GSI Commerce Announces Notice of Conversion of 2.50% Convertible Senior Notes due 2027

GSI Commerce, Inc. (NASDAQ:GSIC), a leading provider of ecommerce and interactive marketing services, today announced that pursuant to the terms of the indenture relating to GSI’s 2.50% Convertible Senior Notes due 2027 (the "Notes”), the Notes have become convertible as a result of the previously announced agreement to be acquired by eBay Inc. (NASDAQ: EBAY). The Company currently anticipates that the effective date of the merger will be June 17, 2011.

As a result of GSI entering into the merger agreement with eBay, holders of the Notes are entitled to convert their Notes in whole or in part (in principal amounts of $1,000 and integral multiples thereof) at any time from and after May 12, 2011 until (but not including) the date which is the Fundamental Change Repurchase Date (as described below).

On or prior to the effective date of the merger, holders of the Notes may convert each $1,000 in principal amount of the Notes into 33.3333 shares of GSI common stock. After the effective date of the merger, the right to convert each $1,000 in principal amount of the Notes shall be changed into the right to receive upon conversion $974.99 in cash (representing the $29.25 per share cash consideration payable in the merger in respect of the shares of GSI common stock otherwise issuable upon conversion of the Notes).

In addition, the merger will constitute a "Makewhole Fundamental Change” under the terms of the indenture governing the Notes. Accordingly, upon the consummation of the merger, GSI will increase the conversion rate applicable to the Notes (for holders that convert their Notes from the date hereof until the Fundamental Change Repurchase Date) by adding to the conversion rate that would otherwise apply to the Notes the Additional Shares determined in accordance with the terms of the indenture. Assuming the Merger is consummated on June 17, 2011, as currently anticipated, the conversion rate will be increased by 5.21 Additional Shares and accordingly each $1,000 in principal amount of the Notes would be entitled to receive upon conversion an aggregate cash payment of $1,127.39. If the Effective Date of the Merger is delayed, the amount of Additional Shares to be added to the conversion rate will be changed in accordance with the terms of the indenture governing the Notes.

Any holder of Notes who converts on or after May 12, 2011 and on or prior to the effective date of the merger will initially receive 33.3333 shares of GSI common stock for each $1,000 in principal amount of the Notes, and will then receive, as soon as practicable following the effective date of the merger, a cash payment representing the number of Additional Shares times $29.25 per $1,000 principal amount of Notes previously converted. Any holder who converts after the effective date of the merger and on or prior to the Fundamental Change Repurchase Date will receive a cash payment in the aggregate amount of $974.99 plus an amount representing the number of Additional Shares times $29.25 per $1,000 principal amount of Notes. The payments respecting the Additional Shares will only be made if the merger is in fact consummated.

Additionally, pursuant to the indenture, any holder who converts after May 15, 2011 but prior to June 1, 2011 will be required to pay in cash an amount equal to the interest payment respecting the Notes so converted to be made by GSI on June 1, 2011 to holders of record on May 15, 2011.

The Notes will cease to be convertible on the Fundamental Change Repurchase Date unless and until they again become convertible in accordance with their terms.

Pursuant to the indenture under which the Notes were issued, the merger will also constitute a "Fundamental Change” and upon consummation, GSI is required to make an offer to repurchase on the Fundamental Change Repurchase Date any Notes that remain outstanding at such time (provided the holders of such Notes do not elect to convert such Notes as set forth above) at a repurchase price equal to the Notes’ principal amount, plus any accrued and unpaid interest. This offer to purchase Notes will be at a price that is less than the amount that can be obtained upon conversion of the Notes on or prior to the Fundamental Change Repurchase Date, as described above. The Company will be required to make such offer within 15 days after the effective date of the merger (such offer, the "Fundamental Change Repurchase Right Notice”). The Fundamental Change Repurchase Date will be the date specified by GSI that is not less than twenty (20) or not more than thirty (30) days after the date of the Fundamental Change Repurchase Right Notice.

In the event the merger is not consummated, any Notes that have not been converted will remain outstanding under the terms of the indenture governing the Notes.

About GSI Commerce

GSI Commerce^® enables ecommerce, multichannel retailing and digital marketing for global enterprises in the U.S. and internationally. GSI’s ecommerce services, which include technology, order management, payment processing, fulfillment and customer care, are available on a modular basis or as part of an integrated solution. GSI’s Global Marketing Services division provides innovative digital marketing products and services comprised of database management and segmentation, marketing distribution channels, a global digital agency to drive strategic and creative direction and an advanced advertising analytics and attribution management platform. Additionally, GSI provides brands and retailers platforms to engage directly with consumers through RueLaLa.com, an online private sale shopping destination, and ShopRunner.com, a members-only shopping service that offers unlimited free two-day shipping and free shipping on returns for a $79 annual subscription.

Caution Regarding Forward Looking Statements

This news release includes "forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, are forward-looking statements. These forward looking statements address, among other things activities, events or developments that we expect, believe or anticipate will or may occur in the future, including our statements relating to the anticipated effective date of the proposed merger eBay. These forward-looking statements are subject to a number of risks that could cause actual results to differ materially from those contained in the forward-looking statements, including the risk that our stockholders may not approve the merger, as well as the risk factors described in Part I, Item 1A, of our 2010 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2011 and Part II, Item 1A, of our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 5, 2011.

Currently unknown or unanticipated risks, or risks that emerge in the future, could cause actual results to differ materially from those described in forward-looking statements, and it is not possible for us to predict all such risks, or the extent to which this may cause actual results to differ from those contained in any forward-looking statement. Except as required by law, we assume no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events, or otherwise.