-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N9n3gxJUhIRWsk1zVd+kcem7jWm1+TBUVe1hHOKSSdvkxtpgt2FJEN9b0Ccoox41 TIlnFsouleCdH8ndk9JpyA== /in/edgar/work/20000920/0001036050-00-001764/0001036050-00-001764.txt : 20000924 0001036050-00-001764.hdr.sgml : 20000924 ACCESSION NUMBER: 0001036050-00-001764 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000913 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000920 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLOBAL SPORTS INC CENTRAL INDEX KEY: 0000828750 STANDARD INDUSTRIAL CLASSIFICATION: [3021 ] IRS NUMBER: 042958132 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-16611 FILM NUMBER: 725631 BUSINESS ADDRESS: STREET 1: 1075 FIRST AVE STREET 2: RTE 3 INDUSTRIAL PARK CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 BUSINESS PHONE: 6102653229 MAIL ADDRESS: STREET 1: 1075 FIRST AVE CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 8-K 1 0001.txt FORM 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ================================================================================ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934. Date of Report: September 13, 2000 ------------------ (Date of earliest event reported) GLOBAL SPORTS, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-16611 04-2958132 - ------------------------------------------------------------------------------------------------------------ (State or other jurisdiction (Commission File Number) (I.R.S. Employer Identification of incorporation or organization) Number)
1075 First Avenue, King of Prussia, PA 19406 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (610) 265-3229 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) ================================================================================ Item 5. Other Events On September 13, 2000, Global Sports, Inc., a Delaware corporation (the "Company"), and Interactive Technology Holdings, LLC, a Delaware limited liability company ("ITH"), entered into a Stock and Warrant Purchase Agreement (the "Purchase Agreement") and related agreements for the sale of (i) 5,000,000 shares of the Company's common stock, par value $.01 per share ("Common Stock") at a purchase price of $8.15 per share, (ii) warrants to purchase 2,500,000 shares of Common Stock at an exercise price of $10.00 per share, and (iii) warrants to purchase 2,000,000 shares of Common Stock at an exercise price of $8.15 per share, all for an aggregate purchase price of $41,312,500 (the warrants in clauses (ii) and (iii) being collectively referred to as the "Warrants"). Upon completion of the contemplated transactions, ITH will own approximately twenty-six percent (26%) of the Company's Common Stock on a fully diluted basis. The Company intends to use the proceeds from the sale of Common Stock and Warrants to ITH for general corporate purposes. The transactions contemplated pursuant to the Purchase Agreement are to be consummated through two separate closings. The initial closing (the "First Closing") took place on September 13, 2000 at which time ITH acquired 1,800,000 shares of Common Stock and Warrants to purchase 1,620,000 of Common Stock. The Company anticipates that a second closing (the "Second Closing") will take place on the later 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, or (ii) such other date as is mutually agreed to by the Company and ITH. At the Second Closing, ITH will acquire an additional 3,200,000 shares of Common Stock and Warrants to purchase an additional 2,880,000 shares of Common Stock. The completion of the Second Closing is subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and certain other limited conditions. The Purchase Agreement provides, among other things, that on and after the First Closing, ITH will have the right, (i) (A) so long as ITH and/or any person under which it is controlled, controlled by or under common control with (collectively, the "Purchaser Group") collectively owns or has the right to acquire 50% of more of the Common Stock (including shares of Common Stock issuable upon exercise of the Warrants, the "Warrant Shares") held immediately after consummation of the First Closing and Second Closing, as appropriate, to designate two (2) members of the Company's Board of Directors, (B) so long as the Purchaser Group collectively owns or has the right to acquire 10% of more of the Common Stock (including Warrant Shares) held immediately after consummation of the First Closing and Second Closing, as appropriate, to designate one (1) member of the Company's Board of Directors; and (ii) so long as the Purchaser Group collectively owns or has the right to acquire 35% of more of the Common Stock (including Warrant Shares) held immediately after consummation of the First Closing and Second Closing, as appropriate, to designate one (1) member of each committee of the Company's Board of Directors. In the Purchase Agreement, the Company has also granted ITH certain preemptive rights. The Company, ITH, SOFTBANK Capital Partners LP, SOFTBANK Capital Advisors Fund LP (together with SOFTBANK Capital Partners LP, "SOFTBANK") and TMCT Ventures, L.P. 2 ("TMCT") also entered into a Second Amended and Registration Rights Agreement, dated as of September 13, 2000, under which the Company has granted each of ITH, SOFTBANK and TMCT certain "demand" and "piggy-back" registration rights with respect to the shares of Common Stock held by such entity. In connection with the Purchase Agreement, Michael G. Rubin, Chairman and Chief Executive Officer of the Company, and ITH entered into a Voting Agreement, dated as of September 13, 2000, whereby (i) Mr. Rubin agreed, among other things, that he will vote all of his shares of Common Stock in favor of election to the Company's Board of Directors of the directors which ITH is entitled to designate upon consummation of the First and Second Closings, and (ii) ITH agreed, among other things, that ITH would vote all of its shares of Common Stock in favor of election to the Company's Board of Directors of certain Continuing Directors (as such term is defined in such Voting Agreement). Additionally, in connection with the consummation of the transactions contemplated pursuant to the Purchase Agreement, ITH and SOFTBANK entered into a Voting Agreement, dated as of September 13, 2000, whereby (i) ITH agreed, among other things, that ITH would vote all of its shares of Common Stock in favor of election to the Company's Board of Directors of the directors to which SOFTBANK is entitled to designate from time to time, and (ii) SOFTBANK agreed, among other things, that SOFTBANK would vote all of its shares of Common Stock in favor of election to the Company's Board of Directors of the directors to which ITH is entitled to designate from time to time. On June 13, 2000, the Company issued a press release relating to the transactions described above. A copy of the press release is attached as Exhibit 99.4 and is incorporated herein by reference. Copies of the definitive agreements are attached as Exhibits 2.1 and 99.1 through 99.3, and are incorporated herein by reference. This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward- looking statements contained herein involve risks and uncertainties, including those relating to the possible inability to complete the Second Closing of the transaction involving the Company and ITH, as scheduled, if at all. Actual results and developments may differ materially from those described or incorporated by reference in this Report. For more information about the Company and risks arising when investing in the Company, investors are directed to the Company's most recent report on Form 10-K as filed with the Securities and Exchange Commission. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits Exhibit 2.1 Stock and Warrant Purchase Agreement, dated as of September 13, 2000, by and between Global Sports, Inc. and Interactive Technology Holdings, LLC. 3 Exhibit 99.1 Voting Agreement, dated as of September 13, 2000, by and between Interactive Technology Holdings, LLC and Michael G. Rubin. Exhibit 99.2 Voting Agreement, dated as of September 13, 2000, by and between Interactive Technology Holdings, LLC, SOFTBANK Capital Partners LP and SOFTBANK Capital Advisors Fund LP. Exhibit 99.3 Second Amended and Restated Registration Rights Agreement, dated as of September 13, 2000, by and between Global Sports, Inc., Interactive Technology Holdings, LLC, SOFTBANK Capital Partners LP, SOFTBANK Capital Advisors Fund LP and TMCT Ventures, L.P. Exhibit 99.4 Press Release dated September 13, 2000, relating to the transactions described herein. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GLOBAL SPORTS, INC. By: /s/ Michael G. Rubin -------------------- Name: Michael G. Rubin Office: Chairman and Chief Executive Officer Dated: September 20, 2000 4 EX-2.1 2 0002.txt STOCK AND WARRANT PURCHASE AGREEMENT EXHIBIT 2.1 STOCK AND WARRANT PURCHASE AGREEMENT This STOCK AND WARRANT PURCHASE AGREEMENT (this "Agreement") is made and entered into as of September 13, 2000 between Global Sports, Inc., a Delaware corporation (the "Company"), and Interactive Technology Holdings, LLC, a Delaware limited liability company (the "Purchaser"). RECITALS WHEREAS, the Company has authorized the sale and issuance of an aggregate of 5,000,000 shares (the "Shares") of the Company's common stock, par value $0.01 per share (the "Common Stock"); and WHEREAS, the Company has authorized the sale and issuance of (i) a warrant (the "First Warrant") to purchase 900,000 shares of Common Stock at an exercise price of $10.00 per share, (ii) a warrant (the "Second Warrant") to purchase 1,600,000 shares of Common Stock at an exercise price of $10.00 per share, (iii) a warrant (the "Third Warrant") to purchase 720,000 shares of Common Stock at an exercise price of $8.15 per share, and (iv) a warrant (the "Fourth Warrant" and, together with the First Warrant, the Second Warrant and the Third Warrant, the "Warrants") to purchase 1,280,000 shares of Common Stock at an exercise price of $8.15 per share (the 4,500,000 shares of Common Stock underlying the Warrants being hereinafter collectively referred to as the "Warrant Shares"); and WHEREAS, the Purchaser desires to purchase the Shares and the Warrants on the terms and conditions set forth herein; and WHEREAS, the Company desires to sell and issue the Shares and the Warrants to the Purchaser on the terms and conditions set forth herein; and NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows: 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 Shares and the Warrants for an aggregate purchase price of $41,312,500 (the "Purchase Price," $14,872,500 of which is hereinafter referred to as the "First Purchase Price" and $26,440,000 of which is hereinafter referred to as the "Second Purchase Price"). The Shares and the Warrants Shares shall have the rights, preferences, privileges and restrictions set forth in the Company's Certificate of Incorporation. The Warrants shall have the rights, preferences, privileges and restrictions set forth in the form of Warrant attached hereto as Exhibit A (the "Warrant Certificate"). --------- ARTICLE II CLOSING DATES; DELIVERY Section 2.1 CLOSINGS AND LOCATION. The purchase and sale of the Shares --------------------- and the Warrants hereunder shall take place at two closings (individually, a "Closing" and, collectively, the "Closings") at the offices of Drinker Biddle & Reath LLP, One Logan Square, Philadelphia, Pennsylvania 19103, at 10:00 a.m., Philadelphia, Pennsylvania time, on the dates hereinafter specified. Section 2.2 FIRST CLOSING. The Closing (the "First Closing") of the ------------- purchase and sale of 1,800,000 of the Shares, the First Warrant and the Third Warrant (the "First Purchase") shall be held on the latest to occur of (i) the date hereof, (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 6.3 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;" provided, however, that if the First Closing shall not have occurred by 5:00 p.m., New York time, on September 15, 2000, either party may terminate this Agreement and neither party shall have any further obligations hereunder. Section 2.3 SECOND CLOSING. The Closing (the "Second Closing") of the -------------- purchase and sale of the remaining 3,200,000 Shares, the Second Warrant and the Fourth Warrant (the "Second Purchase") 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 6.2 and 6.3 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. -------- (a) Subject to the terms and conditions of this Agreement, at the First Closing, (i) the Company shall deliver to the Purchaser (A) a stock certificate or certificates representing the Shares to be purchased by the Purchaser at the First Closing, registered in the name of the Purchaser or its assigns, and (B) the First Warrant and the Third Warrant, in each case against payment of the purchase price therefor; and (ii) the Purchaser shall deliver to the Company the First Purchase Price by wire transfer in immediately available funds to an account designated in writing by the Company. -2- (b) Subject to the terms and conditions of this Agreement, at the Second Closing, (i) the Company shall deliver to the Purchaser (A) a stock certificate or certificates representing the Shares to be purchased by the Purchaser at the Second Closing, registered in the name of the Purchaser or its assigns, and (B) the Second Warrant and the Fourth Warrant, in each case against payment of the purchase price therefor; and (ii) the Purchaser shall deliver to the Company the Second Purchase Price by wire transfer in immediately available funds to an account designated in writing by the Company. 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 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 and, with ------------------------------ respect to clause (b) below, the Warrants, when issued and paid for in accordance with this Agreement, and the Warrant Shares when issued and paid for upon exercise of and in accordance with the Warrants, (a) will be duly authorized, validly issued, fully paid and non-assessable, and (b) will be free of any liens or encumbrances other than as a result of any action by the Purchaser; provided, however, that the Shares, the Warrants and the Warrant -------- ------- Shares may be subject to restrictions on transfer under applicable securities laws or under this Agreement, the Warrants or the Registration Rights Agreement (as defined below). The rights, preferences, privileges and restrictions of the Shares and the Warrant Shares are as stated in the Company's Certificate of Incorporation. The rights, preferences, privileges and restrictions of the Warrants -3- are as stated in the Warrant Certificate. The Warrant Shares have been duly and validly reserved for issuance. The sale of the Shares and the Warrants and the subsequent issuance of the Warrant Shares upon exercise of the Warrants are not and will not be subject to any preemptive rights or rights of first refusal applicable to the Company that have not been properly waived or complied with. Section 3.4 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS. ----------------------------------------------------- (a) The Company has all requisite corporate power and authority to enter into, execute and deliver this Agreement, the Warrants and the Second Amended and Restated Registration Rights Agreement in the form attached hereto as Exhibit B (the "Registration Rights Agreement"), to issue and sell the --------- Shares, the Warrants and, upon exercise of the Warrants, the Warrant Shares, and to consummate the transactions contemplated by this Agreement, the Warrants and the Registration Rights Agreement. This Agreement, the Warrants 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. (b) The execution and delivery by the Company of this Agreement, the Warrants and the Registration Rights Agreement, the issuance and sale of the Shares, the Warrants and, upon exercise of the Warrants, the Warrant Shares, and consummation of the transactions contemplated by this Agreement, the Warrants and the Registration Rights Agreement 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, 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 Warrants and the Registration Rights Agreement, the issuance and sale of the Shares, the Warrants and, upon exercise of the Warrant, the Warrant Shares, 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 -4- "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 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) 60,000,000 shares of Common Stock and (ii) 1,000,000 shares of Preferred Stock, $0.01 par value per share. Schedule 3.5(a) sets forth a --------------- true and complete list as of September 8, 2000 of the total number of all outstanding shares of the Company's capital stock and all options, warrant and other rights to acquire shares of the Company's capital stock held by employees and directors, on the one hand, and by all other persons, on the other hand, and from September 8, 2000 until the date hereof, there have been no changes in the total number of outstanding shares of the Company's capital stock and options, warrants or other rights to acquire shares of the Company's capital stock other than as a result of the issuance of shares of the Company's capital stock upon the exercise or conversion of any option, warrant or other right set forth on Schedule 3.5(a). All issued and outstanding shares of Common Stock and Preferred - --------------- Stock have been duly authorized and validly issued, are fully paid and non- assessable and were issued in compliance with all applicable laws concerning the issuance of securities. (b) 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(b) hereto, there are no outstanding options, warrants, --------------- rights (including conversion or preemptive rights, anti-dilution rights and rights of first refusal), agreements or commitments of any kind to which the Company is a party or by which the Company is bound relating to the issuance, conversion, registration, voting, sale or transfer of any equity interests or other securities of the Company or obligating the Company to purchase or redeem any such equity interests or other securities 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, 1999, including, without limitation, the registration statement on Form S-3 filed with the Commission on April 3, 2000 (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 -5- 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, 1999, taking into account the cumulative effect of all 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 Warrants and the Registration Rights Agreement or to consummate the First Purchase or 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, 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 or as set forth on Schedule 3.10, 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 -6- 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 SPECIAL BENEFITS. 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 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. Section 3.13 OFFERING VALID. Assuming the accuracy of the -------------- representations and warranties of the Purchaser contained in Sections 4.3 and 4.4 hereof, the offer, sale and issuance of the Shares, Warrants and Warrant Shares will be exempt from the registration requirements of the Securities Act, and will have been registered or qualified or are exempt from registration and qualification under the registration, permit or qualification requirements of all other applicable securities laws. Neither the Company nor any agent on its behalf has solicited or will solicit any offers to sell or has offered to sell or will offer to sell all or any part of the Shares or the Warrants to any person or persons so as to bring the sale of such securities by the Company within the registration provisions of the Securities Act or any other applicable securities laws. Section 3.14 ADDITIONAL DOCUMENTS. The Company has made available to the -------------------- Purchaser true and complete copies of each legally-binding agreement, understanding, instrument or contract to which the Company or, to the Company's knowledge, Michael G. Rubin ("Rubin") is a party or by which the Company or, to the Company's knowledge, Rubin is bound relating to the investments in the Company made by SOFTBANK Capital Partners LP and SOFTBANK Capital Advisors Fund LP (collectively, the "Softbank Entities") and by TMCT Ventures, L.P. ("TMCT"), respectively. -7- ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER The Purchaser represents and warrants to the Company as follows: Section 4.1 ORGANIZATION. The Purchaser is a limited liability company ------------ 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 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 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 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 Schedule 13D and a Form 3 under the Exchange Act, and (iii) 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, the Warrants --------------------------------- and, upon exercise of the Warrants, the Warrant 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. The Purchaser has not been formed for the specific purpose of acquiring the Shares, the Warrants and the Warrant Shares. It is understood that transfers by the Purchaser of Shares or Warrants to one or more members of the Purchaser Group (as defined in Section 8.3) shall not be deemed to be inconsistent with this Section 4.3, and the Purchaser shall be permitted to make such transfers from time to time without restriction, so long as any such transfer complies with the Securities Act and any applicable state securities laws. Section 4.4 INVESTMENT EXPERIENCE. The Purchaser is an "accredited --------------------- investor" as defined in Rule 501(a)(3) under the Securities Act. The 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, the Warrants and, upon exercise of the -8- Warrants, the Warrant Shares. The 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, the Warrants and, upon exercise of the Warrants, the Warrant Shares. Section 4.5 RESTRICTED SECURITIES. The Purchaser understands that the --------------------- Shares, the Warrants and the Warrant Shares are characterized as "restricted securities" under the Securities Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that the Purchaser must hold the Shares, the Warrants and, upon exercise of the Warrants, the Warrant 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, the Warrants and the Warrant 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, the ------- Warrants and, upon exercise of the Warrants, the Warrant 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 AND WARRANT PURCHASE AGREEMENT, DATED AS OF SEPTEMBER 13, 2000, 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 the Purchaser, is or may be responsible as a result of the transactions contemplated hereby. -9- 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, but in no event more than 15 days, 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, but in no event more than 15 days, 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 Warrants 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 the Company and the Purchaser. Section 5.2 BOARD OF DIRECTORS. On and after the First Closing Date, the ------------------ Purchaser shall have the right, (i) (A) so long as the Purchaser Group collectively owns or has the right to acquire 50% or more of the Common Stock (including Warrant Shares) held immediately after consummation of the First Purchase or the Second Purchase, as appropriate, to designate two (2) members of the Company's Board of Directors, and (B) so long as the Purchaser Group collectively owns or has the right to acquire 10% or more of the Common Stock (including Warrant Shares) held immediately after consummation of the First Purchase or the Second Purchase, as appropriate, to designate one (1) member of the Company's Board of Directors (collectively, the "Board Composition Requirement"); and (ii) so long as the Purchaser Group collectively owns or has the right to acquire 35% or more of the Common Stock (including Warrant Shares) held immediately after consummation of the First Purchase or the Second Purchase, as appropriate, to designate one (1) member of each committee of the Company's Board of Directors. Section 5.3 PREEMPTIVE RIGHTS. ----------------- (a) If the Company proposes to issue, grant or sell Common Stock or Rights (as defined below), the Company shall first give to the Purchaser (for so long as the Purchaser Group owns or has the right to acquire at least 500,000 shares of Common Stock (appropriately adjusted for any stock split, reverse stock split or stock dividend)) and any transferee (of whom the Company has notice) of shares of Common Stock (including any Warrant Shares and any -10- other shares of Common Stock underlying any other Rights transferred) from the Purchaser which transferee then owns or has the right to acquire at least 500,000 shares of Common Stock (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 (the Purchaser and each qualifying transferee, 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 5.3 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; provided, however, that, in -------- ------- the event that the Company is unable to issue, grant or sell substantially all of the remaining subject shares of Common Stock or Rights on the terms set forth in its notice to the Securityholders, as contemplated by Section 5.3(b), no Securityholder shall be legally bound by its or his notice regarding the exercise of its or his preemptive rights hereunder. The closing of the purchase of shares of Common Stock or Rights by each Securityholder exercising its or his preemptive rights hereunder shall take place at the same time as the closing of the issuance, grant or sale of Common Stock or Rights to persons other than Securityholders, as contemplated by Section 5.3(b). (b) 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 5.3(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 offer, 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 pursuant to the provisions of this Section 5.3. (c) If the Company proposes to issue, grant or sell Common Stock or Rights between the First Closing Date and the Second Closing Date, the Purchaser shall be deemed for purposes of determining its Proportionate Share with respect to its exercise of its preemptive rights in connection with such issuance, grant or sale to own, in addition to those Shares and Warrants purchased at the First Closing, all Shares and Warrants to be purchased at the Second Closing; provided, however, that the closing of the purchase of shares of Common Stock or - -------- ------- -11- Rights by the Purchaser exercising its preemptive rights hereunder shall not occur until the later of (i) the Second Closing Date, or (ii) the closing date referred to in subsection (a) of this Section 5.3; and provided, further, that, -------- ------- in the event that the Second Closing Date does not occur on or before the date which is 180 days following the First Closing Date, but the condition set forth in Section 6.2(f) hereof has been satisfied, the Purchaser shall only be entitled to its actual Proportionate Share with respect to its exercise of its preemptive rights in connection with such issuance, grant or sale and the closing of the purchase of shares of Common Stock or Rights by the Purchaser shall occur on the later of (x) the closing date referred to in subsection (a) of this Section 5.3, or (y) the date ten days after the expiration of such 180- day period. In the event that the Second Closing Date does not occur on or before the date which is 180 days following the First Closing Date, and the applicable waiting period under the HSR Act with respect to the sale of the Shares shall not have expired or been terminated prior to the expiration of such 180-day period, the Purchaser shall have no legal obligation to purchase any shares of Common Stock or Rights hereunder, even if the Purchaser otherwise would have been so obligated. (d) The provisions of this Section 5.3 shall not apply to the following issuances of securities: (i) issuances 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) issuances of Rights, or Common Stock issuable upon exercise of Rights, granted to business partners, retailers or lessors engaged in bona fide business ---- ---- transactions with the Company, where the primary purpose is not to raise additional equity capital for the Company, (iii) issuances 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) issuances in connection with a stock dividend, (v) issuances 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) issuances 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 5.3 would materially and adversely affect the marketing of the offering. (e) For purposes of this Section 5.3, the following terms shall have the corresponding meanings set forth herein: (i) "Proportionate Share" means, with respect to each Securityholder, a fraction (A) 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 (B) 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. (ii) "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, with or without consideration, directly or indirectly, from the Company any Common Stock or any other such option, warrant, security, right or instrument, -12- 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 5.4 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 5.5 RESERVATION OF COMMON STOCK. The Company shall at all times --------------------------- reserve and keep available, solely for issuance and delivery upon the exercise of the Warrants, the number of shares of Common Stock issuable from time to time upon such exercise. Section 5.6 LISTING OF THE SHARES. The Company shall file on a timely --------------------- basis such notification with the NASD as shall be required in connection with the issuance of the Shares, and shall take all such other action as shall be appropriate, with respect to the listing of the Shares on Nasdaq or such other national securities exchange or trading market on which other shares of Common Stock are listed. Section 5.7 REMOVAL OF LEGEND. The Company shall promptly remove, upon the ----------------- request of the Purchaser or any transferee of Shares, the legend set forth in Section 4.6 hereof from the share certificates representing such Shares upon such time as the Shares (a) 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 (b) may be resold pursuant to Rule 144(k) under the Securities Act (or a comparable successor provision); provided that -------- the Purchaser shall be required to provide to the Company appropriate certification as may be reasonably necessary to demonstrate that clause (a) or (b), as the case may be, is applicable. Section 5.8 PROHIBITED TRANSACTIONS. ----------------------- (a) For so long as the Purchaser Group collectively owns or has the right to acquire 10% or more of the Common Stock (including Warrant Shares) held immediately after consummation of the First Purchase or the Second Purchase, as appropriate, the Company shall not, nor shall it permit any of its affiliates to, (i) initiate, solicit or knowingly encourage (including by way of furnishing non-public information), or take any other action to knowingly facilitate or induce, any inquiries with respect to a Prohibited Transaction or the making of any proposal that constitutes, or that may reasonably be expected to lead to, any Prohibited Transaction (as defined below), (ii) enter into discussions or negotiate with any Excluded Transferee (as defined below) or any other person in furtherance of any inquiries with respect to a Prohibited Transaction or to effect a Prohibited Transaction, (iii) agree to or endorse a Prohibited Transaction, or (iv) authorize or instruct any officer, director, employee or other agent of the Company to take any of the actions described in clauses (i) through (iii) above; provided, however, that nothing contained in -------- ------- this Section 5.8(a) shall prohibit the Board of Directors of the Company from taking any of the actions described in clauses (i) through (iv) above in the event that the Board of Directors of the Company concludes in good faith, after consultation with the Company's outside counsel, that, notwithstanding the provisions of this Section 5.8, any such action is required in order for the Board of Directors to comply with its fiduciary duties under -13- applicable law (a "Required Action"); and provided, further, that (x) in the -------- ------- event that the Board of Directors determines, in the manner aforesaid, that any such action is a Required Action, the Board of Directors shall not take such Required Action unless and until (A) the Board of Directors has given the Purchaser notice of its intention to take such Required Action, (B) a period of five business days has elapsed since such notice was given, and (C) the Board of Directors continues to keep the Purchaser apprised, through written notice, of the status of such Required Action; and (y) in the event that the Board of Directors determines that it is in the best interests of the Company to enter into or agree to be bound by definitive documentation regarding a Prohibited Transaction, the Board of Directors shall not enter into or agree to be bound by any such definitive documentation unless and until (I) the Board of Directors has given the Purchaser notice of its intention to enter into or agree to be bound by such definitive documentation and (II) a period of ten business days has elapsed since such notice was given. Notwithstanding the foregoing, nothing contained in this Section 5.9(a) shall prohibit the Board of Directors of the Company from complying with Rule 14d-9 or 14e-2 promulgated under the Exchange Act with regard to a Prohibited Transaction. (b) For so long as the Purchaser Group collectively owns or has the right to acquire 10% or more of the Common Stock (including Warrant Shares) held immediately after consummation of the First Purchase or the Second Purchase, as appropriate, the Company shall not, nor shall it permit any of its affiliates to, enter into any agreement with any Excluded Transferee with respect to any transaction (other than in the definitive agreements for a transaction described in either clause (i) or (ii) of the definition of "Prohibited Transaction," with respect to which the Company has complied with the provisions of subsection (a) of this Section 5.8), if such agreement (1) provides for payments to an Excluded Transferee in the event that the Company enters into an Acquisition Transaction, or (2) otherwise precludes in any manner any type of transaction between the Company and any of its affiliates, on the one hand, and the Purchaser or any of its Affiliates, on the other hand. (c) For purposes of this Section 5.8, the following terms shall have the corresponding meanings set forth herein: (i) "Equity Securities" means (i) any Common Stock or other capital stock of the Company, (ii) any security convertible, with or without consideration, into any Common Stock or other capital stock of the Company (including any option to purchase such a convertible security), (iii) any security carrying any warrant or right to subscribe to or purchase any Common Stock or other capital stock of the Company or (iv) any such warrant or right. (ii) "Excluded Transferee" means Home Shopping Network, Inc., Valuevision International, Inc., and any of their respective affiliates or successors by merger, combination, acquisition or otherwise. (iii) "Prohibited Transaction" means (i) a consolidation or merger of the Company with or into any Excluded Transferee which results in the holders of the Company's capital stock holding less than fifty percent (50%) of the total outstanding voting securities of the surviving corporation, (ii) a sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company to any Excluded Transferee pursuant to one -14- transaction or a series of related transactions, or (iii) the sale or issuance by the Company of any Equity Securities to any Excluded Transferee. (iv) "Acquisition Transaction" means (i) a consolidation or merger of the Company with or into the Purchaser or any of its Affiliates which results in the holders of the Company's capital stock (other than Purchaser and its Affiliates) holding less than fifty percent (50%) of the total outstanding voting securities of the surviving corporation, (ii) a sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company to the Purchaser or any of its Affiliates pursuant to one transaction or a series of related transactions, or (iii) the sale or issuance by the Company of Equity Securities which, upon consummation of such sale or issuance, would result in the Purchaser or any of its Affiliates beneficially owning fifty percent (50%) or more of the total outstanding voting securities of the Company. Section 5.9 OBSERVER STATUS. In the event that any or all of the --------------- directors designated by the Purchaser in accordance with the provisions of Section 5.2 hereof resign from the Board of Directors (or otherwise cease to serve as director(s)) and the Purchaser waives its right pursuant to Section 5.2 hereof to designate another individual to fill the position(s) on the Board of Directors so vacated, the Company shall allow, for so long as the Purchaser Group collectively owns or has the right to acquire 10% or more of the Common Stock (including Warrant Shares) held immediately after consummation of the First Purchase or the Second Purchase, as appropriate, one representative (the "Observer") designated by the Purchaser to attend all meetings of the Company's Board of Directors and any committee thereof in a nonvoting capacity, and in connection therewith, the Company shall give the Observer copies of all notices, minutes, consents and other materials, financial or otherwise, which the Company provides to its Board of Directors or any committee thereof; provided, however, -------- ------- that the Company reserves the right to exclude the Observer from access to any material or meeting or portion thereof if the Company believes upon advice of counsel that such exclusion is reasonably necessary to preserve the attorney- client privilege or to protect confidential proprietary information. Section 5.10 FUTURE AND CURRENT INVESTMENTS AND ACTIVITIES; --------------------------------------------- INFORMATION. ----------- (a) The Company acknowledges that (i) the Purchaser and its Affiliates engage in a wide variety of activities and have investments in many other companies, (ii) it is critical to the Purchaser that the Purchaser and its Affiliates be permitted to continue to develop their current and future business and investment activities without any restriction arising from an investment by the Purchaser or any Affiliate in the Company, the right of Purchaser or any Affiliate to designate a member of the board of directors of the Company or any committee thereof or any relationship, contractual or otherwise, between the Purchaser and any Affiliate and the Company or any affiliate of the Company, and (iii) from time to time, in connection with the foregoing activities of the Purchaser and its current and future Affiliates (the "Activities"), the Purchaser and Affiliates of the Purchaser may have information that may be useful to the Company (which information may or may not be known by a Designated Director or any Observer). The Company further acknowledges that, subject to the provisions of applicable law, (A) the Company does not intend or desire that the relationship between the Purchaser and any of -15- its Affiliates with the Company and any of its affiliates (x) interfere with or impose conditions or restrictions on any of the Activities of the Purchaser or any of its current or future Affiliates, or (y) confer upon the Company any right to participate in any of the Activities of the Purchaser or any of its Affiliates, and (B) the Company intends and desires that (I) the Purchaser and its Affiliates shall be free to engage in the Activities in any capacity, whether active or passive, without any obligation or liability to the Company or to its shareholders, including, without any limitation, any obligation to offer the Company a right to acquire, participate or have any interest of any nature whatsoever in any of such Activities; (II) no director designated by the Purchaser or any Affiliate (a "Designated Director") shall have any liability solely by reason of any such Activities (it being understood that no action by a Designated Director in connection with any such Activities shall be deemed to constitute as such a breach by such Designated Director of any duty owed to the Company); and (III) the Investor, its Affiliates, and its Designated Directors and Observer (as defined below), shall have no duty to disclose any information known to such person to the Company; provided, however, that this Section 5.10 -------- ------- shall not relieve the Purchaser, its Affiliates or a Designated Director or Observer of its or his duty of confidentiality with respect to information pertaining to the Company; and provided, further, that, in the event it has been -------- ------- finally adjudicated by a court of competent jurisdiction that, notwithstanding the provisions of this Section 5.10, any of the foregoing actions on the part of the Purchaser, its Affiliates, or a Designated Director or Observer has resulted in any liability of, or the imposition of any equitable remedy against, the Purchaser or such Affiliate, Designated Director or Observer to the Company by reason of a breach of the fiduciary duty of such person to the Company, there shall not be deemed to have been a violation or breach of this Section 5.10 by the Company. (b) The Company hereby waives, to the full extent that it may do so under applicable law, any claim arising under the corporate opportunity doctrine. In this connection, the Company represents that the board of directors has, in conformance with Section 122(17) of the Delaware General Corporation Law, adopted a resolution to renounce any interest or expectancy of the Company in, or being offered an opportunity to participate in, any business opportunities presented to the Purchaser or any of its Affiliates from whatever source other than the Company. Section 5.11 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, complied with or fulfilled on its part prior to or on the Closing Dates. Section 5.12 DESIGNATION OF BOARD OF DIRECTORS. Promptly after the --------------------------------- Purchaser notifies the Company of the designation of its Directors pursuant to Section 5.2, the Company shall take all actions necessary to establish a Board of Directors meeting the Board Composition Requirement. Section 5.13 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, the Warrants and, upon exercise of the Warrants, the Warrant Shares to the Purchaser and to consummate the -16- transactions contemplated by this Agreement, the Warrants and the Registration Rights Agreement. ARTICLE VI CONDITIONS TO CLOSINGS Section 6.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE FIRST ------------------------------------------------------ CLOSING. The obligation of the Purchaser to consummate the First Purchase and - ------- the other transactions contemplated herein at the First Closing is subject to the fulfillment on or prior to the First 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 the First 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 the First Closing Date; and the Company shall have performed all obligations herein required to be performed by it on or prior to the First Closing Date in all material respects (except with respect to obligations containing a materiality qualification, which must be performed in all respects). (b) REGISTRATION RIGHTS AGREEMENT. The Company, the Softbank ----------------------------- Entities and TMC shall have each duly executed and delivered the Registration Rights Agreement. (c) RUBIN VOTING AGREEMENT. Rubin shall have duly executed and ---------------------- delivered the Voting Agreement in the form attached hereto as Exhibit C (the --------- "Rubin Voting Agreement"). (d) SOFTBANK VOTING AGREEMENT. The Softbank Entities shall have ------------------------- duly executed and delivered the Voting Agreement in the form attached hereto as Exhibit D (the "Softbank Voting Agreement" and, together with the Rubin Voting Agreement, the "Voting Agreements"). (e) CLOSING DELIVERIES. The Company shall have delivered to the ------------------ Purchaser all items required to be delivered by the Company at the First Closing by Section 2.4(a) hereof. (f) COMPLIANCE CERTIFICATE. The President of the Company shall ---------------------- deliver to the Purchaser at the First Closing a certificate certifying that the conditions specified in Section 6.1(a) have been fulfilled. -17- (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 the First Closing Date, reasonably satisfactory in form and substance to Drinker Biddle & Reath LLP, 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) BOARD APPROVAL. The Company's Board of Directors shall have -------------- approved the transactions contemplated by this Agreement, the Registration Rights Agreement and the Voting Agreements, and shall have taken action consistent with Section 5.10 hereof in conformance with Section 122(17) of the Delaware General Corporation Law. (j) AMENDMENT OF EXISTING AGREEMENTS. The two Amended and Restated -------------------------------- Voting Agreements dated May 1, 2000 among Rubin and the Softbank Entities and the Voting Agreement dated May 1, 2000 between Rubin and TMCT shall each have been amended to accommodate the transactions contemplated herein in a form reasonably satisfactory to the Purchaser. (k) WAIVER OF PREEMPTIVE RIGHTS. The Softbank Entities and TMCT --------------------------- shall have all waived their respective preemptive rights with respect to the issuance of the Shares, the Warrants and, upon exercise of the Warrants, the Warrant Shares. Section 6.2 CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE SECOND ------------------------------------------------------- CLOSING. The obligation of the Purchaser to consummate the Second Purchase and - ------- the other transactions contemplated herein at the Second Closing is subject to the fulfillment on or prior to the Second 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 the Second 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 the Second Closing Date; and the Company shall have performed all obligations herein required to be performed by it on or prior to the Second Closing Date in all material respects (except with respect to obligations containing a materiality qualification, which must be performed in all respects). (b) CLOSING DELIVERIES. The Company shall have delivered to the ------------------ Purchaser all items required to be delivered by the Company at the Second Closing by Section 2.4(b) hereof. -18- (c) COMPLIANCE CERTIFICATE. The President of the Company shall ---------------------- deliver to the Purchaser at the Second Closing a certificate certifying that the conditions specified in Section 6.2(a) have been fulfilled. (d) 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 the Second Closing Date, reasonably satisfactory in form and substance to Drinker Biddle & Reath LLP, counsel to the Purchaser. (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. (f) WAITING PERIOD. Any waiting period applicable to the sale -------------- of the Shares under the HSR Act shall have expired or been terminated. (g) FIRST CLOSING. The First Closing shall have occurred. ------------- (h) SATISFACTION OF CONDITIONS. All of the foregoing conditions -------------------------- shall have been satisfied or waived by the Purchaser on or prior to the close of business on the date which is 180 days following the First Closing Date. Section 6.3 CONDITIONS TO THE COMPANY'S OBLIGATIONS AT THE CLOSINGS. The ------------------------------------------------------- obligation of the Company to issue and sell the Shares and the Warrants at each Closing, and to consummate the other transactions contemplated herein, is subject to the fulfillment on or prior to the respective Closing Dates of the following conditions: (a) REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE OF ------------------------------------------------------ OBLIGATIONS. The representations and warranties made by 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 them 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). (b) REGISTRATION RIGHTS AGREEMENT. With respect to the First ----------------------------- Closing, the Purchaser shall have duly executed and delivered the Registration Rights Agreement. (c) VOTING AGREEMENTS. With respect to the First Closing, the ----------------- Purchaser shall have duly executed and delivered the Voting Agreements. -19- (d) CLOSING DELIVERIES. With respect to the First Closing, the ------------------ Purchaser shall have delivered to the Company all items required to be delivered by the Purchaser at the First Closing by Section 2.4(a) hereof, and with respect to the Second Closing, the Purchaser shall have delivered to the Company all items required to be delivered by the Purchaser at the Second Closing by Section 2.4(b) hereof. (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. (f) WAITING PERIOD. With respect to the Second Closing, any -------------- waiting period applicable to the sale of the Shares under the HSR Act shall have expired or been terminated. (g) FIRST CLOSING. With respect to the Second Closing, the First ------------- Closing shall have occurred. (h) SATISFACTION OF CONDITIONS. With respect to the Second -------------------------- Closing, all of the foregoing conditions shall have been satisfied or waived by the Company on or prior to the close of business on the date which is 180 days following the First Closing Date. 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 (an "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 without regard to the conflict of laws provisions thereof. Section 8.2 SURVIVAL. The representations, warranties, covenants and -------- agreements made herein shall survive the closing of the transactions contemplated hereby. -20- 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 the 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 Warrants and the obligation to pay all or any portion of the Purchase Price) to any entity that directly or indirectly controls, is controlled by, or is under common control with the Purchaser, including, without limitation, Comcast Corporation and QVC, Inc. (each, an "Affiliate" and, all Affiliates together with the Purchaser, the "Purchaser Group"); and provided, further, that any such delegation by the -------- ------- Purchaser of its obligations shall not relieve the 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. Except as expressly provided to --------------------------- the contrary in any separate agreement, 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. 1075 First Avenue King of Prussia, Pennsylvania 19406 Telephone: (610) 265-3229 Facsimile: (610) 265-1730 Attn: General Counsel With a copy to: Blank Rome Comisky & McCauley LLP One Logan Square Philadelphia, Pennsylvania 19103 Attn: Francis E. Dehel, Esq. Telephone: (215) 569-5532 Facsimile: (215) 569-5628 -21- To the Purchaser: c/o QVC, Inc. Studio Park Mail Code 223 West Chester, Pennsylvania 19380 Attn: Neal Grabell, Esq. Telephone: (610) 701-8974 Facsimile: (610) 701-1380 With a copy to: Drinker Biddle & Reath LLP One Logan Square Philadelphia, Pennsylvania 19103 Attn: Howard A. Blum, Esq. Telephone: (215) 988-2794 Facsimile: (215) 988-2757 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 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 -22- 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 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. -23- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. GLOBAL SPORTS, INC. By: /s/ Michael G. Rubin -------------------------- Name: Michael G. Rubin Title: President and Chief Executive Officer INTERACTIVE TECHNOLOGY HOLDINGS, LLC By: /s/ Carol Steinberg -------------------------- Name: Carol Steinberg Title: Authorized Signatory -24- EX-99.1 3 0003.txt VOTING AGREEMENT BTWN ITH AND MICHAEL RUBIN EXHIBIT 99.1 EXECUTION COPY VOTING AGREEMENT This VOTING AGREEMENT (this "Agreement") is made and entered into as of September 13, 2000 between Interactive Technology Holdings, LLC (the "Investor") and Michael G. Rubin (the "Principal Stockholder"). RECITALS WHEREAS, on September 13, 2000, the Company and the Investor entered into that certain Stock and Warrant Purchase Agreement (the "Purchase Agreement"), pursuant to which the Company has agreed to sell and issue to the Investor, and the Investor has agreed to purchase from the Company, 5,000,000 shares of the common stock of the Company, par value $0.01 per share (the "Common Stock") and warrants to purchase 4,500,000 shares of Common Stock; and WHEREAS, as an inducement and a condition to consummating the Purchase Agreement, the Investor has required that the Principal Stockholder agree, and the Principal Stockholder has agreed, to enter into this Agreement, and the Principal Stockholder has required that the Investor agree, and the Investor has agreed, to enter into this Agreement; and NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the parties hereto, intending to be legally bound, hereby 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. (b) "Continuing Director" shall initially mean the Principal Stockholder, Jeffrey Rayport and Harvey Lamm, and shall thereafter mean any director who (i) is chosen to fill any vacancy on the Board of Directors created by any of the foregoing or their respective successors ceasing to be a director and (ii) 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) "Investor Designees" shall mean those directors designated by the Investor pursuant to the Purchase Agreement. (d) "Person" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. 2. Composition and Election of Board of Directors. ---------------------------------------------- 2.1 Number of Directors. The Board of Directors of the Company shall ------------------- consist of nine (9) members. Neither party hereto will take any action to change the size of the Board of Directors to other than nine (9) members without the prior written consent of the other party hereto. 2.2 Stockholder Votes. ----------------- (a) 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 (collectively, the "Voting Stock") held of record or Beneficially Owned by the Principal Stockholder in favor of the elections of the Investor Designees. (b) 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 Investor shall vote, or execute and deliver a written consent with respect to, all shares of Voting Stock held of record or Beneficially Owned by the Investor in favor of the election of the Continuing Directors at such time. 2.3 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 respective designees on the Board to nominate a slate of nominees for director which meets the Board Composition Requirement (as defined in the Purchase Agreement) for so long as this Agreement remains in effect, and the nominees so selected by the Board of Directors shall be presented and voted upon at the meeting of stockholders as a slate. 2.4 Removal of Directors. -------------------- (a) Except as otherwise provided in this Section 2.4, the Principal Stockholder agrees not to take any action to remove from the Board of Directors, with or without cause, any Investor Designee. Notwithstanding the foregoing, the Investor shall at all times have the right to remove and to cause the Principal Stockholder to remove, with or without cause, any or all of the Investor Designees. (b) Except as otherwise provided in this Section 2.4, the Investor agrees not to take any action to remove from the Board of Directors, with or without cause, any Continuing Director. Notwithstanding the foregoing, the Principal Stockholder shall at all times -2- have the right to remove and to cause the Investor to remove, with or without cause, any or all of the Continuing Directors. 2.5 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 and the Investor shall each promptly take all necessary and appropriate action, including, to the extent the Principal Stockholder or the Investor have 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 Voting Stock of the Company then held of record or Beneficially Owned by the Principal Stockholder or the Investor, as the case may be, in such a manner to ensure that such vacancy is filled in a manner consistent with the Board Composition Requirement. 3. Other Stockholder Votes. At any meeting of stockholders of the ----------------------- Company, however called, and with respect to any written consent of stockholders of the Company in lieu of a meeting, the Principal Stockholder shall vote, or execute and deliver a written consent with respect to, all shares of Voting Stock then held of record or Beneficially Owned by the Principal Stockholder, (a) 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, and (b) except as otherwise agreed to in writing in advance by the Investor, against the following actions (other than the transactions contemplated by the Purchase Agreement): (i) a dissolution of the Company or (ii) any material change in the present capitalization of the Company or any amendment of the Company's Certificate of Incorporation or Bylaws, in each case, which is intended, or could reasonably be expected, to impede, delay or adversely affect 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 3. 4. 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 the Investor, promptly execute and deliver to the Investor an irrevocable proxy, substantially in the form of Exhibit A hereto, and irrevocably appoint the Investor or its designees, with - --------- full power of substitution, as 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 Voting 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 Sections 2 and 3 hereof. The Principal Stockholder acknowledges that the proxy executed and delivered by him shall be coupled with an interest, shall constitute, among other things, an inducement for the Investor 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 the Principal Stockholder. Such proxy shall operate to revoke and render void any prior proxy as to the shares heretofore granted by the Principal Stockholder which is inconsistent herewith. Such proxy shall terminate upon the termination of this Agreement. -3- 5. 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 Requirement, then, at the written request of the Investor, 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 Requirement as promptly as practicable. 6. Certificate of Incorporation and Bylaws. The Principal Stockholder and --------------------------------------- the Investor shall each vote all shares of Voting Stock then held of record or Beneficially Owned by each of them, respectively, 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. 7. No Transfer of Capital Stock. The Principal Stockholder hereby agrees ---------------------------- that during the period ending six (6) months after the date hereof, such Principal Stockholder shall not sell, transfer or pledge his Voting 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 ("Dispose"), except if such sale, transfer or pledge is (a) consummated in accordance with Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), or (b) consummated pursuant to a registered offering under the Securities Act. In addition, the Principal Stockholder shall not Dispose of more than an aggregate of 1,000,000 shares of the Voting Stock currently owned by the Principal Stockholder, unless all transferees of shares of Voting Stock in excess of the aggregate 1,000,000 shares, to the extent of such excess, shall agree in writing to be bound by the provisions of this Agreement. 8. Miscellaneous. ------------- 8.1 Duration of Agreement. The rights and obligations of the --------------------- Principal Stockholder and the Investor under this Agreement shall terminate upon the earlier of (a) such date as the Investor no longer has the right to designate any directors pursuant to the Purchase Agreement, or (b) such date as the Principal Stockholder no longer owns any Voting Stock of the Company. 8.2 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. 8.3 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. 8.4 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. -4- 8.5 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. 8.6 Governing Law. This Agreement shall be governed by and construed ------------- in accordance with the laws of the State of Delaware without regard to the conflict of law provisions thereof. 8.7 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. 8.8 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; provided, however, that this Agreement -------- ------- shall only be binding (a) upon a transferee of shares of Voting Stock of the Investor if such transferee is a member of the Purchaser Group (as defined in the Purchase Agreement), and (b) upon a transferee of shares of Voting Stock of the Principal Stockholder to the extent such transferee is required to become bound by the provisions of this Agreement pursuant to Section 7 hereof. 8.9 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 the Investor, to: c/o QVC, Inc. Studio Park Mail Code 223 West Chester, Pennsylvania 19380 Telephone: (610) 701-8974 Facsimile: (610) 701-1380 Attn: Neal Grabell, Esq. with a copy to: Drinker Biddle & Reath LLP One Logan Square Philadelphia, PA 19103 Telephone: (215) 988-2794 Facsimile: (215) 988-2757 Attention: Howard A. Blum, Esq. -5- (b) if to the Principal Stockholder, to: Global Sports, Inc. 1075 First Avenue King of Prussia, Pennsylvania 19406 Telephone: (610) 265-3229 Facsimile: (610) 265-1730 Attention: Michael G. Rubin with a copy to: Blank Rome Comisky & McCauley LLP One Logan Square Philadelphia, Pennsylvania 19103 Telephone: (215) 569-5532 Facsimile: (215) 569-5628 Attention: Francis E. Dehel, Esq. -6- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. INTERACTIVE TECHNOLOGY HOLDINGS, LLC By: /s/ Carol Steinberg ---------------------------------- Name: Carol Steinberg Title: Authorized Signatory /s/ Michael G. Rubin ----------------------------------------- MICHAEL G. RUBIN -7- EXHIBIT A Irrevocable Proxy In order to secure the performance of the duties of the undersigned pursuant to the Voting Agreement (the "Voting Agreement") dated as of September 13, 2000 between the undersigned and Interactive Technology Holdings, LLC, the undersigned hereby irrevocably appoints [____________] and [___________], 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 Sections 2 and 3 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 undersigned 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 which is inconsistent herewith. This Proxy shall terminate upon the termination of this Agreement. __________________________________ Michael G. Rubin -8- EX-99.2 4 0004.txt VOTING AGREEMENT BTWN ITH AND SOFTBANK EXHIBIT 99.2 EXECUTION COPY VOTING AGREEMENT This VOTING AGREEMENT (this "Agreement") is made and entered into as of September 13, 2000 among Interactive Technology Holdings, LLC ("ITH")] and SOFTBANK Capital Partners LP ("Softbank Capital Partners") and SOFTBANK Capital Advisors Fund LP ("Softbank Capital Advisors" and, together with Softbank Capital Partners, "Softbank"). RECITALS WHEREAS, on September 13, 2000, ITH and Global Sports, Inc. (the "Company") entered into that certain Stock and Warrant Purchase Agreement (the "ITH Purchase Agreement"), pursuant to which the Company has agreed to sell and issue to ITH, and ITH has agreed to purchase from the Company, 5,000,000 shares of the common stock of the Company, par value $0.01 per share (the "Common Stock") and warrants to purchase 4,500,000 shares of Common Stock; and WHEREAS, as an inducement and a condition to consummating the ITH Purchase Agreement, ITH has required that Softbank agree, and Softbank has agreed, to enter into this Agreement; and NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the parties hereto, intending to be legally bound, hereby 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. (b) "Board Composition Requirement" shall collectively have the meanings given such term in the ITH Purchase Agreement and that certain Stock Purchase Agreement dated April 28, 2000 between the Company and Softbank (the "Softbank Purchase Agreement"). (c) "ITH Designees" shall mean those directors designated by ITH pursuant to the ITH Purchase Agreement. (d) "Person" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. (e) "Softbank Designees" shall mean those directors designated by Softbank pursuant to the Softbank Purchase Agreement. 2. Composition and Election of Board of Directors. ---------------------------------------------- 2.1 Number of Directors. The Board of Directors of the Company ------------------- shall consist of nine (9) members. Neither party hereto will take any action to change the size of the Board of Directors from other than nine (9) members without the prior written consent of the other party hereto. 2.2 Stockholder Votes. ----------------- (a) 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, Softbank 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 (collectively, the "Voting Stock") held of record or Beneficially Owned by Softbank in favor of the elections of the ITH Designees. (b) 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, ITH shall vote, or execute and deliver a written consent with respect to, all shares of Voting Stock held of record or Beneficially Owned by ITH in favor of the elections of the Softbank Designees. 2.3 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 respective designees on the Board to nominate a slate of nominees for director which meets the Board Composition Requirement for so long as this Agreement remains in effect, and the nominees so selected by the Board of Directors shall be presented and voted upon at the meeting of stockholders as a slate. 2.4 Removal of Directors. -------------------- (a) Except as otherwise provided in this Section 2.4, Softbank agrees not to take any action to remove from the Board of Directors, with or without cause, any ITH Designee. Notwithstanding the foregoing, ITH shall at all times have the right to remove and to cause Softbank to remove, with or without cause, any or all of the ITH Designees. (b) Except as otherwise provided in this Section 2.4, ITH agrees not to take any action to remove from the Board of Directors, with or without cause, any Softbank Designee. Notwithstanding the foregoing, Softbank shall at all times have the right to remove and to cause ITH to remove, with or without cause, any or all of the Softbank Designees. -2- 2.5 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, Softbank and ITH shall each promptly take all necessary and appropriate action, including, to the extent Softbank or ITH have 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 Voting Stock of the Company then held of record or Beneficially Owned by Softbank or ITH, as the case may be, in such a manner to ensure that such vacancy is filled in a manner consistent with the Board Composition Requirement. 3. Other Stockholder Votes. At any meeting of stockholders of the ----------------------- Company, however called, and with respect to any written consent of stockholders of the Company in lieu of a meeting, Softbank shall vote, or execute and deliver a written consent with respect to, all shares of Voting Stock then held of record or Beneficially Owned by Softbank, (a) 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 ITH Purchase Agreement, and (b) except as otherwise agreed to in writing in advance by ITH, against the following actions (other than the transactions contemplated by the ITH Purchase Agreement): (i) a dissolution of the Company or (ii) any material change in the present capitalization of the Company or any amendment of the Company's Certificate of Incorporation or Bylaws, in each case, which is intended, or could reasonably be expected, to impede, delay or adversely affect the transactions contemplated by this Agreement and the ITH Purchase Agreement. Softbank agrees that they 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 3. 4. Certificate of Incorporation and Bylaws. Softbank and ITH shall each --------------------------------------- vote all shares of Voting Stock then held of record or Beneficially Owned by each of them, respectively, 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. 5. Miscellaneous. ------------- 5.1 Duration of Agreement. The rights and obligations of Softbank --------------------- and ITH under this Agreement shall terminate on such date as either Softbank or ITH no longer has the right to designate any directors pursuant to the Softbank Purchase Agreement or the ITH Purchase Agreement, respectively. 5.2 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. 5.3 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. -3- 5.4 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. 5.5 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. 5.6 Governing Law. This Agreement shall be governed by and ------------- construed in accordance with the laws of the State of Delaware without regard to the conflict of law provisions thereof. 5.7 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. 5.8 Successors and Assigns. The provisions hereof shall inure to ---------------------- the benefit of, and be binding upon, the successors and assigns of the parties hereto; provided, however, that this Agreement shall only be binding (a) upon a -------- ------- transferee of shares of Voting Stock of ITH if such transferee is a member of the Purchaser Group (as defined in the ITH Purchase Agreement), and (b) upon a transferee of shares of Voting Stock of Softbank if such transferee is a Softbank Entity (as defined in the Softbank Purchase Agreement). 5.9 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 ITH, to: c/o QVC, Inc. Studio Park Mail Code 223 West Chester, Pennsylvania 19380 Telephone: (610) 701-8974 Facsimile: (610) 701-1380 Attn: Neal Grabell, Esq. with a copy to: Drinker Biddle & Reath LLP One Logan Square Philadelphia, PA 19103 Telephone: (215) 988-2794 Facsimile: (215) 988-2757 -4- Attention: Howard A. Blum, Esq. (b) if to Softbank, to: c/o SOFTBANK Capital Partners LP 10 Langley Road, Suite 403 Newton Center, Massachusetts 02169 Facsimile: (617) 928-9301 Attention: Administrative Member with a copy to: Sullivan & Cromwell 1888 Century Park East 21/st/ Floor Los Angeles, California 90067-1725 Telephone: (310) 712-6650 Facsimile: (310) 712-8800 Attention: John L. Savva, Esq. -5- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. INTERACTIVE TECHNOLOGY HOLDINGS, LLC By: /s/ Carol Steinberg ------------------------------ Name: Carol Steinberg Title: Authorized Signatory SOFTBANK CAPITAL PARTNERS LP By: SOFTBANK Capital Partners LLC Its General Partner By: /s/ Steven J. Murray ------------------------------ Name: Steven J. Murray Title: Admin. Member SOFTBANK CAPITAL ADVISORS FUND LP By: SOFTBANK Capital Partners LLC Its General Partner By: /s/ Steven J. Murray ------------------------------ Name: Steven J. Murray Title: Admin. Member -6- EX-99.3 5 0005.txt SECOND AMENDED & RESTATED RIGHTS AGREEMENT EXHIBIT 99.3 ================================================================================ SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT Dated as of September 13, 2000 By and Among GLOBAL SPORTS, INC. and THE HOLDERS LISTED ON THE SIGNATURE PAGES HEREIN ================================================================================ SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT ----------------------------- This SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of September 13, 2000 by and among Global Sports, Inc., a Delaware corporation (the "Company"), and the holders of common stock set forth on the signature pages hereto. This Agreement amends and restates the Amended and Restated Registration Rights Agreement, dated as of May 1, 2000 (the "Prior Agreement"), between the Company, SOFTBANK Capital Partners LP ("SOFTBANK Capital Partners"), SOFTBANK Capital Advisors Fund LP ("SOFTBANK Capital Advisors" and, together with SOFTBANK Capital Partners, "SOFTBANK") and TMCT Ventures, L.P. The Prior Agreement is hereby terminated in its entirety and restated herein. Such termination and restatement is effective upon execution of this Agreement by the holders listed on the signature pages hereto. RECITALS -------- WHEREAS, the Company and SOFTBANK America Inc. ("SOFTBANK America") entered into the Stock Purchase Agreement, dated as of June 10, 1999 (the "1999 SOFTBANK Purchase Agreement"), pursuant to which SOFTBANK America acquired 6,153,850 shares of the Company's Common Stock; WHEREAS, SOFTBANK America assigned its 6,153,850 shares of Common Stock to SOFTBANK; WHEREAS, the Company and SOFTBANK entered into the Stock Purchase Agreement, dated as of April 28, 2000 (the "2000 SOFTBANK Purchase Agreement"), pursuant to which SOFTBANK acquired, in the aggregate, an additional 2,500,000 shares of Common Stock and warrants (the "SOFTBANK Warrants") to purchase, in the aggregate, 1,250,000 shares of Common Stock; WHEREAS, the Company and TMCT Ventures, L.P. entered into the Stock and Warrant Purchase Agreement, dated as of April 27, 2000 (the "TMCT Purchase Agreement"), pursuant to which TMCT Ventures, L.P. acquired 625,000 shares of Common Stock and a warrant (the "TMCT Warrant") to purchase 312,500 shares of Common Stock; WHEREAS, the Prior Agreement was entered into in order to induce SOFTBANK and TMCT Ventures, L.P. to purchase additional shares of Common Stock pursuant to the 2000 SOFTBANK Purchase Agreement and TMCT Purchase Agreement, respectively; WHEREAS, the Company and Interactive Technology Holdings, LLC ("ITH") entered into the Stock and Warrant Purchase Agreement dated as of September 13, 2000 (the "ITH Purchase Agreement" and, together with the 1999 SOFTBANK Purchase Agreement, the 2000 SOFTBANK Purchase Agreement and the TMCT Purchase Agreement, the "Purchase Agreements"), pursuant to which ITH acquired 5,000,000 shares of Common Stock and warrants (the "ITH Warrants" and, together with the SOFTBANK Warrants and the TMCT Warrants, the "Warrants") to purchase 4,500,000 shares of Common Stock; WHEREAS, as an inducement and a condition to consummating the ITH Purchase Agreement, ITH has required that the Company, SOFTBANK and TMCT Ventures, L.P. agree, and the Company, SOFTBANK and TMCT Ventures, L.P. have agreed, to amend and restate the Prior Agreement in the form of this Agreement; and 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 Closing Date specified in the 2000 ------------ SOFTBANK 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. (c) "Common Stock" shall mean the Common Stock, par value $0.01 per ------------ share, of the Company. (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 (i) the Common Stock acquired ---------------------- by SOFTBANK, TMCT Ventures, L.P. and ITH pursuant to the Purchase Agreements, (ii) the Common Stock issuable upon exercise of the Warrants, and (iii) any securities issued -2- 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 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, with or without consideration, 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) Subject to the provisions set forth in this Section 2(a)(i), at any time from and after the date six (6) 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 the Registrable Securities of such Holder or Holders (each, an "Initiating Holder," and, collectively, the "Initiating Holders") under the Securities Act; provided, however, that the Company shall be obligated to -------- ------- register the Registrable Securities upon such demand only if the number of shares of Registrable Securities to be so registered is at least equal to the lesser of (A) 500,000 shares (or, in the case of a demand by TMCT Ventures, L.P., 300,000 shares) or (B) such number of shares as 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 $8 million (or, in the case of a demand by TMCT Ventures, L.P., $2.4 million). Promptly following such -3- demand, the Company shall (1) give notice to each other Holder of Registrable Securities of such demand, which notice shall set forth the identity of the Initiating 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 Initiating Holders of, the Registrable Securities to be so registered. Any other Holder of Registrable Securities may elect, by giving written notice to such effect to the Company no later than 10 business days after the Company shall have given the notice referred to in clause (1) of the preceding sentence, to have all or a portion of such Holder's Registrable Securities included in such registration, and such Holder shall thereby become an Initiating Holder with respect to such registration for all purposes hereunder (it being understood that only the Holder actually making the demand under this Section 2(a)(i) shall be deemed to have used one of its demand registration rights). The Company shall be required to cause to become effective pursuant to this Section 2(a) no more than (i) two (2) registration statements pursuant to demands initiated by TMCT Ventures, L.P. or its successors and assigns, (ii) four (4) registration statements pursuant to demands initiated by SOFTBANK or its successors and assigns and (iii) three (3) registration statements pursuant to demands initiated by ITH or its successors and assigns; provided, the Company shall be required to cause to become -------- effective 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 demand 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 demand 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 demands 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) If, in connection with a registration of Registrable Securities pursuant to Section 2(a)(i) hereof, any managing underwriter shall advise the Initiating Holders 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 Initiating Holders creates a substantial risk that the price per unit that such Initiating Holders will derive from such registration will be materially and adversely affected or that the number of Registrable Securities sought to be registered is too large a number to be reasonably sold, the Company will include in such registration statement such number of Registrable Securities as the Initiating Holders are so advised can reasonably be sold in such offering, or can be sold without such an effect (the "Demand Maximum Number"), as follows and in the following order of priority: (A) first, such number of Registrable Securities as the Initiating Holders shall have requested up to the Demand Maximum Number, allocated pro rata and without any --- ---- priority as between the Initiating Holders, in proportion to the number of Registrable Securities which each Initiating Holder owns or has the right to acquire relative to the total number of Registrable Securities which all Initiating Holders own or have the right to acquire, and (B) second, if and to the extent the number of -4- Registrable Shares to be registered under clause (A) is less than the Demand Maximum Number, and only to the extent the prior express written consent of the Initiating Holders is obtained in accordance with the following sentence, such number of securities of the Company and any other person which, in the aggregate, when added to the number of Registrable Securities to be registered under clause (A), equals the Demand Maximum Number. In the event of any registration of Registrable Securities pursuant to Section 2(a)(i) hereof, the Company shall not, without the prior express written consent of the Initiating Holders owning 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. (iii) In the event that, following any demand pursuant to Section 2(a)(i) hereof but prior to the filing of a registration statement in respect of such demand, (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 Initiating Holders 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 demands 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. (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 -5- 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 number of 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 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 of each other Piggyback Shareholder (provided that if Michael Rubin ("Rubin") is a Piggyback -------- Shareholder, only up to 1,000,000 shares, Rights or securities owned by him), 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 (with respect to shares requested to be registered by Rubin, subject to the cap set forth above), 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. -6- (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 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 (provided that if Rubin is a Piggyback Shareholder, only -------- up to 1,000,000 shares, Rights or securities owned by him), 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 (with respect to shares requested to be registered by Rubin, subject to the cap set forth above), 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 -7- 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, and any shares, Rights or securities sought to be registered by any Requesting Shareholders, (3) 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 (provided that if Rubin is a -------- Piggyback Shareholder, only up to 1,000,000 shares, Rights or securities owned by him), 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 (with respect to shares requested to be registered by Rubin, subject to the cap set forth above), 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 withdrawn Registrable Securities are not included in the applicable registration and not sold pursuant thereto, and such withdrawn Registrable Securities shall continue to be Registrable Securities in accordance herewith. In the event of any such withdrawal with respect to a demand 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 with the registration statement so withdrawn prior to the date such written notice of withdrawal is given, in which event such demand shall not be deemed to have utilized one of the two occasions (in the case of a demand by TMCT Venture, L.P. or its successors and assigns) or three occasions (in the case of a demand by the ITH or its successors and assigns) or four occasions (in the case of a demand by SOFTBANK or its successors and assigns) on which Holders may demand registration pursuant to Section 2(a) or (ii) not to pay such Registration Expenses, in which event such demand 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 number of Registrable Securities to be so registered to less than the lesser of (A) 500,000 shares (or, in the case of a demand by TMCT Ventures, L.P., 300,000 shares) or (B) such number of shares as have a total market value (or, if applicable, a proposed maximum aggregate offering price) of $8 million (or, in the case of a demand by TMCT Ventures, L.P., $2.4 million), then the Company shall, prior to the filing or effectiveness, as appropriate, of such registration statement, give each Holder of Registrable -8- 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 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 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; -9- (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, 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 notification in writing, (A) when such registration statement or the prospectus included therein or any prospectus amendment 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 -10- 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 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 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; -11- (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; (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 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 to 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 -12- 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 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 (A) 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 (B) 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 (I) 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, (II) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 6 hereof, and (III) 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; (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). -13- (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 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 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) -14- 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 Registrable 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 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 (which counsel shall be selected by the Holders of a majority of the Registrable Securities to be registered in such 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: -15- (a) Each registration statement covering Registrable Securities and each prospectus (including any preliminary prospectus) contained therein or furnished 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; 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 Bylaws 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 -16- 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 Section 2 hereof, and in consideration of the agreements of the Holders contained herein, and as an inducement to SOFTBANK, TMCT Ventures, L.P. and ITH to enter into the Purchase Agreements, 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; and provided, further, that the Company shall not be liable to (i) any -------- ------- Holder, underwriter or placement or sales agent under the indemnity agreement in 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 -17- 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 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 indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party -18- 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 (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. -19- (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 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 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 -20- 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 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. (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 1075 First Avenue, King of Prussia, Pennsylvania 19406, Attention: General Counsel, facsimile no. (610)265-1730, and if to a Holder, to the address or -21- 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, TMCT Ventures, L.P., ITH 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 such transfer, such transferee owns at least 300,000 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 Agreements, and delivery of the Common Stock upon exercise of the Warrants, and the transfer and registration of Registrable Securities by any Holder. (h) LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ------------- ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF. -22- (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 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. -23- 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: /s/ Michael G. Rubin ----------------------------- Name: Michael G. Rubin Title: President and Chief Executive Officer -24- SOFTBANK CAPITAL PARTNERS LP By: Softbank Capital Partners LLC Its General Partner By: /s/ Steven J. Murray ------------------------- Name: Steven J. Murray Title: Admin. Member SOFTBANK CAPITAL ADVISORS FUND LP By: Softbank Capital Partners LLC Its General Partner By: /s/ Steven J. Murray ------------------------- Name: Steven J. Murray Title: Admin. Member -25- TMCT VENTURES, L.P. By: /s/ Mark Menell ------------------------- Name: Mark Menell Title: Member -26- INTERACTIVE TECHNOLOGY HOLDINGS, LLC By: /s/ Carol Steinberg --------------------------- Name: Carol Steinberg Title: Authorized Signatory -27- EX-99.4 6 0006.txt PRESS RELEASE EXHIBIT 99.4 Global Sports Contact: Dana Stein Grosser Director of Corporate Communications (610) 491-7000 grosserd@globalsports.com ------------------------- QVC Contact: Ellen Rubin Vice President, Public Relations (610) 701-1647 erubin@qvc.com -------------- FOR IMMEDIATE RELEASE - --------------------- COMCAST CORPORATION AND QVC, INC. TO INVEST $40.8 MILLION IN GLOBAL SPORTS FOR 19% STAKE IN COMPANY COMCAST AND QVC ALSO PURCHASE WARRANTS TO ACQUIRE ADDITIONAL STAKE IN GLOBAL SPORTS GLOBAL SPORTS SELECTED TO DEVELOP AND OPERATE NEW SPORTING GOODS STORE ON IQVC PHILADELPHIA, PENNSYLVANIA, WEST CHESTER, PENNSYLVANIA, and KING OF PRUSSIA, PENNSYLVANIA, September 13, 2000 - GLOBAL SPORTS, INC. (NASDAQ: GSPT) announced today that Comcast Corporation (NASDAQ: CMCSK and CMCSA) and QVC, Inc., through a joint venture company, have agreed to acquire from Global Sports 5.0 million common shares of Global Sports stock at $8.15 per share in cash . This $40.8 million investment will give the companies a combined ownership interest in Global Sports of approximately 19% of the currently outstanding common shares. In addition, the Comcast and QVC venture has agreed to purchase, for $562,000 in cash, warrants to purchase an additional 4.5 million shares of Global Sports common stock, at prices ranging from $8.15 to $10.00 per share. Assuming full exercise of all of the warrants by the Comcast and QVC venture, the aggregate investment in Global Sports would be $82.1 million representing a total ownership of approximately 26% on a fully diluted basis. The transaction is expected to be completed in October following expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and the satisfaction of certain customary conditions. Global Sports also announced today that it has entered into a letter of intent with iQVC, the e-commerce division of QVC, to develop and operate the sporting goods store for iQVC. This will represent Global Sports' seventh new alliance in 2000 and 13th alliance since inception. The new iQVC sports store is expected to launch in time for the upcoming Holiday season and will include a broad selection of merchandise from approximately 1,000 leading sporting goods brands. Commenting on the multiple deals, Doug Briggs, President of QVC, Inc., said, "Our impending relationship with Global Sports is a synergistic homerun. QVC's 14-year track record in electronic commerce combined with Global Sports' presence in the sports merchandising category, makes a real winning team." Michael G. Rubin, Chairman and CEO of Global Sports, commented, "These deals, which add important new strategic investors, raise substantial additional capital, and secure an alliance to power the sporting goods store for one of the premier general merchandise e-merchants, clearly take our company to the next level. The strategic significance of these transactions is enormous. As a leading e-commerce company, QVC's knowledge, experience, and infrastructure in critical functions, such as customer care, fulfillment, and logistics, both in the United States and abroad, are renowned. Moreover, as a media powerhouse, with particularly strong ties in sports programming and entertainment, Comcast provides the opportunity for tremendous benefit as e-commerce increasingly evolves with the popularization of broadband and digital television services. With over $40 million in new cash, combined with our existing strong capital position, we believe that we have more than enough cash to reach profitability." Mr. Rubin continued, "We are also extremely excited to develop and operate the sports store for iQVC, clearly one of the leading general merchandise e-tailers. Furthermore, with the power of the overall QVC business, which generates more than $3.0 billion in annual revenues, we are excited about the potential of this new alliance." About Comcast Corporation Comcast Corporation (www.comcast.com) is principally involved in the --------------- development, management and operation of broadband cable networks, and in the provision of electronic commerce and programming content. Comcast Cable is the third largest cable company in the United States and, incorporating pending cable transactions, will serve more than 8.2 million subscribers. Comcast's commerce and content businesses include majority ownership of QVC, Comcast- Spectacor, Comcast SportsNet, and The Golf Channel, a controlling interest in E! Networks, and other programming investments. About QVC, Inc.iQVC, the Internet's #1 General Merchandise retailer (August 2000 Forrester PowerRankings), is the online retailing division of QVC, Inc. QVC, Inc., a $3.3 billion company, is an e-commerce leader, marketing a wide variety of brand name products in such categories as home furnishing, licensed products, fashion, beauty, electronics and fine jewelry. QVC reaches over 75 million homes in the United States. Other divisions/subsidiaries include Q Direct, QVC Publishing, Q Records, QVC Local, QVC ProductWorks and Pioneer Studios. The QVC Studio Tour is located at the company's world headquarters in West Chester, PA. About Global Sports Global Sports, Inc. (NASDAQ:GSPT) (www.globalsports.com) is a leading developer and operator of e-commerce sporting goods businesses. Global Sports develops and operates the e-commerce sporting goods businesses of specialty retailers, general merchandisers, Internet companies, and media companies under exclusive long-term agreements. The Company operates the e-commerce sporting goods businesses of www.bluelight.com -- the exclusive e-commerce partner for Kmart, www.broadbandsports.com and www.athletesdirect.com, www.buy.com, www.dunhamssports.com, store.foxsports.com, www.mcsports.com, www.oshmans.com, www.qvc.com, www.sportchalet.com, www.sportsrus.com, www.theathletesfoot.com, www.thesportsauthority.com, and store.webmd.com. Statements about Global Sports' outlook and all other statements in this release other than historical facts are forward-looking statements. Since these statements involve risks and uncertainties, they are subject to change at any time and Global Sports' actual results may differ materially from expected results. Many Global Sports' forward-looking statements are based upon certain assumptions, and there are inherent difficulties in predicting certain important factors that could impact these assumptions. These factors, as and when applicable, are discussed in Global Sports' filings with the SEC. # # # -----END PRIVACY-ENHANCED MESSAGE-----