AMENDMENT NO. 1 TO
NOTE PURCHASE AGREEMENT
AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT dated October 31, 2003 (the "Amendment")
by and between Bio-key International, Inc., a Minnesota corporation (the "Company"), and The Shaar Fund,
Ltd. (the "Investor").
WHEREAS, the Company and Investor (collectively, the "Parties") are parties to that certain Note Purchase
Agreement dated January 27, 2003 (the "Note Purchase Agreement"); and
WHEREAS, the Parties have agreed to amend the Note Purchase Agreement to, among other things, provide
additional funding to the Company.
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements set
forth in this Amendment and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the Parties hereby agree as follows:
1. Amendments to Note Purchase Agreement.
(a) Section 1.2(a) of the Note Purchase Agreement is hereby amended to include the following additional
"Subject to the terms and conditions set forth herein, the Investor shall loan up to Two Million Five Hundred
Thousand ($2,500,000) Dollars of additional funding (the "Additional Funding") to the Company. Investor shall
provide the Additional Funding to the Company by advancing to the Company, subject to the conditions set forth
in Sections 1(b) and 1(c) of the Note Purchase Agreement, $300,000 on November 1, 2003 and $200,000 on
the first day of each month commencing December 1, 2003 and terminating October 1, 2004."
(b) Section 2(a) of the Note Purchase Agreement is hereby amended to include the following additional language:
"The Additional Funding shall be evidenced by a secured convertible promissory note (the "Additional Funding
Note") payable to the order of the Investor or its assignee, in substantially the form attached to this Amendment
(c) Section 7 of the Note Purchase Agreement is hereby amended to include the f