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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earlier event reported): June 10, 1999
Global Sports, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware 0-16611 04-2958132
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(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification Number)
555 South Henderson Road
King of Prussia, Pennsylvania 19406
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(Address, including zip code, of Principal Executive Offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (610) 768-0900
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Item 5. Other Events
On June 10, 1999, Global Sports, Inc., a Delaware corporation (the
"Company"), and SOFTBANK America Inc., a Delaware corporation ("SOFTBANK"),
entered into a Stock Purchase Agreement (the "Purchase Agreement") and related
agreements for the sale of 6,153,850 shares of the Company's common stock, par
value $.01 per share ("Common Stock"), to SOFTBANK, at a price of $13.00 per
share (the closing price on May 26, 1999, the day prior to the day the Company
and SOFTBANK agreed in principle to the transaction) for an aggregate purchase
price of $80,000,050. Upon completion of the contemplated transactions,
SOFTBANK will own approximately thirty percent (30%) of the Company's Common
Stock on a fully diluted basis. The Company intends to use the proceeds from
the sale of Common Stock to SOFTBANK for general corporate purposes, including
funding its e-Commerce operations.
The Company anticipates that an initial closing (the "First Closing") will
take place in July 1999 after which time SOFTBANK will have acquired 2,432,692
shares of Common Stock, and that a second closing (the "Second Closing") will
take place on the latest to occur of (i) the first business day following the
date on which the last to be fulfilled or waived of the conditions to the Second
Closing set forth in the Purchase Agreement takes place, (ii) such other date as
is mutually agreed to by the Company and SOFTBANK or (iii) the date of the First
Closing. After the Second Closing, SOFTBANK will have acquired an additional
3,721,158 shares of Common Stock of the Company increasing SOFTBANK's holdings
to 6,153,850 shares.
The total consideration to be paid by SOFTBANK to the Company for the
shares is $80,000,050. The purchase price for the shares to be purchased at the
First Closing will be paid by automatic conversion of the Convertible
Subordinated Note (defined below) in the principal amount of $15,000,000 and by
wire transfer in immediately available funds of an amount equal to the product
of (i) the difference equal to (A) the number of shares to be purchased by
SOFTBANK at the First Closing (as set forth in the Schedule of Purchases
attached to the Purchase Agreement) minus (B) the number of shares issuable upon
conversion of the Convertible Subordinated Note, times (ii) $13.00. The
purchase price of the shares to be purchased at the Second Closing will be paid
by wire transfer of $48,375,054.
The Purchase Agreement provides, among other things, that on and after the
First Closing, SOFTBANK will have the right to designate (i) a number of members
of the Company's Board of Directors equal to the product of (A) the total number
of authorized directors and (B) the aggregate Proportionate Share of SOFTBANK
and the SOFTBANK Entities (as defined in the Purchase Agreement), rounded up to
the nearest whole number, but not to exceed two directors (the "Board
Composition Requirement"), and (ii) so long as SOFTBANK and the SOFTBANK
Entities collectively own 50% or more of the shares purchased pursuant to the
Purchase Agreement, one director to be a member of each committee of the
Company's Board of Directors. "Proportionate Share," as defined in the Purchase
Agreement, means, with respect to each Securityholder (as defined in the
Purchase Agreement), a fraction the numerator of which is the total number of
shares of Common Stock owned and the number of shares of Common Stock issuable
upon exercise of Rights (as defined in the Purchase Agreement) owned by such
Securityholder, and the 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.
On June 21, 1999, SOFTBANK, the Company and Michael G. Rubin, the Company's
Chairman and Chief Executive Officer and holder of more than 65% of the
Company's Common Stock, entered into a letter agreement pursuant to which, among
other things, the parties agreed that if the First Closing has occurred prior to
July 13, 1999, SOFTBANK will not have the right to designate its directors until
the earlier of (a) the completion or adjournment of the Company's 1999 Annual
Meeting of Shareholders and (b) July 13, 1999.
The Company and SOFTBANK also entered into a Registration Rights Agreement,
dated June 10, 1999, under which the Company has granted SOFTBANK certain
"demand" and "piggy-back" registration rights with respect to the shares of
Common Stock purchased pursuant to the Purchase Agreement. In the Purchase
Agreement, the Company has also granted SOFTBANK certain preemptive rights.
In conjunction with the execution of the Purchase Agreement, the Company
and SOFTBANK entered into the Subordinated Loan Agreement, dated as of June 10,
1999, pursuant to which, on such date, SOFTBANK loaned the Company $15,000,000
in order to provide the Company with capital until the First Closing. The loan
was evidenced in the form of a convertible subordinated note. Interest on the
Convertible Subordinated Note accrues on the outstanding principal amount of the
loan at the rate of 4.98% per annum. Upon the First Closing, all unpaid
principal and accrued but unpaid interest due on the Convertible Subordinated
Note will automatically convert into a number of shares of Common Stock equal to
the total amount of unpaid principal and accrued but unpaid interest divided by
$13.00, subject to adjustment under certain circumstances.
In connection with the Purchase Agreement, Mr. Rubin entered into a Voting
Agreement, dated as of June 10, 1999, in favor of SOFTBANK, pursuant to which
Mr. Rubin agreed, among other things, that he will vote all of his shares of
Common Stock (i) in favor of the purchase of shares of Common Stock to be
purchased at the Second Closing pursuant to the Purchase Agreement; (ii) in
favor of an amendment of the Company's Certificate of Incorporation to increase
the authorized number of shares of Common Stock; and (iii) in favor of election
to the Company's Board of Directors of the directors which SOFTBANK is entitled
to designate upon consummation of the First and Second Closings.
SOFTBANK, as an inducement and a condition to consummating the Purchase
Agreement, entered into a Voting Agreement, dated as of June 10, 1999, in favor
of Mr. Rubin, pursuant to which SOFTBANK agreed, among other things, that it
will vote all of its shares of Common Stock in favor of any member of the Board
of Directors of the Company who was a member of the Board prior to the date of
the Purchase Agreement, and any director who is thereafter chosen to fill any
vacancy on the Board of Directors or who is elected as a director (a "Continuing
Director") and who, in either event, is not a director designated by SOFTBANK
pursuant to the Purchase Agreement and in connection with his or her initial
assumption of office is recommended for appointment or election by a majority of
the Continuing Directors then on the Board of Directors.
The completion of the contemplated transactions with SOFTBANK is subject to
the expiration or termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, the approval of the holders of at least a
majority of the outstanding Common Stock of the Company at the Company's 1999
Annual Meeting of Shareholders scheduled to be held on July 13, 1999, and
certain other limited conditions. As stated above, Mr. Rubin, who owns more than
65% of the currently outstanding Common Stock, has agreed to vote in favor of
the SOFTBANK transaction.
On June 11, 1999, the Company issued a press release relating to the
execution of the definitive agreements. A copy of the press release is attached
as Exhibit 99.4 and is incorporated herein by reference. Copies of the
definitive agreements entered into with SOFTBANK are attached as Exhibits 2.1
through 2.3 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 transaction involving
the Company and SOFTBANK, as scheduled, if at all, and those associated with the
ability of the combined company to achieve the anticipated benefits of the
transaction. 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 Purchase Agreement dated June 10, 1999, by and between
Global Sports, Inc., a Delaware corporation, and SOFTBANK
America Inc., a Delaware corporation.
Exhibit 2.2 Subordinated Loan Agreement dated June 10, 1999, by and
between Global Sports, Inc., a Delaware corporation, and
SOFTBANK America Inc., a Delaware corporation.
Exhibit 2.3 Convertible Subordinated Note dated June 10, 1999, issued by
Global Sports, Inc., a Delaware corporation, to SOFTBANK
America Inc., a Delaware corporation.
Exhibit 2.4 Letter Agreement, dated June 21, 1999, by and among Global
Sports, Inc., a Delaware corporation, Michael G. Rubin and
SOFTBANK America Inc., a Delaware corporation.
Exhibit 99.1 Voting Agreement dated June 10, 1999, by and between
SOFTBANK America Inc., a Delaware corporation, and Michael
G. Rubin.
Exhibit 99.2 Voting Agreement dated June 10, 1999, by and between
SOFTBANK America Inc., a Delaware corporation, and Michael
G. Rubin.
Exhibit 99.3 Registration Rights Agreement dated June 10, 1999, by and
between Global Sports, Inc., a Delaware corporation, and
SOFTBANK America Inc., a Delaware corporation.
Exhibit 99.4 Press Release dated June 11, 1999, relating to the execution
of the Stock Purchase Agreement.
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/ Steven A. Wolf
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Name: Steven A. Wolf
Office: Vice President of Finance and
Chief Financial Officer
Dated: June 21, 1999