Document:

ex_154283.htm

Exhibit 10.5

 

 

NEITHER THIS WARRANT NOR THE SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

The number of shares of common stock issuable upon exercise of this warrant may be less than the amounts set forth on the face hereof.

 

This Warrant is issued pursuant to that certain Securities Purchase Agreement dated July __, 2019 by and between the Company and the Holder (as defined below) (the “Purchase Agreement”). Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement. Receipt of this Warrant by the Holder shall constitute acceptance and agreement to all of the terms contained herein.

 

No. 1

 

bio-key international, INC.

 

COMMON STOCK PURCHASE WARRANT

 

 

BIO-Key International, Inc., a Delaware corporation (together with any corporation which shall succeed to or assume the obligations of BIO-Key International, Inc. hereunder, the “Company”), hereby certifies that, for value received, Lind Global Macro Fund, LP, a Delaware limited partnership (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company at any time during the Exercise Period (as defined in Section 9) up to Two Million (2,000,000) fully paid and non-assessable shares of Common Stock (as defined in Section 9), at a purchase price per share equal to the Exercise Price (as defined in Section 9). The number of shares of Common Stock for which this Common Stock Purchase Warrant (this “Warrant”) is exercisable and the Exercise Price are subject to adjustment as provided herein.

 

1.     DEFINITIONS. Certain terms are used in this Warrant as specifically defined in Section 9.

 

2.     EXERCISE OF WARRANT.

 

2.1.     Exercise. This Warrant may be exercised prior to its expiration pursuant to Section 2.5 hereof by the Holder at any time or from time to time during the Exercise Period, by submitting the form of subscription attached hereto (the “Exercise Notice”) duly executed by the Holder, to the Company at its principal office, indicating whether the Holder is electing to purchase a specified number of shares by paying the Aggregate Exercise Price as provided in Section 2.2 or is electing to exercise this Warrant as to a specified number of shares pursuant to the net exercise provisions of Section 2.3. On or before the first Trading Day following the date on which the Company has received the Exercise Notice, the Company shall transmit by electronic mail an acknowledgement of confirmation of receipt of the Exercise Notice. Subject to Section 2.4, this Warrant shall be deemed exercised for all purposes as of the close of business on the day on which the Holder has delivered the Exercise Notice to the Company. The Aggregate Exercise Price, if any, shall be paid by wire transfer to the Company within five (5) Business Days of the date of exercise and prior to the time the Company issues the certificates evidencing the shares issuable upon such exercise. In the event this Warrant is not exercised in full, the Company may, at its expense, require the Holder, after such partial exercise, to promptly return this Warrant to the Company and the Company will forthwith issue and deliver to or upon the order of the Holder a new Warrant or Warrants of like tenor, in the name of the Holder or as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of such shares (without giving effect to any adjustment therein) for which this Warrant shall have been exercised.

 

 

 

 

2.2.     Payment of Exercise Price by Wire Transfer. If the Holder elects to purchase a specified number of shares by paying the Aggregate Exercise Price, the Holder shall pay such amount by wire transfer of immediately available funds to the account designated by the Company in its acknowledgement of receipt of such Exercise Notice pursuant to Section 2.1.

 

2.3.     Net Exercise. If a registration statement covering the shares of Common Stock that are the subject of the Notice of Exercise (the “Unavailable Warrant Shares”) is not available for the resale of such Unavailable Warrant Shares to the public or upon exercise of this Warrant in connection with a Fundamental Transaction, the Holder may elect to exercise this Warrant by receiving shares of Common Stock equal to the number of shares determined pursuant to the following formula:

 

X = Y (A - B)

            A

where,

 

	 	
			X =

				
			the number of shares of Common Stock to be issued to Holder;

			

 

	 	
			Y =

				
			the number of shares of Common Stock as to which this Warrant is to be exercised (as indicated on the Exercise Notice);

			

 

	 	
			A =

				
			VWAP for the Trading Day immediately preceding the date of exercise; and

			

 

	 	
			B =

				
			the Exercise Price.

			

 

2.4.     Antitrust Notification. If the Holder determines, in its sole judgment upon the advice of counsel, that the issuance of any Warrant Shares pursuant to the terms hereof would be subject to the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the Company shall file as soon as practicable after the date on which the Company receives notice from the Holder of the applicability of the HSR Act and a request to so file with the United States Federal Trade Commission and the United States Department of Justice the notification and report form required to be filed by it pursuant to the HSR Act in connection with such issuance.

 

2.5.     Termination. This Warrant shall terminate upon the earlier to occur of (i) exercise in full or (ii) the expiration of the Exercise Period.

 

3.     REGISTRATION RIGHTS. The Holder of this Warrant has certain rights to require the Company to register its resale of the Warrant Shares under the Securities Act and any blue sky or securities laws of any jurisdictions within the United States at the time and in the manner specified in the Purchase Agreement.

 

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4.     DELIVERY OF STOCK CERTIFICATES ON EXERCISE.

 

4.1.     Delivery of Exercise Shares. As soon as practicable after any exercise of this Warrant and in any event within three (3) Trading Days thereafter (such date, the “Exercise Share Delivery Date”), the Company shall, at its expense (including the payment by it of any applicable issue or stamp taxes), cause to be issued in the name of and delivered to the Holder, or as the Holder may direct, a certificate or certificates evidencing the number of fully paid and nonassessable shares of Common Stock (which number shall be rounded down to the nearest whole share in the event any fractional share may otherwise be issuable upon such exercise and the Company shall pay a cash adjustment to the Holder in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price) to which the Holder shall be entitled on such exercise, in such denominations as may be requested by the Holder, which certificate or certificates shall be free of restrictive and trading legends (except for any such legends as may be required under the Securities Act). In lieu of delivering physical certificates for the shares of Common Stock issuable upon any exercise of this Warrant, provided the Warrant Shares are not restricted securities and the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program or a similar program, upon request of the Holder, the Company shall cause its transfer agent to electronically transmit such shares of Common Stock issuable upon exercise of this Warrant to the Holder (or its designee), by crediting the account of the Holder’s (or such designee’s) broker with DTC through its Deposit Withdrawal Agent Commission system (provided that the same time periods herein as for stock certificates shall apply) as instructed by the Holder (or its designee).

 

4.2.     Compensation for Buy-In on Failure to Timely Deliver Exercise Shares. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder Exercise Shares pursuant to an exercise on or before the Exercise Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Exercise Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (a) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Exercise Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (b) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Exercise Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (a) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

4.3.     Charges, Taxes and Expenses. Issuance of Exercise Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Exercise Shares, all of which taxes and expenses shall be paid by the Company, and such Exercise Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event Exercise Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto (the “Assignment Form”) duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

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5.     CERTAIN ADJUSTMENT.

 

5.1.     Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (a) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (b) subdivides outstanding shares of Common Stock into a larger number of shares, (c) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 5.1 shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

5.2     Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the beneficial ownership limitation provided for in Section 10, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the beneficial ownership limitation).

 

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5.3     Fundamental Transaction. If, at any time while this Warrant is outstanding, (a) the Company effects any merger or consolidation of the Company with or into another Person, (b) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (c) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (d) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (each, a “Fundamental Transaction”), then, upon the closing of a Fundamental Transaction and payment of the exercise price therefore (including at the election of the Holder by cashless exercise), the Holder shall receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon exercise of this Warrant upon the closing of such Fundamental Transaction. The foregoing notwithstanding, if the Company effects any reclassification of the Common Stock or any compulsory share exchange, in each case, into another security of the Company, this Warrant shall remain outstanding and the Holder shall be entitled to receive the Alternative Consideration upon any subsequent exercise of this Warrant and the payment of the exercise price therefor. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 5.3

 

5.4     Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding at the close of the Trading Day on or, if not applicable, most recently preceding, such given date.

 

5.5     Notice to Holder.

 

(a)      Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

(b)      Notice to Allow Exercise by Holder. If (i) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock; (ii) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (iii) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (iv) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; or (v) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. Subject to applicable law, the Holder is entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice. Notwithstanding the foregoing, the delivery of the notice described in this Section 5.5 is not intended to and shall not bestow upon the Holder any voting rights whatsoever with respect to outstanding unexercised Warrants.

 

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6.     NO IMPAIRMENT. The Company will not, by amendment of the Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in taking all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of Common Stock receivable on the exercise of this Warrant above the amount payable therefor on such exercise and (b) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of stock on the exercise of this Warrant from time to time outstanding.

 

7.     NOTICES OF RECORD DATE. In the event of:

 

(a)     any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right;

 

(b)     any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or any consolidation or merger of the Company with or into any other Person or any other Change of Control; or

 

(c)     any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

then, and in each such event, the Company will mail or cause to be mailed to the Holder a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is anticipated to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up. Such notice shall be mailed at least fifteen (15) days prior to the date specified in such notice on which any such action is to be taken.

 

8.     RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT; REGULATORY COMPLIANCE.

 

8.1.     Reservation of Stock Issuable on Exercise of Warrant. The Company shall at all times while this Warrant shall be outstanding, reserve and keep available out of its authorized but unissued Common Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect the exercise of all or any portion of the Warrant Shares (disregarding for this purpose any and all limitations of any kind on such exercise). The Company shall, from time to time in accordance with the Delaware General Corporation Law, increase the authorized number of shares of Common Stock or take other effective action if at any time the unissued number of authorized shares shall not be sufficient to satisfy the Company’s obligations under this Section 8.

 

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8.2.     Regulatory Compliance. If any shares of Common Stock to be reserved for the purpose of exercise of the Warrant Shares require registration or listing with or approval of any Governmental Authority, stock exchange or other regulatory body under any federal or state law or regulation or otherwise before such shares may be validly issued or delivered upon exercise, the Company shall, at its sole cost and expense, in good faith and as expeditiously as possible, secure such registration, listing or approval, as the case may be.

 

9.     DEFINITIONS. As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

 

“Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified.

 

“Aggregate Exercise Price” means, in connection with the exercise of this Warrant at any time, an amount equal to the product obtained by multiplying (i) the Exercise Price times (ii) the number of shares of Common Stock for which this Warrant is being exercised at such time.

 

“Business Day” means any day other than a Saturday, Sunday or any other day on which banks are permitted or required to be closed in New York City.

 

“Certificate of Incorporation” means the Company’s Certificate of Incorporation as amended to date.

 

“Change of Control” has the meaning set forth in the Purchase Agreement.

 

“Common Stock” means (i) the Company’s Common Stock, $0.0001 par value per share, and (ii) any other securities into which or for which any of the securities described in clause (i) above have been converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

 

“Exercise Period” means the period commencing on the Issue Date and ending 11:59 P.M. (New York City time) on the five year anniversary of the Issue Date or earlier closing of a Fundamental Transaction (other than a Fundamental Transaction of the type described in clause (d) of the definition thereof resulting in the conversion into or exchange for another security of the Company).

 

“Exercise Price” means $1.50 per share, as may be adjusted pursuant to the terms hereof.

 

“Exercise Shares” means the shares of Common Stock for which this Warrant is then being exercised.

 

“Fair Market Value” means, with respect to any security or other property, the fair market value of such security or other property as determined by the Board of Directors, acting in good faith.

 

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“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Issue Date” means July __, 2019.

 

“Note” means the senior secured convertible promissory note issued by the Company to the Holder pursuant to the Purchase Agreement. 

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

 

“Subsidiary” means, as of any time of determination and with respect to any Person, any United States corporation, partnership, limited liability company or limited liability partnership, all of the stock (or other equity interest) of every class of which, except directors’ qualifying shares (or any equivalent), shall, at such time, be owned by such Person either directly or through Subsidiaries and of which such Person or a Subsidiary shall have 100% control thereof, except directors’ qualifying shares. Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the Company.

 

“Trading Day” means a day on which the Common Stock is traded on a Trading Market.

 

“Trading Market” means whichever of the New York Stock Exchange, NYSE: Amex Exchange, or the Nasdaq Stock Market (including the Nasdaq Capital Market), on which the Common Stock is listed or quoted for trading on the date in question.

 

“VWAP” means, as of any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of one share of Common Stock trading in the ordinary course of business on the applicable Trading Price for such date (or the nearest preceding date) on such Trading Market as reported by Bloomberg Financial L.P.; (b) if the Common Stock is not then listed on a Trading Market and if the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, the volume weighted average price of one share of Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, as reported by Bloomberg Financial L.P.; (c) if the Common Stock is not then listed or quoted on the OTC Bulletin Board and if prices for the Common Stock is then reported in the “Pink Sheets” published by the Pink OTC Markets Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price of one share of Common Stock so reported, as reported by Bloomberg Financial L.P.; or (d) in all other cases, the fair market value of one share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company (in each case rounded to four decimal places).

 

“Warrant Shares” means collectively the shares of Common Stock of the Company issuable upon exercise of the Warrant in accordance with its terms, as such number may be adjusted pursuant to the provisions thereof.

 

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10.     LIMITATION ON BENEFICIAL OWNERSHIP. Notwithstanding anything to the contrary contained herein, the Holder shall not be entitled to receive shares of Common Stock or other securities (together with Common Stock, “Equity Interests”) upon exercise of this Warrant to the extent (but only to the extent) that such exercise or receipt would cause the Holder Group to become, directly or indirectly, a “beneficial owner” (within the meaning of Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) of a number of Equity Interests of a class that is registered under the Exchange Act which exceeds the Maximum Percentage (as defined below) of the Equity Interests of such class that are outstanding at such time. Any purported delivery of Equity Interests in connection with the exercise of the Warrant prior to the termination of this restriction in accordance herewith shall be void and have no effect to the extent (but only to the extent) that such delivery would result in the Holder Group becoming the beneficial owner of more than the Maximum Percentage of the Equity Interests of a class that is registered under the Exchange Act that is outstanding at such time. If any delivery of Equity Interests owed to the Holder following exercise of this Warrant is not made, in whole or in part, as a result of this limitation, the Company’s obligation to make such delivery shall not be extinguished and the Company shall deliver such Equity Interests as promptly as practicable after the Holder gives notice to the Company that such delivery would not result in such limitation being triggered or upon termination of the restriction in accordance with the terms hereof. To the extent limitations contained in this Section 10 apply, the determination of whether this Warrant is exercisable and of which portion of this Warrant is exercisable shall be the sole responsibility and in the sole determination of the Holder, and the submission of an Exercise Notice shall be deemed to constitute the Holder’s determination that the issuance of the full number of Warrant Shares requested in the Exercise Notice is permitted hereunder, and neither the Company nor any Warrant agent shall have any obligation to verify or confirm the accuracy of such determination. For purposes of this Section 10, (i) the term “Maximum Percentage” shall mean 4.99%; provided, that if at any time after the date hereof the Holder Group beneficially owns in excess of 4.99% of any class of Equity Interests in the Company that is registered under the Exchange Act (excluding any Equity Interests deemed beneficially owned by virtue of this Warrant or the Note), then the Maximum Percentage shall automatically increase to 9.99% so long as the Holder Group owns in excess of 4.99% of such class of Equity Interests (and shall, for the avoidance of doubt, automatically decrease to 4.99% upon the Holder Group ceasing to own in excess of 4.99% of such class of Equity Interests); and (ii) the term “Holder Group” shall mean the Holder plus any other Person with which the Holder is considered to be part of a group under Section 13 of the Exchange Act or with which the Holder otherwise files reports under Sections 13 and/or 16 of the Exchange Act. In determining the number of Equity Interests of a particular class outstanding at any point in time, the Holder may rely on the number of outstanding Equity Interests of such class as reflected in (x) the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission, as the case may be, (y) a more recent public announcement by the Company or (z) a more recent notice by the Company or its transfer agent to the Holder setting forth the number of Equity Interests of such class then outstanding. For any reason at any time, upon written or oral request of the Holder, the Company shall, within one (1) Trading Day of such request, confirm orally and in writing to the Holder the number of Equity Interests of any class then outstanding. The provisions of this Section 10 shall be construed, corrected and implemented in a manner so as to effectuate the intended beneficial ownership limitation herein contained.

 

11.     REGISTRATION AND TRANSFER OF WARRANT.

 

11.1.     Registration of Warrant. The Company shall register and record transfers, exchanges, reissuances and cancellations of this Warrant, upon the records to be maintained by the Company for that purpose, in the name of the record holder hereof from time to time. The Company may deem and treat the registered holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary. The Company shall be entitled to rely, and held harmless in acting or refraining from acting in reliance upon, any notices, instructions or documents it believes in good faith to be from an authorized representative of the Holder.

 

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11.2     Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form of assignment (the “Assignment Notice”) attached hereto duly executed by the Holder or its agent or attorney. The Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of the transferred Warrant under the 1933 Act. Upon such surrender, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such Assignment Notice, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. This Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Exercise Shares without having a new Warrant issued.

 

11.3.     New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 11.2, as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for this Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original Issue Date and shall be identical with this Warrant except as to the number of Exercise Shares issuable pursuant thereto.

 

12.    LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Exercise Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of this Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

13.     REMEDIES. The Company stipulates that the remedies at law of the Holder in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

 

14.     NO RIGHTS AS A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Exercise Shares.

 

15.     NOTICES. All notices, requests, demands and other communications that are required or may be given pursuant to the terms of this Warrant shall be in writing and shall be deemed delivered (i) on the date of delivery when delivered by hand on a Business Day during normal business hours or, if delivered on a day that is not a Business Day or after normal business hours, then on the next Business Day, (ii) on the date of transmission when sent by facsimile transmission or email during normal business hours on a Business Day with telephone confirmation of receipt or, if transmitted on a day that is not a Business Day or after normal business hours, then on the next Business Day, or (iii) on the second Business Day after the date of dispatch when sent by a reputable courier service that maintains records of receipt. The addresses for notice shall be as set forth in the Purchase Agreement.

 

-10-

 

 

16.     CONSENT TO AMENDMENTS. Any term of this Warrant may be amended, and the Company may take any action herein prohibited, or compliance therewith may be waived, only if the Company shall have obtained the written consent (and not without such written consent) to such amendment, action or waiver from the Holder. No course of dealing between the Company and the Holder nor any delay in exercising any rights hereunder shall operate as a waiver of any rights of the Holder.

 

17.     MISCELLANEOUS. In case any provision of this Warrant shall be invalid, illegal or unenforceable, or partially invalid, illegal or unenforceable, the provision shall be enforced to the extent, if any, that it may legally be enforced and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. If any provision of this Warrant is found to conflict with the Purchase Agreement, the provisions of this Warrant shall prevail. If any provision of this Warrant is found to conflict with the Note, the provisions of the Note shall prevail. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE INTERNAL LAW OF THE STATE OF DELAWARE EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD PERMIT THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.

 

[Remainder of Page Intentionally Left Blank]

 

-11-

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer.

 

Dated as of July ___, 2019

 

 

	 	BIO-KEY INTERNATIONAL, INC.
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	By:	 	 
	 	 	 	 
	 	Name:	  Michael W. DePasquale	 
	 	 	 	 
	 	Title:	  CEO	 

 

-12-

 

 

FORM OF SUBSCRIPTION

 

(To be signed only on exercise

of Common Stock Purchase Warrant)

 

TO:     BIO-Key International, Inc.

 

1.     The undersigned Holder of the attached Warrant hereby elects to exercise its purchase right under such Warrant to purchase shares of Common Stock of BIO-Key International, Inc., a Delaware corporation (the “Company”), as follows (check one or more, as applicable):

 

	 	
			☐

				
			to exercise the Warrant to purchase __________ shares of Common Stock and to pay the Aggregate Exercise Price therefor by wire transfer of United States funds to the account of the Company, which transfer has been made prior to or as of the date of delivery of this Form of Subscription pursuant to the instructions of the Company;

			
	 	 	 
	 	 	and/or

 

	 	
			☐

				
			to exercise the Warrant with respect to ____________ shares of Common Stock pursuant to the net exercise provisions specified in Section 2.3 of the Warrant.

			

 

2.     In exercising this Warrant, the undersigned Holder hereby confirms and acknowledges that the shares of Common Stock are being acquired solely for the account of the undersigned and not as a nominee for any other party, and for investment, and that the undersigned shall 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 or any state securities laws. The undersigned hereby further confirms and acknowledges that it is an “accredited investor”, as that term is defined under the Securities Act.

 

3.     Please issue a stock certificate or certificates representing the appropriate number of shares of Common Stock in the name of the undersigned or in such other name(s) as is specified below:

 

	 	Name:	                                                         
	 	 	 
	 	Address:	                                                         
	 	 	                                                         
	 	 	                                                         
	 	TIN:	                                                         

 

 

 

	 	 	Dated:                                                    
	
			(Signature must conform exactly to name of Holder as specified on the face of the Warrant)

				 	
			 

			

 

 

 

 

FORM OF ASSIGNMENT

(To be signed only on transfer of Warrant)

 

 

For value received, the undersigned hereby sells, assigns, and transfers unto ________________ the right represented by the within Warrant to purchase              shares of Common Stock of BIO-Key International, Inc., a Delaware corporation, to which the within Warrant relates, and appoints _________________ attorney to transfer such right on the books of BIO-Key International, Inc., with full power of substitution in the premises.

 

	 	 	[insert name of Holder]	 
	 	 	 	 
	 	 	 	 
	 	 	 	 	 	 
	Dated:                                            	 	By:	 	 
	 	 	 	 	 	 
	 	 	Title:	 	 
	 	 	 	 	 
	 	 	[insert address of Holder]	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	Signed in the presence of:Exhibit 10.1

 

Loan Number _____________

FOURTH AMENDMENT TO CREDIT AGREEMENT

 

THIS FOURTH AMENDMENT
TO CREDIT AGREEMENT (this “Amendment”), dated as of May 1, 2019, is entered into by and between BIOANALYTICAL
SYSTEMS, INC., an Indiana corporation (“Borrower”), and FIRST INTERNET BANK OF INDIANA, an Indiana state
bank (“Bank”).

 

WITNESSETH THAT:

 

WHEREAS, Borrower
and Bank entered into certain loan documents, including but not limited to that certain Credit Agreement dated June 23, 2017, as
amended by that certain First Amendment to Credit Agreement dated July 2, 2018, as further amended by that Second Amendment to
Credit Agreement dated September 6, 2018, and as further amended by that Third Amendment to Credit Agreement dated September 28,
2018 (the “Loan Agreement”); and

 

WHEREAS, Borrower
has applied to Bank for modifications to the Loan Agreement and existing credit facilities, and for extension of an additional
term loan in the principal amount of One Million Two Hundred Seventy Thousand Six Hundred Forty-Six and 10/100 Dollars ($1,270,646.10),
and for extension of an additional capex line of credit in the principal amount of One Million One Hundred Thousand and No/100
Dollars ($1,100,000.00); and

 

WHEREAS, Bank
is willing to make such modifications to the Loan Agreement and extend such additional term loan and line of credit on the terms
and conditions stated herein.

 

NOW, THEREFORE,
in consideration of these premises and the undertakings of the parties hereto, Borrower and Bank hereby agree as follows:

 

A.           Effect
of Amendment. This Amendment shall not change, modify, amend or revise the terms, conditions and provisions of the Loan
Agreement, the terms and provisions of which are incorporated herein by reference, except as expressly provided herein and agreed
upon by the parties hereto. This Amendment is not intended to be nor shall it constitute a novation or accord and satisfaction
of the outstanding instruments by and between the parties hereto. Borrower and Bank agree that, except as expressly provided herein,
all terms and conditions of the Loan Agreement shall remain and continue in full force and effect. Borrower acknowledges and agrees
that the indebtedness under the Loan Agreement remains outstanding and is not extinguished, paid or retired by this Amendment,
or any other agreements between the parties hereto prior to the date hereof, and that Borrower is and continues to be fully liable
for all obligations to Bank contemplated by or arising out of the Loan Agreement. Except as expressly provided otherwise by this
Amendment, the credit facilities contemplated by this Amendment shall be made according to and pursuant to all conditions, covenants,
representations and warranties contained in the Loan Agreement, as amended hereby.

 

B.           Definitions.
Terms defined in the Loan Agreement which are used herein shall have the same meaning as set forth in the Loan Agreement unless
otherwise specified herein.

 

C.           Additional
Obligations of Borrower. In addition to the fees stated in the Loan Agreement, Borrower shall also pay: (i) all reasonable
costs and expenses incidental to this Amendment, including, but not limited to, reasonable fees and out-of-pocket expenses of Bank’s
counsel; and (ii) a non-refundable renewal fee in the amount of Twenty-Three Thousand Seven Hundred Eighty and No/100 Dollars ($23,780.00),
which fee shall be due and payable concurrently herewith, and (iii) a non-refundable commitment fee in the amount of Twenty Thousand
Two Hundred Fifty and No/100 Dollars ($20,250.00), which fee shall be due and payable concurrently herewith.

 

     

     

    

 

D.           Reaffirmation
of Representations and Warranties. Borrower hereby reaffirms all representations and warranties contained in Section 3
of the Loan Agreement and within Section 3 of the Loan Agreement, all references to the Loan Agreement shall be deemed to include
this Amendment.

 

E.           Reaffirmation
of Covenants. Borrower hereby reaffirms its duty to comply with the covenants contained in Sections 4 and 5 of the Loan
Agreement, as the same are modified herein.

 

F.           Reaffirmation
of Events of Default and Rights of Bank. Borrower hereby reaffirms the events of default and rights of Bank contained in
Section 6 of the Loan Agreement, as amended by this Amendment.

 

G.           Amendments.

 

(a)          The
following provisions shall be new or amended definitions in Exhibit 1 of the Loan Agreement:

 

“Capital Expenditures” means all expenditures
which, in accordance with GAAP, would be classified as capital expenditures.

 

“Eligible Account”
means an Account (as defined in the Uniform Commercial Code) owing to the Borrower or any Entity Guarantor (exclusive of any Account
owing to an Affiliate that is not an Entity Guarantor) from an Account Debtor which meets each of the following requirements:

 

(a)          it
arises from the sale or lease of goods or the rendering of services which have been earned or billed in accordance with signed
contracts by the Borrower or any Entity Guarantor; and if it arises from the sale or lease of goods, (i) such goods comply
with such Account Debtor’s specifications (if any) and have been delivered to such Account Debtor and (ii) the Borrower
or any Entity Guarantor has possession of, or if requested by the Bank has delivered to the Lender, delivery receipts evidencing
such delivery;

 

(b)          it
(i) is subject to a perfected, first priority Lien in favor of the Bank and (ii) is not subject to any other assignment, claim
or Lien;

 

(c)          it
is a valid, legally enforceable and unconditional obligation of the Account Debtor with respect thereto, and is not subject to
the fulfillment of any condition whatsoever or any counterclaim, setoff, reduction (collectively, “contra accounts”)
or any credit, allowance, discount, rebate or adjustment by the Account Debtor with respect thereto, or to any claim by such Account
Debtor denying liability thereunder in whole or in part and the Account Debtor has not refused to accept and/or has not returned
or offered to return any of the goods or services which are the subject of such Account;

 

(d)          there
is no bankruptcy, insolvency or liquidation proceeding pending by or against the Account Debtor with respect thereto;

 

(e)          the
Account Debtor with respect thereto is a resident or citizen of, and is located within, the United States, unless the sale of goods
or services giving rise to such Account is on letter of credit, banker’s acceptance or other credit support terms reasonably
satisfactory to the Bank;

 

(f)          it
is not an Account arising from a “sale on approval,” “sale or return,” “consignment” or “bill
and hold” or subject to any other repurchase or return agreement;

 

(g)          it
is not an Account with respect to which possession and/or control of the goods sold giving rise thereto is held, maintained or
retained by the Borrower or any Entity Guarantor (or by any agent or custodian of the Borrower or any Entity Guarantor) for the
account of or subject to further and/or future direction from the Account Debtor with respect thereto;

 

    	2

     

    

 

(h)          it
arises in the ordinary course of business of the Borrower or any Entity Guarantor;

 

(i)          if
the Account Debtor is the United States or any department, agency or instrumentality thereof, the Borrower or any Entity Guarantor
has assigned its right to payment of such Account to the Bank pursuant to the Assignment of Claims Act of 1940, and evidence (satisfactory
to the Bank) of such assignment has been delivered to the Bank;

 

(j)          if
the Borrower or any Entity Guarantor maintains a credit limit for an Account Debtor, the aggregate dollar amount of Accounts due
from such Account Debtor, including such Account, does not exceed such credit limit;

 

(k)          if
the Account is evidenced by chattel paper or an instrument, the originals of such chattel paper or instrument shall have been endorsed
and/or assigned and delivered to the Bank or, in the case of electronic chattel paper, shall be in the control of the Bank, in
each case in a manner satisfactory to the Bank;

 

(l)          such
Account is evidenced by an invoice delivered to the related Account Debtor and is not more than (i) ninety (90) days past the original
invoice date thereof, according to the original terms of sale;

 

(m)          it
is not an Account with respect to an Account Debtor that is located in any jurisdiction which has adopted a statute or other requirement
with respect to which any Person that obtains business from within such jurisdiction must file a notice of business activities
report or make any other required filings in a timely manner in order to enforce its claims in such jurisdiction’s courts
unless (i) such notice of business activities report has been duly and timely filed or the Borrower or any Entity Guarantor is
exempt from filing such report and has provided the Bank with satisfactory evidence of such exemption or (ii) the failure to make
such filings may be cured retroactively by the Borrower or any Entity Guarantor for a nominal fee;

 

(n)          the
Account Debtor with respect thereto is not an Affiliate of the Borrower or any Entity Guarantor; and

 

(o)          it
is not owed by an Account Debtor with respect to which 15% or more of the aggregate amount of outstanding Accounts owed at such
time by such Account Debtor is classified as ineligible under clause (l) of this definition.

 

An Account which is at any time
an Eligible Account, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be an Eligible
Account. Further, with respect to any Account, if the Bank at any time hereafter determines in its reasonable discretion that the
prospect of payment or performance by the Account Debtor with respect thereto is materially impaired for any reason whatsoever,
such Account after written notice of such determination is given to the Borrower shall cease to be an Eligible Account.

 

“Entity Guarantors”
means BAS Evansville, Inc., Seventh Wave Indiana and Oriole.

 

“Fourth Amendment”
means that certain Fourth Amendment to Credit Agreement executed by and between Borrower and Bank dated as of May 1, 2019.

 

“Loans”
means the Term Loan, Term Loan #2, Term Loan #3, Capex Line of Credit, Construction Loan, Equipment Loan, and the Revolving Loans.

 

    	3

     

    

 

“Notes”
means the Term Note, Term Note #2, Term Note #3, Capex Line of Credit Note, Construction Loan Note, Equipment Loan Note and Revolving
Note, together with any renewals, amendments, restatements and extensions thereof.

 

“Oriole”
means Oriole Toxicology Services LLC, an Indiana limited liability company.

 

“Run-rate Cost-Savings
& Synergies” means the amount of "run rate" cost savings, operating expense reductions and synergies related
to the acquisition of certain assets of Smithers Avanza Toxicology Services LLC projected by
the Borrower in good faith to result from actions taken or expected to be taken within 12 months after the Closing Date. 
The "run rate" cost savings, operating expense reductions and synergies shall be:

(a) calculated on a Pro Forma basis
as though such "run rate" cost savings, operating expense reductions and synergies had been realized on the first day
of the period for which Consolidated EBITDA is being determined), net of the amount of actual benefits realized during such period.
 

(b) reasonably identifiable and factually
supportable (in the good faith determination of the Borrower); and

(c) in any Test Period equal to the
lesser of $560,000 or 15% of consolidated trailing 12 month period EBITDA, calculated before giving effect thereto, for such test
period determined on a pro forma basis.

 

“Security Agreement”
means, individually or collectively as the context requires, (i) the Security Agreement and Perfection Certificate dated June 23,
2017 between Borrower and Bank, securing the Obligations, (ii) the Security Agreement and Perfection Certificate dated June 23,
2017 between Bank and BAS Evansville, Inc., securing its Guaranty of the Obligations, (iii) the Amended and Restated Security Agreement
and Perfection Certificate dated September 6, 2018 between Bank and Seventh Wave Indiana, securing its Guaranty of the Obligations,
(iv) Security Agreement and Perfection Certificate dated May 1, 2019 between Bank and Oriole, securing its Guaranty of the Obligations,
(v) the Grant of Security Interest in Trademarks dated June 23, 2017 executed by Borrower, securing the Obligations, and (vi) the
Grant of Security Interest in Copyrights dated June 23, 2017 executed by Borrower, securing the Obligations.

 

“Unfunded Capital Expenditures” means,
for any period, the amount equal to all expenditures (by the expenditure of cash or fundings under working capital revolving debt)
made by the Company and its Subsidiaries during such period in respect of the purchase or other acquisition or improvement of any
fixed or capital asset and any other amounts so expended or funded which would, in accordance with GAAP, be set forth as capital
expenditures on the consolidated statement of cash flows of the Company and its Subsidiaries for such period.  

 

(b)           Section
2.1 of the Loan Agreement is hereby deleted and replaced with the following:

 

2.1.          Revolving
Credit Loans. (a) Subject to the terms and conditions of this Agreement, Bank hereby extends or continues to extend to Borrower
a revolving line of credit facility (the “Facility”) under which Bank shall make loans (the “Revolving Loans”)
to Borrower at Borrower’s request from time to time during the term of this Agreement in an aggregate amount not to exceed
Three Million Five Hundred Thousand and No/100 Dollars ($3,500,000.00). Borrower may, from time to time, borrow, repay (without
penalty or charge), and reborrow under the Facility, provided that the principal amount of all Revolving Loans outstanding at any
one time under the Facility will not exceed the lesser of (i) Three Million Five Hundred Thousand and No/100 Dollars ($3,500,000.00)
and (ii) the Borrowing Base (the “Revolving Loan Availability”). If the amount of Revolving Loans outstanding at any
time under the Facility exceeds the Revolving Loan Availability, Borrower will, upon request, immediately pay the amount of such
excess to Bank in cash. In the event Borrower fails to pay such excess following any such request, Bank may, in its discretion,
setoff such amount against Borrower’s accounts at Bank, if any, and, if such excess is not satisfied by such setoff, declare
an Event of Default

 

    	4

     

    

 

(b)          Borrower
may request a Revolving Loan by written or telephone notice to Bank. Bank will make Revolving Loans by crediting the amount thereof
to Borrower’s account at Bank, if any, or as otherwise directed by Borrower and approved by Bank. Loan proceeds will be used
for general business purposes.

 

(c)          On
June 23, 2017, Borrower issued and delivered to Bank a Revolving Note in the original principal amount of Two Million and No/100
Dollars ($2,000,000.00) (the “Original Note”), which Original Note has been previously amended and is being further
amended and restated as of May 1, 2019 in the maximum principal amount of Three Million Five Hundred Thousand and No/100 Dollars
($3,500,000.00) in the form attached hereto on Exhibit 2.1B (the “Revolving Note”), bearing interest
and repayable as specified in the Revolving Note.

 

(d)          The
term of the Facility will expire on June 30, 2020, and the Revolving Note will become payable in full on that date.

 

(c)           Section
2.7 is hereby added to the Loan Agreement as follows:

 

2.7           Term
Loan #3. (a) Subject to the terms and conditions hereof, Bank shall make to Borrower a term loan (the “Term Loan #3”)
on May 1, 2019 in an aggregate amount of One Million Two Hundred Seventy Thousand Six Hundred Forty-Six and 10/100 Dollars ($1,270,646.10).
The unpaid principal balance, together with all accrued but unpaid interest and reimbursable expenses, shall be payable in accordance
with the terms of the Term Loan #3 as evidenced by a Term Loan Note (the “Term Note #3”) to be issued by Borrower to
Bank dated May 1, 2019 with a final maturity date of November 1, 2025, and otherwise in substantially the form of Exhibit
2.4.

 

(b)          The
proceeds of the Term Loan #3 will be used to support the acquisition of the assets of Smithers Avanza Toxicology Services LLC and
for general business purposes.

 

(c)          Borrower
shall have the right to prepay the principal of the Term Loan #3 in accordance with the provisions and prepayment penalties set
forth in the Term Note #3. Early principal payments will not, unless agreed to by Bank in writing, relieve Borrower of Borrower’s
obligation to continue to make regular monthly payments required by the Term Note #3. Rather, early payments will reduce the principal
balance due and may result in Borrower’s making fewer payments. Borrower agrees not to send Bank payments marked “paid
in full”, “without recourse” or similar language. If Borrower sends such a payment, Bank may accept it without
losing any of Bank’s rights under the Term Note #3, and Borrower will remain obligated to pay any further amount owed to
Bank.

 

(d)           Section
2.8 is hereby added to the Loan Agreement as follows:

 

2.8           Capex
Line of Credit. (a) Subject to the terms and conditions hereof, Bank shall lend to Borrower an equipment draw loan (the “Capex
Line of Credit”) on May 1, 2019 in an aggregate amount of One Million One Hundred Thousand and No/100 Dollars ($1,100,000.00).
So long as no Event of Default has occurred, Borrower may obtain advances under the Equipment Loan until June 30, 2020, at which
time Borrower’s right to obtain advances under the Capex Line of Credit shall terminate and the unpaid principal balance,
together with all accrued but unpaid interest and reimbursable expenses, shall be payable in accordance with the terms of that
certain Capex Line of Credit Note issued by Borrower to Bank dated May 1, 2019, as amended, modified or restated from time to time
(the “Capex Line of Credit Note”). The term of the Capex Line of Credit shall expire on June 30, 2020 (the “Capex
Line of Credit Maturity Date”), unless the Capex Line of Credit is sooner paid pursuant to the terms hereof.

 

    	5

     

    

 

(b)          The
proceeds of the Capex Line of Credit will be used to fund equipment needs of the Borrower.

 

(c)          Borrower
shall have the right to prepay the principal of the Capex Line of Credit in accordance with the provisions and prepayment penalties
set forth in the Capex Line of Credit Note. Early principal payments will not, unless agreed to by Bank in writing, relieve Borrower
of Borrower’s obligation to continue to make regular monthly payments required by the Capex Line of Credit Note. Rather,
early payments will reduce the principal balance due and may result in Borrower’s making fewer payments. Borrower agrees
not to send Bank payments marked “paid in full”, “without recourse” or similar language. If Borrower sends
such a payment, Bank may accept it without losing any of Bank’s rights under the Capex Line of Credit Note, and Borrower
will remain obligated to pay any further amount owed to Bank.

 

(e)           Section
5.10 of the Loan Agreement is hereby deleted and replaced with the following:

 

(a) Borrower shall not permit
the Minimum Debt Service Coverage Ratio, tested quarterly and measured on a trailing twelve (12) month basis, to be less than the
following each quarter ending:

 

(i)          1.25
to 1.0 at March 31, 2019;

(ii)         1.25
to 1.0 at June 30, 2019;

(iii)        1.15
to 1.0 at September 30, 2019;

(iv)        1.15
to 1.0 at December 31, 2019; 

(v)         1.20
to 1.0 at March 31, 2020;

(vi)        1.25
to 1.0 at June 30, 2020 and each quarter thereafter.

 

The “Minimum
Debt Service Coverage Ratio” means, for any computation period, the ratio of: (a) the sum of Borrower’s (i) consolidated
pre-tax net income for such period plus (ii) consolidated interest expense for such period, plus (ii) consolidated amortization
expense during such period, plus (iv) consolidated depreciation expense during such period, plus (v) consolidated stock compensation
expense during such period, plus (vi) non-recurring transaction costs of up to $525,000 related to the acquisition of Seventh Wave
Laboratories, LLC and/or expansion of Premises #2 , as approved by Bank through September 30, 2019 plus (vii) non-recurring transaction
costs of up to $520,000 related to the acquisition of Smithers Avanza Toxicology Services LLC, incurred through December 31, 2019,
as approved by Bank through June 30, 2020, plus (viii) run-rate cost savings and synergies in the quarters ending June 30, 2019
through March 31, 2020 related to the acquisition of Smithers Avanza Toxicology Services LLC (the sum of items (i) through (viii)
“EBITDA”) less (iv) distributions/dividends paid by Borrower in cash during such period, less (v) consolidated unfunded
capital expenditure expenses during such period, excluding unfunded capital expenditures related to building expansion costs of
up to $400,000 incurred during the fiscal year ended September 30, 2018 and fiscal year ended September 30, 2019 divided by (b)
the sum of Borrower’s (i) scheduled or required principal payments, including such payments on account of debt in favor of
the Bank, subordinated debt and capital leases, during such period, plus (ii) consolidated cash interest payments made during such
period.

 

    	6

     

    

 

(b) Beginning
March 31, 2019, the Cash Flow Leverage Ratio, tested at the end of each fiscal quarter ending as follows:

 

(i)          Suspended
at March 31, 2019;

(ii)         Suspended
at June 30, 2019;

(iii)        Suspended
at September 30, 2019;

(iv)        Suspended
at December 31, 2019;

(v)         March
31, 2020 not to exceed 5.00 to 1.00x;

(vi)        June
30, 2020 and thereafter not to exceed 4.50x to 1.00x.

 

The “Cash
Flow Coverage Ratio” means, for any computation period, the ratio of: (a) Borrower’s Total Funded Debt as of the last
day of such period, divided by (b) Borrower’s EBITDA calculated on a trailing twelve (12) month basis. For purposes of this
calculation, “Total Funded Debt “means, as of any date of determination, the aggregate principal amount of indebtedness
of the Borrower outstanding on such date, determined in accordance with GAAP, consisting of (i) indebtedness for borrowed money,
(ii) unreimbursed obligations in respect of drawn letters of credit, (iii) obligations in respect of capitalized leases, (iv) obligations
in respect of purchase money debt, and (v) debt obligations evidenced by bonds, debentures, promissory notes, loan agreements or
similar instruments.

 

(f)           Section
4.12 is hereby added to the Agreement as follows:

 

4.12         Life
Insurance. Borrower shall, not later than August 1, 2019, obtain a life insurance policy on the life of Robert Leasure, Jr.
in an amount not less than Two Million and No/100 Dollars ($2,000,000.00), provide Bank with an assignment of such life insurance
policy as collateral for all obligations of Borrower now existing or hereafter arising in favor of Bank, and maintain such life
insurance policy while any Obligations of the Borrower exist under this Agreement.

 

H.           Necessary
Documents. The obligation of Bank to make the modifications to the Loan Agreement under this Amendment is subject to the
receipt by Bank on or before the date hereof of all of the following, each dated as of the date hereof or another date acceptable
to Bank and each to be in the form and substance approved by Bank on the date on which this Amendment is executed and delivered
by Borrower and Bank:

 

(1)         This
Amendment executed by Borrower.

 

(2)         The
Amended and Restated Revolving Note executed by Borrower.

 

(3)         Term
Loan Note (Term Note #3) executed by Borrower.

 

(4)         Capex
Line of Credit Note executed by Borrower.

 

(5)         Amended
and Restated Equipment Loan Note executed by Borrower.

 

(6)         Amended
and Restated Construction Loan Note executed by Borrower.

 

(7)         Amended
and Restated Guaranty Agreement executed by BAS Evansville, Inc.

 

    	7

     

    

 

(8)         Amended
and Restated Guaranty Agreement executed by Seventh Wave Laboratories LLC.

 

(9)         Guaranty
Agreement executed by Oriole Toxicology Services LLC.

 

(10)        Security
Agreement executed by Oriole Toxicology Services LLC.

 

(11)        Third
Modification of Mortgage (Premises #1).

 

(12)        First
Modification of Amended and Restated Mortgage (Premises #2).

 

(13)        Fourth
Amended and Restated Environmental Indemnity Agreement executed by Borrower, BAS Evansville, Inc., Seventh Wave Indiana, and Oriole
Toxicology Services LLC.

 

(14)        Subordination
Agreement executed by Borrower, Oriole Toxicology Services LLC, Bank and Smithers Avanza Toxicology Services LLC.

 

(15)        Guarantor’s
Certificate executed by Seventh Wave Laboratories LLC.

 

(16)        Guarantor’s
Certificate executed by BAS Evansville, Inc.

 

(17)        Guarantor’s
Certificate executed by Oriole Toxicology Services LLC.

 

(18)        Borrower’s
Certificate executed by Borrower.

 

(19)        Patriot
Act Certification executed by Oriole Toxicology Services LLC.

 

(20)        Such
other documents, information, opinions, etc., as Bank may reasonably request.

 

I.           Representations
and Warranties of Borrower. Borrower hereby represents and warrants, in addition to any other representations and warranties
contained herein, in the Loan Agreement, the Loan Documents (as defined in the Loan Agreement) or any other document, writing or
statement delivered or mailed to Bank or its agent by Borrower, as follows:

 

(1)         This
Amendment constitutes a legal, valid and binding obligation of Borrower enforceable in accordance with its terms. Borrower has
taken all necessary and appropriate corporate action for the approval of this Amendment and the authorization of the execution,
delivery and performance thereof.

 

(2)         There
is no Event of Default under the Loan Agreement, this Amendment or the Loan Documents.

 

(3)         Borrower
hereby specifically confirms and ratifies its obligations, waivers and consents under each of the Loan Documents.

 

(4)         Except
as specifically amended herein, all representations, warranties and other assertions of fact contained in the Loan Agreement and
the Loan Documents continue to be true, accurate and complete.

 

(5)         Except
as provided in writing to Bank prior to the date hereof, there have been no changes to the Articles of Incorporation, By-Laws,
the identities of the named executive officers of Borrower, or the composition of the board of directors of Borrower since execution
of the Loan Agreement.

 

    	8

     

    

 

(6)         Borrower
acknowledges that the definition “Loan Documents” shall include this Amendment and all the documents executed contemporaneously
herewith.

 

J.           Consents.
(a)          Upon Bank’s receipt of the fully executed Subordination Agreement,
Bank consents to the Borrower guarantying the obligations of Oriole Toxicology Services LLC, as maker under that certain Unsecured
Subordinated Promissory Note payable to Smithers Avanza Toxicology Services LLC, in the maximum principal amount of $810,000.00.

 

(b)          Bank
hereby consents to Borrower guarantying the lease for the primary space to be occupied by Oriole Toxicology Services LLC, pursuant
to a certain lease agreement originally entered into between Avanza Development Services, LLC and Rickman Firstfield Associates
dated December 30, 2009 (as amended from time to time, the “Avanza Lease”), which Avanza Lease has been or will be
assigned to Oriole Toxicology Services LLC, as the new lessee, and further amended on or around May 1, 2019.

 

K.          Governing
Law. This Amendment has been executed and delivered and is intended to be performed in the State of Indiana and shall be
governed, construed and enforced in all respects in accordance with the substantive laws of the State of Indiana.

 

L.           Headings.
The section headings used in this Amendment are for convenience only and shall not be read or construed as limiting the substance
or generality of this Amendment.

 

M.          Counterparts.
This Amendment may be signed in one or more counterparts, each of which shall be considered an original, with the same effect as
if the signatures were upon the same instrument.

 

N.           Modification.
This Amendment may be amended, modified, renewed or extended only by written instrument executed in the manner of its original
execution.

 

O.           Waiver
of Certain Rights. Borrower waives acceptance or notice of acceptance hereof and agrees that the Loan Agreement, this Amendment,
and all of the other Loan Documents shall be fully valid, binding, effective and enforceable as of the date hereof, even though
this Amendment and any one or more of the other Loan Documents which require the signature of Bank, may be executed by an on behalf
of Bank on other than the date hereof.

 

P.           Waiver
of Defenses and Claims. In consideration of the financial accommodations provided to Borrower by Bank as contemplated by
this Amendment, Borrower hereby waives, releases and forever discharges Bank from and against any and all rights, claims or causes
of action against Bank arising under Bank’s actions or inactions with respect to the Loan Documents or any security interest,
lien or collateral in connection therewith as well as any and all rights of set off, defenses, claims, causes of action and any
other bar to the enforcement of the Loan Documents which exist as of the date hereof.

 

Q.           Force
and Effect. Except as otherwise modified herein, all other terms and conditions of the Loan Agreement remain in full force
and effect.

 

    	9

     

    

 

Loan Number _____________

 

[SIGNATURE PAGE –
FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

IN WITNESS WHEREOF,
the parties hereto have caused this Fourth Amendment to Credit Agreement to be executed by their duly authorized officers as of
the day and year first above written.

 

	 	Bioanalytical Systems, Inc.
	 	 	 
	 	By:	/s/ Robert Leasure, Jr.
	 	 	Robert Leasure, Jr., President and Chief Executive Officer
	 	 	 
	 	FIRST INTERNET BANK OF INDIANA
	 	 	 
	 	By:	/s/ Katrina McWilliams
	 	 	Katrina McWilliams, Vice President

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