Document:

Exhibit
10.85

 

SECURITIES
EXCHANGE AGREEMENT

 

This Securities Exchange
Agreement (the “Agreement”) is entered into as of November 12,
2009 by and among BIO-key International, Inc., a Delaware corporation (the
“Company”), The Shaar Fund, Ltd. (“Shaar”), Thomas J. Colatosti (“TJC”
and, together with Shaar, collectively the “Holders”
and individually a “Holder”).

 

Introduction

 

At the request of the
Company, Shaar (a) has extended the due date of the Company’s Eight
Percent (8%) Promissory Note Due November 3, 2009, in the principal amount
of $1,000,000, pursuant to a Note Amendment and Extension Agreement dated as of
November 3, 2009 between the Company and Shaar, and (b) has made a
bridge loan to the Company in the principal amount of $750,000, evidenced by the
Company’s Six Percent (6%) Promissory Note dated November 12, 2009, and,
in consideration thereof, the Company has agreed to enter into this Agreement.

 

Shaar is the holder of
27,932 shares, and TJC is the holder of 2,625 shares (collectively the “Exchanged Shares”), of the Company’s Series A
Convertible Preferred Stock, $0.0001 par value per share (the “Series A Preferred Stock”).  The Company and the Holders desire to
exchange (a) all dividends accrued and unpaid on their Exchanged Shares
for the Convertible Notes (as defined below) to and including the Closing Date
(as defined below), and the Company and (b) the Exchanged Shares for the
Company’s Series D Convertible Preferred Stock, $0.0001 par value per
share (the “Series D Preferred Stock”),
and the Warrants (as defined below) on the terms and conditions set forth in
this Agreement.

 

NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:

 

1.                                      Exchange
of the Exchanged Shares for the Notes, the Series D Preferred Stock and
the Warrants.

 

1.1.                            Authorization of the Notes.  The Company has authorized the
issuance of  Seven Percent (7%)
Convertible Promissory Notes in the respective 
principal amounts set forth in Section 3.5 below in the form
attached hereto as Exhibit A
(the “Convertible  Notes”) to Shaar on the terms and
conditions set forth in this Agreement. 
Each Holder hereby consents to the issuance of his or its Convertible
Note, and the indebtedness represented thereby, on the terms and  conditions set forth in this Agreement.

 

1.2                               Authorization
of the Series D Preferred Stock.   The Company has authorized, approved and adopted
the Certificate of Designation of the Series D Preferred Stock of the
Company, consisting of 100,000 shares, in the form attached hereto as Exhibit B (the “Series D  Certificate
of Designation”), and has authorized the issuance of 27,932
shares of the Series D Preferred Stock to Shaar and 2,625 shares of the Series D
Preferred Stock to TJC, in exchange for the Series A Preferred Stock owned
by the respective Holders.

 

 

1.3                               Authorization
of the Warrant.  The Company
has authorized the issuance of Warrants to purchase up to 5,000,000 shares of
the Company’s Common Stock, $0.0001 par value per share (“Common Stock”),
in the form attached hereto as Exhibit C
(the “Warrants”), including up to 4,750,000
shares to Shaar and up to 250,000 shares to TJC on the terms and conditions set
forth in this Agreement.

 

1.4                               The
Exchange.  In exchange
for the delivery by the Holders of the Exchanged Shares, the Company agrees, in
full settlement of the Company’s obligations (as of the Closing Date) under the
Series A Certificate of Designation (as defined below) and the Exchanged
Shares, to issue and deliver to the Holders his or its Convertible Note, the Series D
Preferred Stock and the Warrants (the “Exchange”).  Other than as set
forth in this Agreement, the Exchange shall be made without any additional
consideration payable to or by the Holders or the Company.  As used herein, “Series A
Certificate of Designation” means the Certificate of Designation of
the Company filed with the Secretary of State of the State of Delaware on July 28,
2004, which provides for the designation of
the rights and preferences of the Series A Preferred Stock.

 

1.5                               Closing.  The closing of the Exchange on the terms and
conditions set forth in this Agreement (the “Closing”)
shall take place remotely via the exchange of documents and signatures at 10:00 a.m.
EST on the date that is five (5) days after the satisfaction or waiver of
all of the conditions set forth in Section 4 hereof, or on such other date
as the parties hereto may agree (the “Closing Date”).

 

1.6                               Closing
Documents and Payments.  At
the Closing, (a) the Company shall deliver to the Holders the Convertible
Notes,  the Series D Preferred Stock
and the Warrants and (b) each Holder shall deliver to the Company stock
certificate(s) representing its or his Exchanged Shares, together with a
duly executed transfer power transferring its or his Exchanged Shares to the
Company for cancellation.

 

2.                                      Representations
and Warranties of the Holder.  The Holders, severally and not jointly, each
represents and warrants to the Company as follows:

 

2.1.                            Title.  Each Holder has good title to his or its  Exchanged Shares free and clear of any and
all restrictions, encumbrances, liens, rights, title or interests of others,
other than restrictions under applicable securities laws.

 

2.2.                            Authority.  Each Holder has the requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby and to deliver his or its Exchanged Shares to the Company
in accordance herewith.

 

3.                                      Representations
and Warranties of the Company.  The Company represents and warrants to the
Holder as follows:

 

3.1.                            Entity Matters.  The Company is duly
organized and validly existing in good standing under the laws of the State of
Delaware, has all requisite power and authority to conduct its business and to
own its property as the same is and shall be conducted or owned, and is
qualified to do business as a foreign corporation in all locations required
under the laws of each

 

 

jurisdiction
in which it does business and under which the failure so to qualify and remain
in good standing would have a material adverse effect on the Company.  The execution of this Agreement, the
Convertible Notes, the Series D Preferred Stock and the Warrants (collectively,
the “Exchange Documents”) will not
violate the Company’s Certificate of Incorporation or By-Laws.

 

3.2.                            No Violation.  The performance by the Company of the Company’s
obligations hereunder or under any other Exchange Document does not constitute
a violation of any law, order, regulation, contract, or agreement to which the
Company is a party or by which the Company or the Company’s property may be
bound and does not require any filing or registration with, or any permit,
license, consent, or approval of, any governmental agency or regulatory
authority, other than the filing of the Series D Certificate of
Designation with the Secretary of State of the State of Delaware, or the
waiver, consent or approval of any other party which has not been or will not
be duly obtained as of the Closing Date.

 

3.3.                            No Litigation.  There is no litigation or arbitration pending
or, to the Company’s knowledge, threatened against the Company which, if adversely decided, could
materially impair the ability of the Company to pay and perform the Company’s
obligations under any Exchange Document.

 

3.4.                            Exchange Documents Enforceable.  The Exchange
Documents have been duly authorized, executed, and delivered by the Company and
are legal, valid, and binding instruments, enforceable against the Company in
accordance with their respective terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights and  general principles of equity that restrict the availability of
equitable or legal remedies.

 

3.5.                            Amount of
Notes.  The
principal amount of the Convertible Note to be issued to each Holder will be
equal to the aggregate amount of all accrued and unpaid dividends on such
Holder’s Exchanged Shares to and including the Closing Date.

 

4.                                      Conditions
Precedent to the Holders’ Obligations.  it shall be a condition precedent to each of
the Holders’ obligations under this Agreement that all of the following
requirements are satisfied:

 

4.1.                            Representations and Warranties.  All representations and warranties made by or
on behalf of the Company shall be true, correct and complete in all material
respects on and as of the Closing Date.

 

4.2.                            Sale of the Company’s Law Enforcement Division.  The closing of the sale of the
Company’s Law Enforcement Division to InterAct911 Mobile Systems, Inc.
(the “Buyer”) pursuant to that
certain Asset Purchase Agreement dated as of August 13, 2009 (as amended,
restated, supplemented or otherwise modified from time to time, the “Asset Purchase Agreement”) by and between
the Company and the Buyer shall have occurred.

 

4.3.                            Redemption of Series B and Series C Preferred
Stock.  All
outstanding shares of the Company’s Series B Convertible Preferred
Stock, $0.0001 par value per share (“Series B
Preferred Stock”), and Series C Convertible Preferred Stock,
$0.0001 par value per share

 

 

(“Series C Preferred Stock”), shall have been redeemed in
accordance with the terms of Section 7(a) of the Certificate of
Designation for the Series B Preferred Stock and Section 7(a) of
the Certificate of Designation for the Series C Preferred Stock, respectively.  The parties
acknowledge and agree that in the event that any holder of Series B Preferred Stock or Series C Preferred Stock (other than
the Holders) has his or its shares redeemed on terms more favorable than those
contained in the Certificate of Designation with respect to such series, each
Holder shall be entitled to have its or his shares of Series B Preferred
Stock and/or Series C Preferred Stock, as applicable, redeemed on the most
favorable terms afforded to any other such holder.

 

4.4.                            Officer’s Certificate.  An officer of the Company
shall deliver to the Holders a certificate certifying that the conditions
specified in Sections 4.1, 4.2 and 4.3 hereof have been satisfied.

 

4.5.                            Additional Conditions Precedent.  Each Holder shall have received each of the
following, as applicable:

 

(a)                                  the Convertible
Note executed and delivered by the Company in favor of such Holder;

 

(b)                                 certificates
for their respective shares of Series D Preferred Stock executed and
delivered by the Company;

 

(c)                                  their respective Warrants executed and delivered by the Company; and

 

(d)                                 Such other and
further documents, agreements and instruments as the Holders or their counsel
may reasonably require to evidence, confirm or give effect to the undertakings
of the Company set forth herein.

 

5.                                      Miscellaneous.

 

5.1.         Governing Law. 
THIS AGREEMENT AND EACH OTHER EXCHANGE AGREEMENT 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. 
ANY ACTION BROUGHT BY ANY PARTY AGAINST ANOTHER CONCERNING THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND EACH OTHER EXCHANGE AGREEMENT
SHALL BE BROUGHT ONLY IN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS
LOCATED IN THE STATE OF NEW YORK, IN EACH CASE SITTING IN THE CITY OF NEW YORK,
BOROUGH OF MANHATTAN.  ALL PARTIES AND
THE INDIVIDUALS EXECUTING THIS AGREEMENT AND THE OTHER EXCHANGE AGREEMENTS ON
BEHALF OF THE COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND
WAIVE TRIAL BY JURY.  IN THE EVENT THAT
ANY PROVISION OF THIS AGREEMENT OR ANY OTHER EXCHANGE AGREEMENT DELIVERED IN
CONNECTION HEREWITH IS INVALID OR UNENFORCEABLE UNDER ANY APPLICABLE STATUTE OR
RULE OF LAW, THEN SUCH PROVISION SHALL BE DEEMED INOPERATIVE TO THE EXTENT THAT
IT MAY CONFLICT THEREWITH AND SHALL BE DEEMED MODIFIED TO
CONFORM WITH SUCH STATUTE OR RULE OF LAW. 
ANY SUCH PROVISION WHICH MAY PROVE INVALID OR

 

 

UNENFORCEABLE UNDER ANY LAW
SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS
AGREEMENT OR ANY OTHER EXCHANGE AGREEMENT.

 

5.2.                            Termination.  This Agreement shall terminate and be of no
further force or effect if the Closing (as defined in the Asset Purchase
Agreement) shall not have been consummated by January 31, 2010; provided,
however, that in such event, the Company agrees to issue to the
Shaar a Warrant in the form of the Warrant to purchase up to 2,000,000 shares of
Common Stock at an exercise price of $0.30 per share.

 

5.3.                            Survival.  The
representations, warranties, covenants and agreements made herein shall survive
any investigation made by the Holders and for one year after the date of the
closing of the transactions contemplated hereby.  All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument, unless
otherwise specified therein.

 

5.4.                            Successors.  Except as
otherwise expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon, the successors, heirs, executors and
administrators of the parties hereto.  No
Holder may assign its rights hereunder to a competitor of the Company.  The Company may not assign its rights or
delegate its obligations hereunder to a third party without obtaining the
consent of the Holders, such consent not to be unreasonably withheld or
delayed.

 

5.5.                            Entire Agreement.  This
Agreement, the other Exchange Documents, the exhibits and schedules hereto and
thereto and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and no party shall be liable or bound to any other in any
manner by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.

 

5.6.                            Omitted.

 

5.7.                            Amendments and Waivers.  This Agreement may be amended or modified
only upon the written consent of the Company and Shaar.

 

5.8.                            Delays or Omissions.  It
is agreed that no delay or omission to exercise any right, power or remedy
accruing to any party, upon any breach, default or noncompliance by another
party under this Agreement or the other Exchange Documents, shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring.  All remedies, either under this Agreement or
the other Exchange Documents, by law or otherwise afforded to any party, shall
be cumulative and not alternative.

 

5.9.                            Notices.  All notices
and other communications given or made pursuant to this Agreement shall be in
writing and shall be deemed effectively given upon the earlier of actual
receipt or:  (a) personal delivery
to the party to be notified, (b) when sent, if sent by electronic

 

 

mail or facsimile during
normal business hours of the recipient, and if not sent during normal business
hours, then on the recipient’s next business day, (c) five (5) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) business day after deposit
with a nationally recognized overnight courier, freight prepaid, specifying
next business day delivery, with written verification of receipt.  All communications shall be sent to the
respective parties at the following addresses or to such other e-mail address,
facsimile number or address as subsequently modified by written notice given in
accordance with this Section:

 

	
  If
  to the Company or to TJC, to: or c/o

  	
   

  	
  BIO-key
  International, Inc.

  
	
   

  	
   

  	
  3349
  Highway 138

  
	
   

  	
   

  	
  Building
  D, Suite B

  
	
   

  	
   

  	
  Wall,
  NJ 07719

  
	
   

  	
   

  	
  Attn:
  Chief Executive Officer

  
	
   

  	
   

  	
  Facsimile:
  [                            ]

  
	
   

  	
   

  	
   

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

  	
   

  	
  Choate,
  Hall & Stewart LLP

  Two International Place

  Boston, MA 02110

  Attention: Charles J. Johnson, Esq.

  Facsimile: (617) 248-4000

  
	
   

  	
   

  	
   

  
	
  If to Shaar, to:

  	
   

  	
  The Shaar Fund Ltd.

  
	
   

  	
   

  	
  c/o Maarten Robberts

  
	
   

  	
   

  	
  SS&C Fund Services
  N.V.

  
	
   

  	
   

  	
  Pareraweg 45

  
	
   

  	
   

  	
  Curacao, Netherlands
  Antilles

  
	
   

  	
   

  	
  Facsimile: (599-9)
  434-3560

  
	
   

  	
   

  	
   

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

  	
   

  	
  Meltzer, Lippe,
  Goldstein & Breitstone, LLP

  190 Willis Avenue

  Mineola, NY 11501

  Attention: Ira R. Halperin, Esq.

  Facsimile: (516) 747-0653 

  

 

5.10.                     Titles and Subtitles.  The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

 

5.11.                     Facsimile Signatures; Counterparts.  This Agreement 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.

 

5.12.                     Broker’s Fees.  Each party
hereto represents and warrants that no agent, broker, investment banker, person
or firm acting on behalf of or under the authority of such party hereto is or
will be entitled to any broker’s or finder’s fee or any other commission
directly or indirectly in connection with the transactions contemplated
herein.  Each party hereto further agrees
to

 

 

indemnify each other party
for any claims, losses or expenses incurred by such other party as a result of
the representation by such party in this Section 5.12 being untrue.

 

5.13.                     Construction.  Each party
acknowledges that its legal counsel participated in the preparation of this
Agreement and the other Exchange Documents and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Agreement to favor any party
against the other.

 

[Signature pages follow]

 

 

IN WITNESS WHEREOF, each of the parties hereto has
executed this Agreement as a sealed instrument as of the date first written
above. 

 

	
   

  	
  THE
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  BIO-KEY
  INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas J. Colatosti

  
	
   

  	
   

  	
  Name:
  Thomas J. Colatosti

  
	
   

  	
   

  	
  Title: Chairman

  

 

8

 

	
   

  	
  THE
  HOLDERS:

  
	
   

  	
   

  
	
   

  	
  THE
  SHAAR FUND, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  SS&C Fund Services N.V.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Thomas J. Colatosti

  
	
   

  	
   

  	
  Thomas J. Colatosti

  

 

9

 

Exhibit A

 

Form of Convertible Note

 

 

Exhibit B

 

Form of Series D Certificate of Designation

 

 

Exhibit C

 

Form of WarrantExhibit
10.86

 

EXECUTION COPY

 

INTERACT911 MOBILE SYSTEMS, INC.

 

GUARANTEED
SECURED PROMISSORY NOTE

 

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

 

	
  $4,000,000

  	
  December     , 2009

  
	
   

  	
  Winston-Salem, North Carolina

  

 

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

 

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

 

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

 

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

 

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

 

 

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

 

(b)           a
Change of Control occurs;

 

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

 

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

 

(e)           Maker
shall be dissolved or liquidated;

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

	
   

  	
  InterAct911 Mobile Systems, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Secretary

  	
   

  

 

SIGNATURE
PAGE TO PROMISSORY NOTE

 

 

GUARANTY

 

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

 

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

 

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

 

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

 

	
   

  	
   

  	
  InterAct911
  Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Secretary

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SilkRoad
  Equity, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

SIGNATURE
PAGE TO GUARANTY

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00171-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00171-of-00352.parquet"}]]