SECURED CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE NOTE MAY NOT BE OFFERED, RESOLD,
PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO
REGISTRATION THEREUNDER OR THE AVAILABILITY OF AN EXEMPTION THEREFROM.
No. N- Up to US $ 2,500,000
BIO-KEY INTERNATIONAL, INC.
FOR VALUE RECEIVED, BIO-KEY INTERNATIONAL, INC., a Minnesota corporation (the "Company"),
promises to pay to THE SHAAR FUND LTD., the registered holder hereof (the "Holder"), the principal sum of
Two Million Five Hundred Thousand and 00/100 ($2,500,000) Dollars, or such lesser amount as may have been
advanced from time to time after the date hereof under that certain Note Purchase Agreement dated January 27,
2003, as amended October __, 2003, by and between the Company and Investor (the "Agreement"), and to pay
interest in arrears at the rate of 7% per annum on the outstanding principal balance due hereunder. Accrual of
interest shall commence on the first such business day to occur after the date hereof and shall continue until
payment in full of the principal sum has been made or duly provided for on a 360 day basis. The principal of, and
interest on, this Note are payable in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts, at the address last appearing on the Note
Register of the Company as designated in writing by the Holder from time to time. The Company will pay the
principal of and interest upon this Note, less any amounts required by law to be deducted, to the registered
holder of this Note to such date and addressed to such holder at the last address appearing on the Note Register.
The forwarding of such check shall constitute a payment of principal and interest hereunder and shall satisfy and
discharge the liability for princ