UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
RULE 13D-1(A) AND AMENDMENTS THERETO FILED
PURSUANT TO RULE 13D-2(A).
(AMENDMENT NO. ______________)*
FIRST VIRTUAL HOLDINGS INCORPORATED
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.001 PER SHARE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
337486 10 4
--------------------------------------
(CUSIP Number)
RONALD FISHER STEPHEN A. GRANT, ESQ.
SOFTBANK HOLDINGS INC. SULLIVAN & CROMWELL
10 LANGLEY ROAD, SUITE 403 125 BROAD STREET
NEWTON CENTER, MA 02159 NEW YORK, NY 10004
(617) 928-9300 (212) 558-4000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
APRIL 30, 1998
--------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
|_|.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
SEC 1746(12-91)
<PAGE>
SCHEDULE 13D
CUSIP NO. 337486 10 4 PAGE 1 OF 14 PAGES
- ---------------------- ------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SOFTBANK HOLDINGS INC.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) |_|
(B) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 19,701,213(1)(2)
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 4,979,611(2)
REPORTING ------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 19,701,213(1)(2)
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,680,824(1)(2)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
81.5%(1)(2)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
(1) Such number of shares and percentage are estimated and are subject to
increase as described in Item 5.
(2) See Item 5.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SCHEDULE 13D
<PAGE>
CUSIP NO. 337486 10 4 PAGE 2 OF 14 PAGES
- ---------------------- ------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SOFTBANK TECHNOLOGY VENTURES IV L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) |_|
(B) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 7,974,392(1)
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 4,979,611(1)
REPORTING ------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 7,974,392(1)
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,954,003(1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
65.6%(1)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
(1) See Item 5.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
CUSIP NO. 337486 10 4 PAGE 3 OF 14 PAGES
- ---------------------- ------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SOFTBANK CORPORATION
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) |_|
(B) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
JAPAN
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 19,701,213(1)(2)
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 4,979,611(2)
REPORTING ------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 19,701,213(1)(2)
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,680,824(1)(2)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
81.5%(1)(2)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
HC, CO
- --------------------------------------------------------------------------------
(1) Such number of shares and percentage are estimated and are subject to
increase as described in Item 5.
(2) See Item 5.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
CUSIP NO. 337486 10 4 PAGE 4 OF 14 PAGES
- ---------------------- ------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
MASAYOSHI SON
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) |_|
(B) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
JAPAN
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 19,701,213(1)(2)
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 4,979,611(2)
REPORTING ------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 19,701,213(1)(2)
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,680,824(1)(2)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
81.5%(1)(2)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
(1) Such number of shares and percentage are estimated and are subject to
increase as described in Item 5.
(2) See Item 5.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
CUSIP NO. 337486 10 4 PAGE 5 OF 14 PAGES
- ---------------------- ------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
STV IV LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) |_|
(B) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 7,974,392(1)
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 4,979,611(1)
REPORTING ------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 7,974,392(1)
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,954,003(1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
65.6%(1)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- --------------------------------------------------------------------------------
(1) See Item 5.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
CUSIP NO. 337486 10 4 PAGE 6 OF 14 PAGES
- ---------------------- ------------------
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (the "Statement") relates to the common
stock, par value $0.001 per share (the "Common Stock"), of First Virtual
Holdings Incorporated, a Delaware corporation (the "Company"). The principal
executive offices of the Company are located at 11975 El Camino Real, Suite 300,
San Diego, California 92130-2543.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is filed by SOFTBANK Holdings Inc. ("SOFTBANK
Holdings"), SOFTBANK Technology Ventures IV L.P. ("SOFTBANK Technology"),
SOFTBANK Corporation ("SOFTBANK"), Masayoshi Son ("Son") and STV IV LLC ("STV"
and, together with SOFTBANK Holdings, SOFTBANK Technology and SOFTBANK, the
"Reporting Persons").
(A), (B), (C) AND (F). The principal business offices of SOFTBANK
Holdings are located at 10 Langley Road, Suite 403, Newton Center, Massachusetts
02159. The principal business offices of SOFTBANK Technology and STV are located
at 333 West San Carlos Street, Suite 1225, San Jose, California 95110. The
principal business offices of SOFTBANK are located at 24-1,
Nihonbashi-Hakozaki-cho, Chuo-ku, Tokyo 103 Japan. Son's business address is
24-1, Nihonbashi-Hakozaki-cho, Chuo-Ku, Tokyo 103 Japan.
SOFTBANK Holdings is a Delaware corporation and is a wholly-owned
subsidiary of SOFTBANK.
STV is a Delaware limited liability company and is wholly-owned by
SOFTBANK Holdings.
SOFTBANK Technology is a Delaware limited partnership. SOFTBANK
Technology's two general partners are SOFTBANK Holdings and STV.
SOFTBANK is a corporation organized under the laws of Japan.
Son, a Japanese citizen, is President, Chief Executive Officer and a
director of SOFTBANK. Son owns, directly and indirectly, an approximate 50%
interest in SOFTBANK.
(D) AND (E). During the last five years, neither the Reporting Persons
nor, to the best knowledge of the Reporting Persons, any of the persons listed
in Schedule 1, 2 or 3, (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) has been a party
to any civil proceeding of a judicial or administrative body of competent
jurisdiction, and is or was, as a result of such proceeding, subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws, or finding
any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The purchases of the shares of Common Stock to be purchased by SOFTBANK
Holdings and SOFTBANK Technology as reported herein will be funded by available
working capital of SOFTBANK Holdings and SOFTBANK Technology.
ITEM 4. PURPOSE OF TRANSACTION.
The purpose of the transactions by the Reporting Persons described in
this Statement is the acquisition of a controlling interest in the Company.
Pursuant to the Purchase Agreement, dated as of April 30, 1998 (the
"Purchase Agreement"), by and among the Company, SOFTBANK Holdings and SOFTBANK
Technology, SOFTBANK Holdings and SOFTBANK Technology each severally agreed to
purchase 5,000,000 shares of Common Stock from the Company for a purchase price
of $0.60 per share. The consummation of the transactions contemplated in the
Purchase Agreement is conditioned on the prior or concurrent consummation of the
transactions contemplated in the Option Agreement and the Promissory Note and
Stock Purchase Agreement referred to below.
Pursuant to the Option Agreement, dated as of April 30, 1998 (the
"Option Agreement"), by and among SOFTBANK Technology, SOFTBANK Holdings and the
persons and entities whose names appear on the signature page thereof, SOFTBANK
<PAGE>
CUSIP NO. 337486 10 4 PAGE 7 OF 14 PAGES
- ---------------------- ------------------
Technology and SOFTBANK Holdings purchased options (the "Options") on 327 and
328 shares of Series A Convertible Preferred Stock of the Company (the
"Preferred Shares"), respectively. Upon exercise of the Options, each Preferred
Share will be convertible, pursuant to the Conversion Agreement referred to
below, into 9,096 shares of Common Stock. Exercise of the Options is subject to
certain conditions precedent which are expected to be satisfied upon or
following consummation of the transactions contemplated by the Purchase
Agreement and the Promissory Note and Stock Purchase Agreement referred to
below.
Pursuant to the Promissory Note and Stock Purchase Agreement, dated as
of April 30, 1998 (the "Promissory Note and Stock Purchase Agreement"), by and
among SOFTBANK Holdings and holders of Promissory Notes and Common Stock of the
Company listed on Exhibit A thereof, SOFTBANK Holdings has agreed to purchase
and such holders have agreed to sell (1) 1,200,000 shares of Common Stock and
(2) promissory notes (the "Promissory Notes") in a principal amount of
$1,200,000. Pursuant to the Conversion Agreement, upon consummation of such
purchase of the Promissory Notes, the Promissory Notes will be converted into
approximately 2,543,333 shares of Common Stock (subject to increase on account
of accrued interest as described in Item 5 below). The consummation of the
transactions contemplated in the Promissory Note and Stock Purchase Agreement is
conditioned on the prior or concurrent consummation of the transactions
contemplated by the Purchase Agreement. Although at this time SOFTBANK Holdings
has no agreement to do so, SOFTBANK Holdings currently anticipates that 50% of
the shares of Common Stock to be purchased pursuant to the Promissory Note and
Stock Purchase Agreement and 50% of the shares of Common Stock to be issued upon
conversion of the Promissory Notes will be purchased by SOFTBANK Technology.
In connection with the execution of the Option Agreement and the
Promissory Note and Stock Purchase Agreement, SOFTBANK Holdings and SOFTBANK
Technology entered into a Conversion Agreement, dated as of April 30, 1998 (the
"Conversion Agreement")(attached hereto as Exhibit G), with the Company
providing for the conversion of the Promissory Notes and the Preferred Shares
into shares of Common Stock. Pursuant to the Conversion Agreement, as soon as
reasonably practicable after acquiring any Promissory Notes or Preferred Shares,
SOFTBANK Holdings and SOFTBANK Technology will tender such Promissory Notes or
Preferred Shares to the Company for conversion into shares of Common Stock. The
Promissory Notes will be converted into a number of shares of Common Stock equal
to the ratio determined by dividing (i) the principal amount of, and accrued but
unpaid interest owing on, the Promissory Notes as of the date of conversion by
(ii) $0.60 (subject to adjustment in certain circumstances). Each Preferred
Share tendered for conversion will be converted into a number of shares of
Common Stock equal to (i) $5,458 divided by (ii) $0.60 (subject to adjustment
in certain circumstances), rounded down to the nearest whole share.
SOFTBANK Holdings and SOFTBANK Technology may transfer a portion of the
shares of Common Stock to be acquired pursuant to the agreements described
above, or assign their respective rights pursuant to such agreements to acquire
shares of Common Stock, Preferred Shares or Promissory Notes to one or more of
their respective affiliates or entities in which they may or may not have
minority equity investments, although they currently have no specific plans to
do so.
Certain stockholders of the Company holding in the aggregate
approximately 42.3% of the shares of Common Stock outstanding as of April 30,
1998 (the "Stockholders") entered into a Stockholders' Agreement, dated as of
April 30, 1998 (the "Stockholders' Agreement"), in favor of SOFTBANK Technology
and SOFTBANK Holdings. Pursuant to the Stockholders' Agreement, each Stockholder
agreed that it will, at any meeting of stockholders of the Company, or in
connection with any written consent of stockholders of the Company, vote or
cause to be voted all shares of Common Stock then held of record or beneficially
owned by such Stockholder (i) in favor of the Stock Issuances (as defined
therein), the execution and delivery by the Company of the Purchase Agreement
and the approval of the terms thereof and each of the other actions contemplated
by the Purchase Agreement and the Stockholders' Agreement, and any actions
required in furtherance thereof; (ii) against any action or agreement that would
result in a breach in any respect of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Purchase Agreement;
and (iii) except as otherwise agreed to in writing in advance by SOFTBANK
Holdings and SOFTBANK Technology, against the following actions (other than the
Stock Issuances and the transactions contemplated by the Purchase Agreement):
(A) any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company or its subsidiaries; (B) a
sale, lease or transfer of all or substantially all of assets of the Company or
its subsidiaries, or a reorganization, recapitalization, dissolution or
liquidation of the Company or its subsidiaries; (C) any material change in the
capitalization of the Company or any amendment of the Company's Certificate of
Incorporation or By-laws which, in the case of the matters referred to in this
clause (C), is intended, or could reasonably be expected, to impede, delay or
adversely affect the Stock Issuances and the transactions contemplated by the
Purchase Agreement. Each Stockholder also agreed that it will not enter into any
agreement or understanding with any person or entity the effect of which would
be inconsistent or violative of the provisions and agreements contained in the
Stockholders' Agreement and delivered to SOFTBANK Technology and SOFTBANK
Holdings irrevocable proxies to vote all of the shares of Common Stock
beneficially owned by them, together with any shares acquired by them in any
capacity after the date thereof, in the manner and with respect to the matters
set forth in the Stockholders' Agreement.
<PAGE>
CUSIP NO. 337486 10 4 PAGE 8 OF 14 PAGES
- ---------------------- ------------------
A condition to the consummation of the transactions contemplated by the
Purchase Agreement is that the stockholders of the Company holding a majority of
the outstanding shares of Common Stock will have elected a Board of Directors
consisting of a total of five members meeting the requirement (the "Board
Composition Requirement") that one of such members will be designated by Lee H.
Stein, one of such members will be designated by Paymentech Merchant Services,
Inc. and the remaining members will be designated by SOFTBANK Holdings and
SOFTBANK Technology, acting jointly. In addition, consummation of the
transactions contemplated by the Purchase Agreement is conditioned on the
execution and delivery by Lee H. Stein, June L. Stein, Paymentech Merchant
Services, Inc. and First USA Financial (the "Principal Stockholders"), SOFTBANK
Holdings and SOFTBANK Technology of a voting agreement providing for maintenance
of the Board Composition Requirement for a period ending on the earlier of (1)
the second anniversary of the consummation of the transaction contemplated by
the Purchase Agreement and (2) such time as the Principal Stockholders
collectively beneficially own less than 75% of the number of shares of Common
Stock beneficially owned by them as of the date of the Purchase Agreement.
The Purchase Agreement contains a covenant by the Company to take
customary actions to seek stockholder approval of an amendment of the Company's
Certificate of Incorporation to eliminate the classification of the Company's
Board of Directors so that, following such amendment, the entire Board of
Directors shall be elected at each annual meeting of stockholders.
The Purchase Agreement also provides for the payment by the Company to
SOFTBANK Holdings and SOFTBANK Technology of a termination fee in certain
circumstances. See Exhibit D hereto.
Other than as described herein, the Reporting Persons have no present
plans or proposals which relate to or would result in: (i) the acquisition by
any person of additional securities of the Company, or the disposition of
securities of the Company; (ii) an extraordinary corporate transaction, such as
a merger, reorganization or liquidation, involving the Company or any of its
subsidiaries; (iii) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries; (iv) any change in the present Board or
management of the Company, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the Board; (v) any
material change in the present capitalization or dividend policy of the Company;
(vi) any other material change in the Company's business or corporate structure;
(vii) changes in the Company's certificate of incorporation or by-laws or other
actions which may impede the acquisition of control of the Company by any
persons; (viii) causing a class of securities of the Company to be delisted from
a national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(ix) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or (x) any action similar to those enumerated
above (collectively, the "Specified Actions"). However, the Reporting Persons
intend to evaluate the proposed investment in the Company on an ongoing basis
and, depending on their evaluation of the business and prospects of the Company
and other factors that they may deem relevant, the Reporting Persons may
determine to dispose of their contractual rights to acquire such shares or
acquire additional shares or take other actions if market conditions or other
business considerations, in the judgment of the Reporting Persons, warrant. Such
additional acquisitions may be effected through open market purchases, privately
negotiated transactions, tender offers to existing holders or direct negotiation
with the Company. Such further acquisitions, dispositions or other actions may
or may not result in any of the Specified Actions.
All references to the Purchase Agreement, the Option Agreement, the
Promissory Note and Stock Purchase Agreement, the Conversion Agreement and the
Stockholders' Agreement are qualified in their entirety by the full text of such
agreements, copies of which are attached as Exhibits hereto and are incorporated
by reference herein. See also Item 6.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(A) AND (B). SOFTBANK Technology.
SOFTBANK Technology may be deemed to be the beneficial owner of
7,974,392 shares of Common Stock consisting of (i) 5,000,000 shares of Common
Stock that it will, subject to the satisfaction of the conditions set forth
therein, have the right to acquire from the Company pursuant to the Purchase
Agreement and (ii) 2,974,392 shares that, subject to the satisfaction of the
conditions set forth therein, it will have the right to acquire upon exercise of
the Options to purchase Preferred Shares pursuant to the Option Agreement and
conversion of such Preferred Shares into shares of Common Stock pursuant to the
Conversion Agreement. Upon consummation of the transactions contemplated by the
Purchase Agreement, the Option Agreement and the Conversion Agreement, SOFTBANK
Technology will have sole voting power and sole dispositive power with respect
to such shares. In addition, pursuant to the Stockholders' Agreement and the
proxies delivered thereunder as described in Item 4, SOFTBANK Technology may be
deemed to beneficially own 4,979,611 shares of Common Stock inasmuch as the
holders thereof have granted a representative of SOFTBANK Technology an
irrevocable proxy to vote such shares as described in Item 4. Similar proxy
rights with respect to such 4,979,611 shares of Common Stock have been granted
to SOFTBANK Holdings. Accordingly, SOFTBANK Technology may be deemed to have
shared voting power with respect to such 4,979,611 shares of Common Stock. As a
result of the foregoing, SOFTBANK Technology may be deemed to be the beneficial
owner of an aggregate of 12,954,003 shares of Common Stock, comprising 65.6% of
the Common Stock (based on the number of shares of Common Stock outstanding as
of April 28, 1998, as represented by the Company pursuant to the Purchase
Agreement, and calculated as provided by Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")).
<PAGE>
CUSIP NO. 337486 10 4 PAGE 9 OF 14 PAGES
- ---------------------- ------------------
STV.
As a general partner of SOFTBANK Technology, STV may be deemed to be
the beneficial owner of 12,954,003 shares of Common Stock, comprising 65.6% of
the Common Stock (based on the number of shares of Common Stock outstanding as
of April 28, 1998, as represented by the Company pursuant to the Purchase
Agreement, and calculated as provided by Rule 13d-3 under the Exchange Act).
Upon consummation of the transactions contemplated by the Purchase Agreement,
the Option Agreement and the Conversion Agreement, STV will have the sole voting
power and sole dispositive power with respect to 7,974,392 shares of Common
Stock. In addition, STV may be deemed to have shared voting power with respect
to 4,979,611 shares of Common Stock.
SOFTBANK Holdings.
As the sole equityholder of STV, SOFTBANK Holdings may be deemed to be
the beneficial owner of 12,954,003 shares of Common Stock and to have sole
voting power and sole dispositive power (subject to consummation of the
transactions contemplated by the Purchase Agreement, the Option Agreement and
the Conversion Agreement) with respect to 7,974,392 shares of Common Stock and
shared voting power with respect to 4,979,611 shares of Common Stock. In
addition, SOFTBANK Holdings may be deemed to be the beneficial owner of (i)
5,000,000 shares of Common Stock that it will, subject to the satisfaction of
the conditions set forth therein, have the right to purchase from the Company
pursuant to the Purchase Agreement, (ii) 2,983,488 shares of Common Stock that
it will have the right to acquire upon exercise of the Options to purchase
Preferred Shares pursuant to the Option Agreement and conversion of such
Preferred Shares into Common Stock pursuant to the Conversion Agreement, (iii)
1,200,000 shares of Common Stock that it has the right to acquire pursuant to
the Promissory Note and Stock Purchase Agreement and (iv) approximately
2,543,333 shares of Common Stock that it will have the right to acquire through
purchase of the Promissory Notes and conversion of such Promissory Notes into
Common Stock pursuant to the Conversion Agreement. As a result of the foregoing,
SOFTBANK Holdings may be deemed to be the beneficial owner of an aggregate of
24,680,824 shares of Common Stock, comprising 81.5% of the Common Stock (based
on the number of shares of Common Stock outstanding as of April 28, 1998, as
represented by the Company pursuant to the Purchase Agreement, and calculated as
provided by Rule 13d-3 under the Exchange Act), and may be deemed to have sole
voting power and sole dispositive power (assuming consummation of the
transactions described in this Statement) with respect to 19,701,213 shares of
Common Stock and to have shared voting power with respect to 4,979,611 shares of
Common Stock.
SOFTBANK; Son.
As the parent of SOFTBANK Holdings and the direct and indirect owner of
an approximate 50% interest of SOFTBANK, respectively, SOFTBANK and Son may each
be deemed to be the beneficial owner of an aggregate of 24,680,824 shares of
Common Stock, comprising 81.5% of the Common Stock (based on the number of
shares of Common Stock outstanding as of April 28, 1998, as represented by the
Company pursuant to the Purchase Agreement, and calculated as provided by Rule
13d-3 under the Exchange Act) and may be deemed to have sole voting power and
sole dispositive power (assuming consummation of the transactions described in
this Statement) with respect to 19,701,213 shares of Common Stock and to have
shared voting power with respect to 4,979,611 shares of Common Stock.
(C). None of the Reporting Persons, nor, to the best knowledge of the
Reporting Persons, any of the persons listed on Schedule 1, 2 or 3 hereto, has
effected any transactions in the securities of the Company during the past 60
days other than those transactions described above.
(D) AND (E). Not applicable.
Pursuant to the Conversion Agreement, the actual number of shares of
Common Stock that may be issued upon conversion of the Promissory Notes will be
equal to (i) the principal amount thereof ($1,200,000) and accrued interest
thereon to the date of conversion divided by (ii) $0.60. The calculations set
forth in this Item 5 are based on the accrued interest on the Promissory Notes
as of April 15, 1998, as estimated by the Company, of approximately $326,000.
Interest accrues on the Promissory Notes at the rate of 8.0% per annum.
Accordingly, although the actual number of shares of Common Stock to be issued
upon conversion of the Promissory Notes is not currently determinable, the
number of such shares will increase by approximately 438 shares for each day
following April 15, 1998 until the date such conversion is effected.
None of the Reporting Persons has the right to vote or dispose of any
of the shares that it may acquire pursuant to the Purchase Agreement, the Option
Agreement, the Promissory Note and Stock Purchase Agreement and the Conversion
Agreement unless and until the transactions contemplated thereby are
consummated. Such transactions are subject to conditions precedent, including
approval by stockholders of the Company holding a majority of the outstanding
shares of Common Stock. There can be no assurance that such transactions will be
consummated.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
In connection with the execution of the Purchase Agreement, SOFTBANK
Holdings entered into a Loan Agreement, dated as of April 30, 1998 (the "Loan
Agreement") (attached hereto as Exhibit H), with the Company. Under the Loan
Agreement, SOFTBANK
<PAGE>
CUSIP NO. 337486 10 4 PAGE 10 OF 14 PAGES
- ---------------------- -------------------
Holdings agreed to lend to the Company funds in an aggregate principal amount of
up to $1,500,000 in installments of not less than $200,000 per advance. The
first loan disbursement in the principal amount of $500,000 was made on April
30, 1998. The obligation of SOFTBANK Holdings to make disbursements is subject
to receipt by it of a statement prepared by the Company specifying the proposed
application of the proceeds of such disbursements. Interest shall accrue on the
outstanding principal amount of the loans made pursuant to the Loan Agreement at
the rate of 8.0% per annum. The obligation of SOFTBANK Holdings to make
disbursements under the Loan Agreement will terminate in the event that the
Purchase Agreement is terminated. Loans made under the Loan Agreement will
mature upon the earlier of (i) July 31, 1998 or (ii) the acceleration of the
maturity thereof upon an event of default as provided in the Loan Agreement.
The descriptions of the Stockholders' Agreement, the Purchase
Agreement, the Option Agreement, the Promissory Note and Stock Purchase
Agreement and the Conversion Agreement in Items 4 and 5 are hereby incorporated
herein by reference.
Except as described in this Statement, none of the Reporting Persons,
nor to the best knowledge of the Reporting Persons, any of the persons listed on
Schedule 1, 2 or 3 hereto, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option arrangements, put or
calls, guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
All references to the Purchase Agreement and the Loan Agreement are
qualified in their entirety by the full text of such agreements, copies of which
are attached as Exhibits hereto and are incorporated by reference herein. See
also Item 4.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A Agreement of Joint Filing, dated as of May 8, 1998,
by and among SOFTBANK Holdings, SOFTBANK Technology,
SOFTBANK, Son and STV.
Exhibit B Power of Attorney (incorporated by reference to
Exhibit 24 to the Statement on Schedule 13G filed by
SOFTBANK, Son and SOFTBANK Ventures, Inc. on February
18, 1998 with respect to Concentric Network
Corporation).
Exhibit C Stockholders' Agreement, dated as of April 30,
1998, by the stockholders of the Company whose names
appear on the signature page thereof, in favor of
SOFTBANK Technology and SOFTBANK Holdings.
Exhibit D Purchase Agreement, dated as of April 30, 1998, by
and among the Company, SOFTBANK Holdings and SOFTBANK
Technology.
Exhibit E Option Agreement, dated as of April 30, 1998, by
and among SOFTBANK Technology, SOFTBANK Holdings and
the persons and entities whose names appear on the
signature page thereof.
Exhibit F Promissory Note and Stock Purchase Agreement, dated
as of April 30, 1998, by and among SOFTBANK Holdings
and the holders of Promissory Notes and Common Stock
of the Company listed on Exhibit A thereof.
Exhibit G Conversion Agreement, dated as of April 30, 1998,
by and among the Company, SOFTBANK Technology and
SOFTBANK Holdings.
Exhibit H Loan Agreement, dated as of April 30, 1998, by and
among the Company and SOFTBANK Holdings.
<PAGE>
CUSIP NO. 337486 10 4 PAGE 11 OF 14 PAGES
- ---------------------- ------------------
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
May 11, 1998 SOFTBANK HOLDINGS INC.
By: /s/ Ronald D. Fisher
--------------------------------
Name: Ronald D. Fisher
Title: Vice Chairman
SOFTBANK TECHNOLOGY VENTURES IV L.P.
By: STV IV LLC
Its General Partner
By: /s/ Gary Rieschel
--------------------------
Name: Gary Rieschel
Title: Executive Managing
Director
SOFTBANK CORPORATION
By: /s/ Ronald D. Fisher
---------------------------------
Name: Ronald D. Fisher
Title: Attorney-in-Fact
MASAYOSHI SON
By: /s/ Ronald D. Fisher
---------------------------------
Name: Ronald D. Fisher
Title: Attorney-in-Fact
STV IV LLC
By: /s/ Gary Rieschel
---------------------------------
Name: Gary Rieschel
Title: Executive Managing
Director
<PAGE>
CUSIP NO. 337486 10 4 PAGE 12 OF 14 PAGES
- ---------------------- -------------------
SCHEDULE 1
DIRECTORS AND EXECUTIVE OFFICERS OF SOFTBANK HOLDINGS
The business address for each of the individuals listed below, except
Masayoshi Son, Yoshitaka Kitao and Stephen A. Grant, is 10 Langley Road, Suite
403, Newton Center, Massachusetts 02159. The business address for Masayoshi Son
and Yoshitaka Kitao is 24-1, Nihonbashi-Hakozaki-cho, Chuo-ku, Tokyo 103 Japan.
The business address for Stephen A. Grant is 125 Broad Street, New York, New
York 10004.
Each of the individuals listed below is an American citizen, except for
Masayoshi Son and Yoshitaka Kitao, each a citizen of Japan.
NAME PRESENT AND PRINCIPAL OCCUPATION
- ---- --------------------------------
Masayoshi Son Chairman of the Board, President and director of
SOFTBANK Holdings; President, Chief Executive Officer and
director of SOFTBANK.
Ronald D. Fisher Vice Chairman and director of SOFTBANK Holdings; director
of SOFTBANK; Managing Director of STV.
Yoshitaka Kitao Director of SOFTBANK Holdings; Executive Vice President,
Chief Financial Officer and director of SOFTBANK.
Stephen A. Grant Secretary of SOFTBANK Holdings; Partner, Sullivan &
Cromwell.
Thomas L. Wright Vice President and Treasurer of SOFTBANK Holdings.
Louis Demarco Vice President-Tax of SOFTBANK Holdings.
<PAGE>
CUSIP NO. 337486 10 4 PAGE 13 OF 14 PAGES
- ---------------------- -------------------
SCHEDULE 2
DIRECTORS AND EXECUTIVE OFFICERS OF SOFTBANK CORPORATION
The business address for each of the individuals listed below, except
Ronald D. Fisher, is 24-1, Nihonbashi-Hakozaki-cho, Chuo-ku, Tokyo 103 Japan.
The business address for Ronald D. Fisher is 10 Langley Road, Suite 403, Newton
Center, Massachusetts 02159.
Each of the individuals listed below is a Japanese citizen, except for
Ronald D. Fisher, a citizen of the United States.
NAME PRESENT AND PRINCIPAL OCCUPATION
- ---- --------------------------------
Masayoshi Son President, Chief Executive Officer and director of
SOFTBANK; Chairman of the Board, President and director of
SOFTBANK Holdings.
Ken Miyauchi Executive Vice President and director of SOFTBANK.
Norikazu Ishikawa Executive Vice President and director of SOFTBANK.
Yoshitaka Kitao Executive Vice President, Chief Financial Officer
and director of SOFTBANK; director of SOFTBANK Holdings.
Makoto Okazaki Executive Vice President and director of SOFTBANK.
Toshio Inaba Director of SOFTBANK.
Hiroshi Wada Director of SOFTBANK.
Goro Hashimoto Director of SOFTBANK.
Takashi Eguchi Director of SOFTBANK.
Ronald D. Fisher Director of SOFTBANK; Vice Chairman of SOFTBANK Holdings;
Managing Director of STV.
Katsura Sato Full-Time Corporate Auditor of SOFTBANK.
Saburo Kobayashi Corporate Auditor of SOFTBANK.
Toshihiro Kiribuchi Corporate Auditor of SOFTBANK.
Hidekazu Kubokawa Corporate Auditor of SOFTBANK.
<PAGE>
CUSIP NO. 337486 10 4 PAGE 14 OF 14 PAGES
- ---------------------- -------------------
SCHEDULE 3
OFFICERS OF STV
The business address for each of the individuals listed below is 333
West San Carlos Street, Suite 1225, San Jose, California 95110. Each of the
individuals listed below is a United States citizen.
NAME PRESENT AND PRINCIPAL OCCUPATION
- ---- --------------------------------
Bradley A. Feld Managing Director of STV.
Charles R. Lax Managing Director of STV.
Gary Rieschel Executive Managing Director of STV.
Scott Russell Managing Director of STV.
Matthew Ocko Managing Director of STV.
Ronald D. Fisher Managing Director of STV; director of SOFTBANK; Vice
Chairman of SOFTBANK Holdings.
EXHIBIT A
AGREEMENT OF JOINT FILING
In accordance with Rule 13d-1(k) under the Securities and Exchange Act
of 1934, as amended, the undersigned hereby agree to the joint filing on behalf
of each of them of a Statement on Schedule 13D, and any amendments thereto, with
respect to the Common Stock, par value $0.001 per share, of First Virtual
Holdings Incorporated and that this Agreement be included as an Exhibit to such
filing.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to constitute one and the same Agreement.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned hereby executes this
Agreement as of May 8, 1998.
SOFTBANK HOLDINGS INC.
By: /s/ Ronald D. Fisher
-----------------------------------------------
Name: Ronald D. Fisher
Title: Vice Chairman
SOFTBANK TECHNOLOGY VENTURES IV L.P.
By: STV IV LLC
Its General Partner
By: /s/ Gary Rieschel
--------------------------------------
Name: Gary Rieschel
Title: Executive Managing Director
SOFTBANK CORPORATION
By: /s/ Ronald D. Fisher
-----------------------------------------------
Name: Ronald D. Fisher
Title: Attorney-in-Fact
MASAYOSHI SON
By: /s/ Ronald D. Fisher
-----------------------------------------------
Name: Ronald D. Fisher
Title: Attorney-in-Fact
STV IV LLC
By: /s/ Gary Rieschel
-----------------------------------------------
Name: Gary Rieschel
Title: Executive Managing Director
EXHIBIT C
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, dated as of April 30, 1998 (this "Agreement"),
by the undersigned stockholders (the "Stockholders") of First Virtual Holdings
Incorporated, a Delaware corporation (the "Company"), in favor of SOFTBANK
Technology Ventures IV L.P. and SOFTBANK Holdings Inc., a Delaware corporation
(collectively, the "Purchasers").
RECITALS
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Purchasers and the Company are entering into a Purchase Agreement
(as such agreement may hereafter be amended from time to time, the "Purchase
Agreement"), pursuant to which the Company will issue and sell to the Purchasers
(the "Stock Sale"), and the Purchasers will purchase from the Company, an
aggregate of 10,000,000 shares of Common Stock, par value $0.001 per share
("Common Stock");
WHEREAS, the Purchase Agreement contemplates that (i) upon purchase by
the Purchasers of certain promissory notes of the Company in the aggregate
principal amount of $1,200,000 (the "Notes") from the holders thereof, the
Purchasers shall have the right to convert such principal amount and all accrued
interest thereon into shares of Common Stock at a conversion price of $0.75 per
share and (ii) upon the purchase by the Purchaser of outstanding shares of
Series A Convertible Preferred Stock pursuant to an option or purchase agreement
between the Purchasers and the current holders of such shares, such shares of
Series A Convertible Preferred Stock shall be convertible thereafter, into
shares of Common Stock at a conversion price of $0.75 per share (the Stock Sale
and the issuance of Common Stock upon conversion of the Notes and the Series A
Convertible Preferred Stock being herein collectively referred to as the "Stock
Issuances").
WHEREAS, as an inducement and a condition to entering into the Purchase
Agreement, the Purchasers have required that the Stockholders agree, and each of
the Stockholders has agreed, to enter into this Agreement.
<PAGE>
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein the
parties hereto hereby agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
shall include securities Beneficially Owned by all other Persons with whom such
Person would constitute a "group" within the meaning of Section 13(d)(3) of the
Exchange Act.
(b) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
2. Provisions Concerning the Shares. During the period commencing
on the date hereof and continuing until the earliest to occur of (i) consumma-
tion of the Stock Sale, (ii) termination of the Purchase Agreement in
accordance with its terms or (iii) _________, 1998 (such earliest date, the
"Expiration Date"), each Stockholder agrees that it shall, at any meeting of
stockholders of the Company, however called, or in connection with any written
consent of stockholders of the Company, vote (or cause to be voted) the shares
(if any) of Common Stock then held of record or Beneficially Owned by such
Stockholder, (i) in favor of the Stock Issuances, the execution and delivery by
the Company of the Purchase Agreement and the approval of the terms thereof and
each of the other actions contemplated by the Purchase Agreement and this
Agreement, and any actions required in furtherance thereof and hereof; (ii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Purchase Agreement; and (iii) except as otherwise agreed
to in writing in advance by the Purchasers, against the following actions (other
than the Stock Issuances and the transactions contemplated by the Purchase
Agreement): (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or its
subsidiaries; (B) a
-2-
<PAGE>
sale, lease or transfer of all or substantially all of assets of the Company or
its subsidiaries, or a reorganization, recapitalization, dissolution or
liquidation of the Company or its subsidiaries; (C) any material change in the
present capitalization of the Company or any amendment of the Company's
Certificate of Incorporation or By-laws which, in the case of the matters
referred to in this clause (C) of this Section 2, is intended, or could
reasonably be expected, to impede, delay or adversely affect the Stock Issuance
and the transactions contemplated by this Agreement and the Purchase Agreement.
Each Stockholder agrees that it shall not enter into any agreement or
understanding with any person or entity the effect of which would be
inconsistent or violative of the provisions and agreements contained in this
Section 2.
Each Stockholder, in furtherance of the transactions contemplated
hereby and by the Purchase Agreement, and in order to secure the performance by
of its duties under this Agreement, shall promptly execute and deliver to
Purchasers an irrevocable proxy, substantially in the form of Exhibit A hereto,
and irrevocably appoint Purchasers or their designees, with full power of
substitution, its attorney, agent and proxy to vote (or cause to be voted) or,
if applicable, to give consent with respect to, all of the shares of Common
Stock Beneficially Owned by such Stockholder as set forth on Schedule I hereto
(the "Existing Shares"), together with any shares acquired by such Stockholder
in any capacity after the date hereof (together with the Existing Shares, the
"Owned Shares") in the manner, and with respect to the matters, set forth above.
Each Stockholder acknowledges that the proxy executed and delivered by it shall
be coupled with an interest, shall constitute, among other things, an inducement
for Purchasers to enter into the Purchase Agreement, shall be irrevocable and
binding on any successor in interest of such Stockholder and shall not be
terminated by operation of law upon the occurrence of any event, including,
without limitation, the death or incapacity of such Stockholder. Such proxy
shall operation to revoke and render void any prior proxy as to the shares
heretofore granted by such Stockholder. Such proxy shall terminate on the
Expiration Date.
-3-
<PAGE>
3. Covenants, Representations and Warranties of each Stockholder.
Each Stockholder hereby represents and warrants to Purchaser as follows:
(a) Ownership of Shares. Such Stockholder is the record and Beneficial
Owner of such Stockholder's Existing Shares. On the date hereof, such
Stockholder's Existing Shares constitute all of the shares of Common Stock owned
of record or Beneficially Owned by such Stockholder. Such Stockholder has sole
voting power and sole power of disposition with respect to all of such
Stockholder's Existing Shares.
(b) Power; No Conflict. Such Stockholder has the legal capacity, power
and authority to enter into and perform all of his obligations under this
Agreement. The execution, delivery and performance of this Agreement by such
Stockholder will not violate any other agreement to which the Stockholder is a
party including, without limitation, any voting agreement, proxy arrangement,
pledge agreement, shareholders' agreement or voting trust.
4. Stop Transfer. Each Stockholder agrees that, prior to the
Expiration Date, it shall not request that the Company or any other person
register the transfer (by book-entry or otherwise) of any certificate
representing any of such Stockholder's Owned Shares, unless such transfer is
made in compliance with this Agreement and unless the transferee agrees in
writing to be bound by the provisions hereof for the benefit of the Purchasers.
In the event of a stock dividend or distribution, or any change in the shares by
reason of any stock dividend, split-up, recapitalization, combination, exchange
of shares or the like, the term "Owned Shares" shall include all such stock
dividends and distributions and any shares of capital stock into which or for
which any or all of such Owned Shares may be changed or exchanged.
5. Confidentiality. Each Stockholder recognizes that successful
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to the matters referred to herein. In this
connection, pending public disclosure thereof, each Stockholder agrees that it
shall not disclose or discuss such matters with anyone not a party to this
agreement (other than its counsel and advisors, if any) without the prior
written consent of Purchasers, except for filings required pursuant to the
Exchange Act and the rules and regulations thereunder or disclosures
Stockholder's counsel advises are necessary in
-4-
<PAGE>
order to fulfill its obligations imposed by law, in which event such Stockholder
shall give notice of such disclosure to Purchasers as promptly as practicable,
and in any event prior to the time any such filing or disclosure is made.
6. Miscellaneous.
(a) Modification and Waiver. No amendment or modification of the terms
or provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed to or shall constitute a waiver of
any other provisions hereof. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof.
(b) Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof. Any
previous agreement or understandings between the parties regarding the subject
matter hereof are merged into and superseded by this Agreement.
(c) Severability. In case any provision in this Agreement (including
the Exhibit hereto) shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
(d) Binding Agreement. This Agreement and the obligations hereunder
shall attach to the Owned Shares and shall be binding upon any person or entity
to which legal or beneficial ownership of such Owned Shares shall pass, whether
by operation of law or otherwise. Notwithstanding any transfer of Owned Shares,
the transferor shall remain liable for the performance of all obligations under
this Agreement of the transferor.
(e) Specific Performance. Each of the Stockholders recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and, therefore, in the
event of any such breach, the Purchasers shall be entitled to the remedy of
specific performance of such covenants and agreements and injunctive and other
equitable
-5-
<PAGE>
relief in addition to any other remedy to which they may be entitled, at law or
in equity.
(F) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
(g) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the Stockholders have caused this Agreement to be
duly executed as of the day and year first above written.
STOCKHOLDERS:
Paymentech, Inc. Marshall Rose
By: /s/ Philip E. Taken By: /s/ Marshall Rose
Date: 4/29/98 Date: 98-04-28
First USA Financial Einar Stefferud
By: /s/ Stacie Klein By: /s/ Einar Stefferud
Date: 4/29/98 Date: 08 April 1998
G.E. Capital Stein Children's Trust
By: /s/ Thomas Crowley By: /s/ June L. Stein*
Date: April 29, 1998 Date: 4/29/98
The Stein Company, Ltd. Lee H. Stein
By: Stein & Stein, Inc. By: /s/ Lee H. Stein
By: Date: 4/29/98
By: /s/ June L. Stein
June L. Stein
By: /s/ June L. Stein
Date: 4/29/98
Sybase, Inc.
By: /s/ Robert Epstein
Date: 4/29/98
*As Trustee of the three education trusts for Spencer M. Stein, Skyler M. Stein
and Serena G. Stein.
-6-
<PAGE>
EXHIBIT A
Irrevocable Proxy
In order to secure the performance of the duties of the undersigned
pursuant to the Stockholders' Agreement, dated as of April __, 1998 (the
"Stockholders' Agreement"), by the undersigned, and certain other stockholders
in favor of SOFTBANK Technology Ventures IV L.P. and SOFTBANK Holdings Inc.
(collectively, the "Purchasers"), the undersigned hereby irrevocably appoints
Ronald Fisher and Bradley Feld, and each of them, the attorneys, agents and
proxies, with full power of substitution in each of them, for the undersigned,
and in the name, place and stead of the undersigned, to vote (or cause to be
voted) or, if applicable, to give consent, in such manner as each such attorney,
agent and proxy or his substitute shall in his sole discretion deem proper to
record such vote (or consent) in the manner, and with respect to the matters,
set forth in Section 2 of the Stockholders' Agreement with respect to all shares
of Common Stock, par value $0.001 per share, of First Virtual Holdings
Incorporated, a Delaware corporation (the "Company"), which the undersigned is
or may be entitled to vote at any meeting of the Company held after the date
hereof, whether annual or special and whether or not an adjourned meeting, or,
if applicable, to given written consent with respect thereto. This Proxy is
coupled with an interest, shall be irrevocable and binding on any successor in
interest of the undersigned and shall not be terminated by operation of law upon
the occurrence of any event, including, without limitation, the death or
incapacity of the undersigned. This Proxy shall operate to revoke and render
void any prior proxy as to the shares of Common Stock heretofore granted by the
undersigned. This Proxy shall terminate upon the Expiration Date (as defined in
the Stockholders' Agreement).
Dated: _______________________ _________________________
A-1
EXHIBIT D
PURCHASE AGREEMENT
This PURCHASE AGREEMENT, dated as of April 30, 1998 (the "Agreement"),
is entered into by and among (i) First Virtual Holdings Incorporated, a Delaware
corporation (the "Company"), and (ii) SOFTBANK Technology Ventures IV L.P., a
Delaware limited partnership, and SOFTBANK Holdings Inc., a Delaware corporation
(each a "Purchaser" and, collectively, the "Purchasers").
WHEREAS, the Company has an authorized capitalization of 40,000,000
shares of common stock, par value $0.001 per share ("Common Stock"), of which,
as of April 28, 1998, 11,779,653 shares of Common Stock are issued and
outstanding, and 5,000,000 shares of Preferred Stock, par value $0.001 per
share, of which 655 shares of Preferred Stock are issued and outstanding; and
WHEREAS, the Company and the Purchasers desire that the Purchasers
participate in the ownership of the Company through the purchase of an aggregate
of 10,000,000 shares of Common Stock (the "Shares") from the Company.
NOW, THEREFORE, the parties hereto agree as follows:
1. Purchase and Sale
(a) Upon the terms and subject to the conditions of this Agreement,
each Purchaser, severally and not jointly, will purchase, and the Company will
issue and sell to each Purchaser, the number of Shares set forth opposite such
Purchaser's name on Exhibit A hereto against payment to the Company of the
purchase price of $0.60 per Share. The consummation of such purchase and sale
(the "Closing") shall occur at the offices of Sullivan & Cromwell, 444 South
Flower Street, Los Angeles, CA 90071 at 9:00 A.M. on the first business day
following the satisfaction or waiver of the conditions set forth in Sections 5
and 6 hereof, or at such other time and date as the Purchasers and the Company
mutually agree (the "Closing Date").
(b) At the Closing, the Company shall deliver to each Purchaser a stock
certificate representing the number of Shares to be purchased by such Purchaser
as set forth on
<PAGE>
Exhibit A against payment to the Company by wire transfer of the purchase price
therefor in immediately available funds.
2. Representations and Warranties of the Company
The Company represents and warrants to the Purchasers as follows:
(a) Corporate Existence. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all power necessary to carry on its business as now being conducted. The
Company is duly qualified to do business and is in good standing in California
and Texas, and there is no other jurisdiction in which the failure to so qualify
would have a material adverse effect on the business, financial condition or
results of operations of the Company (a "Material Adverse Effect").
(b) Execution, Delivery and Performance. The Company has the corporate
power and authority to execute, deliver and perform its obligations under this
Agreement. The Board of Directors of the Company has unanimously approved this
Agreement and the transactions contemplated hereby. This Agreement has been duly
authorized, executed and delivered by the Company, and constitutes a valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms.
(c) Capitalization. At the date hereof and as of the Closing, the
authorized capitalization of the Company consists and will consist of 40,000,000
shares of Common Stock and 5,000,000 shares of Preferred Stock, of which 1,000
shares are designated Series A Convertible Preferred Stock. As of April 28,
1998, the Company has 11,779,653 shares of Common Stock issued and outstanding
and 15,490,320 shares of Common Stock reserved for issuance upon exercise of
outstanding stock options and warrants, and a sufficient number of shares
reserved for issuance upon conversion of shares of Series A Convertible
Preferred Stock and pursuant to the Company's employee stock purchase plans
Except as set forth on Schedule 2(c) hereto, (i) the Company does not have
outstanding any other capital stock, or options or warrants for or securities
convertible into or exchangeable for any shares of capital stock, and (ii) no
person has any right to subscribe for or to purchase any stock or options for or
securities convertible into or exchangeable for any shares of capital stock.
-2-
<PAGE>
(d) Shares. All of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable. The Shares when issued and delivered in accordance with the
terms of this Agreement, the shares of Common Stock issuable upon conversion of
the Series A Convertible Preferred Stock, when issued and delivered in
accordance with the Company's Certificate of Incorporation and Certificate of
Designation of Series A Preferred Stock and the Conversion Agreement in the form
of Exhibit 2(d) hereto, and shares to be issued upon conversion of the
promissory notes (the "Promissory Notes") in the aggregate principal amount of
$1,200,000 as contemplated by Section 4(g) hereof, when issued and delivered
will, in each case, be duly and validly authorized and issued and will be fully
paid and non-assessable. The Shares and shares of Common Stock to be issued upon
conversion of the Series A Convertible Preferred Stock and the Promissory Notes
are herein collectively referred to as the "Underlying Shares."
(e) SEC Documents. (i) The Company has filed all forms, reports and
documents required to be filed by it with the Securities and Exchange Commission
("SEC") since December 31, 1996 (collectively, together with the Company's
Registration Statement on Form S-1 (File No. 333-14573) in the form in which it
became effective, the "Company Reports"). As of their respective dates, the
Company Reports and any such reports, forms and other documents filed by the
Company with the SEC after the date of this Agreement and before the Closing (i)
complied, or will comply, as to form in all material respects with the
applicable requirements of the Securities Act of 1933, the Securities Exchange
Act of 1934, and the rules and regulations thereunder and (ii) did not, or will
not, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(ii) Each of the balance sheets of the Company included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presents the financial position of the Company as of its
date, and each of the statements of income, retained earnings and cash flows of
the Company included in or incorporated by reference into the Company Reports
(including any related notes and schedules) fairly presents the results of
operations, retained earnings or cash flows,
-3-
<PAGE>
as the case may be, of the Company for the periods set forth therein (subject,
in the case of unaudited statements, to normal year-end audit adjustments which
would not be material in amount or effect), in each case in accordance with
generally accepted accounting principles consistently applied during the periods
involved, except as may be noted therein. The Company does not have any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) that would be required to be reflected on, or reserved against in,
a balance sheet of the Company or described in the notes thereto, under
generally accepted accounting principles consistently applied, except for (i)
liabilities or obligations that were so reserved on, or reflected in (including
the notes to), the balance sheet of the Company as of December 31, 1997 or March
31, 1998; (ii) liabilities or obligations arising in the ordinary course of
business since December 31, 1997 and (iii) liabilities or obligations which
would not, individually or in the aggregate, have a Material Adverse Effect.
(f) Absence of Certain Changes. Except as set forth in Schedule 2(h)
hereto, since March 31, 1998, there has not been (i) any material adverse change
in the Company's business, financial condition or results of operations or (ii)
any material change in the Company's accounting principles, practices or
methods.
(g) Taxes. (i) The Company has filed all material tax returns and
reports required to be filed by it, or requests for extensions to file such
returns or reports have been timely filed and granted and have not expired, and
all tax returns and reports are complete and accurate in all respects, except to
the extent that such failures to file, have extensions granted that remain in
effect or be complete and accurate in all respects, as applicable, individually
or in the aggregate, would not have a Material Averse Effect. The Company has
paid all taxes shown as due on such tax returns and reports. The most recent
financial statements contained in the Company Reports reflect an adequate
reserve for all taxes payable by the Company for all taxable periods and
portions thereof accrued through the date of such financial statements, and no
deficiencies for any taxes have been proposed, asserted or assessed against the
Company that are not adequately reserved for. No tax audits of the Company by
any federal, state, local or foreign tax authority are currently being conducted
or, to the Company's knowledge, pending. No requests for waivers of the time to
assess any taxes against the Company or any of its subsidiaries have been
granted or are pending.
-4-
<PAGE>
(ii) As used in this Section 2(g), "taxes" shall include all Federal,
state, local and foreign income, franchise, property, sales, use, excise and
other taxes, including obligations for withholding taxes from payments due or
made to any other person and any interest, penalties or additions to tax.
(h) Intellectual Property. The Company owns, licenses or otherwise has
the right to use all patents, trademarks, service marks, trade names and other
intellectual property necessary to enable it to carry on its business as now
conducted without, to the best of its knowledge, any conflict with or
infringement of the rights of others.
(i) No Conflict. The execution and delivery of this Agreement and the
performance of the Company's obligations hereunder will not (a) violate or be in
conflict with (i) any provision of law, (ii) any order, rule or regulation of
any court or other governmental agency or authority binding on the Company or
(iii) any provision of the Certificate of Incorporation or By-Laws of the
Company, (b) violate, be in conflict with, result in a breach of, or constitute
(with or without notice or lapse of time or both) a default under any material
indenture, agreement, lease or other agreement or instrument to which the
Company is a party or by which it or any of its properties is bound, or (c)
result in the creation or imposition of any lien, charge or encumbrance upon any
of its properties or assets.
(j) Litigation. Except as disclosed in the Company Reports or as set
forth in Schedule 2(j), there is no litigation or proceeding pending or, to the
best of the Company's knowledge, threatened against the Company or its
properties or business which is likely to have a Material Adverse Effect or
which seeks to prevent the consummation of the transactions contemplated by this
Agreement.
(k) Employment Agreements. Except as listed in Schedule 2(k) (copies of
which have heretofore been provided to the Purchasers), the Company is not a
party to any employment agreement with any of its employees.
(l) Employee Benefit Plans. Except as described in Schedule 2(l)
(copies of which have heretofore been provided to the Purchasers), the Company
does not maintain an employee benefit plan that is subject to Title IV of the
Employee Retirement Income Security Act of 1974, as amended. There is no
litigation or proceeding pending or, to the best
-5-
<PAGE>
of the Company's knowledge, threatened against any such plan or any
administrator or fiduciary thereof.
(m) Consents, etc. No consent, approval or authorization of or
declaration or filing with any governmental authority or other persons or
entities on the part of the Company is required in connection with the execution
or delivery of this Agreement or the consummation of the transactions
contemplated hereby other than the approval by the holders of a majority of the
Company's outstanding shares of Common Stock of the issuance and sale of the
Shares and the issuance of the Underlying Shares as contemplated by Section 4(g)
hereof, except as otherwise contemplated by this agreement.
(n) Finders. There is no investment banker, broker, finder, consultant
or similar intermediary that has been retained by, or is authorized to act on
behalf of the Company who is entitled to any fee or commission upon consummation
of the transactions contemplated by this Agreement.
3. Representations and Warranties of the Purchasers
Each Purchaser, severally but not jointly, represents and warrants to
the Company as follows:
(a) Investment Representations.
(i) Such Purchaser is acquiring the Shares and will acquire any
Underlying Shares for its own account for investment and not with a view to
distribution.
(ii) Such Purchaser is an "accredited investor" as defined in Rule
501(a) under the Securities Act of 1933 (the "Securities Act").
(iii) Such Purchaser has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits
and risks of the prospective investment in the Shares and the Underlying Shares,
and has so evaluated the merits and risks of such investment.
(iv) Such Purchaser is able to bear the economic risk of an investment
in the Shares and the Underlying Shares and, at the present time, is able to
afford a complete loss of such investment.
-6-
<PAGE>
(v) Such Purchaser understands and acknowledges that (i) the Shares and
the Underlying Shares are being offered and sold to it without registration
under the Securities Act by reason of reliance upon certain exemptions therefrom
and (ii) the availability of such exemptions, depends in part on, the foregoing
representations set forth in this Section 3(a).
(b) Execution, Delivery and Performance. Such Purchaser has the
corporate or partnership, as applicable, power and authority to execute, deliver
and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by such Purchaser and constitutes a valid and binding
agreement of such Purchaser enforceable against it in accordance with its terms.
(c) Consents, etc. No consent, approval or authorization of or
declaration or filing with any governmental authority or other persons or
entities on the part of such Purchaser is required in connection with the
execution or delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(d) Finders. There is no investment banker, broker, finder, consultant
or similar intermediary that has been retained by, or is authorized to act on
behalf of, such Purchaser who is entitled to any fee or commission upon
consummation of the transactions contemplated by this Agreement.
4. Covenants
(a) Issuance of Capital Stock. The Company covenants and agrees that,
after the date hereof and prior to the earlier of the Closing Date or the
termination of this Agreement pursuant to Section 8 hereof, except as otherwise
contemplated by this Agreement, or as described on Schedule 4(a) hereof, the
Company shall not issue, sell, pledge or dispose of any additional shares of, or
securities convertible or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class of the Company or its subsidiaries other than shares of Common Stock
issuable pursuant to options outstanding on the date hereof, upon exercise of
warrants outstanding on the date hereof or upon conversion of the Series A
Convertible Preferred Stock. Notwithstanding the foregoing, the Company may
continue to
-7-
<PAGE>
issue stock options to employees and consultants under its 1995 Stock Plan, and
stock purchase rights to employees under its Employee Stock Purchase Plan
consistent with past practice.
(b) Alternative Transactions. The Company covenants that, except as
permitted by Section 4(a) hereof, (A) prior to the earlier of the Closing Date
or the termination of this Agreement pursuant to Section 8 hereof, neither the
Company nor any of its officers, directors, advisors, agents or any other person
or entity acting on behalf of any or all of them (collectively,
"Representatives") shall, directly or indirectly, initiate, solicit, induce,
support, encourage (including, without limitation by providing non-public
information), agree to, or enter into any alternative proposal, negotiation or
transaction for an investment in, sale of any outstanding or newly-issued equity
interests in or voting securities of, or sale or transfer of a substantial
portion of the assets, stock or business (include by way of merger or
consolidation) of, the Company (an "Alternative Transaction") and (B) in the
event the Company receives any proposal for an Alternative Transaction, the
Company shall promptly notify the Purchasers of the receipt of such proposal;
provided, however, that this Section 4(b) and Section 4(a)shall not restrict the
Company's ability to incur bona fide indebtedness that is not convertible into
or exchangeable for any equity security of the Company; provided, further, that,
notwithstanding this Section 4(b)and Section 4(a), the Company may issue or sell
in a transaction pursuant to a bona fide offer from a third party (x) no more
than 666,667 shares (the "Maximum Number") of its Common Stock at a price per
share of not less than $0.75 (the "Minimum Price") and (y) convertible debt
securities or non-voting convertible preferred securities collectively
convertible into no more than the Maximum Number less the number of shares sold
pursuant to clause (x) hereof at a conversion price per share not less than the
Minimum Price, in each case (x) and (y) provided that the Purchasers are
previously offered in writing the opportunity to purchase such securities on the
same or more favorable terms as those offered by such third party (it being
understood that (1) such written offer to the Purchasers shall identify the
third party offeror and describe with specificity the terms of the transaction
proposed to be consummated with such third party and (2) the Purchasers shall
exercise such right of first refusal within 2 business days after receipt of
such notice). In the event of a stock split, reverse stock split or stock
dividend involving the Company, the Minimum
-8-
<PAGE>
Price and the Maximum Number shall be appropriately adjusted.
(c) Meeting of the Company Stockholders. The Company shall take all
customary actions in accordance with applicable law and its Certificate of
Incorporation and By-Laws to seek (i) stockholder approval by the holders of a
majority of the outstanding shares of Common Stock at the annual meeting of
stockholders to be held on or before June 30, 1998 (the "Annual Meeting") of the
issuance and sale of the Shares and the issuance of the Underlying Shares as
contemplated hereby; (ii) the election at or immediately following the Annual
Meeting of a Board of Directors consisting of a total of five members (or seven
members if requested in writing by the Purchasers prior to the filing with the
Securities and Exchange Commission of proxy materials in respect of the Annual
Meeting) meeting the requirement (the "Board Composition Requirement") that one
of such members shall be designated by Lee H. Stein, one of such members shall
be designated by Paymentech Merchant Services, Inc. and the remaining members
shall be designated by the Purchasers, acting jointly, and (iii) stockholder
approval of an amendment of the Company's Certificate of Incorporation to
eliminate the classification of the Board of Directors so that, following such
amendment, the entire Board of Directors shall be elected at each annual meeting
of stockholders. Subject to the exceptions hereinafter set forth in this Section
4(c), the Board of Directors of the Company shall recommend such approval and
the Company shall solicit such approval in accordance with its customary
practices. The proxy statement soliciting proxies in connection with such
meeting shall not be filed, and no amendment or supplement to the proxy
statement will be made by the Company, without prior consultation with the
Purchasers and their counsel. Notwithstanding any other provision of this
Agreement, prior to the approval of this Agreement by the stockholders of the
Company, if a Superior Offer (as hereinafter defined) is made to the Company and
is not withdrawn, the Board of Directors of the Company may, in light of the
Superior Offer, to the extent it determines in good faith, after consultation
with outside legal counsel, that it is required to do so in order to comply with
its fiduciary duties to the Company's stockholders under applicable law,
withdraw or modify its approval or recommendation of this Agreement and the
transactions contemplated hereby and/or approve or recommend such Superior
Offer, in each case at any time after the fourth business day following written
notice by the Company to the Purchasers advising the Purchasers that the Board
of
-9-
<PAGE>
Directors has received a Superior Offer and specifying the material terms and
structure of the Superior Offer (a "Notice of Superior Offer"). In addition, if
the Board of Directors proposes to withdraw or adversely modify its approval or
recommendation of the transactions contemplated hereby or to approve or
recommend a Superior Offer, the Company shall make effective provision to ensure
that there shall be cash available to pay the Termination Fee (as defined in
Section 8(f)) within the time period and in the manner provided in Section 8(f).
In such event, the Company may refrain from soliciting proxies from its
stockholders with respect to this Agreement and the transactions contemplated
thereby, in which event, however, the Company shall, subject to compliance with
applicable law, include in the proxy statement mailed by the Company to its
stockholders with respect to the meeting at which the Superior Offer is to be
considered by stockholders, proxy materials that have been prepared by the
Purchasers. Nothing contained herein shall prohibit the Company from taking and
disclosing to its stockholders a position contemplated by Rule 14d-9(e) under
the Exchange Act prior to the fourth business day following Purchaser's receipt
of a Notice of Superior Offer, provided that the Company does not withdraw or
modify its position with respect to the transactions contemplated hereby or
approve or recommend an Alternative Transaction.
A "Superior Offer" means a bona fide written offer made by a third
party to acquire, directly or indirectly a number of shares equal to more than
50% of the Common Stock of the Company or the purchase of all or substantially
all of the Company's assets on terms that the Company's Board of Directors
determines in its reasonable judgment, after consultation with independent
financial advisors of national reputation, to be more favorable to the Company's
stockholders than this Agreement and the transactions contemplated hereby or any
revised offer made by Purchasers following a Notice of Superior Offer.
(d) Access. Upon reasonable notice, the Company shall afford
Purchasers' officers, employees, counsel, accountants and other authorized
representatives access, during normal business hours throughout the period prior
to the Closing Date, to its properties, books, contracts and records and, during
such period, the Company shall (and shall cause each of its subsidiaries to)
furnish promptly to Purchaser all information concerning its business,
properties and personnel as the Purchasers or their representatives may
reasonably request. The Purchasers
-10-
<PAGE>
shall not, and each of them shall cause its representatives not to, use any
information obtained pursuant to this paragraph for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement.
(e) Publicity. The Company and the Purchasers shall consult with each
other prior to issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby and prior to making any
filings with any federal or state governmental or regulatory agency or any
self-regulatory organization with respect thereto.
(f) Change of Control Benefits. The Company shall use its reasonable
efforts to cause to be waived any provisions contained in any employment or
severance agreement with Lee H. Stein which provides for the payment, accrual or
acceleration of any benefit (other than the accelerated vesting of stock options
with respect to no more than 67,708 shares of Common Stock plus 255,319 unvested
options under the Company's Compensation Reduction Plan (of a total of 351,064
options thereunder)) to such person as a result of the consummation of the
transactions contemplated hereby; provided however that the Company shall have
offered Mr. Stein an agreement for provision of consulting services following
the Closing Date, which agreement shall provide for monthly consulting fees of
no less than $6,500 per month and shall be terminable on no less than two months
notice.
(g) Related Transactions. The Company and the Purchasers shall cause to
be done all things necessary and appropriate so that (i) upon purchase by the
Purchasers of all or part of the Promissory Notes described on Schedule 4(g)
hereto by the Purchasers from the holders thereof, such principal amount and all
accrued interest thereon shall be converted into Common Stock at a conversion
price of $0.60 per share immediately prior to the Closing and (ii) upon the
purchase by the Purchaser of outstanding shares of Series A Convertible
Preferred Stock pursuant to an option or purchase agreement between the
Purchasers and the current holders of such shares (the "Options"), such shares
of Series A Convertible Preferred Stock shall be converted into Common Stock at
a conversion price of $0.60 per share. The purchase of the Promissory Notes and
the Options are herein collectively referred to as the "Related Transactions."
The conversion prices referred to in this Paragraph (g) shall be subject to
customary anti-dilution adjustments in the event of a stock split, reverse stock
-11-
<PAGE>
split, stock dividend, issuance of Common Stock at below the prevailing market
price or similar transactions or events.
(h) Fulfillment of Conditions. Each of the Company and each Purchaser
shall use reasonable efforts to perform, comply with and fulfill all
obligations, covenants and conditions required by this Agreement to be
performed, complied with or fulfilled on its part prior to or at the Closing
Date.
(i) Further Assurances. The Company shall use its reasonable efforts at
any time and from time to time prior to, at and after the Closing to execute and
deliver to the Purchasers such further documents and instruments and to take all
such further actions as the Purchasers reasonably may request in order to convey
and transfer the Shares and provide for the conveyance and transfer of the
Underlying Shares to the Purchasers and to consummate the transactions
contemplated by this Agreement; provided, however, that nothing herein shall be
deemed to create any duty or obligation on the part of the Company to facilitate
or otherwise participate in the sale of the Promissory Notes or the issuance or
sale of the Options or the Series A Preferred Stock underlying such Options to
the Purchasers or on the part of the Purchasers to enter into agreements with
the holders of the Promissory Notes or the Series A Convertible Preferred Stock
except on terms and conditions satisfactory to the Purchasers in their sole
discretion.
5. Conditions Precedent to Obligations of the Purchasers
The Purchasers' obligation to consummate the transactions contemplated
by this Agreement is subject to the satisfaction at or prior to the Closing Date
of each of the following conditions:
(a) The Related Transactions shall be consummated before or
concurrently with the consummation of the transactions contemplated in this
Agreement.
(b) The Company shall have caused to be waived any provisions contained
in any employment or severance agreements with Lee H. Stein which provide for
the payment, accrual or acceleration of any benefit (other than the accelerated
vesting of stock options with respect to no more than 67,708 shares of Common
Stock plus 255,319 unvested options under the Company's Compensation Reduction
Plan (of a total of 351,064 options thereunder)) to such person as a result of
the consummation of the transactions contemplated
-12-
<PAGE>
hereby; provided however that the Company shall have offered Mr. Stein an
agreement for provision of consulting services following the Closing Date, which
agreement shall provide for monthly consulting fees of no less than $6,500 per
month and shall be terminable on no less than two months notice.
(c) The Purchasers shall have received indications reasonably
satisfactory to them from Nasdaq to the effect that, subject to consummation of
the transactions contemplated hereby and the Related Transactions and subsequent
compliance by the Company with applicable requirements for continued quotation,
the Common Stock will not be removed from quotation on the Nasdaq National
Market on account of any potential failure to meet applicable minimum tangible
net asset requirements.
(d) No preliminary or permanent injunction or other binding order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, shall be in
effect which shall have the effect of preventing the consummation of the
transactions contemplated by this Agreement; provided, however, that the parties
hereto shall use their best efforts to seek to obtain the removal of such
injunction, order, decree or ruling.
(e) All representations and warranties of the Company contained in this
Agreement shall be true in all material respects at and as of the Closing Date
as though made at such time (except where such representations and warranties
speak as of an earlier date), and the Company shall have performed and complied
in all material respects with all covenants, obligations and conditions required
by this Agreement to be performed or complied with by it prior to or on the
Closing Date.
(f) Stockholders of the Company holding a majority of the outstanding
shares of Common Stock shall have approved the issuance and sale of the Shares
and the issuance of the Underlying Shares as provided herein and a Board of
Directors meeting the Board Composition Requirement shall have been duly
established.
(g) The Company shall have duly executed and delivered the Conversion
Agreement substantially in the form of Exhibit 2(d) hereto.
(h) Lee H. Stein, June L. Stein, Paymentech Merchant Services, Inc. and
First USA Financial (the
-13-
<PAGE>
"Principal Stockholders") shall have executed and delivered a voting agreement
reasonably satisfactory to the parties thereto providing for maintenance of the
Board Composition Requirement for a period ending on the earlier of (1) the
second anniversary of the Closing Date and (2) such time as the Principal
Stockholders collectively beneficially own less than 75% of the number of shares
of the Company's Common Stock beneficially owned as of the date hereof.
(i) All corporate and other proceedings required to carry out the
transactions contemplated by this Agreement and all instruments and other
documents relating to such transactions shall be reasonably satisfactory in form
and substance to Sullivan & Cromwell, counsel to the Purchasers, and the
Purchasers shall have been furnished with such instruments, documents and
opinions as such counsel shall have reasonably requested.
6. Conditions Precedent to Obligations of the Company
The obligation of the Company to consummate the transactions
contemplated by this Agreement is subject to the satisfaction at or prior to the
Closing Date of each of the following conditions:
(a) No preliminary or permanent injunction or other binding order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, shall be in
effect which shall have the effect of preventing the consummation of the
transactions contemplated by this Agreement; provided, however, that the parties
hereto shall use their best efforts to seek to obtain the removal of such
injunction, order, decree or ruling.
(b) All representations and warranties of the Purchasers contained in
this Agreement shall be true in all material respects at and as of the Closing
Date as though made at such time, and the Purchasers shall have performed and
complied in all material respects with all covenants, obligations and conditions
required by this Agreement to be performed or complied with by them prior to or
on the Closing Date.
(c) Stockholders of the Company holding a majority of the outstanding
shares of Common Stock shall have approved the issuance and sale of the Shares
and the issuance of the Underlying Shares as provided herein.
-14-
<PAGE>
(d) The Purchasers shall have duly executed and delivered the
Conversion Agreement substantially in the form of Exhibit 2(d) hereto.
(e) The Purchasers shall have executed and delivered a voting agreement
reasonably satisfactory to the parties thereto providing for maintenance of the
Board Composition Requirement for a period ending on the earlier of (1) the
second anniversary of the Closing Date and (2) such time as the Principal
Stockholders collectively beneficially own less than 75% of the number of shares
of the Company's Common Stock beneficially owned as of the date hereof.
(f) All corporate and other proceedings required to carry out the
transactions contemplated by this Agreement and all instruments and other
documents relating to such transactions shall be reasonably satisfactory in form
and substance to Wilson Sonsini Goodrich & Rosati, counsel to the Company, and
the Company shall have been furnished with such instruments and documents as
such counsel shall have reasonably requested.
7. Indemnification
Each of the Company and each Purchaser (severally but not jointly)(an
"Indemnifying Party") covenants and agrees to indemnify and hold the other (the
"Indemnified Party") harmless from and against, and to reimburse each
Indemnified Party for, any claim for any losses, damages, liabilities or
expenses, including reasonable counsel fees (collectively "Damages") incurred by
such Indemnified Party by reason of or arising from (i) any misrepresentation or
breach of any representation or warranty of such Indemnifying Party contained in
this Agreement or in any instrument delivered hereunder or (ii) any failure by
such Indemnifying Party to perform any obligation or covenant required to be
performed by it under any provision of this Agreement.
The indemnification obligation hereunder shall not apply to any claim
until the aggregate of all such claims against an Indemnifying Party reaches
$200,000, in which event such Indemnifying Party's indemnity obligation shall
apply to the total amount. The liability of the Company, on the one hand, and
the aggregate liability of the Purchasers, on the other hand, for indemnity
hereunder shall not exceed $10.0 million.
-15-
<PAGE>
8. Termination
(a) This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing, by mutual consent of
the Purchasers and the Company.
(b) This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by action of the Purchasers, acting jointly, or the
Company if (i) the transactions contemplated hereby shall not have been
consummated by July 15, 1998, or (ii) the approval of the Company's stockholders
of the issuance and sale of the Shares and the issuance of the Underlying Shares
as contemplated hereby shall not have been obtained at the Company's 1998 Annual
Meeting of Stockholders or a special meeting duly convened therefor or at any
adjournment thereof or (iii) a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory or
administrative agency or commission shall have issued an order, decree or ruling
or taken any other action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-appealable or
(iv) the Board of Governors of Nasdaq shall have notified the Company after the
date hereof of a final decision to remove the Common Stock from quotation from
the Nasdaq National Market; provided, that the party seeking to terminate this
Agreement pursuant to the foregoing clause (iii) shall have used all reasonable
efforts to remove such injunction, order or decree; and provided, in the case of
a termination pursuant to clause (i) above, that the terminating party shall not
have breached in any material respect its obligations under this Agreement in
any manner that shall have substantially contributed to the failure to
consummate the transactions contemplated hereby by July 31, 1998.
(c) This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing by action of the Board
of Directors of the Company, if there has been a material breach by any
Purchaser of any representation, warranty, covenant or agreement made by it in
this Agreement.
(d) This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing by the Purchasers,
acting jointly, if (i) the Board of Directors of the Company shall have
-16-
<PAGE>
withdrawn or modified in a manner materially adverse to the Purchasers its
approval or recommendation to stockholders of the transactions contemplated
hereby or (ii) there has been a material breach by the Company of any
representation, warranty, covenant or agreement made by it in this Agreement
which breach (if not a breach of Section 4(a) or 4(b) hereof, which shall be
deemed uncurable) has not not been cured within 15 days of delivery of notice
thereof to the Company or (iii) the Board of Directors shall have withdrawn or
adversely modified its approval or recommendation to stockholders of the
transactions contemplated hereby or shall have approved or recommended to
stockholders an Alternative Transaction that constitutes a Superior Offer.
(e) In the event of termination of this Agreement and the abandonment
of the transactions contemplated hereby pursuant to this Section 8, all
obligations of the parties hereto (other than the obligations of the Company
pursuant to Section 8(f) hereof) shall terminate; provided, that in the event of
termination of this Agreement pursuant to Sections 8(c) and 8(d), nothing herein
shall relieve a party from liability for any willful breach of this Agreement.
(f) If after the date hereof and during the term of this Agreement
Purchaser shall have terminated this Agreement pursuant to Section 8.1(d)(iii)
hereof, then the Company shall, on or prior to the earlier of (i) the 30th day
after the date of such termination or (ii) two business days after the date the
Company enters into an agreement with a third party to consummate an Alternative
Transaction, pay to Purchasers a fee of $600,000 (the "Termination Fee") in
same-day funds. The Company acknowledges that the agreement contained in this
Section 8(f) are an integral part of the transactions contemplated in this
Agreement, and that, without this agreement, Purchasers would not enter into
this Agreement.
9. Miscellaneous
(a) Fees and Expenses. Upon the closing of the purchase of the Shares
and except as otherwise expressly provided in this Agreement, the Company shall
pay its own fees and expenses of its counsel, accountants and other experts and
all other expenses incurred by it in connection with the negotiation,
preparation, execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and all other matters incident thereto and
shall reimburse the Purchasers for their reasonable out-of-pocket expenses
-17-
<PAGE>
(including reasonable fees and expenses of counsel) in an amount not to exceed
$150,000 incurred by the Purchasers in connection with the negotiation,
preparation, execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby upon presentment of bills therefor.
(b) Survival. All representations, warranties, covenants and agreements
made herein shall survive for two years after the Closing Date and shall
continue in full force and effect after delivery of and payment for the Shares
and after issuance of the Underlying Shares through such date. No claim on
account of any breach of any representation, warranty, covenant or agreement
made herein, or for indemnification in respect thereof, may be asserted unless
written notice of such breach has been given to the party against whom such
claim is asserted prior to such second anniversary.
(c) Modification and Waiver. No amendment or modification of the terms
or provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed to or shall constitute a waiver of
any other provisions hereof. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof.
(d) Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof. Any
previous agreement or understandings between the parties regarding the subject
matter hereof are merged into and superseded by this Agreement.
(e) Severability. In case any provision in this Agreement (including
the Exhibits and Schedules hereto) shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
(f) Notices. All notices, consents or other communications shall be in
writing, and shall be deemed to have been duly given and delivered when
delivered by hand, or when mailed by registered or certified mail, return
receipt requested, postage prepaid, or when received via telecopy, telex or
other electronic transmission, in all
-18-
<PAGE>
cases addressed to the party for whom intended at its address set forth below:
If to the Purchasers:
SOFTBANK Holdings Inc.
10 Langley Road, Suite 403
Newton Center, Massachusetts 02169
Facsimile No.: (617) 928-9301
Attention: Ronald Fisher
Vice Chairman
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telephone : (212) 558-3504
Telecopier: (212) 558-3588
Attention : Stephen A. Grant, Esq.
If to the Company:
First Virtual Holdings Incorporated
11975 El Camino Real
Suite 300
San Diego, California 92130
Telephone : (619) 793-2700
Telecopier: (619) 793-2950
Attention : Lee H. Stein
Chairman of the Board
and Chief Executive Officer
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Telephone : (650) 493-9300
Telecopier: (650) 493-6811
Attention : Jeffrey D. Saper, Esq.
John T. Sheridan, Esq.
or such other address as a party shall have designated by notice in writing to
the other party given in the manner provided by this Section.
(g) No Implied Rights. Nothing herein express or implied, is intended
to or shall be construed to confer upon
-19-
<PAGE>
or give to any person, firm, corporation or legal entity, other than the parties
hereto and their affiliates, any interest, rights, remedies or other benefits
with respect to or in connection with any agreement or provision contained
herein or contemplated hereby.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.
-20-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
FIRST VIRTUAL HOLDINGS
INCORPORATED
By: /s/ Lee H. Stein
----------------------------------------
Name: Lee H. Stein
Title: Chairman of the Board
and Chief Executive
Officer
SOFTBANK TECHNOLOGY
VENTURES IV L.P.
By: Its General Partner
STV IV LLC
By: /s/ Bradley A. Feld
----------------------------------
Name: Bradley Feld
Title: Managing Director
SOFTBANK HOLDINGS INC.
By: /s/ Ronald Fisher
---------------------------------------
Name: Ronald Fisher
Title: Vice Chairman
-21-
<PAGE>
EXHIBIT A
SCHEDULE OF PURCHASERS
NUMBER OF SHARES OF COMMON STOCK
NAME PURCHASED
Softbank Holdings Inc. 5,000,000
SOFTBANK Technology Ventures 5,000,000
IV L.P.
TOTAL 10,000,000
==========
EXHIBIT E
OPTION AGREEMENT
THIS OPTION AGREEMENT ("the "Agreement") is made as of April 30, 1998
between SOFTBANK Technology Ventures IV L.P., a Delaware limited partnership
("SOFTBANK Technology"), and SOFTBANK Holdings Inc., a Delaware corporation
("SOFTBANK Holdings" and, together with SOFTBANK Technology, the "Optionees"),
and the persons and entities whose names appear on the signature page hereto
(the "STOCKHOLDERS").
RECITALS
A. The Stockholders own the number of shares of Series A Convertible
Preferred Stock (the "SHARES") of First Virtual Holdings Incorporated (the
"COMPANY") set forth on Schedule A hereto.
B. For good and valuable consideration, the receipt of which is hereby
acknowledged, the Stockholders wish to grant the Optionees options to purchase
the Shares pursuant to the terms of this Agreement.
C. The Optionees wish to purchase such options.
NOW, THEREFORE, intending to be legally bound hereby, the parties agree
as follows:
1. Grant of Option; Term.
1.1 Consideration. Upon execution of this Agreement and in
consideration for the rights granted to the Optionees herein, the Optionees
shall pay to each of the Stockholders, by check or wire transfer in immediately
available funds, the cash amount set forth opposite such Stockholder's name of
Schedule A hereto.
1.2 Grant of Option; Exercise Price. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each of the Stockholders hereby grants to each Optionee an option (the "OPTION")
to purchase from such Stockholder all or any part of the number of Shares set
forth opposite such Stockholder's name on Schedule A hereto in the column under
such Optionee's name, at an exercise price (the "EXERCISE PRICE") of $5,274.81
per Share.
<PAGE>
1.3 Term. The Options shall terminate on the earlier of (a) 5:00 p.m.,
New York City time, on July 31, 1998, or (b) such time and date, if any, as the
Purchase Agreement to be entered into by the Company and the Optionees in
respect of the purchase by the Optionees of 10 million shares of Common Stock,
par value $0.001 per share ("COMMON STOCK"), from the Company shall have been
terminated (such earlier time and date being herein referred to as the
"EXPIRATION DATE")
1.4 Voting Rights and Cash Dividends. The Stockholders shall have the
right to vote and to receive all dividends with respect to the Shares until the
transfer of such Shares to an Optionee pursuant to this Agreement.
1.5 Changes in Capital Structure. In the event of a stock split,
reverse stock split, stock dividend or recapitalization in respect of the
Shares, or if the Shares are converted or exchanged for other securities as a
result of a merger, reorganization or reclassification involving the Company,
the number of Shares, the class of securities and the Exercise Price shall be
equitably adjusted.
2. Exercise of Option.
2.1 Partial Exercise and Time of Exercise. Subject to satisfaction or
waiver by the Stockholder that granted an Option of the conditions set forth in
Section 2.5 hereof, such Option may be exercised in whole or in part, from time
to time, on or prior to the Expiration Date.
2.2 Manner of Exercise. Subject to satisfaction or waiver by the
Stockholder that granted an Option of the conditions set forth in Section 2.5
hereof, an Optionee may exercise such Option, or any part of such Option, by
written notice (the "OPTION EXERCISE NOTICE") to the Stockholder that granted
such Option specifying the number of Shares with respect to which such Option is
exercised and the effective date of the exercise (the "OPTION EXERCISE DATE"),
which shall be ten (10) days after the date on which the Stockholder is deemed
to receive the Option Exercise Notice. Such Option Exercise Notice shall also
specify the date for payment (the "PAYMENT DATE") which shall be no later than
ten (10) days after the Option Exercise Date.
-2-
<PAGE>
2.3 Payment of Exercise Price. The purchase price payable upon exercise
of an Option (the "PURCHASE PRICE") shall equal the product obtained by
multiplying (a) the number of Shares as to which the Option is exercised, by (b)
the Exercise Price. The Purchase Price shall be paid by wire transfer on the
Payment Date of immediately available funds to a bank account to be designated
by the Stockholder that granted the Option being exercised no less than five (5)
days prior to the Payment Date.
2.4 Assignment of Option Rights. An Optionee may, in its sole
discretion, assign its rights to purchase the Shares hereunder, provided that
the assignee shall agree in writing to assume such Optionee's obligations
hereunder.
2.5 Conditions to Warrant Exercise. The right of an Optionee to
exercise any Option granted hereunder shall be subject to the following
conditions:
(a) The terms of the warrants granted to the Stockholders by the
Company to purchase an aggregate of 556,750 shares of Common Stock shall have
been amended to reduce the exercise price thereof to $1.00 per share without any
other amendments to the terms thereof (as so amended, the "Warrants").
(b) The Company shall have filed with respect to all shares of Common
Stock underlying the Warrants (as amended as described in Section 2.4(a)) such
post-effective amendments or supplements to its registration statement on Form
S-3 (File No. 333-42855), or filed a new registration statement with the
Securities and Exchange Commission, in each case as may be necessary to register
all such shares and any such post-effective amendment and/or new registration
statement shall have been declared effective by the Securities and Exchange
Commission, and the Company shall have confirmed to the Stockholders in writing
that, subject to Section 4(h) of the Private Placement Purchase Agreement, dated
October 14, 1997, between the Company, on the one hand, and the Subscribers
party thereto, on the other, the Company shall use its best efforts to maintain
the effectiveness of such registration statement or statements until the
exercisability of the Warrants shall expire in accordance with its terms (or, if
earlier, such date that the shares of Common Stock issuable upon exercise
-3-
<PAGE>
of the Warrants shall have been sold pursuant to such registration statement or
statements).
3. Representations, Warranties and Covenants of Stockholders.
Each Stockholder, severally but not jointly, represents, warrants and
covenants as follows:
3.1 Independent Investigation. Such Stockholder is aware of, and has
conducted an independent investigation of, the Company's business affairs,
financial condition and prospects, and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to grant the Options
granted by such Stockholder hereunder. Without limiting the foregoing, such
Stockholder has reviewed and is familiar with all the Company's filings with the
Securities and Exchange Commission under the Securities Exchange Act of 1934. In
entering into this agreement, such Stockholder has not relied on any written or
oral statement of any nature with respect to the business, financial condition
or prospects of the Company made by any Optionee or any other entity, including,
without limitation, the Company.
3.2 Ownership of the Securities. Such Stockholder is the beneficial
owner of the Shares set forth opposite such Stockholder's name in Schedule A
hereto, and such Shares are owned free and clear of all liens, encumbrances,
charges, security interests, claims and assessments, and are subject to no
restrictions with respect to transferability except in compliance with
applicable securities laws.
3.3 Restriction on Sale. For so long as the Options remain in effect,
such Stockholder shall not sell, offer or agree to sell, grant any option for
the sale of, transfer or otherwise dispose of, hypothecate, pledge or otherwise
encumber, directly or indirectly, any of the Shares, or voluntarily initiate or
effect any conversion of the Shares into Common Stock or other securities of the
Company.
3.4 Sale of Stock. The sale and delivery of the Shares to each Optionee
upon exercise of the Options pursuant to the terms hereof will vest in such
Optionee legal and valid title to the Shares free and clear of all
-4-
<PAGE>
liens, encumbrances or other defects of title other than (i) those created by
such Optionee, and (ii) restrictions on sales of the Shares under applicable
securities laws.
3.5 No Conflict. The execution, delivery and performance by such
Stockholder of this Agreement and the consummation by it of the transactions
contemplated hereby will not, with or without the giving of notice or the lapse
of time, or both, (i) violate any provision of law, rule or regulation, foreign
or domestic, applicable to such Stockholder, (ii) violate any order, judgment or
decree of any court or governmental agency or authority applicable to such
Stockholder, (iii) in the case of a Stockholder that is a corporation or
partnership, violate the certificate of incorporation and by-laws or partnership
agreement, as applicable, of such Stockholder or (iv) violate any contract,
agreement or arrangement to which the Stockholder is a party or by which such
Stockholder is bound. No consent, approval or authorization of, or exemption by,
or filing with, any governmental authority or third party is required to be
obtained by such Stockholder in connection with the execution, delivery and
performance by it of this Agreement or the taking of any other action
contemplated hereby.
3.6 Due Authorization. In the case of any Stockholder that is a
corporation or partnership, all corporate or partnership action, as applicable,
necessary for the authorization of this Agreement and the performance of all
obligations of such Stockholder hereunder has been taken.
3.7 Further Purchases of Company Stock by Optionee. Such Stockholder
has been informed by the Optionees that the Optionees may determine to purchase
additional outstanding shares of capital stock of the Company from other
stockholders of the Company in the future. Such Stockholder further understands
that the terms of any such additional purchases by the Optionees will be
determined by the Optionees and such stockholders and/or the Company. Such
Stockholder also understands that the Optionees regard the execution of this
agreement as a condition to proceeding with any additional purchases of capital
stock of the Company.
3.8 Finders. There is no investment banker, broker, finder, consultant
or similar intermediary that has
-5-
<PAGE>
been retained by, or is authorized to act on behalf of, such Stockholder who is
entitled to any fee or commission upon consummation of the transactions
contemplated by this Agreement.
3.9 Publicity. Such Stockholder shall not issue any press release or
otherwise make any such public statement with respect to the transactions
contemplated hereby without the prior consent of the Optionees, except that no
prior consent shall be required if such disclosure is required by law, in which
case the Stockholder shall provide the Optionees with prior notice of such
public statement.
3.10 Restriction on Resale. Each Stockholder hereby agrees that, during
the period indicated, such Stockholder shall not exercise Warrants owned by such
Stockholder for a number of shares of Common Stock that exceeds the percentage
of the shares of Common Stock underlying such Warrants set forth in the table
below (or sell through a short sale or derivatives transaction more than such
percentage of such shares):
Period Percentage
------ ----------
Closing of transactions
contemplated by Purchase
Agreement ("Closing")
until the date
6 months thereafter.................................0%
6 months after the Closing
until the date
12 months after the Closing........................50%
After the date 12 months
after Closing.....................................100%
Notwithstanding the foregoing, the restrictions in this Section 3.10 shall not
apply if (i) following the end of any twenty consecutive trading day period in
which the closing bid price of the Common Stock on the Nasdaq National Market
(or, if the Common Stock is not quoted thereon, the closing bid price on the
other principal over-the-counter market or the closing sale price on any
national securities exchange on which the Common Stock is admitted for quotation
or listed) exceeds $5.00 per share (appropriately adjusted for
-6-
<PAGE>
any stock split or stock dividend after the date hereof) for any ten trading
days during such twenty trading day period or (ii) an Optionee shall register
any of the shares of Common Stock beneficially owned by such Optionee for sale
pursuant to a registration statement filed with the Securities and Exchange
Commission.
3.11 Further Assurances. Upon the reasonable request of the Optionees,
each Stockholder agrees to prepare, execute and deliver any further instruments
and do any further acts that may be necessary to carry out more effectively the
purposes of this Agreement.
4. Representations, Warranties and Covenants of Optionees.
Each Optionee, severally but not jointly, represents, warrants and
agrees as follows:
4.1 Investment Representations.
(a) Investment Intent. Such Optionee is acquiring the Options and, upon
exercise thereof, the Shares for its own account for investment and not with a
view to distribution.
(b) Qualifications. Such Optionee is an "accredited investor" as
defined in Rule 501(a) under the Securities Act of 1933 (the "Securities Act").
(c) Experience. Such Optionee has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Options and the
Shares, and has so evaluated the merits and risks of such investment.
(d) Ability to Bear Risk. Such Optionee is able to bear the economic
risk of an investment in the Options and the Shares and, at the present time, is
able to afford a complete loss of such investment.
(e) Reliance. Such Optionee understands and acknowledges that (i) the
Options and the Shares are being offered and sold to it without registration
under the Securities Act by reason of reliance upon certain exemptions therefrom
and (ii) the availability of such exemptions,
-7-
<PAGE>
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations set forth in this Section 4.1.
4.2 Due Authorization. All corporate or partnership action, as
applicable, on the part of such Optionee necessary for the authorization of this
Agreement and the performance of all obligations of such Optionee hereunder has
been taken.
5. Miscellaneous.
5.1 Modification and Waiver. No amendment or modification of the terms
or provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed to or shall constitute a waiver of
any other provisions hereof. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof.
5.2 Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof. Any
previous agreement or understandings between the parties regarding the subject
matter hereof are merged into and superseded by this Agreement.
5.3 Severability. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
5.4 No Implied Rights. Except as otherwise provided in Section 3.1(e),
nothing herein, express or implied, is intended to or shall be construed to
confer upon or give to any person, firm, corporation or legal entity, other than
the parties hereto, any interest, rights, remedies or other benefits with
respect to or in connection with any agreement or provision contained herein or
contemplated hereby.
5.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
-8-
<PAGE>
5.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.
5.7 Successors and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
5.8 Notices. All notices and other communications under this Agreement
shall be in writing, and shall be deemed to have been duly given on the date of
delivery if delivered personally, on the date transmitted by telecopy or on the
second day after mailing if mailed to the party to whom notice is to be given by
first class mail, registered or certified, postage prepaid, and addressed as
follows (until any such address is changed by notice duly given):
(a) if to the Optionees, to:
SOFTBANK Holdings Inc.
10 Langley Road, Suite 403
Newton Center, Massachusetts 02169
Facsimile No.: (617) 928-9301
Attention:
(b) if to a Stockholder, at such Stockholder's address as set forth on
Exhibit A hereto.
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
STOCKHOLDERS OPTIONEES
Huberfeld Bodner Family SOFTBANK Technology
Foundation Ventures IV L.P.
By:/s/ Murray Huberfeld By: STV IV LLC
------------------------- Its General Partner
Title: President By: /s/Bradley A. Feld
--------------------- ----------------------------
Millenco LP Title: Managing Director
By:/s/ Murray Huberfeld
-------------------------
Title: CEO SOFTBANK Holdings Inc.
----------------------
By: /s/ Ronald Fisher
Murray Huberfeld/David --------------------------------
Bodner Partnership
Title: Vice Chairman
By:/s/ Murray Huberfeld
-------------------------
Title: Partner
----------------------
/s/ Seth J. Antine
- ----------------------------
Seth J. Antine
/s/ Rita Folger
- ----------------------------
Rita Folger
/s/ Isaac Weiss
- ----------------------------
Isaac Weiss
-10-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
OPTIONS TO OPTIONS TO
BE PURCHASED BE PURCHASED AGGREGATE
NO. OF BY SOFTBANK BY SOFTBANK PURCHASE
NAME SHARES TECHNOLOGY HOLDINGS PRICE
<S> <C> <C> <C> <C>
Huberfeld Bodner Family
Foundation
152 West 57th Street
54th Floor
New York, NY 10019 400 200 200 $73,282.45
Millenco LP
111 Broadway
New York, NY 10006 130 65 65 23,816.79
Murray Huberfeld/
David Bodner Partnership
152 West 57th St.,
54th Floor
New York, NY 10019 35 17 18 6,412.21
Seth J. Antine
2120 Bay Ave.
Brooklyn, NY 11210 60 30 30 10,992.37
Rita Folger
521 Fifth Ave.
New York, NY 10175 20 10 10 3,664.12
Isaac Weiss
3070 Bedford Ave.
Brooklyn, NY 11210 10 5 5 1,832.06
Total 655 327 328 $120,000.00
</TABLE>
EXHIBIT F
PROMISSORY NOTE AND STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made this 30th day of April, 1998, between SOFTBANK
Holdings Inc., (the "PURCHASER"), and those certain holders of promissory notes
and Common Stock of First Virtual Holdings Incorporated (the "COMPANY") listed
on Exhibit A hereto ( each a "SELLER" and, collectively, the "Sellers").
RECITALS
A. The Sellers hold the promissory notes of the Company (the "NOTES") with
principal amounts as set forth on Exhibit A hereto, shares of Common Stock,
par value $0.001 per share ("Common Stock"), of the Company as set forth on
Exhibit A hereto (the "SHARES" and, together with the Notes, the
"Securities"). In addition to the Shares, the Sellers hold other shares of
Common Stock and options to purchase shares of Common Stock which are not
subject to, or affected by, this Agreement.
B. The Sellers have filed legal complaints naming the Company as a defendant in
the Superior Court of the State of California for the County of San Diego
seeking collection of amounts allegedly due under the Notes.
C. The Sellers desire to sell to the Purchaser the Securities set forth
opposite each respective Seller's name in Exhibit A hereto, which Securities
are held of record and beneficially owned by such Sellers.
D. The Purchaser wishes to purchase such Securities from the Sellers.
E. Each of the Purchaser and the Sellers is familiar with, and has conducted an
independent investigation of, the Company's current business and financial
condition.
NOW, THEREFORE, intending to be legally bound hereby, the parties agree as
follows:
<PAGE>
SECTION 1. PURCHASE AND SALE OF SECURITIES
At the Closing (as defined in Section 2.1 hereof), on the terms and subject
to the conditions set forth in this Agreement, each Seller shall sell, convey,
transfer, assign and deliver to the Purchaser, free and clear of all liens,
encumbrances or other defects of title, the Notes and the number of Shares set
forth opposite such Seller's name in Exhibit A hereto for the aggregate purchase
price set forth opposite such Seller's name in Exhibit A hereto, and the
Purchaser shall purchase and acquire such Securities from such Seller. The
purchase price for the Securities shall be equal to the sum of the principal
amount of the Notes plus accrued interest thereon to the Closing Date (as
defined in Section 2.1) plus $0.60 per Share to be purchased hereunder.
SECTION 2. CLOSING
2.1 Closing Date. The closing of the purchase and sale of the Securities
(the "CLOSING") shall be held (i) at the offices of Sullivan & Cromwell, 444
South Flower Street, Los Angeles, California, at 9:00 A.M., Los Angeles time, on
the first business day on which the last to be fulfilled or waived of the
conditions set forth in Section 5 hereof shall be fulfilled or waived in
accordance with this Agreement or (ii) at such other place and time and/or on
such other date as the parties may mutually agree (the date of the Closing is
hereinafter referred to as the "CLOSING DATE").
2.2 Delivery. At the Closing, (i) each Seller will deliver, or cause to be
delivered, to the Purchaser the original Notes and certificate(s) evidencing the
appropriate number of Shares and shall concurrently deliver to the Company an
executed general release (the "Release") (A) releasing the Company from any
liability or obligation in respect of any purported failure to pay principal or
accrued interest owing on the Notes when due and from all other claims,
obligations and liabilities of whatsoever kind, whether known or unknown,
whether or not concealed or hidden, and whether or not such Seller knows or
suspects such claims exist in his favor, that such Seller then has or previously
had against the Company, its subsidiaries, affiliates, directors, stockholders,
officers, employees and agents, and specifically waiving the provisions of
Section 1542 of the California Civil Code, and (B) agreeing to dismiss with
prejudice the complaints filed in the Superior Court of the State of California,
for the County of San Diego, in the matters of Next
-2-
<PAGE>
Century Communications Corp. v. First Virtual Holdings Incorporated, Case no.
717918, and Tawfiq N. Khoury and Richel G. Khoury, Individually, and as Trustees
for the TNKRGK Family Trust Dated 12/23/76 v. First Virtual Holdings
Incorporated, Case No. 717919 (collectively, the "Litigation") and (ii) the
Purchaser shall pay the purchase price therefor by wire transfer to a bank
account specified by such Seller or by check. In the event payment of the
purchase price is not made as required hereby, the Release shall not be
effective.
2.3 Assignment of Purchase Rights. The Purchaser may, in its sole
discretion, assign its rights to purchase the Securities hereunder, except that
it may not under any circumstances assign the right to any officer or director
of the Company or any person or entity that is the beneficial owner of 5% or
more of the outstanding shares of Common Stock as reported on the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 or, to
the Purchaser's knowledge, an affiliate or, in the case of individuals, relative
thereof, provided that the assignee shall agree in writing to assume all
Purchaser's obligations hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants as follows:
3.1 Investment Representations.
(a) The Purchaser is acquiring the Securities for its own account for
investment and not with a view to distribution.
(b) The Purchaser is an "accredited investor" as defined in Rule 501(a)
under the Securities Act of 1933 (the "Securities Act").
(c) The Purchaser has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment.
(d) The Purchaser is able to bear the economic risk of an investment in
the Securities and, at the present time, is able to afford a complete loss of
such investment.
-3-
<PAGE>
(e) The Purchaser understands and acknowledges that (i) the Securities
are being offered and sold to it without registration under the Securities Act
by reason of reliance upon certain exemptions therefrom and (ii) the
availability of such exemptions, depends in part on, the foregoing
representations set forth in this Section 3.1.
3.2 Due Authorization. All corporate or partnership action, as applicable,
on the part of the Purchaser necessary for the authorization of this Agreement
and the performance of all obligations of the Purchaser hereunder has been
taken.
3.3 Related Agreements. Concurrently with entering into this Agreement, the
Purchaser is entering into a Purchase Agreement providing for the purchase from
the Company of 10,000,000 shares of its Common Stock (the "Purchase Agreement")
by the Purchaser and its affiliates, subject to the terms and conditions set
forth herein, and a Loan Agreement providing, subject to the terms and
conditions set forth therein, for the extension of credit to the Company of up
to $1,500,000 (of which $500,000 is expected to be funded on or about the date
hereof) to fund operating expenditures of the Company (the "Loan Agreement"). It
is understood that nothing in this representation and warranty shall create any
express or implied obligation of the Purchaser to the Sellers with respect to
the Purchaser's performance of its obligations under the Purchase Agreement or
the Loan Agreement or constitute the Sellers third party beneficiaries thereof.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller, severally but not jointly, represents and warrants as follows:
4.1 Independent Investigation. Each of the Sellers is aware of, and has
conducted an independent Investigation of, the Company's business affairs,
financial condition and prospects, and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to sell the
Securities. Without limiting the foregoing, the Seller has reviewed and is
familiar with all the Company's filings with the Securities and Exchange
Commission under the Securities Exchange Act of 1934. In entering into this
agreement, the Seller has not relied on any written or oral statement of any
nature with respect to the business, financial condition or prospects of the
Company made by the Purchaser or any other entity, including without limitation
the Company.
-4-
<PAGE>
4.2 Further Purchases of Company Stock by Purchaser. The Seller has been
informed by the Purchaser that the Purchaser may determine to purchase
additional outstanding shares of capital stock of the Company from other
stockholders of the Company or from the Company in the future, including through
the Related Transactions (as defined in Section 5.2 hereof). The Seller further
understands that the terms of any such additional purchases by the Purchaser
will be determined by the Purchaser and such stockholders or the Company, at a
purchase price or conversion price of $0.60 per share. The Seller also
understands that Purchaser regards the execution of this agreement as a
condition to proceeding with any additional purchases of capital stock of the
Company.
4.3 Ownership of the Securities. The Seller is the beneficial owner of the
Notes and Shares set forth opposite such Seller's name in Exhibit A hereto, and
such Securities are owned free and clear of all liens, encumbrances, charges,
security interests, claims and assessments, and are subject to no restrictions
with respect to transferability except in compliance with applicable securities
laws as set forth in the legend thereon.
4.4 Offering. So long as this Agreement remains in force, the Seller will
not offer any of the Securities for sale to any person other than the Purchaser
or enter into any discussions or negotiations with any person other than the
Purchaser in respect thereof.
4.5 Sale of Securities. The sale and delivery of the Securities to the
Purchaser pursuant to the terms hereof will vest in the Purchaser legal and
valid title to the Securities free and clear of all liens, encumbrances or other
defects of title other than (i) those created by the Purchaser, and (ii)
restrictions on sales of the Securities under applicable securities laws.
4.6 No Conflict. The execution, delivery and performance by the Seller of
this Agreement and the consummation by it of the transactions contemplated
hereby will not, with or without the giving of notice of the lapse of time, or
both, (i) violate any provision of law, rule or regulation, foreign or domestic,
(ii) violate any order, judgment or decree applicable to the Seller, (iii) in
the case of any Seller that is a corporation or trust, violate the certificate
of incorporation and by-laws, or declaration or agreement of trust, or
comparable governing document, of such Seller or (iv) violate any contract,
agreement or arrangement to which the Seller is a party or by which the Seller
is bound. No consent, approval or authorization
-5-
<PAGE>
of, or exemption by, or filing with, any governmental authority or third party
is required to be obtained by the Seller in connection with the execution,
delivery and performance by it of this Agreement or the taking of any other
action contemplated hereby.
4.7 Due Authorization. In the case of any Seller which is a corporation or
trust, all corporate or trust action on the part of the Seller necessary for the
authorization of this Agreement and the performance of all obligations of such
Seller hereunder has been taken.
SECTION 5. CONDITIONS TO CLOSING
5.1 Representations and Warranties. The Sellers' obligations to consummate
the sale of the Securities under this Agreement are subject to the condition
that the representations and warranties made by the Purchaser in this Agreement
shall be true and correct when made and as of the Closing Date. The Purchaser's
obligation to consummate the purchase of the Securities under this Agreement is
subject to the condition the representations and warranties made by the Sellers
in this Agreement shall be true and correct when made and as of the Closing
Date.
5.2 General Release. The Company shall have executed and delivered to the
Sellers a general release releasing the Sellers from all claims, obligations and
liabilities of whatsoever kind, whether known or unknown, whether or not
concealed or hidden, and whether or not the Company knows or suspects such
claims exist in its favor, that the Company then has or previously had against
any Seller, its subsidiaries, affiliates, directors, stockholders, officers,
employees and agents, and specifically waiving the provisions of Section 1542 of
the California Civil Code.
5.3 Series A Convertible Preferred Stock and Common Stock Transactions.
(a) The Purchaser's obligation to consummate the purchase of the
Securities under this Agreement is subject to the condition that the following
transactions (the "RELATED TRANSACTIONS") shall have been consummated: (i) the
holders of outstanding shares of Series A Convertible Preferred Stock of the
Company (the "SERIES A HOLDERS") shall have entered into a binding agreement to
sell to the Purchasers or its affiliates or designees, or granted to the
Purchaser or its
-6-
<PAGE>
affiliates or designees an option to purchase, at least 90% of the outstanding
shares of Series A Convertible Preferred Stock and (ii) and the Company shall
have consummated the sale to the Purchaser and its affiliates of 10,000,000
shares of its Common Stock pursuant to a Purchase Agreement, of even date
herewith (the "Purchase Agreement"), between such parties.
(b) This condition to closing shall not be deemed to create any express
or implied obligation on the part of the Purchaser to enter into any agreement
or transaction with the Series A Holders or the Company to take any action or
make any offer to induce such Series A Holders or the Company to enter into any
agreement or transaction. The Sellers understand and agree that substantial
uncertainty exists as to whether such an agreement or transaction will be
entered into. Each of the Sellers understands and agrees that failure of the
condition to closing to be satisfied will cause a failure of the essential
purpose of this agreement for Purchaser. Each of the Sellers further agrees that
failure of the Purchaser to cause this condition to closing to be satisfied, for
any reason or for no reason, shall not give rise to any claim by any Seller
against the Purchaser or any other entity, including the Company, in equity or
at law.
SECTION 6. MISCELLANEOUS
6.1 Termination. This Agreement shall terminate upon the earlier to occur of
(i) July 31, 1998, if the transactions contemplated hereby are not consummated
on or prior to such date or (ii) the date the Purchase Agreement is terminated
by any of the parties thereto. The Purchaser shall notify the Sellers promptly
following any such termination of the Purchase Agreement. In the event of such
termination, no party hereto shall have any further liability or obligation to
any other party to this Agreement pursuant to this Agreement or as a consequence
thereof, provided that nothing herein shall relieve a party for its willful
breach of this Agreement.
6.2 Modification and Waiver. No amendment or modification of the terms or
provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed to or shall constitute a waiver of
any other provisions hereof. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof.
-7-
<PAGE>
6.3 Expenses. At the Closing, the Purchaser shall reimburse the Sellers for
the reasonable legal fees and disbursements of outside counsel for the Sellers
upon, delivery of a copy of the bill from such counsel, in an amount not to
exceed (a) $60,000 for services rendered in connection with the Litigation and
(b) $10,000 for services rendered in connection with the negotiation of this
Agreement, and any related agreements, instruments or pleadings, and the
consummation of the transactions contemplated hereby. Except as set forth in the
immediately preceding sentence, each of the parties hereto shall bear its or his
own expenses.
6.4 Entire Agreement. This Agreement sets forth the entire understanding of
the parties with respect to the subject matter hereof. Any previous agreement or
understandings between the parties regarding the subject matter hereof are
merged into and superseded by this Agreement.
6.5 Severability. In case any provision in this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
6.6 No Implied Rights. Nothing herein express or implied is intended to or
shall be construed to confer upon or give to any person, firm, corporation or
legal entity, other than the parties hereto, any interest, rights, remedies or
other benefits with respect to or in connection with any agreement or provision
contained herein or contemplated hereby; provided, however, that the
representations, warranties, covenants and agreements of the Purchaser and the
Sellers set forth in Sections 3.1, 4.1, 4.2 and 5.2(b) shall inure to the
benefit of the Company and the Company shall be entitled to rely on such
representations, warranties and agreements.
6.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
6.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.
6.9 Successors and Assigns. The provisions hereof shall inure to the benefit
of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
-8-
<PAGE>
6.10 Notices. All notices and other communications under this Agreement
shall be in writing, and shall be deemed to have been duly given on the date of
delivery if delivered personally, on the date transmitted by telecopy or on the
second day after mailing if mailed to the party to whom notice is to be given by
first class mail, registered or certified, postage prepaid, and addressed as
follows (until any such address is changed by notice duly given):
(a) if to the Purchaser, to:
SOFTBANK Holdings Inc.
10 Langley Road, Suite 403
Newton Center, Massachusetts 02169
Attention: Ronald Fisher
Telecopy: (617) 928-9301
(b) if to a Seller, at such Seller's address as set forth on the
signature page hereof.
-9-
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
date first hereinabove set forth.
SELLERS PURCHASER
NEXT CENTURY SOFTBANK HOLDINGS INC.
COMMUNICATIONS CORP.
By: /s/ Jon Rubin By: /s/ Ronald Fisher
--------------------------------------- ------------------------------
Title: Jon Rubin, President Title: Vice Chairman
Address: 1400 Key Boulevard Address: 10 Langley Road,
1st Floor Suite 403
Arlington, VA 22209 Newton Center,
Massachusetts 02169
TNKRGK FAMILY TRUST T/D 12/23/76
By:/s/ Noelle F. Khoury, Attorney-in-Fact
---------------------------------------
Title: Tawfiq N. Khoury, Trustee
Address: 2525 Congress Street, Suite 200
San Diego, CA 92110
JASON B. KHOURY T/D 1/27/87
By:/s/ Noelle F. Khoury, Attorney-in-Fact
---------------------------------------
Title: Jason B. Khoury, Trustee
Address: 2525 Congress Street, Suite 200
San Diego, CA 92110
BRIAN N. KHOURY T/D 1/27/87
By:/s/ Noelle F. Khoury, Attorney-in-Fact
---------------------------------------
Title: Brian N. Khoury, Trustee
Address: 2525 Congress Street, Suite 200
San Diego, CA 92110
NOELLE F. KHOURY T/D 1/27/87
By:/s/ Noelle F. Khoury, Attorney-in-Fact
---------------------------------------
Title: Noelle F. Khoury, Trustee
Address: 2525 Congress Street, Suite 200
San Diego, CA 92110
/s/ Jon M. Rubin
- ------------------------------------------
Jon M. Rubin
Address: 1400 Key Boulevard, 1st Floor
Arlington, VA 22209
-10-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
SCHEDULE OF SELLERS
PRINCIPAL ACCRUED AGGREGATE
AMOUNT OF INTEREST ON NO. OF PURCHASE PRICE
NAME NOTES NOTES SHARES OF SECURITIES*
<S> <C> <C> <C> <C>
Next Century $800,000 To be 450,000 $1,070,000.00
Communications calculated
Corp. as of the
Closing
TNKRGK FAMILY TRUST T/D $400,000 To be 156,250 $493,750.00
12/23/76 calculated
as of the
Closing
JASON B. KHOURY T/D -- -- 156,250 $93,750.00
1/27/87
BRIAN N. KHOURY T/D -- -- 156,250 $93,750.00
1/27/87
- --------
<FN>
* There shall be added to the aggregate purchase price set forth in this
Exhibit A an amount equal to accrued interest on the Notes determined as of
the Closing.
</FN>
-11-
<PAGE>
NOELLE F. KHOURY T/D -- -- 156,250 $93,750.00
1/27/87
JON M. RUBIN -- -- 125,000 $75,000.00
TOTAL $1,200,000 To be 1,200,000 $1,920,000.00
calculated
as of the
Closing
</TABLE>
-12-
EXHIBIT G
CONVERSION AGREEMENT
THIS CONVERSION AGREEMENT (the "Agreement") is made and entered into as
of April 30, 1998, by and between First Virtual Holdings Incorporated, a
Delaware corporation (the "Company"), on the one hand, and SOFTBANK Technology
Ventures IV L.P., a Delaware limited partnership and SOFTBANK Holdings Inc., a
Delaware corporation (the "Purchasers"), on the other hand.
RECITALS
WHEREAS, on the date hereof, the Company and the Purchasers are
entering into a Purchase Agreement (the "Purchase Agreement"), pursuant to which
the Purchasers are acquiring 10 million shares of the Company's Common Stock,
$0.001 par value (the "Common Stock").
WHEREAS, the Purchase Agreement contemplates that one or more of the
Purchasers shall enter into an agreement to purchase promissory notes with an
aggregate principal amount of $1.2 million held by persons affiliated with
Tawfiq N. Khoury and Next Century Communications Corp. (the "Notes") and an
agreement to purchase, or to acquire options to purchase, up to 655 shares of
the Company's Series A Preferred Stock (the "Preferred Shares").
WHEREAS, the Company and the Purchasers wish to provide for conversion
of all Notes and Preferred Shares acquired by the Purchasers into Common Stock
of the Company.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby the parties agree as follows:
ARTICLE I
CONVERSION OF THE SHARES
1.1 CONVERSION OF NOTES. At such time as the Purchasers acquire any of
the Notes and without further action by any of the Purchasers or the Company,
such Notes shall be cancelled and all amounts owing under such Notes shall be
converted into a number of shares of Common Stock of the Company (the
"Conversion Shares") equal to the ratio obtained by dividing (i) the principal
amount of, and accrued but unpaid interest owing on, such Notes as of the date
of conversion, by (ii) $0.60 (subject to adjustment in the event of stock
splits, stock dividends, recpaitalizations and similar events). The Purchasers
shall tender such Notes to the Company for cancellation as soon as reasonably
practicable, and the Company shall arrange to have stock certificates
representing the Conversion Shares issued and delivered to the Purchaser as soon
as reasonably practicable thereafter.
1.2 CONVERSION OF PREFERRED SHARES. As soon as reasonably practical
after acquiring any Preferred Shares, the Purchaser acquiring such Preferred
Shares shall tender the stock certificates
<PAGE>
representing such Preferred Shares to the Company for conversion. Such Preferred
Shares shall be converted into shares of the Company's Common Stock in
accordance with the Company's Certificate of Incorporation and Certificate of
Designation of Series A Preferred Stock (the "Certificate of Designation");
provided however that, notwithstanding anything to the contrary in the
Certificate of Designation, (i) the term "Conversion Price" as used in the
Certificate of Designation shall mean $0.60, subject to adjustment in the event
of stock splits, stock dividends, recapitalizations and similar events and (ii)
the number of shares of Common Stock issuable upon conversion of each share of
Series A Preferred Stock shall be equal to the quotient obtained by dividing (A)
$5,458 by (B) the Conversion Price, rounded down to the nearest whole share. The
Company and the Purchasers hereby waive the application of any provision of the
Certificate of Designation contrary to the foregoing sentence. The Company shall
arrange to have stock certificates representing the Conversion Shares issued and
delivered to the Purchaser as soon as reasonably practicable after such
conversion.
ARTICLE II
MISCELLANEOUS
2.1 AMENDMENTS, WAIVERS AND CONSENTS. Any provision in this Agreement
to the contrary notwithstanding, changes in or additions to this Agreement may
be made, and compliance with any covenant or provision herein or therein set
forth may be omitted or waived, upon the written consent of the Company and the
Purchasers. Any waiver or consent may be given subject to satisfaction of
conditions stated therein and any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
2.2 ADDRESSES FOR NOTICES, ETC. Any notices and other communications
required or permitted under this Agreement shall be effective if in writing and
delivered personally or sent by telecopier, Federal Express or registered or
certified mail, postage prepaid, addressed as follows:
If to the Purchasers, to: SOFTBANK Holdings Inc.
10 Langley Road, Suite 403
Newton Center, Massachusetts 02169
Telecopier: (617) 928-9301
Attention: Ronald Fisher
Vice Chairman
with a copy to: Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telephone: (212) 558-3504
Telecopier: (212) 558-3588
Attention: Stephen A. Grant, Esq.
If to the Company, to: First Virtual Holdings Incorporated
11975 El Camino Real
Suite 300
-2-
<PAGE>
San Diego, California 92130
Telephone: (619) 793-2700
Telecopier: (619) 793-2950
Attention: Lee H. Stein
Chairman of the Board
and Chief Executive Officer
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Telephone: (650) 493-9300
Telecopier: (650) 493-6811
Attention: Jeffrey D. Saper, Esq.
John T. Sheridan, Esq.
Unless otherwise specified herein, such notices or other communications
shall be deemed effective (a) on the date delivered, if delivered personally,
(b) two business days after being sent, if sent by Federal Express or other
commercial overnight delivery service, (c) one business day after being sent, if
sent by telecopier with confirmation of good transmission and receipt, and (d)
three business days after being sent, if sent by registered or certified mail.
Each of the parties hereto shall be entitled to specify another address by
giving notice as aforesaid to each of the other parties hereto.
2.3 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Company and the Purchasers and their respective
successors and assigns, except that no party shall have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
other parties.
2.4 PRIOR AGREEMENTS. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings or agreements
concerning the subject matter hereof.
2.5 SEVERABILITY. The invalidity or unenforceability of any provision
herein shall in no way affect the validity or enforceability of any other
provision.
2.6 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware without reference to
conflicts of law principles.
2.7 HEADINGS. Article, Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
2.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
-3-
<PAGE>
2.9 FURTHER ASSURANCES. From and after the date of this Agreement, each
of the parties hereto shall execute and deliver such instruments, documents and
other writings as may be necessary or desirable to confirm and carry out and to
effectuate fully the intent and purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
COMPANY: FIRST VIRTUAL HOLDINGS INCORPORATED
By: /s/ Lee H. Stein
-------------------------------
Name: Lee H. Stein
Title: Chairman & CEO
PURCHASERS: SOFTBANK TECHNOLOGY VENTURES IV L.P.
By: STV IV LLC, its General Partner
By: /s/ Bradley Feld
-------------------------------
Name: Bradley Feld
Title: Managing Director
SOFTBANK HOLDINGS INC.
By: /s/ Ronald Fisher
-------------------------------
Name: Ronald Fisher
Title: Vice Chairman
-4-
EXHIBIT H
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made effective as of the 30th
day of April, 1998 (the "EFFECTIVE DATE"), by and between First Virtual Holdings
Incorporated, a Delaware corporation (the "COMPANY") , and SOFTBANK Holdings
Inc., a Delaware corporation ("LENDER").
RECITALS
WHEREAS, on the date hereof, the Company and Lender are entering into a
Purchase Agreement (the "Purchase Agreement"), pursuant to which the Company
intends to sell and Lender intends to acquire 10 million shares of the Company's
Common Stock, par value $.001 per share (the "Share Acquisition").
WHEREAS, the Company and Lender wish to enter into this Agreement to
fund the Company's operations until the closing of the Share Acquisition, which
is currently expected to occur on or around June 24, 1998.
IN WITNESS WHEREOF, the parties agree as follows:
1. THE LOAN. Subject to the terms and conditions of this Agreement,
Lender agrees to loan to the Company, and the Company agrees to borrow from
Lender, funds in an aggregated principal amount of up to One Million Five
Hundred Thousand Dollars ($1,500,000) (the "LOAN"), in installments of not less
than Two Hundred Thousand Dollars ($200,000) per advance. Subject to Section 4
hereof, advances shall be made in the amounts specified by the Company (each a
"LOAN DISBURSEMENT") within five (5) days following the date of receipt of
written notice from the Company (the "NOTICE DATE") as to such Loan
Disbursement, provided that the maximum amount advanced by Lender shall not
exceed the total amount of the Loan. The first loan disbursement, with a
principal amount of $500,000, shall be made on the date hereof. Interest shall
accrue on each Loan Disbursement from the date of advance (each a "DISBURSEMENT
DATE") by Lender. Lender will transmit each Loan Disbursement to the Company via
wire transfer at the following account: Account No.: 001-26-1495, Bank Name:
City National Bank, Beverly Hills, CA; ABA No. 1220-16-066; or pursuant to such
other instructions as may have been provided in writing by the Company, and the
Company will accept each Loan Disbursement pursuant to the terms of this
Agreement.
2. THE NOTES. Each of the Loan Disbursements will be evidenced by, and
repaid with interest in accordance with, an interest-bearing promissory note in
the form of Exhibit A (the "NOTES"), duly completed and dated as of the date of
such Loan Disbursement and delivered to Lender at or prior to the time of such
Loan Disbursement.
3. INTEREST AND PAYMENTS. Interest shall accrue and be paid to Lender
on the outstanding and unpaid principal amount of the Loan at the rate of 8.0%
per annum, computed on the
<PAGE>
basis of the actual number of days elapsed and a year of 360 days consisting of
twelve 30 day months. Payments of principal and interest will be made to Lender
in the manner specified in the Note. The principal amount of the Loan may be
prepaid in whole or in part at any time and from time to time without premium or
penalty.
4. SPENDING PLAN. The obligation of Lender to make any Loan
Disbursement to the Company (other than the first loan disbursement made on the
date hereof) will be subject to Lender's receipt, on or before the Notice Date,
of a statement prepared by the Company specifying in reasonable detail the
Company's proposed application of the proceeds of such Loan Disbursement (the
"Spending Plan"), which Spending Plan shall be satisfactory to the Lender.
Lender shall not unreasonably withhold its consent to any Spending Plan,
provided that such Spending Plan shall in the good faith judgment of the
Company's Board of Directors be consistent with maintaining and preserving the
Company's operations. The proceeds of any Loan Disbursement shall be used only
for the purposes set forth in the Spending Plan delivered with respect to such
Loan Disbursement.
5. FAILURE TO PROVIDE LOAN DISBURSEMENTS. In the event that Lender
shall fail to provide Loan Disbursements pursuant to this Agreement upon request
by the Company as required by Section 4 hereof, then the Company shall have
right to terminate this Agreement and the Purchase Agreement, and all rights
obligations of the parties under this Agreement and the Purchase Agreement shall
terminate and be without further effect. The parties agree that Section 5 shall
supersede any provision of the Purchase Agreement to the contrary.
6. TERMINATION OF DISBURSEMENT OBLIGATION. Lender shall not be required
to make any further Loan Disbursements under this Agreement in the event that
and following such time as the Purchase Agreement is terminated in accordance
with Section 8 thereof.
7. EVENTS OF DEFAULT. The occurrence of any of the following events
will be an "Event of Default" hereunder:
(a) Voluntary Bankruptcy or Insolvency Proceedings. The Company
shall (i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of its or any of its
creditors, (iii) be dissolved or liquidated in full or in substantial part, (iv)
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
consent to any such relief or to the appointment of or taking possession of its
property by any official in an involuntary case or other proceeding commenced
against it, or (v) take any action for the purpose of effecting any of the
foregoing; or
(b) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under any
bankruptcy, insolvency or other
-2-
<PAGE>
similar law now or hereafter in effect shall be commenced and an order for
relief entered or such proceeding shall not be dismissed or discharged within
sixty (60) days of commencement.
(c) Cross Default. The Company fails to pay or discharge any
obligation in excess of $200,000 when due, whether by scheduled maturity,
required prepayment, acceleration, or otherwise) (other than any debts to Tawfiq
N. Khoury, Jon M. Rubin, Next Century Communications Corp. or their respective
affiliates).
(d) Judgment. Rendering of a final judgment or judgments (not
subject to appeal) against the Company or any of its subsidiaries in an
aggregate amount in excess of $500,000 which remains unstayed, in effect and
unpaid for a period of 60 consecutive days thereafter.
(e) Conversion Default. With respect to outstanding obligations
under any Note, any breach by the Company with respect to its obligations to
issue shares of Common Stock upon conversion of such Note pursuant to
Section 3 thereof.
8. RIGHTS OF THE LENDER UPON DEFAULT. Upon the occurrence or existence
of an Event of Default specified in Section 7(a) or (b), immediately and without
notice, all outstanding obligations payable by the Company hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived. Upon the occurrence or existence of an Event of Default as specified in
Sections 7(c), (d) or (e), the Lender may declare all outstanding obligations
under all outstanding Notes immediately due and payable by written notice to the
Company and upon any such declaration such obligations shall become immediately
due and payable.
9. SUCCESSORS AND ASSIGNS. The Company and the Holder shall be binding
upon and benefit the successors, assigns, heirs, administrators and transferees
of the parties.
10. WAIVER AND AMENDMENT. Any provision of this Agreement may be
amended, waived or modified upon the written consent of the Company and the
Lender.
11. ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned, by operation of law or otherwise, in
whole or in part, by the Company or the Holder without the prior written consent
of the other party except (i) in the case of the Company, in connection with an
assignment in whole to a successor corporation to the Company, provided that
such successor corporation acquires, by purchase of assets, merger or otherwise,
all or substantially all of the Company's property and assets, and (ii) in the
case of Lender, in connection with any transfer to a subsidiary or parent
company of the Lender or partnership of which the Lender is the sole general
partner, provided in any such case that the transferee provides such investment
representations as the Company may reasonably request to ensure securities law
compliance.
12. ADDRESSES FOR NOTICES, ETC. Any notices and other communications
required or permitted under this Agreement shall be effective if in writing and
delivered personally or sent by telecopier, Federal Express or registered or
certified mail, postage prepaid, addressed as follows:
-3-
<PAGE>
If to Lender, to: SOFTBANK Holdings Inc.
10 Langley Road, Suite 403
Newton Center, Massachusetts 02169
Telecopier: (617) 928-9301
Attention: Ronald Fisher
Vice Chairman
with a copy to: Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telephone: (212) 558-3504
Telecopier: (212) 558-3588
Attention: Stephen A. Grant, Esq.
If to the Company, to: First Virtual Holdings Incorporated
11975 El Camino Real
Suite 300
San Diego, California 92130
Telephone: (619) 793-2700
Telecopier: (619) 793-2950
Attention: Lee H. Stein
Chairman of the Board
and Chief Executive Officer
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Telephone: (650) 493-9300
Telecopier: (650) 493-6811
Attention: Jeffrey D. Saper, Esq.
John T. Sheridan, Esq.
Unless otherwise specified herein, such notices or other communications
shall be deemed effective (a) on the date delivered, if delivered personally,
(b) two business days after being sent, if sent by Federal Express or other
commercial overnight delivery service, (c) one business day after being sent, if
sent by telecopier with confirmation of good transmission and receipt, and (d)
three business days after being sent, if sent by registered or certified mail.
Each of the parties hereto shall be entitled to specify another address by
giving notice as aforesaid to each of the other parties hereto.
13. SEVERABILITY. The holding of any provision of this Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provisions and the other provisions of this Note shall remain in full
force and effect.
-4-
<PAGE>
14. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
FIRST VIRTUAL HOLDINGS INCORPORATED,
a Delaware corporation
By: /s/ Lee H. Stein
--------------------------------
Title: Chairman & CEO
-----------------------------
SOFTBANK HOLDINGS INC.,
a Delaware corporation
By: /s/ Ronald Fisher
--------------------------------
Title: Vice Chairman
-----------------------------
-6-
