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Exhibit 10.14
FIRST VIRTUAL HOLDINGS INCORPORATED
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
This Series D Preferred Stock Purchase Agreement (the "Agreement") is
made as of August 26, 1996, among First Virtual Holdings Incorporated, a
Delaware corporation (the "COMPANY"), with its principal office at 00000 Xx
Xxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, XX 00000-0000, and First Data Corporation, a
Delaware corporation with a principal place of business at 0000 Xxxxx Xxxxxx
Xx., Xxxxxxxxx, Xxxxxxxx 00000 (the "PURCHASER" or "FDC").
SECTION 1
Authorization and Sale of Preferred Stock
1.1 Authorization. The Company has authorized or will have
authorized as of the Closing Date (as defined below) the sale and issuance of
200,000 shares of its Series D Preferred Stock (the "SERIES D PREFERRED"), and
40,000,000 shares of its Common Stock (the "COMMON STOCK") having the rights,
restrictions, privileges and preferences as set forth in the Company's Amended
and Restated Certificate of Incorporation in the form attached to this
Agreement as Exhibit A (the "RESTATED CERTIFICATE").
1.2 Sale of Series D Preferred. Subject to the terms and
conditions hereof, the Company will issue and sell to the Purchaser, and the
Purchaser will buy from the Company, 200,000 shares of Series D Preferred (the
"SHARES") at a cash purchase price of $15.00 per share.
1.3 Warrant; Letter of Intent. At the Closing (as hereinafter
defined) the Company shall issue to the Purchaser a warrant (the "WARRANT") to
purchase shares of its Common Stock (the "WARRANT SHARES") in substantially the
form attached hereto as Exhibit G. At the Closing, the Company and the
Purchaser shall each execute and deliver a Marketing and Product Development
Agreement between the Company and Purchaser, in substantially the form attached
hereto as Exhibit F.
SECTION 2
Closing Date; Delivery
2.1 Closing Date. The closing of the purchase and sale of the
Shares hereunder (the "CLOSING") shall be held at 10:00 a.m. on August 21, 1996
or on such other date as the Company and the Purchaser may agree to (the date
of such Closing being referred to as the "CLOSING DATE"). The place
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of the Closing (including the place of delivery to the Purchaser by the Company
of the certificates evidencing the Shares and the Warrant and the place of
payment to the Company by the Purchaser of the purchase price therefor) shall
be at the principle executive offices of the Company, or such other place as
the Purchaser and the Company may mutually agree.
2.2 Delivery. At the Closing, (i) the Company will deliver to the
Purchaser a certificate representing the Shares purchased by the Purchaser
against payment of the purchase price therefor, by check or wire transfer
payable to the Company, or by a combination thereof, and (ii) the Company shall
deliver the Warrant to the Purchaser against payment of the purchase price
therefor, by check or wire transfer payable to the Company, in the amount of
$20,000. In the event the Closing shall not have occurred by August 31, 1996
(the "Termination Date") then, unless otherwise specifically agreed by the
parties, this Agreement shall terminate and none of the parties hereto shall
have any obligation or liability to the other party for any reason, including
without limitation any failure to take any action which may be necessary to
ensure that the condition to closing set forth in Section 5 and Section 6
hereof are satisfied prior to the Termination Date.
SECTION 3
Representations and Warranties of the Company
Except as set forth on Exhibit B attached hereto, the Company hereby
represents and warrants to the Purchaser as follows:
3.1 Organization and Standing. The Company is a corporation duly
organized and existing under, and by virtue of, the laws of the State of
Delaware and is in good standing under such laws. The Company has requisite
corporate power to own and operate its properties and assets, and to carry on
its business as presently conducted and as proposed to be conducted. The
Company is duly licensed or qualified to do business as a foreign corporation,
and is in good standing, in each state wherein the properties owned or leased
or the business transacted by the Company makes such qualification to do
business as a foreign corporation necessary and where the failure to qualify
would have a material and adverse effect on the condition of the Company,
financial or otherwise, and no other jurisdiction has demanded, requested or
otherwise indicated that (or inquired whether) the Company is required to so
qualify.
3.2 Corporate Power. The Company has all requisite legal and
corporate power to execute and deliver this Agreement, the Amended and Restated
Shareholder Rights Agreement attached hereto as Exhibit C (the "SHAREHOLDER
RIGHTS AGREEMENT"), the Warrant and the Marketing and Product Development
Agreement (collectively, the "TRANSACTION DOCUMENTS"), to sell and issue the
Shares hereunder, to issue the Common Stock issuable upon conversion of the
Preferred Shares and upon exercise of the Warrant and to carry out and perform
its obligations under the terms of the Transaction Documents.
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3.3 Subsidiaries. The Company has no subsidiaries or affiliated
companies and does not otherwise own or control, directly or indirectly, any
voting security or other equity interest in any other corporation, association
or business entity.
3.4 Capitalization. The authorized capital stock of the Company
consists solely of 40,000,000 shares of Common Stock, of which 4,441,519 shares
are issued and outstanding, 1,545,816 shares of Series A Preferred Stock, of
which 693,544 are issued and outstanding, and 1,724,679 shares of Series B
Preferred Stock, of which 1,248,945 are issued and outstanding, 130,952 shares
of Series C Preferred Stock, of which 130,952 are issued and outstanding, and
200,000 shares of Series D Preferred none of which has been or will be issued
or outstanding prior to the Closing. All such issued and outstanding shares
have been duly authorized and validly issued, and are fully paid and
nonassessable. All outstanding shares of capital stock of the Company have
been issued free of preemptive or similar rights. The Company has, and will at
all relevant times have, reserved 200,000 shares of Series D Preferred for
issuance hereunder and sufficient shares of Common Stock for issuance upon
conversion of the Shares and upon exercise of the Warrant. The Company has
reserved 2,000,000 shares of Common Stock for issuance pursuant to its 1995
Stock Option Plan, of which options to purchase 720,395 shares are outstanding,
and 468,750 shares of Common Stock for issuance pursuant to its 1994 Stock
Option Plan, of which options to purchase 468,750 shares are outstanding. The
Company has reserved 1,000,000 shares for issuance upon exercise of additional
outstanding options granted to officers, directors, employees and consultants
of the Company, which options were not granted under the 1994 Stock Option Plan
or the 1995 Stock Option Plan. The Company has further reserved 852,272 shares
of Series A Preferred Stock, 475,734 shares of Series B Preferred Stock and
47,619 shares of Common Stock for issuance upon exercise of outstanding
warrants. The Company has also issued a warrant to purchase a number of shares
of Common Stock equivalent to up to 4% of its outstanding capital stock as of
the date of exercise upon attainment of certain performance targets by the
holder of such warrant. All outstanding Common Stock and Preferred Stock was
issued in compliance with all federal and state securities laws. Assuming the
accuracy of the Purchaser's representations in Section 4 below, upon issuance
the Shares and the Warrant will have been issued in compliance with all federal
and state securities laws.
3.5 Authorization; Conflicts. All corporate action on the part of
the Company, its directors and shareholders necessary for the authorization,
execution, delivery and performance of the Transaction Documents, the
authorization, sale, issuance and delivery of the Shares and the Warrant (and
the Common Stock issuable upon conversion of the Shares and upon exercise of
the Warrant) and the performance of the Company's obligations under each of
the Transaction Documents has been taken or will be taken prior to the Closing.
The Transaction Documents, when executed and delivered by the Company, shall
constitute valid and binding obligations of the Company enforceable in
accordance with their respective terms. The Shares, when issued in compliance
with the provisions of this Agreement, will be validly issued, fully paid and
nonassessable, and free of any preemptive or similar
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rights and liens, encumbrances or other adverse claims (other than such
preemptive rights, liens, encumbrances or other rights which shall have been
waived on or prior to the Closing Date). The shares of Common Stock issuable
upon conversion of the Shares and upon exercise of the Warrant have been duly
and validly reserved and, when issued in compliance with the provisions of this
Agreement or of the Warrant, as the case may be, will be validly issued, fully
paid and nonassessable, and free of any preemptive or similar rights and liens,
encumbrances or other adverse claims (other than such preemptive rights, liens,
encumbrances or other rights as shall have been waived on or prior to the
Closing Date). The Series D Preferred will have the rights, preferences and
privileges set forth in the Restated Certificate. Except as set forth above,
or in the Shareholder Rights Agreement, there are no outstanding options,
warrants, conversion privileges, preemptive rights or other rights to purchase
or subscribe for or otherwise acquire any security of the Company or any
subsidiary of the Company. Except as set forth in the Shareholder Rights
Agreement among the Company and certain of its shareholders, the Company is not
a party to or subject to any agreement or understanding, and to the knowledge
of the Company there is no agreement or understanding between any persons or
entities, which offers or relates to the voting of any securities of the
Company. The Company holds no stock in treasury. The execution, delivery and
performance by the Company of the Transaction Documents and compliance
therewith will not result in any violation of and will not conflict with, or
result in a breach of any of the terms of, or constitute a default under, the
Company's Certificate of Incorporation or Bylaws or any mortgage, indenture,
agreement, instrument, judgment, decree, order, rule or regulation or other
restriction to which the Company is a party or by which it is bound or any
provision of state or Federal law to which the Company is subject, or result in
the creation of any mortgage, pledge, lien, encumbrance or charge upon any of
the properties or assets of the Company pursuant to any such term or result in
the suspension, revocation, impairment, forfeiture or non-renewal of any
permit, license, authorization or approval applicable to the Company's
operations or any of its assets or properties.
3.6 Title to Properties and Assets; Liens, etc. The Company has
good and marketable title to its properties and assets, and has good title to
all its leasehold interests, in each case subject to no mortgage, pledge, lien,
lease, encumbrance or charge, other than (i) the lien of current taxes not yet
due and payable, and (ii) possible minor liens and encumbrances which do not in
any case materially detract from the value of the property subject thereto or
materially impair the operations of the Company, and which have not arisen
otherwise than in the ordinary course of business.
3.7 Financial Statements; Liabilities. The Company has delivered
to the Purchaser its audited balance sheet and statement of operations as of
and for fiscal year ended December 31, 1995, and its unaudited balance sheet
and statement of operations as of and for the six months ended June 30, 1996
(the "FINANCIAL STATEMENTS"). The Financial Statements are complete and
correct in all material respects and have been prepared in accordance with
generally accepted accounting principles, except that the unaudited Financial
Statements do not contain footnotes and are subject to normal recurring
adjustments for such period. The Financial Statements accurately set out and
describe the financial condition and operating results of the Company as of the
dates, and during the periods, indicated therein. Since June 30, 1996, there
has not been any change in the assets, liabilities, financial condition or
operations of the Company from that reflected in the Financial Statements,
except changes in the ordinary course of business which have not been, in the
aggregate, materially adverse. The Company does not have any liabilities of
any sort with a value in excess of $200,000 in the aggregate that are not
disclosed in the Financial Statements.
3.8 Outstanding Debt. Except as set forth in the Financial
Statements the Company has no outstanding indebtedness for borrowed money and
is not a guarantor or otherwise contingently liable for any indebtedness for
borrowed money (including, without limitation, liability by way of agreement,
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contingent or otherwise, to purchase, provide funds for payment, supply funds
or otherwise invest in any debtor or otherwise to insure any creditor against
loss). There exists no default under the provisions of any instrument
evidencing any such indebtedness or otherwise or of any agreement relating
thereto.
3.9 Shareholders, Directors and Officers; Indebtedness. The
Company is not indebted, directly or indirectly, to any of its officers,
directors or shareholders or any of their respective relatives or affiliates.
No officer, director or shareholder of the Company, or any of their relatives
or affiliates, is indebted to the Company. To the knowledge of the Company,
none of the officers or directors or significant employees or advisors of the
Company, or their respective spouses, or relatives, owns directly or
indirectly, a material interest in any entity that is a competitor, customer or
supplier of (or has any existing contractual relationship with) the Company.
3.10 Litigation and Bankruptcy Proceedings.
(a) There is neither pending nor, to the knowledge of the
Company, threatened any action, suit, proceeding or claim, whether or not
purportedly on behalf of the Company, to which the Company is or may be named
as a party or its property is or may be subject, or to the knowledge of the
Company, to which any officer, key employee or principal shareholder of the
Company is subject and in which an unfavorable outcome, ruling or finding in
any such matter or for all such matters taken as a whole might have a material
adverse effect on the condition, financial or otherwise, prospects, or
operations of the Company. The Company is not aware of any specific valid
basis for any claim of the type described in the preceding sentence, and the
Company has no knowledge of any unasserted claim, the assertion of which is
likely, and which, if asserted, will seek damages, an injunction or other
legal, equitable, monetary or nonmonetary relief, which claim individually or
collectively with other such unasserted claims if granted would have a material
adverse effect on the condition, financial or otherwise, prospects or
operations of the Company.
(b) The Company has not admitted in writing its inability
to pay its debts generally as they become due, filed or consented to the filing
against it of a petition in bankruptcy or a petition to take advantage of any
insolvency act, made an assignment for the benefit of creditors, consented to
the appointment of a receiver for itself or for the whole or any substantial
part of its property, or had a petition in bankruptcy filed against it, been
adjudicated a bankrupt or filed a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other similar law or
statute.
3.11 Consents. No consent, approval, qualification, order or
authorization of, or filing with, any governmental authority, is required in
connection with the Company's valid execution, delivery or performance of the
Transaction Documents or the offer, sale or issuance of the Shares or the
consummation of any other transaction contemplated on the part of the Company
except for the filing of the Restated Certificate with the Delaware Secretary
of State, which filing will be completed prior to the Closing and filing of
notices required by applicable Federal and state securities laws.
3.12 Permits, Franchises, Licenses, Trademarks, Patents, and Other
Rights. To the knowledge of the Company, the Company has all governmental and
other permits, licenses and other similar authority necessary for the conduct
of its business as now being conducted by it, the lack of which could
materially
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and adversely affect the operations or condition, financial or otherwise, or
prospects of the Company, and it is not in default in any material respect
under any of such permits, licenses or other similar authority.
3.13 Patents, Trademarks, etc. To the knowledge of the Company,
the Company owns or has the right, or prior to the Closing will own or have the
right, to use, free and clear of all liens, charges, claims and restrictions,
all patents, trademarks, service marks, trade names, copyrights, licenses and
rights necessary to its business as now conducted (the "INTELLECTUAL PROPERTY")
and is not infringing upon or otherwise acting adversely to the right or
claimed right of any person or entity under or with respect to such party's
patents, trademarks, service marks, trade names or copyrights. The execution
and delivery by the Company of the Transaction Documents and its performance of
its obligations under the Transaction Documents will not violate the terms of
any of the Company's rights in the Intellectual Property. There are no
outstanding options, licenses, or agreements of any kind relating to the
Intellectual Property, nor is the Company bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes of any other person or entity. The Company
has not received any communications alleging that the Company has violated or,
by conducting its business as proposed, would violate any patent, trademark,
service xxxx, trade name, copyright or trade secret or other proprietary right
of any other person or entity. The Company is not aware that any of its
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere
with the use of such employee's best efforts to promote the interests of the
Company or that would conflict with the Company's business as proposed to be
conducted.
3.14 Material Contracts and Commitments. Neither the Company, nor,
to the best knowledge of the Company, any third party is in default under (a)
any material contract, agreement or instrument to which the Company is a party
or by which it is bound or (b) any agreement with respect to indebtedness for
borrowed money.
3.15 Compliance with Other Instruments, None Burdensome, etc. The
Company is not in violation of any term of the Restated Certificate or the
By-Laws, or in any material respect of any term or provision of any mortgage,
indenture, contract, agreement, instrument, judgment or decree, and to the best
of its knowledge, is not in violation of any order, statute, rule or regulation
applicable to the Company, which violation reasonably would be expected to have
a material adverse effect on the Company's business, condition (financial or
otherwise), prospects or operations. The execution, delivery and performance
of and compliance with the Transaction Documents and the issuance of the
Shares and the Common Stock issuable upon conversion of the Shares and the
exercise of the Warrant, have not resulted and will not result in any violation
of, or conflict with, or constitute a default under, or result in the creation
of, any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company; and there is no such violation or default
or event that, with the passage of time or giving of notice or both, would
constitute a violation or default which materially and adversely affects the
Company's business , condition (financial or otherwise), prospects or
operations.
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3.16 Employees. To the best of the Company's knowledge, no
employee of the Company is in violation of any term of any employment contract,
patent disclosure agreement or any other contract or agreement relating to the
relationship of any such employee with the Company or any other person or
entity because of the nature of the business conducted or to be conducted by
the Company. The Company does not have and has never had any collective
bargaining agreements covering any of its employees.
3.17 Employee Agreements. Each person presently employed by the
Company, including its officers, has executed (or will execute by the Closing
Date) a Proprietary Information Agreement in substantially the form of Exhibit
D attached hereto.
3.18 Employee Benefit Plan Obligations. The Company does not
maintain or have any obligations with respect to any employee benefit plan
(within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974 ("ERISA")). The Company is not, nor was it at any time, obligated
to contribute to any employee pension benefit plan which is or was a
multi-employer plan within the meaning of Section 3(37) of ERISA.
3.19 Disclosure. This Agreement and the Exhibits hereto as well as
any other document, certificate, schedule, financial, business or other written
statement described in Exhibit B do not contain any untrue statement of a
material fact and do not omit to state a material fact necessary in order to
make the statements contained herein or therein not misleading. To the
knowledge of the Company, there is no fact or circumstance that materially and
adversely affects the condition, financial or otherwise, assets, business,
prospects or operations of the Company that has not been disclosed to the
Purchaser.
3.20 Registration Rights. Except as set forth in the Shareholder
Rights Agreement, the Company is not under any obligation to redeem, or to
register under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
any of its securities.
3.21 Governmental Consent, etc. No consent, approval or
authorization of, or designation, declaration or filing with, any governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement and the other Transaction Documents,
or the offer, sale or issuance of the Shares (or the Common Stock issuable
upon conversion of the Shares or exercise of the Warrant), or the consummation
of any other transaction contemplated thereby, except (a) filing of the
Restated Certificate in the office of the Secretary of State of the State of
Delaware, which the Company will complete prior to the Closing, and (b)
qualification (or taking such action as may be necessary to secure an exemption
from qualification, if available) of the offer and sale of the Shares (and the
Common Stock issuable upon conversion of the Shares or exercise of the
Warrant) under applicable Blue Sky laws, which filing and qualification, if
required, will be accomplished in a timely manner prior to or promptly upon
completion of the Closing.
3.22 Brokers or Finders. The Company has not incurred, and will
not incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby.
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3.23 Section 83(b) Elections. To the knowledge of the Company,
each individual who purchased shares of the Company's Common Stock which vest
over time contingent on provision of services to the Company has timely filed
an election under Section 83(b) of the Internal Revenue Code of 1986, as
amended.
3.24 Use of Proceeds. The Company has not allocated any specific
portion of the proceeds of this transaction for any particular purpose. The
Company expects to add the proceeds of this transaction to working capital,
where such proceeds will be available for general corporate purposes
SECTION 4
Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to the Company with
respect to its purchase of the Shares and the Warrant as follows:
4.1 Investment Representations and Covenants of the Purchaser.
(a) This Agreement is made by the Company in reliance
upon the Purchaser's representations and covenants made in this Section 4. The
Purchaser represents that the Shares, the Warrant and the Common Stock issuable
upon conversion of the Shares and exercise of the Warrant will be acquired for
investment for its own account, not as a nominee or agent, and not with a view
to the sale or "distribution" of any part thereof within the meaning of the
Securities Act.
(b) The Purchaser understands and acknowledges that the
offering of the Shares and the Warrant pursuant to this Agreement will not, and
any issuance of Common Stock on conversion of the Shares may not, be registered
under the Securities Act on the ground that the sale provided for in this
Agreement and the issuance of securities hereunder is exempt pursuant to
Section 4(2) of the Securities Act, and that the Company's reliance on such
exemption is predicated on the Purchaser's representations set forth herein.
(c) The Purchaser is an "accredited investor" within the
meaning of Regulation D under the Securities Act.
(d) The Purchaser is experienced in making venture
capital investments in high-technology companies and it is able to fend for
itself in transactions such as the one contemplated by this Agreement, has such
knowledge and experience in financial and business matters that it is capable
of evaluating the merits and risks of its prospective investment in the
Company, and has the ability to bear the economic risks of the investment.
(e) The Purchaser acknowledges that it has been informed
of, and has considered in evaluating its investment in the Shares and the
Warrant, the following factors (without limitation): (i) the Company's business
and prospects are highly dependent on the acceptance of the Company's Internet
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Payment System and other Internet-related products and services, and on
widespread adoption of the Internet as a medium for commercial transactions;
(ii) the market for Internet-based transaction payment systems has only
recently begun to develop, is rapidly evolving and is characterized by an
increasing number of entrants and rapid technological change; (iii) 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 a
reliable network backbone or timely development of complimentary products, such
as high speed modems; (iv) if the necessary infrastructure or complementary
products are not developed, if the Internet does not become a viable commercial
marketplace, or if the Company's Internet Payment System is not widely adopted
by merchants and consumers, the Company's business, operating results and
financial condition will be materially adversely affected.
(f) The Purchaser acknowledges and understands that the
Shares, the Warrant and any Common Stock acquired upon the conversion of the
Shares and exercise of the Warrant, must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available, and that, except as otherwise provided in the
Shareholder Rights Agreement, the Company is under no obligation to register
either the Shares or such Common Stock.
(g) The Purchaser acknowledges that it is familiar with
Rule 144 promulgated under the Securities Act.
(h) The Purchaser acknowledges that in the event the
applicable requirements of Rule 144 are not met, registration under the
Securities Act or compliance with another exemption from registration will be
required for any disposition of its stock.
(i) The Purchaser covenants that, in the absence of an
effective registration statement covering the stock in question, it will not
sell, transfer or otherwise dispose of the Shares, the Warrant or any Common
Stock issued on conversion of the Shares or exercise of the Warrant other than
in a transaction registered under the Securities Act or exempt from the
registration provisions thereof. In connection therewith the Purchaser
acknowledges that the Company shall make a notation on its stock books
regarding the restrictions on transfer set forth in this Section 4 and shall
transfer shares and warrants on the books of the Company only to the extent not
inconsistent therewith.
4.2 Receipt of Information. The Purchaser has received and
reviewed this Agreement and all Exhibits hereto, and a draft of Company's
Registration Statement on Form S-1 dated July 2, 1996 (but has had no
involvement in the preparation of such draft); to its knowledge, it, its
attorneys and its accountants have had access to, and an opportunity to review
all documents and other materials requested of the Company; to its knowledge,
it and they have been given an opportunity to ask any and all questions of; and
receive answers from, the Company concerning the terms and conditions of the
offering and to obtain all information it or they believe necessary or
appropriate to evaluate the suitability of an investment in the Shares and the
Warrant.
4.3 Authorization. This Agreement when executed and delivered by
the Purchaser will constitute a valid and legally binding obligation of the
Purchaser, enforceable in accordance with its
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terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies.
4.4 Brokers or Finders. The Company has not, and will not, incur,
directly or indirectly, as a result of any action taken by the Purchaser, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement.
SECTION 5
Purchaser Conditions to Closing
The Purchaser's obligation to purchase the Shares and the Warrant at
the Closing is, at the option of such Purchaser, subject to the fulfillment on
or prior to the Closing Date of the following conditions:
5.1 Representations and Warranties Correct. The representations
and warranties made by the Company in Section 3 hereof shall be true and
correct in all material respects when made, and shall be true and correct in
all material respects on the Closing Date with the same force and effect as if
they had been made on and as of the Closing Date.
5.2 Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to the Closing
Date shall have been performed or complied with in all material respects.
5.3 Opinion of Company's Counsel. The Purchaser shall have
received from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel to the Company, an
opinion addressed to it, dated the Closing Date, in substantially the form of
Exhibit E.
5.4 Compliance Certificate. The Company shall have delivered to
the Purchaser a certificate executed by the President of the Company, dated the
Closing Date, and certifying to the fulfillment of the conditions specified in
Sections 5.1 and 5.2 of this Agreement, and that he has made, or caused to be
made, such investigations as he deemed necessary in order to permit him to
verify the accuracy of the information set forth in such certificate.
5.5 Blue Sky. The Company shall have obtained all necessary Blue
Sky law permits and qualifications, or secured an exemption therefrom, required
by any state for the offer and sale of the Shares, the Warrant, the issuance of
Common Stock upon conversion of the Shares and the issuance of Common Stock
upon exercise of the Warrant.
5.6 Restated Certificate. The Restated Certificate shall have
been filed with the Secretary of State of the State of Delaware.
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5.7 Shareholder Rights Agreement. The Shareholder Rights
Agreement shall have been executed as set forth in Exhibit C hereto by each of
the parties listed on the signature pages thereto and shall be in full force
and effect as of the Closing Date.
5.8 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be satisfactory
in substance and form to the Purchaser and its counsel.
5.9 No Material Adverse Change. There shall have been no material
adverse change in the Company's business or financial condition or prospects,
except for continuing losses from operations consistent with past losses.
5.10 Marketing Agreement. The Company shall have duly executed and
delivered the Marketing and Product Development Agreement in the form attached
hereto as Exhibit F.
5.11 Consents. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body or any other person or entity
that are required in connection with the lawful issuance and sale of the
Shares, or the Common Stock to be issued on conversion of the Preferred Shares
or upon exercise of the Warrant, or any of the other transactions contemplated
by this Agreement or the other Transaction Documents shall have been duly
obtained and effective as of the Closing.
5.12 First USA Right. Section 20 of the Shareholder Rights
Agreement dated July 3, 1996 by and among the Company and certain of its
stockholders shall have been amended, terminated or waived so as to allow the
Company to commence utilizing payment card transaction acquirors other than
First USA Merchant Services, Inc. for payment processing services.
SECTION 6
Company Conditions to Closing
The Company's obligation to sell and issue the Shares at the Closing
is, at the option of the Company, subject to the fulfillment of the following
conditions:
6.1 Representations. The representations made by the Purchaser in
Section 4 hereof shall be true and correct in all material respects when made,
and shall be true and correct in all material respects on the Closing Date.
6.2 Blue Sky. The Company shall have obtained all necessary Blue
Sky law permits and qualifications, or secured an exemption therefrom, required
by any state for the offer and sale of the Shares, the Warrant, the issuance of
Common Stock upon conversion of the Shares and the issuance of Common Stock
upon exercise of the Warrant.
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6.3 Restated Certificate. The Restated Certificate shall have
been filed with the Secretary of State of the State of Delaware.
6.4 Payment of Purchase Price. The Purchaser shall have delivered
to the Company the purchase price for the Shares and the Warrant.
6.5 Marketing Agreement. The Purchaser shall have duly executed
and delivered a Marketing and Product Development Agreement in the form
attached hereto as Exhibit F.
SECTION 7
Covenants of the Purchaser
The Purchaser hereby covenants to and agrees with the Company as
follows:
7.1 Limitation on Ownership of Voting Stock.
(a) For a period of one year from the closing date of the
initial public offering of the Company's Common Stock, the Purchaser and its
Affiliates shall not acquire beneficial ownership of any Voting Stock (as
defined in Section 8.1), any securities convertible into or exchangeable for
Voting Stock, or any other right to acquire Voting Stock (except, in any case,
by way of stock dividends or other distributions made available to holders of
any Voting Stock generally) without the written consent of the Company, if the
effect of such acquisition would be to increase the Voting Power of all Voting
Stock then beneficially owned by the Purchaser and its Affiliates(as defined in
Section 8.1) or which it has a right to acquire to more than 10% of the Total
Voting Power of the Company. For purposes of this Section 7, "beneficial"
ownership shall not include, and this Section 7 shall not be applicable to, any
securities that are beneficially owned by a Purchaser in its capacity as a
fiduciary, employee benefit trustee, pension fund manager, investment adviser ,
quasi-fiduciary, trustee, agent or similar role for the benefit of third
parties other than the Purchaser and its affiliates.
(b) Recapitalization or Repurchase. The Purchaser will
not be obligated to dispose of any shares of Voting Stock if the aggregate
percentage beneficial ownership of the Purchaser is increased as a result of a
recapitalization of the Company or a repurchase of securities by the Company or
any other action taken by the Company or any Affiliate of the Company.
7.2 Voting.
(a) For a period of two years following the closing date
of the initial public offering of the Company's Common Stock, the Purchaser
shall take such action as may be required so that all shares of Common Stock of
the Company owned by the Purchaser and its Affiliates are voted for
management's nominees to the Board of Directors of the Company. The Purchaser,
as the holder of such shares of Common Stock, shall use its reasonable efforts
to be present, in person or by proxy, at all meetings of shareholders of the
Company as to which the designee of the Purchaser to the Board of
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Directors of the Company has received at least 20 days prior written notice so
that all shares of Common Stock beneficially owned by the Purchaser may be
counted for the purposes of determining the presence of a quorum at such
meetings.
(b) For so long as this Section 7.2 is in effect the
Purchaser shall not deposit any Warrant Shares in a voting trust or, except as
otherwise provided herein, subject any Warrant Shares to any arrangement or
agreement with respect to the voting of such Warrant Shares (except for the
granting of proxies to the proxy holders proposed by the Company's Board of
Directors, if the Purchaser so desires).
(c) Solicitation of Proxies. Without the Company's prior
written consent, the Purchaser and its Affiliates shall not solicit proxies
with respect to any Voting Stock, nor shall it become a "participant" in any
"election contest" (as such terms are used in Rule 14a-11 of Regulation 14A
under the Exchange Act) relating to the election of directors of the Company;
provided, however, that the Purchaser shall not be deemed to be a "participant"
by reason of the membership of any designee of the Purchaser on the Company's
Board of Directors. The Purchaser shall exercise its influence on the
management, Board of Directors and policies of the Company in a manner
consistent with its interests, the fiduciary duties of its designees on the
Company's Board of Directors, and any business agreements between the Purchaser
and the Company.
7.3 Right of First Offer. Prior to making any sale or transfer of
the Warrant or the Warrant Shares, the Purchaser shall give the Company the
opportunity to purchase such Warrant or Warrant Shares in the following manner:
(a) The Purchaser shall give notice (the "TRANSFER
NOTICE") to the Company in writing of such intention, specifying the portion of
the Warrant (the "WARRANT INTEREST") the amount of Warrant Shares proposed to
be sold or transferred, the proposed price per share therefor (the "TRANSFER
PRICE") and the other material terms upon which such disposition is proposed to
be made.
(b) The Company shall have the right, exercisable by
irrevocable written notice given by the Company to the Purchaser within 24
hours after receipt of such Transfer Notice, to purchase all but not part of
the Warrant Interest or the Warrant Shares specified in such Transfer Notice
for a price per share equal to the Transfer Price and otherwise on terms no
less favorable to the Purchaser than those described in the Transfer Notice;
provided that if the Company notifies the Purchaser of its election to exercise
its right of first offer, the Purchaser may, by notice to the Company, within 5
business days, withdraw the Transfer Notice, and decline to sell or transfer
the Warrant Interest or the Warrant Shares.
(c) If the Company exercises its right of first offer
hereunder, the closing of the purchase (including the payment in full therefor)
of the Warrant Interest or Warrant Shares with respect to which such right has
been exercised shall take place on the date specified in the Company's
acceptance (which date shall not be more than 45 days after the date of such
acceptance) at the offices of the Purchaser located at the address set forth in
this Agreement, or at such other time and place as the Company and the
Purchaser may agree. The Company and the Purchaser will use their respective
best
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efforts to comply with all Federal and state laws, rules and regulations
applicable to any purchase of a Warrant Interest or Warrant Shares under this
Section 7.3.
(d) If the Company does not exercise its right of first
offer hereunder within the time specified for such exercise, the Purchaser
shall be free, during the period of 120 calendar days following the expiration
of such time for exercise, to sell the Warrant Interest or Warrant Shares
specified in such Transfer Notice on terms no less favorable to the buyer of
such Warrant Interest or Warrant Shares than the terms specified in such
Transfer Notice.
(e) In the event that the Company elects to exercise a
right of first offer under this Section 7.3, the Company may specify prior to
closing such purchase another person as its designee to purchase the Warrant
Interest or Warrant Shares to which such notice relates. If the Company shall
designate another person as the Purchaser pursuant to this Section 7.3, the
giving of notice of acceptance of the right of first offer by the Company shall
constitute a legally binding obligation of the Company to complete such
purchase if such person shall fail to do so.
7.4 Common Stock Purchase Right.
(a) In the event that the Purchaser, or any transferee of
the Purchaser, elects to request redemption of any or all of the shares of
Series D Preferred purchased pursuant hereto by such Purchaser pursuant to
Section II(4) of the Restated Certificate, then following such redemption, the
Company shall be entitled to purchase from the Purchaser a number of fully paid
and nonassessable shares of the Company's Common Stock determined as
hereinafter provided, at a purchase price of $0.01 per share (subject to
adjustment in the event of stock splits, stock dividends and similar events).
(b) The number of shares of Common Stock which the
Company may purchase pursuant to this Section 7.4. from time to time shall
equal 250% of the number of shares of Series D Preferred previously redeemed by
the Company in accordance with Section IV(4) of the Restated Certificate
(subject to adjustment in the event of stock splits, stock dividends and
similar events).
(c) The Company's purchase right shall be exercised by
delivery of written notice stating the number of shares to be purchased and
requested effective date of the purchase, which shall not be less than 10 days
subsequent to the date of delivery of the notice, and delivery of payment of
the purchase price of the shares thereby purchased in cash or check. At the
requested effective date of the purchase, the Purchaser shall deliver to the
Company at its principal executive offices a stock certificate for the number
of shares purchased. In the event that the number of shares represented by the
stock certificate tendered exceeds the number of shares purchased by the
Company, the Company shall promptly thereafter issue to the Purchaser a new
certificate for the balance of the shares.
(d) The Company's rights pursuant to this Section 7.4
shall expire 60 days after such date as no shares of Series D Preferred are
held by the Purchaser or its transferees.
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SECTION 8
Miscellaneous
8.1 Certain Definitions. As used in this Agreement:
(a) Total Voting Power. The term "Total Voting Power of
the Company" means the total number of votes which may be cast in the election
of directors of the Company at any meeting of stockholders of the Company if
all securities entitled to vote in the election of directors of the Company
were present and voted at such meeting (other than votes that may be cast only
upon the happening of a contingency).
(b) Voting Stock. The term "Voting Stock" means the
Common Stock, and any other securities issued by the Company having the
ordinary power to vote in the election of directors of the Company (other than
securities having such power only upon the happening of a contingency).
(c) Person. The term "Person" shall mean any person,
individual, corporation, partnership, trust or other nongovernmental entity or
any governmental agency, court, authority or other body (whether foreign,
federal, state, local or otherwise).
(d) Affiliate. The term "Affiliate" of any person shall
mean any person controlling, controlled by or under common control with such
person.
8.2 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of California, without giving effect to the
conflicts of laws principals thereof.
8.3 Survival. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by the Purchaser
and the closing of the transactions contemplated hereby.
8.4 Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the parties
hereto, provided, however, that the rights of the Purchaser to purchase Shares
at the Closing shall not be assignable to a person or entity that is not an
affiliate of the Purchaser without the written consent of the Company.
8.5 Entire Agreement; Amendment. This Agreement and the other
documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof and supersede all prior written and all prior or
contemporaneous oral negotiations, agreements, arrangements and understandings.
Neither this Agreement nor any term hereof may be amended, waived, discharged,
or terminated other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge, or termination is
sought.
8.6 Notices, etc. All notices and other communications required
or permitted hereunder shall be in writing and shall be deemed effectively
given upon delivery to the party to be notified in person or
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by courier service or five days after deposit with the United States mail, by
registered or certified mail, postage prepaid, addressed (a) if to the
Purchaser, at such Purchaser's address set forth on the first page of this
Agreement, or at such other address as the Purchaser shall have furnished to the
Company in writing, with a copy to Xxxxxx Xxxxx, First Data Corporation, 0000
Xxxxx 000xx Xxxxxx, XX-00, Xxxxx, Xxxxxxxx 00000-0000 or (b) if to any other
holder of any Shares, at such address as such holder shall have furnished the
Company in writing, or, until any such holder so furnishes an address to the
Company, then to and at the address of the last holder of such Shares who has so
furnished an address to the Company, or (c) if to the Company, one copy should
be sent to its address set forth on the first page of this Agreement and
addressed to the attention of the President, or at such other address as the
Company shall have furnished to the Purchaser, with a copy to Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX
00000, Attn.: Xxxxxxx X. XxXxxxx, Esq.
8.7 Disclosure. The Company shall not publicize the investment by
FDC or any other aspect of the relationship between FDC and the Company (other
than information as has been previously disclosed to the public with FDC's
consent in a substantially similar form), in any press releases or promotional
materials, without FDC's prior consent, which consent shall not be unreasonably
withheld or delayed provided further that FDC's prior consent shall not be
required for statements which (a) refer to FDC as an investor in the Company or
to the dollar amount of FDC's investment in the Company or (b) refer to the
general nature of any agreements between the Company and FDC. The Company
shall exert reasonable efforts to obtain FDC's prior consent to any description
of FDC's investment contained in filings with governmental agencies, including
without limitation the Securities and Exchange Commission; provided that the
Company shall be under no obligation to delay any such filing in order to
obtain such consent if the Company is not able to obtain such consent prior to
the desired time of filing.
8.8 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any holder of any Shares, upon any breach or
default of the Company under this Agreement, shall impair any such right, power
or remedy of such holder nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
8.9 Expenses. The Company and the Purchaser shall each bear
their own expenses and legal fees with respect to this Agreement and the
transactions contemplated hereby; except that, the Company will pay the
reasonable legal fees and reasonable expenses (up to a maximum of $20,000) upon
receipt of a xxxx therefor at the Closing, incurred by counsel to FDC.
8.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
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8.11 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in fill force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to
any party.
8.12 Gender. The use of the neuter gender herein shall be deemed
to include the masculine and the feminine gender, if the context so requires.
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The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY" FIRST VIRTUAL HOLDINGS
INCORPORATED
a Delaware corporation
By: /s/ Xxx X. Xxxxx
------------------------------------
Xxx X. Xxxxx, President
"PURCHASER" FIRST DATA CORPORATION
a Delaware corporation
By: /s/ Xxx Xxxxx
------------------------------------
Title: Assistant Secretary
-----------------------------------
EXHIBITS:
A Restated Certificate
B Schedule of Exceptions
C Shareholder Rights Agreement
D Proprietary Information Agreement
E Opinion of Company Counsel
F Form of Marketing and Product Development Agreement
G Form of Warrant
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