this Section 10).  “Triggering Event” shall mean the date that
either (1) any one person, or more than one person acting as a group,
acquires ownership of stock of the Company that, together with stock held by
such person or group, constitutes more than 50% of the total fair market value
or total voting power of the stock of the Company, (2) any one person, or
more than one person acting as a group that are unrelated to the Company,
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company that
have a total gross fair market value equal to or more than 40% of the total
gross fair market value of all of the assets of the Company, (3) the date
that during a 12-month period 30% of the voting power of the stock is acquired,
or (4) during a 12-month period, a majority of the members of the board of
directors are replaced.Exhibit
10.1

 

SETTLEMENT AND MUTUAL RELEASE
AGREEMENT

 

This Agreement (“Agreement”)
is made effective as of July 28, 2008, by and between DATARADIO
CORPORATION, a Delaware corporation (“Dataradio”), on the one
hand, and BIO-KEY INTERNATIONAL, INC., a Delaware
corporation (“BIO-key”), on the other hand.  Dataradio and BIO-key may hereinafter
individually be referred to as a “Party” and shall hereinafter
collectively be referred to as the “Parties”.  Myers, Widders, Gibson, Jones &
Schneider, LLP is also a party to this Agreement, solely for the purpose of
serving as the Escrow Agent under Section 5 hereof.  This Agreement is entered into with regard to
the following facts:

 

R E C I T A L S

 

WHEREAS,
on or about June 1, 2003, BIO-key’s predecessor-in-interest, Aether
Systems, Inc. (“Aether”), entered into a Subcontractor Agreement
with Dataradio (the “Subcontractor Agreement”).  BIO-key is the successor-in-interest to the
rights and obligations of Aether under the Subcontractor Agreement.  Pursuant to the terms of the Subcontractor
Agreement, among other things, Dataradio agreed to provide equipment, products,
goods, software and documentation to Aether in connection with the “Copsmart
Project” for Aether’s customer, Hamilton County, Ohio; and

 

WHEREAS, as
of April 3, 2008, the balance owing Dataradio by BIO-key pursuant to the
Subcontractor Agreement amounted to $2,356,771.00 comprised of $2,149,030.00
owed pursuant to Dataradio invoice number 273 dated January 18, 2008 and
$207,741.00 representing amounts retained by BIO-key under previous Dataradio
invoices; and

 

WHEREAS,
on April 3, 2008, counsel for Dataradio submitted a demand for payment to
BIO-key demanding payment in the sum of $2,356,771.00 (the “Claim”); and

 

1

 

WHEREAS,
without admission of any liability or fault, and to avoid the expense and
uncertainties of litigation, the Parties wish to settle the Claim, and agree as
follows:

 

NOW,
THEREFORE, FOR GOOD CAUSE AND VALUABLE CONSIDERATION, THE ADEQUACY OF WHICH IS
HEREBY ACKNOWLEDGED, THE PARTIES EXPRESSLY AGREE AS FOLLOWS:

 

T E R M S  O F  S E T T L E M E N T

 

1.             Payment
Terms.

 

A.            BIO-key shall pay to
Dataradio the sum of $2,356,771.00 (the “Balance”), plus interest at
seven percent (7%) per annum on the unpaid balance in accordance with the
payment terms and schedule set forth in Attachment “A” hereto and incorporated
herein by reference (the “Promised Installment Payments”).  The first “Total Payment” due under the
Promised Installment Payments shall be immediately due and payable to Dataradio
upon execution of this Agreement by both Parties.

 

B.            As indicated on
Attachment “A”, BIO-key anticipates receiving payments from Hamilton County,
Ohio on or about September 1, 2008 in the sum of $236,538.00, and on or
about April 1, 2009, in the sum of $808,452.00 (the “Hamilton County
Monies”).   Notwithstanding Section 2
hereof, in the event these payments are made by Hamilton County, Ohio to
BIO-key directly, within three (3) business days following actual receipt
of any or all of the Hamilton County Monies by BIO-key, BIO-key agrees to
deliver to Dataradio, in the manner provided in Section 1.E. hereof, the
full amount of such payments actually received by BIO-key, without deduction or
offset of any kind, which amounts actually received by Dataradio shall be
applied to the Balance.  In the event any
or all of the Hamilton County Monies are not received by BIO-key or Dataradio,
the total amount of the Hamilton County Monies not received shall 

 

2

 

continue to be
included in the Balance and such amount shall be paid at the time of the June 1,
2009 scheduled payment by BIO-key to Dataradio contemplated under the Promised
Installment Payments.

 

C.            The total of any
unpaid Balance and accrued interest is due and payable on June 1, 2009.

 

D.            All payments made
shall first be applied to interest then due and the balance applied to the
principal to reduce the balance thereof.

 

E.             All Promised
Installment Payments made by BIO-key or on behalf of BIO-key shall be made
payable to “Dataradio”  and
delivered to Erik B. Feingold, Esq. c/o the law offices of Myers, Widders,
Gibson, Jones & Schneider, LLP, 5425 Everglades Street, Ventura,
California 93003 (the “Payment Address”).

 

F.             BIO-key shall be
entitled to pre-pay, in whole or in part, the remaining unpaid Balance plus
accrued interest at any time without penalty.

 

2.             Assignment of
Hamilton County Monies. 
BIO-key does hereby irrevocably convey, transfer and assign to Dataradio
all of BIO-key’s right, title and interest in and to the Hamilton County
Monies.  Concurrently with the execution
of this Agreement, BIO-key shall execute the Assignment Agreement, attached
hereto as Attachment “B” (the “Hamilton County Assignment”), which assignment
instructs Hamilton County, Ohio to make all payments of the Hamilton County
Monies payable directly to Dataradio and delivered to the Payment Address.  Upon execution of the Hamilton County
Assignment, BIO-key shall deliver, or shall cause to be delivered, the executed
Hamilton County Assignment to Hamilton County, Ohio.

 

3.             Default.  So long as there is no Uncured Default (as
defined in Section 4, below) 

 

3

 

existing,
Dataradio and counsel for Dataradio shall forbear from demanding the payment of
the Claim and from exercising, directly or indirectly, any of Dataradio’s
rights and remedies against BIO-key with respect to the Claim and any amounts
related thereto.  The occurrence of any
one or more of the following events, acts or occurrences, unless otherwise
waived in writing by Dataradio, shall constitute an event of default (each an “Event
of Default”):  (i) BIO-key shall
fail to pay as and when due any installment required pursuant to the Promised
Installment Payments, or shall fail to pay any interest or other amounts
payable under this Agreement as and when due; or (ii) BIO-key shall fail
to perform, comply with or observe any agreement, covenant or obligation under Section 7
of this Agreement.  Upon the occurrence
of an Event of Default, Dataradio or its counsel shall give notice thereof to
BIO-key and its counsel, and BIO-key shall have until the seventh (7th)
business day following the date of its receipt of Dataradio’s notice (the “Cure
Date”) to cure the Event of Default. 
Said notice shall specify the exact Cure Date to cure any monetary Event
of Default.  Cure of an Event of Default
pertaining to the payment of money shall require that the delinquent payment be
received at the Payment Address on or prior to the Cure Date with readily
available funds, which shall be accomplished solely by cashier’s check or the
wire transfer of funds.  Cure of an Event
of Default pertaining to any act or failure to act by BIO-key resulting in a
breach of this Agreement other than for the payment of money, shall require
that such Event of Default be fully cured on or prior to the Cure Date, or, if the nature of the Event of
Default is such that more than seven (7) business days are reasonably
required for its cure, BIO-key shall not be deemed to be in default if BIO-key
promptly commences the cure on or prior to the Cure Date and diligently and
continuously prosecutes such cure to completion within fourteen (14) business
days following the Cure Date. 
Notwithstanding 

 

4

 

the notice and cure periods set forth above, any Event of Default
occurring more than twice during a twelve (12) month period shall be
immediately deemed an Uncured Default (as defined below), and Dataradio shall
be entitled, without notice to BIO-key or its attorney, to proceed as provided
herein.

 

4.             Remedies
Upon Event of Default.  In
the event there exists an Event of Default that, after the giving of notice as
and if required under this Agreement, is not timely cured as set forth in Section 3
above (an “Uncured Default”), then the entire unpaid Balance, plus
accrued and unpaid interest due thereon, shall automatically become immediately
due and payable, and Dataradio and counsel for Dataradio shall be entitled to
proceed with entry of judgment (the “Judgment”) for the amount of the
unpaid Balance, plus accrued and unpaid interest due thereon.

 

5.             Confession
of Judgment.

 

A.            Concurrently with the
execution of this Agreement, BIO-key will (i) execute a Confession of
Judgment Statement and provide an Attorney’s Declaration in support of the
Confession of Judgment Statement in the forms attached collectively as
Attachment “C” (the “Judgment Documents”) and (ii) deliver the
Judgment Documents to the law offices of Myers, Widders, Gibson, Jones &
Schneider, LLP, 5425 Everglades Street, Ventura, California 93003 (the “Escrow
Agent”), to be held in escrow in accordance with this Agreement.  Notwithstanding anything contained herein,
neither Dataradio nor the Escrow Agent shall file or record the Judgment
Documents in any manner until there occurs an Uncured Default and the
procedures described in Section 5.B(i) below have been satisfied.

 

5

 

B.            The Escrow Agent shall
release the Judgment Documents from escrow as follows:

 

(i)            In the event that the
Escrow Agent receives a written declaration under penalty of perjury by an
authorized representative of Dataradio stating that an Uncured Default has
occurred and attesting to the facts and circumstances surrounding the Event of
Default and the Uncured Default, the Escrow Agent shall deliver the Judgment
Documents to Dataradio.  Dataradio may
then file the Judgment Documents, which filing shall include the declaration
described in the preceding sentence, and obtain, by ex parte
application in any court of competent jurisdiction in the states of either
California, Massachusetts, New Jersey or Minnesota, a judgment against BIO-key
as set forth in the Judgment Documents, for the amount of the unpaid Balance,
plus accrued and unpaid interest due thereon. 
Dataradio may record and enforce the judgment against BIO-key to the
fullest extent allowed by law.

 

(ii)           If no Uncured Default
occurs, upon Dataradio’s receipt of the entire unpaid Balance, plus accrued and
unpaid interest thereon, pursuant to this Agreement, Dataradio shall, within
one (1) business day after receiving such final payment, deliver written
notice to the Escrow Agent that such payment has been made.  Within two (2) business days after
receiving such notice, the Escrow Agent shall deliver the Judgment Documents to
BIO-key.

 

C.            Should the Judgment
Documents be rejected by the Clerk of the Court in any of the states of
California, Massachusetts, New Jersey or Minnesota for any reason, or should
the Courts in any of the states of California, Massachusetts, New Jersey or
Minnesota decline to enter judgment in Dataradio’s favor on the Judgment
Documents, then BIO-key will reasonably cooperate in providing Dataradio, or
the Court with any and all different or additional documents as may prove
necessary in order to have the Judgment entered, consistent with the purposes
of this Agreement.

 

6

 

6.             No Appeal from Judgment.  BIO-key acknowledges and agrees that the
payment of the Balance which is settled and resolved by this Agreement, and
upon which the Judgment would be based is subject to being confessed by
judgment.  Accordingly, and in recognition
of the fact that such Judgment would be entered by Confession of Judgment,
BIO-key acknowledges and agrees that BIO-key has, or would have, no right of
appeal from such judgment; nevertheless, BIO-key hereby unconditionally and
irrevocably surrenders and waives any and all rights of appeal from such
Judgment that BIO-key may arguably have, on any ground whatsoever.

 

7.             Covenants of BIO-key.

 

A.           Preservation
of Existence.  So long as any portion
of the Balance shall remain unpaid, BIO-key shall, unless Dataradio shall
otherwise consent in writing, maintain and preserve, , its existence, rights
and privileges, and become or remain, , duly qualified and in good standing in
each jurisdiction in which the character of the properties owned or leased by
it or in which the transaction of its business makes such qualification
necessary.

 

B.            Compliance
with Laws.  So long as any portion of
the Balance shall remain unpaid, BIO-key shall, unless Dataradio shall
otherwise consent in writing, comply, in all material respects, with all
applicable laws, rules, regulations, orders, judgments and awards.

 

C.            Liens.  So long as any portion of the Balance shall
remain unpaid, BIO-key shall not, unless Dataradio shall otherwise consent in
writing, (i) create, incur, assume or suffer to exist, or permit any of
its subsidiaries to create, incur, assume or suffer to exist, any lien,
mortgage, deed of trust, pledge, security interest, charge or other encumbrance
or security, including any financing lease, deposit arrangement or assignment
intended as, or having the 

 

7

 

effect of, security (a “Lien”), upon or with
respect to any of its properties or assets, of any kind or nature, tangible or
intangible, and wherever located, whether now or hereafter acquired; (ii) file
or knowingly suffer to exist under the Uniform Commercial Code or any similar
law or statute of any jurisdiction, a financing statement that names it or any
of its subsidiaries as debtor; or (iii) sign or suffer to exist any
security agreement; other than, as to all of the above, Permitted Liens.  For purposes of this Agreement, “Permitted
Liens” shall mean (u) liens for current taxes and assessments not yet
due and payable, (v) mechanics’ liens arising in the ordinary course of business, (w) such Liens that may
exist as of the date hereof on account of that certain Subordinated Secured
Promissory Note dated September 30, 2004 issued by BIO-key and Public
Safety Group, Inc. in favor of Aether Systems, Inc., as amended by
Amendment No. 1 dated as of January 23, 2006; (x) such Liens
that may exist as of the date hereof on account of that certain Securities
Purchase Agreement, dated as of January 23, 2006, by and among BIO-key,
The Shaar Fund Ltd., Longview Fund, L.P. and Longview Special Finance; (y) such
Liens that may exist as of the date hereof on account of that certain Securities Exchange Agreement, dated as of August 10,
2006, by and among BIO-key, The Shaar Fund Ltd., Longview Fund, L.P., Longview
Special Finance and certain other holders of BIO-key’s Subordinated Convertible
Promissory Notes; and (z) a security interest in BIO-key’s deposit accounts, in an amount not to
exceed $50,000, granted to a commercial bank to secure payment and performance
under a letter of credit established in conjunction with BIO-key’s lease of its Marlborough, Massachusetts
office.

 

D.            Dividends.  So long as any portion of the Balance
shall remain unpaid, BIO-key shall not, unless Dataradio shall otherwise
consent in writing, declare or pay any cash dividend or other cash
distribution, direct or indirect, on account of any capital stock of BIO-key 

 

8

 

or any of its subsidiaries, now or hereafter
outstanding.

 

E.            Fundamental Change.  If a Fundamental Change (as defined below)
shall occur at any time while any portion of the Balance shall remain unpaid,
the entire unpaid Balance shall be immediately paid by BIO-key to Dataradio,
plus accrued and unpaid interest; provided, however, if the Fundamental Change
results in Net Cash Proceeds (as defined below) equal to less than the
then-unpaid Balance, BIO-key shall pay to Dataradio an amount equal to one
hundred percent (100%) of such Net Cash Proceeds, which shall reduce the
Balance by such amount, and this Agreement shall remain in full force and
effect.  For purposes of this Agreement,
a “Fundamental Change” shall mean the occurrence of any of the
following:  (i) consummation of any
share exchange, consolidation, or merger of BIO-key, or any sale, lease or
other transfer in one transaction or series of transactions, of all or
substantially all of the assets of BIO-key and its subsidiaries, taken as a
whole, or an operating division thereof, to any person other than BIO-key or
one of its subsidiaries, or (ii) the winding-up, liquidation or
dissolution of BIO-key.  For purposes of
this Agreement, “Net Cash Proceeds” means the amount of cash actually
received from time to time, from any source whatsoever, related to a
Fundamental Change by or on behalf of BIO-key or its subsidiaries after
deducting therefrom only (w) amounts then owed by BIO-key or its
subsidiaries to the holders of any Permitted Liens, (x) bona fide and
verified out-of-pocket costs and expenses related thereto incurred by BIO-key
or its subsidiaries in connection therewith, (y) transfer taxes paid to
any taxing authorities by BIO-key or its subsidiaries in connection therewith,
and (z) net income taxes to be paid in connection therewith (after taking
into account any tax credits or deductions).

 

F.            Maintenance of
Properties.  BIO-key shall, and shall
cause each of its 

 

9

 

subsidiaries to, maintain or cause to be maintained in
good repair, working order and condition (ordinary wear and tear excepted) all
properties and other assets useful or necessary to its business.

 

8.             Jurisdiction and Venue.  As further set forth in this Section 8,
this Agreement shall and in all respects be governed by and construed in
accordance with the laws of the states of California, Massachusetts, New Jersey
and/or Minnesota, depending upon the nature of the dispute and where a Judgment
is sought to be obtained, applicable to agreements of this nature made and
fully to be performed in such states by residents thereof.  Each party hereby submits itself, to the
fullest extent permitted by applicable law, to the jurisdiction and venue of
the states of California, Massachusetts, New Jersey or Minnesota with respect
to entry of the Judgment and hereby waives any and all objections it may have
with respect to the jurisdiction of such forums or the inconvenience of such
forums or venues.  Except for the entry
of the Judgment, with respect to any other dispute, controversy, interpretation
or differences which may arise between or among the Parties out of or in
connection with this Agreement or breach thereof, each party hereby submits
itself, to the fullest extent permitted by applicable law, to the jurisdiction
and venue of the State of California and hereby waives any and all objections
it may have with respect to the jurisdiction of such forum or the inconvenience
of such forum or venue.

 

9.             Release
of Claims.  Except as
otherwise set forth in this Agreement, in consideration for this Agreement and
the other consideration set forth hereinabove all acknowledged as adequate, the
Parties hereto release and forever discharge, subject to the rights available
to Dataradio upon the occurrence of an Uncured Default, each other and their
predecessors, successors, heirs, assigns, employees, owners, agents, attorneys,
subsidiaries, 

 

10

 

insurance carriers and divisions or affiliated
corporations with which they were previously or hereinafter affiliated in any
manner (also jointly referred to herein as “Released Parties”), from any and
all claims, demands, causes of action, obligations, damages, attorney’s fees,
costs and liabilities, whether or not now known, suspected or claimed, which
the Parties ever had, now have, or may claim to have against Released Parties,
or any of them, as of the date the Parties execute this Agreement by reason of
any act or omission solely regarding the Claim. 
Notwithstanding any other provision of this Agreement, the releases
contained herein shall not limit, affect, or apply to any of the Parties’
obligations under this Agreement.  It is
also expressly understood and agreed between the Parties that this Agreement
does not apply to any other claims between the Parties other than the Claim.  The release set forth hereinabove is a
limited general release of all claims, demands, causes of action, obligations,
damages and liabilities of any nature whatsoever that are described in the
release and is intended to encompass all known and unknown, foreseen or
unforeseen claims which the parties to this Agreement hereto may have as of the
date the releasing Parties execute this Agreement or by reason of any act or
omission concerning any matter or thing stated, claimed or alleged, or could
have been alleged solely regarding the Claim. 
The Parties hereto acknowledge that they may hereafter discover facts
different from those or in addition to those they now know or believe to be
true with respect to the Claim that is the subject of this release set forth
hereinabove, and they expressly agree to assume the risk of possible discovery
of additional or different facts, and agree that this Agreement shall be and
remain effective in all respects regardless of such additional or different
facts.  Further, the releasing Parties to
this Agreement agree to waive and relinquish all rights and benefits they may
have under Section 1542 of the California Civil Code
and any related 

 

11

 

rights under the laws of the states of Massachusetts,
New Jersey or Minnesota.  California Civil Code Section 1542 reads as follows:

 

“ A general release does not extend to claims which
the creditor does not know or suspect to exist in his or her favor at the time
of executing the release, which if known by him or her must have materially
affected his or her settlement with the debtor.”

 

Dataradio                                   BIO-key                                                        

 

10.           Successor
and Assigns.  This
Agreement and the covenants and conditions contained herein shall apply to, be
binding upon, and inure to the benefit of the respective representatives,
assigns, successors, employees and insurers of the parties hereto; provided,
however, BIO-key shall not assign any of its obligations under this Agreement
without the prior written consent of Dataradio.

 

11.           No Prior
Assignments.  The Parties
represent that there has been no assignment, sale, or transfer, by operation of
law or otherwise of any claim, right or interest released and that each of the
Parties has the authority and right to settle, compromise and release any
claim, right or interest released.

 

12.           Representations
and Warranties.  Each
Party represents and warrants to the other Party as follows:

 

A.           This Agreement is the
product of negotiation and preparation by and between each Party and their
respective attorneys.  Therefore, the
Parties acknowledge and agree that this Agreement shall not be deemed prepared
or drafted by one Party or another and should be construed accordingly.

 

12

 

B.            Neither Party has made
any statement or representation regarding the facts relied upon in entering
into this Agreement and the Parties do not rely upon statements,
representations or comments of any of the Parties in executing this Agreement,
or in making this settlement, except as expressly stated in this
Agreement.  They further represent and
warrant that the consideration recited in this Agreement is the sole and only
consideration for this Agreement, and no representations, promises or
inducements have been made by any Party or its officers, employees, agents or
attorneys thereof other than those appearing in this Agreement.

 

C.            Each Party has read
this Agreement and understands its contents.

 

D.            Each Party has full
corporate power and authority to execute and deliver this Agreement, the
Hamilton County Assignment and each of the Judgment Documents to which it is a
party and to perform its obligations hereunder and thereunder.  The execution and delivery by each Party of
this Agreement, the Hamilton County Assignment and each of the Judgment
Documents to which it is a party have been duly and validly authorized by all
necessary corporate action.  This
Agreement, the Hamilton County Assignment and each of the Judgment Documents to
which such Party is a party has been duly executed and delivered by such
Party.  This Agreement, the Hamilton
County Assignment and the Judgment Documents to which such Party is a party
constitute the legal, valid and binding obligations of such Party, enforceable
against such Party in accordance with its and their respective terms.  The persons who have executed this Agreement,
the Hamilton County Assignment and the Judgment Documents on behalf of the
Parties are duly authorized and have the full power and authority of the Parties
to do so.

 

F.             The Parties
acknowledge and agree that this Agreement is entered into as 

 

13

 

part of a
compromise and settlement of disputed claims. 
The Parties further acknowledge and agree that acceptance of the
Agreement is not an admission of any facts, matter or things.  Neither this Agreement nor any of its terms
shall be offered or received as evidence in any proceeding in any forum as an
admission of any liability or wrongdoing on the part of any person released by
this Agreement, except a proceeding related to this Agreement.

 

G.            Dataradio represents
and warrants to BIO-key that Dataradio owns all right, title and interest in
and to the Claim, free and clear of any liens or other encumbrances, and that
no other person or entity has any right (beneficial or otherwise) to any
portion of the Claim or to make any other claim against BIO-key for any portion
of the Balance.

 

13.           Attorney’s
Fees; Expert’s Fees; Costs.  
In the event that any action, suit or other proceeding (including any
and all appeals or petitions therefrom) is instituted to remedy, prevent or
obtain relief from a breach of this Agreement, or arising out of or related to
this Agreement, the prevailing Party shall recover all reasonable attorney’s
and expert fees and costs in addition to any other relief to which that Party
may be entitled.  Further, in the event
any amendment of this Agreement, workout, restructuring or similar arrangement
is initiated at the request of or on behalf of BIO-key, BIO-key shall promptly
pay after demand any and all costs and expenses (including attorney’s fees)
incurred by Dataradio in connection with such amendment, workout, restructuring
or similar arrangement.

 

14.           Confidentiality.  Except as provided
herein and except in a confidential
communication with such Party’s attorneys, such Party’s accountants, or its
officers, directors, and affiliates, or as otherwise required by applicable law
or by a court of competent jurisdiction, no Party nor any of such Party’s
agents or representatives (including such Party’s attorneys) will 

 

14

 

at any time publish, disseminate, or
communicate to any third party, directly or indirectly, any information
relating to the terms and conditions of this Agreement (including but not
limited to any payments to be made pursuant to this Agreement).

 

15.           Notices.  Unless otherwise
expressly provided herein, any notices to be furnished under this Agreement
will be sufficient if in writing and (i) hand delivered, (ii) sent by
certified or registered mail, (iii) by nationally recognized overnight
courier, (iv) by facsimile or (v) by e-mail, if notice is also
contemporaneously sent by one of the other methods of delivery.  Notices sent pursuant to the provisions of
this section shall be deemed delivered on the earlier of actual receipt or two (2) business
days after transmittal.  All notices
shall be addressed as follows:

 

	
  If to Dataradio:

  
	
   

  	
   

  
	
   

  	
  Dataradio Corporation

  
	
   

  	
  1401 North Rice Avenue

  
	
   

  	
  Oxnard, California
  93030

  
	
   

  	
  Attn:  Rick Vitelle

  
	
   

  	
  Telephone:  805-419-8344

  
	
   

  	
  Facsimile:  805-482-5842

  
	
   

  	
  E-mail:  rvitelle@calamp.com

  
	
   

  	
   

  
	
   

  	
  with a copy (which shall not constitute notice) to:

  
	
   

  	
   

  
	
   

  	
  Myers,
  Widders, Gibson, Jones & Schneider, LLP

  
	
   

  	
  5425 Everglades
  Street

  
	
   

  	
  Ventura,
  California 93003

  
	
   

  	
  Attention:
  Erik B. Feingold, Esq.

  
	
   

  	
  Facsimile:
  805-650-5177

  
	
   

  	
  E-mail: efeingold@mwgjs.com

  
	
   

  	
   

  
	
  If to BIO-key:

  
	
   

  
	
   

  	
  BIO-key International, Inc.

  
	
   

  	
  3349 Highway 138

  
	
   

  	
  Building D, Suite B

  
	
   

  	
  Wall, NJ 07719

  
	
   

  	
  Attn:  Michael W. DePasquale

  

 

15

 

	
   

  	
  Telephone:  732-359-1111

  
	
   

  	
  Facsimile:

  
	
   

  	
  E-Mail: 
  mike.depasquale@bio-key.com

  
	
   

  	
   

  
	
   

  	
  with a copy (which shall not constitute notice) to:

  
	
   

  	
   

  
	
   

  	
  Choate,
  Hall & Stewart LLP

  
	
   

  	
  Two
  International Place

  
	
   

  	
  Boston,
  Massachusetts 02110

  
	
   

  	
  Attention:  Brian J. Carr, Esq.

  
	
   

  	
  Facsimile:
  617-248-4000

  
	
   

  	
  E-mail:  bcarr@choate.com

  

 

Either Dataradio
or BIO-key may at any time change the address to which notices are to be given
to it by notice to the other in accordance with the terms hereof.

 

16.           Counterparts.  This Agreement may be executed in one or more
counterparts, by either facsimile or scanned signatures, each of which shall be
deemed to be an original, but all of which together shall constitute one and
the same instrument.

 

17.           Independent
Representation.  Each
Party acknowledges that it has been represented by independent counsel of its
own choosing throughout the negotiations which preceded the execution of this
Agreement, and that this Agreement was executed with the consent and advice of
such independent legal counsel.

 

18.           Entire
Agreement.  This Agreement
and the Judgment Documents constitute the entire agreement, and supersede all
prior written agreements, arrangements, communications and understandings and
all prior and contemporaneous oral agreements, arrangements, communications and
understandings among the Parties with respect to the subject matter of this
Agreement and the Claim.

 

19.           Amendment.  This Agreement may not be amended, modified or
supplemented in any manner, whether by course of conduct or otherwise, except
by an instrument in writing 

 

16

 

signed on behalf
of each Party and otherwise as expressly set forth herein.

 

20.           Severability.  Whenever possible, each provision or portion
of any provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of
any provision of this Agreement is held to be invalid, illegal or unenforceable
in any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.

 

21.           Time of
the Essence.  Time is of
the essence with regard to all dates and time periods set forth or referred to
in this Agreement.

 

22.           Waiver.  No failure or delay of either Party in
exercising any right or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such right or power, or any
course of conduct, preclude any other or further exercise thereof or the
exercise of any other right or power. 
The rights and remedies of the Parties hereunder are cumulative and are
not exclusive of any rights or remedies which they would otherwise have
hereunder.  Any agreement on the part of
either Party to any such waiver shall be valid only if set forth in a written
instrument executed and delivered by a duly authorized officer on behalf of
such Party.

 

23.           Further
Assurances.  From time to
time after the execution of this Agreement, and for no further consideration,
each of the Parties shall execute, acknowledge and deliver such assignments,
transfers, consents and other documents and instruments and take such other 

 

17

 

actions as may be
necessary or desirable to consummate and make effective the transactions
contemplated by this Agreement.

 

[signature page follows]

 

18

 

WHEREFORE,
the Parties hereto have executed this Agreement as of the date first set forth
above.

 

 

	
   

  	
  BIO-KEY
  INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael W.
  DePasquale

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DATARADIO
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard K.
  Vitelle

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and
  agreed, solely for the purpose

  	
   

  
	
  of serving as
  the Escrow Agent in accordance with

  	
   

  
	
  Section 5
  hereof:

  	
   

  
	
   

  	
   

  
	
  MYERS, WIDDERS, GIBSON, JONES &
  SCHNEIDER, L.L.P.,

  
	
  as Escrow Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Erik B.
  Feingold

  	
   

  	
   

  
	
   

  	
  Erik B. Feingold

  	
   

  
					

 

19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}]]