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SCHEDULE 13D
(RULE 13D-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ______________)*
GLOBAL SPORTS, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
37937A 10 7
----------------
(CUSIP Number)
RONALD D. FISHER JOHN L. SAVVA, ESQ.
FRANCIS JACOBS SULLIVAN & CROMWELL
SOFTBANK AMERICA INC. 1888 CENTURY PARK EAST, SUITE 2100
300 DELAWARE AVENUE, SUITE 900 LOS ANGELES, CA 90067
WILMINGTON, DE 19801 (310) 712-6600
(302) 552-3104
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
JUNE 10, 1999
-----------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box |_|.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SEC 1746(12-91)
<PAGE>
SCHEDULE 13D
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CUSIP NO. 37937A 10 7 PAGE 2 OF 16 PAGES
- --------------------- ------------------
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
SOFTBANK AMERICA INC.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |_|
(SEE INSTRUCTIONS) (B) |_|
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
- -------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH 8,039,086
REPORTING --------------------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 0
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,039,086
- -------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
66.1%
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
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<PAGE>
SCHEDULE 13D
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CUSIP NO. 783756 10 9 PAGE 3 OF 16 PAGES
- --------------------- ------------------
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
SOFTBANK HOLDINGS INC.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |_|
(SEE INSTRUCTIONS) (B) |_|
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
- -------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH 8,039,086
REPORTING --------------------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 0
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,039,086
- -------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
66.1%
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
HC, CO
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<PAGE>
SCHEDULE 13D
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CUSIP NO. 783756 10 9 PAGE 4 OF 16 PAGES
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- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
SOFTBANK CORP.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |_|
(SEE INSTRUCTIONS) (B) |_|
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
- -------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
JAPAN
- -------------------------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH 8,039,086
REPORTING --------------------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 0
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,039,086
- -------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
66.1%
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
HC, CO
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<PAGE>
SCHEDULE 13D
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CUSIP NO. 783756 10 9 PAGE 5 OF 16 PAGES
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- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
MASAYOSHI SON
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |_|
(SEE INSTRUCTIONS) (B) |_|
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
- -------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
JAPAN
- -------------------------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH 8,039,086
REPORTING --------------------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 0
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,039,086
- -------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
66.1%
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
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CUSIP NO. 37937A 10 7 PAGE 6 OF 16 PAGES
- --------------------- ------------------
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (the "Statement") relates to the common
stock, par value $0.01 per share (the "Common Stock"), of Global Sports, Inc., a
Delaware corporation (the "Company"). The principal executive offices of the
Company are located at 555 South Henderson Road, King of Prussia, Pennsylvania
19406.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is filed by SOFTBANK America Inc. ("SOFTBANK America"),
SOFTBANK Holdings Inc. ("SOFTBANK Holdings"), SOFTBANK Corp. ("SOFTBANK") and
Masayoshi Son ("Son" and, together with SOFTBANK America, SOFTBANK Holdings and
SOFTBANK, the "Reporting Persons").
(A), (B), (C) AND (F). The principal business offices of SOFTBANK
America are located at 300 Delaware Avenue, Suite 900, Wilmington, Delaware
19801. The principal business offices of SOFTBANK Holdings are located at 10
Langley Road, Suite 403, Newton Center, Massachusetts 02159. The principal
business offices of SOFTBANK are located at 24-1, Nihonbashi-Hakozakicho,
Chuo-ku, Tokyo 103-8501, Japan. Son's business address is c/o SOFTBANK Corp.,
24-1, Nihonbashi-Hakozakicho, Chuo-Ku, Tokyo 103-8501, Japan.
SOFTBANK America and SOFTBANK Holdings are Delaware corporations
wholly-owned by SOFTBANK. Their principal business is to serve as holding
companies for SOFTBANK's operations and investments.
SOFTBANK is a corporation organized under the laws of Japan, and its
principal businesses include the provision of information and distribution
services and infrastructure for the digital information industry, the
distribution of computer network products and the publication of Japanese
computer technology magazines.
Son, a Japanese citizen, is President, Chief Executive Officer and a
director of SOFTBANK. Son owns, directly and indirectly, an approximate 43.3%
interest in SOFTBANK.
(D) AND (E). During the last five years, neither the Reporting Persons
nor, to the best knowledge of the Reporting Persons, any of the persons listed
in Schedule 1, 2 or 3 hereto, (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) has been a party
to any civil proceeding of a judicial or administrative body of competent
jurisdiction, and is or was, as a result of such proceeding, subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws, or finding
any violation with respect to such laws.
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP NO. 37937A 10 7 PAGE 7 OF 16 PAGES
- --------------------- ------------------
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The purchases of the shares of Common Stock to be purchased by
SOFTBANK America as reported herein shall be for an amount totaling
approximately $80 million and will be funded by available working capital of
SOFTBANK America. See also Item 4.
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Persons intend to acquire an approximate 30% interest in
the Company for the purpose of investment only.
Pursuant to the Purchase Agreement, dated as of June 10, 1999 (the
"Purchase Agreement")(attached hereto as Exhibit C), between the Company and
SOFTBANK America, SOFTBANK America agreed to purchase an aggregate of 6,153,850
shares of Common Stock from the Company for a purchase price of $13.00 per
share. The Reporting Persons anticipate that an initial closing (the "First
Closing") will take place in July 1999 after which time SOFTBANK America will
have acquired 2,432,692 shares of Common Stock. A second closing (the "Second
Closing") will take place on the latest to occur of (i) the first business day
following the date on which the last to be fulfilled or waived of the conditions
to the Second Closing set forth in the Purchase Agreement takes place, (ii) such
other date as is mutually agreed to by the Company and SOFTBANK America or (iii)
the date of the First Closing. After the Second Closing, SOFTBANK America will
have acquired an additional 3,721,158 shares of Common Stock of the Company
increasing SOFTBANK America's holdings to 6,153,850 shares. The total
consideration to be paid by SOFTBANK America to the Company for the shares is
$80,000,050. The purchase price for the shares to be purchased at the First
Closing will be paid by automatic conversion of the Convertible Subordinated
Note (defined below) in the principal amount of $15,000,000 and by wire transfer
in immediately available funds of an amount equal to the product of (i) the
difference equal to (A) the number of shares to be purchased by SOFTBANK America
at the First Closing (as set forth in the Schedule of Purchases attached to the
Purchase Agreement) minus (B) the number of shares issuable upon conversion of
the Convertible Subordinated Note, times (ii) $13.00. The purchase price of the
shares to be purchased at the Second Closing will be paid by wire transfer of
$48,375,054.
The Purchase Agreement provides, among other things, that on and after
the First Closing, SOFTBANK America will have the right to designate (i) a
number of members of the Company's Board of Directors equal to the product of
(A) the total number of authorized directors and (B) the aggregate Proportionate
Share of SOFTBANK America and the SOFTBANK Entities (as defined in the Purchase
Agreement), rounded up to the nearest whole number, but not to exceed two
directors (the "Board Composition Requirement"), and (ii) so long as SOFTBANK
America and the SOFTBANK Entities collectively own 50% or more of the shares
purchased pursuant to the Purchase Agreement, one director to be a member of
each committee of the Company's Board of Directors. "Proportionate Share," as
defined in the Purchase Agreement, means, with respect to each Securityholder
(as defined in the Purchase Agreement), a fraction the numerator of which is the
total number of shares of Common Stock owned and the number of shares of Common
Stock issuable upon exercise of Rights (as defined in the Purchase Agreement)
owned by such Securityholder, and the
<PAGE>
SCHEDULE 13D
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CUSIP NO. 37937A 10 7 PAGE 8 OF 16 PAGES
- --------------------- ------------------
denominator of which is the total number of shares of Common Stock outstanding
plus the number of shares of Common Stock issuable upon exercise of all Rights
outstanding.
The Purchase Agreement contains a covenant by the Company to seek
stockholder approval of an amendment of the Company's certificate of
incorporation to increase the authorized number of shares of Common Stock.
SOFTBANK America also entered into a Registration Rights Agreement,
dated June 10, 1999 (the "Registration Rights Agreement")(attached hereto as
Exhibit D), with the Company which grants SOFTBANK America "demand" and
"piggy-back" registration rights with respect to the shares of Common Stock
purchased pursuant to the Purchase Agreement.
In conjunction with the execution of the Purchase Agreement, SOFTBANK
America entered into the Subordinated Loan Agreement, dated as of June 10, 1999
(the "Subordinated Loan Agreement")(attached hereto as Exhibit G), with the
Company pursuant to which, on such date, SOFTBANK America loaned the Company $15
million. The loan was evidenced in the form of a convertible subordinated note
(the "Convertible Subordinated Note")(attached hereto as Exhibit H). Interest on
the Convertible Subordinated Note accrues on the outstanding principal amount of
the loan at the rate of 4.98% per annum. Upon the First Closing, all unpaid
principal and accrued but unpaid interest due on the Convertible Subordinated
Note will automatically convert into a number of shares of Common Stock equal to
the total amount of unpaid principal and accrued but unpaid interest divided by
$13.00, subject to adjustment under certain circumstances.
Subject to Section 5.2(a) of the Purchase Agreement, SOFTBANK America
may sell, transfer, assign or pledge all or any part of the shares it purchases
pursuant to the Purchase Agreement to any affiliates of SOFTBANK America or
SOFTBANK, including, without limitation, any partnership or other entity of
which any direct or indirect subsidiary of SOFTBANK is a general partner or has
investment discretion, or any employees of any of the foregoing (any such person
or entity being herein referred to as a "SOFTBANK Entity"). SOFTBANK America
anticipates that some or all of the shares of Common Stock to be purchased
pursuant to the agreements described herein will be transferred to a SOFTBANK
Entity.
Other than as described in this Statement, the Reporting Persons have
no present plans or proposals which relate to or would result in: (i) the
acquisition by any person of additional securities of the Company or the
disposition of securities of the Company; (ii) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Company or any of its subsidiaries; (iii) a sale or transfer of a material
amount of assets of the Company or any of its subsidiaries; (iv) any change in
the present Board or management of the Company, including any plans or proposals
to change the number or term of directors or to fill any existing vacancies on
the Board; (v) any material change in the present capitalization or dividend
policy of the Company; (vi) any other material change in the Company's business
or corporate structure; (vii) changes in the Company's certificate of
incorporation or by-laws or other actions which may impede the acquisition of
control of the Company by any persons; (viii) causing a class of securities of
the Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association; (ix) a class of equity securities of the
Company becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934, as amended; or
<PAGE>
SCHEDULE 13D
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CUSIP NO. 37937A 10 7 PAGE 9 OF 16 PAGES
- --------------------- ------------------
(x) any action similar to those enumerated above (collectively, the "Specified
Actions"). However, the Reporting Persons intend to evaluate the proposed
investment in the Company on an ongoing basis, and, depending on their
evaluation of the business and prospects of the Company and other factors that
they may deem relevant, the Reporting Persons may determine to dispose of their
contractual rights to acquire such shares or acquire additional shares or take
other actions if market conditions or other business considerations, in the
judgment of the Reporting Persons, warrant. Such additional acquisitions may be
effected through open market purchases, privately negotiated transactions,
tender offers to existing holders or direct negotiation with the Company. Such
further acquisitions, dispositions or other actions may or may not result in the
Specified Actions.
All references to the Purchase Agreement, the Registration Rights
Agreement, the Subordinated Loan Agreement and the Convertible Subordinated Note
are qualified in their entirety by the full text of such agreements, copies of
which are attached as Exhibits hereto and are incorporated by reference herein.
See also Item 6.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
SOFTBANK America is a wholly-owned subsidiary of SOFTBANK Holdings,
which in turn is a wholly-owned subsidiary of SOFTBANK. Son is the President and
Chief Executive Officer of SOFTBANK and owns an approximate 43.3% interest in
SOFTBANK. Accordingly, securities owned by SOFTBANK America may be regarded as
being beneficially owned by SOFTBANK Holdings; securities owned by SOFTBANK
Holdings may be regarded as being beneficially owned by SOFTBANK; and securities
owned by SOFTBANK may be regarded as being beneficially owned by Son.
(A) AND (B). SOFTBANK AMERICA.
By virtue of the Rubin Voting Agreement described in Item 6, SOFTBANK
America may be deemed to beneficially own 8,039,086 shares of Common Stock
inasmuch as the holder thereof has granted representatives of SOFTBANK America
an irrevocable proxy to vote such shares as described in Item 4; accordingly,
SOFTBANK America may be deemed to have shared voting power with respect to such
8,039,086 shares of Common Stock. As a result of the foregoing, SOFTBANK America
may be deemed to be the beneficial owner of an aggregate of 8,039,086 shares of
Common Stock, comprising 66.1% of the Common Stock (based on the number of
shares of Common Stock outstanding as of June 10, 1999, as represented by the
Company pursuant to the Purchase Agreement, and calculated as provided by Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")).
SOFTBANK HOLDINGS.
As the sole equityholder of SOFTBANK America, SOFTBANK Holdings may be
deemed to be the beneficial owner of an aggregate of 8,039,086 shares of Common
Stock, comprising 66.1% of the Common Stock (based on the number of shares of
Common Stock outstanding as of June 10, 1999, as represented by the Company in
the Purchase Agreement, and calculated as provided by Rule 13d-3 under the
Exchange Act) and may be deemed to have shared voting power with respect to such
8,039,086 shares of Common Stock.
<PAGE>
SCHEDULE 13D
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CUSIP NO. 37937A 10 7 PAGE 10 OF 16 PAGES
- --------------------- -------------------
SOFTBANK; SON.
As the parent of SOFTBANK Holdings and SOFTBANK America and the direct
and indirect owner of an approximate 43.3% interest of SOFTBANK, respectively,
SOFTBANK and Son may each be deemed to be the beneficial owner of an aggregate
of 8,039,086 shares of Common Stock, comprising 66.1% of the Common Stock (based
on the number of shares of Common Stock outstanding as of June 10, 1999, as
represented by the Company in the Purchase Agreement, and calculated as provided
by Rule 13d-3 under the Exchange Act), and may be deemed to have shared voting
power with respect to such 8,039,086 shares of Common Stock.
(C) None of the Reporting Persons, nor, to the best knowledge of the
Reporting Persons, any of the persons listed on Schedule 1, 2 or 3 hereto, has
engaged in any transactions in the securities of the Company during the past 60
days other than those transactions described above.
(D) AND (E). Not applicable.
None of the Reporting Persons has the right to vote or dispose of any
of the shares that it may acquire pursuant to the Purchase Agreement, except as
provided in the SOFTBANK America Voting Agreement and the Rubin Voting
Agreement, unless and until the transactions contemplated thereby are
consummated. Such transactions are subject to conditions precedent, and there
can be no assurance that such transactions will be consummated.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Michael G. Rubin, the principal stockholder of the Company holding in
the aggregate approximately 66.1% of the shares of Common Stock outstanding as
of June 10, 1999 ("Rubin") entered into a Voting Agreement, dated as of June 10,
1999 (the "Rubin Voting Agreement")(attached hereto as Exhibit E), in favor of
SOFTBANK America. Pursuant to the Rubin Voting Agreement, Rubin agreed that he
will, at any meeting of stockholders of the Company, or in connection with any
written consent of stockholders of the Company, vote or cause to be voted all
shares of Common Stock then held of record or beneficially owned by him (i) in
favor of the purchase of shares of Common Stock to be purchased at the Second
Closing pursuant to the Purchase Agreement (the "Second Purchase"); (ii) in
favor of the amendment of the Company's certificate of incorporation to increase
the authorized number of shares of Common Stock; (iii) against any
action or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Purchase Agreement; (iv) in favor of election to the Board of
Directors of the directors which SOFTBANK America is entitled to designate upon
consummation of the Second Purchase and which have been identified by SOFTBANK
America as nominees for such purpose; and (v) except as otherwise agreed to in
writing in advance by SOFTBANK America, against the following actions (other
than the Second Purchase and the transactions contemplated by the Purchase
Agreement): (A) a dissolution of the Company or (B) any material change in the
present capitalization of the Company or any amendment of the Company's
certificate of incorporation or by-laws, in each case, which is intended, or
could reasonably be expected, to impede, delay or adversely affect the Second
Purchase and the transactions
<PAGE>
SCHEDULE 13D
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CUSIP NO. 37937A 10 7 PAGE 11 OF 16 PAGES
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contemplated by the Rubin Voting Agreement and the Purchase Agreement. Rubin
also agreed that he will not enter into any agreement or understanding with any
person or entity the effect of which would be inconsistent or violative of the
provisions and agreements contained in the Rubin Voting Agreement and delivered
to SOFTBANK America an irrevocable proxy to vote all of the shares of Common
Stock beneficially owned by him, together with any shares acquired by him in any
capacity after the date thereof, in the manner and with respect to the matters
set forth in the Rubin Voting Agreement. In addition, Rubin agreed not to take
any action to remove, with or without cause, any director of the Company
designated by SOFTBANK America. Notwithstanding the foregoing, SOFTBANK America
has the right at all times to remove, with or without cause, any or all of the
directors designated by SOFTBANK America.
SOFTBANK America entered into a Voting Agreement, dated as of June 10,
1999 (the "SOFTBANK America Voting Agreement")(attached hereto as Exhibit F), in
favor of Rubin. Pursuant to the SOFTBANK America Voting Agreement, SOFTBANK
America agreed that it will, at any meeting of stockholders of the Company, or
in connection with any written consent of stockholders of the Company, vote or
cause to be voted all shares of Common Stock then held of record or beneficially
owned by it with respect to all directorships other than those which SOFTBANK
America is entitled to designate pursuant to the Purchase Agreement (i) in favor
of any member of the Board of Directors of the Company who was a member of the
Board prior to the date of the Purchase Agreement, and any director who is
thereafter chosen to fill any vacancy on the Board of Directors or who is
elected as a director (a "Continuing Director") and who, in either event, is not
a director designated by SOFTBANK America pursuant to the Purchase Agreement and
in connection with his or her initial assumption of office is recommended for
appointment or election by a majority of the Continuing Directors then on the
Board of Directors, and (ii) against the election of any directors other than
those directors specified in clause (i) of this sentence. In addition, SOFTBANK
America agreed not to take any action to remove, with or without cause, any
director of the Company other than the SOFTBANK America designees.
On June 21, 1999, SOFTBANK America, Global Sports and Rubin entered
into a sideletter agreement (the "Sideletter Agreement") pursuant to which the
parties agreed that, notwithstanding any provision to the contrary in the
Purchase Agreement, if the First Closing has occurred prior to July 13, 1999,
(1) SOFTBANK America will not have the right to designate new members to Global
Sports' Board of Directors until the earlier of (a) the completion and
adjournment of Global Sports' next annual meeting of stockholders and (b) 5:00
p.m. P.S.T., on July 13, 1999 (such earlier time being the "Effective Time");
(2) Rubin will not be obligated to vote in favor of the members of the Global
Sports Board of Directors to be designated by SOFTBANK America to satisfy the
Board Composition Requirement until the Effective Time; (3) Rubin will not be
required to vote against any slate of directors up for election to Global
Sports' Board of Directors until the Effective Time; and (4) the failure by
Rubin or Global Sports to cause the Board Composition Requirement to be
satisfied by the First Closing Date will not, by itself, excuse SOFTBANK from
consummating the First Purchase.
Except as described in this Statement, none of the Reporting Persons,
nor to the best knowledge of the Reporting Persons, any of the persons listed on
Schedule 1, 2 or 3 hereto, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option arrangements, put or
calls, guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
All references to the Rubin Voting Agreement, the SOFTBANK America
Voting Agreement and the Sideletter Agreement are qualified in their entirety by
the full text of such agreements, copies of which are attached as Exhibits
hereto and are incorporated by reference herein. The descriptions of the
Purchase Agreement, the Registration Rights Agreement, the Subordinated Loan
Agreement and the Convertible Subordinated Note in Item 4 are hereby
incorporated herein by reference. See also Item 4.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A Agreement of Joint Filing, dated as of June 17,
1999, by and among SOFTBANK Holdings, SOFTBANK
America, SOFTBANK and Son.
<PAGE>
SCHEDULE 13D
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CUSIP NO. 37937A 10 7 PAGE 12 OF 16 PAGES
- --------------------- ------------------
Exhibit B Power of Attorney (incorporated by reference to
Exhibit 24 to the Statement on Schedule 13G filed
by SOFTBANK, Son and SOFTBANK Ventures, Inc. on
February 18, 1998 with respect to Concentric Network
Corporation).
Exhibit C Purchase Agreement, dated as of June 10, 1999, between
the Company and SOFTBANK America.
Exhibit D Registration Rights Agreement, dated as of June 10,
1999, between SOFTBANK America and the Company.
Exhibit E Voting Agreement, dated as of June 10, 1999, by Michael
G. Rubin, in favor of SOFTBANK America.
Exhibit F Voting Agreement dated as of June 10, 1999, by SOFTBANK
America, in favor of Michael G. Rubin.
Exhibit G Subordinated Loan Agreement, dated as of June 10, 1999,
between SOFTBANK America and the Company.
Exhibit H Convertible Subordinated Note, dated as of June 10,
1999, by the Company.
Exhibit I Sideletter Agreement, dated as of June 21, 1999, by
and between SOFTBANK America, Global Sports and Rubin.
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP NO. 37937A 10 7 PAGE 13 OF 16 PAGES
- --------------------- ------------------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
June 21, 1999 SOFTBANK AMERICA INC.
By: /s/ Stephen A. Grant
------------------------------
Name: Stephen A. Grant
Title: Attorney-in-Fact
SOFTBANK HOLDINGS INC.
By: /s/ Stephen A. Grant
------------------------------
Name: Stephen A. Grant
Title: Attorney-in-Fact
SOFTBANK CORP.
By: /s/ Stephen A. Grant
------------------------------
Name: Stephen A. Grant
Title: Attorney-in-Fact
MASAYOSHI SON
By: /s/ Stephen A. Grant
------------------------------
Name: Stephen A. Grant
Title: Attorney-in-Fact
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP NO. 37937A 10 7 PAGE 14 OF 16 PAGES
- --------------------- ------------------
SCHEDULE 1
DIRECTORS AND EXECUTIVE OFFICERS OF SOFTBANK AMERICA
The business address for each of the individuals listed below, except
Masayoshi Son, Yoshitaka Kitao and Hitoshi Hasegawa, is 10 Langley Road, Suite
403, Newton Center, Massachusetts 02159. The business address for Masayoshi Son,
Yoshitaka Kitao and Hitoshi Hasegawa is 24-1, Nihonbashi-Hakozakicho, Chuo-ku,
Tokyo 103-8501, Japan.
All directors and executive officers listed below are United States
citizens, except Masayoshi Son, Yoshitaka Kitao and Hitoshi Hasegawa, each a
citizen of Japan.
<TABLE>
<CAPTION>
NAME POSITION PRESENT AND PRINCIPAL OCCUPATION
- ---- -------- --------------------------------
<S> <C> <C>
Masayoshi Son Chairman and Director President and Chief Executive Officer of
SOFTBANK
Ronald D. Fisher Vice Chairman and Director Vice Chairman of SOFTBANK Holdings
Yoshitaka Kitao Director Executive Vice President and Chief Financial
Officer of SOFTBANK
Steven Murray Treasurer Treasurer of SOFTBANK Holdings
Hitoshi Hasegawa Secretary Counsel of SOFTBANK
</TABLE>
<PAGE>
SCHEDULE 13D
- --------------------- -------------------
CUSIP NO. 37937A 10 7 PAGE 15 OF 16 PAGES
- --------------------- -------------------
SCHEDULE 2
DIRECTORS AND EXECUTIVE OFFICERS OF SOFTBANK HOLDINGS
The business address for each of the individuals listed below, except
Masayoshi Son, Yoshitaka Kitao and Stephen A. Grant, is 10 Langley Road, Suite
403, Newton Center, Massachusetts 02159. The business address for Masayoshi Son
and Yoshitaka Kitao is 24-1, Nihonbashi-Hakozakicho, Chuo-ku, Tokyo 103-8501,
Japan. The business address for Stephen A. Grant is 125 Broad Street, New York,
New York 10004.
All directors and executive officers listed below are United States
citizens, except Masayoshi Son and Yoshitaka Kitao, each a citizen of Japan.
<TABLE>
<CAPTION>
NAME POSITION PRESENT AND PRINCIPAL OCCUPATION
- ---- -------- --------------------------------
<S> <C> <C>
Masayoshi Son Chairman and Director President and Chief Executive Officer of SOFTBANK
Ronald D. Fisher Vice Chairman and Director Vice Chairman of SOFTBANK Holdings
Yoshitaka Kitao Director Executive Vice President and Chief Financial Officer of
SOFTBANK
Gary Rieschel Senior Vice President Executive Managing Director of STV LLC
Stephen A. Grant Secretary Partner, Sullivan & Cromwell.
Thomas L. Wright Vice President and Treasurer Treasurer of Ziff-Davis Inc.
Louis Demarco Vice President-Tax Vice President-Tax of SOFTBANK Holdings
Charles R. Lax Vice President Managing Director of STV
</TABLE>
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP NO. 37937A 10 7 PAGE 16 OF 16 PAGES
- --------------------- ------------------
SCHEDULE 3
DIRECTORS AND EXECUTIVE OFFICERS OF SOFTBANK CORP.
The business address for each of the individuals listed below, except
Ronald D. Fisher, is 24-1, Nihonbashi-Hakozakicho, Chuo-ku, Tokyo 103-8501,
Japan. The business address for Ronald D. Fisher is 10 Langley Road, Suite 403,
Newton Center, Massachusetts 02159.
Each of the individuals listed below is a Japanese citizen, except for
Ronald D. Fisher, a citizen of the United States.
<TABLE>
<CAPTION>
NAME POSITION PRESENT AND PRINCIPAL OCCUPATION
- ---- -------- --------------------------------
<S> <C> <C>
Masayoshi Son President, Chief Executive and President and Chief Executive Officer of SOFTBANK
Director
Ken Miyauchi Executive Vice President, Software Executive Vice President and director of SOFTBANK
& Network Products Division, and
Director
Norikazu Ishikawa Executive Vice President, Human Executive Vice President of SOFTBANK
Resources and General Affairs
Division, and Director
Yoshitaka Kitao Executive Vice President, Chief Executive Vice President and Chief Financial Officer of
Financial Officer and Director SOFTBANK
Makoto Okazaki Executive Vice President, Publishing Executive Vice President of SOFTBANK
Division, and Director
Takashi Eguchi Director President and Chief Executive Officer of PASONA
SOFTBANK Inc.
Ronald D. Fisher Director Vice Chairman of SOFTBANK Holdings
Katsura Sato Full-Time Corporate Auditor Full-Time Corporate Auditor of SOFTBANK
Saburo Kobayashi Corporate Auditor Corporate Auditor of SOFTBANK
Hidekazu Kubokawa Corporate Auditor Corporate Auditor of SOFTBANK
Masahiro Inoue Director President and Chief Executive Officer of Yahoo Japan
Corporation
Eric Hippeau Director Chairman and Chief Executive Officer of Ziff-Davis, Inc.
Mitsuo Sano Full-Time Corporate Auditor Full-Time Corporate Auditor of SOFTBANK
</TABLE>
EXHIBIT A
AGREEMENT OF JOINT FILING
In accordance with Rule 13d-1(k) under the Securities and Exchange Act
of 1934, as amended, the undersigned hereby agree to the joint filing on behalf
of each of them of a Statement on Schedule 13D, and any amendments thereto, with
respect to the Common Stock, par value $0.01 per share, of Global Sports, Inc.
and that this Agreement be included as an Exhibit to such filing.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to constitute one and the same Agreement.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned hereby executes this
Agreement as of June 17, 1999.
SOFTBANK AMERICA INC.
By: /s/ Stephen A. Grant
------------------------------
Name: Stephen A. Grant
Title: Attorney-in-Fact
SOFTBANK HOLDINGS INC.
By: /s/ Stephen A. Grant
------------------------------
Name: Stephen A. Grant
Title: Attorney-in-Fact
SOFTBANK CORP.
By: /s/ Stephen A. Grant
------------------------------
Name: Stephen A. Grant
Title: Attorney-in-Fact
MASAYOSHI SON
By: /s/ Stephen A. Grant
------------------------------
Name: Stephen A. Grant
Title: Attorney-in-Fact
EXHIBIT C
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of June 10, 1999, between Global Sports, Inc., a Delaware corporation (the
"Company"), and SOFTBANK America Inc., a Delaware corporation (the "Purchaser").
ARTICLE I
AUTHORIZATION AND SALE OF STOCK
Section 1.1 SALE OF THE SHARES. Subject to the terms and conditions hereof,
at the Closings (as defined in Section 2.1 hereof), the Company shall issue and
sell to the Purchaser, and the Purchaser shall purchase from the Company, the
total number of shares (collectively, the "Shares") of common stock, par value
$0.01 per share ("Common Stock"), of the Company specified on the Schedule of
Purchases attached hereto as Exhibit A, at a purchase price per Share equal to
$13.00, for an aggregate purchase price of $80,000,050 in cash in immediately
available funds.
ARTICLE II
CLOSING DATE; DELIVERY
Section 2.1 CLOSINGS AND LOCATION. The purchase and sale of the Shares
hereunder shall take place at two closings (individually, a "Closing" and,
collectively, the "Closings") at the offices of Sullivan & Cromwell, 1888
Century Park East, Los Angeles, California 90067, at 10:00 a.m., California
time, on the dates hereinafter specified.
Section 2.2 FIRST CLOSING. The Closing of the purchase and sale of the
Shares designated for issuance at the first Closing (the "First Purchase") as
set forth on the Schedule of Purchases (the "First Closing") shall be held on
the later to occur of (i) July 15, 1999 or, if earlier, such date as SOFTBANK
Capital Partners, L.P. ("SOFTBANK Capital Partners") is formed as a Delaware
limited partnership and
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<PAGE>
has consummated the first closing with investors therein, (ii) the first
business day following the date on which the last to be fulfilled or waived of
the conditions to the First Closing set forth in Sections 6.1 and 6.2 hereof
have been fulfilled or waived in accordance with this Agreement or (iii) such
other date as is mutually agreed to by the Company and the Purchaser. The date
of the First Closing is hereinafter referred to as the "First Closing Date."
Section 2.3 SECOND CLOSING. The Closing of the purchase and sale of the
Shares designated for issuance at the second Closing (the "Second Purchase") as
set forth on the Schedule of Purchases (the "Second Closing") shall be held on
the latest to occur of (i) the first business day following the date on which
the last to be fulfilled or waived of the conditions to the Second Closing set
forth in Sections 6.1 and 6.2 hereof have been fulfilled or waived in accordance
with this Agreement, (ii) such other date as is mutually agreed to by the
Company and the Purchaser or (iii) the First Closing Date. The date of the
Second Closing is hereinafter referred to as the "Second Closing Date," and the
First Closing Date and the Second Closing Date are hereinafter collectively
referred to as the "Closing Dates."
Section 2.4 DELIVERY. Subject to the terms and conditions of this
Agreement, at each Closing, the Company shall deliver to the Purchaser a stock
certificate or certificates representing the Shares to be purchased by the
Purchaser at such Closing, registered in the name of the Purchaser or its
assigns, against payment of the purchase price therefor. The purchase price of
the Shares to be purchased at the First Closing shall be paid by automatic
conversion of the Convertible Subordinated Note (as defined in the Subordinated
Loan Agreement between the Company and the Purchaser dated as of the date
hereof) in the principal amount of $15.0 million, dated the date hereof, issued
by the Company in favor of the Purchaser in accordance with its terms in
exchange for the number of shares issuable upon such conversion as provided
therein (the "Conversion Number") and by wire transfer in immediately available
funds to an account designated in writing by the Company of an
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<PAGE>
amount equal to the product (i) the difference equal to (A) the number of Shares
to be purchased by the Purchaser at such Closing minus (B) the Conversion Number
times (ii) $13.00. The purchase price of the Shares to be purchased at the
Second Closing shall be paid by wire transfer of $48,375,054 in immediately
available funds to an account designated in writing by the Company for such
purpose.
Section 2.5 CONSUMMATION OF CLOSING. All acts, deliveries and confirmations
comprising each Closing regardless of chronological sequence shall be deemed to
occur contemporaneously and simultaneously upon the occurrence of the last act,
delivery or confirmation of such Closing and none of such acts, deliveries or
confirmations shall be effective unless and until the last of same shall have
occurred.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows:
Section 3.1 ORGANIZATION. 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 to own, lease and operate its property and
to carry on its business as now being conducted and is duly qualified to do
business and is in good standing in each jurisdiction where it is required to be
so qualified and in good standing, except for any such jurisdiction in which the
failure to be so qualified and in good standing would not, individually or in
the aggregate, have a material adverse effect on the business, financial
condition, results of operations or prospects of the Company (a "Material
Adverse Effect").
Section 3.2 SUBSIDIARIES. Each of the Company's subsidiaries is a
corporation duly organized, validly existing in good standing under the laws of
the jurisdiction
-3-
<PAGE>
of its organization, and is duly qualified to do business and in good standing
in the jurisdictions where it is required to be so qualified and is in good
standing, except for any such jurisdiction in which the failure to be so
qualified and in good standing would not, individually or in the aggregate, have
a Material Adverse Effect.
Section 3.3 VALID ISSUANCE OF COMMON STOCK. The Shares, when issued and
paid for in accordance with this Agreement, will be duly authorized, validly
issued, fully paid and non-assessable.
Section 3.4 AUTHORITY; NO CONFLICT; REQUIRED FILINGS
AND CONSENTS.
(a) The Company has all requisite corporate power and authority to
enter into this Agreement, the Registration Rights Agreement in the form
attached hereto as Exhibit B (the "Registration Rights Agreement"), the
Subordinated Loan Agreement between the Company and the Purchaser dated as of
the date hereof (the "Loan Agreement") and the Convertible Subordinated Note and
to consummate the transactions contemplated by this Agreement and the
Registration Rights Agreement, the Loan Agreement and the Convertible
Subordinated Note. This Agreement, the Loan Agreement, the Convertible
Subordinated Note and the Registration Rights Agreement have been duly
authorized, executed and delivered by the Company and constitute valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles;
provided, however, that it is understood that pursuant to the regulations of the
National Association of Securities Dealers, Inc. (the "NASD Rules"), stockholder
approval of the consummation of the Second Purchase is required prior to such
consummation.
(b) The execution and delivery by the Company of this Agreement, the
Registration Rights Agreement, the Loan Agreement and the Convertible
Subordinated Note does not,
-4-
<PAGE>
and consummation of the transactions contemplated by this Agreement, the
Registration Rights Agreement, the Loan Agreement and the Convertible
Subordinated Note will not, (i) conflict with, or result in any violation or
breach of any provision of, the Certificate of Incorporation or Bylaws of the
Company, (ii) result in any violation or breach of, or constitute (with or
without notice or lapse of time, or both) a default (or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
material benefit) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries, properties or assets may be bound,
or (iii) conflict with or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any of its subsidiaries, properties or assets (provided, with
respect to clauses (ii) and (iii), with respect to the Shares to be purchased at
the Second Closing, that stockholder approval of such purchase is obtained in
conformity with the NASD Rules prior to the Second Closing), except in the case
of (ii) and (iii) for any such violations, defaults, breaches, terminations,
cancellations, accelerations, losses or conflicts which would not, individually
or in the aggregate, have a Material Adverse Effect, and would not materially
burden or delay the consummation of the transactions contemplated hereby.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality (a "Governmental Entity") is
required by or with respect to the Company in connection with the execution and
delivery of this Agreement, the Registration Rights Agreement, the Loan
Agreement and the Convertible Subordinated Note or the consummation of the
transactions contemplated hereby or thereby, except for (i) the filing of a Form
D under the Securities Act of 1933, as amended (the "Securities Act"), (ii) such
filings as may be required under applicable state securities laws or the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
-5-
<PAGE>
amended (the "HSR Act"), and (iii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
and would not materially burden or delay the consummation of the transactions
contemplated hereby.
Section 3.5 CAPITALIZATION.
(a) The authorized capital stock of the Company as of the date hereof
consists of (i) 20,000,000 shares of Common Stock, of which 12,163,619 shares
are issued and outstanding, and (ii) 1,000,000 shares of Preferred Stock, $0.01
par value per share, of which 10,000 shares are issued or outstanding.
(b) The authorized capital stock of the Company as of the Second
Closing Date and immediately prior to the Second Closing shall be as set forth
in Section 3.5(a) hereof, subject, however, to (i) an increase in the authorized
number of shares of Common Stock to 30,000,000, which is contemplated to occur
following the Annual Meeting (as defined in Section 5.6 hereof), (ii) the prior
sale and issuance of the Shares to be issued and sold at the First Closing, (ii)
the grant of options to purchase shares of Common Stock under the Company's
employee stock option plans and the exercise of options outstanding as of the
date hereof and (iii) any other issuance of the Company's capital stock, or
securities convertible into such capital stock, as may be approved by the
Purchaser.
(c) Other than (i) as disclosed in the Company Commission Reports (as
defined below) or in documents incorporated by reference therein, (ii) stock
options and employee stock purchases following the date of the most recent
Company Commission Report under the Company's stock option, stock incentive and
stock purchase plans described in the Company Commission Reports and (iii) as
disclosed on Schedule 3.5(c) hereto, there are no outstanding options, warrants
or commitments of any kind to which the Company is a party or by which it is
bound obligating the Company to
-6-
<PAGE>
issue, deliver or sell any shares of capital stock of the
Company.
Section 3.6 COMMISSION FILINGS; FINANCIAL
STATEMENTS.
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") and made available to the Purchaser and its representatives
all forms, reports and documents filed by the Company with the Commission since
December 31, 1998 (collectively, the "Company Commission Reports"). The Company
Commission Reports (i) at the time filed, complied in all material respects with
the applicable requirements of the Securities Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as applicable, and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such amending or superseding filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Each of the financial statements (including, in each case, any
related notes) contained in the Company Commission Reports complied as to form
in all material respects with the applicable published rules and regulations of
the Commission with respect thereto, was prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q of
the Commission) and include all adjustments, consisting only of normal
accounting adjustments, that the Company reasonably considers necessary for a
fair presentation of its financial position at the respective dates and the
results of its operations and cash flows for the periods indicated. Except as
disclosed in the Company Commission Reports filed with the Commission prior to
the date hereof, since December 31, 1998, taking into account the cumulative
effect of all
-7-
<PAGE>
developments and events since such date, there has not been any development or
event, or series of developments or events, that would reasonably be expected to
have a Material Adverse Effect.
Section 3.7 COMPLIANCE WITH LAWS. Each of the Company and its subsidiaries
has complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state or local statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, including but not limited to statutes, laws or
regulations relating to the protection of the environment or concerning the
handling, storage, disposal or discharge of toxic materials, except for failures
to comply or violations which would not, individually or in the aggregate, have
a Material Adverse Effect on the Company.
Section 3.8 STOCKHOLDERS' CONSENT. No consent or approval of the
stockholders of the Company is required or necessary for the Company to enter
into this Agreement, the Registration Rights Agreement, the Loan Agreement and
the Convertible Subordinated Note or to consummate the First Purchase. Except
for the requirement pursuant to the NASD Rules that the Second Purchase be
approved by the stockholders of the Company prior to the consummation thereof,
and approval of the Charter Amendment (as defined in Section 5.6 hereof), no
approval of the stockholders of the Company is required for the Company to
consummate the Second Purchase.
Section 3.9 LITIGATION. Except as otherwise disclosed as of the date of
this Agreement in the Company Commission Reports, (i) there is no private or
governmental action, suit, proceeding, claim, arbitration or investigation
pending before any agency, court or tribunal, foreign or domestic, or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries or properties or any of its officers or directors (in their
capacities as such), which, if determined adversely to the Company, would,
individually or in the aggregate, have a Material Adverse Effect, and (ii) there
is no judgment,
-8-
<PAGE>
decree or order against the Company or any of its subsidiaries, or, to the
knowledge of the Company, against any of its respective directors or officers
(in their capacities as such) relating to the business of the Company or any of
its subsidiaries, the existence of which would have a Material Adverse Effect.
Section 3.10 INTELLECTUAL PROPERTY. Except as disclosed in the Company
Commission Reports, each of the Company and its subsidiaries (i) owns or
possesses adequate licenses or other rights to use all patents, trademarks,
service marks, trade names, copyrights, technology, software, know-how and trade
secrets (collectively, "Intellectual Property") necessary to conduct the
business now conducted by the Company and its subsidiaries and (ii) either owns
or possesses, or can acquire on commercially reasonable terms, adequate licenses
or other rights to use all Intellectual Property necessary to conduct the
business proposed to be conducted by the Company and its subsidiaries. Except as
disclosed in the Company Commission Reports, neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict with (and
knows of no such infringement of or conflict with) asserted rights of others
with respect to any Intellectual Property; and, to the Company's knowledge, the
discoveries, inventions, products, services or processes used in the business of
the Company and its subsidiaries do not infringe or conflict with any right or
patent of any third party, or any discovery, invention, product or process which
is the subject of a patent application filed by any third party.
Section 3.11 CHANGE OF CONTROL BENEFITS. Except as set forth on Schedule
3.11, there exist no provisions contained in any employment or severance
agreement or benefit plan of the Company which provide for the payment, accrual
or acceleration of any benefit to any person as a result of the consummation of
the transactions contemplated hereby.
Section 3.12 FINDER'S FEES. The Company has retained no finder or broker in
connection with the transactions contemplated by this Agreement and hereby
agrees to
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<PAGE>
indemnify and to hold the Purchaser harmless from any liability for commission
or compensation in the nature of a finder's fee to any broker or other person or
firm (and the costs and expenses of defending against such liability or asserted
liability) for which the Company, or any of its employees or representatives
acting on behalf of the Company, is or may be responsible as a result of the
transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
Section 4.1 ORGANIZATION. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Section 4.2 AUTHORITY.
(a) The Purchaser has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Purchaser. This
Agreement has been duly executed and delivered by the Purchaser and constitutes
a valid and legally binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to the Purchaser in connection with the execution and delivery of
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<PAGE>
this Agreement or the consummation of the transactions contemplated hereby,
except for (i) the filing of a notification and report form under the HSR Act,
compliance with the rules and regulations thereunder and satisfaction of the
applicable waiting period thereunder, (ii) the filing of a Form D under the
Securities Act, (iii) such filings as may be required under applicable state
securities laws and (iv) such other consents, authorizations, filings, approvals
and registrations which, if not obtained or made, would not materially burden or
delay the consummation of the transactions contemplated hereby.
Section 4.3 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Shares will be acquired
solely for investment purposes, for the Purchaser's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof; provided, however, that, notwithstanding the foregoing, it is
understood and acknowledged that prior to, on or following the First Closing
Date, (i) the Purchaser may transfer all or a portion of the Shares purchased by
it hereunder to SOFTBANK Capital Partners or (ii) the Purchaser may assign its
rights to purchase any or all of the Shares to be purchased by it hereunder to
SOFTBANK Capital Partners, in which event such Shares will be purchased by
SOFTBANK Capital Partners. The Purchaser has not been formed for the specific
purpose of acquiring the Shares.
Section 4.4 INVESTMENT EXPERIENCE. Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. Purchaser has had an
opportunity to ask questions and receive answers regarding the Company's
business affairs and financial condition and believes it has acquired sufficient
information about the Company to reach an informed decision to purchase the
Shares. Purchaser has such business and financial experience as is required to
give it the capacity to protect its own interests in connection with the
purchase of the Shares.
Section 4.5 RESTRICTED SECURITIES. The Purchaser understands that the
Shares are characterized as "restricted securities" under the Securities Act
inasmuch as they are being acquired from the Company in a transaction not
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<PAGE>
involving a public offering and that Purchaser must hold the Shares indefinitely
unless the sale thereof is registered under the Securities Act and qualified
under state securities laws, or an exemption from such registration and
qualification requirements is available. The Purchaser further acknowledges that
if an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Shares, and on requirements relating
to the Company which are outside of the Purchaser's control.
Section 4.6 LEGENDS. The Purchaser understands that the Shares, and any
securities issued in respect thereof or exchange therefor, may bear one or all
of the following legends until such time, if any, as the Shares or such
securities (i) are sold in compliance with Rule 144 under the Securities Act (or
a comparable successor provision) or in a transaction registered under the
Securities Act or (ii) may be resold pursuant to Rule 144(k) under the
Securities Act (or a comparable successor provision):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
SALE OR DISTRIBUTION MAY BE EFFECTED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN APPLICABLE EXEMPTION THEREFROM AND
IN COMPLIANCE WITH THE TERMS OF THE STOCK PURCHASE AGREEMENT, DATED AS OF JUNE
10, 1999, WITH THE COMPANY, A COPY OF WHICH IS AVAILABLE FROM THE COMPANY ON
REQUEST."
Section 4.7 FINDER'S FEES. The Purchaser has not retained any finder or
broker in connection with the transactions contemplated by this Agreement and
hereby agrees to indemnify and to hold the Company harmless from any liability
for any commission or compensation in the nature of a finder's fee to any broker
or other person or firm (and the costs and expenses of defending against such
liability or asserted liability) for which the Purchaser, or any of its
employees or representatives acting on behalf of
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the Purchaser, is or may be responsible as a result of the transactions
contemplated hereby.
ARTICLE V
COVENANTS
Section 5.1 HSR ACT FILINGS.
(a) The Purchaser shall make all filings required under the HSR Act
relating to the transactions contemplated by this Agreement and shall use
commercially reasonably efforts to cause any such required filings to be made
promptly after the date hereof.
(b) The Company shall make all filings required under the HSR Act
relating to the transactions contemplated by this Agreement and shall use
commercially reasonable efforts to cause any such required filings to be made
promptly after the date hereof.
(c) The parties will each use commercially reasonable efforts to
promptly furnish, or, cause to be furnished, any information that may be
required by the Federal Trade Commission (the "FTC") or the Department of
Justice (the "DOJ") under the HSR Act in order for the requisite approvals for
the purchase and sale of the Shares and the consummation of the related
transactions contemplated by this Agreement to be obtained or any applicable
waiting periods to be terminated or expire; provided, however, that in the event
the FTC or the DOJ issues a "second request" in connection with any such filing,
the parties hereto will consult with each other in good faith regarding
appropriate further action, which shall be taken only to the extent agreed upon
by all of the parties.
Section 5.2 TRANSFER RESTRICTIONS.
(a) The Purchaser shall not, directly or indirectly, sell, transfer,
assign, pledge or otherwise dispose of any interest in any of the Shares
acquired
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hereunder for a period of one (1) year following the First Closing Date (the
"Holding Period"); provided, however, that such agreement shall not be deemed to
limit the Purchaser's right to consummate a merger or other corporate
transaction involving a change of control of the Purchaser as a result of which
Shares may be deemed to be transferred by operation of law to a successor in
interest of the Purchaser; provided, further, that, notwithstanding anything in
this Section 5.2(a) to the contrary, but subject to Section 5.2(b), the
Purchaser shall be permitted to sell, transfer, assign or pledge all or any part
of the Shares to any affiliates of Purchaser or SOFTBANK Corp., a Japanese
corporation, including, without limitation, SOFTBANK Capital Partners and any
other partnership or other entity of which any direct or indirect subsidiary of
SOFTBANK Corp. is a general partner or has investment discretion, or any
employees of any of the foregoing (any such person or entity being herein
referred to as a "SOFTBANK Entity"). The Purchaser shall not sell or transfer
the Shares or any interest therein except in compliance with the Securities Act,
applicable state securities laws and this Agreement.
(b) Prior to, and as a condition to, any transfer referred to in the
second proviso to the first sentence of Section 5.2(a), the transferee shall
agree in writing, for the benefit of the Company, to be bound by the transfer
restrictions set forth in this Section 5.2.
Section 5.3 BOARD OF DIRECTORS. On and after the First Closing Date, the
Purchaser shall have the right to designate (i) a number of members of the
Company's Board of Directors equal to the product of (A) the total number of
authorized directors and (B) the aggregate Proportionate Share (as defined
below) of the Purchaser and the SOFTBANK Entities on the Company's Board of
Directors, rounded up to the nearest whole number, but not to exceed two
directors (the "Board Composition Requirement"), and (ii) so long as the
Purchaser and the SOFTBANK Entities collectively own 50% or more of the Shares
theretofore purchased hereunder, the Purchaser shall have the right to designate
one director to be a member of each committee of the Company's Board of
Directors.
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Section 5.4 PREEMPTIVE RIGHTS.
(a) If the Company proposes to issue, grant or sell Common Stock or
Rights, the Company shall first give to the Purchaser (so long as the Purchaser
owns at least 500,000 Shares) and any transferee of Shares from the Purchaser
then owning at least 500,000 Shares (appropriately adjusted for any stock split,
reverse stock split or stock dividend), except for any transferee that acquires
such Shares in a public offering registered under the Securities Act or in a
transaction on the open market effected pursuant to Rule 144 under the
Securities Act, (each a "Securityholder") written notice setting forth in
reasonable detail the price and other terms on which such shares of Common Stock
or Rights are proposed to be issued or sold, the terms of any such Rights and
the amount thereof proposed to be issued, granted or sold. Each Securityholder
shall thereafter have the preemptive right, exercisable by written notice to the
Company no later than twenty (20) days after the Company's notice is given, to
purchase the number of such shares of Common Stock or Rights set forth in the
Securityholder's notice (but in no event more than the Securityholder's
Proportionate Share (as defined below) thereof, as of the date of the Company's
notice), at the price and on the other terms set forth in the Company's notice.
Any notice by a Securityholder exercising the right to purchase shares of Common
Stock or Rights pursuant to this Section 5.4 shall constitute an irrevocable
commitment to purchase from the Company the shares of Common Stock or Rights
specified in such notice, subject to the maximum set forth in the preceding
sentence. If all the Securityholders exercise their preemptive rights set forth
in this Section 5.4(a) to the full extent of their Proportionate Share or if for
any other reason the Company shall not issue, grant or sell shares of Common
Stock or Rights to persons other than Securityholders, then the closing of the
purchase of shares of Common Stock or Rights by Securityholders shall take place
on such date, no less than ten (10) and no more than thirty (30) days after the
expiration of the 20-day period referred to above, as the Company may select,
and the Company shall notify the Securityholders of such closing at least seven
(7) days prior thereto. If all persons entitled
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thereto do not exercise their preemptive rights to the full extent of their
Proportionate Share and, as contemplated by Section 5.4(b), the Company shall
issue, grant or sell shares of Common Stock or Rights to persons other than
Securityholders, then the closing of the purchase of shares of Common Stock or
Rights shall take place at the same time as the closing of such issuance, grant
or sale.
(b) If all persons entitled thereto do not exercise their preemptive
rights to the full extent of their Proportionate Share, the Company shall use
its good faith and commercially reasonable efforts to issue, grant or sell the
remaining subject shares of Common Stock or Rights on the terms set forth in its
notice to Securityholders, unless the Company is advised by its financial
advisors that the remaining number or amount is too small to be reasonably sold.
From the expiration of the 20-day period first referred to in Section 5.4(a) and
for a period of 90 days thereafter, the Company may offer, issue, grant and sell
to any person or entity shares of Common Stock or Rights having the terms set
forth in the Company's notice relating to such shares of Common Stock or Rights
at a price and on other terms no less favorable to the Company, and including no
less cash, than those set forth in such notice (without deduction for reasonable
underwriting, sales agency and similar fees payable in connection therewith);
provided, however, that the Company may not issue, grant or sell shares of
Common Stock or Rights in an amount greater than the amount set forth in such
notice minus the amount purchased or committed to be purchased by
Securityholders rights.
(c) The provisions of this Section 5.4 shall not apply to the
following issuances of securities: (i) pursuant to an approved stock option
plan, stock purchase plan, or similar benefit program or agreement for the
benefit of employees of, or consultants to, the Company, where the primary
purpose is not to raise additional equity capital for the Company, (ii) the
issuance of Rights, or Common Stock issuable upon exercise of Rights, granted to
retailers or lessors engaged in bona fide business transactions with the
Company, where the primary purpose is not to raise
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additional equity capital for the Company, (iii) as direct consideration for the
acquisition by the Company of another business entity or the merger of any
business entity with or into the Company, (iv) in connection with a stock
dividend, (v) upon the exercise of warrants or options, or upon the conversion
of convertible securities, outstanding on the date hereof or as to which
Securityholders have been previously offered the right to participate as
contemplated hereby or (vi) in an underwritten public offering registered under
the Securities Act if the managing underwriters advise the Securityholders in
writing that the purchase of shares of Common Stock pursuant to the preemptive
rights afforded by this Section 5.4 would materially and adversely affect the
marketing of the offering.
(d) For purposes of this Section 5.4, the following terms shall have
the corresponding meanings set forth herein:
"Proportionate Share" means, with respect to each Securityholder, a
fraction the numerator of which is the total number of shares of Common Stock
owned and the number of shares of Common Stock issuable upon exercise of Rights
owned by such Securityholder, and the denominator of which is the total number
of shares of Common Stock outstanding plus the number of shares of Common Stock
issuable upon exercise of all Rights outstanding.
"Right" means any option, warrant, security, right or other instrument
convertible into or exchangeable or exercisable for, or otherwise giving the
holder thereof the right to acquire, directly or indirectly, from the Company
any Common Stock or any other such option, warrant, security, right or
instrument, including any instrument issued by the Company or any subsidiary
thereof the value of which is measured by reference to the value of the Common
Stock.
Section 5.5 ALTERNATIVE TRANSACTIONS. The Company covenants that prior to
the earlier of (i) the Second Closing Date and (ii) the date 90 days after the
date hereof, (A) neither the Company nor any of its officers,
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directors, advisors, agents or any other person or entity acting on behalf of
any or all of them (collectively, "Representatives") shall, directly or
indirectly, initiate, solicit, induce, support, encourage (including, without
limitation by providing non-public information), agree to, or enter into any
alternative proposal, negotiation or transaction for an investment in or sale of
newly-issued equity interests in or voting securities of the Company (an
"Alternative Transaction") and (B) in the event the Company receives any
proposal for an Alternative Transaction, the Company shall promptly notify the
Purchaser of the receipt of such proposal; provided, however, that this Section
5.5 shall not restrict the Company's ability to incur bona fide indebtedness
that is not convertible into or exchangeable for any equity security of the
Company; provided, further, that, notwithstanding this Section 5.5, the Company
may issue or sell in a transaction pursuant to a bona fide offer from a third
party (x) its Common Stock at a price per share of not less than $13.00 (the
"Minimum Price") and (y) convertible debt securities or convertible preferred
securities at a conversion price per share not less than the Minimum Price, in
each case (x) and (y) provided that the Purchaser is previously offered in
writing the opportunity to purchase such securities on the same terms as, or on
terms more favorable to the Purchaser than, those offered by such third party
(it being understood that (i) such written offer to the Purchaser shall identify
the third party offeror and describe with specificity the terms of the
transaction proposed to be consummated with such third party and (ii) the
Purchaser shall exercise such right of first refusal within 2 business days
after receipt of such notice). In the event of a stock split, reverse stock
split or stock dividend involving the Company, the Minimum Price shall be
appropriately adjusted.
Section 5.6 MEETING OF THE COMPANY STOCKHOLDERS. The Company shall take all
customary actions in accordance with applicable law and its Certificate of
Incorporation and By-Laws to seek stockholder approval by the holders of a
majority of the outstanding shares of Common Stock at the annual meeting of
stockholders to be held on or before July 13, 1999 (the "Annual Meeting") (i) of
the Second
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Purchase as contemplated hereby, (ii) of an amendment to the Company's
certificate of incorporation increasing the authorized number of shares of
Common Stock to 30,000,000 (the "Charter Amendment") and (iii) of election of a
Board of Directors meeting the Board Composition Requirements (calculated in a
manner that gives effect to the purchase of the Shares to be purchased at the
Second Closing). The Board of Directors of the Company shall recommend such
approval, and the Company shall solicit such approval in accordance with its
customary practices. No amendment or supplement to the proxy statement
soliciting proxies in connection with such Annual Meeting shall be filed or made
by the Company without prior consultation with the Purchaser and its counsel.
Section 5.7 PUBLICITY. The Company and the Purchaser shall consult with
each other prior to issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and prior to
making any filings with any federal or state governmental or regulatory agency
or any self-regulatory organization with respect thereto.
Section 5.8 LIMITATION ON OWNERSHIP OF COMMON STOCK. Commencing on the
First Closing Date and prior to the fifth anniversary thereof, the Purchaser
shall not acquire beneficial ownership of any Common Stock or any Rights
(except, in any case, by way of stock dividends, stock splits or other
distributions or offerings made available to holders of Common Stock generally)
without the written consent of the Company, if the effect of such acquisition
would be to increase the Purchaser's Proportionate Share to greater than 35%;
provided, however, that:
(i) Nothing herein shall prevent the Purchaser from acquiring Common
Stock or Rights if it is publicly disclosed or the Purchaser otherwise learns
that any person or persons acting together that would constitute a "group" for
purposes of Section 13(d) of the Exchange Act (a "Group") has acquired or
proposes to acquire, immediately or at some later date, beneficial ownership
(within the meaning of Rule 13(d)-3 under the Exchange Act) of Common Stock
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which results or would result in such person or Group (other than Michael G.
Rubin, any member of Mr. Rubin's immediate family or any trust of which the
beneficiaries are Mr. Rubin and/or members of his immediate family) benefi-
cially owning Common Stock in excess of the maximum number of shares of Common
Stock the Purchaser is then permitted to acquire hereunder; provided that the
number of additional shares of Common Stock acquired by the Purchaser pursuant
to this paragraph (i) when added to the Common Stock then beneficially owned by
the Purchaser shall not exceed the number of shares of Common Stock beneficially
owned or proposed to be beneficially owned by such other person or Group;
(ii) Nothing herein shall prevent the Purchaser from acquiring Common
Stock or Rights, without regard to the limitations of this Section, if a tender
or exchange offer is made as evidenced by the filing with the Securities and
Exchange Commission of a Statement on Schedule 14D-1 (or any successor schedule
or form promulgated or adopted for such purpose) and the actual dissemination of
tender offer materials to securityholders by any person or Group (not including
the Company or the Purchaser) which offers to purchase or exchange for cash or
other consideration Common Stock which, if added to the Common Stock (if any)
already owned by such person or Group would result in such person or Group
beneficially owning Common Stock representing more than 30% of the then
outstanding Common Stock; and
(iii) The Purchaser shall not be obligated to dispose of any Common
Stock if the Purchaser's Proportionate Share is increased as a result of (a) any
actions taken by the Purchaser which are permitted under paragraph (i) or (ii)
of this Section 5.8, (b) a recapitalization of the Company or (c) a repurchase
of any shares of Common Stock by the Company or any other action taken by the
Company or its affiliates or associates.
Section 5.9 FULFILLMENT OF CONDITIONS. Each of the Company and the
Purchaser shall use reasonable efforts to perform, comply with and fulfill all
obligations, covenants and conditions required by this Agreement to be
performed,
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complied with or fulfilled on its part prior to or at the Closing Dates.
Section 5.10 FURTHER ASSURANCES. The Company shall use its reasonable
efforts at any time and from time to time prior to, at and after the Closings to
execute and deliver to the Purchaser such further documents and instruments and
to take all such further actions as the Purchaser reasonably may request in
order to convey and transfer the Shares to the Purchaser and to consummate the
transactions contemplated by this Agreement and the Registration Rights
Agreement.
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS. The obligation of
the Purchaser to purchase the Shares at each Closing is subject to the
fulfillment on or prior to the relevant Closing Date of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Article
III hereof shall be true and correct in all material respects as of the date of
this Agreement and as of such Closing Date (except with respect to
representations and warranties made as of a specific time, which shall be true
in all material respects as of such time, and except for representations and
warranties containing a materiality qualification, which must be true in all
respects) with the same effect as though such representations and warranties had
been made at and as of such Closing Date, provided, however, that the
representation set forth in Section 3.5(c) shall be deemed true in all material
respects as of such Closing Date so long as the Company updates Schedule 3.5(c)
as of such Closing Date; and the Company shall have performed all obligations
herein required to be performed by it on or prior to such Closing Date in all
material respects (except with respect to obligations containing a materiality
qualification, which must be performed in all respects).
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(b) REGISTRATION RIGHTS AGREEMENT. The Company shall have duly
executed and delivered the Registration Rights Agreement.
(c) VOTING AGREEMENT. Michael G. Rubin shall have duly executed and
delivered the Voting Agreement in the form attached hereto as Exhibit C.
(d) BOARD COMPOSITION. A Board of Directors meeting the Board
Composition Requirement applicable after giving effect to the purchase of the
Shares to be purchased at such Closing shall have been duly established and in
place.
(e) STOCKHOLDER APPROVAL. With respect to the Second Closing,
stockholders of the Company holding a majority of the outstanding shares of
Common Stock shall have approved the Second Purchase and the Charter Amendment
as provided herein.
(f) COMPLIANCE CERTIFICATE. The President of the Company shall deliver
to the Purchaser at such Closing a certificate certifying that the conditions
specified in Section 6.1(a) have been fulfilled.
(g) OPINION OF COMPANY'S COUNSEL. The Purchaser shall have received
from Blank, Rome, Comisky & McCauley LLP, counsel to the Company, an opinion
addressed to the Purchaser, dated such Closing Date, reasonably satisfactory in
form and substance to Sullivan & Cromwell, counsel to the Purchaser.
(h) NO INJUNCTION, ORDER, ETC. There shall be no injunction, order or
decree of any nature of any court or government authority of competent
jurisdiction that is in effect that restrains or prohibits the consummation of
the transactions contemplated hereby.
(i) WAITING PERIOD. Any waiting period applicable to the sale of the
Shares under the HSR Act shall have expired or been terminated.
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Section 6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Shares at each Closing is subject to the
fulfillment on or prior to the relevant Closing Date of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE OF
OBLIGATIONS. The representations and warranties of the Purchaser in Article IV
hereof shall be true and correct in all material respects as of the date of this
Agreement and as of such Closing Date (except with respect to representations
and warranties made as of a specific time, which shall be true in all material
respects as of such time, and except for representations and warranties
containing a materiality qualification, which must be true in all respects) with
the same effect as though such representations and warranties had been made at
and as of such Closing Date; and the Purchaser shall have performed all
obligations herein required to be performed by it on or prior to such Closing
Date in all material respects (except with respect to covenants containing a
materiality qualification, which must be performed in all respects).
(b) REGISTRATION RIGHTS AGREEMENT. The Purchaser shall have duly
executed and delivered the Registration Rights Agreement.
(c) VOTING AGREEMENT. The Purchaser shall have duly executed and
delivered the Voting Agreement in the form attached hereto as Exhibit D.
(d) STOCKHOLDER APPROVAL. With respect to the Second Closing,
stockholders of the Company holding a majority of the outstanding shares of
Common Stock shall have approved the Second Purchase and the Charter Amendment
as provided herein.
(e) NO INJUNCTION, ORDER, ETC. There shall be no injunction, order or
decree of any nature of any court or government authority of competent
jurisdiction that is in effect that restrains or prohibits the consummation of
the transactions contemplated hereby.
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(f) WAITING PERIOD. Any waiting period applicable to the sale of the
Shares under the HSR Act shall have expired or been terminated.
ARTICLE VII
INDEMNIFICATION
Section 7.1 INDEMNIFICATION. Each of the Company and the Purchaser (an
"Indemnifying Party") covenants and agrees to indemnify and hold the other (the
"Indemnified Party") harmless from and against, and to reimburse the Indemnified
Party for, any claim for any losses, damages, liabilities or expenses, including
reasonable counsel fees (collectively "Damages") incurred by such Indemnified
Party by reason of or arising from (i) any misrepresentation or breach of any
representation or warranty of such Indemnifying Party contained in this
Agreement or in any instrument delivered hereunder or (ii) any failure by such
Indemnifying Party to perform any obligation or covenant required to be
performed by it under any provision of this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
Section 8.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive the closing of the transactions
contemplated hereby.
Section 8.3 SUCCESSORS AND ASSIGNS. Except as expressly provided herein,
the rights and obligations hereunder may not be assigned or delegated by the
Purchaser or the Company without the prior written consent of the other;
provided, however, that Purchaser may assign, in whole or in part, its rights
and delegate its obligation, hereunder (including, without limitation, the right
to purchase any or all of the Shares and the obligation to pay
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all or any portion of the Purchase Price for the Shares) to any SOFTBANK Entity;
provided, further, that any such delegation by the Purchaser of its obligations
shall not relieve Purchaser of liability to the Company that it would otherwise
have in the event such obligations are not performed. The provisions hereof
shall inure to the benefit of, and be binding upon, the successors and permitted
assigns of the parties hereto.
Section 8.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the
full and entire understanding and agreement among the parties with regard to the
subject matter hereof. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Purchaser.
Section 8.5 NOTICES AND OTHER COMMUNICATIONS. Every notice or other
communication required or contemplated by this Agreement by either party shall
be delivered either by (i) personal delivery, (ii) postage prepaid return
receipt requested by registered or certified mail, (iii) overnight courier, such
as Federal Express or UPS, or (iv) facsimile with a confirmation copy sent
simultaneously by postage prepaid, return receipt requested, registered or
certified mail, in each case addressed to the Company or the Purchaser as the
case may be at the following address:
To the Company: Global Sports, Inc.
555 South Henderson Road
King of Prussia, Pennsylvania 19406
Telephone: (610) 768-0900
Facsimile: (610) 768-0753
Attn: Michael G. Rubin
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With a copy to:
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103
Attn: Arthur Miller, Esq.
Telephone: (215) 569-5544
Facsimile: (215) 569-5628
To the Purchaser: SOFTBANK Holdings Inc.
10 Langley Road, Suite 403
Newton Center, MA 02159
Attn: Ronald D. Fisher
Facsimile: (617) 928-9301
SOFTBANK America Inc.
300 Delaware Avenue, Suite 900
Wilmington, Delaware 19801
Attn: Francis Jacobs
Facsimile: (302) 552-3128
With a copy to: Sullivan & Cromwell
1888 Century Park East
Suite 2100
Los Angeles, CA 90067
Attn: John L. Savva, Esq.
Facsimile: (310) 712-8800
or at such other address as the intended recipient previously shall have
designated by written notice given in like manner to the other party. Notice by
registered or certified mail shall be effective on the date it is officially
recorded as delivered to the intended recipient by return receipt or equivalent,
and in the absence of such record of delivery, the effective date shall be
presumed to have been the fifth (5th) business day after it was deposited in the
mail. All notices delivered in person or sent by courier shall be deemed to have
been delivered to and received by the addressee and shall be effective on the
date of personal delivery; notices delivered by facsimile with simultaneous
confirmation copy by registered or
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certified mail shall be deemed delivered to and received by the addressee and
effective on the date sent. Notice not given in writing shall be effective only
if acknowledged in writing by a duly authorized representative of the party to
whom it was given.
Section 8.6 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any person or entity hereunder shall impair
any such right, power or remedy nor shall it be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any person or entity hereunder of any breach or default
under this Agreement, or any waiver on the part of any such person or entity of
any provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies either under this Agreement, or by law or otherwise shall be cumulative
and not alternative.
Section 8.7 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 8.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. Execution and delivery of this Agreement by
exchange of facsimile copies bearing the facsimile signature of a party hereto
shall constitute a valid and binding execution and delivery of this Agreement by
such party.
Section 8.9 ATTORNEYS' FEES. If any action or proceeding shall be commenced
to enforce this Agreement or any right arising in connection with this
Agreement, the prevailing party in such action or proceeding shall be
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entitled to recover from the other party the reasonable attorneys' fees, costs
and expenses incurred by such prevailing party in connection with such action or
proceeding.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
GLOBAL SPORTS, INC.
By:____________________________
Name:
Title:
SOFTBANK AMERICA INC.
By:____________________________
Name:
Title:
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EXHIBIT A
SCHEDULE OF PURCHASES BY PURCHASER
FIRST CLOSING
SHARES PURCHASED 2,432,692
PURCHASE PRICE $31,624,996
SECOND CLOSING
SHARES PURCHASED 3,721,158
PURCHASE PRICE $48,375,054
TOTAL SHARES PURCHASED 6,153,850
TOTAL PURCHASE PRICE $80,000,050
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EXHIBIT B
REGISTRATION RIGHTS
AGREEMENT
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EXHIBIT C
VOTING AGREEMENT
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EXHIBIT D
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of June 10, 1999
By and Among
GLOBAL SPORTS, INC.
and
SOFTBANK AMERICA INC.
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of June 10, 1999, by and among
Global Sports, Inc., a Delaware corporation (the "Company"), and SOFTBANK
America Inc., a Delaware corporation ("SOFTBANK America").
RECITALS
WHEREAS, the Company and SOFTBANK America have entered into the Stock
Purchase Agreement, dated as of June 10, 1999 (the "Purchase Agreement"),
providing for, among other things, the sale by the Company and the purchase by
SOFTBANK America or its designees of an aggregate of 6,153,850 shares of Common
Stock; and
WHEREAS, this Agreement is being entered into in order to induce
SOFTBANK America to purchase the Common Stock pursuant to the Purchase
Agreement;
NOW, THEREFORE, in consideration of the premises, and of the
mutual covenants, representations, warranties and agreements herein contained,
the parties hereto agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the
following respective meanings:
(a) "Closing Date" shall mean the First Closing Date specified
in the Purchase Agreement.
(b) "Commission" shall mean the Securities and Exchange Commission,
or any other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular purpose.
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(c) "Common Stock" shall mean the Common Stock, par value $0.01 per
share, of the Company purchased by SOFTBANK America pursuant to the Purchase
Agreement.
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934, or
any successor thereto, as the same shall be amended from time to time.
(e)"Existing Registration Agreements" shall mean the agreements set
forth on Schedule 1(e) hereto.
(f) "Holder" shall mean any party hereto (other than the Company) and
each of its respective successive successors and assigns who acquire Registrable
Securities, directly or indirectly, from any such party or from any successive
successor or assign of any such party.
(g) The term "person" shall mean a corporation, association,
partnership, limited liability company, organization, business, individual,
government or political subdivision thereof or governmental agency.
(h) "Registrable Securities" shall mean the Common Stock; and
any securities issued successively in exchange for or in respect of any of the
foregoing, whether pursuant to a merger or consolidation, as a result of any
successive stock split or reclassification of, or stock dividend on, any of the
foregoing or otherwise; provided, however, that such shares of Common Stock or
securities shall cease to be Registrable Securities when (i) a registration
statement registering such shares of Common Stock or securities, as the case may
be, under the Securities Act has been declared effective and such shares of
Common Stock or securities, as the case may be, have been sold or otherwise
transferred by the Holder thereof pursuant to such effective registration
statement or (ii) such shares of Common Stock or securities, as the case may be,
are sold pursuant to Rule 144 (or any successor provision) promulgated under the
Securities Act under circumstances in which any legend borne by such shares of
Common Stock or securities relating to restrictions on transferability
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thereof, under the Securities Act or otherwise, is removed by the Company.
(i) "Registration Expenses" shall have the meaning assigned
thereto in Section 4 of this Agreement.
(j) "Rights" shall mean any option, warrant, security, right or
other instrument convertible into or exchangeable or exercisable for, or
otherwise giving the holder thereof the right to acquire, directly or
indirectly, any Common Stock or any other such option, warrant, security, right
or instrument, including any instrument the value of which is measured by
reference to the value of the Common Stock.
(k) "Securities Act" shall mean the Securities Act of 1933,
or any successor thereto, as the same shall be amended from time to time.
(l) "Senior Registration Rights Agreement" shall mean (i) the
Registration Rights Agreement, dated May 12, 1998, among the Company, DMJ
Financial, Inc., James J. Salter, Kenneth J. Finkelstein and certain individuals
and entities specified therein, and (ii) the Registration Rights Agreement,
dated July 27, 1998, between the Company and Jerome F. Sheldon.
2. Registration Under the Securities Act.
(a) Demand Registrations.
(i) At any time from and after the date 12 months after the Closing
Date, any Holder or Holders may elect, by giving written notice thereof to the
Company, to require the Company to use its reasonable best efforts to register
all or a portion of its Registrable Securities under the Securities Act;
provided, however, that the Company shall be obligated to register the
Registrable Securities upon such election only if the Registrable Securities to
be registered, in the aggregate, constitute 5% or more of the then-outstanding
securities of the class or series to which such Registrable Securities belong;
provided, further, that
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in any event the Company shall be obligated to register such Registrable
Securities upon such election only if the Registrable Securities to be
registered have a total market value (or, if there is no existing public market,
a proposed maximum aggregate offering price to be set forth on the facing page
of the applicable registration statement) of at least $5 million. Promptly
following such election, the Company shall (1) give notice to each other Holder
of Registrable Securities of such election, which notice shall set forth the
identity of the electing Holders, and (2) use its reasonable best efforts to
cause to be declared or become effective under the Securities Act a registration
statement providing for the registration of, and the sale in accordance with the
intended method or methods of distribution thereof by the electing Holders of,
the Registrable Securities. The Company shall be required to cause to become
effective pursuant to this Section 2(a) no more than three registration
statements in the aggregate and no more than one registration statement in any
six month period. Notwithstanding the foregoing, the Company shall not be
obligated to register Registrable Securities upon any election pursuant to this
Section 2(a)(i) if (1) fewer than 180 days have elapsed after the effective date
of a registration statement registering newly issued or treasury shares of the
Company's common stock for purposes of a primary offering (as defined in Section
2(b)(i) hereof) on a firm commitment underwritten basis, but only if and to the
extent that (x) the underwriting agreement entered into in connection with any
such offering expressly prohibited registration of Registrable Securities upon
such election and (y) no period referred to in this sentence, and no
postponement referred to in Section 2(a)(iii) hereof, was in effect during the
12 months immediately preceding the commencement of such 180 day period, unless
any Holders having made elections during the previous period or postponement, as
the case may be, shall have had the opportunity to register their Registrable
Securities pursuant to an effective registration statement prior to the current
such period.
(ii) In the event of any registration of Registrable Securities
pursuant to Section 2(a)(i) hereof,
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the Company shall not, without the express written consent of the Holders of a
majority of such Registrable Securities, cause or permit any other securities of
the Company or of any other Person (whether such securities are to be issued by
the Company, are held in the Company's treasury or are then outstanding and held
by other persons) to be covered by such registration statement or otherwise to
be included in such registration; provided, however, that any other Holder of
Registrable Securities may elect, by giving written notice to such effect to the
Company no later than 15 business days after the Company shall have given the
notice referred to in clause (1) of Section 2(a)(i), to have such Holder's
Registrable Securities included in such registration, in which case such Holder
shall be treated for all purposes hereunder as having made a demand for
registration pursuant to this Section 2(a).
(iii) In the event that, following any election pursuant to Section
2(a)(i) hereof but prior to the filing of a registration statement in respect of
such election, (A) the Board of Directors of the Company, in its reasonable
judgment and in good faith, resolves that the filing of such registration
statement and the offering of Registrable Securities pursuant thereto would
materially interfere with any significant acquisition, corporate reorganization
or other similar transaction involving the Company, and (B) the Company gives
the Holders having made such election written notice of such determination
(which notice shall include a copy of such resolution), the Company shall,
notwithstanding the provisions of Section 2(a)(i) hereof, be entitled to
postpone for up to 90 days the filing of any registration statement otherwise
required to be prepared and filed by it pursuant to Section 2(a)(i) hereof;
provided, however, that no such postponement may be effected if any other
postponement of a registration pursuant to this Section 2 was in effect during
the 12 months immediately preceding the commencement of such postponement,
unless any Holders having made elections during the previous postponement shall
have had the opportunity to register their Registrable Securities pursuant to an
effective registration statement prior to the current postponement.
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<PAGE>
(b) "Piggy-Back" Registrations.
(i) If, at any time, the Company proposes to register any of
its Common Stock or Rights or any other equity securities under the Securities
Act on a registration statement on Form S-1, Form S-2 or Form S-3 (or an
equivalent general registration form then in effect) for purposes of an offering
or sale by or on behalf of the Company of its Common Stock or Rights or such
equity securities for its own account (a "primary offering"), or upon the
request or for the account of any holder of its Common Stock or Rights or any
such equity securities (a "secondary offering"), or for purposes of a combined
primary and secondary offering (a "combined offering"), then each such time the
Company shall, at least 10 business days prior to the time when any such
registration statement is filed with the Commission, give prompt written notice
to the Holders of its intention to do so. Such notice shall specify, at a
minimum, the number and class of shares, Rights or equity securities so proposed
to be registered, the proposed date of filing of such registration statement,
any proposed means of distribution of such shares, Rights or securities, any
proposed managing underwriter or underwriters of such shares, Rights or
securities and a good faith estimate by the Company of the proposed maximum
offering price thereof, as such price is proposed to appear on the facing page
of such registration statement. Upon the written direction of any Holder or
Holders, given within five business days following the receipt by such Holder of
any such written notice (which direction shall specify the number of Registrable
Securities intended to be disposed of by such Holder and the intended method of
distribution thereof), the Company shall include in such registration statement
any or all of the Registrable Securities then held by such Holder requesting
such registration (a "Selling Shareholder") to the extent necessary to permit
the sale or other disposition of such Registrable Securities as such Holder has
so directed the Company to be so registered. Notwithstanding the foregoing, the
Holders shall not have any right under this Section 2(b) if the registration
proposed to be effected by the Company relates solely to shares of Common Stock,
Rights or other equity securities
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which are issuable solely to officers or employees of the Company or any
subsidiary thereof pursuant to a bona fide employee stock option, bonus or other
employee benefit plan or as direct consideration in connection with a merger,
exchange offer or acquisition of a business.
(ii) In the event that the Company proposes to register shares of
Common Stock, Rights or other equity securities for purposes of a primary
offering, and any managing underwriter shall advise the Company and the Selling
Shareholders in writing that, in its opinion, the inclusion in the registration
statement of some or all of the Registrable Securities sought to be registered
by such Selling Shareholders creates a substantial risk that the price per unit
the Company will derive from such registration will be materially and adversely
affected or that the number of shares, Rights or securities sought to be
registered (including, in addition to the securities sought to be registered by
the Company, any securities sought to be included in such registration statement
by any other shareholder pursuant to "piggyback" registration rights (a
"Piggyback Shareholder") and those sought to be registered by the Selling
Shareholders) is too large a number to be reasonably sold, then the Company will
include in such registration statement such number of shares, Rights or
securities as the Company, the Piggyback Shareholders and such Selling
Shareholders are so advised can be sold in such offering without such an effect
(the "Primary Maximum Number"), as follows and in the following order of
priority: (A) first, such number of shares, Rights or securities as the Company,
in its reasonable judgment and acting in good faith and in accordance with sound
financial practice, shall have determined, (B) second, if and to the extent that
the number of shares, Rights or securities to be registered under clause (A) is
less than the Primary Maximum Number, shares, Rights or securities of each
Piggyback Shareholder that is exercising "piggyback" registration rights under a
Senior Registration Rights Agreement, and (C) third, if and to the extent that
the number of shares, Rights or securities to be registered under clauses (A)
and (B) is less than the Primary Maximum Number, Registrable Securities of each
Selling Shareholder and shares, Rights or securities
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of each other Piggyback Shareholder, pro rata, and without any priority as
between the Selling Shareholders and such Piggyback Shareholders, in proportion
to the number sought to be registered by each Selling Shareholder and each such
Piggyback Shareholder relative to the number sought to be registered by all the
Selling Shareholders and all such Piggyback Shareholders, which in the
aggregate, when added to the number of shares, Rights or securities to be
registered under clauses (A) and (B), equals the Primary Maximum Number.
(iii) In the event that the Company proposes to register shares of
Common Stock or other equity securities for purposes of a secondary offering,
upon the request or for the account of any holder thereof pursuant to "demand"
registration rights of such holder (each a "Requesting Shareholder"), and any
managing underwriter shall advise the Requesting Shareholder or Shareholders and
the Selling Shareholders in writing that, in its opinion, the inclusion in the
registration statement of some or all of the shares, Rights or securities sought
to be registered by the Requesting Shareholders and of the Registrable
Securities sought to be registered by the Selling Shareholders creates a
substantial risk that the price per unit that such Requesting Shareholder or
Shareholders and such Selling Shareholders will derive from such registration
will be materially and adversely affected or that the number of shares, Rights
or securities sought to be registered (including any securities sought to be
registered at the instance of the Requesting Shareholder or Shareholders, any
securities sought to be included in such Registration Statement by any Piggyback
Shareholder and those sought to be registered by the Selling Shareholders) is
too large a number to be reasonably sold, the Company will include in such
registration statement such number of shares, Rights or securities as the
Requesting Shareholders and the Selling Shareholders are so advised can
reasonably be sold in such offering, or can be sold without such an effect (the
"Secondary Maximum Number"), as follows and in the following order of priority:
(A) first, such number of shares, Rights or securities as the Requesting
Shareholder shall have requested, (B) second, if and to the extent that the
number
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<PAGE>
of shares, Rights or securities to be registered under clause (A) is less than
the Secondary Maximum Number, shares, Rights or securities of each Piggyback
Shareholder that is exercising "piggyback" registration rights under a Senior
Registration Rights Agreement, and (C) third, if and to the extent that the
number of shares, Rights or securities to be registered under clauses (A) and
(B) is less than the Secondary Maximum Number, Registrable Securities of each
Selling Shareholder and shares, Rights or securities of each other Piggyback
Shareholder, pro rata, and without any priority as between the Selling
Shareholders and each such Piggyback Shareholders, in proportion to the number
sought to be registered by each Selling Shareholder and such Piggyback
Shareholder relative to the number sought to be registered by all the Selling
Shareholders and all such Piggyback Shareholders, which, in the aggregate, when
added to the number of shares, Rights or securities to be registered under
clauses (A) and (B), equals the Secondary Maximum Number.
(iv) In the event that the Company proposes to register shares of
Common Stock, Rights or other equity securities for purposes of a combined
offering, and any managing underwriter shall advise the Company, the Requesting
Shareholder or Shareholders and the Selling Shareholders in writing that, in its
opinion, the inclusion in the registration statement of some or all of the
Registrable Securities sought to be registered by the Selling Shareholders and
any shares, Rights or securities sought to be registered by Piggyback
Shareholders creates a substantial risk that the price per unit the Company
and/or the Requesting Shareholders will derive from such registration will be
materially and adversely affected, then the Company will include in such
registration statement such number of shares, Rights or securities as the
Company, the Requesting Shareholders, the Piggyback Shareholders and the Selling
Shareholders are so advised can be sold in such offering without such an effect
(the "Combined Maximum Number"), as follows and in the following order of
priority: (A) first, such number of shares, Rights or securities as the Company,
in its reasonable judgment and acting in good faith and in accordance with sound
financial practice, shall
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have determined, and any shares, Rights or securities sought to be registered by
any Requesting Shareholders, (B) second, if and to the extent that the number of
shares, Rights or securities to be registered under clause (A) is less than the
Combined Maximum Number, shares, Rights or securities of each Piggyback
Shareholder that is exercising "piggyback" registration rights under a Senior
Registration Rights Agreement, and (C) third, if and to the extent that the
number of shares, Rights or securities to be registered under clauses (A) and
(B) is less than the Combined Maximum Number, such number of Registrable
Securities of each Selling Shareholder and such number of shares, Rights or
securities of each other Piggyback Shareholder, pro rata, and without any
priority as between the Selling Shareholders and each such Piggyback
Shareholders, in proportion to the number sought to be registered by each
Selling Shareholder and each such Piggyback Shareholder relative to the number
sought to be registered by all the Requesting Shareholders and Selling
Shareholders, which, in the aggregate, when added to the number of shares,
Rights or securities to be registered under clauses (A) and (B), equals the
Combined Maximum Number.
(c) Withdrawals. Any Holder having notified or directed the
Company to include any or all of his or its Registrable Securities in a
registration statement pursuant to Section 2(a) or 2(b) hereof shall have the
right to withdraw such notice or direction with respect to any or all of the
Registrable Securities designated for registration thereby by giving written
notice to such effect to the Company at least five business days prior to the
anticipated effective date of such registration statement. In the event of any
such withdrawal, the Company shall amend such registration statement and take
such other actions as may be necessary so that such Registrable Securities are
not included in the applicable registration and not sold pursuant thereto, and
such Registrable Securities shall continue to be Registrable Securities in
accordance herewith. In the event of any such withdrawal with respect to a
direction pursuant to Section 2(a), the Holders, at their option, may elect (i)
to pay the Registration Expenses (as defined in Section 4 hereof), incurred in
connection
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with the registration statement so withdrawn prior to the date such written
notice of withdrawal is given, in which event such direction shall not be deemed
to have utilized one of the three occasions on which Holders may demand
registration pursuant to Section 2(a) or (ii) not to pay such Registration
Expenses, in which event such direction shall be deemed, notwithstanding such
withdrawal, to have utilized one of such occasions. No such withdrawal shall
affect the obligations of the Company with respect to Registrable Securities not
so withdrawn, provided, however, that in the case of a registration pursuant to
Section 2(a) hereof, if such withdrawal shall reduce the total market value of
the Registrable Securities to be registered (or, if applicable, the proposed
maximum aggregate offering price thereof) below $5 million, then the Company
shall, prior to the filing or effectiveness, as appropriate, of such
registration statement, give each Holder of Registrable Securities so to be
registered notice, referring to this Agreement, of such fact and, within ten
business days following the giving of such notice, either the Company or the
Holders of a majority of such Registrable Securities may, by written notice to
each Holder of such Registrable Securities or the Company, as the case may be,
elect that such registration statement not be filed or, if it has theretofore
been filed, that it be withdrawn. During such ten business day period, the
Company shall not file such registration statement or, if it has theretofore
been filed, shall use its reasonable best efforts not to permit it to become
effective. In the event of any election contemplated by the proviso to the next
preceding sentence, no registration statement with respect to Registrable
Securities shall thereafter be filed with the Commission without compliance with
all of the procedures set forth in Section 2(a) hereof.
3. Registration Procedures.
(a) In connection with the Company's obligations with respect
to any registration of Registrable Securities pursuant to Section 2 hereof, the
Company shall use its reasonable best efforts to effect or cause such
registration to permit the sale of the Registrable Securities by the
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Holders thereof in accordance with the intended method or methods of
distribution thereof described in the registration statement relating thereto
and to maintain the effectiveness of such registration statement for a period of
six calendar months after the date of effectiveness of such registration
statement or, if shorter, until the disposition of all of the Registrable
Securities covered by such registration statement is completed. In connection
therewith, the Company shall, as soon as reasonably possible:
(i) prepare and file with the Commission a registration statement with
respect to such registration on any form which may be utilized by the
Company and which shall permit the disposition of the Registrable
Securities in accordance with the intended method or methods thereof, as
specified in writing by the Holders thereof, and use its reasonable best
efforts to cause such registration statement to become effective as soon as
reasonably possible thereafter;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus included
therein as may be necessary to effect and maintain the effectiveness of
such registration statement and as may be required by the applicable rules
and regulations of the Commission and the instructions applicable to the
form of such registration statement, and furnish to the underwriters, if
any, of the Registrable Securities to be registered, the sales or placement
agent, if any, therefor, and a representative of the Holders of Registrable
Securities registered thereby copies of any such supplement or amendment
prior to its being used and/or filed with the Commission;
(iii) comply with the provisions of the Securities Act applicable to
issuers with respect to the disposition of all of the Registrable
Securities covered by such registration statement in accordance with the
intended methods of disposition by the Holders thereof set forth in such
registration statement, in
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any such case for a period of six calendar months after the date of
effectiveness of such registration statement or, if shorter, until such
disposition is completed;
(iv) provide (A) any Holder registering more than 10% of the
Registrable Securities to be registered, (B) the underwriters (which term,
for purposes of this Agreement, shall include a person deemed to be an
underwriter within the meaning of Section 2(11) of the Securities Act), if
any, of the Registrable Securities to be registered, (C) the sales or
placement agent, if any, therefor, (D) counsel for such underwriters or
agent, and (E) counsel for the Holders thereof the opportunity to
participate in the preparation of such registration statement, each
prospectus included therein or filed with the Commission, and each
amendment or supplement thereto;
(v) for a reasonable period prior to the filing of such registration
statement, and throughout the period specified in Section 3(a)(iii) hereof,
make available for inspection by the parties referred to in Section
3(a)(iv), subject to execution and delivery of a confidentiality agreement
in customary form in favor of the Company by the Holders seeking to
exercise such inspection rights, above such financial and other information
and books and records of the Company, and cause the officers, directors,
employees, counsel and independent certified public accountants of the
Company to respond to such inquiries, as shall be reasonably necessary, in
the judgment of the respective counsel referred to in such Section, to
conduct a reasonable investigation within the meaning of Section 11 of the
Securities Act;
(vi) promptly notify the selling Holders of Registrable Securities,
the sales or placement agent, if any, therefor and the managing underwriter
or underwriters, if any, thereof and confirm such advice in writing, (A)
when such registration statement or the prospectus included therein or any
prospectus amendment
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or supplement or post-effective amendment has been filed, and, with respect
to such registration statement or any post-effective amendment, when the
same has become effective, (B) of any comments by the Commission and by the
Blue Sky or securities commissioner or regulator of any state with respect
thereto or any request by the Commission for amendments or supplements to
such registration statement or prospectus or for additional information,
(C) of the issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation or
threatening of any proceedings for that purpose, (D) if at any time the
representations and warranties of the Company contemplated by Section
3(a)(xv) or Section 5 hereof cease to be true and correct in all material
respects, (E) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose, or (F) at any time when a prospectus is
required to be delivered under the Securities Act, that such registration
statement, prospectus, prospectus supplement or post-effective amendment,
or any document incorporated by reference in any of the foregoing, contains
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(vii) use its reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of such registration statement or any
post-effective amendment thereto at the earliest practicable date;
(viii) if requested by any managing underwriter or underwriters, any
placement or sales agent or any Holder, promptly incorporate in a
prospectus supplement or post-effective amendment such information as is
required by the applicable rules and regulations of the Commission and as
such managing underwriter or underwriters, such agent or such Holder
specifies
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should be included therein relating to the terms of the sale of such
Registrable Securities, including, without limitation, information with
respect to the number of Registrable Securities being sold by the Holders
or agent or to any underwriters, the name and description of the Holders,
agent or underwriter, the offering price of such Registrable Securities and
any discount, commission or other compensation payable in respect thereof,
the purchase price being paid therefor by such underwriters and with
respect to any other terms of the offering of the Registrable Securities to
be sold by the Holders or agent or to such underwriters; and make all
required filings of such prospectus supplement or post-effective amendment
promptly after notification of the matters to be incorporated in such
prospectus supplement or post effective amendment;
(ix) furnish (A) to any Holder registering more than ten percent of
the Registrable Securities to be registered in such registration, each
placement or sales agent, if any, therefor, each underwriter, if any,
thereof and the respective counsel referred to in Section 3(a)(iv) an
executed copy of such registration statement, each such amendment and
supplement thereto (in each case including all exhibits thereto and
documents incorporated by reference therein), and (B) to any Holder of
Registrable Securities to be registered in such registration such number of
copies of such registration statement (excluding exhibits thereto and
documents incorporated by reference therein unless specifically so
requested by any Holder, agent or underwriter, as the case may be) and of
the prospectus included in such registration statement (including each
preliminary prospectus), in conformity with the requirements of the
Securities Act, and such other documents, as any such Holder, agent, if
any, and underwriter, if any, may reasonably request in order to facilitate
the offering and disposition of the Registrable Securities owned by any
such Holder, offered or sold by such agent or underwritten by such
underwriter and to permit each Holder, agent and underwriter to satisfy the
prospectus delivery
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requirements of the Securities Act; and the Company hereby consents to the
use of such prospectus (including such preliminary prospectus) and any
amendment or supplement thereto by each Holder and by any such agent and
underwriter, in each case in the form most recently provided to such party
by the Company, in connection with the offering and sale of the Registrable
Securities covered by the prospectus (including such preliminary
prospectus) or any supplement or amendment thereto;
(x) use its reasonable best efforts to (A) register or qualify the
Registrable Securities to be included in such registration statement under
such securities laws or blue sky laws of such jurisdictions as any Holder
and any placement or sales agent, if any, therefor and underwriter, if any,
thereof shall reasonably request, (B) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions for
so long as may be necessary to enable the Holders, agents or underwriters
to complete its distribution of Securities pursuant to such registration
statement and (C) take any and all other actions as may be reasonably
necessary or advisable to enable the Holders, agents, if any, and
underwriters, if any, to consummate the disposition in such jurisdictions
of such Registrable Securities; provided, however, that the Company shall
not be required for any such purpose to (I) qualify as a foreign
corporation in any jurisdiction wherein it would not otherwise be required
to qualify but for the requirements of this Section 3(a)(x) or (II) consent
to general service of process in any such jurisdiction;
(xi) use its reasonable best efforts to obtain the consent or approval
of each governmental agency or authority, whether federal, state or local,
which may be required to effect such registration or the offering or sale
in connection therewith or to enable the Holders to offer, or to consummate
the disposition of, the Registrable Securities;
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(xii) cooperate with the Holders and the managing underwriters, if
any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates shall be
printed, lithographed or engraved, or produced by any combination of such
methods, on steel engraved borders if required or appropriate and which
shall not bear any restrictive legends; and, in the case of an underwritten
offering, enable such Registrable Securities to be in such denominations
and registered in such names as the managing underwriters may request at
least two business days prior to any sale of the Registrable Securities;
(xiii) provide a CUSIP number for all Registrable Securities, not
later than the effective date of such registration statement;
(xiv) enter into one or more underwriting agreements, engagement
letters, agency agreements, "best efforts" underwriting agreements or
similar agreements, as appropriate, and take such other actions in
connection therewith as the Holders shall reasonably request in order to
expedite or facilitate the disposition of the Registrable Securities
registered;
(xv) whether or not an agreement of the type referred to in Section
(3)(a)(xiv) hereof is entered into and whether or not any portion of the
offering contemplated by such registration statement is an underwritten
offering or is made through a placement or sales agent or any other entity,
(A) make such representations and warranties to the Holders and the
placement or sales agent, if any, therefor and the underwriters, if any,
thereof in form, substance and scope as are customarily made in connection
with an offering of common stock or other equity securities pursuant to any
appropriate agreement and/or to a registration statement filed on the form
applicable to such registration; (B) use its reasonable best efforts to
obtain an opinion of counsel to the Company in customary form and covering
such matters, of the type
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customarily covered by such an opinion, as the managing underwriters, if
any, and as the Holders may reasonably request, addressed to the Holders
and the placement or sales agent, if any, therefor and the underwriters, if
any, thereof, and dated the effective date of such registration statement
(and if such registration statement contemplates an underwritten offering
of a part or all of the Registrable Securities, dated the date of the
closing under the underwriting agreement relating thereto); (C) use its
reasonable best efforts obtain a "comfort" letter or letters from the
independent certified public accountants of the Company addressed to the
Holders and the placement or sales agent, if any, therefor and the
underwriters, if any, thereof, dated (I) the effective date of such
registration statement, (II) the effective date of any prospectus
supplement, if any, to the prospectus included in such registration
statement or post-effective amendment to such registration statement which
includes unaudited or audited financial statements as of a date or for a
period subsequent to that of the latest such statements included in such
prospectus and (III) (if such registration statement contemplates an
underwritten offering pursuant to any prospectus supplement to the
prospectus included in such registration statement or post-effective
amendment to such registration statement which includes unaudited or
audited financial statements as of a date or for a period subsequent to
that of the latest such statements included in such prospectus) dated the
date of the closing under the underwriting agreement relating thereto, such
letter or letters to be in customary form and covering such matters of the
type customarily covered by letters of such type; (D) deliver such
documents and certificates, including officers' certificates, as may be
reasonably requested by the Holders and the placement or sales agent, if
any, therefor and the managing underwriters, if any, thereof to evidence
the accuracy of the representations and warranties made pursuant to clause
(A) above or those contained in Section 5(a) hereof and the compliance with
or satisfaction of any agreements or conditions
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contained in the underwriting agreement or other agreement entered into by
the Company; and (E) undertake such obligations relating to expense
reimbursement, indemnification and contribution as are provided in Section
6 hereof;
(xvi) in the event that (i) any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or participate as
a member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Rules of Fair Practice and the
By-Laws of the National Association of Securities Dealers, Inc. ("NASD"))
thereof, whether as a Holder of Registrable Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, or (ii) more than 10% of the net offering proceeds,
not including underwriting compensation, of such distribution is intended
to be paid to any such broker-dealer or "associated or affiliated persons"
of such broker-dealer or "members of the immediate family of such persons"
(each within the meaning of such Rules), the Company shall take reasonable
steps to assist such broker-dealer in complying with the requirements of
such Rules and By-Laws, including, without limitation, by (A) if such Rules
or By-Laws shall so require, engaging a "qualified independent underwriter"
(as defined in such Schedule) to participate in the preparation of the
registration statement relating to such Registrable Securities, to exercise
usual standards of due diligence in respect thereto and, if any portion of
the offering contemplated by such registration statement is an underwritten
offering or is made through a placement or sales agent, to recommend the
price of such Registrable Securities, (B) indemnifying any such qualified
independent underwriter to the extent of the indemnification of
underwriters provided in Section 6 hereof, and (C) providing such
information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the Rules of Fair Practice
of the NASD;
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(xvii) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders, as soon as
practicable but in any event not later than eighteen months after the
effective date of such registration statement, an earning statement of the
Company and its subsidiaries complying with Section 11(a) of the Securities
Act (including, at the option of the Company, Rule 158 thereunder); and
(xviii) use its reasonable best efforts to list prior to the effective
date of such registration statement, subject to notice of issuance, the
Registrable Securities covered by such registration statement on any
securities exchange on which the Common Stock is then listed or, if the
Common Stock is not then so listed, to have the Registrable Securities
accepted for quotation of trading on the Nasdaq National Market (or a
comparable interdealer quotation system then in effect).
(b) In the event that the Company would be required, pursuant to
Section 3(a)(vi)(F) above, to notify the Holders, the placement or sales agent,
if any, therefor and the managing underwriters, if any, thereof, the Company
shall without delay prepare and furnish to the Holders, to each placement or
sales agent, if any, and to each underwriter, if any, a reasonable number of
copies of a prospectus supplemented or amended so that, as thereafter delivered
to purchasers of Registrable Securities, such prospectus shall not 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 not misleading in
light of the circumstances then existing. The Holders agree that upon receipt of
any notice from the Company pursuant to Section 3(a)(vi)(F) hereof, they shall
forthwith discontinue the disposition of Registrable Securities pursuant to the
registration statement applicable to such Registrable Securities until they
shall have received copies of such amended or supplemented prospectus, and if so
directed by the Company, the Holders shall deliver to the Company (at the
Company's
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expense) all copies, other than permanent file copies, then in their possession
of the prospectus covering such Registrable Securities at the time of receipt of
such notice.
(c) The Company may require the Holders to furnish to the Company such
information regarding the Holders and their intended method of distribution of
such Registrable Securities as the Company may from time to time reasonably
request in writing, but only to the extent that such information is required in
order to comply with the Securities Act. Each Holder agrees to notify the
Company as promptly as practicable of any inaccuracy or change in information
previously furnished by such Holder to the Company or of the occurrence of any
event in either case as a result of which any prospectus relating to such
registration contains or would contain an untrue statement of a material fact
regarding such Holder or such Holder's intended method of distribution of such
Registrable Securities or omits or would omit to state any material fact
regarding such Holder or its intended method of distribution of such Registrable
Securities required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and promptly
to furnish to the Company any additional information required to correct and
update any previously furnished information or required so that such prospectus
shall not contain, with respect to such Holder or the distribution of such
Registrable Securities, 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 not misleading in light of the circumstances then existing.
(d) From the time that the Company receives any notice pursuant to
Section 2(a)(i) hereof or, as the case may be, any direction from a Holder in
connection with a secondary offering or a combined offering pursuant to Section
2(b)(i) hereof until the earlier of (i) the date 90 days after the effectiveness
of the registration statement relating thereto or such shorter period of time as
may be recommended by the managing underwriters involved in such offering and
(ii) the date an election is made not to
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file a registration statement with the Commission pursuant to Section 2(c)
hereof, the Company will not offer, issue, sell, agree or commit to issue or
sell, grant any option for the purchase of, file with the Commission a
registration statement relating to any primary, secondary or combined offering
of or solicit any offer to buy any Common Stock or any Rights, other than (A) in
connection with the Registrable Securities to be registered pursuant to such
notice or direction, (B) such Common Stock or other equity securities as were,
at the time of such direction, to be included in such secondary offering or
combined offering, (C) pursuant to an approved employee stock option, stock
purchase plan, or similar benefit program or agreement for the benefit of
employees of, or consultants to, the Company, where the primary purpose is not
to raise additional equity capital for the Company or (D) as direct
consideration for the acquisition of a business in a merger, consolidation or
similar transaction.
4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid promptly
upon request being made therefor all expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
(a) all Commission and any NASD registration and filing fees and expenses, (b)
all fees and expenses in connection with the qualification of the Securities for
offering and sale under the State securities and blue sky laws, including
reasonable fees and disbursements of counsel for the placement or sales agent or
underwriters in connection with such qualifications, (c) all expenses relating
to the preparation, printing, distribution and reproduction of each registration
statement required to be filed hereunder, each prospectus included therein or
prepared for distribution pursuant hereto, each amendment or supplement to the
foregoing, the certificates representing the Common Stock or other equity
securities to be sold and all other documents relating hereto, (d) messenger and
delivery expenses, (e) fees and expenses of any escrow agent or custodian, (f)
internal expenses of the Company (including, without limitation, all salaries
and expenses of
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the Company's officers and employees performing legal or accounting duties), (g)
fees, disbursements and expenses of counsel and independent certified public
accountants of the Company (including the expenses of any opinions or "comfort"
letters required by or incident to such performance and compliance), (h) fees,
disbursements and expenses (including fees and expenses of counsel) of any
"qualified independent underwriter" engaged pursuant to Section 3(a)(xvi)
hereof, (i) reasonable fees, disbursements and expenses of one counsel for all
of the Holders retained in connection with any particular registration, and
fees, expenses and disbursements of any other persons retained by the Company in
connection with such registration, and (j) all fees and expenses (including,
without limitation, listing and qualification fees) in connection with the
listing or admission to quotation of the Registrable Securities as required by
Section 3(a)(xviii) hereof (collectively, the "Registration Expenses"). To the
extent that any Registration Expenses are incurred, assumed or paid by the
Holder or any placement or sales agent therefor or underwriter thereof, the
Company shall reimburse such person for the full amount of the Registration
Expenses so incurred, assumed or paid promptly after receipt of a request
therefor. Notwithstanding the foregoing, the Holders of Registrable Securities
being registered each shall pay their pro rata share (based on their proportion
of the Registrable Securities being sold by them) of all agency fees and
commissions and all underwriting discounts and commissions attributable to the
sale of the Registrable Securities and the fees and disbursements of any counsel
or other advisors or experts retained by the Holder, other than the counsel and
experts specifically referred to above.
5. Representations and Warranties.
The Company represents and warrants to, and agrees with, each Holder
from time to time of Registrable Securities that:
(a) Each registration statement covering Registrable Securities and
each prospectus (including any preliminary prospectus) contained therein or
furnished
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pursuant to Section 3(a)(ix) hereof and any further amendments or supplements to
any such registration statement or prospectus, when it becomes effective or is
filed with the Commission, as the case may be, and, in the case of an
underwritten offering of Registrable Securities, at the time of the closing
under the underwriting agreement relating thereto will conform in all material
respects to the requirements of the Securities Act and will not 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 not misleading;
and at all times subsequent to the effective date of such registration statement
when a prospectus would be required to be delivered under the Securities Act,
other than from (i) such time as a notice has been given to Holders of
Registrable Securities pursuant to Section 3(a)(vi)(F) hereof until (ii) such
time as the Company furnishes an amended or supplemented prospectus pursuant to
Section 3(b) hereof, each such registration statement, and each prospectus
contained therein or furnished pursuant to Section 3(a)(ix) hereof, as then
amended or supplemented, will conform in all material respects to the
requirements of the Securities Act and will not 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 not misleading in the light of the
circumstances then existing; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company by a
Holder of Registrable Securities expressly for use therein.
(b) Any documents incorporated by reference in any prospectus referred
to in Section 5(a) hereof, when they become or became effective or are or were
filed with the Commission, as the case may be, as then amended or supplemented,
will conform or conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and none of such documents
will contain an untrue statement of a material fact or will omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading;
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<PAGE>
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by a Holder of Registrable Securities
expressly for use therein.
(c) The compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein contemplated will not
(i) conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any
subsidiary is a party or by which the Company or any subsidiary is bound or to
which any of the property or assets of the Company or any subsidiary is subject,
or (ii) result in any violation of the provisions of the Certificate of
Incorporation or By-Laws of the Company or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any subsidiary or any of their properties except, with respect to
clause (i) or (ii), for such conflicts, breaches, defaults and violations as,
individually and in the aggregate, do not have a material adverse effect on the
financial condition, results of operations, business or prospects of the Company
and its subsidiaries and do not materially hinder or delay the exercise by the
Holders of their rights hereunder; and no consent, approval, authorization,
order, registration or qualification of or with any such court or governmental
agency or body is required for the consummation by the Company of the
transactions contemplated by this Agreement, except the registration under the
Securities Act of the Registrable Securities and such consents, approvals,
authorizations, registrations or qualifications as may be required under State
securities or blue sky laws in connection with the offering and distribution of
the Registrable Securities.
6. Indemnification.
(a) Indemnification by the Company. Upon the registration of any
Registrable Securities pursuant to
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Section 2 hereof, and in consideration of the agreements of the Holders
contained herein, and as an inducement to SOFTBANK America to enter into the
Purchase Agreement, the Company shall, and it hereby agrees to, indemnify and
hold harmless each Holder, and each person who participates as a placement or
sales agent or as an underwriter in any offering or sale of such Registrable
Securities, against any losses, claims, damages or liabilities, joint or
several, to which any such Holder, agent or underwriter may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
registration statement under which such Registrable Securities were registered
under the Securities Act, or any preliminary or final prospectus contained
therein or furnished by the Company to any such Holder, agent or underwriter, or
any amendment or supplement thereto, or any document incorporated by reference
therein, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Registration Statement
or any amendment thereto) or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading (in the
case of any preliminary or final prospectus or supplement thereto), and the
Company shall, and it hereby agrees to, reimburse any such Holder, agent and
underwriter for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such action or claim; provided,
however, that the Company shall not be liable to any such person in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary or final
prospectus, amendment or supplement or incorporated document in reliance upon
and in conformity with written information furnished to the Company by such
person expressly for use therein; provided, further, that the Company shall not
be liable to (i) any Holder, underwriter or placement or sales agent under the
indemnity agreement in
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this subsection (a) with respect to any preliminary prospectus to the extent
that any such loss, claim, damage or liability of such Holder, underwriter or
agent, respectively, results from the fact that such Holder, underwriter or
agent sold Registrable Securities to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
related final prospectus if the Company has previously furnished on a timely
basis to such Holder, underwriter or agent, respectively, sufficient copies
thereof and such prospectus corrects the statement or omission, or alleged
statement or omission, out of which such loss, claim, damage or liability arises
or (ii) any Holder distributing securities otherwise than in an underwritten
offering or through a broker-dealer acting as placement agent for such Holder,
with respect to any preliminary or final prospectus to the extent that any such
loss, claim, damage or liability of such Holder arises from the fact that such
Holder delivered such preliminary or final prospectus after receipt of any
notice from the Company pursuant to Section 3(a)(vi)(F) hereof and the amended
or supplemented prospectus furnished pursuant to Section 3(b) hereof corrects
the statement or omission, or alleged statement or omission, out of which such
loss, claim, damage or liability arises.
(b) Indemnification by the Holder and any Agents and Underwriters. The
Company may require, as a condition to including any Registrable Securities in
any registration statement filed pursuant to Section 2 hereof and to entering
into any underwriting agreement with respect thereto, that the Company shall
have received an undertaking from the Holder thereof and from each underwriter
named in any such underwriting agreement, severally and not jointly, to (i)
indemnify and hold harmless the Company, and all other Holders, if any, of
Registrable Securities selling under the same registration statement, against
any losses, claims, damages or liabilities to which the Company or such other
Holders of Registrable Securities may become subject, under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in
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such registration statement, or any preliminary or final prospectus contained
therein or furnished by the Company to the Holders, agent or underwriter, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading (in the case
of the Registration Statement or any amendment thereto) or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (in the case of any preliminary or final prospectus or
supplement thereto), in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by the Holder or underwriter expressly for use therein,
and (ii) reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any such
action or claim; provided, however, that no Holder shall be required to
undertake liability under this Section 6(b) for any amounts in excess of the
dollar amount of the proceeds to be received by such Holder from the sale of its
Registrable Securities pursuant to such registration, as reduced by any damages
or other amounts that such Holder was otherwise required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of written notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions of
or contemplated by this Section 6, notify such indemnifying party in writing of
the commencement of such action; but the omission so to notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party except to the extent the indemnifying party is materially
prejudiced thereby. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the commencement
thereof, such
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indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who may be counsel to the indemnifying party unless
representation of both parties by the same counsel would be inappropriate due to
actual or potential conflicts of interest between them), and, after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, such indemnifying party shall not be liable to such
indemnified party for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation.
(d) Contribution. Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 6(a) or Section 6(b) hereof
are unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), 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 the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or by
such indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation
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(even if the Holders or any agents or underwriters or all of them were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in this Section
6(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, or liabilities (or actions in respect thereof) referred
to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 6(d), no Holder shall be required to contribute any amount in excess of
the amount by which the dollar amount of the proceeds received by such Holder
from the sale of any Registrable Securities (after deducting any fees, discounts
and commissions applicable thereto) exceeds the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, and no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Holders' and any underwriter's
obligations in this Section 6(d) to contribute shall be several in proportion to
the number or amount of Registrable Securities sold or underwritten, as the case
may be, by them and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director and partner of any
Holder, agent or underwriter and each person, if any, who controls any Holder,
agent or underwriter within the meaning of the Securities Act; and the
obligations of the
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Holders and any underwriters contemplated by this Section 6 shall be in addition
to any liability which the Holders or any underwriter may otherwise have and
shall extend, upon the same terms and conditions, to each officer and director
of the Company (including any person who, with his consent, is named in any
registration statement as about to become a director of the Company) and to each
person, if any, who controls the Company within the meaning of the Securities
Act.
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Registrable Securities
covered by any registration statement filed pursuant to Section 2(a) hereof are
to be sold pursuant to an underwritten offering, the managing underwriter or
underwriters thereof shall be designated by the Company, provided that such
designated managing underwriter or underwriters is or are reasonably acceptable
to the Holders of a majority of the Registrable Securities so to be offered.
(b) Participation by Holders. Each Holder hereby agrees that it may
not participate in any underwritten offering hereunder unless it (i) agrees to
sell its Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. Rule 144.
The Company covenants to and with each Holder of Registrable
Securities that to the extent it shall be required to do so under the Exchange
Act, the Company shall timely file the reports required to be filed by it under
the Exchange Act or the Securities Act (including, but not limited to, the
reports under Section 13 and 15(d) of the Exchange Act referred to in
subparagraph (c)(1) of Rule 144
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adopted by the Commission under the Securities Act) and the rules and
regulations adopted by the Commission thereunder, and shall take such further
action as any Holder may reasonably request, all to the extent required from
time to time to enable the Holders to sell Registrable Securities without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any Holder of Registrable Securities, the
Company shall deliver to such Holder a written statement as to whether it has
complied with such requirements.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company covenants and agrees that
it shall not (i) grant registration rights with respect to any class of Common
Stock or any other securities which would be inconsistent with the terms
contained in this Agreement or (ii) enter into or become bound by, or permit any
subsidiary of the Company to enter into or become bound by, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument which
would prohibit, be violated by, conflict with or provide that a default would
arise from, the compliance by the Company with any of the provisions of this
Agreement or the consummation of the transactions herein contemplated, except
for any such prohibitions, violations, conflicts or defaults as, individually
and in the aggregate, would not have a material adverse effect on the financial
condition, results of operations, business or prospects of the Company and its
subsidiaries and would not materially hinder or delay the exercise by the
Holders of their rights hereunder. The Company represents and warrants that it
is not currently a party to any agreement with respect to any of its equity or
debt securities granting any registration rights to any person, other than the
Existing Registration Agreements.
(b) Specific Performance. The Company acknowledges that it would be
impossible to determine the
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amount of damages that would result from any breach by it of any of the
provisions of this Agreement and that the remedy at law for any breach, or
threatened breach, of any of such provisions would likely be inadequate and,
accordingly, agrees that each Holder shall, in addition to any other rights or
remedies which it may have, be entitled to seek such equitable and injunctive
relief as may be available from any court of competent jurisdiction to compel
specific performance of, or restrain the Company from violating any of, such
provisions. In connection with any action or proceeding for injunctive relief,
the Company hereby waives the claim or defense that a remedy at law alone is
adequate and agrees, to the maximum extent permitted by law, to have each
provision of this Agreement specifically enforced against it, without the
necessity of posting bond or other security against it.
(c) Illegality. If any term or provision of this Agreement or any
application thereof shall be declared or held invalid, illegal or unenforceable,
in whole or in part, whether generally or in any particular jurisdiction, such
provision shall be deemed amended to the extent, but only to the extent,
necessary to cure such invalidity, illegality or unenforceability, and the
validity, legality and enforceability of the remaining provisions, both
generally and in every other jurisdiction, shall not in any way be affected or
impaired thereby.
(d) Recovery of Litigation Costs. Except as otherwise expressly
provided herein to the contrary, in the event any dispute between the parties to
this Agreement shall result in litigation, arbitration or other proceeding, the
prevailing party shall be entitled to recover from the losing party all
reasonable costs and expenses, including without limitation reasonable
attorneys' fees and disbursements, incurred by the prevailing party in
connection with such litigation or other proceeding and any appeal thereof. Such
costs, expenses, fees and disbursements shall be included in and made a part of
the judgment recovered by the prevailing party, if any.
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(e) Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, when delivered personally or by courier,
three days after being deposited in the mail (registered or certified mail,
postage prepaid, return receipt requested), or when received by facsimile
transmission if promptly confirmed by one of the foregoing means, as follows: If
to the Company, to it at 555 South Henderson Road, King of Prussia, Pennsylvania
19406, Attention: President, facsimile no. (610)768-0753, and if to a Holder, to
the address or facsimile transmission number of such Holder set forth in the
security register or other records of the Company, or to such other address or
facsimile transmission number as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
(f) Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and shall be
enforceable by the parties hereto and their respective successors and assigns,
but, except as set forth in this Section 9(f), no such term or provision is for
the benefit of, or intended to create any obligations to, any other persons. In
the event that any transferee of SOFTBANK America or any other Holder shall
acquire Registrable Securities, in any manner, whether by gift, bequest,
purchase, operation of law or otherwise, such transferee shall, without any
further writing or action of any kind, be deemed a party hereto for all purposes
and such Registrable Securities shall be held subject to all of the terms of
this Agreement, and by taking and holding such Registrable Securities, such
transferee shall be entitled to receive the benefits of and be conclusively
deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement; provided, however, that no such transferee shall
receive such benefits (or be deemed to have agreed to be bound by and to perform
such terms and provisions) unless, immediately after giving effect to such
transfer, and taking into account any Registrable Securities held by such
transferee prior to such transfer as well as the Registrable Securities acquired
by such transferee in
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such transfer, such transferee owns at least 500,000 shares of Common Stock
(appropriately adjusted for any stock split, reverse stock split or stock
dividend) or an equivalent number of Registrable Securities other than Common
Stock. If the Company shall so request, any such successor, assign or transferee
shall agree in writing to acquire and hold the Registrable Securities subject to
all of the terms hereof. Any Holder effecting a transfer to a transferee that
acquires any rights or benefits under this Agreement as a result of such
transfer shall, prior to or promptly after such transfer is made, give written
notice to the Company of such transfer, specifying the number of Registrable
Securities transferred and identifying the transferee.
(g) Survival. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Agreement or made pursuant
hereto shall remain in full force and effect regardless of any investigation (or
statement as to the results thereof) made by or on behalf of any Holder, any
director, officer, partner or employee of any Holder, any agent or underwriter
or any director, officer, partner or employee thereof, or any controlling person
of any of the foregoing, and shall survive delivery of and payment for the
Common Stock purchased pursuant to the Purchase Agreement and the transfer and
registration of Registrable Securities by any Holder.
(h) LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN WITH THE LAWS OF THE STATE OF DELAWARE
(i) Headings. The descriptive headings of the several Sections and
paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
(j) Entire Agreement; Amendments. This Agreement and the other
writings referred to herein or delivered pursuant hereto which form a part
hereof contain the entire understanding of the parties with respect to its
subject
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matter. This Agreement supersedes all prior agreements and understandings
between the parties with respect to its subject matter. This Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only by a written instrument duly executed by the Company and the Holders of
more than 50 percent of the Registrable Securities at the time outstanding. Each
Holder of any Registrable Securities at the time or thereafter outstanding shall
be bound by any amendment or waiver effected pursuant to this Section 9(h),
whether or not any notice, writing or marking indicating such amendment or
waiver appears on such Registrable Securities or is delivered to such Holder.
The entry by the Company into any contract, agreement or understanding that
directly or indirectly gives to any person the right to register, or cause the
Company to register, any securities of the Company under the Securities Act on
terms more favorable to such person than those set forth herein shall require
written approval by the Holders of more than 50 percent of the Registrable
Securities at the time outstanding.
(k) Inspection. For so long as this Agreement shall be in effect, this
Agreement and a complete list of the names and addresses of all the Holders of
Registrable Securities shall be made available for inspection and copying on any
business day by any Holder of Registrable Securities at the offices of the
Company at the address thereof set forth in Section 9(e) above.
(l) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the date first written above.
GLOBAL SPORTS, INC.
By:________________________________
Name:
Title:
SOFTBANK AMERICA INC.
By:________________________________
Address: 300 Delaware Avenue,
Suite 900
Wilmington, Delaware 19801
Fax No.: (302) 552-3128
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EXHIBIT E
VOTING AGREEMENT
THIS VOTING AGREEMENT is made and entered into as of June 10, 1999
(this "Agreement") between SOFTBANK America Inc., a Delaware corporation
("SOFTBANK" or the "Purchaser"), and Michael G. Rubin (the "Principal
Stockholder").
RECITALS
WHEREAS, on June 10, 1999, Global Sports, Inc., a Delaware
corporation (the "Company"), and SOFTBANK entered into a Purchase Agreement (the
"Purchase Agreement"), pursuant to which SOFTBANK intends to acquire 6,153,850
shares of the Company's Common Stock, par value $0.01 per share (the "Common
Stock"); and
WHEREAS, as an inducement and a condition to consummating the Purchase
Agreement, the Purchaser has required that the Principal Stockholder agree, and
the Principal Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the covenants set forth herein,
and for other good and valuable consideration, intending to be legally bound
hereby, the parties agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
shall include securities Beneficially Owned by all other Persons with whom such
Person would constitute a "group" within the meaning of Section 13(d)(3) of the
Exchange Act.
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(b) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
2. The Second Purchase.
2.1 Approval of the Second Purchase. During the period commencing on
the date hereof and continuing until the earlier to occur of (i) consummation of
the Second Closing (as defined in the Purchase Agreement) or (ii) the 90th day
after the date of the Purchase Agreement (such earlier date, the "Expiration
Date"), the Principal Stockholder agrees that it shall, at any meeting of
stockholders of the Company, however called, or in connection with any written
consent of stockholders of the Company, vote (or cause to be voted) the shares
(if any) of capital stock of the Company (the "Capital Stock")then held of
record or Beneficially Owned by such Principal Stockholder, (i) in favor of the
purchase of shares of Common Stock to be purchased at the Second Closing
pursuant to the Purchase Agreement (the "Second Purchase"); (ii) in favor of the
amendment of the Certificate of Incorporation of the Company to increase the
authorized number of shares of Common Stock to 30,000,000; (iii) against any
action or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Purchase Agreement; (iv) in favor of election to the Board of
Directors of the directors which SOFTBANK is entitled to designate upon
consummation of the Second Purchase (as defined in the Purchase Agreement) and
which have been identified by SOFTBANK as nominees for such purpose; and (v)
except as otherwise agreed to in writing in advance by the Purchaser, against
the following actions (other than the Second Purchase and the transactions
contemplated by the Purchase Agreement): (A) a dissolution of the Company or (B)
any material change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or By-laws, in each
case, which is intended, or could reasonably be expected, to impede, delay or
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adversely affect the Second Purchase and the transactions contemplated by this
Agreement and the Purchase Agreement. The Principal Stockholder agrees that it
shall not enter into any agreement or understanding with any Person the effect
of which would be inconsistent or violative of the provisions and agreements
contained in this Section 2.
2.2 Irrevocable Proxy. The Principal Stockholder, in furtherance of
the transactions contemplated hereby and by the Purchase Agreement, and in order
to secure the performance by the Principal Stockholder of its duties under this
Agreement, shall, if and when requested by SOFTBANK, promptly execute and
deliver to the Purchaser an irrevocable proxy, substantially in the form of
Exhibit A hereto, and irrevocably appoint Purchaser or its designees, with full
power of substitution, its attorney, agent and proxy to vote (or cause to be
voted) or, if applicable, to give consent with respect to, all of the shares of
Common Stock Beneficially Owned by such Principal Stockholder, together with any
shares acquired by such Principal Stockholder in any capacity after the date
hereof in the manner, and with respect to the matters, set forth in Section 2.1
hereof. The Principal Stockholder acknowledges that the proxy executed and
delivered by it shall be coupled with an interest, shall constitute, among other
things, an inducement for the Purchaser to enter into the Purchase Agreement,
shall be irrevocable and binding on any successor in interest of such Principal
Stockholder and shall not be terminated by operation of law upon the occurrence
of any event, including, without limitation, the death or incapacity of such
Principal Stockholder. Such proxy shall operate to revoke and render void any
prior proxy as to the shares heretofore granted by such Principal Stockholder.
Such proxy shall terminate on the Expiration Date.
3. Composition and Nomination of Board of Directors.
3.1 Board Composition Requirements. The parties hereto intend that
SOFTBANK shall have the right to designate (i) a number of members of the
Company's Board of Directors equal to the product of (A) the total number of
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authorized directors and (B) the aggregate Proportionate Share (as defined in
the Purchase Agreement) of the Purchaser and the SOFTBANK Entities (as defined
in the Purchase Agreement) on the Company's Board of Directors, rounded up to
the nearest whole number, but not to exceed two directors (the "Board
Composition Requirement"), and (ii) so long as the Purchaser and the SOFTBANK
Entities collectively own 50% or more of the Shares theretofore purchased
hereunder, the Purchaser shall have the right to designate one director to be a
member of each committee of the Company's Board of Directors. At any meeting of
stockholders at which directors are to be elected and with respect to any
written consent of stockholders of the Company in lieu of meeting relating to
the election of directors, the Principal Stockholder shall vote, or execute and
deliver a written consent with respect to, all shares of Common Stock and any
other voting securities of the Company held of record or Beneficially Owned by
it in favor of a slate of directors meeting the Board Composition Requirement
and nominated as contemplated by Section 3.2 hereof and against any slate of
directors that does not satisfy the Board Composition Requirements or the
nomination procedures contemplated by Section 3.2.
3.2 Nominating Procedures. In connection with each meeting of
stockholders of the Company at which directors of the Company are to be elected,
the parties hereto shall cause their designees on the Board to nominate a slate
of nominees for director which meets the Board Composition Requirements for so
long as this Agreement remains in effect.
The nominees so selected by the Board of Directors shall be presented
and voted upon at the meeting of stockholders as a slate.
3.3 Removal of Directors. Except as otherwise provided in this Section
3.3, the Principal Stockholder agrees not to take any action to remove, with or
without cause, any director of the Company designated by SOFTBANK.
Notwithstanding the foregoing, SOFTBANK shall at all times have the right to
remove and to cause the Principal
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Stockholder to remove, with or without cause, any or all of the directors
designated by SOFTBANK.
3.4 Vacancies. If a vacancy is created on the Board of Directors by
reason of the death, disability, removal or resignation of any one of the
directors, the Principal Stockholder shall promptly take all necessary and
appropriate action, including, to the extent it has power to do so, calling a
special meeting of stockholders or executing a written consent of stockholders
in lieu of meeting and voting, or executing and delivering a written consent
with respect to, the shares of Common Stock and any other voting securities of
the Company then held of record or Beneficially Owned in such a manner to ensure
that such vacancy is filled in a manner consistent with the Board Composition
Requirements.
4. Action to Reconstitute Board of Directors. If at any time and for
any reason the Board of Directors shall fail to satisfy the Board Composition
Requirements, then, at the written request of SOFTBANK, the Principal
Stockholder shall, to the extent it has power to do so, cause to be called a
special meeting of the stockholders to be held for the purpose of taking
whatever action may be necessary to ensure that the Board is constituted so as
to satisfy the Board Composition Requirements as promptly as practicable.
5. Certificate of Incorporation and Bylaws. The Principal Stockholder
shall vote all shares of Common Stock and any other voting securities of the
Company then held of record or Beneficially Owned and shall take all other
actions necessary and appropriate (including, without limitation, removing any
director) to ensure that the Company's Certificate of Incorporation and Bylaws
do not at any time conflict with the provisions of this Agreement.
6. No Transfer of Common Stock. From the date hereof until the
Expiration Date, the Principal Stockholder shall not sell, transfer or pledge
his Common Stock to another Person or otherwise engage in any act which would
decrease the Principal Stockholder's percentage of Common Stock ownership on the
date hereof, except, in each such case, if
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the transferee agrees in writing to be bound by the provisions of this
Agreement.
7. Miscellaneous.
7.1 Modification and Waiver. No amendment or modification of the terms
or provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed to or shall constitute a waiver of
any other provisions hereof. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof.
7.2 Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof. Any
previous agreement or understandings between the parties regarding the subject
matter hereof are merged into and superseded by this Agreement.
7.3 Severability. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
7.4 No Implied Rights. Nothing herein, express or implied, is intended
to or shall be construed to confer upon or give to any person, firm, corporation
or legal entity, other than the parties hereto, any interest, rights, remedies
or other benefits with respect to or in connection with any agreement or
provision contained herein or contemplated hereby.
7.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
7.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.
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<PAGE>
7.7 Successors and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
7.8 Notices. All notices and other communications under this Agreement
shall be in writing, and shall be deemed to have been duly given on the date of
delivery if delivered personally or on the third business day after mailing or
if mailed to the party to whom notice is to be given by first class mail,
registered or certified, postage prepaid, return receipt requested, and
addressed as follows (until any such address is changed by notice duly given):
(a) if to SOFTBANK, to:
SOFTBANK AMERICA Inc.
300 Delaware Avenue, Suite 900
Wilmington, Delaware 19801
Facsimile: (302) 552-3128
Attention: Frances Jacobs
SOFTBANK Holdings Inc.
10 Langley Road, Suite 403
Newton Center, Massachusetts 02169
Facsimile: (617) 928-9301
Attention: Ronald Fisher
.Vice Chairman
with a copy to:
Sullivan & Cromwell
1888 Century Park East
21st Floor
Los Angeles, California 90067-1725
Telephone: (310) 712-6650
Facsimile: (310) 712-8800
Attention: John L. Savva, Esq.
(b) if to the Principal Stockholder, to:
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<PAGE>
Global Sports, Inc.
555 South Henderson Road
King of Prussia, Pennsylvania 19406
Telephone: (610) 768-0900
Facsimile: (610) 768-0753
Attention: Michael G. Rubin
with a copy to:
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103
Telephone: (215) 569-5544
Facsimile: (215) 569-5628
Attention: Arthur Miller, Esq.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
SOFTBANK AMERICA INC.
By:___________________________________
Name:
Title:
______________________________________
MICHAEL G. RUBIN
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EXHIBIT A
Irrevocable Proxy
In order to secure the performance of the duties of the undersigned
pursuant to the Voting Agreement, dated as of June 10, 1999 (the "Voting
Agreement"), between the undersigned and SOFTBANK America Inc., the undersigned
hereby irrevocably appoints Ronald D. Fisher and Steven Murray, and each of
them, the attorneys, agents and proxies, with full power of substitution in each
of them, for the undersigned, and in the name, place and stead of the
undersigned, to vote (or cause to be voted) or, if applicable, to give consent,
in such manners each such attorney, agent and proxy or his substitute shall in
his sole discretion deem proper to record such vote (or consent) in the manner,
and with respect to the matters, set forth in Section 2 of the Voting Agreement
with respect to all shares of Common Stock and voting securities of Global
Sports, Inc., a Delaware corporation (the "Company"), which the undersigned is
or may be entitled to vote at any meeting of the Company held after the date
hereof, whether annual or special and whether or not an adjourned meeting, or if
applicable, to given written consent with respect thereto. This Proxy is coupled
with an interest, shall be irrevocable and binding on any successor in interest
of the undesigned and shall not be terminated by operation of law upon the
occurrence of any event, including, without limitation, the death or incapacity
of the undersigned. This Proxy shall operate to revoke and render void any prior
proxy as to the shares of Common Stock and voting securities heretofore granted
by the undersigned. This Proxy shall terminate upon the Expiration Date (as
defined in the Voting Agreement).
___________________________
Michael G. Rubin
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EXHIBIT F
VOTING AGREEMENT
THIS VOTING AGREEMENT is made and entered into as of June 10, 1999
(this "Agreement") between SOFTBANK America Inc., a Delaware corporation
("SOFTBANK" or the "Purchaser"), and Michael G. Rubin (the "Principal
Stockholder").
RECITALS
WHEREAS, on June 10, 1999, Global Sports, Inc., a Delaware corporation
(the "Company"), and SOFTBANK entered into a Purchase Agreement (the "Purchase
Agreement"), pursuant to which SOFTBANK intends to acquire 6,153,850 shares of
the Company's Common Stock, par value $0.01 per share (the "Common Stock"); and
WHEREAS, as an inducement and a condition to consummating the Purchase
Agreement, the Principal Stockholder has required that the Purchaser agree, and
the Purchaser has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the covenants set forth herein, and
for other good and valuable consideration, intending to be legally bound hereby,
the parties agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
shall include securities Beneficially Owned by all other Persons with whom such
Person would constitute a "group" within the meaning of Section 13(d)(3) of the
Exchange Act.
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(b) "Continuing Director" shall mean any member of the Board of
Directors of the Corporation who was a member of the Board prior to the date of
the Purchase Agreement, and any director who is thereafter chosen to fill any
vacancy on the Board of Directors or who is elected as a director and who, in
either event, is not a director designated by SOFTBANK pursuant to Section 5.3
of the Purchase Agreement and in connection with his or her initial assumption
of office is recommended for appointment or election by a majority of the
Continuing Directors then on the Board of Directors.
(c) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
2. Composition and Nomination of Board of Directors.
2.1 Board Composition Requirements. At any meeting of stockholders at
which directors are to be elected and with respect to any written consent of
stockholders of the Company in lieu of a meeting relating to the election of
directors, the Purchaser shall vote, or execute and deliver a written consent
with respect to, all shares of Common Stock and any other voting securities of
the Company held of record or Beneficially Owned by it with respect to all
directorships other than those which the Purchaser is entitled to designate
pursuant to Section 5.3 of the Purchase Agreement(the "SOFTBANK Designees"), (a)
in favor of the Continuing Directors at such time and (b) against the election
of any directors other than the Continuing Directors.
2.2 Removal of Directors. Except as otherwise provided in this Section
2.2, the Purchaser agrees not to take any action to remove, with or without
cause, any director of the Company other than the SOFTBANK Designees.
Notwithstanding the foregoing, the Principal Stockholder shall at all times have
the right to remove and to cause the Purchaser to remove, with or without cause,
any or all of the directors other than the SOFTBANK Designees.
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2.3 Vacancies. If a vacancy in the office of a Continuing Director is
created on the Board of Directors by reason of the death, disability, removal or
resignation of any one of the Continuing Directors, the Purchaser shall promptly
take all necessary and appropriate action, including voting, or executing and
delivering a written consent with respect to, the shares of Common Stock and any
other voting securities of the Company then held of record or Beneficially Owned
by the Purchaser in such a manner to ensure that such vacancy is filled with a
Continuing Director.
3. Certificate of Incorporation and Bylaws. The Purchaser shall vote
all shares of Common Stock and any other voting securities of the Company then
held of record or Beneficially Owned and shall take all other actions necessary
and appropriate (including, without limitation, voting to remove any director)
to ensure that the Company's Certificate of Incorporation and Bylaws do not at
any time conflict with the provisions of this Agreement.
4. Miscellaneous.
4.1 Modification and Waiver. No amendment or modification of the terms
or provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed to or shall constitute a waiver of
any other provisions hereof. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof.
4.2 Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof. Any
previous agreement or understandings between the parties regarding the subject
matter hereof are merged into and superseded by this Agreement.
4.3 Severability. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining
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provisions shall not in any way be affected or impaired thereby.
4.4 No Implied Rights. Nothing herein, express or implied, is intended
to or shall be construed to confer upon or give to any person, firm, corporation
or legal entity, other than the parties hereto, any interest, rights, remedies
or other benefits with respect to or in connection with any agreement or
provision contained herein or contemplated hereby.
4.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
4.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.
4.7 Successors and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
4.8 Notices. All notices and other communications under this Agreement
shall be in writing, and shall be deemed to have been duly given on the date of
delivery if delivered personally or on the third business day after mailing or
if mailed to the party to whom notice is to be given by first class mail,
registered or certified, postage prepaid, return receipt requested, and
addressed as follows (until any such address is changed by notice duly given):
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(a) if to SOFTBANK, to:
SOFTBANK AMERICA Inc.
300 Delaware Avenue, Suite 900
Wilmington, Delaware 19801
Facsimile No.: (302) 552-3128
Attn: Frances Jacobs
SOFTBANK Holdings Inc.
10 Langley Road, Suite 403
Newton Center, Massachusetts 02169
Facsimile No.: (617) 928-9301
Attention: Ronald Fisher
Vice Chairman
with a copy to:
Sullivan & Cromwell
1888 Century Park East
21st Floor
Los Angeles, California 90067-1725
Telephone: (310) 712-6650
Telecopier: (310) 712-8800
Attention: John L. Savva, Esq.
(b) if to the Principal Stockholder, to:
Global Sports, Inc.
555 South Henderson Road
King of Prussia, Pennsylvania 19406
Telephone: (610) 768-0900
Facsimile: (610) 768-0753
Attention: Michael G. Rubin
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<PAGE>
with a copy to:
Blank Rome Comisky McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103
Telephone: (215) 569-5544
Facsimile: (215) 569-5628
Attention: Arthur Miller, Esq.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
SOFTBANK AMERICA INC.
By:________________________________
Name:
Title:
___________________________________
MICHAEL G. RUBIN
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EXHIBIT G
SUBORDINATED LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made effective as of the 10th day
of June, 1999 (the "EFFECTIVE DATE"), by and between Global Sports, Inc., a
Delaware corporation (the "COMPANY") , and SOFTBANK America Inc., a Delaware
corporation ("LENDER").
RECITALS
WHEREAS, on the date hereof, the Company and Lender are entering into a
Stock Purchase Agreement (the "Purchase Agreement"), pursuant to which the
Company intends to sell and Lender intends to acquire 6,153,850 shares of the
Company's Common Stock, par value $.01 per share (the "Share Acquisition").
WHEREAS, the Company and Lender wish to enter into this Agreement to fund
the Company's operations until the closing of the Share Acquisition.
IN WITNESS WHEREOF, the parties agree as follows:
1. THE LOAN. Subject to the terms and conditions of this Agreement, Lender
agrees to lend to the Company, and the Company agrees to borrow from Lender,
funds in an aggregate principal amount of Fifteen Million Dollars ($15,000,000)
(the "LOAN"), in one installment. The Loan shall be made on the date hereof.
Interest shall accrue on the Loan from the date hereof. Lender will transmit the
Loan via wire transfer of immediately available funds to the following account:
Account No.: 323-266193, Bank Name: The Chase Manhattan Bank; ABA No.:
021000021; or pursuant to such other instructions as may have been provided in
writing by the Company, and the Company will accept the Loan pursuant to the
terms of this Agreement.
2. THE CONVERTIBLE SUBORDINATED NOTE. The Loan will be evidenced by, and
repaid with interest in accordance with, an interest-bearing promissory note in
the form of Exhibit A (the "CONVERTIBLE SUBORDINATED NOTE"), duly completed and
dated as of the date of the Loan and delivered to Lender at or prior to the time
of the Loan.
3. INTEREST AND PAYMENTS. Interest shall accrue and be paid to Lender on
the outstanding and unpaid principal amount of the Loan at the rate of 4.98% per
annum, computed on the basis of the actual number of days elapsed and a year of
360 days consisting of twelve 30 day months. Payments of principal and interest
will be made to Lender in the manner specified in the Convertible Subordinated
Note.
4. CONDITIONS TO FUNDING OF LOAN. The obligation of the Lender to make the
Loan is subject to the fulfillment on or prior to the time of funding of the
Loan of the following conditions:
(a) The representations and warranties made by the Company in Article
III of the Purchase Agreement shall be true and correct in all material respects
as of such time (except
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<PAGE>
with respect to representations and warranties made as of a specific time, which
shall be true in all material respects as of such time, and except for
representations and warranties containing a materiality qualification, which
must be true in all respects) with the same effect as though such
representations and warranties had been made at and as of such time; and the
Company shall have performed all obligations herein required to be performed by
it on or prior to such time in all material respects (except with respect to
obligations containing a materiality qualification, which must be performed in
all respects).
(b) The Company shall have duly executed and delivered the Purchase
Agreement and the Convertible Subordinated Note.
(c) The Company shall have duly executed and delivered the Registration
Rights Agreement (as defined in the Purchase Agreement).
(d) Michael G. Rubin shall have duly executed and delivered the Voting
Agreement in the form attached hereto as Exhibit C to the Purchase Agreement.
(e) If the Purchase Agreement is executed and delivered on a date prior
to the date the Loan is funded, the President of the Company shall deliver to
the Lender on the date of funding a certificate certifying that the conditions
specified in Section 3(a) have been fulfilled.
(f) The Lender shall have received from Blank, Rome, Comisky & McCauley
LLP, counsel to the Company, an opinion addressed to the Lender, dated the date
of such funding, reasonably satisfactory in form and substance to Sullivan &
Cromwell, counsel to the Lender.
5. EVENTS OF DEFAULT. The occurrence of any of the following events will be
an "Event of Default" hereunder:
(a) Voluntary Bankruptcy or Insolvency Proceedings. The Company shall
(i) apply for or consent to the appointment of a receiver, trustee, liquidator
or custodian of itself or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of its or any of its creditors, (iii)
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
consent to any such relief or to the appointment of or taking possession of its
property by any official in an involuntary case or other proceeding commenced
against it, or (iv) take any action for the purpose of effecting any of the
foregoing; or
(b) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for
the appointment of a receiver, trustee, liquidator or custodian of the Company
or of all or a substantial part of the property thereof, or an involuntary case
or other proceedings seeking liquidation, reorganization or other relief with
respect to the Company or the debts thereof under any bankruptcy,
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<PAGE>
insolvency or other similar law now or hereafter in effect shall be commenced
and an order for relief entered or such proceeding shall not be dismissed or
discharged within sixty (60) days of commencement.
(c) Cross Default. The Company fails to pay or discharge any obligation
in excess of $1,000,000 when due, whether by scheduled maturity, required
prepayment, acceleration, or otherwise).
(d) Judgment. Rendering of a final judgment or judgments (not subject
to appeal) against the Company or any of its subsidiaries in an aggregate amount
in excess of $1,000,000 which remains unstayed, in effect and unpaid for a
period of 60 consecutive days thereafter.
(e) Conversion Default. With respect to outstanding obligations under
the Convertible Subordinated Note, any breach by the Company with respect to its
obligations to issue shares of Common Stock upon conversion of the Convertible
Subordinated Note pursuant to Section 3 thereof.
6. RIGHTS OF THE LENDER UPON DEFAULT. Upon the occurrence or existence of
an Event of Default specified in Section 5(a) or (b), immediately and without
notice, all outstanding obligations payable by the Company hereunder and under
the Convertible Subordinated Note shall automatically become immediately due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived. Upon the occurrence or existence of an
Event of Default as specified in Sections 5(c), (d) or (e), the Lender may
declare the outstanding obligations hereunder and under the Convertible
Subordinated Note immediately due and payable by written notice to the Company
and upon any such declaration such obligations shall become immediately due and
payable.
7. SUCCESSORS AND ASSIGNS. This Agreement and the Convertible Subordinated
Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
8. WAIVER AND AMENDMENT. Any provision of this Agreement may be amended,
waived or modified upon the written consent of the Company and the Lender.
9. ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned, by operation of law or otherwise, in
whole or in part, by the Company or the Holder without the prior written consent
of the other party except (i) in the case of the Company, in connection with an
assignment in whole to a successor corporation to the Company, provided that
such successor corporation acquires, by purchase of assets, merger or otherwise,
all or substantially all of the Company's property and assets, and (ii) in the
case of Lender to any affiliates of Lender or SOFTBANK Corp., a Japanese
corporation, including,
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<PAGE>
without limitation, any partnership or other entity of which any direct or
indirect subsidiary of SOFTBANK Corp. is a general partner or has investment
discretion, or any employees of any of the foregoing.
10. ADDRESSES FOR NOTICES, ETC. Any notices and other communications
required or permitted under this Agreement shall be effective if in writing and
delivered personally or sent by telecopier, Federal Express or registered or
certified mail, postage prepaid, addressed as follows:
If to Lender, to: SOFTBANK Holdings Inc.
10 Langley Road, Suite 403
Newton Center, MA 02159
Attn: Ronald D. Fisher
Facsimile: (617) 928-9301
SOFTBANK America Inc.
300 Delaware Avenue, Suite 900
Wilmington, Delaware 19801
Attn: Francis Jacobs
Facsimile: (302) 552-3128
with a copy to: Sullivan & Cromwell
1888 Century Park East
Los Angeles, California 90067
Telephone: (310) 712-6650
Telecopier: (310) 712-8800
Attention: John L. Savva, Esq.
If to the Company, to: Global Sports, Inc.
555 South Henderson Road
King of Prussia, Pennsylvania 19103
Telephone: (610) 768-0900
Telecopier: (610) 768-0753
Attention: Michael G. Rubin
with a copy to: Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103
Telephone: (215) 569-5544
Telecopier: (215) 569-5628
Attention: Arthur Miller, Esq.
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<PAGE>
Unless otherwise specified herein, such notices or other communications
shall be deemed effective (a) on the date delivered, if delivered personally,
(b) two business days after being sent, if sent by Federal Express or other
commercial overnight delivery service, (c) one business day after being sent, if
sent by telecopier with confirmation of good transmission and receipt, and (d)
three business days after being sent, if sent by registered or certified mail.
Each of the parties hereto shall be entitled to specify another address by
giving notice as aforesaid to each of the other parties hereto.
11. SEVERABILITY. The holding of any provision of this Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provisions and the other provisions of this Convertible Subordinated
Note shall remain in full force and effect.
12. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
GLOBAL SPORTS, INC.,
a Delaware corporation
By:_______________________
Title:____________________
SOFTBANK AMERICA INC.,
a Delaware corporation
By:_______________________
Title:____________________
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EXHIBIT H
THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN EXEMPTION
FROM REGISTRATION. PAYMENT OF THIS NOTE AND ACCRUED INTEREST HEREON IS
EXPRESSLY SUBJECT TO THE TERMS AND CONDITIONS OF THE SUBORDINATION
AGREEMENT REFERRED TO IN THIS NOTE.
GLOBAL SPORTS, INC.
CONVERTIBLE SUBORDINATED NOTE
NOTE NO. 1999A-I
$15,000,000.00 June 10, 1999
King of Prussia, Pennsylvania
FOR VALUE RECEIVED, Global Sports, Inc., a Delaware corporation (the
"COMPANY"), promises to pay to SOFTBANK America Inc. ("SOFTBANK), or its
assigns (each of SOFTBANK and any such assign, a "Holder"), the principal sum
of $15,000,000.00, or such lesser amount as shall then equal the outstanding
principal amount hereof, together with interest from the date of this
Convertible Subordinated Note on the unpaid principal balance at a rate equal to
4.98% per annum, computed on the basis of the actual number of days elapsed and
a year of 360 days consisting of twelve 30-day months. Unless this Convertible
Subordinated Note is earlier converted in accordance with Section 3 hereof, all
unpaid principal, together with any then unpaid and accrued interest and other
amounts payable hereunder, shall be due and payable on the earlier of (i)
September 30, 1999 (the "Maturity Date"), or (ii) the acceleration of the
maturity thereof in accordance with Section 4 of the Subordinated Loan Agreement
dated June 10, 1999 (the "SUBORDINATED LOAN AGREEMENT") between the Company and
SOFTBANK America.
This Convertible Subordinated Note shall be governed by, and be subject to,
the terms of the Subordinated Loan Agreement, all of which provisions are hereby
incorporated herein by reference.
The following is a statement of the rights of the Holder and the conditions
to which this Convertible Subordinated Note is subject, and to which the Holder
hereof, by the acceptance of this Convertible Subordinated Note, agrees:
1. DEFINITIONS. As used in this Convertible Subordinated Note, the
following capitalized terms have the following meanings:
(a) The "COMPANY" includes the corporation initially executing this
Convertible Subordinated Note and any Person that shall succeed to or assume the
obligations of the Company under this Convertible Subordinated Note.
(b) "HOLDER" shall mean the Person specified in the introductory
paragraph of this Convertible Subordinated Note or any Person who shall at the
time be the registered holder of this Convertible Subordinated Note.
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<PAGE>
(c) "PERSON" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture or any other
entity or a governmental authority.
2. INTEREST. Accrued interest on this Convertible Subordinated Note shall
be payable at such time as the outstanding principal amount hereof shall be paid
in full; provided however, that in the event this Convertible Subordinated Note
is not previously converted and the principal amount hereof is not repaid in
full on the Maturity Date, accrued but unpaid interest on this Convertible
Subordinated Note shall thereafter be paid in cash on the Maturity Date, the
last business day of each calendar month thereafter and on such date as the
outstanding principal amount hereof shall be paid in full.
3. CONVERSION.
(a) Common Stock Financing. Upon the First Closing, as defined in the
Purchase Agreement between the Company and SOFTBANK of even date herewith (the
"Purchase Agreement"), all principal and accrued interest due on this
Convertible Subordinated Note shall automatically convert into a number of
shares of Common Stock (the "CONVERSION NUMBER") determined by dividing all of
the unpaid principal and accrued but unpaid interest on this Convertible
Subordinated Note as of the First Closing Date (as defined in the Purchase
Agreement) by $13.00, subject to appropriate adjustment in the event of stock
splits, stock dividends, recapitalization and similar events (as so adjusted,
the "CONVERSION PRICE"). The cancellation of this Convertible Subordinated Note
in connection with such conversion shall be deemed to be payment in full of the
purchase price of a number of shares equal to the Conversion Number purchased
pursuant to the Purchase Agreement.
(b) Optional Conversion. At any time after September 1, 1999, and
whether before or after the Maturity Date, the Holder may, at its option, by
written notice to the Company, convert this Convertible Subordinated Note into a
number of shares of Common Stock equal to (i) the unpaid principal and accrued
but unpaid interest as of the date such conversion becomes effective divided by
(ii) the Conversion Price. Promptly following receipt of such notice, the
Company shall take or use its reasonable best efforts to cause to be taken such
actions as may be necessary to permit such conversion to be effected as promptly
as reasonably practicable thereafter, including, without limitation, making such
filings as may be required to be made by the Company or its affiliates under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Company
shall at all times reserve and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock, for the purpose of effecting the
conversion of this Convertible Subordinated Note, the full number of shares of
Common Stock then issuable upon the conversion of this Convertible Subordinated
Note.
(c) Issuance of Securities on Conversion. Concurrent with the
conversion of this Convertible Subordinated Note, the Company will cause to be
issued in the name of, and delivered to, the Holder, a certificate or
certificates representing the number of shares of the Common Stock to which the
Holder shall be entitled on such conversion. No fractional shares will be issued
on conversion of this Convertible Subordinated Note and in lieu thereof the
Holder shall be entitled to payment in cash of the amount of the Convertible
Subordinated Note not converted into shares.
(d) Termination of Rights. All rights with respect to this Convertible
Subordinated Note shall terminate upon the issuance of shares of Common Stock
upon conversion of this Convertible
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<PAGE>
Subordinated Note, whether or not this Convertible Subordinated Note has been
surrendered. Notwithstanding the foregoing, the Holder agrees to surrender this
Convertible Subordinated Note to the Company for cancellation as soon as is
practicable following conversion of this Convertible Subordinated Note.
4. SUCCESSORS AND ASSIGNS. Subject to the restrictions on transfer
described in Section 6 below, the rights and obligations of the Company and the
Holder shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
5. WAIVER AND AMENDMENT. Any provision of this Convertible Subordinated
Note may be amended, waived or modified upon the written consent of the Company
and SOFTBANK.
6. ASSIGNMENT. Neither this Convertible Subordinated Note nor any of the
rights, interests or obligations hereunder may be assigned, by operation of law
or otherwise, in whole or in part, by the Company or the Holder without the
prior written consent of the other party except (i) in the case of the Company,
in connection with an assignment in whole to a successor corporation to the
Company, provided that such successor corporation acquires, by purchase of
assets, merger or otherwise, all or substantially all of the Company's property
and assets, and (ii) in the case of Holder to any affiliates of Holder or
SOFTBANK Corp., a Japanese corporation, including, without limitation, any
partnership or other entity of which any direct or indirect subsidiary of
SOFTBANK Corp. is a general partner or has investment discretion, or any
employees of any of the foregoing.
7. SUBORDINATION. The Company and each Holder, by its acceptance hereof,
agree that the payment of the principal amount evidenced by this Note and all
accrued interest thereon is hereby expressly made subordinate and junior in
right of payment to the prior indefeasible payment in full of all obligations,
liabilities and indebtedness now and hereafter owing by the Company to Foothill
Capital Corporation ("FOOTHILL") to the extent and subject to the terms and
conditions set forth in that certain Subordination Agreement, dated on or about
the date hereof, executed by and among the Company, SOFTBANK and Foothill.
8. ADDRESSES FOR NOTICES, ETC. Any notices and other communications
required or permitted under this Agreement shall be effective if in writing and
delivered personally or sent by telecopier, Federal Express or registered or
certified mail, postage prepaid, addressed as follows:
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<PAGE>
If to the Holder, to: SOFTBANK Holdings Inc.
10 Langley Road, Suite 403
Newton Center, MA 02159
Attention: Ronald D. Fisher
Facsimile: (617) 928-9301
SOFTBANK America Inc.
300 Delaware Avenue, Suite 900
Wilmington, Delaware 19801
Attention: Francis Jacobs
Facsimile: (302) 552-3128
with a copy to: Sullivan & Cromwell
1888 Century Park East
Suite 2100
Los Angeles, California 90067
Telephone: (310) 712-6650
Telecopier: (310) 712-8800
Attention: John L. Savva, Esq.
If to the Company, to: Global Sports, Inc.
555 South Henderson Road
King of Prussia, Pennsylvania 19406
Telephone: (610) 768-0900
Telecopier: (610) 768-0753
Attention: Michael G. Rubin
with a copy to: Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103
Telephone: (215) 569-5544
Telecopier: (215) 569-5628
Attention: Arthur Miller, Esq.
Unless otherwise specified herein, such notices or other communications
shall be deemed effective (a) on the date delivered, if delivered personally,
(b) two business days after being sent, if sent by Federal Express or other
commercial overnight delivery service, (c) one business day after being sent, if
sent by telecopier with confirmation of good transmission and receipt, and (d)
three business days after being sent, if sent by registered or certified mail.
Each of the parties hereto shall be entitled to specify another address by
giving notice as aforesaid to each of the other parties hereto.
9. PAYMENT. Except in the event this Convertible Subordinated Note is
converted into Common Stock as provided herein, payment shall be made in lawful
tender of the United States.
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<PAGE>
10. SEVERABILITY. The holding of any provision of this Convertible
Subordinated Note to be invalid or unenforceable by a court of competent
jurisdiction shall not affect any other provisions and the other provisions of
this Convertible Subordinated Note shall remain in full force and effect.
11. GOVERNING LAW. This Convertible Subordinated Note shall be governed by
and construed and enforced in accordance with the laws of the State of Delaware.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Convertible Subordinated
Note to be issued as of the date first written above.
GLOBAL SPORTS, INC.
a Delaware corporation
By:_________________________________
Title:______________________________
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SOFTBANK America Inc.
300 Delaware Avenue
Suite 900
Wilmington, Delaware 19801
June 21, 1999
Via Facsimile
- -------------
Global Sports, Inc.
555 South Henderson Road
King of Prussia, Pennsylvania 19406
Attention: Michael G. Rubin
Dear Mr. Rubin:
Notwithstanding any provision to the contrary in the Stock Purchase
Agreement, dated as of June 10, 1999 (the "Purchase Agreement"), between
SOFTBANK America Inc. ("SOFTBANK") and Global Sports, Inc. ("Global Sports") or
the Voting Agreement, dated as of June 10, 1999 (the "Voting Agreement"),
between SOFTBANK and Michael G. Rubin ("Rubin"), SOFTBANK, Rubin and Global
Sports hereby agree that if the First Closing has occurred prior to July 13,
1999 (i) SOFTBANK shall not have the right to designate new members to Global
Sports' Board of Directors until the earlier of (a) the completion or
adjournment of Global Sports' next annual meeting of stockholders and (b) 5:00
p.m., P.S.T., on July 13, 1999 (such earlier time, the "Effective Time"); (ii)
Rubin shall not be obligated to vote in favor of the members of the Global
Sports' Board of Directors to be designated by SOFTBANK to satisfy the Board
Composition Requirement until the Effective Time; (iii) Rubin shall not be
required to vote against any slate of directors up for election to Global
Sports' Board of Directors until the Effective Time; and (iv) the failure by
Rubin or Global Sports to cause the Board Composition Requirement to be
satisfied by the First Closing Date shall not, by itself, excuse SOFTBANK from
consummating the First Purchase.
<PAGE>
Global Sports, Inc. -2-
Except as otherwise specifically provided herein, the obligations of
Global Sports set forth in the Purchase Agreement and the obligations of Rubin
set forth in the Voting Agreement shall continue in full force and effect
without modification.
<PAGE>
Global Sports, Inc. -3-
Capitalized terms used herein and not defined herein shall have the
respective meanings set forth in the Purchase Agreement.
Please acknowlege your agreement with these terms by signing below.
Very Truly Yours,
SOFTBANK AMERICA INC.
By: __________________
Name:
Title:
Acknowledged and Agreed:
GLOBAL SPORTS, INC.
By: _____________________
Name:
Title:
_____________________
MICHAEL G. RUBIN
