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                                                                Exhibit 10.45

     THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
     THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
     ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
     STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
     ACCORDANCE WITH RULE 144, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR
     THE HOLDER OF THESE SECURITIES, REASONABLY SATISFACTORY TO THE COMPANY,
     STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT
     FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.

                         OPTION TO PURCHASE COMMON STOCK
                                       OF
                           BIO-KEY INTERNATIONAL, INC.
                           Void after ________ , 2011

     This certifies that, for value received, Kenneth Souza ("Holder"), is
entitled, subject to the terms set forth below, to purchase from BIO-KEY
INTERNATIONAL, INC., a Minnesota corporation (the "Company"), shares of the
common stock, $.01 par value per share, of the Company ("Common Stock"), as
constituted on the date hereof (the "Option Issue Date"), with the Notice of
Exercise attached hereto duly executed, and simultaneous payment therefor in
lawful money of the United States or as otherwise provided in Section 3 hereof,
at the Exercise Price then in effect. The number, character and Exercise Price
of the shares of Common Stock issuable upon exercise hereof are subject to
adjustment as provided herein.

     1. TERM OF OPTION. Subject to compliance with the vesting provisions
identified at Section 2.3 hereof, this Option shall be exercisable, in whole or
in part, during the term commencing on the Option Issue Date and ending at 5:00
p.m. CST on _______ , 2011 (the "Option Expiration Date") and shall be void
thereafter.

     2. NUMBER OF SHARES, EXERCISE PRICE AND VESTING PROVISIONS.

          2.1 NUMBER OF SHARES. The number of shares of Common Stock which may
     be purchased pursuant to this Option shall be 300,000 shares (the
     "Shares"), subject, however, to adjustment pursuant to Section 11 hereof.

          2.2 EXERCISE PRICE. The Exercise Price at which this Option, or
     portion thereof, may be exercised shall be $____(1) per Share, subject,
     however, to adjustment pursuant to Section 11 hereof.

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(1) The last sale price of the Company's common stock as reported on the OTC
Bulletin Board on the Option Issue Date.

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          2.3 VESTING. This Option shall vest in accordance with the following
     schedule:

               (i)   100,000 Shares shall vest on _________, 2005;

               (ii)  100,000 Shares shall vest on ______ , 2006; and

               (iii) 100,000 Shares shall vest on _______, 2007.

     3. EXERCISE OF OPTION.

          3.1 PAYMENT OF EXERCISE PRICE. Subject to the terms hereof, the
     purchase rights represented by this Option are exercisable by the Holder in
     whole or in part, at any time, or from time to time, by the surrender of
     this Option and the Notice of Exercise annexed hereto duly completed and
     executed on behalf of the Holder, at the office of the Company (or such
     other office or agency of the Company as it may designate by notice in
     writing to the Holder at the address of the Holder appearing on the books
     of the Company) accompanied by payment of the Exercise Price in full (i) in
     cash or by bank or certified check for the Shares with respect to which
     this Option is exercised; (ii) by delivery to the Company of shares of the
     Company's Common Stock having a Fair Market Value (as defined below) equal
     to the aggregate Exercise Price of the Shares being purchased which Holder
     is the record and beneficial owner of and which have been held by the
     Holder for at least six (6) months; (iii) if the Shares are eligible for
     public resale, by delivering to the Company a Notice of Exercise together
     with an irrevocable direction to a broker-dealer registered under the
     Securities Exchange Act of 1934, as amended (the "Exchange Act"), to sell a
     sufficient portion of the Shares and deliver the sales proceeds directly to
     the Company to pay the Exercise Price; or (iv) by any combination of the
     procedures set forth in subsections (i), (ii) and (iii) of this Section
     3.1.

          3.2 FAIR MARKET VALUE. If previously owned shares of Common Stock are
     tendered as payment of the Exercise Price, the value of such shares shall
     be the "Fair Market Value" of such shares on the trading date immediately
     preceding the date of exercise. For the purpose of this Agreement, the
     "Fair Market Value" shall be:

               (a) If the Common Stock is admitted to quotation on the National
          Association of Securities Dealers Automated Quotation System
          ("NASDAQ"), the Fair Market Value on any given date shall be the
          average of the highest bid and lowest asked prices of the Common Stock
          as reported for such date or, if no bid and asked prices were reported
          for such date, for the last day preceding such date for which such
          prices were reported;

               (b) If the Common Stock is admitted to trading on a United States
          securities exchange or the NASDAQ National Market System, the Fair
          Market Value on any date shall be the closing price reported for the
          Common Stock on such exchange or system for such date or, if no sales
          were reported for such date, for the last day preceding such date for
          which a sale was reported;

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               (c) If the Common Stock is traded in the over-the-counter market
          and not on any national securities exchange nor in the NASDAQ
          Reporting System, the Fair Market Value shall be the average of the
          mean between the last bid and ask prices per share, as reported by the
          National Quotation Bureau, Inc., or an equivalent generally accepted
          reporting service, or if not so reported, the average of the closing
          bid and asked prices for a share as furnished to the Company by any
          member of the National Association of Securities Dealers, Inc.,
          selected by the Company for that purpose; or

               (d) If the Fair Market Value of the Common Stock cannot be
          determined on the basis previously set forth in this definition on the
          date that the Fair Market Value is to be determined, the Board of
          Directors of the Company shall in good faith determine the Fair Market
          Value of the Common Stock on such date.

If the tender of previously owned shares would result in an issuance of a whole
number of Shares and a fractional Share of Common Stock, the value of such
fractional share shall be paid to the Company in cash or by check by the Holder.

          3.3 TERMINATION OF EMPLOYMENT; DEATH.

               (a) If Holder shall cease to be employed by the Company, all
          Options to which Holder is then entitled to exercise may be exercised
          only within ninety (90) days after the termination of employment and
          prior to the Option Termination Date or, if such termination was due
          to disability or retirement (as hereinafter defined), within one (1)
          year after termination of employment and prior to the Option
          Termination Date. Notwithstanding the foregoing, in the event that any
          termination of employment shall be for Cause as that term is defined
          in any employment agreement by and between the Holder and the Company,
          then this Option shall forthwith terminate.

               (b) If Holder shall die while employed by the Company and prior
          to the Option Termination Date, any Options then exercisable may be
          exercised only within one (1) year after Holder's death, prior to the
          Option Termination Date and only by the Holder's personal
          representative or persons entitled thereto under the Holder's will or
          the laws of descent and distribution.

               (c) This Option may not be exercised for more Shares (subject to
          adjustment as provided in Section 11 hereof) after the termination of
          the Holder's employment or death, as the case may be, than the Holder
          was entitled to purchase thereunder at the time of the termination of
          the Holder's employment or death.

          3.4 EXERCISE DATE; DELIVERY OF CERTIFICATES. This Option shall be
     deemed to have been exercised immediately prior to the close of business on
     the date of its surrender for exercise as provided above, and Holder shall
     be treated for all purposes as the holder of record of such Shares as of
     the close of business on such date. As promptly as practicable on or after
     such date and in any event within ten (10) days thereafter, the Company at
     its expense shall issue and deliver to the Holder a certificate or
     certificates for the number of Shares issuable upon such exercise. In the
     event that this Option is exercised in part, the Company at its expense
     will

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     execute and deliver a new Option of like tenor exercisable for the number
     of shares for which this Option may then be exercised.

     4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this Option.
In lieu of any fractional share to which the Holder would otherwise be entitled,
the Company shall make a cash payment equal to the Exercise Price multiplied by
such fraction.

     5. REPLACEMENT OF OPTION. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Option and, in
the case of loss, theft or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and substance to the Company or, in the case of
mutilation, on surrender and cancellation of this Option, the Company at its
expense shall execute and deliver, in lieu of this Option, a new Option of like
tenor and amount.

     6. RIGHTS OF STOCKHOLDER. Except as otherwise contemplated herein, the
Holder shall not be entitled to vote or receive dividends or be deemed the
holder of Common Stock or any other securities of the Company that may at any
time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder, as such, any of the
rights of a stockholder of the Company or any 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 (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, or change of stock to no par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Option shall have been exercised as
provided herein.

     7. TRANSFER OF OPTION.

          7.1. NON-TRANSFERABILITY. This Option shall not be assigned,
     transferred, pledged or hypothecated in any way, nor subject to execution,
     attachment or similar process, otherwise than by will or by the laws of
     descent and distribution. Any attempted assignment, transfer, pledge,
     hypothecation or other disposition of this Option contrary to the
     provisions hereof, and the levy of an execution, attachment, or similar
     process upon the Option, shall be null and void and without effect.

          7.2. COMPLIANCE WITH SECURITIES LAWS; RESTRICTIONS ON TRANSFERS. In
     addition to restrictions on transfer of this Option and Shares set forth in
     Section 7.1 above.

               (a) The Holder of this Option, by acceptance hereof, acknowledges
          that this Option and the Shares to be issued upon exercise hereof are
          being acquired solely for the Holder's own account and not as a
          nominee for any other party, and for investment (unless such shares
          are subject to resale pursuant to an effective prospectus), and that
          the Holder will not offer, sell or otherwise dispose of any Shares to
          be issued upon exercise hereof except under circumstances that will
          not result in a violation of applicable federal and state securities
          laws. Upon exercise of this Option, the Holder shall, if requested by
          the Company, confirm in writing, in a form satisfactory to the
          Company, that the Shares of Common Stock so purchased are being
          acquired solely for the Holder's own account and not as a nominee for
          any other party, for

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          investment (unless such shares are subject to resale pursuant to an
          effective prospectus), and not with a view toward distribution or
          resale.

               (b) Neither this Option nor any share of Common Stock issued upon
          exercise of this Option may be offered for sale or sold, or otherwise
          transferred or sold in any transaction which would constitute a sale
          thereof within the meaning of the 1933 Act, unless (i) such security
          has been registered for sale under the 1933 Act and registered or
          qualified under applicable state securities laws relating to the offer
          an sale of securities; (ii) exemptions from the registration
          requirements of the 1933 Act and the registration or qualification
          requirements of all such state securities laws are available and the
          Company shall have received an opinion of counsel satisfactory to the
          Company that the proposed sale or other disposition of such securities
          may be effected without registration under the 1933 Act and would not
          result in any violation of any applicable state securities laws
          relating to the registration or qualification of securities for sale,
          such counsel and such opinion to be satisfactory to the Company. The
          Holder of this Option, by acceptance hereof, acknowledges that the
          Company has no obligation to file a registration statement with the
          Securities and Exchange Commission or any state securities commission
          to register the issuance of the Shares upon exercise hereof or the
          sale or transfer of the Shares after issuance.

               (c) All Shares issued upon exercise hereof shall be stamped or
          imprinted with a legend in substantially the following form (in
          addition to any legend required by state securities laws).

               THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
               REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
               NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE
               IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING
               SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144, OR
               THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
               THESE SECURITIES, REASONABLY SATISFACTORY TO THE COMPANY, STATING
               THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT
               FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
               SUCH ACT.

               (d) Holder recognizes that investing in the Option and the Shares
          involves a high degree of risk, and Holder is in a financial position
          to hold the Option and the Shares indefinitely and is able to bear the
          economic risk and withstand a complete loss of its investment in the
          Option and the Shares. The Holder is a sophisticated investor and is
          capable of evaluating the merits and risks of investing in the
          Company. The Holder has had an opportunity to discuss the Company's
          business, management and financial affairs with the Company's
          management, has been given full and complete access to information
          concerning the Company, and has utilized such access to its
          satisfaction for the purpose of obtaining information or verifying
          information and has had the opportunity to inspect the Company's
          operation. Holder has had the opportunity to ask questions of, and
          receive answers from the management of the Company (and any person
          acting on its behalf) concerning the Option and the Shares and the
          agreements and transactions contemplated hereby, and to obtain any
          additional information as Holder may have requested in making its
          investment decision.

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               (e) Holder acknowledges and represents: (i) that he has been
          afforded the opportunity to review and is familiar with the business
          prospects and finances of the Company and has based his decision to
          invest solely on the information contained therein and has not been
          furnished with any other literature, prospectus or other information
          except as included in such reports; (ii) he maintains his domicile and
          is not a transient or temporary resident at the address on the books
          and records of the Company; (iii) he understands that no federal or
          state agency has approved or disapproved the Option or Shares or made
          any finding or determination as to the fairness of the Option and
          Common Stock for investment; and (iv) that the Company has made no
          representations, warranties, or assurances as to (A) the future
          trading value of the Common Stock, (B) whether there will be a public
          market for the resale of the Common Stock or (C) the filing of a
          registration statement with the Securities and Exchange Commission or
          any state securities commission to register the issuance of the Shares
          upon exercise hereof or the sale or transfer of the Shares after
          issuance.

     8. RESERVATION AND ISSUANCE OF STOCK; PAYMENT OF TAXES.

               (a) The Company covenants that during the term that this Option
          is exercisable, the Company will reserve from its authorized and
          unissued Common Stock a sufficient number of shares to provide for the
          issuance of the Shares upon the exercise of this Option, and from time
          to time will take all steps necessary to amend its Certificate of
          Incorporation to provide sufficient reserves of shares of Common Stock
          issuable upon the exercise of the Option.

               (b) The Company further covenants that all shares of Common Stock
          issuable upon the due exercise of this Option will be free and clear
          from all taxes or liens, charges and security interests created by the
          Company with respect to the issuance thereof, however, the Company
          shall not be obligated or liable for the payment of any taxes, liens
          or charges of Holder, or any other party contemplated by Section 7,
          incurred in connection with the issuance of this Option or the Common
          Stock upon the due exercise of this Option. The Company agrees that
          its issuance of this Option shall constitute full authority to its
          officers who are charged with the duty of executing stock certificates
          to execute and issue the necessary certificates for the shares of
          Common Stock upon the exercise of this Option. The Common Stock
          issuable upon the due exercise of this Option, will, upon issuance in
          accordance with the terms hereof, be duly authorized, validly issued,
          fully paid and non-assessable.

               (c) Upon exercise of the Option, the Company shall have the right
          to require the Holder to remit to the Company an amount sufficient to
          satisfy federal, state and local tax withholding requirements prior to
          the delivery of any certificate for Shares of Common Stock purchased
          pursuant to the Option, if in the opinion of counsel to the Company
          such withholding is required under applicable tax laws.

               (d) If Holder is obligated to pay the Company an amount required
          to be withheld under applicable tax withholding requirements may pay
          such amount (i) in cash; (ii) in the discretion of the Board of
          Directors of the Company, through the delivery to the Company of
          previously-owned shares of Common Stock having an aggregate Fair
          Market Value equal to the tax obligation provided that the previously
          owned shares delivered in satisfaction of the withholding obligations
          must have been held by the Holder for at least six (6) months; (iii)
          in the

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          discretion of the Board of Directors of the Company, through the
          withholding of Shares of Common Stock otherwise issuable to the Holder
          in connection with the Option exercise; or (iv) in the discretion of
          the Board of Directors of the Company, through a combination of the
          procedures set forth in subsections (i), (ii) and (iii) of this
          Section 8(d).

     9. NOTICES.

               (a) Whenever the Exercise Price or number of shares purchasable
          hereunder shall be adjusted pursuant to Section 11 hereof, the Company
          shall issue a certificate signed by its Chief Financial Officer
          setting forth, in reasonable detail, the event requiring the
          adjustment, the amount of the adjustment, the method by which such
          adjustment was calculated, and the Exercise Price and number of shares
          purchasable hereunder after giving effect to such adjustment, and
          shall cause a copy of such certificate to be mailed (by first-class
          mail, postage prepaid) to the Holder of this Option.

               (b) All notices, advices and communications under this Option
          shall be deemed to have been given, (i) in the case of personal
          delivery, on the date of such delivery and (ii) in the case of
          mailing, on the third business day following the date of such mailing,
          addressed as follows:

                    If to the Company:

                    BIO-key International, Inc.
                    1285 Corporate Center Drive
                    Suite 175
                    Eagan, MN 55121

                    With a copy to:

                    Duane Morris LLP
                    51 Haddonfield Road, Suite 340
                    Cherry Hill, NJ 08002
                    Attn.: Vincent A. Vietti, Esquire

                    and to the Holder:

                    Kenneth Souza
                    18 Harris Farm Road
                    Bolton, MA 01740

          Either of the Company or the Holder may from time to time change the
     address to which notices to it are to be mailed hereunder by notice in
     accordance with the provisions of this Paragraph 9.

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     10. AMENDMENTS.

               (a) Any term of this Option may be amended with the written
          consent of the Company and the Holder. Any amendment effected in
          accordance with this Section 10 shall be binding upon the Holder, each
          future holder and the Company.

               (b) No waivers of, or exceptions to, any term, condition or
          provision of this Option, in any one or more instances, shall be
          deemed to be, or construed as, a further or continuing waiver of any
          such term, condition or provision.

          11. ADJUSTMENTS. The number of Shares of Common Stock purchasable
     hereunder and the Exercise Price is subject to adjustment from time to time
     upon the occurrence of certain events, as follows:

               11.1. REORGANIZATION, MERGER OR SALE OF ASSETS. If at any time
          while this Option, or any portion thereof, is outstanding and
          unexpired there shall be (i) a reorganization (other than a
          combination, reclassification, exchange or subdivision of shares
          otherwise provided for herein); or (ii) a merger or consolidation of
          the Company in which the shares of the Company's capital stock
          outstanding immediately prior to the merger are converted by virtue of
          the merger into other property, whether in the form of securities,
          cash or otherwise, then, as a part of such reorganization, merger, or
          consolidation, lawful provision shall be made so that the holder of
          this Option shall upon such reorganization, merger, or consolidation,
          have the right by exercising such Option, to purchase the kind and
          number of shares of Common Stock or other securities or property
          (including cash) otherwise receivable upon such reorganization, merger
          or consolidation by a holder of the number of shares of Common Stock
          that might have been purchased upon exercise of such Option
          immediately prior to such reorganization, merger or consolidation. The
          foregoing provisions of this Section 11.1 shall similarly apply to
          successive reorganizations, consolidations or mergers. If the
          per-share consideration payable to the Holder hereof for shares in
          connection with any such transaction is in a form other than cash or
          marketable securities, then the value of such consideration shall be
          determined in good faith by the Company's Board of Directors. In all
          events, appropriate adjustment (as determined in good faith by the
          Company's Board of Directors) shall be made in the application of the
          provisions of this Option with respect to the rights and interests of
          the Holder after the transaction, to the end that the provisions of
          this Option shall be applicable after that event, as near as
          reasonably may be, in relation to any shares or other property
          deliverable after that event upon exercise of this Option.

               11.2. RECLASSIFICATION. If the Company, at any time while this
          Option, or any portion thereof, remains outstanding and unexpired, by
          reclassification of securities or otherwise, shall change any of the
          securities as to which purchase rights under this Option exist into
          the same or a different number of securities of any other class or
          classes, this Option shall thereafter represent the right to acquire
          such number and kind of securities as would have been issuable as the
          result of such change with respect to the securities that were subject
          to the purchase rights under this Option immediately prior to such
          reclassification or other change and the Exercise Price therefor shall
          be appropriately adjusted, all subject to further adjustment as
          provided in this Section 11.

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               11.3. SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the Company
          at any time while this Option, or any portion thereof, remains
          outstanding and unexpired shall split, subdivide or combine the
          securities as to which purchase rights under this Option exist, into a
          different number of securities of the same class, the Exercise Price
          and the number of shares issuable upon exercise of this Option shall
          be proportionately adjusted.

               11.4. ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR
          PROPERTY. If while this Option, or any portion hereof, remains
          outstanding and unexpired the holders of the securities as to which
          purchase rights under this Option exist at the time shall have
          received, or, on or after the record date fixed for the determination
          of eligible Stockholders, shall have become entitled to receive,
          without payment therefor, other or additional stock or other
          securities or property (other than cash) of the Company by way of
          dividend, then and in each case, this Option shall represent the right
          to acquire, in addition to the number of shares of the security
          receivable upon exercise of this Option, and without payment of any
          additional consideration therefor, the amount of such other or
          additional stock or other securities or property (other than cash) of
          the Company that such holder would hold on the date of such exercise
          had it been the holder of record of the security receivable upon
          exercise of this Option on the date hereof and had thereafter, during
          the period from the date hereof to and including the date of such
          exercise, retained such shares and/or all other additional stock,
          other securities or property available by this Option as aforesaid
          during such period.

               11.5 GOOD FAITH. The Company will not, by any voluntary action,
          avoid or seek to avoid the observance or performance of any of the
          terms to be observed or performed hereunder by the Company, but will
          at all times in good faith assist in the carrying out of all the
          provisions of this Section 11 and in the taking of all such action as
          may be necessary or appropriate in order to protect the rights of the
          Holder of this Option against impairment.

               12. FUNDAMENTAL TRANSACTION. For purposes of this Section 12, a
          "Fundamental Transaction" shall mean (i) the dissolution or
          liquidation of the Company; (ii) a merger, reorganization or
          consolidation in which the Company is acquired by another person or
          entity (other than a holding company or subsidiary formed by the
          Company); (iii) the sale of all or substantially all of the assets of
          the Company to any person or persons; or (iv) the sale in a single
          transaction or a series of related transactions of voting stock
          representing more than fifty percent (50%) of the voting power of all
          outstanding shares of the Company to any person or persons. In the
          event of a Fundamental Transaction, this Option shall automatically
          become immediately exercisable in full, and shall be deemed to have
          attained such status immediately prior to the Fundamental Transaction.
          Holder shall be given at least 15 days prior written notice of a
          Fundamental Transaction and shall be permitted to exercise any vested
          Options during this 15 day period (including those Options vesting as
          a result of the provisions of this Section 12). In the event of a
          Fundamental Transaction, any Options which are neither assumed or
          substituted for in connection with the Fundamental Transaction nor
          exercised as of the date of the Fundamental Transaction, shall
          terminate and cease to be outstanding effective as of the date of the
          Fundamental Transaction, unless otherwise provided by the Board of
          Directors of the Company.

               13. SEVERABILITY. Whenever possible, each provision of this
          Option shall be interpreted in such manner as to be effective and
          valid under applicable law, but if any provision

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          of this Option 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 the
          validity, legality or enforceability of any other provision of this
          Option in such jurisdiction or affect the validity, legality or
          enforceability of any provision in any other jurisdiction, but this
          Option shall be reformed, construed and enforced in such jurisdiction
          as if such invalid, illegal or unenforceable provision had never been
          contained herein.

     14. GOVERNING LAW. The corporate law of the State of Minnesota shall govern
all issues and questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity,
interpretation and enforceability of this Option and the exhibits and schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of Massachusetts, without giving effect to any choice of law or conflict
of law rules or provisions (whether of the State of Massachusetts or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Massachusetts.

     15. JURISDICTION. The Holder and the Company agree to submit to personal
jurisdiction and to waive any objection as to venue in the federal or state
courts of Massachusetts. Service of process on the Company or the Holder in any
action arising out of or relating to this Option shall be effective if mailed to
such party at the address listed in Section 9 hereof.

     16. ARBITRATION. If a dispute arises as to interpretation of this Option,
it shall be decided finally by three arbitrators in an arbitration proceeding
conforming to the Rules of the American Arbitration Association applicable to
commercial arbitration. The arbitrators shall be appointed as follows: one by
the Company, one by the Holder and the third by the said two arbitrators, or, if
they cannot agree, then the third arbitrator shall be appointed by the American
Arbitration Association. The third arbitrator shall be chairman of the panel and
shall be impartial. The arbitration shall take place in Minneapolis, Minnesota.
The decision of a majority of the arbitrators shall be conclusively binding upon
the parties and final, and such decision shall be enforceable as a judgment in
any court of competent jurisdiction. Each party shall pay the fees and expenses
of the arbitrator appointed by it, its counsel and its witnesses. The parties
shall share equally the fees and expenses of the impartial arbitrator.

     17. INTENTIONALLY OMITTED.

     18. SUCCESSORS AND ASSIGNS. This Option shall inure to the benefit of and
be binding on the respective successors, assigns and legal representatives of
the Holder and the Company.

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     IN WITNESS WHEREOF, the Company and Holder have caused this Option to be
executed as of ____________, 2004.

                                        Bio-key International, Inc.

                                        By: ________________________________

                                            Name: __________________________

                                            Title: _________________________

AGREED AND ACCEPTED:

KENNETH SOUZA

____________________________
         Signature

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                               NOTICE OF EXERCISE

TO:  [_____________________________]

     (1) The undersigned hereby elects to purchase _______ shares of Common
Stock of BIO-KEY INTERNATIONAL, INC. pursuant to the terms of the attached
Option, and tenders herewith payment of the purchase price for such shares in
full in the following manner (please check one of the following choices):

     [ ]  In Cash

     [ ]  Cashless exercise through a broker; or

     [ ]  Delivery of previously owned shares.

     (2) In exercising this Option, the undersigned hereby confirms and
acknowledges that the shares of Common Stock to be issued upon conversion
thereof are being acquired solely for the account of the undersigned and not as
a nominee for any other party, and for investment (unless such shares are
subject to resale pursuant to an effective prospectus), and that the undersigned
will not offer, sell or otherwise dispose of any such shares of Common Stock
except under circumstances that will not result in a violation of the Securities
Act of 1933, as amended, or any state securities laws.

     (3) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned.

                                               [_______________________________]

__________________________                     _________________________________
(Date)                                         (Signature)

                                       12<Page>

                                                                Exhibit 10.46

                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT (the "Agreement") dated _____________, 2004 by and between
BIO-Key International, Inc., a Minnesota corporation with its principal place of
business at 1285 Corporate Center Drive, Suite 175, Eagan, MN 55121 (the
"Company") and Kenneth Souza, residing at 18 Harris Farm Road, Bolton, MA 01740
(the "Executive").

                                   WITNESSETH:

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

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

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

     1. EMPLOYMENT TERM. This Agreement shall remain in force and effect for a
term commencing on the Effective Date hereof and expiring on the first
anniversary hereof (the "Initial Term"), or until the employment relationship is
terminated pursuant to Section 4 hereof. Upon the expiration of the Initial
Term, this Agreement will be renewed automatically for successive one year
periods (each, a "Renewal Term"), unless sooner terminated in accordance with
the provisions of Section 4 or unless Company gives written notice of
non-renewal at least two (2) months prior to the date on which the Executive's
employment would otherwise end.

     2. DUTIES; EXCLUSIVE SERVICES AND BEST EFFORTS.

        (a) DUTIES. Executive shall hold the position of Senior Vice President
Product Strategy and Chief Technology Officer and shall have such
responsibilities, duties and authority consistent with such position as may from
time to time be determined by the Company's Chief Executive Officer ("CEO") or
board of directors. The Executive shall report to the CEO.

        (b) EXCLUSIVE SERVICES AND BEST EFFORTS. The Executive agrees to devote
his best efforts, energies and skill to the faithful, competent and diligent
discharge of the duties and responsibilities attributable to his position, and
to this end, will devote his fulltime attention to the business and affairs of
the Company. The Executive also agrees that he shall not take personal advantage
of any business opportunities that arise during his employment that may benefit
the Company. All material facts regarding such opportunities must be promptly
reported to the Company's Board of Directors for its consideration.

<Page>

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

        (a) BASE SALARY. The Executive shall be paid a base annual salary equal
to Two Hundred Thousand Dollars ($200,000). The Executive's annual base salary
shall be payable in equal installments in accordance with the Company's general
salary payment policies but no less frequently than monthly.

        (b) PERFORMANCE BONUS. In addition to Base Salary, an annual
"Performance Bonus" in the amount of up to $76,000 shall be paid to Executive
upon achievement of certain performance criteria determined as follows: (i)
fifty percent (50%) of the Performance Bonus shall be based on the Company
achieving certain "Financial Performance Targets" during each fiscal quarter
completed during the Term commencing with the quarter ending December 31, 2004;
and (ii) fifty percent (50%) of the Performance Bonus shall be based on the
Executive achieving certain MBO's during each fiscal quarter completed during
the Term commencing with the quarter ending December 31, 2004. The Financial
Performance Targets and MBO's shall be determined by the Company in advance of
each such fiscal quarter. The Performance Bonus, if any, shall be paid in
quarterly installments forty-five (45) days after the end of the fiscal quarter
to which the Performance Bonus relates in the amount of up to $19,000 per fiscal
quarter.

        (c) INCENTIVE COMPENSATION. Upon the completion of one (1) year of
employment with the Company, the Executive shall be eligible to receive a stock
option to purchase up to 300,000 shares of the Company's Common Stock based on
the Executive's performance as determined by the Company in its sole discretion.
The Executive may be eligible to receive awards under the Company's incentive
compensation plans, including without limitation, any stock option plans,
applicable to high level executives of the Company, in accordance with the terms
thereof and on a basis commensurate with his position and responsibilities. Any
such compensation shall be determined by the Company in its sole discretion.
Nothing herein shall effect any rights or obligations of the Executive or the
Company created pursuant to any stock option plan or stock option agreement
between the parties hereto.

        (d) STOCK OPTIONS. Executive shall be granted, subject to the terms of a
stock option agreement to be entered into by the Company and Executive in
substantially the form attached hereto as Exhibit A, a stock option to purchase
300,000 shares of the Company's Common Stock.

        (e) BENEFITS PLANS. The Executive shall be eligible to participate in
any and all employee welfare and health benefit plans (including, but not
limited to, life insurance, health, medical and dental plans) and other employee
benefit plans, which may be established by the Company from time to time for the
benefit of other Company employees of comparable status. The Executive shall be
required to comply with the conditions attendant to coverage by such preceding
plans and policies and shall comply with and be eligible for benefits only in
accordance with the terms and conditions of such plans as they may be amended
from time to

                                      -2-

<Page>

time. Nothing in this Agreement shall be construed as requiring the
Company to establish or continue any particular benefit plan in discharge of its
obligations under this Agreement.

        (f) VACATION. The Executive shall be eligible for three (3) weeks of
paid vacation each year of his employment hereunder. The Executive shall be
permitted to carry over and accrue unused vacation time for a period of up to
two years. Except as required by applicable law, in no event shall the Executive
be entitled to receive any cash compensation in lieu of unused vacation time.

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

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

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

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

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

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

                                      -3-

<Page>

Sections 5, 7 8 and 9 hereof shall survive the termination of Executive's
employment, and Executive shall remain bound thereby.

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

        CAUSE. "Cause" for Termination shall mean the following conduct of the
Executive:

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

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

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

            (iv) Conviction of a felony or plea of guilty or NOLO CONTENDERE to
a felony;

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

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

        (e) TERMINATION BY COMPANY WITHOUT CAUSE. Upon termination of this
Agreement without Cause, the Company shall be released from any and all further
obligations under this Agreement, except that the Executive shall continue to be
paid or provided, as

                                      -4-

<Page>

applicable, in the same manner as before termination, and for a period of time
equal to the greater of (i) six (6) months; and (ii) that number of months
remaining until the end of the Term, if, and only if, the Executive signs a
valid general release of all claims against the Company, its affiliates,
subsidiaries, officers, directors and agents, in a form provided by the Company.
The Company shall have no further obligation or liability to the Executive. The
Executive's obligations under Sections 5, 7, 8 and 9 hereof and shall survive
the termination of the Executive's employment, regardless of the circumstances
of any such termination, and the Executive shall remain bound thereby.

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

     5. NON-COMPETITION AND BUSINESS OPPORTUNITIES.

        (a) NON-COMPETITION. The Executive understands that the Company (for
this purpose, Company shall include all subsidiaries and affiliates of the
Company) is in the business of (i) developing and licensing finger print
identification technologies, and distributing products incorporating such
technologies to original equipment manufacturers, systems integrators,
application developers and end users; and (ii) developing, licensing and/or
selling software, products and services, including wireless solutions, and
providing technology support and services to the law enforcement and public
safety markets. The Executive agrees that during the period of his employment
hereunder and for a period of one (1) year thereafter, the Executive will not
directly or indirectly: (i) market, sell or perform services such as are offered
or conducted by the Company during the period of his employment, to any customer
or client of the Company or "Prospective Customer" or client of the Company; or
(ii) engage, directly or indirectly, whether as principal or as agent, officer,
director, employee, consultant, shareholder, or otherwise, alone or in
association with any other person, corporation or other entity, in any
"Competing Business". For the purpose of this Agreement, "Prospective Customer"
shall mean any person with whom the Company has engaged in any discussion or
negotiation regarding the use of the Company's products or services. For
purposes of this Section 5(a), the term "shareholder" shall exclude any interest
owned by Employer in a public company to the extent the Employer owns less than
five percent (5%) of any such company's outstanding common stock. For the
further purposes of this Agreement, the term "Competing Business" shall mean any
person, corporation or other entity (X) developing and/or licensing finger print
identification technologies or distributing products incorporating such
technologies, (Y), developing, licensing or selling software, products and
services, including wireless solutions, or providing technology support or
services to the law enforcement and public safety markets within the United
States or (Z) offering or developing products or services in competition with
products or services offered by, or being developed by the Company at the time
of the termination of Executive's employment with the Company. Due to the nature
of the markets served and the technology and products to be developed and
marketed by the Company which are intended to be available on a national basis,
the restrictions set forth in this Section 5(a) can not be limited to a specific
geographic area within the United States.

                                      -5-

<Page>

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

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

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

                                      -6-

<Page>

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

     7. DISCLOSURE OF INNOVATIONS; ASSIGNMENT OF OWNERSHIP OF INNOVATIONS;
PROTECTION OF CONFIDENTIAL INFORMATION. Executive hereby represents and warrants
to the Company that Executive understands that the Company is in the business of
(i) developing and licensing finger print identification technologies, and
distributing products incorporating such technologies, to original equipment
manufacturers, systems integrators, application developers and end users; and
(ii) developing, licensing and/or selling software, products and services,
including wireless solutions, and providing technology support and services to
the law enforcement and public safety markets, and that Executive may have
access to or acquire information with respect to Confidential Information (as
defined below), including software, processes and methods, development tools,
scientific, technical and/or business innovations.

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

        (b) ASSIGNMENT OF OWNERSHIP OF INNOVATIONS. Executive agrees that all
Innovations will be the sole and exclusive property of the Company and Executive
hereby assigns all of Executive's rights, title or interest in the Innovations
and in all related patents, copyrights, trademarks, trade secrets, rights of
priority and other proprietary rights to the Company. At the Company's request
and expense, during and after the period of Executive's employment with the
Company, Executive will assist and cooperate with the Company in all respects
and will execute documents, and, subject to Executive's reasonable availability,
give testimony and take further acts requested by the Company to obtain,
maintain, perfect and enforce for the Company patent, copyright, trademark,
trade secret and other legal protection for the Innovations. Executive hereby

                                      -7-

<Page>

appoints an authorized officer of the Company as Executive's attorney-in-fact to
execute documents on his behalf for this purpose. Executive has attached hereto
as Exhibit C a list of Innovations as of the date hereof which belong to
Executive and which are not assigned to the Company hereunder (the "Prior
Innovations"), or, if no such list is attached, Executive represents that there
are no Prior Innovations.

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

     8. WORK MADE FOR HIRE; DISCLOSURE OF WORKS AND INVENTIONS/ASSIGNMENT OF
PATENTS.

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

                                      -8-

<Page>

or documents as may be requested by the Company in order to effectuate the
purposes of this paragraph.

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

     9. COMPANY PROPERTY. All records, files, lists, including computer
generated lists, drawings, documents, software, documents, equipment, models,
binaries, object modules, libraries, source code and similar items relating to
the Company's business that the Executive shall prepare or receive from the
Company and all Confidential Information shall remain the Company's sole and
exclusive property ("Company Business Property"). Upon termination of this
Agreement, the Executive shall promptly return to the Company all property of
the Company in his possession, including Company Business Property. The
Executive further represents that he will not copy or cause to be copied, print
out, or cause to be printed out any Company Business Property other than as
specifically authorized and required in the performance of the Executive's
duties. The Executive additionally represents that, upon termination of his
employment with the Company, he will not retain in his possession any such
Company Business Property.

     10. COOPERATION. The Executive and Company agree that during the term of
Executive's employment they shall, at the request of the other Party, render all
assistance and perform all lawful acts that each Party considers necessary or
advisable in connection with any litigation involving either Party or any
director, officer, employee, shareholder, agent, representative, consultant,
client, or vendor of the Company.

     11. EMPLOYMENT DISPUTE SETTLEMENT PROCEDURE/WAIVER OF RIGHTS.

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

                                      -9-

<Page>

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

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

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

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

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

     13. SUCCESSORS AND ASSIGNS. Neither this Agreement, nor any of the
Executive's rights, powers, duties or obligations hereunder, may be assigned by
the Executive. This Agreement shall be binding upon and inure to the benefit of
the Executive and his heirs and legal representatives and the Company and its
successors. Successors of the Company shall include,

                                      -10-

<Page>

without limitation, any company or companies, individuals, groups, associations,
partnerships, firm, venture or other entity or party acquiring, directly or
indirectly, all or substantially all of the assets of the Company, whether by
merger, consolidation, purchase, lease or otherwise. Any such successor referred
to in this paragraph shall thereafter be deemed "the Company" for the purpose
hereof. All covenants and restrictions upon the Executive hereunder, including,
but not limited to Sections 5, 7, 8 and 9 hereof, are specifically assignable by
the Company.

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

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

                  (a)  If to the Company:

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

                       Duane Morris LLP
                       Colwick Building
                       51 Haddonfield Road
                       Suite 340
                       Cherry Hill, NJ 08002
                       Attn:  Vincent A. Vietti, Esquire

                  (b)  If to the Executive:

                       Kenneth Souza
                       18 Harris Farm Road
                       Bolton, MA 01740

                                      -11-

<Page>

     16. CONSTRUCTION OF AGREEMENT.

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

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

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

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

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

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

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

                                      -12-

<Page>

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

                                  BIO-KEY INTERNATIONAL, INC.

                                  By:
                                      ----------------------------------------
                                       Name: MICHAEL W. DEPASQUALE
                                       Title: CHIEF EXECUTIVE OFFICER

                                  EXECUTIVE

                                  --------------------------------------------
                                  Kenneth Souza

                                      -13-

<Page>

                                    EXHIBIT A

                                 FORM OF OPTION

<Page>

                                    EXHIBIT B

         LIST OF PRIOR CONFIDENTIALITY AND/OR NONCOMPETITION AGREEMENTS

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

</Table>

   Date: ___________, 2004
                                    --------------------------------------------
                                    Executive's Signature

<Page>

                                    EXHIBIT C

                                PRIOR INNOVATIONS

   Date: ___________, 2004
                                    --------------------------------------------
                                    Executive's Signature

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}]]