SECURITIES AND EXCHANGE COMMISSION
Washington, DC
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 13, 1999
Fingermatrix, Inc.
(Exact name of Registrant as Specified in its Charter)
New York 0-9940 13-2854686
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
249 North Saw Mill River Road, Elmsford, New York 10523
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (914) 592-5930
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Item 5. Other Events
On September 13, 1999, the Registrant issued to GIL Security Systems,
Inc. ("GIL") 14,134 shares of its Series A 2% Voting Convertible Redeemable
Preferred Stock ("Series A Preferred Stock") in payment of the purchase price
for 1,000,000 shares of the common stock of GIL pursuant to a Stock Purchase
Agreement between the Registrant and GIL entered into on such date. The
Registrant's Series A Preferred Stock issued to GIL is convertible into
10,498,735 shares of the Registrant's common stock, at a conversion rate of
742.8 shares of common stock for each share of Series A Preferred Stock, subject
to and conditioned upon a recapitalization of the Registrant (the
"Recapitalization") pursuant to which the Registrant's authorized capitalization
will be increased to provide for, among other things, the reservation of a
sufficient number of shares of the Registrant's common stock to accommodate any
such conversion. The 10,498,735 shares of the Registrant's common stock issuable
to GIL upon such conversion will represent approximately 10% of the total issued
and outstanding shares of the Registrant's common stock, on a fully diluted
basis. The Registrant granted "piggy-back" registration rights to GIL with
respect to any shares of the Registrant's common stock that are issued to GIL
upon conversion of the Series A Preferred Stock until such time as any of such
shares become eligible for public sale under Rule 144(k) of the Securities Act
of 1933, as amended (the "Securities Act").
Trinity Group, Inc., Carol Schiller and Grazyna Wnuk, holders of 5% or
more of the Registrant's outstanding common stock, agreed not to publicly sell
the shares of the Registrant's common stock owned by them unless and to the
extent that GIL publicly sells any of the shares of the Registrant's common
stock acquired by it upon conversion of the Series A Preferred Stock unless 50%
or more of such shares are registered under the Securities Act, or such shares
become eligible for public sale under Rule 144(k) under the Securities Act.
On September 13, 1999, Secured Portal Systems, Inc. ("SPS"), a majority
owned subsidiary of the Registrant, entered into an Exclusive Distribution
Agreement with GIL (the "Distribution Agreement") pursuant to which SPS was
engaged as the exclusive distributor for a certain secured entrance system
developed, manufactured and marketed by GIL (the "Security Systems") for a term
commencing as of September 1, 1999 and expiring on August 31, 2004. SPS obtained
the exclusive right to distribute the Security Systems to certain categories of
customers defined in the Distribution Agreement, including certain agencies of
the Federal Government, department stores and retail stores located in the
United States, the Government of Israel, NCR Corp., and Sun Microsystems.
A certain percentage of the shares of Series A Preferred Stock issued
to GIL under the Purchase Agreement are subject to redemption by the Registrant
in the event that the Distribution Agreement is terminated upon the written
consent of SPS and GIL prior to the expiration of the term of such Agreement.
The number of shares of Series A Preferred Stock which is subject to such
redemption will be determined by reference to the number of months elapsed
during the term of the Distribution Agreement at the time, if any, that the
Distribution Agreement is
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terminated. GIL has a similar redemption right with respect to the shares of
GIL's common stock purchased by the Registrant under the Purchase Agreement. The
redemption price payable by the Registrant in such circumstances is $.0001 per
share. In addition, in the event that the Registrant does not complete the
Recapitalization by September 13, 2000, GIL has the right to modify the
distribution rights granted to SPS under the Distribution Agreement from
exclusive to non-exclusive for the remainder of the term of such Agreement.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Form of Exclusive Distribution Agreement dated September
13, 1999 between Secured Portal Systems, Inc. and GIL Security Systems, Inc.
99.2 Form of Stock Purchase Agreement dated September 13, 1999
between the Registrant and GIL Security Systems, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FINGERMATRIX, INC.
By:/S/_______________________________
Date: September 22, 1999 Lewis S. Schiller
Chief Executive Officer
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Exhibit 99.1
EXCLUSIVE DISTRIBUTION AGREEMENT
AGREEMENT made this 13th day of September, 1999 by and between GIL
SECURITY SYSTEMS, INC., a Delaware corporation with offices at 150-38 12th
Avenue, Whitestone, New York 11357 ("GIL") and SECURED PORTAL SYSTEMS, INC., a
Delaware corporation with offices at 249 Saw Mill River Road, Elmsford, New York
10523 ("Distributor").
W I T N E S S E T H :
WHEREAS, GIL is engaged in the manufacture and sale of security
entrance systems for use as a security device by a variety of customers at
airports, federal buildings, court houses, embassies, correctional facilities,
schools, governmental operations, department stores and other retail outlets;
and
WHEREAS, Distributor has been formed to market and distribute the
aforementioned security entrance systems manufactured and marketed by GIL and is
a wholly owned subsidiary of Fingermatrix, Inc. ("Fingermatrix"), a publicly
owned company; and
WHEREAS, Distributor is desirous of obtaining certain exclusive
distribution rights for the aforementioned security entrance systems
manufactured by GIL, and GIL is agreeable to granting such rights to
Distributor, all on and subject to the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby unconditionally acknowledged, the parties hereto do hereby agree as
follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1. "Agreement" shall mean this Exclusive Distribution
Agreement between GIL and Distributor.
1.2. "Customer's Prepared Site" shall mean the area or site of
Distributor's customer in which the Product will be installed, which site has
been prepared by such customer to accommodate the installation of the Product in
accordance with the Product specifications.
1.3. "Designated Shipper" shall have the meaning provided in
Section 4.1 hereof.
1.4. "Events of Default" shall have the meaning provided in
Section 11.1 hereof.
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1.5. "Exclusive License" shall mean that certain exclusive
license agreement dated September 13, 1999 between Alan J. Risi ("Risi") and GIL
pursuant to which Risi exclusively licensed all exclusive world-wide rights in
and to the GIL Intellectual Property for a term commencing on September 13, 1999
and terminating on August 31, 2004.
1.6. "FINX Shares" shall have the meaning provided in Section
9.1 hereof.
1.7. "GIL Intellectual Property" shall mean the GIL Marks, the
GIL Patents and the GIL Technology.
1.8. "GIL Marks" shall mean all copyrights, trademarks and
trade names owned by, licensed to, or under the exclusive control of GIL
relating to the Products, whether registered or unregistered, including, without
limitation, the trademark "GIL 2001 Security Doors".
1.9. "GIL Patents" shall mean all present and future United
States and foreign patents and patent applications exclusively licensed to GIL,
the claims of which cover any of the Products in any way.
1.10. "GIL Shares" shall have the meaning provided in Section
9.1 hereof.
1.11. "GIL Technology" shall mean all processes, methods,
trade secrets, ideas, techniques, information, know-how and other technology
exclusively licensed to GIL relating to the Products in any way.
1.12. "List Price" or "List Prices" shall mean GIL's wholesale
list prices for all Products, including, without limitation, all packing costs,
all costs incurred in producing and making available each such Product to the
Designated Shipper and all costs of the installation of such Products at the
Customer's Prepared Site.
1.13. "Minimum Purchase Obligation" shall have the meaning
provided in Section 5.3 hereof.
1.14. "Most Favored Nations Price" shall have the meaning
provided in Section 5.1 hereof.
1.15. "Product" or "Products" shall mean all security entrance
systems created, developed, manufactured and/or distributed or otherwise sold by
GIL, whether now existing or otherwise developed during the Term hereof,
including all models of the GIL-2001 security door series.
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1.16. "Protected Customers" shall mean the United States
Treasury Department, United States Central Intelligence Agency and all other
United States Government intelligence agencies, United States National Security
Agency, United States Defense Intelligence Agency, United States Department of
the Navy, United States Air Force, United States Army, all United States Federal
Courts and all United States Embassies and, with respect to all of the
foregoing, all present or future agencies, affiliates or subdivisions thereof,
all department stores and retail stores located in the United States (to include
all retail stores located in foreign countries which are part of a retail store
chain which is based in the United States), the Government of Israel (to include
all present and future agencies, affiliates and subdivisions thereof) NCR Corp.
and Sun Microsystems (to include all subsidiaries and affiliates thereof),
including with respect to all of the foregoing customers, all of their
respective facilities, wherever located.
1.17. "Purchase Price" shall have the meaning provided in
Section 5.1 hereof.
1.18. "Stock Purchase Agreement" shall have the meaning
provided in Section 9.1 hereof.
1.19. "Term" shall have the meaning provided in Section 3
hereof.
ARTICLE 2
APPOINTMENT OF DISTRIBUTOR
2.1. GIL hereby grants Distributor, during the Term hereof and
subject to the terms and conditions contained herein, the sole and exclusive
right to sell, market and distribute the Products to Protected Customers and
Distributor hereby accepts such appointment. Distributor shall purchase all
Products solely from GIL. GIL also hereby grants Distributor (and all Protected
Customers to which Distributor sells Products) a use license to the GIL
Intellectual Property for the use and operation of the Products for all periods
during or after the Term hereof that such Products are in use. Reference is made
to Section 5.4 of the Stock Purchase Agreement. In the event that the
Recapitalization (as defined in the Stock Purchase Agreement) is not completed
by September 30, 2000, GIL will have the right, upon notice to Distributor, to
modify the distribution rights granted to Distributor hereunder to non-exclusive
distribution rights. In such event, the exclusive distribution rights granted to
Distributor hereunder will become non-exclusive distribution rights for the
remainder of the Term of this Agreement.
2.2. Distributor shall have the non-exclusive right, during
the Term hereof, to sell Products to customers other than Protected Customers.
In such instances, Distributor shall sell such Products to such customers at the
List Prices and otherwise on payment and other terms determined by GIL. GIL
shall pay Distributor a commission of 15% of the gross sale price for such
Products (exclusive of freight, insurance, and sales taxes, if any) at such time
as GIL receives payment therefor from such customers. Distributor shall also be
entitled to receive such
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commissions with respect to all sales of Products to such customers that are
consummated prior to the termination or expiration of this Agreement but which
are paid for thereafter.
2.3. Distributor shall also have the right to lease Products
to Protected Customers during the Term hereof, provided that Distributor pays
GIL the Purchase Price therefor in accordance with the terms of this Agreement.
In any such instance, GIL shall also receive twenty percent (20%) of all
revenues received from any such lessee of the Products, net of all sales and
similar taxes, if any, and all debt service and other costs relating to any
financing obtained for such lease, such sum to be paid to GIL upon Distributor's
receipt of any such lease revenues.
2.4. GIL will service all products sold or leased to Protected
Customers on terms to be determined by GIL during the Term hereof. Distributor
shall receive twenty percent (20%) of all service revenues received by GIL, net
of (i) all actual direct costs of GIL in providing such service, and (ii) all
sales and similar taxes, if any, such sum to be paid to Distributor upon GIL's
receipt of any such service revenues.
2.5. Distributor hereby recognizes GIL's exclusive worldwide
license rights to the GIL Intellectual Property and agrees that it will not,
during the Term of this Agreement or thereafter, attack the validity or any
rights of GIL in and to the GIL Intellectual Property, including the GIL Marks
or the GIL Patents, or do or suffer to be done any act or thing which might in
any way impair the rights of GIL in and to the GIL Intellectual Property. GIL
shall, at all times during the Term hereof and at its sole cost and expense,
prosecute, maintain and defend all patents, trademarks, trade names and
copyrights relating to the Products, and all pending and future applications
therefor. GIL will notify Distributor of all issued patents, trademarks, trade
names and copyrights and of the status of all pending applications therefor. To
the extent required by applicable law and at no cost to Distributor, Distributor
will cooperate with GIL, upon GIL's reasonable request, with any such pending or
future applications for any of the foregoing intellectual property during the
Term of this Agreement.
ARTICLE 3
THE TERM
The term of this Agreement shall commence as of September 1, 1999 and
expire on August 31, 2004, subject to earlier termination as provided in Article
11 hereof (the "Term"). The Term of this Agreement may be extended for any
additional period that may be mutually agreed upon, in writing, between GIL and
Distributor. If the Term of this Agreement is extended, as aforesaid, any such
additional period shall be deemed a part of the Term hereof.
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ARTICLE 4
PURCHASE AND DELIVERY
4.1. GIL will supply all Products sold by Distributor under
this Agreement. All such Products will conform to the specifications therefor
which are established by GIL (and as may be modified by GIL from time to time).
GIL will provide notice to Distributor of any change or modification in the
specifications of the Products promptly after GIL determines same. The current
specifications for the Products are set forth on Exhibit B hereto. Distributor
shall place written purchase orders for all Products purchased by it under this
Agreement. Each such purchase order shall be delivered to GIL at 150-38 12th
Avenue, Whitestone, New York and shall specify the number of Products being
purchased, the carrier or shipper to be utilized to ship such Products to
Distributor's customers (the "Designated Shipper"), the required delivery and
installation dates, and the installation site. GIL will make the Products
available to the Designated Shipper pursuant to each such purchase order within
the time period specified therein. In no event, however, will GIL be required to
deliver Products pursuant to any such purchase order in less than twenty (20)
weeks after its receipt of any such purchase order, absent GIL's written consent
to an earlier delivery date. GIL will install the Products at the Customer's
Prepared Site within the time period specified in any such purchase order, the
cost of which will be included in the List Price for any of such Products, and
will notify Distributor upon the completion of the installation. Distributor's
customers shall be solely responsible for all costs incurred in connection with
the creation and preparation of the Customer's Prepared Site and will provide
access to GIL at such site sufficient to enable GIL's delivery and installation
of the Products.
4.2. Distributor shall have the right prior to shipment, upon
prior notice to GIL and during normal business hours, to inspect the Products to
be delivered by GIL hereunder, at Distributor's sole expense, at the facilities
where such Products are being produced and at any warehouse at which such
Products are being stored, for purposes of quality control.
4.3. All risk of loss to the Products shall be borne by GIL
until the installation of the Products at Customer's Prepared Site as specified
in Distributor's purchase order. All title and ownership rights to the Products
shall pass to Distributor upon and subject to full payment of the Purchase Price
therefor.
4.4. Distributor shall have the right to sell the Products to
the Protected Customers at any price determined by it, except that any such
price shall not be less than the List Price therefor (or any "Most Favored
Nations Price", if applicable), unless otherwise consented to in writing by GIL
and subject to applicable law.
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ARTICLE 5
PURCHASE PRICE AND PAYMENT TERMS
5.1. Distributor shall pay GIL for each Product purchased
under this Agreement, an amount equal to the List Price for such Products, less
twenty percent (20%) thereof (the "Purchase Price"). Annexed hereto as Exhibit A
is a copy of the List Prices which are effective as of the date of this
Agreement. The Purchase Price shall not include the costs of freight, insurance
and sales taxes, if any, and all other costs necessary to deliver the Products
to the Customer's Prepared Site as specified in Distributor's purchase order,
all of which costs shall be borne solely by Distributor or its customer. GIL
shall promptly notify Distributor, in writing, of any change in the List Prices
during the Term of this Agreement and any such change in List Prices shall only
be effective with respect to purchase orders issued by Distributor sixty (60) or
more days after the date of any such notification. Notwithstanding the foregoing
or any other provision of this Agreement to the contrary, in the event that GIL
sells Products to any customer at a price less than the List Prices, Distributor
shall be entitled to purchase such Products from GIL at any such lower price
(the "Most Favored Nations Price"). Notwithstanding the foregoing, the Most
Favored Nations Price shall only be available to Distributor with respect to
purchase orders placed by Distributor which are identical in quantity and kind
to the purchase order of the customer of GIL which was entitled to a purchase
price less than the List Prices. Upon request of Distributor, GIL will, within
thirty (30) days of such request, promptly notify Distributor of any
circumstance in which it sells Products at purchase prices less than the List
Prices therefor.
5.2. Distributor shall pay the Purchase Price for all Products
purchased from GIL hereunder not later than forty-five (45) days after GIL's
completion of the installation of the Products.
5.3. Distributor will be required to purchase and pay GIL for,
in order to maintain its exclusive distribution rights under this Agreement,
such minimum number of Products during the Term hereof (the "Minimum Purchase
Obligation") as the parties shall mutually agree upon, in writing, within six
(6) months after the date of this Agreement. Until such time as the parties
shall mutually agree upon the Minimum Purchase Obligation of Distributor, there
shall be no such obligation of Distributor hereunder.
5.4. Distributor shall receive a credit against any such
Minimum Purchase Obligation in an amount equal to all Products which are
purchased and paid for in each period that may be mutually agreed upon which
exceed the minimum number of Products to be purchased in or during each such
period, such excess to be applied to any such Minimum Purchase Obligation for
all such successive periods until such excess has been fully utilized for such
purpose.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF GIL AND DISTRIBUTOR
6.1. GIL hereby represents and warrants to Distributor the
following:
(a) GIL is a corporation, duly organized, validly
existing, and in good standing under the laws of the State of Delaware and has
all requisite power and authority to own or lease its properties and carry on
its business as now conducted. GIL is an affiliate of Georal International, Ltd.
("Georal") by virtue of the ownership and/or control of both GIL and Georal by
Risi.
(b) All action on the part of GIL necessary for the
authorization, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, has been properly taken
and obtained by it and this Agreement constitutes a valid and legally binding
obligation of GIL enforceable in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency, reorganization, moratorium, or other
laws affecting generally the enforcement of creditors' rights and by general
principles of equity.
(c) There is no action, suit, proceeding, or
investigation pending or, to the knowledge of GIL, threatened against GIL or
Georal which in any way relates to the validity of this Agreement or the right
of GIL to enter into, to consummate this Agreement and the transactions
contemplated hereby.
(d) The authorization, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any violation or be in conflict with or
constitute, with or without the passage of time or giving of notice, a default
under GIL's Certificate of Incorporation or By-Laws or any instrument, judgment,
order, writ, decree or agreement to which GIL is a party or by which it or
Georal is bound.
(e) No consent, approval, order, authorization,
registration, qualification, license, permit, designation or declaration of, or
other filing with or notification to, any foreign and/or domestic federal, state
or local governmental authority or agency or any third party (including Georal)
is required in connection with the authorization, execution, delivery and
performance of this Agreement or the sale and distribution of the Products as
contemplated hereby.
(f) By virtue of the Exclusive License, GIL is the
sole and exclusive world-wide licensee of all of the GIL Intellectual Property.
To the best of its knowledge, the GIL Intellectual Property does not infringe
upon the rights of any third party. All rights to the GIL Intellectual Property
have been transferred and assigned by Risi to GIL. On the date of the execution
of the Exclusive License, Risi was not insolvent and exclusively licensed such
rights to
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GIL, free and clear of all liens, claims and encumbrances whatsoever. All rights
to modifications, improvements, alterations or new products hereafter created
to, or with respect to, the Products, will be exclusively licensed to GIL under
the Exclusive License and no third party (other than Risi), shall have any
rights thereto. The Exclusive License, a copy of which is annexed hereto as
Exhibit D, is in full force and effect and is not in default by either party
thereto, nor is there any event existing which, with or without the passage of
time, will constitute any default thereunder.
(g) Neither Risi nor GIL has granted any third party
any distribution rights for the Products for any of the Protected Customers.
(h) GIL is authorized to issue 200,000,000 shares of
Common Stock, par value $.0001 per share, and 10,000,000 shares of Preferred
Stock, par value $.0001 per share, of which there are an aggregate of
100,000,000 shares of such Common Stock issued and outstanding on the date
hereof and none of the shares of such Preferred Stock are issued and outstanding
nor has any series thereof been designated. The Preferred Stock of GIL, when
designated, will not be convertible into shares of Common Stock of GIL.
(i) Except as set forth in this Section 6.1 or as
otherwise expressly provided in this Agreement, GIL has made no other
representations or warranties to Distributor in connection with this Agreement
or the transactions contemplated by this Agreement.
6.2. Distributor hereby represents and warrants to GIL the
following:
(a) Distributor is a corporation, duly organized,
validly existing, and in good standing under the laws of Delaware and has all
requisite power and authority to own or lease its properties and carry on its
business as now conducted.
(b) All action on the part of Distributor necessary
for the authorization, execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, has been properly
taken and obtained by it and this Agreement constitutes a valid and legally
binding obligation of Distributor enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other laws affecting generally the enforcement of creditors'
rights and by general principles of equity.
(c) There is no action, suit, proceeding, or
investigation pending or, to the knowledge of Distributor, threatened against
the Distributor which in any way relates to the validity of this Agreement or
the right of Distributor to enter into or to consummate this Agreement and the
transactions contemplated hereby.
(d) The authorization, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any
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violation or be in conflict with or constitute, with or without the passage of
time or giving of notice, a default under Distributor's Certificate of
Incorporation or By-Laws or any instrument, judgment, order, writ, decree or
agreement to which the Distributor is a party.
(e) Fingermatrix is authorized to issue 20,000,000
shares of Common Stock, par value $.01 per share, and 1,000,000 shares of
Preferred Stock, par value $.01 per share, of which there are an aggregate of
20,000,000 shares of such Common Stock, 100,000 shares of Series A 2% Voting
Convertible Redeemable Preferred Stock and 1,000 shares of Series B 4% Preferred
Stock issued and outstanding on the date hereof.
(f) Except as set forth in this Section 6.2 or as
otherwise expressly provided in this Agreement, Distributor has made no other
representations or warranties to GIL in connection with this Agreement or the
transactions contemplated by this Agreement.
ARTICLE 7
BOOKS AND RECORDS AND INSPECTION
Each of GIL and Distributor shall maintain complete and
accurate books of account and records containing all information relating to
purchases and sales of Products and the List Prices thereof. Such books and
records shall be maintained at each of the parties' principal place of business,
or at such other location as each of the parties shall notify the other.
Distributor shall have the right to inspect, examine and copy and otherwise
audit all books and records of GIL with respect to List Prices and the sales
prices charged by GIL to its other customers. GIL shall have the right to
inspect, examine and copy and otherwise audit all books and records of
Distributor with respect to Distributor's sales of Products. Any such inspection
shall be conducted at the expense of the party conducting such inspection.
ARTICLE 8
PRODUCT WARRANTIES
8.1. GIL will warrant the materials and workmanship of the
Products supplied to Distributor for one year from the date of installation of
the Products at the Customer's Prepared Site. The aforementioned Warranty shall
also be made available to all Protected Customers who purchase Products from
Distributor during the Term of this Agreement, such Warranty to be substantially
in the form annexed a Exhibit C.
8.2. GIL will maintain in force and effect during the Term
hereof, at its cost, product liability insurance covering the Products sold or
leased by Distributor hereunder, in such amounts as shall be mutually agreed
upon between Distributor and GIL. Any such insurance policy shall name
Distributor and the Protected Customer, as applicable, as loss payees. Upon
request by Distributor, GIL will furnish Distributor with a certificate of
insurance or other evidence of such insurance being in force and effect.
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ARTICLE 9
EQUITY INTERESTS
9.1. Pursuant to a Stock Purchase Agreement between
Fingermatrix and GIL of even date herewith (the "Stock Purchase Agreement"),
Distributor has caused Fingermatrix to issue and deliver to GIL 14,134 shares of
Fingermatrix's Series A 2% Voting Convertible Redeemable Preferred Stock, $.01
par value per share (the "FINX Shares"), which shares are convertible into
10,500,148 shares of Fingermatrix's Common Stock, $.01 par value per share
(which, when issued and delivered to GIL under the Stock Purchase Agreement,
will represent approximately ten percent (10%) of the total issued and
outstanding shares of Common Stock of Fingermatrix, on a fully diluted basis and
assuming the full conversion of the FINX Shares), in payment for 1,000,000
shares of GIL's Common Stock, $.0001 par value per share (the "GIL Shares")
purchased by Fingermatrix thereunder (which when issued and delivered to
Distributor under the Stock Purchase Agreement, will represent approximately one
percent (1%) of the total issued and outstanding shares of Common Stock of GIL).
9.2. Both the GIL Shares and FINX Shares are subject to
redemption as provided in the Stock Purchase Agreement. No sale, assignment,
encumbrance, hypothecation, pledge, or other disposition of the GIL Shares or
the FINX Shares shall be made by either GIL or Fingermatrix until such time as
the redemption rights specified in the Stock Purchase Agreement hereof have
terminated in accordance with the terms thereof.
ARTICLE 10
FINANCING
10.1. Distributor may introduce GIL to a financing source(s)
selected by Distributor. In the event that such financing source provides
equipment or other financing to GIL which is accepted by it during the Term of
this Agreement, Distributor shall receive a fee in an amount mutually agreed
upon between GIL and Distributor prior to the consummation of any such
financing. Any such fee will be paid to Distributor simultaneously with GIL's
receipt of such financing proceeds.
10.2. In the event that GIL intends to undertake an initial
public offering of its securities at any time during the Term of this Agreement,
Distributor shall have the right, for a period of thirty (30) days from the date
it receives notice of GIL's intention to undertake such offering, to devise a
plan and structure for such initial public offering which is acceptable to GIL.
Distributor shall, from time to time and as reasonably requested by GIL during
the Term hereof, provide financial consulting and related services to GIL in
connection with its activities. Distributor shall expend such of its time as it
deems necessary to perform such consulting and related services. Subject to
GIL's receipt of the proceeds of any such offering, Distributor shall receive
payment for its prior financial consulting services in an amount to be mutually
agreed upon between GIL and Distributor.
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ARTICLE 11
EVENTS OF DEFAULT AND TERMINATION
11.1. The following occurrences shall constitute events of
default under this Agreement ("Events of Default"):
(a) The failure of Distributor to pay the Purchase
Price for all Products purchased by Distributor under this Agreement or to
comply with any Minimum Purchase Obligation, when due in accordance with the
provisions of this Agreement; provided that Distributor receives notice thereof
from GIL and does not cure such failure within thirty (30) business days after
such notice.
(b) The breach by GIL or Distributor, as the case may
be, of any of their respective material representations, warranties, covenants
or obligations under this Agreement (other than as provided in subsection (a)
above), provided that the breaching party receives notice thereof from the party
claiming such breach and fails to cure any such breach within thirty (30) days
after such notice.
11.2. In the event of the occurrence of an Event of Default,
GIL or Distributor, as the case may be, shall have the right to institute an
action to recover any damages which may result therefrom and/or to exercise any
other legal or equitable rights or remedies provided for hereunder or otherwise
available under applicable law. Notwithstanding the foregoing, neither GIL nor
Distributor shall have the right to terminate this Agreement upon the occurrence
of any Event of Default, the sole right of either party to terminate this
Agreement being based upon and subject to the consummation of a written
instrument signed by both GIL and Distributor agreeing to such termination.
11.3. In the event of any termination of this Agreement prior
to the expiration of the Term hereof, Distributor shall immediately discontinue
all marketing, sales and promotional activities in connection with Products, as
well as all distribution and sale of Products and all use of the GIL
Intellectual Property, except that Distributor shall have a period of up to nine
(9) months after any such termination to sell all inventory of Products and to
fulfill all purchase orders therefor which were issued to Distributor on or
prior to the date of any such termination, provided that Distributor fully pays
the Purchase Price for such Products. Distributor will furnish GIL with reports
of all such sales.
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ARTICLE 12
FORCE MAJEURE
Notwithstanding any provision of this Agreement to the
contrary, if GIL or Distributor is delayed, hindered in or prevented from, in
whole or in part, performing any of their respective obligations under this
Agreement by reason of any fire, strike, civil commotion, lockout, labor
dispute, law, rule, proclamation, or governmental regulation, insurrection, war,
public disaster, flood, unavoidable casualty, act of God or the elements,
earthquake, vandalism, sabotage, failure of power or any other reason beyond
GIL's or Distributor's control, then the party so affected shall be excused from
its performance hereunder solely for the duration of such force majeure until
the completion of the remedial activity in response to the force majeure and the
time for performance shall be extended for a time period equal to the duration
of the force majeure and the remedial period.
ARTICLE 13
PUBLIC STATEMENTS
Neither GIL nor Distributor (nor Georal or Fingermatrix) shall
release any information concerning this Agreement or the transactions
contemplated hereby which is intended for or may result in the public
dissemination thereof, without first obtaining the other party's written consent
prior to the release thereof. Nothing contained in this Article 13 shall
prohibit Fingermatrix from releasing any such information to the extent required
by applicable law or issuing any press release announcing this Agreement or the
transaction contemplated hereby.
ARTICLE 14
CONFIDENTIALITY
Unless and to the extent required by applicable law,
Distributor shall not disclose any of the GIL Intellectual Property which is
conspicuously marked or otherwise designated in writing by GIL as "Confidential
and Proprietary Information", except as required in connection with
Distributor's activities under and in connection with this Agreement.
Notwithstanding the foregoing, Distributor shall not be under any such
prohibition with respect to any information or documentation concerning the GIL
Intellectual Property which is published or otherwise in the public domain other
than as a result of Distributor's breach of the aforementioned confidentiality
covenant.
ARTICLE 15
MISCELLANEOUS
15.1. Sole and Entire Agreement. This Agreement, including the
Exhibits hereto, constitutes the sole and entire agreement between the parties
hereto with respect to the subject matter hereof (except for the applicable
provisions of the Stock Purchase Agreement) and
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supersedes all prior agreements, representations, warranties, statements,
promises, information, arrangements and understandings, whether oral or written,
express or implied, between the parties hereto with respect to the subject
matter hereof and may not be changed or modified except by an instrument in
writing signed by the party to be bound thereby. No course of conduct or dealing
or trade usage or custom or course of performance by the parties hereto shall
constitute or be relied upon as a modification, supplement, or waiver of any
provision of this Agreement. This Agreement has been subject to the mutual
consultation, negotiation and agreement of the parties hereto and shall not be
construed for or against any party hereto on the basis of such party having
drafted this Agreement.
15.2. Brokers. The parties hereto each agree and represent and
warrant to the other that no broker or finder was in any way instrumental or had
any part in bringing about this transaction. Each of the parties hereto hereby
agrees to defend, indemnify and hold the other harmless from and against any
loss, liability, claim, cost or expense (including reasonable counsel fees)
resulting from any claim that may be made against the other by any broker,
finder or other person or entity claiming a commission, fee, or other
compensation by reason of this transaction based upon such indemnifying party's
acts or omissions.
15.3. Notices. All notices, consents, requests, demands and
other communications required or permitted to be given under this Agreement (the
"Notices") shall be in writing and delivered personally, receipt acknowledged,
or mailed by registered or certified mail, postage prepaid, return receipt
requested and addressed to the parties hereto as follows (or to such other
addresses as either of the parties hereto shall specify by notice given in
accordance with this provision):
(a) If to GIL:
GIL Security Systems, Inc.
150-38 12th Avenue
Whitestone, NY 11357
Attn: Alan J. Risi
with a copy to:
Edmond J. Pryor, Esq.
1960 Williamsbridge Road
Bronx, New York 10461
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(b) If to Distributor:
Fingermatrix, Inc.
249 Saw Mill River Road
Elmsford, New York 10523
Attn: Lewis S. Schiller
with a copy to:
Robert L. Blessey, Esq.
51 Lyon Ridge Road
Katonah, New York 10536
All such Notices shall be deemed given when personally delivered as aforesaid,
or, if mailed as aforesaid, on the third business day after the mailing thereof
or on the day actually received, if earlier, except for a notice of a change of
address which shall be effective only upon receipt.
15.4. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Nothing contained in this Agreement is intended to confer
upon any person or entity, any rights, benefits, obligations, remedies or
liabilities under or by reason of this Agreement.
15.5. Waiver. No waiver of any provision of this Agreement or
of any breach thereof shall be effective unless in writing and signed by the
party to be bound thereby. The waiver by either party hereto of a breach of any
provision of this Agreement, or of any representation, warranty, obligation or
covenant in this Agreement by the other party hereto, shall not be construed as
a waiver of any subsequent breach or of any other provision, representation,
warranty, obligation or covenant of such other party, unless the instrument of
waiver expressly so provides.
15.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York with respect to
contracts made and to be fully performed therein, without regard to the
conflicts of laws principles thereof (except as to matters pertaining to the
issuance, delivery and transferability of the GIL Shares and the FINX Shares
which shall be governed by the applicable provisions of Federal and State
securities laws), and shall be enforced exclusively in the federal or state
courts located in the City, County and State of New York. GIL and Distributor
hereby waive any defense of forum non conveniens with respect to any action
commenced in any such court.
15.7. Assignment. This Agreement shall not be assigned by GIL
or Distributor without the prior consent of GIL or Distributor, as the case may
be. Any assignment contrary to the terms hereof shall be null and void and will
not confer any rights or benefits upon the assignee thereof. Distributor shall
not have the right, without GIL's consent, to appoint sub-
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distributors. No such sub-distribution agreement or arrangement will affect
Distributor's obligations under this Agreement.
15.8. Exclusive License. The Exclusive License will not be
amended, modified, transferred or assigned, nor will any rights of the Licensor
thereunder be encumbered at any time during the Term of this Agreement without
the written consent of Distributor.
15.9. Further Assurances. The parties hereto hereby agree
that, at any time and from time to time after the date hereof upon the
reasonable request of the other party hereto, they shall do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, such further acts, deeds, assignments, transfers, conveyances, and
assurances as may be reasonably required to more effectively consummate this
Agreement and the transactions contemplated thereby or to confirm or otherwise
effectuate the provisions of this Agreement.
15.10. Expenses. Each party hereto represents and warrants to
the other that it has been represented by counsel in connection with the
negotiation, preparation, and consummation of this Agreement. Except as
expressly provided in this Agreement, each of the parties hereto shall bear all
of its respective costs and expenses incurred in connection with the
negotiation, preparation, execution, consummation, performance and/or
enforcement of this Agreement, including, without limitation, the fees and
disbursements of their respective counsel, financial advisors and accountants.
Notwithstanding the foregoing, in the event of any action or proceeding
instituted by either party hereto to enforce the provisions of this Agreement,
the party prevailing therein shall be entitled to reimbursement by the other
breaching party of the legal costs and expenses incurred by the prevailing party
in connection therewith.
15.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which, when executed and delivered, shall be deemed
an original, but all of which when taken together, shall constitute one and the
same instrument.
15.12. Headings. The Article headings used in this Agreement
have been used for convenience of reference only and are not to be considered in
construing or interpreting this Agreement.
15.13. Partial Invalidity. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision(s)
shall be excluded from this Agreement and the balance of this Agreement shall
remain in full force and effect.
15.14. Cumulative Remedies. Unless expressly provided to the
contrary, no remedy set forth in this Agreement is exclusive of any other
available remedy or remedies, whether legal or equitable, but each remedy is
cumulative and in addition to every other right or remedy provided under this
Agreement or now or hereafter existing at law or in equity. Either party hereto
may pursue its rights and remedies concurrently or in any sequence and no
exercise of one right or remedy shall be deemed to be an election of remedies.
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15.15. Grammar. Unless the context of this Agreement clearly
requires otherwise, the plural includes the singular, the singular includes the
plural, the part includes the whole, "including" is not limiting, and "or" has
the inclusive meaning of the phrase "and/or". The words "hereof", "herein",
"hereby", "hereunder" and other similar terms in this Agreement refer to this
Agreement as a whole and not exclusively to any particular provision of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals as of the day and year first above written.
WITNESS: GIL SECURITY SYSTEMS, INC.
______________________ By:________________________________
- ---------------------- -----------------------------------
Print Name Print Name and Title
WITNESS: SECURED PORTAL SYSTEMS, INC.
_______________________ By:________________________________
- ----------------------- -----------------------------------
Print Name Print Name and Title
AGREED TO SOLELY AS TO SECTIONS
6.1(f) AND ARTICLE 15 HEREOF
WITNESS:
- ------------------------ -----------------------------------
Alan J. Risi
- ------------------------
Print Name
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EXHIBIT A
GIL'S LIST PRICES
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EXHIBIT B
PRODUCT SPECIFICATIONS
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EXHIBIT C
FORM OF WARRANTY
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EXHIBIT D
EXCLUSIVE LICENSE
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Exhibit 99.2
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT made this 13th day of September, 1999 by and
between GIL SECURITY SYSTEMS, INC., a Delaware corporation with offices at
150-38 12th Avenue, Whitestone, New York 11357 ("Seller") and FINGERMATRIX,
INC., a New York corporation with offices at 249 Saw Mill River Road, Elmsford,
New York 10523 ("Buyer").
W I T N E S S E T H :
WHEREAS, Seller and Buyer's subsidiary, Secured Portal Systems, Inc.
("SPS"), have entered into an Exclusive Distribution Agreement of even date
herewith pursuant to which Seller granted SPS certain exclusive distribution
rights to a security entrance system manufactured and marketed by Seller (the
"Distribution Agreement"); and
WHEREAS, in order to enhance the business relationship between Seller
and SPS in furtherance of the Distribution Agreement, Seller has agreed to sell
to Buyer certain shares of its Common Stock, $.0001 par value per share, and
Buyer is desirous of purchasing such shares from Seller, all on and subject to
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby duly acknowledged, the undersigned do hereby agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1. "Agreement" shall mean this Stock Purchase Agreement between
Seller and Buyer.
1.2. "Closing" shall have the meaning provided in Section 6.1 hereof.
1.3. "Closing Date" shall have the meaning provided for in Section 6.1
hereof.
1.4. "Commission" shall mean the Securities and Exchange Commission.
1.5. "Common Stock" shall mean the $.01 par value per share common
stock of Buyer.
1.6. "Converted FINX Shares" shall mean such number of shares of Common
Stock which are acquired by Seller upon conversion of the FINX Shares.
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1.7. "FINX Shares" shall mean the 14,134 shares of Buyer's Series A 2%
Voting Convertible Redeemable Preferred Stock, $.01 par value per share, which
shares are convertible into an aggregate of 10,500,148 shares of Common Stock at
a conversion rate of 742.9 shares of Common Stock for each share of Buyer's
Series A 2% Voting Convertible Redeemable Preferred Stock.
1.8. "GIL Shares" shall mean the 1,000,000 shares of common stock,
$.0001 par value per share, of GIL.
1.9. "Indemnified Party" shall have the meaning provided in Section 7.8
hereof.
1.10. "Indemnifying Party" shall have the meaning provided in Section
7.8 hereof.
1.11. "Losses" shall have the meaning provided in Section 7.6 hereof.
1.12. "Other Holders" shall mean Blake Schiller, Carol Schiller, Doug
Schiller, Lewis Schiller and Grace Wnuk.
1.13. "Purchase Price" shall have the meaning provided in Section 2.2
hereof.
1.14. "Recapitalization" shall have the meaning provided in Section 5.4
hereof.
1.15. "Redemption Price" shall have the meaning provided in Section 5.1
hereof.
1.16. "Registration Notice" shall have the meaning provided in Section
7.1 hereof.
1.17. "Registration Statement" shall mean any Registration Statement
prepared and filed by Buyer with the Commission pursuant to Article 7 hereof.
1.18. "Securities Act" shall have the meaning provided in Section 3.8
hereof.
1.19. "Statement of Designations" shall have the meaning provided in
Section 5.5 hereof.
1.20. "TGI" shall mean The Trinity Group, Inc., a Delaware corporation
with offices at 249 Saw Mill River Road, Elmsford, New York 10523.
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ARTICLE 2
PURCHASE OF GIL SHARES
2.1. Purchase of GIL Shares. On and subject to the Closing Date, Seller
will sell, transfer and assign to Buyer, all right, title and interest in and to
the GIL Shares, for the consideration set forth in Paragraph 2.2 below. At the
Closing, Seller will deliver the stock certificate for the GIL Shares to Buyer
registered in Buyer's name.
2.2. Purchase Price for the GIL Shares. The purchase price for the GIL
Shares being purchased by Buyer hereunder is the FINX Shares (the "Purchase
Price"). On and subject to the Closing Date, in consideration of the sale,
transfer and assignment to Buyer of the GIL Shares, Buyer will pay the Purchase
Price by delivering the FINX Shares to Seller registered in Seller's name.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer the following:
3.1. Organization; Good Standing. Seller is a corporation, duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own or lease its
properties and carry on its business as now conducted.
3.2. Authorization. All action on the part of Seller necessary for the
authorization, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, has been properly taken
and obtained by it and this Agreement constitutes a valid and legally binding
obligation of Seller enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization, moratorium, or
other laws affecting generally the enforcement of creditors' rights and by
general principles of equity.
3.3. No Litigation. There is no action, suit, proceeding, or
investigation pending or, to the knowledge of Seller, threatened against Seller
which in any way relates to the validity of this Agreement or the right of
Seller to enter into or consummate this Agreement and the transactions
contemplated hereby.
3.4. Authorization. The authorization, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any violation or be in conflict with or
constitute, with or without the passage of time or giving of notice, a default
under Seller's Certificate of Incorporation or By-Laws or any instrument,
judgment, order, writ, decree or agreement to which Seller is a party or by
which it is bound.
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3.5. No Consents. No consent, approval, order, authorization,
registration, qualification, license, permit, designation or declaration of, or
other filing with or notification to, any foreign and/or domestic federal, state
or local governmental authority or agency or any third party is required in
connection with the authorization, execution, delivery and performance of this
Agreement.
3.6. Capitalization. All of the GIL Shares will, when issued on the
Closing Date, be duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock of Seller which will represent approximately 1% of the
total issued and outstanding shares of capital stock of Seller. GIL is
authorized to issue 200,000,000 shares of Common Stock, par value $.0001 per
share, and 10,000,000 shares of Preferred Stock, par value $.0001 per share, of
which there are an aggregate of 100,000,000 shares of such Common Stock issued
and outstanding on the date hereof and none of the shares of such Preferred
Stock are issued and outstanding nor has any series thereof been designated. The
Preferred Stock of GIL, when designated, will not be convertible into shares of
Common Stock of GIL.
3.7. Title. Seller will, on the Closing Date, issue and deliver the GIL
Shares to Buyer, free and clear of all liens, claims and encumbrances
whatsoever.
3.8. Investment Representations. Seller understands and acknowledges
that the FINX Shares have not been and will not be registered under the
Securities Act of 1933, as amended (the "Securities Act") and are being issued
and delivered hereunder pursuant to an exemption from the registration
requirements of Section 5 of the Securities Act inasmuch as the issuance of the
FINX Shares involves a transaction by an issuer not involving a public offering
and that reliance upon such exemption is predicated in part upon the following
representations and warranties of Seller:
A. Seller is acquiring the FINX Shares for investment purposes
only, for its own account, and not for, with any view to, or in connection with
any distribution or public offering thereof within the meaning of the Securities
Act.
B. Seller understands that the FINX Shares have not been
registered under the Securities Act or any state securities law by reason of
their issuance in a transaction which is exempt from the registration
requirements of the Securities Act and such laws and the FINX Shares must be
held indefinitely unless they are subsequently registered under the Securities
Act and such laws or a subsequent disposition thereof is exempt from
registration under the applicable provisions of the Securities Act and such
laws.
C. Seller has sufficient knowledge and expertise in business
and financial matters so as to enable it to analyze and evaluate the merits and
risks of the investment contemplated hereby and is able to bear the economic
risk of such investment, including a complete loss of its investment in the FINX
Shares.
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D. Seller acknowledges that it has made detailed inquiry
concerning Buyer and its business and that the officers of Buyer have made
available to Seller any and all written information which it has requested and
have answered to Seller's satisfaction all inquiries made by Seller.
E. The transactions provided for in this Agreement with
respect to the FINX Shares are not part of any pre-existing plan or arrangement
for, and there is no agreement or other understanding with respect to, the
distribution by Seller of any of the FINX Shares.
3.9. No Broker. Seller has no obligation or commitment to, and has no
agreement or understanding with, any broker or finder in connection with the
transactions contemplated by this Agreement, except for Stanley Ross. Seller
shall be solely responsible for the payment of any fee to Stanley Ross for such
services.
3.10. No Other Representations. Except as set forth in this Section 3
or as otherwise expressly provided elsewhere in this Agreement, Seller has made
no other representations or warranties to Buyer in connection with this
Agreement or the transactions contemplated by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller the following:
4.1. Organization; Good Standing. Buyer is a corporation, duly
organized, validly existing, and in good standing under the laws of the State of
New York and has all requisite power and authority to own or lease its
properties and carry on its business as now conducted.
4.2. Authorization. Subject to the provisions of Section 5.4 hereof,
all action on the part of Buyer necessary for the authorization, execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, has been properly taken and obtained by it and
this Agreement constitutes a valid and legally binding obligation of Buyer
enforceable in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other laws affecting
generally the enforcement of creditors' rights and by general principles of
equity.
4.3. No Litigation. There is no action, suit, proceeding, or
investigation pending or, to the knowledge of Buyer, threatened against Buyer
which in any way relates to the validity of this Agreement or the right of Buyer
to enter into or consummate this Agreement and the transactions contemplated
hereby.
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4.4. Authorization. The authorization, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any violation or be in conflict with or
constitute, with or without the passage of time or giving of notice, a default
under Buyer's Certificate of Incorporation or By-Laws or any instrument,
judgment, order, writ, decree or agreement to which Buyer is a party or by which
it is bound.
4.5. No Consents. No consent, approval, order, authorization,
registration, qualification, license, permit, designation or declaration of, or
other filing with or notification to, any foreign and/or domestic federal, state
or local governmental authority or agency or any third party is required in
connection with the authorization, execution, delivery and performance of this
Agreement.
4.6. Capitalization. All of the FINX Shares will, when issued on the
Closing Date, be duly authorized, validly issued, fully paid and non-assessable
shares of Buyer's Series A 2% Voting Convertible Redeemable Preferred Stock
which will represent, upon the full conversion thereof, approximately 10% of the
total issued and outstanding shares of Common Stock of Buyer, on a fully diluted
basis. Buyer is authorized to issue 20,000,000 shares of Common Stock, par value
$.01 per share, and 1,000,000 shares of Preferred Stock, par value $.01 per
share, of which there are an aggregate of 20,000,000 shares of such Common
Stock, 100,000 shares of Series A 2% Voting Convertible Redeemable Preferred
Stock and 1,000 shares of Series B 4% Preferred Stock issued and outstanding on
the date hereof.
4.7. Title. Buyer will, on the Closing Date, issue and deliver the FINX
Shares to Seller, free and clear of all liens, claims and encumbrances
whatsoever.
4.8. Investment Representations. Buyer understands and acknowledges
that the GIL Shares have not been and will not be registered under the
Securities Act and are being issued and delivered hereunder pursuant to an
exemption from the registration requirements of Section 5 of the Securities Act
inasmuch as the issuance of the GIL Shares involves a transaction by an issuer
not involving a public offering and that reliance upon such exemption is
predicated in part upon the following representations and warranties of Buyer:
A. Buyer is acquiring the GIL Shares for investment purposes
only, for its own account, and not for, with any view to, or in connection with
any distribution or public offering thereof within the meaning of the Securities
Act.
B. Buyer understands that the GIL Shares have not been
registered under the Securities Act or any state securities law by reason of
their issuance in a transaction which is exempt from the registration
requirements of the Securities Act and such laws and the GIL Shares must be held
indefinitely unless they are subsequently registered under the Securities Act
and such laws or a subsequent disposition thereof is exempt from registration
under the applicable provisions of the Securities Act and such laws.
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C. Buyer has sufficient knowledge and expertise in business
and financial matters so as to enable it to analyze and evaluate the merits and
risks of the investment contemplated hereby and is able to bear the economic
risk of such investment, including a complete loss of its investment in the GIL
Shares.
D. Buyer acknowledges that it has made detailed inquiry
concerning Seller and its business and that the officers of Seller have made
available to Buyer any and all written information which it has requested and
have answered to Buyer's satisfaction all inquiries made by Buyer.
E. The transactions provided for in this Agreement with
respect to the GIL Shares are not part of any pre-existing plan or arrangement
for, and there is no agreement or other understanding with respect to, the
distribution by Buyer of any of the GIL Shares.
4.9. No Broker. Buyer has no obligation or commitment to, and has no
agreement or understanding with, any broker or finder in connection with the
transactions contemplated by this Agreement.
4.10. No Other Representation. Except as set forth in this Section 4 or
as otherwise expressly provided elsewhere in this Agreement, Buyer has made no
other representations or warranties to Seller in connection with this Agreement
or the transactions contemplated by this Agreement.
ARTICLE 5
ADDITIONAL RIGHTS AND COVENANTS
5.1. Redemption. Reference is made to the Distribution Agreement, the
terms of which are incorporated herein by reference thereto. In the event of the
termination of the Distribution Agreement in accordance with the provisions of
Section 11.2 thereof, both Seller and Buyer shall have the right to redeem, for
a redemption price equal to the par value of the GIL Shares or FINX Shares, as
applicable (the "Redemption Price"), such number of the GIL Shares or FINX
Shares, as applicable, as shall equal the product of the GIL Shares or the FINX
Shares, as applicable, multiplied by a fraction, the numerator of which will be
the number of full months which have elapsed during the Term of the Distribution
Agreement as of the date of termination, and the denominator of which will be
sixty (60). The Redemption Price must be paid in full at the time of redemption
and a notice from either Seller or Buyer, as applicable, must be provided to the
other within thirty (30) days of the date of any such termination, which notice
must indicate an election by the party providing the notice to redeem such
shares. In the event that such notice of redemption is not timely provided by
either party, as aforesaid, the party failing to timely provide such notice
shall have no further rights of redemption with respect to the GIL Shares or
FINX Shares, as applicable.
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5.2. Resale Covenant. As of the date hereof, TGI, Carol Schiller and
Grazyna Wnuk own 6,871,150, 1,162,810 and 1,585,650 shares of the Common Stock
of Buyer, respectively. By their execution of this Agreement, TGI, Carol
Schiller and Grazyna Wnuk hereby agree that, until such time as either (i)
Seller has registered under the Securities Act more than fifty percent (50%) of
the FINX Shares, or (ii) the FINX Shares are eligible for public sale under Rule
144(k) of the Securities Act, they will not publicly sell the shares of Buyer's
Common Stock owned by them unless and to the extent that Seller publicly sells
any of the FINX Shares. From and after any date that Seller publicly sells any
of the FINX Shares, TGI, Carol Schiller and Grazyna Wnuk shall have the right to
publicly sell an equal number of the shares of Buyer's Common Stock owned by
them, in the aggregate.
5.3. GIL Share Transfers. Subject to compliance with all applicable
provisions of Federal and state securities laws, Buyer will not object to any
transfer by Seller that is hereafter made of all or any portion of the FINX
Shares or the Converted FINX Shares to Alan J. Risi or Stanley Ross (or members
of their immediate families or to trusts established for their benefit or the
benefit of such family members).
5.4. Buyer Recapitalization. Notwithstanding any provision of this
Agreement or the Distribution Agreement to the contrary, Seller acknowledges
that, as of the date hereof, Buyer does not have sufficient shares of Common
Stock authorized for issuance to allow for conversion of the FINX Shares. Buyer
has instructed its counsel to prepare and file all required documents to effect
a recapitalization of Buyer pursuant to which, among other things, Buyer's
authorized capital will be increased to provide for a sufficient number of
shares of Common Stock to accommodate the full conversion of the FINX Shares
(the "Recapitalization"). Buyer will use its best efforts to complete such
recapitalization as soon as practicable after the date hereof and will notify
Seller as soon as the same has been completed. Buyer will notify Seller when the
Recapitalization has been completed.
5.5. Conversion Rights. By virtue of the provisions of the Statement of
the Powers, Designations, Preferences, Privileges, Rights and Restrictions of
the Series A 2% Voting Convertible Redeemable Preferred Stock of Buyer, the
holders of shares of such Preferred Stock will, automatically upon the
completion of the Recapitalization, have their shares of such Preferred Stock
converted into Common Stock and, if the Recapitalization is not completed by
January 1, 2000, such holders shall have the right, at any time thereafter
(subject to completion of the Recapitalization) and solely upon notice to Buyer,
to convert any shares of such series of Preferred Stock into Common Stock in
accordance with the provisions of the Statement of Designations. A copy of such
Statement of Powers, Designations, Preferences, Privileges, Rights and
Restrictions is attached hereto as Exhibit "A".
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ARTICLE 6
CLOSING AND CLOSING DOCUMENTS
6.1. The Closing. The closing of this transaction (the "Closing") will
take place on the date hereof (the "Closing Date") at the offices of Widowski,
Cassidy & Steinhart, LLC, 425 Madison Avenue, Suite 700, New York, New York
10017 or on such other date or place upon which Buyer and Seller may hereafter
agree.
6.2. Seller's Delivery at Closing. At the Closing, Seller will deliver
to Buyer a certificate for the GIL Shares registered in Buyer's name, together
with a corporate resolution of Seller authorizing the transaction contemplated
by this Agreement, all in form and substance satisfactory to counsel for Buyer.
6.3. Buyer's Delivery at Closing. At the Closing, Buyer will deliver to
Seller a certificate for the FINX Shares registered in Seller's name, together
with a corporate resolution of Buyer authorizing the issuance to Seller of the
FINX Shares, all in form and substance satisfactory to counsel for Seller.
ARTICLE 7
REGISTRATION RIGHTS
7.1. Registration. If Buyer, at any time prior to the date that the
Converted FINX Shares are eligible for public sale under Rule 144(k) of the
Securities Act, proposes to register any of its equity securities for its own
account in connection with a public offering under the Securities Act (other
than in connection with a merger, consolidation, acquisition of stock or assets
of another entity, securities to be offered to officers and directors of Buyer
or securities registered pursuant to Form S-4, S-8, or any subsequent similar or
comparable form of Registration Statement), or for the account of any or all of
the Other Holders, Buyer shall request that the managing underwriter or
underwriter of any such underwritten public offering include the Converted FINX
Shares in any such Registration Statement relating thereto. If such managing
underwriter or underwriter agrees to include any or all of the Converted FINX
Shares in such Registration Statement, Buyer shall, at such time, give prompt
notice to Seller of its intention to effect such registration and of Seller's
right to include the Converted FINX Shares therein (a "Registration Notice"),
and upon any request of Seller delivered to Buyer within twenty (20) days after
giving such Registration Notice, which request shall specify the Converted FINX
Shares intended to be disposed of by Seller and the intended method of
disposition thereof, Buyer shall include such Converted FINX Shares held by
Seller in such Registration Statement; provided, however, that:
(a) If, at any time after giving a Registration Notice and
prior to the effective date of any Registration Statement filed by Buyer with
the Commission in connection therewith, Buyer shall determine not to register or
to delay the registration of such Converted FINX Shares,
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for any reason at its sole election, Buyer may give notice of such determination
to Seller and thereupon shall be relieved of its obligation to register any
Converted FINX Shares issued or issuable in connection with such registration;
and in the case of a determination by Buyer to delay any such registration,
Buyer shall thereupon be permitted to delay registering any of such Converted
FINX Shares for the same period as the delay in respect of securities being
included in any such Registration Statement.
(b) If the managing underwriter or underwriter in any
underwritten public offering shall advise Buyer that it has determined not to
include all or any portion of the Converted FINX Shares requested by Seller to
be included in such Registration Statement, then such Converted FINX Shares
shall be excluded from such Registration Statement, provided that such managing
underwriter or underwriter is unaffiliated with Buyer or its officers or
directors by virtue of the absence of any ownership interest of Buyer or such
individuals in such managing underwriter or underwriter; in case of an exclusion
as to only a portion of such Converted FINX Shares, all shares of Common Stock
owned by Seller and the Other Holders for which registration has been requested
shall be allocated among Seller and the Other Holders in accordance with the
provisions of subparagraph 7.2 hereof.
7.2. Allocation. If securities proposed to be offered for sale pursuant
to any Registration Statement include securities owned by Other Holders and the
total number of securities to be offered by Seller and such Other Holders
pursuant to this Article is required to be reduced pursuant to a request from
any managing underwriter or underwriter, the aggregate number of Converted FINX
Shares to be included in such Registration Statement shall equal the number of
Converted FINX Shares which bears the same ratio to the maximum number of
securities that such managing underwriter or underwriter believes may be
included for Seller and the Other Holders as the original number of Converted
FINX Shares proposed to be included therein by Seller bears to the total
original number of securities proposed to be included therein by Seller and the
Other Holders. In such event, Buyer shall give Seller prompt notice of the
number of Converted FINX Shares to be included in such Registration Statement
and the basis of the determination thereof.
7.3. Furnishing of Information. Buyer's obligations pursuant to this
Article 7 shall be subject to and conditioned upon Seller providing Buyer in a
timely manner with such information which Buyer or any managing underwriter or
underwriter may request in connection with the Registration Statement,
including, but not limited to, information concerning Seller, any underwriter or
broker-dealer engaged by Seller, the proposed manner of distribution of the
Converted FINX Shares and any information requested by the Commission.
7.4. Cooperation. Seller hereby agrees to cooperate with Buyer in all
respects in connection with this Agreement, including timely supplying all
information reasonably requested by Buyer and executing and delivering all
documents reasonably requested in connection with the registration and sale of
the Converted FINX Shares.
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7.5. Cost of Registration. Buyer shall bear the entire cost and expense
of any registration of Converted FINX Shares pursuant to this Article 7,
including, without limitation, printing expenses, fees and disbursements of
Buyer's counsel, accounting, audit fees and costs and all registration and
filing fees (both Federal and state); provided that Seller shall bear the fees
of its counsel and accountants, and all transfer taxes and all underwriting
discounts or commissions applicable to the Converted FINX Shares sold by it
pursuant thereto.
7.6. Indemnification by Buyer. Buyer shall indemnify and hold harmless
Seller and each affiliate, officer, director, shareholder, and partner of
Seller, any underwriter or broker-dealer (as defined in the Securities Act), who
may purchase from or sell any Converted FINX Shares for Seller, and each person,
if any, who controls Seller or such underwriter or broker-dealer (within the
meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended) from and against any and all losses, claims, damages, liabilities,
costs and expenses (including attorneys' fees) (the "Losses") caused by any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or any prospectus included therein or any related
application or other filing under any state securities law or by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading to which Seller or
any of such persons may become subject under the Securities Act, the Securities
Exchange Act of 1934, as amended, or other Federal or state laws, rules or
regulations, at common law or otherwise, except insofar as such Losses are
caused by any such untrue statement or alleged untrue statement or omission or
alleged omission which is based upon information furnished or required to be
furnished to Buyer by Seller or any of such persons or entities expressly for
use in any Registration Statement.
7.7. Indemnification by Seller. Seller shall indemnify and hold
harmless Buyer, its directors, each officer signing a Registration Statement,
each person, if any, who controls Buyer within the meaning of the Securities
Act, Buyer's counsel, any managing underwriter or underwriter (and each person
who controls the managing underwriter or the underwriter within the meaning of
the Securities Act), and each other person whose securities are being offered or
sold pursuant to such Registration Statement, from and against any and all
Losses caused by any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement or any prospectus required to be
filed or furnished in connection therewith, or any related application or other
filing under any state securities law or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading to which Buyer, or any
of such persons may become subject under the Securities Act, the Securities
Exchange Act of 1934, as amended, or other Federal or state laws, rules or
regulations, at common law or otherwise, insofar as such Losses are caused by
any untrue statement or alleged untrue statement or omission or alleged omission
which is based upon information furnished to Buyer by Seller expressly for use
in any Registration Statement.
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7.8. Indemnification Procedure. If any action or claim shall be brought
or asserted by a person or entity entitled to indemnification pursuant to this
Article (an "Indemnified Party") against any person or entity who or which is
responsible to provide indemnification thereunder (an "Indemnifying Party"), the
Indemnified Party shall promptly notify the Indemnifying Party in writing, of
all of the particulars with respect thereto, and the Indemnifying Party shall
assume the defense of any action or proceeding relating thereto, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all legal and other expenses of such defense. The failure of the
Indemnified Party to so notify the Indemnifying Party will not relieve the
Indemnifying Party of any liability for indemnification which it may have to the
Indemnified Party hereunder, unless such failure materially prejudices the
rights of the Indemnifying Party. The Indemnified Party shall have the right to
employ separate counsel in any action or proceeding relating to a claim for
indemnification hereunder and to participate in the defense thereof, but the
fees and expenses of such counsel shall be borne by the Indemnified Party unless
(a) the employment thereof has been specifically authorized by the Indemnifying
Party, in writing, or (b) the Indemnifying Party has failed to assume the
defense and employ counsel as provided herein, or (c) the named parties to any
such action or proceeding (including any impleaded parties) include both an
Indemnified Party and an Indemnifying Party, and in the judgment of the counsel
for the Indemnifying Party, it is advisable for the Indemnified Party or
controlling person to be represented by separate counsel (in which case the
Indemnifying Party shall not have the right to assume the defense of such action
or proceeding on behalf of the Indemnified Party or such controlling person), it
being understood, however, that the Indemnifying Party shall, in connection with
any one such action or separate but substantially similar or related actions
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of only one separate firm of attorneys at any time
in each jurisdiction for all indemnified parties (including Seller and the Other
Holders and whether pursuant to this Agreement or any other agreements granting
registration rights), which firm shall be designated in writing by all such
indemnified parties. The Indemnifying Party shall not be liable for any
settlement of any such action or proceeding which is effected by an Indemnified
Party without the written consent of the Indemnifying Party (which consent shall
not be unreasonably withheld), but if settled with such written consent, or if
there be a final judgment or decree for the plaintiff in any such action or
proceeding by a court of competent jurisdiction and the time to appeal shall
have expired or the last appeal shall have been denied, the Indemnifying Party
agrees to indemnify and hold harmless the Indemnified Party from and against any
loss or liability by reason of such settlement or judgment.
7.9. Contribution. If the indemnification provided for in this Article
is held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any Loss, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party thereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Loss in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party, on the one hand and of the Indemnified Party, on the other hand, in
connection with the matters which resulted in such Loss, as well as any other
relevant equitable considerations. The relevant fault
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of the Indemnifying Party and the Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission, or alleged omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the party's relative intent, knowledge, access to information and
opportunity to correct or prevent such statements or omissions. Notwithstanding
the foregoing, the amount that Seller shall be obligated to contribute pursuant
to this Section shall be limited to an amount equal to the proceeds received by
Seller from the Converted FINX Shares sold pursuant to the Registration
Statement which gives rise to such obligation to contribute (less the aggregate
amount of any damages which Seller has otherwise been required to pay in respect
of such Loss).
7.10. Survival. The indemnification provided for by this Article shall
be a continuing right to indemnification and shall survive the registration and
sale of any Converted FINX Shares by any person entitled to indemnification
hereunder and the expiration or termination of this Agreement.
7.11. Assignment of Rights. The rights of Seller to request Buyer to
register Converted FINX Shares pursuant to this Article may not be assigned by
Seller other than to Alan J. Risi and Stanley Ross (or to such family members or
trusts referred to in Section 5.3 hereof). Any such assignee must, as a
condition to such assignment, execute and deliver to Buyer an instrument
prepared by Buyer's counsel pursuant to which such assignee agrees to be bound
by the provisions of this Article.
ARTICLE 8
CERTIFICATE LEGENDS
The certificates for the GIL Shares and the FINX Shares will, when
delivered on the Closing Date, contain the following legends:
"The shares of ________ Stock evidenced by this certificate
have been purchased for investment and may not be sold or
otherwise transferred unless there is delivered to the Company
an opinion of counsel satisfactory to the Company that either
such shares of __________ have been registered under the
Securities Act of 1933, as amended (the "Act"), and there is
in effect a current prospectus meeting the requirements of
subsection 10(a) of the Act which will be delivered to the
purchaser or transferee at or prior to the time of delivery of
such shares for sale or transfer or such shares may be sold
without violating Section 5 of the Act."
"The sale, assignment, encumbrance, hypothecation, pledge or
other disposition of the shares of the Company's _______ Stock
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represented by this Certificate are subject to certain rights
and restrictions as to redemption and resale as set forth in
that certain Stock Purchase Agreement between Fingermatrix,
Inc. and GIL Security Systems, Inc. dated September __, 1999."
ARTICLE 9
MISCELLANEOUS
9.1. Sole and Entire Agreement. This Agreement constitutes the sole and
entire agreement between the parties hereto with respect to the subject matter
hereof (except for the applicable provisions of the Distribution Agreement) and
supersedes all prior agreements, representations, warranties, statements,
promises, information, arrangements and understandings, whether oral or written,
express or implied, between the parties hereto with respect to the subject
matter hereof and may not be changed or modified except by an instrument in
writing signed by the party to be bound thereby. No course of conduct or dealing
or trade usage or custom or course of performance by the parties hereto shall
constitute or be relied upon as a modification, supplement, or waiver of any
provision of this Agreement. This Agreement has been subject to the mutual
consultation, negotiation and agreement of the parties hereto and shall not be
construed for or against any party hereto on the basis of such party having
drafted this Agreement.
9.2. Notices. All notices, consents, requests, demands and other
communications required or permitted to be given under this Agreement (the
"Notices") shall be in writing and delivered personally, receipt acknowledged,
or mailed by registered or certified mail, postage prepaid, return receipt
requested and addressed to the parties hereto as follows (or to such other
addresses as either of the parties hereto shall specify by notice given in
accordance with this provision):
(a) If to Seller:
GIL Security Systems, Inc.
150-38 12th Avenue
Whitestone, NY 11357
Attn: Alan J. Risi
with a copy to:
Edmond J. Pryor, Esq.
1960 Williamsbridge Road
Bronx, New York 10461
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(b) If to Buyer:
Fingermatrix, Inc.
249 Saw Mill River Road
Elmsford, New York 10523
Attn: Lewis S. Schiller
with a copy to:
Robert L. Blessey, Esq.
51 Lyon Ridge Road
Katonah, New York 10536
All such Notices shall be deemed given when personally delivered as aforesaid,
or, if mailed as aforesaid, on the third business day after the mailing thereof
or on the day actually received, if earlier, except for a notice of a change of
address which shall be effective only upon receipt.
9.3. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. Nothing contained in this Agreement is intended to confer upon any
person or entity, any rights, benefits, obligations, remedies or liabilities
under or by reason of this Agreement.
9.4. Waiver. No waiver of any provision of this Agreement or of any
breach thereof shall be effective unless in writing and signed by the party to
be bound thereby. The waiver by any party hereto of a breach of any provision of
this Agreement, or of any representation, warranty, obligation or covenant in
this Agreement by any other party hereto, shall not be construed as a waiver of
any subsequent breach or of any other provision, representation, warranty,
obligation or covenant of such other party, unless the instrument of waiver
expressly so provides.
9.5. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York with respect to contracts
made and to be fully performed therein, without regard to the conflicts of laws
principles thereof (except as to matters pertaining to the issuance, delivery
and transferability of the GIL Shares and the FINX Shares which shall be
governed by the applicable provisions of Federal and state securities laws), and
shall be enforced exclusively in the federal or state courts located in the
City, County and State of New York. Seller and Buyer hereby waive any defense of
forum non conveniens with respect to any action commenced in any such court.
9.6. Assignment. Except as specifically provided for herein, this
Agreement shall not be assigned by Seller or Buyer without the prior consent of
Seller or Buyer, as the case may be.
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Any assignment contrary to the terms hereof shall be null and void and will not
confer any rights or benefits upon the assignee thereof.
9.7. Further Assurances. The parties hereto hereby agree that, at any
time and from time to time after the date hereof upon the reasonable request of
the other party hereto, they shall do, execute, acknowledge and deliver, or
cause to be done, executed, acknowledged and delivered, such further acts,
deeds, assignments, transfers, conveyances, and assurances as may be reasonably
required to more effectively consummate this Agreement and the transactions
contemplated thereby or to confirm or otherwise effectuate the provisions of
this Agreement.
9.8. Expenses. Each party hereto represents and warrants to the other
that it has been represented by counsel in connection with the negotiation,
preparation, and consummation of this Agreement. Except as expressly provided in
this Agreement, each of the parties hereto shall bear all of its respective
costs and expenses incurred in connection with the negotiation, preparation,
execution, consummation, performance and/or enforcement of this Agreement,
including, without limitation, the fees and disbursements of their respective
counsel, financial advisors and accountants. Notwithstanding the foregoing, in
the event of any action or proceeding instituted by any party hereto to enforce
the provisions of this Agreement, the party prevailing therein shall be entitled
to reimbursement by the other breaching party of the legal costs and expenses
incurred by the prevailing party in connection therewith.
9.9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed and delivered, shall be deemed an
original, but all of which when taken together, shall constitute one and the
same instrument.
9.10. Headings. The Article headings used in this Agreement have been
used for convenience of reference only and are not to be considered in
construing or interpreting this Agreement.
9.11. Partial Invalidity. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision(s) shall be
excluded from this Agreement and the balance of this Agreement shall remain in
full force and effect.
9.12. Cumulative Remedies. Unless expressly provided to the contrary,
no remedy set forth in this Agreement is exclusive of any other available remedy
or remedies, whether legal or equitable, but each remedy is cumulative and in
addition to every other right or remedy provided under this Agreement or now or
hereafter existing at law or in equity. Any party hereto may pursue its rights
and remedies concurrently or in any sequence and no exercise of one right or
remedy shall be deemed to be an election of remedies.
9.13. Grammar. Unless the context of this Agreement clearly requires
otherwise, the plural includes the singular, the singular includes the plural,
the part includes the whole, "including" is not limiting, and "or" has the
inclusive meaning of the phrase "and/or". The words
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"hereof", "herein", "hereby", "hereunder" and other similar terms in this
Agreement refer to this Agreement as a whole and not exclusively to any
particular provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals as of the day and year first above written.
WITNESS: GIL SECURITY SYSTEMS, INC.
______________________ By:________________________________
- ---------------------- -----------------------------------
Print Name Print Name and Title
WITNESS: FINGERMATRIX, INC.
_______________________ By:________________________________
- ----------------------- -----------------------------------
Print Name Print Name and Title
AGREED TO AND ACCEPTED SOLELY
AS TO SECTIONS 5.2 AND ARTICLE 9
HEREOF
WITNESS: THE TRINITY GROUP, INC.
_______________________ By:________________________________
- ----------------------- -----------------------------------
Print Name Print Name and Title
[SIGNATURES CONTINUE ON NEXT PAGE]
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WITNESS:
- ----------------------
- ---------------------- -----------------------------------
Print Name Carol Schiller
WITNESS:
- ----------------------
- ---------------------- -----------------------------------
Print Name Grazyna Wnuk
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EXHIBIT A
STATEMENT OF THE POWERS, DESIGNATIONS PREFERENCES,
RIGHTS AND RESTRICTIONS OF THE SERIES A 2% VOTING
CONVERTIBLE REDEEMABLE PREFERRED STOCK OF
FINGERMATRIX, INC.
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