EXHIBIT 99.3
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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
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SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
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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
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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.
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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
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SOFTBANK Purchase Agreement.
(b) "Commission" shall mean the Securities and Exchange Commission,
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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
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share, of the Company.
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934, or
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any successor thereto, as the same shall be amended from time to time.
(e) "Existing Registration Agreements" shall mean the agreements set
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forth on Schedule 1(e) hereto.
(f) "Holder" shall mean any party hereto (other than the Company) and
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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,
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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
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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
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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
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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
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in Section 4 of this Agreement.
(j) "Rights" shall mean any option, warrant, security, right or other
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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
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successor thereto, as the same shall be amended from time to time.
(l) "Senior Registration Rights Agreement" shall mean (i) the
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Registration Rights Agreement, dated May 12, 1998, among the Company, DMJ
Financial, Inc., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and certain individuals
and entities specified therein, and (ii) the Registration Rights Agreement,
dated July 27, 1998, between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
2. Registration Under the Securities Act.
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(a) Demand Registrations.
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(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
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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
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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
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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
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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
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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
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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.
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(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
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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 ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇") is a Piggyback
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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
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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
▇▇▇▇▇, 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.
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(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 ▇▇▇▇▇ is a Piggyback Shareholder, only
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up to 1,000,000 shares, Rights or securities owned by him), pro rata, and
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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 ▇▇▇▇▇,
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
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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 ▇▇▇▇▇ is a
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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
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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 ▇▇▇▇▇, 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
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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
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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
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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.
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(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;
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(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
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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
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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
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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
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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
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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.
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(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
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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 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: General Counsel, facsimile no. (▇▇▇)▇▇▇-▇▇▇▇, and if to a Holder, to
the address or
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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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and
Chief Executive Officer
-24-
SOFTBANK CAPITAL PARTNERS LP
By: Softbank Capital Partners LLC
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Admin. Member
SOFTBANK CAPITAL ADVISORS FUND LP
By: Softbank Capital Partners LLC
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Admin. Member
-25-
TMCT VENTURES, L.P.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Member
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INTERACTIVE TECHNOLOGY HOLDINGS, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Authorized Signatory
-27-