GameStop 2004 Annual Report Download - page 50

Item 13. Certain Relationships and Related Transactions
Agreements With Barnes & Noble
In connection with the consummation of our initial public oÅering in February 2002, we entered into
various agreements with Barnes & Noble relating to our relationship with Barnes & Noble following the
completion of our initial public oÅering.
Separation Agreement
We entered into a ""separation agreement'' with Barnes & Noble, which governs our respective rights and
duties with respect to our initial public oÅering and the distribution to Barnes & Noble stockholders of its
shares of our capital stock (which is referred to as the ""spin-oÅ''), and contains covenants designed to
facilitate the spin-oÅ and to protect its intended tax-free nature.
Under the separation agreement, we agreed not to take certain actions without the approval of Barnes &
Noble or the satisfaction of certain procedures. These actions include:
‚ until two years after the spin-oÅ, entering into or permitting any transaction or series of transactions
which would result in a person or persons acquiring or having the right to acquire shares of our capital
stock that would comprise 50% or more of either the value of all outstanding shares of our capital stock
or the total combined voting power of our outstanding voting stock; and
‚ until two years after the spin-oÅ, liquidating, disposing of, or otherwise discontinuing the conduct of
any portion of our active trade or business.
We have generally agreed to indemnify Barnes & Noble and its aÇliates against any and all tax-related
losses incurred by Barnes & Noble in connection with any proposed tax assessment or tax controversy with
respect to the spin-oÅ to the extent caused by any breach by us of any of our representations, warranties or
covenants made in the separation agreement. This indemniÑcation does not apply if Barnes & Noble permits
us to take certain actions or if we otherwise comply with the terms of the separation agreement.
Insurance Agreement
We entered into an ""insurance agreement'' with Barnes & Noble, pursuant to which Barnes & Noble
allowed us to participate in Barnes & Noble's worker's compensation, property and general liability and
directors' and oÇcers' liability insurance programs. We shall reimburse Barnes & Noble for our pro rata share
of the cost of providing these insurance programs. In Ñscal 2004, Barnes & Noble charged us approximately
$2,662,000 for our insurance program.
The insurance agreement terminated in part on May 1, 2005 and will terminate in full on June 1, 2005, at
which time we will procure our own insurance.
Operating Agreement
We entered into an ""operating agreement'' with Barnes & Noble, pursuant to which we operate the
existing video game departments in ten Barnes & Noble stores. We pay Barnes & Noble a licensing fee equal
to 7.0% of the aggregate gross sales of each such department. In Ñscal 2004, Barnes & Noble charged us
approximately $859,000 in connection with our operation of such departments in Barnes & Noble stores.
The operating agreement will remain in force unless terminated:
‚ by mutual agreement of us and Barnes & Noble;
‚ automatically, in the event that we no longer operate any department within Barnes & Noble's stores;
‚ by us or Barnes & Noble, with respect to any department, upon not less than 30 days prior notice;
‚ by Barnes & Noble because of an uncured default by us;
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