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EXHIBIT 99.3
Private Placement Purchase Agreement
October 22, 1997
First Virtual Holdings Incorporated
00000 Xx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Gentlemen:
1. The undersigned ("Subscriber") has reviewed the filings which you (the
"Company") have made with the Securities Exchange Commission during the past 12
months. The Company represents and warrants to the Subscriber that all such
filings were made timely, are correct and accurate in all material respects and
in all material respects state all facts necessary to make such filings not
misleading. Subscriber has had the opportunity to discuss the Company's affairs
with the Company's officers.
2. At a closing (the "Closing") to occur at the offices of the Company
simultaneously herewith, the Subscriber will for $50,000 per Unit (as defined
below) purchase from the Company, and the Company will sell, the number of Units
set forth below opposite Subscriber's name below. Each Unit consists of 10
shares of Series A Convertible Preferred Stock (the "Preferred") having a
liquidation value of $5,000 per share (the "Preferred") and warrants (the
"Warrants") to purchase 8,500 shares of common stock of the Company, par value
$0.001 per share ("Common Stock"). Such purchase by Subscriber is part of an
offering in which an aggregate of 100 Units will be sold simultaneously with
such sale to Subscriber. The purchasers of the 100 Units are referred to herein
collectively as the "Purchasers." The purchase price will be paid in full and in
cash at the Closing. The date of the Closing is referred to herein as the
"Completion Date."
3. The Certificate of Determination for the Preferred is in the form of
Exhibit A. The Warrants are in the form of Exhibit B.
4. Registration.
(a) The Company represents that it has no knowledge of any facts or
circumstances which at any time from and after December 15, 1997
would make it ineligible to file registration statements on Form
S-3 for sales of securities by shareholders of the Company. The
Company will on or before December 19, 1997 file a registration
statement on Form S-3 (or on a similar form if S-3 is not
available) (the "Registration Statement") for the
non-underwritten public sale by the holders of the shares of
Common Stock which have theretofore been issued or which may
thereafter be issued on conversion of the Preferred or upon
exercise of the Warrants.
(b) The Company shall use its best efforts to cause the Registration
Statement to become effective not later than 60 days after the
date of filing, and, subject to Section 4(h), to remain effective
for two years with respect to Common Stock issued upon conversion
of Preferred Stock and three years with respect to Common Stock
issued upon exercise of Warrants; provided, however, that the
Subscriber shall provide all such information and materials
relating to the Subscriber, and take all such action as may be
required in order to permit the Company to comply with all the
applicable requirements of the SEC and to obtain any desired
acceleration of the effective date of such Registration
Statement, such provision of information and materials to be a
condition precedent to the obligations of the Company pursuant to
this Section. The registration shall be accompanied by blue sky
clearances in such states as the holders may reasonably request.
(c) The Company shall pay all expenses of the registration hereunder,
other than the holders' brokerage fees, discounts or commissions,
and transfer taxes, if any.
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(d) Registration rights may be assigned to assignees of the
Preferred, the Warrants or the underlying stock, but only with
the Company's prior written consent, which consent shall not be
unreasonably withheld or delayed. The provisions of this Section
are for the benefit of the Subscriber and Subscriber's personal
representatives and permitted assigns.
(e) In connection with such registration, the Company and the
Subscriber will sign indemnification agreements which are
conventional in transactions of this kind.
(f) Should Subscriber from time to time or times give to the Company
notice that it has assigned all or any part of the Preferred or
the Warrants or any shares of Common Stock issuable on conversion
or exercise in transactions permitted hereunder, the Company
shall, at no cost to Subscriber, within five business days file a
supplement to the registration statement to reflect the name(s)
of the transferee(s) as (a) selling shareholder(s).
(g) Notwithstanding Section 4(b), the Company shall be entitled to
postpone the declaration of effectiveness of any Registration
Statement prepared and filed pursuant to this Section 4 for a
reasonable period of time, but not in excess of 60 calendar days
after the applicable deadline, if the Board of Directors of the
Company determines that there exists material non-public
information about the Company which is not disclosed, and is
required to be disclosed, in the prospectus included in the
Registration Statement, and which information was not theretofore
known to the Company.
(h) Subscriber agrees that, upon receipt of any notice from the
Company of the happening of a Material Event, Subscriber will
forthwith discontinue disposition of the Common Stock pursuant to
any Registration Statement described in Section 4(b) for not more
than 45 days, before the end of which period, the Company agrees
to deliver to Subscriber copies of supplemented or amended
prospectuses prepared by the Company. "Material Event" means the
happening of any event during the period that the Registration
Statement described in Section 4(b) hereof is required to be
effective as a result of which such registration statement or the
related prospectus contains or may contain any untrue statement
of a material fact or omits or may omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading.
(i) Subscriber agrees that for a period of 12 months from the Closing
it shall not offer, sell, contract to sell, grant any option to
purchase or otherwise dispose of any Common Stock (each, a
"Sale") that Subscriber does not own as of such date, provided,
however, that no such restriction shall apply to any Common Stock
to be issued to Subscriber upon the conversion of any Preferred
which is converted within 10 business days after such Sale or
upon the exercise of any Warrants which are exercised within 10
business days after such Sale.
5. The Company covenants to call a meeting of stockholders on or before
April 30, 1998 and to hold such meeting not later than June 30, 1998 (the
"Annual Meeting") and to propose to the stockholders at such meeting that the
stockholders approve the issuance of shares on conversion of the Preferred and
on exercise of the Warrants. Xxx X. Xxxxx has agreed to vote in favor of such
approval, and the Board of Directors of the Company will recommend that the
stockholders of the Company vote in favor of such approval. Until such approval
is obtained, the Warrants shall not be exercisable, and the maximum number of
shares which will be issued on conversion of the Preferred by all Purchasers is
1,760,000, issuable on a first converted-first exercised basis. Should such
approval not be obtained on or before June 30, 1998, then until such approval is
obtained, the Company shall on demand by Subscriber made at any time or times
redeem any portion of the Preferred Stock which is not convertible under the
preceding sentence and which is designated by Subscriber for redemption (the
"Redeemed Portion") at a redemption price equal to $6,000 per share proposed to
be converted plus accrued but unpaid dividends. The redemption price for each
redemption demand shall be payable within 90 business days after such demand is
made, and shall accrue interest from the date of the demand by Subscriber at 11%
per annum or, if
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less, the maximum statutory interest rate in California. Interest shall be
payable on demand by Subscriber after such 90th day.
6. Certain General Representations.
(a) Subscriber represents and warrants that it is purchasing the
Units solely for investment solely for its own account and not
with a view to or for the resale or distribution or of Units, or
of the Preferred or any shares (the "Shares") of Common Stock
issuable upon conversion or exercise thereof .
(b) Subscriber understands that it may sell or otherwise transfer the
Units, the Preferred, the Warrants or the Shares only if such
transaction is duly registered under the Securities Act of 1933,
as amended, under the Registration Statement or otherwise, or if
Subscriber shall have received the favorable opinion of counsel
to the holder, which opinion shall be reasonably satisfactory to
counsel to the Company, to the effect that such sale or other
transfer may be made in the absence of registration under the
Securities Act of 1933, as amended (the "Securities Act") , and
registration or qualification in every applicable state. The
certificates representing the aforesaid securities will be
legended to reflect these restrictions, and stop transfer
instructions will apply. Subscriber realizes that the Units are
not a liquid investment.
(c) Subscriber has not relied upon the advice of a "Purchaser
Representative" (as defined in Regulation D of the Securities
Act) in evaluating the risks and merits of this investment.
Subscriber has the knowledge and experience to evaluate the
Company and the risks and merits relating thereto.
(d) Subscriber represents and warrants that Subscriber is an
"accredited investor" as such term is defined in Rule 501 of
Regulation D promulgated pursuant to the Securities Act of 1933,
as amended, and shall be such on the date any shares are issued
to the holder; Subscriber acknowledges that Subscriber is able to
bear the economic risk of losing Subscriber's entire investment
in the shares and understands that an investment in the Company
involves substantial risks; Subscriber has the power and
authority to enter into this agreement, and the execution and
delivery of, and performance under this agreement shall not
conflict with any rule, regulation, judgment or agreement
applicable to the Subscriber; and Subscriber has invested in
previous transactions involving restricted securities.
(e) Subscriber represents that Subscriber's investment decision to
purchase the Units was based exclusively on the Company's SEC
filings.
(f) The Subscriber acknowledges that it has been informed of, and has
considered in evaluating its investment in the Units, the
following factors (without limitation): (i) the Company's
business and prospects are highly dependent on the acceptance of
the Company's Internet Payment System and other Internet-related
products and services, and on widespread adoption of the Internet
as a medium for commercial transactions; (ii) the Company is
currently in the process of shifting the focus of its business
away from the Company's Internet Payment System and towards the
Company's Interactive Messaging Platform, and there can be no
assurance as to the technical viability or market acceptance of
the Interactive Messaging Platform, (iii) the market for
Internet-based transaction systems has only recently begun to
develop, is rapidly evolving and is characterized by an
increasing number of entrants and rapid technological change;
(iv) the future viability of the Internet as a medium for
commercial transactions is highly speculative; the Internet may
not prove to be a viable commercial marketplace because of
inadequate development of the necessary infrastructure, such as
reliable network backbone or timely development of complementary
products, such as high speed modems; (v) if the necessary
infrastructure or
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complementary products are not developed, if the Internet does
not become a viable commercial marketplace, or if the Company's
Internet Payment System and Interactive Messaging Platform are
not widely adopted by merchants and consumers, the Company's
business, operating results and financial condition will be
materially adversely affected; and (vi) the Company is currently
actively exploring various strategic options which may include
without limitation the acquisition of the Company or its assets
by a third party, or an acquisition by the Company of other
businesses or technologies, and the Company has engaged an
investment bank to advise it in connection with such strategic
options.
7. Fees and Expenses.
(a) The Company will upon Closing pay to Xxxxxxx Trading Company a
fee for all Purchasers which aggregates $50,000.
(b) The Company will at Closing pay a total of $15,000 to Xxxxx X.
Xxxxxx for his services as counsel to certain Purchasers in
connection herewith.
(c) Except as aforesaid, each party shall bear its own expenses in
connection with this transaction.
8. Funding Limitations; Certain Company Representations and Covenants.
(a) During the 200-day period after the Completion Date, but only so
long as the Purchasers in the aggregate continue to own not less
than 50% of the Preferred, the Company will not without the prior
written consent of Subscriber raise funds by way of the sale of
debt or equity securities pursuant to Regulation D or Regulation
S under the Securities Act except:
(i) from existing shareholders of the Company;
(ii) from an entity whose relationship with the Company creates
intangible value for the Company; or
(iii) to fund merger and or acquisition related activity.
(b) Notwithstanding anything to the contrary contained in Section
8(a), the Company may, upon 10 days' prior written notice to
Subscriber, raise additional funds within the period specified in
Section 8(a) to the extent the Board of Directors determines, in
good faith, that such action is necessary in order to allow the
Company to meet its obligations as they become due. The notice to
Subscriber aforesaid shall set forth in detail the nature of the
proposed financing and detailed factors and all other relevant
information which support the Board's determination as aforesaid.
(c) The Company represents that neither the issuance of the Preferred
or Warrants, nor the conversion or exercise thereof, will trigger
any rights under any outstanding securities of the Company.
(d) For so long as Subscriber owns any shares of Preferred, the
Company will promptly forward to Subscriber copies of all press
releases by the Company and all filings made by the Company with
the Securities and Exchange Commission.
9. The Preferred shall be transferable by the Investor only with the prior
written consent of the Company, which shall not be unreasonably withheld or
delayed. It shall be a condition precedent to any transfer that the transferee
enter into an agreement containing representations and covenants of the
transferee substantially similar to those contained in this Agreement.
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10. This Agreement may not be changed or terminated except by written
agreement of the Company and a majority-in-interest of the Purchasers. It shall
be binding on the parties and on their personal representatives and permitted
assigns. It sets forth all agreements of the parties. It shall be enforceable by
decrees of specific performance (without posting bond or other security) as well
as by other available remedies. This Agreement may be signed in counterparts.
This Agreement shall be governed by the internal laws of the State of
California. The California courts shall have exclusive jurisdiction over this
instrument and the enforcement thereof. Service of process shall be effective if
by certified mail, return receipt requested.
Subscriber: FIRST VIRTUAL HOLDINGS INCORPORATED
_________________________ By:_____________________________
Number of Units: _____________
