EXHIBIT 2.3
THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER SAID ACT OR AN EXEMPTION FROM REGISTRATION. PAYMENT OF
THIS NOTE AND ACCRUED INTEREST HEREON IS EXPRESSLY SUBJECT TO THE TERMS AND
CONDITIONS OF THE SUBORDINATION AGREEMENT REFERRED TO IN THIS NOTE.
GLOBAL SPORTS, INC.
CONVERTIBLE SUBORDINATED NOTE
NOTE NO. 1999A-I
$15,000,000.00 June 10, 1999
King of Prussia, Pennsylvania
FOR VALUE RECEIVED, Global Sports, Inc., a Delaware corporation (the
"COMPANY"), promises to pay to SOFTBANK America Inc. ("SOFTBANK) , or its
assigns (each of SOFTBANK and any such assign, a "Holder") , the principal sum
of $15,000,000.00, or such lesser amount as shall then equal the outstanding
principal amount hereof, together with interest from the date of this
Convertible Subordinated Note on the unpaid principal balance at a rate equal to
4.98% per annum, computed on the basis of the actual number of days elapsed and
a year of 360 days consisting of twelve 30-day months. Unless this Convertible
Subordinated Note is earlier converted in accordance with Section 3 hereof, all
unpaid principal, together with any then unpaid and accrued interest and other
amounts payable hereunder, shall be due and payable on the earlier of (i)
September 30, 1999 (the "Maturity Date"), or (ii) the acceleration of the
maturity thereof in accordance with Section 4 of the Subordinated Loan Agreement
dated June 10, 1999 (the "Subordinated Loan Agreement") between the Company and
SOFTBANK America.
This Convertible Subordinated Note shall be governed by, and be subject to,
the terms of the Subordinated Loan Agreement, all of which provisions are hereby
incorporated herein by reference.
The following is a statement of the rights of the Holder and the conditions
to which this Convertible Subordinated Note is subject, and to which the Holder
hereof, by the acceptance of this Convertible Subordinated Note, agrees:
1. Definitions. As used in this Convertible Subordinated Note, the
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following capitalized terms have the following meanings:
(a) The "Company" includes the corporation initially executing this
Convertible Subordinated Note and any Person that shall succeed to or assume the
obligations of the Company under
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this Convertible Subordinated Note.
(b) "Holder" shall mean the Person specified in the introductory
paragraph of this Convertible Subordinated Note or any Person who shall at the
time be the registered holder of this Convertible Subordinated Note.
(c) "Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture or any other
entity or a governmental authority.
2. Interest. Accrued interest on this Convertible Subordinated Note
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shall be payable at such time as the outstanding principal amount hereof shall
be paid in full; provided however, that in the event this Convertible
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Subordinated Note is not previously converted and the principal amount hereof is
not repaid in full on the Maturity Date, accrued but unpaid interest on this
Convertible Subordinated Note shall thereafter be paid in cash on the Maturity
Date, the last business day of each calendar month thereafter and on such date
as the outstanding principal amount hereof shall be paid in full.
3. Conversion.
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(a) Common Stock Financing. Upon the First Closing, as defined in the
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Purchase Agreement between the Company and SOFTBANK of even date herewith (the
"Purchase Agreement"), all principal and accrued interest due on this
Convertible Subordinated Note shall automatically convert into a number of
shares of Common Stock (the "Conversion Number") determined by dividing all of
the unpaid principal and accrued but unpaid interest on this Convertible
Subordinated Note as of the First Closing Date (as defined in the Purchase
Agreement) by $13.00, subject to appropriate adjustment in the event of stock
splits, stock dividends, recapitalization and similar events (as so adjusted,
the "Conversion Price"). The cancellation of this Convertible Subordinated Note
in connection with such conversion shall be deemed to be payment in full of the
purchase price of a number of shares equal to the Conversion Number purchased
pursuant to the Purchase Agreement.
(b) Optional Conversion. At any time after September 1, 1999, and
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whether before or after the Maturity Date, the Holder may, at its option, by
written notice to the Company, convert this Convertible Subordinated Note into a
number of shares of Common Stock equal to (i) the unpaid principal and accrued
but unpaid interest as of the date such conversion becomes effective divided by
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(ii) the Conversion Price. Promptly following receipt of such notice, the
Company shall take or use its reasonable best efforts to cause to be taken such
actions as may be necessary to permit such conversion to be effected as promptly
as reasonably practicable thereafter, including, without limitation, making such
filings as may be required to be made by the Company or its affiliates under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Company
shall at all times reserve and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock, for the purpose of effecting the
conversion of this Convertible Subordinated Note, the full number of shares of
Common Stock then issuable upon the conversion of this Convertible Subordinated
Note.
(c) Issuance of Securities on Conversion. Concurrent with the
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conversion of this
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Convertible Subordinated Note, the Company will cause to be issued in the name
of, and delivered to, the Holder, a certificate or certificates representing the
number of shares of the Common Stock to which the Holder shall be entitled on
such conversion. No fractional shares will be issued on conversion of this
Convertible Subordinated Note and in lieu thereof the Holder shall be entitled
to payment in cash of the amount of the Convertible Subordinated Note not
converted into shares.
(d) Termination of Rights. All rights with respect to this
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Convertible Subordinated Note shall terminate upon the issuance of shares of
Common Stock upon conversion of this Convertible Subordinated Note, whether or
not this Convertible Subordinated Note has been surrendered. Notwithstanding the
foregoing, the Holder agrees to surrender this Convertible Subordinated Note to
the Company for cancellation as soon as is practicable following conversion of
this Convertible Subordinated Note.
4. Successors and Assigns. Subject to the restrictions on transfer
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described in Section 6 below, the rights and obligations of the Company and the
Holder shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
5. Waiver and Amendment. Any provision of this Convertible Subordinated
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Note may be amended, waived or modified upon the written consent of the Company
and SOFTBANK.
6. Assignment. Neither this Convertible Subordinated Note nor any of the
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rights, interests or obligations hereunder may be assigned, by operation of law
or otherwise, in whole or in part, by the Company or the Holder without the
prior written consent of the other party except (i) in the case of the Company,
in connection with an assignment in whole to a successor corporation to the
Company, provided that such successor corporation acquires, by purchase of
assets, merger or otherwise, all or substantially all of the Company's property
and assets, and (ii) in the case of Holder to any affiliates of Holder or
SOFTBANK Corp., a Japanese corporation, including, without limitation, any
partnership or other entity of which any direct or indirect subsidiary of
SOFTBANK Corp. is a general partner or has investment discretion, or any
employees of any of the foregoing.
7. Subordination. The Company and each Holder, by its acceptance hereof,
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agree that the payment of the principal amount evidenced by this Note and all
accrued interest thereon is hereby expressly made subordinate and junior in
right of payment to the prior indefeasible payment in full of all obligations,
liabilities and indebtedness now and hereafter owing by the Company to Foothill
Capital Corporation ("Foothill") to the extent and subject to the terms and
conditions set forth in that certain Subordination Agreement, dated on or about
the date hereof, executed by and among the Company, SOFTBANK and Foothill.
8. Addresses for Notices, etc. Any notices and other communications
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required or permitted under this Agreement shall be effective if in writing and
delivered personally or sent by telecopier, Federal Express or registered or
certified mail, postage prepaid, addressed as follows:
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If to the Holder, to: SOFTBANK Holdings Inc.
10 Langley Road, Suite 403
Newton Center, MA 02159
Attention: Ronald D. Fisher
Facsimile: (617) 928-9301
SOFTBANK America Inc.
300 Delaware Avenue, Suite 900
Wilmington, Delaware 19801
Attention: Francis Jacobs
Facsimile: (302) 552-3128
with a copy to: Sullivan & Cromwell
1888 Century Park East
Suite 2100
Los Angeles, California 90067
Telephone: (310) 712-6650
Telecopier: (310) 712-8800
Attention: John L. Savva, Esq.
If to the Company, to: Global Sports, Inc.
555 South Henderson Road
King of Prussia, Pennsylvania 19406
Telephone: (610) 768-0900
Telecopier: (610) 768-0753
Attention: Michael G. Rubin
with a copy to: Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103
Telephone: (215) 569-5544
Telecopier: (215) 569-5628
Attention: Arthur Miller, Esq.
Unless otherwise specified herein, such notices or other communications
shall be deemed effective (a) on the date delivered, if delivered personally,
(b) two business days after being sent, if sent by Federal Express or other
commercial overnight delivery service, (c) one business day after being sent, if
sent by telecopier with confirmation of good transmission and receipt, and (d)
three business days after being sent, if sent by registered or certified mail.
Each of the parties hereto shall be entitled to specify another address by
giving notice as aforesaid to each of the other parties hereto.
9. Payment. Except in the event this Convertible Subordinated Note is
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converted into
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Common Stock as provided herein, payment shall be made in lawful tender of the
United States.
10. Severability. The holding of any provision of this Convertible
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Subordinated Note to be invalid or unenforceable by a court of competent
jurisdiction shall not affect any other provisions and the other provisions of
this Convertible Subordinated Note shall remain in full force and effect.
11. Governing Law. This Convertible Subordinated Note shall be governed
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by and construed and enforced in accordance with the laws of the State of
Delaware.
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IN WITNESS WHEREOF, the Company has caused this Convertible Subordinated
Note to be issued as of the date first written above.
GLOBAL SPORTS, INC.
a Delaware corporation
By:/s/ Michael G. Rubin
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Michael G. Rubin
Title: Chairman and Chief Executive Officer
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