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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 Xxxxxxxx & Xxxxxxxx, 000 Xxxxx
Xxxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000 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
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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.
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(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,
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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.
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(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
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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.
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(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
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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
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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 Xxx X. Xxxxx, 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
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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
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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 Xxx X. Xxxxx 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 Xx. Xxxxx 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
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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 Xxx X. Xxxxx 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
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hereby; provided however that the Company shall have offered Xx. Xxxxx 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) Xxx X. Xxxxx, June X. Xxxxx, Paymentech Merchant Services, Inc. and
First USA Financial (the
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"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 Xxxxxxxx & Xxxxxxxx, 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.
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(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 Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 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.
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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
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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
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(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
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cases addressed to the party for whom intended at its address set forth below:
If to the Purchasers:
SOFTBANK Holdings Inc.
00 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx
Vice Chairman
With a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
If to the Company:
First Virtual Holdings Incorporated
00000 Xx Xxxxxx Xxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxx X. Xxxxx
Chairman of the Board
and Chief Executive Officer
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxx X. Xxxxxxxx, 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
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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.
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