EXHIBIT 4.2
WARRANT EXCHANGE AND EXERCISE AGREEMENT
This WARRANT EXCHANGE AND EXERCISE AGREEMENT is dated and effective as
of March 12, 1996, and is being entered by and between AVERY COMMUNICATIONS,
INC., a Delaware corporation, and the person or persons whose name or names, as
the case may be, is or are set forth on the signature page hereto, with
reference to the following RECITALS:
RECITALS
Each of the Investors owns the Current Warrants set forth in Column B
of Exhibit A.
Each of the Investors desires to exchange the Current Investments for
New Warrants.
NOW, THEREFORE, in consideration of the recitals and of the respective
covenants, representations, warranties and agreements herein contained, and
intending to be legally bound hereby, the parties hereto do hereby agree as
follows:
SECTION 1. DEFINITIONS.
For convenience and brevity, certain terms used in various parts of
this Agreement are listed in alphabetical order and defined or referred to below
(such terms to be equally applicable to both singular and plural forms of the
terms defined).
"Agreement" means this Warrant Exchange and Exercise
Agreement.
"Business Day" means any calendar day which is not a Saturday,
Sunday or other day on which commercial banks in Dallas, Texas, or New
York, New York, are authorized or required to close by applicable law.
"Closing" and "Closing Date" are defined in Section 3.1.
"Common Stock" means the 20,000,000 authorized shares of
Common Stock, par value $0.01 per share, of the Company.
"Company" means Avery Communications, Inc., a Delaware
corporation.
"Contract" means any written or oral contract, agreement,
lease, plan, instrument or other document, commitment, arrangement,
undertaking, practice or authorization that is or may be binding on any
person or its property under applicable law.
"Court Order" means any judgment, decree, injunction, order or
ruling of any federal, state or local court or governmental or
regulatory body or authority that is binding on any person or its
property under applicable law.
"Current Investments" means the Current Warrants.
"Current Warrants" means the warrants to purchase shares of
the Common Stock of the Company owned by each of the Investors as set
forth in Column B of Exhibit A.
"Default" means (1) a breach of or default under any Contract,
(2) the occurrence of an event that with the passage of time or the
giving of notice or both would constitute a breach of or default under
any Contract, or (3) the occurrence of an event that with or without
the passage of time or the giving of notice or both would give rise to
a right of termination, renegotiation or acceleration under any
Contract.
"Governmental Authority" means any federal, state, local or
other governmental agency or body or of any other type of regulatory
body, including, without limitation, those covering environmental,
energy, safety, health, transportation, bribery, recordkeeping, zoning,
antidiscrimination, antitrust, wage and hour, and price and wage
control matters.
"Investor" or "Investors" means the person or persons listed
on Exhibit A, who is or who are the owner or the owners, as the case
may be, of all of the Current Investments.
"Licenses" means licenses, franchises, permits, easements,
rights and other authorizations.
"Lien" means any mortgage, lien, security interest, pledge,
encumbrance, restriction on transferability, defect of title, charge or
claim of any nature whatsoever on any property or property interest.
"Litigation" means any lawsuit, action, arbitration,
administrative or other proceeding, criminal prosecution or
governmental investigation or inquiry involving or affecting any party
hereto or any Contracts to which any party hereto is a party or by
which such party or any of such party's assets may be bound or
affected.
"New Warrants" means the Current Warrants, the exercise prices
of which have been reduced as herein provided.
"Person" or "person" means any natural person, firm,
partnership, association, corporation, company, business trust, trust,
Governmental Authority or other entity.
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"Preferred Stock" means the 20,000,000 authorized shares of
Preferred Stock, par value $0.01 per share, of the Company.
"Regulation" means any statute, law, ordinance, regulation,
order or rule of any Governmental Authority.
"Regulation D" means Regulation D promulgated by the SEC under
the Securities Act.
"SEC" means the United States Securities and Exchange
Commission.
"Securities" means the shares of Common Stock issuable to each
of the Investors upon the exercise of the New Warrants.
"Securities Act" means the Securities Act of 1933, as amended.
"Transactions" means the exchange of all of the Current
Investments by each of the Investors for the Securities of the Company
and the simultaneous exercise of the New Warrants by each of the
Investors as herein provided, and all related transactions provided for
in or contemplated by this Agreement or any Exhibit hereto.
SECTION 2. THE TRANSACTIONS.
2.1 EXCHANGE OF CURRENT INVESTMENTS FOR SECURITIES. Subject to
the terms and conditions hereinafter set forth and on the basis of and in
reliance upon the representations, warranties, obligations and agreements set
forth herein, at the Closing each Investor shall sell, transfer, assign and
convey to the Company, and the Company shall purchase from each Investor, all of
the Current Investments owned by such Investor in exchange for the New Warrants
as set forth after such Investor's name in Column C of Exhibit A.
2.2 REDUCTION OF EXERCISE PRICE OF CURRENT WARRANTS; EXERCISE
PRICE OF NEW WARRANTS. Subject to the terms and conditions hereinafter set forth
and on the basis of the representations, warranties, obligations and agreements
set forth herein, at the Closing, the exercise price of the Current Warrants
shall be reduced to $0.50 per share of Common Stock.
2.3 EXERCISE OF NEW WARRANTS. At the Closing, and in
consideration of the reduction of the exercise price of the Current Warrants as
herein provided, the Investors shall exercise all the New Warrants. The full
purchase price therefor shall be paid to the Company at the Closing by wire
transfer of immediately available funds to the Company's bank account in Dallas,
Texas, or by delivery at the Closing of a cashier's check payable to the order
of the Company.
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2.4 POST-CLOSING ADJUSTMENT OF EXERCISE PRICE. If, subsequent
to the Closing, the exercise price of any warrants to purchase shares of Common
Stock of the Company issued and outstanding on the date hereof with an exercise
price equal to or greater than $0.50 per share, or the conversion price of any
convertible debt securities of the Company convertible into or exchangeable for
shares of Common Stock of the Company issued and outstanding on the date hereof
with a conversion price equal to or greater than $0.50 per share, shall be
reduced to an exercise price or a conversion price, as the case may be, of less
than $0.50 per share for one share of Common Stock of the Company, then the
exercise price set forth in Section 2.2 shall be reduced to such lower price.
Upon the occurrence of such an event or events, the Company shall promptly
refund to each of the Investors the difference obtained by subtracting such
lower price from $0.50. The adjustments required hereby shall be made at any
time and from time to time as necessary to assure that the exercise price of the
New Warrants hereunder is never greater than the exercise price or the
conversion price paid by the holders the warrants and convertible securities of
the Company issued and outstanding on the date hereof with an exercise or a
conversion price equal to or greater than $0.50 per share for one of share of
Common Stock of the Company. For the purposes hereof, in determining whether the
exercise or conversion price is less than $0.50 for one share of Common Stock of
the Company, the actual exercise or conversion price, as the case may be, shall
be reduced on a per share basis by any consideration given to the holder thereof
by the Company upon or in connection with the exercise or conversion, as the
case may be, thereof.
2.5 DEFAULT BY ANY INVESTOR AT THE CLOSING. Notwithstanding
the provisions of Section 2.1, if any of the Investors shall fail or refuse to
deliver any of the Current Investments as provided in Section 2.1, or if any of
the Investors shall fail or refuse to consummate the transactions described in
this Agreement prior to or on the Closing Date, such failure or refusal shall
not relieve the other Investors of any obligations under this Agreement, and the
Company, at its option and without prejudice to its rights against any such
defaulting Investor, may either (1) acquire the remaining Current Investments
which it is entitled to acquire hereunder, or (2) refuse to make such
acquisition and thereby terminate all of its obligations hereunder. Each of the
Investors acknowledges that the Current Investments are unique and otherwise not
available and agree that in addition to any other remedies, the Company may
invoke any equitable remedies to enforce delivery of the Current Investments
hereunder, including, without limitation, an action or suit for specific
performance.
SECTION 3. CLOSING.
3.1 CLOSING DATE. The consummation of the sale and purchase of
the Current Investments and the exercise of the Current Warrants (the "Closing")
shall take place at the offices of the Company at 10:00 A.M. local time, on
March 14, 1996, or at such other time or place or on such other date as the
Company and the Investors may agree in writing. The date of the Closing is
hereinafter sometimes referred to as the "Closing Date." In lieu of the
foregoing, the Investors and the Company may conduct the Closing by exchanging
the Closing documents required hereby by mail, express delivery service, or
facsimile or other electronic media, or by such other means as they may mutually
agree. If the parties hereto choose to
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exchange the Closing documents without meeting in person, the Closing shall be
deemed to have taken place in Dallas, Texas, the parties hereto shall be deemed
to have been present in person thereat for all purposes, and the Closing Date
shall be deemed to be the date on which the Company receives the full purchase
price for the exercise of the New Warrants as herein provided.
3.2 DELIVERIES. At the Closing, subject to the provisions of
this Agreement, each Investor shall deliver to the Company, free and clear of
all Liens, the Current Warrants, in negotiable form, duly endorsed in blank, or
with separate notarized stock transfer powers attached thereto and signed in
blank, and, with a properly completed notice of exercise in the form, if any,
attached to the Current Warrants, in exchange for the New Warrants set forth
opposite each Investor's name in Column C on Exhibit A. At the Closing, each of
the Investors shall also deliver to the Company, and the Company shall deliver
to each of the Investors, the certificates, opinions and other instruments and
documents referred to in Sections 8 and 9.
3.3 TERMINATION. In the event that the Closing shall not have
taken place on or before ten Business Days following the date of this Agreement,
or such later date as shall be mutually agreed to in writing by the Company and
each of the Investors, all of the rights and obligations of the parties under
this Agreement shall terminate without liability, except for liability in the
event the Closing does not occur and this Agreement terminates by reason of a
default or breach by any party hereto.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each
Investor hereby represents and warrants to the Company, severally and not
jointly, and solely on each Investor's own behalf, as follows:
4.1 AUTHORITY AND BINDING EFFECT. Investor has the full power
and authority to execute, deliver and perform this Agreement and has taken all
actions necessary to secure all approvals required in connection therewith. This
Agreement constitutes the legal, valid and binding obligation of Investor,
enforceable against such Investor in accordance with its terms.
4.2 VALIDITY OF CONTEMPLATED TRANSACTIONS. Neither the
execution and delivery of this Agreement by Investor nor the consummation of the
Transactions contemplated hereby will contravene or violate any Regulation or
Court Order which is applicable to Investor, or will result in a Default under,
or require the consent or approval of any party to, any Contract to or by which
Investor is a party or otherwise bound or affected, or require Investor to
notify or obtain any License from any Governmental Authority. Investor is not a
party to any Contract or subject to any restriction or any Court Order or
Regulation which affects or restricts the ability of Investor to consummate the
Transactions contemplated hereby.
4.3 TITLE TO SECURITIES. Investor owns outright and has good
and marketable title to all of the Current Warrants set forth in Column B of
Exhibit A as being owned by Investor, free and clear of all Liens.
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SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to each Investor as follows:
5.1 ORGANIZATION AND STANDING. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, having all requisite corporate power and authority to perform
its obligations under this Agreement.
5.2 AUTHORITY AND BINDING EFFECT. The Company has the
corporate power and authority to execute, deliver and perform this Agreement and
has taken all actions necessary to secure all approvals required in connection
therewith. The execution, delivery and performance of this Agreement by the
Company has been duly authorized by all necessary corporation action. This
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against it in accordance with its terms.
5.3 VALIDITY OF CONTEMPLATED TRANSACTIONS. Neither the
execution and delivery of this Agreement by the Company nor the consummation of
the Transactions contemplated hereby by the Company will contravene or violate
any Regulation or Court Order which is applicable to the Company, or the
Certificate of Incorporation or By-Laws of the Company, or will result in a
Default under, or require the consent or approval of any party to, any Contract
to or by which the Company is a party or by which it is otherwise bound or
affected, or require the Company to notify or obtain any License from any
Governmental Authority. The Company is not a party to any Contracts or subject
to any restriction or any Court Order or Regulation which affects or restricts
the ability of the Company to consummate the Transactions contemplated hereby.
5.4 CAPITALIZATION. The Company's authorized capital stock
consists of 40,000,000 shares of capital stock, which are divided into
20,000,000 shares of Common Stock, par value $0.01 per share, and 20,000,000
shares of Preferred Stock, par value $0.01 per share. There are 2,934,566 shares
of the Company's Common Stock presently outstanding. No shares of the Company's
Preferred Stock are presently outstanding. All of the shares of the Company's
Common Stock have been duly authorized and validly issued, are fully paid and
nonassessable, were not issued in violation of any Contract binding upon the
Company, and were issued in compliance with all applicable charter documents of
the Company. Except as contemplated by this Agreement and as set forth on
Exhibit B, there are no (i) existing Contracts, subscriptions, options,
warrants, calls, commitments or rights of any character to purchase or otherwise
acquire any capital shares or other securities of the Company, whether or not
presently issued or outstanding, from the Company, at any time, or upon the
happening of any stated event; (ii) outstanding securities that are convertible
into or exchangeable for capital shares or other securities of the Company; and
(iii) Contracts, subscriptions, options, warrants, calls, commitments or rights
to purchase or otherwise acquire from the Company any such convertible or
exchangeable securities. On the Closing Date, the Securities and the New
Warrants will be duly authorized, and, when issued as herein provided, will be
validly issued, fully paid and nonassessable, will not be issued in violation of
any Contract binding upon the Company, and will be issued in compliance with
applicable charter documents of the Company.
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SECTION 6. INVESTMENT REPRESENTATIONS AND WARRANTIES. Each Investor
acknowledges that the Securities are being acquired for each Investor's own
account as part of a private offering, exempt from registration under the
Securities Act and all applicable state securities or blue sky laws, for
investment only and not with a view to the distribution or other sale thereof,
and that an exemption from registration under the Securities Act or any
applicable state securities laws may not be available if the Securities are
acquired by Investor with a view to resale or distribution thereof under any
conditions or circumstances as would constitute a distribution of the Securities
within the meaning and purview of the Securities Act or the applicable state
securities laws. Accordingly, each Investor represents and warrants to the
Company, severally and not jointly, and solely on each Investor's own behalf, as
follows:
6.1 OWN ACCOUNT. No other person will acquire, directly or
indirectly, any interest in the Securities (or any portion thereof) as a result
of Investor's acquisition of the Securities pursuant to this Agreement.
6.2 SECURITIES TO BE HELD FOR INVESTMENT. It is Investor's
intention to acquire and hold the Securities solely for Investor's private
investment and for Investor's own account and with no view or intention to
distribute (including, without limitation, any distribution to the shareholders
of Investor pursuant to the terms of its governing instruments), sell, resell,
assign, pledge, mortgage, hypothecate, or otherwise transfer or dispose of the
Securities (or any portion thereof) except pursuant to a valid exception from
registration or a registered offering under the Securities Act.
6.3 NO TRANSFERS OF SECURITIES CONTEMPLATED. Investor has no
contract, undertaking, agreement, or arrangement with any person to sell or
otherwise transfer to any person, or to have any person sell on behalf of
Investor, the Securities (or any portion thereof), and Investor is not engaged
in and does not plan to engage within the foreseeable future in any discussion
with any person relative to the sale or any transfer of the Securities (or any
portion thereof).
6.4 NO EVENTS REQUIRING TRANSFER OF SECURITIES. Investor is
not aware of any occurrence, event, or circumstance upon the happening of which
Investor intends to attempt to sell, resell, assign, pledge, mortgage,
hypothecate, or otherwise transfer or dispose of the Securities (or any portion
thereof), and Investor does not have any present intention of selling,
transferring, or otherwise disposing of the Securities (or any portion thereof)
after the lapse of any particular period of time.
6.5 ACCREDITED INVESTOR STATUS. Investor is, and will be on
the Closing Date, an "accredited investor," as such term is defined in the
Securities Act or Regulation D, and under the securities laws of certain states,
because Investor is described in one of the categories set forth below, the
designation of which category is set forth opposite the Investor's signature on
the signature pages of this Agreement:
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(A) a bank as defined in Section 3(a)(2) of the
Securities Act, whether acting in its individual or fiduciary capacity;
(B) a savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities Act, whether
acting in its individual or fiduciary capacity;
(C) a broker or dealer registered under Section 15 of
the Securities Exchange Act of 1934, as amended;
(D) an insurance company as defined in Section 2(13)
of the Securities Act;
(E) an investment company registered under the
Investment Company Act of 1940, as amended, or a business development company as
defined in section 2(a)(48) of that Act;
(F) a Small Business Investment Company licensed by
the U.S. Small Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958;
(G) a plan established by a state, its political
subdivisions or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, and such plan has total assets
in excess of $5,000,000;
(H) (i) an employee benefit plan within the meaning
of Title I of the Employee Retirement Income Security Act of 1974, with the
investment decisions being made by a plan fiduciary, as defined in section 3(21)
of such Act, which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or (ii) an employee benefit plan that
has total assets in excess of $5,000,000, or (iii) a self-directed employee
benefit plan and the investment decisions are made solely by persons that are
accredited investors;
(I) a private business development company as defined
in section 202(a)(22) of the Investment Advisors Act of 1940, as amended;
(J) an organization described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended, corporation, Massachusetts or
similar business trust, or partnership, in each case, not newly formed, actively
engaged in a trade or business, and having total assets in excess of $5,000,000;
(K) a natural person with an individual net worth, or
joint net worth with Investor's spouse, in excess of $1,000,000;
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(L) a natural person who had an individual income in
excess of $200,000 or joint income with Investor's spouse of $300,000 in each of
the two most recent years, and reasonably expects to reach the same income level
in the current year;
(M) a trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring any securities to
be offered in the future, whose purchase is directed by a person who has such
knowledge and experience in financial and business matters that such person is
capable of evaluating the merits and risks of the prospective investment, as
described in Rule 506(b)(2)(ii) of Regulation D; or
(N) an entity in which all the equity owners are
accredited investors.
6.6 SOPHISTICATED INVESTOR STATUS. Investor is, and will be on
the Closing Date, a sophisticated investor which has the capacity to protect
Investor's own interests in investments of this nature, and has such knowledge
and experience in financial and business matters that Investor is capable of
evaluating the merits and risks of this investment.
6.7 ALL NECESSARY INFORMATION RECEIVED. Investor has had all
documents, records, books and due diligence materials pertaining to this
acquisition made available to Investor and Investor's accountants and advisors;
Investor has also had an opportunity to ask questions and receive answers
concerning this acquisition; and Investor has all of the information deemed by
Investor to be necessary or appropriate to evaluate this investment and the
risks and merits thereof.
6.8 NO RELIANCE ON OTHER INFORMATION. Investor is acquiring
the Securities solely upon the information provided to Investor as specified in
Section 6.7, above, together with information obtained by Investor through
Investor's independent investigation, and has not relied on any oral
representations as to the risks or merits of this investment.
6.9 INVESTOR AWARE OF RISKS. Investor is aware of the
following:
(A) the Securities are speculative, with no assurance
of any income from the Securities;
(B) no federal or state agency has made any finding
or determination as to the fairness of the acquisition, or any recommendation or
endorsement of such acquisition;
(C) transferability of the Securities is highly
restricted and, accordingly, it may not be possible for Investor to liquidate
the Securities in case of emergency; and
(D) with respect to the tax aspects of an investment
in the Securities, Investor in making Investor's investment decision is not
relying to any degree upon the advice of the Company, or any person affiliated
therewith, but rather solely upon Investor's own legal, financial and tax
advisors.
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SECTION 7. SURVIVAL OF REPRESENTATION AND WARRANTIES. All of the
representations, warranties, covenants and agreements made by each party in this
Agreement or in any attachment, Exhibit, certificate, document or list delivered
by any such party pursuant hereto or in connection with the Transactions
contemplated hereby shall survive the Closing and each party hereto (taking the
Investors as a single party) shall be entitled to rely upon the representations
and warranties of the other party set forth in this Agreement.
SECTION 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY. Subject
to waiver as set forth in Section 10.8, the obligations of the Company under
this Agreement are subject to the fulfillment prior to or at the Closing of each
of the following conditions:
8.1 REPRESENTATIONS TRUE AT CLOSING. The representations and
warranties of the Investors set forth in Sections and shall be true and correct
on the Closing Date with the same effect as if made at that time.
8.2 PERFORMANCE BY THE INVESTORS. The Investors shall have
performed and satisfied all agreements and conditions which each of them is
required by this Agreement to perform or satisfy prior to or on the Closing
Date.
8.3 CERTIFICATES. The Company shall have received certificates
from each of the Investors dated the Closing Date certifying in such detail as
the Company may reasonably request that each of the conditions described in
Sections 8.1 and 8.2 has been fulfilled.
8.4 FORM AND CONTENT OF DOCUMENTS. The form and content of all
documents, certificates and other instruments to be delivered by the Investors
shall be reasonably satisfactory to the Company.
8.5 LITIGATION AFFECTING CLOSING. No Court Order shall have
been issued or entered which would be violated by the completion of the
Transactions. No person who or which is not a party to this Agreement shall have
commenced or threatened to commence any Litigation seeking to restrain or
prohibit, or to obtain substantial damages in connection with, this Agreement or
the Transactions contemplated by this Agreement and no Litigation shall be
pending against the Company or any Subsidiary.
8.6 REGULATORY COMPLIANCE AND APPROVALS. The Company shall be
satisfied that all approvals required under any Regulations to carry out the
Transactions shall have been obtained and that the parties shall have complied
with all Regulations applicable to the Transactions.
8.7 CONSENTS AND APPROVALS. The Investors and the Company
shall have obtained all consents and approvals necessary to complete the
Transactions and related transactions.
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SECTION 9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE INVESTORS.
Subject to waiver as set forth in Section 10.8, the obligations of the Investors
under this Agreement are subject to the fulfillment prior to or at the Closing
of each of the following conditions:
9.1 COMPANY REPRESENTATIONS TRUE AT CLOSING. The
representations and warranties of the Company set forth in Section 5 shall be
true and correct on the Closing Date with the same effect as if made at that
time.
9.2 PERFORMANCE BY THE COMPANY. The Company shall have
performed and satisfied all agreements and conditions which it is required by
this Agreement to perform or satisfy prior to or on the Closing Date.
9.3 OFFICER'S CERTIFICATE. The Investors shall have received a
certificate from an appropriate officer of the Company dated the Closing Date
certifying in such detail as the Investors may reasonably request that each of
the conditions described in Sections 9.1 and 9.2 has been fulfilled.
9.4 INCUMBENCY CERTIFICATE. The Investors shall have received
a certificate of the Secretary or an Assistant Secretary of the Company dated
the Closing Date certifying to the incumbency of the officers of the Company
signing for it and as to the authenticity of their signatures.
9.5 FORM AND CONTENT OF DOCUMENTS. The form and content of all
documents, certificates and other instruments to be delivered by the Company
shall be reasonably satisfactory to the Investors.
9.6 LITIGATION AFFECTING CLOSING. No Court Order shall have
been issued or entered which would be violated by the completion of the
Transactions. No person who or which is not a party to this Agreement shall have
commenced or threatened to commence any Litigation seeking to restrain or
prohibit, or to obtain substantial damages in connection with, this Agreement or
the Transactions contemplated by this Agreement.
9.7 REGULATORY COMPLIANCE AND APPROVAL. The Investors shall be
satisfied that all approvals required under any Regulations to carry out the
Transactions shall have been obtained and that the parties have complied with
all Regulations applicable to the Transactions.
SECTION 10. MISCELLANEOUS.
10.1 NO TRANSFER OF SECURITIES BY INVESTOR. None of the
Investors will distribute (including, without limitation, any distribution to
the shareholders or partners of any Investor pursuant to the terms of its
governing instruments or any distribution in connection with the dissolution of
any Investor), sell, resell, assign, pledge, mortgage, hypothecate, or otherwise
transfer or dispose of the Securities (or any portion thereof) (any such event
or combination thereof being hereinafter referred to as a "Transfer") without
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first furnishing to the Company an
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opinion of counsel, which opinion shall be satisfactory in form, scope and
substance to the Company in sole discretion, that registration under the
Securities Act or any applicable state securities laws is not required in
connection with any proposed Transfer.
10.2 LEGEND ON CERTIFICATES. Each certificate representing the
Securities shall bear a legend consistent with the representations, warranties
and agreements set forth herein, which shall read substantially as follows:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED BY
THE ISSUEE FOR INVESTMENT PURPOSES. SAID SHARES MAY NOT BE SOLD OR
TRANSFERRED UNLESS (A) THEY HAVE BEEN REGISTERED UNDER SAID ACT, OR (B)
THE TRANSFER AGENT (OR THE COMPANY IF THEN ACTING AS ITS TRANSFER
AGENT) IS PRESENTED WITH EITHER A WRITTEN OPINION SATISFACTORY TO
COUNSEL FOR THE COMPANY OR A 'NO-ACTION' OR INTERPRETIVE LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE CIRCUMSTANCES OF SUCH SALE OR
TRANSFER."
10.3 PAYMENT OF EXPENSES. Each of the Investors and the
Company will pay all legal, accounting and other fees and expenses which such
party incurs in connection with this Agreement and the Transactions contemplated
hereby, and none of the expenses of the Investors shall be paid by the Company.
However, if this Agreement is terminated pursuant to Section 10.5 or if the
failure to satisfy a condition of Closing arises out of the breach, existing at
the time of the execution of this Agreement, of a representation or warranty
contained in this Agreement, the party terminating this Agreement shall be
entitled to receive from the breaching party or parties the expenses of the
terminating party incurred between the date of this Agreement and the date of
termination.
10.4 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time on or prior to the Closing Date by mutual consent of the
Investors and the Company.
10.5 TERMINATION FOR BREACH. The Company may terminate its
obligations under this Agreement at any time prior to the Closing Date if any of
the Investors shall have breached any of their representations, warranties or
other obligations under this Agreement in any material respect. The Investors
may likewise terminate their obligations under this Agreement at any time prior
to the Closing Date if the Company shall have breached any of its
representations, warranties or other obligations under this Agreement in any
material respect. Such termination may be effected by written notice from either
the Company or the Investors, as appropriate, citing the reasons for termination
and shall not subject the terminating party to any liability for any valid
termination.
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10.6 BROKERS' AND FINDERS' FEES. Except for the advisory fee
paid by the Company to Phipps, Teman & Company, L.L.C., the payment of which fee
is the sole responsibility of the Company, the Investors as a group and the
Company each to the other represents and warrants that all negotiations relative
to this Agreement have been carried on by them directly without the intervention
of any person, firm, corporation or other entity who or which may be entitled to
any brokerage fee or other commission in respect of the execution of this
Agreement or the consummation of the Transactions contemplated hereby, and each
of them shall indemnify and hold the other or any affiliate of them harmless
against any and all claims, losses, liabilities or expenses which may be
asserted against any of them as a result of any dealings, arrangements or
agreements by the indemnifying party with any such person, firm, corporation or
other entity.
10.7 ASSIGNMENT AND BINDING EFFECT. This Agreement may not be
assigned prior to the Closing by any party hereto without the prior written
consent of the other parties. Subject to the foregoing, all of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the heirs, executors, legal representatives, successors
and assigns of each of the Investors and by the successors and assigns of the
Company.
10.8 WAIVER. Any term or provision of this Agreement may be
waived at any time by the party entitled to the benefit thereof by a written
instrument executed by such party.
10.9 NOTICES. Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given only if delivered personally to the
address set forth below (to the attention of the person identified below) or
sent by telegram or by registered or certified mail, postage prepaid, if to
Company, to: Avery Communications, Inc., 801 Greenview Drive, Grand Prairie,
Texas 75050, Attention: Thomas M. Lyons; and if to any of the Investors, to
their addresses set forth on Exhibit A hereto, or to such other address as the
addressee may have specified in a notice duly given to the sender and to counsel
as provided herein. Such notice, request, demand, waiver, consent, approval or
other communication will be deemed to have given as of the date so delivered or
telegraphed or, if mailed, three business days after the date so mailed.
10.10 TEXAS LAW TO GOVERN. This Agreement shall be governed by
and interpreted and enforced in accordance with the substantive laws of the
State of Texas, without giving effect to the conflict of law rules thereof.
10.11 REMEDIES NOT EXCLUSIVE. Nothing in this Agreement shall
be deemed to limit or restrict in any manner other rights or remedies that any
party may have against any other party at law, in equity or otherwise.
10.12 NO BENEFIT TO OTHERS. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit of
the parties hereto and the Company and their heirs, executors, legal
representatives, successors and assigns, and they shall not be construed as
conferring and are not intended to confer any rights on any other persons.
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10.13 CONTENTS OF AGREEMENT. This Agreement, together with any
documents referred to herein, sets forth the entire agreement of the parties
hereto with respect to the Transactions contemplated hereby. This Agreement may
not be amended except by an instrument in writing signed by the parties hereto,
and no claimed amendment, modification, termination or waiver shall be binding
unless in writing and signed by the party against whom or which such claimed
amendment, modification, termination or waiver is sought to be enforced.
10.14 SECTION HEADINGS AND GENDER. All section headings and
the use of a particular gender are for convenience only and shall in no way
modify or restrict any of the terms or provisions hereof. Any reference in this
Agreement to a Section or Exhibit shall be deemed to be a reference to a Section
or Exhibit of this Agreement unless the context otherwise expressly requires.
10.15 COOPERATION. Subject to the provisions hereof, the
parties hereto shall use their best efforts to take, or cause to be taken, such
action, to execute and deliver, or cause to be executed and delivered, such
additional documents and instruments and to do, or cause to be done, all things
necessary, proper or advisable under the provisions of this Agreement and under
applicable law to consummate and make effective the Transactions contemplated by
this Agreement.
10.16 SEVERABILITY. Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.17 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which is an original and all of which together shall
be deemed to be one and the same instrument. This Agreement shall become binding
when one or more counterparts taken together shall have been executed and
delivered by all of the parties, it not being necessary that any counterpart
hereof be executed by more than one of the parties hereto. It shall not be
necessary in making proof of this Agreement or any counterpart hereof to produce
or account for any of the other counterparts.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above, and, in connection therewith, each
of the Investors hereby certifies that it is an "accredited investor" because
such Investor is described in the subparagraph of Section 6.5 indicated next to
such Investor's signature below.
INSTRUCTIONS: PLEASE MANUALLY INSERT THE APPROPRIATE
SUBPARAGRAPH OF SECTION 6.5 IN THE SPACE PROVIDED TO INDICATE WHY
EACH INVESTOR IS AN "ACCREDITED INVESTOR" AND SIGN AND COMPLETE
THE SIGNATURE BLOCKS AS NECESSARY.
THE INVESTORS
-------------
RILAR FAMILY ASSOCIATES LIMITED PARTNERSHIP
Section 6.5, subparagraph ____ By:________________________________________
Print Name:________________________________
Title: General Partner
Section 6.5, subparagraph ____ ___________________________________________
Russell T. Stern, Jr.
EDWARD J. HARRISON IRA
Section 6.5, subparagraph ____ By: NORWEST BANK MINNESOTA, N.A., TRUSTEE
By:________________________________________
Print Name:________________________________
Title:_____________________________________
Section 6.5, subparagraph ____ ___________________________________________
Henry N. Schneider
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WAVELAND LIMITED LIABILITY CORP.
Section 6.5, subparagraph ____ By:________________________________________
Print Name: Patrick J. Haynes, III
Title: Manager
THE COMPANY
-----------
AVERY COMMUNICATIONS, INC.
By:________________________________________
Print Name: Thomas M. Lyons
Title: President
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EXHIBIT A
INVESTORS
(A) (B) (C)
New Warrants
Name and Address Number of Current to be
of Investor Warrants Owned Received
----------- -------------- --------
Rilar Family Associates 71,000 @ $1.098 101,000 @ $0.50
Limited Partnership 30,000 @ $1.886
c/o Global Capital Resources, Inc.
450 Park Avenue,
Suite 1000
New York, NY 10022
Russell T. Stern 20,000 @ $1.098 50,000 @ $0.50
c/o The Thurston Group 30,000 @ $1.886
190 South LaSalle Street,
Suite 1410
Chicago, IL 60603
Edward J. Harrison IRA 71,000 @ $1.098 101,000 @ $0.50
c/o Investment Management 30,000 @ $1.886
& Trust
Norwest Bank Minnesota, N.A.
Norwest Center
6th & Marquette
Minneapolis, MN 55479
Henry N. Schneider 71,000 @ $1.098 101,000 @ $0.50
c/o Global Capital Resources, Inc. 30,000 @ $1.886
450 Park Avenue,
Suite 1000
New York, NY 10022
Waveland Limited Liability Corp. 71,000 @ $1.098 101,000 @ $0.50
c/o The Thurston Group 30,000 @ $1.886
190 South LaSalle Street,
Suite 1410
Chicago, IL 60603
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