GameStop 2005 Annual Report Download - page 95

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 Electronics Boutique’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 merger.
Concurrently with the consummation of the merger 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 Guarantors
assumed all the obligations of a subsidiary guarantor under the Purchase Agreement and the Registration Rights
Agreement.
Under certain conditions, the Issuers may on any one or more occasions prior to maturity redeem up to 100% of
the aggregate principal amount of Senior Floating Rate Notes and/or Senior Notes issued under the Indenture at
redemption prices at or in excess of 100% of the principal amount thereof plus accrued and unpaid interest, if any, to
the redemption date. The circumstances which would limit the percentage of the Notes which may be redeemed or
which would require the Company to pay a premium in excess of 100% of the principal amount are defined in the
Indenture. The Issuers may acquire Senior Floating Rate Notes and Senior Notes by means other than redemption,
whether by tender offer, open market purchases, negotiated transactions or otherwise, in accordance with applicable
securities laws, so long as such acquisitions do not otherwise violate the terms of the Indenture.
Upon a Change of Control (as defined in the Indenture), the Issuers are required to offer to purchase all of the
Notes then outstanding at 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase.
The Indenture contains affirmative and negative covenants customary for such financings, including, among
other things, limitations on (1) the incurrence of additional debt, (2) restricted payments, (3) liens, (4) sale and
leaseback transactions and (5) asset sales. Events of default provided for in the Indenture include, among other
things, failure to pay interest or principal on the Notes, other breaches of covenants in the Indenture, and certain
events of bankruptcy and insolvency.
The Senior Notes were priced at 98.688% , resulting in a discount at the time of issue of $8,528. The discount is
being amortized using the effective interest method. As of January 28, 2006, the unamortized original issue discount
was $8,212.
In October 2004, Historical GameStop issued a promissory note in favor of Barnes & Noble in the principal
amount of $74,020 in connection with the repurchase of Historical GameStop’s Class B common shares held by
Barnes & Noble. Payments of $37,500 and $12,173 were made in January 2005 and October 2005, respectively, as
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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)