This ESCROW AGREEMENT (this "AGREEMENT") made as of May 31, 2005, by and among BIO-KEY
INTERNATIONAL, INC., (the "ISSUER"), JESUP & LAMONT SECURITIES CORP. (the "PLACEMENT
AGENT"), whose addresses and other information appear below, and Thelen Reid & Priest LLP, 875 Third
Avenue, New York, New York 10022 (the "ESCROW AGENT").
WHEREAS, the Issuer proposes to sell $2.5-5 million (the "OFFERING AMOUNT") of the Issuer's
subordinated convertible debentures and warrants to purchase common stock of the Issuer (the "SECURITIES")
to investors (the subscribers of the Securities pursuant to this offering are hereinafter referred to as
"INVESTORS"), in a private offering to accredited investors (the "OFFERING");
WHEREAS, the Issuer and the Placement Agent propose to establish an escrow account (the "ESCROW
ACCOUNT"), to which subscription monies which are received by the Escrow Agent from the Placement Agent
in connection with the Offering are to be credited, and the Escrow Agent is willing to establish the Escrow
Account on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to
be legally bound hereby, the parties hereto hereby agree as follows:
2. ESTABLISHMENT OF THE BANK ACCOUNT.
2.1 The Escrow Agent shall use its IOLA account which is a non-interest-bearing escrow account at the branch
of a bank selected by the Escrow Agent, (heretofore defined as the "BANK ACCOUNT"). The purpose of the
Bank Account is for (a) the deposit of all subscription monies (checks or wire transfers) which are received by
the Placement Agent from prospective purchasers of the Securities and are delivered by the Placement Agent to
the Escrow Agent,
(b) the holding of amounts of subscription monies which are collected through the banking system and (c) the
disbursement of collected funds, all as described herein.
3. DEPOSITS TO THE BANK ACCOUNT.
3.1 The Plac