<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
April 30, 1998
Date of Report (Date of earliest event reported)
FIRST VIRTUAL HOLDINGS INCORPORATED
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 000-21751 33-0612860
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification
incorporation) No.)
</TABLE>
11975 El Camino Real, Suite 300
San Diego, California 92130-2543
(Address of principal executive offices)
(619) 793-2700
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 5. OTHER EVENTS
On April 30, 1998, First Virtual Holdings Incorporated (the "Company"), SOFTBANK
Holdings Inc. ("SOFTBANK") and certain of itsaffiliates have entered into a
definitive agreement for the sale of 10 million shares of the Company's Common
Stock at a price of $0.60 per share. The Company also agreed to issue additional
shares of its Common Stock to SOFTBANK at a conversion price of approximately
$0.60 per share upon the conversion of approximately $1.5 million in debt
obligations of the Company which SOFTBANK has agreed to acquire, and upon
conversion of shares of preferred stock of the Company which SOFTBANK has
acquired an option to purchase from third parties. If the contemplated
transactions are completed, SOFTBANK and its affiliates will own a majority of
the Company's outstanding Common Stock and will have the ability to designate a
majority of the members of the Company's Board of Directors.
The completion of the contemplated transactions is subject to satisfaction of
several significant contingencies and conditions, including the approval by
stockholders at the Company's annual meeting of stockholders in June 1998. First
Virtual and SOFTBANK have also entered into an interim loan agreement under
which the Company may request up to $1.5 million in loans from SOFTBANK upon
satisfaction of certain conditions.
On May 1, 1998, the Company issued a press release relating to the execution of
the definitive agreement. A copy of the press release is attached as Exhibit
99.1 and is incorporated herein by reference.
Copies of the definitive agreements entered into with SOFTBANK and its
affiliates are attached as Exhibits 2.1 through 2.4 and are incorporated herein
by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits in accordance with Item 601 of Regulation S-K:
Exhibits.
<TABLE>
<S> <C>
2.1 Purchase Agreement dated April 30, 1998 among the Company,
SOFTBANK Holdings Inc. and SOFTBANK Technology Ventures IV L.P.
2.2. Loan Agreement dated April 30, 1998 among the Company and SOFTBANK
Holdings Inc.
2.3 Form of Converible Promissory Note
2.4 Conversion Agreement dated April 30, 1998 among the Company and
SOFTBANK Holdings Inc.
99.1 Press Release dated May 1, 1998.
</TABLE>
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST VIRTUAL HOLDINGS INCORPORATED
Dated: May 1, 1998 By: /s/ John M. Stachowiak
-----------------------
John M. Stachowiak
Vice President, Finance & Chief Financial
Officer
<PAGE> 4
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
NUMBER
<S> <C>
2.1 Purchase Agreement dated April 30, 1998 among the Company,
SOFTBANK Holdings Inc. and SOFTBANK Technology Ventures IV L.P.
2.2 Loan Agreement dated April 30, 1998 among the Company and SOFTBANK
Holdings Inc.
2.3 Form of Converible Promissory Note
2.4 Conversion Agreement dated April 30, 1998 among the Company and
SOFTBANK Holdings Inc.
99.1 Press Release dated May 1, 1998.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
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 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> 2
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> 3
(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 1993, 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> 4
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 Adverse 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> 5
(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(1) (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> 6
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> 7
(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> 8
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, director 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> 9
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> 10
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 the
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 Purchaser 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> 11
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> 12
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> 13
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> 14
"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> 15
(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> 16
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> 17
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 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 a 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
shall be consummated 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> 18
(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> 19
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> 20
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 on 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> 1
EXHIBIT 2.2
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 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
<PAGE> 2
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 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.
-2-
<PAGE> 3
(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:
If to Lender, to: SOFTBANK Holdings Inc.
10 Langley Road, Suite 403
Newton Center, Massachusetts 02169
-3-
<PAGE> 4
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.
14. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York.
-4-
<PAGE> 5
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
----------------------------------
-5-
<PAGE> 1
EXHIBIT 2.3
THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION
OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE CORPORATION
THAT SUCH REGISTRATION IS NOT REQUIRED.
FIRST VIRTUAL HOLDINGS INCORPORATED
CONVERTIBLE PROMISSORY NOTE
NOTE NO. 1998A-___
$___________ __________, 1998
San Diego, California
FOR VALUE RECEIVED, First Virtual Holdings Incorporated, a Delaware
corporation (the "COMPANY"), promises to pay to SOFTBANK Holdings, Inc.
("SOFTBANK HOLDINGS" or the "HOLDER"), or its registered assigns, the principal
sum of $__________, or such lesser amount as shall then equal the outstanding
principal amount hereof, together with interest from the date of this Note on
the unpaid principal balance at a rate equal to eight percent (8.0%) per annum,
computed on the basis of the actual number of days elapsed and a year of 360
days consisting of twelve 30-day months. Unless this Note is earlier converted
in accordance with Section 3 hereof, all unpaid principal, together with any
then unpaid and accrued interest and other amounts payable hereunder, shall be
due and payable on the earlier of (i) July 31, 1998 (the "MATURITY DATE"), or
(ii) the acceleration of the maturity thereof in accordance with Section 7 of
the Loan Agreement dated April 30, 1998 (the "LOAN AGREEMENT") between the
Company and SOFTBANK Holdings.
This Note shall be governd by, and be subject to, the terms of the Loan
Agreement, all of which provisions are hereby incorporated herein by reference.
The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:
1. DEFINITIONS. As used in this Note, the following capitalized terms
have the following meanings:
(a) "HOLDER" shall mean the Person specified in the introductory
paragraph of this Note or any Person who shall at the time be the registered
holder of this Note.
(b) "MAJORITY IN INTEREST" shall, as of any time, mean more than
50% of the aggregate outstanding principal amount of the Notes issued under the
Loan Agreement outstanding at such time.
(c) The "COMPANY" includes the corporation initially executing
this Note and any Person that shall succeed to or assume the obligations of the
Company under this Note.
<PAGE> 2
(d) "PERSON" shall mean and include an individual, a partnership,
a corporation (including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture or any other
entity or a governmental authority.
2. INTEREST. Accrued interest on this Note shall be payable at such time
as the outstanding principal amount hereof shall be paid in full.
3. AUTOMATIC CONVERSION.
(a) Common Stock Financing. Upon the closing (the "CLOSING") of
the sale of Common Stock by the Company to SOFTBANK Holdings, Inc. and SOFTBANK
Technology Partners IV L.P. pursuant to the Purchase Agreement between the
Company and such purchasers of even date herewith (the "COMMON STOCK
FINANCING"), all principal and accrued interest due on this Note shall
automatically convert into a number of shares of Common Stock (the "CONVERSION
NUMBER") determined by dividing all of the unpaid principal and interest due on
this Note as of the Closing by $0.60 (subject to appropriate adjustment in the
event of stock splits, stock dividends, recapitalizations and similar events).
The cancellation of this Note in connection with such conversion shall be deemed
to be payment in full of the purchase price of a number of shares equal to the
Conversion Number purchased by SOFTBANK Holdings pursuant to the Purchase
Agreement.
(b) Issuance of Securities on Conversion. As soon as practicable
after conversion of this Note, the Company will cause to be issued in the name
of and delivered to the Holder, a certificate or certificates representing the
number of shares of the Common Stock to which the Holder shall be entitled on
such conversion. No fractional shares will be issued on conversion of this Note
and in lieu thereof the Holder shall be entitled to payment in cash of the
amount of the Note not converted into shares.
(c) Termination of Rights. All rights with respect to this Note
shall terminate upon the issuance of shares of Common Stock upon conversion of
this Note, whether or not this Note has been surrendered. Notwithstanding the
foregoing, the Holder agrees to surrender this Note to the Company for
cancellation as soon as is possible following conversion of this Note, and no
certificate shall be issued until the Note is surrendered for cancellation.
4. SUCCESSORS AND ASSIGNS. Subject to the restrictions on transfer
described in Section 6 below, the rights and obligations of the Company and the
Holder shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
5. WAIVER AND AMENDMENT. Any provision of this Note may be amended,
waived or modified upon the written consent of the Company and holders of a
Majority in Interest.
6. ASSIGNMENT. Neither this Note 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 Holder, in connection with any transfer to a subsidiary or parent
company of the Holder or partnership of which the Holder is a general partner,
provided in any such case that the transferee
-2-
<PAGE> 3
provides such investment representations as the Company may reasonably request
to ensure securities law compliance.
7. 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 Holder, 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
-3-
<PAGE> 4
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.
8. PAYMENT. Payment shall be made in lawful tender of the United States.
This Note may be prepaid at any time without penalty, on 15 days prior written
notice to the Holder.
9. USURY. In the event any interest is paid on this Note which is deemed
to be in excess of the then legal maximum rate, then that portion of the
interest payment representing an amount in excess of the then legal maximum rate
shall be deemed a payment of principal and applied against the principal of this
Note.
10. SEVERABILITY. The holding of any provision of this Note 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.
11. GOVERNING LAW. This Note shall be governed by and construed and
enforced in accordance with the laws of the State of New York.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
FIRST VIRTUAL HOLDINGS INCORPORATED,
a Delaware corporation
By: /s/ Lee H. Stein
--------------------------------
Title: Chairman and CEO
--------------------------------
Accepted by Holder:
SOFTBANK HOLDINGS INC.
By: /s/ RONALD FISHER
--------------------------------
Title: Vice Chairman
------------------------------
-5-
<PAGE> 1
EXHIBIT 2.4
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, recapitalizations 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 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
<PAGE> 2
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
San Diego, California 92130
Telephone: (619) 793-2700
-2-
<PAGE> 3
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.
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.
-3-
<PAGE> 4
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-
<PAGE> 1
EXHIBIT 99.1
For more information, contact:
John Stachowiak, Chief Financial Officer
(619) 350-3540; [email protected]
Todd Savitt, Director, Corporate Communications
(619) 350-3539; [email protected]
FIRST VIRTUAL HOLDINGS INCORPORATED ANNOUNCES THE SIGNING OF A
$6 MILLION DEFINITIVE INVESTMENT AGREEMENT
SAN DIEGO, Calif., May 1, 1998 - First Virtual Holdings Incorporated (NASDAQ:
FVHI), a leader in advanced marketing and customer service systems for Internet
commerce, today announced that SOFTBANK Holdings Inc. ("SOFTBANK") and certain
of its affiliates have entered into a definitive agreement with the Company to
purchase 10 million shares of the Company's Common Stock at a price of $0.60 per
share. The Company has also agreed to issue additional shares of its Common
Stock to SOFTBANK at a conversion price of approximately $0.60 per share upon
the conversion of approximately $1.5 million in debt obligations of the Company
which SOFTBANK has agreed to acquire, and upon conversion of shares of preferred
stock of the Company which SOFTBANK has acquired an option to purchase from
third parties. If the contemplated transactions are completed, SOFTBANK and its
affiliates will own a majority of the Company's outstanding Common Stock and
will have the ability to designate a majority of the members of the Company's
Board of Directors.
The completion of the contemplated transactions is subject to satisfaction of
several significant contingencies and conditions, including the approval by
stockholders at the Company's annual meeting of stockholders in June 1998. First
Virtual and SOFTBANK have also entered into an interim loan agreement under
which the Company may request up to $1.5 million in loans from SOFTBANK upon
satisfaction of certain conditions.
SOFTBANK Holdings Inc. is the holding company for all of SOFTBANK Corporations'
U.S.- based activities. Its major operating companies include Ziff-Davis,
Kingston Technology
<PAGE> 2
Company, SOFTBANK Services Group, SOFTBANK Content Services and UT Starcom.
SOFTBANK is the largest shareholder of Yahoo! Inc.
Founded in 1994, First Virtual Holdings Incorporated (NASDAQ: FVHI), is a leader
in advanced marketing and customer service systems for Internet commerce. The
company pioneered secure online payment systems and now focuses on supplying an
integrated system for relationship-based transactive messaging using standard
e-mail. First Virtual maintains its headquarters in San Diego as well as a data
center in Dallas. The company has strategic relationships with First Data
Corporation and Paymentech, Inc.
First Virtual Holdings Inc. 11975 El Camino Real, Suite 300, San Diego,
California 92130. Tel: 619-793-2700; fax: 619-793-2950; e-mail:
[email protected]; website: www.firstvirtual.com.
# # #
