Document:

Exhibit 10.14

 

AMENDMENT NO. 1
TO

SUBORDINATED
SECURED PROMISSORY NOTE

 

This Amendment No. 1 to Subordinated
Secured Promissory Note (the “Amendment”) is entered into by and among
BIO-key International, Inc., a Delaware corporation (“BIO-key”), Public
Safety Group, Inc., a Delaware corporation (“PSG” and, together
with BIO-key, the “Makers”), and Aether Systems, Inc., a Delaware
corporation (“Aether”), and is effective as of the 23rd day of January,
2006.

 

WHEREAS, the Makers issued a Subordinated
Secured Convertible Note to Aether on September 30, 2004 in the aggregate
original principal amount of $6,884,588 (the “Note”; all capitalized
terms used herein without definition shall have the meanings set forth in the
Note)

 

WHEREAS, the Makers have received consent to
amend the Note from Laurus Master Fund, Ltd. (“Laurus”) as required by Section 5.3
of that certain Intercreditor Agreement by and among Laurus, Aether, BIO-key
and PSG dated as of September 30, 2004; and

 

WHEREAS, the parties now wish to amend the Note
as set forth in this Amendment.

 

NOW, THEREFORE, in consideration of the
mutual promises set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:

 

1.                                       Maximum
Principal Amount. The Note is hereby amended by deleting all references
therein to “$6,884,588”, and replacing them with “$7,884,588”.

 

2.                                       Interest
Payments. No interest shall accrue on the Note following the date of this
Amendment with respect to amounts in excess of $6,884,588, unless and only to
the extent that BIO-key receives payment from Aether pursuant to paragraph 2 of
the letter agreement dated as of January    , 2006 by and
between BIO-key and Aether (the “Letter Agreement”).

 

3.                                       Extension of
Hamilton LC.

 

(a)                                  If
Aether, in its sole discretion, agrees to extend the Hamilton LC beyond December 31,
2006 and to extend the payment date under the Note to correspond to such
extension, then BIO-key hereby agrees to pay Aether a letter of credit fee
equal to 2% of the amount of the Hamilton LC (the “LC Extension Fee”),
which shall be payable on the effective date of such extension by Aether. If
Aether should decide to extend the Hamilton LC for more than six months (either
in a single extension or as a result of multiple extensions), an additional LC
Extension Fee will be due and payable on each six-month anniversary of such
extension period following December 31, 2006, and each LC Extension Fee
shall be deemed earned when due and shall not be subject to any pro-ration or
reduction if the Hamilton LC or the Note is terminated, expires, is drawn upon
or is reduced in amount any time prior to six months following the date of
payment of an LC Extension Fee. For the avoidance of doubt, the LC Extension
Fee shall be in addition to, and not in lieu of, the Hamilton Fees.
Notwithstanding anything to the contrary in this paragraph 3(a), if (i) BIO-key
is able to reduce the amount outstanding under the Hamilton LC by at least
fifty-percent (50%) as of September 30, 2006 and (ii) BIO-key has
timely made all payments required under the Note and the Sublease in accordance
with the terms of such agreements, the initial LC Extension Fee shall be equal
to 1% of the amount of the Hamilton LC (the “Reduced LC Extension Fee”).
If BIO-key qualifies for the Reduced LC Extension Fee and if Aether should
decide to extend the Hamilton LC for more than six months (either in a single
extension or as a result of multiple extensions), BIO-key will be required to
pay the full LC Extension Fee on each six-month anniversary of such extension
period following December 31, 2006.

 

(b)                                 If
Aether, in its sole discretion, agrees to extend the Hamilton LC beyond December 31,
2006, the termination date of the Note shall be automatically extended to such
date that is thirty (30) days following the extended expiration date of the
Hamilton LC. In the case of multiple extensions of the Hamilton LC by Aether,
the termination date of the Note shall automatically be extended to such date
that is thirty (30) days following such extended expiration date of the
Hamilton LC.

 

(c)                                  In
no event shall the Note terminate less than thirty (30) days after the
expiration of the Hamilton LC.

 

4.                                       No Other
Amendments. Except as expressly set forth in this Amendment, no other term
or provision of the Note is hereby amended or affected in any way, and the Note
shall remain in full force and effect after the date hereof.

 

 

5.                                       Governing Law.
This Amendment shall be governed by and construed in accordance with the laws
of the State of New York, without regard to principles of conflicts of laws.

 

6.                                       Facsimile
Signatures; Counterparts. This Amendment may be executed by facsimile
signatures and in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument.

 

* * * * *

2EXHIBIT 4.7

 

FORM OF AMENDED AND RESTATED
WARRANTS

TO PURCHASE COMMON STOCK

 

THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (“ACT”), AND MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT (WHICH, IF REQUESTED BY THE ISSUER,
SHALL BE ACCOMPANIED BY AN OPINION OF COUNSEL TO SUCH EFFECT REASONABLY
SATISFACTORY TO THE ISSUER).

 

ROLLER BEARING HOLDING COMPANY, INC.

 

AMENDED
AND RESTATED

WARRANTS TO PURCHASE COMMON STOCK

 

THIS AMENDED AND RESTATED
WARRANT (“Warrant Agreement”) is entered into effective as of the [                    ],
by and between ROLLER BEARING HOLDING COMPANY, INC., a Delaware corporation
(the “Company”), and [                    ]
(the “Holder”).

 

W I T N E S S E T H

 

WHEREAS,
the Company previously granted to Holder the Warrants to purchase that number
of shares of Class A Common Stock of the Company, as reflected by the Warrant
Certificates referred to on Annex A hereto (the “Original Warrants”); and

 

WHEREAS,
the parties desire to amend, restate and consolidate the Original Warrants in
their entirety by entering into this Warrant Agreement;

 

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

 

Section 1.              Warrants.
 Subject to the terms and conditions
set forth herein, this Warrant Agreement entitles the Holder to purchase up to [                         ]
shares (each such share being referred to herein as a “Warrant Share” and all
such shares being referred to herein, collectively, as the “Warrant Shares”) of
Class A Common Stock, $0.01 par value per share, of the Company (“Common
Stock”), and at the exercise price of [               ]
per Warrant Share (the “Exercise Price”). 
This Warrant Agreement is not intended to be an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code, as
amended.

 

Section 2.              Duration
and Exercise of Warrants.

 

(a)           Subject to all the terms and
conditions hereinafter set forth (including, without limitation, the terms and
conditions in Section 16), the Warrants may be exercised by the Holder, in
whole or in part, at any time or from time to time, prior to 5:00 p.m.,
eastern standard time, on June 23, 2007 (the “Expiration Time”).  At the Expiration Time, each Warrant not
exercised prior thereto shall be and become void and of no value.

 

 

(b)           100% of the Warrants may be exercised
immediately upon execution hereof.  In
addition, this Warrant Agreement may not be exercised for less than fifty (50)
Warrant Shares at a time unless it is for the balance of the Warrant Shares
available hereunder.

 

(c)           Notwithstanding Section 2(a) hereof,
following the termination of the Holder’s employment with the Company, this
Warrant Agreement shall remain exercisable (but only to the extent of such
Warrants have become Vested Warrants on the date immediately prior to such
termination) for the period ending on the earlier of (i) the Expiration
Time or (ii) the date determined below, after which time the Warrants
(whether Vested Warrants or otherwise) shall then forever lapse:

 

(i)            immediately
upon the effective date of the termination of, the Holder’s employment by the
Company for “Cause,” which for purposes of this Warrant Agreement shall have
the meaning set forth in Section 2.3(b) of the Stock Transfer
Restriction Agreement dated as of the date hereof by and among the Company,
Michael J. Hartnett, and the Holder (the “Stockholders Agreement”); or

 

(ii)           upon
the ninetieth (90th) day after the termination of the Holder’s employment with
the Company for any reason other than death or for Cause; or

 

(iii)          upon
the first annual anniversary of the termination of the Holder’s employment with
the Company due to the Holder’s death.

 

(d)           This Warrant Agreement shall not be
affected by leaves of absence approved in writing by the Chief Executive
Officer of the Company or by any change of employment status so long as the
Holder continues to be an employee of the Company.  Nothing in this Warrant Agreement shall
confer on the Holder any right to continue in the employ of the Company or to
interfere with the right of the Company to terminate the Holder’s employment at
any time, subject to the terms of any separate employment agreement to the
contrary.

 

Section 3.              Method of
Exercise.

 

(a)           Subject to Sections 4, 9 and 10
hereof, upon (i) delivery or a Form of Election to Purchase attached
as Annex B hereto (the “Form of Election to Purchase”) duly completed and
signed, to the Company at the address provided in Section II, and (ii) payment
by delivery of a cashier’s or certified check made payable to the Company, in
an amount equal to the Exercise Price multiplied by the number of Warrant
Shares being so exercised the Company shall promptly issue and cause to be
delivered to, or upon the written order of the Holder, a certificate for the
Warrant Shares subject to such exercise. 
The “Date of Election to Purchase” any Warrant means the date on which
the Company shall have received both (1) a Form of Election to
Purchase duly completed and signed, and (2) payment of the Exercise Price
for such, Warrants being acquired.

 

(b)           In the event shares of Common Stock
of the Company are registered under the Securities Exchange Act of 1934,
payment of the Exercise Price hererunder may, in the sole discretion of the
Company, be made by delivering (or certifying as to ownership of) certificates
of shares of Common Stock of the Company which have been held by the Holder for
at least six months (or such longer period as may be required to avoid a charge
to earnings for financial 

 

2

 

reporting
purposes) which are equal in value (based on their Fair Market Value (as
defined in Section 1.3 of the Stockholders Agreement) on the date of
surrender or certification) to such Exercise Price or the portion thereof so
paid.  In addition, in the event shares
of Common Stock of the Company are registered under the Securities Exchange Act
of 1934, payment of the Exercise Price hereunder may, in the sole discretion of
the Company, also be made by delivering a properly executed Form of
Election to Purchase to the Company together with a copy of irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds to pay the Exercise Price. 
To facilitate the foregoing, the Company may enter into agreements for
coordinated procedures with one or more brokerage firms.

 

Section 4.              Payment
of Taxes.  The Company
shall have the right to require, prior to the issuance or delivery of a
certificate for any Warrant Shares acquired hereunder, payment by the Holder
(by cashier’s or certified check made payable to the Company) of any income or
employment taxes, if any, required by law to be withheld by the Company in
connection with the exercise of all or part of this Warrant Agreement.

 

Section 5.              Non-Transferability;
Death.  Except as provided
in the Stockholders Agreement, this Warrant Agreement is not transferable by
the Holder otherwise than by will or the laws of descent and distribution and
is exercisable during the Holder’s lifetime only by him.  If the Holder dies while employed by the
Company, this Warrant Agreement may be exercised only during the period
described in Section 2(c)(ii) (but not later than the Expiration
Time) by his estate or the person to whom this Warrant Agreement passes by will
or the laws of descent and distribution, but only to the extent that the Holder
could have exercised this Warrant Agreement on the date of his death.

 

Section 6.              Reservation
and Issuance of Warrant Shares.

 

(a)           The Company shall at all times have
authorized, and reserve and keep available, exclusively for the purpose of
enabling it to satisfy any obligation to issue Warrant Shares upon the exercise
of the Warrants, the number of Warrant Shares deliverable upon exercise of the
Warrants.  The Company shall take all
corporate action necessary to enable the Company to validly and legally issue,
at the Exercise Price, Warrant Shares that are fully-paid and nonassessable.

 

(b)           The Company covenants that all
Warrant Shares will, upon issuance in accordance with the terms of this Warrant
Agreement, be (i) duly authorized, validly issued, fully paid and
nonassessable and (ii) free from all taxes or other governmental charges
with respect to the issuance thereof (exclusive of income or employment taxes)
and from all liens, charges and security interests created by the Company.

 

Section 7.              Adjustments:
Notice of Certain Events.

 

(a)           If the Company shall effect a stock
dividend, stock split, recapitalization, reorganization, exchange of shares,
liquidation, combination or other change in corporate structure affecting the
shares of Common Stock, the total number of Warrant Shares then remaining
subject to purchase hereunder and the Exercise Price per share shall be
adjusted so that the total consideration payable to the Company upon the
purchase of all shares not 

 

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theretofore
purchased and the interest (as a percentage of all similar interests in the
Company) to be received on exercise hereof shall not be changed.

 

(b)           Should the Company elect to undertake
any sale of all or substantially all of its assets, or any merger,
consolidation, combination or other corporate reorganization or restructuring
of the Company with or into another corporation which results in the
outstanding shares of Common Stock being converted into or exchanged for
different securities, cash or other property, or any combination thereof (an “Acquisition”),
the Company shall give written notice of such event to the Holder at least
fifteen (15) days prior to the date on which such transaction is expected to
become effective or consummated.  Such
notice shall specify such expected date of effectiveness or consummation.  Failure to give such notice or any defect
therein shall not effect the validity of any action taken in connection with
such transaction.

 

Section 8.              No Stock
Rights.  The Holder shall
not be entitled to vote nor be deemed the holder of shares of Common Stock or
any other securities of the Company which may at any time be issuable on the
exercise the Warrants, nor shall anything contained herein be construed to
confer upon the Holder the rights of a stockholder of the Company or the right
to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, to exercise any preemptive right, to receive notice of
meetings or other actions affecting stockholders (except as provided herein),
or to receive dividends or subscription rights or otherwise, unless and until
certificates for the Warrant Shares are issued following the Date of Election
to Purchase.

 

Section 9.              Fractional
Warrants and Fractional Warrant Shares.  The Company may, but shall not be required to,
issue fractional Warrant Shares.  If any
fraction of a Warrant Share would, except for the provisions of this Section 9,
be issuable to the Holder upon exercise of any Warrants, the Company may, at
its election, pay to such Holder an amount in cash equal to the difference
between (a) the Fair Market Value of one share of Common Stock and (b) the
Exercise Price, multiplied by such fraction. 
The Holder expressly waives the right to receive any fractional Warrant
Shares upon exercise of a Warrant.  The
Holder shall be entitled to receive fractional Warrant Shares at the election
of the Company.

 

Section 10.            Registration
of Warrant Shares.  The
Company shall not be required to issue or deliver any certificate for its
shares of Common Stock purchased upon the exercise of this Warrant Agreement
prior to the admission of such shares to listing on any stock exchange on which
shares of the Company’s Common Stock may at that time be listed.  In the event of the exercise of this Warrant
Agreement with respect to any shares subject hereto, if other shares of Common
Stock of the Company are then listed, the Company shall make prompt application
for such listing with respect to the shares acquired upon the exercise
hereof.  If at any time during the
Warrant Agreement period the Company shall be advised by its counsel that
shares deliverable upon exercise of Warrants are required to be registered
under the Federal Securities Act of 1933, as amended, or that delivery of the
shares must be accompanied or preceded by a prospectus meeting the requirements
of the Act, the Company will use reasonable efforts to effect such registration
or provide such prospectus not later than a reasonable time following each
exercise of this Warrant Agreement, but delivery of shares by the Company may
be deferred until registration is effected or a prospectus available.  The Company shall be under no obligation to
register the shares deliverable upon exercise of this Warrant Agreement unless
it 

 

4

 

shall be advised by its counsel that such shares are required to be so
registered.  The Holder shall have no
interest in the shares covered by this Warrant Agreement unless and until
certificates for the shares are issued following the exercise of this Warrant
Agreement.  Notwithstanding anything to
the contrary in this Warrant Agreement, in lieu of affecting the registration
statement described in the preceding sentence, the Company may, in the
alternative, provide the Holder with a cash payment in consideration of the
Warrant Shares subject to such exercise in an amount equal to the excess of the
Fair Market Value of one share of Common Stock over the Exercise Price,
multiplied by the number of Warrant Shares subject to such exercise, and the
Company shall have no further liability of any kind to the Holder with respect
to such Warrant Shares.

 

Section 11.            Notices.  All notices, requests, demands and other
communications relating to this Warrant Agreement shall be in writing,
including by telecopier, addressed, if to the registered Holder hereof, to it
at the address furnished by the registered Holder to the Company, and if to the
Company, at its office at 60 Round Hill Road, P.O. Box 430, Fairfield,
Connecticut 06430-043060, Attention: Chief Executive Officer, or to such other
address as any party shall notify the other party in writing, and shall be
effective, in the case of written notice by mail, three days after placement
into the mails (first class, postage prepaid), and in the case of notice by telecopier
on the same day as sent.

 

Section 12.            Binding
Effect.  This Warrant
Agreement shall be binding upon and inure to the sole and exclusive benefit of
the Company, its permitted successors and permitted assigns, and the Holder.

 

Section 13.            Survival
of Rights and Duties. 
Unless earlier terminated or cancelled in whole or in part pursuant to
Sections 2 or 15 hereof, this Warrant Agreement and any unexercised Warrants
represented hereby shall terminate and be of no further force and effect on the
earlier of the Expiration Time or the date on which all the Warrants shall have
been exercised, except that the provisions of Sections 4, 6(b) and 10 of
this Warrant Agreement shall continue in full force and effect after any such
termination or cancellation.

 

Section 14.            Governing
Law.  This Warrant
Agreement shall be construed in accordance with and governed by the internal
laws of the State of Delaware applicable to contracts executed and to be
performed wholly within such state, without regard to the principles of
conflicts or choice of law.

 

Section 15.            Entire
Agreement: Modification and Waiver.  Subject to Section 16 hereof, this
Warrant Agreement represents the entire agreement between the Company and the
Holder relating to the subject matter hereof, and supersedes any and all prior
agreements, including but not limited to the Original Warrants.  This Warrant Agreement and any term hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such change, waiver,
discharge or termination is sought.

 

Section 16.            Stockholders Agreement.  The Holder acknowledges that it is a party to
the Stockholders Agreement, a copy of which is attached as Annex C hereto, and
that the Holder is bound by all the terms and conditions of such Stockholders
Agreement.  Any and all 

 

5

 

Warrant Shares issued from time to time hereunder shall, immediately
upon issuance thereof, and without any further action by or on behalf of the
Holder or the Company, be subject to the Stockholders Agreement.

 

6

 

IN WITNESS WHEREOF, the
Company has caused this Warrant Agreement to be executed under its corporate
seal by its officers thereunto duly authorized as of the date hereof, and the
Holder has caused this warrant to be executed and delivered by its duly
authorized representative.

 

	
   

  	
  ROLLER BEARING HOLDING COMPANY, 

  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Holder

  
					

 

 

ANNEX
B

FORM OF ELECTION TO PURCHASE

 

(To be executed by the
Holder if the Holder desires to exercise Warrants evidenced by the foregoing
Warrant Agreement)

 

To Roller Bearing Holding
Company, Inc.:

 

The undersigned hereby
irrevocably elects to exercise
           Warrants (as
defined in and evidenced by the foregoing Warrant) for, and to purchase
thereunder,
               
full shares of common stock, $0.01 par value per share, of Roller Bearing
Holding Company, Inc., issuable upon exercise of such Warrants and delivery
of $           in cash and
any applicable taxes payable by the undersigned pursuant to such Warrant
Agreement.

 

The undersigned requests
that certificates for such shares be issued in the name of the following:

 

	
   

  	
  PLEASE INSERT SOCIAL SECURITY OR

  
	
   

  	
  TAX IDENTIFICATION NUMBER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Please print name and address)

  

 

 

	
  (Please print name and
  address)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  HOLDER

  
	
   

  	
   

  	
   

  
	
   

  	
  (Signature)

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