GameStop 2005 Annual Report Download - page 46

in escrow pending approval of the mergers by Historical GameStop’s and EB’s stockholders, which approval was a
condition to the consummation of the mergers. The offering of the Notes was conducted in a private transaction
under Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), and in
transactions outside the United States in reliance upon Regulation S under the Securities Act. The Notes have not
been registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or
sold in the United States absent registration or an applicable exemption from registration requirements.
The Notes were sold pursuant to a purchase agreement, dated September 21, 2005, by and among the Issuers,
the subsidiary guarantors listed on Schedule I-A thereto, and Citigroup Global Markets Inc., for themselves and as
representatives of the several initial purchasers listed on Schedule II thereto (the “Purchase Agreement”). A copy of
the Purchase Agreement was filed as Exhibit 1.1 to Historical GameStop’s Current Report on Form 8-K, dated
September 27, 2005.
The Notes were issued under an indenture (the “Indenture”), dated September 28, 2005, by and among the
Issuers, the subsidiary guarantors party thereto, and Citibank, N.A., as trustee (the “Trustee”). The Senior Floating
Rate Notes were priced at 100%, bear interest at LIBOR plus 3.875% and mature on October 1, 2011. The rate of
interest on the Senior Floating Rate Notes as of January 28, 2006 was 8.405% per annum. The Senior Notes were
priced at 98.688%, bear interest at 8.0% per annum and mature on October 1, 2012. The Issuers will pay interest on
the Senior Floating Rate Notes quarterly, in arrears, every January 1, April 1, July 1 and October 1, to holders of
record on the immediately preceding December 15, March 15, June 15 and September 15, and at maturity. The first
interest payment was made on the first business day following its due date of January 1, 2006. The Issuers will pay
interest on the Senior Notes semi-annually, in arrears, every April 1 and October 1, commencing on April 1, 2006, to
holders of record on the immediately preceding March 15 and September 15, and at maturity. A copy of the
Indenture was filed as Exhibit 4.2 to Historical GameStop’s Current Report on Form 8-K, dated September 30,
2005.
In connection with the closing of the offering, the Issuers also entered into a registration rights agreement,
dated September 28, 2005, by and among the Issuers, the subsidiary guarantors listed on Schedule I-A thereto, and
Citigroup Global Markets Inc., for themselves and as representatives of the several initial purchasers listed on
Schedule II thereto (the “Registration Rights Agreement”). The Registration Rights Agreement requires the Issuers
to, among other things, (1) file a registration statement with the SEC to be used in connection with the exchange of
the Notes for publicly registered notes with substantially identical terms, (2) use their reasonable best efforts to
cause the registration statement to be declared effective within 210 days from the date the Notes were issued, and
(3) use their commercially reasonable efforts to consummate the exchange offer with respect to the Notes within
270 days from the date the Notes were issued. In addition, under certain circumstances, including (among other
things) the exchange offer not being consummated within 270 days from the date the Notes were issued, the Issuers
may be required to file a shelf registration statement. A copy of the Registration Rights Agreement was filed as
Exhibit 4.3 to Historical GameStop’s Current Report on Form 8-K, dated September 30, 2005. The Company
intends to file a registration statement on Form S-4 in order to register new notes (the “New Notes”) with the same
terms and conditions as the Notes in order to facilitate an exchange of the New Notes for the Notes. Under the terms
of the indenture for the Notes, if we do not complete an offer to exchange the Notes for the New Notes by June 23,
2006, the interest rate on the Notes will increase by 25 basis points until we complete the exchange offer.
At the scheduled meetings of Historical GameStop’s and EB’s stockholders held on October 6, 2005, the
proposal for the business combination was approved. On October 7, 2005, the proceeds of the offering placed in
escrow, minus certain fees and expenses of the initial purchasers and others, were released to the Company. Such net
proceeds of the offering were used to pay the cash portion of the merger consideration paid to the stockholders of EB
in connection with the mergers.
Concurrently with the consummation of the mergers on October 8, 2005, EB and its direct and indirect
domestic wholly-owned subsidiaries (together, the “EB Guarantors”) became subsidiaries of the Company and
entered into: (1) a first supplemental indenture, dated October 8, 2005, by and among the Issuers, the EB Guarantors
and the Trustee, pursuant to which the EB Guarantors assumed all the obligations of a subsidiary guarantor under
the Notes and the Indenture; and (2) a joinder agreement, dated October 8, 2005, pursuant to which the EB
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