10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended September 30, 2003

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from       to

Commission file number 000-23305

FIRST VIRTUAL COMMUNICATIONS, INC.

(Exact name of registrant in its character)

Delaware
(State or other jurisdiction of
incorporation or organization) 77-0357037
(I.R.S. employer identification number)

3200 Bridge Parkway, Suite 202
Redwood City, CA 94065
(Address of principal executive offices)

(650) 801-6500
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

     The number of shares of Common Stock outstanding as of November 13, 2003 was 14,511,311.

TABLE OF CONTENTS

PART 1. FINANCIAL INFORMATION
	Item 1. Financial Statements
		Condensed Consolidated Balance Sheets
		Condensed Consolidated Statements of Operations
		Condensed Consolidated Statements of Cash Flows
		Notes to Unaudited Condensed Consolidated Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures about Market Risk
	Item 4. Controls and Procedures
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Changes in Securities
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT INDEX
EXHIBIT 4.11
EXHIBIT 4.12
EXHIBIT 4.13
EXHIBIT 4.14
EXHIBIT 10.52
EXHIBIT 10.53
EXHIBIT 10.54
EXHIBIT 10.55
EXHIBIT 10.56
EXHIBIT 10.57
EXHIBIT 10.58
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

First Virtual Communications, Inc.
Form 10-Q

Index

		Page
PART 1.	FINANCIAL INFORMATION		3
Item 1.	Financial Statements		3
	Condensed Consolidated Balance Sheets at September 30, 2003 and December 31, 2002		3
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2003 and 2002		4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2003 and 2002		5
	Notes to Unaudited Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		26
Item 4.	Controls and Procedures		26
PART II.	OTHER INFORMATION		27
Item 1.	Legal Proceedings		27
Item 2.	Changes in Securities		27
Item 6.	Exhibits and Reports on Form 8-K		28
SIGNATURES			30
EXHIBIT INDEX			31

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PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

First Virtual Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data; unaudited)

				September 30,			December 31,
				2003			2002
ASSETS
Current assets:
	Cash and cash equivalents			$	6,487		$	8,352
	Short-term investments				86			83
	Accounts receivable, net				2,408			4,080
	Inventory, net				—			613
	Prepaids and other current assets				992			406
			Total current assets		9,973			13,534
Property and equipment, net					1,109			2,197
Other assets					776			293
Intangible assets, net					3,374			3,736
				$	15,232		$	19,760
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable				1,404			1,192
	Current portion of long-term debt				1,000			—
	Accrued liabilities				6,015			5,139
	Deferred revenue				4,602			6,656
		Total current liabilities			13,021			12,987
Long-term debt, net of current portion					1,750			—
Stockholders’ equity:
	Convertible Preferred Stock, $.001 par value; 5,000,000 shares authorized; 27,437 shares issued and outstanding, respectively				—			—
	Common stock, $.001 par value; 100,000,000 shares authorized; 8,135,982 and 6,686,036 shares issued and outstanding, respectively				40			40
	Additional paid-in capital				119,331			118,531
	Accumulated other comprehensive loss				(310	)		(210	)
	Accumulated deficit				(118,600	)		(111,588	)
		Total stockholders’ equity			461			6,773
				$	15,232		$	19,760

See accompanying notes to condensed consolidated financial statements.

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First Virtual Communications, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data; unaudited)

			Three months ended						Nine months ended
			September 30,						September 30,
			2003			2002			2003			2002
Revenue
	Software		$	3,416		$	2,052		$	10,074		$	8,050
	Product			311			2,956			1,698			7,865
	Support service			1,647			1,129			4,873			3,467
		Total revenue		5,374			6,137			16,645			19,382
Cost of revenue
	Software			238			95			681			438
	Product			169			1,549			586			5,329
	Support service			529			395			1,491			1,273
		Total cost of revenue		936			2,039			2,758			7,040
Gross profit				4,438			4,098			13,887			12,342
Operating expense:
	Research and development			2,043			2,346			6,925			7,534
	Sales and marketing			2,863			2,618			8,234			6,908
	General and administrative			1,472			2,784			4,842			7,845
	Other non-recurring charges			—			—			838			—
		Total operating expense		6,378			7,748			20,839			22,287
Operating loss				(1,940	)		(3,650	)		(6,952	)		(9,945	)
Other income (expense), net				(52	)		40			(59	)		132
Minority interest in consolidated subsidiary				—			(17	)		—			—
Net loss			$	(1,992	)	$	(3,627	)	$	(7,011	)	$	(9,813	)
Basic and diluted net loss per share			$	(0.24	)	$	(0.45	)	$	(0.86	)	$	(1.31	)
Shares used in computing basic and diluted net loss per share				8,136			8,055			8,112			7,497

See accompanying notes to condensed consolidated financial statements.

4

First Virtual Communications, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands; unaudited)

					Nine Months Ended September 30,
					2003			2002
Cash flows from operating activities:
	Net loss				$	(7,011	)	$	(9,813	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation and amortization				1,543			2,372
		Provision for returns and doubtful accounts				58			281
		Provision for inventory				24			1,000
		Loss on disposal of fixed assets				351			—
		Loss on closure of FVC India				9			—
		Other				(95	)		(189	)
		Changes in assets and liabilities
			Accounts receivable			1,159			202
			Inventory			589			814
			Prepaid expenses and other assets			(343	)		(362	)
			Accounts payable			212			(1,086	)
			Accrued liabilities			(502	)		(493	)
			Deferred revenue			(148	)		3,051
				Net cash used in operating activities		(4,154	)		(4,223	)
Cash flows from investing activities:
	Acquisition of businesses					(132	)		(437	)
	Acquisition of property and equipment					(391	)		(494	)
	Proceeds from sales of short-term investments, net					—			1,852
				Net cash provided by (used in) investing activities		(523	)		921
Cash flows from financing activities:
	Proceeds from issuance of common stock, net					62			5,022
	Proceeds from drawdown of term loan					3,000			—
	Payment on long term debt					(250	)		—
				Net cash provided by financing activities		2,812			5,022
Net increase (decrease) in cash and cash equivalents						(1,865	)		1,720
Cash and cash equivalents at beginning of period						8,352			6,946
Cash and cash equivalents at end of period					$	6,487		$	8,666

See accompanying notes to condensed consolidated financial statements.

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First Virtual Communications, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Basis of Presentation

     First Virtual Communications, Inc. (the “Company”) has prepared the accompanying financial data for the quarterly period ended September 30, 2003 pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations.

     In the opinion of management, the accompanying condensed consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the Company’s consolidated financial position as of September 30, 2003, consolidated results of operations for the three and nine months ended September 30, 2003 and 2002, and consolidated cash flow activities for the nine months ended September 30, 2003 and 2002.

     The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates.

     The results of operations for the three and nine months ended September 30, 2003 are not necessarily indicative of the results to be expected for the full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto included in the Company’s 2002 Annual Report on Form 10-K.

     The unaudited condensed consolidated balance sheet at December 31, 2002 that has been derived from the audited consolidated financial statements at that date does not include all of the information and footnotes required by generally accepted accounting principles in the United States of America for complete financial statements.

     On June 26, 2003 the Company’s Board of Directors approved a 1-for-5 reverse split of the Company’s common stock, effective at 5:00 pm EDT on June 27, 2003, with trading commencing on a post-reverse stock split basis on market open on Monday June 30, 2003. The reverse split was previously approved by the stockholders at the Company’s June 13, 2003 Annual Stockholders Meeting. As of 5:00 pm EDT on June 27, 2003, each five shares of the Company’s outstanding common stock was automatically combined and converted into one share of common stock. In addition, the Company made adjustments to its outstanding options and warrants to reflect the reverse stock split. All outstanding common stock and outstanding option and warrant numbers reflected in this Quarterly Report, reflect the 1-for-5 reverse stock split.

Concentrations of credit risk

     Revenue during the three and nine months ended September 30, 2003 and 2002 and accounts receivable as of September 30, 2003 and December 31, 2002 of customers comprising more than 10% of revenue or receivable are summarized as follows:

		Three Months Ended September 30,						Nine Months Ended September 30,
		2003			2002			2003			2002
Revenue:
	Company A		30	%		—			18	%		—
	Company B		—			24	%		—			—
	Company C		—			—			—			10	%
	Company D		—			—			—			10	%

		September 30,			December 31,
		2003			2002
Accounts receivable:
	Company A		27	%		—
	Company E		—			20	%

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2. Stock Based Compensation

     As of September 30, 2003, the Company maintained stock option plans under which the Company may grant incentive stock options and non-qualified stock options to employees, consultants and non-employee directors. The Company has chosen to account for those plans under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations.

     The following table illustrates the effect on net income and earnings per share during the three and nine months ended September 30, 2003 and 2002 if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
Net Loss	$	(1,992	)	$	(3,627	)	$	(7,011	)	$	(9,813	)
Add: Stock-based employee compensation expense included in reported net income		—			4			8			39
Deduct: Total stock based employee compensation expense determined pursuant to SFAS 123		(286	)		(738	)		(916	)		(1,080	)
Pro forma net loss	$	(2,278	)	$	(4,361	)	$	(7,919	)	$	(10,854	)
As reported net loss per share (basic and diluted)	$	(0.24	)	$	(0.45	)	$	(0.86	)	$	(1.31	)
Pro forma net loss per share (basic and diluted)	$	(0.28	)	$	(0.54	)	$	(0.98	)	$	(1.45	)

     In December 2002, the Financial Accounting Standard Board issued Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of SFAS 123” (SFAS 148). This statement amends SFAS 123 to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of SFAS 123 to require disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company has adopted the annual disclosure provisions of SFAS 148 and adopted the interim disclosure provisions for financial reports beginning with the quarter ended December 31, 2002.

     The weighted-average estimated grant-date fair value of options granted under the Company’s various stock option plans was $0.88 and $1.23, respectively, during the three months ended September 30, 2003 and 2002, and $0.82 and $1.95, respectively, during the nine months ended September 30, 2003 and 2002. The fair value of each stock option on the date of grant was determined using the Black-Scholes model with the following assumptions:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
Risk-free interest rate		2.5	%		3.0	%		2.5	%		3.0	%
Volatility		113	%		113	%		113	%		113	%
Option term (in years)		5			5			5			5
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%

7

     On July 25, 2003, the Company offered a voluntary employee stock option exchange program to its employees and members of its board of directors. Under the exchange offer, eligible employees and members of the board of directors had the opportunity to exchange their outstanding stock options for new options to be granted under the Company’s 1999 Equity Incentive Plan and 1997 Equity Incentive Plan, pursuant to the terms of the replacement option agreements between the Company and its employees and members of the board of directors. Under the exchange offer, all outstanding options were eligible options. The replacement options will represent an option to purchase one share of the Company’s common stock for each option to purchase three shares of the Company’s common stock exchanged; provided, however, that under the exchange offer, options granted in the six-month period immediately preceding the offer date that were cancelled due to the participation in the offer will be replaced by the same number of replacement options. The replacement options will be granted on the replacement grant date, February 23, 2004 and will have an exercise price at least equal to the fair market value of First Virtual Communications’ common stock on that date. The new options will vest in equivalent monthly increments over a 24 month period commencing with the replacement grant date. Replacement options granted to employees located outside the United States may be subject to different vesting and other terms than those described above.

3. Additional consideration for Acquisition of FVC.COM (UK) Ltd.

     In May 1999, the Company acquired a controlling interest in FVC.COM (UK) Ltd., a distributor of the Company’s products in the United Kingdom and the Middle East. The Company acquired 52% of the outstanding stock of a newly incorporated holding company that owned 100% of the shares of this entity, in exchange for a cash payment of $750,000. The transaction was accounted for as a purchase; accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair market values at the date of acquisition.

     In July 2002, the Company acquired the remaining 48% interest of FVC.COM (UK) Ltd. in a transaction accounted for as a purchase business combination. The purchase price was comprised of cash consideration of $437,000, including direct acquisition costs of $178,000 for legal and consulting fees. Contingent on certain events, the purchase price further increased by $35,000 based on (1) a percentage of the gross profit of the United Kingdom sales territory for the period from June 1, 2002 to December 31, 2002 and (2) the results of collection of certain receivables outstanding as of the acquisition date. Subsequent to the year ended December 31, 2002, the Company fully collected the residual balance of the receivables as of the acquisition date. In the quarter ended March 31, 2003, the purchase price increased by $98,000, for a total final cash consideration of $570,000. The purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair market values at the date of acquisition. At the acquisition date, the book value of the assets and liabilities acquired approximated fair value. As a result, the purchase price was allocated to goodwill. In the second quarter of 2003, the Company made the aggregate additional consideration payment of $132,000.

4. Non-recurring Charges

     During the nine months ended September 30, 2003, the Company incurred $838,000 of non-recurring charges related to the relocation of the Company’s California office from Santa Clara to Redwood City and the closure of the Company’s India operations. The company incurred no non-recurring charges during the three months ended September 30, 2003 and 2002.

     The non-recurring charges for the nine months ended September 2003 and 2002 were as follows (in thousands):

			For the Nine Months Ended
			September 30,
			2003		2002
Relocation costs
	Fixed assets retirement		$	350	$	—
		Refurbishment cost		259		—
		Moving costs		69		—
	Total relocation costs			678		—
Closure of India operations				160		—
			$	838	$	—

5. Short Term Investments

8

     Management determines the appropriate classification of short-term investments in marketable securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Available-for-sale securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date. The net unrealized gains or losses on available-for-sale securities are reported as a component of comprehensive loss, net of tax. The specific identification method is used to compute the realized gains and losses on debt and equity securities.

     The Company regularly monitors and evaluates the realizable value of its marketable securities. If events and circumstances indicate that a decline in the value of these assets has occurred and is other than temporary, the Company records a charge to investment income (expense). At September 30, 2003, all short-term investments have been classified as “available-for-sale securities.”

     Marketable securities are comprised as follows (in thousands):

	September 30,		December 31,
	2003		2002
Certificate of deposit	$	70	$	70
Equity securities		16		13
	$	86	$	83

     As of September 30, 2003, the Company’s available-for-sale securities had contractual maturities of less than one year. Available- for-sale securities are comprised as follows at September 30, 2003 and December 31, 2002 (in thousands):

			Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
September 30, 2003
Equity securities	$	164	$	13	$	(161	)	$	16
Debt securities		70		—		—			70
Total	$	234	$	13	$	(161	)	$	86
December 31, 2002
Equity securities	$	164	$	3	$	(154	)	$	13
Debt securities		70		—		—			70
Total	$	234	$	3	$	(154	)	$	83

6. Inventory

     Inventories as of September 30, 2003 and December 31, 2002 were (in thousands):

	September 30,		December 31,
	2003		2002
Raw materials	$	—	$	266
Finished goods		—		347
Total inventory	$	—	$	613

     The Company notified its customers in May 2003 that it will no longer offer legacy ATM hardware products. All remaining inventory of those products have been written off and the Company intends to dispose of those products by the end of 2003.

9

7. Net Loss Per Share

     Basic loss per share is based on the weighted-average number of common shares outstanding excluding contingently issuable or returnable shares, such as shares of unvested restricted common stock. Diluted loss per share is based on the weighted-average number of common shares outstanding and dilutive potential common shares outstanding.

     As a result of the losses incurred by the Company for the three and nine months ended September 30, 2003 and 2002, all potential common shares were anti-dilutive and were excluded from the diluted net loss per share calculations for such periods.

     The following table summarizes securities outstanding that were not included in the calculations of diluted net loss per share for the three and nine months ended September 30, 2003 and 2002, since their inclusion would be anti-dilutive (in thousands):

	Three and Nine Months Ended
	September 30,
	2003		2002
Common stock options		2,135		2,356
Common stock warrants		1,890		1,383
Convertible preferred stock		867		855

     The common stock warrants are exercisable at $1.35 to $32.65 per share and expire at various times from June 8, 2005 through September 28, 2008. The stock options outstanding at September 30, 2003 had a weighted average exercise price per share of $7.09 and expire beginning in June 2004 through September 2013.

8. Warranties

     The Company primarily sells software products. We provide for future warranty costs upon product delivery or from the purchase date. The specific terms and conditions of those warranties vary depending upon the product sold, the country in which the customers are located and agreements we have with various customers.

     Software products generally carry a 90-day warranty on the software media from the date of delivery or purchase. Otherwise, software products are sold on an as-is basis. Longer warranty periods may be provided on a contract-by-contract basis and are limited. Our liability under these warranties is to replace defective media and in some cases to provide a corrected copy of any portion of the software found not to be in substantial compliance with the published specifications in the product documentation. In such cases, if the Company is unable to make the products conform with published specifications, the Company may be obligated to refund the amount actually paid by customers.

     Factors that affect our warranty liability include the number of units sold, historical experience and management’s judgment regarding anticipated rates of warranty claims and cost per claim. We assess the adequacy of our recorded warranty liabilities every quarter and make adjustments to the liability if necessary. The Company has gone through the transition from being primarily a hardware-based company to a software-based company, subsequent to the acquisition of CUseeMe Networks on June 19, 2001, and has discontinued offering hardware products to the marketplace other than products currently in fully reserved inventory, which the Company expects will be disposed of by the end of 2003.

     Changes in our warranty liability, which is included as a component of “Accrued liabilities” on the Consolidated Balance Sheet, during the nine months ended September 30, 2003 were as follows (in thousands):

Beginning balance as of December 31, 2002	$	428
Provision for warranty liability		123
Settlement made under warranty		(179	)
Reduction to warranty reserve		(149	)
Ending balance as of September 30, 2003	$	223

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9. Comprehensive Loss

     Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources, including foreign currency translation adjustments and unrealized gains and losses on marketable securities.

     Components of accumulated other comprehensive loss consist of the following (in thousands):

	September 30,			December 31,
	2003			2002
Foreign currency translation	$	(162	)	$	(59	)
Unrealized loss on marketable securities, net of income taxes		(148	)		(151	)
	$	(310	)	$	(210	)

     Comprehensive losses for the three and nine-month periods ended September 30, 2003 and 2002 were as follows (in thousands):

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2003			2002			2003			2002
Net Loss, as reported	$	(1,992	)	$	(3,627	)	$	(7,011	)	$	(9,813	)
Cumulative translation adjustment		(57	)		(89	)		(103	)		(171	)
Unrealized gain (loss) on marketable securities, net of income taxes		10			(8	)		3			(103	)
Comprehensive loss	$	(2,039	)	$	(3,724	)	$	(7,111	)	$	(10,087	)

10. Litigation

     On February 11, 2003, the Company received an adversarial complaint filed by Visitalk.com in connection with Visitalk.com’s reorganization proceedings in the United States Bankruptcy Court District of Arizona, alleging that CUseeMe Networks, which was acquired by the Company on June 19, 2001, breached a 1999 Strategic Partnership Agreement and sought damages of $435,000. In April, the Company responded to the complaint with a Motion to Stay Proceedings and to compel Matter to Proceed to Arbitration. In June 2003, the parties reached a mutual agreement to dismiss the adversarial action with prejudice, exchange a mutual general release of all claims and waive attorney’s fees and costs. The parties have executed a formal settlement agreement which will not become effective until approved by the Bankruptcy Court.

11. New Accounting Pronouncements

     In May 2003, the Financial Accounting Standard Board issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This Statement establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuer. This Statement is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities. For nonpublic entities, mandatorily redeemable financial instruments are subject to the provisions of this Statement for the first period beginning after December 15, 2003. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the statement and still existing at the beginning of the interim period of adoption. The impact of the effective provisions of SFAS No. 150 has not had a material impact on the Company’s financial statements. The Company continues to assess the possible impact of potential changes to this pronouncement as and when they are announced.

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12. Subsequent Events

     On September 30, 2003, the Company entered into an Equity Investment Agreement with Net One Systems Co., Ltd. (“Net One”). Pursuant to the agreement, Net One was authorized to return approximately $1.5 million of products previously purchased from the Company, net of $75,000 of expenses, in exchange for shares of common stock of the Company. The Company had not recognized these prior shipments as revenue, but had recorded the transactions as deferred revenue. On October 8, 2003, the Company issued 642,921 shares of the Company’s common stock to Net One at $2.45 per share as consideration for the returned products. The $112,000 cost of the products to be returned was recorded as a charge to cost of revenue.

     On November 7, 2003, the Company entered into definitive agreements to sell approximately 5.7 million shares of common stock in a private placement with institutional investors, priced at $1.79 per share. The transaction closed on November 12, 2003, resulting in gross proceeds to the Company of approximately $10.3 million, or approximately $9.3 million net of placement fees and expenses. Investors in the private placement also received warrants to purchase up to 2.9 million shares of common stock at an exercise price of $1.79 per share. The warrants have a five year life.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following discussion of the financial condition and results of operations of First Virtual Communications, Inc. should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and the Notes thereto included in Item 1 of this Quarterly Report on Form 10-Q, and “Management’s Discussion and Analysis of Financial condition and Results of Operations” contained in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission, or SEC, on April 15, 2003.

     In addition to the historical information contained in this Quarterly Report, this Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. These forward looking statements include, without limitation, statements containing the words “believes,” “anticipates,” “expects,” “intends” and words of similar import. Such forward-looking statements will have known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: the Company’s variability of operating results, market acceptance of rich media web conferencing technology, rich media web conferencing and collaboration technology dependence on IP-based networks and other technologies, the Company’s potential inability to maintain business relationships with telecommunications carriers, distributors and suppliers, rapid technological changes, competition and consolidation in the web conferencing industry, the Company’s ability to satisfy the continued listing requirements of the Nasdaq SmallCap market, the importance of attracting and retaining personnel, management of the Company’s growth, cost pressures in the web conferencing industry, dependence on key employees, and other risk factors set forth below and described in this Quarterly Report on Form 10-Q and in other documents the Company files with the SEC. The Company assumes no obligation to update any forward-looking statements contained herein. The Company’s expectations and the events, conditions and circumstances on which these forward-looking statements are based, may change.

Overview

     The Company delivers integrated, software technologies for rich media web conferencing and collaboration solutions. The Company combines its expertise in networking systems, real-time audio and video technology, and web-based collaboration to provide integrated voice, video, data, text and streaming media solutions for a wide range of rich media enterprise applications, including web conferences, broadcasts, video-on-demand, videoconferences and video calls over converged multi-service networks. The Company was incorporated in California in October 1993 and reincorporated in Delaware in December 1997. The Company first shipped its products in 1995.

     On June 19, 2001, the Company and CUseeMe Networks completed a merger, pursuant to which CUseeMe Networks became a wholly owned subsidiary of the Company. The Company is now able to provide a broad range of integrated rich media web conferencing solutions that run seamlessly across multiple network types to enterprise customers and service providers worldwide.

     In the three and nine months ended September 30, 2003, the Company recorded $5.4 million and $16.6 million in revenue, respectively, a decrease of 12% and 14% compared to the same periods of the previous year. The Company derived its revenue in the

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three and nine months ended September 30, 2003 and fiscal 2002 from sales to distributors, original equipment manufacturers, or OEMs, value-added resellers, or VARS, federal government agencies, enterprise customers and telecommunications service providers.

     The following table summarizes the percentage of total revenue by enterprise customers and service providers during the three and nine months ended September 30, 2003 and 2002:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2003			2002			2003			2002
Enterprise customers		91	%		91	%		88	%		77	%
Service providers		9	%		9	%		12	%		23	%
Total		100	%		100	%		100	%		100	%

     The Company’s internal sales and marketing force qualifies and stimulates end-user demand, and manages the Company’s strategic relationships with its distribution partners, including OEMs, VARs and systems integrators. At September 30, 2003 and 2002, one customer accounted for 27% and 26%, respectively, of total accounts receivable. For the three and nine months ended September 30, 2003, one customer accounted for 30% and 18%, respectively, of total revenue. One customer accounted for 24% of total revenue for the three months ended September 30, 2002. Two customers accounted for 10% of the total revenue for the nine months ended September 30, 2002.

     The Company maintains sales offices in the United Kingdom, France, Germany, Italy, China and Japan, and distributes its products in both Europe and Asia through resellers and distributors in more than 25 countries. The Company’s revenue from international sales represented 33% and 31% respectively, of its total revenue in the three months ended September 30, 2003 and 2002 and 37% and 30%, of its total revenue in the nine months ended September 30, 2003 and 2002, respectively. The Company expects that revenue from shipments to customers outside of the United States will continue to represent a significant portion of its future revenue. In addition, the Company believes that a small portion of its sales through OEMs, resellers and integrators are ultimately sold to international end-users. Revenue from the Company’s international operations are subject to various risks, including seasonality, longer payment cycles, changes in regulatory requirements and tariffs, reduced protection of intellectual property rights, political and economic instability, and currency risks, among others. To date, the Company has not engaged in any foreign currency hedging activity.

Critical Accounting Policies

     There have been no material changes to our critical accounting policies and estimates as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

Results of Operations

     The following table sets forth certain items from the Company’s condensed consolidated statements of operations as a percentage of total revenue for the periods indicated:

		Three months ended						Nine months ended
		September 30,						September 30,
		2003			2002			2003			2002
Revenue			100.0	%		100.0	%		100.0	%		100.0	%
Cost of revenue			17.4	%		33.2	%		16.6	%		36.3	%
	Gross profit		82.6	%		66.8	%		83.4	%		63.7	%

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			Three months ended						Nine months ended
			September 30,						September 30,
			2003			2002			2003			2002
Operating expense:
	Research and development			38.0	%		38.2	%		41.6	%		38.9	%
	Sales and marketing			53.3	%		42.7	%		49.5	%		35.6	%
	General and administrative			27.4	%		45.4	%		29.1	%		40.5	%
	Other non-recurring charges			0.0	%		0.0	%		5.0	%		0.0	%
		Total operating expense		118.7	%		126.3	%		125.2	%		115.0	%
Operating loss				-36.1	%		-59.5	%		-41.8	%		-51.3	%
Other income (expense), net				-1.0	%		0.7	%		-0.3	%		0.7	%
Minority interest in consolidated subsidiary				0.0	%		-0.3	%		0.0	%		0.0	%
Net loss				-37.1	%		-59.1	%		-42.1	%		-50.6	%

Three Months Ended September 30, 2003 Compared to Three Months Ended September 30, 2002

     Revenue. Revenue was $5.4 million for the three months ended September 30, 2003, a decrease of 12% from the $6.1 million recorded in the three months ended September 30, 2002. The following table summarizes the total revenue by software, products and support services (in thousands) for the three months ended September 30, 2003 and 2002:

	Three Months Ended September 30,
	2003		2002
Software	$	3,416	$	2,052
Product		311		2,956
Support service		1,647		1,129
Total revenue	$	5,374	$	6,137

     Software revenue consists of revenue from the sale of our Click to Meet™, or CTM, family of software products. Software revenue increased $1.4 million to $3.4 million in the three months ended September 30, 2003, an increase of 66% from $2.1 million in the same period of last year. The increase resulted from the Company’s transition from sales of hardware-based ATM legacy products to software-based products and the expansion of its customer base worldwide. The Company is uncertain of future software revenue.

     Product revenue consists of revenue from the sale of ATM legacy hardware products, including hardware products sourced from third parties and sold by the Company. Product revenue decreased $2.6 million to $311,000 in the three months ended September 30, 2003, a decrease of 89% from $3.0 million in the same period of last year. The decrease was primarily a result of the lower demand and lower average selling prices for hardware-based ATM legacy products. Additionally, the Company provided only limited marketing and promotional support for these products in 2002. The Company has notified its customers that as of May 1, 2003, it is no longer offering ATM legacy products for sale other than products currently in its fully reserved inventory.

     Support service revenue consists of software license subscriptions, hardware maintenance, training, installation and consulting revenue. Support service revenue increased $518,000 to $1.6 million in the three months ended September 30, 2003, an increase of 46% from $1.1 million in the three months ended September 30, 2002, primarily due to an increase in the sale of software subscriptions for the Company’s Click to Meet product family.

     Cost of Revenue. Cost of revenue consists primarily of costs associated with the purchase of components from outside manufacturers or the manufacture of the Company’s legacy products by outside manufacturers and related costs of freight, inventory obsolescence, royalties, warranties and customer support costs, which were charged against income in the period incurred. Total costs of revenue decreased by 54%, or $1.1 million, to $936,000 for the three months ended September 30, 2003, from $2.0 million for the three months ended September 30, 2002. As a percentage of total revenues, cost of sales declined to 17% for the three months ended September 30, 2003, from 33% for the three months ended September 30, 2002. The Company expects costs of revenue as a percentage of revenue to remain in a range of 15% to 20% for the balance of 2003. Gross margin represents the difference between

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revenue and cost of revenue as a percentage of revenue. Overall gross margin in the three months ended September 30, 2003 was 83%, compared to 67% in the comparable period of 2002.

     Cost of software revenue was $238,000 for the three months ended September 30, 2003, compared to $95,000 for the three months ended September 30, 2002. The gross margin on software revenue decreased to 93% for the three months ended September 30, 2003, from 95% for the three months ended September 30, 2002.

     Cost of product revenue decreased by 89%, or $1.4 million, to $169,000 for the three months ended September 30, 2003, from $1.5 million for the three months ended September 30, 2002. The decrease was primarily due to the lower sales volume of product revenue. The gross margin on product revenue was 46% for the three months ended September 30, 2003, compared to 48% for the three months ended September 30, 2002.

     Cost of support service revenue increased by 34%, or $134,000, to $529,000 for the three months ended September 30, 2003, from $395,000 for the three months ended September 30, 2002. This increase was primarily due to an increase in personnel related expenses as a result of increased employee headcount needed to support our increasing customer base. The gross margin on support service revenues increased to 68% for the three months ended September 30, 2003, from 65% for the three months ended September 30, 2002, primarily due to the increase in the revenue from support services, partially offset by increases in the cost of support services.

     Research and Development. Research and development expense consists primarily of personnel costs, costs of contractors and outside consultants, supplies and materials expenses, equipment depreciation and overhead costs. Research and development expense decreased $303,000 to $2.0 million in the three months ended September 30, 2003, a decrease of 13% compared to the $2.3 million for the three months ended September 30, 2002. The decrease of expenses in the third quarter of 2003 was primarily due to a reduction of $136,000 in equipment and maintenance expense, lower facility costs resulting from the relocation of the Company’s California office from Santa Clara to Redwood City during the second quarter of 2003 and the discontinuation of development activities in India which also took place in the second quarter of 2003. As a percentage of total revenue, research and development expense was 38% for the three months ended September 30, 2003 and 2002, primarily as a result of the lower sales during the three months ended September 30, 2003, offset by the lower research and development expenses. The Company expects research and development expenses, as expressed in absolute dollars, to remain approximately at current levels for the balance of 2003.

     Sales and Marketing. Sales and marketing expense includes personnel and related overhead costs for sales and marketing, costs of outside contractors, advertising, trade shows and other related marketing and promotional expenses. Sales and marketing expense increased $245,000 to $2.9 million for the three months ended September 30, 2003, an increase of 9% compared to the $2.6 million for the three months ended September 30, 2002. The increase of expenses in the third quarter of 2003 was primarily due to the higher payroll related expenses, partially offset by lower facility costs. As a percentage of total revenue, sales and marketing expense increased to 53% for the three months ended September 30, 2003, from 43% for the three months ended September 30, 2002, primarily due to lower revenue and higher sales and marketing expense during the three months ended September 30, 2003. The Company expects sales and marketing expense, as expressed in absolute dollars, to increase incrementally each quarter during the balance of 2003. The increases will be primarily related to increased staffing in both the sales and the marketing functions, and, to the extent that revenues may increase in future quarters, due to higher sales commissions.

     General and Administrative. General and administrative expense includes personnel and related overhead costs for finance, human resources, product operations and general management and the amortization of intangible assets. General and administrative expense decreased $1.3 million to $1.5 million for the three months ended September 30, 2003, a 47% decrease from the $2.8 million in the three months ended September 30, 2002. The decrease in the third quarter of 2003 primarily was due to a reduction of $870,000 in professional fees, $307,000 in amortization expense resulting from the write down of intangibles at December 31, 2002 and reduced facilities costs. As a percentage of revenue, general and administrative expense decreased to 27% in the three months ended September 30, 2003, compared to 45% for the three months ended September 30, 2002. The decrease in general and administrative expense as a percentage of revenues for the three months ended September 30, 2003, primarily reflects the lower expense from the comparable period of 2002 offset in part by the impact of lower revenues in the quarter ended September 30, 2003. The Company expects general and administrative expenses, as expressed in absolute dollars, to remain approximately at current levels for the balance of 2003.

     Other Income (Expense), Net. Other income (expense), net, consists primarily of interest income earned on short-term investments and cash balances, offset by interest expense relating to the Company’s credit facilities and long-term debt, if any. Other income (expense) totaled $(52,000) for the three months ended September 30, 2003, compared to $40,000 for the three months ended

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September 30, 2002. The decline was primarily due to the financing costs related to the term loan with Silicon Valley Bank during the quarter and a decline in interest income as a result of lower market interest rates and lower cash balances.

     Minority Interest in Consolidated Subsidiary. Minority interest reflects the interest of minority stockholders in the operating results of the Company’s consolidated subsidiary in the United Kingdom. In July 2002, the Company acquired the remaining 48% minority interest in this subsidiary for the aggregate consideration of $570,000. For the three months ended September 30, 2002, the amount reflects the portion of losses in this subsidiary that were attributable to minority stockholders. There was no minority interest in the three months ended September 30, 2003.

     Income Taxes. The Company has incurred losses since its inception. No tax benefit was recorded for any period presented, as the Company believes that, based on the history of such losses and other factors, the weight of available evidence indicates that it is more likely than not that the Company will not be able to realize the benefit of these net operating losses, and thus a full valuation reserve has been recorded.

Nine Months Ended September 30, 2003 Compared to Nine Months Ended September 30, 2002

     Revenue. Revenue was $16.6 million for the nine months ended September 30, 2003, a decrease of 14% from the $19.4 million recorded in the nine months ended September 30, 2002. The following table summarizes the total revenue by software, products and support services (in thousands) for the nine months ended September 30, 2003 and 2002:

	Nine Months Ended September 30,
	2003		2002
Software	$	10,074	$	8,050
Product		1,698		7,865
Support service		4,873		3,467
Total revenue	$	16,645	$	19,382

     Software revenue primarily consists of revenue from the sale of the Click to Meet™, or CTM, family of software products. Software revenue increased $2.0 to $10.1 million in the nine months ended September 30, 2003, an increase of 25% from $8.1 million in the same period in 2002. The increase in software revenue resulted from the Company’s transition from sales of hardware-based ATM legacy products to software-based products and the expansion of its customer base worldwide, offset in part by a decrease in licensing fees from a reseller in Japan pursuant to a licensing agreement which expired in September 2002. The Company is uncertain of future software revenue.

     Product revenue includes sales of ATM legacy hardware products, including hardware products sourced from third parties and sold by the Company. Product revenue decreased $6.2 million to $1.7 million in the nine months ended September 30, 2003, a decrease of 78% from $7.9 million in the same period in 2002. The decrease was primarily a result of lower demand and lower average selling prices for hardware-based ATM legacy products. Additionally, the Company provided only limited marketing and promotional support for these products in 2003. The Company notified its customers that as of May 1, 2003, it is no longer offering ATM legacy products for sale other than products currently in its fully reserved inventory.

     Support service revenue consists of software license subscriptions, hardware maintenance, training, installation and consulting revenue. Support service revenue increased $1.4 million to $4.9 million in the nine months ended September 30, 2003, an increase of 41% from $3.5 million in the nine months ended September 30, 2002, primarily due to an increase in the sale of software subscriptions for the Company’s Click to Meet product family.

     Costs of Revenue. Costs of revenue consists primarily of costs associated with the purchase of components from outside manufacturers or the manufacture of the Company’s legacy products by outside manufacturers and related costs of freight, inventory obsolescence, royalties, warranties and customer support costs, which were charged against income in the period incurred. Total costs of revenue decreased by $4.3 million, or 61%, to $2.8 million for the nine months ended September 30, 2003, from $7.0 million for the nine months ended September 30, 2002. As a percentage of total revenues, cost of sales declined to 17% for the nine months ended September 30, 2003, from 36% for the nine months ended September 30, 2002. The Company expects costs of revenue as a percent of revenue to remain in a range of 15% to 20% for the balance of 2003. Gross margin represents the difference between revenue and cost

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of revenue as a percentage of revenue. Overall gross margin in the nine months ended September 30, 2003 was 83%, compared to 64% in the comparable period of 2002.

     Cost of software revenue was $681,000 for the nine months ended September 30, 2003, compared to $438,000 for the nine months ended September 30, 2002. The gross margin on software revenue decreased to 93% for the nine months ended September 30, 2003, from 95% for the nine months ended September 30, 2002.

     Cost of product revenue decreased by 89%, or $4.7 million, to $586,000 for the nine months ended September 30, 2003, from $5.3 million for the nine months ended September 30, 2002. The decrease was primarily due to the lower sales volume of product revenue and the sales of fully reserved legacy ATM inventory of $394,000, which had no associated cost of revenue during the nine months ended September 30, 2003, due to inventory writedowns in prior periods, and a provision for excess and obsolete inventory of $1.0 million related to legacy ATM products in the nine months ended September 30, 2002. The gross margin on product revenue increased to 65% for the nine months ended September 30, 2003 from 32% for the nine months ended September 30, 2002, also primarily due to sales of fully reserved inventory of $394,000 during the nine months ended September 30, 2003 and the provision for excess and obsolete inventory of $1.0 million in the nine months ended September 30, 2002.

     Cost of support service revenue increased $218,000 to $1.5 million for the nine months ended September 30, 2003, from $1.3 million for the nine months ended September 30, 2002. This increase was primarily due to an increase in personnel related expenses as a result of increased employee headcount needed to support our increasing customer base. The gross margin on support service revenues increased to 69% for the nine months ended September 30, 2003, from 63% for the nine months ended September 30, 2002, primarily due to the increase in the revenue from support services, partially offset by increases in the cost of support services.

     Research and Development. Research and development expense consists primarily of personnel costs, costs of contractors and outside consultants, supplies and materials expenses, equipment depreciation and overhead costs. Research and development expense decreased $609,000 to $6.9 million for the nine months ended September 30, 2003, a decrease of 8% compared to the $7.5 million during the nine months ended September 30, 2002. The decrease in absolute dollars was principally due to the lower equipment and maintenance expense, lower facility costs resulting from the relocation of the Company’s California office from Santa Clara to Redwood City in May of 2003 and discontinuation of development activities in India in May 2003. As a percentage of total revenue, research and development expense increased to 42% for the nine months ended September 30, 2003, from 39% for the nine months ended September 30, 2002, primarily as a result of the lower sales during the nine months ended September 30, 2003 compared to relatively fixed research and development expenses. The Company expects research and development expenses, as expressed in absolute dollars, to remain approximately at current levels for the balance of 2003.

     Sales and Marketing. Sales and marketing expense includes personnel and related overhead costs for sales and marketing, costs of outside contractors, advertising, trade shows and other related marketing and promotional expenses. Sales and marketing expense increased $1.3 million to $8.2 million for the nine months ended September 30, 2003, an increase of 19% compared to the $6.9 million for the nine months ended September 30, 2002. Expenses in the nine months ended September 30, 2003 increased $609,000, primarily due to expansion of our Asia sales office with higher personnel and other expenses and higher compensation expense resulting from our acquisition of our FVC.Com (Asia) distributor offset in part by lower facilities costs. In the same period of 2002, the Company recorded a reduction in sales and marketing expense of $359,000, reflecting collection of a customer receivable that had previously been deemed uncollectible. As a percentage of total revenue, sales and marketing expense increased to 49% for the nine months ended September 30, 2003, from 36% for the nine months ended September 30, 2002, primarily due to lower revenue and higher sales and marketing expense during the current period. The Company expects sales and marketing expense, as expressed in absolute dollars, to increase incrementally each quarter during the balance of 2003. The increases are expected to be primarily related to increased staffing in both the sales and the marketing functions, and, to the extent that revenues may increase in future quarters, due to higher sales commissions.

     General and Administrative. General and administrative expense includes personnel and related overhead costs for finance, human resources, information technology, product operations and general management and the amortization of intangible assets. General and administrative expense decreased $3.0 million to $4.8 million for the nine months ended September 30, 2003, a 38% decrease from the $7.8 million in the nine months ended September 30, 2002. The decrease in the nine months ended September 30, 2003 primarily was due to a reduction of $613,000 in bad debt expense resulting from the Company’s improved credit procedures, a reduction of $602,000 in professional fees, and $1.8 million in amortization expense resulting from the writedown of intangibles at December 31, 2002 and reduced facilities costs and other costs. As a percentage of revenue, general and administrative expense decreased to 29% in the nine months ended September 30, 2003, compared to 40% for the nine months ended September 30, 2002. The decrease in general and administrative expense as a percentage of revenues for the nine months ended September 30, 2003, primarily reflects the lower

17

expense from the comparable period of 2002 offset in part by the impact of lower revenues in the quarter ended September 30, 2003. The Company expects general and administrative expenses, as expressed in absolute dollars, to remain approximately at current levels for the balance of 2003.

     Other non-recurring costs. The $838,000 of one-time charges in the nine months ended September 30, 2003 includes $678,000 due to the relocation of the Company’s California office from Santa Clara to Redwood City and $160,000 for costs related to the discontinuation of the Company’s India operations, both in May 2003. The cost of the office relocation includes $350,000 of loss from retirement of fixed assets, $259,000 of refurbishment cost and $69,000 of moving cost. The Company incurred no non-recurring costs in the nine months ended September 30, 2002.

     Other Income (Expense), Net. Other income, net, consists primarily of interest income earned on short-term investments and cash balances, offset by interest expense relating to the Company’s credit facilities and long-term debt, if any. Other income (expense) totaled $(59,000) for the nine months ended September 30, 2003, compared to $132,000 for the nine months ended September 30, 2002. The decline was primarily due to the financing costs related to the term loan with Silicon Valley Bank during the nine months ended September 30, 2003 and a decline in interest income as a result of lower market interest rates and lower cash balances.

     Minority Interest in Consolidated Subsidiary. Minority interest reflects the interest of minority stockholders in the operating results of the Company’s consolidated subsidiary in the United Kingdom. In July 2002, the Company acquired the remaining 48% minority interest in this subsidiary for the aggregate consideration of $570,000. For the nine months ended September 30, 2002, the amount reflects the portion of losses in this subsidiary that were attributable to minority stockholders. There was no minority interest in the nine months ended September 30, 2003.

     Income Taxes. The Company has incurred losses since its inception. No tax benefit was recorded for any period presented, as the Company believes that, based on the history of such losses and other factors, the weight of available evidence indicates that it is more likely than not that the Company will not be able to realize the benefit of these net operating losses or other deferred tax assets, and thus a full valuation reserve has been recorded.

Liquidity and Capital Resources

     Since inception, the Company has financed its operations primarily through private and public placements of equity securities, revenue from sales of the Company’s products and services and to a lesser extent through certain credit facilities and long-term debt, including the $3.0 million of term loan drawn down on June 23, 2003. As of September 30, 2003, the Company had cash and cash equivalents and short-term investments of $6.6 million.

     In order to improve liquidity and reduce costs, the Company completed the following actions in April 2003. The Company reached agreement with its bank for a $3 million credit facility that may be used by the Company at any time prior to December 31, 2003. The interest rate is equal to the bank’s prime rate plus 2.25% with a floor at 6.5%. The Company paid a $22,500 commitment fee at the closing and is subject to a commitment fee of 0.25% per annum on any unused borrowings, with this fee paid quarterly. Funds drawn under the facility will be recorded as a secured term loan, fully amortized and repaid over a three-year period. The term loan facility is secured by all of the Company’s assets, including intellectual property rights, and contains certain financial covenants, including the maintenance of cash deposits at the bank of not less than $2.9 million, as well as a liquidity covenant. The liquidity covenant requires that the sum of (i) the amount of the Company’s unrestricted cash on deposit in the bank, plus (ii) the Company’s eligible accounts receivable, divided by (iii) the amount outstanding under the loan agreement be at all times equal to 2.0 or higher. The liquidity covenant is only applicable if the loan is drawn down. On June 23, 2003, $3.0 million of term loan was drawn down and outstanding. As of September 30, 2003, the Company had made $250,000 in payments on the term loan and the outstanding balance was $2,750,000.

     The Company also entered into a private equity line financing agreement with Ralph Ungermann, Executive Chairman of the Company’s Board of Directors, under which the Company may require Mr. Ungermann to purchase up to $1 million of its common stock at a purchase price of $1.55 per share during the period from April 14, 2003 through April 13, 2004. The Company may draw down funds under the private equity line financing agreement up to four times during the 12-month term of the agreement, with each draw for a minimum of $250,000. As of September 30, 2003, the Company had not drawn down any funds under this private equity line financing agreement.

     In April 2003, the Company also signed an agreement with its landlord to terminate the Company’s lease for its Santa Clara, California headquarters and executed a new lease that will reduce annual rental expense and cash payments by approximately $900,000 for each of the next five years.

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          On November 7, 2003, the Company entered into definitive agreements to sell approximately 5.7 million shares of common stock in a private placement with institutional investors, priced at $1.79 per share. The transaction closed on November 12, 2003, resulting in gross proceeds to the Company of approximately $10.3 million, or approximately $9.3 million net of placement fees and expenses. Investors in the private placement also received warrants to purchase up to 2.9 million shares of common stock at an exercise price of $1.79 per share. The warrants have a five year life.

     The Company has experienced significant net operating losses since inception. In the nine months ended September 30, 2003, the Company incurred net losses of $7.0 million and used $4.2 million of cash in its operating activities. In the comparable period of 2002, the Company incurred net losses of $9.8 million and used $4.2 million of cash in its operating activities. Management currently expects that operating losses and negative cash flows will continue for the foreseeable future and that the Company’s existing cash and investments, together with the funds provided pursuant to its credit facility with its bank, the financing agreement with Mr. Ungermann and the recent private placement financing are adequate to fund the Company’s operations through at least the next twelve months. However, the Company’s cash requirements depend on several factors, including the introduction or delay of new products, the rate of market acceptance of its products and services, the ability to expand and retain its customer base and other factors.

     Cash used in operating activities remained flat at $4.2 million in the nine months ended September 30, 2003 and 2002. During the nine months ended September 30, 2003, net cash used in operating activities of $4.2 million was comprised of the net loss of $7.0 million, offset by $967,000 decrease in current net assets and by $1.9 million of adjustments for non-cash items such as depreciation, amortization and a loss on disposal of fixed assets. The decrease in current net assets in the nine months ended September 30, 2003 consisted of reductions in receivables of $1.2 million and inventory of $589,000, an increase in accounts payable of $212,000, offset in part by an increase in prepaid expenses and other current assets of $343,000, reductions in accrued liabilities of $502,000 and deferred revenue of $148,000. During the nine months ended September 30, 2002, net cash used in operating activities was $4.2 million. This was comprised of the net loss of $9.8 million, offset by $2.1 million decrease in current net assets and $5.6 million of adjustments for non-cash items such as depreciation, amortization and increases in the provisions for doubtful accounts and inventory. The decrease in current net assets consisted of decreases in receivables of $202,000 and inventory of $814,000 and a increase in deferred revenue of $3.1 million, offset in part by an increase in prepaid expenses and other assets of $362,000 and reductions in accounts payable of $1.1 million and accrued liabilities of $493,000.

     Cash used in investment activities totaled $523,000 for the nine months ended September 30, 2003, primarily for the acquisition of property and equipment. Cash provided by investment activities totaled $921,000 for the nine months ended September 30, 2002, primarily resulting from $1.9 million of net sales and maturities of short-term investments, partially offset by the acquisition of property and equipment and business.

     Cash provided by financing activities was $2.8 million for the nine months ended September 30, 2003, principally consisting of proceeds from a term loan facility with our bank. Cash provided by financing activities was $5.0 million for the nine months ended September 30, 2002, primarily from the issuance of stock.

     As of September 30, 2003, our contractual obligations and other commitments were as follows :

		Three Months
		Ending						Years Ending
		December 31,						December 31,
Contractual obligation		Total		2003		2004		2005		2006		2007		After 2007
Principal of long-term debt		$	2,750,000	$	250,000	$	1,000,000	$	1,000,000	$	500,000	$	—	$	—
Operating leases			7,999,741		253,664		1,005,531		906,740		767,145		748,554		4,318,107
	Total contractual cash obligation	$	10,749,741	$	503,664	$	2,005,531	$	1,906,740	$	1,267,145	$	748,554	$	4,318,107

New Accounting Pronouncements.

     In May 2003, the Financial Accounting Standard Board issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This Statement establishes standards for how an issuer classifies and measures in its

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statement of financial position certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuer. This Statement is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities. For nonpublic entities, mandatorily redeemable financial instruments are subject to the provisions of this Statement for the first period beginning after December 15, 2003. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the statement and still existing at the beginning of the interim period of adoption. The impact of the effective provisions of SFAS No. 150 has not had a material impact on the Company’s financial statements. The Company continues to assess the possible impact of potential changes to this pronouncement as and when they are announced.

Risk Factors

     In addition to the other information provided in this Quarterly Report and in the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2003, the following risk factors should be considered in evaluating the Company and its business.

The Company has a history of operating losses and will incur losses in the future. The Company may never generate sufficient revenue to achieve profitability.

     The Company has incurred operating losses in each quarter since it commenced operations in 1993. The Company expects to continue to devote substantial resources to its research and development and sales and marketing activities. As a result, the Company expects that it will continue to incur operating losses for the foreseeable future. At September 30, 2003, the Company had an accumulated deficit of $116.6 million.

The Company’s quarterly financial results are expected to fluctuate and may cause the price of the Company’s common stock to fall.

     The Company has experienced in the past, and is likely to experience in the future, fluctuations in revenue, gross margin and operating results. Various factors could contribute to the fluctuations in revenue, gross margin and operating results in the future, including the Company’s:

• success in developing our rich media Web conferencing business and in developing, introducing and shipping new products and product enhancements, particularly for the Click to Meet product family, including the Click to Meet Conference Server;

• success in accurately forecasting demand for new orders that may have short lead-times before required shipment, product mix, percentage of revenue derived from original equipment manufacturers, or OEMs, versus distributors or resellers;

• new product introductions and price reductions by competitors;

• results from strategic collaborations;

• use of OEMs, distributors, resellers, and other third parties;

• ability to attract, retain and motivate qualified personnel;

• research and development efforts and success; and

• selling, general and administrative expenditures.

     Additionally, the Company’s operating results may vary significantly depending on a number of factors that are outside of its control. Further, a significant portion of the Company’s expenses are fixed. The Company has made significant progress in reducing its operating expenses in the last fiscal year and during the first nine months of 2003 and expects that operating expenses will decrease in the future due to continued expense reduction measures. However, to the extent that operating expenses are not reduced and to the extent that revenue or gross margin cannot be increased, the Company’s business, financial condition and results of operations would be materially adversely affected. Due to all the foregoing factors, it is likely that in some future quarter, as at times in past quarters, the

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Company’s results of operations will be below the expectations of public market analysts and investors, resulting in a negative impact on the Company’s common stock price.

If the carrying value of the Company’s long lived assets is not recoverable, an impairment loss must be recognized which could adversely affect the Company’s financial results.

     Certain events or changes in circumstances would require the Company to assess the recoverability of the carrying amount of long-lived assets. In the year ended December 31, 2002, the Company recorded impairment charges of $3.3 million relating to technology acquired in a prior acquisition and $6.6 million relating to goodwill. In addition, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards, or SFAS No. 142, in July 2001, whereby goodwill must be evaluated annually and whenever events or circumstances occur which indicate goodwill might be impaired. The Company adopted SFAS No. 142 on January 1, 2002. The Company will continue to evaluate the recoverability of the carrying amount of our long-lived assets, and may incur substantial impairment charges that could adversely affect the Company’s financial results in the future.

The Company’s success depends on the market’s acceptance of rich media web conferencing services and the Company’s products, including Click to Meet and the Multi Conferencing Unit.

     The Company’s success depends in part on the market’s acceptance of rich media web conferencing services and the Company’s products, including Click to Meet and the Multi Conferencing Unit, or MCU. Potential end-users must accept video applications as a viable alternative to face-to-face meetings and conventional classroom-based learning. New applications, such as the use of video conferencing in marketing, selling and manufacturing, are still in the development stage. The Company’s contracts with telecommunications service providers to provide video and web conferencing solutions are in the early stage and only recently has the Company received significant revenue from this market segment. If rich media, web conferencing and broadband video services fail to achieve broad commercial acceptance or if such acceptance is delayed, the Company’s business, financial condition and results of operations will be materially adversely affected. The Company anticipates that growth in the foreseeable future will come from the sale of its Click to Meet and MCU products and services. Broad market acceptance of these products and services is therefore critical to the Company’s operating success.

The Company faces potential delisting from The Nasdaq SmallCap Market. If delisting occurs, the market price and market liquidity of the Company’s common stock would be materially adversely affected.

     The Company’s common stock currently is listed on The Nasdaq SmallCap Market. Pursuant to its rules, The Nasdaq National Market delisted the Company’s shares from the Nasdaq National Market based on the shares trading below $1.00 per share on The Nasdaq National Market for a period of 30 consecutive trading days. On September 9, 2002, the Company’s shares began trading on The Nasdaq SmallCap Market. In October 2002, the Company received a letter from Nasdaq advising it that the Company’s common stock must have a closing bid price of at least $1.00 per share for a minimum of ten consecutive trading days by March 26, 2003 in order to continue trading on the Nasdaq SmallCap Market, subject to appeal by the Company. On April 1, 2003, the Company received an additional letter from Nasdaq advising that, based on recent Nasdaq modifications to the bid price rules, it would be granted an additional 90 calendar day period within which to remedy the bid price deficiency. To demonstrate compliance with the minimum bid price requirement, the Company implemented a 1-for-5 reverse stock split on June 27, 2003. After demonstrating a closing bid price of at least $1.00 per share for a minimum of ten consecutive trading days, the Company regained compliance with the Nasdaq Small Cap Market. However, on July 31, 2003, the Company received an additional letter from Nasdaq indicating that as of July 30, 2003, the Company failed to comply with Nasdaq rules that require that the Company have a minimum of $2,500,000 in stockholders’ equity or $35 million market value of listed securities or $500,000 of net income from continuing operations for the most recently completed fiscal year. The Company responded to Nasdaq by August 14, 2003 and advised Nasdaq of its plans to regain compliance with the Nasdaq Small Cap listing requirements. In a letter dated September 5, 2003, the Nasdaq staff advised the Company that its response was insufficient and advised the Company that its stock was subject to delisting. The Company requested an appeal from Nasdaq and an appeal hearing was held on October 16, 2003.

     The Company attended an oral appeal hearing with a Nasdaq Listing Qualifications Panel (“Panel”) on October 16, 2003 and requested an extension of time to regain compliance and demonstrate its ability to sustain compliance with the minimum stockholders’ equity requirement. The Panel provided the Company with additional time until October 31, 2003 to obtain and provide to Nasdaq a term sheet for a financing to raise sufficient capital to permit the Company to regain compliance and demonstrate its ability to sustain compliance with the minimum stockholders’ equity requirement. The Company delivered the term sheet to the Panel on October 31, 2003 and on November 10, 2003 announced that it had entered into definitive agreements to sell approximately 5.7 million shares of its common stock in a private placement with institutional investors. The transaction closed on November 12, 2003, resulting in gross proceeds to the Company of approximately $10.3 million, or approximately $9.3 million net of placement fees and expenses. Investors in the private placement also received warrants to purchase up to 2.9 million shares of common stock at an exercise price of $1.79 per share. The warrants have a five year life.

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     If delisting from Nasdaq occurs, the trading of the Company’s common stock is likely to be conducted on the over-the-counter bulletin board, which will have a materially adverse affect on the market price of the Company’s common stock and on the ability of stockholders and investors to buy and sell the common stock. If delisting occurs, you may lose some or all of your investment.

The Company’s inability to secure additional funding could adversely affect its business.

     We believe the Company has adequate cash and access to cash to meet its anticipated working capital and capital expenditure requirements through the first quarter of 2004. However, the Company plans to raise additional funds through debt sources and/or the issuance of equity securities. If additional funds are raised through the issuance of equity securities, the percentage ownership of existing stockholders of the Company will be reduced, stockholders may experience additional dilution, and the new equity securities may have rights, preferences or privileges senior to those of the holders of the Company’s common stock. Additional financing may not be available when needed or on terms favorable to the Company, or at all. Additionally, if delisting from Nasdaq occurs, it will be more difficult to raise additional funds. If adequate funds are not available or are not available on acceptable terms, it could have a material adverse effect on the Company’s business, financial condition and operating results. The Company may be required to delay, scale back or eliminate some or all of its development programs for its products and may be unable to take advantage of future opportunities or respond to competitive pressures.

The Company’s software products may contain undetected defects or defects that have been detected but are more costly than anticipated to adequately address.

     Software developed by the Company or developed by others and incorporated by the Company into its products may contain significant undetected errors or errors that have been detected but are more significant and costly to address than anticipated, especially when first released or as new versions are released. Although the Company’s software products are tested before commercial release, errors in the products may be found after customers begin to use the software. Any defects in the Company’s current or future products may result in significant decreases in revenue or increases in expenses because of adverse publicity, reduced orders, product returns, uncollectible accounts receivable, delays in collecting accounts receivable, and additional and unexpected costs of further product development to correct the defects.

The Company’s common stock price is volatile.

     The market price of the Company’s common stock has been extremely volatile in the past and, like that of other technology companies, is likely to be volatile in the future, depending upon many factors, including:

• fluctuations in the Company’s financial results;

• technological innovations or new commercial products developed by the Company or its competitors;

• establishment of and success of corporate partnerships or licensing arrangements;

• announcements by the Company or others regarding the acquisition of technologies, products or companies;

• regulatory changes and developments that affect the Company’s business;

• developments or disputes concerning patent and proprietary rights and other legal matters;

• an adverse outcome from pending or any future legal matters;

• issuance of new or changed stock market analyst reports and/or recommendations;

• significant dilution in connection with equity financings;

• economic and other external factors; and

• failure to satisfy the Nasdaq listing requirements.

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     One or more of these factors could significantly harm the Company’s business and decrease the price of our common stock in the public market. Severe price fluctuations in a company’s stock, including the Company’s stock, have frequently been followed by securities litigation. Litigation can result in substantial costs and a diversion of management’s attention and resources and therefore could have a material adverse effect on the Company’s business, financial condition and results of operations. Past financial performance of the Company should not be considered a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

The Company has a history of generating a large percentage of its revenue at the end of each quarterly accounting period.

     Due to the way that many customers in the Company’s target markets allocate and spend their budgeted funds for acquisition of the Company’s products and other products, a large percentage of the Company’s business is booked at the end of each quarterly accounting period. Because of this, the Company may not be able to reliably predict order volumes. If the Company is unable to ship its customer orders on time, there could be a material adverse effect on the Company’s results of operations.

The Company’s success depends on the performance of participants in the Company’s distribution channels.

     The Company currently sells its products through OEMs, distributors and resellers. The Company’s future performance will depend in large part on sales of its products through these distribution relationships, such as those with Comp View, Inc., GSA, Net One, NEC, AT&T and other key partners. Agreements with distribution partners generally provide for discounts based on the Company’s list prices, and do not require minimum purchases or restrict development or distribution of competitive products. Therefore, entities that distribute the Company’s products may compete with the Company. In addition, OEMs, distributors and resellers may not dedicate sufficient resources or give sufficient priority to selling the Company’s products. The Company additionally depends on its distribution relationships for most customer support, and expends significant resources to train its OEMs, distributors and resellers to support these customers. These entities can generally terminate the distribution relationship upon 30 days notice. The loss of a distribution relationship or a decline in the efforts of a material distributor, or loss in business or cancellation of orders from, significant changes in scheduled deliveries to, or decreases in the prices of products sold to, any of these distribution relationships could have a material adverse effect on the Company’s results of operations.

The Company expects to rely on a limited number of large customers for its revenue in the future. Losing one or more of these customers may adversely affect the Company’s future revenue.

     The Company depends on a limited number of large end-user customers for a significant portion of its revenue which has resulted in, and may in the future result in, significant fluctuations in quarterly revenue. The Company expects that revenue from the sale of products to large resellers and telecommunications service providers will continue to account for a significant percentage of its revenue in any particular quarter for the foreseeable future. Additionally, a significant portion of the Company’s sales of video conferencing products has historically been to government agencies, such as military and educational institutions, or to third parties using the Company’s products on behalf of government agencies. Government customers are often subject to budgetary pressures and may from time to time reduce their expenditures and/or cancel orders. The loss of any major customer, or any reduction or delay in orders by a customer, or the failure of the Company or its distribution partners to market the Company’s products successfully to new customers could have a material adverse effect on the Company’s business, financial condition and results of operations.

Because sales of some of the Company’s products require a lengthy sales effort and implementation cycle, revenue may be unpredictable, and the Company’s business may be harmed.

     Sales of some of the Company’s products have required and will continue to require an extended sales effort. For some projects, the period from an initial sales call to an end-user agreement can range from six to twelve months and can be longer. Therefore, the timing of revenue recognition, as well as related cash receipts, may be unpredictable. A lengthy delay in booking orders, obtaining payment and recognizing revenue could have a material adverse effect on the Company’s business, financial condition and results of operations.

Rapid technological change and evolving industry standards and regulations may impair the Company’s ability to develop and market its products and services.

     Rapid technological change and evolving industry standards characterize the market for the Company’s products and services. The Company’s success depends, in part, on its ability to maintain technological leadership and enhance and expand its existing product and services offerings. The Company’s success also depends in part upon its ability and the ability of its strategic partners to comply

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with evolving industry standards. The Company’s products must meet a significant number of domestic and international video, voice and data communications regulations and standards, some of which are evolving as new technologies are deployed. The Company’s products are currently in compliance with applicable regulatory requirements. However, as standards evolve, the Company will be required to modify its products, or develop and support new versions of its products. In addition, telecommunications service providers require that equipment connected to their networks comply with their own environment and standards, which may vary from industry standards.

     The Company’s ability to compete successfully is also dependent upon the continued compatibility and interoperability of its products with products and architectures offered by other vendors. The Company’s business, financial condition and results of operations and cash flows would be materially adversely affected if it were unable in a timely manner to comply with evolving industry standards or to address compatibility issues. In addition, from time to time, the Company may announce new products, capabilities or technologies that have the potential to replace or shorten the life cycle of the Company’s existing product offerings. The announcement of product enhancements or new product or service offerings could cause customers to defer purchasing the Company’s products. In addition, the Company has experienced delays in the introduction of new products in the past and may experience additional delays in the introduction of products currently under development or products developed in the future. The failure of the Company to successfully introduce new products, product enhancements or services on schedule or in time to meet market opportunities, or customer delays in purchasing products in anticipation of new product introductions or because of changes in industry standards, could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company faces intense competition from other industry participants and may not be able to compete effectively.

     The market for Web conferencing and networking products and services is extremely competitive. Because the barriers to entry in the market are relatively low and the potential market is large, the Company expects continued growth in existing competitors and the entrance of new competitors in the future. Many of the Company’s current and potential competitors have significantly longer operating histories and significantly greater managerial, financial, marketing, technical and other competitive resources, as well as greater name recognition, than that of the Company. As a result, these companies may be able to adapt more quickly to new or emerging technologies and changes in customer requirements and may be able to devote greater resources to the promotion and sale of their competing products and services. As a result, the Company may not be able to compete successfully with existing or new competitors in the rich media Web conferencing and collaboration solutions market. The Company believes that its ability to compete successfully in this market depends on a number of factors both within and outside its control, including:

• the timing of the introduction of new products, product upgrades and services by the Company and its competitors;

• the pricing policies of the Company’s competitors and suppliers;

• the Company’s ability to hire and retain highly qualified employees;

• continued investment in research and development;

• continued investment in sales and marketing; and

• the adoption and evolution of industry standards.

The Company’s business may be harmed if it is unable to protect its proprietary rights.

     The Company’s success and ability to compete in the rich media Web conferencing and collaboration solutions markets depends, in part, upon its ability to protect its proprietary technology. The Company may be unable to deter misappropriation of its proprietary technology, detect unauthorized use, and take appropriate steps to enforce its intellectual property rights.

     The Company does not rely on patent protection for its products, and does not hold any patents, although it has filed patent applications relating to tunneling technology and the initiation and support of video conferencing using instant messaging. This patent application may not be approved, however, and even if issued by the United States Patent and Trademark Office, it may not give the Company an advantage over competitors. The Company’s adherence to industry-wide technical standards and specifications may limit its opportunities to provide proprietary product features. The Company currently licenses certain technology from third parties and plans to continue to do so in the future. The commercial success of the Company will depend, in part, on its ability to continue to obtain licenses to use third-party technology in its products.

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     The Company relies upon a combination of trade secret, copyright and trademark laws and contractual restrictions to establish and protect proprietary rights in its technology. The Company also enters into confidentiality and invention assignment agreements with its employees and enters into non-disclosure agreements with its consultants, suppliers, distributors and customers to limit access to and disclosure of its proprietary information. However, these statutory and contractual arrangements may not be sufficient to deter misappropriation of the Company’s proprietary technologies. In addition, independent third parties may develop similar or superior technologies to those of the Company. Furthermore, the laws of some foreign countries do not provide the same degree of protection of the Company’s proprietary information as do the laws of the United States.

Claims by third parties that the Company infringes their proprietary technology could prevent the Company from offering its products or otherwise materially harm the Company’s business.

     The commercial success of the Company also will depend, in part, on the Company not breaching third-party intellectual property rights. The Company licenses certain third-party technology for use in its products, but is subject to claims and the risk of litigation alleging infringement of other third-party intellectual property rights. A number of companies have developed technologies or received patents on technologies that may be related to or be competitive with the Company’s technologies. The Company has not conducted a patent search relating to the technology used in its products. In addition, since patent applications in the United States are not publicly disclosed until the patent issues, applications may have been filed, which, if issued as patents, would relate to the Company’s products. The Company’s lack of patents may inhibit the Company’s ability to negotiate or obtain licenses from or oppose patents of third parties, if necessary.

     The Company may incur substantial costs in defending itself and its customers against intellectual property litigation, including pending and potential future litigation, regardless of the merits of such claims. The Company may also be required by contract or by statutory implied warranties to indemnify its distribution partners and end-users against third-party infringement claims. Parties making infringement claims against the Company may be able to obtain injunctive or other equitable relief which could effectively block the Company’s ability to sell its products in the United States and abroad, and could result in an award of substantial damages. In the event of a successful claim of infringement against the Company, the Company, its customers and end-users may be required to obtain one or more licenses from third parties. The Company, or its customers, may not be able to obtain necessary licenses from third parties at a reasonable cost, or at all. The defense of any lawsuit could result in time-consuming and expensive litigation, damages, license fees, royalty payments and restrictions on the Company’s ability to sell its products, any of which could have a material adverse effect on the Company’s business, financial condition, and results of operations.

The Company faces additional risks from its international operations.

     The Company’s international business involves a number of risks that could adversely affect its operating results or contribute to fluctuations in those results. The Company’s revenue from international sales represented 33% and 31%, respectively, of its total revenue in the three months ended September 30, 2003 and 2002 and 37% and 30%, respectively, of its total revenue in the nine months ended September 30, 2003 and 2002, respectively. The Company intends to seek opportunities to expand its product and service offerings into additional international markets, although the Company may not succeed in developing localized versions of its products for new international markets or in marketing or distributing products and services in those markets.

     The majority of the Company’s international sales are currently denominated in United States dollars. However, it is possible that a significantly higher level of future sales of the Company’s products may be denominated in foreign currencies. To the extent that the Company’s sales are denominated in currencies other than United States dollars, fluctuations in exchange rates may result in foreign exchange losses. The Company does not have experience in implementing hedging techniques that might minimize the Company’s risks from exchange rate fluctuations.

     The Company’s international business also involves a number of other difficulties and risks, including risks associated with:

• changing economic conditions and political instability in foreign countries;

• export restrictions and export controls relating to the Company’s technology;

• compliance with existing and changing regulatory requirements;

• tariffs and other trade barriers;

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• difficulties in staffing and managing international operations ;

• longer payment cycles and problems in collecting accounts receivable;

• software piracy;

• seasonal reductions in business activity in Europe and certain other parts of the world during the summer months; and

• potentially adverse tax consequences.

Control by Insiders

     As of September 30, 2003, the Company’s executive officers, directors and their affiliates beneficially owned approximately 1.4 million shares, or approximately 17%, of the then outstanding shares of the Company’s common stock. As a result, these persons may have the ability to effectively control the Company and direct its affairs and business, including the election of directors and approval of significant corporate transactions. This concentration of ownership may also have the effect of delaying, deferring or preventing a change in control of the Company, and making certain transactions more difficult or impossible absent the support of these stockholders, including proxy contests, mergers involving the Company, tender offers, open-market purchase programs or other purchases of common stock that could give stockholders of the Company the opportunity to realize a premium over the then prevailing market price for shares of common stock.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     The Company’s market risk exposures as set forth in its Annual Report on Form 10-K for the year ended December 31, 2002 have not materially changed.

Item 4. Controls and Procedures

     An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of the end of the quarter ended September 30, 2003.

     An evaluation was also performed under the supervision and with the participation of our management, including our CEO and CFO, of any change in our internal controls over financial reporting that occurred during our last fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. That evaluation did not identify any change in our internal controls over financial reporting that occurred during our latest fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

     Limitations on the Effectiveness of Controls. The Company’s management, including the CEO and CFO, does not expect that its disclosure controls will prevent all error or potential fraud. A control system, no matter how well conceived and operated, can provide only reasonable not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their cost. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons or by collusion of two or more people. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     On February 11, 2003, the Company received an adversarial complaint filed by Visitalk.com in connection with Visitalk.com’s reorganization proceedings in the United States Bankruptcy Court District of Arizona, alleging that CUseeMe Networks, which was acquired by the Company on June 19, 2001, breached a 1999 Strategic Partnership Agreement and sought damages of $435,000. In April, the Company responded to the complaint with a Motion to Stay Proceedings and to compel Matter to Proceed to Arbitration. In June 2003, the parties reached a mutual agreement to dismiss the adversarial action with prejudice, exchange a mutual general release of all claims and waive attorney’s fees and costs. The parties have executed a formal settlement agreement, which will not become effective until approved by the Bankruptcy Court.

Item 2. Changes in Securities

(a) On July 25, 2003, the Company offered a voluntary employee stock option exchange program to its employees and members of its board of directors. Under the exchange offer, eligible employees and members of the board of directors had the opportunity to exchange their outstanding stock options for new options to be granted under the Company’s 1999 Equity Incentive Plan and 1997 Equity Incentive Plan, pursuant to the terms of the replacement option agreements between the Company and its employees and members of the board of directors. Under the exchange offer, all outstanding options were eligible options. The exchange offer period expired on August 22, 2003. Options accepted for exchange will be cancelled and exchanged for replacement options covering one share for each three shares covered by the exchanged options; provided, however, that under the exchange offer, options granted in the six-month period immediately preceding the offer date that are cancelled due to the participation in the offer will be replaced by the same number of replacement options. The replacement options will be granted on the replacement grant date, February 23, 2004, and will have an exercise price equal to the fair market value of First Virtual Communications’ common stock on that date. The new options will vest in equivalent monthly increments over a 24 month period commencing with the replacement grant date. Replacement options granted to employees located outside the United States may be subject to different vesting and other terms than those described above.

(b) On September 30, 2003, the Company issued warrants to its landlord as partial consideration for the termination of an existing lease between the Company and the landlord. The Company issued a five-year warrant to Richard T. Peerey Separate Property Trust, for the purchase of up to 200,000 shares of Common Stock at an exercise price of $1.35 per share. The Company also issued a five-year warrant to John Arrillaga Survivor’s Trust, for the purchase of up to 200,000 shares of Common Stock at an exercise price of $1.35 per share.

     On September 30, 2003, the Company entered into an Equity Investment Agreement with Net One Systems Co., Ltd. (“Net One”), pursuant to which Net One was authorized to return approximately $1.5 million of products previously purchased from the Company, net of $75,000 of expenses, in exchange for shares of common stock of the Company, at a purchase price of $2.45 per share. On October 8, 2003, the Company issued 642,921 shares of the Company’s common stock to Net One at $2.45 per share as consideration for the returned products.

     On November 7, 2003, the Company entered into definitive agreements to sell approximately 5.7 million shares of common stock in a private placement with institutional investors and their affiliates who are accredited investors under the securities laws, priced at $1.79 per share. The transaction closed on November 12, 2003, resulting in gross proceeds to the Company of approximately $10.3 million, or approximately $9.3 million net of placement fees and expenses. Investors in the private placement also received warrants to purchase up to 2.9 million shares of common stock at an exercise price of $1.79 per share. The warrants have a five year life. Adam Stettner, a member of the Company’s Board of Directors, is managing director of Special Situations Technology Fund, L.P., one of the investors in the financing. The Company is required to file a registration statement within 30 days of the closing of the offering to register the resale of the Common Stock issued in the financing and issuable upon exercise of the warrants issued in the financing.

     On November 12, 2003, the Company issued a warrant to Roth Capital Partners LLC (“Roth”), as partial consideration for services rendered by Roth as the Company’s placement agent in the Company’s private placement financing which closed on November 12, 2003. The warrant is exercisable for up to 458,592 shares of the Company’s Common Stock at an exercise price of $2.15 per share and has a five year term.

     The parties intended the above private placements to be exempt from registration and prospectus delivery requirements under the Securities Act of 1933, as amended (the “Act”), pursuant to Section 4(2) of the Act and Regulation D promulgated thereunder. Each of the above investors represented that they were an accredited investor and that the investor’s intention was to acquire the securities for investment only and not with a view to distribution thereof. An appropriate legend was affixed to each warrant and share of common stock issued in the above private placements and will be placed on any common stock certificates issued under the private equity line of financing agreement or issued upon exercise of the above warrants. Each investor was knowledgeable, sophisticated and experienced in making investment decisions of this kind and received adequate information about the Company or had adequate access, through the investor’s business relationship with the Company, to information about the Company.

27

Item 6. Exhibits and Reports on Form 8-K.

     (a)  Exhibits

Exhibit
No.	Description of Document
3.1	Amended and Restated Certificate of Incorporation of the Company (1)
3.2	Certificate of Ownership and Merger, effective August 3, 1998(2)
3.3	Certificate of Designation of Series A Convertible Preferred Stock (3)
3.4	Amended Bylaws of the Registrant(1)
3.5	Certificate of Ownership and Merger, effective February 5, 2001(4)
3.6	Certificate of Amendment of Restated Certificate of Incorporation filed on June 19, 2001(4)
3.7	Certificate of Amendment of Amended and Restated Certificate of Incorporation filed on June 26, 2003(8)
4.1	Specimen Common Stock Certificate (2)
4.2	Specimen Series A Convertible Preferred Stock Certificate (3)
4.3	Warrant to purchase 522,875 shares, after giving effect to the 1-for-5 reverse stock split, of the Company’s Common Stock, dated May 7, 2001, issued by the Company to PictureTel Corporation (5)
4.4	Warrant to purchase 170,000 shares, after giving effect to the 1-for-5 reverse stock split, subject to adjustment, of the Company’s Common Stock, dated June 8, 2000, issued by the Company to Vulcan Ventures Incorporated (3)
4.6	Warrant to purchase the Company’s Common Stock, dated April 12, 2002, issued by the Company to the purchasers and in the amounts as set forth on Schedule A attached thereto (6)
4.7	Registration Rights Agreement, dated April 12, 2002, by and among the Company and each of the purchasers listed therein (6)
4.8	Registration Rights Agreement, dated June 8, 2000, between the Company and Vulcan Ventures Incorporated (3)
4.9	Warrant to purchase 60,000 shares, after giving effect to the 1-for-5 reverse stock split, of the Company’s Common Stock, dated April 14, 2003, issued by the Company to Ralph Ungermann (7)
4.10	Warrant to purchase 56,250 shares, after giving effect to the 1-for-5 reverse stock split, of the Company’s Common Stock, dated April 3, 2003, issued by the Company to Silicon Valley Bank (7)
4.11	Warrant to purchase 200,000 shares of the Company’s Common Stock, dated September 30, 2003, issued by the Company to Richard T. Peerey Separate Property Trust
4.12	Warrant to purchase 200,000 shares of the Company’s Common Stock, dated September 30, 2003, issued by the Company to John Arrillaga Survivor’s Trust
4.13	Warrants to purchase up to 2,866,199 shares of the Company’s Common Stock, dated November 12, 2003, issued by the Company to the purchasers set forth on the Schedule of Purchasers attached thereto
4.14	Warrant to purchase up to 458,592 shares of the Company’s Common Stock, dated November 12, 2003, issued by the Company to Roth Capital Partners LLC

28

Exhibit
No.	Description of Document
10.52	Employment agreement between the Company and Jonathan Morgan, dated October 9, 2003.
10.53	Amendment Number One to the Partner Agreement between the Company and Net One Systems Co., Ltd., dated April 1, 2002
10.54	Amendment Number Two to the Partner Agreement between the Company and Net One Systems Co., Ltd., dated September 30, 2003*
10.55	Employment agreement between the Company and David Weinstein, dated September 4, 2003
10.56	Employment agreement between the Company and Frank Kaplan, dated November 25, 2002
10.57	Securities Purchase Agreement, dated as of November 7, 2003, by and among the Company and the purchasers set forth on the Schedule of Purchasers attached thereto
10.58	Registration Rights Agreement, dated as of November 7, 2003, by and among the Company and the purchasers set forth on the Schedule of Purchasers attached thereto
24.1	Power of Attorney (included on signature page)
31.1	Certificate of Principal Executive Officer, dated November 14, 2003, required by Section 302 of the Public Company Accounting Reform and Investor Protection Act of 2002 (18 U.S.C. §1350, as adopted)
31.2	Certificate of Principal Financial Officer, dated November 14, 2003, required by Section 302 of the Public Company Accounting Reform and Investor Protection Act of 2002 (18 U.S.C. §1350, as adopted)
32.1	Certification of Principal Executive Officer, dated November 14, 2003, required by Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002 (18 U.S.C. §1350, as adopted)\
32.2	Certificate of Principal Financial Officer, dated November 14, 2003, required by Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002 (18 U.S.C. §1350, as adopted)

Notes to Exhibits

*     Confidential treatment has been requested with respect to certain portions of this Exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

(1)  Filed as an exhibit to the Company’s Registration Statement on Form S-1, as amended (File No. 333-38755).

(2)  Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, filed on August 11, 1998 (File No. 000-23305).

(3)  Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, filed on August 14, 2000 (File No. 000-23305).

(4)  Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, filed on August 15, 2001 (File No. 000-23305).

(5)  Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, filed on November 14, 2001 (File No. 000- 23305).

(6)  Filed as an exhibit to the Company’s Registration Statement on Form S-3 (File No. 333-88058), as filed on May 10, 2002.

(7)  Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, filed on May 15, 2003 (File No. 000-23305).

(8)  Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, filed on August 14, 2003 (File No. 000-23305).

     (b)  Reports on Form 8-K.

     On October 28, 2003, the Company filed a Form 8-K that furnished a press release announcing the Company’s financial results for the quarter ended September 30, 2003.

29

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 14, 2003	FIRST VIRTUAL COMMUNICATIONS, INC.
	By:	/s/ Truman Cole
		Truman Cole
		Chief Financial Officer
		(Duly Authorized Officer and Principal
		Financial and Accounting Officer)

30

EXHIBIT INDEX

Exhibit
No.	Description of Document
3.1	Amended and Restated Certificate of Incorporation of the Company (1)
3.2	Certificate of Ownership and Merger, effective August 3, 1998(2)
3.3	Certificate of Designation of Series A Convertible Preferred Stock (3)
3.4	Amended Bylaws of the Registrant(1)
3.5	Certificate of Ownership and Merger, effective February 5, 2001(4)
3.6	Certificate of Amendment of Restated Certificate of Incorporation filed on June 19, 2001(4)
3.7	Certificate of Amendment of Amended and Restated Certificate of Incorporation filed on June 26, 2003(8)
4.1	Specimen Common Stock Certificate (2)
4.2	Specimen Series A Convertible Preferred Stock Certificate (3)
4.3	Warrant to purchase 522,875 shares, after giving effect to the 1-for-5 reverse stock split, of the Company’s Common Stock, dated May 7, 2001, issued by the Company to PictureTel Corporation (5)
4.4	Warrant to purchase 170,000 shares, after giving effect to the 1-for-5 reverse stock split, subject to adjustment, of the Company’s Common Stock, dated June 8, 2000, issued by the Company to Vulcan Ventures Incorporated (3)
4.6	Warrant to purchase the Company’s Common Stock, dated April 12, 2002, issued by the Company to the purchasers and in the amounts as set forth on Schedule A attached thereto (6)
4.7	Registration Rights Agreement, dated April 12, 2002, by and among the Company and each of the purchasers listed therein (6)
4.8	Registration Rights Agreement, dated June 8, 2000, between the Company and Vulcan Ventures Incorporated (3)
4.9	Warrant to purchase 60,000 shares, after giving effect to the 1-for-5 reverse stock split, of the Company’s Common Stock, dated April 14, 2003, issued by the Company to Ralph Ungermann (7)
4.10	Warrant to purchase 56,250 shares, after giving effect to the 1-for-5 reverse stock split, of the Company’s Common Stock, dated April 3, 2003, issued by the Company to Silicon Valley Bank (7)
4.11	Warrant to purchase 200,000 shares of the Company’s Common Stock, dated September 30, 2003, issued by the Company to Richard T. Peerey Separate Property Trust
4.12	Warrant to purchase 200,000 shares of the Company’s Common Stock, dated September 30, 2003, issued by the Company to John Arrillaga Survivor’s Trust
4.13	Warrants to purchase up to 2,866,199 shares of the Company’s Common Stock, dated November 12, 2003, issued by the Company to the purchasers set forth on the Schedule of Purchasers attached thereto
4.14	Warrant to purchase up to 458,592 shares of the Company’s Common Stock, dated November 12, 2003, issued by the Company to Roth Capital Partners LLC

31

Exhibit
No.	Description of Document
10.52	Employment agreement between the Company and Jonathan Morgan, dated October 9, 2003
10.53	Amendment Number One to the Partner Agreement between the Company and Net One Systems Co., Ltd., dated April 1, 2002
10.54	Amendment Number Two to the Partner Agreement between the Company and Net One Systems Co., Ltd., dated September 30, 2003*
10.55	Employment agreement between the Company and David Weinstein, dated September 4, 2003
10.56	Employment agreement between the Company and Frank Kaplan, dated November 25, 2002
10.57	Securities Purchase Agreement, dated as of November 7, 2003, by and among the Company and the purchasers set forth on the Schedule of Purchasers attached thereto
10.58	Registration Rights Agreement, dated as of November 7, 2003, by and among the Company and the purchasers set forth on the Schedule of Purchasers attached thereto
24.1	Power of Attorney (included on signature page)
31.1	Certificate of Principal Executive Officer, dated November 14, 2003, required by Section 302 of the Public Company Accounting Reform and Investor Protection Act of 2002 (18 U.S.C. §1350, as adopted)
31.2	Certificate of Principal Financial Officer, dated November 14, 2003, required by Section 302 of the Public Company Accounting Reform and Investor Protection Act of 2002 (18 U.S.C. §1350, as adopted)
32.1	Certification of Principal Executive Officer, dated November 14, 2003, required by Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002 (18 U.S.C. §1350, as adopted)
32.2	Certificate of Principal Financial Officer, dated November 14, 2003, required by Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002 (18 U.S.C. §1350, as adopted)

Notes to Exhibits

*     Confidential treatment has been requested with respect to certain portions of this Exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

(1)  Filed as an exhibit to the Company’s Registration Statement on Form S-1, as amended (File No. 333-38755).

(2)  Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed on August 11, 1998 (File No. 000-23305).

(3)  Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed on August 14, 2000 (File No. 000-23305).

(4)  Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed on August 15, 2001 (File No. 000-23305).

(5)  Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed on November 14, 2001 (File No. 000-23305).

(6)  Filed as an exhibit to the Company’s Registration Statement on Form S-3 (File No. 333-88058), as filed on May 10, 2002.

(7)  Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, filed on May 15, 2003 (File No. 000-23305).

(8)  Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, filed on August 14, 2003 (File No. 000-23305).

32 EX-4.11 3 f94230exv4w11.txt EXHIBIT 4.11 EXHIBIT 4.11 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT. THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS. THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON SEPTEMBER 29, 2008 (THE "EXPIRATION DATE"). No. CSW-20 FIRST VIRTUAL COMMUNICATIONS, INC. WARRANT TO PURCHASE 200,000 SHARES OF COMMON STOCK, PAR VALUE $0.001 PER SHARE SEPTEMBER 30, 2003 VOID AFTER SEPTEMBER 29, 2008 FOR VALUE RECEIVED, Richard T. Peery Separate Property Trust ("Warrantholder"), is entitled to purchase, subject to the provisions of this Warrant, from First Virtual Communications, Inc., a Delaware corporation ("Company"), at any time after September 30, 2003 and not later than 5:00 P.M., Eastern time, on the Expiration Date (as defined above), at an exercise price per share equal to $1.35, (the exercise price in effect being herein called the "Warrant Price"), 200,000 shares ("Warrant Shares") of the Company's Common Stock, par value $0.001 per share ("Common Stock"). The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as described herein. SECTION 1. Registration. The Company shall maintain books for the transfer and registration of the Warrant. Upon the initial issuance of this Warrant, the Company shall issue and register the Warrant in the name of the Warrantholder. SECTION 2. Transfers. As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under the Securities Act of 1933, as amended ("Securities Act"), or an exemption from such registration. Subject to such restrictions, the Company shall transfer this Warrant from time to time upon the books to be maintained by the Company for that purpose, upon surrender thereof for transfer properly endorsed or accompanied by appropriate instructions for transfer and such other documents as may be reasonably required by the Company, including, if required by the Company, an opinion of its counsel to the effect that such transfer is exempt from the registration requirements of the Securities Act of 1933, to 1 establish that such transfer is being made in accordance with the terms hereof, and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company. SECTION 3. Exercise of Warrant. Subject to the provisions hereof, the Warrantholder may exercise this Warrant in whole or in part at any time upon surrender of the Warrant, together with delivery of the duly executed Warrant exercise form attached hereto as Appendix A (the "Exercise Agreement") and payment by cash, certified check or wire transfer of funds for the aggregate Warrant Price for that number of Warrant Shares then being purchased, to the Company during normal business hours on any business day at the Company's principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof). The Warrant Shares so purchased shall be deemed to be issued to the holder hereof or such holder's designee, as the record owner of such shares, as of the close of business on the date on which this Warrant shall have been surrendered (or evidence of loss, theft or destruction thereof and security or indemnity satisfactory to the Company), the Warrant Price shall have been paid and the completed Exercise Agreement shall have been delivered. Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in the Exercise Agreement, shall be delivered to the holder hereof within a reasonable time, not exceeding three (3) business days, after this Warrant shall have been so exercised. The certificates so delivered shall be in such denominations as may be requested by the holder hereof and shall be registered in the name of such holder or such other name as shall be designated by such holder. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the holder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised. As used herein, "business day" means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business. Each exercise hereof shall constitute the re-affirmation by the Warrantholder that the representations and warranties with respect to the Warrant Shares contained in Section 4 below are true and correct in all respects with respect to the Warrantholder as of the time of such exercise. SECTION 3.1 Net Exercise. Notwithstanding any provisions herein to the contrary, if the fair market value of one share of the Company's Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant by payment of cash, the Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Notice of Exercise in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula: X = Y (A-B) ------- A Where X = the number of shares of Common Stock to be issued to the Holder Y = the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation) 2. A = the fair market value of one share of the Company's Common Stock (at the date of such calculation) B = Exercise Price (as adjusted to the date of such calculation) For purposes of the above calculation, the fair market value of one share of Common Stock shall be equal to the fair market value of one share of Common Stock of the Company as quoted on the Nasdaq SmallCap or National Market on the date of such calculation. SECTION 4. Compliance with the Securities Act of 1933; Investment Representations. (A) The Company may cause the legend set forth on the first page of this Warrant to be set forth on each Warrant or similar legend on any security issued or issuable upon exercise of this Warrant, unless counsel for the Company is of the opinion as to any such security that such legend is unnecessary. (B) The Investor understands that: (i) the offering and sale of this Warrant and the Warrant Shares purchasable upon exercise of this Warrant is intended to be exempt from the registration requirements of the Securities Act; (ii) the offer and sale of this Warrant and the Warrant Shares purchasable upon exercise of this Warrant has not been registered under the Securities Act or any other applicable securities laws and such securities may be resold only if registered under the Securities Act and any other applicable securities laws or if an exemption from such registration requirements is available; and (iii) the Company is not required to register any resale of this Warrants or the Warrant Shares under the Securities Act or any other applicable securities laws. (C) The Investor represents that the Warrant and the Warrant Shares purchasable upon exercise of this Warrant are being acquired for his own account and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act or any other securities laws that may be applicable. (D) The Investor represents that the Investor (i) is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D under the Securities Act, (ii) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of his acquisition of the Warrant and investment in the Warrant Shares and is capable of bearing the economic risks of such investment, including a complete loss of his investment in any Warrant Shares purchasable upon exercise of this Warrant; (iii) believes that his acquisition of the Warrant and investment in the Warrant Shares purchasable upon exercise of this Warrant is suitable for him based upon his objectives and financial needs, and the Investor has adequate means for providing for his current financial needs and business contingencies and has no present need for liquidity of any investment with respect to this Warrant or any Warrant Shares purchasable upon exercise of this Warrant; and (iv) has not purchased, sold or entered into any put option, short position or similar arrangement with respect to any Warrant Shares purchasable upon exercise of this Warrant. 3. (E) The Investor acknowledges that no oral or written statements or representations have been made to the Investor by or on behalf of the Company in connection with the offering and sale of this Warrant or any Warrant Shares purchasable upon exercise of this Warrant other than those set forth in the Company's Annual Report on Form 10-K for the year-ended December 31, 2002, the Company's definitive proxy statement, filed April 30, 2003, and the Company's other reports and documents filed under Sections 13(a), 13(c), 14 or 15(d) under the Securities Exchange Act of 1934, as amended, or as set forth herein. (F) The Investor acknowledges that the Securities Act and state securities laws restrict the transferability of securities, such as the Warrant Shares, issued in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 4(2) thereunder and applicable state securities laws, and that, unless registered under the Securities Act or an exemption from registration is available, the Warrant Shares purchasable upon exercise of this Warrant must be held indefinitely. (G) The Investor has been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the issuance of this Warrant and the Warrant Shares purchasable upon exercise of this Warrant which have been requested by the Investor. The Investor has been afforded the opportunity to ask questions of the Company. The Investor understands that its investment in the Warrant and any Warrant Shares purchasable upon exercise of this Warrant involves a significant degree of risk. (H) The Investor shall make all filings with the Commission required under the Exchange Act, including reports required under Regulation 13D-G thereunder, within the time periods required under the Exchange Act, in connection with any purchase of Warrant Shares upon exercise of this Warrant. SECTION 5. Payment of Taxes. The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a name other than that of the registered holder of this Warrant in respect of which such shares are issued, and in such case, the Company shall not be required to issue or deliver any certificate for Warrant Shares or any Warrant until the person requesting the same has paid to the Company the amount of such tax or has established to the Company's reasonable satisfaction that such tax has been paid. The holder shall be responsible for income taxes due under federal, state or other law, if any such tax is due. SECTION 6. Mutilated or Missing Warrants. In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto, if requested by the Company. 4. SECTION 7. Reservation of Common Stock. The Company hereby represents and warrants that there have been reserved, and the Company shall at all applicable times keep reserved until issued (if necessary) as contemplated by this Section 7, out of the authorized and unissued shares of Common Stock, sufficient shares to provide for the exercise of the rights of purchase represented by this Warrant. The Company agrees that all Warrant Shares issued upon due exercise of the Warrant shall be, at the time of delivery of the certificates for such Warrant Shares, duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company. SECTION 8. Adjustments. Subject and pursuant to the provisions of this Section 8, the Warrant Price and number of Warrant Shares subject to this Warrant shall be subject to adjustment from time to time as set forth hereinafter. (A) If the Company shall, at any time or from time to time while this Warrant is outstanding, pay a dividend or make a distribution on its Common Stock in shares of Common Stock, subdivide its outstanding shares of Common Stock into a greater number of shares or combine its outstanding shares of Common Stock into a smaller number of shares or issue by reclassification of its outstanding shares of Common Stock any shares of its capital stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then the number of Warrant Shares purchasable upon exercise of the Warrant and the Warrant Price in effect immediately prior to the date upon which such change shall become effective, shall be adjusted by the Company so that the Warrantholder thereafter exercising the Warrant shall be entitled to receive the number of shares of Common Stock or other capital stock which the Warrantholder would have received if the Warrant had been exercised immediately prior to such event upon payment of a Warrant Price that has been adjusted to reflect a fair allocation of the economics of such event to the Warrantholder. Such adjustments shall be made successively whenever any event listed above shall occur. (B) If any capital reorganization, reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation in which the Company is not the survivor, or sale, transfer or other disposition of all or substantially all of the Company's assets to another corporation shall be effected, then, as a condition of such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be made whereby each Warrantholder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of the Warrant, had such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of each Warrantholder to the end that the provisions hereof (including, without limitation, provision for adjustment of the Warrant Price) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or properties thereafter deliverable upon the exercise thereof. The Company shall not effect any such consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with the consummation thereof the successor 5. corporation (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall assume the obligation to deliver to the holder of the Warrant, at the last address of such holder appearing on the books of the Company, such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to purchase, and the other obligations under this Warrant. The provisions of this paragraph (b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, transfers or other dispositions. SECTION 9. Fractional Interest. The Company shall not be required to issue fractions of Warrant Shares upon the exercise of this Warrant. If any fractional share of Common Stock would, except for the provisions of the first sentence of this Section 9, be deliverable upon such exercise, the Company, in lieu of delivering such fractional share, shall pay to the exercising holder of this Warrant an amount in cash equal to the Fair Market Value of such fractional share of Common Stock on the date of exercise. As used in this Warrant, "Fair Market Value" of a share of Common Stock as of a particular date (the "Valuation Date") shall mean the following: (a) if the Common Stock is then listed on a national stock exchange, the closing sale price of one share of Common Stock on such exchange on the last trading day prior to the Valuation Date; (b) if the Common Stock is then quoted on Nasdaq, the closing sale price of one share of Common Stock on Nasdaq on the last trading day prior to the Valuation Date or, if no such closing sale price is available, the average of the high bid and the low sales price quoted on Nasdaq on the last trading day prior to the Valuation Date; or (c) if the Common Stock is not then listed on a national stock exchange or quoted on Nasdaq, the Fair Market Value of one share of Common Stock as of the Valuation Date, shall be determined in good faith by the Board of Directors of the Company. SECTION 10. Benefits. Nothing in this Warrant shall be construed to give any person, firm or corporation (other than the Company and the Warrantholder) any legal or equitable right, remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company and the Warrantholder. SECTION 11. Notices to Warrantholder. Upon the happening of any event requiring an adjustment of the Warrant Price, the Company shall promptly give written notice thereof to the Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant Price and the adjusted number of Warrant Shares resulting from such event and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Failure to give such notice to the Warrantholder or any defect therein shall not affect the legality or validity of the subject adjustment. SECTION 12. Identity of Transfer Agent. The Transfer Agent for the Common Stock is Computer Share Trust Company. Upon the appointment of any subsequent transfer agent for the Common Stock or other shares of the Company's capital stock issuable upon the exercise of the rights of purchase represented by the Warrant, the Company will mail to the Warrantholder a statement setting forth the name and address of such transfer agent. 6. SECTION 13. Notices. Unless otherwise provided, any notice required or permitted under this Warrant shall be given in writing and shall be deemed effectively given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii) if given by telex or telecopier, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one day after delivery to such carrier. All notices shall be addressed as follows: if to the Warrantholder, at its address as set forth in the Company's books and records and, if to the Company, at the address as follows, or at such other address as the Warrantholder or the Company may designate by ten days' advance written notice to the other: If to the Company: First Virtual Communications, Inc. 3393 Octavius Drive Santa Clara, California 95054 Attention: Chief Financial Officer Fax: (408) 748-2241 With a copy to: Cooley Godward llp 4401 Eastgate Mall San Diego, California 92121-1909 Attention: Julie M. Robinson, Esq. Fax: (858) 550-6420 SECTION 14. Successors. All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns hereunder. SECTION 15. Governing Law. This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of California, without reference to the choice of law provisions thereof. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of California located in Northern California and the United States District Court for the Northern District of California for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The 7. Company and, by accepting this Warrant, the Warrantholder, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. SECTION 16. No Rights as Stockholder. Prior to the exercise of this Warrant, the Warrantholder shall not have or exercise any rights as a stockholder of the Company by virtue of its ownership of this Warrant. SECTION 17. Amendment; Waiver. This Warrant may be amended or waived (including the adjustment provisions included in Section 8 of this Warrant) upon the written consent of the Company and the Warrantholder Section Headings. The section heading in this Warrant are for the convenience of the Company and the Warrantholder and in no way alter, modify, amend, limit or restrict the provisions hereof. 8. IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the 30th day of September, 2003. FIRST VIRTUAL COMMUNICATIONS, INC. By: /s/ Truman Cole --------------------------------- Name: Truman Cole ------------------------------------ Title: CFO ----------------------------------- 9. APPENDIX A FIRST VIRTUAL COMMUNICATIONS, INC. WARRANT EXERCISE FORM To: First Virtual Communications, Inc. The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant ("Warrant") for, and to purchase thereunder by the payment of the Warrant Price and surrender of the Warrant, _______________ shares of Common Stock ("Warrant Shares") provided for therein, and requests that certificates for the Warrant Shares be issued as follows: ------------------------------- Name -------------------------------- Address -------------------------------- -------------------------------- Federal Tax ID or Social Security No. and delivered by (certified mail to the above address, or (electronically (provide DWAC Instructions:___________________), or (other (specify): ________________________________). and, if the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned's Assignee as below indicated and delivered to the address stated below. Dated: ___________________, ____ Note: The signature must correspond with Signature:_______________________________ the name of the registered holder as written on the first page of the Warrant in every ------------------------- particular, without alteration or enlargement Name (please print) or any change whatever, unless the Warrant has been assigned. ------------------------- ------------------------- Address ------------------------- Federal Identification or Social Security No. Assignee: ------------------------------- ------------------------------- ------------------------------- EX-4.12 4 f94230exv4w12.txt EXHIBIT 4.12 EXHIBIT 4.12 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT. THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS. THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON SEPTEMBER 29, 2008 (THE "EXPIRATION DATE"). No. CSW-19 FIRST VIRTUAL COMMUNICATIONS, INC. WARRANT TO PURCHASE 200,000 SHARES OF COMMON STOCK, PAR VALUE $0.001 PER SHARE SEPTEMBER 30, 2003 VOID AFTER SEPTEMBER 29, 2008 FOR VALUE RECEIVED, John Arrillaga Survivor's Trust ("Warrantholder"), is entitled to purchase, subject to the provisions of this Warrant, from First Virtual Communications, Inc., a Delaware corporation ("Company"), at any time after September 30, 2003 and not later than 5:00 P.M., Eastern time, on the Expiration Date (as defined above), at an exercise price per share equal to $1.35, (the exercise price in effect being herein called the "Warrant Price"), 200,000 shares ("Warrant Shares") of the Company's Common Stock, par value $0.001 per share ("Common Stock"). The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as described herein. SECTION 1. Registration. The Company shall maintain books for the transfer and registration of the Warrant. Upon the initial issuance of this Warrant, the Company shall issue and register the Warrant in the name of the Warrantholder. SECTION 2. Transfers. As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under the Securities Act of 1933, as amended ("Securities Act"), or an exemption from such registration. Subject to such restrictions, the Company shall transfer this Warrant from time to time upon the books to be maintained by the Company for that purpose, upon surrender thereof for transfer properly endorsed or accompanied by appropriate instructions for transfer and such other documents as may be reasonably required by the Company, including, if required by the Company, an opinion of its counsel to the effect that such transfer is exempt from the registration requirements of the Securities Act of 1933, to 1 establish that such transfer is being made in accordance with the terms hereof, and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company. SECTION 3. Exercise of Warrant. Subject to the provisions hereof, the Warrantholder may exercise this Warrant in whole or in part at any time upon surrender of the Warrant, together with delivery of the duly executed Warrant exercise form attached hereto as Appendix A (the "Exercise Agreement") and payment by cash, certified check or wire transfer of funds for the aggregate Warrant Price for that number of Warrant Shares then being purchased, to the Company during normal business hours on any business day at the Company's principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof). The Warrant Shares so purchased shall be deemed to be issued to the holder hereof or such holder's designee, as the record owner of such shares, as of the close of business on the date on which this Warrant shall have been surrendered (or evidence of loss, theft or destruction thereof and security or indemnity satisfactory to the Company), the Warrant Price shall have been paid and the completed Exercise Agreement shall have been delivered. Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in the Exercise Agreement, shall be delivered to the holder hereof within a reasonable time, not exceeding three (3) business days, after this Warrant shall have been so exercised. The certificates so delivered shall be in such denominations as may be requested by the holder hereof and shall be registered in the name of such holder or such other name as shall be designated by such holder. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the holder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised. As used herein, "business day" means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business. Each exercise hereof shall constitute the re-affirmation by the Warrantholder that the representations and warranties with respect to the Warrant Shares contained in Section 4 below are true and correct in all respects with respect to the Warrantholder as of the time of such exercise. SECTION 3.1 Net Exercise. Notwithstanding any provisions herein to the contrary, if the fair market value of one share of the Company's Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant by payment of cash, the Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Notice of Exercise in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula: X = Y (A-B) ------- A Where X = the number of shares of Common Stock to be issued to the Holder Y = the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation) 2. A = the fair market value of one share of the Company's Common Stock (at the date of such calculation) B = Exercise Price (as adjusted to the date of such calculation) For purposes of the above calculation, the fair market value of one share of Common Stock shall be equal to the fair market value of one share of Common Stock of the Company as quoted on the Nasdaq SmallCap or National Market on the date of such calculation. SECTION 4. Compliance with the Securities Act of 1933; Investment Representations. (A) The Company may cause the legend set forth on the first page of this Warrant to be set forth on each Warrant or similar legend on any security issued or issuable upon exercise of this Warrant, unless counsel for the Company is of the opinion as to any such security that such legend is unnecessary. (B) The Investor understands that: (i) the offering and sale of this Warrant and the Warrant Shares purchasable upon exercise of this Warrant is intended to be exempt from the registration requirements of the Securities Act; (ii) the offer and sale of this Warrant and the Warrant Shares purchasable upon exercise of this Warrant has not been registered under the Securities Act or any other applicable securities laws and such securities may be resold only if registered under the Securities Act and any other applicable securities laws or if an exemption from such registration requirements is available; and (iii) the Company is not required to register any resale of this Warrants or the Warrant Shares under the Securities Act or any other applicable securities laws. (C) The Investor represents that the Warrant and the Warrant Shares purchasable upon exercise of this Warrant are being acquired for his own account and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act or any other securities laws that may be applicable. (D) The Investor represents that the Investor (i) is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D under the Securities Act, (ii) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of his acquisition of the Warrant and investment in the Warrant Shares and is capable of bearing the economic risks of such investment, including a complete loss of his investment in any Warrant Shares purchasable upon exercise of this Warrant; (iii) believes that his acquisition of the Warrant and investment in the Warrant Shares purchasable upon exercise of this Warrant is suitable for him based upon his objectives and financial needs, and the Investor has adequate means for providing for his current financial needs and business contingencies and has no present need for liquidity of any investment with respect to this Warrant or any Warrant Shares purchasable upon exercise of this Warrant; and (iv) has not purchased, sold or entered into any put option, short position or similar arrangement with respect to any Warrant Shares purchasable upon exercise of this Warrant. 3. (E) The Investor acknowledges that no oral or written statements or representations have been made to the Investor by or on behalf of the Company in connection with the offering and sale of this Warrant or any Warrant Shares purchasable upon exercise of this Warrant other than those set forth in the Company's Annual Report on Form 10-K for the year-ended December 31, 2002, the Company's definitive proxy statement, filed April 30, 2003, and the Company's other reports and documents filed under Sections 13(a), 13(c), 14 or 15(d) under the Securities Exchange Act of 1934, as amended, or as set forth herein. (F) The Investor acknowledges that the Securities Act and state securities laws restrict the transferability of securities, such as the Warrant Shares, issued in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 4(2) thereunder and applicable state securities laws, and that, unless registered under the Securities Act or an exemption from registration is available, the Warrant Shares purchasable upon exercise of this Warrant must be held indefinitely. (G) The Investor has been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the issuance of this Warrant and the Warrant Shares purchasable upon exercise of this Warrant which have been requested by the Investor. The Investor has been afforded the opportunity to ask questions of the Company. The Investor understands that its investment in the Warrant and any Warrant Shares purchasable upon exercise of this Warrant involves a significant degree of risk. (H) The Investor shall make all filings with the Commission required under the Exchange Act, including reports required under Regulation 13D-G thereunder, within the time periods required under the Exchange Act, in connection with any purchase of Warrant Shares upon exercise of this Warrant. SECTION 5. Payment of Taxes. The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a name other than that of the registered holder of this Warrant in respect of which such shares are issued, and in such case, the Company shall not be required to issue or deliver any certificate for Warrant Shares or any Warrant until the person requesting the same has paid to the Company the amount of such tax or has established to the Company's reasonable satisfaction that such tax has been paid. The holder shall be responsible for income taxes due under federal, state or other law, if any such tax is due. SECTION 6. Mutilated or Missing Warrants. In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto, if requested by the Company. 4. SECTION 7. Reservation of Common Stock. The Company hereby represents and warrants that there have been reserved, and the Company shall at all applicable times keep reserved until issued (if necessary) as contemplated by this Section 7, out of the authorized and unissued shares of Common Stock, sufficient shares to provide for the exercise of the rights of purchase represented by this Warrant. The Company agrees that all Warrant Shares issued upon due exercise of the Warrant shall be, at the time of delivery of the certificates for such Warrant Shares, duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company. SECTION 8. Adjustments. Subject and pursuant to the provisions of this Section 8, the Warrant Price and number of Warrant Shares subject to this Warrant shall be subject to adjustment from time to time as set forth hereinafter. (A) If the Company shall, at any time or from time to time while this Warrant is outstanding, pay a dividend or make a distribution on its Common Stock in shares of Common Stock, subdivide its outstanding shares of Common Stock into a greater number of shares or combine its outstanding shares of Common Stock into a smaller number of shares or issue by reclassification of its outstanding shares of Common Stock any shares of its capital stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then the number of Warrant Shares purchasable upon exercise of the Warrant and the Warrant Price in effect immediately prior to the date upon which such change shall become effective, shall be adjusted by the Company so that the Warrantholder thereafter exercising the Warrant shall be entitled to receive the number of shares of Common Stock or other capital stock which the Warrantholder would have received if the Warrant had been exercised immediately prior to such event upon payment of a Warrant Price that has been adjusted to reflect a fair allocation of the economics of such event to the Warrantholder. Such adjustments shall be made successively whenever any event listed above shall occur. (B) If any capital reorganization, reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation in which the Company is not the survivor, or sale, transfer or other disposition of all or substantially all of the Company's assets to another corporation shall be effected, then, as a condition of such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be made whereby each Warrantholder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of the Warrant, had such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of each Warrantholder to the end that the provisions hereof (including, without limitation, provision for adjustment of the Warrant Price) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or properties thereafter deliverable upon the exercise thereof. The Company shall not effect any such consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with the consummation thereof the successor 5. corporation (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall assume the obligation to deliver to the holder of the Warrant, at the last address of such holder appearing on the books of the Company, such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to purchase, and the other obligations under this Warrant. The provisions of this paragraph (b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, transfers or other dispositions. SECTION 9. Fractional Interest. The Company shall not be required to issue fractions of Warrant Shares upon the exercise of this Warrant. If any fractional share of Common Stock would, except for the provisions of the first sentence of this Section 9, be deliverable upon such exercise, the Company, in lieu of delivering such fractional share, shall pay to the exercising holder of this Warrant an amount in cash equal to the Fair Market Value of such fractional share of Common Stock on the date of exercise. As used in this Warrant, "Fair Market Value" of a share of Common Stock as of a particular date (the "Valuation Date") shall mean the following: (a) if the Common Stock is then listed on a national stock exchange, the closing sale price of one share of Common Stock on such exchange on the last trading day prior to the Valuation Date; (b) if the Common Stock is then quoted on Nasdaq, the closing sale price of one share of Common Stock on Nasdaq on the last trading day prior to the Valuation Date or, if no such closing sale price is available, the average of the high bid and the low sales price quoted on Nasdaq on the last trading day prior to the Valuation Date; or (c) if the Common Stock is not then listed on a national stock exchange or quoted on Nasdaq, the Fair Market Value of one share of Common Stock as of the Valuation Date, shall be determined in good faith by the Board of Directors of the Company. SECTION 10. Benefits. Nothing in this Warrant shall be construed to give any person, firm or corporation (other than the Company and the Warrantholder) any legal or equitable right, remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company and the Warrantholder. SECTION 11. Notices to Warrantholder. Upon the happening of any event requiring an adjustment of the Warrant Price, the Company shall promptly give written notice thereof to the Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant Price and the adjusted number of Warrant Shares resulting from such event and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Failure to give such notice to the Warrantholder or any defect therein shall not affect the legality or validity of the subject adjustment. SECTION 12. Identity of Transfer Agent. The Transfer Agent for the Common Stock is Computer Share Trust Company. Upon the appointment of any subsequent transfer agent for the Common Stock or other shares of the Company's capital stock issuable upon the exercise of the rights of purchase represented by the Warrant, the Company will mail to the Warrantholder a statement setting forth the name and address of such transfer agent. 6. SECTION 13. Notices. Unless otherwise provided, any notice required or permitted under this Warrant shall be given in writing and shall be deemed effectively given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii) if given by telex or telecopier, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one day after delivery to such carrier. All notices shall be addressed as follows: if to the Warrantholder, at its address as set forth in the Company's books and records and, if to the Company, at the address as follows, or at such other address as the Warrantholder or the Company may designate by ten days' advance written notice to the other: If to the Company: First Virtual Communications, Inc. 3393 Octavius Drive Santa Clara, California 95054 Attention: Chief Financial Officer Fax: (408) 748-2241 With a copy to: Cooley Godward llp 4401 Eastgate Mall San Diego, California 92121-1909 Attention: Julie M. Robinson, Esq. Fax: (858) 550-6420 SECTION 14. Successors. All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns hereunder. SECTION 15. Governing Law. This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of California, without reference to the choice of law provisions thereof. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of California located in Northern California and the United States District Court for the Northern District of California for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The 7. Company and, by accepting this Warrant, the Warrantholder, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. SECTION 16. No Rights as Stockholder. Prior to the exercise of this Warrant, the Warrantholder shall not have or exercise any rights as a stockholder of the Company by virtue of its ownership of this Warrant. SECTION 17. Amendment; Waiver. This Warrant may be amended or waived (including the adjustment provisions included in Section 8 of this Warrant) upon the written consent of the Company and the Warrantholder Section Headings. The section heading in this Warrant are for the convenience of the Company and the Warrantholder and in no way alter, modify, amend, limit or restrict the provisions hereof. 8. IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the 30th day of September, 2003. FIRST VIRTUAL COMMUNICATIONS, INC. By: /s/ Truman Cole --------------------------------------- Name: Truman Cole ------------------------------------ Title: CFO ----------------------------------- 9. APPENDIX A FIRST VIRTUAL COMMUNICATIONS, INC. WARRANT EXERCISE FORM To: First Virtual Communications, Inc. The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant ("Warrant") for, and to purchase thereunder by the payment of the Warrant Price and surrender of the Warrant, _______________ shares of Common Stock ("Warrant Shares") provided for therein, and requests that certificates for the Warrant Shares be issued as follows: ------------------------------- Name -------------------------------- Address -------------------------------- -------------------------------- Federal Tax ID or Social Security No. and delivered by (certified mail to the above address, or (electronically (provide DWAC Instructions:___________________), or (other (specify): ___________________________________________). and, if the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned's Assignee as below indicated and delivered to the address stated below. Dated: ___________________, ____ Note: The signature must correspond with Signature:______________________________ the name of the registered holder as written on the first page of the Warrant in every --------------------------------- particular, without alteration or enlargement Name (please print) or any change whatever, unless the Warrant has been assigned. ------------------------------ ------------------------------ Address ------------------------------ Federal Identification or Social Security No. Assignee: ------------------------------- ------------------------------- ------------------------------- EX-4.13 5 f94230exv4w13.txt EXHIBIT 4.13 Exhibit 4.13 NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. COMMON STOCK PURCHASE WARRANT To Purchase __________ Shares of Common Stock of FIRST VIRTUAL COMMUNICATIONS, INC. THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") CERTIFIES that, for value received, _____________ (the "Holder"), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance of this Warrant (the "Initial Exercise Date") and on or prior to the fifth anniversary of the Initial Exercise Date (the "Termination Date") but not thereafter, to subscribe for and purchase from First Virtual Communications, Inc., a corporation incorporated in the State of Delaware (the "Company"), up to ____________ shares (the "Warrant Shares") of Common Stock, par value $0.001 per share, of the Company (the "Common Stock"). The purchase price of one share of Common Stock (the "Exercise Price") under this Warrant shall be $1.77, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS SET FORTH IN THAT CERTAIN SECURITIES PURCHASE AGREEMENT (THE "PURCHASE AGREEMENT"), DATED NOVEMBER 6, 2003, AMONG THE COMPANY AND THE PURCHASERS SIGNATORY THERETO. 1 1. Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company. 2. Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). 3. Exercise of Warrant. (a) Subject to Section 3(c) below, exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, within 5 Trading Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have surrendered this Warrant to the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased (and all taxes required to be paid by the Holder, if any, pursuant to Section 5 prior to the issuance of such shares) by wire transfer or cashier's check drawn on a United States bank. Certificates for shares purchased hereunder shall be delivered to the Holder within 3 Trading Days from the delivery to the Company of the Notice of Exercise Form by facsimile copy, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above ("Warrant Share Delivery Date). This Warrant shall be deemed to have been exercised on the later of the date the Notice of Exercise is delivered to the Company by facsimile copy, the date the Exercise Price (and all taxes required to be paid by the Holder, if any, pursuant to Section 5 prior to the issuance of such shares) is received by the Company, and the date the Warrant is surrendered to the Company (or evidence of loss, theft or destruction thereof and security or indemnity reasonably satisfactory to the Company) (the later date, the "Exercise Date"). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the close of business on the Exercise Date. If the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the third Trading Day following the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise. In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to an exercise by the seventh 2 Trading Day after the Warrant Share Delivery Date, and if after such day the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a "Buy-In"), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. (b) If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. (c) The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder's affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by 3 the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. To the extent that the limitation contained in this Section 3(c) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder) and of which a portion of this Warrant is exercisable shall be in the sole discretion of such Holder, and the submission of a Notice of Exercise shall be deemed to be such Holder's determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. For purposes of this Section 3(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company's most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company's transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 3(c) may be waived by the Holder upon, at the election of the Holder, not less than 61 days' prior notice to the Company, and the provisions of this Section 3(c) shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). (d) If at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a "cashless exercise" in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where: (A) = the Closing Price on the Trading Day immediately preceding the date of such election; (B) = the Exercise Price of the Warrants, as adjusted; and (X) = the number of Warrant Shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant. (e) Subject to the provisions of this Section 3, if after the first anniversary of the Initial Exercise Date each VWAP (as defined below) for any twenty consecutive Trading Days (the "Measurement Price") (such period commencing only after such anniversary date) exceeds the then Exercise Price (as adjusted under this Warrant) by 200% (the "Threshold Price"), then the Company may, within three Trading Days of such period, call for cancellation of all or any portion of this Warrant for which a Notice of Exercise 4 has not yet been delivered (such right, a "Call"). To exercise this right, the Company must deliver to the Holder an irrevocable written notice (a "Call Notice"), indicating therein the portion of the unexercised portion of this Warrant to which such notice applies. If the conditions set forth below for such Call are satisfied from the period from the date of the Call Notice through and including the Call Date (as defined below), then any portion of this Warrant subject to such Call Notice for which a Notice of Exercise shall not have been received by the Company from and after the date of the Call Notice will be cancelled at 6:30 p.m. (New York City time) on the 10th Trading Day after the date of the Call Notice is received by the Holder (such date, the "Call Date"). Any unexercised portion of this Warrant to which the Call Notice does not pertain, if any, will be unaffected by such Call Notice. In furtherance thereof, the Company covenants and agrees that it will honor all Notices of Exercise with respect to Warrant Shares subject to a Call Notice that are tendered from the time of delivery of the Call Notice on the Call Date. The parties agree that any Notice of Exercise delivered following a Call Notice shall first reduce to zero the number of Warrant Shares subject to such Call Notice prior to reducing the remaining Warrant Shares available for purchase under this Warrant. For example, if (x) this Warrant then permits the Holder to acquire 100 Warrant Shares, (y) a Call Notice pertains to 75 Warrant Shares, and (z) prior to the Call Date the Holder tenders a Notice of Exercise in respect of 50 Warrant Shares, then (1) on the Call Date the right under this Warrant to acquire 25 Warrant Shares will be automatically cancelled, (2) the Company, in the time and manner required under this Warrant, will have issued and delivered (or be required to issue and deliver) to the Holder 50 Warrant Shares in respect of the exercises following receipt of the Call Notice, and (3) the Holder may, until the Termination Date, exercise this Warrant for cash by payment of the aggregate Exercise Price then in effect for 25 Warrant Shares (subject to adjustment as herein provided and subject to subsequent Call Notices and the other terms and conditions of this Warrant). Subject again to the provisions of this Section 3, the Company may deliver subsequent Call Notices for any portion of this Warrant for which the Holder shall not have delivered a Notice of Exercise. Notwithstanding anything to the contrary set forth in this Warrant, the Company may not require the cancellation of this Warrant pursuant to this Section 3(d) (and any Call Notice will be void), unless, from the beginning of the 20 consecutive Trading Days used to determine whether the Common Stock has achieved the Threshold Price through the Call Date, (i) the Company shall have honored in accordance with the terms of this Warrant all Notices of Exercise delivered prior to the Call Date, (ii) the Registration Statement shall be effective as to all Warrant Shares and the prospectus thereunder available for use by the Holder for the resale of all such Warrant Shares (and the Company is not aware of any event or occurrence that would make it appropriate for the Company to suspend the effectiveness of the Registration Statement), (iii) the Warrant Shares shall be listed or quoted for trading on the Principal Market and trading in the Common Stock shall not have been suspended (and the Company is not then aware of any event or occurrence that would required trading to be suspended) and (iv) such issuance would be permitted in full without violating the limitations set forth in Section 3(c). "VWAP" means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or 5 the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based on a trading day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b) if the Common Stock is not then listed or quoted on a Trading Market and if prices for the Common Stock are then quoted on the OTC Bulletin Board, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted on the OTC Bulletin Board and if prices for the Common Stock are then reported in the "Pink Sheets" published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers and reasonably acceptable to the Company. 4. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price. 5. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. 6. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof. 7. Transfer, Division and Combination. (a) Subject to compliance with any applicable securities laws and the conditions set forth in Sections 1 and 7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part (provided that if the Warrant is being transferred in part, the portion of this Warrant being transferred shall represents the right to purchase at least 100,000 Warrant Shares (or such lesser amount comprising the entire number of Warrant Shares then underlying this Warrant and subject to adjustment as provided herein), upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and compliance with the conditions referenced in 6 the preceding sentence, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued. (b) Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, (i) this Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney, and (ii) the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. (c) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7. (d) The Company agrees to maintain, at its aforesaid office or at the offices of a designated agent, books for the registration and the registration of transfer of the Warrants. (e) At the time of the surrender of this Warrant in connection with any transfer of this Warrant, the Company will require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions and reasonably acceptable to the Company) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company, (iii) that the transferee be an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act and (iv) such other documents as may be reasonably requested by the Company to give effect to the transfer and comply with applicable laws. 8. No Rights as Shareholder until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the delivery of the Exercise Notice, the surrender of this Warrant, the payment of the aggregate Exercise Price to the Company, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the Exercise Date as determined in accordance with Section 3(a). 9. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it 7 (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or cause to be delivered a stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate. 10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday. 11. Adjustments of Exercise Price and Number of Warrant Shares; Stock Splits, etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the events described in the next sentence. In the event the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in prior to the date upon which such event described in clauses (i) through (iv) of this Section 3(a) shall become effective. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder, the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security equal to (x) the result obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment divided by (y) the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event. 12. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all or substantially all of its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("Other Property"), to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, 8 consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, "common stock of the successor or acquiring corporation" shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets. 13. Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company. 14. Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made. 15. Notice of Corporate Action. If at any time: (a) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or (b) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or, (c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; 9 then, in any one or more of such cases, the Company shall give to Holder (i) at least 10 days' prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify, to the extent known by the Company, (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d). 16. Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. 17. Miscellaneous. (a) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement. (b) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws. (c) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder's rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder as determined by a court of law, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, 10 but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. (d) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement. (e) Limitation of Liability. Subject to Section 3(d), no provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. (f) Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (g) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares. (h) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder. (i) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant. (j) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. ******************** 11 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: November 12, 2003 FIRST VIRTUAL COMMUNICATIONS, INC. By: /s/ Truman Cole _______________________________ Name: Title: 12 NOTICE OF EXERCISE To: First Virtual Communications, Inc. (1) The undersigned hereby elects to purchase ________ Warrant Shares of First Virtual Communications, Inc. pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any. (2) Payment shall take the form of (check applicable box): [ ] in lawful money of the United States; or [ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 3(d), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 3(d). (3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below: ________________________________________ The Warrant Shares shall be delivered to the following: ________________________________________ ________________________________________ ________________________________________ (4) Accredited Investor. The undersigned is an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933, as amended. [PURCHASER] By: ______________________________ Name: Title: Dated: ________________________ ASSIGNMENT FORM (To assign the foregoing warrant, execute this form and supply required information. Do not use this form to exercise the warrant.) FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to _______________________________________________ whose address is _______________________________________________________________. _______________________________________________________________ Dated: ______________, _______ Holder's Signature: ___________________________ Holder's Address: _____________________________ _____________________________ Signature Guaranteed: ___________________________________________ NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant. EXHIBIT A PURCHASERS

NAME OF PURCHASER NUMBER OF SHARES NUMBER OF WARRANTS ----------------- ---------------- ------------------ LAGUNITAS PARTNERS LP 837,989 418,994 J. Patterson McBaine 111,732 55,806 Jon D. Gruber & Linda W. Gruber 111,732 55,866 Gruber & McBaine International 279,330 139,665 Special Situations Fund III, L.P. 553,771 276,885 Special Situations Cayman Fund L.P. 178,911 89,455 Special Situations Technology Fund L.P. 17,039 8,519 Special Situations Technology Fund II L.P. 102,235 51,117 MicroCapital Fund L.P. 391,061 195,530 MicroCapital Fund Ltd. 167,598 83,799 Bonanza Fund 139,655 69,832 Firelake Strategic Technology Fund, L.P. 837,989 418,994 Agile Partners, LP 279,3320 139,665 Behavioral Financial Fund Ltd. 782,123 391,061 Jurika Family Trust 167,598 83,799 JMK Investment Partners, L.P. 167,598 83,799 Encinal Crossover Fund 83,799 41,899 Neal I. Goldman IRA Rollover 200,000 100,000 Palisades Master Fund L.P. 279,330 139,665 Gordon J. Roth 11,174 5,587

Joseph Paul Schimmelpfennig 11,174 5,587 John J. Weber 11,174 5,587 Jeffrey M. Ng 8,380 4,190 Louis J. Ellis 1,676 838 EX-4.14 6 f94230exv4w14.txt EXHIBIT 4.14 EXHIBIT 4.14 THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. FIRST VIRTUAL COMMUNICATIONS, INC. WARRANT TO PURCHASE COMMON STOCK NO. CSW-21 NOVEMBER 12, 2003 VOID AFTER NOVEMBER 11, 2008 THIS CERTIFIES THAT, for value received, Roth Capital Partners LLC, with its principal office at 24 Corporate Plaza, Newport Beach, California 92660, or assigns (the "HOLDER"), is entitled to purchase, subject to the provisions of this Warrant, at the Exercise Price (defined below) from First Virtual Communications, Inc., a Delaware corporation, with its principal office at 3200 Bridge Parkway, Suite 202, Redwood City, CA 94065 (the "COMPANY") up to 458,592 shares of the Common Stock of the Company (the "COMMON STOCK"), commencing May 12, 2004. This Warrant is being issued pursuant to the terms of the Letter Agreement dated September 30, 2003 between the Company and the Holder. 1. DEFINITIONS. As used herein, the following terms shall have the following respective meanings: (a) "EXERCISE PERIOD" shall mean the period commencing May 12, 2004 and ending at 5:00 P.M. PDT on November 11, 2008, unless sooner terminated as provided below. (b) "EXERCISE PRICE" shall mean $2.15 per share, subject to adjustment pursuant to Section 5 below. (c) "EXERCISE SHARES" shall mean the shares of the Company's Common Stock issuable upon exercise of this Warrant, subject to adjustment pursuant to the terms herein, including but not limited to adjustment pursuant to Section 5 below. 2. EXERCISE OF WARRANT. The rights represented by this Warrant may be exercised in whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth above (or at such other address as it may designate by notice in writing to the Holder): (a) An executed Notice of Exercise in the form attached hereto; (b) Payment of the Exercise Price either (i) in cash or by check, or (ii) by cancellation of indebtedness; and (c) This Warrant. 1 Upon the exercise of the rights represented by this Warrant, a certificate or certificates for the Exercise Shares so purchased, registered in the name of the Holder or persons affiliated with the Holder, if the Holder so designates, shall be issued and delivered to the Holder within a reasonable time after the rights represented by this Warrant shall have been so exercised. The person in whose name any certificate or certificates for Exercise Shares are to be issued upon exercise of this Warrant shall be deemed to have become the holder of record of such shares on the date on which this Warrant was surrendered and payment of the Exercise Price was made, irrespective of the date of delivery of such certificate or certificates, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open. 2.1 NET EXERCISE. Notwithstanding any provisions herein to the contrary, if the fair market value of one share of the Company's Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant by payment of cash, the Holder may, commencing on May 12, 2004 and thereafter for the full term of this Warrant, elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Notice of Exercise in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula: X = Y (A-B) ------- A Where X = the number of shares of Common Stock to be issued to the Holder Y = the number of shares of Common Stock purchasable under this Warrant or, if only a portion of this Warrant is being exercised, the portion of this Warrant being canceled (at the date of such calculation) A = the fair market value of one share of the Company's Common Stock (at the date of such calculation) B = Exercise Price (as adjusted to the date of such calculation) For purposes of the above calculation, the fair market value of one share of Common Stock shall be on any particular date (a) the last reported closing bid price per share of Common Stock on such date on the Nasdaq SmallCap Market (or the Nasdaq National Market, as the case may be), or (b) if there is no such price on such date, then the closing bid price on the Nasdaq SmallCap Market (or the Nasdaq National Market, as the case may be) on the date nearest preceding such date, or (c) if the Common Stock is not then listed or quoted on the Nasdaq SmallCap Market or the Nasdaq National Market, and if prices for the Common Stock are then reported in the "pink sheets" published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) if the shares of Common Stock are 2 not then publicly traded, the fair market value of a share of Common Stock as determined in good faith by the Board of Directors of the Company. 3. COVENANTS OF THE COMPANY. 3.1 COVENANTS AS TO EXERCISE SHARES. The Company covenants and agrees that all Exercise Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof. The Company further covenants and agrees that the Company will at all times during the Exercise Period, have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. If at any time during the Exercise Period the number of authorized but unissued shares of Common Stock shall not be sufficient to permit exercise of this Warrant, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes. 3.2 NO IMPAIRMENT. Except and to the extent as waived or consented to by the Holder, the Company will not, by amendment of its Amended and Restated Certificate of Incorporation, as amended, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder against impairment. 3.3 NOTICES OF RECORD DATE. In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend which is the same as cash dividends paid in previous quarters) or other distribution, the Company shall mail to the Holder, at least ten days prior to the date specified herein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution. 4. REPRESENTATIONS OF HOLDER. 4.1 ACQUISITION OF WARRANT FOR PERSONAL ACCOUNT. The Holder represents and warrants that it is acquiring this Warrant and the Exercise Shares solely for its account for investment and not with a view to or for sale or distribution of said Warrant or Exercise Shares or any part thereof. The Holder also represents that the entire legal and beneficial interests of this Warrant and Exercise Shares the Holder is acquiring is being acquired for, and will be held for, its account only. 4.2 SECURITIES ARE NOT REGISTERED. (A) The Holder understands that this Warrant and the Exercise Shares have not been registered under the Securities Act of 1933, as amended (the "ACT"), on the basis that no distribution or public offering of the stock of the Company is to be effected. The Holder realizes that the basis for the exemption may not be present if, notwithstanding its 3 representations, the Holder has a present intention of acquiring the securities for a fixed or determinable period in the future, selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the securities. The Holder has no such present intention. (b) The Holder recognizes that this Warrant and the Exercise Shares must be held indefinitely unless they are subsequently registered under the Act or an exemption from such registration is available. The Holder recognizes that the Company has no obligation to register this Warrant or the Exercise Shares of the Company, or to comply with any exemption from such registration. (c) The Holder is aware that neither this Warrant nor the Exercise Shares may be sold pursuant to Rule 144 adopted under the Act unless certain conditions are met, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale following the required holding period under Rule 144 and the number of shares being sold during any three month period not exceeding specified limitations. 4.3 DISPOSITION OF WARRANT AND EXERCISE SHARES. (a) The Holder further agrees not to make any disposition of all or any part of this Warrant or Exercise Shares in any event unless and until: (i) The Company shall have received a letter secured by the Holder from the Securities and Exchange Commission stating that no action will be recommended to the Commission with respect to the proposed disposition; (ii) There is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with said registration statement; or (iii) The Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, the Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, for the Holder to the effect that such disposition will not require registration of this Warrant or Exercise Shares, as applicable, under the Act or any applicable state securities laws. (b) The Holder understands and agrees that all certificates evidencing the Exercise Shares to be issued to the Holder may bear the following legend: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL 4 SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. 5. ADJUSTMENT OF EXERCISE PRICE. In the event of changes in the outstanding Common Stock of the Company by reason of stock dividends, split-ups, recapitalizations, reclassifications, combinations or exchanges of shares, separations, reorganizations, liquidations, or the like, the number and class of shares available under this Warrant in the aggregate and the Exercise Price shall be correspondingly adjusted to give the Holder of this Warrant, on exercise for the same aggregate Exercise Price, the total number, class, and kind of shares as the Holder would have owned had this Warrant been exercised prior to the event and had the Holder continued to hold such shares until after the event requiring adjustment. The form of this Warrant need not be changed because of any adjustment in the number of Exercise Shares subject to this Warrant. 6. FRACTIONAL SHARES. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Exercise Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then current fair market value of an Exercise Share by such fraction. 7. NO STOCKHOLDER RIGHTS. This Warrant in and of itself shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company. 8. TRANSFER OF WARRANT. Subject to applicable laws and the restriction on transfer set forth on the first page of this Warrant, this Warrant and all rights hereunder are transferable, by the Holder in person or by duly authorized attorney, upon delivery of this Warrant and the form of assignment attached hereto to any transferee designated by Holder. The transferee shall sign an investment letter in form and substance satisfactory to the Company. 9. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone. 10. NOTICES, ETC. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the address listed on the signature 5 page and to the Holder at the address on the Company records, or at such other address as the Company or Holder may designate by ten days advance written notice to the other party hereto. 11. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein. 12. GOVERNING LAW. This Warrant and all rights, obligations and liabilities hereunder shall be governed by the laws of the State of California. IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer as of November 12, 2003. FIRST VIRTUAL COMMUNICATIONS, INC. By: /s/ Truman Cole ------------------------------------ Name: Truman Cole Title: Chief Financial Officer 6 NOTICE OF EXERCISE TO: FIRST VIRTUAL COMMUNICATIONS, INC. (1) [ ] The undersigned hereby elects to purchase ________ shares of the Common Stock of First Virtual Communications, Inc. (the "COMPANY") pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any. [ ] The undersigned hereby elects to purchase ________ shares of the Common Stock of the Company pursuant to the terms of the net exercise provisions set forth in Section 2.1 of the attached Warrant, and shall tender payment of all applicable transfer taxes, if any. (2) Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: ____________________________ (Name) ____________________________ ____________________________ (Address) (3) The undersigned represents that (i) the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares; (ii) the undersigned is aware of the Company's business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company; (iii) the undersigned is experienced in making investments of this type and has such knowledge and background in financial and business matters that the undersigned is capable of evaluating the merits and risks of this investment and protecting the undersigned's own interests; (iv) the undersigned understands that the shares of Common Stock issuable upon exercise of this Warrant have not been registered under the Securities Act of 1933, as amended (the "SECURITIES ACT"), by reason of a specific exemption from the registration provisions of the Securities Act, which exemption depends upon, among other things, the bona fide nature of the investment intent as expressed herein, and, because such securities have not been registered under the Securities Act, they must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available; (v) the undersigned is aware that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144 adopted under the Securities Act unless certain conditions are met and until the undersigned has held the shares for the number of years prescribed by Rule 144; and (vi) the undersigned agrees not to make any disposition of all or any part of the aforesaid shares of Common Stock unless and until there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement, or the undersigned has provided the Company with an opinion of counsel satisfactory to the Company, stating that such registration is not required. __________________ _________________________________________ (Date) (Signature) _________________________________________ (Print name) ASSIGNMENT FORM (To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.) FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to Name:___________________________________________________________________________ (Please Print) Address:________________________________________________________________________ (Please Print) Dated: __________, 20____ Holder's Signature:____________________________________ Holder's Address:______________________________________ NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of this Warrant, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant. EX-10.52 7 f94230exv10w52.txt EXHIBIT 10.52 EXHIBIT 10.52 October 9, 2003 Jonathan G. Morgan 170 30th Avenue San Francisco, CA 94121 RE: EMPLOYMENT TERMS Dear Jonathan: First Virtual Communications, Inc. (the "COMPANY") is pleased to confirm your position as President and Chief Executive Officer, pursuant to the terms of this letter agreement ("AGREEMENT"). 1. DUTIES You will be expected to perform various duties consistent with your position. As a Section 16 officer, this position reports to the Company's Board of Directors ("BOARD"). Additionally the Compensation Committee will establish certain performance targets and Company goals related to your specific job function, in consultation with you as set forth herein. 2. COMPENSATION 2.1 BASE CASH COMPENSATION. For the year 2003, your base salary will be $300,000 per year (less payroll deductions and all required withholdings), which will be subject to annual review. You will be paid bi-weekly and you will be eligible for all standard Company benefits provided to other senior executives. Details about these benefit plans are available for your review upon request from the Company's Director of Human Resources. The Company may modify benefits packages from time to time, as it deems necessary. 2.2 VARIABLE CASH COMPENSATION. You will also be entitled to annual performance based cash and stock option compensation as determined by the Compensation Committee and agreed to by you on an annual basis within the first 60 days of each calendar year, commencing with the calendar year 2004, subject to your achievement of specified performance targets ("Variable Compensation"). Such performance targets shall be set forth in writing and attached to this agreement as Exhibit D. 2.3 STOCK OPTIONS. You received under the Company's 1997 Equity Incentive Plan and 1999 Equity Incentive Plan, options to purchase an aggregate of 210,000 shares of the Company's common stock, at an exercise price equal to the fair market value of $4.05 per share, the stock's closing price as reported on the Nasdaq SmallCap Market on May 15, 2003. (The number of shares in this Section 2.5 and 1 exercise price have been adjusted to reflect the one-for-five reverse split of the Company's common stock on June 27, 2003 at 5:00 p.m.). This is in addition to the options to purchase 30,000 shares of the Company's common stock granted to you on November 13, 2002. In accordance with Section 3, Stock Options, of the Offer Letter between you and the Company, dated October 29, 2002, you will also receive under the Company's 1999 Equity Incentive Plan, an option to purchase 20,000 shares of the Company's common stock, for meeting the objective of finding a permanent Company President and Chief Executive Officer within six months of October 29, 2002. The stock option will be governed by and granted pursuant to a separate Stock Option Agreement. The exercise price per share of the stock option will be equal to the fair market value of the Common Stock on the date of grant, which will be the date the Board approves the stock option grant. The Board will meet to approve the grant promptly following the execution of this Agreement. The stock option will be fully vested on the date of grant. 3. TERMINATION OF EMPLOYMENT Employment at First Virtual Communications is "at will." The Company may terminate your employment at any time and for any or no reason, with or without Cause or advance notice, by giving you written notice of such termination. Similarly, you may terminate your employment with the Company at any time at your election, in your sole discretion, for any or no reason upon written notice to the Company. The terms of your employment relationship may not be modified except by a written agreement signed by the Chairman of the Compensation Committee or another director or officer designated by the Compensation Committee. In the event that the Company terminates your employment without Cause, you terminate you employment with the Company for Good Reason, or upon your Disability, then upon your furnishing to the Company an executed release and waiver of claims in the form attached hereto as EXHIBIT A, you shall be entitled to receive severance payments and other rights in the form of (i) your accrued base salary and accrued and unused vacation benefits earned through your date of termination, (ii) continuation of your base compensation in effect at the time of your termination, for a period of twelve (12) months after the date of termination to be paid out bi-weekly in accordance with the Company's regular payroll policies, (iii) any variable compensation earned as of the date of your termination, to be paid out in accordance with the terms of your Variable Compensation, and (iv) a six (6) month period (or such longer period specified in your option agreements) immediately following your date of termination in which to exercise any outstanding stock options of the Company which are then held by you which are vested as of your termination date. All cash payments shall be subject to applicable payroll deductions and withholdings. During the severance period, you shall be entitled to receive COBRA medical benefits for yourself and eligible dependents paid for by the Company until the earlier of (a) twelve (12) months after the date of termination, or (b) 2 the date that you become eligible to receive medical benefits from another company or business entity that provides coverage for you and your dependents. "CAUSE" means your: (i) gross negligence or willful misconduct in connection with the performance of your duties to the Company that in the written determination of a majority of the Board has not been cured within thirty (30) days following receipt by you of written notice from the Board identifying such acts of gross negligence or willful misconduct; (ii) commission of a felony (other than a traffic-related offense) that in the written determination of a majority of the Board has caused material injury to the Company's business; (iii) dishonesty with respect to a significant matter relating to the Company's business and intended to result in personal enrichment of you or your family at the expense of the Company; or (iv) material breach of this Offer Letter or the Proprietary Information and Inventions Agreement referenced below by and between you and the Company, which material breach has not been cured within thirty (30) days following receipt by you of written notice from the Board identifying such material breach. "GOOD REASON" means: (i) the assignment to you of any position other than President and Chief Executive Officer of the Company or any material reduction in your duties, authority or responsibilities as in effect prior to such reduction such that you no longer have the duties, authority and responsibilities customarily associated with the office of President and Chief Executive Officer of the Company; (ii) a reduction by the Company in your base salary, or variable compensation as in effect immediately before such reduction unless such reduction in base salary or variable compensation is made as a part of a general cost-savings plan to reduce expenses that is applicable to all senior executives similarly situated; (iii) your relocation to a facility or a location more than thirty-five (35) miles from your then present location; or (iv) any failure of the Company to obtain the assumption of this Agreement by any successor or assign of the Company, except, in any such case, if agreed in writing by you to be an exception to this definition. "DISABILITY" means your death, or physical or mental disability that prevents you from satisfactorily performing the normal duties and responsibilities of your office in the reasonable good faith determination of the Board for a period of more than one hundred twenty (120) consecutive days. If your employment is terminated for Cause, or you voluntarily terminate your employment from the Company for other than Good Reason, all compensation and benefits will cease immediately and you will receive no additional payment from the Company other than (i) your accrued base salary and accrued and unused vacation benefits earned through your date of termination and (ii) any variable compensation earned as of the date of your termination to be paid out in accordance with Sections 2.3 and 2.4. 3 4. COMPANY POLICY As a Company employee, you are expected to abide by the Company's policies, procedures, rules and regulations and acknowledge in writing that you have read the Company's Employee Handbook, which will govern the terms and conditions of your employment. The Company's Employee Handbook may be modified from time to time at the sole discretion of the Company. Normal working hours are from 8:00 a.m. to 5:00 p.m., Monday through Friday. As an exempt salaried employee, you will be expected to work additional hours as required by the nature of your work assignments. As part of your employment, you shall not engage in other for profit activities (other than passive investment activities) outside the Company's employment, unless such activity has been specifically authorized by the Board or the Compensation Committee. 5. PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT As a condition of employment, you previously signed and will be required to continue to comply with the Proprietary Information and Inventions Agreement, attached hereto as EXHIBIT B, which prohibits unauthorized use or disclosure of the Company's proprietary information, among other things. In your work for the Company, you will be expected not to use or disclose any confidential information, including trade secrets, of any former employer or other person to whom you have an obligation of confidentiality. Rather, you will be expected to use only that information which is generally known and used by persons with training and experience comparable to your own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company. During our discussions about your proposed job duties, you assured us that you would be able to perform those duties within the guidelines just described. You agree that you will not bring onto Company premises any unpublished documents or property belonging to any former employer or other person to whom you have an obligation of confidentiality. 6. CHANGE OF CONTROL You will also be covered by the Company's Executive Officer's Change of Control Plan, which is attached to this agreement as EXHIBIT C. 7. ENTIRE AGREEMENT This Agreement, together with your Proprietary Information and Inventions Agreement, the Executive Officer's Change of Control Plan and the stock option documents referred to herein, constitute the complete and exclusive statement of the terms of your employment with the Company. The employment terms in this Agreement supersede any other agreements or promises made to you by anyone, whether oral or written, including the Offer Letter between you and the Company dated October 29, 2002. The terms of this 4 Agreement cannot be modified, except in a writing signed by the Company's Chairman of the Compensation Committee or other officer or director designated by the Compensation Committee. 8. GOVERNING LAW This Agreement will be governed by and construed according to the laws of the State of California. You hereby expressly consent to the personal jurisdiction of the state and federal courts located in the County of San Francisco, California for any lawsuit arising from or related to this Agreement. 9. ARBITRATION The parties hereby agree that any dispute, claim or controversy arising out of, relating to or in connection with this Agreement ("ARBITRABLE CLAIMS") shall be determined exclusively by and through final and binding arbitration in San Mateo County, California, each party hereto expressly and conclusively waiving its right to proceed to a judicial determination with respect to the merits of such arbitrable matters. Such arbitration shall be conducted in accordance with the American Arbitration Association National Rules for Resolution of Employment Disputes then in effect before a neutral and impartial arbitrator who shall be selected by mutual agreement of the parties. The arbitrator shall prepare a written decision containing the essential findings and conclusions on which the award is based so as to ensure meaningful judicial review of the decision. The arbitrator shall apply the same substantive law, with the same statutes of limitations and same remedies, that would apply if the claims were brought in a court of law. This Agreement shall be governed by the California Arbitration Act and the arbitrator, in ruling on procedural and substantive issues raised in the arbitration itself, shall apply the substantive law of the State of California. Either party may bring an action in court to compel arbitration under this Agreement and to enforce an arbitration award. Otherwise, neither party shall initiate or prosecute any lawsuit in any way related to any Arbitrable Claim. THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS. 10. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon your heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, and its assigns. Please sign and date this Agreement, and return it to the Company's Human Resources Department. We understand you have accepted employment with the Company under the terms described above. As required by law, this offer is subject to satisfactory proof of your right to work in the United States. We look forward to your favorable reply and to a productive and enjoyable work relationship. 5 11. SEVERABILITY. If one or more of the provisions of this Agreement are deemed unenforceable by law, then such provision or provisions will be deemed stricken from this Agreement and the remaining provisions shall continue in full force and effect. 12. SEVERANCE BENEFITS. Any Severance benefits under the second paragraph of Section 3, item (ii), continuation of base compensation, of this Agreement to which you may be entitled, shall be in lieu of any benefits to which you would otherwise be entitled under Section 5(i) of the Company's Executive Officers' Change of Control Plan. Please sign this document as acceptance of the employment terms listed in this Agreement. Sincerely, FIRST VIRTUAL COMMUNICATIONS, INC. By: /s/ Norman Gaut ______________________________ Norman Gaut Chairman of the Compensation Committee ACCEPTED: /s/ Jonathan G. Morgan _______________________________ Jonathan G. Morgan 6 Attachments: Exhibit A: Form of Release Exhibit B: Proprietary Information and Inventions Agreement Exhibit C: Executive Officers' Change of Control Plan Exhibit D: Variable Compensation 7 EXHIBIT A RELEASE AGREEMENT [Employees 40 and over] I, ____________, understand that my position with _____________ (the "Company") was terminated effective _________, 2002 (the "Separation Date"). The Company has agreed that if I choose to sign this Agreement and provided the Agreement becomes effective, the Company will pay me severance in the amount of ____ weeks of base salary minus the standard withholdings and deductions. This payment will be made within three (3) days of the Effective Date of this Agreement. I understand that I am not entitled to this severance payment unless I sign this Agreement and it becomes effective. I understand that in addition to this severance, the Company will pay me all of my accrued salary and vacation to which I am entitled by law. In exchange for the consideration provided to me by this Agreement that I am not otherwise entitled to receive, I hereby generally and completely release the Company and its directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers, affiliates, and assigns from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to my signing this Agreement. This general release includes, but is not limited to: (1) all claims arising out of or in any way related to my employment with the Company or the termination of that employment; (2) all claims related to my compensation or benefits from the Company, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (4) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (5) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys' fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (as amended) ("ADEA"), and the California Fair Employment and Housing Act (as amended). In giving this release, which includes claims which may be unknown to me at present, I hereby acknowledge that I have read and understand Section 1542 of the Civil Code of the State of California which reads as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. I hereby expressly waive and relinquish all rights and benefits under this section and any law or legal principle of similar effect in any jurisdiction with respect to claims released hereby. I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the federal Age Discrimination in Employment Act of 1967, as amended ("ADEA"). I also acknowledge that the consideration given for the waiver in the above paragraph is in addition to anything of value to which I was already entitled. I have been advised by this writing, as required by the ADEA that: (a) my waiver and release do not apply to any claims that may arise after my signing of this Agreement; (b) I should consult with an attorney prior to executing this release; (c) I 1. have twenty-one (21) days within which to consider this release (although I may choose to voluntarily execute this release earlier); (d) I have seven (7) days following the execution of this release to revoke the Agreement; and (e) this Agreement will not be effective until the eighth day after this Agreement has been signed both by me and by the Company ("Effective Date"). I acknowledge my continuing obligations under my Proprietary Information and Inventions Agreement, a copy of which is attached hereto as Exhibit A. Pursuant to the Proprietary Information and Inventions Agreement I understand that among other things, I must not use or disclose any confidential or proprietary information of the Company and I must immediately return all Company property and documents (including all embodiments of proprietary information) and all copies thereof in my possession or control. This Agreement [including Exhibit A hereto] constitutes the complete, final and exclusive embodiment of the entire agreement between the Company and me with regard to the subject matter hereof. I am not relying on any promise or representation by the Company that is not expressly stated herein. This Agreement may only be modified by a writing signed by both me and a duly authorized officer of the Company. I accept and agree to the terms and conditions stated above: ___________________ _______________________ Date [Employee] ___________________ _______________________ Date [Company] 2. EXHIBIT B FIRST VIRTUAL COMMUNICATIONS, INC. FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT In consideration of my employment or continued employment by First Virtual Communications, Inc. (the "Company"), and the compensation now and hereafter paid to me, I hereby agree as follows: 1. RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times during the term of my employment and thereafter, I will hold in strictest confidence and will not disclose, use, lecture upon or publish any of the Company's Proprietary Information (defined below), except as such disclosure, use or publication may be required in connection with my work for the Company and an officer of the Company expressly authorizes such in writing. I hereby assign to the Company any rights I may have or acquire in such Proprietary Information and recognize that all Proprietary Information shall be the sole property of the Company and its assigns and the Company and its assigns shall be the sole owner of all trade secret rights, patent rights, copyrights, mask work rights, trade secret rights and all other rights throughout the world (collectively, "Proprietary Rights") in connection therewith. The term "Proprietary Information" shall mean trade secrets, confidential knowledge, data or any other proprietary information of the Company. By way of illustration but not limitation, "Proprietary Information" includes (a) trade secrets, inventions, mask works, ideas, processes, formulas, source and object codes, data, programs, other works of authorship, cell lines, know-how, improvements, discoveries, developments, designs and techniques (hereinafter collectively referred to as "Inventions"); and (b) information regarding plans for research, development, new products, marketing and selling, business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers; and information regarding the skills and compensation of other employees of the Company. 2. THIRD PARTY INFORMATION. I understand, in addition, that the Company has received and in the future will receive from third parties confidential or proprietary information ("Third Party Information") subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. During the term of my employment and thereafter, I will hold Third Party Information in the strictest confidence and will not disclose (to anyone other than Company personnel who need to know such information in connection with their work for the Company) or use, except in connection with my work for the Company, Third Party Information unless expressly authorized by an officer of the Company in writing. 3. ASSIGNMENT OF INVENTIONS. 3.1 ASSIGNMENT. I hereby assign to the Company all my right, title and interest in and to any and all Inventions (and all Proprietary Rights with respect thereto) whether or not patentable or registrable under copyright or similar statutes, made or conceived or reduced to practice or learned by me, either alone or jointly with others, during the period of my employment with the Company. Inventions assigned to or as directed by the Company by this paragraph 3 are hereinafter referred to as "Company Inventions." I recognize that this 1. Agreement does not require assignment of any invention that qualifies fully for protection under Section 2870 of the California Labor Code (hereinafter "Section 2870"), which provides as follows: (1) Any provision in an employment agreement that provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either: (A) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer. (B) Result from any work performed by the employee for the employer. (2) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (i), the provision is against the public policy of this state and is unenforceable. 3.2 GOVERNMENT. I also assign to or as directed by the Company all my right, title and interest in and to any and all Inventions, full title to which is required to be in the United States by a contract between the Company and the United States or any of its agencies. 3.3 WORKS FOR HIRE. I acknowledge that all original works of authorship that are made by me (solely or jointly with others) within the scope of my employment and that are protectable by copyright are "works made for hire," as that term is defined in the United States Copyright Act (17 U.S.C., Section 101). 4. ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company in every proper way to obtain and from time to time enforce United States and foreign Proprietary Rights relating to Company Inventions in any and all countries. To that end I will execute, verify and deliver such documents and perform such other acts (including appearances as a witness) as the Company may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary Rights and the assignment thereof. In addition, I will execute, verify and deliver assignments of such Proprietary Rights to the Company or its designee. My obligation to assist the Company with respect to Proprietary Rights relating to such Company Inventions in any and all countries shall continue beyond the termination of my employment, but the Company shall compensate me at a reasonable rate after my termination for the time actually spent by me at the Company's request on such assistance. In the event the Company is unable for any reason, after reasonable effort, to secure my signature on any document needed in connection with the actions specified in the preceding paragraph, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, which appointment is coupled with an interest, to act for and in my behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of the preceding paragraph thereon with the 2. same legal force and effect as if executed by me. I hereby waive and quitclaim to the Company any and all claims, of any nature whatsoever, that I now or may hereafter have for infringement of any Proprietary Rights assigned hereunder to the Company. 5. OBLIGATION TO KEEP COMPANY INFORMED. During the period of my employment and for six (6) months after termination of my employment with the Company, I will promptly disclose to the Company fully and in writing and will hold in trust for the sole right and benefit of the Company any and all Inventions authored, conceived or reduced to practice by me, either alone or jointly with others. In addition, after termination of my employment, I will promptly disclose to the Company all patent applications filed by me or on my behalf within a year after termination of employment. At the time of each such disclosure, I will advise the Company in writing of any Inventions that I believe fully qualify for protection under Section 2870; and I will at that time provide to the Company in writing all evidence necessary to substantiate that belief. I understand that the Company will keep in confidence and will not disclose to third parties without my consent any proprietary information disclosed in writing to the Company pursuant to this Agreement relating to Inventions that qualify fully for protection under the provisions of Section 2870. I will preserve the confidentiality of any Invention that does not fully qualify for protection under Section 2870. I agree to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that may be required by the Company) of all Proprietary Information developed by me and all Inventions made by me during the period of my employment at the Company, which records shall be available to and remain the sole property of the Company at all times. 6. PRIOR INVENTIONS. Inventions, if any, patented or unpatented, that I made prior to the commencement of my employment with the Company are excluded from the scope of this Agreement. To preclude any possible uncertainty, I have set forth on Exhibit A attached hereto a complete disclosure of all Inventions that I have, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice prior to the commencement of my employment with the Company, that I consider to be my property or the property of third parties and that I wish to have excluded from the scope of this Agreement. If disclosure of any such Invention on Exhibit A would cause me to violate any prior confidentiality agreement, I understand that I am not to disclose such Inventions on Exhibit A. Instead, I am to disclose in the applicable space on Exhibit A, only a cursory name for each such Invention, a listing of the party(s) to whom it belongs and the fact that full disclosure as to such Invention has not been made for that reason. 7. ADDITIONAL ACTIVITIES. I agree that during the period of my employment by the Company I will not, without the Company's express written consent, engage in any employment or business activity other than for the Company. As further assurance that I will not improperly use or disclose any Proprietary Information of the Company, I agree that, for the period of my employment by the Company and for one (l) year after the date of termination of my employment by the Company, I will not (i) solicit or induce any employee of the Company to leave the employ of the Company or (ii) solicit the business of any customer of the Company (other than, prior to termination of my employment, on behalf of the Company and, after termination of my employment, with respect to products or services of a type not supplied by the Company). 3. If any restriction set forth in this Section is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable. 8. NO IMPROPER USE OF MATERIALS. During my employment by the Company I will not improperly use or disclose any confidential information or trade secrets, if any, of any former employer or any other person to whom I have an obligation of confidentiality, and I will not bring onto the premises of the Company any unpublished documents or any property belonging to any former employer or any other person to whom I have an obligation of confidentiality unless previously and specifically consented to in writing by that former employer or person. I will use in the performance of my duties only information which is generally known and used by persons with training and experience comparable to my own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company or by me while employed by the Company. 9. NO CONFLICTING OBLIGATION. I represent that my performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement or obligation of mine relating to any time prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict herewith. 10. RETURN OF COMPANY DOCUMENTS. When I leave the employ of the Company, I will deliver to the Company any and all drawings, notes, memoranda, specifications, devices, formulas, molecules, cells and documents, together with all copies thereof, and any other material containing or disclosing any Company Inventions, Third Party Information or Proprietary Information of the Company, whether kept at the Company, home or elsewhere. I further agree that any property situated on the Company's premises and owned by the Company, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company personnel at any time with or without notice. Prior to leaving, I will cooperate with the Company in completing and signing the Company's termination statement for technical and management personnel confirming the above and my obligations under this Agreement. 11. LAW AND REMEDIES. I understand that the unauthorized taking of the Company's trade secrets (i) could result in civil liability under California Civil Code Section 3426, and that, if willful, could result in an award for triple the amount of the Company's damages and attorneys' fees; and (ii) is a crime under California Penal Code Section 499(c), punishable by imprisonment for a time not exceeding one year, or by a fine not exceeding five thousand dollars ($5,000), or by both. Because my services are personal and unique and because I may have access to and become acquainted with the Proprietary Information of the Company, the Company shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that the Company may have for a breach of this Agreement. 4. 12. NOTICES. Any notices required or permitted hereunder shall be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing. Such notice shall be deemed given upon personal delivery to the appropriate address or if sent by certified or registered mail, three days after the date of mailing. 13. GENERAL PROVISIONS. 13.1 GOVERNING LAW. This Agreement will be governed by and construed according to the laws of the State of California without respect to its choice of law provisions. 13.2 ENTIRE AGREEMENT. This Agreement is the final, complete and exclusive agreement of the parties with respect to the subject matter hereof and supersedes and merges all prior discussions between us. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing and signed by the party to be charged therewith. Any subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement. As used in this Agreement, the period of my employment includes any time during which I may be retained by the Company as a consultant. 13.3 SEVERABILITY. If one or more of the provisions in this Agreement are deemed unenforceable by law, then such provision will be deemed stricken from this Agreement and the remaining provisions will continue in full force and effect. 13.4 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon my heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, and its assigns. 13.5 SURVIVAL. The provisions of this Agreement shall survive the termination of my employment and the assignment of this Agreement by the Company to any successor in interest or other assignee. 13.6 EMPLOYMENT. I agree and understand that nothing in this Agreement shall confer any right with respect to continuation of my employment by the Company, nor shall it interfere in any way with my right or the Company's right to terminate my employment at any time, with or without cause. 13.7 WAIVER. No waiver by the Company of any breach of this Agreement shall be a waiver of any preceding or succeeding breach. No waiver by the Company of any right under this Agreement shall be construed as a waiver of any other right. The Company shall not be required to give notice to enforce strict adherence to all terms of this Agreement. This Agreement shall be effective as of the first day of my employment with the Company, namely October 9, 2002. 5. I UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO INVENTIONS I MAKE DURING MY EMPLOYMENT, AND RESTRICTS MY RIGHT TO DISCLOSE OR USE THE COMPANY'S CONFIDENTIAL INFORMATION DURING OR SUBSEQUENT TO MY EMPLOYMENT. I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT. October 9, 2003 /s/ Jonathan Morgan ______________________ ___________________________________ Date EMPLOYEE SIGNATURE Address: ___________________________________ ___________________________________ ACCEPTED AND AGREED TO: FIRST VIRTUAL COMMUNICATIONS, INC. By: /s/ Tammy Polanco _________________________________________ Name:________________________________________ Title:_______________________________________ Address: First Virtual Communications, Inc. 3200 Bridge Parkway, Suite 202 Redwood City, CA 94065 6. EXHIBIT A TO PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT FVC.COM 3393 Octavius Drive Santa Clara, CA 95054 Gentlemen: 1. Except as noted in Section 2 below, the following is a complete disclosure of all inventions or improvements relevant to the subject matter of my employment by FVC.COM (the "Company") that have been made or conceived or first reduced to practice by me alone or jointly with others prior to my engagement by the Company: _____ No inventions or improvements. _____ See below: _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _____ Additional sheets attached. 2. Due to a prior confidentiality agreement, I cannot complete the disclosure under Section 1 above with respect to inventions or improvements generally listed below, the proprietary rights and duty of confidentiality with respect to which I owe to the following party(s): INVENTION OR IMPROVEMENT PARTY(S) RELATIONSHIP _______________________________________________________________________ 1. _______________________________________________________________________ 2. _______________________________________________________________________ 3. _______________________________________________________________________ _____ Additional sheets attached. 7. 3. I propose to bring to my employment the following devices, materials and documents of a former employer or other person to whom I have an obligation of confidentiality that are not generally available to the public, which materials and documents may be used in my employment pursuant to the express written authorization of my former employer or such other person (a copy of which is attached hereto): _____ No Material. _____ See Below: _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _____ Additional sheets attached. Date: _______________________ Very truly yours, __________________________________________ Employee Signature 8. EXHIBIT C FIRST VIRTUAL COMMUNICATIONS, INC. EXECUTIVE OFFICERS' CHANGE OF CONTROL PLAN ADOPTED BY THE BOARD OF DIRECTORS ON FEBRUARY 17, 1999 AMENDED BY THE BOARD OF DIRECTORS ON OCTOBER 23, 2003 1. INTRODUCTION; PURPOSES. (a) The purpose of this Plan is to provide certain executive officers of the Company with protection of certain benefits in case of a termination of his or her employment with the Company in connection with a Change of Control of the Company. (b) The Company, by means of the Plan, seeks (i) to retain the services of certain current executive officers of the Company, (ii) to secure and retain the services of new Section 16 Officers and (iii) to provide incentives for such officers to exert maximum efforts for the success of the Company even in the face of a potential Change of Control of the Company. 2. COVERAGE OF THE PLAN. Each person who, after the Effective Date, is appointed a Section 16 Officer of the Company, if and as of the date the officer is confirmed as a Section 16 Officer by action of the Board shall be covered by this Plan. 3. DEFINITIONS. (a) "ACCOUNTANTS" has the meaning given thereto in Section 6(b). (b) "ADEA" has the meaning given thereto in Section 7(c). (c) "BOARD" means the Board of Directors of the Company. (d) "CAUSE" means Executive's: (i) gross negligence or willful misconduct in connection with the performance of Executive's duties to the Company that in the written determination of a majority of the Board has not been cured within thirty (30) days following receipt by Executive of written notice from the Board identifying such acts of gross negligence or willful misconduct; (ii) commission of a felony (other than a traffic-related offense) that in the written determination of a majority of the Board has caused material injury to the Company's business; (iii) dishonesty with respect to a significant matter relating to the Company's business and intended to result in personal enrichment of Executive or his or her family at the expense of the Company; or (iv) material breach of any agreement by and between Executive and the Company, which material breach has not been cured within thirty (30) days following receipt by Executive of written notice from the Board identifying such material breach. (e) "CHANGE OF CONTROL" means: (i) a dissolution or liquidation of the Company; (ii) a sale of all or substantially all the assets of the Company; (iii) a merger or consolidation in which the Company is not the surviving corporation and in which beneficial ownership of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors has changed; (iv) a reverse merger in which the Company is the surviving corporation but the shares of the common stock of the Company outstanding immediately before the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, and in which beneficial ownership of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors has changed; (v) an acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or subsidiary of the Company or other entity controlled by the Company) of the beneficial ownership (within the meaning of Rule 13d_3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors; or, (vi) in the event that the individuals who are members of the Incumbent Board cease for any reason to constitute at least fifty percent (50%) of the Board. (f) "CODE" means the Internal Revenue Code of 1986, as amended. (g) "COMMITTEE" means a committee appointed by the Board in accordance with Section 4(c). (h) "COMPANY" means First Virtual Communications, Inc., a Delaware corporation. (i) "COMPANY-PAID COVERAGE" has the meaning given thereto in Section 5. (j) "DISABILITY" means Executive's death, or physical or mental disability that prevents Executive from satisfactorily performing the normal duties and responsibilities of Executive's office in the good faith determination of the Board for a period of more than one hundred twenty (120) consecutive days. (K) "EFFECTIVE DATE" means February 17, 1999. (L) "EMPLOYEE AGREEMENT AND RELEASE" has the meaning given thereto in Section 7(c). (M) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. (N) "EXCISE TAX" has the meaning given thereto in Section 6. (O) "EXECUTIVE" means a person covered by this Plan pursuant to Section 2(a) or 2. Section 2(b). (p) "GOOD REASON" means: (i) any material reduction of Executive's duties, authority or responsibilities relative to Executive's duties, authority, or responsibilities as in effect immediately before such reduction, except if agreed to in writing by Executive; (ii) a reduction by the Company in the base salary or Target Bonus opportunity of Executive as in effect immediately before such reduction; (iii) the relocation of Executive to a facility or a location more than thirty_five (35) miles from Executive's then present location, without Executive's written consent; or (iv) any failure of the Company to obtain the assumption of this Plan by any successor or assign of the Company. (q) "INCUMBENT BOARD" means the individuals who, as of the Effective Date, are members of the Board. If the election, or nomination for election by the Company's stockholders, of any new director is approved by a vote of at least fifty percent (50%) of the Incumbent Board, such new director shall be considered as a member of the Incumbent Board. (r) "PLAN" means this Executive Officers' Change of Control Plan. (s) "PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT" has the meaning given thereto in Section 7(b). (t) "SECTION 16 OFFICER" means an "officer" of the Company, as defined in Rule 16a-1(f) promulgated under the Exchange Act, provided such officer is designated as such by action of the Board. (u) "TARGET BONUS" means Executive's target bonus for the then current fiscal year, as set by the compensation committee of the Board. 4. ADMINISTRATION (a) The Board shall administer the Plan unless and until the Board delegates administration to a Committee, as provided in Section 4(c). (b) The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan: (i) To construe and interpret the Plan and the rights covered under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective. (ii) To amend or terminate the Plan as provided in Section 11. (iii) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company that are not in conflict with the provisions of the Plan. 3. (c) The Board may delegate administration of the Plan to a committee of the Board composed of not fewer than two (2) members, all of the members of which committee shall be, members of the Board. If administration is delegated to a committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee of two (2) or more members of the Board any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or such a subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. 5. SEVERANCE BENEFITS IN THE EVENT OF A CHANGE OF CONTROL. If within eighteen (18) months following the date of a Change of Control of the Company Executive's employment with the Company terminates involuntarily other than for Cause, death or Disability, or if within such eighteen (18) month period, Executive terminates his or her employment with the Company voluntarily with Good Reason, then, subject to Section 6 and Section 7: (i) Executive shall be entitled to receive base salary continuation payments at Executive's base salary rate in effect on the date of termination, paid on a monthly basis, for twelve (12) months after the date of termination, in addition to any accrued but unpaid base salary, bonus payments, and/or accrued and unused vacation; (ii) each of Executive's outstanding stock options, restricted stock awards and restricted stock purchases, and any options, awards or purchases held in the name of an estate planning vehicle for the benefit of Executive or his or her immediate family, shall have their vesting and exercisability schedules accelerated in full as of the date of termination; (iii) Executive shall be entitled to receive bonus continuation payments totaling the Executive's Target Bonus in effect on the date of termination, paid on a monthly basis, for twelve (12) months after the date of termination; and (iv) if at the time of termination Executive is covered by the Company's group health plan, the Company shall provide to Executive, subject to Executive and his or her eligible spouse and/or dependents electing continuation coverage under COBRA, one hundred percent (100%) Company-paid group health coverage at the same level of coverage as was provided to Executive immediately prior to the date of termination (the "COMPANY-PAID COVERAGE"). If such coverage included Executive's spouse and/or dependents immediately prior to the date of termination, such spouse and/or dependents shall also be covered at Company expense. Company-Paid Coverage shall continue until the earlier of (x) twelve (12) months from the date of termination, or (y) the date that Executive and his or her spouse and/or dependents become covered under another employer's group health plan that provides Executive and his or her spouse and/or dependents with comparable benefits and levels of coverage. In no event shall Executive be obligated to seek other employment or take any other action to mitigate the amounts payable to Executive hereunder. 6. PARACHUTE PAYMENTS; EXCISE TAX. In the event that the severance, acceleration of stock options and other benefits payable to Executive as a result of a Change of Control of the Company (i) constitute "parachute payments" within the meaning of Section 280G (as it may be amended or replaced) of the Code and (ii) but for this Section 6, would be subject to the excise tax imposed by Section 4999 (as it may be amended or replaced) of the Code (the "EXCISE TAX"), then Executive's benefits payable in connection therewith shall be either (a) delivered in full, or 4. (b) delivered as to such lesser extent that would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless the Company and Executive otherwise agree in writing, any determination required under this Section 6 shall be made in writing in good faith by the outside accounting firm responsible for auditing the Company's financial records (the "ACCOUNTANTS"). In the event of a reduction in benefits hereunder, Executive shall be given the choice of which benefits to reduce. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code. The Company and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section hereunder. 7. LIMITATIONS AND CONDITIONS ON BENEFITS. The benefits and payments provided under this Plan shall be subject to the following terms and limitations: (a) WITHHOLDING TAXES. The Company shall withhold appropriate federal, state and local income and employment taxes from any payments hereunder. (b) PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT PRIOR TO RECEIPT OF BENEFITS. Executive shall have executed and delivered to the Company a standard form of the Company's proprietary information and inventions agreement, a copy of the current form of which is attached hereto as Exhibit A (the "PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT"), prior to the receipt or provision of any benefits (including the acceleration benefits) under this Plan. Additionally, Executive agrees that all documents, records, apparatus, equipment and other physical property that is furnished to or obtained by Executive in the course of his or her employment with the Company shall be and shall remain the sole property of the Company. Executive agrees not to make or retain copies, reproductions or summaries of any such property, except as otherwise necessary while acting in the normal course of business. In the event of any breach by Executive of the Proprietary Information and Inventions Agreement, all benefits payable under Section 5 of this Plan shall immediately terminate. (c) EMPLOYEE AGREEMENT AND RELEASE PRIOR TO RECEIPT OF BENEFITS. If, pursuant to Section 5, Executive's employment with the Company terminates involuntarily other than for Cause, death or Disability, or Executive terminates his or her employment with the Company voluntarily with Good Reason, then prior to, and as a condition of the receipt of any benefits (including the acceleration benefits) under this Plan on account of such termination, Executive shall, as of the date of such termination, execute an employee agreement and release in the form attached hereto as Exhibit B (the "EMPLOYEE AGREEMENT AND RELEASE"). Such Employee Agreement and Release shall specifically relate to all of Executive's rights and claims in existence at the time of such execution and shall confirm Executive's obligations under the Company's standard form of Proprietary Information and Inventions Agreement. If and only if Executive is covered by the federal Age Discrimination in Employment Act of 1967, as amended 5. ("ADEA") (currently all those 40 years of age or over on the date of termination), Executive has twenty_one (21) days to consider whether to execute such Employee Agreement and Release and Executive may revoke such Employee Agreement and Release within seven (7) days after execution of such Employee Agreement and Release. In the event Executive is covered by ADEA and does not execute such Employee Agreement and Release within the twenty_one (21) days specified above, or if Executive revokes such Employee Agreement and Release within the seven (7) day period specified above, no benefits (including the acceleration benefits) shall be payable or made available to Executive on account of a termination under Section 5 of this Plan. 8. TERMINATION. Prior to a Change of Control of the Company, the right to receive benefits under this Plan shall automatically terminate on the date Executive ceases to be a Section 16 Officer, for any reason or no reason, as evidenced by the written resignation of Executive, by action of the Board removing Executive as a Section 16 Officer or otherwise. 9. NOTICES. Any notices provided for in this Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to Executive, five (5) days after deposit in the United States mail, postage prepaid, addressed to Executive at the address specified in the corporate records of the Company or at such other address as Executive hereafter designates by written notice to the Company. 10. AMENDMENT OR TERMINATION OF THE PLAN. (a) The Board at any time, and from time to time, may amend or terminate this Plan; provided, however, that any such termination must occur prior to the occurrence of a Change of Control of the Company. (b) Rights and obligations under this Plan of persons covered by this Plan before any amendment of this Plan made at or after the time of the occurrence of a Change of Control of the Company shall not be impaired by any amendment of this Plan unless (i) the Company requests the consent of the person covered by this Plan and (ii) such person consents in writing. 11. GOVERNING LAW. This Plan shall be governed by, and construed in accordance with, the laws of the State of California, regardless of the law that might be applied under applicable principles of conflicts of law. 6. Exhibit A to Executive Officers' Change of Control Plan FIRST VIRTUAL COMMUNICATIONS, INC. FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT In consideration of my employment or continued employment by First Virtual Communications, Inc. (the "Company"), and the compensation now and hereafter paid to me, I hereby agree as follows: 1. RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times during the term of my employment and thereafter, I will hold in strictest confidence and will not disclose, use, lecture upon or publish any of the Company's Proprietary Information (defined below), except as such disclosure, use or publication may be required in connection with my work for the Company and an officer of the Company expressly authorizes such in writing. I hereby assign to the Company any rights I may have or acquire in such Proprietary Information and recognize that all Proprietary Information shall be the sole property of the Company and its assigns and the Company and its assigns shall be the sole owner of all trade secret rights, patent rights, copyrights, mask work rights, trade secret rights and all other rights throughout the world (collectively, "Proprietary Rights") in connection therewith. The term "Proprietary Information" shall mean trade secrets, confidential knowledge, data or any other proprietary information of the Company. By way of illustration but not limitation, "Proprietary Information" includes (a) trade secrets, inventions, mask works, ideas, processes, formulas, source and object codes, data, programs, other works of authorship, cell lines, know_how, improvements, discoveries, developments, designs and techniques (hereinafter collectively referred to as "Inventions"); and (b) information regarding plans for research, development, new products, marketing and selling, business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers; and information regarding the skills and compensation of other employees of the Company. 2. THIRD PARTY INFORMATION. I understand, in addition, that the Company has received and in the future will receive from third parties confidential or proprietary information ("Third Party Information") subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. During the term of my employment and thereafter, I will hold Third Party Information in the strictest confidence and will not disclose (to anyone other than Company personnel who need to know such information in connection with their work for the Company) or use, except in connection with my work for the Company, Third Party Information unless expressly authorized by an officer of the Company in writing. 3. ASSIGNMENT OF INVENTIONS. 3.1 ASSIGNMENT. I hereby assign to the Company all my right, title and interest in and to any and all Inventions (and all Proprietary Rights with respect thereto) whether or not patentable or registrable under copyright or similar statutes, made or conceived or reduced to practice or learned by me, either alone or jointly with others, during the period of my employment with the Company. Inventions assigned to or as directed by the Company by this paragraph 3 are hereinafter referred to as "Company Inventions." I recognize that this Agreement does not require assignment of any invention that qualifies fully for protection under Section 2870 of the California Labor Code (hereinafter "Section 2870"), which provides as follows: (1) Any provision in an employment agreement that provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either: (A) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer. (B) Result from any work performed by the employee for the employer. (2) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (i), the provision is against the public policy of this state and is unenforceable. 3.2 GOVERNMENT. I also assign to or as directed by the Company all my right, title and interest in and to any and all Inventions, full title to which is required to be in the United States by a contract between the Company and the United States or any of its agencies. 3.3 WORKS FOR HIRE. I acknowledge that all original works of authorship that are made by me (solely or jointly with others) within the scope of my employment and that are protectable by copyright are "works made for hire," as that term is defined in the United States Copyright Act (17 U.S.C., Section 101). 4. ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company in every proper way to obtain and from time to time enforce United States and foreign Proprietary Rights relating to Company Inventions in any and all countries. To that end I will execute, verify and deliver such documents and perform such other acts (including appearances as a witness) as the Company may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary Rights and the assignment thereof. In addition, I will execute, verify and deliver assignments of such Proprietary Rights to the Company or its designee. My obligation to assist the Company with respect to Proprietary Rights relating to such Company Inventions in any and all countries shall continue beyond the termination of my employment, but the Company shall compensate me at a reasonable rate after my termination for the time actually spent by me at the Company's request on such assistance. In the event the Company is unable for any reason, after reasonable effort, to secure my signature on any document needed in connection with the actions specified in the preceding 2. paragraph, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, which appointment is coupled with an interest, to act for and in my behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of the preceding paragraph thereon with the same legal force and effect as if executed by me. I hereby waive and quitclaim to the Company any and all claims, of any nature whatsoever, that I now or may hereafter have for infringement of any Proprietary Rights assigned hereunder to the Company. 5. OBLIGATION TO KEEP COMPANY INFORMED. During the period of my employment and for six (6) months after termination of my employment with the Company, I will promptly disclose to the Company fully and in writing and will hold in trust for the sole right and benefit of the Company any and all Inventions authored, conceived or reduced to practice by me, either alone or jointly with others. In addition, after termination of my employment, I will promptly disclose to the Company all patent applications filed by me or on my behalf within a year after termination of employment. At the time of each such disclosure, I will advise the Company in writing of any Inventions that I believe fully qualify for protection under Section 2870; and I will at that time provide to the Company in writing all evidence necessary to substantiate that belief. I understand that the Company will keep in confidence and will not disclose to third parties without my consent any proprietary information disclosed in writing to the Company pursuant to this Agreement relating to Inventions that qualify fully for protection under the provisions of Section 2870. I will preserve the confidentiality of any Invention that does not fully qualify for protection under Section 2870. I agree to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that may be required by the Company) of all Proprietary Information developed by me and all Inventions made by me during the period of my employment at the Company, which records shall be available to and remain the sole property of the Company at all times. 6. PRIOR INVENTIONS. Inventions, if any, patented or unpatented, that I made prior to the commencement of my employment with the Company are excluded from the scope of this Agreement. To preclude any possible uncertainty, I have set forth on Exhibit A attached hereto a complete disclosure of all Inventions that I have, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice prior to the commencement of my employment with the Company, that I consider to be my property or the property of third parties and that I wish to have excluded from the scope of this Agreement. If disclosure of any such Invention on Exhibit A would cause me to violate any prior confidentiality agreement, I understand that I am not to disclose such Inventions on Exhibit A. Instead, I am to disclose in the applicable space on Exhibit A, only a cursory name for each such Invention, a listing of the party(s) to whom it belongs and the fact that full disclosure as to such Invention has not been made for that reason. 7. ADDITIONAL ACTIVITIES. I agree that during the period of my employment by the Company I will not, without the Company's express written consent, engage in any employment or business activity other than for the Company. As further assurance that I will not improperly use or disclose any Proprietary Information of the Company, I agree that, for the period of my employment by the Company and for one (l) year after the date of termination of my employment by the Company, I will not (i) solicit or induce any employee of the Company to leave the employ of the Company or (ii) solicit the business of any customer of the Company 3. (other than, prior to termination of my employment, on behalf of the Company and, after termination of my employment, with respect to products or services of a type not supplied by the Company). If any restriction set forth in this Section is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable. 8. NO IMPROPER USE OF MATERIALS. During my employment by the Company I will not improperly use or disclose any confidential information or trade secrets, if any, of any former employer or any other person to whom I have an obligation of confidentiality, and I will not bring onto the premises of the Company any unpublished documents or any property belonging to any former employer or any other person to whom I have an obligation of confidentiality unless previously and specifically consented to in writing by that former employer or person. I will use in the performance of my duties only information which is generally known and used by persons with training and experience comparable to my own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company or by me while employed by the Company. 9. NO CONFLICTING OBLIGATION. I represent that my performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement or obligation of mine relating to any time prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict herewith. 10. RETURN OF COMPANY DOCUMENTS. When I leave the employ of the Company, I will deliver to the Company any and all drawings, notes, memoranda, specifications, devices, formulas, molecules, cells and documents, together with all copies thereof, and any other material containing or disclosing any Company Inventions, Third Party Information or Proprietary Information of the Company, whether kept at the Company, home or elsewhere. I further agree that any property situated on the Company's premises and owned by the Company, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company personnel at any time with or without notice. Prior to leaving, I will cooperate with the Company in completing and signing the Company's termination statement for technical and management personnel confirming the above and my obligations under this Agreement. 11. LAW AND REMEDIES. I understand that the unauthorized taking of the Company's trade secrets (i) could result in civil liability under California Civil Code Section 3426, and that, if willful, could result in an award for triple the amount of the Company's damages and attorneys' fees; and (ii) is a crime under California Penal Code Section 499(c), punishable by imprisonment for a time not exceeding one year, or by a fine not exceeding five thousand dollars ($5,000), or by both. Because my services are personal and unique and because I may have access to and become acquainted with the Proprietary Information of the Company, the Company shall have the right to enforce this Agreement and any of its provisions by injunction, 4. specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that the Company may have for a breach of this Agreement. 12. NOTICES. Any notices required or permitted hereunder shall be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing. Such notice shall be deemed given upon personal delivery to the appropriate address or if sent by certified or registered mail, three days after the date of mailing. 13. GENERAL PROVISIONS. 13.1 GOVERNING LAW. This Agreement will be governed by and construed according to the laws of the State of California without respect to its choice of law provisions. 13.2 ENTIRE AGREEMENT. This Agreement is the final, complete and exclusive agreement of the parties with respect to the subject matter hereof and supersedes and merges all prior discussions between us. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing and signed by the party to be charged therewith. Any subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement. As used in this Agreement, the period of my employment includes any time during which I may be retained by the Company as a consultant. 13.3 SEVERABILITY. If one or more of the provisions in this Agreement are deemed unenforceable by law, then such provision will be deemed stricken from this Agreement and the remaining provisions will continue in full force and effect. 13.4 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon my heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, and its assigns. 13.5 SURVIVAL. The provisions of this Agreement shall survive the termination of my employment and the assignment of this Agreement by the Company to any successor in interest or other assignee. 13.6 EMPLOYMENT. I agree and understand that nothing in this Agreement shall confer any right with respect to continuation of my employment by the Company, nor shall it interfere in any way with my right or the Company's right to terminate my employment at any time, with or without cause. 13.7 WAIVER. No waiver by the Company of any breach of this Agreement shall be a waiver of any preceding or succeeding breach. No waiver by the Company of any right under this Agreement shall be construed as a waiver of any other right. The Company shall not be required to give notice to enforce strict adherence to all terms of this Agreement. This Agreement shall be effective as of the first day of my employment with the Company, namely _____________. 5. I UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO INVENTIONS I MAKE DURING MY EMPLOYMENT, AND RESTRICTS MY RIGHT TO DISCLOSE OR USE THE COMPANY'S CONFIDENTIAL INFORMATION DURING OR SUBSEQUENT TO MY EMPLOYMENT. I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT. _________________________________________ EXECUTIVE Address: _________________________________ _________________________________ ACCEPTED AND AGREED TO: FIRST VIRTUAL COMMUNICATIONS, INC. By: ________________________________________ Name: Title: Address: First Virtual Communications, Inc. 3200 Bridge Parkway, Suite 202 Redwood City, CA 94065 6. Exhibit A to Proprietary Information and Inventions Agreement None. Exhibit B to Executive Officers' Change of Control Plan FIRST VIRTUAL COMMUNICATIONS, INC. EMPLOYEE AGREEMENT AND RELEASE I hereby confirm my obligations under the Company's standard form of proprietary information agreement. I acknowledge that I have read and understand Section 1542 of the California Civil Code that reads as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims I may have against the Company. Except as otherwise set forth in the Company's Executive Officers' Change of Control Plan and this Agreement, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the Effective Date of this Agreement, including but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended ("ADEA"); the federal Americans with Disabilities Act of 1990; the California Fair Employment and Housing Act, as amended; tort law; contract law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to release the Company from its obligation to indemnify you pursuant to any applicable indemnification agreement and to provide you with continued coverage under the Company's directors and officers liability insurance policy to the same extent that it has provided such coverage to previously departed officers and directors of the Company. I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under ADEA. I also acknowledge that the consideration given for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. If and only if I am covered by ADEA, I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (A) my waiver and release do not apply to any rights or claims that may arise after the Effective Date of this Agreement; (B) I have the right to consult with an attorney prior to executing this Agreement; (c) I have twenty-one (21) days to consider this Agreement (although I may choose to voluntarily execute this Agreement earlier); (D) I have seven (7) days following the execution of this Agreement to revoke the Agreement; and (E) this Agreement shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Agreement is executed by me (the "Effective Date"). If I am not covered by ADEA, I acknowledge that this Agreement shall be effective as of the date upon which this Agreement has been executed by me (the "Effective Date"). By:___________________________________ EXECUTIVE Date:_________________________________ 2. FIRST VIRTUAL COMMUNICATIONS, INC. EXECUTIVE OFFICERS' CHANGE OF CONTROL PLAN _____________________, Executive: First Virtual Communications, Inc. (the "Company") acknowledges that you are covered by its Executive Officers' Change of Control Plan (the "Plan"). Dated the _____ day of _________, 2002. Very truly yours, FIRST VIRTUAL COMMUNICATIONS, INC. By_________________________________ ATTACHMENTS: First Virtual Communications, Inc. Executive Officers' Change of Control Plan Proprietary Information and Inventions Agreement Employee Agreement and Release The undersigned acknowledges that he or she is covered by the Plan and has received a copy of the attachments referenced above. Furthermore, the undersigned agrees to be bound by the obligations of an Executive described in the Plan, including, without limitation, the obligations described in Sections 6 and 7 of the Plan. _____________________________ EXECUTIVE Address _____________________________ _____________________________ EXHIBIT D VARIABLE COMPENSATION 11 EX-10.53 8 f94230exv10w53.txt EXHIBIT 10.53 EXHIBIT 10.53 AMENDMENT THIS IS AN AMENDMENT (THE "AMENDMENT") OF THE FIRST VIRTUAL COMMUNICATIONS PARTNER AGREEMENT (the "AGREEMENT") made and entered into as of the 1st day of April 2002 (the "AGREEMENT DATE") by and between FIRST VIRTUAL COMMUNICATIONS, INC. ("FVC"), a Delaware corporation its principal place of business at 3393 Octavius Drive, Santa Clara, CA 95054, USA; and NET ONE SYSTEMS ("NET ONE"), a Japanese corporation with its principal place of business at Sphere Tower Tennoz, 2-8, Higashi Shinagawa 2-Chome, Shinagawa-Ku, Tokyo 140-8621, Japan; FVC and Net One. In consideration of the mutual covenants and agreement contained herein, the sufficiency of which is hereby acknowledged, the parties agree as follows: 1. The following language in Section 4.4 of the Agreement does not accurately reflect the intent and objectives of the parties. Therefore, as of the Agreement Date, such language hereby is deleted in its entirety and is replaced with the following: All Products delivered pursuant to the terms of this Agreement shall be suitably packed for shipment in FVC's standard shipping cartons, marked for shipment to Partner's address set forth above or at such other address as the parties agree upon, and delivered to the carrier agent F.O.B. FVC's shipping location, at which time risk of loss and title to the Products shall pass to Partner. All freight, insurance, and other shipping expenses, as well as expenses for any special packing requested by Partner, will be paid by Partner. 2. In the last sentence of Section 15.8 the reference to Section 14.8 shall now be replaced with reference to Section 15.8. 3. Except as expressly amended in the foregoing Sections 1 and 2 of this Amendment, the Agreement is hereby confirmed and ratified in all respects. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. FIRST VIRTUAL COMMUNICATIONS, INC. NET ONE SYSTEMS By: /s/Ralph Ungermann BY: /s/Kazuo Sato ______________________________ ______________________________ Title: Executive Chairman Title: President and CEO ___________________________ ___________________________ Date: September 28, 2002 Date: September 25,2002 ____________________________ ____________________________ EX-10.54 9 f94230exv10w54.txt EXHIBIT 10.54 EXHIBIT 10.54 CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SECOND AMENDMENT TO PARTNER AGREEMENT THIS IS AN AMENDMENT (THE "AMENDMENT NO.2") OF THE FIRST VIRTUAL COMMUNICATIONS PARTNER AGREEMENT (the "AGREEMENT"), made and entered into as of the 1st day of April 2002 and amended as of the 31st day of July 2002, by and between FIRST VIRTUAL COMMUNICATIONS, INC. ("FVC"), a Delaware corporation with its principal place of business at 3200 Bridge Parkway, Suite 202, Redwood City, CA 94065, USA; and NET ONE SYSTEMS CO., LTD. ("NET ONE"), a Japanese corporation with its principal place of business at Sphere Tower Tennoz, 2-8, Higashi Shinagawa 2-Chome, Shinagawa-Ku, Tokyo 140-8621, Japan. In consideration of the mutual covenants and agreement contained herein, the sufficiency of which is hereby acknowledged, the parties agree as follows: 1. This Amendment No.2 becomes effective as of the 30th day of September 2003 ("Amendment No.2 Effective Date"). 2. The following language in Section 3.0 of the Agreement is hereby amended and replaced with the following: TERM. This Agreement shall commence on the Effective Date, and shall continue for a five (5) year period unless otherwise terminated earlier as provided in Section 13 (the "TERM"). Upon completion of the first and third years of the Term of this Agreement, the parties may re-evaluate the terms of this Agreement, in light of the relationship between the parties, and if the parties mutually agree to any changes to such terms and conditions, the parties shall execute a written amendment hereto. 3. The following sentence in Section 5.1 of the Agreement is hereby deleted: Partner may also be eligible to receive marketing co-op funds, in accordance with the guidelines set forth in Exhibit F. 4. The following language in Section 6.1 of the Agreement is hereby amended and replaced with the following: PURCHASE TARGETS. Partner agrees to sell and support the complete line of FVC's rich media web conferencing products and services. Partner will use commercially reasonable efforts to meet the purchase targets set forth in Exhibit A. 5. Exhibit A (Sales Commitment and Discounts) of the Agreement is hereby amended and replaced with Exhibit A (Sales Targets and Discounts) attached to this Amendment No.2. 6. Exhibit F (Terms of Inventory for Equity Exchange) attached to this Amendment No.2 shall be added and incorporated to the Agreement in its entirety. 7. Except as expressly amended in the foregoing Sections 2, 3, 4, 5, 6 and 7 of this Amendment No.2, the Agreement is hereby confirmed and ratified in all respects. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date above. FIRST VIRTUAL COMMUNICATIONS, INC. NET ONE SYSTEMS CO., LTD. By: /s/ Truman Cole By: /s/ Kazuo Sato ------------------------------------- ----------------------------- Name: Truman Cole Name: Kazuo Sato Title: Vice President/CFO Title: President & CEO Date: October 6, 2003 Date: October 3, 2003 EXHIBIT A SALES TARGETS AND DISCOUNTS Partner will use commercially reasonable efforts to meet the following purchase targets: Year 3: April 1, 2004 - March 31, 2005 = [***] Year 4: April 1, 2005 - March 31, 2006 = [***] Year 5: April 1, 2006 - March 31, 2007 = To be mutually agreed between the parties. DISCOUNT LEVELS: FVC offers the following product discounts from its published Book Price at the time of order. From time to time, FVC reserves the right to add new products to this Discount Schedule or to adjust prices relative to market conditions and dynamics. PRODUCT VOLUME DISCOUNT SOFTWARE LICENSES, UPGRADES AND OPTIONS [***] SOFTWARE SUBSCRIPTION AND SUPPORT [***] DISCOUNT LEVELS [***]: [***] shall mean [***] to [***] for the [***] and [***] and [***], i.e. [***] and [***]. On [***] of [***], [***] will [***] with [***] of [***] to [***], such [***] to be [***]. SUPPORT SERVICES During the Term, Partner shall pay [***] of the post-discount Product price of products purchased during each year of the Term, on a product by-product basis for all products purchased during such year, within thirty (30) days after the beginning date of each succeeding year. [*] = CONFIDENTIAL TREATMENT REQUESTED EXHIBIT F TERMS OF INVENTORY FOR EQUITY EXCHANGE Notwithstanding the provisions of the Agreement, the following shall apply: Inventory Return 1. Net One agrees to return a minimum of $1.5 million of its existing FVC product inventory to FVC ("RETURNED INVENTORY") pursuant to the terms of an Equity Investment Agreement as of Amendment No.2 Effective Date. In consideration of the above mentioned product, FVC will issue Net One shares of FVC common stock in the amount to be determined by dividing the value of Returned Inventory by the average closing price of FVC common stock for the thirty (30) days prior to Amendment No.2 Effective Date, as reported on the Nasdaq SmallCap. The FVC issued shares will not be registered shares. FVC shall use its best efforts to register such issued shares to Net One in a prompt and timely manner. 2. Returned Inventory shall be valued at the price of the product and support service originally paid FVC by Net One subject to Exhibit A. Returned inventory may include any Click to Meet software purchased from FVC and up to 37 Compaq servers and up to 37 each of the additional processor boards, memory boards and non-FVC software applications bundled with the servers. All components of Returned Inventory must be returned to FVC by October 3, 2003 The then-current representative of FVC Japan (Mr. Takayuki Kanda is designated by FVC on Amendment No.2 Effective Date) shall accept such return at Net One's offices in Japan. Net One agrees to provide storage space for Returned Inventory for up to ninety (90) days from Amendment No.2 Effective Date at no charge to FVC. Thereafter Net One may dispose of the remaining FVC products of Returned Inventory at its own expense. If FVC solely determines that the server hardware requires to be returned to its California location, Net One agrees to pay the freight costs of such shipment. Inventory Exchange For the balance of Net One's FVC Product inventory not sold by Net One by the time of Amendment No.2 Effective Date, excluding any remaining server hardware, ("REMAINING INVENTORY") Net One may either return or dispose at its own expense such stock as previously outlined for full credit, with such credit applied to new purchases of software licenses and software subscriptions from the current FVC US Price List. Remaining Inventory returns will be valued at the price originally paid by Net One. New products ordered in exchange for Remaining Inventory returned product will be valued at current US list price, reduced by the following discounts: - - [***] - - [***] For the purpose of clarification, FVC shall provide support service for the new products [***] NetOne. This right of exchange for Remaining Inventory shall terminate on March 31, 2004. [*]= CONFIDENTIAL TREATMENT REQUESTED EX-10.55 10 f94230exv10w55.txt EXHIBIT 10.55 EXHIBIT 10.55 Thursday, September 04, 2003 David Weinstein 3180 Ross Road Palo Alto CA, 94303 RE: EMPLOYMENT TERMS Dear Mr. Weinstein: First Virtual Communications, Inc. (the "Company") is pleased to offer you the position of Vice President of Marketing, pursuant to the terms of this letter agreement ("Agreement"), subject to the satisfactory review of your references. Please respond to me by 5:00 p.m., West Coast time, on September 19, 2003, at which time this offer will expire. 1. DUTIES You will be expected to perform various duties consistent with your position. Upon acceptance of this offer, you will be an executive officer of the Company. On the date that you are confirmed as a Section 16 Officer by action of the Company's Board of Directors, you shall be covered by the Company's Executive Officers' Change of Control Plan and the First Virtual Communications, Inc. Indemnity Plan. As a Section 16 officer, you will report to the Company's Chief Executive Officer, unless otherwise assigned by the Company. Additionally you will be expected to achieve certain performance targets and Company goals related to your specific job function ("ANNUAL PERFORMANCE TARGETS"). Such Performance Targets shall be set and measured at the sole discretion of the Company's President and Chief Executive Officer ("CEO"). 2. COMPENSATION Your annual base salary will be $200,000 per year, less payroll deductions and all required withholdings. You will be paid bi-weekly and you will be eligible for the following standard Company benefits: medical insurance, paid time off, and holidays. Details about these benefit plans are available for your review in the Total Rewards benefit guide delivered to you with this Agreement. The Company may modify its benefits and compensation packages from time to time, in its sole discretion, as it deems necessary. 3. STOCK OPTIONS Upon commencement of employment and subject to approval of the Company's Board of Directors, you will be granted a Stock Option under the Company's Equity Plans to purchase 80,000 shares of the Company's Common Stock (the "STOCK OPTION"). The Stock Option will be governed by and granted pursuant to a separate Stock Option Agreement. The exercise price per share of the Stock Option will be equal to the fair market value of the Common Stock established on the date of grant, subject to approval by the Board of Directors. The Stock Option will be subject to vesting so long as you continue to be employed with the Company, according to the following schedule: twelve and one-half percent (12 1/2%) of the shares subject to the Stock Option will vest on the last day of the sixth full calendar month of your employment after the date of grant and the remaining shares subject to the Stock Option will vest in equal installments at the end of each monthly period thereafter. If you have questions regarding the tax implications of the Stock Option or any part of your compensation package, please consult with your own tax advisor. 4. TERMINATION Employment at First Virtual Communications is "at will." The Company may terminate your employment at any time and for any or no reason, with or without Cause or advance notice, by giving you written notice of such termination. Similarly, you may terminate your employment with the Company at any time at your election, in your sole discretion, for any or no reason upon written notice to the Company. The term of your employment relationship may not be modified except by a written agreement signed by the Chief Executive Officer or President of the Company. In the event that the Company terminates your employment without Cause (as defined below), and upon your furnishing to the Company an executed release and waiver of claims, you shall be entitled to receive severance payments in the form of (i) a continuation of your base salary for a period of three months after your date of termination, at the rate in effect on your date of termination, and (ii) During the severance period, assuming that you are eligible for COBRA, you shall be entitled to receive medical benefits for yourself and eligible dependents paid for by the Company until the earlier of (a) three (3) months after your date of termination, or (b) the date that you become eligible to receive medical benefits from another company or business entity. "CAUSE" means your: (i) gross negligence or willful misconduct in connection with the performance of your duties to the Company that in the written determination of a majority of the Board has not been cured within thirty (30) days following receipt by you of written notice from the Board identifying such acts of gross negligence or willful misconduct; (ii) failure to achieve your Annual Performance Targets, following 30 days written notice from the CEO of such failure; (iii) commission of a felony (other than a traffic-related offense) that in the written determination of a majority of the Board has caused material injury to the Company's business; (iv) dishonesty with respect to a significant matter relating to the Company's business and intended to result in personal enrichment of you or your family at the expense of the Company; or (v) material breach of this Offer Letter and Employment Agreement, Proprietary Information and Inventions Agreement or Indemnification Agreement by and between you and the Company, which material breach has not been cured within thirty (30) days following receipt by you of written notice from the Board identifying such material breach. If your employment is terminated for Cause, or you voluntarily terminate your employment from the Company for any reason, all compensation and benefits will cease immediately and you will receive no additional payment from the Company other than your accrued base salary and accrued and unused vacation benefits earned through your date of termination. 2. 5. COMPANY POLICY As a Company employee, you will be expected to abide by the Company's policies, procedures, rules and regulations which will govern the terms and conditions of your employment. The Company's policies may be modified from time to time at the sole discretion of the Company. Normal working hours are from 8:00 a.m. to 5:00 p.m., Monday through Friday. As an exempt salaried employee, you will be expected to work additional hours as required by the nature of your work assignments. 6. PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT As a condition of employment, you will be required to sign and comply with the Proprietary Information and Inventions Agreement, attached hereto as Exhibit A, which prohibits unauthorized use or disclosure of the Company's proprietary information, among other things. In your work for the Company, you will be expected not to use or disclose any confidential information, including trade secrets, of any former employer or other person to whom you have an obligation of confidentiality. Rather, you will be expected to use only that information which is generally known and used by persons with training and experience comparable to your own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company. During our discussions about your proposed job duties, you assured us that you would be able to perform those duties within the guidelines just described. You agree that you will not bring onto Company premises any unpublished documents or property belonging to any former employer or other person to whom you have an obligation of confidentiality. 7. ENTIRE AGREEMENT This Agreement, together with your Proprietary Information and Inventions Agreement and the stock documents and Total Rewards benefit guide referred to herein, forms the complete and exclusive statement of the terms of your employment with the Company. The employment terms in this Agreement supersede any other agreements or promises made to you by anyone, whether oral or written. The terms of this Agreement cannot be modified, except in a writing signed by the Company's Chief Executive Officer or President. 8. GOVERNING LAW This Agreement will be governed by and construed according to the laws of the State of California. You hereby expressly consent to the personal jurisdiction of the state and federal courts located in Redwood City, California for any lawsuit filed there against you by the Company arising from or related to this Agreement. 9. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon your heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, and its assigns. As required by law, this offer is subject to satisfactory proof of your right to work in the United States. Please sign and date this Agreement, and return it to the Company's Human Resources 3. Department by September 19, 2003, if you wish to accept employment with the Company under the terms described above. If you accept our offer, we would like you to start as soon as possible. We look forward to your favorable reply and to a productive and enjoyable work relationship. Sincerely, FIRST VIRTUAL COMMUNICATIONS By: /s/ Tammy Polanco _____________________________________ Tammy Polanco Director, Human Resources Accepted: /s/ David Weinstein ________________________________________ David Weinstein September 8, 2003 ________________________________________ Date Attachment: Exhibit A: Proprietary Information and Inventions Agreement 4. FIRST VIRTUAL COMMUNICATIONS, INC. FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT In consideration of my employment or continued employment by First Virtual Communications, Inc. (the "Company"), and the compensation now and hereafter paid to me, I hereby agree as follows: 1. RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times during the term of my employment and thereafter, I will hold in strictest confidence and will not disclose, use, lecture upon or publish any of the Company's Proprietary Information (defined below), except as such disclosure, use or publication may be required in connection with my work for the Company and an officer of the Company expressly authorizes such in writing. I hereby assign to the Company any rights I may have or acquire in such Proprietary Information and recognize that all Proprietary Information shall be the sole property of the Company and its assigns and the Company and its assigns shall be the sole owner of all trade secret rights, patent rights, copyrights, mask work rights, trade secret rights and all other rights throughout the world (collectively, "Proprietary Rights") in connection therewith. The term "Proprietary Information" shall mean trade secrets, confidential knowledge, data or any other proprietary information of the Company. By way of illustration but not limitation, "Proprietary Information" includes (a) trade secrets, inventions, mask works, ideas, processes, formulas, source and object codes, data, programs, other works of authorship, cell lines, know-how, improvements, discoveries, developments, designs and techniques (hereinafter collectively referred to as "Inventions"); and (b) information regarding plans for research, development, new products, marketing and selling, business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers; and information regarding the skills and compensation of other employees of the Company. 2. THIRD PARTY INFORMATION. I understand, in addition, that the Company has received and in the future will receive from third parties confidential or proprietary information ("Third Party Information") subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. During the term of my employment and thereafter, I will hold Third Party Information in the strictest confidence and will not disclose (to anyone other than Company personnel who need to know such information in connection with their work for the Company) or use, except in connection with my work for the Company, Third Party Information unless expressly authorized by an officer of the Company in writing. 3. ASSIGNMENT OF INVENTIONS. 3.1 ASSIGNMENT. I hereby assign to the Company all my right, title and interest in and to any and all Inventions (and all Proprietary Rights with respect thereto) whether or not patentable or registrable under copyright or similar statutes, made or conceived or reduced to practice or learned by me, either alone or jointly with others, during the period of my employment with the Company. Inventions assigned to or as directed by the Company by this paragraph 3 are hereinafter referred to as "Company Inventions." I recognize that this 1. Agreement does not require assignment of any invention that qualifies fully for protection under Section 2870 of the California Labor Code (hereinafter "Section 2870"), which provides as follows: (1) Any provision in an employment agreement that provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either: (A) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer. (B) Result from any work performed by the employee for the employer. (2) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (i), the provision is against the public policy of this state and is unenforceable. 3.2 GOVERNMENT. I also assign to or as directed by the Company all my right, title and interest in and to any and all Inventions, full title to which is required to be in the United States by a contract between the Company and the United States or any of its agencies. 3.3 WORKS FOR HIRE. I acknowledge that all original works of authorship that are made by me (solely or jointly with others) within the scope of my employment and that are protectable by copyright are "works made for hire," as that term is defined in the United States Copyright Act (17 U.S.C., Section 101). 4. ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company in every proper way to obtain and from time to time enforce United States and foreign Proprietary Rights relating to Company Inventions in any and all countries. To that end I will execute, verify and deliver such documents and perform such other acts (including appearances as a witness) as the Company may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary Rights and the assignment thereof. In addition, I will execute, verify and deliver assignments of such Proprietary Rights to the Company or its designee. My obligation to assist the Company with respect to Proprietary Rights relating to such Company Inventions in any and all countries shall continue beyond the termination of my employment, but the Company shall compensate me at a reasonable rate after my termination for the time actually spent by me at the Company's request on such assistance. In the event the Company is unable for any reason, after reasonable effort, to secure my signature on any document needed in connection with the actions specified in the preceding paragraph, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, which appointment is coupled with an interest, to act for and in my behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of the preceding paragraph thereon with the 2. same legal force and effect as if executed by me. I hereby waive and quitclaim to the Company any and all claims, of any nature whatsoever, that I now or may hereafter have for infringement of any Proprietary Rights assigned hereunder to the Company. 5. OBLIGATION TO KEEP COMPANY INFORMED. During the period of my employment and for six (6) months after termination of my employment with the Company, I will promptly disclose to the Company fully and in writing and will hold in trust for the sole right and benefit of the Company any and all Inventions authored, conceived or reduced to practice by me, either alone or jointly with others. In addition, after termination of my employment, I will promptly disclose to the Company all patent applications filed by me or on my behalf within a year after termination of employment. At the time of each such disclosure, I will advise the Company in writing of any Inventions that I believe fully qualify for protection under Section 2870; and I will at that time provide to the Company in writing all evidence necessary to substantiate that belief. I understand that the Company will keep in confidence and will not disclose to third parties without my consent any proprietary information disclosed in writing to the Company pursuant to this Agreement relating to Inventions that qualify fully for protection under the provisions of Section 2870. I will preserve the confidentiality of any Invention that does not fully qualify for protection under Section 2870. I agree to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that may be required by the Company) of all Proprietary Information developed by me and all Inventions made by me during the period of my employment at the Company, which records shall be available to and remain the sole property of the Company at all times. 6. PRIOR INVENTIONS. Inventions, if any, patented or unpatented, that I made prior to the commencement of my employment with the Company are excluded from the scope of this Agreement. To preclude any possible uncertainty, I have set forth on Exhibit A attached hereto a complete disclosure of all Inventions that I have, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice prior to the commencement of my employment with the Company, that I consider to be my property or the property of third parties and that I wish to have excluded from the scope of this Agreement. If disclosure of any such Invention on Exhibit A would cause me to violate any prior confidentiality agreement, I understand that I am not to disclose such Inventions on Exhibit A. Instead, I am to disclose in the applicable space on Exhibit A, only a cursory name for each such Invention, a listing of the party(s) to whom it belongs and the fact that full disclosure as to such Invention has not been made for that reason. 7. ADDITIONAL ACTIVITIES. I agree that during the period of my employment by the Company I will not, without the Company's express written consent, engage in any employment or business activity other than for the Company. As further assurance that I will not improperly use or disclose any Proprietary Information of the Company, I agree that, for the period of my employment by the Company and for one (l) year after the date of termination of my employment by the Company, I will not (i) solicit or induce any employee of the Company to leave the employ of the Company or (ii) solicit the business of any customer of the Company (other than, prior to termination of my employment, on behalf of the Company and, after termination of my employment, with respect to products or services of a type not supplied by the Company). 3. If any restriction set forth in this Section is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable. 8. NO IMPROPER USE OF MATERIALS. During my employment by the Company I will not improperly use or disclose any confidential information or trade secrets, if any, of any former employer or any other person to whom I have an obligation of confidentiality, and I will not bring onto the premises of the Company any unpublished documents or any property belonging to any former employer or any other person to whom I have an obligation of confidentiality unless previously and specifically consented to in writing by that former employer or person. I will use in the performance of my duties only information which is generally known and used by persons with training and experience comparable to my own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company or by me while employed by the Company. 9. NO CONFLICTING OBLIGATION. I represent that my performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement or obligation of mine relating to any time prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict herewith. 10. RETURN OF COMPANY DOCUMENTS. When I leave the employ of the Company, I will deliver to the Company any and all drawings, notes, memoranda, specifications, devices, formulas, molecules, cells and documents, together with all copies thereof, and any other material containing or disclosing any Company Inventions, Third Party Information or Proprietary Information of the Company, whether kept at the Company, home or elsewhere. I further agree that any property situated on the Company's premises and owned by the Company, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company personnel at any time with or without notice. Prior to leaving, I will cooperate with the Company in completing and signing the Company's termination statement for technical and management personnel confirming the above and my obligations under this Agreement. 11. LAW AND REMEDIES. I understand that the unauthorized taking of the Company's trade secrets (i) could result in civil liability under California Civil Code Section 3426, and that, if willful, could result in an award for triple the amount of the Company's damages and attorneys' fees; and (ii) is a crime under California Penal Code Section 499(c), punishable by imprisonment for a time not exceeding one year, or by a fine not exceeding five thousand dollars ($5,000), or by both. Because my services are personal and unique and because I may have access to and become acquainted with the Proprietary Information of the Company, the Company shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that the Company may have for a breach of this Agreement. 4. 12. NOTICES. Any notices required or permitted hereunder shall be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing. Such notice shall be deemed given upon personal delivery to the appropriate address or if sent by certified or registered mail, three days after the date of mailing. 13. GENERAL PROVISIONS. 13.1 GOVERNING LAW. This Agreement will be governed by and construed according to the laws of the State of California without respect to its choice of law provisions. 13.2 ENTIRE AGREEMENT. This Agreement is the final, complete and exclusive agreement of the parties with respect to the subject matter hereof and supersedes and merges all prior discussions between us. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing and signed by the party to be charged therewith. Any subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement. As used in this Agreement, the period of my employment includes any time during which I may be retained by the Company as a consultant. 13.3 SEVERABILITY. If one or more of the provisions in this Agreement are deemed unenforceable by law, then such provision will be deemed stricken from this Agreement and the remaining provisions will continue in full force and effect. 13.4 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon my heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, and its assigns. 13.5 SURVIVAL. The provisions of this Agreement shall survive the termination of my employment and the assignment of this Agreement by the Company to any successor in interest or other assignee. 13.6 EMPLOYMENT. I agree and understand that nothing in this Agreement shall confer any right with respect to continuation of my employment by the Company, nor shall it interfere in any way with my right or the Company's right to terminate my employment at any time, with or without cause. 13.7 WAIVER. No waiver by the Company of any breach of this Agreement shall be a waiver of any preceding or succeeding breach. No waiver by the Company of any right under this Agreement shall be construed as a waiver of any other right. The Company shall not be required to give notice to enforce strict adherence to all terms of this Agreement. This Agreement shall be effective as of the first day of my employment with the Company, namely _____________. 5. I UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO INVENTIONS I MAKE DURING MY EMPLOYMENT, AND RESTRICTS MY RIGHT TO DISCLOSE OR USE THE COMPANY'S CONFIDENTIAL INFORMATION DURING OR SUBSEQUENT TO MY EMPLOYMENT. I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT. __________________ ____________________________________ Date EMPLOYEE SIGNATURE Address: _____________________________________ _____________________________________ ACCEPTED AND AGREED TO: FIRST VIRTUAL COMMUNICATIONS, INC. By: ____________________________________________ Name: ____________________________________________ Title:____________________________________________ Address: First Virtual Communications, Inc. 3393 Octavius Drive Santa Clara, CA 95054 6. EXHIBIT A TO PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT FVC.COM 3393 Octavius Drive Santa Clara, CA 95054 Gentlemen: 1. Except as noted in Section 2 below, the following is a complete disclosure of all inventions or improvements relevant to the subject matter of my employment by FVC.COM (the "Company") that have been made or conceived or first reduced to practice by me alone or jointly with others prior to my engagement by the Company: _____ No inventions or improvements. _____ See below: _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _____ Additional sheets attached. 2. Due to a prior confidentiality agreement, I cannot complete the disclosure under Section 1 above with respect to inventions or improvements generally listed below, the proprietary rights and duty of confidentiality with respect to which I owe to the following party(s): INVENTION OR IMPROVEMENT PARTY(s) RELATIONSHIP _______________________________________________________________________ 1. _______________________________________________________________________ 2. _______________________________________________________________________ 3. _______________________________________________________________________ _____ Additional sheets attached. 7. 3. I propose to bring to my employment the following devices, materials and documents of a former employer or other person to whom I have an obligation of confidentiality that are not generally available to the public, which materials and documents may be used in my employment pursuant to the express written authorization of my former employer or such other person (a copy of which is attached hereto): _____ No Material. _____ See Below: _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _____ Additional sheets attached. Date: __________________ Very truly yours, _______________________________ Employee Signature 8. EX-10.56 11 f94230exv10w56.txt EXHIBIT 10.56 November 25, 2002 Frank S. Kaplan 4100 Shadow Oak Lane Austin, TX 78746 512-306-9132 RE: EMPLOYMENT TERMS Dear Mr. Kaplan: First Virtual Communications, Inc. (the "Company") is pleased to offer you the position of Vice President of World Wide Sales, pursuant to the terms of this letter agreement ("Agreement"), subject to the satisfactory review of your references. Please respond to me by 5:00 p.m., West Coast time, on November 29, 2002, at which time this offer will expire. 1. DUTIES You will be expected to perform various duties consistent with your position. You will report to the Company's President and Chief Executive Officer, Jonathan Morgan, unless otherwise assigned by the Company. Additionally you will be expected to achieve certain performance targets and Company goals related to your specific job function, ("ANNUAL PERFORMANCE TARGETS"). Such Performance Targets shall be set and measured at the sole discretion of the Company's President and Chief Executive Officer. 2. COMPENSATION Your annual base salary will be $180,000 per year through December 31, 2003, less payroll deductions and all required withholdings. Upon achieving 100% of your 2003 sales quota, your target commissions will total $120,000 for an annual total target compensation package of $300,000 for the calendar year 2003. Beginning January 1, 2004, your annual base salary will be reduced to $150,000. Your target commissions upon achieving 100% of your sales quota will be $150,000 for a total cash compensation target of $300,000 for calendar year 2004. You will be paid bi-weekly and you will be eligible for the following standard Company benefits: medical insurance, paid time off, and holidays. Details about these benefit plans are available for your review in the attached Total Rewards benefit guide. The Company may modify its benefits and compensation packages from time to time, in its sole discretion, as it deems necessary. 3. STOCK OPTIONS Upon commencement of employment and subject to approval of the Company's Board of Directors, you will be granted a Stock Option under the Company's Employee Stock Option Plan to purchase 400,000 shares of the Company's Common Stock (the "STOCK OPTION"). The Stock Option will be governed by and granted pursuant to a separate Stock Option Agreement. The exercise price per share of the Stock Option will be equal to the fair market value of the Common Stock established on the date of grant, subject to approval by the Board of Directors. The Stock Option will be subject to vesting so long as you continue to be employed with the Company, according to the following schedule: twelve and a half percent (12 1/2%) of the shares subject to the Stock Option will vest on the last day of the sixth full calendar month of your employment after the date of grant and the remaining shares subject to the Stock Option will vest in equal installments at the end of each monthly period thereafter. If you have questions regarding the tax implications of the Stock Option or any part of your compensation package, please consult with your own tax advisor. 4. TERMINATION Employment at First Virtual Communications is "at will". The Company may terminate your employment at any time and for any or no reason, with or without Cause or advance notice, by giving you written notice of such termination. Similarly, you may terminate your employment with the Company at any time at your election, in your sole discretion, for any or no reason upon written notice to the Company. The term of your employment relationship may not be modified except by a written agreement signed by the Chief Executive Officer or President of the Company. In the event that the Company terminates your employment without Cause and subject to your successful achievement of your Annual Performance Targets, as determined by the CEO in the CEO's sole discretion, then upon your furnishing to the Company an executed release and waiver of claims, you shall be entitled to receive severance payments in the form of continuation of your base salary and 100% of your target commission, in effect at the time of your termination, subject to the standard payroll deductions and withholdings, for a period of three (3) months after the date of termination. During the severance period, assuming that you are eligible for COBRA, you shall be entitled to receive medical benefits for yourself and eligible dependents paid for by the Company until the earlier of (a) three (3) months after the date of termination, or (b) the date that you become eligible to receive medical benefits from another company or business entity. "CAUSE" means Executive's: (i) gross negligence or willful misconduct in connection with the performance of Executive's duties to the Company that in the written determination of a majority of the Board has not been cured within thirty (30) days following receipt by Executive of written notice from the Board identifying such acts of gross negligence or willful misconduct; (ii) commission of a felony (other than a traffic-related offense) that in the written determination of a majority of the Board has caused material injury to the Company's business; (iii) dishonesty with respect to a significant matter relating to the Company's business and intended to result in personal enrichment of Executive or his or her family at the expense of the Company; or (iv) material breach of any agreement by and between Executive and the Company, which material breach has not been cured within thirty (30) days following receipt by Executive of written notice from the Board identifying such material breach. 2. If your employment is terminated for Cause, or you voluntarily terminate your employment from the Company, all compensation and benefits will cease immediately and you will receive no additional payment from the Company other than your accrued base salary and accrued and unused vacation benefits earned through your date of termination. 5. COMPANY POLICY As a Company employee, you will be expected to abide by the Company's policies, procedures, rules and regulations which will govern the terms and conditions of your employment. The Company's Employee Handbook may be modified from time to time at the sole discretion of the Company. Normal working hours are from 8:00 a.m. to 5:00 p.m., Monday through Friday. As an exempt salaried employee, you will be expected to work additional hours as required by the nature of your work assignments. 6. PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT As a condition of employment, you will be required to sign and comply with the Proprietary Information and Inventions Agreement, attached hereto as Exhibit A, which prohibits unauthorized use or disclosure of the Company's proprietary information, among other things. In your work for the Company, you will be expected not to use or disclose any confidential information, including trade secrets, of any former employer or other person to whom you have an obligation of confidentiality. Rather, you will be expected to use only that information which is generally known and used by persons with training and experience comparable to your own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company. During our discussions about your proposed job duties, you assured us that you would be able to perform those duties within the guidelines just described. You agree that you will not bring onto Company premises any unpublished documents or property belonging to any former employer or other person to whom you have an obligation of confidentiality. 7. ENTIRE AGREEMENT This Agreement, together with your Proprietary Information and Inventions Agreement and the stock documents referred to herein, forms the complete and exclusive statement of the terms of your employment with the Company. The employment terms in this Agreement supersede any other agreements or promises made to you by anyone, whether oral or written. The terms of this Agreement cannot be modified, except in a writing signed by the Company's Chief Executive Officer or President. 8. GOVERNING LAW 3. This Agreement will be governed by and construed according to the laws of the State of California. You hereby expressly consent to the personal jurisdiction of the state and federal courts located in Santa Clara, California for any lawsuit filed there against you by the Company arising from or related to this Agreement. 9. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon your heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, and its assigns. As required by law, this offer is subject to satisfactory proof of your right to work in the United States. Please sign and date this Agreement, and return it to the Company's Human Resources Department by November 29, 2002, if you wish to accept employment with the Company under the terms described above. If you accept our offer, we would like you to start as soon as possible. We look forward to your favorable reply and to a productive and enjoyable work relationship. Sincerely, FIRST VIRTUAL COMMUNICATIONS By: /s/ Tammy Polanco ___________________________ Tammy Polanco Director, Human Resources Accepted: /s/ Frank S. Kaplan ______________________________ Frank S. Kaplan December 12, 2002 ______________________________ Date Attachment: Exhibit A: Proprietary Information and Inventions Agreement 4. EXHIBIT A FIRST VIRTUAL COMMUNICATIONS, INC. FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT In consideration of my employment or continued employment by FIRST VIRTUAL COMMUNICATIONS, Inc. (the "Company"), and the compensation now and hereafter paid to me, I hereby agree as follows: 1. RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times during the term of my employment and thereafter, I will hold in strictest confidence and will not disclose, use, lecture upon or publish any of the Company's Proprietary Information (defined below), except as such disclosure, use or publication may be required in connection with my work for the Company and an officer of the Company expressly authorizes such in writing. I hereby assign to the Company any rights I may have or acquire in such Proprietary Information and recognize that all Proprietary Information shall be the sole property of the Company and its assigns and the Company and its assigns shall be the sole owner of all trade secret rights, patent rights, copyrights, mask work rights, trade secret rights and all other rights throughout the world (collectively, "Proprietary Rights") in connection therewith. The term "Proprietary Information" shall mean trade secrets, confidential knowledge, data or any other proprietary information of the Company. By way of illustration but not limitation, "Proprietary Information" includes (a) trade secrets, inventions, mask works, ideas, processes, formulas, source and object codes, data, programs, other works of authorship, cell lines, know-how, improvements, discoveries, developments, designs and techniques (hereinafter collectively referred to as "Inventions"); and (b) information regarding plans for research, development, new products, marketing and selling, business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers; and information regarding the skills and compensation of other employees of the Company. 2. THIRD PARTY INFORMATION. I understand, in addition, that the Company has received and in the future will receive from third parties confidential or proprietary information ("Third Party Information") subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. During the term of my employment and thereafter, I will hold Third Party Information in the strictest confidence and will not disclose (to anyone other than Company personnel who need to know such information in connection with their work for the Company) or use, except in connection with my work for the Company, Third Party Information unless expressly authorized by an officer of the Company in writing. 3. ASSIGNMENT OF INVENTIONS. 3.1 ASSIGNMENT. I hereby assign to the Company all my right, title and interest in and to any and all Inventions (and all Proprietary Rights with respect thereto) whether or not patentable or registrable under copyright or similar statutes, made or conceived or reduced to practice or learned by me, either alone or jointly with others, during the period of my employment with the Company. Inventions assigned to or as directed by the Company by this paragraph 3 are hereinafter referred to as "Company Inventions." I recognize that this Agreement does not require assignment of any invention that qualifies fully for protection under Section 2870 of the California Labor Code (hereinafter "Section 2870"), which provides as follows: (1) Any provision in an employment agreement that provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either: (A) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer. (B) Result from any work performed by the employee for the employer. (2) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (i), the provision is against the public policy of this state and is unenforceable. 3.2 GOVERNMENT. I also assign to or as directed by the Company all my right, title and interest in and to any and all Inventions, full title to which is required to be in the United States by a contract between the Company and the United States or any of its agencies. 3.3 WORKS FOR HIRE. I acknowledge that all original works of authorship that are made by me (solely or jointly with others) within the scope of my employment and that are protectable by copyright are "works made for hire," as that term is defined in the United States Copyright Act (17 U.S.C., Section 101). 4. ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company in every proper way to obtain and from time to time enforce United States and foreign Proprietary Rights relating to Company Inventions in any and all countries. To that end I will execute, verify and deliver such documents and perform such other acts (including appearances as a witness) as the Company may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary Rights and the assignment thereof. In addition, I will execute, verify and deliver assignments of such Proprietary Rights to the Company or its designee. My obligation to assist the Company with respect to Proprietary Rights relating to such Company Inventions in any and all countries shall continue beyond the termination of my employment, but the Company shall compensate me at a reasonable rate after my termination for the time actually spent by me at the Company's request on such assistance. In the event the Company is unable for any reason, after reasonable effort, to secure my signature on any document needed in connection with the actions specified in the preceding paragraph, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, which appointment is coupled with an interest, to act for and in my behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of the preceding paragraph thereon with the same legal force and effect as if executed by me. I hereby waive and quitclaim to the Company any and all claims, of any nature whatsoever, that I now or may hereafter have for infringement of any Proprietary Rights assigned hereunder to the Company. 5. OBLIGATION TO KEEP COMPANY INFORMED. During the period of my employment and for six (6) months after termination of my employment with the Company, I will promptly disclose to the Company fully and in writing and will hold in trust for the sole right and benefit of the Company any and all Inventions authored, conceived or reduced to practice by me, either alone or jointly with others. In addition, after termination of my employment, I will promptly disclose to the Company all patent applications filed by me or on my behalf within a year after termination of employment. At the time of 2. each such disclosure, I will advise the Company in writing of any Inventions that I believe fully qualify for protection under Section 2870; and I will at that time provide to the Company in writing all evidence necessary to substantiate that belief. I understand that the Company will keep in confidence and will not disclose to third parties without my consent any proprietary information disclosed in writing to the Company pursuant to this Agreement relating to Inventions that qualify fully for protection under the provisions of Section 2870. I will preserve the confidentiality of any Invention that does not fully qualify for protection under Section 2870. I agree to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that may be required by the Company) of all Proprietary Information developed by me and all Inventions made by me during the period of my employment at the Company, which records shall be available to and remain the sole property of the Company at all times. 6. PRIOR INVENTIONS. Inventions, if any, patented or unpatented, that I made prior to the commencement of my employment with the Company are excluded from the scope of this Agreement. To preclude any possible uncertainty, I have set forth on Exhibit A attached hereto a complete disclosure of all Inventions that I have, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice prior to the commencement of my employment with the Company, that I consider to be my property or the property of third parties and that I wish to have excluded from the scope of this Agreement. If disclosure of any such Invention on Exhibit A would cause me to violate any prior confidentiality agreement, I understand that I am not to disclose such Inventions on Exhibit A. Instead, I am to disclose in the applicable space on Exhibit A, only a cursory name for each such Invention, a listing of the party(s) to whom it belongs and the fact that full disclosure as to such Invention has not been made for that reason. 7. ADDITIONAL ACTIVITIES. I agree that during the period of my employment by the Company I will not, without the Company's express written consent, engage in any employment or business activity other than for the Company. As further assurance that I will not improperly use or disclose any Proprietary Information of the Company, I agree that, for the period of my employment by the Company and for one (l) year after the date of termination of my employment by the Company, I will not (i) solicit or induce any employee of the Company to leave the employ of the Company or (ii) solicit the business of any customer of the Company (other than, prior to termination of my employment, on behalf of the Company and, after termination of my employment, with respect to products or services of a type not supplied by the Company). If any restriction set forth in this Section is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable. 8. NO IMPROPER USE OF MATERIALS. During my employment by the Company I will not improperly use or disclose any confidential information or trade secrets, if any, of any former employer or any other person to whom I have an obligation of confidentiality, and I will not bring onto the premises of the Company any unpublished documents or any property belonging to any former employer or any other person to whom I have an obligation of confidentiality unless previously and specifically consented to in writing by that former employer or person. I will use in the performance of my duties only information which is generally known and used by persons with training and experience comparable to my own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company or by me while employed by the Company. 3. 9. NO CONFLICTING OBLIGATION. I represent that my performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement or obligation of mine relating to any time prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict herewith. 10. RETURN OF COMPANY DOCUMENTS. When I leave the employ of the Company, I will deliver to the Company any and all drawings, notes, memoranda, specifications, devices, formulas, molecules, cells and documents, together with all copies thereof, and any other material containing or disclosing any Company Inventions, Third Party Information or Proprietary Information of the Company, whether kept at the Company, home or elsewhere. I further agree that any property situated on the Company's premises and owned by the Company, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company personnel at any time with or without notice. Prior to leaving, I will cooperate with the Company in completing and signing the Company's termination statement for technical and management personnel confirming the above and my obligations under this Agreement. 11. LAW AND REMEDIES. I understand that the unauthorized taking of the Company's trade secrets (i) could result in civil liability under California Civil Code Section 3426, and that, if willful, could result in an award for triple the amount of the Company's damages and attorneys' fees; and (ii) is a crime under California Penal Code Section 499(c), punishable by imprisonment for a time not exceeding one year, or by a fine not exceeding five thousand dollars ($5,000), or by both. Because my services are personal and unique and because I may have access to and become acquainted with the Proprietary Information of the Company, the Company shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that the Company may have for a breach of this Agreement. 12. NOTICES. Any notices required or permitted hereunder shall be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing. Such notice shall be deemed given upon personal delivery to the appropriate address or if sent by certified or registered mail, three days after the date of mailing. 13. GENERAL PROVISIONS. 13.1 GOVERNING LAW. This Agreement will be governed by and construed according to the laws of the State of California without respect to its choice of law provisions. 13.2 ENTIRE AGREEMENT. This Agreement is the final, complete and exclusive agreement of the parties with respect to the subject matter hereof and supersedes and merges all prior discussions between us. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing and signed by the party to be charged therewith. Any subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement. As used in this Agreement, the period of my employment includes any time during which I may be retained by the Company as a consultant. 13.3 SEVERABILITY. If one or more of the provisions in this Agreement are deemed unenforceable by law, then such provision will be deemed stricken from this Agreement and the remaining provisions will continue in full force and effect. 4. 13.4 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon my heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, and its assigns. 13.5 SURVIVAL. The provisions of this Agreement shall survive the termination of my employment and the assignment of this Agreement by the Company to any successor in interest or other assignee. 13.6 EMPLOYMENT. I agree and understand that nothing in this Agreement shall confer any right with respect to continuation of my employment by the Company, nor shall it interfere in any way with my right or the Company's right to terminate my employment at any time, with or without cause. 13.7 WAIVER. No waiver by the Company of any breach of this Agreement shall be a waiver of any preceding or succeeding breach. No waiver by the Company of any right under this Agreement shall be construed as a waiver of any other right. The Company shall not be required to give notice to enforce strict adherence to all terms of this Agreement. This Agreement shall be effective as of the first day of my employment with the Company, namely ________________ . I UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO INVENTIONS I MAKE DURING MY EMPLOYMENT, AND RESTRICTS MY RIGHT TO DISCLOSE OR USE THE COMPANY'S CONFIDENTIAL INFORMATION DURING OR SUBSEQUENT TO MY EMPLOYMENT. I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT. ________________________________________ EXECUTIVE Address: ______________________________ ______________________________ 5. EX-10.57 12 f94230exv10w57.txt EXHIBIT 10.57 Exhibit 10.57 SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this "Agreement") is dated as of November 7, 2003, among First Virtual Communications, Inc., a Delaware corporation (the "Company"), and the purchasers identified on the Schedule of Purchasers attached hereto (each a "Purchaser" and collectively the "Purchasers"); and WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act, and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Purchasers, and each Purchaser, severally and not jointly, desires to purchase from the Company in the aggregate, up to $12,000,000 of Common Stock and Warrants on the Closing Date. Capitalized terms used herein and not otherwise defined are defined in Section 1.1 below. NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agrees as follows: ARTICLE I. DEFINITIONS 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings indicated in this Section 1.1: "Action" shall have the meaning ascribed to such term in Section 3.1(j). "Affiliate" means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144. With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser. "Business Day" means any day except Saturday, Sunday and any day which shall be a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close. "Closing" means the closing of the purchase and sale of the Common Stock and the Warrants pursuant to Section 2.1. "Closing Date" means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers' obligations to pay the Subscription Amount and (ii) the Company's obligations to deliver the Securities have been satisfied or waived. 1 "Closing Price" means on any particular date (a) the last reported closing bid price per share of Common Stock on such date on the Trading Market (as reported by Bloomberg L.P. at 4:15 PM (New York time), or (b) if there is no such price on such date, then the closing bid price on the Trading Market on the date nearest preceding such date (as reported by Bloomberg L.P. at 4:15 PM (New York time) for the closing bid price for regular session trading on such day), or (c) if the Common Stock is not then listed or quoted on the Trading Market and if prices for the Common Stock are then reported in the "pink sheets" published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) if the shares of Common Stock are not then publicly traded the fair market value of a share of Common Stock as determined by an appraiser selected in good faith by the Purchasers of a majority in interest of the Shares then outstanding. "Commission" means the Securities and Exchange Commission. "Common Stock" means the common stock of the Company, $0.001 par value per share, and any securities into which such common stock may hereafter be reclassified. "Common Stock Equivalents" means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. "Company Counsel" means Cooley Godward LLP with offices located at 4401 Eastgate Mall, San Diego, CA 92121-9109. "Disclosure Schedules" means the Disclosure Schedules delivered concurrently herewith. "Effective Date" means the date that the Registration Statement is first declared effective by the Commission. "Escrow Agent" shall have the meaning set forth in the Escrow Agreement. "Escrow Agreement" shall mean the Escrow Agreement in substantially the form of Exhibit B hereto executed and delivered contemporaneously with this Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "FW" means Feldman Weinstein LLP with offices located at 420 Lexington Avenue, New York, New York 10170-0002. "Intellectual Property Rights" shall have the meaning ascribed to such term in Section 3.1(o). 2 "Liens" means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction created by or upon the Company. "Material Adverse Effect" shall have the meaning ascribed to such term in Section 3.1(b). "Material Permits" shall have the meaning ascribed to such term in Section 3.1(m). "Per Share Purchase Price" equals $1.79(1), subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement and prior to the Closing Date. "Person" means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. "Proceeding" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened. "Registration Statement" means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Shares and the Warrant Shares. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the date of this Agreement, among the Company and each Purchaser, in the form of Exhibit A hereto. "Required Approvals" shall have the meaning ascribed to such term in Section 3.1(e). "Rule 144" means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "SEC Reports" shall have the meaning ascribed to such term in Section 3.1(h). "Securities" means the Shares, the Warrants and the Warrant Shares. "Securities Act" means the Securities Act of 1933, as amended. - ----------------------- 1 The lesser of (i) 100% of the Closing Price on the date immediately prior to the date hereof (if signed before the close of market) and (ii) 100% of the average of the 5 Closing Prices immediately prior to the date hereof, or, if permitted, such lower price as is possible to qualify for a fair market value transaction under the rules of the Trading Market, plus, in each case, $0.0625 per share as required by Nasdaq for the Warrant Shares. 3 "Shares" means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement. "Subscription Amount" means, as to each Purchaser, the amounts set forth below such Purchaser's signature block on the signature page hereto, in United States dollars and in immediately available funds. "Subsidiary" shall mean the subsidiaries of the Company, if any, set forth on Schedule 3.1(a). "Trading Day" means (i) a day on which the Common Stock is traded on a Trading Market, or (ii) if the Common Stock is not listed on a Trading Market, a day on which the Common Stock is traded on the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day. "Trading Market" means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market. "Transaction Documents" means this Agreement, the Escrow Agreement, the Warrants and the Registration Rights Agreement. "Warrants" means the Common Stock Purchase Warrants, in the form of Exhibit C, issuable to the Purchasers at the Closing, which warrants shall be exercisable immediately upon issuance for a term of 5 years and have an exercise price equal to $1.79(2). "Warrant Shares" means the shares of Common Stock issuable upon exercise of the Warrants. ARTICLE II. PURCHASE AND SALE 2.1 Closing. On the Closing Date, each Purchaser shall purchase from the Company, severally and not jointly with the other Purchasers, and the Company shall issue and sell to each Purchaser, (a) a number of Shares equal to such Purchaser's Subscription Amount divided by the Per Share Purchase Price and (b) the Warrants as determined pursuant to Section 2.2(a)(iii). The aggregate Subscription Amounts for Shares sold hereunder shall be up to $12,000,000. Upon satisfaction of the conditions set forth in Section 2.2, the Closing shall occur at the offices of the Escrow Agent, or such other location as the parties shall mutually agree. - ----------------------- 2 The Per Share Purchase Price. 4 2.2 Closing Conditions; Deliveries. (a) On the Closing Date, the Company shall deliver or cause to be delivered to the Escrow Agent with respect to each Purchaser the following: (i) this Agreement duly executed by the Company; (ii) a certificate evidencing a number of Shares equal to such Purchaser's Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser; (iii) a Warrant, registered in the name of such Purchaser, pursuant to which such Purchaser shall have the right to acquire up to the number of shares of Common Stock equal to one half of the Shares to be issued to such Purchaser at the Closing; (iv) the Registration Rights Agreement duly executed by the Company; (v) the Escrow Agreement duly executed by the Company; and (vi) a legal opinion of Company Counsel, in the form of Exhibit D attached hereto. (b) On the Closing Date, each Purchaser shall deliver or cause to be delivered to the Escrow Agent the following: (i) this Agreement duly executed by such Purchaser; (ii) such Purchaser's Subscription Amount by wire transfer to the account of the Escrow Agent; (iii) the Escrow Agreement duly executed by such Purchaser; and (iv) the Registration Rights Agreement duly executed by such Purchaser. (c) All representations and warranties of the other party contained herein shall remain true and correct as of the Closing Date. (d) All obligations, covenants and agreements of the parties required to be performed at or prior to the Closing Date shall have been performed. (e) On or prior to the Closing Date, the Company shall have received confirmation from the Trading Market that no stockholder vote is required in connection with the Closing or the Company shall have complied with such stockholder vote requirement. (f) From the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission, and, at any time prior to the Closing 5 Date, trading in securities generally as reported by Bloomberg Financial Markets shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of each Purchaser, makes it impracticable or inadvisable to purchase the Shares at the such Closing. ARTICLE III. REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties of the Company. Except as set forth under the corresponding section of the Disclosure Schedules delivered concurrently herewith, the Company hereby makes the following representations and warranties as of the date hereof and as of the Closing Date to each Purchaser: (a) Subsidiaries. All of the subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, then references in the Transaction Documents to the Subsidiaries will be disregarded. (b) Organization and Qualification. Each of the Company and the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business or financial condition of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company's ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a "Material Adverse Effect") and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification. 6 (c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company in connection therewith other than in connection with the Required Approvals. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale of the Securities and the consummation by the Company of the other transactions contemplated thereby do not and will not (i) conflict with or violate any provision of the Company's or any Subsidiary's certificate or articles of incorporation, bylaws or other organizational or charter documents currently in effect, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary currently is a party or by which any property or asset of the Company or any Subsidiary currently is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary currently is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary currently is bound or affected, or (iv) conflict with or violate the terms of any agreement by which the Company or any Subsidiary currently is bound or to which any property or asset of the Company or any Subsidiary currently is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect. (e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Registration Statement, (iii) application(s) to each applicable Trading Market for the listing of the 7 Shares and Warrant Shares for trading thereon in the time and manner required thereby, and (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the "Required Approvals"). (f) Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. The issuance of the Shares is not subject to any preemptive or similar rights to subscribe for or purchase securities. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement and the Warrants. (g) Capitalization. The capitalization of the Company is as described in the Company's most recent periodic report filed with the Commission. The Company has not issued any capital stock since such filing other than pursuant to the exercise of employee stock options under the Company's stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company's employee stock purchase plan and pursuant to the conversion or exercise of outstanding Common Stock Equivalents outstanding. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities or in connection with the granting of options to employees, officers and directors of the Company pursuant to any stock option plan duly adopted by the Board of Directors of the Company, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. The issue and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale of the Shares. Except as disclosed in the SEC Reports, there are no stockholders agreements, voting agreements or other similar agreements with respect to the Company's capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company's stockholders. (h) SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the 8 foregoing materials, including the exhibits thereto, being collectively referred to herein as the "SEC Reports") on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports complied in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved ("GAAP"), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. (i) Material Changes. Except as set forth in the SEC Reports, since the date of the latest audited financial statements included within the SEC Reports, except as disclosed in the SEC Reports, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company's financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. (j) Litigation. Except as disclosed in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an "Action") which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Except as disclosed in the SEC Reports, neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action 9 involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. Except as disclosed in the SEC Reports, there has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. (k) Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which could reasonably be expected to result in a Material Adverse Effect. (l) Compliance. Except as disclosed in the SEC Reports, neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business except in each case as could not have a Material Adverse Effect. (m) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not have or reasonably be expected to result in a Material Adverse Effect ("Material Permits"), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit. (n) Title to Assets. Except as set forth in the SEC Reports, the Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and the Subsidiaries and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in compliance. 10 (o) Patents and Trademarks. To the knowledge of the Company and each Subsidiary, the Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have or reasonably be expected to result in a Material Adverse Effect (collectively, the "Intellectual Property Rights"). Except as disclosed in the SEC Reports, neither the Company nor any Subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and do not violate or infringe the Intellectual Property Rights of others. (p) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost. (q) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $60,000 other than (i) for payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) for other employee benefits, including stock option agreements under any stock option plan of the Company. (r) Internal Accounting Controls. The Company and each of the Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company, including the Subsidiaries, is made known to the certifying officers by others 11 within those entities, particularly during the period in which the Company's most recently filed period report under the Exchange Act, as the case may be, is being prepared. The Company's certifying officers have evaluated the effectiveness of the Company's controls and procedures as of a date within 90 days prior to the filing date of the most recently filed periodic report under the Exchange Act (such date, the "Evaluation Date"). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no significant changes in the Company's internal controls (as such term is defined in Item 307(b) of Regulation S-K under the Exchange Act) or, to the Company's knowledge, in other factors that could significantly affect the Company's internal controls. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with GAAP and the applicable requirements of the Exchange Act. (s) Certain Fees. No brokerage or finder's fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement, other than to Roth Capital Partners, LLC. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement. (t) Private Placement. Assuming the accuracy of the Purchasers representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market. (u) Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Shares, will not be or be an Affiliate of, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act. (v) Registration Rights. No Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company. (w) Listing and Maintenance Requirements. The Company's Common Stock is registered pursuant to Section 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. Except as set forth in the SEC Reports, the Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. 12 (x) Application of Takeover Protections. The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company's Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation the Company's issuance of the Securities and the Purchasers' ownership of the Securities. (y) Disclosure. Other than the terms of the transaction contemplated by this Agreement, the Company confirms that, neither the Company nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that constitutes or might constitute material, non-public information; provided, however, that the Company makes no representation with respect to any information provided to the Purchasers by Roth Capital Partners, LLC. The Company understands and confirms that the Purchasers will rely on the foregoing representations and covenants in effecting transactions in securities of the Company. All disclosure provided to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, furnished by or on behalf of the Company are true and correct and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (z) No Integrated Offering. Assuming the accuracy of the Purchasers' representations and warranties set forth in Section 3.2, neither the Company, nor any of its affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of the Securities Act or any applicable shareholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. (aa) Solvency. Based on the financial condition of the Company as of the Closing Date after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the Company's fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of the Company's existing debts and other liabilities (including known contingent liabilities) as they mature; (ii) the Company's assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof; and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or 13 in respect of its debt when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). (bb) Form S-3 Eligibility. The Company is eligible to register the resale of its Common Stock by the Purchasers under Form S-3 promulgated under the Securities Act and the Company hereby covenants and agrees to use its commercially reasonable best efforts to maintain its eligibility to use Form S-3 until the Registration Statement covering the resale of the Shares shall have been filed with, and declared effective by, the Commission. (cc) Taxes. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary. (dd) General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Shares by any form of general solicitation or general advertising. The Company has offered the Shares for sale only to the Purchasers and certain other "accredited investors" within the meaning of Rule 501 under the Securities Act. (ee) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any corrupt funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended. (ff) Accountants. To the Company's knowledge, PriceWaterhouseCoopers LLP, the Company's accountants, who the Company expects will express their opinion with respect to the financial statements to be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003, are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder. (gg) Acknowledgment Regarding Purchasers' Purchase of Shares. The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm's length purchaser with respect to the Transaction Documents and the transactions contemplated hereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice 14 given by any Purchaser or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Purchasers' purchase of the Shares. The Company further represents to each Purchaser that the Company's decision to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives. 3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, for itself and for no other Purchaser, represents and warrants as of the date hereof and as of the Closing Date to the Company as follows: (a) Organization; Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations thereunder. The execution, delivery and performance by such Purchaser of the transactions contemplated by the Transaction Agreements have been duly authorized by all necessary corporate or similar action on the part of such Purchaser. Each Transaction Document to which it is party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. (b) Investment Intent. Such Purchaser understands that the Securities are "restricted securities" and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Securities or any part thereof, has no present intention of distributing any of such Securities and has no arrangement or understanding with any other persons regarding the distribution of such Securities (this representation and warranty not limiting such Purchaser's right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business. Such Purchaser does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities (this representation and warranty not limiting such Purchaser's right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws). (c) Purchaser Status. At the time such Purchaser was offered the Securities, it was, and at the date hereof and on the Closing Date it is an "accredited investor" as defined in Rule 501(a) under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act. 15 (d) Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. (e) General Solicitation. Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement. The Company acknowledges and agrees that each Purchaser does not make or has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.2. ARTICLE IV. OTHER AGREEMENTS OF THE PARTIES 4.1 Transfer Restrictions. (a) The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities, other than pursuant to an effective registration statement or Rule 144 (as to any transfer pursuant to Rule 144, provided that the holder thereof provides the Company with such documents as may be reasonably requested by the Company to give effect to the transfer and comply with applicable laws), to the Company or to an Affiliate of a Purchaser, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of a Purchaser under this Agreement and the Registration Rights Agreement. (b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1(b), of a legend on any of the Securities in the following form: THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A 16 TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an "accredited investor" as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and the Registration rights Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser's expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including, if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required post-effective amendment to the Registration Statement to appropriately amend the list of Selling Stockholders thereunder. (c) The Company shall, upon request and subject to Section 4(e) below, and assuming the Purchaser is not an Affiliate of the Company, promptly reissue certificates evidencing the Shares and Warrant Shares without any legend (including the legend set forth in Section 4.1(b)), (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, or (ii) following any sale of such Shares or Warrant Shares pursuant to Rule 144, provided that the holder thereof provides the Company with such documents as may be reasonably requested by the Company to give effect to the transfer and comply with applicable laws, or (iii) if such Shares or Warrant Shares are eligible for sale under Rule 144(k), or (iv) if, in the opinion of counsel to the Company, such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the Staff of the Commission). The Company shall cause its counsel (which may be in-house counsel) to issue a legal opinion to the Company's transfer agent promptly after the Effective Date if required by the Company's transfer agent to effect the removal of the legend hereunder. Subject to the foregoing, if all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the resale of the Warrant Shares, such Warrant Shares shall be issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will promptly, but in no event later than five Trading Days following the delivery by a Purchaser to the Company or the Company's transfer agent of a certificate representing Shares or Warrant Shares, as the case may be, issued with a restrictive legend and, if the sale or transfer is made pursuant to Rule 144, any other required documentation that are reasonable and customary for 17 such sales or transfers (such fifth Trading Day after such delivery, the "Legend Removal Date"), deliver or cause to be delivered to such Purchaser a certificate representing such Securities that is free from all restrictive and other legends, unless the Purchaser is an Affiliate of the Company. Unless the Purchaser is an Affiliate of the Company, the Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section. (d) In addition to such Purchaser's other available remedies, the Company shall pay to a Purchaser, in cash, as liquidated damages and not as a penalty, for each $1,000 of Shares or Warrant Shares (based on the Closing Price of the Common Stock on the date such Securities are submitted to the Company's transfer agent) subject to Section 4.1(c), $5 per Trading Day (increasing to $10 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after the fifth Trading Day following the Legend Removal Date until such certificate is delivered. Nothing herein shall limit such Purchaser's right to pursue actual damages for the Company's failure to deliver certificates representing any Securities as required by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. (e) Each Purchaser, severally and not jointly with the other Purchasers, agrees that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company's reliance that the Purchaser will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom. 4.2 Furnishing of Information. As long as any Purchaser owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Securities under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144. 4.3 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction. 18 4.4 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. Eastern time on the Trading Day following the Closing Date, issue a press release or file a Current Report on Form 8-K, in each case reasonably acceptable to each Purchaser disclosing the transactions contemplated hereby. The Company and each Purchaser shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (i) as required by federal securities law in connection with the registration statement contemplated by the Registration Rights Agreement and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under subclause (i) or (ii) and (iii) except that the Transaction Documents will be filed with the Company's SEC Reports. Notwithstanding anything herein to the contrary, any party to this Agreement (and any employee, representative, or other agent of any party to this Agreement) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure; provided, however, that such disclosure may not be made to the extent reasonably necessary to comply with any applicable federal or state securities laws. For the purposes of the foregoing sentence, (i) the "tax treatment" of a transaction means the purported or claimed federal income tax treatment of the transaction, and (ii) the "tax structure" of a transaction means any fact that may be relevant to understanding the purported or claimed federal income tax treatment of the transaction. 4.5 Shareholders Rights Plan. No claim will be made or enforced by the Company or, to the knowledge of the Company, any other Person that any Purchaser is an "Acquiring Person" under any shareholders rights plan or similar plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers. The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act. 4.6 Non-Public Information. The Company covenants and agrees that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing representations in effecting transactions in securities of the Company. 4.7 Use of Proceeds. Except as set forth on Schedule 4.7 attached hereto, the Company shall use the net proceeds from the sale of the Securities hereunder for working capital 19 purposes and not for the satisfaction of any portion of the Company's debt (other than payment of trade payables in the ordinary course of the Company's business and prior practices and periodic installment payments under outstanding indebtedness), to redeem any Company equity or equity-equivalent securities or to settle any outstanding litigation. 4.8 Indemnification of Purchasers. (a) The Company will indemnify and hold the Purchasers and their directors, officers, shareholders, partners, employees and agents (each, a "Purchaser Party") harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys' fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to: (a) any misrepresentation, breach or inaccuracy on the part of the Company of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents; or (b) any cause of action, suit or claim brought or made against such Purchaser Party and arising solely out of or solely resulting from the Purchaser's execution, delivery, performance or enforcement of this Agreement or any of the other Transaction Documents, other than directly resulting from the gross negligence or willful misconduct of the Purchasers. The Company will reimburse such Purchaser for its reasonable legal and other expenses (including the cost of any investigation, preparation and travel in connection therewith) incurred in connection therewith, as such expenses are incurred. (b) Promptly after receipt by any Purchaser Party (the "Indemnified Person") of notice of any demand, claim or circumstances which would or might give rise to a claim or the commencement of any action, proceeding or investigation in respect of which indemnity may be sought pursuant to Section 4.8, such Indemnified Person shall promptly notify the Company in writing and the Company shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person, and shall assume the payment of all fees and expenses; provided, however, that the failure of any Indemnified Person so to notify the Company shall not relieve the Company of its obligations hereunder except to the extent that the Company is materially prejudiced by such failure to notify. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company and the Indemnified Person shall have mutually agreed to the retention of such counsel; or (ii) in the reasonable judgment of counsel to such Indemnified Person representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Company shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, but if settled with such consent, or if there be a final judgment for the plaintiff, the Company shall indemnify and hold harmless such Indemnified Person from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, the Company shall not effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could 20 have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such proceeding. 4.9 Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants. 4.10 Listing of Common Stock. The Company hereby agrees to use commercially reasonable efforts to maintain the listing of the Common Stock on a Trading Market, and as soon as reasonably practicable following the Closing (but not later than the earlier of the Effective Date and the first anniversary of the Closing Date) to list all of the Shares and Warrant Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will include in such application all of the Shares and Warrant Shares, and will take such other action as is necessary to cause all of the Shares and Warrant Shares to be listed on such other Trading Market as promptly as possible. The Company will take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of the Trading Market. 4.11 Equal Treatment of Purchasers. No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended to treat for the Company the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise. ARTICLE V. MISCELLANEOUS 5.1 Fees and Expenses. Except as otherwise set forth in this Agreement, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all stamp and other taxes and duties levied in connection with the initial sale of the Securities to the Purchasers. 5.2 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. 21 5.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. 5.4 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and each Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. 5.5 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. 5.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser. Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions hereof that apply to the "Purchasers". 5.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8. 5.8 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of San Francisco. Each party hereto hereby 22 irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of San Francisco, California for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by delivering a copy thereof via overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto (including its affiliates, agents, officers, directors and employees) hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of a Transaction Document, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys' fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 5.9 Survival. The representations and warranties herein shall survive the Closing and delivery of the Shares and Warrant Shares. 5.10 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof. 5.11 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement. 5.12 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, required by the Company's transfer agent. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities. 23 5.13 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agree to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. 5.14 Independent Nature of Purchasers' Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser was introduced to the Company by Roth Capital Partners, LLC, which has acted solely as agent for the Company and not for any Purchaser. Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents. For reasons of administrative convenience only, Purchasers and their respective counsel have chosen to communicate with the Company through FW. FW does not represent all of the Purchasers but only the placement agent, Roth Capital Partners, LLC. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Purchasers. (Signature Page Follows) 24 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. FIRST VIRTUAL COMMUNICATIONS, INC. Address for Notice: By: /s/ Truman Cole ---------------------------------------- Name: Truman Cole Title: Chief Financial Officer Attn: Tel: Fax: With copy to (which shall not constitute notice): Cooley Godward LLP 4401 Eastgate Mall San Diego, CA 92121-9109 Attn: Julie M. Robinson With a copy to for benefit of Placement Agent: Feldman Weinstein LLP 420 Lexington Avenue New York, New York 10170 Attn: Robert F. Charron Tel: (212) 869-7000 Fax: (212) 401-4741 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES FOR PURCHASERS FOLLOW] IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. [PURCHASER] Address for Notice: By: _____________________________________ Name: Title: Attn: Subscription Amount: $ [FVCX SPA SIGNATURE PAGE CONTINUED] SCHEDULE OF PURCHASERS

NAME OF PURCHASER NUMBER OF SHARES NUMBER OF WARRANTS ----------------- ---------------- ------------------ Lagunitas Partners LP 837,989 418,994 J. Patterson McBaine 111,732 55,806 Jon D. Gruber & Linda W. Gruber 111,732 55,866 Gruber & McBaine International 279,330 139,665 Special Situations Fund III, L.P. 553,771 276,885 Special Situations Cayman Fund L.P. 178,911 89,455 Special Situations Technology Fund L.P. 17,039 8,519 Special Situations Technology Fund II L.P. 102,235 51,117 MicroCapital Fund L.P. 391,061 195,530 MicroCapital Fund Ltd. 167,598 83,799 Bonanza Fund 139,655 69,832 Firelake Strategic Technology Fund, L.P. 837,989 418,994 Agile Partners, LP 279,3320 139,665 Behavioral Financial Fund Ltd. 782,123 391,061 Jurika Family Trust 167,598 83,799 JMK Investment Partners, L.P. 167,598 83,799 Encinal Crossover Fund 83,799 41,899 Neal I. Goldman IRA Rollover 200,000 100,000 Palisades Master Fund L.P. 279,330 139,665 Gordon J. Roth 11,174 5,587

Joseph Paul Schimmelpfennig 11,174 5,587 John J. Weber 11,174 5,587 Jeffrey M. Ng 8,380 4,190 Louis J. Ellis 1,676 838 EXHIBIT A REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is made and entered into as of November 6, 2003, by and among First Virtual Communications, Inc., a Delaware corporation (the "Company"), and the purchasers signatory hereto (each such purchaser, a "Purchaser" and collectively, the "Purchasers"). This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof among the Company and the Purchasers (the "Purchase Agreement"). The Company and the Purchasers hereby agree as follows: ARTICLE I. DEFINITIONS. Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings: "Advice" shall have the meaning set forth in Section 6(d). "Effectiveness Date" means, with respect to the Registration Statement required to be filed hereunder, the earlier of (a) the 90th calendar day following the date of the Filing Date, and (b) the fifth Trading Day following the date on which the Company is notified by the Commission that the Registration Statement will not be reviewed or is no longer subject to further review and comments. "Effectiveness Period" shall have the meaning set forth in Section 2(a). "Event" shall have the meaning set fort in Section 2(b). "Event Date" shall have the meaning set forth in Section 2(b). "Filing Date" means, with respect to the Registration Statement required to be filed hereunder, the 30th calendar day following the Closing Date. "Holder" or "Holders" means the holder or holders, as the case may be, from time to time of Registrable Securities. "Indemnified Party" shall have the meaning set forth in Section 5(c). "Indemnifying Party" shall have the meaning set forth in Section 5(c). "Losses" shall have the meaning set forth in Section 5(a). "Proceeding" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened in writing. "Prospectus" means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference in such Prospectus. "Registrable Securities" means all of the Shares and the Warrant Shares, together with any shares of Common Stock issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that a security ceases to be a Registrable Security when it: (i) has been registered pursuant to an effective registration statement under the Securities Act and sold in a manner contemplated by the Registration Statement, or (ii) has been transferred in compliance with Rule 144 under the Securities Act (or any successor provision thereto) or is transferable pursuant to paragraph (k) of such Rule 144 (or any successor provision thereto). "Registration Statement" means the registration statements required to be filed hereunder, including (in each case) the Prospectus, amendments and supplements to the registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference in the registration statement. "Rule 415" means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. "Rule 424" means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. ARTICLE II. REGISTRATION. 2.1 On or prior to the Filing Date, the Company shall prepare and file with the Commission the Registration Statement covering the resale of all of the Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement required hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case the Registration shall be on another appropriate form in accordance herewith). The Registration Statement required hereunder shall contain (except if otherwise directed by the Holders) substantially the "Plan of Distribution" attached hereto as Annex A. Subject to the terms of this Agreement, the Company shall use commercially reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event not later than the Effectiveness Date, and shall use commercially reasonable efforts to keep the Registration Statement continuously effective, subject to Sections 3(c), 3(i) and 6(d) below, under the Securities Act until the date when all Registrable Securities covered by the Registration Statement have been sold or may be sold without volume restrictions pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company's transfer agent and the affected Holders (the "Effectiveness Period"). 2.2 If: (i) a Registration Statement is not filed on or prior to the Filing Date (if the Company files a Registration Statement without complying with Section 3(a), the Company shall not be deemed to have satisfied this clause (i)), or (ii) the Company fails to file with the Commission a request for acceleration in accordance with Rule 461 promulgated under the Securities Act, within five Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that a Registration Statement will not be "reviewed," or is not subject to further review (unless the Company provides notice to the Holders of a circumstance contemplated by Section 3(c)(vi) that would make it appropriate to suspend the filing of the Registration Statement and the related Prospectus for a reasonable period of time not to exceed 10 Trading Days), or (iii) prior to the date when such Registration Statement is first declared effective by the Commission, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such Registration Statement within 15 Trading Days after the receipt of comments by or notice from the Commission that such amendment is required in order for a Registration Statement to be declared effective, or (iv) a Registration Statement filed or required to be filed hereunder is not declared effective by the Commission on or before the Effectiveness Date, or (v) after a Registration Statement is first declared effective by the Commission, it ceases for any reason to remain continuously effective as to all Registrable Securities for which it is required to be effective, or the Holders are not permitted to utilize the Prospectus therein to resell such Registrable Securities, for in any such case 15 consecutive days but no more than an aggregate of 30 days during any 12 month period (which need not be consecutive Trading Days)(any such failure or breach being referred to as an "Event," and for purposes of clause (i) or (iv) the date on which such Event occurs, or for purposes of clause (ii) the date on which such five Trading Day period (or, if there is a delay in filing as a result of a circumstance contemplated by Section 3(c)(vi), 10 Trading Day period) is exceeded, or for purposes of clause (iii) the date which such 15 Trading Day period is exceeded, or for purposes of clause (v) the date on which such 15 or 30 day period, as applicable, is exceeded being referred to as "Event Date"), then in addition to any other rights the Holders may have hereunder or under applicable law: (x) on each such Event Date the Company shall pay to each Holder an amount in cash, as liquidated damages and not as a penalty, equal to 1.5% of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for any Registrable Securities then held by such Holder; and (y) on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as liquidated damages and not as a penalty, equal to 1.5% of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for any Registrable Securities then held by such Holder; provided, however, that under no circumstances shall the Company be required to pay hereunder to any Holder during any one month period in excess of an aggregate of 1.5% of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for any Registrable Securities then held by such Holder. If the Company fails to pay any liquidated damages pursuant to this Section 2(b) in full within 10 Trading Days after the date payable, the Company will pay interest thereon at a rate of 15% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The liquidated damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an Event. ARTICLE III. REGISTRATION PROCEDURES In connection with the Company's registration obligations hereunder, the Company shall: 3.1 Not less than five Trading Days prior to the filing of the Registration Statement or two days prior to the filing of any related Prospectus or any amendment or supplement thereto, the Company shall, (i) furnish to the Holders copies of all such documents proposed to be filed (including documents incorporated or deemed incorporated by reference to the extent requested by such Person) which documents will be subject to the review of such Holders, and (ii) cause its officers and directors, counsel and independent certified public accountants to respond to such reasonable inquiries as shall be necessary, in the reasonable opinion of respective counsel to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file the Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities then held by all Holders shall reasonably object in good faith, provided that the Company is notified of such objection in writing prior to the date 2 Trading Days after the Holders have been so furnished copies of such documents proposed to be filed. If the Company fails to file a Registration Statement or any such prospectus or any amendments or supplements thereto so as to give rise to an Event contemplated by Section 2(b) as a result of the Holders objection to the filing of the Registration Statement, the Company shall not be required to pay any liquidated damages contemplated by Section 2(b) with respect to such Event for any delay resulting from the Holder's objection to such filing.; provided, however, if it is later determined that such objections were reasonable and in good faith, the Company shall be required to pay such liquidated damages contemplated by Section 2(b) with respect to such Event. 3.2 (i) Prepare and file with the Commission such amendments, including post-effective amendments, to the Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii) reasonable efforts to respond as promptly as reasonably practicable to any comments received from the Commission with respect to the Registration Statement or any amendment thereto and, as promptly as reasonably possible, upon request, provide the Holders true and complete copies of all correspondence from and to the Commission relating to the Registration Statement; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by the Holders thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented. 3.3 Notify the Holders of Registrable Securities to be sold as promptly as reasonably possible and (if requested by any such Person) confirm such notice in writing promptly following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement is proposed to be filed; (B) the Commission notifies the Company that there will be a "review" of the Registration Statement and if the Commission comments in writing on the Registration Statement (the Company shall upon request provide true and complete copies thereof and all written responses thereto to each of the Holders); and (C) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement or Prospectus or for additional information with respect to the Registration Statement; (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (v) of the occurrence of any event or passage of time that makes the financial statements included in the Registration Statement ineligible for inclusion therein or any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or (vi) of the occurrence or existence of a pending corporate development or other material non-public information concerning the Company that, in the reasonable discretion of the Company, makes it appropriate to suspend the availability of the Registration Statement and the related Prospectus. 3.4 Use commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of the Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as reasonably practicable. 3.5 Furnish to each Holder, without charge, at least one conformed copy of the Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission. 3.6 Upon request, promptly deliver to each Holder, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request in connection with resales by the Holder of Registrable Securities. Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to clauses (ii) through (vii) of Section 3(c). 3.7 Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each such Registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction. 3.8 If requested by the Holders, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement and applicable state and federal securities laws, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request. 3.9 Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with clauses (ii) through (vi) of Section 3(c) above to suspend the use of the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3(i) to suspend the availability of a Registration Statement and Prospectus, subject to the payment of liquidated damages pursuant to Section 2(b), for a period not to exceed 60 consecutive days or for multiple periods not to exceed 90 days in the aggregate in any 12 month period. 3.10 Comply with all applicable rules and regulations of the Commission. 3.11 The Company may require each Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and the person thereof that has voting and dispositive control over the Shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company's request, any liquidated damages that are accruing at such time or that result from such delay shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended, until such information is delivered to the Company. ARTICLE IV. REGISTRATION EXPENSES All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the Trading Market on which the Common Stock is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is reasonably requested by the holders of a majority of the Registrable Securities included in the Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders. ARTICLE V. INDEMNIFICATION 5.1 Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, agents and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, pursuant to which Registrable Securities were registered under the Securities Act or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (i) such untrue statements or omissions or alleged untrue statements or omissions are based upon information regarding such Holder furnished in writing to the Company by such Holder for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement. 5.2 Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based upon: (x) such Holder's failure to comply with the prospectus delivery requirements of the Securities Act or (y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company for inclusion in the Registration Statement or such Prospectus or (ii) to the extent that (1) such untrue statements or omissions are based upon information regarding such Holder furnished in writing to the Company by such Holder for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and approved in writing by such Holder for use in the Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the gross proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. 5.3 Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the "Indemnifying Party") in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have prejudiced the Indemnifying Party. An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is not entitled to indemnification hereunder, determined based upon the relative faults of the parties. 5.4 Contribution. If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys' or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, except in the case of fraud by such Holder. The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. ARTICLE VI. MISCELLANEOUS 6.1 Remedies. In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. 6.2 No Piggyback on Registrations. Except as set forth on Schedule 6(b) attached hereto, neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in a Registration Statement other than the Registrable Securities, and the Company shall not after the date hereof enter into any agreement providing any such right to any of its security holders. Except as set forth on Schedule 6(b), no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company. The Company shall not file any other registration statement (other than a registration statement on Form S-8) until after the Effective Date. 6.3 Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. 6.4 Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder's receipt of the copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as it practicable. The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2(b). 6.5 Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the stock option or other employee benefit plans, then the Company shall send to each Holder a written notice of such determination and, if within fifteen days after the date of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered, subject to customary underwriter cutbacks applicable to all holders of registration rights. 6.6 Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and each Holder of the then outstanding Registrable Securities. 6.7 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be made in accordance with the provisions of the Purchase Agreement. 6.8 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under the Purchase Agreement. 6.9 Execution and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof. 6.10 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined with the provisions of the Purchase Agreement. 6.11 Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. 6.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 6.13 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 6.14 Independent Nature of Purchasers' Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose. ************************* IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above. FIRST VIRTUAL COMMUNICATIONS, INC. By: ________________________________ Name: Title: [SIGNATURE PAGE OF HOLDERS FOLLOWS] [PURCHASER'S SIGNATURE PAGE TO FVCX RRA] [PURCHASER] By: ________________________________________ Name: Title: SCHEDULE 6(b) The Company has outstanding obligations to register securities of the Company as follows: (i) the Company is obligated to register 642,921 shares of Common Stock that were issued to Net One Systems Co., Ltd. ("Net One") in early October 2003 pursuant to that certain Equity Investment Agreement dated September 30, 2003 by and between the Company and Net One; (ii) the Company has certain obligations pursuant to that certain Registration Rights Agreement dated as of June 2000, by and between the Company and Vulcan Inc., to register the shares of common stock issuable upon conversion of the Series A Preferred Stock and upon exercise of a warrant to purchase common stock held by Vulcan, Inc.; (iii) the Company has certain obligations pursuant to that certain Registration Rights Agreement dated as of April 12, 2002, by and among the Company and the investors referenced therein, and (iv) the Company is obligated to register any shares that may be issued to Ralph Ungermann, Executive Chairman of the Company's Board of Directors, pursuant to that certain Private Equity Line Financing Agreement dated as of April 14, 2003 between the Company and Mr. Ungermann. The Company intends to include the 642,921 shares issued to Net One pursuant to the Equity Investment Agreement referenced above on the Registration Statement. ANNEX A Plan of Distribution The Selling Stockholders (the "Selling Stockholders") of the common stock ("Common Stock") of First Virtual Communications, Inc. (the "Company") and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on the Nasdaq SmallCap Market or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling shares: - - ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers, which may include long sales or short sales effected after the effective date of the prospectus of which this registration statement is a part; - - block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; - - purchases by a broker-dealer as principal and resale by the broker-dealer for its account; - - an exchange distribution in accordance with the rules of the applicable exchange; - - privately negotiated transactions; - - "at the market" or through market makers or into an existing market for the shares - - broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share; - - a combination of any such methods of sale; - - through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; or - - any other method permitted pursuant to applicable law. The Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), if available, rather than under this prospectus. Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. In connection with the sale of our common stock or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The Selling Stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each of the Selling Stockholders have informed the Company that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the Common Stock. Some of the underwriters or agents and their associates may be customers of, engage in transactions with and perform services for the Company in the ordinary course of business. The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the shares, including all reasonable costs and expenses incurred by us or the Selling Stockholders and all registration and filing fees and legal fees and accounting fees. The Company has agreed to indemnify the Selling Stockholders and certain control and other related persons related to the foregoing persons against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. The Selling Stockholders have agreed to indemnify the Company in certain circumstances, as well as certain related persons, against certain liabilities, including liabilities under the Securities Act. The Selling Stockholders are not obligated to, and there is no assurance that the Selling Stockholders will, sell any or all of the shares being offered by this prospectus. The Company has agreed with the Selling Stockholders to keep the registration statement effective until the shares being offered by this prospectus may be sold without registration or restriction pursuant to Rule 144(k) promulgated under the Securities Act, or, if earlier, until the distribution contemplated in this prospectus has been completed. EXHIBIT B ESCROW AGREEMENT THIS ESCROW AGREEMENT (this "Agreement") is made as of November 6, 2003, by and among First Virtual Communications, Inc., a corporation incorporated under the laws of Delaware (the "Company"), the purchasers signatory hereto (each a "Purchaser" and together the "Purchasers"), and Feldman Weinstein LLP, with an address at 420 Lexington Avenue, New York, New York 10170-0002 (the "Escrow Agent"). CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN SHALL HAVE THE MEANINGS SET FORTH IN THE SECURITIES PURCHASE AGREEMENT REFERRED TO IN THE FIRST RECITAL. W I T N E S S E T H: WHEREAS, the Purchasers will be purchasing from the Company, severally and not jointly with the other Purchasers, up to $12,000,000 of Common Stock and Warrants on the Closing Date as set forth in the Securities Purchase Agreement (the "Purchase Agreement") dated the date hereof between the Purchasers and the Company, which securities will be issued under the terms contained herein and in the Purchase Agreement; and WHEREAS, it is intended that the purchase of the securities be consummated in accordance with the requirements set forth in Regulation D promulgated under the Securities Act of 1933, as amended; and WHEREAS, the Company and the Purchasers have requested that the Escrow Agent hold the Subscription Amounts in escrow until the Escrow Agent has received the Release Notice in the form attached hereto from the Company and each Purchaser; NOW, THEREFORE, in consideration of the covenants and mutual promises contained herein and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged and intending to be legally bound hereby, the parties agree as follows: ARTICLE I. TERMS OF THE ESCROW 1.1 The parties hereby agree to establish an escrow account with the Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase of up to $12,000,000 of Common Stock and Warrants, in the aggregate, as contemplated by the Purchase Agreement. 1.2 Upon the Escrow Agent's receipt of the aggregate Subscription Amounts for the Closing into its master escrow account, together with executed counterparts of this Agreement, the Purchase Agreement and the Registration Rights Agreement, it shall telephonically advise the Company, or the Company's designated attorney or agent, of the amount of funds it has received into its master escrow account. 1.3 Wire transfers to the Escrow Agent shall be made as follows: STERLING NATIONAL BANK 622 3RD AVENUE NEW YORK, NY 10017 Account Name: Feldman Weinstein LLP ABA ROUTING NO: 026007773 ACCT NO: 0814180101 Remark: fvcx/[FUND NAME] (a) The Company, promptly following being advised by the Escrow Agent that the Escrow Agent has received the Subscription Amounts for the Closing along with facsimile copies of counterpart signature pages of the Purchase Agreement, Registration Rights Agreement and this Agreement from each Purchaser, shall deliver to the Escrow Agent the stock certificates and Warrants evidencing the Securities to be issued to each Purchaser at the Closing together with: (i) the Company's executed counterpart of the Purchase Agreement; (ii) the Company's executed counterpart of the Registration Rights Agreement; (iii) the executed opinion of Cooley Godward LLP, in the form of Exhibit C to the Purchase Agreement; (iv) a warrant, issued to Roth Capital Partners, LLC, to purchase up to a number of shares of Common Stock equal to 8% of the Shares purchased at the Closing and an exercise price equal to 120% of the Per Share Purchase Price, and have a term of five years ("ROTH Warrant"); and (v) the Company's original executed counterpart of this Escrow Agreement. (b) In the event that the foregoing items are not in the Escrow Agent's possession within five (5) Trading Days of the Escrow Agent notifying the Company that the Escrow Agent has custody of the Subscription Amount for the Closing, then each Purchaser shall have the right to demand the return of their portion of the Subscription Amount. (c) Once the Escrow Agent receives a Release Notice in the form attached hereto as Exhibit X executed by the Company and each Purchaser, it shall (a) wire 93% of the aggregate Subscription Amounts to the Company's account listed in Section 1.7 below, and (b) wire the remaining 7% of the aggregate Subscription Amounts per the written instructions of Roth Capital Management. Wire transfers to the Company shall be made per the written instructions of the Company to the Escrow Agent. (d) Once the funds (as set forth above) have been sent per the Company's instructions, the Escrow Agent shall then arrange to have the Shares, the Purchase Agreement, the Registration Rights Agreement, the Warrants, Roth Warrant, the Escrow Agreement and the opinion of counsel delivered to the appropriate parties. ARTICLE II. MISCELLANEOUS 2.1 No waiver or any breach of any covenant or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or of any other covenant or provision herein contained. No extension of time for performance of any obligation or act shall be deemed an extension of the time for performance of any other obligation or act. 2.2 All notices or other communications required or permitted hereunder shall be in writing, and shall be sent as set forth in the Purchase Agreement. 2.3 This Escrow Agreement shall be binding upon and shall inure to the benefit of the permitted successors and permitted assigns of the parties hereto. 2.4 This Escrow Agreement is the final expression of, and contains the entire agreement between, the parties with respect to the subject matter hereof and supersedes all prior understandings with respect thereto. This Escrow Agreement may not be modified, changed, supplemented or terminated, nor may any obligations hereunder be waived, except by written instrument signed by the parties to be charged or by a party's agent duly authorized in writing or as otherwise expressly permitted herein. 2.5 Whenever required by the context of this Escrow Agreement, the singular shall include the plural and masculine shall include the feminine. This Escrow Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if all parties had prepared the same. Unless otherwise indicated, all references to Articles are to this Escrow Agreement. 2.6 The parties hereto expressly agree that this Escrow Agreement shall be governed by, interpreted under and construed and enforced in accordance with the laws of the State of New York. Any action to enforce, arising out of, or relating in any way to, any provisions of this Escrow Agreement shall only be brought in a state or Federal court sitting in New York City. 2.7 The Escrow Agent's duties hereunder may be altered, amended, modified or revoked only by a writing signed by the Company, each Purchaser and the Escrow Agent. 2.8 The Escrow Agent shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by the Escrow Agent to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall not be personally liable for any act the Escrow Agent may do or omit to do hereunder as the Escrow Agent while acting in good faith and in the absence of gross negligence, fraud and willful misconduct, and any act done or omitted by the Escrow Agent pursuant to the advice of the Escrow Agent's attorneys-at-law shall be conclusive evidence of such good faith, in the absence of gross negligence, fraud and willful misconduct. 2.9 The Escrow Agent is hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law and is hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case the Escrow Agent obeys or complies with any such order, judgment or decree, the Escrow Agent shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction. 2.10 The Escrow Agent shall not be liable in any respect on account of the identity, authorization or rights of the parties executing or delivering or purporting to execute or deliver the Purchase Agreement or any documents or papers deposited or called for thereunder in the absence of gross negligence, fraud and willful misconduct. 2.11 The Escrow Agent shall be entitled to employ such legal counsel and other experts as the Escrow Agent may deem necessary properly to advise the Escrow Agent in connection with the Escrow Agent's duties hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation; provided that the costs of such compensation shall be borne by the Escrow Agent. The Escrow Agent has acted as legal counsel for Roth Capital Management ("ROTH") and may continue to act as legal counsel for ROTH from time to time, notwithstanding its duties as the Escrow Agent hereunder. The Company and the Purchasers consent to the Escrow Agent in such capacity as legal counsel for ROTH and waive any claim that such representation represents a conflict of interest on the part of the Escrow Agent. The Company understands that ROTH and the Escrow Agent are relying explicitly on the foregoing provision in entering into this Escrow Agreement. 2.12 The Escrow Agent's responsibilities as escrow agent hereunder shall terminate if the Escrow Agent shall resign by giving written notice to the Company and the Purchasers. In the event of any such resignation, the Purchasers and the Company shall appoint a successor Escrow Agent and the Escrow Agent shall deliver to such successor Escrow Agent any escrow funds and other documents held by the Escrow Agent. 2.13 If the Escrow Agent reasonably requires other or further instruments in connection with this Escrow Agreement or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments. 2.14 It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the documents or the escrow funds held by the Escrow Agent hereunder, the Escrow Agent is authorized and directed in the Escrow Agent's sole discretion (1) to retain in the Escrow Agent's possession without liability to anyone all or any part of said documents or the escrow funds until such disputes shall have been settled either by mutual written agreement of the parties concerned, or by a final order, decree or judgment or a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but the Escrow Agent shall be under no duty whatsoever to institute or defend any such proceedings or (2) to deliver the escrow funds and any other property and documents held by the Escrow Agent hereunder to a state or Federal court having competent subject matter jurisdiction and located in the City of New York in accordance with the applicable procedure therefore 2.15 The Company and each Purchaser agree jointly and severally to indemnify and hold harmless the Escrow Agent and its partners, employees, agents and representatives from any and all claims, liabilities, costs or expenses in any way arising from or relating to the duties or performance of the Escrow Agent hereunder or the transactions contemplated hereby or by the Purchase Agreement other than any such claim, liability, cost or expense to the extent the same shall have been determined by final, unappealable judgment of a court of competent jurisdiction to have resulted from the gross negligence, fraud or willful misconduct of the Escrow Agent. ************************ EXHIBIT C IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of date first written above. FIRST VIRTUAL COMMUNICATIONS, INC. By:______________________________________ Name: Title: ESCROW AGENT: FELDMAN WEINSTEIN LLP By:______________________________________ Name: Title: [SIGNATURE PAGE OF HOLDERS FOLLOWS] [PURCHASER'S SIGNATURE PAGE TO RCG ESCROW] [PURCHASER] By: _____________________________________ Name: Title: [PURCHASERS' SIGNATURE PAGE FOLLOWS] EXHIBIT X TO ESCROW AGREEMENT RELEASE NOTICE The UNDERSIGNED, pursuant to the Escrow Agreement, dated as of November __, 2003, among First Virtual Communications, Inc., the Purchasers signatory thereto and Feldman Weinstein LLP, as Escrow Agent (the "Escrow Agreement"; capitalized terms used herein and not defined shall have the meaning ascribed to such terms in the Escrow Agreement), hereby notify the Escrow Agent that each of the conditions precedent to the purchase and sale of the Shares set forth in the Securities Purchase Agreement have been satisfied. The Company and the undersigned Purchaser hereby confirm that all of their respective representations and warranties contained in the Purchase Agreement remain true and correct and authorize the release by the Escrow Agent of the funds and documents to be released at the Closing as described in the Escrow Agreement. This Release Notice shall not be effective until executed by the Company and the Purchasers. This Release Notice may be signed in one or more counterparts, each of which shall be deemed an original. IN WITNESS WHEREOF, the undersigned have caused this Release Notice to be duly executed and delivered as of this __ day of November, 2003. FIRST VIRTUAL COMMUNICATIONS, INC. By: ______________________________ Name: Title: [SIGNATURE PAGE OF HOLDERS FOLLOWS] EXHIBIT C FORM OF WARRANT ARTICLE I. TITLE TO WARRANT Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company. ARTICLE II. AUTHORIZATION OF SHARES The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). ARTICLE III. EXERCISE OF WARRANT (a) Subject to Section 3(c) below, exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, within 5 Trading Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have surrendered this Warrant to the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased (and all taxes required to be paid by the Holder, if any, pursuant to Section 5 prior to the issuance of such shares) by wire transfer or cashier's check drawn on a United States bank. Certificates for shares purchased hereunder shall be delivered to the Holder within 3 Trading Days from the delivery to the Company of the Notice of Exercise Form by facsimile copy, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above ("Warrant Share Delivery Date). This Warrant shall be deemed to have been exercised on the later of the date the Notice of Exercise is delivered to the Company by facsimile copy, the date the Exercise Price (and all taxes required to be paid by the Holder, if any, pursuant to Section 5 prior to the issuance of such shares) is received by the Company, and the date the Warrant is surrendered to the Company (or evidence of loss, theft or destruction thereof and security or indemnity reasonably satisfactory to the Company) (the later date, the "Exercise Date"). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the close of business on the Exercise Date. If the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the third Trading Day following the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise. In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to an exercise by the seventh Trading Day after the Warrant Share Delivery Date, and if after such day the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a "Buy-In"), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. (b) If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. (c) [AT CLOSING HOLDER MAY ELECT, BY NOTATION ON ITS SIGNATURE PAGE, TO EXCLUDE THIS PROVISION FROM ITS WARRANT] The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder's affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. To the extent that the limitation contained in this Section 3(c) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder) and of which a portion of this Warrant is exercisable shall be in the sole discretion of such Holder, and the submission of a Notice of Exercise shall be deemed to be such Holder's determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. For purposes of this Section 3(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company's most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company's transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 3(c) may be waived by the Holder upon, at the election of the Holder, not less than 61 days' prior notice to the Company, and the provisions of this Section 3(c) shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). (d) If at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a "cashless exercise" in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where: (A) = the Closing Price on the Trading Day immediately preceding the date of such election; (B) = the Exercise Price of the Warrants, as adjusted; and (X) = the number of Warrant Shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant. (e) Subject to the provisions of this Section 3, if after the first anniversary of the Initial Exercise Date each VWAP (as defined below) for any twenty consecutive Trading Days (the "Measurement Price") (such period commencing only after such anniversary date) exceeds the then Exercise Price (as adjusted under this Warrant) by 200% (the "Threshold Price"), then the Company may, within three Trading Days of such period, call for cancellation of all or any portion of this Warrant for which a Notice of Exercise has not yet been delivered (such right, a "Call"). To exercise this right, the Company must deliver to the Holder an irrevocable written notice (a "Call Notice"), indicating therein the portion of the unexercised portion of this Warrant to which such notice applies. If the conditions set forth below for such Call are satisfied from the period from the date of the Call Notice through and including the Call Date (as defined below), then any portion of this Warrant subject to such Call Notice for which a Notice of Exercise shall not have been received by the Company from and after the date of the Call Notice will be cancelled at 6:30 p.m. (New York City time) on the 10th Trading Day after the date of the Call Notice is received by the Holder (such date, the "Call Date"). Any unexercised portion of this Warrant to which the Call Notice does not pertain, if any, will be unaffected by such Call Notice. In furtherance thereof, the Company covenants and agrees that it will honor all Notices of Exercise with respect to Warrant Shares subject to a Call Notice that are tendered from the time of delivery of the Call Notice on the Call Date. The parties agree that any Notice of Exercise delivered following a Call Notice shall first reduce to zero the number of Warrant Shares subject to such Call Notice prior to reducing the remaining Warrant Shares available for purchase under this Warrant. For example, if (x) this Warrant then permits the Holder to acquire 100 Warrant Shares, (y) a Call Notice pertains to 75 Warrant Shares, and (z) prior to the Call Date the Holder tenders a Notice of Exercise in respect of 50 Warrant Shares, then (1) on the Call Date the right under this Warrant to acquire 25 Warrant Shares will be automatically cancelled, (2) the Company, in the time and manner required under this Warrant, will have issued and delivered (or be required to issue and deliver) to the Holder 50 Warrant Shares in respect of the exercises following receipt of the Call Notice, and (3) the Holder may, until the Termination Date, exercise this Warrant for cash by payment of the aggregate Exercise Price then in effect for 25 Warrant Shares (subject to adjustment as herein provided and subject to subsequent Call Notices and the other terms and conditions of this Warrant). Subject again to the provisions of this Section 3, the Company may deliver subsequent Call Notices for any portion of this Warrant for which the Holder shall not have delivered a Notice of Exercise. Notwithstanding anything to the contrary set forth in this Warrant, the Company may not require the cancellation of this Warrant pursuant to this Section 3(d) (and any Call Notice will be void), unless, from the beginning of the 20 consecutive Trading Days used to determine whether the Common Stock has achieved the Threshold Price through the Call Date, (i) the Company shall have honored in accordance with the terms of this Warrant all Notices of Exercise delivered prior to the Call Date, (ii) the Registration Statement shall be effective as to all Warrant Shares and the prospectus thereunder available for use by the Holder for the resale of all such Warrant Shares (and the Company is not aware of any event or occurrence that would make it appropriate for the Company to suspend the effectiveness of the Registration Statement), (iii) the Warrant Shares shall be listed or quoted for trading on the Principal Market and trading in the Common Stock shall not have been suspended (and the Company is not then aware of any event or occurrence that would required trading to be suspended) and (iv) such issuance would be permitted in full without violating the limitations set forth in Section 3(c). "VWAP" means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based on a trading day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b) if the Common Stock is not then listed or quoted on a Trading Market and if prices for the Common Stock are then quoted on the OTC Bulletin Board, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted on the OTC Bulletin Board and if prices for the Common Stock are then reported in the "Pink Sheets" published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers and reasonably acceptable to the Company. ARTICLE IV. NO FRACTIONAL SHARES OR SCRIP No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price. ARTICLE V. CHARGES, TAXES AND EXPENSES Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. ARTICLE VI. CLOSING OF BOOKS The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof. ARTICLE VII. TRANSFER, DIVISION AND COMBINATION. (a) Subject to compliance with any applicable securities laws and the conditions set forth in Sections 1 and 7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part (provided that if the Warrant is being transferred in part, the portion of this Warrant being transferred shall represents the right to purchase at least 100,000 Warrant Shares (or such lesser amount comprising the entire number of Warrant Shares then underlying this Warrant and subject to adjustment as provided herein), upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and compliance with the conditions referenced in the preceding sentence, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued. (b) Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, (i) this Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney, and (ii) the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. (c) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7. (d) The Company agrees to maintain, at its aforesaid office or at the offices of a designated agent, books for the registration and the registration of transfer of the Warrants. (e) At the time of the surrender of this Warrant in connection with any transfer of this Warrant, the Company will require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions and reasonably acceptable to the Company) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company, (iii) that the transferee be an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act and (iv) such other documents as may be reasonably requested by the Company to give effect to the transfer and comply with applicable laws. ARTICLE VIII. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the delivery of the Exercise Notice, the surrender of this Warrant, the payment of the aggregate Exercise Price to the Company, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the Exercise Date as determined in accordance with Section 3(a). ARTICLE IX. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or cause to be delivered a stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate. ARTICLE X. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday. ARTICLE XI. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES; STOCK SPLITS, ETC. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the events described in the next sentence. In the event the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in prior to the date upon which such event described in clauses (i) through (iv) of this Section 3(a) shall become effective. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder, the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security equal to (x) the result obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment divided by (y) the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event. ARTICLE XII. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR DISPOSITION OF ASSETS In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all or substantially all of its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("Other Property"), to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, "common stock of the successor or acquiring corporation" shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets. ARTICLE XIII. VOLUNTARY ADJUSTMENT BY THE COMPANY The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company. ARTICLE XIV. NOTICE OF ADJUSTMENT Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made. ARTICLE XV. NOTICE OF CORPORATE ACTION If at any time: (a) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or (b) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or, (c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of such cases, the Company shall give to Holder (i) at least 10 days' prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify, to the extent known by the Company, (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d). ARTICLE XVI. AUTHORIZED SHARES The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. ARTICLE XVII. MISCELLANEOUS 17.1 Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement. 17.2 Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws. 17.3 Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder's rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder as determined by a court of law, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. 17.4 Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement. 17.5 Limitation of Liability. Subject to Section 3(d), no provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. 17.6 Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. 17.7 Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares. 17.8 Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder. 17.9 Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant. 17.10 Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. ******************** IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: November __, 2003 FIRST VIRTUAL COMMUNICATIONS, INC. By: ___________________________________ Name: Title: NOTICE OF EXERCISE To: First Virtual Communications, Inc. 1. The undersigned hereby elects to purchase ________ Warrant Shares of First Virtual Communications, Inc. pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.| 2. Payment shall take the form of (check applicable box): [ ] in lawful money of the United States; or [ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 3(d), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 3(d). 3. Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below: ____________________________________ The Warrant Shares shall be delivered to the following: ____________________________________ ____________________________________ ____________________________________ (4) Accredited Investor. The undersigned is an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933, as amended. [PURCHASER] By: ______________________________ Name: Title: Dated: ________________________ ASSIGNMENT FORM (To assign the foregoing warrant, execute this form and supply required information. Do not use this form to exercise the warrant.) FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to _______________________________________________ whose address is _______________________________________________________________. _______________________________________________________________ Dated: ______________, _______ Holder's Signature: _____________________________ Holder's Address: _____________________________ _____________________________ Signature Guaranteed:__________________________________________ NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant. EXHIBIT D FORM OF OPINION November 12, 2003 The Purchasers Named on Exhibit A Hereto RE: FIRST VIRTUAL COMMUNICATIONS, INC. Ladies and Gentlemen: We have acted as counsel for First Virtual Communications, Inc., a Delaware corporation (the "Company") in connection with the negotiation of the Securities Purchase Agreement dated as of November 7, 2003, by and between you (the "PURCHASERS") and the Company (the "PURCHASE AGREEMENT"), which provides for the issuance and sale by the Company of Common Stock and warrants to purchase Common Stock (the "WARRANTS") on the Closing Date, and the Escrow Agreement (the "ESCROW AGREEMENT") and the Registration Rights Agreement between the Purchasers and the Company, each dated as of November 7, 2003 (the "REGISTRATION RIGHTS AGREEMENT") (collectively with the Purchase Agreement, the Escrow Agreement, the Warrants and the Registration Rights Agreement, the "AGREEMENTS"). This opinion is furnished to you pursuant to Section 2.2(a)(vi) of the Purchase Agreement. All terms used herein have the meanings defined for them in the Purchase Agreement unless otherwise defined herein. In connection with this opinion, we have examined and relied upon the representations and warranties as to factual matters contained in and made pursuant to the Purchase Agreement by the various parties and originals or copies certified to our satisfaction, of such records, documents, certificates, opinions, memoranda and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion expressed below. Where we render an opinion "to the best of our knowledge" or concerning an item "known to us" or our opinion otherwise refers to our knowledge, it is based solely upon (i) an inquiry of attorneys within this firm who perform legal services for the Company, (ii) receipt of a certificate executed by an officer of the Company covering such matters (the "CERTIFICATE"), and (iii) such other investigation, if any, that we specifically set forth herein. In rendering this opinion, we have assumed: the genuineness and authenticity of all signatures on original documents; the authenticity of all documents submitted to us as originals; the conformity to originals of all documents submitted to us as copies; the accuracy, completeness and authenticity of certificates of public officials; and the due authorization, execution and delivery of all documents (except the due authorization, execution and delivery by the Company of the Agreements), where authorization, execution and delivery are prerequisites to the effectiveness of such documents. We have also assumed: that all individuals executing and delivering documents had the legal capacity to so execute and deliver; that you have received all documents you were to receive under the Agreements; that the Agreements are obligations binding upon you; if you are a corporation or other entity, that you have filed any required California franchise or income tax returns and have paid any required California franchise or income taxes; that there are no extrinsic agreements or understandings among the parties to the Agreements that would modify or interpret the terms of the Agreements or the respective rights or obligations of the parties thereunder; and that there are no extrinsic agreements or understandings among the parties to the Material Agreements (as defined below) that would modify or interpret the terms of any Material Agreement or the respective rights or obligations of the parties thereunder. Our opinion is expressed only with respect to the federal laws of the United States of America, the laws of the State of California and the General Corporation Law of the State of Delaware. We note that the parties to the Escrow Agreement have designated the laws of the State of New York as the laws governing the Escrow Agreement. Accordingly, with your permission, our opinions in paragraphs 2 and 3 below as to the validity, binding effect and enforceability of the Escrow Agreement are premised upon the result that would be obtained if a California court were to apply the internal laws of the State of California (notwithstanding the designation of the laws of the State of New York) to the interpretation and enforcement of the Escrow Agreement. In addition, we express no opinion on the enforceability of the parties' choice of law. We express no opinion as to whether the laws of any particular jurisdiction apply, and no opinion to the extent that the laws of any jurisdiction other than those identified above are applicable to the subject matter hereof. We are not rendering any opinion as to compliance with any antitrust law, rule or regulation or any antifraud law, rule or regulation relating to securities, or to the sale or issuance thereof. Our opinion in paragraph 1 below as to the good standing of the Company as a domestic corporation in the state of Delaware is based solely upon our review of certifications we received from the Secretary of State of the State of Delaware that the Company is in good standing in such state. We have made no further investigation. With regard to our opinions in paragraphs 2 and 3 below, we express no opinion as to whether the performance by the Company of its indemnity and contribution obligations under the Purchase Agreement and the Registration Rights Agreement complies with any applicable federal securities laws or the laws of the states of California or Delaware relating to indemnification and contribution. With regard to our opinion in paragraph 3 below with respect to material defaults under any Material Agreement, we have relied solely upon (i) representations of an officer of the Company contained in the Certificate, and (iii) an examination of the Material Agreements. We have made no further investigation. With regard to our opinion in paragraph 4 below concerning preemptive or similar rights with respect to the issuance and purchase of the Shares and Warrants, we have relied solely upon (i) representations of officers of the Company contained in the Certificate, and (ii) an examination of the Company's Certificate of Incorporation and Bylaws. We have made no further investigation. In addition, with regard to our opinion in paragraph 4 below, we have assumed full payment by the Purchasers of the purchase price of the Shares, Warrants and Warrant Shares. Our opinions in paragraph 6 below with respect to the outstanding capital stock of the Company are based solely upon our review a certificate of the Company's transfer agent. We have made no further investigation. On the basis of the foregoing, in reliance thereon and with the foregoing qualifications, we are of the opinion that: 1. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business and to own, lease and operate its properties and assets as described in the Company's SEC Reports. 2. The Company has the requisite corporate power and authority to enter into and perform its obligations under the Agreements and to issue the Shares, the Warrants and the Warrant Shares. Each of the Agreements has been duly executed and delivered by the Company and each of the Agreements constitutes valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, except as rights to indemnity under Section 4.8 of the Purchase Agreement and Section 5 of the Registration Rights Agreement may be limited by applicable laws and except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws affecting creditors' rights, and subject to general equity principles and to limitations on availability of equitable relief, including specific performance. 3. The execution and delivery of the Agreements by the Company and the issuance of the Shares and the Warrants, do not, and if issued to the Purchasers on the date hereof, the issuance of the Warrant Shares would not, (i) result in a violation of the Company's Certificate of Incorporation or Bylaws; (ii) constitute a material default under any agreement to which the Company is bound and which agreement is included as an exhibit filed pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K to the SEC Reports (the "MATERIAL AGREEMENTS"), or (iii) result in a violation of any federal or state law, rule or regulation applicable to the Company, except for such violations as would not, individually or in the aggregate, have a Material Adverse Effect. 4. Assuming (a) the accuracy of the representations and warranties of the Purchasers and the Company contained in the Purchase Agreement, and (b) the due performance by each of the Company and the Purchasers of the covenants and the agreements set forth in the Purchase Agreement, respectively, it being understood that this opinion is not expressed as to any subsequent resale of any Shares and Warrants, as of the date hereof, the issuance of the Shares and the Warrants in accordance with the Purchase Agreement are exempt from registration under the Securities Act and the issuance of the Warrant Shares, if issued to the Purchasers on the date hereof, would be exempt from registration under the Securities Act. When so issued, the Shares and the Warrant Shares will be duly and validly issued, fully paid and nonassessable, and free of any preemptive or similar rights contained in the Company's Certificate of Incorporation or Bylaws. 5. We have not been engaged to devote substantive attention to any claims, actions, suits, proceedings or investigations that are pending against the Company or its properties, or against any officer or director of the Company in his or her capacity as such, that are not disclosed in the SEC Reports. To our knowledge, except as set forth in the SEC Reports, the Company is not a party to or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality that would prohibit the issuance of the Shares and the Warrants pursuant to the Purchase Agreement. 6. Immediately prior to the issuance of the Shares, the authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, $.001 par value, of which 8,778,903 shares are issued and outstanding and 5,000,000 shares of Preferred Stock, .001 par value, of which 27,437 shares are designed as Series A Convertible Preferred Stock, all of which are issued and outstanding. This opinion is intended solely for your benefit and is not to be made available to or be relied upon by any other person, firm or entity without our prior written consent. Very truly yours, COOLEY GODWARD LLP EX-10.58 13 f94230exv10w58.txt EXHIBIT 10.58 Exhibit 10.58 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is made and entered into as of November 7, 2003, by and among First Virtual Communications, Inc., a Delaware corporation (the "Company"), and the purchasers named on the Schedule of Purchasers attached hereto as Exhibit A (each such purchaser, a "Purchaser" and collectively, the "Purchasers"). This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof among the Company and the Purchasers (the "Purchase Agreement"). The Company and the Purchasers hereby agree as follows: 1. Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings: "Advice" shall have the meaning set forth in Section 6(d). "Effectiveness Date" means, with respect to the Registration Statement required to be filed hereunder, the earlier of (a) the 90th calendar day following the date of the Filing Date, and (b) the fifth Trading Day following the date on which the Company is notified by the Commission that the Registration Statement will not be reviewed or is no longer subject to further review and comments. "Effectiveness Period" shall have the meaning set forth in Section 2(a). "Event" shall have the meaning set fort in Section 2(b). "Event Date" shall have the meaning set forth in Section 2(b). "Filing Date" means, with respect to the Registration Statement required to be filed hereunder, the 30th calendar day following the Closing Date. "Holder" or "Holders" means the holder or holders, as the case may be, from time to time of Registrable Securities. "Indemnified Party" shall have the meaning set forth in Section 5(c). "Indemnifying Party" shall have the meaning set forth in Section 5(c). "Losses" shall have the meaning set forth in Section 5(a). "Proceeding" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened in writing. 1 "Prospectus" means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference in such Prospectus. "Registrable Securities" means all of the Shares and the Warrant Shares, together with any shares of Common Stock issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that a security ceases to be a Registrable Security when it: (i) has been registered pursuant to an effective registration statement under the Securities Act and sold in a manner contemplated by the Registration Statement, or (ii) has been transferred in compliance with Rule 144 under the Securities Act (or any successor provision thereto) or is transferable pursuant to paragraph (k) of such Rule 144 (or any successor provision thereto). "Registration Statement" means the registration statements required to be filed hereunder, including (in each case) the Prospectus, amendments and supplements to the registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference in the registration statement. "Rule 415" means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. "Rule 424" means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. 2. Registration. (a) On or prior to the Filing Date, the Company shall prepare and file with the Commission the Registration Statement covering the resale of all of the Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement required hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case the Registration shall be on another appropriate form in accordance herewith). The Registration Statement required hereunder shall contain (except if otherwise directed by the Holders) substantially the "Plan of Distribution" attached hereto as Annex A. Subject to the terms of this Agreement, the Company shall use commercially reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event not later than the Effectiveness Date, and shall use commercially reasonable efforts to keep the Registration Statement continuously effective, subject to Sections 3(c), 3(i) and 6(d) below, under the Securities Act until the date when all Registrable Securities covered by the Registration Statement have been sold or may 2 be sold without volume restrictions pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company's transfer agent and the affected Holders (the "Effectiveness Period"). (b) If: (i) a Registration Statement is not filed on or prior to the Filing Date (if the Company files a Registration Statement without complying with Section 3(a), the Company shall not be deemed to have satisfied this clause (i)), or (ii) the Company fails to file with the Commission a request for acceleration in accordance with Rule 461 promulgated under the Securities Act, within five Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that a Registration Statement will not be "reviewed," or is not subject to further review (unless the Company provides notice to the Holders of a circumstance contemplated by Section 3(c)(vi) that would make it appropriate to suspend the filing of the Registration Statement and the related Prospectus for a reasonable period of time not to exceed 10 Trading Days), or (iii) prior to the date when such Registration Statement is first declared effective by the Commission, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such Registration Statement within 15 Trading Days after the receipt of comments by or notice from the Commission that such amendment is required in order for a Registration Statement to be declared effective, or (iv) a Registration Statement filed or required to be filed hereunder is not declared effective by the Commission on or before the Effectiveness Date, or (v) after a Registration Statement is first declared effective by the Commission, it ceases for any reason to remain continuously effective as to all Registrable Securities for which it is required to be effective, or the Holders are not permitted to utilize the Prospectus therein to resell such Registrable Securities, for in any such case 15 consecutive days but no more than an aggregate of 30 days during any 12 month period (which need not be consecutive Trading Days)(any such failure or breach being referred to as an "Event," and for purposes of clause (i) or (iv) the date on which such Event occurs, or for purposes of clause (ii) the date on which such five Trading Day period (or, if there is a delay in filing as a result of a circumstance contemplated by Section 3(c)(vi), 10 Trading Day period) is exceeded, or for purposes of clause (iii) the date which such 15 Trading Day period is exceeded, or for purposes of clause (v) the date on which such 15 or 30 day period, as applicable, is exceeded being referred to as "Event Date"), then in addition to any other rights the Holders may have hereunder or under applicable law: (x) on each such Event Date the Company shall pay to each Holder an amount in cash, as liquidated damages and not as a penalty, equal to 1.5% of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for any Registrable Securities then held by such Holder; and (y) on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as liquidated damages and not as a penalty, equal to 1.5% of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for any Registrable Securities then held by such Holder; provided, however, that under no circumstances shall the Company be required to pay hereunder to any Holder during any one month period in excess of an aggregate of 1.5% of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for any Registrable Securities then held by such Holder. If the Company fails to pay any liquidated damages pursuant to this Section 2(b) in full within 10 Trading Days after the date payable, the Company will pay interest thereon at a rate of 15% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The liquidated damages pursuant to the terms 3 hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an Event. 3. Registration Procedures In connection with the Company's registration obligations hereunder, the Company shall: (a) Not less than five Trading Days prior to the filing of the Registration Statement or two days prior to the filing of any related Prospectus or any amendment or supplement thereto, the Company shall, (i) furnish to the Holders copies of all such documents proposed to be filed (including documents incorporated or deemed incorporated by reference to the extent requested by such Person) which documents will be subject to the review of such Holders, and (ii) cause its officers and directors, counsel and independent certified public accountants to respond to such reasonable inquiries as shall be necessary, in the reasonable opinion of respective counsel to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file the Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities then held by all Holders shall reasonably object in good faith, provided that the Company is notified of such objection in writing prior to the date 2 Trading Days after the Holders have been so furnished copies of such documents proposed to be filed. If the Company fails to file a Registration Statement or any such prospectus or any amendments or supplements thereto so as to give rise to an Event contemplated by Section 2(b) as a result of the Holders objection to the filing of the Registration Statement, the Company shall not be required to pay any liquidated damages contemplated by Section 2(b) with respect to such Event for any delay resulting from the Holder's objection to such filing.; provided, however, if it is later determined that such objections were reasonable and in good faith, the Company shall be required to pay such liquidated damages contemplated by Section 2(b) with respect to such Event. (b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to the Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii) reasonable efforts to respond as promptly as reasonably practicable to any comments received from the Commission with respect to the Registration Statement or any amendment thereto and, as promptly as reasonably possible, upon request, provide the Holders true and complete copies of all correspondence from and to the Commission relating to the Registration Statement; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by the Holders thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented. (c) Notify the Holders of Registrable Securities to be sold as promptly as reasonably possible and (if requested by any such Person) confirm such notice in writing promptly following the day (i)(A) when a Prospectus or any Prospectus supplement or 4 post-effective amendment to the Registration Statement is proposed to be filed; (B) the Commission notifies the Company that there will be a "review" of the Registration Statement and if the Commission comments in writing on the Registration Statement (the Company shall upon request provide true and complete copies thereof and all written responses thereto to each of the Holders); and (C) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement or Prospectus or for additional information with respect to the Registration Statement; (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (v) of the occurrence of any event or passage of time that makes the financial statements included in the Registration Statement ineligible for inclusion therein or any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or (vi) of the occurrence or existence of a pending corporate development or other material non-public information concerning the Company that, in the reasonable discretion of the Company, makes it appropriate to suspend the availability of the Registration Statement and the related Prospectus. (d) Use commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of the Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as reasonably practicable. (e) Furnish to each Holder, without charge, at least one conformed copy of the Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission. (f) Upon request, promptly deliver to each Holder, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request in connection with resales by the Holder of Registrable Securities. Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to clauses (ii) through (vii) of Section 3(c). 5 (g) Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each such Registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction. (h) If requested by the Holders, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement and applicable state and federal securities laws, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request. (i) Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with clauses (ii) through (vi) of Section 3(c) above to suspend the use of the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3(i) to suspend the availability of a Registration Statement and Prospectus, subject to the payment of liquidated damages pursuant to Section 2(b), for a period not to exceed 60 consecutive days or for multiple periods not to exceed 90 days in the aggregate in any 12 month period. (j) Comply with all applicable rules and regulations of the Commission. (k) The Company may require each Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and the person thereof that has voting and dispositive control over the Shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company's request, any liquidated damages that are accruing at such time or that result from such delay shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended, until such information is delivered to the Company. 6 4. Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the Trading Market on which the Common Stock is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is reasonably requested by the holders of a majority of the Registrable Securities included in the Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders. 5. Indemnification (a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, agents and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, pursuant to which Registrable Securities were registered under the Securities Act or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (i) such untrue statements or omissions or alleged untrue statements or omissions are based upon information regarding such Holder furnished in writing to the Company by such Holder for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice 7 contemplated in Section 6(d). The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement. (b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based upon: (x) such Holder's failure to comply with the prospectus delivery requirements of the Securities Act or (y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company for inclusion in the Registration Statement or such Prospectus or (ii) to the extent that (1) such untrue statements or omissions are based upon information regarding such Holder furnished in writing to the Company by such Holder for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and approved in writing by such Holder for use in the Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the gross proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the "Indemnifying Party") in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have prejudiced the Indemnifying Party. An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ 8 counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is not entitled to indemnification hereunder, determined based upon the relative faults of the parties. (d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys' or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount 9 by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, except in the case of fraud by such Holder. The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. 6. Miscellaneous (a) Remedies. In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. (b) No Piggyback on Registrations. Except as set forth on Schedule 6(b) attached hereto, neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in a Registration Statement other than the Registrable Securities, and the Company shall not after the date hereof enter into any agreement providing any such right to any of its security holders. Except as set forth on Schedule 6(b), no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company. The Company shall not file any other registration statement (other than a registration statement on Form S-8) until after the Effective Date. (c) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. (d) Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder's receipt of the copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as it practicable. The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2(b). 10 (e) Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the stock option or other employee benefit plans, then the Company shall send to each Holder a written notice of such determination and, if within fifteen days after the date of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered, subject to customary underwriter cutbacks applicable to all holders of registration rights. (f) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and each Holder of the then outstanding Registrable Securities. (g) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be made in accordance with the provisions of the Purchase Agreement. (h) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under the Purchase Agreement. (i) Execution and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof. (j) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined with the provisions of the Purchase Agreement. (k) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. (l) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, 11 provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. (m) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (n) Independent Nature of Purchasers' Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose. ************************* 12 EXHIBIT A IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above. FIRST VIRTUAL COMMUNICATIONS, INC. By: /s/ Truman Cole _______________________________ Name: Title: [SIGNATURE PAGE OF HOLDERS FOLLOWS] 13 [PURCHASER'S SIGNATURE PAGE TO FVCX RRA] [PURCHASER] By: _____________________________________ Name: Title: [PURCHASERS' SIGNATURE PAGE FOLLOWS] 14 [PURCHASER'S SIGNATURE PAGE TO FVCX RRA] [PURCHASER] By:_____________________________________ Name: Title: 15 SCHEDULE 6(b) The Company has outstanding obligations to register securities of the Company as follows: (i) the Company is obligated to register 642,921 shares of Common Stock that were issued to Net One Systems Co., Ltd. ("Net One") in early October 2003 pursuant to that certain Equity Investment Agreement dated September 30, 2003 by and between the Company and Net One; (ii) the Company has certain obligations pursuant to that certain Registration Rights Agreement dated as of June 2000, by and between the Company and Vulcan Inc., to register the shares of common stock issuable upon conversion of the Series A Preferred Stock and upon exercise of a warrant to purchase common stock held by Vulcan, Inc.; (iii) the Company has certain obligations pursuant to that certain Registration Rights Agreement dated as of April 12, 2002, by and among the Company and the investors referenced therein, and (iv) the Company is obligated to register any shares that may be issued to Ralph Ungermann, Executive Chairman of the Company's Board of Directors, pursuant to that certain Private Equity Line Financing Agreement dated as of April 14, 2003 between the Company and Mr. Ungermann. The Company intends to include the 642,921 shares issued to Net One pursuant to the Equity Investment Agreement referenced above on the Registration Statement. 16 ANNEX A Plan of Distribution The Selling Stockholders (the "Selling Stockholders") of the common stock ("Common Stock") of First Virtual Communications, Inc. (the "Company") and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on the Nasdaq SmallCap Market or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling shares: - ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers, which may include long sales or short sales effected after the effective date of the prospectus of which this registration statement is a part; - block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; - purchases by a broker-dealer as principal and resale by the broker-dealer for its account; - an exchange distribution in accordance with the rules of the applicable exchange; - privately negotiated transactions; - "at the market" or through market makers or into an existing market for the shares - broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share; - a combination of any such methods of sale; - through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; or - any other method permitted pursuant to applicable law. The Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), if available, rather than under this prospectus. Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. In connection with the sale of our common stock or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. 17 The Selling Stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each of the Selling Stockholders have informed the Company that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the Common Stock. Some of the underwriters or agents and their associates may be customers of, engage in transactions with and perform services for the Company in the ordinary course of business. The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the shares, including all reasonable costs and expenses incurred by us or the Selling Stockholders and all registration and filing fees and legal fees and accounting fees. The Company has agreed to indemnify the Selling Stockholders and certain control and other related persons related to the foregoing persons against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. The Selling Stockholders have agreed to indemnify the Company in certain circumstances, as well as certain related persons, against certain liabilities, including liabilities under the Securities Act. The Selling Stockholders are not obligated to, and there is no assurance that the Selling Stockholders will, sell any or all of the shares being offered by this prospectus. The Company has agreed with the Selling Stockholders to keep the registration statement effective until the shares being offered by this prospectus may be sold without registration or restriction pursuant to Rule 144(k) promulgated under the Securities Act, or, if earlier, until the distribution contemplated in this prospectus has been completed. 18 EXHIBIT A PURCHASERS

NAME OF PURCHASER NUMBER OF SHARES NUMBER OF WARRANTS - -------------------------------------------------------------------------------------- LAGUNITAS PARTNERS LP 837,989 418,994 - --------------------------------------------------------------------------------- J. Patterson McBaine 111,732 55,806 - --------------------------------------------------------------------------------- Jon D. Gruber & Linda W. Gruber 111,732 55,866 - --------------------------------------------------------------------------------- Gruber & McBaine International 279,330 139,665 - --------------------------------------------------------------------------------- Special Situations Fund III, L.P. 553,771 276,885 - --------------------------------------------------------------------------------- Special Situations Cayman Fund L.P. 178,911 89,455 - --------------------------------------------------------------------------------- Special Situations Technology Fund L.P. 17,039 8,519 - --------------------------------------------------------------------------------- Special Situations Technology Fund II L.P. 102,235 51,117 - --------------------------------------------------------------------------------- MicroCapital Fund L.P. 391,061 195,530 - --------------------------------------------------------------------------------- MicroCapital Fund Ltd. 167,598 83,799 - --------------------------------------------------------------------------------- Bonanza Fund 139,655 69,832 - --------------------------------------------------------------------------------- Firelake Strategic Technology Fund, L.P. 837,989 418,994 - --------------------------------------------------------------------------------- Agile Partners, LP 279,3320 139,665 - --------------------------------------------------------------------------------- Behavioral Financial Fund Ltd. 782,123 391,061 - --------------------------------------------------------------------------------- Jurika Family Trust 167,598 83,799 - --------------------------------------------------------------------------------- JMK Investment Partners, L.P. 167,598 83,799 - --------------------------------------------------------------------------------- Encinal Crossover Fund 83,799 41,899 - --------------------------------------------------------------------------------- Neal I. Goldman IRA Rollover 200,000 100,000 - --------------------------------------------------------------------------------- Palisades Master Fund L.P. 279,330 139,665 - ---------------------------------------------------------------------------------

19 - --------------------------------------------------------------------------------- Gordon J. Roth 11,174 5,587 - --------------------------------------------------------------------------------- Joseph Paul Schimmelpfennig 11,174 5,587 - --------------------------------------------------------------------------------- John J. Weber 11,174 5,587 - --------------------------------------------------------------------------------- Jeffrey M. Ng 8,380 4,190 - --------------------------------------------------------------------------------- Louis J. Ellis 1,676 838 - --------------------------------------------------------------------------------- 20 EX-31.1 14 f94230exv31w1.txt EXHIBIT 31.1 EXHIBIT 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Jonathan Morgan, certify that: 1. I have reviewed this quarterly report on Form 10-Q of First Virtual Communications, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data and information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated: November 14, 2003 /s/ Jonathan Morgan ------------------------------------- Jonathan Morgan President and Chief Executive Officer EX-31.2 15 f94230exv31w2.txt EXHIBIT 31.2 EXHIBIT 31.2 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Truman Cole, certify that: 1. I have reviewed this quarterly report on Form 10-Q of First Virtual Communications, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data and information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated: November 14, 2003 /s/ Truman Cole ----------------------- Truman Cole Chief Financial Officer EX-32.1 16 f94230exv32w1.txt EXHIBIT 32.1 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of First Virtual Communications, Inc. (the Company) on Form 10-Q for the period ending September 30, 2003, as filed with the Securities and Exchange Commission on or about the date hereof (the "Report"), I, Jonathan Morgan, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge, that: (1) the Report fully complies with the requirements of Section 13(a) and Section 15(d) of the Securities Exchange Act of 1934, as amended; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the end of the period covered by the Report and results of operations of the Company for the period covered by the Report. Date: November 14, 2003 /s/ Jonathan Morgan ------------------------------------- Jonathan Morgan President and Chief Executive Officer This certification shall not be deemed "filed" for purposes of Section 18 of the Securities and Exchange Act of 1934, or the Exchange Act, or otherwise subject to the liability of Section 18 of the Exchange Act. Such certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates it by reference. EX-32.2 17 f94230exv32w2.txt EXHIBIT 32.2 EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of First Virtual Communications, Inc. (the Company) on Form 10-Q for the period ending September 30, 2003, as filed with the Securities and Exchange Commission on or about the date hereof (the "Report"), I, Truman Cole, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge, that: (1) the Report fully complies with the requirements of Section 13(a) and Section 15(d) of the Securities Exchange Act of 1934, as amended; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the end of the period covered by the Report and results of operations of the Company for the period covered by the Report. Date: November 14, 2003 /s/ Truman Cole ----------------------------- Truman Cole Chief Financial Officer This certification shall not be deemed "filed" for purposes of Section 18 of the Securities and Exchange Act of 1934, or the Exchange Act, or otherwise subject to the liability of Section 18 of the Exchange Act. Such certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates it by reference. -----END PRIVACY-ENHANCED MESSAGE-----

EX-4.11

                                                                    EXHIBIT 4.11



         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT. THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS.

THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON SEPTEMBER 29,
2008 (THE "EXPIRATION DATE").

No. CSW-20


                        FIRST VIRTUAL COMMUNICATIONS, INC.

                      WARRANT TO PURCHASE 200,000 SHARES OF
                     COMMON STOCK, PAR VALUE $0.001 PER SHARE

                                                              SEPTEMBER 30, 2003

                          VOID AFTER SEPTEMBER 29, 2008

         FOR VALUE RECEIVED, Richard T. Peery Separate Property Trust
("Warrantholder"), is entitled to purchase, subject to the provisions of this
Warrant, from First Virtual Communications, Inc., a Delaware corporation
("Company"), at any time after September 30, 2003 and not later than 5:00 P.M.,
Eastern time, on the Expiration Date (as defined above), at an exercise price
per share equal to $1.35, (the exercise price in effect being herein called the
"Warrant Price"), 200,000 shares ("Warrant Shares") of the Company's Common
Stock, par value $0.001 per share ("Common Stock"). The number of Warrant Shares
purchasable upon exercise of this Warrant and the Warrant Price shall be subject
to adjustment from time to time as described herein.

         SECTION 1. Registration. The Company shall maintain books for the
transfer and registration of the Warrant. Upon the initial issuance of this
Warrant, the Company shall issue and register the Warrant in the name of the
Warrantholder.

         SECTION 2. Transfers. As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed under the Securities
Act of 1933, as amended ("Securities Act"), or an exemption from such
registration. Subject to such restrictions, the Company shall transfer this
Warrant from time to time upon the books to be maintained by the Company for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer and such other documents as
may be reasonably required by the Company, including, if required by the
Company, an opinion of its counsel to the effect that such transfer is exempt
from the registration requirements of the Securities Act of 1933, to

                                       1

establish that such transfer is being made in accordance with the terms hereof,
and a new Warrant shall be issued to the transferee and the surrendered Warrant
shall be canceled by the Company.

         SECTION 3. Exercise of Warrant. Subject to the provisions hereof, the
Warrantholder may exercise this Warrant in whole or in part at any time upon
surrender of the Warrant, together with delivery of the duly executed Warrant
exercise form attached hereto as Appendix A (the "Exercise Agreement") and
payment by cash, certified check or wire transfer of funds for the aggregate
Warrant Price for that number of Warrant Shares then being purchased, to the
Company during normal business hours on any business day at the Company's
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof). The Warrant Shares so purchased
shall be deemed to be issued to the holder hereof or such holder's designee, as
the record owner of such shares, as of the close of business on the date on
which this Warrant shall have been surrendered (or evidence of loss, theft or
destruction thereof and security or indemnity satisfactory to the Company), the
Warrant Price shall have been paid and the completed Exercise Agreement shall
have been delivered. Certificates for the Warrant Shares so purchased,
representing the aggregate number of shares specified in the Exercise Agreement,
shall be delivered to the holder hereof within a reasonable time, not exceeding
three (3) business days, after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be requested by
the holder hereof and shall be registered in the name of such holder or such
other name as shall be designated by such holder. If this Warrant shall have
been exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver to
the holder a new Warrant representing the number of shares with respect to which
this Warrant shall not then have been exercised. As used herein, "business day"
means a day, other than a Saturday or Sunday, on which banks in New York City
are open for the general transaction of business. Each exercise hereof shall
constitute the re-affirmation by the Warrantholder that the representations and
warranties with respect to the Warrant Shares contained in Section 4 below are
true and correct in all respects with respect to the Warrantholder as of the
time of such exercise.

         SECTION 3.1 Net Exercise. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company's Common Stock is
greater than the Exercise Price (at the date of calculation as set forth below),
in lieu of exercising this Warrant by payment of cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with the properly endorsed Notice of Exercise in
which event the Company shall issue to the Holder a number of shares of Common
Stock computed using the following formula:

                  X = Y (A-B)
                      -------
                        A

Where       X = the number of shares of Common Stock to be issued to the Holder
            Y = the number of shares of Common Stock purchasable under
                  the Warrant or, if only a portion of the Warrant is
                  being exercised, the portion of the Warrant being
                  canceled (at the date of such calculation)



                                       2.

            A =   the fair market value of one share of the Company's Common
                  Stock (at the date of such calculation)

            B =   Exercise Price (as adjusted to the date of such
                  calculation)

For purposes of the above calculation, the fair market value of one share of
Common Stock shall be equal to the fair market value of one share of Common
Stock of the Company as quoted on the Nasdaq SmallCap or National Market on the
date of such calculation.

         SECTION 4. Compliance with the Securities Act of 1933; Investment
Representations.

                  (A) The Company may cause the legend set forth on the first
page of this Warrant to be set forth on each Warrant or similar legend on any
security issued or issuable upon exercise of this Warrant, unless counsel for
the Company is of the opinion as to any such security that such legend is
unnecessary.

                  (B) The Investor understands that: (i) the offering and sale
of this Warrant and the Warrant Shares purchasable upon exercise of this Warrant
is intended to be exempt from the registration requirements of the Securities
Act; (ii) the offer and sale of this Warrant and the Warrant Shares purchasable
upon exercise of this Warrant has not been registered under the Securities Act
or any other applicable securities laws and such securities may be resold only
if registered under the Securities Act and any other applicable securities laws
or if an exemption from such registration requirements is available; and (iii)
the Company is not required to register any resale of this Warrants or the
Warrant Shares under the Securities Act or any other applicable securities laws.

                  (C) The Investor represents that the Warrant and the Warrant
Shares purchasable upon exercise of this Warrant are being acquired for his own
account and not with a view to, or for sale in connection with, any distribution
thereof in violation of the Securities Act or any other securities laws that may
be applicable.

                  (D) The Investor represents that the Investor (i) is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D
under the Securities Act, (ii) has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of his acquisition of the Warrant and investment in the Warrant Shares and
is capable of bearing the economic risks of such investment, including a
complete loss of his investment in any Warrant Shares purchasable upon exercise
of this Warrant; (iii) believes that his acquisition of the Warrant and
investment in the Warrant Shares purchasable upon exercise of this Warrant is
suitable for him based upon his objectives and financial needs, and the Investor
has adequate means for providing for his current financial needs and business
contingencies and has no present need for liquidity of any investment with
respect to this Warrant or any Warrant Shares purchasable upon exercise of this
Warrant; and (iv) has not purchased, sold or entered into any put option, short
position or similar arrangement with respect to any Warrant Shares purchasable
upon exercise of this Warrant.

                                       3.

                  (E) The Investor acknowledges that no oral or written
statements or representations have been made to the Investor by or on behalf of
the Company in connection with the offering and sale of this Warrant or any
Warrant Shares purchasable upon exercise of this Warrant other than those set
forth in the Company's Annual Report on Form 10-K for the year-ended December
31, 2002, the Company's definitive proxy statement, filed April 30, 2003, and
the Company's other reports and documents filed under Sections 13(a), 13(c), 14
or 15(d) under the Securities Exchange Act of 1934, as amended, or as set forth
herein.

                  (F) The Investor acknowledges that the Securities Act and
state securities laws restrict the transferability of securities, such as the
Warrant Shares, issued in reliance upon the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereunder and
applicable state securities laws, and that, unless registered under the
Securities Act or an exemption from registration is available, the Warrant
Shares purchasable upon exercise of this Warrant must be held indefinitely.

                  (G) The Investor has been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the issuance of this Warrant and the Warrant Shares purchasable upon
exercise of this Warrant which have been requested by the Investor. The Investor
has been afforded the opportunity to ask questions of the Company. The Investor
understands that its investment in the Warrant and any Warrant Shares
purchasable upon exercise of this Warrant involves a significant degree of risk.

                  (H) The Investor shall make all filings with the Commission
required under the Exchange Act, including reports required under Regulation
13D-G thereunder, within the time periods required under the Exchange Act, in
connection with any purchase of Warrant Shares upon exercise of this Warrant.

         SECTION 5. Payment of Taxes. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the registered holder of this Warrant in respect of
which such shares are issued, and in such case, the Company shall not be
required to issue or deliver any certificate for Warrant Shares or any Warrant
until the person requesting the same has paid to the Company the amount of such
tax or has established to the Company's reasonable satisfaction that such tax
has been paid. The holder shall be responsible for income taxes due under
federal, state or other law, if any such tax is due.

         SECTION 6. Mutilated or Missing Warrants. In case this Warrant shall be
mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and
substitution of and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.

                                       4.

         SECTION 7. Reservation of Common Stock. The Company hereby represents
and warrants that there have been reserved, and the Company shall at all
applicable times keep reserved until issued (if necessary) as contemplated by
this Section 7, out of the authorized and unissued shares of Common Stock,
sufficient shares to provide for the exercise of the rights of purchase
represented by this Warrant. The Company agrees that all Warrant Shares issued
upon due exercise of the Warrant shall be, at the time of delivery of the
certificates for such Warrant Shares, duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock of the Company.

         SECTION 8. Adjustments. Subject and pursuant to the provisions of this
Section 8, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.

                  (A) If the Company shall, at any time or from time to time
while this Warrant is outstanding, pay a dividend or make a distribution on its
Common Stock in shares of Common Stock, subdivide its outstanding shares of
Common Stock into a greater number of shares or combine its outstanding shares
of Common Stock into a smaller number of shares or issue by reclassification of
its outstanding shares of Common Stock any shares of its capital stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), then the number of
Warrant Shares purchasable upon exercise of the Warrant and the Warrant Price in
effect immediately prior to the date upon which such change shall become
effective, shall be adjusted by the Company so that the Warrantholder thereafter
exercising the Warrant shall be entitled to receive the number of shares of
Common Stock or other capital stock which the Warrantholder would have received
if the Warrant had been exercised immediately prior to such event upon payment
of a Warrant Price that has been adjusted to reflect a fair allocation of the
economics of such event to the Warrantholder. Such adjustments shall be made
successively whenever any event listed above shall occur.

                  (B) If any capital reorganization, reclassification of the
capital stock of the Company, consolidation or merger of the Company with
another corporation in which the Company is not the survivor, or sale, transfer
or other disposition of all or substantially all of the Company's assets to
another corporation shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger, sale, transfer or other
disposition, lawful and adequate provision shall be made whereby each
Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without
limitation, provision for adjustment of the Warrant Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares
of stock, securities or properties thereafter deliverable upon the exercise
thereof. The Company shall not effect any such consolidation, merger, sale,
transfer or other disposition unless prior to or simultaneously with the
consummation thereof the successor

                                       5.

corporation (if other than the Company) resulting from such consolidation or
merger, or the corporation purchasing or otherwise acquiring such assets or
other appropriate corporation or entity shall assume the obligation to deliver
to the holder of the Warrant, at the last address of such holder appearing on
the books of the Company, such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase, and the other obligations under this Warrant. The provisions of this
paragraph (b) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers or other
dispositions.

         SECTION 9. Fractional Interest. The Company shall not be required to
issue fractions of Warrant Shares upon the exercise of this Warrant. If any
fractional share of Common Stock would, except for the provisions of the first
sentence of this Section 9, be deliverable upon such exercise, the Company, in
lieu of delivering such fractional share, shall pay to the exercising holder of
this Warrant an amount in cash equal to the Fair Market Value of such fractional
share of Common Stock on the date of exercise. As used in this Warrant, "Fair
Market Value" of a share of Common Stock as of a particular date (the "Valuation
Date") shall mean the following: (a) if the Common Stock is then listed on a
national stock exchange, the closing sale price of one share of Common Stock on
such exchange on the last trading day prior to the Valuation Date; (b) if the
Common Stock is then quoted on Nasdaq, the closing sale price of one share of
Common Stock on Nasdaq on the last trading day prior to the Valuation Date or,
if no such closing sale price is available, the average of the high bid and the
low sales price quoted on Nasdaq on the last trading day prior to the Valuation
Date; or (c) if the Common Stock is not then listed on a national stock exchange
or quoted on Nasdaq, the Fair Market Value of one share of Common Stock as of
the Valuation Date, shall be determined in good faith by the Board of Directors
of the Company.

         SECTION 10. Benefits. Nothing in this Warrant shall be construed to
give any person, firm or corporation (other than the Company and the
Warrantholder) any legal or equitable right, remedy or claim, it being agreed
that this Warrant shall be for the sole and exclusive benefit of the Company and
the Warrantholder.

         SECTION 11. Notices to Warrantholder. Upon the happening of any event
requiring an adjustment of the Warrant Price, the Company shall promptly give
written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Failure to give such notice to the Warrantholder or any
defect therein shall not affect the legality or validity of the subject
adjustment.

         SECTION 12. Identity of Transfer Agent. The Transfer Agent for the
Common Stock is Computer Share Trust Company. Upon the appointment of any
subsequent transfer agent for the Common Stock or other shares of the Company's
capital stock issuable upon the exercise of the rights of purchase represented
by the Warrant, the Company will mail to the Warrantholder a statement setting
forth the name and address of such transfer agent.

                                       6.

         SECTION 13. Notices. Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or telecopier, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three days after such notice is deposited in first class mail,
postage prepaid, and (iv) if given by an internationally recognized overnight
air courier, then such notice shall be deemed given one day after delivery to
such carrier. All notices shall be addressed as follows: if to the
Warrantholder, at its address as set forth in the Company's books and records
and, if to the Company, at the address as follows, or at such other address as
the Warrantholder or the Company may designate by ten days' advance written
notice to the other:

                  If to the Company:

                        First Virtual Communications, Inc.
                        3393 Octavius Drive
                        Santa Clara, California 95054
                        Attention:  Chief Financial Officer
                        Fax: (408) 748-2241

                  With a copy to:

                        Cooley Godward llp
                        4401 Eastgate Mall
                        San Diego, California 92121-1909
                        Attention:  Julie M. Robinson, Esq.
                        Fax: (858) 550-6420

         SECTION 14. Successors. All the covenants and provisions hereof by or
for the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.

         SECTION 15. Governing Law. This Warrant shall be governed by, and
construed in accordance with, the internal laws of the State of California,
without reference to the choice of law provisions thereof. The Company and, by
accepting this Warrant, the Warrantholder, each irrevocably submits to the
exclusive jurisdiction of the courts of the State of California located in
Northern California and the United States District Court for the Northern
District of California for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Warrant and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Warrant. The
Company and, by accepting this Warrant, the Warrantholder, each irrevocably
consents to the jurisdiction of any such court in any such suit, action or
proceeding and to the laying of venue in such court. The

                                       7.

Company and, by accepting this Warrant, the Warrantholder, each irrevocably
waives any objection to the laying of venue of any such suit, action or
proceeding brought in such courts and irrevocably waives any claim that any such
suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.

         SECTION 16. No Rights as Stockholder. Prior to the exercise of this
Warrant, the Warrantholder shall not have or exercise any rights as a
stockholder of the Company by virtue of its ownership of this Warrant.

         SECTION 17. Amendment; Waiver. This Warrant may be amended or waived
(including the adjustment provisions included in Section 8 of this Warrant) upon
the written consent of the Company and the Warrantholder Section Headings. The
section heading in this Warrant are for the convenience of the Company and the
Warrantholder and in no way alter, modify, amend, limit or restrict the
provisions hereof.

                                       8.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed, as of the 30th day of September, 2003.

                                    FIRST VIRTUAL COMMUNICATIONS, INC.



                                    By: /s/ Truman Cole
                                       ---------------------------------

                                    Name: Truman Cole
                                          ------------------------------------

                                    Title: CFO
                                           -----------------------------------

                                       9.

                                   APPENDIX A
                     FIRST VIRTUAL COMMUNICATIONS, INC.
                              WARRANT EXERCISE FORM

To: First Virtual Communications, Inc.

         The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("Warrant") for, and to purchase
thereunder by the payment of the Warrant Price and surrender of the Warrant,
_______________ shares of Common Stock ("Warrant Shares") provided for therein,
and requests that certificates for the Warrant Shares be issued as follows:

                  -------------------------------
                  Name

                  --------------------------------
                  Address

                  --------------------------------

                  --------------------------------
                  Federal Tax ID or Social Security No.

      and delivered by (certified mail to the above address, or
                       (electronically (provide DWAC
Instructions:___________________), or
                       (other (specify):

________________________________).

and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares purchasable upon exercise of this Warrant be registered in
the name of the undersigned Warrantholder or the undersigned's Assignee as below
indicated and delivered to the address stated below.

Dated: ___________________, ____

Note:  The signature must correspond with
Signature:_______________________________
the name of the registered holder as written on
the first page of the Warrant in every                 -------------------------
particular, without alteration or enlargement          Name (please print)
or any change whatever, unless the Warrant
has been assigned.                                     -------------------------

                                                       -------------------------
                                                       Address

                                                       -------------------------
                                                       Federal Identification or

                                          Social Security No.

                                          Assignee:

                                          -------------------------------
                                          -------------------------------
                                          -------------------------------

EX-4.12

                                                                    EXHIBIT 4.12


         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT. THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS.

THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON SEPTEMBER 29,
2008 (THE "EXPIRATION DATE").

No. CSW-19


                        FIRST VIRTUAL COMMUNICATIONS, INC.

                      WARRANT TO PURCHASE 200,000 SHARES OF
                     COMMON STOCK, PAR VALUE $0.001 PER SHARE

                                                              SEPTEMBER 30, 2003

                          VOID AFTER SEPTEMBER 29, 2008

         FOR VALUE RECEIVED, John Arrillaga Survivor's Trust ("Warrantholder"),
is entitled to purchase, subject to the provisions of this Warrant, from First
Virtual Communications, Inc., a Delaware corporation ("Company"), at any time
after September 30, 2003 and not later than 5:00 P.M., Eastern time, on the
Expiration Date (as defined above), at an exercise price per share equal to
$1.35, (the exercise price in effect being herein called the "Warrant Price"),
200,000 shares ("Warrant Shares") of the Company's Common Stock, par value
$0.001 per share ("Common Stock"). The number of Warrant Shares purchasable upon
exercise of this Warrant and the Warrant Price shall be subject to adjustment
from time to time as described herein.

         SECTION 1. Registration. The Company shall maintain books for the
transfer and registration of the Warrant. Upon the initial issuance of this
Warrant, the Company shall issue and register the Warrant in the name of the
Warrantholder.

         SECTION 2. Transfers. As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed under the Securities
Act of 1933, as amended ("Securities Act"), or an exemption from such
registration. Subject to such restrictions, the Company shall transfer this
Warrant from time to time upon the books to be maintained by the Company for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer and such other documents as
may be reasonably required by the Company, including, if required by the
Company, an opinion of its counsel to the effect that such transfer is exempt
from the registration requirements of the Securities Act of 1933, to

                                       1

establish that such transfer is being made in accordance with the terms hereof,
and a new Warrant shall be issued to the transferee and the surrendered Warrant
shall be canceled by the Company.

         SECTION 3. Exercise of Warrant. Subject to the provisions hereof, the
Warrantholder may exercise this Warrant in whole or in part at any time upon
surrender of the Warrant, together with delivery of the duly executed Warrant
exercise form attached hereto as Appendix A (the "Exercise Agreement") and
payment by cash, certified check or wire transfer of funds for the aggregate
Warrant Price for that number of Warrant Shares then being purchased, to the
Company during normal business hours on any business day at the Company's
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof). The Warrant Shares so purchased
shall be deemed to be issued to the holder hereof or such holder's designee, as
the record owner of such shares, as of the close of business on the date on
which this Warrant shall have been surrendered (or evidence of loss, theft or
destruction thereof and security or indemnity satisfactory to the Company), the
Warrant Price shall have been paid and the completed Exercise Agreement shall
have been delivered. Certificates for the Warrant Shares so purchased,
representing the aggregate number of shares specified in the Exercise Agreement,
shall be delivered to the holder hereof within a reasonable time, not exceeding
three (3) business days, after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be requested by
the holder hereof and shall be registered in the name of such holder or such
other name as shall be designated by such holder. If this Warrant shall have
been exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver to
the holder a new Warrant representing the number of shares with respect to which
this Warrant shall not then have been exercised. As used herein, "business day"
means a day, other than a Saturday or Sunday, on which banks in New York City
are open for the general transaction of business. Each exercise hereof shall
constitute the re-affirmation by the Warrantholder that the representations and
warranties with respect to the Warrant Shares contained in Section 4 below are
true and correct in all respects with respect to the Warrantholder as of the
time of such exercise.

         SECTION 3.1 Net Exercise. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company's Common Stock is
greater than the Exercise Price (at the date of calculation as set forth below),
in lieu of exercising this Warrant by payment of cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with the properly endorsed Notice of Exercise in
which event the Company shall issue to the Holder a number of shares of Common
Stock computed using the following formula:

                  X = Y (A-B)
                      -------
                        A

Where       X = the number of shares of Common Stock to be issued to the Holder
            Y = the number of shares of Common Stock purchasable under
                the Warrant or, if only a portion of the Warrant is
                being exercised, the portion of the Warrant being
                canceled (at the date of such calculation)

                                       2.

            A =   the fair market value of one share of the Company's Common
                  Stock (at the date of such calculation)

            B =   Exercise Price (as adjusted to the date of such
                  calculation)

For purposes of the above calculation, the fair market value of one share of
Common Stock shall be equal to the fair market value of one share of Common
Stock of the Company as quoted on the Nasdaq SmallCap or National Market on the
date of such calculation.

         SECTION 4. Compliance with the Securities Act of 1933; Investment
Representations.

                  (A) The Company may cause the legend set forth on the first
page of this Warrant to be set forth on each Warrant or similar legend on any
security issued or issuable upon exercise of this Warrant, unless counsel for
the Company is of the opinion as to any such security that such legend is
unnecessary.

                  (B) The Investor understands that: (i) the offering and sale
of this Warrant and the Warrant Shares purchasable upon exercise of this Warrant
is intended to be exempt from the registration requirements of the Securities
Act; (ii) the offer and sale of this Warrant and the Warrant Shares purchasable
upon exercise of this Warrant has not been registered under the Securities Act
or any other applicable securities laws and such securities may be resold only
if registered under the Securities Act and any other applicable securities laws
or if an exemption from such registration requirements is available; and (iii)
the Company is not required to register any resale of this Warrants or the
Warrant Shares under the Securities Act or any other applicable securities laws.

                  (C) The Investor represents that the Warrant and the Warrant
Shares purchasable upon exercise of this Warrant are being acquired for his own
account and not with a view to, or for sale in connection with, any distribution
thereof in violation of the Securities Act or any other securities laws that may
be applicable.

                  (D) The Investor represents that the Investor (i) is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D
under the Securities Act, (ii) has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of his acquisition of the Warrant and investment in the Warrant Shares and
is capable of bearing the economic risks of such investment, including a
complete loss of his investment in any Warrant Shares purchasable upon exercise
of this Warrant; (iii) believes that his acquisition of the Warrant and
investment in the Warrant Shares purchasable upon exercise of this Warrant is
suitable for him based upon his objectives and financial needs, and the Investor
has adequate means for providing for his current financial needs and business
contingencies and has no present need for liquidity of any investment with
respect to this Warrant or any Warrant Shares purchasable upon exercise of this
Warrant; and (iv) has not purchased, sold or entered into any put option, short
position or similar arrangement with respect to any Warrant Shares purchasable
upon exercise of this Warrant.

                                       3.

                  (E) The Investor acknowledges that no oral or written
statements or representations have been made to the Investor by or on behalf of
the Company in connection with the offering and sale of this Warrant or any
Warrant Shares purchasable upon exercise of this Warrant other than those set
forth in the Company's Annual Report on Form 10-K for the year-ended December
31, 2002, the Company's definitive proxy statement, filed April 30, 2003, and
the Company's other reports and documents filed under Sections 13(a), 13(c), 14
or 15(d) under the Securities Exchange Act of 1934, as amended, or as set forth
herein.

                  (F) The Investor acknowledges that the Securities Act and
state securities laws restrict the transferability of securities, such as the
Warrant Shares, issued in reliance upon the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereunder and
applicable state securities laws, and that, unless registered under the
Securities Act or an exemption from registration is available, the Warrant
Shares purchasable upon exercise of this Warrant must be held indefinitely.

                  (G) The Investor has been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the issuance of this Warrant and the Warrant Shares purchasable upon
exercise of this Warrant which have been requested by the Investor. The Investor
has been afforded the opportunity to ask questions of the Company. The Investor
understands that its investment in the Warrant and any Warrant Shares
purchasable upon exercise of this Warrant involves a significant degree of risk.

                  (H) The Investor shall make all filings with the Commission
required under the Exchange Act, including reports required under Regulation
13D-G thereunder, within the time periods required under the Exchange Act, in
connection with any purchase of Warrant Shares upon exercise of this Warrant.

         SECTION 5. Payment of Taxes. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the registered holder of this Warrant in respect of
which such shares are issued, and in such case, the Company shall not be
required to issue or deliver any certificate for Warrant Shares or any Warrant
until the person requesting the same has paid to the Company the amount of such
tax or has established to the Company's reasonable satisfaction that such tax
has been paid. The holder shall be responsible for income taxes due under
federal, state or other law, if any such tax is due.

         SECTION 6. Mutilated or Missing Warrants. In case this Warrant shall be
mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and
substitution of and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.

                                       4.

         SECTION 7. Reservation of Common Stock. The Company hereby represents
and warrants that there have been reserved, and the Company shall at all
applicable times keep reserved until issued (if necessary) as contemplated by
this Section 7, out of the authorized and unissued shares of Common Stock,
sufficient shares to provide for the exercise of the rights of purchase
represented by this Warrant. The Company agrees that all Warrant Shares issued
upon due exercise of the Warrant shall be, at the time of delivery of the
certificates for such Warrant Shares, duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock of the Company.

         SECTION 8. Adjustments. Subject and pursuant to the provisions of this
Section 8, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.

                  (A) If the Company shall, at any time or from time to time
while this Warrant is outstanding, pay a dividend or make a distribution on its
Common Stock in shares of Common Stock, subdivide its outstanding shares of
Common Stock into a greater number of shares or combine its outstanding shares
of Common Stock into a smaller number of shares or issue by reclassification of
its outstanding shares of Common Stock any shares of its capital stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), then the number of
Warrant Shares purchasable upon exercise of the Warrant and the Warrant Price in
effect immediately prior to the date upon which such change shall become
effective, shall be adjusted by the Company so that the Warrantholder thereafter
exercising the Warrant shall be entitled to receive the number of shares of
Common Stock or other capital stock which the Warrantholder would have received
if the Warrant had been exercised immediately prior to such event upon payment
of a Warrant Price that has been adjusted to reflect a fair allocation of the
economics of such event to the Warrantholder. Such adjustments shall be made
successively whenever any event listed above shall occur.

                  (B) If any capital reorganization, reclassification of the
capital stock of the Company, consolidation or merger of the Company with
another corporation in which the Company is not the survivor, or sale, transfer
or other disposition of all or substantially all of the Company's assets to
another corporation shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger, sale, transfer or other
disposition, lawful and adequate provision shall be made whereby each
Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without
limitation, provision for adjustment of the Warrant Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares
of stock, securities or properties thereafter deliverable upon the exercise
thereof. The Company shall not effect any such consolidation, merger, sale,
transfer or other disposition unless prior to or simultaneously with the
consummation thereof the successor

                                       5.

corporation (if other than the Company) resulting from such consolidation or
merger, or the corporation purchasing or otherwise acquiring such assets or
other appropriate corporation or entity shall assume the obligation to deliver
to the holder of the Warrant, at the last address of such holder appearing on
the books of the Company, such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase, and the other obligations under this Warrant. The provisions of this
paragraph (b) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers or other
dispositions.

         SECTION 9. Fractional Interest. The Company shall not be required to
issue fractions of Warrant Shares upon the exercise of this Warrant. If any
fractional share of Common Stock would, except for the provisions of the first
sentence of this Section 9, be deliverable upon such exercise, the Company, in
lieu of delivering such fractional share, shall pay to the exercising holder of
this Warrant an amount in cash equal to the Fair Market Value of such fractional
share of Common Stock on the date of exercise. As used in this Warrant, "Fair
Market Value" of a share of Common Stock as of a particular date (the "Valuation
Date") shall mean the following: (a) if the Common Stock is then listed on a
national stock exchange, the closing sale price of one share of Common Stock on
such exchange on the last trading day prior to the Valuation Date; (b) if the
Common Stock is then quoted on Nasdaq, the closing sale price of one share of
Common Stock on Nasdaq on the last trading day prior to the Valuation Date or,
if no such closing sale price is available, the average of the high bid and the
low sales price quoted on Nasdaq on the last trading day prior to the Valuation
Date; or (c) if the Common Stock is not then listed on a national stock exchange
or quoted on Nasdaq, the Fair Market Value of one share of Common Stock as of
the Valuation Date, shall be determined in good faith by the Board of Directors
of the Company.

         SECTION 10. Benefits. Nothing in this Warrant shall be construed to
give any person, firm or corporation (other than the Company and the
Warrantholder) any legal or equitable right, remedy or claim, it being agreed
that this Warrant shall be for the sole and exclusive benefit of the Company and
the Warrantholder.

         SECTION 11. Notices to Warrantholder. Upon the happening of any event
requiring an adjustment of the Warrant Price, the Company shall promptly give
written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Failure to give such notice to the Warrantholder or any
defect therein shall not affect the legality or validity of the subject
adjustment.

         SECTION 12. Identity of Transfer Agent. The Transfer Agent for the
Common Stock is Computer Share Trust Company. Upon the appointment of any
subsequent transfer agent for the Common Stock or other shares of the Company's
capital stock issuable upon the exercise of the rights of purchase represented
by the Warrant, the Company will mail to the Warrantholder a statement setting
forth the name and address of such transfer agent.

                                       6.

         SECTION 13. Notices. Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or telecopier, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three days after such notice is deposited in first class mail,
postage prepaid, and (iv) if given by an internationally recognized overnight
air courier, then such notice shall be deemed given one day after delivery to
such carrier. All notices shall be addressed as follows: if to the
Warrantholder, at its address as set forth in the Company's books and records
and, if to the Company, at the address as follows, or at such other address as
the Warrantholder or the Company may designate by ten days' advance written
notice to the other:

                  If to the Company:

                        First Virtual Communications, Inc.
                        3393 Octavius Drive
                        Santa Clara, California 95054
                        Attention:  Chief Financial Officer
                        Fax: (408) 748-2241

                  With a copy to:

                        Cooley Godward llp
                        4401 Eastgate Mall
                        San Diego, California 92121-1909
                        Attention:  Julie M. Robinson, Esq.
                        Fax: (858) 550-6420

         SECTION 14. Successors. All the covenants and provisions hereof by or
for the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.

      SECTION 15. Governing Law. This Warrant shall be governed by, and
construed in accordance with, the internal laws of the State of California,
without reference to the choice of law provisions thereof. The Company and, by
accepting this Warrant, the Warrantholder, each irrevocably submits to the
exclusive jurisdiction of the courts of the State of California located in
Northern California and the United States District Court for the Northern
District of California for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Warrant and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Warrant. The
Company and, by accepting this Warrant, the Warrantholder, each irrevocably
consents to the jurisdiction of any such court in any such suit, action or
proceeding and to the laying of venue in such court. The

                                       7.

Company and, by accepting this Warrant, the Warrantholder, each irrevocably
waives any objection to the laying of venue of any such suit, action or
proceeding brought in such courts and irrevocably waives any claim that any such
suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.

         SECTION 16. No Rights as Stockholder. Prior to the exercise of this
Warrant, the Warrantholder shall not have or exercise any rights as a
stockholder of the Company by virtue of its ownership of this Warrant.

         SECTION 17. Amendment; Waiver. This Warrant may be amended or waived
(including the adjustment provisions included in Section 8 of this Warrant) upon
the written consent of the Company and the Warrantholder Section Headings. The
section heading in this Warrant are for the convenience of the Company and the
Warrantholder and in no way alter, modify, amend, limit or restrict the
provisions hereof.

                                       8.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed, as of the 30th day of September, 2003.

                                    FIRST VIRTUAL COMMUNICATIONS, INC.



                                    By: /s/ Truman Cole
                                       ---------------------------------------
                                    Name: Truman Cole
                                          ------------------------------------
                                    Title: CFO
                                           -----------------------------------

                                       9.

                                   APPENDIX A
                     FIRST VIRTUAL COMMUNICATIONS, INC.
                              WARRANT EXERCISE FORM

To: First Virtual Communications, Inc.

         The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("Warrant") for, and to purchase
thereunder by the payment of the Warrant Price and surrender of the Warrant,
_______________ shares of Common Stock ("Warrant Shares") provided for therein,
and requests that certificates for the Warrant Shares be issued as follows:

                  -------------------------------
                  Name

                  --------------------------------
                  Address

                  --------------------------------

                  --------------------------------
                  Federal Tax ID or Social Security No.

      and delivered by (certified mail to the above address, or
                       (electronically (provide DWAC

Instructions:___________________), or
                       (other (specify):

___________________________________________).

and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares purchasable upon exercise of this Warrant be registered in
the name of the undersigned Warrantholder or the undersigned's Assignee as below
indicated and delivered to the address stated below.

Dated: ___________________, ____

Note:  The signature must correspond with
       Signature:______________________________

                                                     
the name of the registered holder as written
on the first page of the Warrant in every               ---------------------------------
particular, without alteration or enlargement           Name (please print)
or any change whatever, unless the Warrant
has been assigned.
                                                        ------------------------------

                                                        ------------------------------
                                                        Address

                                                        ------------------------------
                                                        Federal Identification or



                                          Social Security No.

                                          Assignee:

                                          -------------------------------
                                          -------------------------------
                                          -------------------------------

EX-4.13

                                                                    Exhibit 4.13

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

                          COMMON STOCK PURCHASE WARRANT

                To Purchase __________ Shares of Common Stock of

                       FIRST VIRTUAL COMMUNICATIONS, INC.

                  THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") CERTIFIES
that, for value received, _____________ (the "Holder"), is entitled, upon the
terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after the date of issuance of this Warrant (the
"Initial Exercise Date") and on or prior to the fifth anniversary of the Initial
Exercise Date (the "Termination Date") but not thereafter, to subscribe for and
purchase from First Virtual Communications, Inc., a corporation incorporated in
the State of Delaware (the "Company"), up to ____________ shares (the "Warrant
Shares") of Common Stock, par value $0.001 per share, of the Company (the
"Common Stock"). The purchase price of one share of Common Stock (the "Exercise
Price") under this Warrant shall be $1.77, subject to adjustment hereunder. The
Exercise Price and the number of Warrant Shares for which the Warrant is
exercisable shall be subject to adjustment as provided herein. CAPITALIZED TERMS
USED AND NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS SET FORTH IN THAT
CERTAIN SECURITIES PURCHASE AGREEMENT (THE "PURCHASE AGREEMENT"), DATED NOVEMBER
6, 2003, AMONG THE COMPANY AND THE PURCHASERS SIGNATORY THERETO.

                                       1



                  1.       Title to Warrant. Prior to the Termination Date and
subject to compliance with applicable laws and Section 7 of this Warrant, this
Warrant and all rights hereunder are transferable, in whole or in part, at the
office or agency of the Company by the Holder in person or by duly authorized
attorney, upon surrender of this Warrant together with the Assignment Form
annexed hereto properly endorsed. The transferee shall sign an investment letter
in form and substance reasonably satisfactory to the Company.

                  2.       Authorization of Shares. The Company covenants that
all Warrant Shares which may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon exercise of the purchase rights
represented by this Warrant, be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).

                  3.       Exercise of Warrant.


                           (a)      Subject to Section 3(c) below, exercise of
         the purchase rights represented by this Warrant may be made at any time
         or times on or after the Initial Exercise Date and on or before the
         Termination Date by delivery to the Company of a duly executed
         facsimile copy of the Notice of Exercise Form annexed hereto (or such
         other office or agency of the Company as it may designate by notice in
         writing to the registered Holder at the address of such Holder
         appearing on the books of the Company); provided, however, within 5
         Trading Days of the date said Notice of Exercise is delivered to the
         Company, the Holder shall have surrendered this Warrant to the Company
         and the Company shall have received payment of the aggregate Exercise
         Price of the shares thereby purchased (and all taxes required to be
         paid by the Holder, if any, pursuant to Section 5 prior to the issuance
         of such shares) by wire transfer or cashier's check drawn on a United
         States bank. Certificates for shares purchased hereunder shall be
         delivered to the Holder within 3 Trading Days from the delivery to the
         Company of the Notice of Exercise Form by facsimile copy, surrender of
         this Warrant and payment of the aggregate Exercise Price as set forth
         above ("Warrant Share Delivery Date). This Warrant shall be deemed to
         have been exercised on the later of the date the Notice of Exercise is
         delivered to the Company by facsimile copy, the date the Exercise Price
         (and all taxes required to be paid by the Holder, if any, pursuant to
         Section 5 prior to the issuance of such shares) is received by the
         Company, and the date the Warrant is surrendered to the Company (or
         evidence of loss, theft or destruction thereof and security or
         indemnity reasonably satisfactory to the Company) (the later date, the
         "Exercise Date"). The Warrant Shares shall be deemed to have been
         issued, and Holder or any other person so designated to be named
         therein shall be deemed to have become a holder of record of such
         shares for all purposes, as of the close of business on the Exercise
         Date. If the Company fails to deliver to the Holder a certificate or
         certificates representing the Warrant Shares pursuant to this Section
         3(a) by the third Trading Day following the Warrant Share Delivery
         Date, then the Holder will have the right to rescind such exercise. In
         addition to any other rights available to the Holder, if the Company
         fails to deliver to the Holder a certificate or certificates
         representing the Warrant Shares pursuant to an exercise by the seventh

                                       2



         Trading Day after the Warrant Share Delivery Date, and if after such
         day the Holder is required by its broker to purchase (in an open market
         transaction or otherwise) shares of Common Stock to deliver in
         satisfaction of a sale by the Holder of the Warrant Shares which the
         Holder anticipated receiving upon such exercise (a "Buy-In"), then the
         Company shall (1) pay in cash to the Holder the amount by which (x) the
         Holder's total purchase price (including brokerage commissions, if any)
         for the shares of Common Stock so purchased exceeds (y) the amount
         obtained by multiplying (A) the number of Warrant Shares that the
         Company was required to deliver to the Holder in connection with the
         exercise at issue times (B) the price at which the sell order giving
         rise to such purchase obligation was executed, and (2) at the option of
         the Holder, either reinstate the portion of the Warrant and equivalent
         number of Warrant Shares for which such exercise was not honored or
         deliver to the Holder the number of shares of Common Stock that would
         have been issued had the Company timely complied with its exercise and
         delivery obligations hereunder. For example, if the Holder purchases
         Common Stock having a total purchase price of $11,000 to cover a Buy-In
         with respect to an attempted exercise of shares of Common Stock with an
         aggregate sale price giving rise to such purchase obligation of
         $10,000, under clause (1) of the immediately preceding sentence the
         Company shall be required to pay the Holder $1,000. The Holder shall
         provide the Company written notice indicating the amounts payable to
         the Holder in respect of the Buy-In, together with applicable
         confirmations and other evidence reasonably requested by the Company.
         Nothing herein shall limit a Holder's right to pursue any other
         remedies available to it hereunder, at law or in equity including,
         without limitation, a decree of specific performance and/or injunctive
         relief with respect to the Company's failure to timely deliver
         certificates representing shares of Common Stock upon exercise of the
         Warrant as required pursuant to the terms hereof.

                           (b)      If this Warrant shall have been exercised in
         part, the Company shall, at the time of delivery of the certificate or
         certificates representing Warrant Shares, deliver to Holder a new
         Warrant evidencing the rights of Holder to purchase the unpurchased
         Warrant Shares called for by this Warrant, which new Warrant shall in
         all other respects be identical with this Warrant.

                           (c)      The Company shall not effect any exercise of
         this Warrant, and the Holder shall not have the right to exercise any
         portion of this Warrant, pursuant to Section 3(a) or otherwise, to the
         extent that after giving effect to such issuance after exercise, the
         Holder (together with the Holder's affiliates), as set forth on the
         applicable Notice of Exercise, would beneficially own in excess of
         4.99% of the number of shares of the Common Stock outstanding
         immediately after giving effect to such issuance. For purposes of the
         foregoing sentence, the number of shares of Common Stock beneficially
         owned by the Holder and its affiliates shall include the number of
         shares of Common Stock issuable upon exercise of this Warrant with
         respect to which the determination of such sentence is being made, but
         shall exclude the number of shares of Common Stock which would be
         issuable upon (A) exercise of the remaining, nonexercised portion of
         this Warrant beneficially owned by the Holder or any of its affiliates
         and (B) exercise or conversion of the unexercised or nonconverted
         portion of any other securities of the Company (including, without
         limitation, any other Warrants) subject to a limitation on conversion
         or exercise analogous to the limitation contained herein beneficially
         owned by

                                       3



         the Holder or any of its affiliates. Except as set forth in the
         preceding sentence, for purposes of this Section 3(c), beneficial
         ownership shall be calculated in accordance with Section 13(d) of the
         Exchange Act. To the extent that the limitation contained in this
         Section 3(c) applies, the determination of whether this Warrant is
         exercisable (in relation to other securities owned by the Holder) and
         of which a portion of this Warrant is exercisable shall be in the sole
         discretion of such Holder, and the submission of a Notice of Exercise
         shall be deemed to be such Holder's determination of whether this
         Warrant is exercisable (in relation to other securities owned by such
         Holder) and of which portion of this Warrant is exercisable, in each
         case subject to such aggregate percentage limitation, and the Company
         shall have no obligation to verify or confirm the accuracy of such
         determination. For purposes of this Section 3(c), in determining the
         number of outstanding shares of Common Stock, the Holder may rely on
         the number of outstanding shares of Common Stock as reflected in (x)
         the Company's most recent Form 10-Q or Form 10-K, as the case may be,
         (y) a more recent public announcement by the Company or (z) any other
         notice by the Company or the Company's transfer agent setting forth the
         number of shares of Common Stock outstanding. Upon the written or oral
         request of the Holder, the Company shall within two Trading Days
         confirm orally and in writing to the Holder the number of shares of
         Common Stock then outstanding. In any case, the number of outstanding
         shares of Common Stock shall be determined after giving effect to the
         conversion or exercise of securities of the Company, including this
         Warrant, by the Holder or its affiliates since the date as of which
         such number of outstanding shares of Common Stock was reported. The
         provisions of this Section 3(c) may be waived by the Holder upon, at
         the election of the Holder, not less than 61 days' prior notice to the
         Company, and the provisions of this Section 3(c) shall continue to
         apply until such 61st day (or such later date, as determined by the
         Holder, as may be specified in such notice of waiver).

                           (d)      If at any time after one year from the date
         of issuance of this Warrant there is no effective Registration
         Statement registering the resale of the Warrant Shares by the Holder,
         this Warrant may also be exercised at such time by means of a "cashless
         exercise" in which the Holder shall be entitled to receive a
         certificate for the number of Warrant Shares equal to the quotient
         obtained by dividing [(A-B) (X)] by (A), where:

                  (A) = the Closing Price on the Trading Day immediately
                        preceding the date of such election;

                  (B) = the Exercise Price of the Warrants, as adjusted; and

                  (X) = the number of Warrant Shares issuable upon exercise
                        of the Warrants in accordance with the terms of this
                        Warrant.

                           (e)      Subject to the provisions of this Section 3,
         if after the first anniversary of the Initial Exercise Date each VWAP
         (as defined below) for any twenty consecutive Trading Days (the
         "Measurement Price") (such period commencing only after such
         anniversary date) exceeds the then Exercise Price (as adjusted under
         this Warrant) by 200% (the "Threshold Price"), then the Company may,
         within three Trading Days of such period, call for cancellation of all
         or any portion of this Warrant for which a Notice of Exercise

                                       4



         has not yet been delivered (such right, a "Call"). To exercise this
         right, the Company must deliver to the Holder an irrevocable written
         notice (a "Call Notice"), indicating therein the portion of the
         unexercised portion of this Warrant to which such notice applies. If
         the conditions set forth below for such Call are satisfied from the
         period from the date of the Call Notice through and including the Call
         Date (as defined below), then any portion of this Warrant subject to
         such Call Notice for which a Notice of Exercise shall not have been
         received by the Company from and after the date of the Call Notice will
         be cancelled at 6:30 p.m. (New York City time) on the 10th Trading Day
         after the date of the Call Notice is received by the Holder (such date,
         the "Call Date"). Any unexercised portion of this Warrant to which the
         Call Notice does not pertain, if any, will be unaffected by such Call
         Notice. In furtherance thereof, the Company covenants and agrees that
         it will honor all Notices of Exercise with respect to Warrant Shares
         subject to a Call Notice that are tendered from the time of delivery of
         the Call Notice on the Call Date. The parties agree that any Notice of
         Exercise delivered following a Call Notice shall first reduce to zero
         the number of Warrant Shares subject to such Call Notice prior to
         reducing the remaining Warrant Shares available for purchase under this
         Warrant. For example, if (x) this Warrant then permits the Holder to
         acquire 100 Warrant Shares, (y) a Call Notice pertains to 75 Warrant
         Shares, and (z) prior to the Call Date the Holder tenders a Notice of
         Exercise in respect of 50 Warrant Shares, then (1) on the Call Date the
         right under this Warrant to acquire 25 Warrant Shares will be
         automatically cancelled, (2) the Company, in the time and manner
         required under this Warrant, will have issued and delivered (or be
         required to issue and deliver) to the Holder 50 Warrant Shares in
         respect of the exercises following receipt of the Call Notice, and (3)
         the Holder may, until the Termination Date, exercise this Warrant for
         cash by payment of the aggregate Exercise Price then in effect for 25
         Warrant Shares (subject to adjustment as herein provided and subject to
         subsequent Call Notices and the other terms and conditions of this
         Warrant). Subject again to the provisions of this Section 3, the
         Company may deliver subsequent Call Notices for any portion of this
         Warrant for which the Holder shall not have delivered a Notice of
         Exercise. Notwithstanding anything to the contrary set forth in this
         Warrant, the Company may not require the cancellation of this Warrant
         pursuant to this Section 3(d) (and any Call Notice will be void),
         unless, from the beginning of the 20 consecutive Trading Days used to
         determine whether the Common Stock has achieved the Threshold Price
         through the Call Date, (i) the Company shall have honored in accordance
         with the terms of this Warrant all Notices of Exercise delivered prior
         to the Call Date, (ii) the Registration Statement shall be effective as
         to all Warrant Shares and the prospectus thereunder available for use
         by the Holder for the resale of all such Warrant Shares (and the
         Company is not aware of any event or occurrence that would make it
         appropriate for the Company to suspend the effectiveness of the
         Registration Statement), (iii) the Warrant Shares shall be listed or
         quoted for trading on the Principal Market and trading in the Common
         Stock shall not have been suspended (and the Company is not then aware
         of any event or occurrence that would required trading to be suspended)
         and (iv) such issuance would be permitted in full without violating the
         limitations set forth in Section 3(c).

                  "VWAP" means, for any date, the price determined by the first
         of the following clauses that applies: (a) if the Common Stock is then
         listed or quoted on a Trading Market, the daily volume weighted average
         price of the Common Stock for such date (or

                                       5



         the nearest preceding date) on the Trading Market on which the Common
         Stock is then listed or quoted as reported by Bloomberg Financial L.P.
         (based on a trading day from 9:30 a.m. Eastern Time to 4:02 p.m.
         Eastern Time); (b) if the Common Stock is not then listed or quoted on
         a Trading Market and if prices for the Common Stock are then quoted on
         the OTC Bulletin Board, the volume weighted average price of the Common
         Stock for such date (or the nearest preceding date) on the OTC Bulletin
         Board; (c) if the Common Stock is not then listed or quoted on the OTC
         Bulletin Board and if prices for the Common Stock are then reported in
         the "Pink Sheets" published by the National Quotation Bureau
         Incorporated (or a similar organization or agency succeeding to its
         functions of reporting prices), the most recent bid price per share of
         the Common Stock so reported; or (d) in all other cases, the fair
         market value of a share of Common Stock as determined by an independent
         appraiser selected in good faith by the Purchasers and reasonably
         acceptable to the Company.

                  4.       No Fractional Shares or Scrip. No fractional shares
or scrip representing fractional shares shall be issued upon the exercise of
this Warrant. As to any fraction of a share which Holder would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price.

                  5.       Charges, Taxes and Expenses. Issuance of certificates
for Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder or in such name or
names as may be directed by the Holder; provided, however, that in the event
certificates for Warrant Shares are to be issued in a name other than the name
of the Holder, this Warrant when surrendered for exercise shall be accompanied
by the Assignment Form attached hereto duly executed by the Holder; and the
Company may require, as a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.

                  6.       Closing of Books. The Company will not close its
stockholder books or records in any manner which prevents the timely exercise of
this Warrant, pursuant to the terms hereof.

                  7.       Transfer, Division and Combination.

                           (a)      Subject to compliance with any applicable
         securities laws and the conditions set forth in Sections 1 and 7(e)
         hereof and to the provisions of Section 4.1 of the Purchase Agreement,
         this Warrant and all rights hereunder are transferable, in whole or in
         part (provided that if the Warrant is being transferred in part, the
         portion of this Warrant being transferred shall represents the right to
         purchase at least 100,000 Warrant Shares (or such lesser amount
         comprising the entire number of Warrant Shares then underlying this
         Warrant and subject to adjustment as provided herein), upon surrender
         of this Warrant at the principal office of the Company, together with a
         written assignment of this Warrant substantially in the form attached
         hereto duly executed by the Holder or its agent or attorney and funds
         sufficient to pay any transfer taxes payable upon the making of such
         transfer. Upon such surrender and compliance with the conditions
         referenced in

                                       6



         the preceding sentence, if required, such payment, the Company shall
         execute and deliver a new Warrant or Warrants in the name of the
         assignee or assignees and in the denomination or denominations
         specified in such instrument of assignment, and shall issue to the
         assignor a new Warrant evidencing the portion of this Warrant not so
         assigned, and this Warrant shall promptly be cancelled. A Warrant, if
         properly assigned, may be exercised by a new holder for the purchase of
         Warrant Shares without having a new Warrant issued.

                           (b)      Subject to compliance with Section 7(a), as
         to any transfer which may be involved in such division or combination,
         (i) this Warrant may be divided or combined with other Warrants upon
         presentation hereof at the aforesaid office of the Company, together
         with a written notice specifying the names and denominations in which
         new Warrants are to be issued, signed by the Holder or its agent or
         attorney, and (ii) the Company shall execute and deliver a new Warrant
         or Warrants in exchange for the Warrant or Warrants to be divided or
         combined in accordance with such notice.

                           (c)      The Company shall prepare, issue and deliver
         at its own expense (other than transfer taxes) the new Warrant or
         Warrants under this Section 7.

                           (d)      The Company agrees to maintain, at its
         aforesaid office or at the offices of a designated agent, books for the
         registration and the registration of transfer of the Warrants.

                           (e)      At the time of the surrender of this Warrant
         in connection with any transfer of this Warrant, the Company will
         require, as a condition of allowing such transfer (i) that the Holder
         or transferee of this Warrant, as the case may be, furnish to the
         Company a written opinion of counsel (which opinion shall be in form,
         substance and scope customary for opinions of counsel in comparable
         transactions and reasonably acceptable to the Company) to the effect
         that such transfer may be made without registration under the
         Securities Act and under applicable state securities or blue sky laws,
         (ii) that the holder or transferee execute and deliver to the Company
         an investment letter in form and substance acceptable to the Company,
         (iii) that the transferee be an "accredited investor" as defined in
         Rule 501(a) promulgated under the Securities Act and (iv) such other
         documents as may be reasonably requested by the Company to give effect
         to the transfer and comply with applicable laws.

                  8.       No Rights as Shareholder until Exercise. This Warrant
does not entitle the Holder to any voting rights or other rights as a
shareholder of the Company prior to the exercise hereof. Upon the delivery of
the Exercise Notice, the surrender of this Warrant, the payment of the aggregate
Exercise Price to the Company, the Warrant Shares so purchased shall be and be
deemed to be issued to such Holder as the record owner of such shares as of the
close of business on the Exercise Date as determined in accordance with Section
3(a).

                  9.       Loss, Theft, Destruction or Mutilation of Warrant.
The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
or any stock certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it

                                       7



(which, in the case of the Warrant, shall not include the posting of any bond),
and upon surrender and cancellation of such Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or cause to be
delivered a stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.

                  10.      Saturdays, Sundays, Holidays, etc. If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal holiday, then
such action may be taken or such right may be exercised on the next succeeding
day not a Saturday, Sunday or legal holiday.

                  11.      Adjustments of Exercise Price and Number of Warrant
Shares; Stock Splits, etc. The number and kind of securities purchasable upon
the exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time upon the happening of any of the events described
in the next sentence. In the event the Company shall (i) pay a dividend in
shares of Common Stock or make a distribution in shares of Common Stock to
holders of its outstanding Common Stock, (ii) subdivide its outstanding shares
of Common Stock into a greater number of shares, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock, or (iv)
issue any shares of its capital stock in a reclassification of the Common Stock,
then the number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder shall be entitled
to receive the kind and number of Warrant Shares or other securities of the
Company which it would have owned or have been entitled to receive had such
Warrant been exercised in prior to the date upon which such event described in
clauses (i) through (iv) of this Section 3(a) shall become effective. Upon each
such adjustment of the kind and number of Warrant Shares or other securities of
the Company which are purchasable hereunder, the Holder shall thereafter be
entitled to purchase the number of Warrant Shares or other securities resulting
from such adjustment at an Exercise Price per Warrant Share or other security
equal to (x) the result obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
pursuant hereto immediately prior to such adjustment divided by (y) the number
of Warrant Shares or other securities of the Company resulting from such
adjustment. An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.

                  12.      Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets. In case the Company shall reorganize its
capital, reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all of its
property, assets or business to another corporation and, pursuant to the terms
of such reorganization, reclassification, merger, consolidation or disposition
of assets, shares of common stock of the successor or acquiring corporation, or
any cash, shares of stock or other securities or property of any nature
whatsoever (including warrants or other subscription or purchase rights) in
addition to or in lieu of common stock of the successor or acquiring corporation
("Other Property"), to be received by or distributed to the holders of Common
Stock of the Company, then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the number of shares of Common Stock of
the successor or acquiring corporation or of the Company, if it is the surviving
corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger,

                                       8



consolidation or disposition of assets by a Holder of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
event. In case of any such reorganization, reclassification, merger,
consolidation or disposition of assets, the successor or acquiring corporation
(if other than the Company) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined in good faith by resolution of the Board of Directors
of the Company) in order to provide for adjustments of Warrant Shares for which
this Warrant is exercisable which shall be as nearly equivalent as practicable
to the adjustments provided for in this Section 12. For purposes of this Section
12, "common stock of the successor or acquiring corporation" shall include stock
of such corporation of any class which is not preferred as to dividends or
assets over any other class of stock of such corporation and which is not
subject to redemption and shall also include any evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
for any such stock, either immediately or upon the arrival of a specified date
or the happening of a specified event and any warrants or other rights to
subscribe for or purchase any such stock. The foregoing provisions of this
Section 12 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.

                  13.      Voluntary Adjustment by the Company. The Company may
at any time during the term of this Warrant reduce the then current Exercise
Price to any amount and for any period of time deemed appropriate by the Board
of Directors of the Company.

                  14.      Notice of Adjustment. Whenever the number of Warrant
Shares or number or kind of securities or other property purchasable upon the
exercise of this Warrant or the Exercise Price is adjusted, as herein provided,
the Company shall give notice thereof to the Holder, which notice shall state
the number of Warrant Shares (and other securities or property) purchasable upon
the exercise of this Warrant and the Exercise Price of such Warrant Shares (and
other securities or property) after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made.

                  15.      Notice of Corporate Action. If at any time:

                           (a)      the Company shall take a record of the
         holders of its Common Stock for the purpose of entitling them to
         receive a dividend or other distribution, or any right to subscribe for
         or purchase any evidences of its indebtedness, any shares of stock of
         any class or any other securities or property, or to receive any other
         right, or

                           (b)      there shall be any capital reorganization of
         the Company, any reclassification or recapitalization of the capital
         stock of the Company or any consolidation or merger of the Company
         with, or any sale, transfer or other disposition of all or
         substantially all the property, assets or business of the Company to,
         another corporation or,

                           (c)      there shall be a voluntary or involuntary
         dissolution, liquidation or winding up of the Company;

                                       9




then, in any one or more of such cases, the Company shall give to Holder (i) at
least 10 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 10
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify, to the extent
known by the Company, (i) the date on which any such record is to be taken for
the purpose of such dividend, distribution or right, the date on which the
holders of Common Stock shall be entitled to any such dividend, distribution or
right, and the amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is to take place and the
time, if any such time is to be fixed, as of which the holders of Common Stock
shall be entitled to exchange their Warrant Shares for securities or other
property deliverable upon such disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 17(d).

                  16.      Authorized Shares. The Company covenants
that during the period the Warrant is outstanding, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant. The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights
under this Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
the Trading Market upon which the Common Stock may be listed.

                  17.      Miscellaneous.

                           (a)      Jurisdiction. All questions concerning the
         construction, validity, enforcement and interpretation of this Warrant
         shall be determined in accordance with the provisions of the Purchase
         Agreement.

                           (b)      Restrictions. The Holder acknowledges that
         the Warrant Shares acquired upon the exercise of this Warrant, if not
         registered, will have restrictions upon resale imposed by state and
         federal securities laws.

                           (c)      Nonwaiver and Expenses. No course of dealing
         or any delay or failure to exercise any right hereunder on the part of
         Holder shall operate as a waiver of such right or otherwise prejudice
         Holder's rights, powers or remedies, notwithstanding all rights
         hereunder terminate on the Termination Date. If the Company willfully
         and knowingly fails to comply with any provision of this Warrant, which
         results in any material damages to the Holder as determined by a court
         of law, the Company shall pay to Holder such amounts as shall be
         sufficient to cover any costs and expenses including,

                                       10



         but not limited to, reasonable attorneys' fees, including those of
         appellate proceedings, incurred by Holder in collecting any amounts due
         pursuant hereto or in otherwise enforcing any of its rights, powers or
         remedies hereunder.

                           (d)      Notices. Any notice, request or other
         document required or permitted to be given or delivered to the Holder
         by the Company shall be delivered in accordance with the notice
         provisions of the Purchase Agreement.

                           (e)      Limitation of Liability. Subject to Section
         3(d), no provision hereof, in the absence of any affirmative action by
         Holder to exercise this Warrant or purchase Warrant Shares, and no
         enumeration herein of the rights or privileges of Holder, shall give
         rise to any liability of Holder for the purchase price of any Common
         Stock or as a stockholder of the Company, whether such liability is
         asserted by the Company or by creditors of the Company.

                           (f)      Remedies. Holder, in addition to being
         entitled to exercise all rights granted by law, including recovery of
         damages, will be entitled to specific performance of its rights under
         this Warrant. The Company agrees that monetary damages would not be
         adequate compensation for any loss incurred by reason of a breach by it
         of the provisions of this Warrant and hereby agrees to waive the
         defense in any action for specific performance that a remedy at law
         would be adequate.

                           (g)      Successors and Assigns. Subject to
         applicable securities laws, this Warrant and the rights and obligations
         evidenced hereby shall inure to the benefit of and be binding upon the
         successors of the Company and the successors and permitted assigns of
         Holder. The provisions of this Warrant are intended to be for the
         benefit of all Holders from time to time of this Warrant and shall be
         enforceable by any such Holder or holder of Warrant Shares.

                           (h)      Amendment. This Warrant may be modified or
         amended or the provisions hereof waived with the written consent of the
         Company and the Holder.

                           (i)      Severability. Wherever possible, each
         provision of this Warrant shall be interpreted in such manner as to be
         effective and valid under applicable law, but if any provision of this
         Warrant shall be prohibited by or invalid under applicable law, such
         provision shall be ineffective to the extent of such prohibition or
         invalidity, without invalidating the remainder of such provisions or
         the remaining provisions of this Warrant.

                           (j)      Headings. The headings used in this Warrant
         are for the convenience of reference only and shall not, for any
         purpose, be deemed a part of this Warrant.

                              ********************

                                       11



                  IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.

Dated:  November 12, 2003
                                       FIRST VIRTUAL COMMUNICATIONS, INC.

                                       By:      /s/ Truman Cole
                                           _______________________________
                                             Name:
                                             Title:

                                       12



                               NOTICE OF EXERCISE

To: First Virtual Communications, Inc.

                  (1) The undersigned hereby elects to purchase ________ Warrant
Shares of First Virtual Communications, Inc. pursuant to the terms of the
attached Warrant (only if exercised in full), and tenders herewith payment of
the exercise price in full, together with all applicable transfer taxes, if any.

                  (2) Payment shall take the form of (check applicable box):

                           [ ] in lawful money of the United States; or

                           [ ] the cancellation of such number of Warrant Shares
                           as is necessary, in accordance with the formula set
                           forth in subsection 3(d), to exercise this Warrant
                           with respect to the maximum number of Warrant Shares
                           purchasable pursuant to the cashless exercise
                           procedure set forth in subsection 3(d).

                  (3) Please issue a certificate or certificates representing
said Warrant Shares in the name of the undersigned or in such other name as is
specified below:
                  ________________________________________

The Warrant Shares shall be delivered to the following:

                  ________________________________________

                  ________________________________________

                  ________________________________________

                  (4) Accredited Investor. The undersigned is an "accredited
investor" as defined in Regulation D promulgated under the Securities Act of
1933, as amended.

                                       [PURCHASER]

                                       By: ______________________________
                                       Name:
                                       Title:

                                       Dated:  ________________________



                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

                  FOR VALUE RECEIVED, the foregoing Warrant and all rights
evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

                                          Dated:  ______________, _______

                             Holder's Signature: ___________________________

                             Holder's Address: _____________________________

                                               _____________________________

Signature Guaranteed:  ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.



                                    EXHIBIT A

                                   PURCHASERS



           NAME OF PURCHASER                    NUMBER OF SHARES      NUMBER OF WARRANTS
           -----------------                    ----------------      ------------------
                                                                
LAGUNITAS PARTNERS LP                               837,989                418,994

J. Patterson McBaine                                111,732                 55,806

Jon D. Gruber & Linda W. Gruber                     111,732                 55,866

Gruber & McBaine International                      279,330                139,665

Special Situations Fund III, L.P.                   553,771                276,885

Special Situations Cayman Fund L.P.                 178,911                 89,455

Special Situations Technology Fund L.P.              17,039                  8,519

Special Situations Technology Fund II L.P.          102,235                 51,117

MicroCapital Fund L.P.                              391,061                195,530

MicroCapital Fund Ltd.                              167,598                 83,799

Bonanza Fund                                        139,655                 69,832

Firelake Strategic Technology Fund, L.P.            837,989                418,994

Agile Partners, LP                                 279,3320                139,665

Behavioral Financial Fund Ltd.                      782,123                391,061

Jurika Family Trust                                 167,598                 83,799

JMK Investment Partners, L.P.                       167,598                 83,799

Encinal Crossover Fund                               83,799                 41,899

Neal I. Goldman IRA Rollover                        200,000                100,000

Palisades Master Fund L.P.                          279,330                139,665

Gordon J. Roth                                       11,174                  5,587




                                                                       
Joseph Paul Schimmelpfennig                          11,174                  5,587

John J. Weber                                        11,174                  5,587

Jeffrey M. Ng                                         8,380                  4,190

Louis J. Ellis                                        1,676                    838

EX-4.14

                                                                    EXHIBIT 4.14

THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

                       FIRST VIRTUAL COMMUNICATIONS, INC.

                        WARRANT TO PURCHASE COMMON STOCK

NO. CSW-21                                                    NOVEMBER 12, 2003

                          VOID AFTER NOVEMBER 11, 2008

         THIS CERTIFIES THAT, for value received, Roth Capital Partners LLC,
with its principal office at 24 Corporate Plaza, Newport Beach, California
92660, or assigns (the "HOLDER"), is entitled to purchase, subject to the
provisions of this Warrant, at the Exercise Price (defined below) from First
Virtual Communications, Inc., a Delaware corporation, with its principal office
at 3200 Bridge Parkway, Suite 202, Redwood City, CA 94065 (the "COMPANY") up to
458,592 shares of the Common Stock of the Company (the "COMMON STOCK"),
commencing May 12, 2004. This Warrant is being issued pursuant to the terms of
the Letter Agreement dated September 30, 2003 between the Company and the
Holder.

         1.       DEFINITIONS. As used herein, the following terms shall have
the following respective meanings:

                  (a)      "EXERCISE PERIOD" shall mean the period commencing
May 12, 2004 and ending at 5:00 P.M. PDT on November 11, 2008, unless sooner
terminated as provided below.

                  (b)      "EXERCISE PRICE" shall mean $2.15 per share, subject
to adjustment pursuant to Section 5 below.

                  (c)      "EXERCISE SHARES" shall mean the shares of the
Company's Common Stock issuable upon exercise of this Warrant, subject to
adjustment pursuant to the terms herein, including but not limited to adjustment
pursuant to Section 5 below.

         2.       EXERCISE OF WARRANT. The rights represented by this Warrant
may be exercised in whole or in part at any time during the Exercise Period, by
delivery of the following to the Company at its address set forth above (or at
such other address as it may designate by notice in writing to the Holder):

                  (a)      An executed Notice of Exercise in the form attached
hereto;

                  (b)      Payment of the Exercise Price either (i) in cash or
by check, or (ii) by cancellation of indebtedness; and

                  (c)      This Warrant.

                                       1


         Upon the exercise of the rights represented by this Warrant, a
certificate or certificates for the Exercise Shares so purchased, registered in
the name of the Holder or persons affiliated with the Holder, if the Holder so
designates, shall be issued and delivered to the Holder within a reasonable time
after the rights represented by this Warrant shall have been so exercised.

         The person in whose name any certificate or certificates for Exercise
Shares are to be issued upon exercise of this Warrant shall be deemed to have
become the holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate or certificates, except that, if the date of
such surrender and payment is a date when the stock transfer books of the
Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.

                  2.1      NET EXERCISE. Notwithstanding any provisions herein
to the contrary, if the fair market value of one share of the Company's Common
Stock is greater than the Exercise Price (at the date of calculation as set
forth below), in lieu of exercising this Warrant by payment of cash, the Holder
may, commencing on May 12, 2004 and thereafter for the full term of this
Warrant, elect to receive shares equal to the value (as determined below) of
this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with the properly
endorsed Notice of Exercise in which event the Company shall issue to the Holder
a number of shares of Common Stock computed using the following formula:

                           X = Y (A-B)
                               -------
                                  A

         Where    X =      the number of shares of Common Stock to be issued to
                           the Holder

                  Y =      the number of shares of Common Stock purchasable
                           under this Warrant or, if only a portion of this
                           Warrant is being exercised, the portion of this
                           Warrant being canceled (at the date of such
                           calculation)

                  A =      the fair market value of one share of the Company's
                           Common Stock (at the date of such calculation)

                  B =      Exercise Price (as adjusted to the date of such
                           calculation)

         For purposes of the above calculation, the fair market value of one
share of Common Stock shall be on any particular date (a) the last reported
closing bid price per share of Common Stock on such date on the Nasdaq SmallCap
Market (or the Nasdaq National Market, as the case may be), or (b) if there is
no such price on such date, then the closing bid price on the Nasdaq SmallCap
Market (or the Nasdaq National Market, as the case may be) on the date nearest
preceding such date, or (c) if the Common Stock is not then listed or quoted on
the Nasdaq SmallCap Market or the Nasdaq National Market, and if prices for the
Common Stock are then reported in the "pink sheets" published by the National
Quotation Bureau Incorporated (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) if the shares of Common Stock are

                                       2


not then publicly traded, the fair market value of a share of Common Stock as
determined in good faith by the Board of Directors of the Company.

         3.       COVENANTS OF THE COMPANY.

                  3.1      COVENANTS AS TO EXERCISE SHARES. The Company
covenants and agrees that all Exercise Shares that may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be
validly issued and outstanding, fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issuance thereof. The Company
further covenants and agrees that the Company will at all times during the
Exercise Period, have authorized and reserved, free from preemptive rights, a
sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant. If at any time during the Exercise
Period the number of authorized but unissued shares of Common Stock shall not be
sufficient to permit exercise of this Warrant, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes.

                  3.2      NO IMPAIRMENT. Except and to the extent as waived or
consented to by the Holder, the Company will not, by amendment of its Amended
and Restated Certificate of Incorporation, as amended, or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all such
action as may be necessary or appropriate in order to protect the exercise
rights of the Holder against impairment.

                  3.3      NOTICES OF RECORD DATE. In the event of any taking by
the Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Company shall mail to the Holder,
at least ten days prior to the date specified herein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend or
distribution.

         4.       REPRESENTATIONS OF HOLDER.

                  4.1      ACQUISITION OF WARRANT FOR PERSONAL ACCOUNT. The
Holder represents and warrants that it is acquiring this Warrant and the
Exercise Shares solely for its account for investment and not with a view to or
for sale or distribution of said Warrant or Exercise Shares or any part thereof.
The Holder also represents that the entire legal and beneficial interests of
this Warrant and Exercise Shares the Holder is acquiring is being acquired for,
and will be held for, its account only.

                  4.2      SECURITIES ARE NOT REGISTERED.

                           (A)      The Holder understands that this Warrant and
the Exercise Shares have not been registered under the Securities Act of 1933,
as amended (the "ACT"), on the basis that no distribution or public offering of
the stock of the Company is to be effected. The Holder realizes that the basis
for the exemption may not be present if, notwithstanding its

                                       3


representations, the Holder has a present intention of acquiring the securities
for a fixed or determinable period in the future, selling (in connection with a
distribution or otherwise), granting any participation in, or otherwise
distributing the securities. The Holder has no such present intention.

                           (b)      The Holder recognizes that this Warrant and
the Exercise Shares must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
The Holder recognizes that the Company has no obligation to register this
Warrant or the Exercise Shares of the Company, or to comply with any exemption
from such registration.

                           (c)      The Holder is aware that neither this
Warrant nor the Exercise Shares may be sold pursuant to Rule 144 adopted under
the Act unless certain conditions are met, including, among other things, the
existence of a public market for the shares, the availability of certain current
public information about the Company, the resale following the required holding
period under Rule 144 and the number of shares being sold during any three month
period not exceeding specified limitations.

                  4.3      DISPOSITION OF WARRANT AND EXERCISE SHARES.

                           (a)      The Holder further agrees not to make any
disposition of all or any part of this Warrant or Exercise Shares in any event
unless and until:

                                    (i)      The Company shall have received a
letter secured by the Holder from the Securities and Exchange Commission stating
that no action will be recommended to the Commission with respect to the
proposed disposition;

                                    (ii)     There is then in effect a
registration statement under the Act covering such proposed disposition and such
disposition is made in accordance with said registration statement; or

                                    (iii)    The Holder shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition,
and if reasonably requested by the Company, the Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, for
the Holder to the effect that such disposition will not require registration of
this Warrant or Exercise Shares, as applicable, under the Act or any applicable
state securities laws.

                           (b)      The Holder understands and agrees that all
certificates evidencing the Exercise Shares to be issued to the Holder may bear
the following legend:

         THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
         PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
         STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL

                                        4


         SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

         5.       ADJUSTMENT OF EXERCISE PRICE. In the event of changes in the
outstanding Common Stock of the Company by reason of stock dividends, split-ups,
recapitalizations, reclassifications, combinations or exchanges of shares,
separations, reorganizations, liquidations, or the like, the number and class of
shares available under this Warrant in the aggregate and the Exercise Price
shall be correspondingly adjusted to give the Holder of this Warrant, on
exercise for the same aggregate Exercise Price, the total number, class, and
kind of shares as the Holder would have owned had this Warrant been exercised
prior to the event and had the Holder continued to hold such shares until after
the event requiring adjustment. The form of this Warrant need not be changed
because of any adjustment in the number of Exercise Shares subject to this
Warrant.

         6.       FRACTIONAL SHARES. No fractional shares shall be issued upon
the exercise of this Warrant as a consequence of any adjustment pursuant hereto.
All Exercise Shares (including fractions) issuable upon exercise of this Warrant
may be aggregated for purposes of determining whether the exercise would result
in the issuance of any fractional share. If, after aggregation, the exercise
would result in the issuance of a fractional share, the Company shall, in lieu
of issuance of any fractional share, pay the Holder otherwise entitled to such
fraction a sum in cash equal to the product resulting from multiplying the then
current fair market value of an Exercise Share by such fraction.

         7.       NO STOCKHOLDER RIGHTS. This Warrant in and of itself shall not
entitle the Holder to any voting rights or other rights as a stockholder of the
Company.

         8.       TRANSFER OF WARRANT. Subject to applicable laws and the
restriction on transfer set forth on the first page of this Warrant, this
Warrant and all rights hereunder are transferable, by the Holder in person or by
duly authorized attorney, upon delivery of this Warrant and the form of
assignment attached hereto to any transferee designated by Holder. The
transferee shall sign an investment letter in form and substance satisfactory to
the Company.

         9.       LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant
is lost, stolen, mutilated or destroyed, the Company may, on such terms as to
indemnity or otherwise as it may reasonably impose (which shall, in the case of
a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.

         10.      NOTICES, ETC. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given: (a) upon personal
delivery to the party to be notified, (b) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient, if not, then on
the next business day, (c) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to the Company at the address listed on the signature

                                       5


page and to the Holder at the address on the Company records, or at such other
address as the Company or Holder may designate by ten days advance written
notice to the other party hereto.

         11.      ACCEPTANCE. Receipt of this Warrant by the Holder shall
constitute acceptance of and agreement to all of the terms and conditions
contained herein.

         12.      GOVERNING LAW. This Warrant and all rights, obligations and
liabilities hereunder shall be governed by the laws of the State of California.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer as of November 12, 2003.

                                     FIRST VIRTUAL COMMUNICATIONS, INC.

                                     By: /s/ Truman Cole
                                         ------------------------------------
                                     Name: Truman Cole
                                     Title: Chief Financial Officer

                                       6


                               NOTICE OF EXERCISE

TO:  FIRST VIRTUAL COMMUNICATIONS, INC.

         (1)      [ ]      The undersigned hereby elects to purchase ________
shares of the Common Stock of First Virtual Communications, Inc. (the "COMPANY")
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the exercise price in full, together with all applicable transfer taxes, if any.

                  [ ]      The undersigned hereby elects to purchase ________
shares of the Common Stock of the Company pursuant to the terms of the net
exercise provisions set forth in Section 2.1 of the attached Warrant, and shall
tender payment of all applicable transfer taxes, if any.

         (2)      Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:

                          ____________________________
                                     (Name)

                          ____________________________

                          ____________________________
                                    (Address)

         (3)      The undersigned represents that (i) the aforesaid shares of
Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares; (ii) the undersigned is aware of the
Company's business affairs and financial condition and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision
regarding its investment in the Company; (iii) the undersigned is experienced in
making investments of this type and has such knowledge and background in
financial and business matters that the undersigned is capable of evaluating the
merits and risks of this investment and protecting the undersigned's own
interests; (iv) the undersigned understands that the shares of Common Stock
issuable upon exercise of this Warrant have not been registered under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), by reason of a
specific exemption from the registration provisions of the Securities Act, which
exemption depends upon, among other things, the bona fide nature of the
investment intent as expressed herein, and, because such securities have not
been registered under the Securities Act, they must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from such
registration is available; (v) the undersigned is aware that the aforesaid
shares of Common Stock may not be sold pursuant to Rule 144 adopted under the
Securities Act unless certain conditions are met and until the undersigned has
held the shares for the number of years prescribed by Rule 144; and (vi) the
undersigned agrees not to make any disposition of all or any part of the
aforesaid shares of Common Stock unless and until there is then in effect a
registration statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with said registration
statement, or the undersigned has provided the Company with an opinion of
counsel satisfactory to the Company, stating that such registration is not
required.

__________________                     _________________________________________
(Date)                                 (Signature)

                                       _________________________________________
                                       (Print name)



                                 ASSIGNMENT FORM

                           (To assign the foregoing Warrant, execute this form
                           and supply required information. Do not use this form
                           to purchase shares.)

         FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

Name:___________________________________________________________________________
                                 (Please Print)

Address:________________________________________________________________________
                                 (Please Print)

Dated: __________, 20____

Holder's
Signature:____________________________________

Holder's
Address:______________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of this Warrant, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

EX-10.52

                                                                   EXHIBIT 10.52

October 9, 2003

Jonathan G. Morgan
170 30th Avenue
San Francisco, CA  94121

RE: EMPLOYMENT TERMS

Dear Jonathan:

First Virtual Communications, Inc. (the "COMPANY") is pleased to confirm your
position as President and Chief Executive Officer, pursuant to the terms of this
letter agreement ("AGREEMENT").

1.       DUTIES

You will be expected to perform various duties consistent with your position. As
a Section 16 officer, this position reports to the Company's Board of Directors
("BOARD"). Additionally the Compensation Committee will establish certain
performance targets and Company goals related to your specific job function, in
consultation with you as set forth herein.

2.       COMPENSATION

         2.1      BASE CASH COMPENSATION. For the year 2003, your base salary
will be $300,000 per year (less payroll deductions and all required
withholdings), which will be subject to annual review. You will be paid
bi-weekly and you will be eligible for all standard Company benefits provided to
other senior executives. Details about these benefit plans are available for
your review upon request from the Company's Director of Human Resources. The
Company may modify benefits packages from time to time, as it deems necessary.

         2.2      VARIABLE CASH COMPENSATION. You will also be entitled to
annual performance based cash and stock option compensation as determined by the
Compensation Committee and agreed to by you on an annual basis within the first
60 days of each calendar year, commencing with the calendar year 2004, subject
to your achievement of specified performance targets ("Variable Compensation").
Such performance targets shall be set forth in writing and attached to this
agreement as Exhibit D.

         2.3      STOCK OPTIONS. You received under the Company's 1997 Equity
Incentive Plan and 1999 Equity Incentive Plan, options to purchase an aggregate
of 210,000 shares of the Company's common stock, at an exercise price equal to
the fair market value of $4.05 per share, the stock's closing price as reported
on the Nasdaq SmallCap Market on May 15, 2003. (The number of shares in this
Section 2.5 and

1


exercise price have been adjusted to reflect the one-for-five reverse split of
the Company's common stock on June 27, 2003 at 5:00 p.m.). This is in addition
to the options to purchase 30,000 shares of the Company's common stock granted
to you on November 13, 2002.

In accordance with Section 3, Stock Options, of the Offer Letter between you and
the Company, dated October 29, 2002, you will also receive under the Company's
1999 Equity Incentive Plan, an option to purchase 20,000 shares of the Company's
common stock, for meeting the objective of finding a permanent Company President
and Chief Executive Officer within six months of October 29, 2002. The stock
option will be governed by and granted pursuant to a separate Stock Option
Agreement. The exercise price per share of the stock option will be equal to the
fair market value of the Common Stock on the date of grant, which will be the
date the Board approves the stock option grant. The Board will meet to approve
the grant promptly following the execution of this Agreement. The stock option
will be fully vested on the date of grant.

3.       TERMINATION OF EMPLOYMENT

Employment at First Virtual Communications is "at will." The Company may
terminate your employment at any time and for any or no reason, with or without
Cause or advance notice, by giving you written notice of such termination.
Similarly, you may terminate your employment with the Company at any time at
your election, in your sole discretion, for any or no reason upon written notice
to the Company. The terms of your employment relationship may not be modified
except by a written agreement signed by the Chairman of the Compensation
Committee or another director or officer designated by the Compensation
Committee.

In the event that the Company terminates your employment without Cause, you
terminate you employment with the Company for Good Reason, or upon your
Disability, then upon your furnishing to the Company an executed release and
waiver of claims in the form attached hereto as EXHIBIT A, you shall be entitled
to receive severance payments and other rights in the form of (i) your accrued
base salary and accrued and unused vacation benefits earned through your date of
termination, (ii) continuation of your base compensation in effect at the time
of your termination, for a period of twelve (12) months after the date of
termination to be paid out bi-weekly in accordance with the Company's regular
payroll policies, (iii) any variable compensation earned as of the date of your
termination, to be paid out in accordance with the terms of your Variable
Compensation, and (iv) a six (6) month period (or such longer period specified
in your option agreements) immediately following your date of termination in
which to exercise any outstanding stock options of the Company which are then
held by you which are vested as of your termination date. All cash payments
shall be subject to applicable payroll deductions and withholdings. During the
severance period, you shall be entitled to receive COBRA medical benefits for
yourself and eligible dependents paid for by the Company until the earlier of
(a) twelve (12) months after the date of termination, or (b)

2


the date that you become eligible to receive medical benefits from another
company or business entity that provides coverage for you and your dependents.

"CAUSE" means your: (i) gross negligence or willful misconduct in connection
with the performance of your duties to the Company that in the written
determination of a majority of the Board has not been cured within thirty (30)
days following receipt by you of written notice from the Board identifying such
acts of gross negligence or willful misconduct; (ii) commission of a felony
(other than a traffic-related offense) that in the written determination of a
majority of the Board has caused material injury to the Company's business;
(iii) dishonesty with respect to a significant matter relating to the Company's
business and intended to result in personal enrichment of you or your family at
the expense of the Company; or (iv) material breach of this Offer Letter or the
Proprietary Information and Inventions Agreement referenced below by and between
you and the Company, which material breach has not been cured within thirty (30)
days following receipt by you of written notice from the Board identifying such
material breach.

"GOOD REASON" means: (i) the assignment to you of any position other than
President and Chief Executive Officer of the Company or any material reduction
in your duties, authority or responsibilities as in effect prior to such
reduction such that you no longer have the duties, authority and
responsibilities customarily associated with the office of President and Chief
Executive Officer of the Company; (ii) a reduction by the Company in your base
salary, or variable compensation as in effect immediately before such reduction
unless such reduction in base salary or variable compensation is made as a part
of a general cost-savings plan to reduce expenses that is applicable to all
senior executives similarly situated; (iii) your relocation to a facility or a
location more than thirty-five (35) miles from your then present location; or
(iv) any failure of the Company to obtain the assumption of this Agreement by
any successor or assign of the Company, except, in any such case, if agreed in
writing by you to be an exception to this definition.

"DISABILITY" means your death, or physical or mental disability that prevents
you from satisfactorily performing the normal duties and responsibilities of
your office in the reasonable good faith determination of the Board for a period
of more than one hundred twenty (120) consecutive days.

If your employment is terminated for Cause, or you voluntarily terminate your
employment from the Company for other than Good Reason, all compensation and
benefits will cease immediately and you will receive no additional payment from
the Company other than (i) your accrued base salary and accrued and unused
vacation benefits earned through your date of termination and (ii) any variable
compensation earned as of the date of your termination to be paid out in
accordance with Sections 2.3 and 2.4.

3


4.       COMPANY POLICY

As a Company employee, you are expected to abide by the Company's policies,
procedures, rules and regulations and acknowledge in writing that you have read
the Company's Employee Handbook, which will govern the terms and conditions of
your employment. The Company's Employee Handbook may be modified from time to
time at the sole discretion of the Company. Normal working hours are from 8:00
a.m. to 5:00 p.m., Monday through Friday. As an exempt salaried employee, you
will be expected to work additional hours as required by the nature of your work
assignments. As part of your employment, you shall not engage in other for
profit activities (other than passive investment activities) outside the
Company's employment, unless such activity has been specifically authorized by
the Board or the Compensation Committee.

5.       PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

As a condition of employment, you previously signed and will be required to
continue to comply with the Proprietary Information and Inventions Agreement,
attached hereto as EXHIBIT B, which prohibits unauthorized use or disclosure of
the Company's proprietary information, among other things.

In your work for the Company, you will be expected not to use or disclose any
confidential information, including trade secrets, of any former employer or
other person to whom you have an obligation of confidentiality. Rather, you will
be expected to use only that information which is generally known and used by
persons with training and experience comparable to your own, which is common
knowledge in the industry or otherwise legally in the public domain, or which is
otherwise provided or developed by the Company. During our discussions about
your proposed job duties, you assured us that you would be able to perform those
duties within the guidelines just described.

You agree that you will not bring onto Company premises any unpublished
documents or property belonging to any former employer or other person to whom
you have an obligation of confidentiality.

6.       CHANGE OF CONTROL

You will also be covered by the Company's Executive Officer's Change of Control
Plan, which is attached to this agreement as EXHIBIT C.

7.       ENTIRE AGREEMENT

This Agreement, together with your Proprietary Information and Inventions
Agreement, the Executive Officer's Change of Control Plan and the stock option
documents referred to herein, constitute the complete and exclusive statement of
the terms of your employment with the Company. The employment terms in this
Agreement supersede any other agreements or promises made to you by anyone,
whether oral or written, including the Offer Letter between you and the Company
dated October 29, 2002. The terms of this

4


Agreement cannot be modified, except in a writing signed by the Company's
Chairman of the Compensation Committee or other officer or director designated
by the Compensation Committee.

8.       GOVERNING LAW

This Agreement will be governed by and construed according to the laws of the
State of California. You hereby expressly consent to the personal jurisdiction
of the state and federal courts located in the County of San Francisco,
California for any lawsuit arising from or related to this Agreement.

9.       ARBITRATION

The parties hereby agree that any dispute, claim or controversy arising out of,
relating to or in connection with this Agreement ("ARBITRABLE CLAIMS") shall be
determined exclusively by and through final and binding arbitration in San Mateo
County, California, each party hereto expressly and conclusively waiving its
right to proceed to a judicial determination with respect to the merits of such
arbitrable matters. Such arbitration shall be conducted in accordance with the
American Arbitration Association National Rules for Resolution of Employment
Disputes then in effect before a neutral and impartial arbitrator who shall be
selected by mutual agreement of the parties. The arbitrator shall prepare a
written decision containing the essential findings and conclusions on which the
award is based so as to ensure meaningful judicial review of the decision. The
arbitrator shall apply the same substantive law, with the same statutes of
limitations and same remedies, that would apply if the claims were brought in a
court of law. This Agreement shall be governed by the California Arbitration Act
and the arbitrator, in ruling on procedural and substantive issues raised in the
arbitration itself, shall apply the substantive law of the State of California.
Either party may bring an action in court to compel arbitration under this
Agreement and to enforce an arbitration award. Otherwise, neither party shall
initiate or prosecute any lawsuit in any way related to any Arbitrable Claim.
THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO
ARBITRABLE CLAIMS.

10.      SUCCESSORS AND ASSIGNS.

This Agreement will be binding upon your heirs, executors, administrators and
other legal representatives and will be for the benefit of the Company, its
successors, and its assigns. Please sign and date this Agreement, and return it
to the Company's Human Resources Department. We understand you have accepted
employment with the Company under the terms described above. As required by law,
this offer is subject to satisfactory proof of your right to work in the United
States. We look forward to your favorable reply and to a productive and
enjoyable work relationship.

5


11.      SEVERABILITY.

If one or more of the provisions of this Agreement are deemed unenforceable by
law, then such provision or provisions will be deemed stricken from this
Agreement and the remaining provisions shall continue in full force and effect.

12.      SEVERANCE BENEFITS.

Any Severance benefits under the second paragraph of Section 3, item (ii),
continuation of base compensation, of this Agreement to which you may be
entitled, shall be in lieu of any benefits to which you would otherwise be
entitled under Section 5(i) of the Company's Executive Officers' Change of
Control Plan.

Please sign this document as acceptance of the employment terms listed in this
Agreement.

Sincerely,

FIRST VIRTUAL COMMUNICATIONS, INC.

By:   /s/ Norman Gaut
   ______________________________
   Norman Gaut
   Chairman of the Compensation Committee

ACCEPTED:


/s/  Jonathan G. Morgan
_______________________________
Jonathan G. Morgan

6


Attachments:

Exhibit A:  Form of Release
Exhibit B:  Proprietary Information and Inventions Agreement
Exhibit C:  Executive Officers' Change of Control Plan
Exhibit D:  Variable Compensation

7


                                                                       EXHIBIT A

                                RELEASE AGREEMENT
                             [Employees 40 and over]

I, ____________, understand that my position with _____________ (the "Company")
was terminated effective _________, 2002 (the "Separation Date"). The Company
has agreed that if I choose to sign this Agreement and provided the Agreement
becomes effective, the Company will pay me severance in the amount of ____ weeks
of base salary minus the standard withholdings and deductions. This payment will
be made within three (3) days of the Effective Date of this Agreement. I
understand that I am not entitled to this severance payment unless I sign this
Agreement and it becomes effective. I understand that in addition to this
severance, the Company will pay me all of my accrued salary and vacation to
which I am entitled by law.

In exchange for the consideration provided to me by this Agreement that I am not
otherwise entitled to receive, I hereby generally and completely release the
Company and its directors, officers, employees, shareholders, partners, agents,
attorneys, predecessors, successors, parent and subsidiary entities, insurers,
affiliates, and assigns from any and all claims, liabilities and obligations,
both known and unknown, that arise out of or are in any way related to events,
acts, conduct, or omissions occurring prior to my signing this Agreement. This
general release includes, but is not limited to: (1) all claims arising out of
or in any way related to my employment with the Company or the termination of
that employment; (2) all claims related to my compensation or benefits from the
Company, including salary, bonuses, commissions, vacation pay, expense
reimbursements, severance pay, fringe benefits, stock, stock options, or any
other ownership interests in the Company; (3) all claims for breach of contract,
wrongful termination, and breach of the implied covenant of good faith and fair
dealing; (4) all tort claims, including claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (5) all federal,
state, and local statutory claims, including claims for discrimination,
harassment, retaliation, attorneys' fees, or other claims arising under the
federal Civil Rights Act of 1964 (as amended), the federal Americans with
Disabilities Act of 1990, the federal Age Discrimination in Employment Act of
1967 (as amended) ("ADEA"), and the California Fair Employment and Housing Act
(as amended).

In giving this release, which includes claims which may be unknown to me at
present, I hereby acknowledge that I have read and understand Section 1542 of
the Civil Code of the State of California which reads as follows:

         A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
         KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
         RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
         SETTLEMENT WITH THE DEBTOR.

I hereby expressly waive and relinquish all rights and benefits under this
section and any law or legal principle of similar effect in any jurisdiction
with respect to claims released hereby.

I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under the federal Age Discrimination in Employment Act of
1967, as amended ("ADEA"). I also acknowledge that the consideration given for
the waiver in the above paragraph is in addition to anything of value to which I
was already entitled. I have been advised by this writing, as required by the
ADEA that: (a) my waiver and release do not apply to any claims that may arise
after my signing of this Agreement; (b) I should consult with an attorney prior
to executing this release; (c) I

                                       1.



have twenty-one (21) days within which to consider this release (although I may
choose to voluntarily execute this release earlier); (d) I have seven (7) days
following the execution of this release to revoke the Agreement; and (e) this
Agreement will not be effective until the eighth day after this Agreement has
been signed both by me and by the Company ("Effective Date").

I acknowledge my continuing obligations under my Proprietary Information and
Inventions Agreement, a copy of which is attached hereto as Exhibit A. Pursuant
to the Proprietary Information and Inventions Agreement I understand that among
other things, I must not use or disclose any confidential or proprietary
information of the Company and I must immediately return all Company property
and documents (including all embodiments of proprietary information) and all
copies thereof in my possession or control.

This Agreement [including Exhibit A hereto] constitutes the complete, final and
exclusive embodiment of the entire agreement between the Company and me with
regard to the subject matter hereof. I am not relying on any promise or
representation by the Company that is not expressly stated herein. This
Agreement may only be modified by a writing signed by both me and a duly
authorized officer of the Company.

I accept and agree to the terms and conditions stated above:

___________________                                     _______________________
    Date                                                       [Employee]

___________________                                     _______________________
    Date                                                       [Company]

                                       2.



                                                                       EXHIBIT B

                       FIRST VIRTUAL COMMUNICATIONS, INC.

            FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

         In consideration of my employment or continued employment by First
Virtual Communications, Inc. (the "Company"), and the compensation now and
hereafter paid to me, I hereby agree as follows:

         1.       RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during the term of my employment and thereafter, I will hold in strictest
confidence and will not disclose, use, lecture upon or publish any of the
Company's Proprietary Information (defined below), except as such disclosure,
use or publication may be required in connection with my work for the Company
and an officer of the Company expressly authorizes such in writing. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns and the Company and its assigns shall be
the sole owner of all trade secret rights, patent rights, copyrights, mask work
rights, trade secret rights and all other rights throughout the world
(collectively, "Proprietary Rights") in connection therewith.

         The term "Proprietary Information" shall mean trade secrets,
confidential knowledge, data or any other proprietary information of the
Company. By way of illustration but not limitation, "Proprietary Information"
includes (a) trade secrets, inventions, mask works, ideas, processes, formulas,
source and object codes, data, programs, other works of authorship, cell lines,
know-how, improvements, discoveries, developments, designs and techniques
(hereinafter collectively referred to as "Inventions"); and (b) information
regarding plans for research, development, new products, marketing and selling,
business plans, budgets and unpublished financial statements, licenses, prices
and costs, suppliers and customers; and information regarding the skills and
compensation of other employees of the Company.

         2.       THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("Third Party Information") subject to a
duty on the Company's part to maintain the confidentiality of such information
and to use it only for certain limited purposes. During the term of my
employment and thereafter, I will hold Third Party Information in the strictest
confidence and will not disclose (to anyone other than Company personnel who
need to know such information in connection with their work for the Company) or
use, except in connection with my work for the Company, Third Party Information
unless expressly authorized by an officer of the Company in writing.

         3.       ASSIGNMENT OF INVENTIONS.

                  3.1      ASSIGNMENT. I hereby assign to the Company all my
right, title and interest in and to any and all Inventions (and all Proprietary
Rights with respect thereto) whether or not patentable or registrable under
copyright or similar statutes, made or conceived or reduced to practice or
learned by me, either alone or jointly with others, during the period of my
employment with the Company. Inventions assigned to or as directed by the
Company by this paragraph 3 are hereinafter referred to as "Company Inventions."
I recognize that this

                                       1.



Agreement does not require assignment of any invention that qualifies fully for
protection under Section 2870 of the California Labor Code (hereinafter "Section
2870"), which provides as follows:

                  (1)      Any provision in an employment agreement that
provides that an employee shall assign, or offer to assign, any of his or her
rights in an invention to his or her employer shall not apply to an invention
that the employee developed entirely on his or her own time without using the
employer's equipment, supplies, facilities, or trade secret information except
for those inventions that either:

                           (A)      Relate at the time of conception or
reduction to practice of the invention to the employer's business, or actual or
demonstrably anticipated research or development of the employer.

                           (B)      Result from any work performed by the
employee for the employer.

                  (2)      To the extent a provision in an employment agreement
purports to require an employee to assign an invention otherwise excluded from
being required to be assigned under subdivision (i), the provision is against
the public policy of this state and is unenforceable.

                  3.2      GOVERNMENT. I also assign to or as directed by the
Company all my right, title and interest in and to any and all Inventions, full
title to which is required to be in the United States by a contract between the
Company and the United States or any of its agencies.

                  3.3      WORKS FOR HIRE. I acknowledge that all original works
of authorship that are made by me (solely or jointly with others) within the
scope of my employment and that are protectable by copyright are "works made for
hire," as that term is defined in the United States Copyright Act (17 U.S.C.,
Section 101).

         4.       ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company
in every proper way to obtain and from time to time enforce United States and
foreign Proprietary Rights relating to Company Inventions in any and all
countries. To that end I will execute, verify and deliver such documents and
perform such other acts (including appearances as a witness) as the Company may
reasonably request for use in applying for, obtaining, perfecting, evidencing,
sustaining and enforcing such Proprietary Rights and the assignment thereof. In
addition, I will execute, verify and deliver assignments of such Proprietary
Rights to the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and all
countries shall continue beyond the termination of my employment, but the
Company shall compensate me at a reasonable rate after my termination for the
time actually spent by me at the Company's request on such assistance.

         In the event the Company is unable for any reason, after reasonable
effort, to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agent and
attorney in fact, which appointment is coupled with an interest, to act for and
in my behalf to execute, verify and file any such documents and to do all other
lawfully permitted acts to further the purposes of the preceding paragraph
thereon with the

                                       2.



same legal force and effect as if executed by me. I hereby waive and quitclaim
to the Company any and all claims, of any nature whatsoever, that I now or may
hereafter have for infringement of any Proprietary Rights assigned hereunder to
the Company.

         5.       OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for six (6) months after termination of my employment with the
Company, I will promptly disclose to the Company fully and in writing and will
hold in trust for the sole right and benefit of the Company any and all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others. In addition, after termination of my employment, I will
promptly disclose to the Company all patent applications filed by me or on my
behalf within a year after termination of employment. At the time of each such
disclosure, I will advise the Company in writing of any Inventions that I
believe fully qualify for protection under Section 2870; and I will at that time
provide to the Company in writing all evidence necessary to substantiate that
belief. I understand that the Company will keep in confidence and will not
disclose to third parties without my consent any proprietary information
disclosed in writing to the Company pursuant to this Agreement relating to
Inventions that qualify fully for protection under the provisions of Section
2870. I will preserve the confidentiality of any Invention that does not fully
qualify for protection under Section 2870. I agree to keep and maintain adequate
and current records (in the form of notes, sketches, drawings and in any other
form that may be required by the Company) of all Proprietary Information
developed by me and all Inventions made by me during the period of my employment
at the Company, which records shall be available to and remain the sole property
of the Company at all times.

         6.       PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
that I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible uncertainty,
I have set forth on Exhibit A attached hereto a complete disclosure of all
Inventions that I have, alone or jointly with others, conceived, developed or
reduced to practice or caused to be conceived, developed or reduced to practice
prior to the commencement of my employment with the Company, that I consider to
be my property or the property of third parties and that I wish to have excluded
from the scope of this Agreement. If disclosure of any such Invention on Exhibit
A would cause me to violate any prior confidentiality agreement, I understand
that I am not to disclose such Inventions on Exhibit A. Instead, I am to
disclose in the applicable space on Exhibit A, only a cursory name for each such
Invention, a listing of the party(s) to whom it belongs and the fact that full
disclosure as to such Invention has not been made for that reason.

         7.       ADDITIONAL ACTIVITIES. I agree that during the period of my
employment by the Company I will not, without the Company's express written
consent, engage in any employment or business activity other than for the
Company. As further assurance that I will not improperly use or disclose any
Proprietary Information of the Company, I agree that, for the period of my
employment by the Company and for one (l) year after the date of termination of
my employment by the Company, I will not (i) solicit or induce any employee of
the Company to leave the employ of the Company or (ii) solicit the business of
any customer of the Company (other than, prior to termination of my employment,
on behalf of the Company and, after termination of my employment, with respect
to products or services of a type not supplied by the Company).

                                       3.



                  If any restriction set forth in this Section is found by any
court of competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.

         8.       NO IMPROPER USE OF MATERIALS. During my employment by the
Company I will not improperly use or disclose any confidential information or
trade secrets, if any, of any former employer or any other person to whom I have
an obligation of confidentiality, and I will not bring onto the premises of the
Company any unpublished documents or any property belonging to any former
employer or any other person to whom I have an obligation of confidentiality
unless previously and specifically consented to in writing by that former
employer or person. I will use in the performance of my duties only information
which is generally known and used by persons with training and experience
comparable to my own, which is common knowledge in the industry or otherwise
legally in the public domain, or which is otherwise provided or developed by the
Company or by me while employed by the Company.

         9.       NO CONFLICTING OBLIGATION. I represent that my performance of
all the terms of this Agreement and as an employee of the Company does not and
will not breach any agreement or obligation of mine relating to any time prior
to my employment by the Company. I have not entered into, and I agree I will not
enter into, any agreement either written or oral in conflict herewith.

         10.      RETURN OF COMPANY DOCUMENTS. When I leave the employ of the
Company, I will deliver to the Company any and all drawings, notes, memoranda,
specifications, devices, formulas, molecules, cells and documents, together with
all copies thereof, and any other material containing or disclosing any Company
Inventions, Third Party Information or Proprietary Information of the Company,
whether kept at the Company, home or elsewhere. I further agree that any
property situated on the Company's premises and owned by the Company, including
disks and other storage media, filing cabinets or other work areas, is subject
to inspection by Company personnel at any time with or without notice. Prior to
leaving, I will cooperate with the Company in completing and signing the
Company's termination statement for technical and management personnel
confirming the above and my obligations under this Agreement.

         11.      LAW AND REMEDIES. I understand that the unauthorized taking of
the Company's trade secrets (i) could result in civil liability under California
Civil Code Section 3426, and that, if willful, could result in an award for
triple the amount of the Company's damages and attorneys' fees; and (ii) is a
crime under California Penal Code Section 499(c), punishable by imprisonment for
a time not exceeding one year, or by a fine not exceeding five thousand dollars
($5,000), or by both. Because my services are personal and unique and because I
may have access to and become acquainted with the Proprietary Information of the
Company, the Company shall have the right to enforce this Agreement and any of
its provisions by injunction, specific performance or other equitable relief,
without bond and without prejudice to any other rights and remedies that the
Company may have for a breach of this Agreement.

                                       4.



         12.      NOTICES. Any notices required or permitted hereunder shall be
given to the appropriate party at the address specified below or at such other
address as the party shall specify in writing. Such notice shall be deemed given
upon personal delivery to the appropriate address or if sent by certified or
registered mail, three days after the date of mailing.

         13.      GENERAL PROVISIONS.

                  13.1     GOVERNING LAW. This Agreement will be governed by and
construed according to the laws of the State of California without respect to
its choice of law provisions.

                  13.2     ENTIRE AGREEMENT. This Agreement is the final,
complete and exclusive agreement of the parties with respect to the subject
matter hereof and supersedes and merges all prior discussions between us. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, will be effective unless in writing and signed by the
party to be charged therewith. Any subsequent change or changes in my duties,
salary or compensation will not affect the validity or scope of this Agreement.
As used in this Agreement, the period of my employment includes any time during
which I may be retained by the Company as a consultant.

                  13.3     SEVERABILITY. If one or more of the provisions in
this Agreement are deemed unenforceable by law, then such provision will be
deemed stricken from this Agreement and the remaining provisions will continue
in full force and effect.

                  13.4     SUCCESSORS AND ASSIGNS. This Agreement will be
binding upon my heirs, executors, administrators and other legal representatives
and will be for the benefit of the Company, its successors, and its assigns.

                  13.5     SURVIVAL. The provisions of this Agreement shall
survive the termination of my employment and the assignment of this Agreement by
the Company to any successor in interest or other assignee.

                  13.6     EMPLOYMENT. I agree and understand that nothing in
this Agreement shall confer any right with respect to continuation of my
employment by the Company, nor shall it interfere in any way with my right or
the Company's right to terminate my employment at any time, with or without
cause.

                  13.7     WAIVER. No waiver by the Company of any breach of
this Agreement shall be a waiver of any preceding or succeeding breach. No
waiver by the Company of any right under this Agreement shall be construed as a
waiver of any other right. The Company shall not be required to give notice to
enforce strict adherence to all terms of this Agreement.

         This Agreement shall be effective as of the first day of my employment
with the Company, namely October 9, 2002.

                                       5.



         I UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO INVENTIONS I MAKE
DURING MY EMPLOYMENT, AND RESTRICTS MY RIGHT TO DISCLOSE OR USE THE COMPANY'S
CONFIDENTIAL INFORMATION DURING OR SUBSEQUENT TO MY EMPLOYMENT.

         I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT.

October 9, 2003                            /s/ Jonathan Morgan
______________________                    ___________________________________
       Date                               EMPLOYEE SIGNATURE

                                          Address:

                                          ___________________________________
                                          ___________________________________

ACCEPTED AND AGREED TO:

FIRST VIRTUAL COMMUNICATIONS, INC.

By:       /s/ Tammy Polanco
     _________________________________________

Name:________________________________________

Title:_______________________________________

Address:  First Virtual Communications, Inc.
          3200 Bridge Parkway, Suite 202
          Redwood City, CA 94065

                                       6.


                                    EXHIBIT A
                           TO PROPRIETARY INFORMATION
                            AND INVENTIONS AGREEMENT

FVC.COM
3393 Octavius Drive
Santa Clara, CA  95054

Gentlemen:

1.       Except as noted in Section 2 below, the following is a complete
         disclosure of all inventions or improvements relevant to the subject
         matter of my employment by FVC.COM (the "Company") that have been made
         or conceived or first reduced to practice by me alone or jointly with
         others prior to my engagement by the Company:

         _____ No inventions or improvements.

         _____ See below:

         _______________________________________________________________________

         _______________________________________________________________________

         _______________________________________________________________________

         _______________________________________________________________________

         _____    Additional sheets attached.

2.       Due to a prior confidentiality agreement, I cannot complete the
         disclosure under Section 1 above with respect to inventions or
         improvements generally listed below, the proprietary rights and duty of
         confidentiality with respect to which I owe to the following party(s):

              INVENTION OR IMPROVEMENT              PARTY(S) RELATIONSHIP
         _______________________________________________________________________
         1.
         _______________________________________________________________________
         2.
         _______________________________________________________________________
         3.
         _______________________________________________________________________

         _____ Additional sheets attached.

                                       7.



3.       I propose to bring to my employment the following devices, materials
         and documents of a former employer or other person to whom I have an
         obligation of confidentiality that are not generally available to the
         public, which materials and documents may be used in my employment
         pursuant to the express written authorization of my former employer or
         such other person (a copy of which is attached hereto):

         _____ No Material.

         _____ See Below:

         _______________________________________________________________________

         _______________________________________________________________________

         _______________________________________________________________________

         _______________________________________________________________________

         _____ Additional sheets attached.

Date: _______________________

                                  Very truly yours,

                                 __________________________________________
                                 Employee Signature

                                       8.


                                                                       EXHIBIT C

                       FIRST VIRTUAL COMMUNICATIONS, INC.

                   EXECUTIVE OFFICERS' CHANGE OF CONTROL PLAN

             ADOPTED BY THE BOARD OF DIRECTORS ON FEBRUARY 17, 1999

             AMENDED BY THE BOARD OF DIRECTORS ON OCTOBER 23, 2003


1.       INTRODUCTION; PURPOSES.

         (a)      The purpose of this Plan is to provide certain executive
officers of the Company with protection of certain benefits in case of a
termination of his or her employment with the Company in connection with a
Change of Control of the Company.

         (b)      The Company, by means of the Plan, seeks (i) to retain the
services of certain current executive officers of the Company, (ii) to secure
and retain the services of new Section 16 Officers and (iii) to provide
incentives for such officers to exert maximum efforts for the success of the
Company even in the face of a potential Change of Control of the Company.

2.       COVERAGE OF THE PLAN.

                  Each person who, after the Effective Date, is appointed a
Section 16 Officer of the Company, if and as of the date the officer is
confirmed as a Section 16 Officer by action of the Board shall be covered by
this Plan.


3.       DEFINITIONS.

         (a)      "ACCOUNTANTS" has the meaning given thereto in Section 6(b).

         (b)      "ADEA" has the meaning given thereto in Section 7(c).

         (c)      "BOARD" means the Board of Directors of the Company.

         (d)      "CAUSE" means Executive's: (i) gross negligence or willful
misconduct in connection with the performance of Executive's duties to the
Company that in the written determination of a majority of the Board has not
been cured within thirty (30) days following receipt by Executive of written
notice from the Board identifying such acts of gross negligence or willful
misconduct; (ii) commission of a felony (other than a traffic-related offense)
that in the written determination of a majority of the Board has caused material
injury to the Company's business; (iii) dishonesty with respect to a significant
matter relating to the Company's business and intended to result in personal
enrichment of Executive or his or her family at the expense of



the Company; or (iv) material breach of any agreement by and between Executive
and the Company, which material breach has not been cured within thirty (30)
days following receipt by Executive of written notice from the Board identifying
such material breach.

         (e)      "CHANGE OF CONTROL" means: (i) a dissolution or liquidation of
the Company; (ii) a sale of all or substantially all the assets of the Company;
(iii) a merger or consolidation in which the Company is not the surviving
corporation and in which beneficial ownership of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors has changed; (iv) a reverse merger in which
the Company is the surviving corporation but the shares of the common stock of
the Company outstanding immediately before the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, and in which beneficial ownership of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors has changed; (v) an acquisition by any
person, entity or group within the meaning of Section 13(d) or 14(d) of the
Exchange Act, or any comparable successor provisions (excluding any employee
benefit plan, or related trust, sponsored or maintained by the Company or
subsidiary of the Company or other entity controlled by the Company) of the
beneficial ownership (within the meaning of Rule 13d_3 promulgated under the
Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors; or, (vi) in the event that the individuals
who are members of the Incumbent Board cease for any reason to constitute at
least fifty percent (50%) of the Board.

         (f)      "CODE" means the Internal Revenue Code of 1986, as amended.

         (g)      "COMMITTEE" means a committee appointed by the Board in
accordance with Section 4(c).

         (h)      "COMPANY" means First Virtual Communications, Inc., a Delaware
corporation.

         (i)      "COMPANY-PAID COVERAGE" has the meaning given thereto in
Section 5.

         (j)      "DISABILITY" means Executive's death, or physical or mental
disability that prevents Executive from satisfactorily performing the normal
duties and responsibilities of Executive's office in the good faith
determination of the Board for a period of more than one hundred twenty (120)
consecutive days.

         (K)      "EFFECTIVE DATE" means February 17, 1999.

         (L)      "EMPLOYEE AGREEMENT AND RELEASE" has the meaning given thereto
in Section 7(c).

         (M)      "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

         (N)      "EXCISE TAX" has the meaning given thereto in Section 6.

         (O)      "EXECUTIVE" means a person covered by this Plan pursuant to
Section 2(a) or

                                       2.



Section 2(b).

         (p)      "GOOD REASON" means: (i) any material reduction of Executive's
duties, authority or responsibilities relative to Executive's duties, authority,
or responsibilities as in effect immediately before such reduction, except if
agreed to in writing by Executive; (ii) a reduction by the Company in the base
salary or Target Bonus opportunity of Executive as in effect immediately before
such reduction; (iii) the relocation of Executive to a facility or a location
more than thirty_five (35) miles from Executive's then present location, without
Executive's written consent; or (iv) any failure of the Company to obtain the
assumption of this Plan by any successor or assign of the Company.

         (q)      "INCUMBENT BOARD" means the individuals who, as of the
Effective Date, are members of the Board. If the election, or nomination for
election by the Company's stockholders, of any new director is approved by a
vote of at least fifty percent (50%) of the Incumbent Board, such new director
shall be considered as a member of the Incumbent Board.

         (r)      "PLAN" means this Executive Officers' Change of Control Plan.

         (s)      "PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT" has the
meaning given thereto in Section 7(b).

         (t)      "SECTION 16 OFFICER" means an "officer" of the Company, as
defined in Rule 16a-1(f) promulgated under the Exchange Act, provided such
officer is designated as such by action of the Board.

         (u)      "TARGET BONUS" means Executive's target bonus for the then
current fiscal year, as set by the compensation committee of the Board.

4.       ADMINISTRATION

         (a)      The Board shall administer the Plan unless and until the Board
delegates administration to a Committee, as provided in Section 4(c).

         (b)      The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

                  (i)      To construe and interpret the Plan and the rights
 covered under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.

                  (ii)     To amend or terminate the Plan as provided in Section
11.

                  (iii)    Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the best
interests of the Company that are not in conflict with the provisions of the
Plan.

                                      3.



         (c)      The Board may delegate administration of the Plan to a
committee of the Board composed of not fewer than two (2) members, all of the
members of which committee shall be, members of the Board. If administration is
delegated to a committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee of two (2) or more members of
the Board any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or such a subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan.

5.       SEVERANCE BENEFITS IN THE EVENT OF A CHANGE OF CONTROL. If within
eighteen (18) months following the date of a Change of Control of the Company
Executive's employment with the Company terminates involuntarily other than for
Cause, death or Disability, or if within such eighteen (18) month period,
Executive terminates his or her employment with the Company voluntarily with
Good Reason, then, subject to Section 6 and Section 7: (i) Executive shall be
entitled to receive base salary continuation payments at Executive's base salary
rate in effect on the date of termination, paid on a monthly basis, for twelve
(12) months after the date of termination, in addition to any accrued but unpaid
base salary, bonus payments, and/or accrued and unused vacation; (ii) each of
Executive's outstanding stock options, restricted stock awards and restricted
stock purchases, and any options, awards or purchases held in the name of an
estate planning vehicle for the benefit of Executive or his or her immediate
family, shall have their vesting and exercisability schedules accelerated in
full as of the date of termination; (iii) Executive shall be entitled to receive
bonus continuation payments totaling the Executive's Target Bonus in effect on
the date of termination, paid on a monthly basis, for twelve (12) months after
the date of termination; and (iv) if at the time of termination Executive is
covered by the Company's group health plan, the Company shall provide to
Executive, subject to Executive and his or her eligible spouse and/or dependents
electing continuation coverage under COBRA, one hundred percent (100%)
Company-paid group health coverage at the same level of coverage as was provided
to Executive immediately prior to the date of termination (the "COMPANY-PAID
COVERAGE"). If such coverage included Executive's spouse and/or dependents
immediately prior to the date of termination, such spouse and/or dependents
shall also be covered at Company expense. Company-Paid Coverage shall continue
until the earlier of (x) twelve (12) months from the date of termination, or (y)
the date that Executive and his or her spouse and/or dependents become covered
under another employer's group health plan that provides Executive and his or
her spouse and/or dependents with comparable benefits and levels of coverage. In
no event shall Executive be obligated to seek other employment or take any other
action to mitigate the amounts payable to Executive hereunder.

6.       PARACHUTE PAYMENTS; EXCISE TAX. In the event that the severance,
acceleration of stock options and other benefits payable to Executive as a
result of a Change of Control of the Company (i) constitute "parachute payments"
within the meaning of Section 280G (as it may be amended or replaced) of the
Code and (ii) but for this Section 6, would be subject to the excise tax imposed
by Section 4999 (as it may be amended or replaced) of the Code (the "EXCISE
TAX"), then Executive's benefits payable in connection therewith shall be either

         (a)      delivered in full, or

                                       4.



         (b)      delivered as to such lesser extent that would result in no
portion of such benefits being subject to the Excise Tax, whichever of the
foregoing amounts, taking into account the applicable federal, state and local
income taxes and the Excise Tax, results in the receipt by Executive on an
after-tax basis, of the greatest amount of benefits, notwithstanding that all or
some portion of such benefits may be taxable under the Excise Tax. Unless the
Company and Executive otherwise agree in writing, any determination required
under this Section 6 shall be made in writing in good faith by the outside
accounting firm responsible for auditing the Company's financial records (the
"ACCOUNTANTS"). In the event of a reduction in benefits hereunder, Executive
shall be given the choice of which benefits to reduce. For purposes of making
the calculations required by this Section 6, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of the Code.
The Company and Executive shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make a
determination under this Section 6. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section hereunder.

7.       LIMITATIONS AND CONDITIONS ON BENEFITS. The benefits and payments
provided under this Plan shall be subject to the following terms and
limitations:

         (a)      WITHHOLDING TAXES. The Company shall withhold appropriate
federal, state and local income and employment taxes from any payments
hereunder.

         (b)      PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT PRIOR TO
RECEIPT OF BENEFITS. Executive shall have executed and delivered to the Company
a standard form of the Company's proprietary information and inventions
agreement, a copy of the current form of which is attached hereto as Exhibit A
(the "PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT"), prior to the receipt
or provision of any benefits (including the acceleration benefits) under this
Plan. Additionally, Executive agrees that all documents, records, apparatus,
equipment and other physical property that is furnished to or obtained by
Executive in the course of his or her employment with the Company shall be and
shall remain the sole property of the Company. Executive agrees not to make or
retain copies, reproductions or summaries of any such property, except as
otherwise necessary while acting in the normal course of business. In the event
of any breach by Executive of the Proprietary Information and Inventions
Agreement, all benefits payable under Section 5 of this Plan shall immediately
terminate.

         (c)      EMPLOYEE AGREEMENT AND RELEASE PRIOR TO RECEIPT OF BENEFITS.
If, pursuant to Section 5, Executive's employment with the Company terminates
involuntarily other than for Cause, death or Disability, or Executive terminates
his or her employment with the Company voluntarily with Good Reason, then prior
to, and as a condition of the receipt of any benefits (including the
acceleration benefits) under this Plan on account of such termination, Executive
shall, as of the date of such termination, execute an employee agreement and
release in the form attached hereto as Exhibit B (the "EMPLOYEE AGREEMENT AND
RELEASE"). Such Employee Agreement and Release shall specifically relate to all
of Executive's rights and claims in existence at the time of such execution and
shall confirm Executive's obligations under the Company's standard form of
Proprietary Information and Inventions Agreement. If and only if Executive is
covered by the federal Age Discrimination in Employment Act of 1967, as amended

                                       5.



("ADEA") (currently all those 40 years of age or over on the date of
termination), Executive has twenty_one (21) days to consider whether to execute
such Employee Agreement and Release and Executive may revoke such Employee
Agreement and Release within seven (7) days after execution of such Employee
Agreement and Release. In the event Executive is covered by ADEA and does not
execute such Employee Agreement and Release within the twenty_one (21) days
specified above, or if Executive revokes such Employee Agreement and Release
within the seven (7) day period specified above, no benefits (including the
acceleration benefits) shall be payable or made available to Executive on
account of a termination under Section 5 of this Plan.

8.       TERMINATION. Prior to a Change of Control of the Company, the right to
receive benefits under this Plan shall automatically terminate on the date
Executive ceases to be a Section 16 Officer, for any reason or no reason, as
evidenced by the written resignation of Executive, by action of the Board
removing Executive as a Section 16 Officer or otherwise.

9.       NOTICES. Any notices provided for in this Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to Executive, five (5) days after deposit in
the United States mail, postage prepaid, addressed to Executive at the address
specified in the corporate records of the Company or at such other address as
Executive hereafter designates by written notice to the Company.

10.      AMENDMENT OR TERMINATION OF THE PLAN.

         (a)      The Board at any time, and from time to time, may amend or
terminate this Plan; provided, however, that any such termination must occur
prior to the occurrence of a Change of Control of the Company.

         (b)      Rights and obligations under this Plan of persons covered by
this Plan before any amendment of this Plan made at or after the time of the
occurrence of a Change of Control of the Company shall not be impaired by any
amendment of this Plan unless (i) the Company requests the consent of the person
covered by this Plan and (ii) such person consents in writing.

         11.      GOVERNING LAW. This Plan shall be governed by, and construed
in accordance with, the laws of the State of California, regardless of the law
that might be applied under applicable principles of conflicts of law.

                                       6.



                                                                       Exhibit A
                                                          to Executive Officers'
                                                          Change of Control Plan

                       FIRST VIRTUAL COMMUNICATIONS, INC.

            FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

         In consideration of my employment or continued employment by First
Virtual Communications, Inc. (the "Company"), and the compensation now and
hereafter paid to me, I hereby agree as follows:

         1.       RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during the term of my employment and thereafter, I will hold in strictest
confidence and will not disclose, use, lecture upon or publish any of the
Company's Proprietary Information (defined below), except as such disclosure,
use or publication may be required in connection with my work for the Company
and an officer of the Company expressly authorizes such in writing. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns and the Company and its assigns shall be
the sole owner of all trade secret rights, patent rights, copyrights, mask work
rights, trade secret rights and all other rights throughout the world
(collectively, "Proprietary Rights") in connection therewith.

         The term "Proprietary Information" shall mean trade secrets,
confidential knowledge, data or any other proprietary information of the
Company. By way of illustration but not limitation, "Proprietary Information"
includes (a) trade secrets, inventions, mask works, ideas, processes, formulas,
source and object codes, data, programs, other works of authorship, cell lines,
know_how, improvements, discoveries, developments, designs and techniques
(hereinafter collectively referred to as "Inventions"); and (b) information
regarding plans for research, development, new products, marketing and selling,
business plans, budgets and unpublished financial statements, licenses, prices
and costs, suppliers and customers; and information regarding the skills and
compensation of other employees of the Company.

         2.       THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("Third Party Information") subject to a
duty on the Company's part to maintain the confidentiality of such information
and to use it only for certain limited purposes. During the term of my
employment and thereafter, I will hold Third Party Information in the strictest
confidence and will not disclose (to anyone other than Company personnel who
need to know such information in connection with their work for the Company) or
use, except in connection with my work for the Company, Third Party Information
unless expressly authorized by an officer of the Company in writing.

         3.       ASSIGNMENT OF INVENTIONS.

                  3.1      ASSIGNMENT. I hereby assign to the Company all my
right, title and interest in and to any and all Inventions (and all Proprietary
Rights with respect thereto) whether



or not patentable or registrable under copyright or similar statutes, made or
conceived or reduced to practice or learned by me, either alone or jointly with
others, during the period of my employment with the Company. Inventions assigned
to or as directed by the Company by this paragraph 3 are hereinafter referred to
as "Company Inventions." I recognize that this Agreement does not require
assignment of any invention that qualifies fully for protection under Section
2870 of the California Labor Code (hereinafter "Section 2870"), which provides
as follows:

                  (1)      Any provision in an employment agreement that
provides that an employee shall assign, or offer to assign, any of his or her
rights in an invention to his or her employer shall not apply to an invention
that the employee developed entirely on his or her own time without using the
employer's equipment, supplies, facilities, or trade secret information except
for those inventions that either:

                           (A)      Relate at the time of conception or
reduction to practice of the invention to the employer's business, or actual or
demonstrably anticipated research or development of the employer.

                           (B)      Result from any work performed by the
employee for the employer.

                  (2)      To the extent a provision in an employment agreement
purports to require an employee to assign an invention otherwise excluded from
being required to be assigned under subdivision (i), the provision is against
the public policy of this state and is unenforceable.

                  3.2      GOVERNMENT. I also assign to or as directed by the
Company all my right, title and interest in and to any and all Inventions, full
title to which is required to be in the United States by a contract between the
Company and the United States or any of its agencies.

                  3.3      WORKS FOR HIRE. I acknowledge that all original works
of authorship that are made by me (solely or jointly with others) within the
scope of my employment and that are protectable by copyright are "works made for
hire," as that term is defined in the United States Copyright Act (17 U.S.C.,
Section 101).

         4.       ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company
in every proper way to obtain and from time to time enforce United States and
foreign Proprietary Rights relating to Company Inventions in any and all
countries. To that end I will execute, verify and deliver such documents and
perform such other acts (including appearances as a witness) as the Company may
reasonably request for use in applying for, obtaining, perfecting, evidencing,
sustaining and enforcing such Proprietary Rights and the assignment thereof. In
addition, I will execute, verify and deliver assignments of such Proprietary
Rights to the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and all
countries shall continue beyond the termination of my employment, but the
Company shall compensate me at a reasonable rate after my termination for the
time actually spent by me at the Company's request on such assistance.

         In the event the Company is unable for any reason, after reasonable
effort, to secure my signature on any document needed in connection with the
actions specified in the preceding

                                       2.



paragraph, I hereby irrevocably designate and appoint the Company and its duly
authorized officers and agents as my agent and attorney in fact, which
appointment is coupled with an interest, to act for and in my behalf to execute,
verify and file any such documents and to do all other lawfully permitted acts
to further the purposes of the preceding paragraph thereon with the same legal
force and effect as if executed by me. I hereby waive and quitclaim to the
Company any and all claims, of any nature whatsoever, that I now or may
hereafter have for infringement of any Proprietary Rights assigned hereunder to
the Company.

         5.       OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for six (6) months after termination of my employment with the
Company, I will promptly disclose to the Company fully and in writing and will
hold in trust for the sole right and benefit of the Company any and all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others. In addition, after termination of my employment, I will
promptly disclose to the Company all patent applications filed by me or on my
behalf within a year after termination of employment. At the time of each such
disclosure, I will advise the Company in writing of any Inventions that I
believe fully qualify for protection under Section 2870; and I will at that time
provide to the Company in writing all evidence necessary to substantiate that
belief. I understand that the Company will keep in confidence and will not
disclose to third parties without my consent any proprietary information
disclosed in writing to the Company pursuant to this Agreement relating to
Inventions that qualify fully for protection under the provisions of Section
2870. I will preserve the confidentiality of any Invention that does not fully
qualify for protection under Section 2870. I agree to keep and maintain adequate
and current records (in the form of notes, sketches, drawings and in any other
form that may be required by the Company) of all Proprietary Information
developed by me and all Inventions made by me during the period of my employment
at the Company, which records shall be available to and remain the sole property
of the Company at all times.

         6.       PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
that I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible uncertainty,
I have set forth on Exhibit A attached hereto a complete disclosure of all
Inventions that I have, alone or jointly with others, conceived, developed or
reduced to practice or caused to be conceived, developed or reduced to practice
prior to the commencement of my employment with the Company, that I consider to
be my property or the property of third parties and that I wish to have excluded
from the scope of this Agreement. If disclosure of any such Invention on Exhibit
A would cause me to violate any prior confidentiality agreement, I understand
that I am not to disclose such Inventions on Exhibit A. Instead, I am to
disclose in the applicable space on Exhibit A, only a cursory name for each such
Invention, a listing of the party(s) to whom it belongs and the fact that full
disclosure as to such Invention has not been made for that reason.

         7.       ADDITIONAL ACTIVITIES. I agree that during the period of my
employment by the Company I will not, without the Company's express written
consent, engage in any employment or business activity other than for the
Company. As further assurance that I will not improperly use or disclose any
Proprietary Information of the Company, I agree that, for the period of my
employment by the Company and for one (l) year after the date of termination of
my employment by the Company, I will not (i) solicit or induce any employee of
the Company to leave the employ of the Company or (ii) solicit the business of
any customer of the Company

                                       3.



(other than, prior to termination of my employment, on behalf of the Company
and, after termination of my employment, with respect to products or services of
a type not supplied by the Company).

                  If any restriction set forth in this Section is found by any
court of competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.

         8.       NO IMPROPER USE OF MATERIALS. During my employment by the
Company I will not improperly use or disclose any confidential information or
trade secrets, if any, of any former employer or any other person to whom I have
an obligation of confidentiality, and I will not bring onto the premises of the
Company any unpublished documents or any property belonging to any former
employer or any other person to whom I have an obligation of confidentiality
unless previously and specifically consented to in writing by that former
employer or person. I will use in the performance of my duties only information
which is generally known and used by persons with training and experience
comparable to my own, which is common knowledge in the industry or otherwise
legally in the public domain, or which is otherwise provided or developed by the
Company or by me while employed by the Company.

         9.       NO CONFLICTING OBLIGATION. I represent that my performance of
all the terms of this Agreement and as an employee of the Company does not and
will not breach any agreement or obligation of mine relating to any time prior
to my employment by the Company. I have not entered into, and I agree I will not
enter into, any agreement either written or oral in conflict herewith.

         10.      RETURN OF COMPANY DOCUMENTS. When I leave the employ of the
Company, I will deliver to the Company any and all drawings, notes, memoranda,
specifications, devices, formulas, molecules, cells and documents, together with
all copies thereof, and any other material containing or disclosing any Company
Inventions, Third Party Information or Proprietary Information of the Company,
whether kept at the Company, home or elsewhere. I further agree that any
property situated on the Company's premises and owned by the Company, including
disks and other storage media, filing cabinets or other work areas, is subject
to inspection by Company personnel at any time with or without notice. Prior to
leaving, I will cooperate with the Company in completing and signing the
Company's termination statement for technical and management personnel
confirming the above and my obligations under this Agreement.

         11.      LAW AND REMEDIES. I understand that the unauthorized taking of
the Company's trade secrets (i) could result in civil liability under California
Civil Code Section 3426, and that, if willful, could result in an award for
triple the amount of the Company's damages and attorneys' fees; and (ii) is a
crime under California Penal Code Section 499(c), punishable by imprisonment for
a time not exceeding one year, or by a fine not exceeding five thousand dollars
($5,000), or by both. Because my services are personal and unique and because I
may have access to and become acquainted with the Proprietary Information of the
Company, the Company shall have the right to enforce this Agreement and any of
its provisions by injunction,

                                       4.



specific performance or other equitable relief, without bond and without
prejudice to any other rights and remedies that the Company may have for a
breach of this Agreement.

         12.      NOTICES. Any notices required or permitted hereunder shall be
given to the appropriate party at the address specified below or at such other
address as the party shall specify in writing. Such notice shall be deemed given
upon personal delivery to the appropriate address or if sent by certified or
registered mail, three days after the date of mailing.

         13.      GENERAL PROVISIONS.

                  13.1     GOVERNING LAW. This Agreement will be governed by and
construed according to the laws of the State of California without respect to
its choice of law provisions.

                  13.2     ENTIRE AGREEMENT. This Agreement is the final,
complete and exclusive agreement of the parties with respect to the subject
matter hereof and supersedes and merges all prior discussions between us. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, will be effective unless in writing and signed by the
party to be charged therewith. Any subsequent change or changes in my duties,
salary or compensation will not affect the validity or scope of this Agreement.
As used in this Agreement, the period of my employment includes any time during
which I may be retained by the Company as a consultant.

                  13.3     SEVERABILITY. If one or more of the provisions in
this Agreement are deemed unenforceable by law, then such provision will be
deemed stricken from this Agreement and the remaining provisions will continue
in full force and effect.

                  13.4     SUCCESSORS AND ASSIGNS. This Agreement will be
binding upon my heirs, executors, administrators and other legal representatives
and will be for the benefit of the Company, its successors, and its assigns.

                  13.5     SURVIVAL. The provisions of this Agreement shall
survive the termination of my employment and the assignment of this Agreement by
the Company to any successor in interest or other assignee.

                  13.6     EMPLOYMENT. I agree and understand that nothing in
 this Agreement shall confer any right with respect to continuation of my
employment by the Company, nor shall it interfere in any way with my right or
the Company's right to terminate my employment at any time, with or without
cause.

                  13.7     WAIVER. No waiver by the Company of any breach of
this Agreement shall be a waiver of any preceding or succeeding breach. No
waiver by the Company of any right under this Agreement shall be construed as a
waiver of any other right. The Company shall not be required to give notice to
enforce strict adherence to all terms of this Agreement.

         This Agreement shall be effective as of the first day of my employment
with the Company, namely _____________.

                                       5.



         I UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO INVENTIONS I MAKE
DURING MY EMPLOYMENT, AND RESTRICTS MY RIGHT TO DISCLOSE OR USE THE COMPANY'S
CONFIDENTIAL INFORMATION DURING OR SUBSEQUENT TO MY EMPLOYMENT.

         I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT.

                                    _________________________________________
                                    EXECUTIVE

                                    Address:
                                    _________________________________

                                    _________________________________

ACCEPTED AND AGREED TO:

FIRST VIRTUAL COMMUNICATIONS, INC.

By:  ________________________________________
     Name:
     Title:

Address:  First Virtual Communications, Inc.
          3200 Bridge Parkway, Suite 202
          Redwood City, CA 94065

                                       6.



                                                                       Exhibit A
                                                      to Proprietary Information
                                                        and Inventions Agreement

None.



                                                                       Exhibit B
                                                          to Executive Officers'
                                                          Change of Control Plan

                       FIRST VIRTUAL COMMUNICATIONS, INC.

                         EMPLOYEE AGREEMENT AND RELEASE

         I hereby confirm my obligations under the Company's standard form of
proprietary information agreement.

         I acknowledge that I have read and understand Section 1542 of the
California Civil Code that reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to my release of any claims I may
have against the Company.

         Except as otherwise set forth in the Company's Executive Officers'
Change of Control Plan and this Agreement, I hereby release, acquit and forever
discharge the Company, its parents and subsidiaries, and their officers,
directors, agents, servants, employees, shareholders, successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys fees, damages, indemnities and obligations of
every kind and nature, in law, equity, or otherwise, known and unknown,
suspected and unsuspected, disclosed and undisclosed (other than any claim for
indemnification I may have as a result of any third party action against me
based on my employment with the Company), arising out of or in any way related
to agreements, events, acts or conduct at any time prior to and including the
Effective Date of this Agreement, including but not limited to: all such claims
and demands directly or indirectly arising out of or in any way connected with
my employment with the Company or the termination of that employment, including
but not limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands related
to salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law or cause of action including, but not limited to,
the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination
in Employment Act of 1967, as amended ("ADEA"); the federal Americans with
Disabilities Act of 1990; the California Fair Employment and Housing Act, as
amended; tort law; contract law; wrongful discharge; discrimination; fraud;
defamation; emotional distress; and breach of the implied covenant of good faith
and fair dealing; provided, however, that nothing in this paragraph shall be
construed in any way to release the Company from its obligation to indemnify you
pursuant to any applicable indemnification agreement and to provide you with
continued coverage under the Company's directors and officers liability
insurance policy to the same extent that it has provided such coverage to
previously departed officers and directors of the Company.



         I acknowledge that I am knowingly and voluntarily waiving and releasing
any rights I may have under ADEA. I also acknowledge that the consideration
given for the waiver and release in the preceding paragraph hereof is in
addition to anything of value to which I was already entitled. If and only if I
am covered by ADEA, I further acknowledge that I have been advised by this
writing, as required by the ADEA, that: (A) my waiver and release do not apply
to any rights or claims that may arise after the Effective Date of this
Agreement; (B) I have the right to consult with an attorney prior to executing
this Agreement; (c) I have twenty-one (21) days to consider this Agreement
(although I may choose to voluntarily execute this Agreement earlier); (D) I
have seven (7) days following the execution of this Agreement to revoke the
Agreement; and (E) this Agreement shall not be effective until the date upon
which the revocation period has expired, which shall be the eighth day after
this Agreement is executed by me (the "Effective Date"). If I am not covered by
ADEA, I acknowledge that this Agreement shall be effective as of the date upon
which this Agreement has been executed by me (the "Effective Date").

                                        By:___________________________________
                                                    EXECUTIVE

                                        Date:_________________________________

                                       2.



                       FIRST VIRTUAL COMMUNICATIONS, INC.

                   EXECUTIVE OFFICERS' CHANGE OF CONTROL PLAN

_____________________, Executive:

         First Virtual Communications, Inc. (the "Company") acknowledges that
you are covered by its Executive Officers' Change of Control Plan (the "Plan").

Dated the _____ day of _________, 2002.

                                            Very truly yours,

                                            FIRST VIRTUAL COMMUNICATIONS, INC.

                                            By_________________________________

ATTACHMENTS:

         First Virtual Communications, Inc. Executive Officers' Change of
         Control Plan
         Proprietary Information and Inventions Agreement
         Employee Agreement and Release

         The undersigned acknowledges that he or she is covered by the Plan and
has received a copy of the attachments referenced above. Furthermore, the
undersigned agrees to be bound by the obligations of an Executive described in
the Plan, including, without limitation, the obligations described in Sections 6
and 7 of the Plan.

                                                   _____________________________
                                                   EXECUTIVE

                                                   Address

                                                   _____________________________

                                                   _____________________________


                                    EXHIBIT D

                              VARIABLE COMPENSATION

11

EX-10.53

                                                                   EXHIBIT 10.53

                                    AMENDMENT

         THIS IS AN AMENDMENT (THE "AMENDMENT") OF THE FIRST VIRTUAL
COMMUNICATIONS PARTNER AGREEMENT (the "AGREEMENT") made and entered into as of
the 1st day of April 2002 (the "AGREEMENT DATE") by and between FIRST VIRTUAL
COMMUNICATIONS, INC. ("FVC"), a Delaware corporation its principal place of
business at 3393 Octavius Drive, Santa Clara, CA 95054, USA; and NET ONE SYSTEMS
("NET ONE"), a Japanese corporation with its principal place of business at
Sphere Tower Tennoz, 2-8, Higashi Shinagawa 2-Chome, Shinagawa-Ku, Tokyo
140-8621, Japan; FVC and Net One.

         In consideration of the mutual covenants and agreement contained
herein, the sufficiency of which is hereby acknowledged, the parties agree as
follows:

         1.       The following language in Section 4.4 of the Agreement does
                  not accurately reflect the intent and objectives of the
                  parties. Therefore, as of the Agreement Date, such language
                  hereby is deleted in its entirety and is replaced with the
                  following:

                  All Products delivered pursuant to the terms of this Agreement
                  shall be suitably packed for shipment in FVC's standard
                  shipping cartons, marked for shipment to Partner's address set
                  forth above or at such other address as the parties agree
                  upon, and delivered to the carrier agent F.O.B. FVC's shipping
                  location, at which time risk of loss and title to the Products
                  shall pass to Partner. All freight, insurance, and other
                  shipping expenses, as well as expenses for any special packing
                  requested by Partner, will be paid by Partner.

         2.       In the last sentence of Section 15.8 the reference to Section
                  14.8 shall now be replaced with reference to Section 15.8.

         3.       Except as expressly amended in the foregoing Sections 1 and 2
                  of this Amendment, the Agreement is hereby confirmed and
                  ratified in all respects.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.

FIRST VIRTUAL COMMUNICATIONS, INC.             NET ONE SYSTEMS

By: /s/Ralph Ungermann                         BY: /s/Kazuo Sato
   ______________________________                 ______________________________

Title: Executive Chairman                      Title: President and CEO
      ___________________________                    ___________________________

Date: September 28, 2002                       Date: September 25,2002
     ____________________________                   ____________________________

EX-10.54

                                                                   EXHIBIT 10.54

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                      SECOND AMENDMENT TO PARTNER AGREEMENT

         THIS IS AN AMENDMENT (THE "AMENDMENT NO.2") OF THE FIRST VIRTUAL
COMMUNICATIONS PARTNER AGREEMENT (the "AGREEMENT"), made and entered into as of
the 1st day of April 2002 and amended as of the 31st day of July 2002, by and
between FIRST VIRTUAL COMMUNICATIONS, INC. ("FVC"), a Delaware corporation with
its principal place of business at 3200 Bridge Parkway, Suite 202, Redwood City,
CA 94065, USA; and NET ONE SYSTEMS CO., LTD. ("NET ONE"), a Japanese corporation
with its principal place of business at Sphere Tower Tennoz, 2-8, Higashi
Shinagawa 2-Chome, Shinagawa-Ku, Tokyo 140-8621, Japan.

         In consideration of the mutual covenants and agreement contained
herein, the sufficiency of which is hereby acknowledged, the parties agree as
follows:

         1.       This Amendment No.2 becomes effective as of the 30th day of
                  September 2003 ("Amendment No.2 Effective Date").

         2.       The following language in Section 3.0 of the Agreement is
                  hereby amended and replaced with the following:

                  TERM. This Agreement shall commence on the Effective Date, and
                  shall continue for a five (5) year period unless otherwise
                  terminated earlier as provided in Section 13 (the "TERM").
                  Upon completion of the first and third years of the Term of
                  this Agreement, the parties may re-evaluate the terms of this
                  Agreement, in light of the relationship between the parties,
                  and if the parties mutually agree to any changes to such terms
                  and conditions, the parties shall execute a written amendment
                  hereto.

         3.       The following sentence in Section 5.1 of the Agreement is
                  hereby deleted:

                  Partner may also be eligible to receive marketing co-op funds,
                  in accordance with the guidelines set forth in Exhibit F.

         4.       The following language in Section 6.1 of the Agreement is
                  hereby amended and replaced with the following:

                  PURCHASE TARGETS. Partner agrees to sell and support the
                  complete line of FVC's rich media web conferencing products
                  and services. Partner will use commercially reasonable efforts
                  to meet the purchase targets set forth in Exhibit A.

         5.       Exhibit A (Sales Commitment and Discounts) of the Agreement is
                  hereby amended and replaced with Exhibit A (Sales Targets and
                  Discounts) attached to this Amendment No.2.



         6.       Exhibit F (Terms of Inventory for Equity Exchange) attached to
                  this Amendment No.2 shall be added and incorporated to the
                  Agreement in its entirety.

         7.       Except as expressly amended in the foregoing Sections 2, 3, 4,
                  5, 6 and 7 of this Amendment No.2, the Agreement is hereby
                  confirmed and ratified in all respects.




IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date above.

FIRST VIRTUAL COMMUNICATIONS, INC.              NET ONE SYSTEMS CO., LTD.


By:  /s/ Truman Cole                            By: /s/ Kazuo Sato
   -------------------------------------           -----------------------------

Name:   Truman Cole                             Name: Kazuo Sato

Title: Vice President/CFO                       Title: President & CEO

Date: October 6, 2003                           Date: October 3, 2003



                                    EXHIBIT A

                           SALES TARGETS AND DISCOUNTS

Partner will use commercially reasonable efforts to meet the following purchase
targets:

Year 3: April 1, 2004 - March 31, 2005 = [***]
Year 4: April 1, 2005 - March 31, 2006 = [***]
Year 5: April 1, 2006 - March 31, 2007 = To be mutually agreed between the
parties.

DISCOUNT LEVELS:

FVC offers the following product discounts from its published Book Price at the
time of order. From time to time, FVC reserves the right to add new products to
this Discount Schedule or to adjust prices relative to market conditions and
dynamics.

PRODUCT VOLUME DISCOUNT

SOFTWARE LICENSES, UPGRADES AND OPTIONS              [***]
SOFTWARE SUBSCRIPTION AND SUPPORT                    [***]

DISCOUNT LEVELS [***]:

[***] shall mean [***] to [***] for the [***] and [***] and [***], i.e. [***]
and [***].  On [***] of [***], [***] will [***] with [***] of [***] to [***],
such [***] to be [***].

SUPPORT SERVICES

During the Term, Partner shall pay [***] of the post-discount Product price of
products purchased during each year of the Term, on a product by-product basis
for all products purchased during such year, within thirty (30) days after the
beginning date of each succeeding year.

[*] = CONFIDENTIAL TREATMENT REQUESTED


                                    EXHIBIT F
                     TERMS OF INVENTORY FOR EQUITY EXCHANGE

Notwithstanding the provisions of the Agreement, the following shall apply:

Inventory Return

1.   Net One agrees to return a minimum of $1.5 million of its existing FVC
     product inventory to FVC ("RETURNED INVENTORY") pursuant to the terms of an
     Equity Investment Agreement as of Amendment No.2 Effective Date. In
     consideration of the above mentioned product, FVC will issue Net One shares
     of FVC common stock in the amount to be determined by dividing the value of
     Returned Inventory by the average closing price of FVC common stock for the
     thirty (30) days prior to Amendment No.2 Effective Date, as reported on the
     Nasdaq SmallCap. The FVC issued shares will not be registered shares. FVC
     shall use its best efforts to register such issued shares to Net One in a
     prompt and timely manner.

2.   Returned Inventory shall be valued at the price of the product and support
     service originally paid FVC by Net One subject to Exhibit A. Returned
     inventory may include any Click to Meet software purchased from FVC and up
     to 37 Compaq servers and up to 37 each of the additional processor boards,
     memory boards and non-FVC software applications bundled with the servers.
     All components of Returned Inventory must be returned to FVC by October 3,
     2003

     The then-current representative of FVC Japan (Mr. Takayuki Kanda is
     designated by FVC on Amendment No.2 Effective Date) shall accept such
     return at Net One's offices in Japan. Net One agrees to provide storage
     space for Returned Inventory for up to ninety (90) days from Amendment No.2
     Effective Date at no charge to FVC. Thereafter Net One may dispose of the
     remaining FVC products of Returned Inventory at its own expense. If FVC
     solely determines that the server hardware requires to be returned to its
     California location, Net One agrees to pay the freight costs of such
     shipment.

Inventory Exchange

For the balance of Net One's FVC Product inventory not sold by Net One by the
time of Amendment No.2 Effective Date, excluding any remaining server hardware,
("REMAINING INVENTORY") Net One may either return or dispose at its own expense
such stock as previously outlined for full credit, with such credit applied to
new purchases of software licenses and software subscriptions from the current
FVC US Price List. Remaining Inventory returns will be valued at the price
originally paid by Net One. New products ordered in exchange for Remaining
Inventory returned product will be valued at current US list price, reduced by
the following discounts:

- -  [***]
- -  [***]

For the purpose of clarification, FVC shall provide support service for the new
products [***] NetOne.

This right of exchange for Remaining Inventory shall terminate on March 31,
2004.

[*]= CONFIDENTIAL TREATMENT REQUESTED

EX-10.55

                                                                   EXHIBIT 10.55

Thursday, September 04, 2003

David Weinstein
3180 Ross Road
Palo Alto CA, 94303

RE: EMPLOYMENT TERMS

Dear Mr. Weinstein:

First Virtual Communications, Inc. (the "Company") is pleased to offer you the
position of Vice President of Marketing, pursuant to the terms of this letter
agreement ("Agreement"), subject to the satisfactory review of your references.
Please respond to me by 5:00 p.m., West Coast time, on September 19, 2003, at
which time this offer will expire.

1.       DUTIES

You will be expected to perform various duties consistent with your position.
Upon acceptance of this offer, you will be an executive officer of the Company.
On the date that you are confirmed as a Section 16 Officer by action of the
Company's Board of Directors, you shall be covered by the Company's Executive
Officers' Change of Control Plan and the First Virtual Communications, Inc.
Indemnity Plan. As a Section 16 officer, you will report to the Company's Chief
Executive Officer, unless otherwise assigned by the Company. Additionally you
will be expected to achieve certain performance targets and Company goals
related to your specific job function ("ANNUAL PERFORMANCE TARGETS"). Such
Performance Targets shall be set and measured at the sole discretion of the
Company's President and Chief Executive Officer ("CEO").

2.       COMPENSATION

Your annual base salary will be $200,000 per year, less payroll deductions and
all required withholdings. You will be paid bi-weekly and you will be eligible
for the following standard Company benefits: medical insurance, paid time off,
and holidays. Details about these benefit plans are available for your review in
the Total Rewards benefit guide delivered to you with this Agreement. The
Company may modify its benefits and compensation packages from time to time, in
its sole discretion, as it deems necessary.

3.       STOCK OPTIONS

Upon commencement of employment and subject to approval of the Company's Board
of Directors, you will be granted a Stock Option under the Company's Equity
Plans to purchase 80,000 shares of the Company's Common Stock (the "STOCK
OPTION"). The Stock Option will be governed by and granted pursuant to a
separate Stock Option Agreement. The exercise price per share of the Stock
Option will be equal to the fair market value of the Common Stock established on
the date of grant,



subject to approval by the Board of Directors. The Stock Option will be subject
to vesting so long as you continue to be employed with the Company, according to
the following schedule: twelve and one-half percent (12 1/2%) of the shares
subject to the Stock Option will vest on the last day of the sixth full calendar
month of your employment after the date of grant and the remaining shares
subject to the Stock Option will vest in equal installments at the end of each
monthly period thereafter.

If you have questions regarding the tax implications of the Stock Option or any
part of your compensation package, please consult with your own tax advisor.

4.       TERMINATION

Employment at First Virtual Communications is "at will." The Company may
terminate your employment at any time and for any or no reason, with or without
Cause or advance notice, by giving you written notice of such termination.
Similarly, you may terminate your employment with the Company at any time at
your election, in your sole discretion, for any or no reason upon written notice
to the Company. The term of your employment relationship may not be modified
except by a written agreement signed by the Chief Executive Officer or President
of the Company.

In the event that the Company terminates your employment without Cause (as
defined below), and upon your furnishing to the Company an executed release and
waiver of claims, you shall be entitled to receive severance payments in the
form of (i) a continuation of your base salary for a period of three months
after your date of termination, at the rate in effect on your date of
termination, and (ii) During the severance period, assuming that you are
eligible for COBRA, you shall be entitled to receive medical benefits for
yourself and eligible dependents paid for by the Company until the earlier of
(a) three (3) months after your date of termination, or (b) the date that you
become eligible to receive medical benefits from another company or business
entity.

"CAUSE" means your: (i) gross negligence or willful misconduct in connection
with the performance of your duties to the Company that in the written
determination of a majority of the Board has not been cured within thirty (30)
days following receipt by you of written notice from the Board identifying such
acts of gross negligence or willful misconduct; (ii) failure to achieve your
Annual Performance Targets, following 30 days written notice from the CEO of
such failure; (iii) commission of a felony (other than a traffic-related
offense) that in the written determination of a majority of the Board has caused
material injury to the Company's business; (iv) dishonesty with respect to a
significant matter relating to the Company's business and intended to result in
personal enrichment of you or your family at the expense of the Company; or (v)
material breach of this Offer Letter and Employment Agreement, Proprietary
Information and Inventions Agreement or Indemnification Agreement by and between
you and the Company, which material breach has not been cured within thirty (30)
days following receipt by you of written notice from the Board identifying such
material breach.

If your employment is terminated for Cause, or you voluntarily terminate your
employment from the Company for any reason, all compensation and benefits will
cease immediately and you will receive no additional payment from the Company
other than your accrued base salary and accrued and unused vacation benefits
earned through your date of termination.

                                       2.



5.       COMPANY POLICY

As a Company employee, you will be expected to abide by the Company's policies,
procedures, rules and regulations which will govern the terms and conditions of
your employment. The Company's policies may be modified from time to time at the
sole discretion of the Company.

Normal working hours are from 8:00 a.m. to 5:00 p.m., Monday through Friday. As
an exempt salaried employee, you will be expected to work additional hours as
required by the nature of your work assignments.

6.       PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

As a condition of employment, you will be required to sign and comply with the
Proprietary Information and Inventions Agreement, attached hereto as Exhibit A,
which prohibits unauthorized use or disclosure of the Company's proprietary
information, among other things.

In your work for the Company, you will be expected not to use or disclose any
confidential information, including trade secrets, of any former employer or
other person to whom you have an obligation of confidentiality. Rather, you will
be expected to use only that information which is generally known and used by
persons with training and experience comparable to your own, which is common
knowledge in the industry or otherwise legally in the public domain, or which is
otherwise provided or developed by the Company. During our discussions about
your proposed job duties, you assured us that you would be able to perform those
duties within the guidelines just described. You agree that you will not bring
onto Company premises any unpublished documents or property belonging to any
former employer or other person to whom you have an obligation of
confidentiality.

7.       ENTIRE AGREEMENT

This Agreement, together with your Proprietary Information and Inventions
Agreement and the stock documents and Total Rewards benefit guide referred to
herein, forms the complete and exclusive statement of the terms of your
employment with the Company. The employment terms in this Agreement supersede
any other agreements or promises made to you by anyone, whether oral or written.
The terms of this Agreement cannot be modified, except in a writing signed by
the Company's Chief Executive Officer or President.

8.       GOVERNING LAW

This Agreement will be governed by and construed according to the laws of the
State of California. You hereby expressly consent to the personal jurisdiction
of the state and federal courts located in Redwood City, California for any
lawsuit filed there against you by the Company arising from or related to this
Agreement.

9.       SUCCESSORS AND ASSIGNS. This Agreement will be binding upon your heirs,
executors, administrators and other legal representatives and will be for the
benefit of the Company, its successors, and its assigns.

As required by law, this offer is subject to satisfactory proof of your right to
work in the United States. Please sign and date this Agreement, and return it to
the Company's Human Resources

                                       3.



Department by September 19, 2003, if you wish to accept employment with the
Company under the terms described above. If you accept our offer, we would like
you to start as soon as possible.

We look forward to your favorable reply and to a productive and enjoyable work
relationship.

Sincerely,

FIRST VIRTUAL COMMUNICATIONS

By: /s/ Tammy Polanco
   _____________________________________
   Tammy Polanco
   Director, Human Resources

Accepted:

/s/ David Weinstein
________________________________________
David Weinstein

September 8, 2003
________________________________________
Date

Attachment:    Exhibit A:    Proprietary Information and Inventions Agreement

                                       4.



                       FIRST VIRTUAL COMMUNICATIONS, INC.

            FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

         In consideration of my employment or continued employment by First
Virtual Communications, Inc. (the "Company"), and the compensation now and
hereafter paid to me, I hereby agree as follows:

         1.       RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during the term of my employment and thereafter, I will hold in strictest
confidence and will not disclose, use, lecture upon or publish any of the
Company's Proprietary Information (defined below), except as such disclosure,
use or publication may be required in connection with my work for the Company
and an officer of the Company expressly authorizes such in writing. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns and the Company and its assigns shall be
the sole owner of all trade secret rights, patent rights, copyrights, mask work
rights, trade secret rights and all other rights throughout the world
(collectively, "Proprietary Rights") in connection therewith.

         The term "Proprietary Information" shall mean trade secrets,
confidential knowledge, data or any other proprietary information of the
Company. By way of illustration but not limitation, "Proprietary Information"
includes (a) trade secrets, inventions, mask works, ideas, processes, formulas,
source and object codes, data, programs, other works of authorship, cell lines,
know-how, improvements, discoveries, developments, designs and techniques
(hereinafter collectively referred to as "Inventions"); and (b) information
regarding plans for research, development, new products, marketing and selling,
business plans, budgets and unpublished financial statements, licenses, prices
and costs, suppliers and customers; and information regarding the skills and
compensation of other employees of the Company.

         2.       THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("Third Party Information") subject to a
duty on the Company's part to maintain the confidentiality of such information
and to use it only for certain limited purposes. During the term of my
employment and thereafter, I will hold Third Party Information in the strictest
confidence and will not disclose (to anyone other than Company personnel who
need to know such information in connection with their work for the Company) or
use, except in connection with my work for the Company, Third Party Information
unless expressly authorized by an officer of the Company in writing.

         3.       ASSIGNMENT OF INVENTIONS.

                  3.1      ASSIGNMENT. I hereby assign to the Company all my
right, title and interest in and to any and all Inventions (and all Proprietary
Rights with respect thereto) whether or not patentable or registrable under
copyright or similar statutes, made or conceived or reduced to practice or
learned by me, either alone or jointly with others, during the period of my
employment with the Company. Inventions assigned to or as directed by the
Company by this paragraph 3 are hereinafter referred to as "Company Inventions."
I recognize that this

                                       1.



Agreement does not require assignment of any invention that qualifies fully for
protection under Section 2870 of the California Labor Code (hereinafter "Section
2870"), which provides as follows:

                  (1)      Any provision in an employment agreement that
provides that an employee shall assign, or offer to assign, any of his or her
rights in an invention to his or her employer shall not apply to an invention
that the employee developed entirely on his or her own time without using the
employer's equipment, supplies, facilities, or trade secret information except
for those inventions that either:

                           (A)      Relate at the time of conception or
reduction to practice of the invention to the employer's business, or actual or
demonstrably anticipated research or development of the employer.

                           (B)      Result from any work performed by the
employee for the employer.

                  (2)      To the extent a provision in an employment agreement
purports to require an employee to assign an invention otherwise excluded from
being required to be assigned under subdivision (i), the provision is against
the public policy of this state and is unenforceable.

                  3.2      GOVERNMENT. I also assign to or as directed by the
Company all my right, title and interest in and to any and all Inventions, full
title to which is required to be in the United States by a contract between the
Company and the United States or any of its agencies.

                  3.3      WORKS FOR HIRE. I acknowledge that all original works
of authorship that are made by me (solely or jointly with others) within the
scope of my employment and that are protectable by copyright are "works made for
hire," as that term is defined in the United States Copyright Act (17 U.S.C.,
Section 101).

         4.       ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company
in every proper way to obtain and from time to time enforce United States and
foreign Proprietary Rights relating to Company Inventions in any and all
countries. To that end I will execute, verify and deliver such documents and
perform such other acts (including appearances as a witness) as the Company may
reasonably request for use in applying for, obtaining, perfecting, evidencing,
sustaining and enforcing such Proprietary Rights and the assignment thereof. In
addition, I will execute, verify and deliver assignments of such Proprietary
Rights to the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and all
countries shall continue beyond the termination of my employment, but the
Company shall compensate me at a reasonable rate after my termination for the
time actually spent by me at the Company's request on such assistance.

         In the event the Company is unable for any reason, after reasonable
effort, to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agent and
attorney in fact, which appointment is coupled with an interest, to act for and
in my behalf to execute, verify and file any such documents and to do all other
lawfully permitted acts to further the purposes of the preceding paragraph
thereon with the

                                       2.



same legal force and effect as if executed by me. I hereby waive and quitclaim
to the Company any and all claims, of any nature whatsoever, that I now or may
hereafter have for infringement of any Proprietary Rights assigned hereunder to
the Company.

         5.       OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for six (6) months after termination of my employment with the
Company, I will promptly disclose to the Company fully and in writing and will
hold in trust for the sole right and benefit of the Company any and all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others. In addition, after termination of my employment, I will
promptly disclose to the Company all patent applications filed by me or on my
behalf within a year after termination of employment. At the time of each such
disclosure, I will advise the Company in writing of any Inventions that I
believe fully qualify for protection under Section 2870; and I will at that time
provide to the Company in writing all evidence necessary to substantiate that
belief. I understand that the Company will keep in confidence and will not
disclose to third parties without my consent any proprietary information
disclosed in writing to the Company pursuant to this Agreement relating to
Inventions that qualify fully for protection under the provisions of Section
2870. I will preserve the confidentiality of any Invention that does not fully
qualify for protection under Section 2870. I agree to keep and maintain adequate
and current records (in the form of notes, sketches, drawings and in any other
form that may be required by the Company) of all Proprietary Information
developed by me and all Inventions made by me during the period of my employment
at the Company, which records shall be available to and remain the sole property
of the Company at all times.

         6.       PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
that I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible uncertainty,
I have set forth on Exhibit A attached hereto a complete disclosure of all
Inventions that I have, alone or jointly with others, conceived, developed or
reduced to practice or caused to be conceived, developed or reduced to practice
prior to the commencement of my employment with the Company, that I consider to
be my property or the property of third parties and that I wish to have excluded
from the scope of this Agreement. If disclosure of any such Invention on Exhibit
A would cause me to violate any prior confidentiality agreement, I understand
that I am not to disclose such Inventions on Exhibit A. Instead, I am to
disclose in the applicable space on Exhibit A, only a cursory name for each such
Invention, a listing of the party(s) to whom it belongs and the fact that full
disclosure as to such Invention has not been made for that reason.

         7.       ADDITIONAL ACTIVITIES. I agree that during the period of my
employment by the Company I will not, without the Company's express written
consent, engage in any employment or business activity other than for the
Company. As further assurance that I will not improperly use or disclose any
Proprietary Information of the Company, I agree that, for the period of my
employment by the Company and for one (l) year after the date of termination of
my employment by the Company, I will not (i) solicit or induce any employee of
the Company to leave the employ of the Company or (ii) solicit the business of
any customer of the Company (other than, prior to termination of my employment,
on behalf of the Company and, after termination of my employment, with respect
to products or services of a type not supplied by the Company).

                                       3.



                  If any restriction set forth in this Section is found by any
court of competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.

         8.       NO IMPROPER USE OF MATERIALS. During my employment by the
Company I will not improperly use or disclose any confidential information or
trade secrets, if any, of any former employer or any other person to whom I have
an obligation of confidentiality, and I will not bring onto the premises of the
Company any unpublished documents or any property belonging to any former
employer or any other person to whom I have an obligation of confidentiality
unless previously and specifically consented to in writing by that former
employer or person. I will use in the performance of my duties only information
which is generally known and used by persons with training and experience
comparable to my own, which is common knowledge in the industry or otherwise
legally in the public domain, or which is otherwise provided or developed by the
Company or by me while employed by the Company.

         9.       NO CONFLICTING OBLIGATION. I represent that my performance of
all the terms of this Agreement and as an employee of the Company does not and
will not breach any agreement or obligation of mine relating to any time prior
to my employment by the Company. I have not entered into, and I agree I will not
enter into, any agreement either written or oral in conflict herewith.

         10.      RETURN OF COMPANY DOCUMENTS. When I leave the employ of the
Company, I will deliver to the Company any and all drawings, notes, memoranda,
specifications, devices, formulas, molecules, cells and documents, together with
all copies thereof, and any other material containing or disclosing any Company
Inventions, Third Party Information or Proprietary Information of the Company,
whether kept at the Company, home or elsewhere. I further agree that any
property situated on the Company's premises and owned by the Company, including
disks and other storage media, filing cabinets or other work areas, is subject
to inspection by Company personnel at any time with or without notice. Prior to
leaving, I will cooperate with the Company in completing and signing the
Company's termination statement for technical and management personnel
confirming the above and my obligations under this Agreement.

         11.      LAW AND REMEDIES. I understand that the unauthorized taking of
the Company's trade secrets (i) could result in civil liability under California
Civil Code Section 3426, and that, if willful, could result in an award for
triple the amount of the Company's damages and attorneys' fees; and (ii) is a
crime under California Penal Code Section 499(c), punishable by imprisonment for
a time not exceeding one year, or by a fine not exceeding five thousand dollars
($5,000), or by both. Because my services are personal and unique and because I
may have access to and become acquainted with the Proprietary Information of the
Company, the Company shall have the right to enforce this Agreement and any of
its provisions by injunction, specific performance or other equitable relief,
without bond and without prejudice to any other rights and remedies that the
Company may have for a breach of this Agreement.

                                       4.



         12.      NOTICES. Any notices required or permitted hereunder shall be
given to the appropriate party at the address specified below or at such other
address as the party shall specify in writing. Such notice shall be deemed given
upon personal delivery to the appropriate address or if sent by certified or
registered mail, three days after the date of mailing.

         13.      GENERAL PROVISIONS.

                  13.1     GOVERNING LAW. This Agreement will be governed by and
construed according to the laws of the State of California without respect to
its choice of law provisions.

                  13.2     ENTIRE AGREEMENT. This Agreement is the final,
complete and exclusive agreement of the parties with respect to the subject
matter hereof and supersedes and merges all prior discussions between us. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, will be effective unless in writing and signed by the
party to be charged therewith. Any subsequent change or changes in my duties,
salary or compensation will not affect the validity or scope of this Agreement.
As used in this Agreement, the period of my employment includes any time during
which I may be retained by the Company as a consultant.

                  13.3     SEVERABILITY. If one or more of the provisions in
this Agreement are deemed unenforceable by law, then such provision will be
deemed stricken from this Agreement and the remaining provisions will continue
in full force and effect.

                  13.4     SUCCESSORS AND ASSIGNS. This Agreement will be
binding upon my heirs, executors, administrators and other legal representatives
and will be for the benefit of the Company, its successors, and its assigns.

                  13.5     SURVIVAL. The provisions of this Agreement shall
survive the termination of my employment and the assignment of this Agreement by
the Company to any successor in interest or other assignee.

                  13.6     EMPLOYMENT. I agree and understand that nothing in
this Agreement shall confer any right with respect to continuation of my
employment by the Company, nor shall it interfere in any way with my right or
the Company's right to terminate my employment at any time, with or without
cause.

                  13.7     WAIVER. No waiver by the Company of any breach of
this Agreement shall be a waiver of any preceding or succeeding breach. No
waiver by the Company of any right under this Agreement shall be construed as a
waiver of any other right. The Company shall not be required to give notice to
enforce strict adherence to all terms of this Agreement.

         This Agreement shall be effective as of the first day of my employment
with the Company, namely _____________.

                                       5.



         I UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO INVENTIONS I MAKE
DURING MY EMPLOYMENT, AND RESTRICTS MY RIGHT TO DISCLOSE OR USE THE COMPANY'S
CONFIDENTIAL INFORMATION DURING OR SUBSEQUENT TO MY EMPLOYMENT.

         I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT.

__________________                     ____________________________________
      Date                             EMPLOYEE SIGNATURE

                                       Address:

                                       _____________________________________

                                       _____________________________________

ACCEPTED AND AGREED TO:

FIRST VIRTUAL COMMUNICATIONS, INC.

By:   ____________________________________________

Name: ____________________________________________

Title:____________________________________________

Address: First Virtual Communications, Inc.
         3393 Octavius Drive
         Santa Clara, CA 95054

                                       6.



                                    EXHIBIT A
                           TO PROPRIETARY INFORMATION
                            AND INVENTIONS AGREEMENT

FVC.COM
3393 Octavius Drive
Santa Clara, CA  95054

Gentlemen:

1.       Except as noted in Section 2 below, the following is a complete
         disclosure of all inventions or improvements relevant to the subject
         matter of my employment by FVC.COM (the "Company") that have been made
         or conceived or first reduced to practice by me alone or jointly with
         others prior to my engagement by the Company:

         _____    No inventions or improvements.

         _____    See below:

         _______________________________________________________________________

         _______________________________________________________________________

         _______________________________________________________________________

         _______________________________________________________________________

         _____    Additional sheets attached.

2.       Due to a prior confidentiality agreement, I cannot complete the
         disclosure under Section 1 above with respect to inventions or
         improvements generally listed below, the proprietary rights and duty of
         confidentiality with respect to which I owe to the following party(s):

                  INVENTION OR IMPROVEMENT              PARTY(s) RELATIONSHIP
         _______________________________________________________________________
         1.
         _______________________________________________________________________
         2.
         _______________________________________________________________________
         3.
         _______________________________________________________________________

         _____    Additional sheets attached.

                                       7.



3.       I propose to bring to my employment the following devices, materials
         and documents of a former employer or other person to whom I have an
         obligation of confidentiality that are not generally available to the
         public, which materials and documents may be used in my employment
         pursuant to the express written authorization of my former employer or
         such other person (a copy of which is attached hereto):

         _____  No Material.

         _____  See Below:

         _______________________________________________________________________

         _______________________________________________________________________

         _______________________________________________________________________

         _______________________________________________________________________

         _____    Additional sheets attached.

Date:    __________________

                                               Very truly yours,

                                               _______________________________
                                               Employee Signature

                                       8.

EX-10.56

November 25, 2002

Frank S. Kaplan
4100 Shadow Oak Lane
Austin, TX 78746
512-306-9132

RE: EMPLOYMENT TERMS

Dear Mr. Kaplan:

First Virtual Communications, Inc. (the "Company") is pleased to offer you the
position of Vice President of World Wide Sales, pursuant to the terms of this
letter agreement ("Agreement"), subject to the satisfactory review of your
references. Please respond to me by 5:00 p.m., West Coast time, on November 29,
2002, at which time this offer will expire.

1.       DUTIES

You will be expected to perform various duties consistent with your position.
You will report to the Company's President and Chief Executive Officer, Jonathan
Morgan, unless otherwise assigned by the Company. Additionally you will be
expected to achieve certain performance targets and Company goals related to
your specific job function, ("ANNUAL PERFORMANCE TARGETS"). Such Performance
Targets shall be set and measured at the sole discretion of the Company's
President and Chief Executive Officer.

2.       COMPENSATION

Your annual base salary will be $180,000 per year through December 31, 2003,
less payroll deductions and all required withholdings. Upon achieving 100% of
your 2003 sales quota, your target commissions will total $120,000 for an annual
total target compensation package of $300,000 for the calendar year 2003.
Beginning January 1, 2004, your annual base salary will be reduced to $150,000.
Your target commissions upon achieving 100% of your sales quota will be $150,000
for a total cash compensation target of $300,000 for calendar year 2004.

You will be paid bi-weekly and you will be eligible for the following standard
Company benefits: medical insurance, paid time off, and holidays. Details about
these benefit plans are available for your review in the attached Total Rewards
benefit guide. The Company may modify its benefits and compensation packages
from time to time, in its sole discretion, as it deems necessary.

3.       STOCK OPTIONS

Upon commencement of employment and subject to approval of the Company's Board
of Directors, you will be granted a Stock Option under the Company's Employee
Stock Option Plan



to purchase 400,000 shares of the Company's Common Stock (the "STOCK OPTION").
The Stock Option will be governed by and granted pursuant to a separate Stock
Option Agreement. The exercise price per share of the Stock Option will be equal
to the fair market value of the Common Stock established on the date of grant,
subject to approval by the Board of Directors. The Stock Option will be subject
to vesting so long as you continue to be employed with the Company, according to
the following schedule: twelve and a half percent (12 1/2%) of the shares
subject to the Stock Option will vest on the last day of the sixth full calendar
month of your employment after the date of grant and the remaining shares
subject to the Stock Option will vest in equal installments at the end of each
monthly period thereafter.

If you have questions regarding the tax implications of the Stock Option or any
part of your compensation package, please consult with your own tax advisor.

4.       TERMINATION

Employment at First Virtual Communications is "at will". The Company may
terminate your employment at any time and for any or no reason, with or without
Cause or advance notice, by giving you written notice of such termination.
Similarly, you may terminate your employment with the Company at any time at
your election, in your sole discretion, for any or no reason upon written notice
to the Company. The term of your employment relationship may not be modified
except by a written agreement signed by the Chief Executive Officer or President
of the Company.

In the event that the Company terminates your employment without Cause and
subject to your successful achievement of your Annual Performance Targets, as
determined by the CEO in the CEO's sole discretion, then upon your furnishing to
the Company an executed release and waiver of claims, you shall be entitled to
receive severance payments in the form of continuation of your base salary and
100% of your target commission, in effect at the time of your termination,
subject to the standard payroll deductions and withholdings, for a period of
three (3) months after the date of termination. During the severance period,
assuming that you are eligible for COBRA, you shall be entitled to receive
medical benefits for yourself and eligible dependents paid for by the Company
until the earlier of (a) three (3) months after the date of termination, or (b)
the date that you become eligible to receive medical benefits from another
company or business entity.

"CAUSE" means Executive's: (i) gross negligence or willful misconduct in
connection with the performance of Executive's duties to the Company that in the
written determination of a majority of the Board has not been cured within
thirty (30) days following receipt by Executive of written notice from the Board
identifying such acts of gross negligence or willful misconduct; (ii) commission
of a felony (other than a traffic-related offense) that in the written
determination of a majority of the Board has caused material injury to the
Company's business; (iii) dishonesty with respect to a significant matter
relating to the Company's business and intended to result in personal enrichment
of Executive or his or her family at the expense of the Company; or (iv)
material breach of any agreement by and between Executive and the Company, which
material breach has not been cured within thirty (30) days following receipt by
Executive of written notice from the Board identifying such material breach.

                                       2.



If your employment is terminated for Cause, or you voluntarily terminate your
employment from the Company, all compensation and benefits will cease
immediately and you will receive no additional payment from the Company other
than your accrued base salary and accrued and unused vacation benefits earned
through your date of termination.

5.       COMPANY POLICY

As a Company employee, you will be expected to abide by the Company's policies,
procedures, rules and regulations which will govern the terms and conditions of
your employment. The Company's Employee Handbook may be modified from time to
time at the sole discretion of the Company.

Normal working hours are from 8:00 a.m. to 5:00 p.m., Monday through Friday. As
an exempt salaried employee, you will be expected to work additional hours as
required by the nature of your work assignments.

6.       PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

As a condition of employment, you will be required to sign and comply with the
Proprietary Information and Inventions Agreement, attached hereto as Exhibit A,
which prohibits unauthorized use or disclosure of the Company's proprietary
information, among other things.

In your work for the Company, you will be expected not to use or disclose any
confidential information, including trade secrets, of any former employer or
other person to whom you have an obligation of confidentiality. Rather, you will
be expected to use only that information which is generally known and used by
persons with training and experience comparable to your own, which is common
knowledge in the industry or otherwise legally in the public domain, or which is
otherwise provided or developed by the Company. During our discussions about
your proposed job duties, you assured us that you would be able to perform those
duties within the guidelines just described. You agree that you will not bring
onto Company premises any unpublished documents or property belonging to any
former employer or other person to whom you have an obligation of
confidentiality.

7.       ENTIRE AGREEMENT

This Agreement, together with your Proprietary Information and Inventions
Agreement and the stock documents referred to herein, forms the complete and
exclusive statement of the terms of your employment with the Company. The
employment terms in this Agreement supersede any other agreements or promises
made to you by anyone, whether oral or written. The terms of this Agreement
cannot be modified, except in a writing signed by the Company's Chief Executive
Officer or President.

8.       GOVERNING LAW

                                       3.



This Agreement will be governed by and construed according to the laws of the
State of California. You hereby expressly consent to the personal jurisdiction
of the state and federal courts located in Santa Clara, California for any
lawsuit filed there against you by the Company arising from or related to this
Agreement.

9.       SUCCESSORS AND ASSIGNS. This Agreement will be binding upon your heirs,
executors, administrators and other legal representatives and will be for the
benefit of the Company, its successors, and its assigns.

As required by law, this offer is subject to satisfactory proof of your right to
work in the United States. Please sign and date this Agreement, and return it to
the Company's Human Resources Department by November 29, 2002, if you wish to
accept employment with the Company under the terms described above. If you
accept our offer, we would like you to start as soon as possible.

We look forward to your favorable reply and to a productive and enjoyable work
relationship.

Sincerely,

FIRST VIRTUAL COMMUNICATIONS

By: /s/ Tammy Polanco
   ___________________________
   Tammy Polanco
   Director, Human Resources

Accepted:

/s/ Frank S. Kaplan
______________________________
Frank S. Kaplan

December 12, 2002
______________________________
Date

Attachment:   Exhibit A:   Proprietary Information and Inventions Agreement

                                       4.



                                    EXHIBIT A

                       FIRST VIRTUAL COMMUNICATIONS, INC.

            FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

         In consideration of my employment or continued employment by FIRST
VIRTUAL COMMUNICATIONS, Inc. (the "Company"), and the compensation now and
hereafter paid to me, I hereby agree as follows:

         1.       RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during the term of my employment and thereafter, I will hold in strictest
confidence and will not disclose, use, lecture upon or publish any of the
Company's Proprietary Information (defined below), except as such disclosure,
use or publication may be required in connection with my work for the Company
and an officer of the Company expressly authorizes such in writing. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns and the Company and its assigns shall be
the sole owner of all trade secret rights, patent rights, copyrights, mask work
rights, trade secret rights and all other rights throughout the world
(collectively, "Proprietary Rights") in connection therewith.

         The term "Proprietary Information" shall mean trade secrets,
confidential knowledge, data or any other proprietary information of the
Company. By way of illustration but not limitation, "Proprietary Information"
includes (a) trade secrets, inventions, mask works, ideas, processes, formulas,
source and object codes, data, programs, other works of authorship, cell lines,
know-how, improvements, discoveries, developments, designs and techniques
(hereinafter collectively referred to as "Inventions"); and (b) information
regarding plans for research, development, new products, marketing and selling,
business plans, budgets and unpublished financial statements, licenses, prices
and costs, suppliers and customers; and information regarding the skills and
compensation of other employees of the Company.

         2.       THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("Third Party Information") subject to a
duty on the Company's part to maintain the confidentiality of such information
and to use it only for certain limited purposes. During the term of my
employment and thereafter, I will hold Third Party Information in the strictest
confidence and will not disclose (to anyone other than Company personnel who
need to know such information in connection with their work for the Company) or
use, except in connection with my work for the Company, Third Party Information
unless expressly authorized by an officer of the Company in writing.

         3.       ASSIGNMENT OF INVENTIONS.

                  3.1      ASSIGNMENT. I hereby assign to the Company all my
right, title and interest in and to any and all Inventions (and all Proprietary
Rights with respect thereto) whether or not patentable or registrable under
copyright or similar statutes, made or conceived or reduced to practice or
learned by me, either alone or jointly with others, during the period of my
employment with the Company. Inventions assigned to or as directed by the
Company by this paragraph 3 are hereinafter referred to as "Company Inventions."
I recognize that this Agreement does not require assignment of any invention
that qualifies fully for protection under Section 2870 of the California Labor
Code (hereinafter "Section 2870"), which provides as follows:



                  (1)      Any provision in an employment agreement that
provides that an employee shall assign, or offer to assign, any of his or her
rights in an invention to his or her employer shall not apply to an invention
that the employee developed entirely on his or her own time without using the
employer's equipment, supplies, facilities, or trade secret information except
for those inventions that either:

                           (A)      Relate at the time of conception or
reduction to practice of the invention to the employer's business, or actual or
demonstrably anticipated research or development of the employer.

                           (B)      Result from any work performed by the
employee for the employer.

                  (2)      To the extent a provision in an employment agreement
purports to require an employee to assign an invention otherwise excluded from
being required to be assigned under subdivision (i), the provision is against
the public policy of this state and is unenforceable.

                  3.2      GOVERNMENT. I also assign to or as directed by the
Company all my right, title and interest in and to any and all Inventions, full
title to which is required to be in the United States by a contract between the
Company and the United States or any of its agencies.

                  3.3      WORKS FOR HIRE. I acknowledge that all original works
of authorship that are made by me (solely or jointly with others) within the
scope of my employment and that are protectable by copyright are "works made for
hire," as that term is defined in the United States Copyright Act (17 U.S.C.,
Section 101).

         4.       ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company
in every proper way to obtain and from time to time enforce United States and
foreign Proprietary Rights relating to Company Inventions in any and all
countries. To that end I will execute, verify and deliver such documents and
perform such other acts (including appearances as a witness) as the Company may
reasonably request for use in applying for, obtaining, perfecting, evidencing,
sustaining and enforcing such Proprietary Rights and the assignment thereof. In
addition, I will execute, verify and deliver assignments of such Proprietary
Rights to the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and all
countries shall continue beyond the termination of my employment, but the
Company shall compensate me at a reasonable rate after my termination for the
time actually spent by me at the Company's request on such assistance.

         In the event the Company is unable for any reason, after reasonable
effort, to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agent and
attorney in fact, which appointment is coupled with an interest, to act for and
in my behalf to execute, verify and file any such documents and to do all other
lawfully permitted acts to further the purposes of the preceding paragraph
thereon with the same legal force and effect as if executed by me. I hereby
waive and quitclaim to the Company any and all claims, of any nature whatsoever,
that I now or may hereafter have for infringement of any Proprietary Rights
assigned hereunder to the Company.

         5.       OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for six (6) months after termination of my employment with the
Company, I will promptly disclose to the Company fully and in writing and will
hold in trust for the sole right and benefit of the Company any and all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others. In addition, after termination of my employment, I will
promptly disclose to the Company all patent applications filed by me or on my
behalf within a year after termination of employment. At the time of

                                      2.



each such disclosure, I will advise the Company in writing of any Inventions
that I believe fully qualify for protection under Section 2870; and I will at
that time provide to the Company in writing all evidence necessary to
substantiate that belief. I understand that the Company will keep in confidence
and will not disclose to third parties without my consent any proprietary
information disclosed in writing to the Company pursuant to this Agreement
relating to Inventions that qualify fully for protection under the provisions of
Section 2870. I will preserve the confidentiality of any Invention that does not
fully qualify for protection under Section 2870. I agree to keep and maintain
adequate and current records (in the form of notes, sketches, drawings and in
any other form that may be required by the Company) of all Proprietary
Information developed by me and all Inventions made by me during the period of
my employment at the Company, which records shall be available to and remain the
sole property of the Company at all times.

         6.       PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
that I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible uncertainty,
I have set forth on Exhibit A attached hereto a complete disclosure of all
Inventions that I have, alone or jointly with others, conceived, developed or
reduced to practice or caused to be conceived, developed or reduced to practice
prior to the commencement of my employment with the Company, that I consider to
be my property or the property of third parties and that I wish to have excluded
from the scope of this Agreement. If disclosure of any such Invention on Exhibit
A would cause me to violate any prior confidentiality agreement, I understand
that I am not to disclose such Inventions on Exhibit A. Instead, I am to
disclose in the applicable space on Exhibit A, only a cursory name for each such
Invention, a listing of the party(s) to whom it belongs and the fact that full
disclosure as to such Invention has not been made for that reason.

         7.       ADDITIONAL ACTIVITIES. I agree that during the period of my
employment by the Company I will not, without the Company's express written
consent, engage in any employment or business activity other than for the
Company. As further assurance that I will not improperly use or disclose any
Proprietary Information of the Company, I agree that, for the period of my
employment by the Company and for one (l) year after the date of termination of
my employment by the Company, I will not (i) solicit or induce any employee of
the Company to leave the employ of the Company or (ii) solicit the business of
any customer of the Company (other than, prior to termination of my employment,
on behalf of the Company and, after termination of my employment, with respect
to products or services of a type not supplied by the Company).

                  If any restriction set forth in this Section is found by any
court of competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.

         8.       NO IMPROPER USE OF MATERIALS. During my employment by the
Company I will not improperly use or disclose any confidential information or
trade secrets, if any, of any former employer or any other person to whom I have
an obligation of confidentiality, and I will not bring onto the premises of the
Company any unpublished documents or any property belonging to any former
employer or any other person to whom I have an obligation of confidentiality
unless previously and specifically consented to in writing by that former
employer or person. I will use in the performance of my duties only information
which is generally known and used by persons with training and experience
comparable to my own, which is common knowledge in the industry or otherwise
legally in the public domain, or which is otherwise provided or developed by the
Company or by me while employed by the Company.

                                       3.



         9.       NO CONFLICTING OBLIGATION. I represent that my performance of
all the terms of this Agreement and as an employee of the Company does not and
will not breach any agreement or obligation of mine relating to any time prior
to my employment by the Company. I have not entered into, and I agree I will not
enter into, any agreement either written or oral in conflict herewith.

         10.      RETURN OF COMPANY DOCUMENTS. When I leave the employ of the
Company, I will deliver to the Company any and all drawings, notes, memoranda,
specifications, devices, formulas, molecules, cells and documents, together with
all copies thereof, and any other material containing or disclosing any Company
Inventions, Third Party Information or Proprietary Information of the Company,
whether kept at the Company, home or elsewhere. I further agree that any
property situated on the Company's premises and owned by the Company, including
disks and other storage media, filing cabinets or other work areas, is subject
to inspection by Company personnel at any time with or without notice. Prior to
leaving, I will cooperate with the Company in completing and signing the
Company's termination statement for technical and management personnel
confirming the above and my obligations under this Agreement.

         11.      LAW AND REMEDIES. I understand that the unauthorized taking of
the Company's trade secrets (i) could result in civil liability under California
Civil Code Section 3426, and that, if willful, could result in an award for
triple the amount of the Company's damages and attorneys' fees; and (ii) is a
crime under California Penal Code Section 499(c), punishable by imprisonment for
a time not exceeding one year, or by a fine not exceeding five thousand dollars
($5,000), or by both. Because my services are personal and unique and because I
may have access to and become acquainted with the Proprietary Information of the
Company, the Company shall have the right to enforce this Agreement and any of
its provisions by injunction, specific performance or other equitable relief,
without bond and without prejudice to any other rights and remedies that the
Company may have for a breach of this Agreement.

         12.      NOTICES. Any notices required or permitted hereunder shall be
given to the appropriate party at the address specified below or at such other
address as the party shall specify in writing. Such notice shall be deemed given
upon personal delivery to the appropriate address or if sent by certified or
registered mail, three days after the date of mailing.

         13.      GENERAL PROVISIONS.

                  13.1     GOVERNING LAW. This Agreement will be governed by and
construed according to the laws of the State of California without respect to
its choice of law provisions.

                  13.2     ENTIRE AGREEMENT. This Agreement is the final,
 complete and exclusive agreement of the parties with respect to the subject
matter hereof and supersedes and merges all prior discussions between us. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, will be effective unless in writing and signed by the
party to be charged therewith. Any subsequent change or changes in my duties,
salary or compensation will not affect the validity or scope of this Agreement.
As used in this Agreement, the period of my employment includes any time during
which I may be retained by the Company as a consultant.

                  13.3     SEVERABILITY. If one or more of the provisions in
this Agreement are deemed unenforceable by law, then such provision will be
deemed stricken from this Agreement and the remaining provisions will continue
in full force and effect.

                                       4.



                  13.4     SUCCESSORS AND ASSIGNS. This Agreement will be
binding upon my heirs, executors, administrators and other legal representatives
and will be for the benefit of the Company, its successors, and its assigns.

                  13.5     SURVIVAL. The provisions of this Agreement shall
survive the termination of my employment and the assignment of this Agreement by
the Company to any successor in interest or other assignee.

                  13.6     EMPLOYMENT. I agree and understand that nothing in
this Agreement shall confer any right with respect to continuation of my
employment by the Company, nor shall it interfere in any way with my right or
the Company's right to terminate my employment at any time, with or without
cause.

                  13.7     WAIVER. No waiver by the Company of any breach of
this Agreement shall be a waiver of any preceding or succeeding breach. No
waiver by the Company of any right under this Agreement shall be construed as a
waiver of any other right. The Company shall not be required to give notice to
enforce strict adherence to all terms of this Agreement.

         This Agreement shall be effective as of the first day of my employment
with the Company, namely ________________ .

         I UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO INVENTIONS I MAKE
DURING MY EMPLOYMENT, AND RESTRICTS MY RIGHT TO DISCLOSE OR USE THE COMPANY'S
CONFIDENTIAL INFORMATION DURING OR SUBSEQUENT TO MY EMPLOYMENT.

         I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT.

                                    ________________________________________
                                    EXECUTIVE

                                    Address:

                                    ______________________________

                                    ______________________________

                                       5.

EX-10.57

                                                                   Exhibit 10.57

                          SECURITIES PURCHASE AGREEMENT

         This Securities Purchase Agreement (this "Agreement") is dated as of
November 7, 2003, among First Virtual Communications, Inc., a Delaware
corporation (the "Company"), and the purchasers identified on the Schedule of
Purchasers attached hereto (each a "Purchaser" and collectively the
"Purchasers"); and

         WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act, and Rule 506
promulgated thereunder, the Company desires to issue and sell to the Purchasers,
and each Purchaser, severally and not jointly, desires to purchase from the
Company in the aggregate, up to $12,000,000 of Common Stock and Warrants on the
Closing Date. Capitalized terms used herein and not otherwise defined are
defined in Section 1.1 below.

         NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:

                                   ARTICLE I.
                                  DEFINITIONS

         1.1      Definitions. In addition to the terms defined elsewhere in
this Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:

                  "Action" shall have the meaning ascribed to such term in
         Section 3.1(j).

                  "Affiliate" means any Person that, directly or indirectly
         through one or more intermediaries, controls or is controlled by or is
         under common control with a Person as such terms are used in and
         construed under Rule 144. With respect to a Purchaser, any investment
         fund or managed account that is managed on a discretionary basis by the
         same investment manager as such Purchaser will be deemed to be an
         Affiliate of such Purchaser.

                  "Business Day" means any day except Saturday, Sunday and any
         day which shall be a federal legal holiday or a day on which banking
         institutions in the State of New York are authorized or required by law
         or other governmental action to close.

                  "Closing" means the closing of the purchase and sale of the
         Common Stock and the Warrants pursuant to Section 2.1.

                  "Closing Date" means the Trading Day when all of the
         Transaction Documents have been executed and delivered by the
         applicable parties thereto, and all conditions precedent to (i) the
         Purchasers' obligations to pay the Subscription Amount and (ii) the
         Company's obligations to deliver the Securities have been satisfied or
         waived.

                                       1


                  "Closing Price" means on any particular date (a) the last
         reported closing bid price per share of Common Stock on such date on
         the Trading Market (as reported by Bloomberg L.P. at 4:15 PM (New York
         time), or (b) if there is no such price on such date, then the closing
         bid price on the Trading Market on the date nearest preceding such date
         (as reported by Bloomberg L.P. at 4:15 PM (New York time) for the
         closing bid price for regular session trading on such day), or (c) if
         the Common Stock is not then listed or quoted on the Trading Market and
         if prices for the Common Stock are then reported in the "pink sheets"
         published by the National Quotation Bureau Incorporated (or a similar
         organization or agency succeeding to its functions of reporting
         prices), the most recent bid price per share of the Common Stock so
         reported, or (d) if the shares of Common Stock are not then publicly
         traded the fair market value of a share of Common Stock as determined
         by an appraiser selected in good faith by the Purchasers of a majority
         in interest of the Shares then outstanding.

                  "Commission" means the Securities and Exchange Commission.

                  "Common Stock" means the common stock of the Company, $0.001
         par value per share, and any securities into which such common stock
         may hereafter be reclassified.

                  "Common Stock Equivalents" means any securities of the Company
         or the Subsidiaries which would entitle the holder thereof to acquire
         at any time Common Stock, including without limitation, any debt,
         preferred stock, rights, options, warrants or other instrument that is
         at any time convertible into or exchangeable for, or otherwise entitles
         the holder thereof to receive, Common Stock.

                  "Company Counsel" means Cooley Godward LLP with offices
         located at 4401 Eastgate Mall, San Diego, CA 92121-9109.

                  "Disclosure Schedules" means the Disclosure Schedules
         delivered concurrently herewith.

                  "Effective Date" means the date that the Registration
         Statement is first declared effective by the Commission.

                  "Escrow Agent" shall have the meaning set forth in the Escrow
         Agreement.

                  "Escrow Agreement" shall mean the Escrow Agreement in
         substantially the form of Exhibit B hereto executed and delivered
         contemporaneously with this Agreement.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
         amended.

                  "FW" means Feldman Weinstein LLP with offices located at 420
         Lexington Avenue, New York, New York 10170-0002.

                  "Intellectual Property Rights" shall have the meaning ascribed
         to such term in Section 3.1(o).

                                       2


                  "Liens" means a lien, charge, security interest, encumbrance,
         right of first refusal, preemptive right or other restriction created
         by or upon the Company.

                  "Material Adverse Effect" shall have the meaning ascribed to
         such term in Section 3.1(b).

                  "Material Permits" shall have the meaning ascribed to such
         term in Section 3.1(m).

                  "Per Share Purchase Price" equals $1.79(1), subject to
         adjustment for reverse and forward stock splits, stock dividends, stock
         combinations and other similar transactions of the Common Stock that
         occur after the date of this Agreement and prior to the Closing Date.

                  "Person" means an individual or corporation, partnership,
         trust, incorporated or unincorporated association, joint venture,
         limited liability company, joint stock company, government (or an
         agency or subdivision thereof) or other entity of any kind.

                  "Proceeding" means an action, claim, suit, investigation or
         proceeding (including, without limitation, an investigation or partial
         proceeding, such as a deposition), whether commenced or threatened.

                  "Registration Statement" means a registration statement
         meeting the requirements set forth in the Registration Rights Agreement
         and covering the resale by the Purchasers of the Shares and the Warrant
         Shares.

                  "Registration Rights Agreement" means the Registration Rights
         Agreement, dated as of the date of this Agreement, among the Company
         and each Purchaser, in the form of Exhibit A hereto.

                  "Required Approvals" shall have the meaning ascribed to such
         term in Section 3.1(e).

                  "Rule 144" means Rule 144 promulgated by the Commission
         pursuant to the Securities Act, as such Rule may be amended from time
         to time, or any similar rule or regulation hereafter adopted by the
         Commission having substantially the same effect as such Rule.

                  "SEC Reports" shall have the meaning ascribed to such term in
         Section 3.1(h).

                  "Securities" means the Shares, the Warrants and the Warrant
         Shares.

                  "Securities Act" means the Securities Act of 1933, as amended.

- -----------------------

1        The lesser of (i) 100% of the Closing Price on the date immediately
         prior to the date hereof (if signed before the close of market) and
         (ii) 100% of the average of the 5 Closing Prices immediately prior to
         the date hereof, or, if permitted, such lower price as is possible to
         qualify for a fair market value transaction under the rules of the
         Trading Market, plus, in each case, $0.0625 per share as required by
         Nasdaq for the Warrant Shares.

                                       3


                  "Shares" means the shares of Common Stock issued or issuable
         to each Purchaser pursuant to this Agreement.

                  "Subscription Amount" means, as to each Purchaser, the amounts
         set forth below such Purchaser's signature block on the signature page
         hereto, in United States dollars and in immediately available funds.

                  "Subsidiary" shall mean the subsidiaries of the Company, if
         any, set forth on Schedule 3.1(a).

                  "Trading Day" means (i) a day on which the Common Stock is
         traded on a Trading Market, or (ii) if the Common Stock is not listed
         on a Trading Market, a day on which the Common Stock is traded on the
         over-the-counter market, as reported by the OTC Bulletin Board, or
         (iii) if the Common Stock is not quoted on the OTC Bulletin Board, a
         day on which the Common Stock is quoted in the over-the-counter market
         as reported by the National Quotation Bureau Incorporated (or any
         similar organization or agency succeeding its functions of reporting
         prices); provided, that in the event that the Common Stock is not
         listed or quoted as set forth in (i), (ii) and (iii) hereof, then
         Trading Day shall mean a Business Day.

                  "Trading Market" means the following markets or exchanges on
         which the Common Stock is listed or quoted for trading on the date in
         question: the American Stock Exchange, the New York Stock Exchange, the
         Nasdaq National Market or the Nasdaq SmallCap Market.

                  "Transaction Documents" means this Agreement, the Escrow
         Agreement, the Warrants and the Registration Rights Agreement.

                  "Warrants" means the Common Stock Purchase Warrants, in the
         form of Exhibit C, issuable to the Purchasers at the Closing, which
         warrants shall be exercisable immediately upon issuance for a term of 5
         years and have an exercise price equal to $1.79(2).

                  "Warrant Shares" means the shares of Common Stock issuable
         upon exercise of the Warrants.

                                   ARTICLE II.
                                PURCHASE AND SALE

         2.1      Closing. On the Closing Date, each Purchaser shall purchase
from the Company, severally and not jointly with the other Purchasers, and the
Company shall issue and sell to each Purchaser, (a) a number of Shares equal to
such Purchaser's Subscription Amount divided by the Per Share Purchase Price and
(b) the Warrants as determined pursuant to Section 2.2(a)(iii). The aggregate
Subscription Amounts for Shares sold hereunder shall be up to $12,000,000. Upon
satisfaction of the conditions set forth in Section 2.2, the Closing shall occur
at the offices of the Escrow Agent, or such other location as the parties shall
mutually agree.

- -----------------------

2        The Per Share Purchase Price.

                                       4


         2.2      Closing Conditions; Deliveries.

                  (a)      On the Closing Date, the Company shall deliver or
         cause to be delivered to the Escrow Agent with respect to each
         Purchaser the following:

                           (i)      this Agreement duly executed by the Company;

                           (ii)     a certificate evidencing a number of Shares
         equal to such Purchaser's Subscription Amount divided by the Per Share
         Purchase Price, registered in the name of such Purchaser;

                           (iii)    a Warrant, registered in the name of such
         Purchaser, pursuant to which such Purchaser shall have the right to
         acquire up to the number of shares of Common Stock equal to one half of
         the Shares to be issued to such Purchaser at the Closing;

                           (iv)     the Registration Rights Agreement duly
         executed by the Company;

                           (v)      the Escrow Agreement duly executed by the
         Company; and

                           (vi)     a legal opinion of Company Counsel, in the
         form of Exhibit D attached hereto.

                  (b)      On the Closing Date, each Purchaser shall deliver or
         cause to be delivered to the Escrow Agent the following:

                           (i)      this Agreement duly executed by such
         Purchaser;

                           (ii)     such Purchaser's Subscription Amount by wire
         transfer to the account of the Escrow Agent;

                           (iii)    the Escrow Agreement duly executed by such
         Purchaser; and

                           (iv)     the Registration Rights Agreement duly
         executed by such Purchaser.

                  (c)      All representations and warranties of the other party
         contained herein shall remain true and correct as of the Closing Date.

                  (d)      All obligations, covenants and agreements of the
         parties required to be performed at or prior to the Closing Date shall
         have been performed.

                  (e)      On or prior to the Closing Date, the Company shall
         have received confirmation from the Trading Market that no stockholder
         vote is required in connection with the Closing or the Company shall
         have complied with such stockholder vote requirement.

                  (f)      From the date hereof to the Closing Date, trading in
         the Common Stock shall not have been suspended by the Commission, and,
         at any time prior to the Closing

                                       5


         Date, trading in securities generally as reported by Bloomberg
         Financial Markets shall not have been suspended or limited, or minimum
         prices shall not have been established on securities whose trades are
         reported by such service, or on any Trading Market, nor shall a banking
         moratorium have been declared either by the United States or New York
         State authorities nor shall there have occurred any material outbreak
         or escalation of hostilities or other national or international
         calamity of such magnitude in its effect on, or any material adverse
         change in, any financial market which, in each case, in the reasonable
         judgment of each Purchaser, makes it impracticable or inadvisable to
         purchase the Shares at the such Closing.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

         3.1      Representations and Warranties of the Company. Except as set
forth under the corresponding section of the Disclosure Schedules delivered
concurrently herewith, the Company hereby makes the following representations
and warranties as of the date hereof and as of the Closing Date to each
Purchaser:

                  (a)      Subsidiaries. All of the subsidiaries of the Company
         are set forth on Schedule 3.1(a). The Company owns, directly or
         indirectly, all of the capital stock or other equity interests of each
         Subsidiary free and clear of any Liens, and all the issued and
         outstanding shares of capital stock of each Subsidiary are validly
         issued and are fully paid, non-assessable and free of preemptive and
         similar rights to subscribe for or purchase securities. If the Company
         has no subsidiaries, then references in the Transaction Documents to
         the Subsidiaries will be disregarded.

                  (b)      Organization and Qualification. Each of the Company
         and the Subsidiaries is an entity duly incorporated or otherwise
         organized, validly existing and in good standing under the laws of the
         jurisdiction of its incorporation or organization (as applicable), with
         the requisite power and authority to own and use its properties and
         assets and to carry on its business as currently conducted. Neither the
         Company nor any Subsidiary is in violation or default of any of the
         provisions of its respective certificate or articles of incorporation,
         bylaws or other organizational or charter documents. Each of the
         Company and the Subsidiaries is duly qualified to conduct business and
         is in good standing as a foreign corporation or other entity in each
         jurisdiction in which the nature of the business conducted or property
         owned by it makes such qualification necessary, except where the
         failure to be so qualified or in good standing, as the case may be,
         could not have or reasonably be expected to result in (i) a material
         adverse effect on the legality, validity or enforceability of any
         Transaction Document, (ii) a material adverse effect on the results of
         operations, assets, business or financial condition of the Company and
         the Subsidiaries, taken as a whole, or (iii) a material adverse effect
         on the Company's ability to perform in any material respect on a timely
         basis its obligations under any Transaction Document (any of (i), (ii)
         or (iii), a "Material Adverse Effect") and no Proceeding has been
         instituted in any such jurisdiction revoking, limiting or curtailing or
         seeking to revoke, limit or curtail such power and authority or
         qualification.

                                       6


                  (c)      Authorization; Enforcement. The Company has the
         requisite corporate power and authority to enter into and to consummate
         the transactions contemplated by each of the Transaction Documents and
         otherwise to carry out its obligations thereunder. The execution and
         delivery of each of the Transaction Documents by the Company and the
         consummation by it of the transactions contemplated thereby have been
         duly authorized by all necessary action on the part of the Company and
         no further action is required by the Company in connection therewith
         other than in connection with the Required Approvals. Each Transaction
         Document has been (or upon delivery will have been) duly executed by
         the Company and, when delivered in accordance with the terms hereof,
         will constitute the valid and binding obligation of the Company
         enforceable against the Company in accordance with its terms except (i)
         as limited by applicable bankruptcy, insolvency, reorganization,
         moratorium and other laws of general application affecting enforcement
         of creditors' rights generally and (ii) as limited by laws relating to
         the availability of specific performance, injunctive relief or other
         equitable remedies and (iii) insofar as indemnification and
         contribution provisions may be limited by applicable law.

                  (d)      No Conflicts. The execution, delivery and performance
         of the Transaction Documents by the Company, the issuance and sale of
         the Securities and the consummation by the Company of the other
         transactions contemplated thereby do not and will not (i) conflict with
         or violate any provision of the Company's or any Subsidiary's
         certificate or articles of incorporation, bylaws or other
         organizational or charter documents currently in effect, or (ii)
         conflict with, or constitute a default (or an event that with notice or
         lapse of time or both would become a default) under, result in the
         creation of any Lien upon any of the properties or assets of the
         Company or any Subsidiary, or give to others any rights of termination,
         amendment, acceleration or cancellation (with or without notice, lapse
         of time or both) of, any agreement, credit facility, debt or other
         instrument (evidencing a Company or Subsidiary debt or otherwise) or
         other understanding to which the Company or any Subsidiary currently is
         a party or by which any property or asset of the Company or any
         Subsidiary currently is bound or affected, or (iii) subject to the
         Required Approvals, conflict with or result in a violation of any law,
         rule, regulation, order, judgment, injunction, decree or other
         restriction of any court or governmental authority to which the Company
         or a Subsidiary currently is subject (including federal and state
         securities laws and regulations), or by which any property or asset of
         the Company or a Subsidiary currently is bound or affected, or (iv)
         conflict with or violate the terms of any agreement by which the
         Company or any Subsidiary currently is bound or to which any property
         or asset of the Company or any Subsidiary currently is bound or
         affected; except in the case of each of clauses (ii) and (iii), such as
         could not have or reasonably be expected to result in a Material
         Adverse Effect.

                  (e)      Filings, Consents and Approvals. The Company is not
         required to obtain any consent, waiver, authorization or order of, give
         any notice to, or make any filing or registration with, any court or
         other federal, state, local or other governmental authority or other
         Person in connection with the execution, delivery and performance by
         the Company of the Transaction Documents, other than (i) filings
         required pursuant to Section 4.4 of this Agreement, (ii) the filing
         with the Commission of the Registration Statement, (iii) application(s)
         to each applicable Trading Market for the listing of the

                                       7


         Shares and Warrant Shares for trading thereon in the time and manner
         required thereby, and (iv) the filing of Form D with the Commission and
         such filings as are required to be made under applicable state
         securities laws (collectively, the "Required Approvals").

                  (f)      Issuance of the Securities. The Securities are duly
         authorized and, when issued and paid for in accordance with the
         Transaction Documents, will be duly and validly issued, fully paid and
         nonassessable, free and clear of all Liens. The issuance of the Shares
         is not subject to any preemptive or similar rights to subscribe for or
         purchase securities. The Company has reserved from its duly authorized
         capital stock the maximum number of shares of Common Stock issuable
         pursuant to this Agreement and the Warrants.

                  (g)      Capitalization. The capitalization of the Company is
         as described in the Company's most recent periodic report filed with
         the Commission. The Company has not issued any capital stock since such
         filing other than pursuant to the exercise of employee stock options
         under the Company's stock option plans, the issuance of shares of
         Common Stock to employees pursuant to the Company's employee stock
         purchase plan and pursuant to the conversion or exercise of outstanding
         Common Stock Equivalents outstanding. No Person has any right of first
         refusal, preemptive right, right of participation, or any similar right
         to participate in the transactions contemplated by the Transaction
         Documents. Except as a result of the purchase and sale of the
         Securities or in connection with the granting of options to employees,
         officers and directors of the Company pursuant to any stock option plan
         duly adopted by the Board of Directors of the Company, there are no
         outstanding options, warrants, script rights to subscribe to, calls or
         commitments of any character whatsoever relating to, or securities,
         rights or obligations convertible into or exchangeable for, or giving
         any Person any right to subscribe for or acquire, any shares of Common
         Stock, or contracts, commitments, understandings or arrangements by
         which the Company or any Subsidiary is or may become bound to issue
         additional shares of Common Stock, or securities or rights convertible
         or exchangeable into shares of Common Stock. The issue and sale of the
         Securities will not obligate the Company to issue shares of Common
         Stock or other securities to any Person (other than the Purchasers) and
         will not result in a right of any holder of Company securities to
         adjust the exercise, conversion, exchange or reset price under such
         securities. All of the outstanding shares of capital stock of the
         Company are validly issued, fully paid and nonassessable, have been
         issued in compliance with all federal and state securities laws, and
         none of such outstanding shares was issued in violation of any
         preemptive rights or similar rights to subscribe for or purchase
         securities. No further approval or authorization of any stockholder,
         the Board of Directors of the Company or others is required for the
         issuance and sale of the Shares. Except as disclosed in the SEC
         Reports, there are no stockholders agreements, voting agreements or
         other similar agreements with respect to the Company's capital stock to
         which the Company is a party or, to the knowledge of the Company,
         between or among any of the Company's stockholders.

                  (h)      SEC Reports; Financial Statements. The Company has
         filed all reports required to be filed by it under the Securities Act
         and the Exchange Act, including pursuant to Section 13(a) or 15(d)
         thereof, for the two years preceding the date hereof (or such shorter
         period as the Company was required by law to file such material) (the

                                       8


         foregoing materials, including the exhibits thereto, being collectively
         referred to herein as the "SEC Reports") on a timely basis or has
         received a valid extension of such time of filing and has filed any
         such SEC Reports prior to the expiration of any such extension. As of
         their respective dates, the SEC Reports complied in all material
         respects with the requirements of the Securities Act and the Exchange
         Act and the rules and regulations of the Commission promulgated
         thereunder, and none of the SEC Reports, when filed, contained any
         untrue statement of a material fact or omitted to state a material fact
         required to be stated therein or necessary in order to make the
         statements therein, in light of the circumstances under which they were
         made, not misleading. The financial statements of the Company included
         in the SEC Reports complied in all material respects with applicable
         accounting requirements and the rules and regulations of the Commission
         with respect thereto as in effect at the time of filing. Such financial
         statements have been prepared in accordance with United States
         generally accepted accounting principles applied on a consistent basis
         during the periods involved ("GAAP"), except as may be otherwise
         specified in such financial statements or the notes thereto and except
         that unaudited financial statements may not contain all footnotes
         required by GAAP, and fairly present in all material respects the
         financial position of the Company and its consolidated subsidiaries as
         of and for the dates thereof and the results of operations and cash
         flows for the periods then ended, subject, in the case of unaudited
         statements, to normal, immaterial, year-end audit adjustments.

                  (i)      Material Changes. Except as set forth in the SEC
         Reports, since the date of the latest audited financial statements
         included within the SEC Reports, except as disclosed in the SEC
         Reports, (i) there has been no event, occurrence or development that
         has had or that could reasonably be expected to result in a Material
         Adverse Effect, (ii) the Company has not incurred any liabilities
         (contingent or otherwise) other than (A) trade payables and accrued
         expenses incurred in the ordinary course of business consistent with
         past practice and (B) liabilities not required to be reflected in the
         Company's financial statements pursuant to GAAP or required to be
         disclosed in filings made with the Commission, (iii) the Company has
         not altered its method of accounting, (iv) the Company has not declared
         or made any dividend or distribution of cash or other property to its
         stockholders or purchased, redeemed or made any agreements to purchase
         or redeem any shares of its capital stock and (v) the Company has not
         issued any equity securities to any officer, director or Affiliate,
         except pursuant to existing Company stock option plans. The Company
         does not have pending before the Commission any request for
         confidential treatment of information.

                  (j)      Litigation. Except as disclosed in the SEC Reports,
         there is no action, suit, inquiry, notice of violation, proceeding or
         investigation pending or, to the knowledge of the Company, threatened
         against or affecting the Company, any Subsidiary or any of their
         respective properties before or by any court, arbitrator, governmental
         or administrative agency or regulatory authority (federal, state,
         county, local or foreign) (collectively, an "Action") which (i)
         adversely affects or challenges the legality, validity or
         enforceability of any of the Transaction Documents or the Securities or
         (ii) could, if there were an unfavorable decision, have or reasonably
         be expected to result in a Material Adverse Effect. Except as disclosed
         in the SEC Reports, neither the Company nor any Subsidiary, nor any
         director or officer thereof, is or has been the subject of any Action

                                       9


         involving a claim of violation of or liability under federal or state
         securities laws or a claim of breach of fiduciary duty. Except as
         disclosed in the SEC Reports, there has not been, and to the knowledge
         of the Company, there is not pending or contemplated, any investigation
         by the Commission involving the Company or any current or former
         director or officer of the Company. The Commission has not issued any
         stop order or other order suspending the effectiveness of any
         registration statement filed by the Company or any Subsidiary under the
         Exchange Act or the Securities Act.

                  (k)      Labor Relations. No material labor dispute exists or,
         to the knowledge of the Company, is imminent with respect to any of the
         employees of the Company which could reasonably be expected to result
         in a Material Adverse Effect.

                  (l)      Compliance. Except as disclosed in the SEC Reports,
         neither the Company nor any Subsidiary (i) is in default under or in
         violation of (and no event has occurred that has not been waived that,
         with notice or lapse of time or both, would result in a default by the
         Company or any Subsidiary under), nor has the Company or any Subsidiary
         received notice of a claim that it is in default under or that it is in
         violation of, any indenture, loan or credit agreement or any other
         agreement or instrument to which it is a party or by which it or any of
         its properties is bound (whether or not such default or violation has
         been waived), (ii) is in violation of any order of any court,
         arbitrator or governmental body, or (iii) is or has been in violation
         of any statute, rule or regulation of any governmental authority,
         including without limitation all foreign, federal, state and local laws
         applicable to its business except in each case as could not have a
         Material Adverse Effect.

                  (m)      Regulatory Permits. The Company and the Subsidiaries
         possess all certificates, authorizations and permits issued by the
         appropriate federal, state, local or foreign regulatory authorities
         necessary to conduct their respective businesses as described in the
         SEC Reports, except where the failure to possess such permits could not
         have or reasonably be expected to result in a Material Adverse Effect
         ("Material Permits"), and neither the Company nor any Subsidiary has
         received any notice of proceedings relating to the revocation or
         modification of any Material Permit.

                  (n)      Title to Assets. Except as set forth in the SEC
         Reports, the Company and the Subsidiaries have good and marketable
         title in fee simple to all real property owned by them that is material
         to the business of the Company and the Subsidiaries and good and
         marketable title in all personal property owned by them that is
         material to the business of the Company and the Subsidiaries, in each
         case free and clear of all Liens, except for Liens as do not materially
         affect the value of such property and do not materially interfere with
         the use made and proposed to be made of such property by the Company
         and the Subsidiaries and Liens for the payment of federal, state or
         other taxes, the payment of which is neither delinquent nor subject to
         penalties. Any real property and facilities held under lease by the
         Company and the Subsidiaries are held by them under valid, subsisting
         and enforceable leases of which the Company and the Subsidiaries are in
         compliance.

                                       10


                  (o)      Patents and Trademarks. To the knowledge of the
         Company and each Subsidiary, the Company and the Subsidiaries have, or
         have rights to use, all patents, patent applications, trademarks,
         trademark applications, service marks, trade names, copyrights,
         licenses and other similar rights that are necessary or material for
         use in connection with their respective businesses as described in the
         SEC Reports and which the failure to so have could have or reasonably
         be expected to result in a Material Adverse Effect (collectively, the
         "Intellectual Property Rights"). Except as disclosed in the SEC
         Reports, neither the Company nor any Subsidiary has received a written
         notice that the Intellectual Property Rights used by the Company or any
         Subsidiary violates or infringes upon the rights of any Person. To the
         knowledge of the Company, all such Intellectual Property Rights are
         enforceable and do not violate or infringe the Intellectual Property
         Rights of others.

                  (p)      Insurance. The Company and the Subsidiaries are
         insured by insurers of recognized financial responsibility against such
         losses and risks and in such amounts as are prudent and customary in
         the businesses in which the Company and the Subsidiaries are engaged.
         Neither the Company nor any Subsidiary has any reason to believe that
         it will not be able to renew its existing insurance coverage as and
         when such coverage expires or to obtain similar coverage from similar
         insurers as may be necessary to continue its business without a
         significant increase in cost.

                  (q)      Transactions With Affiliates and Employees. Except as
         set forth in the SEC Reports, none of the officers or directors of the
         Company and, to the knowledge of the Company, none of the employees of
         the Company is presently a party to any transaction with the Company or
         any Subsidiary (other than for services as employees, officers and
         directors), including any contract, agreement or other arrangement
         providing for the furnishing of services to or by, providing for rental
         of real or personal property to or from, or otherwise requiring
         payments to or from any officer, director or such employee or, to the
         knowledge of the Company, any entity in which any officer, director, or
         any such employee has a substantial interest or is an officer,
         director, trustee or partner, in each case in excess of $60,000 other
         than (i) for payment of salary or consulting fees for services
         rendered, (ii) reimbursement for expenses incurred on behalf of the
         Company and (iii) for other employee benefits, including stock option
         agreements under any stock option plan of the Company.

                  (r)      Internal Accounting Controls. The Company and each of
         the Subsidiaries maintains a system of internal accounting controls
         sufficient to provide reasonable assurance that (i) transactions are
         executed in accordance with management's general or specific
         authorizations, (ii) transactions are recorded as necessary to permit
         preparation of financial statements in conformity with GAAP and to
         maintain asset accountability, (iii) access to assets is permitted only
         in accordance with management's general or specific authorization, and
         (iv) the recorded accountability for assets is compared with the
         existing assets at reasonable intervals and appropriate action is taken
         with respect to any differences. The Company has established disclosure
         controls and procedures (as defined in Exchange Act Rules 13a-14 and
         15d-14) for the Company and designed such disclosure controls and
         procedures to ensure that material information relating to the Company,
         including the Subsidiaries, is made known to the certifying officers by
         others

                                       11


         within those entities, particularly during the period in which the
         Company's most recently filed period report under the Exchange Act, as
         the case may be, is being prepared. The Company's certifying officers
         have evaluated the effectiveness of the Company's controls and
         procedures as of a date within 90 days prior to the filing date of the
         most recently filed periodic report under the Exchange Act (such date,
         the "Evaluation Date"). The Company presented in its most recently
         filed periodic report under the Exchange Act the conclusions of the
         certifying officers about the effectiveness of the disclosure controls
         and procedures based on their evaluations as of the Evaluation Date.
         Since the Evaluation Date, there have been no significant changes in
         the Company's internal controls (as such term is defined in Item 307(b)
         of Regulation S-K under the Exchange Act) or, to the Company's
         knowledge, in other factors that could significantly affect the
         Company's internal controls. The Company maintains and will continue to
         maintain a standard system of accounting established and administered
         in accordance with GAAP and the applicable requirements of the Exchange
         Act.

                  (s)      Certain Fees. No brokerage or finder's fees or
         commissions are or will be payable by the Company to any broker,
         financial advisor or consultant, finder, placement agent, investment
         banker, bank or other Person with respect to the transactions
         contemplated by this Agreement, other than to Roth Capital Partners,
         LLC. The Purchasers shall have no obligation with respect to any fees
         or with respect to any claims made by or on behalf of other Persons for
         fees of a type contemplated in this Section that may be due in
         connection with the transactions contemplated by this Agreement.

                  (t)      Private Placement. Assuming the accuracy of the
         Purchasers representations and warranties set forth in Section 3.2, no
         registration under the Securities Act is required for the offer and
         sale of the Securities by the Company to the Purchasers as contemplated
         hereby. The issuance and sale of the Securities hereunder does not
         contravene the rules and regulations of the Trading Market.

                  (u)      Investment Company. The Company is not, and is not an
         Affiliate of, and immediately after receipt of payment for the Shares,
         will not be or be an Affiliate of, an "investment company" within the
         meaning of the Investment Company Act of 1940, as amended. The Company
         shall conduct its business in a manner so that it will not become
         subject to the Investment Company Act.

                  (v)      Registration Rights. No Person has any right to cause
         the Company to effect the registration under the Securities Act of any
         securities of the Company.

                  (w)      Listing and Maintenance Requirements. The Company's
         Common Stock is registered pursuant to Section 12(g) of the Exchange
         Act, and the Company has taken no action designed to, or which to its
         knowledge is likely to have the effect of, terminating the registration
         of the Common Stock under the Exchange Act nor has the Company received
         any notification that the Commission is contemplating terminating such
         registration. Except as set forth in the SEC Reports, the Company has
         not, in the 12 months preceding the date hereof, received notice from
         any Trading Market on which the Common Stock is or has been listed or
         quoted to the effect that the Company is not in compliance with the
         listing or maintenance requirements of such Trading Market.

                                       12


                  (x)      Application of Takeover Protections. The Company and
         its Board of Directors have taken all necessary action, if any, in
         order to render inapplicable any control share acquisition, business
         combination, poison pill (including any distribution under a rights
         agreement) or other similar anti-takeover provision under the Company's
         Certificate of Incorporation (or similar charter documents) or the laws
         of its state of incorporation that is or could become applicable to the
         Purchasers as a result of the Purchasers and the Company fulfilling
         their obligations or exercising their rights under the Transaction
         Documents, including without limitation the Company's issuance of the
         Securities and the Purchasers' ownership of the Securities.

                  (y)      Disclosure. Other than the terms of the transaction
         contemplated by this Agreement, the Company confirms that, neither the
         Company nor any other Person acting on its behalf has provided any of
         the Purchasers or their agents or counsel with any information that
         constitutes or might constitute material, non-public information;
         provided, however, that the Company makes no representation with
         respect to any information provided to the Purchasers by Roth Capital
         Partners, LLC. The Company understands and confirms that the Purchasers
         will rely on the foregoing representations and covenants in effecting
         transactions in securities of the Company. All disclosure provided to
         the Purchasers regarding the Company, its business and the transactions
         contemplated hereby, including the Disclosure Schedules to this
         Agreement, furnished by or on behalf of the Company are true and
         correct and do not contain any untrue statement of a material fact or
         omit to state any material fact necessary in order to make the
         statements made therein, in light of the circumstances under which they
         were made, not misleading.

                  (z)      No Integrated Offering. Assuming the accuracy of the
         Purchasers' representations and warranties set forth in Section 3.2,
         neither the Company, nor any of its affiliates, nor any Person acting
         on its or their behalf has, directly or indirectly, made any offers or
         sales of any security or solicited any offers to buy any security,
         under circumstances that would cause this offering of the Securities to
         be integrated with prior offerings by the Company for purposes of the
         Securities Act or any applicable shareholder approval provisions,
         including, without limitation, under the rules and regulations of any
         exchange or automated quotation system on which any of the securities
         of the Company are listed or designated.

                  (aa)     Solvency. Based on the financial condition of the
         Company as of the Closing Date after giving effect to the receipt by
         the Company of the proceeds from the sale of the Securities hereunder,
         (i) the Company's fair saleable value of its assets exceeds the amount
         that will be required to be paid on or in respect of the Company's
         existing debts and other liabilities (including known contingent
         liabilities) as they mature; (ii) the Company's assets do not
         constitute unreasonably small capital to carry on its business for the
         current fiscal year as now conducted and as proposed to be conducted
         including its capital needs taking into account the particular capital
         requirements of the business conducted by the Company, and projected
         capital requirements and capital availability thereof; and (iii) the
         current cash flow of the Company, together with the proceeds the
         Company would receive, were it to liquidate all of its assets, after
         taking into account all anticipated uses of the cash, would be
         sufficient to pay all amounts on or

                                       13


         in respect of its debt when such amounts are required to be paid. The
         Company does not intend to incur debts beyond its ability to pay such
         debts as they mature (taking into account the timing and amounts of
         cash to be payable on or in respect of its debt).

                  (bb)     Form S-3 Eligibility. The Company is eligible to
         register the resale of its Common Stock by the Purchasers under Form
         S-3 promulgated under the Securities Act and the Company hereby
         covenants and agrees to use its commercially reasonable best efforts to
         maintain its eligibility to use Form S-3 until the Registration
         Statement covering the resale of the Shares shall have been filed with,
         and declared effective by, the Commission.

                  (cc)     Taxes. Except for matters that would not,
         individually or in the aggregate, have or reasonably be expected to
         result in a Material Adverse Effect, the Company and each Subsidiary
         has filed all necessary federal, state and foreign income and franchise
         tax returns and has paid or accrued all taxes shown as due thereon, and
         the Company has no knowledge of a tax deficiency which has been
         asserted or threatened against the Company or any Subsidiary.

                  (dd)     General Solicitation. Neither the Company nor any
         person acting on behalf of the Company has offered or sold any of the
         Shares by any form of general solicitation or general advertising. The
         Company has offered the Shares for sale only to the Purchasers and
         certain other "accredited investors" within the meaning of Rule 501
         under the Securities Act.

                  (ee)     Foreign Corrupt Practices. Neither the Company, nor
         to the knowledge of the Company, any agent or other person acting on
         behalf of the Company, has (i) directly or indirectly, used any corrupt
         funds for unlawful contributions, gifts, entertainment or other
         unlawful expenses related to foreign or domestic political activity,
         (ii) made any unlawful payment to foreign or domestic government
         officials or employees or to any foreign or domestic political parties
         or campaigns from corporate funds, (iii) failed to disclose fully any
         contribution made by the Company (or made by any person acting on its
         behalf of which the Company is aware) which is in violation of law, or
         (iv) violated in any material respect any provision of the Foreign
         Corrupt Practices Act of 1977, as amended.

                  (ff)     Accountants. To the Company's knowledge,
         PriceWaterhouseCoopers LLP, the Company's accountants, who the Company
         expects will express their opinion with respect to the financial
         statements to be included in the Company's Annual Report on Form 10-K
         for the year ended December 31, 2003, are independent accountants as
         required by the Securities Act and the rules and regulations
         promulgated thereunder.

                  (gg)     Acknowledgment Regarding Purchasers' Purchase of
         Shares. The Company acknowledges and agrees that each of the Purchasers
         is acting solely in the capacity of an arm's length purchaser with
         respect to the Transaction Documents and the transactions contemplated
         hereby. The Company further acknowledges that no Purchaser is acting as
         a financial advisor or fiduciary of the Company (or in any similar
         capacity) with respect to this Agreement and the transactions
         contemplated hereby and any advice

                                       14


         given by any Purchaser or any of their respective representatives or
         agents in connection with this Agreement and the transactions
         contemplated hereby is merely incidental to the Purchasers' purchase of
         the Shares. The Company further represents to each Purchaser that the
         Company's decision to enter into this Agreement has been based solely
         on the independent evaluation of the transactions contemplated hereby
         by the Company and its representatives.

         3.2      Representations and Warranties of the Purchasers. Each
Purchaser hereby, for itself and for no other Purchaser, represents and warrants
as of the date hereof and as of the Closing Date to the Company as follows:

                  (a)      Organization; Authority. Such Purchaser is an entity
         duly organized, validly existing and in good standing under the laws of
         the jurisdiction of its organization with full right, corporate or
         partnership power and authority to enter into and to consummate the
         transactions contemplated by the Transaction Documents and otherwise to
         carry out its obligations thereunder. The execution, delivery and
         performance by such Purchaser of the transactions contemplated by the
         Transaction Agreements have been duly authorized by all necessary
         corporate or similar action on the part of such Purchaser. Each
         Transaction Document to which it is party has been duly executed by
         such Purchaser, and when delivered by such Purchaser in accordance with
         the terms hereof, will constitute the valid and legally binding
         obligation of such Purchaser, enforceable against it in accordance with
         its terms, except (i) as limited by general equitable principles and
         applicable bankruptcy, insolvency, reorganization, moratorium and other
         laws of general application affecting enforcement of creditors' rights
         generally, (ii) as limited by laws relating to the availability of
         specific performance, injunctive relief or other equitable remedies and
         (iii) insofar as indemnification and contribution provisions may be
         limited by applicable law.

                  (b)      Investment Intent. Such Purchaser understands that
         the Securities are "restricted securities" and have not been registered
         under the Securities Act or any applicable state securities law and is
         acquiring the Securities as principal for its own account for
         investment purposes only and not with a view to or for distributing or
         reselling such Securities or any part thereof, has no present intention
         of distributing any of such Securities and has no arrangement or
         understanding with any other persons regarding the distribution of such
         Securities (this representation and warranty not limiting such
         Purchaser's right to sell the Securities pursuant to the Registration
         Statement or otherwise in compliance with applicable federal and state
         securities laws). Such Purchaser is acquiring the Securities hereunder
         in the ordinary course of its business. Such Purchaser does not have
         any agreement or understanding, directly or indirectly, with any Person
         to distribute any of the Securities (this representation and warranty
         not limiting such Purchaser's right to sell the Securities pursuant to
         the Registration Statement or otherwise in compliance with applicable
         federal and state securities laws).

                  (c)      Purchaser Status. At the time such Purchaser was
         offered the Securities, it was, and at the date hereof and on the
         Closing Date it is an "accredited investor" as defined in Rule 501(a)
         under the Securities Act. Such Purchaser is not required to be
         registered as a broker-dealer under Section 15 of the Exchange Act.

                                       15


                  (d)      Experience of Such Purchaser. Such Purchaser, either
         alone or together with its representatives, has such knowledge,
         sophistication and experience in business and financial matters so as
         to be capable of evaluating the merits and risks of the prospective
         investment in the Securities, and has so evaluated the merits and risks
         of such investment. Such Purchaser is able to bear the economic risk of
         an investment in the Securities and, at the present time, is able to
         afford a complete loss of such investment.

                  (e)      General Solicitation. Such Purchaser is not
         purchasing the Securities as a result of any advertisement, article,
         notice or other communication regarding the Securities published in any
         newspaper, magazine or similar media or broadcast over television or
         radio or presented at any seminar or any other general solicitation or
         general advertisement.

         The Company acknowledges and agrees that each Purchaser does not make
or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in this
Section 3.2.

                                   ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

         4.1      Transfer Restrictions.

                  (a)      The Securities may only be disposed of in compliance
         with state and federal securities laws. In connection with any transfer
         of Securities, other than pursuant to an effective registration
         statement or Rule 144 (as to any transfer pursuant to Rule 144,
         provided that the holder thereof provides the Company with such
         documents as may be reasonably requested by the Company to give effect
         to the transfer and comply with applicable laws), to the Company or to
         an Affiliate of a Purchaser, the Company may require the transferor
         thereof to provide to the Company an opinion of counsel selected by the
         transferor, the form and substance of which opinion shall be reasonably
         satisfactory to the Company, to the effect that such transfer does not
         require registration of such transferred Securities under the
         Securities Act. As a condition of transfer, any such transferee shall
         agree in writing to be bound by the terms of this Agreement and shall
         have the rights of a Purchaser under this Agreement and the
         Registration Rights Agreement.

                  (b)      The Purchasers agree to the imprinting, so long as is
         required by this Section 4.1(b), of a legend on any of the Securities
         in the following form:

                  THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
                  AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
                  STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
                  THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
                  AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
                  TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
                  ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A

                                       16


                  TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
                  THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
                  SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
                  THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
                  REASONABLY ACCEPTABLE TO THE COMPANY.

                  The Company acknowledges and agrees that a Purchaser may from
         time to time pledge pursuant to a bona fide margin agreement with a
         registered broker-dealer or grant a security interest in some or all of
         the Securities to a financial institution that is an "accredited
         investor" as defined in Rule 501(a) under the Securities Act and who
         agrees to be bound by the provisions of this Agreement and the
         Registration rights Agreement and, if required under the terms of such
         arrangement, such Purchaser may transfer pledged or secured Securities
         to the pledgees or secured parties. Such a pledge or transfer would not
         be subject to approval of the Company and no legal opinion of legal
         counsel of the pledgee, secured party or pledgor shall be required in
         connection therewith. Further, no notice shall be required of such
         pledge. At the appropriate Purchaser's expense, the Company will
         execute and deliver such reasonable documentation as a pledgee or
         secured party of Securities may reasonably request in connection with a
         pledge or transfer of the Securities, including, if the Securities are
         subject to registration pursuant to the Registration Rights Agreement,
         the preparation and filing of any required post-effective amendment to
         the Registration Statement to appropriately amend the list of Selling
         Stockholders thereunder.

                  (c)      The Company shall, upon request and subject to
         Section 4(e) below, and assuming the Purchaser is not an Affiliate of
         the Company, promptly reissue certificates evidencing the Shares and
         Warrant Shares without any legend (including the legend set forth in
         Section 4.1(b)), (i) while a registration statement (including the
         Registration Statement) covering the resale of such security is
         effective under the Securities Act, or (ii) following any sale of such
         Shares or Warrant Shares pursuant to Rule 144, provided that the holder
         thereof provides the Company with such documents as may be reasonably
         requested by the Company to give effect to the transfer and comply with
         applicable laws, or (iii) if such Shares or Warrant Shares are eligible
         for sale under Rule 144(k), or (iv) if, in the opinion of counsel to
         the Company, such legend is not required under applicable requirements
         of the Securities Act (including judicial interpretations and
         pronouncements issued by the Staff of the Commission). The Company
         shall cause its counsel (which may be in-house counsel) to issue a
         legal opinion to the Company's transfer agent promptly after the
         Effective Date if required by the Company's transfer agent to effect
         the removal of the legend hereunder. Subject to the foregoing, if all
         or any portion of a Warrant is exercised at a time when there is an
         effective registration statement to cover the resale of the Warrant
         Shares, such Warrant Shares shall be issued free of all legends. The
         Company agrees that following the Effective Date or at such time as
         such legend is no longer required under this Section 4.1(c), it will
         promptly, but in no event later than five Trading Days following the
         delivery by a Purchaser to the Company or the Company's transfer agent
         of a certificate representing Shares or Warrant Shares, as the case may
         be, issued with a restrictive legend and, if the sale or transfer is
         made pursuant to Rule 144, any other required documentation that are
         reasonable and customary for

                                       17


         such sales or transfers (such fifth Trading Day after such delivery,
         the "Legend Removal Date"), deliver or cause to be delivered to such
         Purchaser a certificate representing such Securities that is free from
         all restrictive and other legends, unless the Purchaser is an Affiliate
         of the Company. Unless the Purchaser is an Affiliate of the Company,
         the Company may not make any notation on its records or give
         instructions to any transfer agent of the Company that enlarge the
         restrictions on transfer set forth in this Section.

                  (d)      In addition to such Purchaser's other available
         remedies, the Company shall pay to a Purchaser, in cash, as liquidated
         damages and not as a penalty, for each $1,000 of Shares or Warrant
         Shares (based on the Closing Price of the Common Stock on the date such
         Securities are submitted to the Company's transfer agent) subject to
         Section 4.1(c), $5 per Trading Day (increasing to $10 per Trading Day
         five (5) Trading Days after such damages have begun to accrue) for each
         Trading Day after the fifth Trading Day following the Legend Removal
         Date until such certificate is delivered. Nothing herein shall limit
         such Purchaser's right to pursue actual damages for the Company's
         failure to deliver certificates representing any Securities as required
         by the Transaction Documents, and such Purchaser shall have the right
         to pursue all remedies available to it at law or in equity including,
         without limitation, a decree of specific performance and/or injunctive
         relief.

                  (e)      Each Purchaser, severally and not jointly with the
         other Purchasers, agrees that the removal of the restrictive legend
         from certificates representing Securities as set forth in this Section
         4.1 is predicated upon the Company's reliance that the Purchaser will
         sell any Securities pursuant to either the registration requirements of
         the Securities Act, including any applicable prospectus delivery
         requirements, or an exemption therefrom.

         4.2      Furnishing of Information. As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as any Purchaser owns Securities, if the Company is not
required to file reports pursuant to the Exchange Act, it will prepare and
furnish to the Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell the Securities
under Rule 144. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, all to the extent
required from time to time to enable such Person to sell such Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.

         4.3      Integration. The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers or that
would be integrated with the offer or sale of the Securities for purposes of the
rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless
shareholder approval is obtained before the closing of such subsequent
transaction.

                                       18


         4.4      Securities Laws Disclosure; Publicity. The Company shall, by
8:30 a.m. Eastern time on the Trading Day following the Closing Date, issue a
press release or file a Current Report on Form 8-K, in each case reasonably
acceptable to each Purchaser disclosing the transactions contemplated hereby.
The Company and each Purchaser shall consult with each other in issuing any
press releases with respect to the transactions contemplated hereby, and neither
the Company nor any Purchaser shall issue any such press release or otherwise
make any such public statement without the prior consent of the Company, with
respect to any press release of any Purchaser, or without the prior consent of
each Purchaser, with respect to any press release of the Company, which consent
shall not unreasonably be withheld, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except (i) as required by federal securities law in connection with
the registration statement contemplated by the Registration Rights Agreement and
(ii) to the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Purchasers with prior
notice of such disclosure permitted under subclause (i) or (ii) and (iii) except
that the Transaction Documents will be filed with the Company's SEC Reports.
Notwithstanding anything herein to the contrary, any party to this Agreement
(and any employee, representative, or other agent of any party to this
Agreement) may disclose to any and all persons, without limitation of any kind,
the tax treatment and tax structure of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure; provided, however, that such disclosure may not be made to the extent
reasonably necessary to comply with any applicable federal or state securities
laws. For the purposes of the foregoing sentence, (i) the "tax treatment" of a
transaction means the purported or claimed federal income tax treatment of the
transaction, and (ii) the "tax structure" of a transaction means any fact that
may be relevant to understanding the purported or claimed federal income tax
treatment of the transaction.

         4.5      Shareholders Rights Plan. No claim will be made or enforced by
the Company or, to the knowledge of the Company, any other Person that any
Purchaser is an "Acquiring Person" under any shareholders rights plan or similar
plan or arrangement in effect or hereafter adopted by the Company, or that any
Purchaser could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Securities under the Transaction Documents
or under any other agreement between the Company and the Purchasers. The Company
shall conduct its business in a manner so that it will not become subject to the
Investment Company Act.

         4.6      Non-Public Information. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Purchaser shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.

         4.7      Use of Proceeds. Except as set forth on Schedule 4.7 attached
hereto, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital

                                       19


purposes and not for the satisfaction of any portion of the Company's debt
(other than payment of trade payables in the ordinary course of the Company's
business and prior practices and periodic installment payments under outstanding
indebtedness), to redeem any Company equity or equity-equivalent securities or
to settle any outstanding litigation.

         4.8      Indemnification of Purchasers.

                  (a)      The Company will indemnify and hold the Purchasers
         and their directors, officers, shareholders, partners, employees and
         agents (each, a "Purchaser Party") harmless from any and all losses,
         liabilities, obligations, claims, contingencies, damages, costs and
         expenses, including all judgments, amounts paid in settlements, court
         costs and reasonable attorneys' fees and costs of investigation that
         any such Purchaser Party may suffer or incur as a result of or relating
         to: (a) any misrepresentation, breach or inaccuracy on the part of the
         Company of any of the representations, warranties, covenants or
         agreements made by the Company in this Agreement or in the other
         Transaction Documents; or (b) any cause of action, suit or claim
         brought or made against such Purchaser Party and arising solely out of
         or solely resulting from the Purchaser's execution, delivery,
         performance or enforcement of this Agreement or any of the other
         Transaction Documents, other than directly resulting from the gross
         negligence or willful misconduct of the Purchasers. The Company will
         reimburse such Purchaser for its reasonable legal and other expenses
         (including the cost of any investigation, preparation and travel in
         connection therewith) incurred in connection therewith, as such
         expenses are incurred.

                  (b)      Promptly after receipt by any Purchaser Party (the
         "Indemnified Person") of notice of any demand, claim or circumstances
         which would or might give rise to a claim or the commencement of any
         action, proceeding or investigation in respect of which indemnity may
         be sought pursuant to Section 4.8, such Indemnified Person shall
         promptly notify the Company in writing and the Company shall assume the
         defense thereof, including the employment of counsel reasonably
         satisfactory to such Indemnified Person, and shall assume the payment
         of all fees and expenses; provided, however, that the failure of any
         Indemnified Person so to notify the Company shall not relieve the
         Company of its obligations hereunder except to the extent that the
         Company is materially prejudiced by such failure to notify. In any such
         proceeding, any Indemnified Person shall have the right to retain its
         own counsel, but the fees and expenses of such counsel shall be at the
         expense of such Indemnified Person unless: (i) the Company and the
         Indemnified Person shall have mutually agreed to the retention of such
         counsel; or (ii) in the reasonable judgment of counsel to such
         Indemnified Person representation of both parties by the same counsel
         would be inappropriate due to actual or potential differing interests
         between them. The Company shall not be liable for any settlement of any
         proceeding effected without its written consent, which consent shall
         not be unreasonably withheld, but if settled with such consent, or if
         there be a final judgment for the plaintiff, the Company shall
         indemnify and hold harmless such Indemnified Person from and against
         any loss or liability (to the extent stated above) by reason of such
         settlement or judgment. Without the prior written consent of the
         Indemnified Person, which consent shall not be unreasonably withheld,
         the Company shall not effect any settlement of any pending or
         threatened proceeding in respect of which any Indemnified Person is or
         could

                                       20


         have been a party and indemnity could have been sought hereunder by
         such Indemnified Party, unless such settlement includes an
         unconditional release of such Indemnified Person from all liability
         arising out of such proceeding.

         4.9      Reservation of Common Stock. As of the date hereof, the
Company has reserved and the Company shall continue to reserve and keep
available at all times, free of preemptive rights, a sufficient number of shares
of Common Stock for the purpose of enabling the Company to issue Shares pursuant
to this Agreement and Warrant Shares pursuant to any exercise of the Warrants.

         4.10     Listing of Common Stock. The Company hereby agrees to use
commercially reasonable efforts to maintain the listing of the Common Stock on a
Trading Market, and as soon as reasonably practicable following the Closing (but
not later than the earlier of the Effective Date and the first anniversary of
the Closing Date) to list all of the Shares and Warrant Shares on such Trading
Market. The Company further agrees, if the Company applies to have the Common
Stock traded on any other Trading Market, it will include in such application
all of the Shares and Warrant Shares, and will take such other action as is
necessary to cause all of the Shares and Warrant Shares to be listed on such
other Trading Market as promptly as possible. The Company will take all action
reasonably necessary to continue the listing and trading of its Common Stock on
a Trading Market and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the Trading Market.

         4.11     Equal Treatment of Purchasers. No consideration shall be
offered or paid to any person to amend or consent to a waiver or modification of
any provision of any of the Transaction Documents unless the same consideration
is also offered to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated separately by each Purchaser, and
is intended to treat for the Company the Purchasers as a class and shall not in
any way be construed as the Purchasers acting in concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.

                                   ARTICLE V.
                                 MISCELLANEOUS

         5.1      Fees and Expenses. Except as otherwise set forth in this
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other taxes
and duties levied in connection with the initial sale of the Securities to the
Purchasers.

         5.2      Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

                                       21


         5.3      Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto prior to 6:30
p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number set forth on the signature pages attached hereto on a
day that is not a Trading Day or later than 6:30 p.m. (New York City time) on
any Trading Day, (c) the second Trading Day following the date of mailing, if
sent by U.S. nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth on the signature pages
attached hereto.

         5.4      Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and each Purchaser or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.

         5.5      Construction. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

         5.6      Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of each Purchaser. Any Purchaser may
assign any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities, provided such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to the "Purchasers".

         5.7      No Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.8.

         5.8      Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of California, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of San Francisco. Each party hereto hereby

                                       22


irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of San Francisco, California for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of any of the Transaction Documents), and hereby irrevocably waives,
and agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is improper. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by delivering a copy thereof via overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto (including its affiliates, agents, officers,
directors and employees) hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. If either party shall commence an action or proceeding to
enforce any provisions of a Transaction Document, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its
attorneys' fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

         5.9      Survival. The representations and warranties herein shall
survive the Closing and delivery of the Shares and Warrant Shares.

         5.10     Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

         5.11     Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

         5.12     Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, required by the Company's transfer agent. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Securities.

                                       23


         5.13     Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agree to waive in any
action for specific performance of any such obligation the defense that a remedy
at law would be adequate.

         5.14     Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser was introduced to the Company by Roth Capital Partners,
LLC, which has acted solely as agent for the Company and not for any Purchaser.
Each Purchaser has been represented by its own separate legal counsel in their
review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through FW. FW does not represent all of
the Purchasers but only the placement agent, Roth Capital Partners, LLC. The
Company has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not because it was
required or requested to do so by the Purchasers.

                            (Signature Page Follows)

                                       24


         IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

FIRST VIRTUAL COMMUNICATIONS, INC.                        Address for Notice:

By: /s/ Truman Cole
    ----------------------------------------
    Name: Truman Cole
    Title: Chief Financial Officer                        Attn:
                                                          Tel:
                                                          Fax:
With copy to (which shall not constitute notice):

Cooley Godward LLP
4401 Eastgate Mall
San Diego, CA 92121-9109
Attn: Julie M. Robinson

With a copy to for benefit of Placement Agent:

                                                      Feldman Weinstein LLP
                                                      420 Lexington Avenue
                                                      New York, New York 10170
                                                      Attn: Robert F. Charron
                                                      Tel: (212) 869-7000
                                                      Fax: (212) 401-4741

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]



         IN WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

[PURCHASER]                                               Address for Notice:

By: _____________________________________
         Name:
         Title:                                           Attn:

Subscription Amount: $

[FVCX SPA SIGNATURE PAGE CONTINUED]



                             SCHEDULE OF PURCHASERS



            NAME OF PURCHASER                   NUMBER OF SHARES      NUMBER OF WARRANTS
            -----------------                   ----------------      ------------------
                                                                
Lagunitas Partners LP                                837,989                418,994
J. Patterson McBaine                                 111,732                 55,806
Jon D. Gruber & Linda W. Gruber                      111,732                 55,866
Gruber & McBaine International                       279,330                139,665
Special Situations Fund III, L.P.                    553,771                276,885
Special Situations Cayman Fund L.P.                  178,911                 89,455
Special Situations Technology Fund L.P.               17,039                  8,519
Special Situations Technology Fund II L.P.           102,235                 51,117
MicroCapital Fund L.P.                               391,061                195,530
MicroCapital Fund Ltd.                               167,598                 83,799
Bonanza Fund                                         139,655                 69,832
Firelake Strategic Technology Fund, L.P.             837,989                418,994
Agile Partners, LP                                  279,3320                139,665
Behavioral Financial Fund Ltd.                       782,123                391,061
Jurika Family Trust                                  167,598                 83,799
JMK Investment Partners, L.P.                        167,598                 83,799
Encinal Crossover Fund                                83,799                 41,899
Neal I. Goldman IRA Rollover                         200,000                100,000
Palisades Master Fund L.P.                           279,330                139,665
Gordon J. Roth                                        11,174                  5,587




                                                                        
Joseph Paul Schimmelpfennig                           11,174                  5,587
John J. Weber                                         11,174                  5,587
Jeffrey M. Ng                                          8,380                  4,190
Louis J. Ellis                                         1,676                    838




                                    EXHIBIT A

                          REGISTRATION RIGHTS AGREEMENT

         This Registration Rights Agreement (this "Agreement") is made and
entered into as of November 6, 2003, by and among First Virtual Communications,
Inc., a Delaware corporation (the "Company"), and the purchasers signatory
hereto (each such purchaser, a "Purchaser" and collectively, the "Purchasers").

         This Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof among the Company and the Purchasers (the "Purchase
Agreement").

         The Company and the Purchasers hereby agree as follows:

                                   ARTICLE I.
                                  DEFINITIONS.

Capitalized terms used and not otherwise defined herein that are defined in the
Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:

                  "Advice" shall have the meaning set forth in Section 6(d).

                  "Effectiveness Date" means, with respect to the Registration
         Statement required to be filed hereunder, the earlier of (a) the 90th
         calendar day following the date of the Filing Date, and (b) the fifth
         Trading Day following the date on which the Company is notified by the
         Commission that the Registration Statement will not be reviewed or is
         no longer subject to further review and comments.

                  "Effectiveness Period" shall have the meaning set forth in
         Section 2(a).

                  "Event" shall have the meaning set fort in Section 2(b).

                  "Event Date" shall have the meaning set forth in Section 2(b).

                  "Filing Date" means, with respect to the Registration
         Statement required to be filed hereunder, the 30th calendar day
         following the Closing Date.

                  "Holder" or "Holders" means the holder or holders, as the case
         may be, from time to time of Registrable Securities.

                  "Indemnified Party" shall have the meaning set forth in
         Section 5(c).

                  "Indemnifying Party" shall have the meaning set forth in
         Section 5(c).

                  "Losses" shall have the meaning set forth in Section 5(a).

                  "Proceeding" means an action, claim, suit, investigation or
         proceeding (including, without limitation, an investigation or partial
         proceeding, such as a deposition), whether commenced or threatened in
         writing.



                  "Prospectus" means the prospectus included in the Registration
         Statement (including, without limitation, a prospectus that includes
         any information previously omitted from a prospectus filed as part of
         an effective registration statement in reliance upon Rule 430A
         promulgated under the Securities Act), as amended or supplemented by
         any prospectus supplement, with respect to the terms of the offering of
         any portion of the Registrable Securities covered by the Registration
         Statement, and all other amendments and supplements to the Prospectus,
         including post-effective amendments, and all material incorporated by
         reference in such Prospectus.

                  "Registrable Securities" means all of the Shares and the
         Warrant Shares, together with any shares of Common Stock issued or
         issuable upon any stock split, dividend or other distribution,
         recapitalization or similar event with respect to the foregoing;
         provided, however, that a security ceases to be a Registrable Security
         when it: (i) has been registered pursuant to an effective registration
         statement under the Securities Act and sold in a manner contemplated by
         the Registration Statement, or (ii) has been transferred in compliance
         with Rule 144 under the Securities Act (or any successor provision
         thereto) or is transferable pursuant to paragraph (k) of such Rule 144
         (or any successor provision thereto).

                  "Registration Statement" means the registration statements
         required to be filed hereunder, including (in each case) the
         Prospectus, amendments and supplements to the registration statement or
         Prospectus, including pre- and post-effective amendments, all exhibits
         thereto, and all material incorporated by reference in the registration
         statement.

                  "Rule 415" means Rule 415 promulgated by the Commission
         pursuant to the Securities Act, as such Rule may be amended from time
         to time, or any similar rule or regulation hereafter adopted by the
         Commission having substantially the same purpose and effect as such
         Rule.

                  "Rule 424" means Rule 424 promulgated by the Commission
         pursuant to the Securities Act, as such Rule may be amended from time
         to time, or any similar rule or regulation hereafter adopted by the
         Commission having substantially the same purpose and effect as such
         Rule.

                                   ARTICLE II.
                                  REGISTRATION.

         2.1      On or prior to the Filing Date, the Company shall prepare and
file with the Commission the Registration Statement covering the resale of all
of the Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415. The Registration Statement required hereunder shall be on
Form S-3 (except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case the Registration shall be on
another appropriate form in accordance herewith). The Registration Statement
required hereunder shall contain (except if otherwise directed by the Holders)
substantially the "Plan of Distribution" attached hereto as Annex A. Subject to
the terms of this Agreement, the Company shall use commercially reasonable
efforts to cause the Registration Statement to be declared effective under the
Securities Act as promptly as possible after the filing thereof, but in any
event



not later than the Effectiveness Date, and shall use commercially reasonable
efforts to keep the Registration Statement continuously effective, subject to
Sections 3(c), 3(i) and 6(d) below, under the Securities Act until the date when
all Registrable Securities covered by the Registration Statement have been sold
or may be sold without volume restrictions pursuant to Rule 144(k) as determined
by the counsel to the Company pursuant to a written opinion letter to such
effect, addressed and acceptable to the Company's transfer agent and the
affected Holders (the "Effectiveness Period").

         2.2      If: (i) a Registration Statement is not filed on or prior to
the Filing Date (if the Company files a Registration Statement without complying
with Section 3(a), the Company shall not be deemed to have satisfied this clause
(i)), or (ii) the Company fails to file with the Commission a request for
acceleration in accordance with Rule 461 promulgated under the Securities Act,
within five Trading Days of the date that the Company is notified (orally or in
writing, whichever is earlier) by the Commission that a Registration Statement
will not be "reviewed," or is not subject to further review (unless the Company
provides notice to the Holders of a circumstance contemplated by Section
3(c)(vi) that would make it appropriate to suspend the filing of the
Registration Statement and the related Prospectus for a reasonable period of
time not to exceed 10 Trading Days), or (iii) prior to the date when such
Registration Statement is first declared effective by the Commission, the
Company fails to file a pre-effective amendment and otherwise respond in writing
to comments made by the Commission in respect of such Registration Statement
within 15 Trading Days after the receipt of comments by or notice from the
Commission that such amendment is required in order for a Registration Statement
to be declared effective, or (iv) a Registration Statement filed or required to
be filed hereunder is not declared effective by the Commission on or before the
Effectiveness Date, or (v) after a Registration Statement is first declared
effective by the Commission, it ceases for any reason to remain continuously
effective as to all Registrable Securities for which it is required to be
effective, or the Holders are not permitted to utilize the Prospectus therein to
resell such Registrable Securities, for in any such case 15 consecutive days but
no more than an aggregate of 30 days during any 12 month period (which need not
be consecutive Trading Days)(any such failure or breach being referred to as an
"Event," and for purposes of clause (i) or (iv) the date on which such Event
occurs, or for purposes of clause (ii) the date on which such five Trading Day
period (or, if there is a delay in filing as a result of a circumstance
contemplated by Section 3(c)(vi), 10 Trading Day period) is exceeded, or for
purposes of clause (iii) the date which such 15 Trading Day period is exceeded,
or for purposes of clause (v) the date on which such 15 or 30 day period, as
applicable, is exceeded being referred to as "Event Date"), then in addition to
any other rights the Holders may have hereunder or under applicable law: (x) on
each such Event Date the Company shall pay to each Holder an amount in cash, as
liquidated damages and not as a penalty, equal to 1.5% of the aggregate purchase
price paid by such Holder pursuant to the Purchase Agreement for any Registrable
Securities then held by such Holder; and (y) on each monthly anniversary of each
such Event Date (if the applicable Event shall not have been cured by such date)
until the applicable Event is cured, the Company shall pay to each Holder an
amount in cash, as liquidated damages and not as a penalty, equal to 1.5% of the
aggregate purchase price paid by such Holder pursuant to the Purchase Agreement
for any Registrable Securities then held by such Holder; provided, however, that
under no circumstances shall the Company be required to pay hereunder to any
Holder during any one month period in excess of an aggregate of 1.5% of the
aggregate purchase price paid by such Holder pursuant to the Purchase Agreement
for any Registrable Securities then held by such Holder. If the Company



fails to pay any liquidated damages pursuant to this Section 2(b) in full within
10 Trading Days after the date payable, the Company will pay interest thereon at
a rate of 15% per annum (or such lesser maximum amount that is permitted to be
paid by applicable law) to the Holder, accruing daily from the date such
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. The liquidated damages pursuant to the terms hereof shall
apply on a daily pro-rata basis for any portion of a month prior to the cure of
an Event.

                                  ARTICLE III.
                             REGISTRATION PROCEDURES

         In connection with the Company's registration obligations hereunder,
the Company shall:

         3.1      Not less than five Trading Days prior to the filing of the
Registration Statement or two days prior to the filing of any related Prospectus
or any amendment or supplement thereto, the Company shall, (i) furnish to the
Holders copies of all such documents proposed to be filed (including documents
incorporated or deemed incorporated by reference to the extent requested by such
Person) which documents will be subject to the review of such Holders, and (ii)
cause its officers and directors, counsel and independent certified public
accountants to respond to such reasonable inquiries as shall be necessary, in
the reasonable opinion of respective counsel to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities then held by all Holders shall reasonably object in good faith,
provided that the Company is notified of such objection in writing prior to the
date 2 Trading Days after the Holders have been so furnished copies of such
documents proposed to be filed. If the Company fails to file a Registration
Statement or any such prospectus or any amendments or supplements thereto so as
to give rise to an Event contemplated by Section 2(b) as a result of the Holders
objection to the filing of the Registration Statement, the Company shall not be
required to pay any liquidated damages contemplated by Section 2(b) with respect
to such Event for any delay resulting from the Holder's objection to such
filing.; provided, however, if it is later determined that such objections were
reasonable and in good faith, the Company shall be required to pay such
liquidated damages contemplated by Section 2(b) with respect to such Event.

         3.2      (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; (iii) reasonable
efforts to respond as promptly as reasonably practicable to any comments
received from the Commission with respect to the Registration Statement or any
amendment thereto and, as promptly as reasonably possible, upon request, provide
the Holders true and complete copies of all correspondence from and to the
Commission relating to the Registration Statement; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.



         3.3      Notify the Holders of Registrable Securities to be sold as
promptly as reasonably possible and (if requested by any such Person) confirm
such notice in writing promptly following the day (i)(A) when a Prospectus or
any Prospectus supplement or post-effective amendment to the Registration
Statement is proposed to be filed; (B) the Commission notifies the Company that
there will be a "review" of the Registration Statement and if the Commission
comments in writing on the Registration Statement (the Company shall upon
request provide true and complete copies thereof and all written responses
thereto to each of the Holders); and (C) with respect to the Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the Commission or any other Federal or state governmental
authority during the period of effectiveness of the Registration Statement for
amendments or supplements to the Registration Statement or Prospectus or for
additional information with respect to the Registration Statement; (iii) of the
issuance by the Commission or any other federal or state governmental authority
of any stop order suspending the effectiveness of the Registration Statement
covering any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in the Registration Statement ineligible for
inclusion therein or any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, or
(vi) of the occurrence or existence of a pending corporate development or other
material non-public information concerning the Company that, in the reasonable
discretion of the Company, makes it appropriate to suspend the availability of
the Registration Statement and the related Prospectus.

         3.4      Use commercially reasonable efforts to avoid the issuance of,
or, if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of the Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, as soon as reasonably practicable.

         3.5      Furnish to each Holder, without charge, at least one conformed
copy of the Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.

         3.6      Upon request, promptly deliver to each Holder, without charge,
as many copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request in connection with resales by the Holder of Registrable
Securities. Subject to the terms of this Agreement, the Company hereby consents
to the use of such Prospectus and each amendment or supplement thereto by each
of the



selling Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto,
except after the giving of any notice pursuant to clauses (ii) through (vii) of
Section 3(c).

         3.7      Prior to any resale of Registrable Securities by a Holder, use
its commercially reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from the Registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep each such Registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statement; provided, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified, subject
the Company to any material tax in any such jurisdiction where it is not then so
subject or file a general consent to service of process in any such
jurisdiction.

         3.8      If requested by the Holders, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to the
Registration Statement, which certificates shall be free, to the extent
permitted by the Purchase Agreement and applicable state and federal securities
laws, of all restrictive legends, and to enable such Registrable Securities to
be in such denominations and registered in such names as any such Holders may
request.

         3.9      Upon the occurrence of any event contemplated by Section
3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If the Company notifies the Holders in accordance with clauses
(ii) through (vi) of Section 3(c) above to suspend the use of the use of any
Prospectus until the requisite changes to such Prospectus have been made, then
the Holders shall suspend use of such Prospectus. The Company will use its best
efforts to ensure that the use of the Prospectus may be resumed as promptly as
is practicable. The Company shall be entitled to exercise its right under this
Section 3(i) to suspend the availability of a Registration Statement and
Prospectus, subject to the payment of liquidated damages pursuant to Section
2(b), for a period not to exceed 60 consecutive days or for multiple periods not
to exceed 90 days in the aggregate in any 12 month period.

         3.10     Comply with all applicable rules and regulations of the
Commission.

         3.11     The Company may require each Holder to furnish to the Company
a certified statement as to the number of shares of Common Stock beneficially
owned by such Holder and the person thereof that has voting and dispositive
control over the Shares. During any periods that the Company is unable to meet
its obligations hereunder with respect to the registration of



the Registrable Securities solely because any Holder fails to furnish such
information within three Trading Days of the Company's request, any liquidated
damages that are accruing at such time or that result from such delay shall be
tolled and any Event that may otherwise occur solely because of such delay shall
be suspended, until such information is delivered to the Company.

                                   ARTICLE IV.
                              REGISTRATION EXPENSES

All fees and expenses incident to the performance of or compliance with this
Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the
Trading Market on which the Common Stock is then listed for trading, and (B) in
compliance with applicable state securities or Blue Sky laws), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is reasonably requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company, (v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions or, except to the extent
provided for in the Transaction Documents, any legal fees or other costs of the
Holders.

                                   ARTICLE V.
                                 INDEMNIFICATION

         5.1      Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents and employees of each of them, each
Person who controls any such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers, directors,
agents and employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable
attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out
of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, pursuant to which Registrable Securities were registered under the
Securities Act or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent,



but only to the extent, that (i) such untrue statements or omissions or alleged
untrue statements or omissions are based upon information regarding such Holder
furnished in writing to the Company by such Holder for use therein, or to the
extent that such information relates to such Holder or such Holder's proposed
method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
(it being understood that the Holder has approved Annex A hereto for this
purpose) or (ii) in the case of an occurrence of an event of the type specified
in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder of
the Advice contemplated in Section 6(d). The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement.

         5.2      Indemnification by Holders. Each Holder shall, severally and
not jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, to the extent arising out of or based upon: (x) such Holder's failure
to comply with the prospectus delivery requirements of the Securities Act or (y)
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein not misleading
(i) to the extent, but only to the extent, that such untrue statement or
omission is contained in any information so furnished in writing by such Holder
to the Company for inclusion in the Registration Statement or such Prospectus or
(ii) to the extent that (1) such untrue statements or omissions are based upon
information regarding such Holder furnished in writing to the Company by such
Holder for use therein, or to the extent that such information relates to such
Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and approved in writing by such Holder for use in
the Registration Statement (it being understood that the Holder has approved
Annex A hereto for this purpose), such Prospectus or such form of Prospectus or
in any amendment or supplement thereto or (2) in the case of an occurrence of an
event of the type specified in Section 3(c)(ii)-(vi), the use by such Holder of
an outdated or defective Prospectus after the Company has notified such Holder
in writing that the Prospectus is outdated or defective and prior to the receipt
by such Holder of the Advice contemplated in Section 6(d). In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the gross proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.

         5.3      Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the "Indemnifying Party") in writing, and
the Indemnifying Party shall have the right to assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof;



provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have prejudiced the
Indemnifying Party.

         An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall reasonably believe that a material conflict of interest is likely to exist
if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of one
separate counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.

         Subject to the terms of this Agreement, all reasonable fees and
expenses of the Indemnified Party (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten Trading Days of written notice
thereof to the Indemnifying Party; provided, that the Indemnified Party shall
promptly reimburse the Indemnifying Party for that portion of such fees and
expenses applicable to such actions for which such Indemnified Party is not
entitled to indemnification hereunder, determined based upon the relative faults
of the parties.

         5.4      Contribution. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy
or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission.



The amount paid or payable by a party as a result of any Losses shall be deemed
to include, subject to the limitations set forth in this Agreement, any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms.

         The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, except in the case of fraud by
such Holder.

         The indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

                                   ARTICLE VI.
                                  MISCELLANEOUS

         6.1      Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.

         6.2      No Piggyback on Registrations. Except as set forth on Schedule
6(b) attached hereto, neither the Company nor any of its security holders (other
than the Holders in such capacity pursuant hereto) may include securities of the
Company in a Registration Statement other than the Registrable Securities, and
the Company shall not after the date hereof enter into any agreement providing
any such right to any of its security holders. Except as set forth on Schedule
6(b), no Person has any right to cause the Company to effect the registration
under the Securities Act of any securities of the Company. The Company shall not
file any other registration statement (other than a registration statement on
Form S-8) until after the Effective Date.

         6.3      Compliance. Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.



         6.4      Discontinued Disposition. Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a notice from
the Company of the occurrence of any event of the kind described in Section
3(c), such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement or
until it is advised in writing (the "Advice") by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has received copies
of any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company will use its best efforts to ensure that the use of the Prospectus may
be resumed as promptly as it practicable. The Company agrees and acknowledges
that any periods during which the Holder is required to discontinue the
disposition of the Registrable Securities hereunder shall be subject to the
provisions of Section 2(b).

         6.5      Piggy-Back Registrations. If at any time during the
Effectiveness Period there is not an effective Registration Statement covering
all of the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the stock option or other employee
benefit plans, then the Company shall send to each Holder a written notice of
such determination and, if within fifteen days after the date of such notice,
any such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights.

         6.6      Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and each Holder of the then outstanding Registrable Securities.

         6.7      Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be made in
accordance with the provisions of the Purchase Agreement.

         6.8      Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. Each Holder may
assign their respective rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement.

         6.9      Execution and Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the



party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

         6.10     Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be determined
with the provisions of the Purchase Agreement.

         6.11     Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.

         6.12     Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

         6.13     Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.

         6.14     Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible in
any way for the performance of the obligations of any other Holder hereunder.
Nothing contained herein or in any other agreement or document delivered at any
closing, and no action taken by any Holder pursuant hereto or thereto, shall be
deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Holders
are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Holder shall be entitled to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder to be
joined as an additional party in any proceeding for such purpose.

                            *************************



         IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

                                            FIRST VIRTUAL COMMUNICATIONS, INC.

                                            By: ________________________________
                                                     Name:
                                                     Title:

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]



                    [PURCHASER'S SIGNATURE PAGE TO FVCX RRA]

                                    [PURCHASER]

                                    By: ________________________________________
                                        Name:
                                        Title:


                                  SCHEDULE 6(b)

         The Company has outstanding obligations to register securities of the
Company as follows: (i) the Company is obligated to register 642,921 shares of
Common Stock that were issued to Net One Systems Co., Ltd. ("Net One") in early
October 2003 pursuant to that certain Equity Investment Agreement dated
September 30, 2003 by and between the Company and Net One; (ii) the Company has
certain obligations pursuant to that certain Registration Rights Agreement dated
as of June 2000, by and between the Company and Vulcan Inc., to register the
shares of common stock issuable upon conversion of the Series A Preferred Stock
and upon exercise of a warrant to purchase common stock held by Vulcan, Inc.;
(iii) the Company has certain obligations pursuant to that certain Registration
Rights Agreement dated as of April 12, 2002, by and among the Company and the
investors referenced therein, and (iv) the Company is obligated to register any
shares that may be issued to Ralph Ungermann, Executive Chairman of the
Company's Board of Directors, pursuant to that certain Private Equity Line
Financing Agreement dated as of April 14, 2003 between the Company and Mr.
Ungermann. The Company intends to include the 642,921 shares issued to Net One
pursuant to the Equity Investment Agreement referenced above on the Registration
Statement.




                                     ANNEX A

                              Plan of Distribution

         The Selling Stockholders (the "Selling Stockholders") of the common
stock ("Common Stock") of First Virtual Communications, Inc. (the "Company") and
any of their pledgees, assignees and successors-in-interest may, from time to
time, sell any or all of their shares of Common Stock on the Nasdaq SmallCap
Market or any other stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:

- -        ordinary brokerage transactions and transactions in which the
         broker-dealer solicits purchasers, which may include long sales or
         short sales effected after the effective date of the prospectus of
         which this registration statement is a part;

- -        block trades in which the broker-dealer will attempt to sell the shares
         as agent but may position and resell a portion of the block as
         principal to facilitate the transaction;

- -        purchases by a broker-dealer as principal and resale by the
         broker-dealer for its account;

- -        an exchange distribution in accordance with the rules of the applicable
         exchange;

- -        privately negotiated transactions;

- -        "at the market" or through market makers or into an existing market for
         the shares

- -        broker-dealers may agree with the Selling Stockholders to sell a
         specified number of such shares at a stipulated price per share;

- -        a combination of any such methods of sale;

- -        through the writing or settlement of options or other hedging
         transactions, whether through an options exchange or otherwise; or

- -        any other method permitted pursuant to applicable law.

         The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.

         Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

         In connection with the sale of our common stock or interests therein,
the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial



institutions, which may in turn engage in short sales of the common stock in the
course of hedging the positions they assume. The Selling Stockholders may also
sell shares of our common stock short and deliver these securities to close out
their short positions, or loan or pledge the common stock to broker-dealers that
in turn may sell these securities. The Selling Stockholders may also enter into
option or other transactions with broker-dealers or other financial institutions
or the creation of one or more derivative securities which require the delivery
to such broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).

         The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each of the Selling
Stockholders have informed the Company that it does not have any agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock. Some of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for the Company in the
ordinary course of business.

         The Company is required to pay certain fees and expenses incurred by
the Company incident to the registration of the shares, including all reasonable
costs and expenses incurred by us or the Selling Stockholders and all
registration and filing fees and legal fees and accounting fees.

         The Company has agreed to indemnify the Selling Stockholders and
certain control and other related persons related to the foregoing persons
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act. The Selling Stockholders have agreed to indemnify the
Company in certain circumstances, as well as certain related persons, against
certain liabilities, including liabilities under the Securities Act.

         The Selling Stockholders are not obligated to, and there is no
assurance that the Selling Stockholders will, sell any or all of the shares
being offered by this prospectus.

        The Company has agreed with the Selling Stockholders to keep the
registration statement effective until the shares being offered by this
prospectus may be sold without registration or restriction pursuant to Rule
144(k) promulgated under the Securities Act, or, if earlier, until the
distribution contemplated in this prospectus has been completed.



                                    EXHIBIT B

                                ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this "Agreement") is made as of November 6, 2003, by and
among First Virtual Communications, Inc., a corporation incorporated under the
laws of Delaware (the "Company"), the purchasers signatory hereto (each a
"Purchaser" and together the "Purchasers"), and Feldman Weinstein LLP, with an
address at 420 Lexington Avenue, New York, New York 10170-0002 (the "Escrow
Agent"). CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN SHALL HAVE THE MEANINGS
SET FORTH IN THE SECURITIES PURCHASE AGREEMENT REFERRED TO IN THE FIRST RECITAL.

                              W I T N E S S E T H:

WHEREAS, the Purchasers will be purchasing from the Company, severally and not
jointly with the other Purchasers, up to $12,000,000 of Common Stock and
Warrants on the Closing Date as set forth in the Securities Purchase Agreement
(the "Purchase Agreement") dated the date hereof between the Purchasers and the
Company, which securities will be issued under the terms contained herein and in
the Purchase Agreement; and

WHEREAS, it is intended that the purchase of the securities be consummated in
accordance with the requirements set forth in Regulation D promulgated under the
Securities Act of 1933, as amended; and

WHEREAS, the Company and the Purchasers have requested that the Escrow Agent
hold the Subscription Amounts in escrow until the Escrow Agent has received the
Release Notice in the form attached hereto from the Company and each Purchaser;

NOW, THEREFORE, in consideration of the covenants and mutual promises contained
herein and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged and intending to be legally bound
hereby, the parties agree as follows:

                                   ARTICLE I.
                               TERMS OF THE ESCROW

         1.1      The parties hereby agree to establish an escrow account with
the Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase
of up to $12,000,000 of Common Stock and Warrants, in the aggregate, as
contemplated by the Purchase Agreement.

         1.2      Upon the Escrow Agent's receipt of the aggregate Subscription
Amounts for the Closing into its master escrow account, together with executed
counterparts of this Agreement, the Purchase Agreement and the Registration
Rights Agreement, it shall telephonically advise the Company, or the Company's
designated attorney or agent, of the amount of funds it has received into its
master escrow account.

         1.3      Wire transfers to the Escrow Agent shall be made as follows:



         STERLING NATIONAL BANK
         622 3RD AVENUE
         NEW YORK, NY 10017
         Account Name: Feldman Weinstein LLP
         ABA ROUTING NO: 026007773
         ACCT NO: 0814180101
         Remark: fvcx/[FUND NAME]

         (a)      The Company, promptly following being advised by the Escrow
Agent that the Escrow Agent has received the Subscription Amounts for the
Closing along with facsimile copies of counterpart signature pages of the
Purchase Agreement, Registration Rights Agreement and this Agreement from each
Purchaser, shall deliver to the Escrow Agent the stock certificates and Warrants
evidencing the Securities to be issued to each Purchaser at the Closing together
with:

                  (i)      the Company's executed counterpart of the Purchase
Agreement;

                  (ii)     the Company's executed counterpart of the
Registration Rights Agreement;

                  (iii)    the executed opinion of Cooley Godward LLP, in the
form of Exhibit C to the Purchase Agreement;

                  (iv)     a warrant, issued to Roth Capital Partners, LLC, to
purchase up to a number of shares of Common Stock equal to 8% of the Shares
purchased at the Closing and an exercise price equal to 120% of the Per Share
Purchase Price, and have a term of five years ("ROTH Warrant"); and

                  (v)      the Company's original executed counterpart of this
Escrow Agreement.

         (b)      In the event that the foregoing items are not in the Escrow
Agent's possession within five (5) Trading Days of the Escrow Agent notifying
the Company that the Escrow Agent has custody of the Subscription Amount for the
Closing, then each Purchaser shall have the right to demand the return of their
portion of the Subscription Amount.

         (c)      Once the Escrow Agent receives a Release Notice in the form
attached hereto as Exhibit X executed by the Company and each Purchaser, it
shall (a) wire 93% of the aggregate Subscription Amounts to the Company's
account listed in Section 1.7 below, and (b) wire the remaining 7% of the
aggregate Subscription Amounts per the written instructions of Roth Capital
Management. Wire transfers to the Company shall be made per the written
instructions of the Company to the Escrow Agent.

         (d)      Once the funds (as set forth above) have been sent per the
Company's instructions, the Escrow Agent shall then arrange to have the Shares,
the Purchase Agreement, the Registration Rights Agreement, the Warrants, Roth
Warrant, the Escrow Agreement and the opinion of counsel delivered to the
appropriate parties.



                                  ARTICLE II.
                                 MISCELLANEOUS

         2.1      No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act.

         2.2      All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent as set forth in the Purchase
Agreement.

         2.3      This Escrow Agreement shall be binding upon and shall inure to
the benefit of the permitted successors and permitted assigns of the parties
hereto.

         2.4      This Escrow Agreement is the final expression of, and contains
the entire agreement between, the parties with respect to the subject matter
hereof and supersedes all prior understandings with respect thereto. This Escrow
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by a party's agent duly authorized in writing or as
otherwise expressly permitted herein.

         2.5      Whenever required by the context of this Escrow Agreement, the
singular shall include the plural and masculine shall include the feminine. This
Escrow Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if all parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Escrow Agreement.

         2.6      The parties hereto expressly agree that this Escrow Agreement
shall be governed by, interpreted under and construed and enforced in accordance
with the laws of the State of New York. Any action to enforce, arising out of,
or relating in any way to, any provisions of this Escrow Agreement shall only be
brought in a state or Federal court sitting in New York City.

         2.7      The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, each Purchaser and
the Escrow Agent.

         2.8      The Escrow Agent shall be obligated only for the performance
of such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall not be personally liable
for any act the Escrow Agent may do or omit to do hereunder as the Escrow Agent
while acting in good faith and in the absence of gross negligence, fraud and
willful misconduct, and any act done or omitted by the Escrow Agent pursuant to
the advice of the Escrow Agent's attorneys-at-law shall be conclusive evidence
of such good faith, in the absence of gross negligence, fraud and willful
misconduct.

         2.9      The Escrow Agent is hereby expressly authorized to disregard
any and all warnings given by any of the parties hereto or by any other person
or corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any



such order, judgment or decree, the Escrow Agent shall not be liable to any of
the parties hereto or to any other person, firm or corporation by reason of such
decree being subsequently reversed, modified, annulled, set aside, vacated or
found to have been entered without jurisdiction.

         2.10     The Escrow Agent shall not be liable in any respect on account
of the identity, authorization or rights of the parties executing or delivering
or purporting to execute or deliver the Purchase Agreement or any documents or
papers deposited or called for thereunder in the absence of gross negligence,
fraud and willful misconduct.

         2.11     The Escrow Agent shall be entitled to employ such legal
counsel and other experts as the Escrow Agent may deem necessary properly to
advise the Escrow Agent in connection with the Escrow Agent's duties hereunder,
may rely upon the advice of such counsel, and may pay such counsel reasonable
compensation; provided that the costs of such compensation shall be borne by the
Escrow Agent. The Escrow Agent has acted as legal counsel for Roth Capital
Management ("ROTH") and may continue to act as legal counsel for ROTH from time
to time, notwithstanding its duties as the Escrow Agent hereunder. The Company
and the Purchasers consent to the Escrow Agent in such capacity as legal counsel
for ROTH and waive any claim that such representation represents a conflict of
interest on the part of the Escrow Agent. The Company understands that ROTH and
the Escrow Agent are relying explicitly on the foregoing provision in entering
into this Escrow Agreement.

         2.12     The Escrow Agent's responsibilities as escrow agent hereunder
shall terminate if the Escrow Agent shall resign by giving written notice to the
Company and the Purchasers. In the event of any such resignation, the Purchasers
and the Company shall appoint a successor Escrow Agent and the Escrow Agent
shall deliver to such successor Escrow Agent any escrow funds and other
documents held by the Escrow Agent.

         2.13     If the Escrow Agent reasonably requires other or further
instruments in connection with this Escrow Agreement or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

         2.14     It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the documents
or the escrow funds held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed in the Escrow Agent's sole discretion (1) to retain in
the Escrow Agent's possession without liability to anyone all or any part of
said documents or the escrow funds until such disputes shall have been settled
either by mutual written agreement of the parties concerned, or by a final
order, decree or judgment or a court of competent jurisdiction after the time
for appeal has expired and no appeal has been perfected, but the Escrow Agent
shall be under no duty whatsoever to institute or defend any such proceedings or
(2) to deliver the escrow funds and any other property and documents held by the
Escrow Agent hereunder to a state or Federal court having competent subject
matter jurisdiction and located in the City of New York in accordance with the
applicable procedure therefore

         2.15     The Company and each Purchaser agree jointly and severally to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims, liabilities, costs or expenses in
any way arising from or relating to the duties



or performance of the Escrow Agent hereunder or the transactions contemplated
hereby or by the Purchase Agreement other than any such claim, liability, cost
or expense to the extent the same shall have been determined by final,
unappealable judgment of a court of competent jurisdiction to have resulted from
the gross negligence, fraud or willful misconduct of the Escrow Agent.

                            ************************



                                                                       EXHIBIT C

IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of
date first written above.

FIRST VIRTUAL COMMUNICATIONS, INC.

                  By:______________________________________
                         Name:
                         Title:

                  ESCROW AGENT:

                  FELDMAN WEINSTEIN LLP

                  By:______________________________________
                           Name:
                           Title:

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]



                   [PURCHASER'S SIGNATURE PAGE TO RCG ESCROW]

                            [PURCHASER]

                            By: _____________________________________
                                   Name:
                                   Title:

                      [PURCHASERS' SIGNATURE PAGE FOLLOWS]



                                                                    EXHIBIT X TO
                                                                ESCROW AGREEMENT

                                 RELEASE NOTICE

The UNDERSIGNED, pursuant to the Escrow Agreement, dated as of November __,
2003, among First Virtual Communications, Inc., the Purchasers signatory thereto
and Feldman Weinstein LLP, as Escrow Agent (the "Escrow Agreement"; capitalized
terms used herein and not defined shall have the meaning ascribed to such terms
in the Escrow Agreement), hereby notify the Escrow Agent that each of the
conditions precedent to the purchase and sale of the Shares set forth in the
Securities Purchase Agreement have been satisfied. The Company and the
undersigned Purchaser hereby confirm that all of their respective
representations and warranties contained in the Purchase Agreement remain true
and correct and authorize the release by the Escrow Agent of the funds and
documents to be released at the Closing as described in the Escrow Agreement.
This Release Notice shall not be effective until executed by the Company and the
Purchasers.

This Release Notice may be signed in one or more counterparts, each of which
shall be deemed an original.

IN WITNESS WHEREOF, the undersigned have caused this Release Notice to be duly
executed and delivered as of this __ day of November, 2003.

                                              FIRST VIRTUAL COMMUNICATIONS, INC.

                                              By: ______________________________
                                                  Name:
                                                  Title:

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]


                                   EXHIBIT C

                                FORM OF WARRANT

                                   ARTICLE I.
                                TITLE TO WARRANT

Prior to the Termination Date and subject to compliance with applicable laws and
Section 7 of this Warrant, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
together with the Assignment Form annexed hereto properly endorsed. The
transferee shall sign an investment letter in form and substance reasonably
satisfactory to the Company.

                                  ARTICLE II.
                             AUTHORIZATION OF SHARES

The Company covenants that all Warrant Shares which may be issued upon the
exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).

                                  ARTICLE III.
                               EXERCISE OF WARRANT

                  (a)      Subject to Section 3(c) below, exercise of the
         purchase rights represented by this Warrant may be made at any time or
         times on or after the Initial Exercise Date and on or before the
         Termination Date by delivery to the Company of a duly executed
         facsimile copy of the Notice of Exercise Form annexed hereto (or such
         other office or agency of the Company as it may designate by notice in
         writing to the registered Holder at the address of such Holder
         appearing on the books of the Company); provided, however, within 5
         Trading Days of the date said Notice of Exercise is delivered to the
         Company, the Holder shall have surrendered this Warrant to the Company
         and the Company shall have received payment of the aggregate Exercise
         Price of the shares thereby purchased (and all taxes required to be
         paid by the Holder, if any, pursuant to Section 5 prior to the issuance
         of such shares) by wire transfer or cashier's check drawn on a United
         States bank. Certificates for shares purchased hereunder shall be
         delivered to the Holder within 3 Trading Days from the delivery to the
         Company of the Notice of Exercise Form by facsimile copy, surrender of
         this Warrant and payment of the aggregate Exercise Price as set forth
         above ("Warrant Share Delivery Date). This Warrant shall be deemed to
         have been exercised on the later of the date the Notice of Exercise is
         delivered to the Company by facsimile copy, the date the Exercise Price
         (and all taxes required to be paid by the Holder, if any, pursuant to
         Section 5 prior to the issuance of such shares) is received by the
         Company, and the date the Warrant is surrendered to the Company (or
         evidence of loss, theft or destruction thereof and security or
         indemnity reasonably satisfactory to the Company) (the later date, the
         "Exercise Date"). The Warrant Shares shall be deemed to have been
         issued, and Holder or any other person so designated to be named
         therein shall be deemed to have become a holder of record of such
         shares for all purposes, as of the close of business on the Exercise
         Date. If the Company fails to



         deliver to the Holder a certificate or certificates representing the
         Warrant Shares pursuant to this Section 3(a) by the third Trading Day
         following the Warrant Share Delivery Date, then the Holder will have
         the right to rescind such exercise. In addition to any other rights
         available to the Holder, if the Company fails to deliver to the Holder
         a certificate or certificates representing the Warrant Shares pursuant
         to an exercise by the seventh Trading Day after the Warrant Share
         Delivery Date, and if after such day the Holder is required by its
         broker to purchase (in an open market transaction or otherwise) shares
         of Common Stock to deliver in satisfaction of a sale by the Holder of
         the Warrant Shares which the Holder anticipated receiving upon such
         exercise (a "Buy-In"), then the Company shall (1) pay in cash to the
         Holder the amount by which (x) the Holder's total purchase price
         (including brokerage commissions, if any) for the shares of Common
         Stock so purchased exceeds (y) the amount obtained by multiplying (A)
         the number of Warrant Shares that the Company was required to deliver
         to the Holder in connection with the exercise at issue times (B) the
         price at which the sell order giving rise to such purchase obligation
         was executed, and (2) at the option of the Holder, either reinstate the
         portion of the Warrant and equivalent number of Warrant Shares for
         which such exercise was not honored or deliver to the Holder the number
         of shares of Common Stock that would have been issued had the Company
         timely complied with its exercise and delivery obligations hereunder.
         For example, if the Holder purchases Common Stock having a total
         purchase price of $11,000 to cover a Buy-In with respect to an
         attempted exercise of shares of Common Stock with an aggregate sale
         price giving rise to such purchase obligation of $10,000, under clause
         (1) of the immediately preceding sentence the Company shall be required
         to pay the Holder $1,000. The Holder shall provide the Company written
         notice indicating the amounts payable to the Holder in respect of the
         Buy-In, together with applicable confirmations and other evidence
         reasonably requested by the Company. Nothing herein shall limit a
         Holder's right to pursue any other remedies available to it hereunder,
         at law or in equity including, without limitation, a decree of specific
         performance and/or injunctive relief with respect to the Company's
         failure to timely deliver certificates representing shares of Common
         Stock upon exercise of the Warrant as required pursuant to the terms
         hereof.

                  (b)      If this Warrant shall have been exercised in part,
         the Company shall, at the time of delivery of the certificate or
         certificates representing Warrant Shares, deliver to Holder a new
         Warrant evidencing the rights of Holder to purchase the unpurchased
         Warrant Shares called for by this Warrant, which new Warrant shall in
         all other respects be identical with this Warrant.

                  (c)      [AT CLOSING HOLDER MAY ELECT, BY NOTATION ON ITS
         SIGNATURE PAGE, TO EXCLUDE THIS PROVISION FROM ITS WARRANT] The Company
         shall not effect any exercise of this Warrant, and the Holder shall not
         have the right to exercise any portion of this Warrant, pursuant to
         Section 3(a) or otherwise, to the extent that after giving effect to
         such issuance after exercise, the Holder (together with the Holder's
         affiliates), as set forth on the applicable Notice of Exercise, would
         beneficially own in excess of 4.99% of the number of shares of the
         Common Stock outstanding immediately after giving effect to such
         issuance. For purposes of the foregoing sentence, the number of shares
         of Common Stock beneficially owned by the Holder and its affiliates
         shall include the number of shares of Common Stock issuable



         upon exercise of this Warrant with respect to which the determination
         of such sentence is being made, but shall exclude the number of shares
         of Common Stock which would be issuable upon (A) exercise of the
         remaining, nonexercised portion of this Warrant beneficially owned by
         the Holder or any of its affiliates and (B) exercise or conversion of
         the unexercised or nonconverted portion of any other securities of the
         Company (including, without limitation, any other Warrants) subject to
         a limitation on conversion or exercise analogous to the limitation
         contained herein beneficially owned by the Holder or any of its
         affiliates. Except as set forth in the preceding sentence, for purposes
         of this Section 3(c), beneficial ownership shall be calculated in
         accordance with Section 13(d) of the Exchange Act. To the extent that
         the limitation contained in this Section 3(c) applies, the
         determination of whether this Warrant is exercisable (in relation to
         other securities owned by the Holder) and of which a portion of this
         Warrant is exercisable shall be in the sole discretion of such Holder,
         and the submission of a Notice of Exercise shall be deemed to be such
         Holder's determination of whether this Warrant is exercisable (in
         relation to other securities owned by such Holder) and of which portion
         of this Warrant is exercisable, in each case subject to such aggregate
         percentage limitation, and the Company shall have no obligation to
         verify or confirm the accuracy of such determination. For purposes of
         this Section 3(c), in determining the number of outstanding shares of
         Common Stock, the Holder may rely on the number of outstanding shares
         of Common Stock as reflected in (x) the Company's most recent Form 10-Q
         or Form 10-K, as the case may be, (y) a more recent public announcement
         by the Company or (z) any other notice by the Company or the Company's
         transfer agent setting forth the number of shares of Common Stock
         outstanding. Upon the written or oral request of the Holder, the
         Company shall within two Trading Days confirm orally and in writing to
         the Holder the number of shares of Common Stock then outstanding. In
         any case, the number of outstanding shares of Common Stock shall be
         determined after giving effect to the conversion or exercise of
         securities of the Company, including this Warrant, by the Holder or its
         affiliates since the date as of which such number of outstanding shares
         of Common Stock was reported. The provisions of this Section 3(c) may
         be waived by the Holder upon, at the election of the Holder, not less
         than 61 days' prior notice to the Company, and the provisions of this
         Section 3(c) shall continue to apply until such 61st day (or such later
         date, as determined by the Holder, as may be specified in such notice
         of waiver).

                  (d)      If at any time after one year from the date of
         issuance of this Warrant there is no effective Registration Statement
         registering the resale of the Warrant Shares by the Holder, this
         Warrant may also be exercised at such time by means of a "cashless
         exercise" in which the Holder shall be entitled to receive a
         certificate for the number of Warrant Shares equal to the quotient
         obtained by dividing [(A-B) (X)] by (A), where:

                  (A) =  the Closing Price on the Trading Day immediately
                         preceding the date of such election;

                  (B) =  the Exercise Price of the Warrants, as adjusted; and

                  (X) =  the number of Warrant Shares issuable upon exercise of
                         the Warrants in accordance with the terms of this
                         Warrant.



                  (e)      Subject to the provisions of this Section 3, if after
         the first anniversary of the Initial Exercise Date each VWAP (as
         defined below) for any twenty consecutive Trading Days (the
         "Measurement Price") (such period commencing only after such
         anniversary date) exceeds the then Exercise Price (as adjusted under
         this Warrant) by 200% (the "Threshold Price"), then the Company may,
         within three Trading Days of such period, call for cancellation of all
         or any portion of this Warrant for which a Notice of Exercise has not
         yet been delivered (such right, a "Call"). To exercise this right, the
         Company must deliver to the Holder an irrevocable written notice (a
         "Call Notice"), indicating therein the portion of the unexercised
         portion of this Warrant to which such notice applies. If the conditions
         set forth below for such Call are satisfied from the period from the
         date of the Call Notice through and including the Call Date (as defined
         below), then any portion of this Warrant subject to such Call Notice
         for which a Notice of Exercise shall not have been received by the
         Company from and after the date of the Call Notice will be cancelled at
         6:30 p.m. (New York City time) on the 10th Trading Day after the date
         of the Call Notice is received by the Holder (such date, the "Call
         Date"). Any unexercised portion of this Warrant to which the Call
         Notice does not pertain, if any, will be unaffected by such Call
         Notice. In furtherance thereof, the Company covenants and agrees that
         it will honor all Notices of Exercise with respect to Warrant Shares
         subject to a Call Notice that are tendered from the time of delivery of
         the Call Notice on the Call Date. The parties agree that any Notice of
         Exercise delivered following a Call Notice shall first reduce to zero
         the number of Warrant Shares subject to such Call Notice prior to
         reducing the remaining Warrant Shares available for purchase under this
         Warrant. For example, if (x) this Warrant then permits the Holder to
         acquire 100 Warrant Shares, (y) a Call Notice pertains to 75 Warrant
         Shares, and (z) prior to the Call Date the Holder tenders a Notice of
         Exercise in respect of 50 Warrant Shares, then (1) on the Call Date the
         right under this Warrant to acquire 25 Warrant Shares will be
         automatically cancelled, (2) the Company, in the time and manner
         required under this Warrant, will have issued and delivered (or be
         required to issue and deliver) to the Holder 50 Warrant Shares in
         respect of the exercises following receipt of the Call Notice, and (3)
         the Holder may, until the Termination Date, exercise this Warrant for
         cash by payment of the aggregate Exercise Price then in effect for 25
         Warrant Shares (subject to adjustment as herein provided and subject to
         subsequent Call Notices and the other terms and conditions of this
         Warrant). Subject again to the provisions of this Section 3, the
         Company may deliver subsequent Call Notices for any portion of this
         Warrant for which the Holder shall not have delivered a Notice of
         Exercise. Notwithstanding anything to the contrary set forth in this
         Warrant, the Company may not require the cancellation of this Warrant
         pursuant to this Section 3(d) (and any Call Notice will be void),
         unless, from the beginning of the 20 consecutive Trading Days used to
         determine whether the Common Stock has achieved the Threshold Price
         through the Call Date, (i) the Company shall have honored in accordance
         with the terms of this Warrant all Notices of Exercise delivered prior
         to the Call Date, (ii) the Registration Statement shall be effective as
         to all Warrant Shares and the prospectus thereunder available for use
         by the Holder for the resale of all such Warrant Shares (and the
         Company is not aware of any event or occurrence that would make it
         appropriate for the Company to suspend the effectiveness of the
         Registration Statement), (iii) the Warrant Shares shall be listed or
         quoted for trading on the Principal Market and trading in the Common
         Stock shall not have been suspended



         (and the Company is not then aware of any event or occurrence that
         would required trading to be suspended) and (iv) such issuance would be
         permitted in full without violating the limitations set forth in
         Section 3(c).

                  "VWAP" means, for any date, the price determined by the first
         of the following clauses that applies: (a) if the Common Stock is then
         listed or quoted on a Trading Market, the daily volume weighted average
         price of the Common Stock for such date (or the nearest preceding date)
         on the Trading Market on which the Common Stock is then listed or
         quoted as reported by Bloomberg Financial L.P. (based on a trading day
         from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b) if the
         Common Stock is not then listed or quoted on a Trading Market and if
         prices for the Common Stock are then quoted on the OTC Bulletin Board,
         the volume weighted average price of the Common Stock for such date (or
         the nearest preceding date) on the OTC Bulletin Board; (c) if the
         Common Stock is not then listed or quoted on the OTC Bulletin Board and
         if prices for the Common Stock are then reported in the "Pink Sheets"
         published by the National Quotation Bureau Incorporated (or a similar
         organization or agency succeeding to its functions of reporting
         prices), the most recent bid price per share of the Common Stock so
         reported; or (d) in all other cases, the fair market value of a share
         of Common Stock as determined by an independent appraiser selected in
         good faith by the Purchasers and reasonably acceptable to the Company.

                                  ARTICLE IV.
                          NO FRACTIONAL SHARES OR SCRIP

         No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant. As to any fraction of a share which
Holder would otherwise be entitled to purchase upon such exercise, the Company
shall pay a cash adjustment in respect of such final fraction in an amount equal
to such fraction multiplied by the Exercise Price.

                                   ARTICLE V.
                           CHARGES, TAXES AND EXPENSES

         Issuance of certificates for Warrant Shares shall be made without
charge to the Holder for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder or in such name or names as may be directed by the Holder;
provided, however, that in the event certificates for Warrant Shares are to be
issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder; and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.

                                  ARTICLE VI.
                                CLOSING OF BOOKS

         The Company will not close its stockholder books or records in any
manner which prevents the timely exercise of this Warrant, pursuant to the terms
hereof.



                                  ARTICLE VII.
                       TRANSFER, DIVISION AND COMBINATION.

                  (a)      Subject to compliance with any applicable securities
         laws and the conditions set forth in Sections 1 and 7(e) hereof and to
         the provisions of Section 4.1 of the Purchase Agreement, this Warrant
         and all rights hereunder are transferable, in whole or in part
         (provided that if the Warrant is being transferred in part, the portion
         of this Warrant being transferred shall represents the right to
         purchase at least 100,000 Warrant Shares (or such lesser amount
         comprising the entire number of Warrant Shares then underlying this
         Warrant and subject to adjustment as provided herein), upon surrender
         of this Warrant at the principal office of the Company, together with a
         written assignment of this Warrant substantially in the form attached
         hereto duly executed by the Holder or its agent or attorney and funds
         sufficient to pay any transfer taxes payable upon the making of such
         transfer. Upon such surrender and compliance with the conditions
         referenced in the preceding sentence, if required, such payment, the
         Company shall execute and deliver a new Warrant or Warrants in the name
         of the assignee or assignees and in the denomination or denominations
         specified in such instrument of assignment, and shall issue to the
         assignor a new Warrant evidencing the portion of this Warrant not so
         assigned, and this Warrant shall promptly be cancelled. A Warrant, if
         properly assigned, may be exercised by a new holder for the purchase of
         Warrant Shares without having a new Warrant issued.

                  (b)      Subject to compliance with Section 7(a), as to any
         transfer which may be involved in such division or combination, (i)
         this Warrant may be divided or combined with other Warrants upon
         presentation hereof at the aforesaid office of the Company, together
         with a written notice specifying the names and denominations in which
         new Warrants are to be issued, signed by the Holder or its agent or
         attorney, and (ii) the Company shall execute and deliver a new Warrant
         or Warrants in exchange for the Warrant or Warrants to be divided or
         combined in accordance with such notice.

                  (c)      The Company shall prepare, issue and deliver at its
         own expense (other than transfer taxes) the new Warrant or Warrants
         under this Section 7.

                  (d)      The Company agrees to maintain, at its aforesaid
         office or at the offices of a designated agent, books for the
         registration and the registration of transfer of the Warrants.

                  (e)      At the time of the surrender of this Warrant in
         connection with any transfer of this Warrant, the Company will require,
         as a condition of allowing such transfer (i) that the Holder or
         transferee of this Warrant, as the case may be, furnish to the Company
         a written opinion of counsel (which opinion shall be in form, substance
         and scope customary for opinions of counsel in comparable transactions
         and reasonably acceptable to the Company) to the effect that such
         transfer may be made without registration under the Securities Act and
         under applicable state securities or blue sky laws, (ii) that the
         holder or transferee execute and deliver to the Company an investment
         letter in form and substance acceptable to the Company, (iii) that the
         transferee be an "accredited investor" as defined in Rule 501(a)
         promulgated under the Securities Act and



         (iv) such other documents as may be reasonably requested by the Company
         to give effect to the transfer and comply with applicable laws.

                                 ARTICLE VIII.
                     NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE

         This Warrant does not entitle the Holder to any voting rights or other
rights as a shareholder of the Company prior to the exercise hereof. Upon the
delivery of the Exercise Notice, the surrender of this Warrant, the payment of
the aggregate Exercise Price to the Company, the Warrant Shares so purchased
shall be and be deemed to be issued to such Holder as the record owner of such
shares as of the close of business on the Exercise Date as determined in
accordance with Section 3(a).

                                  ARTICLE IX.
                LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT

         The Company covenants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant or any stock certificate relating to the Warrant Shares, and in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not include the
posting of any bond), and upon surrender and cancellation of such Warrant or
stock certificate, if mutilated, the Company will make and deliver a new Warrant
or cause to be delivered a stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

                                   ARTICLE X.
                       SATURDAYS, SUNDAYS, HOLIDAYS, ETC.

         If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday, Sunday
or a legal holiday, then such action may be taken or such right may be exercised
on the next succeeding day not a Saturday, Sunday or legal holiday.

                                  ARTICLE XI.
                   ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF
                       WARRANT SHARES; STOCK SPLITS, ETC.

         The number and kind of securities purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the happening of any of the events described in the next sentence. In the
event the Company shall (i) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock to holders of its outstanding Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, or (iv) issue any shares of its
capital stock in a reclassification of the Common Stock, then the number of
Warrant Shares purchasable upon exercise of this Warrant immediately prior
thereto shall be adjusted so that the Holder shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which it
would have owned or have been entitled to receive had such Warrant been
exercised in prior to the date upon



which such event described in clauses (i) through (iv) of this Section 3(a)
shall become effective. Upon each such adjustment of the kind and number of
Warrant Shares or other securities of the Company which are purchasable
hereunder, the Holder shall thereafter be entitled to purchase the number of
Warrant Shares or other securities resulting from such adjustment at an Exercise
Price per Warrant Share or other security equal to (x) the result obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment divided by (y) the number of Warrant Shares or other securities
of the Company resulting from such adjustment. An adjustment made pursuant to
this paragraph shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.

                                  ARTICLE XII.
                    REORGANIZATION, RECLASSIFICATION, MERGER,
                     CONSOLIDATION OR DISPOSITION OF ASSETS

         In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all of its property, assets or
business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), to be received by or distributed to the holders of Common Stock of
the Company, then the Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of Warrant Shares
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 12. For purposes of
this Section 12, "common stock of the successor or acquiring corporation" shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and which
is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this Section 12 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.



                                 ARTICLE XIII.
                       VOLUNTARY ADJUSTMENT BY THE COMPANY

         The Company may at any time during the term of this Warrant reduce the
then current Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.

                                  ARTICLE XIV.
                              NOTICE OF ADJUSTMENT

         Whenever the number of Warrant Shares or number or kind of securities
or other property purchasable upon the exercise of this Warrant or the Exercise
Price is adjusted, as herein provided, the Company shall give notice thereof to
the Holder, which notice shall state the number of Warrant Shares (and other
securities or property) purchasable upon the exercise of this Warrant and the
Exercise Price of such Warrant Shares (and other securities or property) after
such adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made.

                                  ARTICLE XV.
                           NOTICE OF CORPORATE ACTION

         If at any time:

                           (a)      the Company shall take a record of the
         holders of its Common Stock for the purpose of entitling them to
         receive a dividend or other distribution, or any right to subscribe for
         or purchase any evidences of its indebtedness, any shares of stock of
         any class or any other securities or property, or to receive any other
         right, or

                           (b)      there shall be any capital reorganization of
         the Company, any reclassification or recapitalization of the capital
         stock of the Company or any consolidation or merger of the Company
         with, or any sale, transfer or other disposition of all or
         substantially all the property, assets or business of the Company to,
         another corporation or,

                           (c)      there shall be a voluntary or involuntary
         dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at
least 10 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 10
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify, to the extent
known by the Company, (i) the date on which any such record is to be taken for
the purpose of such dividend, distribution or right, the date on which the
holders of Common Stock shall be entitled to any such dividend, distribution or
right, and the amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger,



consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
the holders of Common Stock shall be entitled to exchange their Warrant Shares
for securities or other property deliverable upon such disposition, dissolution,
liquidation or winding up. Each such written notice shall be sufficiently given
if addressed to Holder at the last address of Holder appearing on the books of
the Company and delivered in accordance with Section 17(d).

                                  ARTICLE XVI.
                                AUTHORIZED SHARES

         The Company covenants that during the period the Warrant is
outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares
may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which the Common
Stock may be listed.

                                  ARTICLE XVII.
                                  MISCELLANEOUS

         17.1     Jurisdiction. All questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be determined in
accordance with the provisions of the Purchase Agreement.

         17.2     Restrictions. The Holder acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.

         17.3     Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding all rights hereunder terminate on the Termination Date. If the
Company willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder as determined by a
court of law, the Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys' fees, including those of appellate proceedings, incurred
by Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.

         17.4     Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement.

         17.5     Limitation of Liability. Subject to Section 3(d), no provision
hereof, in the absence of any affirmative action by Holder to exercise this
Warrant or purchase Warrant Shares,



and no enumeration herein of the rights or privileges of Holder, shall give rise
to any liability of Holder for the purchase price of any Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.

         17.6     Remedies. Holder, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.

         17.7     Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.

         17.8     Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.

         17.9     Severability. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

         17.10    Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.

                              ********************



                  IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.

Dated: November __, 2003
                                        FIRST VIRTUAL COMMUNICATIONS, INC.

                                        By: ___________________________________
                                                   Name:
                                                   Title:



                               NOTICE OF EXERCISE

To:      First Virtual Communications, Inc.

                  1.       The undersigned hereby elects to purchase ________
Warrant Shares of First Virtual Communications, Inc. pursuant to the terms of
the attached Warrant (only if exercised in full), and tenders herewith payment
of the exercise price in full, together with all applicable transfer taxes, if
any.|

                  2.       Payment shall take the form of (check applicable
box):

                           [  ] in lawful money of the United States; or

                           [ ] the cancellation of such number of Warrant Shares
                           as is necessary, in accordance with the formula set
                           forth in subsection 3(d), to exercise this Warrant
                           with respect to the maximum number of Warrant Shares
                           purchasable pursuant to the cashless exercise
                           procedure set forth in subsection 3(d).

                  3.       Please issue a certificate or certificates
representing said Warrant Shares in the name of the undersigned or in such other
name as is specified below:

                      ____________________________________

The Warrant Shares shall be delivered to the following:

                      ____________________________________

                      ____________________________________

                      ____________________________________

                  (4)      Accredited Investor. The undersigned is an
"accredited investor" as defined in Regulation D promulgated under the
Securities Act of 1933, as amended.

                                              [PURCHASER]

                                              By: ______________________________
                                              Name:
                                              Title:

                                              Dated:  ________________________



                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

                  FOR VALUE RECEIVED, the foregoing Warrant and all rights
evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

                                                 Dated:  ______________, _______

                  Holder's Signature: _____________________________

                  Holder's Address:   _____________________________

                                      _____________________________

Signature Guaranteed:__________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.



                                    EXHIBIT D

                                 FORM OF OPINION

November 12, 2003

         The Purchasers Named

         on Exhibit A Hereto

RE:      FIRST VIRTUAL COMMUNICATIONS, INC.

Ladies and Gentlemen:

We have acted as counsel for First Virtual Communications, Inc., a Delaware
corporation (the "Company") in connection with the negotiation of the Securities
Purchase Agreement dated as of November 7, 2003, by and between you (the
"PURCHASERS") and the Company (the "PURCHASE AGREEMENT"), which provides for the
issuance and sale by the Company of Common Stock and warrants to purchase Common
Stock (the "WARRANTS") on the Closing Date, and the Escrow Agreement (the
"ESCROW AGREEMENT") and the Registration Rights Agreement between the Purchasers
and the Company, each dated as of November 7, 2003 (the "REGISTRATION RIGHTS
AGREEMENT") (collectively with the Purchase Agreement, the Escrow Agreement, the
Warrants and the Registration Rights Agreement, the "AGREEMENTS"). This opinion
is furnished to you pursuant to Section 2.2(a)(vi) of the Purchase Agreement.
All terms used herein have the meanings defined for them in the Purchase
Agreement unless otherwise defined herein.

In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Purchase Agreement by the various parties and originals or
copies certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. Where we render
an opinion "to the best of our knowledge" or concerning an item "known to us" or
our opinion otherwise refers to our knowledge, it is based solely upon (i) an
inquiry of attorneys within this firm who perform legal services for the
Company, (ii) receipt of a certificate executed by an officer of the Company
covering such matters (the "CERTIFICATE"), and (iii) such other investigation,
if any, that we specifically set forth herein.

In rendering this opinion, we have assumed: the genuineness and authenticity of
all signatures on original documents; the authenticity of all documents
submitted to us as originals; the conformity to originals of all documents
submitted to us as copies; the accuracy, completeness and authenticity of
certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Agreements), where authorization, execution and delivery
are prerequisites to the effectiveness of such documents. We have also assumed:
that all individuals executing and delivering documents had the legal capacity
to so execute and deliver; that you have received all documents you were to
receive under the Agreements; that the Agreements are obligations binding upon
you; if you are a corporation or other entity, that you have filed any required



California franchise or income tax returns and have paid any required California
franchise or income taxes; that there are no extrinsic agreements or
understandings among the parties to the Agreements that would modify or
interpret the terms of the Agreements or the respective rights or obligations of
the parties thereunder; and that there are no extrinsic agreements or
understandings among the parties to the Material Agreements (as defined below)
that would modify or interpret the terms of any Material Agreement or the
respective rights or obligations of the parties thereunder.

Our opinion is expressed only with respect to the federal laws of the United
States of America, the laws of the State of California and the General
Corporation Law of the State of Delaware. We note that the parties to the Escrow
Agreement have designated the laws of the State of New York as the laws
governing the Escrow Agreement. Accordingly, with your permission, our opinions
in paragraphs 2 and 3 below as to the validity, binding effect and
enforceability of the Escrow Agreement are premised upon the result that would
be obtained if a California court were to apply the internal laws of the State
of California (notwithstanding the designation of the laws of the State of New
York) to the interpretation and enforcement of the Escrow Agreement. In
addition, we express no opinion on the enforceability of the parties' choice of
law. We express no opinion as to whether the laws of any particular jurisdiction
apply, and no opinion to the extent that the laws of any jurisdiction other than
those identified above are applicable to the subject matter hereof. We are not
rendering any opinion as to compliance with any antitrust law, rule or
regulation or any antifraud law, rule or regulation relating to securities, or
to the sale or issuance thereof.

Our opinion in paragraph 1 below as to the good standing of the Company as a
domestic corporation in the state of Delaware is based solely upon our review of
certifications we received from the Secretary of State of the State of Delaware
that the Company is in good standing in such state. We have made no further
investigation.

With regard to our opinions in paragraphs 2 and 3 below, we express no opinion
as to whether the performance by the Company of its indemnity and contribution
obligations under the Purchase Agreement and the Registration Rights Agreement
complies with any applicable federal securities laws or the laws of the states
of California or Delaware relating to indemnification and contribution.

With regard to our opinion in paragraph 3 below with respect to material
defaults under any Material Agreement, we have relied solely upon (i)
representations of an officer of the Company contained in the Certificate, and
(iii) an examination of the Material Agreements. We have made no further
investigation.

With regard to our opinion in paragraph 4 below concerning preemptive or similar
rights with respect to the issuance and purchase of the Shares and Warrants, we
have relied solely upon (i) representations of officers of the Company contained
in the Certificate, and (ii) an examination of the Company's Certificate of
Incorporation and Bylaws. We have made no further investigation. In addition,
with regard to our opinion in paragraph 4 below, we have assumed full payment by
the Purchasers of the purchase price of the Shares, Warrants and Warrant Shares.

Our opinions in paragraph 6 below with respect to the outstanding capital stock
of the Company are based solely upon our review a certificate of the Company's
transfer agent. We have made no further investigation.



On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, we are of the opinion that:

1.       The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business and to own, lease and
operate its properties and assets as described in the Company's SEC Reports.

2.       The Company has the requisite corporate power and authority to enter
into and perform its obligations under the Agreements and to issue the Shares,
the Warrants and the Warrant Shares. Each of the Agreements has been duly
executed and delivered by the Company and each of the Agreements constitutes
valid and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as rights to indemnity under
Section 4.8 of the Purchase Agreement and Section 5 of the Registration Rights
Agreement may be limited by applicable laws and except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws affecting creditors' rights, and subject to
general equity principles and to limitations on availability of equitable
relief, including specific performance.

3.       The execution and delivery of the Agreements by the Company and the
issuance of the Shares and the Warrants, do not, and if issued to the Purchasers
on the date hereof, the issuance of the Warrant Shares would not, (i) result in
a violation of the Company's Certificate of Incorporation or Bylaws; (ii)
constitute a material default under any agreement to which the Company is bound
and which agreement is included as an exhibit filed pursuant to Item 601(b)(4)
or Item 601(b)(10) of Regulation S-K to the SEC Reports (the "MATERIAL
AGREEMENTS"), or (iii) result in a violation of any federal or state law, rule
or regulation applicable to the Company, except for such violations as would
not, individually or in the aggregate, have a Material Adverse Effect.

4.       Assuming (a) the accuracy of the representations and warranties of the
Purchasers and the Company contained in the Purchase Agreement, and (b) the due
performance by each of the Company and the Purchasers of the covenants and the
agreements set forth in the Purchase Agreement, respectively, it being
understood that this opinion is not expressed as to any subsequent resale of any
Shares and Warrants, as of the date hereof, the issuance of the Shares and the
Warrants in accordance with the Purchase Agreement are exempt from registration
under the Securities Act and the issuance of the Warrant Shares, if issued to
the Purchasers on the date hereof, would be exempt from registration under the
Securities Act. When so issued, the Shares and the Warrant Shares will be duly
and validly issued, fully paid and nonassessable, and free of any preemptive or
similar rights contained in the Company's Certificate of Incorporation or
Bylaws.

5.       We have not been engaged to devote substantive attention to any claims,
actions, suits, proceedings or investigations that are pending against the
Company or its properties, or against any officer or director of the Company in
his or her capacity as such, that are not disclosed in the SEC Reports. To our
knowledge, except as set forth in the SEC Reports, the Company is not a party to
or subject to the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality that would prohibit the
issuance of the Shares and the Warrants pursuant to the Purchase Agreement.



6.       Immediately prior to the issuance of the Shares, the authorized capital
stock of the Company consists of 100,000,000 shares of Common Stock, $.001 par
value, of which 8,778,903 shares are issued and outstanding and 5,000,000 shares
of Preferred Stock, .001 par value, of which 27,437 shares are designed as
Series A Convertible Preferred Stock, all of which are issued and outstanding.

This opinion is intended solely for your benefit and is not to be made available
to or be relied upon by any other person, firm or entity without our prior
written consent.

Very truly yours,

COOLEY GODWARD LLP

EX-10.58

                                                                   Exhibit 10.58

                          REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (this "Agreement") is made
and entered into as of November 7, 2003, by and among First Virtual
Communications, Inc., a Delaware corporation (the "Company"), and the purchasers
named on the Schedule of Purchasers attached hereto as Exhibit A (each such
purchaser, a "Purchaser" and collectively, the "Purchasers").

                  This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers (the
"Purchase Agreement").

                  The Company and the Purchasers hereby agree as follows:

         1.       Definitions. Capitalized terms used and not otherwise defined
herein that are defined in the Purchase Agreement shall have the meanings given
such terms in the Purchase Agreement. As used in this Agreement, the following
terms shall have the following meanings:

                  "Advice" shall have the meaning set forth in Section 6(d).

                  "Effectiveness Date" means, with respect to the Registration
         Statement required to be filed hereunder, the earlier of (a) the 90th
         calendar day following the date of the Filing Date, and (b) the fifth
         Trading Day following the date on which the Company is notified by the
         Commission that the Registration Statement will not be reviewed or is
         no longer subject to further review and comments.

                  "Effectiveness Period" shall have the meaning set forth in
         Section 2(a).

                  "Event" shall have the meaning set fort in Section 2(b).

                  "Event Date" shall have the meaning set forth in Section 2(b).

                  "Filing Date" means, with respect to the Registration
         Statement required to be filed hereunder, the 30th calendar day
         following the Closing Date.

                  "Holder" or "Holders" means the holder or holders, as the case
         may be, from time to time of Registrable Securities.

                  "Indemnified Party" shall have the meaning set forth in
         Section 5(c).

                  "Indemnifying Party" shall have the meaning set forth in
         Section 5(c).

                  "Losses" shall have the meaning set forth in Section 5(a).

                  "Proceeding" means an action, claim, suit, investigation or
         proceeding (including, without limitation, an investigation or partial
         proceeding, such as a deposition), whether commenced or threatened in
         writing.

                                       1


                  "Prospectus" means the prospectus included in the Registration
         Statement (including, without limitation, a prospectus that includes
         any information previously omitted from a prospectus filed as part of
         an effective registration statement in reliance upon Rule 430A
         promulgated under the Securities Act), as amended or supplemented by
         any prospectus supplement, with respect to the terms of the offering of
         any portion of the Registrable Securities covered by the Registration
         Statement, and all other amendments and supplements to the Prospectus,
         including post-effective amendments, and all material incorporated by
         reference in such Prospectus.

                  "Registrable Securities" means all of the Shares and the
         Warrant Shares, together with any shares of Common Stock issued or
         issuable upon any stock split, dividend or other distribution,
         recapitalization or similar event with respect to the foregoing;
         provided, however, that a security ceases to be a Registrable Security
         when it: (i) has been registered pursuant to an effective registration
         statement under the Securities Act and sold in a manner contemplated by
         the Registration Statement, or (ii) has been transferred in compliance
         with Rule 144 under the Securities Act (or any successor provision
         thereto) or is transferable pursuant to paragraph (k) of such Rule 144
         (or any successor provision thereto).

                  "Registration Statement" means the registration statements
         required to be filed hereunder, including (in each case) the
         Prospectus, amendments and supplements to the registration statement or
         Prospectus, including pre- and post-effective amendments, all exhibits
         thereto, and all material incorporated by reference in the registration
         statement.

                  "Rule 415" means Rule 415 promulgated by the Commission
         pursuant to the Securities Act, as such Rule may be amended from time
         to time, or any similar rule or regulation hereafter adopted by the
         Commission having substantially the same purpose and effect as such
         Rule.

                  "Rule 424" means Rule 424 promulgated by the Commission
         pursuant to the Securities Act, as such Rule may be amended from time
         to time, or any similar rule or regulation hereafter adopted by the
         Commission having substantially the same purpose and effect as such
         Rule.

         2.       Registration.

                  (a)      On or prior to the Filing Date, the Company shall
         prepare and file with the Commission the Registration Statement
         covering the resale of all of the Registrable Securities for an
         offering to be made on a continuous basis pursuant to Rule 415. The
         Registration Statement required hereunder shall be on Form S-3 (except
         if the Company is not then eligible to register for resale the
         Registrable Securities on Form S-3, in which case the Registration
         shall be on another appropriate form in accordance herewith). The
         Registration Statement required hereunder shall contain (except if
         otherwise directed by the Holders) substantially the "Plan of
         Distribution" attached hereto as Annex A. Subject to the terms of this
         Agreement, the Company shall use commercially reasonable efforts to
         cause the Registration Statement to be declared effective under the
         Securities Act as promptly as possible after the filing thereof, but in
         any event not later than the Effectiveness Date, and shall use
         commercially reasonable efforts to keep the Registration Statement
         continuously effective, subject to Sections 3(c), 3(i) and 6(d) below,
         under the Securities Act until the date when all Registrable Securities
         covered by the Registration Statement have been sold or may

                                       2


         be sold without volume restrictions pursuant to Rule 144(k) as
         determined by the counsel to the Company pursuant to a written opinion
         letter to such effect, addressed and acceptable to the Company's
         transfer agent and the affected Holders (the "Effectiveness Period").

                  (b)      If: (i) a Registration Statement is not filed on or
         prior to the Filing Date (if the Company files a Registration Statement
         without complying with Section 3(a), the Company shall not be deemed to
         have satisfied this clause (i)), or (ii) the Company fails to file with
         the Commission a request for acceleration in accordance with Rule 461
         promulgated under the Securities Act, within five Trading Days of the
         date that the Company is notified (orally or in writing, whichever is
         earlier) by the Commission that a Registration Statement will not be
         "reviewed," or is not subject to further review (unless the Company
         provides notice to the Holders of a circumstance contemplated by
         Section 3(c)(vi) that would make it appropriate to suspend the filing
         of the Registration Statement and the related Prospectus for a
         reasonable period of time not to exceed 10 Trading Days), or (iii)
         prior to the date when such Registration Statement is first declared
         effective by the Commission, the Company fails to file a pre-effective
         amendment and otherwise respond in writing to comments made by the
         Commission in respect of such Registration Statement within 15 Trading
         Days after the receipt of comments by or notice from the Commission
         that such amendment is required in order for a Registration Statement
         to be declared effective, or (iv) a Registration Statement filed or
         required to be filed hereunder is not declared effective by the
         Commission on or before the Effectiveness Date, or (v) after a
         Registration Statement is first declared effective by the Commission,
         it ceases for any reason to remain continuously effective as to all
         Registrable Securities for which it is required to be effective, or the
         Holders are not permitted to utilize the Prospectus therein to resell
         such Registrable Securities, for in any such case 15 consecutive days
         but no more than an aggregate of 30 days during any 12 month period
         (which need not be consecutive Trading Days)(any such failure or breach
         being referred to as an "Event," and for purposes of clause (i) or (iv)
         the date on which such Event occurs, or for purposes of clause (ii) the
         date on which such five Trading Day period (or, if there is a delay in
         filing as a result of a circumstance contemplated by Section 3(c)(vi),
         10 Trading Day period) is exceeded, or for purposes of clause (iii) the
         date which such 15 Trading Day period is exceeded, or for purposes of
         clause (v) the date on which such 15 or 30 day period, as applicable,
         is exceeded being referred to as "Event Date"), then in addition to any
         other rights the Holders may have hereunder or under applicable law:
         (x) on each such Event Date the Company shall pay to each Holder an
         amount in cash, as liquidated damages and not as a penalty, equal to
         1.5% of the aggregate purchase price paid by such Holder pursuant to
         the Purchase Agreement for any Registrable Securities then held by such
         Holder; and (y) on each monthly anniversary of each such Event Date (if
         the applicable Event shall not have been cured by such date) until the
         applicable Event is cured, the Company shall pay to each Holder an
         amount in cash, as liquidated damages and not as a penalty, equal to
         1.5% of the aggregate purchase price paid by such Holder pursuant to
         the Purchase Agreement for any Registrable Securities then held by such
         Holder; provided, however, that under no circumstances shall the
         Company be required to pay hereunder to any Holder during any one month
         period in excess of an aggregate of 1.5% of the aggregate purchase
         price paid by such Holder pursuant to the Purchase Agreement for any
         Registrable Securities then held by such Holder. If the Company fails
         to pay any liquidated damages pursuant to this Section 2(b) in full
         within 10 Trading Days after the date payable, the Company will pay
         interest thereon at a rate of 15% per annum (or such lesser maximum
         amount that is permitted to be paid by applicable law) to the Holder,
         accruing daily from the date such liquidated damages are due until such
         amounts, plus all such interest thereon, are paid in full. The
         liquidated damages pursuant to the terms

                                       3


         hereof shall apply on a daily pro-rata basis for any portion of a month
         prior to the cure of an Event.

         3.       Registration Procedures

                  In connection with the Company's registration obligations
hereunder, the Company shall:

                  (a)      Not less than five Trading Days prior to the filing
         of the Registration Statement or two days prior to the filing of any
         related Prospectus or any amendment or supplement thereto, the Company
         shall, (i) furnish to the Holders copies of all such documents proposed
         to be filed (including documents incorporated or deemed incorporated by
         reference to the extent requested by such Person) which documents will
         be subject to the review of such Holders, and (ii) cause its officers
         and directors, counsel and independent certified public accountants to
         respond to such reasonable inquiries as shall be necessary, in the
         reasonable opinion of respective counsel to conduct a reasonable
         investigation within the meaning of the Securities Act. The Company
         shall not file the Registration Statement or any such Prospectus or any
         amendments or supplements thereto to which the Holders of a majority of
         the Registrable Securities then held by all Holders shall reasonably
         object in good faith, provided that the Company is notified of such
         objection in writing prior to the date 2 Trading Days after the Holders
         have been so furnished copies of such documents proposed to be filed.
         If the Company fails to file a Registration Statement or any such
         prospectus or any amendments or supplements thereto so as to give rise
         to an Event contemplated by Section 2(b) as a result of the Holders
         objection to the filing of the Registration Statement, the Company
         shall not be required to pay any liquidated damages contemplated by
         Section 2(b) with respect to such Event for any delay resulting from
         the Holder's objection to such filing.; provided, however, if it is
         later determined that such objections were reasonable and in good
         faith, the Company shall be required to pay such liquidated damages
         contemplated by Section 2(b) with respect to such Event.

                  (b)      (i) Prepare and file with the Commission such
         amendments, including post-effective amendments, to the Registration
         Statement and the Prospectus used in connection therewith as may be
         necessary to keep the Registration Statement continuously effective as
         to the applicable Registrable Securities for the Effectiveness Period;
         (ii) cause the related Prospectus to be amended or supplemented by any
         required Prospectus supplement, and as so supplemented or amended to be
         filed pursuant to Rule 424; (iii) reasonable efforts to respond as
         promptly as reasonably practicable to any comments received from the
         Commission with respect to the Registration Statement or any amendment
         thereto and, as promptly as reasonably possible, upon request, provide
         the Holders true and complete copies of all correspondence from and to
         the Commission relating to the Registration Statement; and (iv) comply
         in all material respects with the provisions of the Securities Act and
         the Exchange Act with respect to the disposition of all Registrable
         Securities covered by the Registration Statement during the applicable
         period in accordance with the intended methods of disposition by the
         Holders thereof set forth in the Registration Statement as so amended
         or in such Prospectus as so supplemented.

                  (c)      Notify the Holders of Registrable Securities to be
         sold as promptly as reasonably possible and (if requested by any such
         Person) confirm such notice in writing promptly following the day
         (i)(A) when a Prospectus or any Prospectus supplement or

                                       4


         post-effective amendment to the Registration Statement is proposed to
         be filed; (B) the Commission notifies the Company that there will be a
         "review" of the Registration Statement and if the Commission comments
         in writing on the Registration Statement (the Company shall upon
         request provide true and complete copies thereof and all written
         responses thereto to each of the Holders); and (C) with respect to the
         Registration Statement or any post-effective amendment, when the same
         has become effective; (ii) of any request by the Commission or any
         other Federal or state governmental authority during the period of
         effectiveness of the Registration Statement for amendments or
         supplements to the Registration Statement or Prospectus or for
         additional information with respect to the Registration Statement;
         (iii) of the issuance by the Commission or any other federal or state
         governmental authority of any stop order suspending the effectiveness
         of the Registration Statement covering any or all of the Registrable
         Securities or the initiation of any Proceedings for that purpose; (iv)
         of the receipt by the Company of any notification with respect to the
         suspension of the qualification or exemption from qualification of any
         of the Registrable Securities for sale in any jurisdiction, or the
         initiation or threatening of any Proceeding for such purpose; and (v)
         of the occurrence of any event or passage of time that makes the
         financial statements included in the Registration Statement ineligible
         for inclusion therein or any statement made in the Registration
         Statement or Prospectus or any document incorporated or deemed to be
         incorporated therein by reference untrue in any material respect or
         that requires any revisions to the Registration Statement, Prospectus
         or other documents so that, in the case of the Registration Statement
         or the Prospectus, as the case may be, it will not contain any untrue
         statement of a material fact or omit to state any material fact
         required to be stated therein or necessary to make the statements
         therein, in light of the circumstances under which they were made, not
         misleading, or (vi) of the occurrence or existence of a pending
         corporate development or other material non-public information
         concerning the Company that, in the reasonable discretion of the
         Company, makes it appropriate to suspend the availability of the
         Registration Statement and the related Prospectus.

                  (d)      Use commercially reasonable efforts to avoid the
         issuance of, or, if issued, obtain the withdrawal of (i) any order
         suspending the effectiveness of the Registration Statement, or (ii) any
         suspension of the qualification (or exemption from qualification) of
         any of the Registrable Securities for sale in any jurisdiction, as soon
         as reasonably practicable.

                  (e)      Furnish to each Holder, without charge, at least one
         conformed copy of the Registration Statement and each amendment
         thereto, including financial statements and schedules, all documents
         incorporated or deemed to be incorporated therein by reference to the
         extent requested by such Person, and all exhibits to the extent
         requested by such Person (including those previously furnished or
         incorporated by reference) promptly after the filing of such documents
         with the Commission.

                  (f)      Upon request, promptly deliver to each Holder,
         without charge, as many copies of the Prospectus or Prospectuses
         (including each form of prospectus) and each amendment or supplement
         thereto as such Persons may reasonably request in connection with
         resales by the Holder of Registrable Securities. Subject to the terms
         of this Agreement, the Company hereby consents to the use of such
         Prospectus and each amendment or supplement thereto by each of the
         selling Holders in connection with the offering and sale of the
         Registrable Securities covered by such Prospectus and any amendment or
         supplement thereto, except after the giving of any notice pursuant to
         clauses (ii) through (vii) of Section 3(c).

                                       5


                  (g)      Prior to any resale of Registrable Securities by a
         Holder, use its commercially reasonable efforts to register or qualify
         or cooperate with the selling Holders in connection with the
         registration or qualification (or exemption from the Registration or
         qualification) of such Registrable Securities for the resale by the
         Holder under the securities or Blue Sky laws of such jurisdictions
         within the United States as any Holder reasonably requests in writing,
         to keep each such Registration or qualification (or exemption
         therefrom) effective during the Effectiveness Period and to do any and
         all other acts or things reasonably necessary to enable the disposition
         in such jurisdictions of the Registrable Securities covered by the
         Registration Statement; provided, that the Company shall not be
         required to qualify generally to do business in any jurisdiction where
         it is not then so qualified, subject the Company to any material tax in
         any such jurisdiction where it is not then so subject or file a general
         consent to service of process in any such jurisdiction.

                  (h)      If requested by the Holders, cooperate with the
         Holders to facilitate the timely preparation and delivery of
         certificates representing Registrable Securities to be delivered to a
         transferee pursuant to the Registration Statement, which certificates
         shall be free, to the extent permitted by the Purchase Agreement and
         applicable state and federal securities laws, of all restrictive
         legends, and to enable such Registrable Securities to be in such
         denominations and registered in such names as any such Holders may
         request.

                  (i)      Upon the occurrence of any event contemplated by
         Section 3(c)(v), as promptly as reasonably possible, prepare a
         supplement or amendment, including a post-effective amendment, to the
         Registration Statement or a supplement to the related Prospectus or any
         document incorporated or deemed to be incorporated therein by
         reference, and file any other required document so that, as thereafter
         delivered, neither the Registration Statement nor such Prospectus will
         contain an untrue statement of a material fact or omit to state a
         material fact required to be stated therein or necessary to make the
         statements therein, in light of the circumstances under which they were
         made, not misleading. If the Company notifies the Holders in accordance
         with clauses (ii) through (vi) of Section 3(c) above to suspend the use
         of the use of any Prospectus until the requisite changes to such
         Prospectus have been made, then the Holders shall suspend use of such
         Prospectus. The Company will use its best efforts to ensure that the
         use of the Prospectus may be resumed as promptly as is practicable. The
         Company shall be entitled to exercise its right under this Section 3(i)
         to suspend the availability of a Registration Statement and Prospectus,
         subject to the payment of liquidated damages pursuant to Section 2(b),
         for a period not to exceed 60 consecutive days or for multiple periods
         not to exceed 90 days in the aggregate in any 12 month period.

                  (j)      Comply with all applicable rules and regulations of
         the Commission.

                  (k)      The Company may require each Holder to furnish to the
         Company a certified statement as to the number of shares of Common
         Stock beneficially owned by such Holder and the person thereof that has
         voting and dispositive control over the Shares. During any periods that
         the Company is unable to meet its obligations hereunder with respect to
         the registration of the Registrable Securities solely because any
         Holder fails to furnish such information within three Trading Days of
         the Company's request, any liquidated damages that are accruing at such
         time or that result from such delay shall be tolled and any Event that
         may otherwise occur solely because of such delay shall be suspended,
         until such information is delivered to the Company.

                                       6


         4.       Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the Trading Market on which the Common Stock is then
listed for trading, and (B) in compliance with applicable state securities or
Blue Sky laws), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is reasonably requested by the holders of a
majority of the Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions or, except to the extent
provided for in the Transaction Documents, any legal fees or other costs of the
Holders.

         5.       Indemnification

                  (a)      Indemnification by the Company. The Company shall,
         notwithstanding any termination of this Agreement, indemnify and hold
         harmless each Holder, the officers, directors, agents and employees of
         each of them, each Person who controls any such Holder (within the
         meaning of Section 15 of the Securities Act or Section 20 of the
         Exchange Act) and the officers, directors, agents and employees of each
         such controlling Person, to the fullest extent permitted by applicable
         law, from and against any and all losses, claims, damages, liabilities,
         costs (including, without limitation, reasonable attorneys' fees) and
         expenses (collectively, "Losses"), as incurred, arising out of or
         relating to any untrue or alleged untrue statement of a material fact
         contained in the Registration Statement, any Prospectus or any form of
         prospectus or in any amendment or supplement thereto or in any
         preliminary prospectus, pursuant to which Registrable Securities were
         registered under the Securities Act or arising out of or relating to
         any omission or alleged omission of a material fact required to be
         stated therein or necessary to make the statements therein (in the case
         of any Prospectus or form of prospectus or supplement thereto, in light
         of the circumstances under which they were made) not misleading, except
         to the extent, but only to the extent, that (i) such untrue statements
         or omissions or alleged untrue statements or omissions are based upon
         information regarding such Holder furnished in writing to the Company
         by such Holder for use therein, or to the extent that such information
         relates to such Holder or such Holder's proposed method of distribution
         of Registrable Securities and was reviewed and expressly approved in
         writing by such Holder for use in the Registration Statement, such
         Prospectus or such form of Prospectus or in any amendment or supplement
         thereto (it being understood that the Holder has approved Annex A
         hereto for this purpose) or (ii) in the case of an occurrence of an
         event of the type specified in Section 3(c)(ii)-(v), the use by such
         Holder of an outdated or defective Prospectus after the Company has
         notified such Holder in writing that the Prospectus is outdated or
         defective and prior to the receipt by such Holder of the Advice

                                       7


         contemplated in Section 6(d). The Company shall notify the Holders
         promptly of the institution, threat or assertion of any Proceeding of
         which the Company is aware in connection with the transactions
         contemplated by this Agreement.

                  (b)      Indemnification by Holders. Each Holder shall,
         severally and not jointly, indemnify and hold harmless the Company, its
         directors, officers, agents and employees, each Person who controls the
         Company (within the meaning of Section 15 of the Securities Act and
         Section 20 of the Exchange Act), and the directors, officers, agents or
         employees of such controlling Persons, to the fullest extent permitted
         by applicable law, from and against all Losses, as incurred, to the
         extent arising out of or based upon: (x) such Holder's failure to
         comply with the prospectus delivery requirements of the Securities Act
         or (y) any untrue or alleged untrue statement of a material fact
         contained in any Registration Statement, any Prospectus, or any form of
         prospectus, or in any amendment or supplement thereto or in any
         preliminary prospectus, or arising out of or relating to any omission
         or alleged omission of a material fact required to be stated therein or
         necessary to make the statements therein not misleading (i) to the
         extent, but only to the extent, that such untrue statement or omission
         is contained in any information so furnished in writing by such Holder
         to the Company for inclusion in the Registration Statement or such
         Prospectus or (ii) to the extent that (1) such untrue statements or
         omissions are based upon information regarding such Holder furnished in
         writing to the Company by such Holder for use therein, or to the extent
         that such information relates to such Holder or such Holder's proposed
         method of distribution of Registrable Securities and was reviewed and
         approved in writing by such Holder for use in the Registration
         Statement (it being understood that the Holder has approved Annex A
         hereto for this purpose), such Prospectus or such form of Prospectus or
         in any amendment or supplement thereto or (2) in the case of an
         occurrence of an event of the type specified in Section 3(c)(ii)-(vi),
         the use by such Holder of an outdated or defective Prospectus after the
         Company has notified such Holder in writing that the Prospectus is
         outdated or defective and prior to the receipt by such Holder of the
         Advice contemplated in Section 6(d). In no event shall the liability of
         any selling Holder hereunder be greater in amount than the dollar
         amount of the gross proceeds received by such Holder upon the sale of
         the Registrable Securities giving rise to such indemnification
         obligation.

                  (c)      Conduct of Indemnification Proceedings. If any
         Proceeding shall be brought or asserted against any Person entitled to
         indemnity hereunder (an "Indemnified Party"), such Indemnified Party
         shall promptly notify the Person from whom indemnity is sought (the
         "Indemnifying Party") in writing, and the Indemnifying Party shall have
         the right to assume the defense thereof, including the employment of
         counsel reasonably satisfactory to the Indemnified Party and the
         payment of all fees and expenses incurred in connection with defense
         thereof; provided, that the failure of any Indemnified Party to give
         such notice shall not relieve the Indemnifying Party of its obligations
         or liabilities pursuant to this Agreement, except (and only) to the
         extent that it shall be finally determined by a court of competent
         jurisdiction (which determination is not subject to appeal or further
         review) that such failure shall have prejudiced the Indemnifying Party.

                  An Indemnified Party shall have the right to employ separate
         counsel in any such Proceeding and to participate in the defense
         thereof, but the fees and expenses of such counsel shall be at the
         expense of such Indemnified Party or Parties unless: (1) the
         Indemnifying Party has agreed in writing to pay such fees and expenses;
         (2) the Indemnifying Party shall have failed promptly to assume the
         defense of such Proceeding and to employ

                                       8


         counsel reasonably satisfactory to such Indemnified Party in any such
         Proceeding; or (3) the named parties to any such Proceeding (including
         any impleaded parties) include both such Indemnified Party and the
         Indemnifying Party, and such Indemnified Party shall reasonably believe
         that a material conflict of interest is likely to exist if the same
         counsel were to represent such Indemnified Party and the Indemnifying
         Party (in which case, if such Indemnified Party notifies the
         Indemnifying Party in writing that it elects to employ separate counsel
         at the expense of the Indemnifying Party, the Indemnifying Party shall
         not have the right to assume the defense thereof and the reasonable
         fees and expenses of one separate counsel shall be at the expense of
         the Indemnifying Party). The Indemnifying Party shall not be liable for
         any settlement of any such Proceeding effected without its written
         consent, which consent shall not be unreasonably withheld. No
         Indemnifying Party shall, without the prior written consent of the
         Indemnified Party, effect any settlement of any pending Proceeding in
         respect of which any Indemnified Party is a party, unless such
         settlement includes an unconditional release of such Indemnified Party
         from all liability on claims that are the subject matter of such
         Proceeding.

                  Subject to the terms of this Agreement, all reasonable fees
         and expenses of the Indemnified Party (including reasonable fees and
         expenses to the extent incurred in connection with investigating or
         preparing to defend such Proceeding in a manner not inconsistent with
         this Section) shall be paid to the Indemnified Party, as incurred,
         within ten Trading Days of written notice thereof to the Indemnifying
         Party; provided, that the Indemnified Party shall promptly reimburse
         the Indemnifying Party for that portion of such fees and expenses
         applicable to such actions for which such Indemnified Party is not
         entitled to indemnification hereunder, determined based upon the
         relative faults of the parties.

                  (d)      Contribution. If a claim for indemnification under
         Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason
         of public policy or otherwise), then each Indemnifying Party, in lieu
         of indemnifying such Indemnified Party, shall contribute to the amount
         paid or payable by such Indemnified Party as a result of such Losses,
         in such proportion as is appropriate to reflect the relative fault of
         the Indemnifying Party and Indemnified Party in connection with the
         actions, statements or omissions that resulted in such Losses as well
         as any other relevant equitable considerations. The relative fault of
         such Indemnifying Party and Indemnified Party shall be determined by
         reference to, among other things, whether any action in question,
         including any untrue or alleged untrue statement of a material fact or
         omission or alleged omission of a material fact, has been taken or made
         by, or relates to information supplied by, such Indemnifying Party or
         Indemnified Party, and the parties' relative intent, knowledge, access
         to information and opportunity to correct or prevent such action,
         statement or omission. The amount paid or payable by a party as a
         result of any Losses shall be deemed to include, subject to the
         limitations set forth in this Agreement, any reasonable attorneys' or
         other reasonable fees or expenses incurred by such party in connection
         with any Proceeding to the extent such party would have been
         indemnified for such fees or expenses if the indemnification provided
         for in this Section was available to such party in accordance with its
         terms.

                  The parties hereto agree that it would not be just and
         equitable if contribution pursuant to this Section 5(d) were determined
         by pro rata allocation or by any other method of allocation that does
         not take into account the equitable considerations referred to in the
         immediately preceding paragraph. Notwithstanding the provisions of this
         Section 5(d), no Holder shall be required to contribute, in the
         aggregate, any amount in excess of the amount

                                       9


         by which the proceeds actually received by such Holder from the sale of
         the Registrable Securities subject to the Proceeding exceeds the amount
         of any damages that such Holder has otherwise been required to pay by
         reason of such untrue or alleged untrue statement or omission or
         alleged omission, except in the case of fraud by such Holder.

                  The indemnity and contribution agreements contained in this
         Section are in addition to any liability that the Indemnifying Parties
         may have to the Indemnified Parties.

         6.       Miscellaneous

                  (a)      Remedies. In the event of a breach by the Company or
         by a Holder, of any of their obligations under this Agreement, each
         Holder or the Company, as the case may be, in addition to being
         entitled to exercise all rights granted by law and under this
         Agreement, including recovery of damages, will be entitled to specific
         performance of its rights under this Agreement. The Company and each
         Holder agree that monetary damages would not provide adequate
         compensation for any losses incurred by reason of a breach by it of any
         of the provisions of this Agreement and hereby further agrees that, in
         the event of any action for specific performance in respect of such
         breach, it shall waive the defense that a remedy at law would be
         adequate.

                  (b)      No Piggyback on Registrations. Except as set forth on
         Schedule 6(b) attached hereto, neither the Company nor any of its
         security holders (other than the Holders in such capacity pursuant
         hereto) may include securities of the Company in a Registration
         Statement other than the Registrable Securities, and the Company shall
         not after the date hereof enter into any agreement providing any such
         right to any of its security holders. Except as set forth on Schedule
         6(b), no Person has any right to cause the Company to effect the
         registration under the Securities Act of any securities of the Company.
         The Company shall not file any other registration statement (other than
         a registration statement on Form S-8) until after the Effective Date.

                  (c)      Compliance. Each Holder covenants and agrees that it
         will comply with the prospectus delivery requirements of the Securities
         Act as applicable to it in connection with sales of Registrable
         Securities pursuant to the Registration Statement.

                  (d)      Discontinued Disposition. Each Holder agrees by its
         acquisition of such Registrable Securities that, upon receipt of a
         notice from the Company of the occurrence of any event of the kind
         described in Section 3(c), such Holder will forthwith discontinue
         disposition of such Registrable Securities under the Registration
         Statement until such Holder's receipt of the copies of the supplemented
         Prospectus and/or amended Registration Statement or until it is advised
         in writing (the "Advice") by the Company that the use of the applicable
         Prospectus may be resumed, and, in either case, has received copies of
         any additional or supplemental filings that are incorporated or deemed
         to be incorporated by reference in such Prospectus or Registration
         Statement. The Company will use its best efforts to ensure that the use
         of the Prospectus may be resumed as promptly as it practicable. The
         Company agrees and acknowledges that any periods during which the
         Holder is required to discontinue the disposition of the Registrable
         Securities hereunder shall be subject to the provisions of Section
         2(b).

                                       10


                  (e)      Piggy-Back Registrations. If at any time during the
         Effectiveness Period there is not an effective Registration Statement
         covering all of the Registrable Securities and the Company shall
         determine to prepare and file with the Commission a registration
         statement relating to an offering for its own account or the account of
         others under the Securities Act of any of its equity securities, other
         than on Form S-4 or Form S-8 (each as promulgated under the Securities
         Act) or their then equivalents relating to equity securities to be
         issued solely in connection with any acquisition of any entity or
         business or equity securities issuable in connection with the stock
         option or other employee benefit plans, then the Company shall send to
         each Holder a written notice of such determination and, if within
         fifteen days after the date of such notice, any such Holder shall so
         request in writing, the Company shall include in such registration
         statement all or any part of such Registrable Securities such Holder
         requests to be registered, subject to customary underwriter cutbacks
         applicable to all holders of registration rights.

                  (f)      Amendments and Waivers. The provisions of this
         Agreement, including the provisions of this sentence, may not be
         amended, modified or supplemented, and waivers or consents to
         departures from the provisions hereof may not be given, unless the same
         shall be in writing and signed by the Company and each Holder of the
         then outstanding Registrable Securities.

                  (g)      Notices. Any and all notices or other communications
         or deliveries required or permitted to be provided hereunder shall be
         made in accordance with the provisions of the Purchase Agreement.

                  (h)      Successors and Assigns. This Agreement shall inure to
         the benefit of and be binding upon the successors and permitted assigns
         of each of the parties and shall inure to the benefit of each Holder.
         Each Holder may assign their respective rights hereunder in the manner
         and to the Persons as permitted under the Purchase Agreement.

                  (i)      Execution and Counterparts. This Agreement may be
         executed in any number of counterparts, each of which when so executed
         shall be deemed to be an original and, all of which taken together
         shall constitute one and the same Agreement. In the event that any
         signature is delivered by facsimile transmission, such signature shall
         create a valid binding obligation of the party executing (or on whose
         behalf such signature is executed) the same with the same force and
         effect as if such facsimile signature were the original thereof.

                  (j)      Governing Law. All questions concerning the
         construction, validity, enforcement and interpretation of this
         Agreement shall be determined with the provisions of the Purchase
         Agreement.

                  (k)      Cumulative Remedies. The remedies provided herein are
         cumulative and not exclusive of any remedies provided by law.

                  (l)      Severability. If any term, provision, covenant or
         restriction of this Agreement is held by a court of competent
         jurisdiction to be invalid, illegal, void or unenforceable, the
         remainder of the terms, provisions, covenants and restrictions set
         forth herein shall remain in full force and effect and shall in no way
         be affected, impaired or invalidated, and the parties hereto shall use
         their commercially reasonable efforts to find and employ an alternative
         means to achieve the same or substantially the same result as that
         contemplated by such term,

                                       11


         provision, covenant or restriction. It is hereby stipulated and
         declared to be the intention of the parties that they would have
         executed the remaining terms, provisions, covenants and restrictions
         without including any of such that may be hereafter declared invalid,
         illegal, void or unenforceable.

                  (m)      Headings. The headings in this Agreement are for
         convenience of reference only and shall not limit or otherwise affect
         the meaning hereof.

                  (n)      Independent Nature of Purchasers' Obligations and
         Rights. The obligations of each Holder hereunder are several and not
         joint with the obligations of any other Holder hereunder, and no Holder
         shall be responsible in any way for the performance of the obligations
         of any other Holder hereunder. Nothing contained herein or in any other
         agreement or document delivered at any closing, and no action taken by
         any Holder pursuant hereto or thereto, shall be deemed to constitute
         the Holders as a partnership, an association, a joint venture or any
         other kind of entity, or create a presumption that the Holders are in
         any way acting in concert with respect to such obligations or the
         transactions contemplated by this Agreement. Each Holder shall be
         entitled to protect and enforce its rights, including without
         limitation the rights arising out of this Agreement, and it shall not
         be necessary for any other Holder to be joined as an additional party
         in any proceeding for such purpose.

                           *************************

                                       12


                                                                       EXHIBIT A

                  IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.

                                            FIRST VIRTUAL COMMUNICATIONS, INC.

                                            By: /s/ Truman Cole
                                               _______________________________
                                                     Name:
                                                     Title:

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]

                                       13



                    [PURCHASER'S SIGNATURE PAGE TO FVCX RRA]

                                   [PURCHASER]

                                    By: _____________________________________
                                           Name:
                                           Title:

                      [PURCHASERS' SIGNATURE PAGE FOLLOWS]

                                       14



                    [PURCHASER'S SIGNATURE PAGE TO FVCX RRA]

[PURCHASER]

By:_____________________________________
       Name:
       Title:

                                       15



                                  SCHEDULE 6(b)

         The Company has outstanding obligations to register securities of the
Company as follows: (i) the Company is obligated to register 642,921 shares of
Common Stock that were issued to Net One Systems Co., Ltd. ("Net One") in early
October 2003 pursuant to that certain Equity Investment Agreement dated
September 30, 2003 by and between the Company and Net One; (ii) the Company has
certain obligations pursuant to that certain Registration Rights Agreement dated
as of June 2000, by and between the Company and Vulcan Inc., to register the
shares of common stock issuable upon conversion of the Series A Preferred Stock
and upon exercise of a warrant to purchase common stock held by Vulcan, Inc.;
(iii) the Company has certain obligations pursuant to that certain Registration
Rights Agreement dated as of April 12, 2002, by and among the Company and the
investors referenced therein, and (iv) the Company is obligated to register any
shares that may be issued to Ralph Ungermann, Executive Chairman of the
Company's Board of Directors, pursuant to that certain Private Equity Line
Financing Agreement dated as of April 14, 2003 between the Company and Mr.
Ungermann. The Company intends to include the 642,921 shares issued to Net One
pursuant to the Equity Investment Agreement referenced above on the Registration
Statement.

                                       16



                                     ANNEX A

                              Plan of Distribution

         The Selling Stockholders (the "Selling Stockholders") of the common
stock ("Common Stock") of First Virtual Communications, Inc. (the "Company") and
any of their pledgees, assignees and successors-in-interest may, from time to
time, sell any or all of their shares of Common Stock on the Nasdaq SmallCap
Market or any other stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:

                  -        ordinary brokerage transactions and transactions in
                           which the broker-dealer solicits purchasers, which
                           may include long sales or short sales effected after
                           the effective date of the prospectus of which this
                           registration statement is a part;

                  -        block trades in which the broker-dealer will attempt
                           to sell the shares as agent but may position and
                           resell a portion of the block as principal to
                           facilitate the transaction;

                  -        purchases by a broker-dealer as principal and resale
                           by the broker-dealer for its account;

                  -        an exchange distribution in accordance with the rules
                           of the applicable exchange;

                  -        privately negotiated transactions;

                  -        "at the market" or through market makers or into an
                           existing market for the shares

                  -        broker-dealers may agree with the Selling
                           Stockholders to sell a specified number of such
                           shares at a stipulated price per share;

                  -        a combination of any such methods of sale;

                  -        through the writing or settlement of options or other
                           hedging transactions, whether through an options
                           exchange or otherwise; or

                  -        any other method permitted pursuant to applicable
                           law.

         The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.

         Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

         In connection with the sale of our common stock or interests therein,
the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume.

                                       17


The Selling Stockholders may also sell shares of our common stock short and
deliver these securities to close out their short positions, or loan or pledge
the common stock to broker-dealers that in turn may sell these securities. The
Selling Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).

         The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each of the Selling
Stockholders have informed the Company that it does not have any agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock. Some of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for the Company in the
ordinary course of business.

         The Company is required to pay certain fees and expenses incurred by
the Company incident to the registration of the shares, including all reasonable
costs and expenses incurred by us or the Selling Stockholders and all
registration and filing fees and legal fees and accounting fees.

         The Company has agreed to indemnify the Selling Stockholders and
certain control and other related persons related to the foregoing persons
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act. The Selling Stockholders have agreed to indemnify the
Company in certain circumstances, as well as certain related persons, against
certain liabilities, including liabilities under the Securities Act.

         The Selling Stockholders are not obligated to, and there is no
assurance that the Selling Stockholders will, sell any or all of the shares
being offered by this prospectus.

        The Company has agreed with the Selling Stockholders to keep the
registration statement effective until the shares being offered by this
prospectus may be sold without registration or restriction pursuant to Rule
144(k) promulgated under the Securities Act, or, if earlier, until the
distribution contemplated in this prospectus has been completed.

                                       18



                                    EXHIBIT A

                                   PURCHASERS



      NAME OF PURCHASER                        NUMBER OF SHARES     NUMBER OF WARRANTS
- --------------------------------------------------------------------------------------
                                                              
LAGUNITAS PARTNERS LP                               837,989               418,994
- ---------------------------------------------------------------------------------
J. Patterson McBaine                                111,732                55,806
- ---------------------------------------------------------------------------------
Jon D. Gruber & Linda W. Gruber                     111,732                55,866
- ---------------------------------------------------------------------------------
Gruber & McBaine International                      279,330               139,665
- ---------------------------------------------------------------------------------
Special Situations Fund III, L.P.                   553,771               276,885
- ---------------------------------------------------------------------------------
Special Situations Cayman Fund L.P.                 178,911                89,455
- ---------------------------------------------------------------------------------
Special Situations Technology Fund L.P.              17,039                 8,519
- ---------------------------------------------------------------------------------
Special Situations Technology Fund II L.P.          102,235                51,117
- ---------------------------------------------------------------------------------
MicroCapital Fund L.P.                              391,061               195,530
- ---------------------------------------------------------------------------------
MicroCapital Fund Ltd.                              167,598                83,799
- ---------------------------------------------------------------------------------
Bonanza Fund                                        139,655                69,832
- ---------------------------------------------------------------------------------
Firelake Strategic Technology Fund, L.P.            837,989               418,994
- ---------------------------------------------------------------------------------
Agile Partners, LP                                 279,3320               139,665
- ---------------------------------------------------------------------------------
Behavioral Financial Fund Ltd.                      782,123               391,061
- ---------------------------------------------------------------------------------
Jurika Family Trust                                 167,598                83,799
- ---------------------------------------------------------------------------------
JMK Investment Partners, L.P.                       167,598                83,799
- ---------------------------------------------------------------------------------
Encinal Crossover Fund                               83,799                41,899
- ---------------------------------------------------------------------------------
Neal I. Goldman IRA Rollover                        200,000               100,000
- ---------------------------------------------------------------------------------
Palisades Master Fund L.P.                          279,330               139,665
- ---------------------------------------------------------------------------------


                                       19


                                                                      
- ---------------------------------------------------------------------------------
Gordon J. Roth                                       11,174                 5,587
- ---------------------------------------------------------------------------------
Joseph Paul Schimmelpfennig                          11,174                 5,587
- ---------------------------------------------------------------------------------
John J. Weber                                        11,174                 5,587
- ---------------------------------------------------------------------------------
Jeffrey M. Ng                                         8,380                 4,190
- ---------------------------------------------------------------------------------
Louis J. Ellis                                        1,676                   838
- ---------------------------------------------------------------------------------



                                       20

EX-31.1

                                                                    EXHIBIT 31.1

                                  CERTIFICATION
            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jonathan Morgan, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of First Virtual
Communications, Inc.;

2.       Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

c) disclosed in this quarterly report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

5.       The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls
which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial data and information; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.

         Dated: November 14, 2003          /s/ Jonathan Morgan
                                           -------------------------------------
                                           Jonathan Morgan
                                           President and Chief Executive Officer

EX-31.2

                                                                    EXHIBIT 31.2

                                  CERTIFICATION
            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Truman Cole, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of First Virtual
Communications, Inc.;

2.       Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

c) disclosed in this quarterly report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

5.       The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report financial data and
information; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.

         Dated: November 14, 2003                        /s/ Truman Cole
                                                         -----------------------
                                                         Truman Cole
                                                         Chief Financial Officer

EX-32.1

                                                                    EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    In connection with the Quarterly Report of First Virtual Communications,
Inc. (the Company) on Form 10-Q for the period ending September 30, 2003, as
filed with the Securities and Exchange Commission on or about the date hereof
(the "Report"), I, Jonathan Morgan, President and Chief Executive Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge,
that:

    (1) the Report fully complies with the requirements of Section 13(a) and
Section 15(d) of the Securities Exchange Act of 1934, as amended; and

    (2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company at
the end of the period covered by the Report and results of operations of the
Company for the period covered by the Report.

         Date: November 14, 2003                  /s/ Jonathan Morgan
                                           -------------------------------------
                                                    Jonathan Morgan
                                           President and Chief Executive Officer

    This certification shall not be deemed "filed" for purposes of Section 18 of
the Securities and Exchange Act of 1934, or the Exchange Act, or otherwise
subject to the liability of Section 18 of the Exchange Act. Such certification
shall not be deemed to be incorporated by reference into any filing under the
Securities Act of 1933 or the Exchange Act, except to the extent that the
Company specifically incorporates it by reference.

EX-32.2

                                                                    EXHIBIT 32.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    In connection with the Quarterly Report of First Virtual Communications,
Inc. (the Company) on Form 10-Q for the period ending September 30, 2003, as
filed with the Securities and Exchange Commission on or about the date hereof
(the "Report"), I, Truman Cole, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to the best of my knowledge, that:

    (1) the Report fully complies with the requirements of Section 13(a) and
Section 15(d) of the Securities Exchange Act of 1934, as amended; and

    (2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company at
the end of the period covered by the Report and results of operations of the
Company for the period covered by the Report.

         Date: November 14, 2003                         /s/ Truman Cole
                                                   -----------------------------
                                                           Truman Cole
                                                     Chief Financial Officer

    This certification shall not be deemed "filed" for purposes of Section 18 of
the Securities and Exchange Act of 1934, or the Exchange Act, or otherwise
subject to the liability of Section 18 of the Exchange Act. Such certification
shall not be deemed to be incorporated by reference into any filing under the
Securities Act of 1933 or the Exchange Act, except to the extent that the
Company specifically incorporates it by reference.