AGREEMENT FOR POST-CLOSING ADJUSTMENTS
This Agreement for Post-Closing Adjustments is made as of February 1,
1999, by and among Venture Funding, Ltd., a Colorado corporation ("VFL"),
Boutine, LLC, a Colorado limited liability company ("Boutine"), Network
Acquisitions, Inc., a Colorado corporation ("NAI"), Cavion Technologies,
Inc., a Colorado corporation ("Cavion"), Xxxxx X. Xxxxxx, Xxxxx X. Xxxxxx
and Xxxx Xxxxxxxx.
Pursuant to the Asset Purchase Agreement dated December 31, 1998 (the
"Purchase Agreement") between Cavion and NAI, NAI has agreed to purchase
substantially all of Cavion's assets for shares of NAI's common stock and
assumption of certain liabilities. This agreement is being entered into
in connection with the closing under the Purchase Agreement. VFL and
Boutine are the controlling shareholders of NAI. Xxxxxx, Xxxxxx and
Xxxxxxxx (the "Managers") are the management shareholders of NAI.
NAI is in the process of raising capital through an offering of NAI's
Convertible Preferred Stock, Series A (the "preferred stock offering").
NAI's obtaining this capital is a condition to Cavion's obligation to
close under the Purchase Agreement. The parties have agreed to close the
transaction contemplated by the Purchase Agreement (the "Asset Closing"),
subject to later completion of the preferred stock offering. This
structure will require a post-closing adjustment of the holdings of common
stock among VFL, Boutine, Cavion and the Managers in order to implement
the parties' intention with respect to percentage ownership of the common
stock. The purpose of this agreement is to provide for the post-closing
adjustment of common stock holdings, and to determine what will occur if
the preferred stock offering does not close.
NAI and Cavion have agreed that (1) the number of shares of NAI's
Class A common stock (the "common stock") issued to Cavion will be equal
to 12% of the equity interest in NAI (fully diluted) as of the closing
under the preferred stock offering, subject to certain adjustments
described below, and (2) the number of shares of common stock held by the
Managers will be equal to 20% of the equity interest in NAI (fully
diluted), subject to the same adjustments.
Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. POST-CLOSING ADJUSTMENT OF SHARES. Within ten business days
after the initial closing of the preferred stock offering (the "Offering
Closing"), NAI will deliver to all parties a true and accurate final
accounting of all costs related to the offering, and the following
adjustments will be made.
(a) VFL and Boutine will assign and deliver shares of common stock
to Cavion, or Cavion will assign and deliver shares of common
stock to VFL and Boutine, as required so that Cavion holds 12%
of the equity interest in NAI on a fully diluted basis as of the
Offering Closing, subject to the calculations described in the
following section.
(b) VFL and Boutine will assign and deliver shares of common stock
to Xxxxxx, Xxxxxx and Xxxxxxxx, or Xxxxxx, Xxxxxx and Xxxxxxxx
will assign and deliver shares of common stock to VFL and
Boutine, as required so that the Managers hold 20% of the equity
interest in NAI on a fully diluted basis as of the Offering
Closing, subject to the calculations described in the following
section.
2. CALCULATION OF ADJUSTMENT. For purposes of calculating the
equity interests of Cavion and the Managers under this agreement, the
following principles will apply:
(a) The warrants issued under the Private Placement Memorandum dated
October 20, 1998 will be counted as if exercised in full prior
to the Offering Closing.
(b) The Convertible Preferred Stock, Series A of NAI (the "Preferred
Stock") will be counted as if converted in full prior to the
Offering Closing, to the extent of (1) one-half of the total $2
million offering of Preferred Stock, plus (2) the number of
additional shares of Preferred Stock that, at the offering
price, results in proceeds equal to the underwriter's total cash
compensation (including expense allowance) related to the shares
counted under clause (1), and the additional underwriter's
compensation related to all additional shares counted under this
clause (2), plus (3) the number of additional shares of
Preferred Stock that, at the offering price, results in proceeds
equal to NAI's total other costs related to the preferred stock
offering (including without limitation amounts payable to
counsel, accountants and the printer for the offering).
3. IMPLEMENTATION OF STOCK TRANSFER. If so requested by Cavion,
VFL and Boutine will assign to the voting shareholders of Cavion the
number of shares deliverable to Cavion under Section 1, and will deliver
these shares to Cavion for the benefit of its voting shareholders.
4. EFFECT OF FAILURE TO CLOSE THE PREFERRED STOCK OFFERING. As
used in this agreement, the "Trigger Date" means (a) the Termination Date
of the preferred stock offering (as defined in the final Private Placement
Memorandum for the preferred stock offering), or (b) such other date as
VFL, Boutine, NAI and Cavion agree. If the Offering Closing has not
occurred by the Trigger Date, then Cavion will be entitled to rescind the
transaction described in the Purchase Agreement by giving notice to NAI,
VFL and Boutine. The notice will state the effective date of the
rescission (the "Rescission Date"), which will be at least five business
days after the date of the notice.
5. IMPLEMENTATION OF ASSET RETRANSFER. If Cavion exercises its
rescission right under the preceding section, the parties will take the
following actions on the Rescission Date:
(a) The assets and liabilities assigned to and assumed by NAI under
the Xxxx of Sale, Assignment and Assumption Agreement, as
increased or decreased in the ordinary course of business
following the Asset Closing, will be assigned to and assumed by
Cavion, free and clear of all liens, claims and encumbrances
other than those in place as of the Asset Closing. The shares
of NAI Class A and Class B Common Stock received by Cavion at
the Asset Closing will be assigned to NAI, free and clear of all
liens, claims and encumbrances.
(b) The retransfer of assets, liabilities and shares will be subject
to representations, warranties and indemnities equivalent to the
representations, warranties and indemnities in the Purchase
Agreement, with NAI being treated as the Seller and Cavion as
the Buyer for the period between the Asset Closing and the
Rescission Date.
(c) Cavion will agree to pay NAI an amount equal to (1) all amounts
due as of the Asset Closing under the Loan Agreement dated as of
September 14, 1998 between NAI and Cavion, plus (2) the cash
used in operations between the date of the Asset Closing and the
Rescission Date, plus (or minus) (3) the amount by which the
cash and cash equivalents transferred to Cavion on the
Rescission Date exceeds (or is less than) the cash and cash
equivalents transferred to NAI at the Asset Closing. This
amount will be due 60 days after the Rescission Date, and will
otherwise be subject to the terms of the Loan Agreement.
(d) The employment contracts between the Managers and NAI, the
Agreement for Sharing of Dilution executed at the Asset Closing,
and sections 1, 2 and 3 of this agreement, will be terminated.
The Managers will resign as officers and directors of NAI.
(e) Following the Rescission Date, each party will continue to be
subject to the confidentiality provisions of the Purchase
Agreement. These obligations will remain in effect for three
years following the Rescission Date, or with respect to any
trade secret, for as long as such information remains a trade
secret.
6. COVENANTS DURING THE OFFERING PERIOD. Until the Offering
Closing, NAI covenants with Cavion as follows:
(a) NAI will not, without the approval of those board members of NAI
who are also board members of Cavion, (1) merge, consolidate
with any entity, liquidate, dissolve, or reorganize; (2) acquire
or dispose of material assets in other than in the ordinary
course of business; (3) declare or pay any dividends, make any
distribution of assets to any shareholder, or acquire any of its
equity securities; (4) issue any equity securities of any kind
except in connection with the Offering; (5) institute any
methods of accounting that differ materially from the methods
used as of the Asset Closing; or (6) agree to do any of the
foregoing.
(b) Except with the approval of those board members of NAI who are
also board members of Cavion, NAI will (1) carry on the business
acquired from Cavion in substantially the same manner as it was
conducted prior to the Asset Closing; (2) use its best efforts
to maintain and support the name and business relationships
acquired from Cavion; (3) pay when due all indebtedness incident
to its operations (except as contested in good faith and with
appropriate accounting reserves); (4) keep its properties in
good repair, and appropriately insured; and (5) comply with all
material applicable legal requirements.
7. TERM. This agreement will terminate upon completion of the
adjustments described in section 1, or upon completion of the transactions
described in section 5, whichever comes sooner.
8. GENERAL. This agreement is governed by the laws of the State of
Colorado. This agreement supersedes all agreements previously made
between the parties concerning its subject matter, and may not be waived
or modified except in writing signed by the parties. If any provision of
this agreement is found to be invalid or unenforceable, such provision
will be modified to the minimum extent necessary to be valid and
enforceable, and the remainder hereof will not be affected. This
agreement is binding on and enforceable by and against the parties and
their successors, legal representatives and assigns. No party may assign
its obligations under this agreement except to a purchaser of
substantially all of that party's stock in NAI. The obligations of VFL
and Boutine under this agreement are joint and several. Notices under
this agreement will be in writing and will be effective when received by
certified mail to the addresses given below. Refusal to accept delivery
will be deemed receipt. This agreement does not supersede or exclude any
remedy that any party may have as a result of failure to close the
preferred stock offering or otherwise. The prevailing party will be
entitled to reimbursement of reasonable fees and costs in connection with
any dispute regarding this agreement.
[END OF AGREEMENT;
SIGNATURE PAGE FOLLOWS NEXT]
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement for Post-Closing Adjustments as of the date first referenced
above.
CAVION TECHNOLOGIES, INC. NETWORK ACQUISITIONS, INC.
/s/ Xxxxx. J. Xxxxxx /s/Xxxxxx X. Xxxxxx
By: Xxxxx X. Xxxxxx, President By: Xxxxxx X. Xxxxxx, President
0000 Xxxxx Xxxxxx, Xxxxx 000 0000 X. Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000-0000 Xxxxxx, Xxxxxxxx 00000
VENTURE FUNDING, LTD. BOUTINE, LLC
/s/Xxxxxx X. Xxxxxx /s/Xxxx Xxxxxx
By: Xxxxxx X. Xxxxxx, President By: Xxxx Xxxxxx, Manager
0000 X. Xxxxxx Xxxx, Xxxxx 000 c/o First Capital Investments, Inc.
Xxxxxx, Xxxxxxxx 00000 0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
/s/ Xxxxx X. Xxxxxx /s/Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx Xxxxx X. Xxxxxx
c/o Cavion Technologies, Inc. 0000 X. Xxxxxx Xxx
0000 Xxxxx Xxxxxx, Xxxxx 000 Xxxxxx, Xxxxxxxx 00000
Xxxxxx, Xxxxxxxx 00000-0000
/s/Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
0000 X. Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
