Document:

Exhibit
10.1

 

Agreement
and Plan of Merger

 

By and
Among

 

Avery
Communications, Inc.

 

ACI
Telecommunications Financial Services Corporation

 

Primal
Systems, Inc.

 

Mark J.
Nielsen

 

John Faltys

 

Joseph R.
Simrell

 

and

 

David
Haynes

 

 

 

DATED AS OF
MARCH 19, 1999

 

 

 

Table of
Contents

 

	
  1.

  	
  TERMS OF
  THE MERGER

  	
   

  
	
   

  	
  1.1

  	
  Statutory
  Merger

  	
   

  
	
   

  	
  1.2

  	
  Effective Time

  	
   

  
	
   

  	
  1.3

  	
  Effects
  of the Merger

  	
   

  
	
   

  	
  1.4

  	
  Certificate of
  Incorporation

  	
   

  
	
   

  	
  1.5

  	
  Bylaws

  	
   

  
	
   

  	
  1.6

  	
  Directors
  and Officers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  CONVERSION
  OF SECURITIES; EXCHANGE OF CERTIFICATES

  	
   

  
	
   

  	
  2.1

  	
  Merger
  Consideration; Conversion and Cancellation of Securities

  	
   

  
	
   

  	
  2.2

  	
  Dissenting
  Shares

  	
   

  
	
   

  	
  2.3

  	
  Exchange
  of Certificates

  	
   

  
	
   

  	
  2.4

  	
  Stock Transfer
  Books

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  CLOSING

  	
   

  
	
   

  	
  3.1

  	
  Closing

  	
   

  
	
   

  	
  3.2

  	
  Closing
  Obligations

  	
   

  
	
   

  	
  3.3

  	
  Adjustment
  of Merger Consideration; Contingent Merger Consideration

  	
   

  
	
   

  	
  3.4

  	
  Contingent Pay-Out
  Procedures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS
  AND WARRANTIES OF PRIMAL

  	
   

  
	
   

  	
  4.1

  	
  Organization and Good
  Standing

  	
   

  
	
   

  	
  4.2

  	
  Authority;
  No Conflict

  	
   

  
	
   

  	
  4.3

  	
  Capitalization

  	
   

  
	
   

  	
  4.4

  	
  Financial
  Statements

  	
   

  
	
   

  	
  4.5

  	
  Books and
  Records

  	
   

  
	
   

  	
  4.6

  	
  Title to
  Properties; Encumbrances

  	
   

  
	
   

  	
  4.7

  	
  Condition and
  Sufficiency of Assets

  	
   

  
	
   

  	
  4.8

  	
  Accounts
  Receivable

  	
   

  
	
   

  	
  4.9

  	
  Inventory

  	
   

  
	
   

  	
  4.10

  	
  No Undisclosed Liabilities

  	
   

  
	
   

  	
  4.11

  	
  Taxes

  	
   

  
	
   

  	
  4.12

  	
  No Material Adverse Change

  	
   

  
	
   

  	
  4.13

  	
  Employee
  Benefits

  	
   

  
	
   

  	
  4.14

  	
  Compliance
  with Legal Requirements; Governmental Authorizations

  	
   

  
	
   

  	
  4.15

  	
  Legal
  Proceedings; Orders

  	
   

  
	
   

  	
  4.16

  	
  Absence of
  Certain Changes and Events

  	
   

  
	
   

  	
  4.17

  	
  Contracts;
  No Defaults

  	
   

  
	
   

  	
  4.18

  	
  Insurance

  	
   

  

 

i

 

	
   

  	
  4.19

  	
  Environmental
  Matters

  	
   

  
	
   

  	
  4.20

  	
  Employees

  	
   

  
	
   

  	
  4.21

  	
  Labor Relations; Compliance

  	
   

  
	
   

  	
  4.22

  	
  Intellectual
  Property

  	
   

  
	
   

  	
  4.23

  	
  Relationships with
  Related Persons

  	
   

  
	
   

  	
  4.24

  	
  Projections of
  Financial Performance

  	
   

  
	
   

  	
  4.25

  	
  Tax Matters

  	
   

  
	
   

  	
  4.26

  	
  Certain Business Practices

  	
   

  
	
   

  	
  4.27

  	
  Interest
  Rate and Foreign Exchange Contracts

  	
   

  
	
   

  	
  4.28

  	
  Year 2000
  Matters

  	
   

  
	
   

  	
  4.29

  	
  Proxy Statement

  	
   

  
	
   

  	
  4.30

  	
  Brokers or
  Finders

  	
   

  
	
   

  	
  4.31

  	
  Disclosure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  REPRESENTATIONS
  AND WARRANTIES OF AVERY

  	
   

  
	
   

  	
  5.1

  	
  Organization and Good
  Standing

  	
   

  
	
   

  	
  5.2

  	
  Authority;
  No Conflict

  	
   

  
	
   

  	
  5.3

  	
  Capitalization

  	
   

  
	
   

  	
  5.4

  	
  Financial
  Statements

  	
   

  
	
   

  	
  5.5

  	
  Books and
  Records

  	
   

  
	
   

  	
  5.6

  	
  Title to Properties;
  Encumbrances

  	
   

  
	
   

  	
  5.7

  	
  Accounts
  Receivable

  	
   

  
	
   

  	
  5.8

  	
  No Undisclosed Liabilities

  	
   

  
	
   

  	
  5.9

  	
  Taxes

  	
   

  
	
   

  	
  5.10

  	
  No Material Adverse Change

  	
   

  
	
   

  	
  5.11

  	
  Compliance
  with Legal Requirements; Governmental Authorizations

  	
   

  
	
   

  	
  5.12

  	
  Legal Proceedings; Orders

  	
   

  
	
   

  	
  5.13

  	
  Absence of
  Certain Changes and Events

  	
   

  
	
   

  	
  5.14

  	
  Contracts;
  No Defaults

  	
   

  
	
   

  	
  5.15

  	
  Insurance

  	
   

  
	
   

  	
  5.16

  	
  Proxy
  Statement

  	
   

  
	
   

  	
  5.17

  	
  Tax Matters

  	
   

  
	
   

  	
  5.18

  	
  Brokers
  or Finders

  	
   

  
	
   

  	
  5.19

  	
  Disclosure

  	
   

  

 

ii

 

	
  6.

  	
  COVENANTS OF
  PRIMAL PRIOR TO CLOSING DATE

  	
   

  
	
   

  	
  6.1

  	
  Access
  and Investigation

  	
   

  
	
   

  	
  6.2

  	
  Delivery of Primal
  Disclosure Letter

  	
   

  
	
   

  	
  6.3

  	
  Operation
  of the Businesses of the Acquired Companies

  	
   

  
	
   

  	
  6.4

  	
  Negative
  Covenant

  	
   

  
	
   

  	
  6.5

  	
  Required
  Approvals

  	
   

  
	
   

  	
  6.6

  	
  Notification

  	
   

  
	
   

  	
  6.7

  	
  No Negotiation

  	
   

  
	
   

  	
  6.8

  	
  Best Efforts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  COVENANTS OF
  AVERY PRIOR TO CLOSING DATE

  	
   

  
	
   

  	
  7.1

  	
  Access and Investigation

  	
   

  
	
   

  	
  7.2

  	
  Approvals of
  Governmental Bodies

  	
   

  
	
   

  	
  7.3

  	
  Notification

  	
   

  
	
   

  	
  7.4

  	
  Best Efforts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  CONDITIONS
  PRECEDENT TO AVERY’S OBLIGATION TO CLOSE

  	
   

  
	
   

  	
  8.1

  	
  Accuracy of Representations

  	
   

  
	
   

  	
  8.2

  	
  Primal’s
  Performance

  	
   

  
	
   

  	
  8.3

  	
  Consents

  	
   

  
	
   

  	
  8.4

  	
  Additional
  Documents

  	
   

  
	
   

  	
  8.5

  	
  No Proceedings

  	
   

  
	
   

  	
  8.6

  	
  No
  Claim Regarding Stock Ownership or Merger Consideration

  	
   

  
	
   

  	
  8.7

  	
  No Prohibition

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  CONDITIONS
  PRECEDENT TO PRIMAL’S OBLIGATION TO CLOSE

  	
   

  
	
   

  	
  9.1

  	
  Accuracy of Representations

  	
   

  
	
   

  	
  9.2

  	
  Avery’s
  Performance

  	
   

  
	
   

  	
  9.3

  	
  Consents

  	
   

  
	
   

  	
  9.4

  	
  Additional
  Documents

  	
   

  
	
   

  	
  9.5

  	
  No Injunction

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  ADDITIONAL
  AGREEMENTS

  	
   

  
	
   

  	
  10.1

  	
  Meeting
  of Stockholders

  	
   

  
	
   

  	
  10.2

  	
  Tax Treatment

  	
   

  
	
   

  	
  10.3

  	
  Conveyance
  Taxes

  	
   

  
	
   

  	
  10.4

  	
  Voting
  Agreement

  	
   

  

 

iii

 

	
  11.

  	
  TERMINATION

  	
   

  
	
   

  	
  11.1

  	
  Termination
  Events

  	
   

  
	
   

  	
  11.2

  	
  Effect
  of Termination

  	
   

  
	
   

  	
  11.3

  	
  Purchase
  of 20% of the Shares of Primal of Primal Common Stock

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  INDEMNIFICATION; REMEDIES

  	
   

  
	
   

  	
  12.1

  	
  Survival;
  Right to Indemnification Not Affected By Knowledge

  	
   

  
	
   

  	
  12.2

  	
  Indemnification
  and Payment of Damages By Stockholders

  	
   

  
	
   

  	
  12.3

  	
  Time
  Limitations

  	
   

  
	
   

  	
  12.4

  	
  Limitations on
  Amount—Stockholders

  	
   

  
	
   

  	
  12.5

  	
  Escrow;
  Right of Set-Off

  	
   

  
	
   

  	
  12.6

  	
  Procedure
  for Indemnification—Third-Party Claims

  	
   

  
	
   

  	
  12.7

  	
  Procedure
  for Indemnification—Other Claims

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  DEFINITIONS; CONSTRUCTION

  	
   

  
	
   

  	
  “Acquired
  Companies”

  	
   

  
	
   

  	
  “Applicable
  Contract”

  	
   

  
	
   

  	
  “Avery”

  	
   

  
	
   

  	
  “Avery Applicable Contract”

  	
   

  
	
   

  	
  “Avery
  Common Stock”

  	
   

  
	
   

  	
  “Avery
  Disclosure Letter”

  	
   

  
	
   

  	
  “Avery Material Adverse
  Effect”

  	
   

  
	
   

  	
  “Avery
  Preferred Stock”

  	
   

  
	
   

  	
  “Avery Stock”

  	
   

  
	
   

  	
  “Balance Sheet”

  	
   

  
	
   

  	
  “Best Efforts”

  	
   

  
	
   

  	
  “Breach”

  	
   

  
	
   

  	
  “CGCL”

  	
   

  
	
   

  	
  “Closing”

  	
   

  
	
   

  	
  “Closing Date”

  	
   

  
	
   

  	
  “Consent”

  	
   

  
	
   

  	
  “Constituent Corporations”

  	
   

  
	
   

  	
  “Contemplated Transactions”

  	
   

  
	
   

  	
  “Contract”

  	
   

  
	
   

  	
  “Corsair
  Agreement”

  	
   

  
	
   

  	
  “Damages”

  	
   

  
	
   

  	
  “DGCL”

  	
   

  

 

iv

 

	
   

  	
  “Employment
  Agreements”

  	
   

  
	
   

  	
  “Encumbrance”

  	
   

  
	
   

  	
  “End-User
  Licenses”

  	
   

  
	
   

  	
  “Environment”

  	
   

  
	
   

  	
  “Environmental
  Law”

  	
   

  
	
   

  	
  “Environmental Liabilities”

  	
   

  
	
   

  	
  “ERISA”

  	
   

  
	
   

  	
  “Escrow
  Agreement”

  	
   

  
	
   

  	
  “GAAP”

  	
   

  
	
   

  	
  “Governmental
  Authorization”

  	
   

  
	
   

  	
  “Governmental
  Body”

  	
   

  
	
   

  	
  “Hazardous
  Materials”

  	
   

  
	
   

  	
  “HSR Act”

  	
   

  
	
   

  	
  “Intellectual Property
  Assets”

  	
   

  
	
   

  	
  “Interim
  Balance Sheet”

  	
   

  
	
   

  	
  “IRC”

  	
   

  
	
   

  	
  “IRS”

  	
   

  
	
   

  	
  “Knowledge”

  	
   

  
	
   

  	
  “Legal
  Requirement”

  	
   

  
	
   

  	
  “Material
  Avery Contract”

  	
   

  
	
   

  	
  “Merger”

  	
   

  
	
   

  	
  “Merger Sub”

  	
   

  
	
   

  	
  “Occupational Safety
  and Health Law”

  	
   

  
	
   

  	
  “Order”

  	
   

  
	
   

  	
  “Ordinary Course of
  Business”

  	
   

  
	
   

  	
  “Organizational Documents”

  	
   

  
	
   

  	
  “Outfront
  Software”

  	
   

  
	
   

  	
  “Person”

  	
   

  
	
   

  	
  “Plan”

  	
   

  
	
   

  	
  “Primal
  Disclosure Letter”

  	
   

  
	
   

  	
  “Primal
  Intellectual Property Asset”

  	
   

  
	
   

  	
  “Primal Material
  Adverse Effect

  	
   

  
	
   

  	
  “Proceeding”

  	
   

  
	
   

  	
  “Related Person”

  	
   

  
	
   

  	
  “Release”

  	
   

  
	
   

  	
  “Representative”

  	
   

  
	
   

  	
  “Securities Act”

  	
   

  
	
   

  	
  “Securityholder
  Agent”

  	
   

  

 

v

 

	
   

  	
  “Software”

  	
   

  
	
   

  	
  “Source Code”

  	
   

  
	
   

  	
  “Stockholders”

  	
   

  
	
   

  	
  “Stockholders’
  Releases”

  	
   

  
	
   

  	
  “Subscriber
  Assets”

  	
   

  
	
   

  	
  “Subsidiary”

  	
   

  
	
   

  	
  “Surviving
  Corporation”

  	
   

  
	
   

  	
  “Tax”

  	
   

  
	
   

  	
  “Tax Return”

  	
   

  
	
   

  	
  “Threatened”

  	
   

  
	
   

  	
  “Trading Day”

  	
   

  
	
   

  	
  “Value”

  	
   

  
	
   

  	
  “WBS”

  	
   

  
	
   

  	
  “WBS
  Transaction”

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  GENERAL PROVISIONS

  	
   

  
	
   

  	
  14.1

  	
  Expenses

  	
   

  
	
   

  	
  14.2

  	
  Public
  Announcements

  	
   

  
	
   

  	
  14.3

  	
  Confidentiality

  	
   

  
	
   

  	
  14.4

  	
  Notices

  	
   

  
	
   

  	
  14.5

  	
  Jurisdiction; Service
  of Process

  	
   

  
	
   

  	
  14.6

  	
  Further
  Assurances

  	
   

  
	
   

  	
  14.7

  	
  Waiver

  	
   

  
	
   

  	
  14.8

  	
  Entire Agreement and
  Modification

  	
   

  
	
   

  	
  14.9

  	
  Disclosure
  Letters

  	
   

  
	
   

  	
  14.10

  	
  Assignments,
  Successors, and Third-Party Rights

  	
   

  
	
   

  	
  14.11

  	
  Severability

  	
   

  
	
   

  	
  14.12

  	
  Interpretation

  	
   

  
	
   

  	
  14.13

  	
  Time of Essence

  	
   

  
	
   

  	
  14.14

  	
  Governing Law

  	
   

  
	
   

  	
  14.15

  	
  Counterparts

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Annex A

  	
  Form of Voting Agreement

  	
   

  
	
  Annex B

  	
  Certificate of Designations of
  Series F Junior Participating Convertible Preferred Stock 

  	
   

  
					

 

vi

 

	
  Exhibit 3.2(a)(i)

  	
  Form of Stockholders’ Releases

  	
   

  
	
  Exhibit 3.2(a)(ii)

  	
  Form of Employment Agreements

  	
   

  
	
  Exhibit
  3.2(a)(iii)

  	
  Form of
  Lockup Letters

  	
   

  
	
  Exhibit 3.2(b)

  	
  Escrow Agreement

  	
   

  
	
  Exhibit 3.2(d)

  	
  Investors Rights Agreement

  	
   

  
	
  Exhibit 8.4(b)

  	
  Form of Estoppel Certificates

  	
   

  

 

vii

 

Agreement
and Plan of Merger

 

This
AGREEMENT AND PLAN OF MERGER (this “Agreement”)is made as of March 19, 1999, by and among Avery
Communications, Inc., a Delaware corporation (“Avery”),
ACI Telecommunications Financial Services Corporation, a Delaware
corporation and wholly owned subsidiary of Avery (“Merger Sub”), Primal Systems, Inc., a California corporation (the “Primal”), Mark J. Nielsen, an individual resident
in San Juan Capistrano, California (“Nielsen”),
John Faltys, an individual resident in Orange, California (“Faltys”), Joseph R. Simrell, an individual
resident in Aliso Viejo, California (“Simrell”),
and David Haynes, an individual resident in Irvine, California (“Haynes,” and,
collectively with Nielsen, Faltys, and Simrell, the “Stockholders”).

 

RECITALS

 

A.            The Boards of
Directors of Avery, Merger Sub and Primal deem it advisable and in the best
interests of their respective companies and their respective stockholders to
enter into a business combination by means of the merger of Primal with and
into Merger Sub under the terms of this Agreement and have approved and adopted
this Agreement.

 

B.            Concurrently with the
execution and delivery of this Agreement and as a condition and inducement to
the willingness of Avery and Merger Sub to enter into this Agreement, certain
holders of common stock, with no par value per share (the “Primal Common Stock”), of Primal have each entered into a
Voting Agreement in the form attached hereto as Annex A  (the “Voting Agreement”) dated as of the date
hereof pursuant to which such holders have agreed to vote their shares of
Primal Common Stock in the manner set forth therein.

 

C.            Upon the terms and
subject to the conditions of this Agreement and in accordance with the General
Corporation Law of the State of Delaware (the “DGCL”) and the General Corporation Law
of the State of California (the “CGCL”), Primal will merge with
and into Merger Sub (the “Merger”)
and Merger Sub will survive (the “Surviving Corporation”).

 

D.            For United States
federal income tax purposes, it is intended that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the “Code”), and that this Agreement shall be,
and is hereby, adopted as a plan of reorganization for purposes of
Section 368 of the Code.

 

E.             For all purposes of
this Agreement, except as otherwise expressly provided or unless the context
otherwise requires, the terms defined in Section 13 have the meanings
assigned to them or referred to in Section 13, and include the plural as
well as the singular.

 

NOW, THEREFORE, in
consideration of the foregoing and the respective representations, warranties,
covenants and agreements set forth in this Agreement, the parties hereto,
intending to be legally bound, agree as follows:

 

 

AGREEMENT

 

1.            TERMS OF THE MERGER

 

1.1          STATUTORY MERGER

 

Subject to the terms and conditions and in reliance
upon the representations, warranties, covenants and agreements contained
herein, Primal will merge with and into Merger Sub at the Effective Time. The
terms and conditions of the Merger and the mode of carrying the same into
effect will be as set forth in this Agreement. As a result of the Merger, the
separate corporate existence of Primal will cease and Merger Sub will continue
as the surviving corporation and as a wholly owned subsidiary of Avery. Merger
Sub as the surviving corporation after the Merger is hereinafter sometimes
referred to as the “Surviving
Corporation.”

 

1.2          EFFECTIVE
TIME

 

Subject to the terms and conditions set forth in this Agreement (a) an
agreement of merger and accompanying officers’ certificates (together, the “CA Agreement of Merger”)
shall be duly executed and
acknowledged by Avery, Merger Sub and Primal and thereafter delivered to the
Secretary of State of the State of California for filing pursuant to the CGCL
on the Closing Date, and (b) a Certificate of Merger (the “Merger Certificate”) shall
be duly executed and acknowledged by Merger Sub and thereafter delivered to the
Secretary of State of the State of Delaware for filing pursuant to the DGCL on
the Closing Date. The Merger shall become effective at such time as a properly
executed copy of the CA Agreement of Merger is duly filed with the Secretary of
State of the State of California in accordance with the CGCL, or such later
time as Merger Sub and Primal may agree upon and set forth in the CA Agreement
of Merger and the Merger Certificate (the time the Merger becomes effective
being referred to herein as the “Effective Time”).

 

1.3          EFFECTS OF THE
MERGER

 

On
and after the Effective Time (a) the Merger in all respects shall have the
effect provided for in Section 259 of the DGCL, in Section 1107 of
the CGCL and in this Agreement; (b) the Surviving Corporation shall possess all
the rights, privileges, powers and franchises of a public as well as of a
private nature of each of the Constituent Corporations; (c) the Surviving
Corporation shall be subject to all of the restrictions, disabilities and
duties of each of the Constituent Corporations; (d) all property, real,
personal and mixed, and all debts due to either of the Constituent Corporations
on whatever account, as well as all other things in action or belonging to each
of the Constituent Corporations, shall be vested in the Surviving Corporation;
(e) all property, rights, privileges, powers and franchises and all and every
other interest of each of the Constituent Corporations shall be thereafter the
property of the Surviving Corporation as they were of the respective
Constituent Corporations, and the title to real estate (if any) vested by deed
or otherwise, in either of the Constituent Corporations, shall not revert or be
in any way impaired; (f) all rights of creditors and all liens upon any
property of either of the Constituent Corporations shall be preserved
unimpaired;

 

2

 

and
(g) all debts, liabilities and duties of the Constituent Corporations shall
thenceforth attach to the Surviving Corporation and may be enforced against it
to the same extent as if said debts, liabilities and duties had been incurred
by it.

 

1.4          CERTIFICATE OF INCORPORATION

 

Unless
otherwise determined by Avery prior to the Effective Time, at the Effective
Time, the Certificate of Incorporation of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
Certificate of Incorporation, except that Article 1 of the Certificate of
Incorporation of the Surviving Corporation shall be amended to read in its
entirety as follows: “The name of the corporation is Primal Solutions, Inc.”

 

1.5          BYLAWS

 

Unless
otherwise determined by Avery, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation
until thereafter amended.

 

1.6          DIRECTORS AND OFFICERS

 

The
director(s) of Merger Sub immediately prior to the Effective Time shall be the
director(s) of the Surviving Corporation, each to hold office in accordance
with the Certificate of Incorporation and Bylaws of the Surviving Corporation.
The officers of Merger Sub immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, each to hold office in
accordance with the Bylaws of the Surviving Corporation.

 

2.             CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES

 

2.1          MERGER CONSIDERATION; CONVERSION AND CANCELLATION OF SECURITIES

 

The
maximum number of shares of Avery Preferred Stock to be issued in exchange for
the acquisition by Avery of all outstanding shares of Primal Common Stock shall
not exceed the result of (i) 4,000,000 shares of Avery Preferred Stock minus
(ii) such number of shares of the Avery Preferred Stock as would, at the
Effective Time, be convertible into the number of shares of Avery Common Stock
to be reserved for issuance upon the exercise of options to be granted by Avery
to former employees of Primal (such result being herein referred to as the “Merger Consideration”).
At the Effective Time, by virtue of the Merger and without any action on the
part of the holders of any of the following securities:

 

(a)           Subject to the other
provisions of this Section 2, each share of Primal Common Stock issued and
outstanding immediately prior to the Effective Time (excluding any Primal
Common Stock described in Section 2.1 (c)) will be converted into the
right to receive that fraction of a share of Avery Preferred Stock equal to the
product (the “Preferred
Exchange Ratio”)  of (1) one share

 

3

 

of
Primal Common Stock multiplied by (2) a fraction, the numerator of which is the
Merger Consideration and the denominator of which is the lesser of (A)
11,311,196 or (B) the actual number of shares of Primal Common Stock
outstanding immediately prior to the Effective Time. Notwithstanding the
foregoing, if between the date of this Agreement and the Effective Time the
outstanding shares of Avery Stock or Primal Common Stock shall have been
changed into a different number of shares or a different class, by reason of
any stock dividend, subdivision, reclassification, recapitalization, split,
conversion, consolidation, combination or exchange of shares, the Preferred
Exchange Ratio will be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, conversion,
consolidation, combination or exchange of shares.

 

(b)           Subject to the other provisions of this
Section 2, all shares of Primal Common Stock will, upon conversion thereof
into shares of Avery Preferred Stock at the Effective Time, cease to be
outstanding and will automatically be canceled and retired, and each
certificate previously evidencing Primal Common Stock outstanding immediately
prior to the Effective Time (other than Primal Common Stock described in
Section 2.1 (c)) will thereafter represent only the right to receive (i)
the number of whole shares of Avery Preferred Stock and (ii) as provided in
Section 3.2(e), cash in lieu of fractional shares into which the shares of
Primal Common Stock represented by such certificate have been converted
pursuant to this Section 2.1(b). The holders of certificates previously
evidencing Primal Common Stock will cease to have any rights with respect to
such Primal Common Stock except as otherwise provided herein or by Law.

 

(c)           Notwithstanding any provision of this
Agreement to the contrary, each share of Primal Common Stock held in the
treasury of Primal and each share of Primal Common Stock, if any, owned by
Avery or any direct or indirect wholly owned Subsidiary of Avery or of Primal
immediately prior to the Effective Time will be canceled.

 

(d)           Each share of common stock, par value $.01
per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become one fully paid and nonassessable
share of common stock, par value $.01 per share, of the Surviving Corporation.

 

2.2          DISSENTING SHARES

 

(a)           Notwithstanding any provision of this
Agreement to the contrary, any shares of Primal Common Stock held by a holder
who has demanded and perfected appraisal or dissenters’ rights for such shares
in accordance with the CGCL and who, as of the Effective Time, has not
effectively withdrawn or lost such appraisal or dissenters’ rights (“Dissenting Shares”) shall
not be converted into or represent a right to receive Avery Preferred Stock
pursuant to Section 2.1, but the holder thereof shall only be entitled to
such rights as are granted by the CGCL.

 

(b)           Notwithstanding the provisions of
subsection (a), if any holder of shares of Primal Common Stock who demands
appraisal of such shares under the CGCL shall effectively withdraw or lose
(through failure to perfect or otherwise) the right to appraisal, then, as of
the later of the

 

4

 

Effective
Time and the occurrence of such event, such holder’s shares shall automatically
be converted into and represent only the right to receive Avery Preferred Stock
and payment for any fractional share as provided in Section 2.3(c),
without interest thereon, upon surrender of the certificate representing such
shares.

 

(c)           Primal shall give Avery (i) prompt notice of
any written demands for appraisal of any shares of Primal Common Stock,
withdrawals of such demands, and any other instruments served pursuant to the
CGCL and received by Primal and (ii) the opportunity to participate in all
negotiations and proceedings with respect to demands for appraisal under the
CGCL. Primal shall not, except with the prior written consent of Avery,
voluntarily make any payment with respect to any demands for appraisal of
capital stock of Primal or offer to settle or settle any such demands.

 

2.3          EXCHANGE OF CERTIFICATES

 

(a)           Exchange Fund; Escrow. On the day of the Effective Time, Avery will
deposit, or cause to be deposited, with the Exchange Agent, for the benefit of
the former holders of Primal Common Stock, for exchange in accordance with this
Section 2, through the Exchange Agent, certificates representing no more
than 2,000,000 shares of Avery Preferred Stock issuable pursuant to Section 2.1in exchange for certificates
representing Primal Common Stock immediately prior to the Effective Time (such
shares of Avery Preferred Stock so deposited, together with cash realized and
held by the Exchange Agent for the benefit of such former holders of Primal
Common Stock in accordance with Section 2.3(e), being referred to as the “Exchange Fund”). Thereafter,
Avery will deposit, or cause to be deposited, with the Exchange Agent, for the
benefit of any former holders of Primal Common Stock who have not yet
surrendered their shares of Primal Common Stock for exchange, at the
appropriate payment date, the amount of dividends or other distributions, with
a record date after the Effective Time but prior to surrender, payable with
respect to any shares of Avery Preferred Stock remaining in the Exchange Fund
on such record date. The Exchange Agent will, pursuant to irrevocable
instructions from Avery, deliver Avery Preferred Stock and any such dividends
or distributions related thereto, in exchange for certificates theretofore
evidencing Primal Common Stock surrendered to the Exchange Agent pursuant to
Section 2.3(c).

 

On
the day of the Effective Time, Avery will deposit, or cause to be deposited,
with the Escrow Agent 2,000,000 shares of the Avery Preferred Stock (the “Escrow Shares”)
to be held by the Escrow Agent
pursuant to the terms of this Agreement and the Escrow Agreement.

 

(b)           Letter of Transmittal.  Promptly after the Effective Time, Avery will cause the Exchange Agent
to mail to each record holder of a certificate or certificates representing
Primal Common Stock immediately prior to the Effective Time (i) a letter of
transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the certificates formerly representing Primal Common Stock
shall pass, only upon delivery of such certificates to the Exchange Agent and
shall be in such form and have such other provisions, including appropriate
provisions with respect to back-up withholding, as Avery may reasonably specify,
and (ii) instructions for use in effecting the surrender of the certificates
formerly representing Primal Common Stock. Upon surrender of

 

5

 

a
certificate formerly representing Primal Common Stock for cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, the holder thereof shall
be entitled to receive in exchange therefor that portion of the Exchange Fund which
such holder has the right to receive pursuant to the provisions of this
Section 2, after giving effect to any required withholding Tax, and the
certificate formerly representing Primal Common Stock so surrendered shall
forthwith be canceled. No interest will be paid or accrued on the cash to be
paid which is in the Exchange Fund.

 

(c)           Exchange Procedures. Promptly after the Effective Time, the
Exchange Agent will distribute to each former holder of Primal Common Stock,
upon surrender to the Exchange Agent for cancellation of one or more
certificates, accompanied by a duly executed letter of transmittal, that
theretofore evidenced shares of Primal Common Stock, certificates evidencing
the appropriate number of shares of Avery Preferred Stock into which such
shares of Primal Common Stock were converted pursuant to the Merger, less such
holder’s pro rata share of the Escrow Shares, and any dividends or
distributions related thereto which such former holder of Primal Common Stock
is entitled to receive pursuant to the provisions of this Section 2. If
shares of Avery Preferred Stock are to be issued to a Person other than the
Person in whose name the surrendered certificate or certificates are
registered, it will be a condition of issuance of Avery Preferred Stock that
the surrendered certificate or certificates shall be properly endorsed, with
signatures guaranteed by a member firm of the New York Stock Exchange or a bank
chartered under the Laws of the United States, or otherwise in proper form for
transfer and that the Person requesting such payment shall pay any transfer or
other Taxes required by reason of the issuance of Avery Preferred Stock to a
Person other than the registered holder of the surrendered certificate or
certificates or such Person shall establish to the satisfaction of Avery that
any such Tax has been paid or is not applicable. Notwithstanding the foregoing,
neither the Exchange Agent nor any party hereto will be liable to any former
holder of Primal Common Stock for any Avery Preferred Stock or cash or
dividends or distributions thereon delivered to a public official pursuant to
any applicable escheat Law.

 

(d)           Distributions with Respect
to Unexchanged Shares of Primal Common Stock. No dividends or other distributions declared
or made with respect to Avery Preferred Stock on or after the Effective Time
will be paid to the holder of any certificate that theretofore evidenced shares
of Primal Common Stock until the holder of such certificate shall surrender
such certificate. Subject to the effect of any applicable abandoned property,
escheat or other similar Laws, following surrender of any such certificate,
there will be paid from the Exchange Fund to the holder of the certificates
evidencing whole shares of Avery Preferred Stock issued in exchange therefor,
without interest, (i) promptly, the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of Avery Preferred Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions, with a record date after
the Effective Time but prior to surrender and a payment date occurring after
surrender, payable with respect to such whole shares of Avery Preferred Stock.

 

6

 

(e)           No Fractional Shares. No certificates or scrip representing
fractional shares of Avery Preferred Stock shall be issued upon the surrender
for exchange of certificates formerly representing shares of Primal Common
Stock pursuant to this Section 2; no dividend, stock split or other change
in the capital structure of Avery shall relate to any fractional security; and
such fractional interests shall not entitle the owner thereof to vote or to any
rights of a security holder. In lieu of a fraction of a share of Avery
Preferred Stock, each holder of shares of Primal Common Stock who would
otherwise be entitled to a fraction of a share of Avery Preferred Stock shall
be entitled to receive, except as provided below, that number of whole shares
of Avery Preferred Stock determined, to the extent reasonably practicable, by
rounding such fraction upward or downward to the nearest whole number of shares
of Avery Preferred Stock. Notwithstanding the foregoing, however, appropriate
adjustments, either upward or downward, and in no event in an amount equal to
or exceeding one whole share of Avery Preferred Stock, shall be made as
necessary to the determination of the number of whole shares of Avery Preferred
Stock to which a holder of Primal Common Stock is entitled so that a total of
2,000,000 shares of the Avery Preferred Stock are issued to the holders of the
Primal Common Stock at the Effective Time and so that a total 2,000,000 shares
of Avery Preferred Stock are deposited with the Escrow Agent pursuant to the
terms of this Agreement and the Escrow Agreement on the day of the Effective
Time.

 

(f)            Termination of Exchange
Fund. Any portion of the
Exchange Fund which remains unclaimed by the former holders of Primal Common
Stock for twelve months after the Effective Time will be delivered to Avery,
upon demand, and any former holders of Primal Common Stock who have not
theretofore complied with this Section 2 will, subject to applicable
abandoned property, escheat and other similar Laws, thereafter look only to
Avery for Avery Preferred Stock and any cash to which they are entitled.

 

(g)           Withholding of Tax.  Avery or the Exchange Agent will be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
former holder of Primal Common Stock such amounts as Avery (or any Affiliate
thereof) or the Exchange Agent are required to deduct and withhold with respect
to the making of such payment under the Code, or any provision of state, local
or foreign Tax Law. To the extent that amounts are so withheld by Avery or the
Exchange Agent, such withheld amounts will be treated for all purposes of this
Agreement as having been paid to the former holder of Primal Common Stock in
respect of whom such deduction and withholding was made by Avery or the
Exchange Agent.

 

(h)           Lost Certificates. If any certificate evidencing Primal Common
Stock shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such certificate to be lost,
stolen or destroyed and, if required by Avery, the posting by such Person of a
bond, in such reasonable amount as Avery or its transfer agent may direct, as
indemnity against claims that may be made against it with respect to such
certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed certificate that number of shares of Avery Preferred Stock to which
the holder may be entitled pursuant to this Section 2 and cash and any
dividends or other distributions to which the holder thereof may be entitled
pursuant to Section 2.3(d) or Section 2.3(e).

 

7

 

2.4          STOCK TRANSFER BOOKS

 

At the Effective Time, the stock transfer books of Primal will be
closed and there will be no further registration of transfers of shares of
Primal Common Stock thereafter on the records of Primal. If, after the
Effective Time, certificates formerly representing Primal Common Stock are
presented to the Surviving Corporation, they shall be canceled and exchanged
for certificates representing Avery Stock and such other cash and property as
are then in the Exchange Fund.

 

3.             CLOSING

 

3.1          CLOSING

 

The
Closing will take place at the offices of Winstead Sechrest & Minick P.C., 5400 Renaissance Tower,
1201 Elm Street, Dallas, Texas, at 10:00 a.m. on the tenth Business Day
following the date on which the conditions to the Closing have been satisfied
or waived and Avery notifies Primal of its election, which Avery may make in
its sole and absolute discretion, to cause the Merger and the Closing to occur,
or at such other place, time and date as the parties hereto may agree. At the
conclusion of the Closing on the Closing Date, the parties hereto will cause
the Merger Certificate to be filed with the Secretary of State of the State of
Delaware and the CA Agreement of Merger to be filed with the Secretary of State
of the State of California. Subject to the provisions of Section 11,
failure to consummate the Merger provided for in this Agreement on the date and
time and at the place determined pursuant to this Section 3.1 will not
result in the termination of this Agreement and will not relieve any party of
any obligation under this Agreement.

 

3.2          CLOSING OBLIGATIONS

 

At the Closing:

 

(a)           Primal will deliver to
Avery:

 

(i)            releases in the form of Exhibit 3.2(a)(i)
executed by Stockholders (collectively, “Stockholders’ Releases”);

 

(ii)           employment agreements in the form of Exhibit
3.2(a)(ii) executed by Faltys, Simrell and Haynes (collectively, “Employment Agreements”); and

 

(iii)          letters in the form of Exhibit 3.2(a)(iii)
executed by the Stockholders (collectively, the “Lockup Letters”).

 

(b)           Avery and Stockholders will enter into an
escrow agreement in the form of Exhibit 3.2(b) (the “Escrow Agreement”) with
Bank One, Texas, NA (the “Escrow Agent”).

 

(c)           Avery will deliver, or cause to be delivered, the
Escrow Shares to the Escrow Agent.

 

8

 

(d)           Avery and Stockholders
will enter into an investors rights agreement in the form of Exhibit 3.2(d)
(the “Investors Rights Agreement”).

 

3.3          ADJUSTMENT OF MERGER CONSIDERATION; CONTINGENT MERGER
CONSIDERATION

 

In addition to the Merger
Consideration, the holders of Primal Common Stock at the Effective Time shall
be entitled to a release of the Escrow Shares and to receive additional merger
consideration consisting of shares of the Avery Preferred Stock (the “Additional Merger Consideration”)
based upon the aggregate revenues and earnings of the Surviving Corporation for
the period commencing August 1, 1999, and ending on July 31, 2000
(the “Earn-Out Period”), as follows:

 

AUGUST 1, 1999 TO JULY 31, 2000

 

	
  REVENUES

  	
   

  	
  BASE LOSS

  	
   

  	
  LOSS

  DIFFERENTIAL

  MULTIPLIER

  	
   

  	
  SHARES OF

  AVERY PREFERRED STOCK(1)

  (SUBJECT TO ADJUSTMENT(2))

  	
   

  
	
  $

  	
  2,550,000

  	
   

  	
  $

  	
  1,082,000

  	
   

  	
  100

  	
  %

  	
  0

  	
   

  
	
  $

  	
  3,060,000

  	
   

  	
  $

  	
  1,082,000

  	
   

  	
  120

  	
  %

  	
  300,000

  	
   

  
	
  $

  	
  3,825,000

  	
   

  	
  $

  	
  1,082,000

  	
   

  	
  150

  	
  %

  	
  850,000

  	
   

  
	
  $

  	
  4,080,000

  	
   

  	
  $

  	
  1,082,000

  	
   

  	
  160

  	
  %

  	
  1,250,000

  	
   

  
	
  $

  	
  4,590,000

  	
   

  	
  $

  	
  1,082,000

  	
   

  	
  180

  	
  %

  	
  2,000,000

  	
   

  
	
  $

  	
  5,100,000

  	
   

  	
  $

  	
  1,082,000

  	
   

  	
  200

  	
  %

  	
  $

  	
  1,250,000

  	
   

  
	
  $

  	
  5,610,000

  	
   

  	
  $

  	
  1,122,000

  	
   

  	
  220

  	
  %

  	
  $

  	
  2,250,000

  	
   

  
	
  $

  	
  6,375,000

  	
   

  	
  $

  	
  1,275,000

  	
   

  	
  250

  	
  %

  	
  $

  	
  4,000,000

  	
   

  
	
  $

  	
  6,885,000

  	
   

  	
  $

  	
  1,377,000

  	
   

  	
  270

  	
  %

  	
  $

  	
  5,250,000

  	
   

  
	
  $

  	
  7,650,000

  	
   

  	
  $

  	
  1,530,000

  	
   

  	
  300

  	
  %

  	
  $

  	
  6,900,000

  	
   

  
	
  $

  	
  8,160,000

  	
   

  	
  $

  	
  1,632,000

  	
   

  	
  320

  	
  %

  	
  $

  	
  8,000,000

  	
   

  

 

(1)           Numbers
expressed in shares in this column represent shares that will be released from
the Escrow Shares. Numbers expressed in dollars in this column will be paid in
additional shares of Avery Preferred Stock, such number of shares being
determined as provided below.

(2)           The
shares of Avery Preferred Stock are subject to reduction as provided below.

 

9

 

The
number of shares of Avery Preferred Stock eligible for release from the Escrow
Agreement or that may be issued as Additional Merger Consideration, in each
case as set forth in the table above, will be reduced if Primal’s loss for the
Earn-Out Period, determined without any reduction for taxes, depreciation or
amortization (the “Actual
Operating Loss”),
were to be more than the Base
Loss. The Base Loss for the Earn-Out Period for all revenue amounts up to
$5,100,000 set forth in the table above shall be deemed to be $1,082,000. For
revenues greater than $5,100,000 set forth in the table above, the Base Loss
shall be deemed to equal to 20% of Primal’s actual revenues for the Earn-Out
Period. If the Actual Operating Loss is greater than the Base Loss, then the
amount by which the Actual Operating Loss exceeds the Base Loss shall be
multiplied by the “Loss Differential Multiplier” specified in the table above.
The resulting dollar amount will be deducted from the earn-out amounts
expressed in dollars in the table above, or reduce the number of Escrow Shares
eligible for release from the Escrow Agreement set forth in the table above,
such number of shares being determined by first dividing (i) the resulting
dollar amount by (ii) the Value of a share of Avery Common Stock on the
Determination Date, and then multiplying that result by the “Current Conversion
Price” for the Avery Preferred Stock on the Determination Date.

 

The
maximum number of shares of Avery Preferred Stock that may be issued as
Additional Merger Consideration shall not exceed 4,000,000 shares of Avery
Preferred Stock.

 

For
purposes of determining the number of shares of Avery Preferred Stock to be
issued as Additional Merger Consideration, the Value of a share of Avery Common
Stock shall be equal to the greater of (i) the Value of a share of Avery Common
Stock on the Determination Date or (ii) $2.00. The amounts expressed in dollars
in the table above shall be divided by the Value of a share of Avery Common
Stock as so determined. The number of shares of Avery Preferred Stock, if any,
to be issued as Additional Merger Consideration shall be determined by
multiplying such number by the “Current Conversion Price” for the Avery
Preferred Stock on the Determination Date.

 

To
the extent that less than all the Escrow Shares are entitled to be released
from the Escrow Agreement because the thresholds set forth in the table above
are not met, such Escrow Shares not released shall be returned to Avery for
cancellation and the holders of shares of the Primal Common Stock at the
Effective Time shall have no rights thereto whatsoever.

 

Notwithstanding
the foregoing, if between the date of this Agreement and the Determination Date
the outstanding shares of Avery Preferred Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, conversion,
consolidation, combination or exchange of shares, the provisions for
determining the Additional Merger Consideration will be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, conversion, consolidation, combination or exchange of
shares.

 

10

 

3.4          CONTINGENT PAY-OUT PROCEDURES

 

(a)           Avery will prepare and will cause
PricewaterhouseCoopers LLP, Avery’s certified public accountants, to review
financial statements (“Closing
Financial Statements”) of Primal for the Earn-Out Period. Avery will deliver the Closing
Financial Statements to the Stockholders within forty-five days after the last
day of the Earn-Out Period. If within thirty days following delivery of the
Closing Financial Statements, the Stockholders have not given Avery notice of
their objection to the Closing Financial Statements (such notice must contain a
statement of the basis of such objection), then the revenues and earnings or
losses reflected in the Closing Financial Statements will be used in computing
the Additional Merger Consideration. If Avery gives such notice of objection,
then the issues in dispute will be submitted to Ernst & Young LLP,
certified public accountants (the “Accountants”), for
resolution. If issues in dispute are submitted to the Accountants for
resolution, (i) each party will furnish to the Accountants such workpapers and
other documents and information relating to the disputed issues as the Accountants
may request and are available to that party or its Subsidiaries (or its
independent public accountants), and will be afforded the opportunity to
present to the Accountants any material relating to the determination and to
discuss the determination with the Accountants; (ii) the determination by the
Accountants, as set forth in a notice delivered to both parties by the
Accountants, will be binding and conclusive on the parties; and (iii) Avery and
Stockholders will each bear 50% of the fees of the Accountants for such
determination. The date on which the final determination of the Additional
Merger Consideration is made is herein called the “Determination Date.”

 

(b)           On the tenth business day following the
Determination Date, Avery will cause to be released from the Escrow Agreement,
or will issue, or cause to be issued, or both, shares of Avery Preferred Stock
equal to the Additional Merger Consideration.

 

4.             REPRESENTATIONS AND WARRANTIES OF
PRIMAL

 

WBS is expressly excluded from any representation and warranty of
Primal contained herein. Subject to the foregoing, Primal represents and
warrants to Avery as follows:

 

4.1          ORGANIZATION AND GOOD STANDING

 

(a)           Part 4.1 of the Primal Disclosure Letter
contains a complete and accurate list for each Acquired Company of its name,
its jurisdiction of incorporation, other jurisdictions in which it is
authorized to do business, and its capitalization (including the identity of
each stockholder and the number of shares held by each). Each Acquired Company
is a corporation duly organized, validly existing, and in good standing under
the laws of its jurisdiction of incorporation, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all
its obligations under Applicable Contracts. Each Acquired Company is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of the activities
conducted

 

11

 

by
it, requires such qualification, except for such failures to be so qualified
and in good standing that would not have a Primal Material Adverse Effect.

 

(b)           Primal has delivered to Avery copies of the
Organizational Documents of each Acquired Company, as currently in effect.

 

4.2          AUTHORITY; NO CONFLICT

 

(a)           This Agreement constitutes the legal, valid,
and binding obligation of Primal, enforceable against Primal in accordance with
its terms. Primal has the absolute and unrestricted right, power, authority,
and capacity to execute and deliver this Agreement and to perform its
obligations under this Agreement.

 

(b)           Except as set forth in Part 4.2 of the Primal
Disclosure Letter, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time):

 

(i)            contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents of the Acquired
Companies, or (B) any resolution adopted by the board of directors or the
stockholders of any Acquired Company;

 

(ii)           contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which any
Acquired Company, or any of the assets owned or used by any Acquired Company,
may be subject;

 

(iii)          contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by any Acquired Company or that
otherwise relates to the business of, or any of the assets owned or used by,
any Acquired Company;

 

(iv)          cause Avery or any Acquired Company to become
subject to, or to become liable for the payment of, any Tax;

 

(v)           cause any of the assets owned by any Acquired
Company to be reassessed or revalued by any taxing authority or other
Governmental Body;

 

(vi)          contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any Applicable Contract;
or

 

12

 

(vii)         result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or used by any
Acquired Company.

 

Except
as set forth in Part 4.2 of the Primal Disclosure Letter, no Acquired Company
is or will be required to give any notice to or obtain any Consent from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.

 

4.3          CAPITALIZATION

 

(a)           The authorized equity securities of Primal
consist of 50,000,000 shares of common stock, no par value per share, of which
8,956,003 shares are issued and outstanding and constitute the Shares. The
Primal Common Stock is held of record by the persons, with the addresses of
record and in the amounts set forth on Part 4.3(a) of the Primal Disclosure
Letter, along with the vesting schedule for such shares, if any. Except as
set forth on Part 4.3(a) of the Primal Disclosure Letter, all outstanding
shares of Primal Common Stock are duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights created by statute, the
Articles of Incorporation or Bylaws of the Company or any agreement to which
the Company is a party or by which it is bound.

 

(b)           The Company has reserved 2,750,000 shares of
Common Stock for issuance to employees and consultants pursuant to the 1998
Stock Option Plan (the “Primal
Option Plan”) of Primal, of which 2,355,193 shares are subject
to outstanding, unexercised options (each, a ‘‘Primal Option”), 644,413 shares remain
available for future grant and no shares have been issued pursuant to the
exercise of options issued under the Primal Option Plan. Part 4.3(b) of the
Primal Disclosure Letter sets forth for each outstanding Primal Option the name
of the holder of such Primal Option, the domicile address of such holder, the
number of shares of Primal Common Stock subject to such Primal Option, the
exercise price of such Primal Option, and the vesting schedule for such
Primal Option, including the extent vested to date and whether the
exercisability of such Primal Option will be accelerated and become exercisable
by reason of the transactions contemplated by this Agreement.   Except for the Primal Option Plan and the
Primal Options granted, issued and outstanding thereunder, no shares of Primal
Common Stock are reserved for issuance, and there are no contracts, agreements,
commitments or arrangements obligating Primal to offer, sell, issue or grant
any shares of, or any options, warrants or rights of any kind to acquire any
shares of, or any securities that are convertible into or exchangeable for any
shares of, capital stock of Primal, to redeem, purchase or acquire, or offer to
purchase or acquire, any outstanding shares of, or any outstanding options,
warrants or rights of any kind to acquire any shares of, or any outstanding
securities that are convertible into or exchangeable for any shares of, capital
stock of Primal or to grant any Encumbrance on any shares of capital stock of
Primal.

 

(c)           The authorized, issued and outstanding
capital stock of, or other equity interests in, each of Primal’s Subsidiaries
and the names of the holders of record of the capital stock or other equity
interests of each such Subsidiary, in each case, as of the date hereof, are set
forth in Part 4.3(c)

 

13

 

of
the Primal Disclosure Letter. The issued and outstanding shares of capital
stock of, or other equity interests in, each of the Subsidiaries of Primal that
are owned by Primal or any of its Subsidiaries have been duly authorized and
are validly issued, and, with respect to capital stock, are fully paid and
nonassessable, and were not issued in violation of any preemptive or similar
rights of any Person. All such issued and outstanding shares or other equity
interests, that are indicated as owned by Primal or one of its Subsidiaries in
Part 4.3(c) of Primal’s Disclosure Letter, are owned beneficially as set forth
therein and free and clear of all Encumbrances. No shares of capital stock of,
or other equity interests in, any Subsidiary of Primal are reserved for
issuance, and there are no contracts, agreements, commitments or arrangements
obligating Primal or any of its Subsidiaries (i) to offer, sell, issue, grant,
pledge, dispose of or encumber any shares of capital stock of, or other equity
interests in, or any options, warrants or rights of any kind to acquire any
shares of capital stock of, or other equity interests in, or any securities
that are convertible into or exchangeable for any shares of capital stock of,
or other equity interests in, any of the Subsidiaries of Primal, (ii) to
redeem, purchase or acquire, or offer to purchase or acquire, any outstanding
shares of capital stock of, or other equity interests in, or any outstanding
options, warrants or rights of any kind to acquire any shares of capital stock
of, or other equity interest in, or any outstanding securities that are
convertible into or exchangeable for, any shares of capital stock of, or other
equity interests in, any of the Subsidiaries of Primal or (iii) to grant any
Encumbrance on any outstanding shares of capital stock of, or other equity
interest in, any of the Subsidiaries of Primal.

 

4.4          FINANCIAL STATEMENTS

 

Primal has delivered to Avery; (a) an unaudited balance sheet of Primal
as at December 31, 1998 (the “Balance Sheet”), and the related unaudited statements of income, changes in
stockholders’ equity, and cash flows for the fiscal year then ended, and (b) an
unaudited balance sheet of Primal as at February 28, 1999 (the “Interim Balance Sheet”),
and the related unaudited
statements of income, changes in stockholders’ equity, and cash flows for the
two-months then ended, including in each case the notes thereto. Such financial
statements and notes fairly present the financial condition and the results of
operations, changes in stockholders’ equity, and cash flows of Primal as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP, subject, in the case of interim
financial statements, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be materially adverse) and
the absence of notes (that, if presented, would not differ materially from
those included in the Balance Sheet); the financial statements referred to in
this Section 4.4 reflect the consistent application of such accounting
principles throughout the periods involved.

 

4.5          BOOKS AND RECORDS

 

The
books of account, minute books, stock record books, and other records of the
Acquired Companies, all of which have been made available to Avery, are
complete and correct and have been maintained in accordance with sound business
practices and the requirements of Section 13(b)(2) of the Securities
Exchange Act of 1934, as amended (regardless of whether or not the Acquired
Companies are subject to that Section), including the maintenance of an
adequate system of internal

 

14

 

controls. The minute
books of the Acquired Companies contain accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders, the Boards
of Directors, and committees of the Boards of Directors of the Acquired
Companies, and no meeting of any such stockholders, Board of Directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books. At the Closing, all of those books and records
will be in the possession of the Acquired Companies.

 

4.6          TITLE TO PROPERTIES; ENCUMBRANCES

 

Part 4.6 of the Primal
Disclosure Letter contains a complete and accurate list of all real property,
leaseholds, or other interests therein owned by any Acquired Company. The
Acquired Companies own (with good and marketable title in the case of real
property, subject only to the matters permitted by the following sentence) all
the properties and assets (whether real, personal, or mixed and whether
tangible or intangible) that they purport to own located in the facilities
owned or operated by the Acquired Companies or reflected as owned in the books
and records of the Acquired Companies, including all of the properties and
assets reflected in the Balance Sheet and the Interim Balance Sheet (except for
assets held under capitalized leases disclosed or not required to be disclosed
in Part 4.6 of the Primal Disclosure Letter and personal property sold since
the date of the Balance Sheet and the Interim Balance Sheet, as the case may
be, in the Ordinary Course of Business), and all of the properties and assets
purchased or otherwise acquired by the Acquired Companies since the date of the
Balance Sheet (except for personal property acquired and sold since the date of
the Balance Sheet in the Ordinary Course of Business and consistent with past
practice). All material properties and assets reflected in the Balance Sheet
and the Interim Balance Sheet are free and clear of all Encumbrances and are
not, in the case of real property, subject to any rights of way, building use
restrictions, exceptions, variances, reservations, or limitations of any nature
except, with respect to all such properties and assets, (a) mortgages or
security interests shown on the Balance Sheet or the Interim Balance Sheet as
securing specified liabilities or obligations, with respect to which no default
(or event that, with notice or lapse of time or both, would constitute a
default) exists, (b) mortgages or security interests incurred in connection with
the purchase of property or assets after the date of the Interim Balance Sheet
(such mortgages and security interests being limited to the property or assets
so acquired), with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (c) liens for
current taxes not yet due, and (d) with respect to real property, (i) minor
imperfections of title, if any, none of which is substantial in amount,
materially detracts from the value or impairs the use of the property subject
thereto, or impairs the operations of any Acquired Company, and (ii) zoning
laws and other land use restrictions that do not impair the present or
anticipated use of the property subject thereto.  All buildings, plants, and structures owned by the Acquired
Companies lie wholly within the boundaries of the real property owned by the
Acquired Companies and do not encroach upon the property of, or otherwise
conflict with the property rights of, any other Person.

 

15

 

4.7          CONDITION AND SUFFICIENCY OF ASSETS

 

The
buildings, plants, structures, and equipment of the Acquired Companies are
sufficient for the continued conduct of the Acquired Companies’ businesses
after the Closing in substantially the same manner as conducted prior to the
Closing.

 

4.8          ACCOUNTS RECEIVABLE

 

All
accounts receivable of the Acquired Companies that are reflected on the Balance
Sheet or the Interim Balance Sheet or on the accounting records of the Acquired
Companies as of the Closing Date (collectively, the “Accounts Receivable”)
represent or will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business. Unless paid
prior to the Closing Date, the Accounts Receivable are or will be as of the
Closing Date current and collectible net of the respective reserves shown on
the Balance Sheet or the Interim Balance Sheet or on the accounting records of
the Acquired Companies as of the Closing Date (which reserves are adequate and
calculated consistent with past practice and, in the case of the reserve as of
the Closing Date, will not represent a greater percentage of the Accounts
Receivable as of the Closing Date than the reserve reflected in the Interim Balance
Sheet represented of the Accounts Receivable reflected therein and will not
represent a material adverse change in the composition of such Accounts
Receivable in terms of aging). Subject to such reserves, and except as set
forth in Part 4.8 of the Primal Disclosure Letter, each of the Accounts
Receivable either has been or will be collected in full, without any set-off,
within ninety days after the day on which it first becomes due and payable.
There is no contest, claim, or right of set-off, other than returns in the
Ordinary Course of Business, under any Contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable. Part
4.8 of the Primal Disclosure Letter contains a complete and accurate list of all
Accounts Receivable as of the date of the Interim Balance Sheet, which list
sets forth the aging of such Accounts Receivable.

 

4.9          INVENTORY

 

None
of the Acquired Companies has or owns any inventory, whether or not required to
be reflected in the Balance Sheet or the Interim Balance Sheet.

 

4.10        NO UNDISCLOSED LIABILITIES

 

Except
as set forth in Part 4.10 of the Primal Disclosure Letter, the Acquired
Companies have no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the Balance Sheet
or the Interim Balance Sheet and current liabilities incurred in the Ordinary
Course of Business since the respective dates thereof.

 

16

 

4.11        TAXES

 

(a)           The Acquired Companies have filed or caused
to be filed (on a timely basis since June 17, 1996) all Tax Returns that
are or were required to be filed by or with respect to any of them, either
separately or as a member of a group of corporations, pursuant to applicable
Legal Requirements.  Primal has
delivered to Avery copies of, and Part 4.11 of the Primal Disclosure Letter
contains a complete and accurate list of, all such Tax Returns filed since
June 17, 1996. The Acquired Companies have paid, or made provision for the
payment of, all Taxes that have or may have become due pursuant to those Tax
Returns or otherwise, or pursuant to any assessment received by any Acquired
Company, except such Taxes, if any, as are listed in Part 4.11 of the Primal
Disclosure Letter and are being contested in good faith and as to which
adequate reserves (determined in accordance with GAAP) have been provided in
the Balance Sheet and the Interim Balance Sheet.

 

(b)           None of the United States federal and state
income Tax Returns of any Acquired Company subject to such Taxes has been
audited by the IRS or relevant state tax authorities. Except as described in
Part 4.11 of the Primal Disclosure Letter, no Acquired Company has given or
been requested to give waivers or extensions (or is or would be subject to a
waiver or extension given by any other Person) of any statute of limitations
relating to the payment of Taxes of any Acquired Company or for which any Acquired
Company may be liable.

 

(c)           The charges, accruals, and reserves with
respect to Taxes on the respective books of each Acquired Company are adequate
(determined in accordance with GAAP) and are at least equal to that Acquired
Company’s liability for Taxes. There exists no proposed tax assessment against
any Acquired Company except as disclosed in the Balance Sheet or in Part 4.11
of the Primal Disclosure Letter. No consent to the application of
Section 341(f)(2) of the IRC has been filed with respect to any property
or assets held, acquired, or to be acquired by any Acquired Company. All Taxes
that any Acquired Company is or was required by Legal Requirements to withhold
or collect have been duly withheld or collected and, to the extent required,
have been paid to the proper Governmental Body or other Person.

 

(d)           All Tax Returns filed by (or that include on
a consolidated basis) any Acquired Company are true, correct, and complete.
There is no tax sharing agreement that will require any payment by any Acquired
Company after the date of this Agreement. No Acquired Company is, or within the
five-year period preceding the Closing Date has been, an “S” corporation.

 

4.12        NO MATERIAL ADVERSE CHANGE

 

Since
the date of the Balance Sheet, there has not been any Primal Material Adverse
Effect, and no event has occurred or circumstance exists that may result in any
Primal Material Adverse Effect.

 

17

 

4.13        EMPLOYEE BENEFITS

 

(a)           Part 4.13 of the Primal’s Disclosure Letter
contains a true and complete list of each deferred compensation, incentive
compensation, stock purchase, stock option and other equity compensation plan,
“welfare” plan, fund or program (within the meaning of ERISA § 3(1)); each
“pension” plan, fund or program (within the meaning of ERISA § 3(2)); each
employment, termination or severance agreement with individuals whose annual
compensation is at a base rate exceeding $50,000, and each other material
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is sponsored, maintained or contributed to or required to be contributed
to by Primal or any entity, that together with Primal would be deemed a “single
employer” within the meaning of ERISA § 4001(b) or under IRC § 414
(an “ERISA Affiliate”), or to which Primal or an ERISA Affiliate
is a party, whether written or oral, for the benefit of any employee or former
employee of Primal or any of its Subsidiaries (the “Primal Plans”).

 

(b)           With respect to each Primal Plan, Primal has
heretofore delivered or made available to Avery true and complete copies of the
Primal Plan and any amendments thereto (or if the Primal Plan is not a written
Primal Plan, a description thereof), any related trust or other funding
vehicle, any reports or summaries required under ERISA or the Code and the most
recent determination letter received from the Internal Revenue Service with
respect to each Primal Plan intended to qualify under IRC § 401.

 

(c)           No material liability under ERISA Title IV or
§ 302 has been incurred by Primal or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to
Primal or any ERISA Affiliate of incurring any such liability.

 

(d)           No Primal Plan is subject to ERISA Title IV or
IRC § 412, nor is any Primal Plan a “multiemployer pension plan,” as
defined in ERISA § 3(37), or subject to ERISA § 302.

 

(e)           Each Primal Plan has been operated and
administered in all material respects in accordance with its terms and
applicable Law, including ERISA and the IRC.

 

(f)            Each Primal Plan intended or required to be
“qualified” within the meaning of IRC § 401(a) is so qualified and the
applicable trust or trusts maintained thereunder are exempt from taxation under
IRC § 501(a).

 

(g)           No Primal Plan provides material medical,
surgical, hospitalization, death or similar benefits (whether or not insured)
for employees or former employees of Primal or any of its Subsidiaries for
periods extending beyond their retirement or other termination of service,
other than (i) coverage mandated by applicable Law, (ii) death benefits under
any “pension plan”, or (iii) benefits the full cost of which is borne by the
current or former employee (or his beneficiary). No Primal Plans are
self-insured “multiple employer welfare arrangements,” as such term is defined
in ERISA § 3(40).

 

18

 

(h)           No amounts payable under the Primal Plans
will fail to be deductible for federal income Tax purposes by virtue of IRC
§ 162(a)(l) or IRC § 280G or would require the payment of an excise
Tax imposed by IRC § 4999.

 

(i)            The execution, delivery and performance of,
and consummation of the transactions contemplated by, this Agreement or the
Voting Agreement will not (i) entitle any current or former employee or officer
of Primal or any ERISA Affiliate to severance pay, unemployment compensation or
any other payment, (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer, or (iii) except
for the outstanding Primal Options, accelerate the vesting of any stock option
or of any shares of restricted stock.

 

(j)            Except as would not be material in any
respect to Primal, there are no pending or, to the Knowledge of Primal, any
threatened or anticipated claims by or on behalf of any Primal Plan, by any
employee or beneficiary covered under any such Primal Plan, or otherwise
involving any such Primal Plan (other than routine claims for benefits).

 

4.14        COMPLlANCE
WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS

 

(a)           Except as set forth in Part 4.14 of the
Primal Disclosure Letter:

 

(i)            each Acquired Company is, and at all times
since June 17, 1996, has been, in compliance in all material respects with
each Legal Requirement that is or was applicable to it or to the conduct or
operation of its business or the ownership or use of any of its assets, and no
failure to comply with any such Legal Requirement has had or could have a
Primal Material Adverse Effect;

 

(ii)           to the Knowledge of Primal, no event has
occurred or circumstance exists that (with or without notice or lapse of time)
(A) may constitute or result in a violation by any Acquired Company of, or a
failure on the part of any Acquired Company to comply with, any Legal Requirement,
or (B) may give rise to any obligation on the part of any Acquired Company to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature; and

 

(iii)          no Acquired Company has received, at any time
since June 17, 1996, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible, or potential violation of, or failure to comply
with, any Legal Requirement, or (B) any actual, alleged, possible, or potential
obligation on the part of any Acquired Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.

 

(b)           Part 4.14 of the Primal Disclosure Letter
contains a complete and accurate list of each Governmental Authorization that
is held by any Acquired Company or that otherwise relates to the business of,
or to any of the assets owned or used by, any Acquired Company. Each
Governmental Authorization listed or required to be listed in Part 4.14 of the
Primal Disclosure Letter is valid and in full force and effect. Except as set
forth in Part 4.14 of the Primal Disclosure Letter:

 

19

 

(i)            each Acquired Company is, and at all times
since June 17, 1996, has been, in full compliance with all of the terms
and requirements of each Governmental Authorization identified or required to
be identified in Part 4.14 of the Primal Disclosure Letter;

 

(ii)           no event has occurred or circumstance exists
that may (with or without notice or lapse of time) (A) constitute or result
directly or indirectly in a violation of or a failure to comply with any term
or requirement of any Governmental Authorization listed or required to be
listed in Part 4.14 of the Primal Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any Governmental Authorization listed
or required to be listed in Part 4.14 of the Primal Disclosure Letter;

 

(iii)          no Acquired Company has received, at any time
since June 17, 1996, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible, or potential violation of or failure to comply with
any term or requirement of any Governmental Authorization, or (B) any actual,
proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Governmental
Authorization; and

 

(iv)          all applications required to have been filed
for the renewal of the Governmental Authorizations listed or required to be
listed in Part 4.14 of the Primal Disclosure Letter have been duly filed on a
timely basis with the appropriate Governmental Bodies, and all other filings
required to have been made with respect to such Governmental Authorizations
have been duly made on a timely basis with the appropriate Governmental Bodies.

 

To
the Knowledge of Primal, the Governmental Authorizations listed in Part 4.14 of
the Primal Disclosure Letter collectively constitute all of the Governmental
Authorizations necessary to permit the Acquired Companies lawfully to conduct
and operate their businesses in the manner they currently conduct and operate
such businesses and to permit the Acquired Companies to own and use their
assets in the manner in which they currently own and use such assets.

 

4.15        LEGAL PROCEEDINGS; ORDERS

 

(a)           Except as set forth in Part 4.15 of the
Primal Disclosure Letter, there is no pending Proceeding:

 

(i)            that has been commenced by or against any
Acquired Company or, to the Knowledge of Primal, that otherwise relates to or
may affect the business of, or any of the assets owned or used by, any Acquired
Company; or

 

(ii)           that challenges, or that may have the effect
of preventing, delaying, making illegal, or otherwise interfering with, the
Merger, Avery’s exercise of control over any Acquired Company, or any of the
other Contemplated Transactions.

 

20

 

To
the Knowledge of the Acquired Companies, (1) no such Proceeding has been
Threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding. Primal
has delivered to Avery copies of all pleadings, correspondence, and other
documents relating to each Proceeding listed in Part 4.15 of the Primal
Disclosure Letter. The Proceedings listed in Part 4.15 of the Primal Disclosure
Letter will not have a Primal Material Adverse Effect on any Acquired Company.

 

(b)           Except as set forth in Part 4.15 of the
Primal Disclosure Letter:

 

(i)            there is no Order to which any of the
Acquired Companies, or any of the assets owned or used by any Acquired Company,
is subject; and

 

(ii)           to the Knowledge of Primal, no officer,
director, agent, or employee of any Acquired Company is subject to any Order
that prohibits such officer, director, agent, or employee from engaging in or
continuing any conduct, activity, or practice relating to the business of any
Acquired Company.

 

(c)           Except as set forth in Part 4.15 of the
Primal Disclosure Letter:

 

(i)            each Acquired Company is, and at all times
since June 17, 1996, has been, in full compliance with all of the terms
and requirements of each Order to which it, or any of the assets owned or used
by it, is or has been subject;

 

(ii)           no event has occurred or circumstance exists
that may constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any Order to
which any Acquired Company, or any of the assets owned or used by any Acquired
Company, is subject; and

 

(iii)          no Acquired Company has received, at any time
since June 17, 1996, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding any actual,
alleged, possible, or potential violation of, or failure to comply with, any
term or requirement of any Order to which any Acquired Company, or any of the
assets owned or used by any Acquired Company, is or has been subject.

 

4.16        ABSENCE OF CERTAIN CHANGES AND EVENTS

 

Except
as set forth in Part 4.16 of the Primal Disclosure Letter, and except for the
WBS Transaction, since the date of the Balance Sheet, the Acquired Companies
have conducted their businesses only in the Ordinary Course of Business and
there has not been any:

 

(a)           change in any Acquired Company’s authorized
or issued capital stock; grant of any stock option or right to purchase shares
of capital stock of any Acquired Company; issuance of any security convertible
into such capital stock; grant of any registration rights; purchase,
redemption,

 

21

 

retirement,
or other acquisition by any Acquired Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;

 

(b)           amendment to the Organizational Documents of
any Acquired Company;

 

(c)           payment or increase by any Acquired Company
of any bonuses, salaries, or other compensation to any stockholder, director,
officer, or (except in the Ordinary Course of Business) employee or entry into
any employment, severance, or similar Contract with any director, officer, or
employee;

 

(d)           adoption of, or increase in the payments to
or benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of any Acquired Company;

 

(e)           damage to or destruction or loss of any asset
or property of any Acquired Company, whether or not covered by insurance,
materially and adversely affecting the properties, assets, business, financial
condition, or prospects of the Acquired Companies, taken as a whole;

 

(f)            entry into, termination of, or receipt of
notice of termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by or to any
Acquired Company of at least $10,000;

 

(g)           sale (other than sales of inventory in the
Ordinary Course of Business), lease, or other disposition of any asset or
property of any Acquired Company or mortgage, pledge, or except for the Avery
Loan, imposition of any lien or other encumbrance on any material asset or
property of any Acquired Company, including the sale, lease, or other
disposition of any of the Intellectual Property Assets;

 

(h)           cancellation or waiver of any claims or
rights with a value to any Acquired Company in excess of $10,000;

 

(i)            material change in the accounting methods
used by any Acquired Company; or

 

(j)            agreement, whether oral or written, by any
Acquired Company to do any of the foregoing.

 

4.17        CONTRACTS; NO
DEFAULTS

 

(a)           Part 4.17(a) of the
Primal Disclosure Letter contains a complete and accurate list, and Primal has delivered to Avery true and
complete copies, of:

 

22

 

(i)            each licensing agreement or other Applicable
Contract with respect to the Software (collectively, the “Software Licenses”);

 

(ii)           each Applicable Contract with respect to the
providing of consulting services by one or more of the Acquired Companies or
any of their employees or agents (collectively, the “Consulting Contracts”);

 

(iii)          each Applicable Contract (other than the
Software Licenses and the Consulting Contracts) that involves performance of
services or delivery of goods or materials by one or more Acquired Companies of
an amount or value in excess of $ 10,000;

 

(iv)          each Applicable Contract that involves
performance of services or delivery of goods or materials to one or more
Acquired Companies of an amount or value in excess of $10,000;

 

(v)           each Applicable Contract that was not entered
into in the Ordinary Course of Business and that involves expenditures or
receipts of one or more Acquired Companies in excess of $10,000;

 

(vi)          each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or personal property (except personal
property leases and installment and conditional sales agreements having a value
per item or aggregate payments of less than $10,000 and with terms of less than
one year);

 

(vii)         each licensing agreement or other Applicable
Contract (other than the Software Licenses) with respect to patents,
trademarks, copyrights, or other intellectual property, including agreements
with current or former employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual Property Assets;

 

(viii)        each collective bargaining agreement and
other Applicable Contract to or with any labor union or other employee
representative of a group of employees;

 

(ix)           each joint venture, partnership, and other
Applicable Contract (however named) involving a sharing of profits, losses,
costs, or liabilities by any Acquired Company with any other Person;

 

(x)            each Applicable Contract containing covenants
that in any way purport to restrict the business activity of any Acquired
Company or any Affiliate of an Acquired Company or limit the freedom of any
Acquired Company or any Affiliate of an Acquired Company to engage in any line
of business or to compete with any Person;

 

23

 

(xi)           each Applicable Contract providing for
payments to or by any Person based on sales, purchases, or profits, other than
direct payments for goods;

 

(xii)          each power of attorney that is currently
effective and outstanding;

 

(xiii)         each Applicable Contract entered into other
than in the Ordinary Course of Business that contains or provides for an
express undertaking by any Acquired Company to be responsible for consequential
damages;

 

(xiv)        each Applicable Contract for capital
expenditures in excess of $ 10,000;

 

(xv)         each written warranty, guaranty, and or other
similar undertaking with respect to contractual performance extended by any
Acquired Company other than in the Ordinary Course of Business; and

 

(xvi)        each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.

 

Part 4.17(a) of the Primal Disclosure Letter sets
forth reasonably complete details concerning such Contracts, including the
parties to the Contracts, the amount of the remaining commitment of the
Acquired Companies under the Contracts, and the Acquired Companies’ office
where details relating to the Contracts are located.

 

(b)           Except as set forth in Part 4.17(b) of the
Primal Disclosure Letter:

 

(i)            no stockholder of Primal (and no Related
Person of any stockholder of Primal) has or may acquire any rights under, and
no stockholder of Primal has or may become subject to any obligation or
liability under, any Contract that relates to the business of, or any of the
assets owned or used by, any Acquired Company; and

 

(ii)           to the Knowledge of the Acquired Companies,
no officer, director, agent, employee, consultant, or contractor of any Acquired
Company is bound by any Contract that purports to limit the ability of such
officer, director, agent, employee, consultant, or contractor to (A) engage in
or continue any conduct, activity, or practice relating to the business of any
Acquired Company, or (B) assign to any Acquired Company or to any other Person
any rights to any invention, improvement, or discovery.

 

(c)           Except as set forth in Part 4.17(c) of the
Primal Disclosure Letter, each Contract identified or required to be identified
in Part 4.17(a) of the Primal Disclosure Letter is in full force and effect
and, to the Knowledge of Primal, is valid and enforceable in accordance with
its terms.

 

24

 

(d)           Except as set forth in Part 4.17(d) of the
Primal Disclosure Letter:

 

(i)            each Acquired Company is, and at all times
since June 17, 1996, has been, in full compliance with all applicable
terms and requirements of each Contract under which such Acquired Company has
or had any obligation or liability or by which such Acquired Company or any of
the assets owned or used by such Acquired Company is or was bound;

 

(ii)           to the Knowledge of Primal, each other Person
that has or had any obligation or liability under any Contract under which an
Acquired Company has or had any rights is, and at all times since June 17,
1996, has been, in full compliance with all applicable terms and requirements
of such Contract;

 

(iii)          to the Knowledge of Primal, no event has
occurred or circumstance exists that (with or without notice or lapse of time)
may contravene, conflict with, or result in a violation or breach of, or give
any Acquired Company or other Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or to
cancel, terminate, or modify, any Applicable Contract; and

 

(iv)          no Acquired Company has given to or received
from any other Person, at any time since June 17, 1996, any written notice
or other written communication regarding any actual, alleged, possible, or
potential violation or breach of, or default under, any Contract.

 

(e)           There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable to any Acquired Company under current or completed Contracts with any
Person and, to the Knowledge of the Acquired Companies, no such Person has made
written demand for such renegotiation.

 

(f)            The Contracts relating to the sale, design,
manufacture, or provision of products or services by the Acquired Companies
have been entered into in the Ordinary Course of Business and, to the Knowledge
of Primal, have been entered into without the commission of any act alone or in
concert with any other Person, or any consideration having been paid or
promised, that is or would be in violation of any Legal Requirement.

 

4.18        INSURANCE

 

(a)           Primal has delivered to Avery:

 

(i)            true and complete copies of all policies of
insurance to which any Acquired Company is a party or under which any Acquired
Company, or any director of any Acquired Company, is or has been covered at any
time within the three years preceding the date of this Agreement;

 

25

 

(ii)           true and complete copies of all pending
applications for policies of insurance; and

 

(iii)          any statement by the auditor of any Acquired
Company’s financial statements with regard to the adequacy of such entity’s
coverage or of the reserves for claims.

 

(b)           Part 4.18(b) of the Primal Disclosure Letter
describes:

 

(i)            any self-insurance arrangement by or
affecting any Acquired Company, including any reserves established thereunder;

 

(ii)           any contract or arrangement, other than a
policy of insurance, for the transfer or sharing of any risk by any Acquired
Company; and

 

(iii)          all obligations of the Acquired Companies to
third parties with respect to insurance (including such obligations under
leases and service agreements) and identifies the policy under which such
coverage is provided.

 

(c)           Part 4.18(c) of the Primal Disclosure Letter
sets forth, by year, for the current policy year and each of the three
preceding policy years:

 

(i)            a summary of the loss experience under each
policy;

 

(ii)           a statement describing each claim under an
insurance policy for an amount in excess of $10,000, which sets forth:

(A)          the name of the claimant;

 

(B)           a description of the policy by insurer, type
of insurance, and period of coverage; and

 

(C)           the amount and a brief description of the
claim; and

 

(iii)          a statement describing the loss experience
for all claims that were self-insured, including the number and aggregate cost
of such claims.

 

(d)           Except as set forth on Part 4.18(d) of the
Primal Disclosure Letter:

 

(i)            All policies to which any Acquired Company is
a party or that provide coverage to any Acquired Company, or any director or
officer of an Acquired Company:

 

26

 

(A)          are valid, outstanding, and enforceable;

 

(B)           are issued by an insurer that is financially
sound and reputable;

 

(C)           taken together, provide adequate insurance
coverage for the assets and the operations of the Acquired Companies for all risks normally insured against by a Person
carrying on the same business or businesses as the Acquired Companies;

 

(D)          are sufficient for compliance with all Legal
Requirements and Contracts to which any Acquired Company is a party or by which any of them is bound;

 

(E)           will continue in full force and effect
following the consummation of the Contemplated Transactions; and

 

(F)           do not provide for any retrospective
premium adjustment or other experienced-based liability on the part of any
Acquired Company.

 

(ii)           No Acquired Company has received (A) any
refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other
indication that any insurance policy is no longer in full force or effect or
will not be renewed or that the issuer of any policy is not willing or able to
perform its obligations thereunder.

 

(iii)          The Acquired Companies have paid all premiums
due, and have otherwise performed all of their respective obligations, under
each policy to which any Acquired Company is a party or that provides coverage
to any Acquired Company or director thereof.

 

(iv)          The Acquired Companies have given notice to
the insurer of all claims that may be insured thereby.

 

4.19       ENVIRONMENTAL MATTERS

 

Except
as set forth in Part 4.19 of the Primal Disclosure Letter:

 

(a)           All of the current operations of the Acquired
Companies and their respective assets, businesses and real property, including
any operations at or from any real property presently owned, used, leased,
occupied, managed or operated by any Acquired Company (collectively, the “Real Property”), comply
and have at all times complied with all applicable Environmental Laws.

 

(b)           To the knowledge of Primal, none of the
assets of the Acquired Companies, nor any of the Real Property, contains any
Hazardous Materials in, on, over, under or at it, in concentrations which would
violate any applicable Environmental Laws or reasonably would be likely to
result in the imposition of liability or obligations on any of the Acquired
Companies under any applicable

 

27

 

Environmental
Laws, including any liability or obligations for the investigation, corrective
action, remediation or monitoring of Hazardous Materials in, on, over, under or
at the Real Property.

 

(c)           None of the Real Property is listed or
proposed for listing on the National Priorities List pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq., as
amended, or any similar inventory of sites requiring investigation or
remediation maintained by any state or locality. None of the Acquired Companies
has received any notice, whether oral or written, from any Governmental Body or
third party of any actual or threatened Environmental Liabilities.

 

(d)           To the Knowledge of Primal, each of the
Acquired Companies has all the permits, licenses, authorizations and approvals
necessary for the conduct of their businesses and for the operations on, in or
at the Real Property (the “Environmental
Permits”), which
are required under applicable Environmental Laws and they are in compliance in
all material respects with the terms and conditions of all such Environmental
Permits. To the Knowledge of Primal, no reason exists why any of the Acquired
Companies would not be capable of continued operation of their businesses in
compliance in all material respects with the Environmental Permits all
applicable Environmental Laws.

 

(e)           None of the Acquired Companies has incurred
any Environmental Liabilities, or has contractually assumed or succeeded to, or
received any written notice that it has assumed or succeeded to by operation of
Law, including Environmental Laws and common law, or otherwise, any
Environmental Liabilities of any other Person.

 

4.20        EMPLOYEES

 

(a)           Part 4.20 of the Primal Disclosure Letter
contains a complete and accurate list of the following information for each
employee or director of the Acquired Companies, including each employee on
leave of absence or layoff status: employer; name; social security number; job
title; current compensation paid or payable and any change in compensation since
January 1, 1998; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under any Acquired Company’s pension,
retirement, profit-sharing, thrift-savings, deferred compensation, stock bonus,
stock option, cash bonus, employee stock ownership (including investment credit
or payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Primal Plan, or any other employee benefit plan.

 

(b)           No employee or director of any Acquired
Company is a party to, or, to the Knowledge of Primal, is otherwise bound by,
any agreement or arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement, between such employee or director and any other
Person (“Proprietary
Rights Agreement”) that
in any way adversely affects or will affect (i) the performance of such
employee’s duties as an employee or director of the Acquired Companies, or (ii)
the ability of any Acquired Company to conduct its business, including any
Proprietary Rights Agreement with the Acquired Companies by any such employee
or director. To Primal’s

 

28

 

Knowledge, no director,
officer, or other key employee of any Acquired Company intends to terminate his
or her employment with such Acquired Company.

 

(c)           Part 4.20 of the Primal
Disclosure Letter also contains a complete and accurate list of the following
information for each retired employee or director of the Acquired Companies, or
their dependents, receiving benefits or scheduled to receive benefits in the
future: name, pension benefit, pension option election, retiree medical
insurance coverage, retiree life insurance coverage, and other benefits.

 

4.21        LABOR RELATIONS; COMPLIANCE

 

Since June 17, 1996,
no Acquired Company has been or is a party to any collective bargaining or
other labor Contract. Since June 17, 1996, there has not been, there is
not presently pending or existing, and to Primal’s Knowledge there is not
Threatened, (a) any strike, slowdown, picketing, work stoppage, or employee
grievance process, (b) any Proceeding against or affecting any Acquired Company
relating to the alleged violation of any Legal Requirement pertaining to labor
relations or employment matters, including any charge or complaint filed by an
employee or union with the National Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable Governmental Body, organizational
activity, or other labor or employment dispute against or affecting any of the
Acquired Companies or their premises, or (c) any application for certification
of a collective bargaining agent. To Primal’s Knowledge, no event has occurred
or circumstance exists that could provide the basis for any work stoppage or
other labor dispute. There is no lockout of any employees by any Acquired
Company, and no such action is contemplated by any Acquired Company. Each
Acquired Company has complied in all respects with all Legal Requirements
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment, except
as set forth in Part 4.21 of the Primal Disclosure Letter, of social security
and similar taxes, occupational safety and health, and plant closing. Except as
set forth in Part 4.21 of the Primal Disclosure Letter, no Acquired Company is
liable for the payment of any compensation, damages, taxes, fines, penalties,
or other amounts, however designated, for failure to comply with any of the
foregoing Legal Requirements.

 

4.22        INTELLECTUAL PROPERTY

 

(a)           Part 4.22(a) of the
Primal Disclosure Letter sets forth a complete and accurate description of the
Outfront Software, the specifications for the Outfront Software and a list of
each Applicable Contract relating to the Outfront Software, including each
license granted by Primal to any Person to use the Outfront Software. Part
4.22(a) also separately sets forth a complete and accurate list of all Software
licensed by Primal from other Persons and used in, and delivered as an integral
part of, the Outfront Software (“Third Party Software”), and a brief description of such
Third Party Software and the terms of the licenses or other Applicable Contract
(collectively, the “Third
Party Licenses”) governing the use of such Third Party Software
by Primal in the Outfront Software, including the royalties or other fees
required thereby. Subject only to the terms of the

 

29

 

Third
Party Licenses requiring the payment of royalties or other fees to the owners
of the Third Party Software, Primal has the unrestricted right to use the Third
Party Software in the Outfront Software and to furnish the Third Party Software
to the customers of Primal as part of the Outfront Software system. No Person not
subject to a valid and enforceable non-disclosure agreement in favor of Primal
is authorized to have access to, or to alter, modify or make any other changes
or revisions to, the Source Code for the Outfront Software, except as provided
in, and subject to the terms and provisions of, those Applicable Contracts
pursuant to which the Source Code for the Outfront Software has been placed in
escrow (“Source Code
Escrow Agreements”).
A complete and accurate list of
all Source Code Escrow Agreements to which any Acquired Company is a party is
set forth separately in Part 4.22(a) of the Primal Disclosure Letter.

 

(b)           No Primal Intellectual
Property Asset has been registered with any Governmental Body and no
application for such registration has been filed with any Governmental Body.
Part 4.22(b) of the Primal Disclosure Letter identifies and provides a brief
description of all other Primal Intellectual Property Assets not described in
Part 4.22(a) of the Primal Disclosure Letter that are owned by Primal and are necessary
to the conduct of the business of any of the Acquired Companies. Part 4.22(b)
of the Primal Disclosure Letter identifies and provides a brief description of
each Primal Intellectual Property Asset licensed to Primal by any Person
(except for the Third Party Licenses and End-User Licenses) and identifies the
license agreement or other Applicable Contract under which such Primal
Intellectual Property Asset is being licensed to Primal. Primal has good, valid
and marketable title to all of the Primal Intellectual Property Assets owned by
Primal, free and clear of all Encumbrances, and has a valid right to use all
Primal Intellectual Property Assets licensed to Primal and identified in Part
4.22(b) of the Primal Disclosure Letter. Except as set forth in Part 4.22(a) of
the Primal Disclosure Letter with respect to the Third Party Software, and
except for one-time payments to purchase End-User Licenses, none of the
Acquired Companies is obligated to make any payment to any Person for the use
of any Intellectual Property Asset used in the business of any of the Acquired
Companies. Except as set forth in Part 4.22(b) of the Primal Disclosure Letter,
Primal is free to use, and, except for the Third Party Software and Software
licensed to Primal under an End-User License, Primal is free to modify, copy,
distribute, sell, license or otherwise exploit each of the Primal Intellectual
Property Assets on an exclusive basis (other than the Third Party Software and
End-User Licenses, with respect to which Primal’s rights are not exclusive).

 

(c)           Primal has not
disclosed or delivered to any Person not subject to a valid and enforceable
non-disclosure agreement in favor of Primal, or permitted the disclosure or
delivery to any Person not subject to a valid and enforceable non-disclosure
agreement in favor of Primal, of the Source Code, or any portion or aspect of
the Source Code, of any Primal Intellectual Property Asset. Primal has not
disclosed or delivered to any Person, or permitted the disclosure or delivery
to any Person, of the object code of any Primal Intellectual Property Asset
except pursuant to valid and enforceable license agreements or pursuant to
valid and enforceable non-disclosure agreements.

 

(d)           To the Knowledge of Primal, none of the
Primal Intellectual Property Assets infringe or conflict with any Intellectual
Property Asset owned or used by any other Person. Primal has not

 

30

 

at
any time received any written notice or other written communication, or to the
Knowledge of Primal, any oral notice or other oral communication, of any such
infringement or conflict. Primal is not infringing, misappropriating or making
any unlawful use of, and Primal has not at any time infringed, misappropriated
or made any unlawful use of, or received any notice or other communication of
any actual, alleged, possible or potential infringement, misappropriation or
unlawful use of, any Intellectual Property Asset owned or used by any other
Person. To the Knowledge of Primal, no other Person is infringing,
misappropriating or making any unlawful use of, and no Intellectual Property
Asset owned or used by any other Person infringes or conflicts with, any Primal
Intellectual Property Asset.

 

(e)           The Primal Intellectual Property Assets constitute
all the Intellectual Property Assets necessary to enable Primal to conduct its
business in the manner in which such business has been and is being conducted.
Except as set forth in Part 4.22(a) of the Primal Disclosure Letter, (i) Primal
has not licensed any of the Primal Intellectual Property Assets to any Person
and (ii) Primal has not entered into any covenant not to compete or any
Contract limiting its ability to exploit fully any of its Intellectual Property
Assets or to transact business in any market or geographical area or with any
Person.

 

(f)            Except in the Ordinary Course of Business,
Primal has not entered into and is not bound by any Contract under which any
Person has the right to distribute or license, on a commercial basis, any Primal
Intellectual Property Asset, including Source Code, object code or any
versions, modifications or derivative works of Source Code or object code in
any Primal Intellectual Property Asset.

 

4.23       RELATIONSHIPS WITH RELATED PERSONS

 

No
Stockholder or any Related Person of Stockholders or of any Acquired Company
has, or since the first day of the next to last completed fiscal year of the
Acquired Companies has had, any interest in any property (whether real,
personal, or mixed and whether tangible or intangible), used in or pertaining
to the Acquired Companies’ businesses. No Stockholder or any Related Person of
Stockholders or of any Acquired Company is, or since the first day of the next
to last completed fiscal year of the Acquired Companies has owned (of record or
as a beneficial owner) an equity interest or any other financial or profit
interest in, a Person that has (i) had business dealings or a material
financial interest in any transaction with any Acquired Company other than
business dealings or transactions conducted in the Ordinary Course of Business
with the Acquired Companies at substantially prevailing market prices and on
substantially prevailing market terms, or (ii) engaged in competition with any
Acquired Company with respect to any line of the products or services of such
Acquired Company (a “Competing
Business”)  in
any market presently served by such Acquired Company except for less than one
percent of the outstanding capital stock of any Competing Business that is
publicly traded on any recognized exchange or in the over-the-counter market.
Except as set forth in Part 4.23 of the Primal Disclosure Letter, no
Stockholder or any Related Person of Stockholders or of any Acquired Company is
a party to any Contract with, or has any claim or right against, any Acquired
Company.

 

31

 

4.24        PROJECTIONS OF FINANCIAL PERFORMANCE

 

Primal
has previously presented and delivered to Avery Primal’s business plan entitled
“Confidential Business Plan” (the “Primal Business Plan”). The 3-year pro forma projected income
statements, 3-year pro forma projected balance sheets, and 3-year pro forma
projected statements of cash flows and the other projections and estimates
contained in Primal Business Plan are based upon factual assumptions that were
reasonably made by Primal and were made in good faith at the time such
projections and estimates were made, and such factual assumptions remain
reasonable and good faith assumptions on and as of the date of this Agreement.
There has been no material change in the business prospects of Primal or in any
other fact or circumstance which would or could reasonably be expected to
render any such projections or estimates, or the assumptions upon which they
were based, unreasonable or not made in good faith in any material respect. The
budgeted operating loss for Primal for the Earn-Out Period is $1,082,000.

 

4.25        TAX
MATTERS

 

To
the Knowledge of Primal, neither Primal nor any of its Affiliates has taken or
agreed to take any action or failed to take any action that would prevent the
Merger from constituting a reorganization within the meaning of IRC
§ 368(a).

 

4.26        CERTAIN
BUSINESS PRACTICES

 

Neither
Primal nor any of its Subsidiaries nor any director, officer, employee or agent
of Primal or any of its Subsidiaries has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful payments relating to
political activity, (ii) made any unlawful payment to any foreign or domestic
government official or employee or to any foreign or domestic political party
or campaign or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, (iii) consummated any transaction, made any payment, entered
into any agreement or arrangement or taken any other action in violation of
Section 1128B(b) of the Social Security Act, as amended, or (iv) made any
other unlawful payment except for the foregoing matters that are not material
in any respect to Primal.

 

4.27        INTEREST
RATE AND FOREIGN EXCHANGE CONTRACTS

 

No
Acquired Company is a party to or otherwise bound by any Contract relating to
interest rate swaps, caps, floors or option agreements or other interest rate
risk management arrangements or foreign exchange contracts to hedge its
investments in foreign currencies.

 

4.28        YEAR 2000 MATTERS

 

Except
as set forth in Part 4.28 of the Primal Disclosure Letter, the Outfront
Software, the computer programs and the technical systems owned, leased,
licensed or used by the Acquired Companies are year 2000 compliant, will function
and operate prior to, during and after the calendar year 2000 in

 

32

 

accordance
with their specifications and will provide the required output without
experiencing abnormal ending dates and/or invalid or incorrect years and shall
incorporate century recognition date data, calculations that use same century
and multi-century formulas and date values that reflect the current century in
all transactions. In addition, all such computer programs and technical systems
will process, manage and manipulate data involving dates, including single
century and multi-century formulas, and will not cause an abnormally ending
scenario within the application or generate incorrect values or invalid results
involving such dates.

 

4.29        PROXY
STATEMENT

 

The
information supplied by Primal or required to be supplied by Primal (except to
the extent revised or superseded by amendments or supplements) for inclusion in
the proxy statement or any amendment or supplement thereto to be sent to the
stockholders of Primal in connection with the meeting of Primal’s stockholders
to consider the Merger (the “Primal Stockholders’ Meeting”) (such proxy statement, as amended or
supplemented, is referred to herein as the “Proxy Statement”) shall not, on the date the Proxy Statement is
first mailed to Primal’s stockholders, at the time of the Primal Stockholders’
Meeting and at the Effective Time, contain any statement which, at such time,
is false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not false or misleading; or
omit to state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies by or on behalf of
Primal for the Primal Stockholders’ Meeting which has become false or
misleading. Notwithstanding the foregoing, Primal makes no representation,
warranty or covenant with respect to any information supplied or required to be
supplied by Avery which is contained in or omitted from any of the foregoing
documents.

 

4.30        BROKERS OR FINDERS

 

Primal
and its agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders’ fees or agents’ commissions or other
similar payment in connection with this Agreement.

 

4.31        DISCLOSURE

 

(a)           No
representation or warranty of Primal in this Agreement and no statement in the
Primal Disclosure Letter omits to state a material fact necessary to make the
statements herein or therein, in light of the circumstances in which they were
made, not misleading.

 

(b)           No
notice given pursuant to Section 6.6 will contain any untrue statement or
omit to state a material fact necessary to make the statements therein or in
this Agreement, in light of the circumstances in which they were made, not
misleading.

 

(c)           There
is no fact known to any of the Acquired Companies that has specific application
to any Acquired Company (other than general economic or industry conditions)
and that

 

33

 

materially
adversely affects or, as far as Primal can reasonably foresee, materially
threatens, the assets, business, financial condition, or results of operations
of the Acquired Companies (on a consolidated basis) that has not been set forth
in this Agreement or the Primal Disclosure Letter.

 

5.             REPRESENTATIONS AND WARRANTIES OF AVERY

 

Avery represents and warrants to Primal as follows:

 

5.1          ORGANIZATION AND GOOD STANDING

 

(a)           Avery is a corporation duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under Applicable
Contracts. Avery is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification, except
for such failures to be so qualified or in good standing that would not have an
Avery Material Adverse Effect.

 

(b)           Merger Sub is a corporation duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under Applicable
Contracts. Merger Sub is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification, except
for such failures to be so qualified or in good standing that would not have an
Avery Material Adverse Effect.

 

5.2          AUTHORITY; NO CONFLICT

 

(a)           This Agreement constitutes the legal, valid,
and binding obligation of Avery and Merger Sub, enforceable against Avery and
Merger Sub in accordance with its terms. Avery and Merger Sub have the absolute
and unrestricted right, power, authority, and capacity to execute and deliver
this Agreement.

 

(b)           Neither the execution and delivery of this
Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):

 

(i)            contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents of Avery or
Merger Sub, or (B) any resolution adopted by the board of directors or the
stockholders of Avery or Merger Sub;

 

34

 

(ii)           contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which Avery or
Merger Sub, or any of the assets owned or used by Avery or Merger Sub, may be
subject;

 

(iii)          contravene, conflict with, or result in a violation
of any of the terms or requirements of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by Avery or Merger Sub or that otherwise relates to
the business of, or any of the assets owned or used by, Avery or Merger Sub; or

 

(iv)          contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any Avery Applicable
Contract; the effect of which would cause an Avery Material Adverse Effect or
would prevent or delay the Merger or otherwise prevent Avery or Merger Sub from
performing their respective obligations under this Agreement.

 

Except as set forth in Part 5.2 of the Avery Disclosure Letter, neither
Avery nor Merger Sub is or will be required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.

 

5.3          CAPITALIZATION

 

The
authorized capital stock of Avery consists solely of 20,000,000 shares of
common stock, par value $0.01 per share (“Common Stock”), and 20,000,000 shares of
preferred stock, par value $0.01 per share (“Preferred Stock”).  As of February 7, 1999, there were 9,836,526 shares of Common
Stock issued and outstanding and 2,826,667 shares of Preferred Stock issued and
outstanding. The shares of Preferred Stock are divided into eight series, of
which 800,000 shares have been designated as the Series A Junior Convertible
Redeemable Preferred Stock (the “Series A Preferred Stock”), 1,050,000 shares have been designated as the
Series B Junior Convertible Redeemable Preferred Stock (the “Series B Preferred Stock”), 340,000
have been designated as the Series C Junior Convertible Redeemable Preferred
Stock (the “Series C
Preferred Stock”), 5,000,000 shares have been designated as the
Senior Cumulative Redeemable Preferred Stock, 1996 HBS Series (the “HBS Senior Preferred Stock”),
1,500,000 shares have been designated as the Series D Senior Convertible
Redeemable Preferred Stock (the “Series D Preferred Stock”), 350,000 shares have been designated as the
Series E Junior Convertible Redeemable Preferred Stock (the “Series E Preferred Stock”),
940,000 shares have been designated as the Senior Cumulative Redeemable
Convertible Preferred Stock, 1997 HBS Exchange Series (the “1997 HBS Senior Preferred Stock”), and 1,050,000 shares have been
designated as the Junior Convertible Redeemable Preferred Stock, Series B
Exchange Series (the “Series
B Exchange Preferred Stock”).
As of February 7,1999, Avery had issued and outstanding 400,000
shares of the Series A Preferred Stock, 500,000 shares of the Series B
Preferred

 

35

 

Stock,
76,667 shares of the Series C Preferred Stock, 1,500,000 shares of the Series D
Preferred Stock, and 350,000 shares of the Series E Preferred Stock. All such
issued and outstanding shares of Common Stock and Preferred Stock have been
duly authorized and validly issued, and are fully paid, nonassessable and free
of preemptive rights. Except for options, warrants and convertible securities
that on February 7, 1999, were exercisable for or convertible into an
aggregate of 3,213,552 shares of Avery Common Stock, and except as contemplated
by this Agreement, there are no options, warrants, calls, subscriptions,
convertible securities, phantom stock rights, or other rights, Contracts,
agreements or commitments which obligates Avery or any of its Subsidiaries to
issue, transfer or sell any shares of capital stock of Avery or any of its
Subsidiaries, or, except as set forth in the Organizational Documents of Avery
relating to the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock, the Series D Preferred Stock, and the Series E
Preferred Stock, any obligation of Avery or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any outstanding capital stock of Avery
or any of its Subsidiaries, or otherwise entitle the holder thereof to receive
or exercise any benefits or rights similar to any rights enjoyed by or accruing
to the holder of shares of capital stock of Avery or any of its Subsidiaries.

 

5.4          FINANCIAL STATEMENTS

 

Avery
has delivered to Stockholders: (a) consolidated balance sheets of Avery as at
December 31 in each of the years 1996 through 1997, and the related
consolidated statements of income, changes in stockholders’ equity, and cash
flow for each of the fiscal years then ended, together with the report thereon
of King Griffin & Adamson, LLP, independent certified public accountants,
(b) a consolidated balance sheet of Avery as at December 31, 1997
(including the notes thereto, the “Avery Balance Sheet”),  and the related consolidated statements of
income, changes in stockholders’ equity, and cash flow for the fiscal year then
ended, together with the report thereon of King Griffin & Adamson, LLP,
independent certified public accountants, and (c) an unaudited consolidated
balance sheet of Avery as at September 30, 1998 (the “Avery Interim Balance Sheet”) and
the related unaudited consolidated statements of income, changes in
stockholders’ equity, and cash flow for the nine months then ended, including
in each case the notes thereto. Such financial statements and notes fairly
present the financial condition and the results of operations, changes in
stockholders’ equity, and cash flow of the Acquired Companies as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP, subject, in the case of interim
financial statements, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be materially adverse) and
the absence of notes (that, if presented, would not differ materially from
those included in the Avery Balance Sheet); the financial statements referred
to in this Section 5.4 reflect the consistent application of such
accounting principles throughout the periods involved, except as disclosed in
the notes to such financial statements.

 

36

 

5.5          BOOKS AND RECORDS

 

The books of account,
minute books, stock record books, and other records of Avery, all of which have
been made available to Primal, are complete and correct and have been
maintained in accordance with sound business practices and the requirements of
Section 13(b)(2) of the Securities Exchange Act of 1934, as amended
(regardless of whether or not the Acquired Companies are subject to that
Section), including the maintenance of an adequate system of internal controls.
The minute books of Avery contain accurate and complete records of all meetings
held of, and corporate action taken by, the stockholders, the Boards of
Directors, and committees of the Boards of Directors of Avery, and no meeting
of any such stockholders, Board of Directors, or committee has been held for
which minutes have not been prepared and are not contained in such minute
books.

 

5.6          TITLE TO PROPERTIES; ENCUMBRANCES

 

Avery owns (with good and
marketable title in the case of real property, subject only to the matters
permitted by the following sentence) all the properties and assets (whether
real, personal, or mixed and whether tangible or intangible) that they purport
to own, including all of the properties and assets reflected in the Avery
Balance Sheet and the Avery Interim Balance Sheet (except for assets held under
capitalized leases disclosed and personal property sold since the date of the
Balance Sheet and the Interim Balance Sheet, as the case may be, in the
Ordinary Course of Business), and all of the properties and assets purchased or
otherwise acquired by Avery since the date of the Balance Sheet (except for
personal property acquired and sold since the date of the Balance Sheet in the
Ordinary Course of Business and consistent with past practice). All material
properties and assets reflected in the Avery Balance Sheet and the Avery
Interim Balance Sheet are free and clear of all Encumbrances and are not, in
the case of real property, subject to any rights of way, building use
restrictions, exceptions, variances, reservations, or limitations of any nature
except, with respect to all such properties and assets, (a) mortgages or
security interests shown on the Avery Balance Sheet or the Avery Interim
Balance Sheet as securing specified liabilities or obligations, with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (b) mortgages or security interests incurred in
connection with the purchase of property or assets after the date of the
Interim Balance Sheet (such mortgages and security interests being limited to
the property or assets so acquired), with respect to which no default (or event
that, with notice or lapse of time or both, would constitute a default) exists,
(c) liens for current taxes not yet due, and (d) with respect to real property,
(i) minor imperfections of title, if any, none of which is substantial in
amount, materially detracts from the value or impairs the use of the property
subject thereto, or impairs the operations of Avery or any of its Subsidiaries,
and (ii) zoning laws and other land use restrictions that do not impair the
present or anticipated use of the property subject thereto. All buildings,
plants, and structures owned by Avery and its Subsidiaries lie wholly within
the boundaries of the real property owned by Avery and its Subsidiaries and do
not encroach upon the property of, or otherwise conflict with the property
rights of, any other Person.

 

37

 

5.7          ACCOUNTS RECEIVABLE

 

All accounts receivable
of Avery that are reflected on the Avery Balance Sheet or the Avery Interim
Balance Sheet (collectively, the “Avery Accounts Receivable”) represent or
will represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. Unless paid prior to the
Closing Date, the Accounts Receivable are or will be as of the Closing Date
current and collectible net of the respective reserves shown on the Avery
Balance Sheet or the Interim Balance Sheet (which reserves are adequate and
calculated consistent with past practice). There is no contest, claim, or right
of set-off, other than in the Ordinary Course of Business, under any Contract
with any obligor of an Accounts Receivable relating to the amount or validity
of such Accounts Receivable.

 

5.8          NO UNDISCLOSED LIABILITIES

 

Except as set forth in
Part 5.8 of the Avery Disclosure Letter, Avery has no liabilities or
obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent, or otherwise) except for liabilities or obligations
reflected or reserved against in the Avery Balance Sheet or the Avery Interim
Balance Sheet and current liabilities incurred in the Ordinary Course of
Business since the respective dates thereof.

 

5.9          TAXES

 

(a)           Avery has filed or
caused to be filed (on a timely basis since January 1, 1996) all Tax
Returns that are or were required to be filed by or with respect to any of
them, either separately or as a member of a group of corporations, pursuant to
applicable Legal Requirements. Avery has paid, or made provision for the
payment of, all Taxes that have or may have become due pursuant to those Tax
Returns or otherwise, or pursuant to any assessment received by Avery, except
such Taxes, if any, as are being contested in good faith and as to which
adequate reserves (determined in accordance with GAAP) have been provided in
the Avery Balance Sheet and the Avery Interim Balance Sheet.

 

(b)           The charges, accruals,
and reserves with respect to Taxes on the respective books of Avery are adequate
(determined in accordance with GAAP) and are at least equal to Avery’s
liability for Taxes. There exists no proposed tax assessment against Avery
except as disclosed in the Avery Balance Sheet.  All Taxes that Avery is or was required by Legal Requirements to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Body or other Person.

 

5.10        NO MATERIAL ADVERSE CHANGE

 

Since the date of the
Avery Balance Sheet, there has not been an Avery Material Adverse Effect, and
no event has occurred or circumstance exists that may result in an Avery
Material Adverse Effect.

 

38

 

5.11        COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS

 

Except
as set forth in Part 5.11 of the Avery Disclosure Letter or except as have not
had and would not reasonably be expected to have an Avery Material Adverse
Effect:

 

(i)            Avery is, and at all times since
January 1, 1998, has been, in compliance in all material respects with
each Legal Requirement that is or was applicable to it or to the conduct or
operation of its business or the ownership or use of any of its assets;

 

(ii)           no event has occurred or circumstance exists
that (with or without notice or lapse of time) (A) may constitute or result in
a violation by Avery of, or a failure on the part of Avery to comply with, any
Legal Requirement, or (B) may give rise to any obligation on the part of Avery
to undertake, or to bear all or any portion of the cost of, any remedial action
of any nature; and

 

(iii)          Avery has not received, at any time since
January 1, 1998, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible, or potential violation of, or failure to comply
with, any Legal Requirement, or (B) any actual, alleged, possible, or potential
obligation on the part of any Acquired Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.

 

5.12        LEGAL PROCEEDINGS; ORDERS

 

(a)           Except as set forth in Part 5.12 of the Avery
Disclosure Letter, there is no pending Proceeding:

 

(i)            that has been commenced by or against Avery
or that otherwise relates to or may affect the business of, or any of the
assets owned or used by, Avery, which, if adversely determined, would have an
Avery Material Adverse Effect; or

 

(ii)           that challenges, or that may have the effect
of preventing, delaying, making illegal, or otherwise interfering with, any of
the Contemplated Transactions.

 

To the Knowledge of Avery, (1) no such Proceeding has been Threatened,
and (2) no event has occurred or circumstance exists that may give rise to or
serve as a basis for the commencement of any such Proceeding.

 

(b)           Except as set forth in Part 5.12 of the Avery
Disclosure Letter:

 

(i)            there is no Order to which Avery or any of
its Subsidiaries, or any of the assets owned or used by Avery or any of its
Subsidiaries, is subject; and

 

39

 

(ii)           to the Knowledge of Avery, no officer,
director, agent, or employee of Avery or any of its Subsidiaries is subject to
any Order that prohibits such officer, director, agent, or employee from
engaging in or continuing any conduct, activity, or practice relating to the
business of Avery or any of its Subsidiaries.

 

(c)           Except as set forth in Part 5.12 of the Avery
Disclosure Letter or except as have not had and would not reasonably be
expected to have an Avery Material Adverse Effect:

 

(i)            Avery and its Subsidiaries are, and at all
times since January 1, 1998, have been, in full compliance with all of the
terms and requirements of each Order to which any of them, or any of the assets
owned or used by them, is or has been subject;

 

(ii)           no event has occurred or circumstance exists
that may constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any Order to
which Avery or any of its Subsidiaries, or any of the assets owned or used by
Avery or any of its Subsidiaries, is subject; and

 

(iii)          Neither Avery nor any of its Subsidiaries has
received, at any time since January 1, 1998, any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding any actual, alleged, possible, or potential violation of, or
failure to comply with, any term or requirement of any Order to which Avery or
any of its Subsidiaries, or any of the assets owned or used by Avery or any of
its Subsidiaries, is or has been subject.

 

5.13        ABSENCE OF CERTAIN CHANGES AND EVENTS

 

Except
as set forth in Part 5.13 of the Avery Disclosure Letter, since the date of the
Avery Balance Sheet, Avery and its Subsidiaries have conducted their businesses
only in the Ordinary Course of Business and there has not been any:

 

(a)           change in Avery’s authorized or issued
capital stock; grant of any stock option or right to purchase shares of capital
stock of Avery; issuance of any security convertible into such capital slock;
grant of any registration rights; purchase, redemption, retirement, or other
acquisition by Avery of any shares of any such capital stock; or declaration or
payment of any dividend or other distribution or payment in respect of shares
of capital stock;

 

(b)           amendment to the Organizational Documents of
Avery;

 

(c)           damage to or destruction or loss of any asset
or property of Avery, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition, or
prospects of Avery and its Subsidiaries, taken as a whole;

 

40

 

(d)           sale (other than sales of inventory in the
Ordinary Course of Business), lease, or other disposition of any asset or
property of any Acquired Company or mortgage, pledge, or imposition of any lien
or other encumbrance on any material asset or property of Avery;

 

(e)           cancellation or waiver of any claims or
rights with a value to any Acquired Company in excess of $100,000;

 

(f)            material change in the accounting methods
used by Avery; or

 

(g)           agreement, whether oral or written, by Avery
to do any of the foregoing.

 

5.14        CONTRACTS; NO DEFAULTS

 

(a)           Each Material Avery Contract is in full force
and effect and is valid and enforceable in accordance with its terms.

 

(b)           Except as set forth in Part 5.14(b) of the
Avery Disclosure Letter:

 

(i)            Avery and its Subsidiaries are, and at all
times since January 1, 1996, have been, in full compliance with all
applicable terms and requirements of each Material Avery Contract under which
Avery or any of its Subsidiaries has or had any obligation or liability or by
which such Avery or any of its Subsidiaries or any of the assets owned or used
by Avery or any of its Subsidiaries is or was bound;

 

(ii)           each other Person that has or had any
obligation or liability under any Material Avery Contract under which Avery or
any of its Subsidiaries has or had any rights is, and at all times since
January 1,1996, has been, in full compliance with all applicable terms and
requirements of such Material Avery Contract;

 

(iii)          no event has occurred or circumstance exists
that (with or without notice or lapse of time) may contravene, conflict with,
or result in a violation or breach of, or give Avery or any of its Subsidiaries
or other Person the right to declare a default or exercise any remedy under, or
to accelerate the maturity or performance of, or to cancel, terminate, or
modify, any Material Avery Contract; and

 

(iv)          neither Avery nor any of its Subsidiaries has
given to or received from any other Person, at any time since January 1,
1996, any notice or other communication (whether oral or written) regarding any
actual, alleged, possible, or potential violation or breach of, or default
under, any Material Avery Contract.

 

41

 

5.15        INSURANCE

 

(a)           Except as set forth on Part 5.15 of the Avery
Disclosure Letter:

 

(i)            All policies of insurance to which Avery is a
party or that provide coverage to Avery, any of its Subsidiaries, or any
director or officer of Avery or any of its Subsidiaries:

 

(A)          are valid, outstanding, and enforceable;

 

(B)           are issued by an insurer that is financially
sound and reputable;

 

(C)           taken together, provide adequate insurance
coverage for the assets and the operations of Avery for all risks normally
insured against by a Person carrying on the same business or businesses as
Avery and its Subsidiaries;

 

(D)          are sufficient for compliance with all Legal
Requirements and Contracts to which Avery or any of its Subsidiaries is a party
or by which any of them is bound; and

 

(E)           will continue in full force and effect
following the consummation of the Contemplated Transactions.

 

(ii)           Avery has paid all premiums due, and have
otherwise performed all of its obligations, under each policy to which Avery is
a party or that provides coverage to Avery, its Subsidiaries, or any director
or officer of Avery or any of its Subsidiaries.

 

5.16        PROXY STATEMENT

 

The
information supplied by Avery or required to be supplied by the Avery (except
to the extent revised or superseded by amendments or supplements) for inclusion
in the Proxy Statement shall not, on the date the Proxy Statement is first
mailed to Primal’s stockholders, at the time of the Primal Stockholders’
Meeting and at the Effective Time, contain any statement which, at such time,
is false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not false or misleading, or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies by or on
behalf of Primal for the Primal Stockholders’ Meeting which has become false or
misleading. Notwithstanding the foregoing, Avery makes no representation,
warranty or covenant with respect to any information supplied or required to be
supplied by Primal which is contained in or omitted from any of the foregoing
documents.

 

42

 

5.17      TAX MATTERS

 

To
the Knowledge of Avery, neither Avery nor any of its Affiliates has taken or
agreed to take any action or failed to take any action that would prevent the
Merger from constituting a reorganization within the meaning of IRC
§ 368(a).

 

5.18      BROKERS OR FINDERS

 

Neither
Avery nor its agents have incurred any obligation or liability, contingent or
otherwise, for brokerage or finders’ fees or agents’ commissions or other
similar payment in connection with this Agreement.

 

5.19      DISCLOSURE

 

(a)           No representation or warranty of Avery in
this Agreement and no statement in the Avery Disclosure Letter omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.

 

(b)           No notice given pursuant to Section 7.3
will contain any untrue statement or omit to state a material fact necessary to
make the statements therein or in this Agreement, in light of the circumstances
in which they were made, not misleading.

 

(c)           There is no fact known to Avery that has
specific application to Avery (other than general economic or industry
conditions) and that materially adversely affects the assets, business,
prospects, financial condition, or results of operations of Avery (on a
consolidated basis) that has not been set forth in this Agreement or the Avery
Disclosure Letter.

 

6.             COVENANTS OF PRIMAL PRIOR TO CLOSING DATE

 

6.1          ACCESS AND INVESTIGATION

 

Between
the date of this Agreement and the Closing Date, each Acquired Company and its
Representatives will, (a) afford Avery and its Representatives and prospective
lenders and their Representatives (collectively, “Avery’s Advisors”)  full and free access to each Acquired Company’s
personnel, properties (including subsurface testing), contracts, books and
records, and other documents and data, (b) furnish Avery and Avery’s Advisors
with copies of all such contracts, books and records, and other existing
documents and data as Avery may reasonably request, and (c) furnish Avery and
Avery’s Advisors with such additional financial, operating, and other data and
information as Avery may reasonably request.

 

43

 

6.2          DELIVERY OF PRIMAL DISCLOSURE
LETTER

 

Primal
shall deliver the Primal Disclosure Letter to Avery or its counsel on or before
5:00 p.m., Central Standard or Daylight Savings Time, as the case may be on
April 8, 1999. At least one copy of the Primal Disclosure Letter shall be
delivered to counsel for Avery at their offices in Dallas, Texas.

 

Avery
shall have through 5:00 p.m., Central Standard or Daylight Savings Time, as the
case may be, on the fourteenth calendar day (or, if not a Business Day, the
next Business Day after such fourteenth calendar day) following the date on
which the Primal Disclosure Letter is delivered to Avery and its counsel as
herein provided (such day being referred to herein as the “Review Termination Date”)
to review the contents of and
disclosures in the Primal Disclosure Letter and to complete its review of the
books, records and operations of Primal. At any time through and including the
Review Termination Date, Avery shall have the right to notify Primal whether it
elects to proceed with the transactions contemplated by this Agreement, or to
terminate this Agreement. In the event Avery elects to terminate this
Agreement, the provisions of Section 11 shall govern and apply for all
purposes, except that (i) the provisions of Section 11.3 shall not be thereafter
applicable and Avery shall have no obligation whatsoever to purchase the 20%
Investment Shares, and (ii) the provisions of the second sentence of
Section 14.1 shall not be thereafter applicable and Avery shall have no
obligation whatsoever to reimburse Primal for legal fees as therein provided.
The termination of this Agreement by Avery pursuant to this Section 6.2
shall in no event or under any circumstance be or be deemed to be a termination
of this Agreement to which the proviso of the second sentence of
Section 11.2 refers.

 

6.3          OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES

 

Between
the date of this Agreement and the Closing Date, each Acquired Company will:

 

(a)           conduct the business of such Acquired Company
only in the Ordinary Course of Business;

 

(b)           use its Best Efforts to preserve intact the
current business organization of such Acquired Company, keep available the
services of the current officers, employees, and agents of such Acquired
Company, and maintain the relations and good will with suppliers, customers,
landlords, creditors, employees, agents, and others having business
relationships with such Acquired Company;

 

(c)           take commercially reasonable measures and
precautions necessary to protect the confidentiality and value of each Primal
Intellectual Property Asset (except Primal Intellectual Property Assets whose
value would be unimpaired by public disclosure) and otherwise to maintain and
protect the value of all Primal Intellectual Property Assets;

 

(d)           confer with Avery concerning operational
matters of a material nature; and

 

44

 

(e)           otherwise report periodically to Avery
concerning the status of the business, operations, and finances of such
Acquired Company.

 

6.4          NEGATIVE COVENANT

 

Except
as otherwise expressly permitted by this Agreement, between the date of this
Agreement and the Closing Date, each Acquired Company will not, without the
prior written consent of Avery, take any affirmative action, or fail to take
any reasonable action within its control, as a result of which any of the
changes or events listed in Section 4.16 is likely to occur, except that
Primal may enter into any Contract or transaction involving a total remaining
commitment to Primal of $10,000 or more if such Contract would be either a
Software License or a Consulting Contract and it is entered in the Ordinary
Course of Business.

 

6.5          REQUIRED APPROVALS

 

As
promptly as practicable after the date of this Agreement, each Acquired Company
will make all filings required by Legal Requirements to be made by it in order
to consummate the Contemplated Transactions (including all filings under the
HSR Act). Between the date of this Agreement and the Closing Date, each
Acquired Company will (a) cooperate with Avery with respect to all filings that
Avery elects to make or is required by Legal Requirements to make in connection
with the Contemplated Transactions, and (b) cooperate with Avery in obtaining
all consents identified in Part 4.2 of the Primal Disclosure Letter (including
taking all actions requested by Avery to cause early termination of any
applicable waiting period under the HSR Act).

 

6.6          NOTIFICATION

 

Between
the date of this Agreement and the Closing Date, Primal will promptly notify
Avery in writing if any Acquired Company becomes aware of any fact or condition
that causes or constitutes a Breach of any of Primal’s representations and
warranties as of the date of this Agreement, or if any Acquired Company becomes
aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. Should any such fact or condition require any change
in the Primal Disclosure Letter if the Primal Disclosure Letter were dated the
date of the occurrence or discovery of any such fact or condition, Primal will
promptly deliver to Avery a supplement to the Primal Disclosure Letter
specifying such change. During the same period, Primal will promptly notify
Avery of the occurrence of any Breach of any covenant of Primal in this
Section 6 or of the occurrence of any event that may make the satisfaction
of the conditions in Section 8 impossible or unlikely. For so long as
representatives of Avery constitute a majority of the members of the board of
directors of WBS, Primal shall have no obligation to notify Avery as herein provided
with respect to changes in the business operations of WBS that would, but for
this sentence, be required by this Section 6.6.

 

45

 

6.7          NO
NEGOTIATION

 

Until
such time, if any, as this Agreement is terminated pursuant to Section 11,
each Acquired Company and each of their Representatives will not, directly or
indirectly solicit, initiate, or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider the
merits of any unsolicited inquiries or proposals from, any Person (other than
Avery) relating to any transaction involving the sale of the business or assets
(other than in the Ordinary Course of Business) of any Acquired Company, or any
of the capital stock of any Acquired Company, or any merger, consolidation,
business combination, or similar transaction involving any Acquired Company.

 

6.8          BEST EFFORTS

 

Between
the date of this Agreement and the Closing Date, Primal will use its Best
Efforts to cause the conditions in Sections 8 and 9 to be satisfied.

 

7.            COVENANTS OF AVERY PRIOR TO CLOSING DATE

 

7.1          ACCESS AND INVESTIGATION

 

Between
the date of this Agreement and the Closing Date, each Acquired Company and its
Representatives will, (a) afford Primal and its Representatives (collectively, “Primal’s Advisors”)
full and free access to each
Acquired Company’s personnel, properties (including subsurface testing),
contracts, books and records, and other documents and data, (b) furnish Primal
and Primal’s Advisors with copies of all such contracts, books and records, and
other existing documents and data as Primal may reasonably request, and (c)
furnish Primal and Primal’s Advisors with such additional financial, operating,
and other data and information as Primal may reasonably request.

 

7.2          APPROVALS OF GOVERNMENTAL BODIES

 

As
promptly as practicable after the date of this Agreement, Avery will, and will
cause each of its Related Persons to, make all filings required by Legal
Requirements to be made by them to consummate the Contemplated Transactions
(including all filings under the HSR Act). Between the date of this Agreement
and the Closing Date, Avery will, and will cause each of its Related Persons
to, cooperate with Primal with respect to all filings that Primal is required
by Legal Requirements to make in connection with the Contemplated Transactions,
and (ii) cooperate with Primal in obtaining all consents identified in Part 4.2
of the Primal Disclosure Letter; provided,
however, that this Agreement will not require Avery to dispose of or
make any change in any portion of its business or to incur any other burden to
obtain a Governmental Authorization.

 

46

 

7.3          NOTIFICATION

 

Between
the date of this Agreement and the Closing Date, Avery will promptly notify
Primal in writing if Avery becomes aware of any fact or condition that causes
or constitutes a Breach of any of Avery’s representations and warranties as of
the date of this Agreement, or if Avery becomes aware of the occurrence after
the date of this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a Breach of any
such representation or warranty had such representation or warranty been made
as of the time of occurrence or discovery of such fact or condition. Should any
such fact or condition require any change in the Avery Disclosure Letter if the
Avery Disclosure Letter were dated the date of the occurrence or discovery of
any such fact or condition, Avery will promptly deliver to Primal a supplement
to the Avery Disclosure Letter specifying such change. During the same period,
Avery will promptly notify Primal of the occurrence of any Breach of any
covenant of Avery in this Section 7 or of the occurrence of any event that
may make the satisfaction of the conditions in Section 9 impossible or
unlikely.

 

7.4          BEST
EFFORTS

 

Except
as set forth in the proviso to Section 7.2, between the date of this
Agreement and the Closing Date, Avery will use its Best Efforts to cause the
conditions in Sections 8 and 9 to be satisfied.

 

8.             CONDITIONS PRECEDENT TO AVERY’S OBLIGATION TO CLOSE

 

Avery’s
obligation to consummate the Merger and to take the other actions required to
be taken by Avery at the Closing is subject to the satisfaction, at or prior to
the Closing, of each of the following conditions (any of which may be waived by
Avery, in whole or in part):

 

8.1          ACCURACY OF REPRESENTATIONS

 

(a)           All of Primal’s representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement, and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date, without giving effect to any supplement to the Primal Disclosure
Letter, and Primal shall have delivered to Avery a certificate, executed by the
President of Primal, to such effect.

 

(b)           Each, of Primal’s representations and
warranties in Sections 4.2(b)(iv), 4.3, 4.4, 4.12, and 4.31 and in the
penultimate sentence of Section 4.24 must have been accurate in all
respects as of the date of this Agreement, and must be accurate in all respects
as of the Closing Date as if made on the Closing Date, without giving effect to
any supplement to the Primal Disclosure Letter, and Primal shall have delivered
to Avery a certificate, executed by the President of Primal, to such effect.

 

47

 

8.2          PRIMAL’S PERFORMANCE

 

(a)           All of the covenants and obligations that
Primal is required to perform or to comply with pursuant to this Agreement at
or prior to the Closing (considered collectively), and each of these covenants
and obligations (considered individually), must have been duly performed and
complied with in all material respects, and Primal shall have delivered to
Avery a certificate, executed by the President of Primal, to such effect.

 

(b)           Each document required to be delivered
pursuant to Section 3.2 must have been delivered, and each of the other
covenants and obligations in Sections 6.5 and 6.8 must have been performed and
complied with in all respects, and Primal shall have delivered to Avery a
certificate, executed by the President of Primal, to such effect.

 

8.3          CONSENTS

 

Each
of the Consents identified in Part 4.2 of the Primal Disclosure Letter must
have been obtained and must be in full force and effect.

 

8.4          ADDITIONAL DOCUMENTS

 

Each
of the following documents must have been delivered to Avery:

 

(a)           estoppel certificates executed on behalf of
the landlord for Primal’s office space on the Closing Date, dated as of a date
not more than five days prior to the Closing Date, each in the form of Exhibit
8.4(b); and

 

(b)           such other certificates and documents as
Avery may reasonably request for the purpose of (i) evidencing the accuracy of
any of Primal’s representations and warranties, (ii) evidencing the performance
by Primal of, or the compliance by Primal with, any covenant or obligation
required to be performed or complied with by Primal, (iii) evidencing the
satisfaction of any condition referred to in this Section 8, or (iv)
otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.

 

8.5          NO
PROCEEDINGS

 

Since
the date of this Agreement, there must not have been commenced or Threatened
against Avery, or against any Person affiliated with Avery, any Proceeding (a)
involving any challenge to, or seeking damages or other relief in connection
with, any of the Contemplated Transactions, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of the
Contemplated Transactions.

 

48

 

8.6          NO CLAIM REGARDING STOCK OWNERSHIP OR MERGER
CONSIDERATION

 

There must not have been
made or Threatened by any Person any claim asserting that such Person (a) is
the holder or the beneficial owner of, or has the right to acquire or to obtain
beneficial ownership of, any stock of, or any other voting, equity, or
ownership interest in, any of the Acquired Companies, or (b) is entitled to all
or any portion of the Merger Consideration.

 

8.7          NO
PROHIBITION

 

Neither the consummation
nor the performance of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time), materially contravene, or
conflict with, or result in a material violation of, or cause Avery or any
Person affiliated with Avery to suffer any material adverse consequence under,
(a) any applicable Legal Requirement or Order, or (b) any Legal Requirement or
Order that has been published, introduced, or otherwise proposed by or before
any Governmental Body.

 

9.             CONDITIONS PRECEDENT TO PRIMAL’S
OBLIGATION TO CLOSE

 

Primal’s obligation to
consummate the Merger and to take the other actions required to be taken by
Primal at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by
Primal, in whole or in part):

 

9.1          ACCURACY OF REPRESENTATIONS

 

All of Avery’s
representations and warranties in this Agreement (considered collectively), and
each of these representations and warranties (considered individually), must
have been accurate in all material respects as of the date of this Agreement
and must be accurate in all material respects as of the Closing Date as if made
on the Closing Date.

 

9.2          AVERY’S PERFORMANCE

 

(a)           All of the covenants
and obligations that Avery is required to perform or to comply with pursuant to
this Agreement at or prior to the Closing (considered collectively), and each
of these covenants and obligations (considered individually), must have been
performed and complied with in all material respects, and Avery shall have
delivered to Primal a certificate, executed by an executive officer of Avery,
to such effect.

 

(b)           Avery must have
delivered each of the documents required to be delivered by Avery pursuant to
Section 3.2, and Avery shall have delivered to Primal a certificate,
executed by an executive officer of Avery, to such effect.

 

49

 

9.3          CONSENTS

 

Each of the Consents
identified in Part 4.2 of the Primal Disclosure Letter must have been obtained
and must be in full force and effect.

 

9.4          ADDITIONAL DOCUMENTS

 

Avery must have caused
the following documents to be delivered to Primal:

 

(a)          such
other certificates and documents as Primal may reasonably request for the
purpose of (i) evidencing the accuracy of any representation or warranty of
Avery, (ii) evidencing the performance by Avery of, or the compliance by Avery
with, any covenant or obligation required to be performed or complied with by
Avery, (iii) evidencing the satisfaction of any condition referred to in this
Section 9, or (iv) otherwise facilitating the consummation of any of the
Contemplated Transactions.

 

9.5          NO
INJUNCTION

 

There must not be in
effect any Legal Requirement or any injunction or other Order that (a)
prohibits the Merger, and (b) has been adopted or issued, or has otherwise
become effective, since the date of this Agreement.

 

10.          ADDITIONAL
AGREEMENTS

 

10.1        MEETING OF STOCKHOLDERS

 

Primal, acting through
its Board of Directors, shall, in accordance with the CGCL and its
Organizational Documents, promptly and duly call, give notice of, convene and
hold as soon as practicable following the date hereof, the Primal Stockholders’
Meeting, and Primal shall consult with Avery in connection therewith. The Board
of Directors of Primal shall declare that this Agreement is advisable and
recommend that the Agreement and the transactions contemplated hereby be
approved and adopted by the stockholders of Primal and include in the Proxy
Statement a copy of such recommendations. Primal shall use reasonable efforts
to secure the vote or consent of stockholders required by the CGCL and its
Organizational Documents to approve and adopt this Agreement and the Merger.

 

10.2        TAX TREATMENT

 

Avery and Primal will
each use reasonable efforts before and after the Closing to cause the Merger to
quality as a reorganization within the meaning of IRC § 368(a), and will
not take, and will use reasonable efforts to prevent any Affiliate of such
party from taking, any actions which could prevent the Merger from qualifying
as such a reorganization, and will take such action as is available and may be
reasonably required to negate the impact of any past actions by such party or
its respective

 

50

 

Affiliates
which would reasonably be expected to adversely impact the qualification of the
Merger as a reorganization within the meaning of IRC § 368(a).

 

10.3        CONVEYANCE TAXES

 

Avery
and Primal shall cooperate in the preparation, execution and filing of all
returns, questionnaires, applications, or other documents regarding (i) any
real property transfer gains, sales, use, transfer, value-added, stock
transfer, and stamp Taxes (ii) any recording, registration and other fees, and
(iii) any similar Taxes or fees that become payable in connection with the transactions
contemplated hereby. The Taxes described in clause (i) above shall be paid by
Primal.

 

10.4        VOTING AGREEMENT

 

Primal
shall use reasonable efforts, on behalf of Avery and pursuant to the request of
Avery, to cause each Stockholder to execute and deliver to Avery the Voting
Agreement concurrently with the execution of this Agreement.

 

11.          TERMINATION

 

11.1        TERMINATION EVENTS

 

This
Agreement may, by notice given prior to or at the Closing, be terminated:

 

(a)           by Avery, in its sole and absolute discretion,
at any time from and after the date of this Agreement through and including the
date that is 270 calendar days after the date of this Agreement (the date of
this Agreement being excluded from such 270-day period);

 

(b)           by either Avery or Primal if a material
Breach of any provision of this Agreement has been committed by the other party
and such Breach has not been waived;

 

(c)           (i) by Avery if any of the conditions in
Section 8 has not been satisfied as of the Closing Date or if satisfaction
of such a condition is or becomes impossible (other than through the failure of
Avery to comply with its obligations under this Agreement) and Avery has not
waived such condition on or before the Closing Date; or (ii) by Primal, if any
of the conditions in Section 9 has not been satisfied as of the Closing
Date or if satisfaction of such a condition is or becomes impossible (other
than through the failure of the Acquired Companies to comply with their
obligations under this Agreement) and Primal has not waived such condition on
or before the Closing Date;

 

(d)           by mutual consent of Avery and Primal; or

 

51

 

(e)           by either Avery or Primal if the Closing has
not occurred (other than through the failure of any party seeking to terminate
this Agreement to comply fully with its obligations under this Agreement) on or
before March 31, 2000, or such later date as the parties may agree upon.

 

11.2        EFFECT OF TERMINATION

 

Each
party’s right of termination under Section 11.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
a right of termination will not be an election of remedies. If this Agreement
is terminated pursuant to Section 11.1, all further obligations of the
parties under this Agreement will terminate, except that the obligations in
Sections 11.3, 14.1 and 14.3 will survive; provided,
however, that if this Agreement is terminated by a party because of
the Breach of the Agreement by the other party or because one or more of the
conditions to the terminating party’s obligations under this Agreement is not
satisfied as a result of the other party’s failure to comply with its
obligations under this Agreement, the terminating party’s right to pursue all
legal remedies will survive such termination unimpaired.

 

11.3        PURCHASE OF 20% OF THE SHARES OF PRIMAL OF PRIMAL COMMON
STOCK

 

If
Avery terminates this Agreement pursuant to Section 11.1 (a), or pursuant
to Section 11.1(c)(ii) because of the non-fulfillment of a condition
specified in Sections 9.1, 9.2 or 9.4, then, in such event, Primal agrees to
sell, and Avery agrees to purchase, that number of shares of Primal Common
Stock (collectively, the “20%
Investment Shares”)  as shall equal the quotient obtained by dividing (i) the sum, without
duplication, of (A) the number of outstanding shares of Primal Common Stock on
the date of the termination of this Agreement, plus (B) the number of shares of
Primal Common Stock reserved for issuance on the date of the termination of
this Agreement upon the exercise of any outstanding options, warrants or rights
of any kind to acquire any shares of, or upon the conversion or exchange of any
securities convertible into or exchangeable for any shares of, Primal Common
Stock, plus (C) the number of shares of Primal Common Stock reserved for
issuance on the date of the termination of this Agreement pursuant to any
contract, agreement, commitment or arrangement obligating Primal to offer,
sell, issue or grant any shares of, or any options, warrants or rights of any
kind to acquire any shares of, or any securities convertible into or
exchangeable for any shares of, Primal Common Stock, excluding those shares
reserved for issuance included in clause (C) hereof, plus (D) the number of
shares of Primal Common Stock reserved for issuance on the date of the
termination of this Agreement pursuant to future awards that could be granted
under the Primal Option Plan, by (ii) eight-tenths (0.8). The purchase price
(the “20% Investment
Purchase Price”) for the 20% Investment Shares shall be
$2,000,000, The 20% Investment Purchase Price shall be payable as follows:
first, by the cancellation of indebtedness owed by Primal to Avery for money
borrowed, including accrued and unpaid interest thereon; and second, by the
wire transfer of immediately available funds for the difference, if any,
between the 20% Investment Purchase Price and the amount credited toward the
20% Investment Purchase Price by the cancellation of such indebtedness and
accrued and unpaid interest. The consummation of the purchase and sale
contemplated hereby (the “Investment
Closing”) shall
take place as provided in Section 3.1 on the thirtieth Business Day
following the date on which notice of termination of this Agreement is

 

52

 

delivered
by Avery to Primal pursuant to Section 11.1. Avery’s obligation to
purchase the Investment Shares and to take the other actions required to be
taken at the Investment Closing is subject to the satisfaction, at or prior to the
Investment Closing, of each of the conditions (any of which may be waived by
Avery, in whole or in part) set forth in Section 8. At the Investment
Closing, payment of the 20% Investment Purchase Price shall be made against
delivery of a certificate representing the 20% Investment Shares, and such
payment and delivery shall be evidenced by the delivery of an appropriate
cross-receipt signed by Avery and Primal.

 

12.          INDEMNIFICATION; REMEDIES

 

12.1        SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE

 

All
representations, warranties, covenants, and obligations in this Agreement, the
Primal Disclosure Letter, the supplements to the Primal Disclosure Letter, the
certificates delivered pursuant to Section 8, and any other certificate or
document delivered pursuant to this Agreement will survive the Closing for a
period of two years. The right to indemnification, payment of Damages or other
remedy based on such representations, warranties, covenants, and obligations
will not be affected by any investigation conducted with respect to, or any
Knowledge acquired (or capable of being acquired) at any time, whether before
or alter the execution and delivery of this Agreement or the Closing Date, with
respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.

 

12.2        INDEMNIFICATION AND PAYMENT OF DAMAGES BY STOCKHOLDERS

 

Stockholders,
jointly and severally, will indemnify and hold harmless Avery, the Acquired
Companies, and their respective Representatives, stockholders, controlling
persons, and affiliates (collectively, the “Indemnified Persons”)  for, and will pay to the Indemnified Persons
the amount of, any loss, liability, claim, damage (including incidental and
consequential damages), expense (including costs of investigation and defense
and reasonable attorneys’ fees) or diminution of value, whether or not
involving a third-party claim, in all cases, net of aggregate tax benefits or
aggregate third party recoveries actually received by the indemnified party or
estimated in good faith to be received by the indemnified party on or before
the second anniversary of the Closing Date (collectively, “Damages”), arising, directly or indirectly, from or in
connection with:

 

(a)           any Breach of any representation or warranty
made by Primal in this Agreement (without giving effect to any supplement to
the Primal Disclosure Letter), the Primal Disclosure Letter, the supplements to
the Primal Disclosure Letter, or any other certificate or document delivered by
Primal pursuant to this Agreement;

 

53

 

(b)           any Breach of any
representation or warranty made by Primal in this Agreement as if such
representation or warranty were made on and as of the Closing Date without
giving effect to any supplement to the Primal Disclosure Letter, other than any
such Breach that is disclosed in a supplement to the Primal Disclosure Letter
and is expressly identified in the certificates delivered pursuant to
Section 8.1 as having caused the condition specified in Section 8.1
not to be satisfied;

 

(c)           any Breach by Primal of
any covenant or obligation of Primal in this Agreement;

 

(d)           any services provided
by any Acquired Company prior to the Closing Date;

 

(e)           any matter disclosed in
Parts 4.2(b)(iv) and 4.15 of the Primal Disclosure Letter; or

 

(f)            any claim by any
Person for brokerage or finder’s fees or commissions or similar payments based
upon any agreement or understanding alleged to have been made by any such
Person with either Stockholder or any Acquired Company (or any Person acting on
their behalf) in connection with any of the Contemplated Transactions.

 

The remedies provided in
this Section 12.2 will not be exclusive of or limit any other remedies
that may be available to Avery or the other Indemnified Persons.

 

12.3        TIME LIMITATIONS

 

If the Closing occurs,
Stockholders will have no liability (for indemnification or otherwise) with
respect to any representation or warranty, or covenant or obligation to be
performed and complied with prior to the Closing Date, other than those in
Sections 4.2(b)(iv), 4.3, 4.11, 4.13, and 4.19, unless on or before two years
following the Closing Date Avery notifies Stockholders of a claim specifying
the factual basis of that claim in reasonable detail to the extent then known
by Avery; a claim with respect to Sections 4.2(b)(iv), 4.3, 4.11, 4.13, and
4.19, or a claim for indemnification or reimbursement not based upon any
representation or warranty or any covenant or obligation to be performed and
complied with prior to the Closing Date, may be made at any time. If the
Closing occurs, Avery will have no liability (for indemnification or otherwise)
with respect to any representation or warranty, or covenant or obligation to be
performed and complied with prior to the Closing Date, unless on or before two
years following the Closing Date Primal, acting through the Securityholder
Agent, notifies Avery of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Primal.

 

12.4        LIMITATIONS ON AMOUNT—STOCKHOLDERS

 

Stockholders will have no
liability (for indemnification or otherwise) with respect to the matters
described in clause (a), clause (b) or, to the extent relating to any failure
to perform or comply prior to the Closing Date, clause (c) of Section 12.2
until the total of all Damages with respect to such matters exceeds $50,000.00,
and then only for the amount by which such Damages exceed $50,000.00. Stockholders
will have no liability (for indemnification or otherwise) with respect to

 

54

 

the
matters described in clause (a) or clause (b), other than, in each case, for a
Breach of the representations and warranties in Sections 4.2(b)(iv), 4.3
and 4.11, or, to the extent relating to any failure to perform or comply prior
to the Closing Date, clause (c) of Section 12.2, in an amount that is
greater than the sum of the Value of the Merger Consideration as of the Effective
Time and the Value of the Additional Merger Consideration, if any, as of the
Determination Date. Stockholders will have no liability (for indemnification or
otherwise) with respect to a Breach of the representations and warranties in
Sections 4.2(b)(iv) and 4.11 in an amount that is greater than the aggregate
liability for Taxes that the stockholders of Primal would have incurred if they
had sold their respective shares of the Primal Common Stock for cash on the
Effective Date. Stockholders’ liability (for indemnification or otherwise) with
respect to a Breach of the representations and warranties in Section 4.3
will not be limited in amount. The foregoing notwithstanding, however, this
Section 12.4 will not apply to any Breach of any of Primal’s representations
and warranties of which any Stockholder had actual knowledge at any time prior
to the date on which such representation and warranty is made or any
intentional Breach by Primal of any covenant or obligation, and Stockholders
will be jointly and severally liable for all Damages with respect to such
Breaches.

 

12.5        ESCROW; RIGHT OF SET-OFF

 

At
the Effective Time, Primal’s stockholders will be deemed to have received and
deposited with the Escrow Agent the Escrow Shares (plus any additional shares as
may be issued upon any stock split, stock dividend or recapitalization effected
by Avery after the Effective Time) without any act of any stockholder. The
portion of the Escrow Shares contributed on behalf of each stockholder of
Primal shall be in proportion to the aggregate Merger Consideration to which
such holder would otherwise be entitled at the Effective Time. The Escrow
Shares shall be available to compensate Avery and its a Affiliates for any
Damages pursuant to Section 12.2.

 

Upon
notice to Stockholders specifying in reasonable detail the basis for such
set-off, Avery may set off any amount to which it may be entitled under this
Section 12, determined in the same manner as claims under the Escrow
Agreement, against amounts otherwise payable hereunder as Additional Merger
Consideration or may give notice of a claim in such amount under the Escrow
Agreement, or both. The exercise of such right of set-off by Avery in good
faith, whether or not ultimately determined to be justified, will not constitute
an event of default hereunder. Neither the exercise of nor the failure to
exercise such right of set-off or to give a notice of a claim under the Escrow
Agreement will constitute an election of remedies or limit Avery in any manner
in the enforcement of any other remedies that may be available to it.

 

In
the event that the Merger is approved, effective upon such vote, and without
further act of any stockholder, a committee comprised of Faltys, Simrell and
Haynes shall be appointed as agent and attorney-in-fact (such committee, the “Securityholder Agent”)
for each stockholder of Primal (except such stockholders, if any, as shall have
perfected their appraisal or dissenters’ rights under the CGCL), for and on
behalf of each stockholder of Primal, to give and receive notices and
communications, to authorize delivery to Avery of shares of Avery Preferred
Stock from the Escrow

 

55

 

Shares
in satisfaction of claims by Avery, to object to such deliveries, to agree to,
negotiate, enter into settlements and compromises of, and, if permitted, to
demand arbitration and to comply with orders of courts and awards of
arbitrators with respect to such claims, and to take all actions necessary or
appropriate in the judgment of the Securityholder Agent for the accomplishment
of the foregoing. The majority vote of the three members of such committee
shall be deemed to be the act of the Securityholder Agent. Such Securityholder
Agent may be changed by the stockholders of Primal from time to time upon not
less than thirty (30) days’ prior written notice to Avery; provided that the
Securityholder Agent may not be removed unless holders of a two-thirds interest
of the Escrow Shares agree to such removal and to the identity of the substituted
agent. Any vacancy in the position of Securityholder Agent may be filled by
approval of the holders of a majority in interest of the Escrow Shares. No bond
shall be required of the Securityholder Agent, and the Securityholder Agent
shall not receive compensation for his or her services. Notice or
communications to or from the Securityholder Agent shall constitute notice to
or form each of the stockholders of Primal. In performing any duties under the
Agreement, the Securityholder Agent shall not be liable to any party for
damages, losses, or expenses, except for gross negligence or willful misconduct
on the part of the Securityholder Agent. The Securityholder Agent shall not
incur any such liability for (A) any act or failure to act made or omitted in
good faith, or (B) any action taken or omitted in reliance upon any instrument,
including any written statement or affidavit provided for in this Agreement
that the Securityholder Agent shall in good faith believe to be genuine, nor
will the Securityholder Agent be liable or responsible for forgeries, fraud,
impersonations, or determining the scope of any representative authority. In
addition, the Securityholder Agent may consult with the legal counsel in
connection with Securityholder Agent’s duties under this Agreement and shall be
fully protected in any act taken, suffered, or permitted by it in good faith in
accordance with the advice of counsel. The Securityholder Agent is not
responsible for determining and verifying the authority of any Person acting or
purporting to act on behalf of any party to this Agreement. Each stockholder of
Primal on whose behalf the Escrow Shares were delivered to the Escrow Agent
pursuant to the Escrow Agreement shall indemnify the Securityholder Agent and
hold the Securityholder Agent harmless against any loss, liability or expense
incurred without gross negligence or willful misconduct on the part of the
Securityholder Agent and arising out of or in connection with the acceptance or
administration of the Securityholder Agent’s duties hereunder. A decision, act,
consent or instruction of the Securityholder Agent shall constitute a decision
of all the stockholders for whom a portion of the Escrow Shares otherwise
issuable to them are deposited with the Escrow Agent pursuant to the Escrow
Agreement, and shall be final, binding and conclusive upon each of such
stockholders, and the Escrow Agent and Avery may rely upon any such decision,
act, consent or instruction of the Securityholder Agent as being the decision,
act, consent or instruction of each every such stockholder of Primal. The
Escrow Agent and Avery are hereby relieved from any liability to any Person for
any acts done by them in accordance with such decision, act, consent or
instruction of the Securityholder Agent.

 

56

 

12.6        PROCEDURE FOR INDEMNIFICATION—THIRD-PARTY CLAIMS

 

(a)           Promptly after receipt by an indemnified
party under Section 12.2 of notice of any Threatened Proceeding against it
or the commencement of any Proceeding against it, such indemnified party will,
if a claim is to be made against an indemnifying party under such Section, give
notice to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the indemnifying
party of any liability that it may have to any indemnified party, except to the
extent that the indemnifying party demonstrates that the defense of such action
is prejudiced by the indemnifying party’s failure to give such notice.

 

(b)           If any Proceeding referred to in
Section 12.6(a) is brought against an indemnified party and it gives
notice to the indemnifying party of the commencement of such Proceeding, the
indemnifying party will be entitled to participate in such Proceeding and, to
the extent that it wishes (unless (i) the indemnifying party is also a party to
such Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), unless the claim involves Taxes, to assume the defense of such
Proceeding with counsel satisfactory to the indemnified party and, after notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such Proceeding, the indemnifying party will not, as long as it
diligently conducts such defense, be liable to the indemnified party under this
Section 12 for any fees of other counsel or any other expenses with
respect to the defense of such Proceeding, in each case subsequently incurred
by the indemnified party in connection with the defense of such Proceeding,
other than reasonable costs of investigation. 
If the indemnifying party assumes the defense of a Proceeding, (i) it
will be conclusively established for purposes of this Agreement that the claims
made in that Proceeding are within the scope of and subject to indemnification;
(ii) no compromise or settlement of such claims may be effected by the
indemnifying party without the indemnified party’s consent unless (A) there is
no finding or admission of any violation of Legal Requirements or any violation
of the rights of any Person and no effect on any other claims that may be made
against the indemnified party, and (B) the sole relief provided is monetary
damages that are paid in full by the indemnifying party; and (iii) the
indemnified party will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given to
an indemnifying party of the commencement of any Proceeding and the
indemnifying party does not, within ten days after the indemnified party’s notice
is given, give notice to the indemnified party of its election to assume the
defense of such Proceeding, the indemnifying party will be bound by any
determination made in such Proceeding or any compromise or settlement effected
by the indemnified party.

 

(c)           Notwithstanding the foregoing, if an
indemnified party determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its Affiliates other
than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by notice to
the indemnifying party, assume the exclusive right to defend, compromise, or
settle such Proceeding, but the indemnifying party will not be bound

 

57

 

by
any determination of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld).

 

(d)           Stockholders hereby consent to the
non-exclusive jurisdiction of any court in which a Proceeding is brought
against any Indemnified Person for purposes of any claim that an Indemnified
Person may have under this Agreement with respect to such Proceeding or the
matters alleged therein, and agree that process may be served on Stockholders
with respect to such a claim anywhere in the world.

 

12.7        PROCEDURE FOR INDEMNIFICATION—OTHER CLAIMS

 

A
claim for indemnification for any matter not involving a third-party claim may
be asserted by notice to the party from whom indemnification is sought.

 

13.          DEFINITIONS; CONSTRUCTION

 

For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, the terms defined in this
Section 13 have the meanings assigned to them or referred to in this Section 13,
and include the plural as well as the singular:

 

“Acquired Companies”—Primal and
its Subsidiaries (other than WBS), collectively.

 

“Applicable Contract”—any
Contract (a) under which any Acquired Company has or may acquire any rights,
(b) under which any Acquired Company has or may become subject to any
obligation or liability, or (c) by which any Acquired Company or any of the
assets owned or used by it is or may become bound.

 

“Avery”—as defined in the first paragraph of this
Agreement.

 

“Avery Applicable Contract”—any Contract (a) under which Avery or any of its Subsidiaries has or
may acquire any rights, (b) under which Avery or any of its Subsidiaries has or
may become subject to any obligation or liability, or (c) by which Avery or any
of its Subsidiaries or any of the assets owned or used by any of them is or may
become bound.

 

“Avery Common Stock”—the common
stock, par value $0.01 per share, of Avery.

 

“Avery Disclosure Letter”—the disclosure letter delivered by Avery to Primal concurrently with
the execution of this Agreement or, at Avery’s option, on or before 5:00 p.m.,
California time, on April 8, 1999.

 

“Avery Material Adverse Effect”—any change or effect that, individually or when taken together with all
other such changes or effects that have occurred prior to the date of
determination of the occurrence of the Avery Material Adverse Effect, is
materially adverse to the business, results of

 

58

 

operations,
or financial condition of Avery and its Subsidiaries, taken as a whole; provided, however, that in determining
whether there has been a Avery Material Adverse Effect, any adverse effect
attributable to the following shall be disregarded: (i) general economic or
business conditions; (ii) general industry conditions; (iii) the taking of any
action permitted or required by this Agreement; (iv) the announcement or
pendency of the Merger or any of the other transactions contemplated by this
Agreement; (v) the Breach by the Primal or the Stockholders of this Agreement;
and (vi) a decline in Avery’s stock price; in each case, to the extent that
such adverse effect is attributable to such event.

 

“Avery Preferred Stock”—the non-voting Series F Junior Participating Convertible Preferred
Stock, par value $0.01 per share, having the preferences, limitations and
rights set forth in the Certificate of Designations attached hereto as Annex B.

 

“Avery Stock”—collectively, the Avery Common Stock and the
Avery Preferred Stock.

 

“Balance Sheet”—as defined in Section 4.4(a).

 

“Best Efforts”—the efforts that a prudent Person desirous
of achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible;  provided, however, that an obligation to use Best Efforts under this Agreement does not
require the Person subject to that obligation to take actions that would result
in a materially adverse change in the benefits to such Person of this Agreement
and the Contemplated Transactions.

 

“Breach”—a “Breach” of a representation, warranty, covenant, obligation, or other provision
of this Agreement or any instrument delivered pursuant to this Agreement will
be deemed to have occurred if there is or has been (a) any inaccuracy in or
breach of, or any failure to perform or comply with, such representation,
warranty, covenant, obligation, or other provision, or (b) any claim (by any
Person) or other occurrence or circumstance that is or was inconsistent with
such representation, warranty, covenant, obligation, or other provision, and
the term “Breach”
means any such inaccuracy, breach, failure, claim, occurrence, or circumstance.

 

“CGCL”—the General Corporation Law of the State of
California.

 

“Closing”—means a meeting, which will be held in
accordance with Section 3.3, of all Persons interested in the transactions
contemplated by this Agreement at which all documents necessary to evidence the
fulfillment or waiver of all conditions precedent to the consummation of the
transactions contemplated by this Agreement are executed and delivered.

 

“Closing Date”—the date on which the Closing actually takes
place.

 

“Consent”—any approval, consent, ratification, waiver,
or other authorization (including any Governmental Authorization).

 

59

 

“Constituent Corporations”—Merger Sub and Primal.

 

“Contemplated Transactions”—all of the transactions contemplated by this Agreement, including:

 

(a)           the
Merger;

 

(b)           the
execution, delivery, and performance of the Employment Agreements, the
Registration Rights Agreement, the Stockholders’ Releases, and the Escrow
Agreement;

 

(c)           the
performance by Avery, Merger Sub, Primal and the Stockholders of their
respective covenants and obligations under this Agreement; and

 

(d)           Avery’s
exercise of control over the Acquired Companies;

 

provided, however, that, when used in any
representation, warranty or agreement herein, the term shall refer only to
those matters applicable to the Person making such representation, warranty or
agreement, the intent being that, unless otherwise expressly provided in this
Agreement, no party to this Agreement is making or shall have been deemed to
have made any representations, warranties or agreements for any other party to
this Agreement by using this defined term.

 

“Contract”—any agreement, contract, obligation,
promise, or undertaking (whether written or oral and whether express or
implied) that is legally binding.

 

“Corsair Agreement”—Asset
Purchase Agreement, dated as of February 3, 1999, by and between Corsair
Communications, Inc., a Delaware corporation, Subscriber Computing, Inc., a
Delaware corporation, WBS and Avery, and the Schedules and Exhibits thereto.

 

“Damages”—as defined in Section 12.2.

 

“DGCL”—the General Corporation Law of the State of
Delaware.

 

“Employment Agreements”—as defined in Section 3.2(a)(ii).

 

“Encumbrance”—any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership.

 

“End-User Licenses”—object code
end-user licenses granted to end users in the ordinary course of business that
permit use of Software products generally available to the public without a
right to modify, distribute or sublicense such Software products.

 

“Environment”—soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins, and wetlands), groundwaters, drinking water supply,

 

60

 

stream sediments, ambient
air (including indoor air), plant and animal life, and any other environmental
medium or natural resource.

 

“Environmental Law”—any
Legal Requirement that requires or relates to:

 

(a)           advising
appropriate authorities, employees, and the public of intended or actual
Releases of pollutants or Hazardous Materials, violations of discharge limits,
or other prohibitions and of the commencements of activities, such as resource
extraction or construction, that could have significant impact on the
Environment;

 

(b)           preventing
or reducing to acceptable levels the Release of pollutants or Hazardous
Materials into the Environment;

 

(c)           reducing
the quantities, preventing the release, or minimizing the hazardous
characteristics of wastes that are generated;

 

(d)           assuring
that products are designed, formulated, packaged, and used so that they do not
present unreasonable risks to human health or the Environment when used or
disposed of;

 

(e)           protecting
resources, species, or ecological amenities;

 

(f)            reducing
to acceptable levels the risks inherent in the transportation of hazardous
substances, pollutants, oil, or other potentially harmful substances;

 

(g)           cleaning
up pollutants that have been Released, preventing the threat of release, or
paying the costs of such clean up or prevention; or

 

(h)           making
responsible parties pay private parties, or groups of them, for damages done to
their health or the Environment, or permitting self-appointed representatives
of the public interest to recover for injuries done to public assets.

 

“Environmental Liabilities”—any
cost, damages, expense, liability, obligation, or other responsibility arising
from or under Environmental Law or Occupational Safety and Health Law and
consisting of or relating to:

 

(a)           any
environmental, health, or safety matters or conditions (including on-site or
off-site contamination, occupational safety and health, and regulation of
chemical substances or products);

 

(b)           fines,
penalties, judgments, awards, settlements, legal or administrative proceedings,
damages, losses, claims, demands and response, investigative, remedial, or

 

61

 

inspection costs and
expenses arising under Environmental Law or Occupational Safety and Health Law;

 

(c)           financial
responsibility under Environmental Law or Occupational Safety and Health Law
for cleanup costs or corrective action, including any investigation, cleanup,
removal, containment, or other remediation or response actions (“Cleanup”)
required by applicable
Environmental Law or Occupational Safety and Health Law (whether or not such
Cleanup has been required or requested by any Governmental Body or any other
Person) and for any natural resource damages; or

 

(d)           any
other compliance, corrective, investigative, or remedial measures required
under Environmental Law or Occupational Safety and Health Law.

 

The
terms “removal,” “remedial,” and “response action,” include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. § 9601 et seq., as amended (“CERCLA”).

 

“ERISA”—the Employee Retirement Income Security Act
of 1974 or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.

 

“Escrow Agreement”—as defined in
Section 3.2(b).

 

“GAAP”—generally accepted United States accounting
principles.

 

“Governmental Authorization”—any approval, consent, license, permit, waiver, or other authorization
issued, granted, given, or otherwise made available by or under the authority
of any Governmental Body or pursuant to any Legal Requirement.

 

“Governmental Body”—any:

 

(a)           nation,
state, county, city, town, village, district, or other jurisdiction of any
nature;

 

(b)           federal,
state, local, municipal, foreign, or other government;

 

(c)           governmental
or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal);

 

(d)           multi-national
organization or body; or

 

(e)           body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature.

 

62

 

“Hazardous
Materials”—any
waste or other substance that is listed, defined, designated, or classified as,
or otherwise determined to be, hazardous, radioactive, or toxic or a pollutant
or a contaminant under or pursuant to any Environmental Law, including any
admixture or solution thereof, and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor and asbestos or
asbestos-containing materials.

 

“HSR Act”—the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.

 

“Intellectual
Property Assets”—any (i) patent, patent application,
trademark (whether registered or unregistered), trademark application, trade
name, fictitious business name, service mark (whether registered or
unregistered), service mark application, copyright (whether registered or
unregistered), copyright application, maskwork, maskwork application, trade
secret, know-how, customer list, franchise, system, Software, Source Code,
computer program, domain name or registration for any Internet site, invention,
design (including any design forming any part of any Internet site), blueprint,
engineering drawing, proprietary product, technology, proprietary right or
other intellectual property right or intangible asset; or (ii) right to use or
exploit any of the foregoing.

 

“Interim
Balance Sheet”—as
defined in Section 4.4(b).

 

“IRC”—the Internal Revenue Code of 1986 or
any successor law, and regulations issued by the IRS pursuant to the Internal
Revenue Code or any successor law.

 

“IRS”—the United States Internal Revenue
Service or any successor agency, and, to the extent relevant, the United States
Department of the Treasury.

 

“Knowledge”—an individual will be deemed to have
“Knowledge” of a particular fact or other matter if:

 

(a)           such
individual is actually aware of such fact or other matter; or

 

(b)           a
prudent individual serving in the same or similar capacity as such individual
would or could be expected to discover or otherwise become aware of such fact
or other matter in the course of serving in the same or similar capacity as
such individual.

 

An individual is under no
obligation to make any investigation for the purposes of this definition.

 

A Person (other than an
individual) will be deemed to have “Knowledge” of a particular fact or other
matter if any individual who is serving, or who has at any time served, as a
director, officer, partner, executor, or trustee of such Person (or in any
similar capacity) has, or at any time had, Knowledge of such fact or other
matter.

 

63

 

“Legal
Requirement”—any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.

 

“Material
Avery Contract”—an
Avery Applicable Contract that is material to Avery and its Subsidiaries taken
as a whole.

 

“Merger”—the
merger of Primal with and into Merger Sub for which provision is made in this
Agreement.

 

“MergerSub”—ACI
Telecommunications Financial Services Corporation, a Delaware corporation.

 

“Occupational
Safety and Health Law”—any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.

 

“Order”—any
award, decision, injunction, judgment, order, ruling, subpoena, or verdict
entered, issued, made, or rendered by any court, administrative agency, or
other Governmental Body or by any arbitrator.

 

“Ordinary
Course of Business”—an action taken by a Person will be
deemed to have been taken in the “Ordinary Course of Business” only if:

 

(a)           such
action is consistent with the past practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person;

 

(b)           such
action is not required to be authorized by the board of directors of such
Person (or by any Person or group of Persons exercising similar authority) and
is not required to be specifically authorized by the parent company (if any) of
such Person; and

 

(c)           such
action is similar in nature and magnitude to actions customarily taken, without
any authorization by the board of directors (or by any Person or group of
Persons exercising similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same line of business as
such Person.

 

“Organizational
Documents”—(a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement
and any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any
amendment to any of the foregoing.

 

64

 

“Outfront
Software”—the
current version of the Software system developed by Primal known as “Outfront,”
including any and all Software implementations of algorithms, models and
methodologies, whether in Source Code or object code, interfaces, navigational
devices, menus, menu structures or arrangements, icons, help and other
operational instructions and the literal expressions of ideas that operate,
cause, create, direct, manipulate, access or otherwise affect the operation of
such Software system, and all documentation, including user manuals and
training materials, relating to such Software system.

 

“Person”—any individual, corporation (including
any non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Body.

 

“Plan”—as defined in Section 4.24.

 

“Primal
Disclosure Letter”—the
disclosure letter delivered by Primal to Avery concurrently with the execution
and delivery of this Agreement or, at Primal’s option, as provided in Section
6.2.

 

“Primal
Intellectual Property Asset”—means any Intellectual Property
Asset owned by or licensed to any of the Acquired Companies, including the
Outfront Software and the Source Code for the Outfront Software and the names
“Primal Systems,” Primal Billing Systems” and “Wireless Billing Systems.”

 

“Primal
Material Adverse Effect”—any  change
or effect that, individually or when taken together with all other such changes
or effects that have occurred prior to the date of determination of the
occurrence of the Primal Material Adverse Effect, is materially adverse to the
business, results of operations, or financial condition of the Primal and its
Subsidiaries (excluding WBS for all purposes), taken as a whole; provided, however, that in determining
whether there has been a Primal Material Adverse Effect, any adverse effect
attributable to the following shall be disregarded: (i) general economic or
business conditions; (ii) general industry conditions; (iii) the taking of any
action permitted or required by this Agreement; (iv) the announcement or
pendency of the Merger or any of the other transactions contemplated by this
Agreement; (v) the Breach by Avery or Merger Sub of this Agreement; in each
case, to the extent that such adverse effect is attributable to such event.

 

“Proceeding”—any action, arbitration, audit,
hearing, investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought, conducted, or
heard by or before, or otherwise involving, any Governmental Body or
arbitrator.

 

65

 

“Related
Person”—with
respect to a particular individual:

 

(a)           each other member of such
individual’s Family;

 

(b)           any Person that is directly or
indirectly controlled by such individual or one or more members of such
individual’s Family;

 

(c)           any Person in which such
individual or members of such individual’s Family hold (individually or in the
aggregate) a Material Interest; and

 

(d)           any Person with respect to which
such individual or one or more members of such individual’s Family serves as a
director, officer, partner, executor, or trustee (or in a similar capacity).

 

With
respect to a specified Person other than an individual:

 

(a)           any Person that directly or
indirectly controls, is directly or indirectly controlled by, or is directly or
indirectly under common control with such specified Person;

 

(b)           any Person that holds a Material
Interest in such specified Person;

 

(c)           each Person that serves as a
director, officer, partner, executor, or trustee of such specified Person (or
in a similar capacity);

 

(d)           any Person in which such
specified Person holds a Material Interest;

 

(e)           any Person with respect to which
such specified Person serves as a general partner or a trustee (or in a similar
capacity); and

 

(f)            any
Related Person of any individual described in clause (b) or (c).

 

For purposes of this definition,
(a) the “Family”
of
an individual includes (i) the individual, (ii) the individual’s spouse and
former spouses, (iii) any other natural person who is related to the individual
or the individual’s spouse within the second degree, and (iv) any other natural
person who resides with such individual, and (b) “Material Interest” means
direct or indirect beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of voting securities or other voting interests
representing at least 5% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 5% of the
outstanding equity securities or equity interests in a Person.

 

“Release”—any spilling, leaking,
emitting, discharging, depositing, escaping, leaching, dumping, or other
releasing into the Environment, whether intentional or unintentional.

 

66

 

“Representative”—with respect to a particular
Person, any director, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants, and
financial advisors.

 

“Securities
Act”—the Securities Act of 1933 or any successor
law, and regulations and rules issued pursuant to that Act or any successor
law.

 

“Securityholder
Agent”—as
defined in Section 12.5.

 

“Software”—any
and all (i) computer programs, including any and all software implementations
of algorithms, models and methodologies, whether in source code or object code,
interfaces, navigational devices, menus, menu structures or arrangements,
icons, help and other operational instructions and the literal expressions of
ideas that operate, cause, create, direct, manipulate, access or otherwise
affect the operation of such computer programs, (ii) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing, and
(iv) all documentation, including user manuals and training materials, relating
to any of the foregoing.

 

“Source Code”—the complete instruction set
for any Software, including all comments and procedural code, such as
compilation switches, job control language statements and a description of the
system/program generation procedure, in a form intelligible to human
programmers and capable of being readily translated by such programmers into
object code for execution on computer equipment through assembly or compiling,
together with all documentation to facilitate such translation, assembly and
compiling; including, without limitation, programmers’ notes, technical and
functional specifications, flow charts, schematics, test programs, statements
of principles of operations, architectural and design standards, and
descriptions of data flows, data structures and control logic.

 

“Stockholders”—as
defined in the first paragraph of this Agreement.

 

“Stockholders’
Releases”—as defined in Section 3.2(a)(i).

 

“Subscriber
Assets”—the
“Assets” as defined in the Corsair Agreement.

 

“Subsidiary”—with respect to any Person (the “Owner”), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation’s or other Person’s board of
directors or similar governing body, or otherwise having the power to direct
the business and policies of that corporation or other Person (other than
securities or other interests having such power only upon the happening of a
contingency that has not occurred) are held by the Owner or one or more of its
Subsidiaries; when used without reference to a particular Person, “Subsidiary” means
a Subsidiary of Primal.

 

67

 

“Surviving
Corporation”—Merger Sub. 

 

“Tax”—any
tax (including any income tax, capital gains tax, value-added tax, sales tax,
property tax, gift tax, or estate tax), levy, assessment, tariff, duty
(including any customs duty), deficiency, or other fee, and any related charge
or amount (including any fine, penalty, interest, or addition to tax), imposed,
assessed, or collected by or under the authority of any Governmental Body or
payable pursuant to any tax-sharing agreement or any other Contract relating to
the sharing or payment of any such tax, levy, assessment, tariff, duty,
deficiency, or fee.

 

“Tax Return”—any
return (including any information return), report, statement, schedule, notice,
form, or other document or information filed with or submitted to, or required
to be filed with or submitted to, any Governmental Body in connection with the
determination, assessment, collection, or payment of any Tax or in connection
with the administration, implementation, or enforcement of or compliance with
any Legal Requirement relating to any Tax.

 

“Threatened”—a
claim, Proceeding, dispute, action, or other matter will be deemed to have been
“Threatened” if any demand or statement has been made (orally or in writing) or
any notice has been given (orally or in writing), or if any other event has
occurred or any other circumstances exist, that would lead a prudent Person to
conclude that such a claim. Proceeding, dispute, action, or other matter is
likely to be asserted, commenced, taken, or otherwise pursued in the future.

 

“Trading Day”—a day
on which the principal national securities exchange on which the shares of the
Avery Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of the Avery Common Stock are not
listed or admitted to trading, means a Business Day.

 

“Value”—with
respect to a share of the Avery Common Stock as of any date, the average of the
“closing
price” for the ten (10) consecutive Trading
Days immediately preceding such date. The “closing price” for
each such Trading Day means the last sale price, regular way on such day, or,
if no such sale takes place on that day, the average of the closing bid and
asked prices on that day, regular way, in either case as reported on the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange, or if the shares of the
Avery Common Stock are not so listed or admitted to trading, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange (including the National
Market System of The Nasdaq Stock Market) on which the shares of the Avery
Common Stock are listed or admitted to trading or, if the shares of the Avery
Common Stock are not so listed or admitted to trading, the last quoted price
or, if not quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or, if such system is no longer in
use, the principal automated quotation system then in use or, if the shares of
the Avery Common Stock are not so quoted by any such system, the average of the
closing bid and asked prices as furnished by a professional market maker
selected by the board of directors of Avery making a market in the shares of
the Avery Common Stock, or, if there is no such market maker or

 

68

 

such closing prices otherwise
are not available, the fair market value of the shares of the Avery Common
Stock as of such day, as determined by the board of directors of Avery in good
faith. In the event Avery issues to all holders of the shares of the Avery
Common Stock rights, options, warrants or convertible or exchangeable
securities entitling the shareholders to subscribe for or purchase shares of
the Avery Stock or any other property, then the Value of a share of the Avery
Common Stock shall include the value of such rights, as determined by the board
of directors of Avery acting in good faith on the basis of such quotations and
other information as it considers, in its reasonable judgment, appropriate.

 

“WBS”—Wireless
Billing Systems, a California corporation.

 

“WBS Transaction”—the acquisition of the Subscriber
Assets by WBS pursuant to the Corsair Agreement.

 

14.          GENERAL PROVISIONS

 

14.1        EXPENSES

 

Except as otherwise expressly
provided in this Agreement, each party to this Agreement will bear its
respective expenses incurred in connection with the preparation, execution, and
performance of this Agreement and the Contemplated Transactions, including all
fees and expenses of agents, representatives, counsel, and accountants. Avery
will reimburse Primal for all legal fees incurred by Primal in connection with
the preparation, execution, and performance of this Agreement and the
Contemplated Transactions. In the event of termination of this Agreement, the
obligation of each party to pay its own expenses will be subject to any rights
of such party arising from a Breach of this Agreement by another party.

 

14.2        PUBLIC ANNOUNCEMENTS

 

Any public announcement or
similar publicity with respect to this Agreement or the Contemplated
Transactions will be issued, if at all, at such time and in such manner as
Avery determines. Unless consented to by Avery in advance or required by Legal
Requirements, prior to the Closing the Acquired Companies shall keep this
Agreement strictly confidential and may not make any disclosure of this
Agreement to any Person. Primal and Avery will consult with each other
concerning the means by which the Acquired Companies’ employees, customers, and
suppliers and others having dealings with the Acquired Companies will be
informed of the Contemplated Transactions, and Avery will have the right to be
present for any such communication.

 

14.3        CONFIDENTIALITY

 

Between the date of this
Agreement and the Closing Date, Avery, Primal and Stockholders will maintain in
confidence, and will cause the directors, officers, employees, agents, and
advisors of Avery and the Acquired Companies to maintain in confidence, and not
use to the detriment of

 

69

 

another party or an Acquired
Company any written, oral, or other information obtained in confidence from
another party or an Acquired Company in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by
or necessary or appropriate in connection with legal proceedings.

 

If the Contemplated Transactions
are not consummated, each party will return or destroy as much of such written
information as the other party may reasonably request. Whether or not the
Closing takes place, the Acquired Companies and Avery waive any cause of
action, right, or claim arising out of the access of Avery or its
Representatives or Primal and its Representatives, as the case may be, to any
trade secrets or other confidential information of the Acquired Companies or
Avery, as the case may be, except for the intentional competitive misuse by
Avery or Primal, as the case may be, of such trade secrets or confidential
information.

 

14.4        NOTICES

 

All notices, consents, waivers,
and other communications under this Agreement must be in writing and will he
deemed to have been duly given when (a) delivered by hand (with written
confirmation of receipt), (b) sent by telecopier (with written confirmation of
receipt), provided that a copy is mailed by registered mail, return receipt
requested, or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by notice to the
other parties):

 

If to
Avery or Merger Sub, to:

 

Avery
Communications, Inc.

190 South
LaSalle Street, Suite 1710

Chicago,
Illinois  60603

Fax
No.: (312) 419-0172

Attention:
Patrick J. Haynes, III, Chairman

 

With
Copy to:

 

Winstead
Sechrest & Minick P.C.

5400
Renaissance Tower

1201
Elm Street

Dallas,
Texas  75270

Fax
No.: (214) 745-5390

Attention:
Bruce A. Cheatham, Esq.

 

70

 

If to Primal or the Stockholders, to:

 

Primal
Systems, Inc.

1500
Quail Street, Suite 700

Newport
Beach, California  92660

Fax
No.: (949) 724-9208

Attention:
John Faltys, President

 

With copy to:

 

Arter
& Hadden LLP

Five
Park Plaza, 10th Floor

Jamboree
Center

Irvine,
California 92614

Fax
No.: (949) 833-9604

Attention:
Stephen H. LaCount, Esq.

 

14.5        JURISDICTION; SERVICE
OF PROCESS

 

Courts within the state of
Delaware will have jurisdiction over any and all disputes between the parties
hereto, whether in law or equity, arising out of or relating to this Agreement,
the Contemplated Transactions or the agreements, instruments and documents
contemplated hereby. The parties consent to and agree to submit to the
jurisdiction of such courts. Each of the parties hereby waives, and agrees not
to assert in any such dispute, to the fullest extent permitted by applicable
Law, any claim that (i) such party is not personally subject to the
jurisdiction of such courts, (ii) such party and such party’s property is
immune from any legal process issued by such courts or (iii) any Proceeding
commenced in such courts is brought in an inconvenient forum. Process in any
action or proceeding referred to in the preceding sentence may be served on any
party anywhere in the world.

 

14.6        FURTHER ASSURANCES

 

The parties agree (a) to furnish
upon request to each other such further information, (b) to execute and deliver
to each other such other documents, and (c) to do such other acts and things,
all as the other party may reasonably request for the purpose of carrying out
the intent of this Agreement and the documents referred to in this Agreement.

 

14.7        WAIVER

 

The rights and remedies of the
parties to this Agreement are cumulative and not alternative. Neither the
failure nor any delay by any party in exercising any right, power, or privilege
under this Agreement or the documents referred to in this Agreement will
operate as a waiver of such right, power, or privilege, and no single or
partial exercise of any such right, power, or privilege will

 

71

 

preclude any other or further
exercise of such right, power, or privilege or the exercise of any other right,
power, or privilege. To the maximum extent permitted by applicable Law, (a) no
claim or right arising out of this Agreement or the documents referred to in
this Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents
referred to in this Agreement.

 

14.8        ENTIRE AGREEMENT AND
MODIFICATION

 

This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.

 

14.9        DISCLOSURE LETTERS

 

(a)           The
disclosures in the Primal Disclosure Letter and the Avery Disclosure Letter,
and those in any Supplement thereto, must relate only to the representations
and warranties in the Section of the Agreement to which they expressly relate
and not to any other representation or warranty in this Agreement.

 

(b)           In the
event of any inconsistency between the statements in the body of this Agreement
and those in the Primal Disclosure Letter or the Avery Disclosure Letter (other
than an exception expressly set forth as such in either such Disclosure Letter
with respect to a specifically identified representation or warranty), the
statements in the body of this Agreement will control.

 

14.10      ASSIGNMENTS, SUCCESSORS, AND THIRD-PARTY
RIGHTS

 

No party may assign any of its
rights under this Agreement without the prior consent of the other parties,
which will not be unreasonably withheld, except that Avery may assign any of
its rights under this Agreement to any Subsidiary of Avery. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing expressed or referred to in this Agreement will be construed
to give any Person other than the parties to this Agreement and the Indemnified
Persons any legal or equitable right, remedy, or claim under or with respect to
this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement, the Indemnified Persons and their successors and
assigns.

 

72

 

14.11      SEVERABILITY

 

If any provision of this
Agreement is held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Agreement will remain in full force
and effect.  Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to
the extent not held invalid or unenforceable.

 

14.12      INTERPRETATION

 

(a)           When a reference is made in this Agreement to
a section or article, such reference shall be to a section or
article of this Agreement unless otherwise clearly indicated to the
contrary.

 

(b)           Whenever the words “include”, “includes” or
“including” are used in this Agreement they shall be deemed to be followed by
the words “without limitation.”

 

(c)           The words “hereof,” “hereby,” “herein” and
“herewith” and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits
and schedules of this Agreement unless otherwise specified.

 

(d)           The plural of any defined term shall have a
meaning correlative to such defined term, and words denoting any gender shall
include all genders. Where a word or phrase is defined herein, each of its
other grammatical forms shall have a corresponding meaning.

 

(e)           A reference to any legislation or to any
provision of any legislation shall include any amendment, modification or
re-enactment thereof, any legislative provision substituted therefor and all
rules, regulations and statutory instruments issued thereunder or pursuant
thereto.

 

(f)            The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any provisions of this Agreement.

 

14.13      TIME OF ESSENCE

 

With regard to all dates
and time periods set forth or referred to in this Agreement, time is of the
essence.

 

73

 

14.14      GOVERNING LAW

 

This
Agreement will be governed by the laws of the State of Delaware without regard
to conflicts of laws principles.

 

14.15      COUNTERPARTS

 

This Agreement may be
executed in one or more counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement.

 

[The remainder of this page has been left blank intentionally.

Signatures of the parties appear on the following page.]

 

74

 

IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.

 

	
   

  	
  AVERY
  COMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scot M. McCormick

  
	
   

  	
   

  	
  Scot
  M. McCormick

  
	
   

  	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  ACI
  TELECOMMUNICATIONS FINANCIAL

  SERVICES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scot M. McCormick

  
	
   

  	
   

  	
  Scot
  M. McCormick

  
	
   

  	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  PRIMAL
  SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John Faltys

  
	
   

  	
   

  	
  John
  Faltys

  
	
   

  	
   

  	
  President

  

 

S-1

 

	
   

  	
  STOCKHOLDERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Mark J. Nielsen

  
	
   

  	
  Mark
  J. Nielsen

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ John Faltys

  
	
   

  	
  John
  Faltys

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Joseph R. Simrell

  
	
   

  	
  Joseph
  R. Simrell

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ David Haynes

  
	
   

  	
  David
  Haynes

  

 

S-2

 

Index of Defined Terms

 

	
  1997
  HBS Senior Preferred Stock

  	
  35

  
	
  20%
  Investment Purchase Price

  	
  52

  
	
  20%
  Investment Shares

  	
  52

  
	
  Accountants

  	
  11

  
	
  Accounts
  Receivable

  	
  16

  
	
  Acquired
  Companies

  	
  58

  
	
  Actual
  Operating Loss

  	
  10

  
	
  Additional
  Merger Consideration

  	
  9

  
	
  Agreement

  	
  1

  
	
  Applicable
  Contract

  	
  58

  
	
  Avery

  	
  1, 58

  
	
  Avery
  Accounts Receivable

  	
  38

  
	
  Avery
  Applicable Contract

  	
  58

  
	
  Avery
  Balance Sheet

  	
  36

  
	
  Avery
  Common Stock

  	
  58

  
	
  Avery
  Disclosure Letter

  	
  58

  
	
  Avery
  Interim Balance Sheet

  	
  36

  
	
  Avery
  Material Adverse Effect

  	
  58

  
	
  Avery
  Preferred Stock

  	
  59

  
	
  Avery
  Stock

  	
  59

  
	
  Avery’s
  Advisors

  	
  43

  
	
  Balance
  Sheet

  	
  14, 59

  
	
  Best
  Efforts

  	
  59

  
	
  Breach

  	
  59

  
	
  CA
  Agreement of Merger

  	
  2

  
	
  CERCLA

  	
  28, 62

  
	
  CGCL

  	
  1, 59

  
	
  Closing

  	
  59

  
	
  Closing
  Date

  	
  59

  
	
  Closing
  Financial Statements

  	
  11

  
	
  closing
  price

  	
  68

  
	
  Code

  	
  1

  
	
  Common
  Stock

  	
  35

  
	
  Competing
  Business

  	
  31

  
	
  Consent

  	
  59

  
	
  Constituent
  Corporations

  	
  60

  
	
  Consulting
  Contracts

  	
  23

  
	
  Contemplated
  Transactions

  	
  60

  
	
  Contract

  	
  60

  
	
  Corsair
  Agreement

  	
  60

  
	
  Damages

  	
  53, 60

  

 

i

 

	
  Determination
  Date

  	
  11

  
	
  DGCL

  	
  1, 60

  
	
  Dissenting
  Shares

  	
  4

  
	
  Earn-Out
  Period

  	
  9

  
	
  Effective
  Time

  	
  2

  
	
  Employment
  Agreements

  	
  8, 60

  
	
  Encumbrance

  	
  60

  
	
  End-User
  Licenses

  	
  60

  
	
  Environment

  	
  60

  
	
  Environmental
  Law

  	
  61

  
	
  Environmental
  Liabilities

  	
  61

  
	
  Environmental
  Permits

  	
  28

  
	
  ERISA

  	
  62

  
	
  ERISA
  Affiliate

  	
  18

  
	
  Escrow
  Agent

  	
  8

  
	
  Escrow
  Agreement

  	
  8, 62

  
	
  Escrow
  Shares

  	
  5

  
	
  Exchange
  Fund

  	
  5

  
	
  Faltys

  	
  1

  
	
  Family

  	
  66

  
	
  GAAP

  	
  62

  
	
  Governmental
  Authorization

  	
  62

  
	
  Governmental
  Body

  	
  62

  
	
  Haynes

  	
  1

  
	
  Hazardous
  Materials

  	
  63

  
	
  HBS
  Senior Preferred Stock

  	
  35

  
	
  HSR
  Act

  	
  63

  
	
  Indemnified
  Persons

  	
  53

  
	
  Intellectual
  Property Assets

  	
  63

  
	
  Interim
  Balance Sheet

  	
  14, 63

  
	
  Investment
  Closing

  	
  52

  
	
  Investors
  Rights Agreement

  	
  9

  
	
  IRC

  	
  63

  
	
  IRS

  	
  63

  
	
  Knowledge

  	
  63

  
	
  Legal
  Requirement

  	
  64

  
	
  Lockup
  Letters

  	
  8

  
	
  Material
  Avery Contract

  	
  64

  
	
  Material
  Interest

  	
  66

  
	
  Merger

  	
  1, 64

  
	
  Merger
  Certificate

  	
  2

  
	
  Merger
  Consideration

  	
  3

  
	
  Merger
  Sub

  	
  1, 64

  

 

ii

 

	
  Nielsen

  	
  1

  
	
  Occupational
  Safety and Health Law

  	
  64

  
	
  Order

  	
  64

  
	
  Ordinary
  Course of Business

  	
  64

  
	
  Organizational
  Documents

  	
  64

  
	
  Outfront
  Software

  	
  65

  
	
  Owner

  	
  67

  
	
  Person

  	
  65

  
	
  Plan

  	
  65

  
	
  Preferred
  Exchange Ratio

  	
  3

  
	
  Preferred
  Stock

  	
  35

  
	
  Primal

  	
  1

  
	
  Primal
  Business Plan

  	
  32

  
	
  Primal
  Common Stock

  	
  1

  
	
  Primal
  Disclosure Letter

  	
  65

  
	
  Primal
  Intellectual Property Asset

  	
  65

  
	
  Primal
  Material Adverse Effect

  	
  65

  
	
  Primal
  Option

  	
  13

  
	
  Primal
  Option Plan

  	
  13

  
	
  Primal
  Plans

  	
  18

  
	
  Primal
  Stockholders’ Meeting

  	
  33

  
	
  Primal’s
  Advisors

  	
  46

  
	
  Proceeding

  	
  65

  
	
  Proprietary
  Rights Agreement

  	
  28

  
	
  Proxy
  Statement

  	
  33

  
	
  Real
  Property

  	
  27

  
	
  Related
  Person

  	
  66

  
	
  Release

  	
  66

  
	
  Representative

  	
  67

  
	
  Review
  Termination Date

  	
  44

  
	
  Securities
  Act

  	
  67

  
	
  Securityholder
  Agent

  	
  55, 67

  
	
  Series
  A Preferred Stock

  	
  35

  
	
  Series
  B Exchange Preferred Stock

  	
  35

  
	
  Series
  B Preferred Stock

  	
  35

  
	
  Series
  C Preferred Stock

  	
  35

  
	
  Series
  D Preferred Stock

  	
  35

  
	
  Series
  E Preferred Stock

  	
  35

  
	
  Simrell

  	
  1

  
	
  Software

  	
  67

  
	
  Software
  Licenses

  	
  23

  
	
  Source
  Code

  	
  67

  
	
  Source
  Code Escrow Agreements

  	
  30

  

 

iii

 

	
  Stockholders

  	
  1, 67

  
	
  Stockholders’
  Releases

  	
  8, 67

  
	
  Subscriber
  Assets

  	
  67

  
	
  Subsidiary

  	
  67

  
	
  Surviving
  Corporation

  	
  1, 2, 68

  
	
  Tax

  	
  68

  
	
  Tax
  Return

  	
  68

  
	
  Third
  Party Licenses

  	
  29

  
	
  Third
  Party Software

  	
  29

  
	
  Threatened

  	
  68

  
	
  Trading
  Day

  	
  68

  
	
  Value

  	
  68

  
	
  Voting
  Agreement

  	
  1

  
	
  WBS

  	
  69

  
	
  WBS
  Transaction

  	
  69

  
	
  1997
  HBS Senior Preferred Stock

  	
  35

  
	
  20%
  Investment Purchase Price

  	
  52

  
	
  20%
  Investment Shares

  	
  52

  
	
  Accountants

  	
  11

  
	
  Accounts
  Receivable

  	
  16

  
	
  Acquired
  Companies

  	
  58

  
	
  Actual
  Operating Loss

  	
  10

  
	
  Additional
  Merger Consideration

  	
  9

  
	
  Agreement

  	
  1

  
	
  Applicable
  Contract

  	
  58

  
	
  Avery

  	
  1, 58

  
	
  Avery
  Accounts Receivable

  	
  38

  
	
  Avery
  Applicable Contract

  	
  58

  
	
  Avery
  Balance Sheet

  	
  36

  
	
  Avery
  Common Stock

  	
  58

  
	
  Avery
  Disclosure Letter

  	
  58

  
	
  Avery
  Interim Balance Sheet

  	
  36

  
	
  Avery
  Material Adverse Effect

  	
  58

  
	
  Avery
  Preferred Stock

  	
  59

  
	
  Avery
  Stock

  	
  59

  
	
  Avery’s
  Advisors

  	
  43

  
	
  Balance
  Sheet

  	
  14, 59

  
	
  Best
  Efforts

  	
  59

  
	
  Breach

  	
  59

  
	
  CA
  Agreement of Merger

  	
  2

  
	
  CERCLA

  	
  28, 62

  
	
  CGCL

  	
  1, 59

  
	
  Closing

  	
  59

  

 

iv

 

	
  Closing
  Date

  	
  59

  
	
  Closing
  Financial Statements

  	
  11

  
	
  closing
  price

  	
  68

  
	
  Code

  	
  1

  
	
  Common
  Stock

  	
  35

  
	
  Competing
  Business

  	
  31

  
	
  Consent

  	
  59

  
	
  Constituent
  Corporations

  	
  60

  
	
  Consulting
  Contracts

  	
  23

  
	
  Contemplated
  Transactions

  	
  60

  
	
  Contract

  	
  60

  
	
  Corsair
  Agreement

  	
  60

  
	
  Damages

  	
  53, 60

  
	
  Determination
  Date

  	
  11

  
	
  DGCL

  	
  1, 60

  
	
  Dissenting
  Shares

  	
  4

  
	
  Earn-Out
  Period

  	
  9

  
	
  Effective
  Time

  	
  2

  
	
  Employment
  Agreements

  	
  8, 60

  
	
  Encumbrance

  	
  60

  
	
  End-User
  Licenses

  	
  60

  
	
  Environment

  	
  60

  
	
  Environmental
  Law

  	
  61

  
	
  Environmental
  Liabilities

  	
  61

  
	
  Environmental
  Permits

  	
  28

  
	
  ERISA

  	
  62

  
	
  ERISA
  Affiliate

  	
  18

  
	
  Escrow
  Agent

  	
  8

  
	
  Escrow
  Agreement

  	
  8, 62

  
	
  Escrow
  Shares

  	
  5

  
	
  Exchange
  Fund

  	
  5

  
	
  Faltys

  	
  1

  
	
  Family

  	
  66

  
	
  GAAP

  	
  62

  
	
  Governmental
  Authorization

  	
  62

  
	
  Governmental
  Body

  	
  62

  
	
  Haynes

  	
  1

  
	
  Hazardous
  Materials

  	
  63

  
	
  HBS
  Senior Preferred Stock

  	
  35

  
	
  HSR
  Act

  	
  63

  
	
  Indemnified
  Persons

  	
  53

  
	
  Intellectual
  Property Assets

  	
  63

  
	
  Interim
  Balance Sheet

  	
  14, 63

  

 

v

 

	
  Investment
  Closing

  	
  52

  
	
  Investors
  Rights Agreement

  	
  9

  
	
  IRC

  	
  63

  
	
  IRS

  	
  63

  
	
  Knowledge

  	
  63

  
	
  Legal
  Requirement

  	
  64

  
	
  Lockup
  Letters

  	
  8

  
	
  Material
  Avery Contract

  	
  64

  
	
  Material
  Interest

  	
  66

  
	
  Merger

  	
  1, 64

  
	
  Merger
  Certificate

  	
  2

  
	
  Merger
  Consideration

  	
  3

  
	
  Merger
  Sub

  	
  1, 64

  
	
  Nielsen

  	
  1

  
	
  Occupational
  Safety and Health Law

  	
  64

  
	
  Order

  	
  64

  
	
  Ordinary
  Course of Business

  	
  64

  
	
  Organizational
  Documents

  	
  64

  
	
  Outfront
  Software

  	
  65

  
	
  Owner

  	
  67

  
	
  Person

  	
  65

  
	
  Plan

  	
  65

  
	
  Preferred
  Exchange Ratio

  	
  3

  
	
  Preferred
  Stock

  	
  35

  
	
  Primal

  	
  1

  
	
  Primal
  Business Plan

  	
  32

  
	
  Primal
  Common Stock

  	
  1

  
	
  Primal
  Disclosure Letter

  	
  65

  
	
  Primal
  Intellectual Property Asset

  	
  65

  
	
  Primal
  Material Adverse Effect

  	
  65

  
	
  Primal
  Option

  	
  13

  
	
  Primal
  Option Plan

  	
  13

  
	
  Primal
  Plans

  	
  18

  
	
  Primal
  Stockholders’ Meeting

  	
  33

  
	
  Primal’s
  Advisors

  	
  46

  
	
  Proceeding

  	
  65

  
	
  Proprietary
  Rights Agreement

  	
  28

  
	
  Proxy
  Statement

  	
  33

  
	
  Real
  Property

  	
  27

  
	
  Related
  Person

  	
  66

  
	
  Release

  	
  66

  
	
  Representative

  	
  67

  
	
  Review
  Termination Date

  	
  44

  

 

vi

 

	
  Securities
  Act

  	
  67

  
	
  Securityholder
  Agent

  	
  55, 67

  
	
  Series
  A Preferred Stock

  	
  35

  
	
  Series
  B Exchange Preferred Stock

  	
  35

  
	
  Series
  B Preferred Stock

  	
  35

  
	
  Series
  C Preferred Stock

  	
  35

  
	
  Series
  D Preferred Stock

  	
  35

  
	
  Series
  E Preferred Stock

  	
  35

  
	
  Simrell

  	
  1

  
	
  Software

  	
  67

  
	
  Software
  Licenses

  	
  23

  
	
  Source
  Code

  	
  67

  
	
  Source
  Code Escrow Agreements

  	
  30

  
	
  Stockholders

  	
  1, 67

  
	
  Stockholders’
  Releases

  	
  8, 67

  
	
  Subscriber
  Assets

  	
  67

  
	
  Subsidiary

  	
  67

  
	
  Surviving
  Corporation

  	
  1, 2

  
	
  Tax

  	
  68

  
	
  Tax
  Return

  	
  68

  
	
  Third
  Party Licenses

  	
  29

  
	
  Third
  Party Software

  	
  29

  
	
  Threatened

  	
  68

  
	
  Trading
  Day

  	
  68

  
	
  Value

  	
  68

  
	
  Voting
  Agreement

  	
  1

  
	
  WBS

  	
  69

  
	
  WBS
  Transaction

  	
  69

  

 

vii

 

ANNEX A

 

FORM OF VOTING AGREEMENT

 

 

VOTING AGREEMENT

 

This VOTING AGREEMENT (the
“Agreement”) is made and entered into as of March 19, 1999 by and
among AVERY COMMUNICATIONS, INC.,
a Delaware corporation (“ACI”), PRIMAL
SYSTEMS, INC., a California corporation (“Primal”),
and
                                ,
a shareholder of Primal (the “Shareholder”). Capitalized terms used
herein but not otherwise defined herein shall have the meanings ascribed to
them in the Merger Agreement (as defined below).

 

R E C I T A L S:

 

A.            Concurrently with the execution of this
Agreement, ACI, ACI Telecommunications Financial Services Corporation, a Delaware
corporation and a wholly owned subsidiary of ACI (“Merger Sub”), Primal,
and certain shareholders of Primal, have entered into an Agreement and Plan of
Merger, dated March 19, 1999 (the “Merger Agreement”), which
provides, among other things, for the merger (the “Merger”) of Primal
with and into Merger Sub. Pursuant to the Merger Agreement, all of the issued
and outstanding shares of capital stock of Primal (the “Primal Capital Stock”)
and all of the outstanding options to acquire shares of Primal Capital Stock
will be converted into the right to receive the Merger Consideration.

 

B.            The Shareholder is the beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) with the right to vote or to direct the vote of
such number of shares of Primal Capital Stock as indicated on the signature
page of this Agreement (the “Shares”).

 

C.            In consideration of the execution of the
Merger Agreement by ACI, the Shareholder agrees to restrict the transfer or disposition
of the Shares, or other shares of Primal Capital Stock acquired by the
Shareholder hereafter and prior to the Expiration Date (as defined in
Section 1.1 below), agrees to vote or to direct the vote of the Shares and
any other such shares of Primal Capital Stock acquired by the Shareholder so as
to facilitate consummation of the Merger, and agrees to grant ACI an
irrevocable proxy to vote the Shares and any other shares of Primal Capital
Stock acquired by the Shareholder upon the terms and subject to the conditions
set forth herein.

 

A G R E E M E N T:

 

NOW, THEREFORE, in consideration of the foregoing and the promises and covenants
contained herein and other good and valuable consideration the receipt of which
is hereby acknowledged, the parties hereto agree as follows:

 

 

Section 1. Agreement to Retain Shares.

 

1.1          Transfer
and Encumbrance. The
Shareholder agrees, during the period beginning on the date hereof and ending
on the Expiration Date (as defined below), not to transfer, sell, exchange,
pledge or otherwise dispose of or encumber (collectively, “Transfer”)
any of the Shares or any New Shares (as defined in Section 1.2 below).
Such restrictions on Transfer, however, shall not be applicable to a gratuitous
Transfer of the Shares or New Shares made to the Shareholder’s spouse or issue,
including adopted children, or to a trust for the exclusive benefit of the
Shareholder or the Shareholder’s spouse or issue. Each person to whom the
Shares or New Shares are Transferred by means of one of the permitted Transfers
specified above must, as a condition precedent to the validity of such
Transfer, acknowledge in writing to Primal and ACI that such person is bound by
the provisions of this Agreement. As used herein, the term “Expiration Date”
shall mean the earlier to occur of (i) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the Merger
Agreement, or (ii) the termination of the Merger Agreement in accordance with
its terms.

 

1.2          New
Shares. The Shareholder
agrees that any shares of Primal Capital Stock that the Shareholder acquires
beneficial ownership with the right to vote or direct the voting of such
shares, after the date of this Agreement and prior to the Expiration Date
(collectively, the “New Shares”), shall be subject to the terms and
conditions of this Agreement to the same extent as if they constituted Shares.

 

Section 2. Agreement to Vote
Shares. At every
meeting of the shareholders of Primal called with respect to any of the
following, and at every adjournment thereof, and on every action or approval by
written consent of the shareholders of Primal with respect to any of the
following, the Shareholder shall vote or direct the vote of the Shares and any
New Shares in favor of approval of the Merger Agreement and the Merger and in
favor of any reasonable matter that could reasonably be expected to facilitate
the Merger.

 

Section 3. Non-Solicitation
Agreement. The
Shareholder agrees, prior to the Expiration Date, not to directly or indirectly
take any of the following actions with any party other than ACI and its
affiliates, agents and representatives and their designees in connection with
any Acquisition Proposal (as defined below): (i) solicit or encourage
submission of any inquiries, proposals or offers by any person, entity or group
(other than ACI, Merger Sub and their affiliates, agents and representatives),
or (ii) participate in any discussions or negotiations with, or disclose any
information concerning Primal to, or afford any access to the properties, books
or records of Primal to, or otherwise assist, facilitate or encourage, or enter
into any agreement or understanding with, any person, entity or group (other
than ACI, Merger Sub and their affiliates, agents and representatives). For the
purposes of this Agreement, an “Acquisition Proposal” shall mean any inquiry or
proposal relating to (i) any merger, consolidation, sale of substantial assets
or similar transactions involving Primal (other than sales of assets or
inventory in the ordinary course of business), or (ii) any sale of equity
interests in Primal (including without limitation by way of a

 

2

 

tender
offer or an exchange offer) other than pursuant to exercise of outstanding options.
In addition, subject to the other provisions of this Section 3, from and
after the date of this Agreement until the Expiration Date, Shareholder agrees
not to directly or indirectly through any of its directors, officers,
employees, representatives, investment bankers, agents or affiliates, make or
authorize any statement, recommendation or solicitation in support of any
Acquisition Proposal made by any person, entity or group (other than ACI or
Merger Sub). Upon execution of this Agreement, Shareholder agrees to
immediately cease any and all existing activities, discussions or negotiations
with any parties (other than ACI, Merger Sub, and their affiliates, agents and
representatives) conducted heretofore with respect to any of the foregoing. In
the event that the Shareholder receives from any third party any offer or
indication of interest (whether made in writing or otherwise) regarding any of
the transactions referred to in the foregoing sentence, or any request for
information about Primal with respect to any of the foregoing, then the
Shareholder shall promptly communicate to ACI the material terms of each such
offer, indication of interest, or request, including the identity of the third
party.

 

Section 4. Irrevocable Proxy. Concurrently with the execution of this
Agreement, the Shareholder agrees to deliver to ACI a proxy, which shall be
deemed to be coupled with an interest, in the form attached as Exhibit A
(the “Proxy”), which shall be irrevocable to the extent permitted by
applicable law, covering the total number of Shares and New Shares of capital
stock of Primal beneficially owned (as such term is defined in Rule 13d-3 under
the Exchange Act) by the Shareholder set forth therein.

 

Section 5. Representations,
Warranties and Covenants of Shareholder. The Shareholder represents, warrants and
covenants to ACI as follows: the Shareholder (i) is the beneficial owner of the
Shares, which at the date of this Agreement and at all times up until the
Expiration Date will be free and clear of any liens, claims, options, charges
or other encumbrances, (ii) does not beneficially own any shares of Primal
Capital Stock other than the Shares (excluding shares as to which Shareholder
currently disclaims beneficial ownership in accordance with applicable law), and
(iii) has full power and authority to make, enter into and carry out the terms
of this Agreement and the Proxy.

 

Section 6. Covenants of Primal. Primal hereby agrees and covenants that:

 

6.1          Except as set forth in Section 1.1
hereof, Primal will not and will not cause its stock transfer agent to,
register the transfer of any of the Shares or New Shares on the stock transfer
ledger of Primal at any time prior to the termination of this Agreement
pursuant to Section 9.

 

6.2          Primal agrees that any shares of Primal
Capital Stock that the Shareholder acquires beneficial ownership after the date
of this Agreement and prior to the termination of this Agreement pursuant to
Section 9 shall be considered “New Shares” and subject to each of the
terms and conditions of this Agreement.

 

3

 

Section 7. Additional
Documents. The
Shareholder and Primal hereby covenant and agree to execute and deliver any
additional documents reasonably necessary or desirable to carry out the purpose
and intent of this Agreement.

 

Section 8. Consent and Waiver. The Shareholder hereby gives any consents or
waivers that are reasonably required for the consummation of the Merger under
the terms of any agreement to which the Shareholder is a party or pursuant to
any rights the Shareholder may have.

 

Section 9. Termination. This Agreement and the Proxy delivered in
connection herewith shall terminate and shall have no further force or effect
as of the Expiration Date.

 

Section 10. Miscellaneous.

 

10.1        Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.

 

10.2        Binding
Effect and Assignment.
This Agreement and all of the provisions hereof shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, but, except as otherwise specifically provided herein,
neither this Agreement nor any of the rights, interests or obligations of the
parties hereto may be assigned by any of the parties without the prior written
consent of the other parties.

 

10.3        Amendments
and Modification. This
Agreement may not be modified, amended, altered or supplemented except by the
execution and delivery of a written agreement executed by the parties hereto.

 

10.4        Specific
Performance, Injunctive Relief. The parties
acknowledge that ACI will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
the Shareholder set forth herein. Therefore, it is agreed that, in addition to
any other remedies that may be available to ACI upon any such violation, ACI
shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to ACI at law or
in equity.

 

10.5        Notices. Notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
commercial delivery service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with acknowledgment of complete
transmission) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):

 

4

 

	
  (a)

  	
   

  	
  If
  to ACI, to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Avery
  Communications, Inc.

  
	
   

  	
   

  	
  190
  South LaSalle Street, Suite 1710

  
	
   

  	
   

  	
  Chicago,
  Illinois 60603

  
	
   

  	
   

  	
  Attention:
  Patrick J. Haynes, III, Chairman

  
	
   

  	
   

  	
  Facsimile
  No.: (312) 419-0172

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With
  a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Winstead
  Sechrest & Minick P.C.

  
	
   

  	
   

  	
  5400
  Renaissance Tower

  
	
   

  	
   

  	
  1201
  Elm Street

  
	
   

  	
   

  	
  Dallas,
  Texas 75270

  
	
   

  	
   

  	
  Attention:
  Bruce A. Cheatham, Esq.

  
	
   

  	
   

  	
  Facsimile
  No.: (214)745-5390

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  If
  to Primal, to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Primal
  Systems, Inc.

  
	
   

  	
   

  	
  1500
  Quail Street, Suite 700

  
	
   

  	
   

  	
  Newport
  Beach, California  92660

  
	
   

  	
   

  	
  Attention:
  John Faltys, President

  
	
   

  	
   

  	
  Facsimile
  No.: (949) 724-9208

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With
  a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Arter
  & Hadden LLP

  
	
   

  	
   

  	
  Five
  Park Plaza, 10th Floor

  
	
   

  	
   

  	
  Jamboree
  Center

  
	
   

  	
   

  	
  Irvine,
  California  92614

  
	
   

  	
   

  	
  Attention:
  Stephen H. LaCount, Esq.

  
	
   

  	
   

  	
  Facsimile
  No.: (949) 833-9604

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  If
  to the Shareholder, to the address set forth on the last page hereof.

  

 

10.6        Governing
Law; Consent to Jurisdiction. The parties have agreed that Delaware law shall govern this Agreement
and that courts within the state of Delaware will have jurisdiction over any
and all disputes between the parties hereto, whether in law or equity, arising
out of or relating to this Agreement or the agreements, instruments and
documents contemplated hereby. The parties consent to and agree to submit to
the jurisdiction of such courts. Each of the parties hereby waives and agrees
not to assert in any such dispute, to the fullest extent permitted by
applicable law, any claim that (i) such party

 

5

 

is
not personally subject to the jurisdiction of such courts, (ii) such party and
such party’s property is immune from any legal process issued by such courts or
(iii) any proceeding commenced in such courts is brought in an inconvenient
forum. Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.

 

10.7        Entire
Agreement. This
Agreement, the Proxy attached hereto, and the Merger Agreement, together with
all the exhibits and schedules attached thereto, contain the entire
understanding of the parties in respect of the subject matter hereof and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.

 

10.8        Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.

 

10.9        Effect of
Headings. The
section headings herein are for convenience only and shall not affect the
construction or interpretation of this Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

6

 

VOTING AGREEMENT

SIGNATURE PAGE

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the day
and year first above written.

 

	
   

  	
  AVERY COMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Scot
  M. McCormick

  
	
   

  	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  PRIMAL SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  John
  Faltys

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
  SHAREHOLDER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Stockholder’s
  Address for Notice:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Shares
  beneficially owned:

  
	
   

  	
   

  
	
   

  	
                 shares
  of Primal Capital Stock

  

 

7

 

Exhibit A

 

IRREVOCABLE
PROXY

TO
VOTE

PRIMAL
SYSTEMS, INC. STOCK

 

The undersigned
shareholder of Primal Systems, Inc., a California corporation (“Primal”),
hereby irrevocably (to the fullest extent permitted by applicable law) appoints
Patrick J. Haynes, III, the Chairman of the Board of Directors of Avery
Communications, Inc., a Delaware corporation (“ACI”), as the sole and
exclusive attorney and proxy of the undersigned, with full power of
substitution and resubstitution, to vote and exercise all voting and related
rights (to the fullest extent that the undersigned is entitled to do so) with
respect to all of the shares of capital stock of Primal which now are or
hereafter may be beneficially owned by the undersigned, and any and all other
shares or securities of Primal issued or issuable in respect thereof on or
after the date hereof (collectively, the “Shares”) in accordance with
the terms of this Irrevocable Proxy. The Shares beneficially owned by the
undersigned shareholder of Primal as of the date of this Irrevocable Proxy are
listed on the final page of this Irrevocable Proxy, along with the number(s) of
the share certificate(s) which represent such Shares. Upon the undersigned’s
execution of this Irrevocable Proxy, any and all prior proxies given by the
undersigned with respect to any Shares are hereby revoked and the undersigned
agrees not to grant any subsequent proxies with respect to the Shares until
after the Expiration Date (as defined below).

 

This Irrevocable
Proxy is granted pursuant to that certain Voting Agreement, dated as of March
19, 1999, by and among ACI, Primal and the undersigned shareholder (the “Voting
Agreement”), and is granted in consideration of ACI entering into that
certain Agreement and Plan of Merger dated as of March 19, 1999 (the “Merger
Agreement”), by and among ACI, ACI Telecommunications Financial Services
Corporation, a Delaware corporation and a wholly owned subsidiary of ACI (“Merger
Sub”), Primal and certain shareholders of Primal. The Merger Agreement
provides, among other things, for the merger of Primal with and into Merger Sub
in accordance with its terms (the “Merger”), and the undersigned
shareholder will be receiving the capital stock of ACI under the Merger. As
used herein, the term “Expiration Date” shall mean the earlier to occur of (i)
such date and time as the Merger shall become effective in accordance with the
terms and provisions of the Merger Agreement, or (ii) the termination of the
Merger Agreement in accordance with its terms.

 

The attorney and
proxy named above is hereby authorized and empowered by the undersigned, at any
time prior to the Expiration Date, to act as the undersigned’s attorney and
proxy to vote the Shares, and to exercise all voting, consent and similar
rights of the undersigned with respect to the Shares (including, without
limitation, the power to execute and deliver written consents pursuant to
applicable law) at every annual, special or adjourned meeting of the
shareholders of Primal and in every written consent in lieu of any such meeting
in favor of approval of the Merger Agreement and the Merger and in favor of any
reasonable matter that could reasonably

 

A-1

 

be expected to facilitate the Merger. The attorneys and proxies named
above may not exercise this Irrevocable Proxy on any other matter except as
provided above. The undersigned shareholder may vote the Shares on all other
matters.

 

Any obligation of
the undersigned hereunder shall be binding upon the successors and assigns of
the undersigned.

 

This Irrevocable
Proxy is deemed to be coupled with an interest and is irrevocable (to the
fullest extent permitted by California General Corporate Law). This Irrevocable Proxy shall
terminate, and be of no further force and effect, automatically upon the
Expiration Date.

 

 

	
  Dated:

  	
  March 19, 1999

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature of Shareholder:

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name of Shareholder:

  
	
   

  	
   

  
	
   

  	
  Shares beneficially owned:

  	
  Certificate Nos.

  
	
   

  	
   

  	
   

  
	
   

  	
          
  shares of Primal Capital Stock

  	
   

  
				

 

A-2

 

ANNEX B

 

 

CERTIFICATE
OF DESIGNATIONS

 

OF

 

SERIES F
JUNIOR PARTICIPATING

 

CONVERTIBLE
PREFERRED STOCK

 

 

AVERY COMMUNICATIONS, INC.

 

CERTIFICATE OF DESIGNATIONS

OF

SERIES F JUNIOR PARTICIPATING
CONVERTIBLE PREFERRED STOCK

 

Avery
Communications, Inc., a Delaware corporation, DOES HEREBY CERTIFY:

 

That, pursuant to
authority conferred upon the Board of Directors of said corporation by virtue
of its Certificate of Incorporation, as amended, and in accordance with Section
151 of the General Corporation Law of the State of Delaware, said Board of
Directors has duly adopted a resolution providing for the issuance of a series of
Preferred Stock, par value $0.01 per share, designated as Series F Junior
Participating Convertible Preferred Stock, which resolution reads as follows:

 

“RESOLVED, that
the Board of Directors (the “Board of Directors”) of Avery Communications, Inc., a
Delaware corporation (the “Corporation”),
hereby authorizes the issuance of a series of the Corporation’s Preferred
Stock, par value $0.01 per share (“Preferred Stock”), and fixes its designation, powers, preferences and
relative, participating, optional, voting or other special rights, and
qualifications, limitations and restrictions thereof, as follows:

 

Section
1.  Designation.  The distinctive serial designation of said series shall be “Series
F Junior Participating Convertible Preferred Stock” (“Series F”). Each share of Series F shall be
identical in all respects with all other shares of Series F except as to the
dates from and after which dividends thereon shall be cumulative.

 

Section
2.  Number of Shares.  The number of shares in Series F shall
initially be 4,000,000, which number may from time to time be increased or
decreased (but not below the total number thereof then outstanding) by the
Board of Directors. Shares of Series F that are redeemed, purchased or
otherwise acquired by the Corporation or converted into Common Stock shall be
cancelled and shall revert to authorized but unissued shares of Preferred Stock
undesignated as to series.

 

Section
3.  Dividends.  So long as any share of Series F remains
outstanding, the holders of shares of the Series F shall be entitled to
participate, on an “if converted” basis, in any and all dividends paid with
respect to the Common Stock, and the holders of the Series F shall be entitled
to a proportionate share of any and all dividends paid by the Corporation with
respect to the Common Stock at any time as any share of the Series F remains
outstanding as though the holders of each such share of the Series F were the
holders of the number of shares of Common Stock of the Corporation into which
their shares of the Series F are convertible as of the record date fixed for
the determination of the holders of Common Stock of the Corporation entitled to
receive such dividend. So long as any share of the Series F remains
outstanding, no dividend shall be paid on any share of the Common Stock unless
concurrently therewith a dividend is paid with respect to all outstanding
shares of the Series F in an amount for each such share of the Series F equal
to the result obtained by multiplying (i) the per share dividend to be paid with
respect to one share of the Common Stock

 

 

by (ii) the number of shares of Common Stock of the Corporation into
which one share of the Series F is convertible as of the record date fixed for
the determination of the holders of Common Stock of the Corporation entitled to
receive such dividend.

 

In the event the
Corporation shall declare a distribution (other than any distribution described
in Section 4) payable in securities of other Persons, evidences of indebtedness
issued by the Corporation or other Persons, assets (excluding cash dividends)
or options or rights to purchase any such securities or evidences of
indebtedness, then, in each such case the holders of the Series F shall be
entitled to a proportionate share of any such distribution as though the
holders of the Series F were the holders of the number of shares of Common
Stock of the Corporation into which their shares of the Series F are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the Corporation entitled to receive such distribution.

 

Section
4.  Liquidation Rights.  In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, then,
before any distribution or payment shall be made to the holders of any Junior
Stock, the holders of shares of Series F shall be entitled to be paid in full
an amount equal to $0.01 per share, together with all accrued dividends to such
distribution or payment date whether or not earned or declared (the “Liquidation Value”). The Series F and the Parity
Preferred shall rank on a parity as to the receipt of the respective
preferential Liquidation Values for each such series upon the occurrence of
such event. If, upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Series F and the Parity Preferred shall be
insufficient to permit the payment to such holders of the full preferential
Liquidation Values payable with respect thereto, then the entire assets and
funds of the Corporation legally available for distribution shall be
distributed ratably among the holders of the Series F and Parity Preferred in
proportion to the preferential amount each such holder is otherwise entitled to
receive. If the Liquidation Value shall have been paid in full to all holders
of shares of Series F and the Parity Preferred, the remaining assets of the
Corporation shall be distributed among the holders of Series F, on an “if
converted” basis, and Junior Stock, according to their respective rights and
preferences and in each case according to their respective numbers of shares.
For the purposes of this Section 4, the consolidation or merger of the
Corporation with any other corporation shall not be deemed to constitute a
liquidation, dissolution or winding up of the Corporation.

 

Section
5.  Conversion Rights.  The holders of shares of Series F shall have
conversion rights as follows (the “Conversion Rights”):

 

(a)  Right to Convert.  Each share of Series F shall be convertible,
at the option of the holder thereof, at any time after the date of issuance of
such share at the office of the Corporation or any transfer agent for such
stock, into such number of fully paid and nonassessable shares of Common Stock
of the Corporation as is determined by dividing $1.00 by the Current Conversion
Price applicable to such share, determined as hereinafter provided, in effect
on the date the certificate is surrendered for conversion, and rounded to the
nearest ten-thousandth (0.0001). The price at which shares of Common Stock
shall be deliverable upon conversion of shares of the Series F (the “Stated Conversion Price”) shall initially be $1.290323 per
share of Common Stock. The Stated Conversion Price shall be adjusted from and
after the Original Issue Date as hereinafter provided.

 

2

 

The Stated Conversion Price at any time in effect or, in the case of
any such adjustment, such Stated Conversion Price as most recently so adjusted,
is herein called the “Current
Conversion Price.”

 

(b)  Mechanics of Conversion.  Before any holder of Series F shall be
entitled to convert the same into shares of Common Stock, such holder shall
surrender the certificate or certificates therefor, duly endorsed, at the
office of the Corporation or of any transfer agent for such stock, and shall
give written notice to the Corporation at such office that such holder elects
to convert the same and shall state therein the name or names in which such
holder wishes the certificate or certificates for shares of Common Stock to be
issued. The Corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Series F, a certificate or
certificates for the number of shares of Common Stock to which such holder
shall be entitled as aforesaid. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of surrender of the
shares of Series F to be converted, and the Person or Persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.

 

(c)  Adjustments Relating to Escrowed Shares.  If any shares of the Series F are released
from escrow pursuant to the terms and conditions of the Escrow Agreement, the
Current Conversion Price in effect immediately prior to such event shall,
concurrently with the effectiveness of such event, be adjusted as if the Stated
Conversion Price had initially been $1.00 per share of Common Stock and had
thereafter been adjusted as provided herein.

 

(d)  Adjustments to Current Conversion Price for
Stock Dividends and for Combinations or Subdivisions of Common Stock.  In the event that the Corporation at any
time or from time to time after the Original Issue Date shall declare or pay,
without consideration, any dividend on the Common Stock payable in Common Stock
or in any right to acquire Common Stock for no consideration, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock or in any right to acquire Common Stock),
or in the event the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Common Stock, then the Current Conversion Price in effect immediately prior
to such event shall, concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate.  In the event that the Corporation shall
declare or pay, without consideration, any dividend on the Common Stock payable
in any right to acquire Common Stock for no consideration, then the Corporation
shall be deemed to have made a dividend payable in Common Stock in an amount of
shares equal to the maximum number of shares issuable upon exercise of such
rights to acquire Common Stock.

 

(e)  Adjustments for Reclassification and
Reorganization.  If at
any time after the Original Issue Date the Common Stock issuable upon
conversion of the Series F shall be changed into the same or a different number
of shares of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise, the Current Conversion Price
then in effect shall, concurrently with the effectiveness of such
reorganization or reclassification, be proportionately adjusted so that the
Series F shall be convertible into, in lieu of the number of shares of Common
Stock which the holders would otherwise have been entitled to receive, a number
of shares of such

 

3

 

other class or classes of stock equivalent to the number of shares of
Common Stock that would have been subject to receipt by the holders upon
conversion of the Series F immediately before that change.

 

(f)  Reorganizations, Mergers, Consolidations or
Sales of Assets.  If
at any time or from time to time after the Original Issue Date there is a
capital reorganization or reclassification of the capital stock of the
Corporation (other than a recapitalization, subdivision, combination,
reclassification, exchange or substitution of shares provided for elsewhere in
this Section 5) or a merger, consolidation or sale of all or substantially all
of the assets of the Corporation, as a part of and as a condition to such
capital reorganization or reclassification, merger, consolidation or sale of
assets provision shall be made so that the holders of the Series F shall
thereafter be entitled to receive upon conversion of the Series F the number of
shares of stock or other securities or property of the Corporation to which a
holder of the number of shares of Common Stock deliverable upon conversion of
the Series F would have been entitled on such capital reorganization or
reclassification, merger, consolidation or sale of assets, subject to
adjustment in respect of such stock or securities by the terms thereof. In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 5 with respect to the rights of the holders of
Series F after the capital reorganization, merger, consolidation or sale of
assets to the end that the provisions of this Section 5 (including adjustment
of the Current Conversion Price then in effect and the number of shares
issuable upon conversion of the Series F) shall be applicable after that event
and be as nearly equivalent as practicable.

 

(g)  No Impairment.  The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Corporation, but will
at all times in good faith assist in the carrying out of all the provisions of
this Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series F against impairment.

 

(h)  Certificates as to Adjustments.  Upon the occurrence of each adjustment or
readjustment of any Current Conversion Price pursuant to this Section 5, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to
each holder of Series F a certificate executed by the Corporation’s President
or Chief Financial Officer setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is
based. The Corporation shall, upon the written request at any time of any
holder of Series F, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
Current Conversion Price for such series of Preferred Stock at the time in
effect, and (iii) the number of shares of Common Stock and the amount, if any,
of other property which at the time would be received upon the conversion of
the Series F.

 

(i)  Notices of Record Date.  In the event that the Corporation shall
propose at any time after the Original Issue Date: (i) to declare any dividend
or distribution upon its Common Stock, whether in cash, property, stock or
other securities, whether or not a regular cash dividend and whether or

 

4

 

not out of earnings or earned surplus; (ii) to offer for subscription
pro rata to the holders of any class or series of its stock any additional
shares of stock of any class or series or other, rights; (iii) to effect any
reclassification or recapitalization of its Common Stock outstanding involving
a change in the Common Stock; or (iv) to merge or consolidate with or into any
other corporation, or sell, lease or convey all or substantially all of its
assets, or to liquidate, dissolve or wind up; then, in connection with each
such event, the Corporation shall send to the holders of Series F:

 

(i) at least
twenty (20) days’ prior written notice of the date on which a record shall be
taken for such dividend, distribution or subscription rights (and specifying
the date on which the holders of Common Stock shall be entitled thereto) or for
determining rights to vote, if any, in respect of the matters referred to in
(iii) and (iv) above; and

 

(ii) in the case
of the matters referred to in (iii) and (iv) above, at least twenty (20) days’
prior written notice of the date when the same shall take place (and specifying
the date on which the holders of Common Stock shall be entitled to exchange
their Common Stock for securities or other property deliverable upon the
occurrence of such event).

 

(j)  Issue Taxes.  The Corporation shall pay any and all issue
and other taxes that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of Series F pursuant hereto; provided,
however, that the Corporation shall not be obligated to pay any transfer taxes
resulting from any transfer requested by any holder in connection with any such
conversion.

 

(k)  Reservation of Stock Issuable Upon
Conversion.  The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series F, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series F; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Series F, the Corporation will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number
of shares as shall be sufficient for such purpose, including, without
limitation, engaging in best efforts to obtain the requisite stockholder
approval of any necessary amendment to the Certificate of Incorporation of the
Corporation.

 

(l)  Fractional Shares.  No fractional share shall be issued upon the
conversion of any share or shares of Series F. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share
of Series F by a holder thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of any fractional share.
If, after the aforementioned aggregation, the conversion would result in the
issuance of a fraction of a share of Common Stock, the Corporation shall, in
lieu of issuing any fractional share, pay the holder otherwise entitled to such
fraction a sum in cash equal to the fair market value of such fraction on the
date of conversion (as determined in good faith by the Board of Directors).

 

5

 

(m)  Notices.  Any notice required by the provisions of
this Section 5 to be given to the holders of shares of Series F shall be deemed
given if deposited in the United States mail, postage prepaid, or if sent by
facsimile or delivered personally by hand or nationally recognized courier and
addressed to each holder of record at such holder’s address or facsimile number
appearing in the records of the Corporation.

 

(n)  Meaning of “Common Stock.”  For the purpose of this Section 5, the term
“Common Stock” shall include any stock of any class or series of the
Corporation which has no preference or priority in the payment of dividends or
in the distribution of assets in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation which is not subject
to redemption by the Corporation. However, shares issuable upon conversion of
shares of Series F shall include only shares of the class designated as Common
Stock as of the Original Issue Date of shares of Series F or shares of the
Corporation of any classes or series resulting from any reclassification or
reclassifications thereof and which have no preference or priority in the
payment of dividends or in the distribution of assets in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and which are not subject to redemption by the Corporation,
provided that if at any time there shall be more than one such resulting class or
series, the shares of each such class and series then so issuable shall be
substantially in the proportion which the total number of shares of such class
and series resulting from all such reclassifications bears to the total number
of shares of all such classes and series resulting from all such
reclassifications.

 

(o)  Postponement of Adjustments; Calculations.  Any adjustment in the conversion price
otherwise required by this Section 5 to be made may be postponed if such
adjustment (plus any other adjustments postponed pursuant to this paragraph and
not theretofore made) would not require an increase or decrease of more than 1%
in such price. All calculations hereunder shall be made to the nearest cent or
to the nearest l/100th of a share, as the case may be.

 

(p)  Tax Adjustments.  The Board of Directors may make such
adjustments in the conversion price, in addition to those required by this
Section 5, as shall be determined by the Board of Directors to be advisable in
order to avoid taxation so far as practicable of any dividend of stock or stock
rights or any event treated as such for Federal income tax purposes to the
recipients. The Board of Directors shall have the power to resolve any
ambiguity or correct any error in this Section 5, and its action in so doing
shall be final and conclusive.

 

(q)  Adjustments Applicable to New Securities.  In the event that any time, as a result of
an adjustment made pursuant to the provisions hereof, the holder of any shares
of Series F thereafter surrendered for conversion shall become entitled to
receive any shares of capital stock of the Corporation other than Common Stock,
thereafter the number of such other shares so receivable upon conversion of
such shares of Series F shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in Section 5 with respect to the Common
Stock shall apply on like terms to any such other shares.

 

6

 

(r)  Accountants’ Certificate.  The certificate of any independent firm of
public accountants of recognized standing selected by the Board of Directors
shall be presumptive evidence of the correctness of any computation made under this
Section 5.

 

Section 6.  Voting Rights.  Except as required by law or the Certificate of Incorporation of
the Corporation, the holders of shares of Series F shall not be entitled to
vote on any matter submitted to the stockholders of the Corporation for a vote
or approval.

 

Section 7.  Senior Preferred Stock Permitted.  The Corporation may, at any time or from
time to time, authorize and issue shares of Preferred Stock in series that are
senior to, or rank on parity with, the Series F, and nothing contained herein
shall limit in any manner whatsoever the authority of the Board of Directors to
fix the designation, powers, preferences and relative, participating, optional,
voting or other special rights, and qualifications, limitations and
restrictions thereof, any one or all of which may rank senior to, or on parity
with, the Series F.

 

Section 8.  Definitions. 
As used herein with respect to Series F, the following terms shall have
the following meanings:

 

(a) 
Escrow Agreement. The term “Escrow Agreement” shall
mean the Escrow Agreement dated as of
             ,
1999, by and among the Corporation, ACI Telecommunications Financial Services
Corporation, a Delaware corporation, each of the shareholders of Primal
Systems, Inc., a California corporation, set forth on Exhibit A thereto, and
Bank One, Texas, NA, as escrow agent.

 

(b)  Junior Stock.
The term “Junior Stock” shall mean the Common Stock, and
any other series of Preferred Stock of the Corporation, or any other class or
series of the capital stock of the Corporation, authorized or issued after the
date on which this Certificate is filed, that is junior to and over which the
Series F has preference and priority in the payment of dividends and in the
payment of amounts in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation.

 

(c) 
Original Issue Date. The term “Original Issue Date” shall mean the date on which a
share of Series F was first issued.

 

(d) 
Parity Preferred. The term “Parity Preferred” shall mean the Series A Junior
Convertible Redeemable Preferred Stock of the Corporation, Series B Junior
Convertible Redeemable Preferred Stock of the Corporation, the Series C Junior
Convertible Redeemable Preferred Stock of the Corporation and the Series E
Junior Convertible Redeemable Preferred Stock of the Corporation and any other
series of Preferred Stock of the Corporation, or any other class or series of
the capital stock of the Corporation, authorized or issued after the date on
which this Certificate is filed, that is equal to and on parity with the Series
F in the payment of dividends and in the payment of amounts in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation.

 

7

 

(e) 
Person. The term “Person” shall
mean any individual, corporation, partnership, joint venture, joint stock
association, business trust and other business entity, trust, unincorporated
organization, governmental agency or authority or any other form of entity.

 

(f) 
Senior Preferred. The term “Senior Preferred” shall mean the Series D Senior
Cumulative Convertible Redeemable Preferred Stock of the Corporation and any
other class or series of the capital stock of the Corporation, authorized or
issued after the date on which this Certificate is filed, that is senior to and
that has preference over the Series F in the payment of dividends and in the
payment of amounts in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation.

 

Section 9.  Other Rights.  The
shares of Series F shall not have any powers, preferences or relative,
participating, optional or other special rights, or qualifications, limitations
or restrictions thereof, other than as set forth herein.

 

IN WITNESS WHEREOF, Avery Communications, Inc. has caused this
Certificate to be signed by Patrick J. Haynes, III, its Chairman, this
             day of
                          ,
1999.

 

	
   

  	
  Avery Communications, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Patrick J. Haynes, III

  Chairman

  

 

8

 

EXHIBIT 3.2(a)(i)

 

FORM OF
STOCKHOLDERS’ RELEASES

 

 

STOCKHOLDER
RELEASE

 

This Release is
being executed and delivered in accordance with Section 3.2(a)(i) of the
Agreement and Plan of Merger (the “Agreement”),
dated              ,  1999, by and among Avery Communications,
Inc., a Delaware corporation (“Avery”), ACI Telecommunications Financial Services Corporation, a
Delaware corporation and wholly owned subsidiary of Avery (“Merger Sub”), Primal Systems, Inc., a
California corporation (the “Primal”), Mark
J. Nielsen, an individual resident in San Juan Capistrano, California (“Nielsen”), John Faltys, an individual
resident in Orange, California (“Faltys”), Joseph
R. Simrell, an individual resident in Aliso Viejo, California (“Simrell”), and David Haynes, an individual
resident in Irvine, California (“Haynes,” and,
collectively with Nielsen, Faltys, and Simrell, the “Stockholders,” and each individually, a “Stockholder”). Capitalized terms used in this
Release without definition have the respective meanings given to them in the
Agreement.

 

Each Stockholder acknowledges that execution and delivery of this
Release is a condition to Avery’s obligation to consummate the Merger pursuant
to the Agreement and that Avery is relying on this Release in consummating the
Merger.

 

Each Stockholder, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged and intending to be legally bound,
in order to induce Avery to consummate the Merger pursuant to the Agreement,
hereby agrees as follows:

 

Each Stockholder, on behalf of himself and each of his Related Persons,
hereby releases and forever discharges Avery, Primal and each of the other
Acquired Companies, and each of their respective individual, joint or mutual,
past, present and future Representatives, affiliates, stockholders, controlling
persons, Subsidiaries, successors and assigns (individually, a “Releasee” and collectively, “Releasees”) from any and all claims,
demands, Proceedings, causes of action, Orders, obligations, contracts,
agreements, debts and liabilities whatsoever, whether known or unknown,
suspected or unsuspected, both at law and in equity, which each of the
Stockholders or any of their respective Related Persons now has, have ever had
or may hereafter have against the respective Releasees arising
contemporaneously with or prior to the Closing Date or on account of or arising
out of any matter, cause or event occurring contemporaneously with or prior to
the Closing Date, including, but not limited to, any rights to indemnification
or reimbursement from Primal or any other Acquired Company, whether pursuant to
their respective Organizational Documents, contract or otherwise, and whether
or not relating to claims pending on, or asserted after, the Closing Date; provided, however, that nothing contained
herein shall operate to release any obligations of Avery arising under the
Agreement, the Investors Rights Agreement, the Escrow Agreement, the loans to
Primal made by the Stockholders listed on Annex A hereto, any obligation of
Merger Sub under the Employment Agreements, or any obligation of Avery under
Nielsen’s Employment Agreement with Avery.

 

Each Stockholder hereby irrevocably covenants to refrain from, directly
or indirectly, asserting any claim or demand, or commencing, instituting or
causing to be commenced, any proceeding of any kind against any Releasee, based
upon any matter purported to be released hereby.

 

Without in any way limiting any of the rights and remedies otherwise
available to any Releasee, each Stockholder, jointly and severally, shall
indemnify and hold harmless each Releasee

 

 

from and against all loss, liability, claim, damage (including
incidental and consequential damages) or expense (including costs of
investigation and defense and reasonable attorney’s fees) whether or not
involving third party claims, arising directly or indirectly from or in
connection with (i) the assertion by or on behalf of the Stockholders or any of
their Related Persons of any claim or other matter purported to be released
pursuant to this Release and (ii) the assertion by any third party of any claim
or demand against any Releasee which claim or demand arises directly or
indirectly from, or in connection with, any assertion by or on behalf of the
Stockholders or any of their Related Persons against such third party of any
claims or other matters purported to be released pursuant to this Release.

 

If any provision of this Release is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Release will
remain in full force and effect. Any provision of this Release held invalid or
unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.

 

This Release may not be changed except in a writing signed by the
person(s) against whose interest such change shall operate. This Release shall
be governed by and construed under the laws of the State of Delaware without
regard to principles of conflicts of law.

 

All words used in this Release will be construed to be of such gender
or number as the circumstances require.

 

IN WITNESS WHEREOF, each of the undersigned have executed and delivered
this Release as of this     day
of       , 1999.

 

	
   

  	
   

  
	
   

  	
  [Name of Releasor]

  

 

 

EXHIBIT
3.2(a)(ii)

 

FORM OF EMPLOYMENT AGREEMENTS

 

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is made as
of     , 199  by                                     ,
a                 corporation
(the “Employer”), and
                   ,
an individual resident in                    
(the “Executive”).

 

RECITALS

 

The Employer desires to employ the Executive, and the Executive wishes
to accept such employment, upon the terms and conditions set forth in this
Agreement.

 

For the purposes of this Agreement, the terms defined in Section 8 of
this Agreement have the meanings specified or referred to in such Section 8.

 

AGREEMENT

 

The parties, intending to be legally bound, agree as follows:

 

1.             EMPLOYMENT TERMS AND
DUTIES

 

1.1          EMPLOYMENT

 

The Employer hereby employs the Executive, and the Executive hereby
accepts employment by the Employer, upon the terms and conditions set forth in
this Agreement.

 

1.2          TERM

 

Subject to the provisions of Section 5, the term of the Executive’s
employment under this Agreement will be two years, beginning on the Effective
Date and ending on the second anniversary of the Effective Date.

 

1.3          DUTIES

 

The Executive will have such duties as are assigned or delegated to the
Executive by the Board of Directors or Chief Executive Officer, and will
initially serve as
                                  of
the Employer.  The Executive will devote
his entire business time, attention, skill, and energy to the business of the
Employer, will use his best efforts to promote the success of the Employer’s
business, and will cooperate fully with the Board of Directors in the
advancement of the best interests of the Employer. Nothing in this Section 1.3,
however, will prevent the Executive from engaging in additional activities in
connection with personal investments and community affairs that are not
inconsistent with the Executive’s duties under this Agreement. If the Executive
is elected as a director of the Employer or as a director or officer of any of
its affiliates, the Executive will fulfill his duties as such director or
officer without additional compensation.

 

 

2.             COMPENSATION

 

2.1          BASIC COMPENSATION

 

(a)           Salary.  The Executive will be paid an annual salary of
$               ,
subject to adjustment as provided below (the “Salary”), which will be payable
in equal periodic installments according to the Employer’s customary payroll
practices, but no less frequently than monthly. The Salary will be reviewed by
the Board of Directors or Chief Executive Officer not less frequently than
annually, and may be adjusted upward or downward in the sole discretion of the
Board of Directors or Chief Executive Officer, but in no event will the Salary
be less than
$                          per
year.

 

(b)           Benefits.  The Executive will,
during the Employment Period, be permitted to participate in such stock option,
restricted stock, pension, profit sharing, bonus, life insurance,
hospitalization, major medical, and other employee benefit plans of the
Employer that may be in effect from time to time, to the extent the Executive
is eligible under the terms of those plans (collectively, the “Benefits”). The
Benefits shall include life insurance on the Executive’s life in an amount not
less than the Executive’s Salary.

 

2.2          INCENTIVE COMPENSATION.

 

As additional compensation (the “Incentive Compensation”) for the
services to be rendered by the Executive pursuant to this Agreement, the
Employer will pay the Executive with respect to each Fiscal Year during the
Employment Period, commencing on or
after            ,
199  , an amount equal to                percent
(   %) of the Employee’s Salary if, and only if, Employer meets
or exceeds the performance goals established by the Board of Directors. Such
performance goals will be established by the Board of Directors within 60 days
from the beginning of each Fiscal Year and will be communicated to the
Executive in writing within 30 days of being so established.

 

3.             FACILITIES AND
EXPENSES

 

The Employer will furnish the Executive office space, equipment,
supplies, and such other facilities and personnel as the Employer deems
necessary or appropriate for the performance of the Executive’s duties under
this Agreement. The Employer will pay the Executive’s dues in such professional
societies and organizations as the Chief Executive Officer deems appropriate,
and will pay on behalf of the Executive (or reimburse the Executive for)
reasonable expenses incurred by the Executive at the request of, or on behalf
of, the Employer in the performance of the Executive’s duties pursuant to this
Agreement, and in accordance with the Employer’s employment policies, including
reasonable expenses incurred by the Executive in attending conventions,
seminars, and other business meetings, in appropriate business entertainment
activities, and for promotional expenses. The Executive must file expense
reports with respect to such expenses in accordance with the Employer’s
policies.

 

2

 

4.             VACATIONS AND
HOLIDAYS

 

The Executive will be entitled to four weeks’ paid vacation each
calendar year in accordance with the vacation policies of the Employer in
effect for its executive officers from time to time. Vacation must be taken by
the Executive at such time or times as approved by the Chief Executive Officer.
The Executive will also be entitled to the paid holidays set forth in the
Employer’s policies.  Two weeks of
vacation days that are not used by the Executive during any such calendar year
may be used in the next calendar year.

 

5.             TERMINATION

 

5.1          EVENTS OF TERMINATION

 

The Employment Period, the Executive’s Basic Compensation and Incentive
Compensation, and any and all other rights of the Executive under this
Agreement or otherwise as an employee of the Employer will terminate (except as
otherwise provided in this Section 5):

 

(i) upon the death of the Executive;

 

(ii) upon the disability of the Executive (as defined
in Section 5.2) immediately upon notice from either party to the other;

 

(iii) for cause (as defined in Section 5.3),
immediately upon notice from the Employer to the Executive, or at such later
time as such notice may specify; or

 

(iv) for good reason (as defined in Section 5.4) upon
not less than thirty days’ prior notice from the Executive to the Employer.

 

5.2          DEFINITION OF DISABILITY

 

For purposes of Section 5.1, the Executive will be deemed to have a
“disability” if, for physical or mental reasons, the Executive is unable to
perform the essential functions of the Executive’s duties under this Agreement
for 120 consecutive days, or 180 days during any twelve-month period, as
determined in accordance with this Section 5.2.

 

5.3          DEFINITION OF “FOR
CAUSE”

 

For purposes of
Section 5.1, the phrase “for cause” means: (a) the Executive’s breach of this
Agreement; (b) the Executive’s failure to adhere to any written Employer policy
if the Executive has been given a reasonable opportunity to comply with such
policy or cure his failure to comply (which reasonable opportunity must be
granted during the ten-day period preceding termination of this Agreement); (c)
the Executive’s failure to perform (other than by reason of Disability), or
gross negligence or willful misconduct in the performance of, his duties and
responsibilities to the Employer, such duties and responsibilities not to be
unreasonably imposed; (d) the Executive’s intentional failure to comply with
any instructions of the Board of Directors or its Chief Executive

 

3

 

Officer, such instructions not to be unreasonably imposed; (e) the
appropriation (or attempted appropriation) of a material business opportunity
of the Employer, including attempting to secure or securing any personal profit
in connection with any transaction entered into on behalf of the Employer; (f)
the misappropriation (or attempted misappropriation) of any of the Employer’s
funds or property; or (g) the conviction of, or the entering of a guilty plea
or plea of no contest with respect to, a felony, the equivalent thereof, or any
other crime with respect to which imprisonment is a possible punishment.

 

5.4          DEFINITION OF “FOR GOOD
REASON”

 

For purposes of Section 5.1, the phrase “for good reason” means any of
the following: (a) The Employer’s material breach of this Agreement; (b) the
assignment of the Executive without his consent to a position,
responsibilities, or duties of a materially lesser status or degree of
responsibility than his position, responsibilities, or duties at the Effective
Date; or (c) the requirement by the Employer that the Executive relocate
Executive’s personal residence outside the metropolitan Orange County,
California, area.

 

5.5          TERMINATION PAY

 

Effective upon the
termination of this Agreement, the Employer will be obligated to pay the
Executive (or, in the event of his death, his designated beneficiary as defined
below) only such compensation as is provided in this Section 5.5, and in lieu
of all other amounts and in settlement and complete release of all claims the
Executive may have against the Employer. 
For purposes of this Section 5.5, the Executive’s designated beneficiary
will be such individual beneficiary or trust, located at such address, as the
Executive may designate by notice to the Employer from time to time or, if the
Executive fails to give notice to the Employer of such a beneficiary, the
Executive’s estate.  Notwithstanding the
preceding sentence, the Employer will have no duty, in any circumstances, to
attempt to open an estate on behalf of the Executive, to determine whether any
beneficiary designated by the Executive is alive or to ascertain the address of
any such beneficiary, to determine the existence of any trust, to determine
whether any person or entity purporting to act as the Executive’s personal
representative (or the trustee of a trust established by the Executive) is duly
authorized to act in that capacity, or to locate or attempt to locate any
beneficiary, personal representative, or trustee.

 

(a)           Termination by the Executive for Good Reason. If the Executive terminates this
Agreement for good reason, the Employer will pay the Executive (i) the
Executive’s Salary for the remainder, if any, of the calendar month in which
such termination is effective and for twelve consecutive calendar months
thereafter, and (ii) that portion of the Executive’s Incentive Compensation, if
any, for the Fiscal Year during which the termination is effective, prorated
through the date of termination. Notwithstanding the preceding sentence, if the
Executive obtains other employment prior to the end of the six months following
the month in which the termination is effective, he must promptly give notice
thereof to the Employer, and the Salary payments under this Agreement for any period
after the Executive obtains other employment will be reduced by the amount of
the cash compensation received and to be received by the Executive from the
Executive’s other employment for services performed during such period.

 

4

 

(b)           Termination by the Employer for Cause. If the Employer terminates this
Agreement for cause, the Executive will be entitled to receive his Salary only
through the date such termination is effective, but will not be entitled to any
Incentive Compensation for the Fiscal Year during which such termination occurs
or any subsequent Fiscal Year.

 

(c)           Termination upon Disability. If this Agreement is terminated
by either party as a result of the Executive’s disability, as determined under
Section 5.2, the Employer will pay the Executive his Salary through the
remainder of the calendar month during which such termination is effective and
for the lesser of (i) three consecutive months thereafter, or (ii) the period
until disability insurance benefits commence under the disability insurance
coverage furnished by the Employer to the Executive.

 

(d)           Termination upon Death. If this Agreement is terminated
because of the Executive’s death, the Executive will be entitled to receive his
Salary through the end of the calendar month in which his death occurs, and
that part of the Executive’s Incentive Compensation, if any, for the Fiscal
Year during which his death occurs, prorated through the end of the calendar
month during which his death occurs.

 

(e)           Benefits. If the Executive’s employment hereunder is terminated for
Good Reason, the Executive will be entitled to continued medical insurance
coverage for the Executive and the Executive’s dependants on the same terms,
including general premium increases, for the period from the date of
termination until the Executive obtains other employment, or for a period of
one year from the date of termination, whichever is less. In all other events,
the Executive’s accrual of, or participation in plans providing for, the
Benefits will cease at the effective date of the termination of this Agreement,
and the Executive will be entitled to accrued Benefits pursuant to such plans
only as provided in such plans.

 

6.             NON-DISCLOSURE
COVENANT; EMPLOYEE INVENTIONS

 

6.1          ACKNOWLEDGMENTS BY THE
EXECUTIVE

 

The Executive acknowledges that (a) during the Employment Period and as
a part of his employment, the Executive will be afforded access to Confidential
Information; (b) public disclosure of such Confidential Information could have
an adverse effect on the Employer and its business; (c) because the Executive
possesses substantial technical expertise and skill with respect to the
Employer’s business, the Employer desires to obtain exclusive ownership of each
Employee Invention, and the Employer will be at a substantial competitive
disadvantage if it fails to acquire exclusive ownership of each Employee
Invention; and (d) the provisions of this Section 6 are reasonable and
necessary to prevent the improper use or disclosure of Confidential Information
and to provide the Employer with exclusive ownership of all Employee
Inventions.

 

6.2          AGREEMENTS OF THE
EXECUTIVE

 

In consideration of the
compensation and benefits to be paid or provided to the Executive by the
Employer under this Agreement, the Executive covenants as follows:

 

5

 

(a)           Confidentiality.

 

(1)  During and following the Employment Period,
the Executive will hold in confidence the Confidential Information and will not
disclose it to any person except with the specific prior written consent of the
Employer or except as otherwise expressly permitted by the terms of this
Agreement.

 

(2)  Any trade secrets of the Employer will be
entitled to all of the protections and benefits under applicable state trade
secret and any other applicable law. If any information that the Employer deems
to be a trade secret is found by a court of competent jurisdiction not to be a
trade secret for purposes of this Agreement, such information will,
nevertheless, be considered Confidential Information for purposes of this
Agreement. The Executive hereby waives any requirement that the Employer submit
proof of the economic value of any trade secret or post a bond or other
security.

 

(3)  None of the foregoing obligations and
restrictions applies to any part of the Confidential Information that the
Executive demonstrates was or became generally available to the public other
than as a result of a disclosure by the Executive.

 

(4)  The Executive will not remove from the
Employer’s premises (except to the extent such removal is for purposes of the
performance of the Executive’s duties at home or while traveling, or except as
otherwise specifically authorized by the Employer) any document, record,
notebook, plan, model, component, device, or computer software or code, whether
embodied in a disk or in any other form (collectively, the “Proprietary
Items”). The Executive recognizes that, as between the Employer and the
Executive, all of the Proprietary Items, whether or not developed by the
Executive, are the exclusive property of the Employer.  Upon termination of this Agreement by either
party, or upon the request of the Employer during the Employment Period, the
Executive will return to the Employer all of the Proprietary Items in the
Executive’s possession or subject to the Executive’s control, and the Executive
shall not retain any copies, abstracts, sketches, or other physical embodiment
of any of the Proprietary Items.

 

(b)           Employee Inventions. Each Employee Invention will
belong exclusively to the Employer. The Executive acknowledges that all of the
Executive’s writing, works of authorship, and other Employee Inventions are
works made for hire and the property of the Employer, including any copyrights,
patents, semiconductor mask protection, or other intellectual property rights
pertaining thereto. If it is determined that any such works are not works made
for hire, the Executive hereby assigns to the Employer all of the Executive’s
right, title, and interest, including all rights of copyright, patent,
semiconductor mask protection, and other intellectual property rights, to or in
such Employee Inventions. The Executive covenants that he will promptly:

 

6

 

(1)  disclose to the Employer in writing any
Employee Invention;

 

(2)  assign to the Employer or to a party
designated by the Employer, at the Employer’s request and without additional
compensation, all of the Executive’s right to the Employee Invention for the
United States and all foreign jurisdictions;

 

(3)  execute and deliver to the Employer such
applications, assignments, and other documents as the Employer may request in
order to apply for and obtain patents or other registrations with respect to
any Employee Invention in the United States and any foreign jurisdictions;

 

(4)  sign all other papers necessary to carry out
the above obligations; and

 

(5)  give testimony and render any other
assistance (but without expense to the Executive) in support of the Employer’s
rights to any Employee Invention.

 

This Agreement shall not apply to any invention which qualifies fully
under the provisions of Section 2870 of the California Labor Code, which
includes inventions developed entirely on Executive’s own time without using
the Employer’s equipment, supplies, facilities or trade secret information,
except for those ideas and inventions that either; (i) relate, at the time of
conception or reduction to practice of the invention, to the Employer’s
business, or actual or demonstrably anticipated research or development of the
Employer, or (ii) result from any work performed by the Executive for the
Employer.

 

6.3          DISPUTES OR
CONTROVERSIES

 

The Executive recognizes that should a dispute or controversy arising
from or relating to this Agreement be submitted for adjudication to any court,
arbitration panel, or other third party, the preservation of the secrecy of
Confidential Information may be jeopardized. All pleadings, documents,
testimony, and records relating to any such adjudication will be maintained in
secrecy and will be available for inspection by the Employer, the Executive,
and their respective attorneys and experts, who will agree, in advance and in
writing, to receive and maintain all such information in secrecy, except as may
be limited by them in writing.

 

7.             NON-COMPETITION AND
NON-INTERFERENCE

 

7.1          ACKNOWLEDGMENTS BY THE
EXECUTIVE

 

The Executive acknowledges that: (a) the services to be performed by
him under this Agreement are of a special, unique, unusual, extraordinary, and
intellectual character; (b) the Employer’s business is national in scope and
its products are marketed throughout the United States; (c) the Employer
competes with other businesses that are or could be located in any part of the
United States; and (d) the provisions of this Section 7 are reasonable and
necessary to protect the Employer’s business.

 

7

 

7.2          COVENANTS OF THE
EXECUTIVE

 

In consideration of the acknowledgments by the Executive, and in
consideration of the compensation and benefits to be paid or provided to the
Executive by the Employer, the Executive covenants that he will not, directly
or indirectly:

 

(a)  during the Employment Period, except in the
course of his employment hereunder, and during the Post-Employment Period,
engage or invest in, own, manage, operate, finance, control, or participate in
the ownership, management, operation, financing, or control of, be employed by,
associated with, or in any manner connected with, lend the Executive’s name or
any similar name to, lend Executive’s credit to or render services or advice
to, any business whose products or activities compete in whole or in part with
the products or activities of the Employer anywhere within the United States;
provided, however, that the Executive may purchase or otherwise acquire up to
(but not more than) one percent of any class of securities of any enterprise
(but without otherwise participating in the activities of such enterprise) if
such securities are listed on any national or regional securities exchange or
have been registered under Section 12(g) of the Securities Exchange Act of
1934;

 

(b)  whether for the Executive’s own account or
for the account of any other person, at any time during the Employment Period
and the Post-Employment Period, solicit business of the same or similar type
being carried on by the Employer, from any person known by the Executive to be
a customer of the Employer, whether or not the Executive had personal contact
with such person during and by reason of the Executive’s employment with the
Employer;

 

(c)  whether for the Executive’s own account or
the account of any other person (i) at any time during the Employment Period
and the Post-Employment Period, solicit, employ, or otherwise engage as an
employee, independent contractor, or otherwise, any person who is or was an
employee of the Employer at any time during the Employment Period or in any
manner induce or attempt to induce any employee of the Employer to terminate his
employment with the Employer; or (ii) at any time during the Employment Period
and the Post-Employment Period, interfere with the Employer’s relationship with
any person, including any person who at any time during the Employment Period
was an employee, contractor, supplier, or customer of the Employer; or

 

(d)  at any time during or after the Employment
Period, disparage the Employer or any of its shareholders, directors, officers,
employees, or agents.

 

The foregoing notwithstanding, the Executive may provide software
consulting services to any business entity that is not a customer of or in
competition with the Employer.

 

8

 

If the Executive breaches any of the terms and provisions of this
Section 7.2, the Employer may, in addition to any other remedies that the
Employer may have for any such breach, immediately terminate the payment of any
benefits then being paid to the Executive during the Post-Employment Period.

 

For purposes of this Section 7.2, the term “Post-Employment Period”
means the one-year period beginning on the date of termination of the
Executive’s employment with the Employer.

 

If any covenant in
this Section 7.2 is held to be unreasonable, arbitrary, or against public
policy, such covenant will be considered to be divisible with respect to scope,
time, and geographic area, and such lesser scope, time, or geographic area, or
all of them, as a court of competent jurisdiction may determine to be
reasonable, not arbitrary, and not against public policy, will be effective,
binding, and enforceable against the Executive.

 

The period of time applicable to any covenant in this Section 7.2 will
be extended by the duration of any violation by the Executive of such covenant.

 

The Executive will, while the covenant under this Section 7.2 is in
effect, give notice to the Employer, within ten days after accepting any other
employment, of the identity of the Executive’s employer. The Employer may
notify such employer that the Executive is bound by this Agreement and, at the
Employer’s election, furnish such employer with a copy of this Agreement or
relevant portions thereof.

 

The terms and provisions of this Section 7.2 shall not be applicable to
the Executive if the Executive terminates this Agreement for good reason.

 

8.             DEFINITIONS

 

For the purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 8.

 

“Agreement”—this
Employment Agreement.

 

“Basic Compensation”—Salary
and Benefits.

 

“Benefits”—as
defined in Section 2.1(b).

 

“Board of Directors”—the
board of directors of the Employer.

 

“Confidential Information”—any
and all:

 

(a)  trade secrets concerning the business and
affairs of the Employer, product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current, and planned research and
development, current and planned manufacturing or

 

9

 

distribution methods and
processes, customer lists, current and anticipated customer requirements, price
lists, market studies, business plans, computer software and programs
(including object code and source code), computer software and database
technologies, systems, structures, and architectures (and related formulae,
compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information, and any other
information, however documented, that is a trade secret within the meaning of
applicable state trade secret law; and

 

(b)  information concerning the business and
affairs of the Employer (which includes historical financial statements,
financial projections and budgets, historical and projected sales, capital
spending budgets and plans, the names and backgrounds of key personnel,
personnel training and techniques and materials), however documented; and

 

(c)  notes, analysis, compilations, studies,
summaries, and other material prepared by or for the Employer containing or
based, in whole or in part, on any information included in the foregoing.

 

“disability”—as
defined in Section 5.2.

 

“Effective
Date”—the date stated in the first paragraph of the
Agreement.

 

“Employee Invention”—any
idea, invention, technique, modification, process, or improvement (whether
patentable or not), any industrial design (whether registerable or not), any
mask work, however fixed or encoded, that is suitable to be fixed, embedded or
programmed in a semiconductor product (whether recordable or not), and any work
of authorship (whether or not copyright protection may be obtained for it)
created, conceived, or developed by the Executive, either solely or in
conjunction with others, during the Employment Period, or a period that
includes a portion of the Employment Period, that relates in any way to, or is
useful in any manner in, the business then being conducted or proposed to be
conducted by the Employer, and any such item created by the Executive, either
solely or in conjunction with others, following termination of the Executive’s
employment with the Employer, that is based upon or uses Confidential
Information.

 

“Employment
Period”—the term of the Executive’s employment under this
Agreement.

 

“Fiscal Year”—the
Employer’s fiscal year, as it exists on the Effective Date or as changed from
time to time.

 

“for cause”—as
defined in Section 5.3.

 

“for good reason”—as
defined in Section 5.4.

 

“Incentive
Compensation”—as defined in Section 2.2.

 

10

 

“Noncompetition Agreement”—as
defined in Section 5.3.

 

“person”—any
individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, or governmental body.

 

“Post-Employment
Period”—as defined in Section 7.2.

 

“Proprietary
Items”—as defined in Section 6.2(a)(4).

 

“Salary”—as
defined in Section 2.1(a).

 

9.             GENERAL PROVISIONS

 

9.1          INJUNCTIVE RELIEF AND
ADDITIONAL REMEDY

 

The Executive acknowledges that the injury that would be suffered by
the Employer as a result of a breach of the provisions of this Agreement
(including any provision of Sections 6 and 7) would be irreparable and that an
award of monetary damages to the Employer for such a breach would be an
inadequate remedy. Consequently, the Employer will have the right, in addition
to any other rights it may have, to obtain injunctive relief to restrain any
breach or threatened breach or otherwise to specifically enforce any provision
of this Agreement, and the Employer will not be obligated to post bond or other
security in seeking such relief. Without limiting the Employer’s rights under
this Section 9 or any other remedies of the Employer, if the Executive breaches
any of the provisions of Section 6 or 7, the Employer will have the right to
cease making any payments otherwise due to the Executive under this Agreement.

 

9.2          COVENANTS OF SECTIONS 6
AND 7 ARE ESSENTIAL AND INDEPENDENT COVENANTS

 

The covenants by the Executive in Sections 6 and 7 are essential
elements of this Agreement, and without the Executive’s agreement to comply
with such covenants, the Employer would not have entered into this Agreement or
employed the Executive.  The Employer
and the Executive have independently consulted their respective counsel and
have been advised in all respects concerning the reasonableness and propriety
of such covenants, with specific regard to the nature of the business conducted
by the Employer.

 

The Executive’s covenants in Sections 6 and 7 are independent covenants
and the existence of any claim by the Executive against the Employer under this
Agreement or otherwise will not excuse the Executive’s breach of any covenant
in Section 6 or 7.

 

If the Executive’s employment hereunder expires or is terminated, this
Agreement will continue in full force and effect as is necessary or appropriate
to enforce the covenants and agreements of the Executive in Sections 6 and 7.

 

11

 

9.3          REPRESENTATIONS AND
WARRANTIES BY THE EXECUTIVE

 

The Executive
represents and warrants to the Employer that the execution and delivery by the
Executive of this Agreement do not, and the performance by the Executive of the
Executive’s obligations hereunder will not, with or without the giving of
notice or the passage of time, or both: 
(a) violate any judgment, writ, injunction, or order of any court,
arbitrator, or governmental agency applicable to the Executive; or (b) conflict
with, result in the breach of any provisions of or the termination of, or
constitute a default under, any agreement to which the Executive is a party or
by which the Executive is or may be bound.

 

9.4          OBLIGATIONS CONTINGENT
ON PERFORMANCE

 

The obligations of the Employer hereunder, including its obligation to
pay the compensation provided for herein, are contingent upon the Executive’s
performance of the Executive’s obligations hereunder.

 

9.5          WAIVER

 

The rights and
remedies of the parties to this Agreement are cumulative and not alternative.
Neither the failure nor any delay by either party in exercising any right,
power, or privilege under this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement can be discharged by one party, in whole or
in part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement.

 

9.6          BINDING EFFECT;
DELEGATION OF DUTIES PROHIBITED

 

This Agreement
shall inure to the benefit of, and shall be binding upon, the parties hereto
and their respective successors, assigns, heirs, and legal representatives,
including any entity with which the Employer may merge or consolidate or to
which all or substantially all of its assets may be transferred. The duties and
covenants of the Executive under this Agreement, being personal, may not be
delegated.

 

9.7          NOTICES

 

All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when
(a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nation-ally recognized overnight delivery service
(receipt requested), in each case to the

 

12

 

appropriate addresses and facsimile numbers set forth below (or to such
other addresses and facsimile numbers as a party may designate by notice to the
other parties):

 

If to Executive:

 

 

 

 

Facsimile No.:

 

 

If to the Employer:

 

 

190 South LaSalle Street, Suite 1710

Chicago, Illinois  
60603

Attention: Patrick J. Haynes, III

Facsimile No.: (312) 419-0172

 

9.8          ENTIRE AGREEMENT;
AMENDMENTS

 

This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, between the parties hereto with respect to the
subject matter hereof. This Agreement may not be amended orally, but only by an
agreement in writing signed by the parties hereto.

 

9.9          ARBITRATION OF DISPUTES

 

Except with
respect to any application for injunctive relief arising out of Sections 6 or 7
hereof, any controversy or claim arising out of or relating to this Agreement,
or the breach hereof, shall be settled by arbitration administered by the
American Arbitration Association in accordance with its commercial arbitration
rules and judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. The arbitration proceedings shall be
conducted before a sole, neutral arbitrator, who shall be a member of the Bar
of the State of Illinois, actively engaged in the practice of law for at least
ten years. The arbitration proceedings shall be conducted in Chicago, Illinois.
Limited civil discovery shall be permitted for the production of documents and
taking of depositions. All discovery shall be governed by the Federal rules of
Civil Procedure. All issues regarding conformation with discovery requests
shall be decided by the arbitrator. Any provisional remedy that would be
available from a court of law shall be available from the arbitrator to the
parties to this Agreement pending arbitration. The award of the arbitrators
need not be accompanied by a reasoned opinion. Neither party nor the arbitrator
may disclose the existence, content, or results of any arbitration hereunder
without the prior written consent of both parties. The

 

13

 

arbitrator shall award to the prevailing party, if any, as determined
by the arbitrator, all of its costs and fees. “Costs and fees” means all
reasonable pre-award expenses of an arbitration, including the arbitrators’
fees, administrative fees, travel expenses, out-of-pocket expenses such as
copying, telephone, court costs, witness fees, and attorneys fees.

 

9.10        SECTION HEADINGS;
CONSTRUCTION

 

The headings of
Sections in this Agreement are provided for convenience only and will not
affect its construction or interpretation. All references to “Section” or
“Sections” refer to the corresponding Section or Sections of this Agreement
unless otherwise specified. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word “including” does not limit the preceding words or
terms.

 

9.11        SEVERABILITY

 

If any provision
of this Agreement is held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Agreement will remain in full force
and effect. Any provision of this Agreement held invalid or unenforceable only
in part or degree will remain in full force and effect to the extent not held
invalid or unenforceable.

 

9.12        COUNTERPARTS

 

This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.

 

IN WITNESS
WHEREOF, the parties have executed and delivered this Agreement as of the date
above first written above.

 

 

	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  

 

14

 

	
   

  	
  EMPLOYER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

15

 

EXHIBIT
3.2(a)(iii)

 

 

FORM OF LOCKUP LETTERS

 

 

FORM OF LOCK-UP AGREEMENT

 

         , 1999

 

Avery Communications, Inc.

190 South LaSalle Street, Suite 1710

Chicago, Illinois  60603

 

Gentlemen:

 

The undersigned is
the beneficial owner of shares of the no par value per share common stock (the
“Primal Common Stock”) of Primal Systems, Inc., a California corporation
(“Primal”). The undersigned understands that Primal has entered into
that certain Agreement and Plan of Merger, dated March 19, 1999, by and among
Avery Communications, Inc., a Delaware corporation (“Avery”), ACI
Telecommunications Financial Services Corporation, a Delaware corporation and
wholly owned subsidiary of Avery (“Merger Sub”), Primal, and certain
shareholders of Primal (the “Merger Agreement”), whereby Primal will
merge with and into Merger Sub (the “Merger”) upon the terms and
conditions as set forth in the Merger Agreement. The undersigned acknowledges
that the undersigned will receive shares of Avery Stock (as defined in the
Merger Agreement) in exchange for the shares of Primal Common Stock held by the
undersigned pursuant to the Merger and in accordance with the terms and
conditions of the Merger Agreement. All terms not otherwise defined herein
shall have the same meanings as in the Merger Agreement.

 

In order to induce Avery, Merger Sub and Primal to enter into the
Merger Agreement and to proceed with the Merger, the undersigned hereby agrees,
for the benefit of Avery, Merger Sub and Primal, that should the Merger be
effected, the undersigned will not, without the prior written consent of Avery,
directly or indirectly, offer, pledge, issue, sell, contract to sell, grant any
option for the sale of, or otherwise dispose of (or announce any offer, pledge,
sale, grant of any option to purchase or other disposition of)  (collectively, “Transfer”) any
Avery Stock or any other securities convertible into, or exchangeable or
exercisable for, Avery Stock received as Merger Consideration (and Additional
Merger Consideration, if any) (collectively, “Securities”), beneficially
owned (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended) by the undersigned on the date hereof to any unaffiliated
third party from the date hereof until August 15, 2000 (the “Lockup Period”).

 

Notwithstanding
anything herein to the contrary, (i) any and all Securities Transferred by the
undersigned to affiliates of the undersigned during the term of this agreement
shall remain subject to the terms of this agreement and shall be conditioned on
the execution and delivery by the transferee of an agreement substantially in
the form of this agreement in favor of Avery, and (ii) the undersigned shall be
permitted to Transfer Securities to one or more charitable organizations as a
bona fide gift, provided that the recipient thereof agrees in writing to be
bound by the terms of this

 

 

agreement. The restrictions set forth in this agreement are expressly
agreed to preclude the holder of the Securities from engaging in any hedging or
other transaction which is designed to or reasonably expected to lead to or
result in a Transfer of Securities during the Lockup Period even if such
Securities would be disposed of by someone other than the undersigned.

 

Furthermore, the
undersigned hereby agrees and consents to the entry of stop transfer
instructions with Avery’s transfer agent against the transfer of the Securities
held by the undersigned except in compliance with this agreement.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

Accepted as of the date

first set forth above:

 

AVERY COMMUNICATIONS, INC.

ACI TELECOMMUNICATIONS
FINANCIAL

SERVICES CORPORATION

 

	
  By:  AVERY
  COMMUNICATIONS, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
    Name:

  	
   

  	
   

  
	
   

  	
    Title:

  	
   

  	
   

  
					

 

For itself and on behalf of Merger Sub

 

2

 

EXHIBIT 3.2(b)

 

 

ESCROW
AGREEMENT

 

 

ESCROW
AGREEMENT

 

This ESCROW AGREEMENT (this “Agreement”),
dated as
of               ,
1999 (the “Closing Date”), is entered into by and among AVERY COMMUNICATIONS, INC., a Delaware
corporation (“Avery”), ACI
TELECOMMUNICATIONS FINANCIAL SERVICES CORPORATION, a Delaware
corporation and wholly owned subsidiary of Avery (“Merger Sub”), each of
the shareholders of PRIMAL SYSTEMS, INC.,
a California corporation (“Primal”) set forth on Exhibit A
attached hereto (the “Shareholders”), and BANK ONE, TEXAS, NA as escrow agent (“Escrow Agent”).

 

This is the Escrow
Agreement referred to in Section 2.3 of the Agreement and Plan of Merger (the “Merger
Agreement”) dated as of March 19, 1999, among Avery, Merger Sub, Primal and
the Shareholders.  Capitalized terms
used in this Agreement without definition shall have the respective meanings
given to them in the Merger Agreement. 
All actions by the Shareholders under this Agreement shall be made by
the Securityholder Agent (as defined in Section 12 of the Merger Agreement) and
any and all actions of the Securityholder Agent pursuant to this Agreement
shall be deemed to be the actions of the Shareholders under this Agreement.

 

The parties,
intending to be legally bound, hereby agree as follows:

 

SECTION
1.         ESTABLISHMENT
OF ESCROW.

 

(a)           In accordance with
Section 2.3 of the Merger Agreement, Avery has deposited into escrow (the “Escrow”)
with Escrow Agent on the date hereof a certificate or certificates representing
2,000,000 shares (the “Escrow Shares”) of the non-voting Participating
Convertible Preferred Stock, 1999 Primal Series, par value $0.01 per share
(the  “Preferred Stock”) of
Avery.  Escrow Agent hereby acknowledges
receipt thereof.

 

(b)           Escrow Agent hereby
agrees to act as escrow agent and to hold, safeguard and disburse the Escrow
Shares pursuant to the terms and conditions hereof.

 

SECTION
2.         RELEASE
OF THE ESCROW SHARES.

 

The following
provisions shall govern with respect to any releases of the Escrow Shares. As
used in this Section 2, the term “Notice” refers to any written notice
given to the Escrow Agent by Avery and the Shareholders requesting a release of
the Escrow Shares, and the term “Counter Notice” refers to any written
notice given to the Escrow Agent by either the Shareholders or by Avery
disputing any requested release of the Escrow Shares.

 

 

(a)           From time to time prior to the Determination
Date, Avery may give Notice to the Shareholders and Escrow Agent specifying in
reasonable detail the nature and dollar amount of any claim (a “Claim”)
it may have under Section 12.2 of the Merger Agreement. Avery may make more
than one Claim with respect to any underlying state of facts. If the
Shareholders give a Counter Notice to Avery and Escrow Agent disputing any
Claim within 10 calendar days following receipt by Escrow Agent of the notice
regarding such Claim, such claim shall be resolved as provided in Section 2(c).
If no Counter Notice is received by Escrow Agent within such 10-day period,
then the dollar amount of damages claimed by Avery as set forth in its Notice
shall be deemed established for purposes of this Escrow Agreement and the
Merger Agreement and, at the end of such 10-day period, Escrow Agent shall pay
to Avery the number of Escrow Shares equal to the dollar amount of the Claim
set forth in the Notice (assuming, for purposes of the valuation of the Escrow
Shares, the per share price of each Escrow Share on the Closing Date) from the
total number of Escrow Shares.  Escrow
Agent shall not inquire into or consider whether a Claim complies with the
requirements of the Merger Agreement.

 

(b)           Within ten (10) business days following the
Determination Date, Avery and the Shareholders shall deliver joint written
instructions (the “Earn-Out Instructions”) to Escrow Agent specifying
the aggregate number of Escrow Shares to be released from Escrow to the
Shareholders as Additional Merger Consideration pursuant to the provisions of
Section 3.3 of the Merger Agreement. If no Counter Notice is received by Escrow
Agent within 10 calendar days following receipt by Escrow Agent of the Earn-Out
Instructions, then, provided that no Claim shall be pending, on the 11th
calendar day following receipt by Escrow Agent of the Earn-Out Instructions,
the Escrow Agent shall release to the Shareholders the number of Escrow Shares
specified in the Earn-Out Instructions. On such date, Escrow Agent shall
release to Avery all Escrow Shares remaining in the Escrow other than those
Escrow Shares to be released to the Shareholders pursuant to the provisions of
this Section 2(b). Escrow Agent may delay delivery of any or all of the Escrow
Shares required by this Section 2(b) for such period of time as may be
necessary for Escrow Agent to obtain share certificates from Avery’s transfer
agent in such amounts as are required to be released from Escrow by this
Section 2(b). Escrow Agent shall not inquire into or consider whether the
Earn-Out Instructions comply with the requirements of the Merger Agreement. In
the event that a Claim or Claims shall be pending on such date, the number of
Escrow Shares as specified in the Earn-Out Instructions shall be reduced by the
amount of Escrow Shares equal to the aggregate dollar value of such Claim or
Claims (assuming, for purposes of the valuation of the Escrow Shares, the per
share price of each Escrow Share on the Closing Date) and shall be retained by
the Escrow Agent until such Claim or Claims shall be distributed pursuant to
the provisions of Section 2(a). In the event the aggregate amount of such Claim
or Claims exceeds the dollar value of the remaining Escrow Shares specified in
the Earn-Out Instructions (assuming, for purposes of the valuation of the
Escrow

 

2

 

Shares, a per share price of each Escrow Share on the
Closing Date) then Escrow Agent shall retain the Escrow Shares until it has
received joint written instructions of Avery and the Shareholders or a final
non-appealable order of a court of competent jurisdiction as contemplated by
Section 2(c).

 

(c)           If a Counter Notice is given to Escrow
Agent, Escrow Agent shall make payment from or release the Escrow Shares, as
the case may be, only in accordance with (i) joint written instructions of
Avery and the Shareholders, or (ii) a final non-appealable order of a court of
competent jurisdiction. Any court order shall be accompanied by a legal opinion
by counsel for the presenting party satisfactory to Escrow Agent in form, scope
and substance to the effect that the order is final and non-appealable. Escrow
Agent shall act on such court order and legal opinion without further question.

 

SECTION
3.         TERMINATION
OF ESCROW.

 

This Agreement
shall automatically terminate on the tenth business day following the first of
the following to occur: (i) receipt of joint written instructions from the
Shareholders and Avery advising Escrow Agent that the Escrow has been terminated
and directing Escrow Agent to release all Escrow Shares as specified in such
instructions; or (ii) the release of all the Escrow Shares pursuant to the
provisions of this Agreement.

 

SECTION
4.         DUTIES
OF ESCROW AGENT.

 

(a)           Escrow Agent shall not be under any duty to
give the Escrow Shares held by it hereunder any greater degree of care than it
gives its own similar property and shall not be required to invest any funds
held hereunder except as directed in this Agreement.

 

(b)           Escrow Agent shall not be liable, except for
its own gross negligence or willful misconduct and, except with respect to
claims based upon such gross negligence or willful misconduct that are
successfully asserted against Escrow Agent, Avery and the Shareholders shall
jointly and severally indemnify and hold harmless Escrow Agent (and any
successor Escrow Agent) from and against any and all losses, liabilities,
claims, actions, damages, fees and expenses, including reasonable attorneys’
fees and disbursements, arising out of and in connection with this Agreement.

 

(c)           Escrow Agent shall be entitled to rely upon
any order, judgment, certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine the authenticity
or the correctness of any fact stated therein or the propriety or validity of
the service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may

 

3

 

assume that the person
purporting to give receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized to
do so. Escrow Agent may conclusively presume that the undersigned
representative of any party hereto which is an entity other than a natural
person has full power and authority to instruct Escrow Agent on behalf of that
party unless written notice to the contrary is delivered to Escrow Agent.

 

(d)           Escrow Agent may act pursuant to the advice
of counsel with respect to any matter relating to this Agreement and shall not
be liable for any action taken or omitted by it in good faith in accordance
with such advice.

 

(e)           Escrow Agent does not have any interest in
the Escrow Shares deposited hereunder but is serving as escrow holder only and
having only possession thereof. Any payments of income, if any, from this
Escrow shall be subject to withholding regulations then in force with respect
to United States taxes. The parties hereto will provide Escrow Agent with
appropriate Internal Revenue Service Forms W-9 for tax identification number
certification, or non-resident alien certifications. This Section 4(e) and
Section 4(b) shall survive notwithstanding any termination of this Agreement or
the resignation of Escrow Agent.

 

(f)            Escrow Agent makes no representation as to
the validity, value, genuineness or the collectability of any security or other
document or instrument held by or delivered to it.

 

(g)           Escrow Agent shall not be called upon to
advise any party as to the wisdom in selling or retaining or taking or
refraining from any action with respect to any securities or other property
deposited hereunder.

 

(h)           Escrow Agent (and any successor Escrow
Agent) may at any time resign as such by delivering the Escrow Shares to any
successor Escrow Agent jointly designated by the other parties hereto in
writing, or to any court of competent jurisdiction, whereupon Escrow Agent
shall be discharged of and from any and all further obligations arising in
connection with this Agreement. The resignation of Escrow Agent will take
effect on the earlier of (i) the appointment of a successor (including a court
of competent jurisdiction), or (ii) the day which is 30 days after the date of
delivery of its written notice of resignation to the other parties hereto.  If at that time Escrow Agent has not
received a designation of a successor Escrow Agent, Escrow Agent’s sole
responsibility after that time shall be to retain and safeguard the Escrow
Shares until receipt of a designation of successor Escrow Agent or a joint
written disposition instruction by the other parties hereto or a final
non-appealable order of a court of competent jurisdiction.

 

4

 

(i)            In the event of any disagreement between
the other parties hereto resulting in adverse claims or demands being made in
connection with the Escrow Shares or in the event that Escrow Agent is in doubt
as to what action it should take hereunder, Escrow Agent shall be entitled to
retain the Escrow Shares until Escrow Agent shall have received (i) a final
non-appealable order of a court of competent jurisdiction directing delivery of
the Escrow Shares, or (ii) a written agreement executed by the other parties
hereto directing delivery of the Escrow Shares, in which event Escrow Agent
shall disburse the Escrow Shares in accordance with such order or agreement.
Any court order shall be accompanied by a legal opinion by counsel for the
presenting party satisfactory to Escrow Agent to the effect that the order is
final and non-appealable. Escrow Agent shall act on such court order and legal
opinion without further question.

 

(j)            If any question, dispute or disagreement
arises among the parties hereto and/or any other party with respect to the Escrow
Shares or the proper interpretation of this Agreement, Escrow Agent in good
faith shall not be required to act and shall not be held liable for refusal to
act until the question or dispute is settled, and Escrow Agent in good faith
has the absolute right at its discretion to do either or both of the following:

 

(i)            withhold and/or stop
all further performance under this Agreement until Escrow Agent is satisfied,
by receipt of a written document in form and substance satisfactory to Escrow
Agent and executed and binding upon all interested parties hereto, that the
question, dispute, or disagreement has been resolved; or

 

(ii)           file a suit in
interpleader and obtain by final judgment, rendered by a court of competent
jurisdiction, an order binding all parties interested in the matter. In any
such suit, or should Escrow Agent become involved in litigation in any manner
whatsoever on account of this Agreement or the Escrow Shares, Escrow Agent
shall be entitled to recover from Avery and the Shareholders, jointly and
severally, its attorneys’ fees and costs.

 

(k)           Avery shall pay Escrow Agent compensation
(as payment in full) for the services to be rendered by Escrow Agent hereunder,
and agree to reimburse Escrow Agent for all reasonable expenses, disbursements
and advances incurred or made by Escrow Agent in performance of its duties
hereunder (including reasonable fees, expenses and disbursements of its
counsel), in accordance with the fee schedule attached hereto as Exhibit B.
Any such compensation and reimbursement to which Escrow Agent is entitled shall
be borne 100% by Avery. Any fees or expenses of Escrow Agent or its counsel
that are not paid as provided for herein may be taken from any property held by
Escrow Agent hereunder.

 

5

 

(l)            The other parties hereto authorize Escrow
Agent, for any securities held hereunder, to use the services of any United
States central securities depository it reasonably deems appropriate,
including, without limitation, the Depositary Trust Company and the Federal
Reserve Book Entry System.

 

SECTION
5.         LIMITED
RESPONSIBILITY.

 

This Agreement
expressly sets forth all the duties of Escrow Agent with respect to any and all
matters pertinent hereto. No implied duties or obligations shall be read into
this Agreement against Escrow Agent. 
Escrow Agent shall not be bound by the provisions of any agreement among
the other parties hereto except this Agreement.

 

SECTION
6.         OWNERSHIP
FOR TAX PURPOSES.

 

The Shareholders agree that, for purposes of federal and other taxes
based on income, each Shareholder will be treated as the owner of such
Shareholder’s pro rata interest in the Escrow Shares, and that each Shareholder
will report all income, if any, that is earned on, or derived from, the Escrow
Shares as such Shareholder’s income, in such proportions, in the taxable year
or years in which such income is properly includible and pay any taxes
attributable thereto.

 

SECTION
7.         VOTING
RIGHTS AND DISTRIBUTIONS.

 

The Shareholders
shall be entitled to exercise all voting rights with respect to the Escrow
Shares, but only to the extent that the terms of the Escrow Shares provide for
voting rights. All distributions on the Escrow Shares, whether in cash, shares
of stock or other property, shall be delivered to the Escrow Agent to be
delivered to the Shareholders pro rata as
instructed by the Shareholders.

 

SECTION
8.         NOTICES.

 

All notices,
consents, waivers and other communications under this Agreement must be in
writing and will be deemed to have been duly given when (a) delivered by hand
(with written confirmation of receipt), (b) sent by telecopier (with written
confirmation of receipt) provided that a copy is mailed by registered or
certified mail, return receipt requested, or (c) when received by the addressee,
if sent by a nationally recognized overnight delivery service (receipt
requested), in each case to the appropriate addresses and telecopier numbers
set forth below (or to such other addresses and telecopier numbers as a party
may designate by notice to the other parties):

 

6

 

	
  (i)

  	
  if to the Shareholders:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile
  No.:             

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Stephen H. LaCount, Esq.

  Arter & Hadden LLP

  Jamboree Center

  Five Park Plaza, Suite 1000

  Irvine, California 92614-8528

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile No.: (949) 833-9604

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
  if to Avery:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Avery Communications, Inc.

  190 South LaSalle Street

  Suite 1710

  Chicago, Illinois 60603

  Attention: Patrick J. Haynes, III

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile No.: (312) 419-0172

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
   

  	
  Bruce A. Cheatham, Esq.

  Winstead Sechrest & Minick P.C.

  1201 Elm Street, Suite 5400

  Dallas, Texas 75270

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile No.: (214) 745-5390

  

 

7

 

	
  (iii)

  	
  if to Escrow Agent:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bank One, Texas, NA

  8111 Preston Road

  2nd Floor

  Dallas, Texas  75225

  Attention: Nancye Patterson

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile No.: (214) 360-3980

  

 

SECTION
9.         COUNTERPARTS.

 

This Agreement may
be executed in one or more counterparts, each of which will be deemed to be an
original and all of which, when taken together, will be deemed to constitute
one and the same.

 

SECTION
10.       SECTION
HEADINGS.

 

The headings of
sections in this Agreement are provided for convenience only and will not
affect its construction or interpretation.

 

SECTION
11.       WAIVER.

 

The rights and
remedies of the parties to this Agreement are cumulative and not alternative.
Neither the failure nor any delay by any party in exercising any right, power,
or privilege under this Agreement or the documents referred to in this
Agreement will operate as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power, or privilege will preclude
any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which
it is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.

 

8

 

SECTION
12.       EXCLUSIVE
AGREEMENT AND MODIFICATION.

 

This Agreement
supersedes all prior agreements among the parties with respect to its subject
matter and constitutes (along with the documents referred to in this Agreement)
a complete and exclusive statement of the terms of the agreement among the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by the Avery, the Shareholders and the
Escrow Agent. The Shareholders acknowledge that the Escrow Agent and its
counsel have not yet given final approval to the form of this Agreement.
Accordingly, the Shareholders agree to enter into, sign, deliver and take any
and all additional actions necessary to amend this Agreement in accordance with
requests made by the Escrow Agent from time to time during the term hereof.

 

SECTION
13.       GOVERNING
LAW.

 

This Agreement
shall be governed by the laws of the State of Delaware, without regard to
conflicts of law principles.

 

[THE
REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.

SIGNATURES OF THE PARTIES APPEAR ON THE FOLLOWING PAGE.]

 

9

 

IN WITNESS
WHEREOF, the parties have executed and delivered this Agreement as of the date
first written above.

 

	
   

  	
  AVERY COMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  ACI TELECOMMUNICATIONS FINANCIAL

  SERVICES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  SHAREHOLDERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Mark J. Nielsen

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  John Faltys

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Joseph R. Simrell

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  David Haynes

  
	
   

  	
   

  
	
   

  	
  ESCROW AGENT:

  
	
   

  	
   

  
	
   

  	
  BANK ONE, TEXAS, NA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						

 

S-1

 

EXHIBIT
A

 

SHAREHOLDERS

 

 

EXHIBIT
B

 

ESCROW
AGENT COMPENSATION

 

 

EXHIBIT 3.2(d)

 

INVESTORS
RIGHTS AGREEMENT

 

 

INVESTORS
RIGHTS AGREEMENT

 

This INVESTORS RIGHTS AGREEMENT (this “Agreement”)
is dated as of
           , 1999, and
is being made and entered into by and among AVERY
COMMUNICATIONS, INC., a Delaware corporation (“ACI”), and
each of the stockholders of PRIMAL SYSTEMS,
INC., a California corporation (“Primal”) set forth on Exhibit
A attached hereto (each, a “Holder” and together, the “Holders”),
with reference to the following RECITALS:

 

R E C I T A L S:

 

A.            For the
convenience of the parties, certain capitalized words and phrases used herein
are defined or referred to in Section 4.1.

 

B.            To set
forth the relative rights of the Holders and to provide the Holders with
greater liquidity in the future with respect to the Registrable Stock, the
Holders wish to have certain rights and ACI wishes to grant such rights to the
Holders.

 

C.            Except
with respect to actions by the Holders pursuant to Section 3.2 of this
Agreement (which shall permit any Holder to act thereunder), all actions by the
Holders under this Agreement shall require the authorization of the number of
Holders constituting at least 66% of the issued and outstanding shares of
Primal held on the date immediately preceding the date hereof.

 

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 hereby agree as follows:

 

ARTICLE 1

 

REGISTRATION RIGHTS

 

Section 1.1  Demand Registration/Obligation of Avery to
Effect a Registration.

 

1.1.1       Request
for Registration. At any
time after the Determination Date (as defined in the Merger Agreement), until
the Expiration Date, the Holders may make a written request (the “Demand
Notice”) for registration under the Securities Act (a “Demand
Registration”) of all or part of the Holders’ Registrable Stock, subject to
the conditions of this Agreement. The Demand Notice will specify the number of
shares of Registrable Stock proposed to be sold and will also specify the
intended method of disposition thereof. ACI will include in the Demand
Registration all Registrable Stock specified in the Demand Notice. The Demand
Registration shall be on such appropriate registration form of the Commission
as ACI shall determine.

 

1.1.2       Limitation
on Demand Registration. ACI
shall not be obligated to effect more than one Demand Registration under this Section
1.1.

 

 

Notwithstanding any provision of this Agreement to the
contrary, ACI shall not be obligated to honor any Demand Notice requesting a
Demand Registration, or otherwise cause a Demand Registration to become
effective hereunder (a “Demand Denial”) if (i) the Demand Notice is
delivered to ACI during the period commencing 90 days before the estimated
effective date of a registration statement pursuant to which ACI proposes to
offer shares of any class of equity securities of ACI in an underwritten
offering and ending 90 days after the closing date of any such offering. If ACI
determines not to proceed with such proposed offering, ACI shall promptly
notify the Holders that (i) ACI’s proposed offering has been cancelled, and
(ii) ACI will file the Demand Registration as soon as practicable as requested
by the Holders. ACI shall only be entitled to one Demand Denial.

 

1.1.3       Effective
Registration and Expense. Upon
receipt of a Demand Notice and in the event that ACI does not effect a Demand
Denial pursuant to Section 1.1.2, ACI will (i) use its best efforts to
prepare and file a registration statement with the Commission covering the
Registrable Stock requested to be included in the Demand Registration within 60
days following receipt of a Demand Notice, and (ii) use its best efforts to
cause the Demand Registration to become effective under the Securities
Act.  A registration will not count as a
Demand Registration unless (i) a registration statement with respect thereto
has become effective (unless the Holders whose Registrable Stock are included in
such Demand Registration withdraw their shares of Registrable Stock, in which
case such demand shall count as the Demand Registration, unless the Holders pay
all costs incurred in connection with the Demand Registration, including
printing, attorneys’ and accountants’ fees and expenses, in which case such
demand shall not count as the Demand Registration), or (ii) the registration
statement is withdrawn due to information pertaining to ACI not known at the
time of the Demand Registration. ACI will pay all Registration Expenses in
connection with the Demand Registration.

 

1.1.4       Obligation
to Register. In the
event that the Registrable Stock shall not be Registered on August 15, 2000,
Avery shall, as soon as practical after August 15, 2000, file a Registration
Statement with the Commission to Register the Registrable Stock.

 

Section 1.2 
Incidental Registration.

 

1.2.1       Piggyback Rights of the Holders. If at any time or times from and after the date hereof
until the Expiration Date, ACI intends to file prior to the Expiration Date a
Registration Statement for the registration of Common Stock with the Commission
on any form permitting the registration of Registrable Stock, then ACI shall
notify the Holders at least 30 days prior to each such filing of ACI’s
intention to file such a Registration Statement, Such notice shall state the
amount and type of securities proposed to be registered thereby, the
underwriters involved, if any, and whether such underwriting is to be
distributed on a firm commitment or best efforts basis. Upon the written
request of the Holders (a “Holder Request”) given within 20 days after
receipt of any such notice stating the number of shares of Registrable Stock to
be disposed of by the Holders and the intended method of disposition, ACI will
use its best efforts to cause the aggregate of the Registrable Stock designated
in the Holder Requests to be included in such registration so as to permit the
disposition (in accordance with the methods specified in the Holder Request(s))
by the

 

2

 

Holders of the Registrable Stock so registered,
subject to the reductions specified in Sections 1.2.2 and 1.2.3, as
applicable. The Holders shall be entitled, subject to such reductions, to
participate in an unlimited number of such registrations.

 

1.2.2       Reductions
of Registrable Stock To Be Included. If the registration proposed by ACI involves an
underwritten offering of the Common Stock, whether or not for sale for the
account of ACI, to be distributed (on a best efforts or firm commitment basis)
by or through one or more underwriters, and the managing underwriter of such
underwritten offering shall advise ACI in writing that, in its opinion, the
registration of all or a specified portion of Registrable Stock concurrently
with the Common Stock will adversely affect the distribution of such Common
Stock by such underwriters, then ACI may require, by written notices to the
Holders, that the distribution of all or a specified portion of the Registrable
Stock be excluded from such registration in accordance with Section 1.7.

 

1.2.3       Withdrawals. ACI may in its discretion
withdraw any Registration Statement filed pursuant to this Section l.2
subsequent to its filing and prior to its effective date without liability to
the Holders, other than to pay expenses pursuant to Section 1.4.

 

Section 1.3 
Indemnity.

 

(a)           ACI
will, and hereby does, indemnify and hold harmless, to the extent permitted by
law, each Holder, its partners, representatives, shareholders, officers and
directors, if any, and each Person, if any, who controls the Holder within the
meaning of Section 15 of the Securities Act, against all losses, claims,
damages, liabilities (or proceedings in respect thereof) and expenses (under
the Securities Act or common law or otherwise), joint or several, resulting
from any untrue or misleading statement or alleged untrue or misleading
statement of a material fact contained in any Registration Statement or any
omission or alleged omission of a material fact required to be stated in the
Registration Statement (as declared effective) or prospectus filed under Rule
424(b) under the Securities Act (and as amended or supplemented if ACI shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or necessary to make the statements therein not misleading, except
insofar as:

 

(i)            such
losses, claims, damages, liabilities (or proceedings in respect thereof) or
expenses are caused by any untrue statement or alleged untrue statement made in
reliance on or in conformity with any information furnished in writing to ACI
by the Holders expressly for use therein; or

 

(ii)           in
the case of any registration that is not an underwritten offering, such losses,
claims, damages, liabilities (or proceedings in respect thereof) or expenses
result from the Holders selling Registrable Stock to a Person asserting the
existence of an untrue or misleading statement or alleged untrue statement or
omission or alleged omission in a preliminary prospectus and to whom there was
not given or sent, at or prior to the written confirmation of the sale of the
Registrable Stock, a copy of the final prospectus or the final prospectus as
then amended or supplemented but only if such statement or omission was
corrected in such final

 

3

 

prospectus or amended or supplemented final prospectus
prior to such written confirmation and the Holders were given notice, prior to
such written confirmation, of the availability of, or that ACI was preparing,
such final prospectus or amended or supplemented final prospectus.

 

If the offering pursuant to any Registration Statement
provided for under this Agreement is made through underwriters, no action or
failure to act on the part of such underwriters (whether or not such
underwriter is an Affiliate of any Holder) shall affect ACI’s obligations to
indemnify the Holders or any other Person pursuant to the preceding sentence.
It is agreed that the indemnity agreement contained in this Section 1.3(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of ACI
(which consent has not been unreasonably withheld).

 

(b)           In
connection with any Registration Statement in which the Holders are
participating, each such Holder will indemnify and hold harmless, to the extent
permitted by law, ACI, its officers, directors, partners, legal counsel, and
accountants, and each underwriter, if any, of ACI Securities covered by such
Registration Statement, and each Person, if any, who controls ACI or any such
underwriter within the meaning of Section 15 of the Securities Act, and each of
the Other Stockholders, and each of their respective officers, directors, and
partners, and each Person controlling any of the Other Stockholders against any
losses, claims, damages, liabilities (or proceedings in respect thereof) and
expenses (under the Securities Act or common law or otherwise) resulting from
any untrue or misleading statement or alleged untrue or misleading statement of
a material fact or any omission or alleged omission of a material fact required
to be stated in the Registration Statement (as declared effective) or
prospectus filed under Rule 424(b) under the Securities Act or preliminary
prospectus or any amendment thereof or supplement thereto, or necessary to make
the statements therein not misleading, but only to the extent that:

 

(i)            such untrue statement
is made in reliance on or in conformity with any information furnished in
writing by the Holders expressly for use therein; or

 

(ii)           in the case of any
registration that is not an underwritten offering, such losses, claims,
damages, liabilities (or proceedings in respect thereof) or expenses resulting
from the Holders selling Registrable Stock to a Person asserting the existence
of an untrue statement or alleged untrue statement or omission or alleged
omission in a preliminary prospectus and to whom there was not given or sent,
at or prior to the written confirmation of the sale of the Registrable Stock, a
copy of the final prospectus or of the final prospectus as then amended or
supplemented but only if such statement or omission was corrected in such final
prospectus or amended or supplemented final prospectus prior to such written
confirmation and the Holders were given notice, prior to such written
confirmation, of the availability of, or that ACI was preparing, such final
prospectus or amended or supplemented final prospectus;

 

provided,
however, that
the obligations of the Holders hereunder shall not apply to amounts paid in
settlement of any such claims, losses, damages, or liabilities (or actions in
respect

 

4

 

thereof) if such
settlement is effected without the consent of the Holders (which consent has
not been unreasonably withheld); and, provided
further, that the obligations of the Holders under this Section
1.3.(b) shall be limited to an amount equal to the net proceeds to the
Holders of the Registrable Stock sold pursuant to such Registration Statement.

 

(c)           Any
Person entitled to indemnification under the provisions of Section 1.3.(a)
or (b) shall (i) give prompt notice to the indemnifying party of any claim
with respect to which it seeks indemnification, and (ii) unless in the opinion
of counsel reasonably satisfactory to the indemnifying party a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, permit such indemnifying party to assume the defense of such
claim, with counsel reasonably satisfactory to the indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party); and if such defense is so assumed, such indemnifying party
shall not enter into any settlement without the consent of the indemnified
party if such settlement attributes liability to the indemnified party and such
indemnifying party shall not be subject to any liability for any settlement
made without its consent (which shall not be unreasonably withheld); and any
underwriting agreement entered into with respect to any Registration Statement
provided for under this Agreement shall so provide. In the event an
indemnifying party shall not be entitled, or elects not, to assume the defense
of a claim, such indemnifying party shall not be obligated to pay the fees and
expenses of more than one counsel or firm of counsel for all parties
indemnified by such indemnifying party in respect of such claim.  Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of a
participating Holder, its officers, directors or any Person, if any, who
controls the Holder as aforesaid, and shall survive the transfer of such
securities by the Holder.

 

(d)           If
for any reason the foregoing indemnity is unavailable, then the indemnifying
party shall contribute to the amount paid or payable by the indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other, or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in such proportion as is appropriate to reflect
not only the relative benefits received by the indemnifying party on the one
hand and the indemnified party on the other but also the relative fault of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations. Notwithstanding the foregoing, no Holder shall be
required to contribute any amount in excess of the amount the Holder would have
been required to pay to an indemnified party if the indemnity under Section 1.3.(a)
or (b), as applicable, was available.  
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. The relative
fault of the indemnifying party and of 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 to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties’ relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.

 

5

 

(e)           An
indemnifying party shall make payments of all amounts required to be made
pursuant to the foregoing provisions of this Section 1.3 to or for the
account of the indemnified party from time to time promptly upon receipt of
bills or invoices relating thereto or when otherwise due and payable.

 

(f)            Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with the underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall control.

 

Section 1.4  Registration Procedures.

 

(a)           Whenever
the Holders have properly requested that any Registrable Stock be registered
pursuant to Sections 1.1 or 1.2, ACI will use its best efforts to effect
the registration in furtherance of the sale of the Registrable Stock in
accordance with the intended method of disposition thereof, and in connection
with any such request ACI will:

 

(i)            prepare and file with
the Commission such amendments and supplements to such Registration Statement
and the prospectus used in connection therewith as may be necessary to keep
such Registration Statement effective for such period (not to exceed 90 days)
as will terminate when all Registrable Stock covered by such Registration
Statement has been sold in compliance with the provisions of the Securities Act
with respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement;

 

(ii)           furnish to each seller
of Registrable Stock such number of copies of such Registration Statement, each
amendment and supplement thereto (in each case including all exhibits thereto),
the prospectus included in such Registration Statement (including each
preliminary prospectus), each amendment and supplement thereto and such other
documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Stock owned by such seller;

 

(iii)          use its best efforts to
register or qualify the Registrable Stock under such other applicable
securities or blue sky laws of such jurisdictions as any seller reasonably
requests and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Stock owned by such seller; provided, however, that ACI will not be
required to (A) qualify generally to do business or subject itself to taxation
in any jurisdiction where it would not otherwise be required to qualify or be
subject but for this subparagraph (iii), or (B) consent to general service of
process in any such jurisdiction;

 

(iv)          use its best efforts to
cause the Registrable Stock covered by such Registration Statement to be
registered with or approved by such other Governmental Authorities as may be
reasonably necessary by virtue of the business and operations

 

6

 

of ACI to enable the
seller or sellers thereof to consummate the disposition of the Registrable
Stock;

 

(v)           (A) notify each seller
of the Registrable Stock, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such Registration Statement contains
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (B) prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of the Registrable Stock, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;

 

(vi)          (A) use commercially
reasonable efforts to cause all Registrable Stock to be listed on each securities
exchange or stock market on which the Common Stock is then listed or quoted,
and (B) unless the same already exists, provide a transfer agent, registrar and
CUSIP number for all Registrable Stock not later than the effective date of the
Registration Statement;

 

(vii)         make available for
inspection at the offices of ACI during regular business hours by any seller of
Registrable Stock, any underwriter participating in any disposition pursuant to
such Registration Statement, and any attorney, accountant or other agent
retained by any such seller or underwriter, such financial and other records,
pertinent corporate documents and properties of ACI as shall be reasonably
requested by them and be necessary to enable them to exercise its due diligence
responsibility; and

 

(viii)        use its best efforts
otherwise to comply with all applicable rules and regulations of the
Commission.

 

(b)           In
connection with any registration effected pursuant to Sections 1.1 or 1.2
that the Holders have requested that their securities be registered pursuant to
such Registration Statement, the Holders shall provide to ACI such information
as may be reasonably requested by ACI or as may be required for inclusion in
such Registration Statement pursuant to the Securities Act and the rules and
regulations thereunder.

 

(c)           Each
Holder agrees by acquisition of the Registrable Stock and the registration
rights thereunder that, upon receipt of any notice from ACI of the happening of
any event of the kind described in Section 1.4(a)(v), each such Holder
will forthwith discontinue disposition of Registrable Stock pursuant to the
Registration Statement covering the Registrable Stock until such Holder’s
receipt of the copies of the supplemented or amended prospectus contemplated by
such Section 1.4(a)(v), and, if so directed by ACI, each such Holder
will deliver to ACI (at ACI’s expense) all copies, other than permanent file
copies then in such Holder’s possession, of the prospectus covering the
Registrable Stock current at the time of receipt of such notice. In the event
ACI shall give any such notice, the

 

7

 

period mentioned
in Section 1.4(a)(i) shall be extended by the number of days during
the period from and including the date of the giving of such notice pursuant to
Section 1.4(a)(v) to and including the date when each seller of
Registrable Stock covered by such Registration Statement shall have received
the copies of the supplemented or amended prospectus contemplated by such Section 1.4(a)(v).

 

Section 1.5  Expenses.  Except
as set forth in Section 1.1.3, all Registration Expenses incurred
in effecting any registration, qualifications or compliance pursuant to this
Agreement shall be borne by ACI. All Selling Expenses relating to Registrable
Stock so registered shall be borne by the Holders, according to the quantity of
Registrable Stock included in such registration along with any other expenses
in connection with the registration required to be borne by the Holders of the
Registrable Stock.

 

Section 1.6  Limitation on
Registration.  Notwithstanding the foregoing,
under no circumstances will ACI be obligated to cause any registration effected
pursuant to this Agreement to remain effective after the Expiration Date or to
include any Registrable Stock in a Registration Statement which becomes
effective after the Expiration Date.

 

Section 1.7  Allocation of Registration
Opportunities.  In any circumstance in which
the Registrable Stock and other shares of Common Stock (including shares of
Common Stock issued or issuable upon conversion of shares of any currently
unissued series of preferred stock of ACI) with registration rights (the “Other
Shares”) requested to be included in a registration on behalf of the
Holders or other selling stockholders (“Other Stockholders”) cannot be
so included as a result of limitations of the aggregate number of shares of
Registrable Stock and Other Shares that may be so included, other than as
provided in Section 1.2.2, the number of shares of Registrable
Stock and Other Shares that may be so included shall be allocated among the
Holders and Other Stockholders requesting inclusion of shares pro  rata
on the basis of the number of shares of Registrable Stock and Other
Shares that would be held by the Holders and Other Stockholders, assuming
conversion; provided, however, that
such allocation shall not operate to reduce the aggregate number of shares of
Registrable Stock and Other Shares to be included in such registration. If any
Holder or any Other Stockholder does not request inclusion of the maximum
number of shares of Registrable Stock and Other Shares allocated to such Person
pursuant to the above-described procedure, the remaining portion of any such
Person’s allocation shall be reallocated among the Holders and Other Stockholders
whose allocations did not satisfy their requests pro rata on the basis of the number of shares of Registrable
Stock and Other Shares which would be held by the Holders and Other
Stockholders, assuming conversion, and this procedure shall be repeated until
all of the shares of Registrable Stock and Other Shares which may be included
in the registration on behalf of the Holders and Other Stockholders have been
so allocated.

 

Section 1.8  Delay of
Registration.  No Holder shall have any right
to take any action to restrain, enjoin, or otherwise delay any registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Article 1.

 

8

 

ARTICLE 2

UNDERWRITTEN OFFERINGS

 

Section 2.1  Underwriting
Arrangements.  If ACI or holders of securities
initially requesting or demanding such registration have determined to enter
into an underwriting agreement in connection therewith, all shares constituting
Registrable Stock to be included in such registration shall be subject to such
underwriting agreement and no Person may participate in such registration
unless such Person agrees to sell such Person’s securities on the basis
provided in the underwriting arrangements approved by such Persons so
determining to enter therein and completes and executes all questionnaires,
indemnities, underwriting agreements and other reasonable documents which must
be executed under the terms of such underwriting arrangements.

 

If requested by
the underwriters for any underwritten offering of Registrable Stock, ACI will
enter into an underwriting agreement that shall contain such representations
and warranties by ACI and such other terms and provisions as are customarily
contained in underwriting agreements with respect to secondary distributions.

 

Section 2.2  Selection of
Underwriters.  If ACI at any time proposes to
register any ACI Securities for sale for its own account and such securities
are to be distributed by or through one or more underwriters, the selection of
the underwriter(s), including, without limitation, the managing underwriter(s),
shall be made solely by ACI.

 

Section 2.3  Holdback Agreements.  Notwithstanding
any other provision of this Agreement, if any registration pursuant to this
Agreement shall be in connection with an underwritten public offering, each
Holder agrees, if so required by the managing underwriter, not to effect any
public sale or distribution of Registrable Stock (other than as part of such underwritten
public offering) within 30 days prior to the effective date of such
Registration Statement or 180 days after the effective date of such
Registration Statement.

 

ARTICLE 3

 

COVENANTS
OF ACI AND THE HOLDERS

 

Section 3.1            Matters
Relating to the Board of Directors of ACI and Primal.

 

3.1.1       Primal
Representative to the Board of Directors.  Contemporaneously
with the execution of this Agreement and the Merger Agreement, a representative
shall be appointed by the Holders (the “Primal Representative”) to serve
as the Primal Representative to the Board of Directors of ACI (the “ACI
Board”). The Primal Representative shall have the right to attend all
meetings of the ACI Board in a non-voting observer capacity, to receive notice
of such meetings, and to receive the information provided by ACI to the ACI
Board; provided, however, that
ACI may require as a condition precedent to the Holders’ rights under this Section 3.1.1
that the Primal Representative proposing to attend any meeting of the ACI Board
and each person to have access to any of the information provided by ACI to the
ACI Board shall agree to hold in confidence and trust and to act in a fiduciary

 

9

 

manner with
respect to all information so received during such meetings of otherwise; and, provided further, that ACI reserves the right not to provide information and to
exclude such Primal Representative from any meeting or portion thereof if
delivery of such information or attendance at such meeting by the Primal
Representative would adversely affect the attorney-client privilege between ACI
and its counsel or if the Primal Representative is a direct competitor of ACI.

 

3.1.2  ACI
Board of Directors.  If
at any time prior to the Expiration Date, Mark J. Nielsen shall no longer serve
as a director on the ACI Board, the Holders shall have the right to designate
an individual (the “Primal Designee”) to serve on the ACI Board. ACI
shall take all steps necessary to cause the appointment of the Primal Designee
to the ACI Board, provided that the Primal Designee be reasonably acceptable to
ACI.  The obligations of ACI pursuant to
this Section 3.1.2 shall terminate upon the Expiration Date.

 

3.1.3  Merger
Sub Board of Directors.  ACI
shall take all steps necessary to cause (i) the size of the Board of Directors
(the “Merger Sub Board”) of the Surviving Corporation under the Merger
Agreement (‘‘Merger Sub”) to be expanded to seven directors, (ii) the
appointment of Mark J. Nielsen as Chairman of the Merger Sub Board, and (iii)
the appointment
of           ,               ,
and                 ,
or any substitute for such persons as shall be selected prior to the Expiration
Date by the Holders and as shall be reasonably acceptable to ACI, as the
Holders’ designees to the Merger Sub Board. Furthermore, ACI hereby covenants
that it will appoint to two of the remaining three director positions on the
Merger Sub Board, individuals who are not officers of ACI or any of its
Affiliates. The obligations of ACI pursuant to this Section 3.1.3
shall terminate upon the Expiration Date.

 

Section 3.2  Repurchase
Right.

 

3.2.1  Provided that Primal shall
have achieved gross revenues of at least $3,825,000 and a base loss of no more
than $1,082,000 for the Earn-Out Period (as defined in the Merger Agreement),
ACI shall be required to repurchase from the Holders (the “Repurchase”),
upon receipt of the Repurchase Notice (as defined below), 1,550,000 shares of
Common Stock issued upon conversion of the Preferred Stock for the purchase price
of $2.50 per share; provided, however, that
if Mark J. Nielsen is employed by ACI on August 15, 2000, the number of
shares of Common Stock subject to repurchase shall be reduced by the total
number of shares of Common Stock received by Mark J. Nielsen as Merger
Consideration under the Merger Agreement (the “Repurchase Shares”). ACI
shall only be required to effect the Repurchase for the benefit of any Holder
upon the receipt of a notice from such Holder (the “Repurchase Notice”),
which sets forth (i) that such Holder requests the Repurchase by ACI, and (ii)
the number of shares of ACI constituting the Repurchase Shares. The right of a
Holder to the Repurchase may only be exercised within sixty (60) days following
August 15, 2000 and, in the event that a Holder does not deliver a
Repurchase Notice to ACI within such 60 days, the rights of such Holder to the
Repurchase under this Section 3.2 shall expire and cease to exist.

 

10

 

3.2.2  ACI
hereby undertakes to use its best efforts to obtain all required regulatory and
legal approvals and to file any required notices as promptly as practicable in
order to accomplish the Repurchase contemplated by this Section 3.2.  Nonetheless, to the extent that ACI is
prohibited under applicable law from effecting the Repurchase in part or in
full, ACI will notify the Holders and thereafter deliver or cause to be
delivered, from time to time, the portion of the Repurchase that it is no
longer prohibited from delivering.

 

ARTICLE 4

 

DEFINITIONS
AND CONSTRUCTION

 

Section 4.1  Definition of Certain Terms.

 

Except as
otherwise expressly provided or unless the context otherwise requires, the
terms defined in this Section 4.1, whenever used in this Agreement,
shall have the respective meanings assigned to them in this Section for
all purposes of this Agreement, and include the plural as well as the singular.

 

As used herein,
the following terms have the following meanings:

 

ACI: as defined in the first paragraph of this Agreement. 

 

ACI Securities: securities issued by ACI.

 

Agreement: this instrument as originally executed, or as it may be
from time to time supplemented or amended by one or more supplements or
amendments hereto entered pursuant to the applicable provisions hereof.

 

Commission: the United States Securities and Exchange Commission and
any successor federal agency having similar powers.

 

Common Stock: the Common Stock, par value $0.01 per share, of ACI.

 

Demand Notice: as defined in Section 1.1.1.

 

Demand Registration: as defined in Section 1.1.1.

 

Expiration Date: the earlier of (i) two years
from the date hereof, or (ii) the earliest date on which the Holder may sell
shares of Registrable Stock under Paragraph (k) of Rule 144.

 

Governmental Authority: the United States of America,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government within any such jurisdiction.

 

Holder: as defined in the first paragraph of this Agreement, and
any Person who (i) subsequently becomes the owner of record of any Registrable
Stock, and (ii) enters into

 

11

 

an amendment or
supplement to this Agreement pursuant to which such subsequent holder of
Registrable Stock agrees to be bound by each and every provision of this
Agreement except for the provisions of Section 1.1, it being
expressly understood and agreed that no subsequent owner of Registrable Stock
shall have any demand registration rights hereunder without the express prior
written consent of ACI.

 

Holder Request: as defined in Section 1.2.1.

 

Merger Agreement: the Merger Agreement dated as of
March 19, 1999, by and between ACI, ACI Telecommunications Financial
Services Corporation, a Delaware corporation and wholly owned subsidiary of
ACI, Primal Systems, Inc., a California corporation, Mark J. Nielsen, an
individual resident in San Juan Capistrano, California, John Faltys, an
individual resident in Orange, California, Joseph R. Simrell, an individual
resident in Aliso Viejo, California, and David Haynes, an individual resident
in Irvine, California.

 

Other Shares: as defined in Section 1.7.

 

Other Stockholders: as defined in Section 1.7.

 

Person: any individual, corporation (including a business trust)
joint stock company, partnership, joint venture, trust, estate, limited
liability company, unincorporated association, unincorporated organization,
Governmental Authority or any other entity.

 

Preferred Stock: the Series F Junior
Participating Convertible Preferred Stock, par value $0.01 per share, of ACI.

 

Register, Registered and Registration: refer to a registration effected
by filing a Registration Statement in compliance with the Securities Act, and
the declaration or ordering by the Commission of the effectiveness of such
Registration Statement.

 

Registrable Stock: the shares of Common Stock to be
issued to the Holders upon the conversion of the shares of Preferred Stock,
including such Preferred Stock that may be issued as Additional Merger
Consideration (as defined in the Merger Agreement), issued pursuant to the
Merger Agreement.

 

Registration Expenses: all expenses incurred in
effecting any registration pursuant to this Agreement, including, without
limitation, all registration, qualification, and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for ACI, blue sky fees
and expenses, and expenses of any regular or special audits incident to or
required by any such registration, but shall not include the compensation of
regular employees of ACI, which shall be paid in any event by ACI, and Selling
Expenses, fees and disbursements of counsel for the Holders.

 

Registration Statement: a registration statement
prepared on an appropriate form promulgated under the Securities Act.

 

12

 

Rule 144: Rule 144 (or any successor
provision) under the Securities Act.

 

Rule 145: Rule 145 (or any successor
provision) under the Securities Act.

 

Securities Act: the Securities Act of 1933, as
amended.

 

Selling Expenses: all underwriting discounts,
selling commissions and stock transfer taxes applicable to the sale of
Registrable Stock and fees and disbursements of counsel for any Holder (other
than the fees and disbursements of counsel included in Registration Expenses).

 

Section 4.2  Rules of Construction

 

(a)           “This
Agreement” means this instrument as originally executed or as it may be from
time to time supplemented or amended by one or more supplements or amendments
hereto entered pursuant to the applicable provisions hereof;

 

(b)           “includes”
and “including” are not limiting, and, in each case, shall be construed as if
followed by the words “without limitation,” “but not limited to” or words of
similar import;

 

(c)           “may not”
is prohibitive, and not permissive;

 

(d)           “shall”
is mandatory, and not permissive;

 

(e)           “or” is
not exclusive [i.e., if a party
“may do (a), (b) or (c),” then the party may do all of, any one of, or any
combination of, (a), (b) or (c)] unless the context expressly provides
otherwise;

 

(f)            all
references in this instrument to designated Articles, Sections, Exhibits, and
Schedules are to the designated Articles, Sections, Exhibits, and Schedules of
this instrument as originally executed;

 

(g)           all references
herein to constitutions, treaties, statutes, laws, rules, regulations,
ordinances, codes or orders include any successor thereto or replacement
thereof, include any amendment, modification or supplements thereof or thereto
from time to time, and, include all rules and regulations promulgated
thereunder or pursuant thereto;

 

(h)           the words
“herein,” “hereof,” “hereto” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision; and

 

(i)            all
terms used herein which are defined in the Securities Act or the rules and
regulations promulgated thereunder have the meanings assigned to them therein
unless otherwise defined herein.

 

13

 

ARTICLE 5

 

GENERAL PROVISIONS

 

Section 5.1  Severability.  If
any provision of this Agreement, including any phrase, sentence, clause,
Section or subsection is inoperative or unenforceable for any reason,
such circumstances shall not have the effect of rendering the provision in
question inoperative or unenforceable in any other case or circumstance, or of
rendering any other provision or provisions herein contained invalid,
inoperative, or unenforceable to any extent whatsoever.

 

Section 5.2  Notices.  All
notices, requests, demands, waivers and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if (a) delivered personally, (b) mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, or (c) sent by next-day or overnight mail or delivery or (d) sent by
telecopy or telegram.

 

	
  (a)

  	
   

  	
  if to ACI, to

  
	
   

  	
   

  
	
   

  	
   

  	
  Avery Communications,
  Inc.

  
	
   

  	
   

  	
  190 South LaSalle
  Street, Suite 1710

  
	
   

  	
   

  	
  Chicago, Illinois   60603

  
	
   

  	
   

  	
  Attention: Patrick J.
  Haynes, III, Chairman

  
	
   

  	
   

  
	
  (b)

  	
   

  	
  if to the Holders, to

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

or, in each case,
at such other address as may be specified in writing to the other parties
hereto.

 

All such notices,
requests, demands, waivers and other communications shall be deemed to have
been received (w) if by personal delivery on the day after such delivery, (x)
if by certified or registered mail, on the seventh business day after the
mailing thereof, (y) if by next-day or overnight mail or delivery, on the day
delivered, (z) if by telecopy or telegram, on the next day following the day on
which such telecopy or telegram was sent, provided that a copy is also sent by
certified or registered mail.

 

Section 5.3  Headings.  The
headings contained in this Agreement are for purposes of convenience only and
shall not affect the meaning or interpretation of this Agreement.

 

Section 5.4  Entire Agreement.  This
Agreement constitutes the entire agreement and supersede all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof.

 

14

 

Section 5.5  Counterparts.  This
Agreement may be executed in several counterparts, each of which shall be
deemed an original and all of which shall together constitute one and the same
instrument.

 

Section 5.6  Governing Law.  This
Agreement shall be governed in all respects, including as to validity,
interpretation and effect, by the internal laws of the State of Delaware,
without giving effect to the conflict of laws rules thereof.

 

Section 5.7  Binding Effect.  This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors and permitted assigns.

 

Section 5.8  Assignment.  This
Agreement shall not be assignable or otherwise transferable by any party hereto
without the prior written consent of the other parties hereto. Notwithstanding
the immediately preceding sentence, the Holders may transfer their respective
rights under this Agreement to any spouse or issue of such Holder, or any trust
solely for the benefit of such Holder, spouse or issue.

 

Section 5.9  No Third Party
Beneficiaries.  Nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto and
their respective heirs, successors and permitted assigns.

 

Section 5.10  Amendment; Waivers,
Etc.  No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding unless
set forth in writing and duly executed by the party against whom enforcement of
the amendment, modification, discharge or waiver is sought. Any such waiver
shall constitute a waiver only with respect to the specific matter described in
such writing and shall in no way impair the rights of the party granting such
waiver in any other respect or at any other time. Neither the waiver by any of
the parties hereto of a breach of or a default under any of the provisions of
this Agreement, nor the failure by any of the parties, on one or more
occasions, to enforce any of the provisions of this Agreement or to exercise
any right or privilege hereunder, shall be construed as a waiver of any other
breach or default of a similar nature, or as a waiver of any of such
provisions, rights or privileges hereunder. The rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies that
any party may otherwise have at law or in equity. The rights and remedies of
any party based upon, arising out of or otherwise in respect of any inaccuracy
or breach of any representation, warranty, covenant or agreement or failure to
fulfill any condition shall in no way be limited by the fact that the act,
omission, occurrence or other state of facts upon which any claim of any such
inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement as to which there is no
inaccuracy or breach.

 

15

 

INVESTOR RIGHTS AGREEMENT

SIGNATURE PAGE

 

IN
WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.

 

	
   

  	
  AVERY
  COMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Scot M. McCormick, Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLDERS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Mark
  J. Nielsen

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  John
  Faltys

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Joseph
  R. Simrell

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  David
  Haynes

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Arun
  Anand

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Murari
  Cholappadi

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Sanjay
  Gupta

  

 

16

 

EXHIBIT A

 

STOCKHOLDERS

 

Mark J. Nielsen

John Faltys

Joseph R. Simrell

David Haynes

Arun Anand

Murari Cholappadi

Sanjay Gupta

 

 

EXHIBIT
8.4(b)

 

FORM OF ESTOPPEL CERTIFICATES

 

 

LANDLORD ESTOPPEL CERTIFICATE

 

Avery
Communications, Inc.

190 South LaSalle
Street, Suite 1710

Chicago,
Illinois  60603

 

RE:          Office
Lease (“Lease”) dated October 1, 1998, by and between SHUWA INVESTMENTS CORPORATION,
a California corporation (“Landlord”) and PRIMAL SYSTEMS, INC., a California corporation (“Primal”),
and EPC INTERNATIONAL, a
California corporation (“EPC”) (Primal and EPC being hereinafter
referred to collectively as “Tenant”)

 

Gentlemen:

 

The undersigned
has been advised that Primal desires to assign its interest in the Lease to ACI
Telecommunications Financial Services Corporation (“Merger Sub”), a
Delaware corporation and wholly owned subsidiary of Avery Communications, Inc.,
a Delaware corporation (“Purchaser”) as part of a merger of Primal with
and into Merger Sub. In doing so, Merger Sub and Purchaser have requested
Landlord to exercise this Landlord Estoppel Certificate for the benefit of
Merger Sub and Purchaser.  In that
regard, Landlord hereby certifies to Merger Sub and Purchaser as follows:

 

	
  1.

  	
   

  	
  Landlord has approved
  the assignment of Primal’s interest in the Lease to Merger Sub and Purchaser
  pursuant to the terms of that certain Agreement and Plan of Merger, dated
  March 19, 1999, by and among Purchaser, Merger Sub, Primal, and certain
  shareholders of Primal.

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  A true, correct and
  complete copy of the Lease (including all amendments thereto) is attached
  hereto as Exhibit “A”.

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  The “Commencement Date”
  of the Lease was December 1, 1998, and the expiration of the primary
  term of the Lease is August 31, 1999. Landlord is holding the amount of
  $10,320.00 as a security deposit under the Lease.  The current monthly rental amount is $10,320.00.

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  All rent, charges and
  other payments due Landlord under the Lease have been paid as of the date of
  this certification, and there have been no prepayments of rent or other
  obligations except for the current month and for security deposits.

  
	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Neither Tenant nor
  Landlord is in default under any terms of the Lease, nor has any event
  occurred which with the passage of time or the giving of notice (or both)
  would become an event of default, under the Lease.

  

 

 

This letter shall
be binding upon Landlord, and shall enure to the benefit of Tenant, Merger Sub
and Purchaser, and their respective successors and assigns.

 

IN WITNESS
WHEREOF, this Landlord Estoppel Certificate is executed as of
the                            day
of               ,
1999.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  SHUWA INVESTMENTS
  CORPORATION,

  
	
   

  	
  a California
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

2

 

EXHIBIT “A”

 

LEASEExhibit 10.12

 

ASSIGNMENT, ASSUMPTION AND CONSENT

 

Assignment of Lease

 

For valuable
consideration, the receipt of which is hereby acknowledged, the undersigned
Corsair Communications, Inc., a Delaware corporation (“Assignor”), hereby assigns and transfers to
Lightbridge, Inc., a Delaware corporation (“Assignee”),
all of its right, title and interest in and to that certain Lease dated
December 21, 1995, by and between Spieker Properties, L.P., a California
limited partnership successor in interest to McDonnell Douglas Realty Company,
a California corporation, and Corsair Communications, a Delaware corporation
successor in interest to Subscribing Computing, Inc., a California corporation
as amended by the First Amendment dated May 16, 1998 and the Lease dated
October 31, 2000 (the “Lease”) by
and between SPIEKER PROPERTIES, L.P., a
California limited partnership (“Landlord”),
as Landlord, and Assignor, as Tenant, leasing those certain premises described
as approximately 13,680 rentable square feet located on the 10th
floor, Suite 1000 and Suite 1050. 
Assignor hereby agree that this assignment shall not relieve Assignor of
any liability or obligation under the Lease, and that Assignor shall continue
to remain liable under the Lease as a principal obligor and not as a surety,
notwithstanding such assignment. Assignor further agrees that a subsequent
modification or extension of the Lease shall not relieve Assignor of any
liability or obligation under the Lease.

 

This assignment is effective as
of February 7, 2001.

 

	
  Dated:

  	
  2/7/01

  	
   

  	
  ASSIGNOR:

  	
  Corsair Communications, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Thomas C. Meyer

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  President & CEO

  

 

 

Assumption of Lease

 

Assignee hereby accepts the
foregoing assignment effective February 7, 2001, and in consideration of
Landlord’s consent thereto, Assignee agrees to be bound by and to faithfully,
timely and fully perform all of the terms and conditions and agreements
contained in the Lease, and to pay promptly all rental and other payments thereunder
of whatever nature. Assignee warrants that it has read the Lease which is made
a part hereof by this reference.

 

Assignee
further understands and agrees that Landlord’s consent to this assignment is
not a consent to any subsequent assignments. Assignee will pay Landlord’s
actual attorneys’ fees incurred for reviewing, investigating, processing and/or
documenting any requested assignment, whether or not Landlord’s consent is
granted.

 

	
  Dated:

  	
     2-07-01

  	
   

  	
  ASSIGNEE:

  	
  Lightbridge,
  Inc.,

  
	
   

  	
   

  	
   

  	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Eugene DiDonato

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  V.P

  

 

 

Consent

 

Landlord
hereby consents to the foregoing assignment by Assignor to Assignee of the
Lease, on the condition that (a) Assignee will promptly pay all rents and other
monies required under the Lease and this assignment, and will perform all
terms, covenants and conditions therein to be performed by Tenant and (b)
Assignor agrees to continue to remain liable under the Lease as principal
obligor and not as surety notwithstanding such assignment. Landlord’s consent
contained herein does not in any way amend or modify the Lease or any of
Landlord’s rights or Tenant’s obligations thereunder.

 

	
  Dated:

  	
  2/7/01

  	
   

  	
  LANDLORD:

  	
  SPIEKER
  PROPERTIES, L.P.,

  
	
   

  	
   

  	
   

  	
   

  	
  a
  California limited partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  Spieker Properties, Inc.,

  a Maryland corporation

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ James R. Woods Jr.

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