TERMINATION AND MODIFICATION AGREEMENT
This Termination and Modification Agreement is made as of September
28, 1998 between Cavion Technologies, Inc., a Colorado corporation (the
"Company"), the investors listed on the SCHEDULE OF INVESTORS attached
hereto (the "Investors"), the founding shareholders listed on the SCHEDULE
OF FOUNDERS attached hereto (the "Founders"), and Xxxxx X. Xxxxxx
("Xxxxxx").
Pursuant to the Investment Agreement dated as of August 1, 1996, the
Investors provided letters of credit and certificates of deposit (the
"Investor Collateral") as security for the Company's $600,000 credit
facility (the "Credit Facility") with US Bank, fka Colorado National Bank
(the "Lending Bank"), and received stock in the Company. The Investors
also were granted additional rights with respect to the Company and its
other shareholders under the Investment Agreement, a Put Agreement between
the Company and the Investors (the "1996 Put Agreement"), a Share Escrow
Agreement between the Company, the Investors, and Norwest Bank Colorado
(as escrow agent), a Subordination Agreement between the Company and its
other shareholders, and (in the case of one investor) an Advisor's Option
Agreement, each of which was dated as of August 1, 1996.
As of May 28, 1998, the Company entered into a Bridge Loan Agreement
with certain of the Investors (the "Bridge Lenders"). As shown on the
SCHEDULE OF INVESTORS, each of the Bridge Lenders received a Senior
Promissory Note earning interest at the rate of 42% per annum, shares of
nonvoting common stock of the Company, and a Put Agreement giving the
Bridge Lenders the right to sell the shares back to the Company for $7.00
per share (the "Bridge Put Agreement"). As of May 28, 1998, the Company
entered into an Additional Bridge Loan Agreement with certain employees,
including Xxxxxx. Each of the Additional Bridge Lenders also received a
Senior Promissory Note, shares of nonvoting common stock of the Company,
and a Put Agreement (the "Additional Bridge Put Agreement").
The Company plans to sell substantially all of its assets and certain
liabilities to Network Acquisitions, Inc. (the "NAI transaction").
Following the sale, the holders of Company voting common stock will
receive an aggregate of 352,941 shares of NAI Class A common stock, and
the holders of Company nonvoting common stock will receive an aggregate of
28,648 shares of NAI class B common stock. As a condition to closing of
the NAI transaction, the Company and the Investors have agreed to
termination of the Investment Agreement and certain modifications to the
Bridge Loan Agreement and the Credit Facility, on the terms contained in
this agreement.
In consideration of the NAI transaction and the mutual covenants
contained in this agreement, it is agreed as follows:
1. Upon closing of the NAI transaction, the Investment
Agreement, the 1996 Put Agreement, the Subordination Agreement and
the Advisor's Option Agreement will terminate without further action
of the parties. The Investors will continue to have reimbursement
rights as described in the following section.
2. Any notice from the Lending Bank of default on the Credit
Facility or of a draw on the Investor Collateral will be provided to
the Investors contemporaneously with the Company. If the Lending
Bank draws on the Investor Collateral, the Company will reimburse the
Investors for the amount of the draws, immediately upon receiving
notice of such draws from the Investors.
3. Upon closing of the NAI transaction, the Share Escrow
Agreement will be revised according to the Amendment to Share Escrow
Agreement dated as of the date hereof, without further action of the
parties. The Share Escrow Agreement will continue to apply to an
equivalent number of shares owned by the Founders, as shown in the
SCHEDULE OF FOUNDERS.
4. If the Lending Bank draws on the Investor Collateral and the
Company fails to reimburse the Investors within 60 days after
receiving notice from the Investors, any Investor may give a Default
Notice to the Escrow Agent under the Share Escrow Agreement, with
copies to the Founders, and the Escrowed Shares will be returned to
the Company's treasury. If the Lending Bank releases the Investor
Collateral without making a draw, or if the Investors are reimbursed,
any Founder may give a Termination Notice to the Escrow Agent, with
copies to the Investors, and the Escrowed Shares will be returned to
the Founders. The terms "Escrowed Shares", "Default Notice" and
"Termination Notice" are defined in the Share Escrow Agreement, as
amended.
5. Upon closing of the NAI transaction, (a) all debt
obligations of the Company to Xxxxx X. Xxxxxx that are deferred in
connection with the NAI transaction will be subordinated to payment
of the Credit Facility, and (b) all obligations of the Company to
Xxxxxx in connection with the Additional Bridge Loan Agreement
(including principal, interest and the Additional Bridge Put
Agreement, as amended in connection with the NAI transaction) will be
subordinated to payment of the Credit Facility. The amounts
described in the preceding sentence will not be paid until the Credit
Facility has been paid in full.
6. Following the closing of the NAI transaction, the Company
plans to distribute to its existing voting shareholders certain
interests in the warrant to purchase common stock of Convergent
Communications, Inc. currently held by the Company (the "Convergent
warrants"). Each Founder agrees that if he exercises Convergent
warrants received from the Company and sells the resulting Convergent
stock, his Net Profit (as defined below) will be held in trust for
the Investors as described in this section. If the Lending Bank
draws on the Investor Collateral and the Company fails to reimburse
the Investors within 60 days after receiving notice from the
Investors, all Net Profit of the Founders will be paid pro rata to
the 1996 investors (to the extent of their lost collateral). For
this purpose, "Net Profit" is defined as the proceeds of sale of the
Convergent stock less the Cost of Exercise. The "Cost of Exercise"
is defined as the sum of (1) the exercise price under the Convergent
warrants, (2) a return on the exercise price from the date of
exercise to the date of sale of 10% per annum (or, if higher, the
interest and fees paid on any funds borrowed from a disinterested
third party to pay the exercise price), and (3) the shareholder's tax
liability and transaction costs (such as brokerage fees) arising out
of sale of the Convergent stock, if any.
7. The Founders' obligations under the preceding section will
terminate when the Lending Bank releases the Investor Collateral
without making a draw, or when the Investors are reimbursed for their
collateral by the Company. However, at any time that the Lending
Bank has drawn on the Investor Collateral and the Company has failed
to reimburse the Investors within 60 days after receiving notice, any
Founder may offer any Convergent stock received upon exercise of
warrants received from the Company to the Investors for a price equal
to the Cost of Exercise. To the extent the offer is accepted within
30 days, the Founder will sell the stock pro rata to the accepting
Investors. To the extent the offer is not accepted within 30 days,
the Founder's obligations under the preceding section (as to the
stock offered and not accepted) will terminate.
8. Upon closing of the NAI transaction, each Senior Promissory
Note issued in connection with the Bridge Loan Agreement will be
amended by revising the second paragraph to read as follows:
The principal indebtedness evidenced by this Note shall bear
interest at the rate that yields a total amount of interest
earned as of the maturity date of $11,438.53. Principal and
interest shall be due and payable in full 30 days after the date
on which 100 credit unions (or other entities associated with
the credit union industry that provide equivalent economics)
have subscribed and connected to the Company's secure network
(or equivalent Company service).
9. The Bridge Put Agreement, as amended by this section, will
apply to the shares of NAI Class B common stock received by each
Bridge Lender following the NAI transaction. Upon closing of the NAI
transaction, section 2(a) of the Bridge Put Agreement will be amended
by deleting the words "January 1, 1999" and substituting the
following:
the date that is 30 days after the date on which 100 credit
unions (or other entities associated with the credit union
industry that provide equivalent economics) have subscribed and
connected to the Company's secure network (or equivalent Company
service)
10. Each Bridge Lender grants to the Company an option
(the "Call") to purchase from the Bridge Lender all or part of the
shares of NAI Class B common stock received by such Bridge Lender
following the NAI transactions at a price of $7.00 per share. The
Call will be exercisable at any time after closing of the NAI
transaction and prior to the end of the Exercise Period (as defined
in the Bridge Put Agreement, as amended). All other terms that apply
to the Put under the Bridge Put Agreement will also apply to the
Call.
11. Each Investor will execute and deliver to the Company
whatever documents are necessary or appropriate in connection with
(a) consummation of the NAI transaction, and (b) distribution of the
Convergent Communications Inc. warrants that the Company intends to
distribute to its shareholders following the transaction. Without
limiting the foregoing, each Investor will execute and deliver to the
Company whatever documents are necessary or appropriate in connection
with extension of the maturity date of the Credit Facility to the
same maturity date provided for the Senior Promissory Notes under
section 3 above.
12. If negotiations concerning the NAI transaction are
terminated without closing the NAI transaction or a substantially
similar transaction, this agreement will terminate.
13. All notices under this agreement will be in writing and
deemed given upon receipt, by (1) personal delivery, (2) receipted
courier service or (3) certified or registered mail, return receipt
requested, addressed to the principal office of the Company (if to
the Company), or to the address shown on the attached schedules.
Refusal to accept delivery will be deemed receipt.
14. This agreement will be governed by the laws of the State of
Delaware. This agreement will be binding upon the personal
representatives, successors and assigns of the parties hereto, but
will not be assignable without the prior written consent of the non-
assigning parties, except that the Company may assign its rights and
obligations under this agreement to NAI without consent. This
agreement constitutes the entire agreement between the parties and
may not be waived or modified except in writing. This agreement may
be executed in any number of counterparts, each of which will be an
original and all of which together will be one instrument. The
headings used in this agreement are for convenience only and will not
affect the interpretation hereof.
IN WITNESS WHEREOF, the parties have executed this Termination and
Modification Agreement as of the date first set forth above.
CAVION TECHNOLOGIES, INC. BRITISH FAR EAST HOLDINGS LTD.
By:/s/Xxxxx X. Xxxxxx By:/s/Xxxxxx Xxxxxx
Xxxxx X. Xxxxxx, CEO Xxxxxx Xxxxxx III, Chairman
XXXXXXX M. B. XXXXXX LIVING TRUST
/s/Xxxxx X. Xxxxxx By:/s/Xxxxxxx M.B. Xxxxxx
Xxxxx E. Xxxxxx Xxxxxxx M. B. Xxxxxx, Trustee
/s/Xxxxxx X. Xxxxxxx /s/Xxxxxx Xxxxxx
Xxxxxx X. Xxxxxxx Xxxxxx Xxxxxx
FAIRWAY REALTY ASSOCIATES
--------------------------- By:/s/Xxxxxx Xxxxxxxx
Xxxx X. Xxxxxx Xxxxxx Xxxxxxxx, General Partner
/s/Xxxxx X. Xxxxxx By:/s/Xxxx XxXxxxx
Xxxxx X. Xxxxxx Xxxx XxXxxxx, General Partner
AMENDMENT TO
TERMINATION AND MODIFICATION AGREEMENT
This Amendment to Termination and Modification Agreement is made as
of January 15, 1999 between Cavion Technologies, Inc., a Colorado
corporation (the "Company"), the investors listed on the SCHEDULE OF
INVESTORS attached hereto (the "Investors"), the founding shareholders
listed on the SCHEDULE OF FOUNDERS attached hereto (the "Founders"), and
Xxxxx X. Xxxxxx ("Xxxxxx").
The parties entered into a Termination and Modification Agreement as
of September 28, 1998 (the "Modification Agreement"), which contemplated
certain changes to the Investment Agreement, the Bridge Loan Agreement and
related documents (as described in the Modification Agreement). The
Modification Agreement called for the signature of Xxxx X. Xxxxxx
("Xxxxxx"), who was one of the original parties to the Share Escrow
Agreement. Xxxxxx has refused to execute the Modification Agreement. The
parties have agreed that the Modification Agreement will remain effective,
subject to the terms contained in this agreement.
In consideration of the foregoing and the NAI transaction, it is
agreed as follows:
1. Upon closing of the NAI transaction, if Xxxxxx has not executed
the Modification Agreement and the Amendment to Share Escrow Agreement
(described in the next section), the shares of NAI Class A common stock
received by the Company in the NAI transaction will be held by the
Company, and will not be distributed to its shareholders, until (a) the
Credit Facility (as defined in the Modification Agreement) has been paid
in full and the collateral provided by the Investors has been released, or
the Investors have been reimbursed in accordance with the Modification
Agreement, and (b) all amounts due under the Bridge Loan Agreement (as
defined in the Modification Agreement), as modified by the Modification
Agreement, have been paid in full.
2. The Amendment to Share Escrow Agreement, executed in connection
with the Modification Agreement, contemplates that the Share Escrow
Agreement will continue to apply to an equivalent number of shares owned
by the Founders (including Xxxxxx), as shown in the SCHEDULE OF FOUNDERS
attached to the Modification Agreement. This Amendment to the Share
Escrow Agreement will not be implemented unless Xxxxxx has executed the
Modification Agreement and the Amendment to Share Escrow Agreement at or
before the closing of the NAI transaction.
3. The parties agree that the Modification Agreement is effective
without Xxxxxx' signature, and the Modification Agreement is amended by
deleting Xxxxxx from the definition of "Founder". If Xxxxxx has executed
the Modification Agreement at or before the closing of the NAI
transaction, this section 3 will no longer be in effect.
4. The cross-reference in section 11 of the Termination and
Modification Agreement to "section 3 above" is incorrect, and should read
"section 8 above". The parties acknowledge that the Termination and
Modification Agreement supersedes the Termination Agreement between the
Company and the Investors dated as of November 24, 1997. Except as
expressly modified by this agreement, the Termination and Modification
Agreement remains unmodified and effective in accordance with its terms,
notwithstanding that it has not been executed by Xxxx X. Xxxxxx.
IN WITNESS WHEREOF, the parties have executed this Amendment to
Termination and Modification Agreement as of the date first set forth
above.
CAVION TECHNOLOGIES, INC. BRITISH FAR EAST HOLDINGS LTD.
By:/s/Xxxxx X. Xxxxxx By:/s/Xxxxxx Xxxxxx
Xxxxx X. Xxxxxx, CEO Xxxxxx Xxxxxx III, Chairman
XXXXXXX M. B. XXXXXX LIVING TRUST
/s/Xxxxx X. Xxxxxx By:/s/Xxxxxxx M.B. Xxxxxx
Xxxxx E. Xxxxxx Xxxxxxx M. B. Xxxxxx, Trustee
/s/Xxxxxx X. Xxxxxxx /s/Xxxxxx Xxxxxx
Xxxxxx X. Xxxxxxx Xxxxxx Xxxxxx
FAIRWAY REALTY ASSOCIATES
/s/Xxxxx X. Xxxxxx By:/s/Xxxxxx Xxxxxxxx
Xxxxx X. Xxxxxx Xxxxxx Xxxxxxxx, General Partner
/s/Xxxxx X. Xxxxxx By:/s/Xxxx XxXxxxx
Xxxxx X. Xxxxxx Xxxx XxXxxxx, General Partner
