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                                                                   EXHIBIT 10.40


                 SEVERANCE AGREEMENT AND RELEASE OF ALL CLAIMS


     This Agreement to Change Status and Release all Claims ("Agreement") is 
made between First Virtual Holdings Incorporated (EMPLOYER) and Carolyn 
Turbyfill (EMPLOYEE) in the complete, final, and binding settlement of all 
claims and potential claims, if any, with respect to their employment 
relationship. This agreement shall be effective June 14, 1998 ("Effective 
Date").

Whereas, Employer has verbally informed Employee that it desires to terminate 
Employee's employment as of the Effective Date, but to ask Employee to consult 
thereafter.

Whereas, Employer will provide Employee with:

(i)    a payment equal to three (3) months salary;

(ii)   accelerated vesting of 100% of the total of options to purchase First 
       Virtual Common Stock held by Employee, as of the Effective Date; and

(iii)  an extension of time to exercise those vested options until June 15, 
       1999.

The parties have agreed as follows:

     All disputes, controversies, and potential disputes or causes of action or 
claims arising out of, or in any way connected with, Employee's employment 
relationship with Employer, whether known or unknown, suspected or unsuspected, 
which the Employee and Employer, its shareholders, officers, assigns, and 
agents, has or may have had against each other are settled.

1.   Employee resigns as Vice President, Engineering and Operations as of the 
Effective Date. The parties acknowledge that Employee is no longer a SEC 
Section 16 officer as of the Effective Date.

2.   Employee represents and warrants, that to the best of her knowledge and 
belief that nothing stated in the Registration Statement on Form S-1 filed with
the Securities and Exchange Commission relating to Employer's initial public
stock offering or the Employer's Form 10K filed for fiscal years 1996 and 1997
or the Employer's Form 10Q filed for first, second, third or fourth quarter of
1997, or the Employer's Form 10Q filed for first quarter of 1998 ("SEC Filings")
was false or inaccurate as of the date of such SEC Filings or failed to state a
fact that when considered in light of all facts and circumstances would be
considered material.

3.   Employer will pay to Employee the total amount of $6,470.51 representing 
vacation pay earned and unused through June 15, 1998, net of applicable 
withholdings, and a refund of moneys paid into the Employee Stock Purchase 
Plan, payable on or before June 30, 1998. Employee agrees and understands that 
this payment and transfer is a full satisfaction of any wages earned, but 
unpaid to date and waives any right under California Labor Code Section 206.5.

4.   Employer will also pay Employee an additional amount of $40,000 
representing three (3) months salary, net of applicable withholdings, payable 
on or before June 30, 1998.



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5.   As of the Effective Date, subject to approval by the Company's Board of 
Directors, the options to purchase Common Stock held by Employee shall be 
exercisable as to the number of shares set forth below for all previously 
existing Option Grants. Employer and Employee agree that as of the Effective 
Date, the Employee is vested in the following options:

<TABLE>
<CAPTION>
   Vesting
Commencement
    Date            Type Granted           Price         Vested and  Exercisable
--------------------------------------------------------------------------------
<S>                    <C>                 <C>                 <C>
4/29/98                ISO                 $0.9375             45,000
</TABLE>

6.   The President of the Company Keith S. Kendrick is the only person 
currently employed by Employer authorized to provide a reference concerning 
Employee. Employer may at its discretion provide the reference only after 
receiving an authorized consent or request signed by Employee identifying the 
authorized inquirer.

7.   The events leading to this Agreement and Release, the fact of the 
Agreement and Release, and the terms and conditions of the Agreement and 
Release are and shall be maintained in privacy and confidence. Both parties 
agree that this confidentiality is a material term of the Agreement and 
Release. Without waiving their agreement concerning confidentiality, the 
parties agree that the information regarding the monetary terms of this 
settlement may be disclosed to any state or federal taxing authority and in 
filing; with the Securities and Exchange Commission as required by law. Such 
disclosure shall not be deemed a breach of this Agreement. Nothing in this 
paragraph is intended to restrict Employee from communicating with prospective 
employers and job referral sources about Employee's job experience at First 
Virtual, the nature and extent of job responsibilities, level of performance, 
the dates of employment, and the fact that Employee's termination resulted from 
a reorganization of Employer and that this termination was not performance 
related. Both Employee and Employer agree that they will do nothing to 
disparage the other in any communications after the date of this Agreement.

8.   Each party acknowledges complete satisfaction of, and does hereby forever 
release, absolve, and discharge the other including but not limited to its 
parent corporation(s), subsidiaries, shareholders, officers, trustees, 
employees, past and present, successors, predecessors, assigns, agents, 
attorneys, and representatives from any and all causes of action judgments, 
liens indebtedness, damages, claims, liabilities, and demands, and causes of 
action of whatever kind or nature (except for Employee's right to unemployment 
insurance should Employee fail to obtain re-employment after the termination of 
this agreement,) whether known or unknown, suspected or unsuspected, which the 
parties now have or hold, or at any time has or held against the other its 
parent corporation(s), subsidiaries, shareholders, officer, trustees, 
employees, past and present, successors, predecessors, assigns and agents 
including, but not limited to, any and all claims, under federal, state or 
local laws prohibiting discrimination in employment (including but not limited 
to the Age Discrimination in Employment Act of 1967), wrongful termination, 
breach of contract, breach of public policy, or any other claims. This release 
expressly waives any and all claims each party may presently have against the 
other regardless of the nature, source, or basis for 



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any such claim. Employee agrees and promises not to file any lawsuit or other 
action asserting any such claims.

8.1   Without expanding or modifying same, Employee acknowledges its continuing 
obligations under its letter provided Employee, dated October 9, 1996 about 
certain rights of indemnification.

8.2   Employee represents and warrants that she has either destroyed or 
delivered to Employer all documents and information in any media either 
provided Employee by Employer or developed by Employee during her employment. 
Employee acknowledges and reaffirms her obligations under the Employee 
Confidentiality and Invention Assignment Agreement dated June 16, 1997, which 
shall be considered a part of this Agreement.

9.    The Parties may in the future discover facts different from or in 
addition to those which are the subject of this Agreement, and agree that this 
Agreement shall remain in effect in all respects, notwithstanding the 
discovery or existence of different or additional facts. It is the intent of 
the Parties to completely, finally, irrevocably, and forever release, forgive, 
remise, acquit, and discharge the matters as provided herein; and in 
furtherance of this intention, this Agreement shall remain in effect as a 
complete and final release, forgiveness, and discharge of those matters, 
notwithstanding the discovery or existence of different or additional facts 
relevant to those matters. Therefore, the Parties waive all rights and benefits 
which they may now have or in the future may have under and by virtue of the 
terms of Section 1542 of the California Civil Code, 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.

10.   Employee and Employer each acknowledge that they have carefully read and 
understand the contents of this Agreement and that this Agreement constitutes 
the entire agreement and understanding of the parties. The parties further 
agree that the terms of this Agreement are contractual and that both parties, 
their heirs, successors, and assigns are bound by it, and that any dispute as 
to its terms or its interpretation is governed by laws of the state of 
California excluding its conflict of laws doctrine. Should any court of law 
find any term or clause invalid under the prevailing law, then that term or 
clause only shall be omitted from enforcement, all other terms and conditions 
remaining enforceable.

11.   Employee acknowledges complete satisfaction of, and does hereby forever 
release, absolve, and discharge Employer, including but not limited to its 
parent corporation(s), subsidiaries, shareholders, officers, trustees, 
employees, past and present, successors, predecessors, assigns, agents, 
attorneys, and representatives from any and all causes of action related to the 
Age Discrimination in Employment Act (ADEA). Employee understands:

      *     That Employee has at least 45 days to review and execute this 
      release and to review information provided by the Company regarding all 
      employment terminations occurring on or around the same time as the 
      termination of Employee's employment; and

      *     That Employee will have 7 days after executing this release to 
      revoke the release; and,


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     *    That Employee is advised to consult with an attorney before executing
     this release; and;

     *    Any revocation shall be in writing and shall be delivered to the
     President by the close of business on the seventh (7th) business day from
     the date Employee signs this agreement.

12.  This is the complete integration of the agreement between the Parties and
supersedes any oral, written, or other representation made prior to or
simultaneous to the execution of this Agreement. If any of the provisions of
this Agreement are found by a court or other authority of competent jurisdiction
to be unenforceable, than that provision(s) shall be stricken from this
Agreement and the remaining provisions will continue in full force and effect.


/s/ CAROLYN TURBYFILL
-----------------------------------
Carolyn Turbyfill     

Date: 6/18/98


First Virtual Holdings Incorporated


/s/ KEITH S. KENDRICK
-----------------------------------
Keith S. Kendrick
Its President

Date: 6/18/98


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