þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended January 29, 2005 | ||
or | ||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Delaware
|
75-2951347 | |
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
|
2250 William D. Tate Avenue,
Grapevine, Texas (Address of principal executive offices) |
76051
(Zip Code) |
(Title of Class) | (Name of Exchange on Which Registered) | |
Class A Common Stock, $.001 par value per share
|
New York Stock Exchange | |
Class B Common Stock, $.001 par value per share
|
New York Stock Exchange | |
Rights to Purchase Series A Junior Participating Preferred
Stock, $.001 par value per share
|
New York Stock Exchange |
Page | ||||||||
PART I | ||||||||
Business | 2 | |||||||
Properties | 17 | |||||||
Legal Proceedings | 18 | |||||||
Submission of Matters to a Vote of Security Holders | 18 | |||||||
PART II | ||||||||
Market for Registrants Common Equity and Related Stockholder Matters | 18 | |||||||
Selected Consolidated Financial Data | 20 | |||||||
Managements Discussion and Analysis of Financial Condition and Results of Operations | 22 | |||||||
Quantitative and Qualitative Disclosures About Market Risk | 31 | |||||||
Consolidated Financial Statements and Supplementary Data | 32 | |||||||
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 32 | |||||||
Controls and Procedures | 32 | |||||||
PART III | ||||||||
Directors and Executive Officers of the Registrant | 32 | |||||||
Executive Compensation | 33 | |||||||
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 33 | |||||||
Certain Relationships and Related Transactions | 33 | |||||||
Principal Accountant Fees and Services | 33 | |||||||
PART IV | ||||||||
Exhibits and Financial Statement Schedules | 33 | |||||||
SIGNATURES | 36 | |||||||
FINANCIAL STATEMENTS | F-1 | |||||||
Amended and Restated 2001 Incentive Plan | ||||||||
Supplemental Compensation Plan | ||||||||
Form of Option Agreement | ||||||||
Subsidiaries | ||||||||
Consent of BDO Seidman, LLP | ||||||||
Certification of CEO Pursuant to Section 302 | ||||||||
Certification of CFO Pursuant to Section 302 | ||||||||
Certification of CEO Pursuant to Section 906 | ||||||||
Certification of CFO Pursuant to Section 906 |
1
Item 1. | Business |
2
| our reliance on suppliers and vendors for sufficient quantities of their products and for new product releases; | |
| economic conditions affecting the electronic game industry; | |
| the competitive environment in the electronic game industry; | |
| our ability to open and operate new stores; | |
| our ability to attract and retain qualified personnel; | |
| our ability to successfully and efficiently transfer our headquarters and distribution center to our new facility; and | |
| other factors described in this Form 10-K, including those set forth under the caption, Business Risk Factors. |
Risks Related to Our Business |
We depend upon the timely delivery of products. |
We depend upon third parties to develop products and software. |
3
Our ability to obtain favorable terms from our suppliers may impact our financial results. |
The video game system and software product industries are cyclical, which could cause significant fluctuation in our earnings. |
An adverse trend in sales during the holiday selling season could impact our financial results. |
Our results of operations may fluctuate from quarter to quarter, which could result in a lower price for our common stock. |
| the timing of new product releases; | |
| the timing of new store openings; and | |
| shifts in the timing of certain promotions. |
Our failure to effectively manage new store openings could lower our sales and profitability. |
4
| the ability to identify new store locations, negotiate suitable leases and build out the stores in a timely and cost efficient manner; | |
| the ability to hire and train skilled associates; | |
| the ability to integrate new stores into our existing operations; and | |
| the ability to increase sales at new store locations. |
If our management information systems fail to perform or are inadequate, our ability to manage our business could be disrupted. |
Our failure to successfully and efficiently transfer our headquarters and distribution center to our new facility could lower our sales and profitability. |
Pressure from our competitors may force us to reduce our prices or increase spending, which could decrease our profitability. |
5
International events could delay or prevent the delivery of products to our suppliers. |
If we are unable to renew or enter into new leases on favorable terms, our revenue growth may decline. |
The ability to download video games and play video games on the Internet could lower our sales. |
If we fail to keep pace with changing industry technology, we will be at a competitive disadvantage. |
The terms of our credit facility could restrict our operational flexibility. |
We depend upon our key personnel and they would be difficult to replace. |
6
We may engage in acquisitions which could negatively impact our business if we fail to successfully complete and integrate them. |
Legislative actions, higher director and officer insurance costs and potential new accounting pronouncements are likely to cause our general and administrative expenses to increase and impact our future financial condition and results of operations. |
The limited voting rights of our Class A common stock could impact its attractiveness to investors and its liquidity and, as a result, its market value. |
| Hardware Platform Technology Evolution. Video game hardware has evolved significantly from the early products launched in the 1980s. The processing speed of video game hardware has increased from 8-bit speeds in the 1980s to 128-bit speeds in next-generation systems such as Sony PlayStation 2, launched in 2000, and Nintendo GameCube and Microsoft Xbox, which both launched in November 2001. In addition, portable handheld video game devices have evolved from the 8-bit Nintendo Game Boy to the 128-bit Nintendo DS, which was introduced in November 2004. Technological developments in both chip processing speed and data storage have provided significant improvements in |
7
advanced graphics and audio quality, which allow software developers to create more advanced games, encourage existing players to upgrade their hardware platforms and attract new video game players to purchase an initial system. As general computer technology advances, we expect video game technology to make similar advances. | ||
| Next-Generation Systems Provide Multiple Capabilities Beyond Gaming. Many next-generation hardware platforms, including Sony PlayStation 2 and Microsoft Xbox, utilize a DVD software format and have the potential to serve as multi-purpose entertainment centers by doubling as a player for DVD movies and compact discs. In addition, both Sony PlayStation 2 and Microsoft Xbox manufacture accessories which provide internet connectivity. | |
| Backward Compatibility. Sony PlayStation 2 and Nintendo DS are both backward compatible, meaning that titles produced for the earlier version of the hardware platform may be used on the new hardware platform. We believe that backward compatibility may result in more stable industry growth because the decrease in consumer demand for products associated with existing hardware platforms that typically precedes the release of next-generation hardware platforms may be diminished. | |
| Introduction of Next-Generation Hardware Platforms Drives Software Demand. Sales of video game software generally increase as next-generation platforms mature and gain wider acceptance. Historically, when a new platform is released, a limited number of compatible game titles are immediately available, but the selection grows rapidly as manufacturers and third-party publishers develop and release game titles for that new platform. For example, when Sony PlayStation 2 was released in October 2000, approximately 30 game titles were available for sale. By January 2003, over 450 game titles for the Sony PlayStation 2 platform were available for sale. Currently, there are over 850 game titles for the Sony PlayStation 2 platform available for sale. | |
| Broadening Demographic Appeal. While the typical electronic game enthusiast is male between the ages of 14 and 35, the electronic game industry is broadening its appeal. More females are playing electronic video games, in part due to the development of video game products that appeal to them. According to ESA, approximately 39% of all electronic game players are female. More adults are also playing video games as a portion of the population that played video games in their childhood continues to play and advance to the next-generation video game products. In addition, the availability of used video game products for sale has enabled a lower-economic demographic, that may not have been able to afford the considerably more expensive new video game products, to participate in the video game industry. |
8
9
| Capitalize on Growth in Demand. Our sales of video game software grew by approximately 26% in fiscal 2003 and by an additional 22% in fiscal 2004. In fiscal 2003 and fiscal 2004, our comparable store sales increased 0.8% and 1.7%, respectively, driven in large measure by the success of Sony PlayStation 2, Microsoft Xbox, Nintendo GameCube and Nintendo DS, which was launched in November 2004. Comparable store sales increased a modest 1.7% in fiscal 2004, as declining video game hardware price points and hardware shortages offset the increase in video game software sales, which was fueled by the success of Grand Theft Auto: San Andreas, from Take-Two Interactive Software, Inc. and Halo 2 from Microsoft Corp. During fiscal 2003 and fiscal 2004, we capitalized on the growth in demand for video game software and accessories that followed the increases in the installed hardware base of these four video game platforms. Over the next few years, we expect to continue to capitalize on the increasing installed base for these platforms, the release in March 2005 of the Sony PSP, the anticipated release in late 2005 of the Microsoft Xbox 2, the anticipated release in 2006 of the Sony PlayStation 3 and the related growth in video game software and accessories sales. | |
| Increase Sales of Used Video Game Products. We will continue to expand the selection and availability of used video game products in both our mall and strip center stores. Our strategy consists of increasing consumer awareness of the benefits of trading in and buying used video game products at our stores through increased marketing activities. We expect the continued growth of new platform technology to drive trade-ins of previous generation products, as well as next generation platforms, thereby expanding the supply of used video game products. | |
| Increase GameStop Brand Awareness. We intend to increase customer awareness of the benefits of shopping in our stores. In connection with our brand-building efforts, in each of the last three fiscal years, we increased the amount of media advertising in targeted markets. In fiscal 2005, we plan to continue to increase media advertising, to expand our GameStop loyalty card program, to aggressively |
10
promote trade-ins of used video game products in our stores and to leverage our web site at www.gamestop.com. |
11
52 Weeks Ended | 52 Weeks Ended | ||||||||
January 29, | January 31, | ||||||||
2005 | 2004 | ||||||||
Video Games:*
|
|||||||||
Video Game Software
|
66 | % | 63 | % | |||||
Video Game Hardware
|
16 | 16 | |||||||
Video Game Accessories
|
11 | 12 | |||||||
PC Software
|
5 | 6 | |||||||
PC Accessories and Other Products
|
2 | 3 |
* | Includes new and used merchandise. |
Store Formats |
| Strip Center Stores. Our strip center stores, which average approximately 1,600 square feet, carry a balanced mix of new and used video game products and PC entertainment software. As of January 29, 2005, we operated 1,310 strip center stores in the United States, Ireland, Northern Ireland and Puerto Rico. Our strip center stores are located in both high traffic power strip centers and local neighborhood strip centers, primarily in major metropolitan areas. These locations provide visibility, easy access and high frequency of visits. We target strip centers that are conveniently located, have a mass merchant or supermarket anchor tenant and have a high volume of customers. | |
| Mall-Based Stores. Our mall-based stores, which average approximately 1,200 square feet, carry primarily new video game products and PC entertainment software, as well as used video game products. As of January 29, 2005, we operated 516 mall stores in high traffic shopping malls in targeted locations throughout the United States, Puerto Rico and Guam. |
Number | ||||
State | of Stores | |||
Alabama
|
27 | |||
Alaska
|
3 | |||
Arizona
|
34 | |||
Arkansas
|
11 | |||
California
|
206 |
12
Number
State
of Stores
28
21
8
1
79
45
2
13
3
94
25
20
14
18
25
3
46
31
66
32
17
34
6
7
18
10
75
15
89
39
6
83
23
15
84
15
5
20
3
30
204
21
1
50
13
Number
State
of Stores
43
11
21
1
1,801
22
3
1,826
14
15
16
Item 2. | Properties |
Number | ||||
Lease Terms to Expire During | of Stores | |||
(12 Months Ending on or About January 31) | ||||
Expired and in negotiations
|
139 | |||
2006
|
186 | |||
2007
|
174 | |||
2008
|
132 | |||
2009
|
169 | |||
2010 and later
|
1,026 | |||
1,826 | ||||
17
Item 3. | Legal Proceedings |
Item 4. | Submission of Matters to a Vote of Security Holders |
Item 5. | Market For Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
18
Fiscal 2004 | ||||||||
High | Low | |||||||
Fourth Quarter
|
$ | 23.50 | $ | 18.68 | ||||
Third Quarter
|
$ | 20.23 | $ | 14.87 | ||||
Second Quarter
|
$ | 18.18 | $ | 14.54 | ||||
First Quarter
|
$ | 18.65 | $ | 16.29 |
Fiscal 2003 | ||||||||
High | Low | |||||||
Fourth Quarter
|
$ | 18.57 | $ | 14.30 | ||||
Third Quarter
|
$ | 18.92 | $ | 12.66 | ||||
Second Quarter
|
$ | 14.85 | $ | 11.55 | ||||
First Quarter
|
$ | 13.00 | $ | 7.59 |
Fiscal 2004 | ||||||||
High | Low | |||||||
Fourth Quarter (from November 12, 2004)
|
$ | 24.00 | $ | 18.75 |
19
Number of Securities | ||||||||||||
Remaining Available for | ||||||||||||
Weighted-Average | Future Issuance Under | |||||||||||
Number of Securities to | Exercise Price of | Equity Compensation | ||||||||||
be Issued Upon Exercise | Outstanding | Plans (Excluding | ||||||||||
of Outstanding Options, | Options, Warrants | Securities Reflected in | ||||||||||
Warrants and Rights | and Rights | Column (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders
|
11,406,000 | $ | 10.86 | 5,168,000 | ||||||||
Equity compensation plans not approved by security holders
|
0 | not applicable | 0 | |||||||||
Total
|
11,406,000 | $ | 10.86 | 5,168,000 | ||||||||
Item 6. | Selected Consolidated Financial Data |
20
Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | ||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||
January 29, | January 31, | February 1, | February 2, | February 3, | ||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||
In Thousands, except per share data and statistical data | ||||||||||||||||||||
Statement of Operations Data:
|
||||||||||||||||||||
Sales
|
$ | 1,842,806 | $ | 1,578,838 | $ | 1,352,791 | $ | 1,121,138 | $ | 756,697 | ||||||||||
Cost of sales
|
1,328,611 | 1,142,264 | 1,009,491 | 854,035 | 570,995 | |||||||||||||||
Gross profit
|
514,195 | 436,574 | 343,300 | 267,103 | 185,702 | |||||||||||||||
Selling, general and administrative expenses(1)(2)
|
378,029 | 302,703 | 233,075 | 202,041 | 157,242 | |||||||||||||||
Depreciation and amortization(1)(2)
|
37,019 | 29,487 | 23,154 | 19,850 | 13,623 | |||||||||||||||
Amortization of goodwill
|
| | | 11,125 | 9,223 | |||||||||||||||
Operating earnings
|
99,147 | 104,384 | 87,071 | 34,087 | 5,614 | |||||||||||||||
Interest expense (income), net
|
236 | (804 | ) | (630 | ) | 19,452 | 23,411 | |||||||||||||
Earnings (loss) before income taxes
|
98,911 | 105,188 | 87,701 | 14,635 | (17,797 | ) | ||||||||||||||
Income tax expense (benefit)
|
37,985 | 41,721 | 35,297 | 7,675 | (5,836 | ) | ||||||||||||||
Net earnings (loss)
|
$ | 60,926 | $ | 63,467 | $ | 52,404 | $ | 6,960 | $ | (11,961 | ) | |||||||||
Net earnings (loss) per share basic
|
$ | 1.11 | $ | 1.13 | $ | 0.93 | $ | 0.19 | $ | (0.33 | ) | |||||||||
Weighted average shares outstanding basic
|
54,662 | 56,330 | 56,289 | 36,009 | 36,009 | |||||||||||||||
Net earnings (loss) per share diluted
|
$ | 1.05 | $ | 1.06 | $ | 0.87 | $ | 0.18 | $ | (0.33 | ) | |||||||||
Weighted average shares outstanding diluted
|
57,796 | 59,764 | 60,419 | 39,397 | 36,009 | |||||||||||||||
Other Financial Data:
|
||||||||||||||||||||
Net earnings (loss) excluding the after-tax effect of goodwill
amortization(3)
|
$ | 60,926 | $ | 63,467 | $ | 52,404 | $ | 15,373 | $ | (5,212 | ) | |||||||||
Net earnings (loss) per share excluding the after-tax effect of
goodwill amortization diluted(3)
|
$ | 1.05 | $ | 1.06 | $ | 0.87 | $ | 0.39 | $ | (0.14 | ) | |||||||||
Store Operating Data:
|
||||||||||||||||||||
Stores open at the end of period
|
1,826 | 1,514 | 1,231 | 1,038 | 978 | |||||||||||||||
Comparable store sales increase (decrease)(4)
|
1.7 | % | 0.8 | % | 11.4 | % | 32.0 | % | (6.7 | )% | ||||||||||
Inventory turnover
|
5.4 | 4.9 | 4.9 | 5.2 | 4.6 | |||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||
Working capital (deficit)
|
$ | 110,093 | $ | 188,378 | $ | 174,482 | $ | 31,107 | $ | (1,726 | ) | |||||||||
Total assets(1)(2)
|
914,983 | 902,189 | 806,237 | 608,674 | 511,504 | |||||||||||||||
Total debt
|
36,520 | | | 399,623 | 385,148 | |||||||||||||||
Total liabilities(1)(2)
|
371,972 | 308,156 | 257,562 | 612,659 | 532,114 | |||||||||||||||
Stockholders equity (deficit)
|
543,011 | 594,033 | 548,675 | (3,985 | ) | (20,610 | ) |
(1) | In 2004, we revised our method of accounting for rent expense to conform to GAAP, as recently clarified by the Chief Accountant of the SEC in a February 7, 2005 letter to the American Institute of Certified Public Accountants. A non-cash, after-tax adjustment of $3,312 was made in the fourth quarter of fiscal 2004 to correct the method of accounting for rent expense (and related deferred rent liability) to include the impact of escalating rents for periods in which we are reasonably assured of exercising lease options and to include any rent holiday period (a period during which the Company is not obligated to pay rent) the lease allows while the store is being constructed. We also corrected our calculation of depreciation expense for leasehold improvements for those leases which do not include an option period. |
21
The impact of these corrections on periods prior to fiscal 2004 was not material and the adjustment does not affect historical or future cash flows or the timing of payments under related leases. See Note 1 of Notes to Consolidated Financial Statements of the Company for additional information concerning lease accounting. | |
(2) | In 2004, the Company changed its classification of tenant improvement allowances on the balance sheets, statement of operations and statements of cash flows. The Company historically classified tenant improvement allowances as reductions of property and equipment on the Companys balance sheets and as reductions in depreciation and amortization in the Companys statements of operations. In order to comply with the provisions of FASB Technical Bulletin No. 88-1, Issues Relating to Accounting for Leases (FTB 88-1), however, the Company has reclassified tenant improvement allowances as deferred rent liabilities (in other long-term liabilities) on the Companys balance sheets and as a reduction of rent expense (in selling, general and administrative expenses) in the statements of operations. The effect of this reclassification increased total assets and total liabilities on the Companys balance sheets by $4,671 as of January 29, 2005, $3,265 as of January 31, 2004, $2,328 as of February 1, 2003, $1,831 as of February 2, 2002 and $1,747 as of February 3, 2001 and decreased selling, general and administrative expense and increased depreciation expense in the Companys statements of operations by $671, $540, $601, $678 and $649 in fiscal 2004, 2003, 2002, 2001 and 2000, respectively. Note 1 of Notes to Consolidated Financial Statements of the Company provides additional information concerning lease accounting. |
(3) | Net earnings (loss) excluding the after-tax effect of goodwill amortization is presented here to provide additional information about our operations. These items should be considered in addition to, but not as a substitute for or superior to, operating earnings, net earnings, cash flow and other measures of financial performance prepared in accordance with GAAP. |
(4) | Stores are included in our comparable store sales base beginning in the 13th month of operation. Comparable store sales for the fiscal year ended February 3, 2001 were computed using the first 52 weeks of the 53 week fiscal year. |
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
22
23
24
25
26
27
28
29
30
31
Fiscal Year
Fiscal Year
Fiscal Year
Ended
Ended
Ended
January 29,
January 31,
February 1,
2005
2004
2003
100.0
%
100.0
%
100.0
%
72.1
72.4
74.6
27.9
27.6
25.4
20.5
19.2
17.3
2.0
1.8
1.7
5.4
6.6
6.4
0.0
0.0
(0.1
)
5.4
6.6
6.5
2.1
2.6
2.6
3.3
%
4.0
%
3.9
%
Fiscal 2004 Compared to Fiscal 2003
Table of Contents
Fiscal 2003 Compared to Fiscal 2002
Table of Contents
Table of Contents
Table of Contents
Payments Due by Period
Less Than
More Than
Contractual Obligations
Total
1 Year
1-3 Years
3-5 Years
5 Years
In millions
$
36.5
$
12.2
$
24.3
$
$
$
444.4
$
70.0
$
120.9
$
98.9
$
154.6
$
480.9
$
82.2
$
145.2
$
98.9
$
154.6
(1)
The long-term debt bears interest at 5.5%, which will result in
additional obligations of approximately $2.0 million in
less than one year and $2.0 million in one to three years.
Table of Contents
Item 7A.
Quantitative and Qualitative Disclosures About Market
Risk
Table of Contents
Item 8.
Financial Statements and Supplementary Data
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
(a) | Evaluation of Disclosure Controls and Procedures |
Item 10. | Directors and Executive Officers of the Registrant(*) |
32
Item 11. | Executive Compensation(*) |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters(*) |
Item 13. | Certain Relationships and Related Transactions(*) |
Item 14. | Principal Accountant Fees and Services(*) |
(*) | The information not otherwise provided herein that is required by Items 10, 11, 12, 13 and 14 will be set forth in the definitive proxy statement relating to the 2005 Annual Meeting of Stockholders of the Company, which is to be filed with the SEC pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. This definitive proxy statement relates to a meeting of stockholders involving the election of directors and the portions therefrom required to be set forth in this Form 10-K by Items 10, 11, 12, 13 and 14 are incorporated herein by reference pursuant to General Instruction G(3) to Form 10-K. |
Item 15. | Exhibits and Financial Statement Schedules |
(1) Index and Consolidated Financial Statements |
(2) Financial Statement Schedules required to be filed by Item 8 of this form: |
Charged to Other | ||||||||||||||||||||
Balance at | Charged to | Accounts- | Write-Offs | Balance at | ||||||||||||||||
Beginning | Costs and | Accounts | Net of | End of | ||||||||||||||||
of Period | Expenses | Payable | Recoveries | Period | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Inventory Reserve, deducted from asset accounts
|
||||||||||||||||||||
52 Weeks Ended January 29, 2005
|
$ | 12,274 | $ | 17,808 | $ | 9,856 | $ | 25,134 | $ | 14,804 | ||||||||||
52 Weeks Ended January 31, 2004
|
11,797 | 12,901 | 10,899 | 23,323 | 12,274 | |||||||||||||||
52 Weeks Ended February 1, 2003
|
10,400 | 14,071 | 10,214 | 22,888 | 11,797 |
33
Exhibit | ||||
Number | Description | |||
3 | .1 | Amended and Restated Certificate of Incorporation.(1) | ||
3 | .2 | Bylaws.(1) | ||
3 | .3 | Certificate of Designation of Preferences and Rights of Preferred Stock, Series A of the Company.(2) | ||
4 | .1 | Rights Agreement, dated October 25, 2004, between the Company and The Bank of New York, as Rights Agent.(2) | ||
10 | .1 | Separation Agreement, dated as of January 1, 2002, between Barnes & Noble and GameStop Corp.(3) | ||
10 | .2 | Tax Disaffiliation Agreement, dated as of January 1, 2002, between Barnes & Noble and GameStop Corp.(1) | ||
10 | .3 | Insurance Agreement, dated as of January 1, 2002, between Barnes & Noble and GameStop Corp.(1) | ||
10 | .4 | Operating Agreement, dated as of January 1, 2002, between Barnes & Noble and GameStop Corp.(1) | ||
10 | .5 | Amended and Restated 2001 Incentive Plan. | ||
10 | .6 | Supplemental Compensation Plan. | ||
10 | .7 | Form of Option Agreement. | ||
10 | .8 | Lease, dated as of March 6, 1997, between RREEF Mid-Cities Industrial L.P. and Babbages Etc. LLC.(1) | ||
10 | .9 | First Amendment to Lease, dated as of December 30, 1999, between RREEF Mid-Cities Industrial L.P. and Babbages Etc. LLC.(1) | ||
10 | .10 | Amended and Restated Credit Agreement, dated as of June 21, 2004.(4) | ||
10 | .11 | Amended and Restated Security Agreement, dated as of June 21, 2004.(4) | ||
10 | .12 | Amended and Restated Securities Collateral Pledge Agreement, dated as of June 21, 2004, between GameStop Corp. and Fleet Retail Group, Inc., as Administrative Agent.(4) | ||
10 | .13 | Amended and Restated Securities Collateral Pledge Agreement, dated as of June 21, 2004, between GameStop, Inc. and Fleet Retail Group, Inc., as Administrative Agent.(4) | ||
10 | .14 | Securities Collateral Pledge Agreement, dated as of June 21, 2004, between GameStop of Texas (GP), LLC and Fleet Retail Group, Inc., as Administrative Agent.(4) | ||
10 | .15 | Securities Collateral Pledge Agreement, dated as of June 21, 2004, between GameStop (LP), LLC and Fleet Retail Group, Inc., as Administrative Agent.(4) | ||
10 | .16 | Amended and Restated Patent and Trademark Securities Agreement, dated as of June 21, 2004.(4) | ||
10 | .17 | Stock Purchase Agreement, dated as of October 1, 2004, by and among the Company, B&N Gamestop Holding Corp. and Barnes & Noble.(5) | ||
10 | .18 | Promissory Note, dated as of October 1, 2004, made by the Company in favor of B&N GameStop Holding Corp.(5) | ||
14 | .1 | Code of Ethics for Senior Financial Officers.(6) | ||
21 | .1 | Subsidiaries. | ||
23 | .1 | Consent of BDO Seidman, LLP | ||
31 | .1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
34
Exhibit
Number
Description
31
.2
Certification of Chief Financial Officer pursuant to
Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32
.1
Certification of Chief Executive Officer pursuant to
Rule 13a-14(b) under the Securities Exchange Act of 1934
and 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32
.2
Certification of Chief Financial Officer pursuant to
Rule 13a-14(b) under the Securities Exchange Act of 1934
and 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(1) | Incorporated by reference to the Registrants Amendment No. 3 to Form S-1 filed with the Securities and Exchange Commission on January 24, 2002 (No. 333-68294). |
(2) | Incorporated by reference to the Registrants Form 8-K filed with the Securities and Exchange Commission on October 28, 2004. |
(3) | Incorporated by reference to the Registrants Amendment No. 4 to Form S-1 filed with the Securities and Exchange Commission on February 5, 2002 (No. 333-68294). |
(4) | Incorporated by reference to the Registrants Form 10-Q for the fiscal quarter ended July 31, 2004 filed with the Securities and Exchange Commission on September 7, 2004. |
(5) | Incorporated by reference to the Registrants Form 8-K filed with the Securities and Exchange Commission on October 5, 2004. |
(6) | Incorporated by reference to the Registrants Form 10-K for the fiscal year ended January 31, 2004 filed with the Securities and Exchange Commission on April 14, 2004. |
35
GAMESTOP CORP. |
By: | /s/ R. Richard Fontaine |
|
|
R. Richard Fontaine | |
Chairman of the Board and | |
Chief Executive Officer |
Name | Capacity | Date | ||||
/s/
R. Richard Fontaine
|
Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer) | April 11, 2005 | ||||
/s/
David W. Carlson
|
Executive Vice President, Chief Financial Officer and Assistant Secretary (Principal Accounting and Financial Officer) | April 11, 2005 | ||||
/s/
Daniel A. DeMatteo
|
Vice Chairman and Chief Operating Officer and Director | April 11, 2005 | ||||
/s/
Michael N. Rosen
|
Secretary and Director | April 11, 2005 | ||||
/s/
Leonard Riggio
|
Director | April 11, 2005 | ||||
/s/
Stephanie M. Shern
|
Director | April 11, 2005 | ||||
/s/
Edward A. Volkwein
|
Director | April 11, 2005 | ||||
/s/
Gerald R.
Szczepanski
|
Director | April 11, 2005 |
36
Page | |||||
GameStop Corp. Consolidated Financial Statements:
|
|||||
F-2 | |||||
Consolidated Financial Statements:
|
|||||
F-5 | |||||
F-6 | |||||
F-7 | |||||
F-8 | |||||
F-9 |
F-1
/s/ BDO SEIDMAN, LLP | |
|
|
BDO Seidman, LLP |
F-2
F-3
F-4
Table of Contents
/s/ BDO
SEIDMAN, LLP
BDO Seidman, LLP
Table of Contents
F-5
F-6
F-7
F-8
F-9
F-10
F-11
F-12
F-13
F-14
F-15
F-16
F-17
F-18
F-19
F-20
F-21
F-22
F-23
F-24
F-25
F-26
F-27
Table of Contents
52 Weeks
52 Weeks
52 Weeks
Ended
Ended
Ended
January 29,
January 31,
February 1,
2005
2004
2003
(In thousands, except per share data)
$
1,842,806
$
1,578,838
$
1,352,791
1,328,611
1,142,264
1,009,491
514,195
436,574
343,300
378,029
302,703
233,075
37,019
29,487
23,154
99,147
104,384
87,071
(1,919
)
(1,467
)
(1,998
)
2,155
663
1,368
98,911
105,188
87,701
37,985
41,721
35,297
$
60,926
$
63,467
$
52,404
$
1.11
$
1.13
$
0.93
54,662
56,330
56,289
$
1.05
$
1.06
$
0.87
57,796
59,764
60,419
Table of Contents
Accumulated
Common Stock
Additional
Other
Paid in
Comprehensive
Retained
Treasury
Shares
Class A
Shares
Class B
Capital
Income
Earnings
Stock
Total
(In thousands)
$
36,009
$
36
$
(6,237
)
$
$
2,216
$
$
(3,985
)
20,764
21
347,318
347,339
286
2,917
2,917
150,000
150,000
52,404
52,404
21,050
21
36,009
36
493,998
54,620
548,675
63,467
296
63,763
1,943
2
16,599
16,601
(35,006
)
(35,006
)
22,993
23
36,009
36
510,597
296
118,087
(35,006
)
594,033
60,926
271
61,197
1,196
1
14,555
14,556
(6,107
)
(6
)
(24,383
)
(87,392
)
(111,781
)
(14,994
)
(14,994
)
24,189
$
24
29,902
$
30
$
500,769
$
567
$
91,621
$
(50,000
)
$
543,011
Table of Contents
52 Weeks
52 Weeks
52 Weeks
Ended
Ended
Ended
January 29,
January 31,
February 1,
2005
2004
2003
(In thousands)
$
60,926
$
63,467
$
52,404
37,019
29,487
23,154
17,808
12,901
14,071
432
313
242
4,752
5,713
4,710
5,082
9,702
1,906
382
213
205
5,349
338
329
1,644
937
498
(96
)
(298
)
(267
)
(1,954
)
(963
)
(10,578
)
(72,712
)
(37,089
)
(4,060
)
(4,111
)
(1,872
)
9,722
(12,775
)
17,872
40,056
36,374
145,987
71,277
93,969
(98,305
)
(64,484
)
(40,628
)
(62
)
(3,027
)
(825
)
(522
)
(788
)
(99,192
)
(68,033
)
(41,416
)
347,339
9,474
6,899
1,011
(250,000
)
(2,296
)
(14,994
)
(35,006
)
(111,781
)
74,020
(37,500
)
377
(80,781
)
(30,403
)
98,727
73
34
(33,913
)
(27,125
)
151,280
204,905
232,030
80,750
$
170,992
$
204,905
$
232,030
Table of Contents
1.
Summary of Significant Accounting Policies
Background and Basis of Presentation
Consolidation
Year-End
Table of Contents
Cash and Cash Equivalents
Merchandise Inventories
Property and Equipment
Goodwill
Table of Contents
Revenue Recognition
Pre-Opening Expenses
Closed Store Expenses
Advertising Expenses
Income Taxes
Table of Contents
Lease Accounting
Foreign Currency Translation
Table of Contents
Net Earnings Per Common Share
Stock Options
52 Weeks
52 Weeks
52 Weeks
Ended
Ended
Ended
January 29,
January 31,
February 1,
2005
2004
2003
(In thousands, except per share data)
$
60,926
$
63,467
$
52,404
9,405
7,888
8,287
$
51,521
$
55,579
$
44,117
$
1.11
$
1.13
$
0.93
$
0.94
$
0.99
$
0.78
$
1.05
$
1.06
$
0.87
$
0.89
$
0.93
$
0.73
Table of Contents
52 Weeks
52 Weeks
52 Weeks
Ended
Ended
Ended
January 29,
January 31,
February 1,
2005
2004
2003
60.1
%
61.6
%
61.9
%
3.3
%
3.2
%
4.6
%
6.0
6.0
6.0
0
%
0
%
0
%
Use of Estimates
Fair Values of Financial Instruments
Vendor Concentration
Classifications
Table of Contents
Reclassifications
2.
Vendor Arrangements
Table of Contents
52 Weeks
52 Weeks
Ended
Ended
January 31,
February 1,
2004
2003
(In thousands, except per
share data)
$
1,578,838
$
1,352,791
1,138,596
984,530
440,242
368,261
302,703
258,371
29,487
23,154
108,052
86,736
(1,467
)
(1,998
)
663
1,368
108,856
87,366
43,108
35,160
$
65,748
$
52,206
$
1.17
$
0.93
56,330
56,289
$
1.10
$
0.86
59,764
60,419
3.
Acquisitions
Table of Contents
4.
Computation of Net Earnings per Common Share
52 Weeks
52 Weeks
52 Weeks
Ended
Ended
Ended
January 29,
January 31,
February 1,
2005
2004
2003
(In thousands, except per share data)
$
60,926
$
63,467
$
52,404
54,662
56,330
56,289
3,134
3,434
4,130
57,796
59,764
60,419
$
1.11
$
1.13
$
0.93
$
1.05
$
1.06
$
0.87
Anti-
Range of
Dilutive
Exercise
Expiration
Shares
Prices
Dates
(In thousands, except per share data)
30
$21.25
2012
3,831
$18.00-$21.25
Through 2013
4,372
$16.48-$21.25
Through 2012
5.
Receivables, Net
January 29,
January 31,
2005
2004
(In thousands)
$
5,946
$
5,147
4,259
4,787
(393
)
(389
)
$
9,812
$
9,545
Table of Contents
6.
Accrued Liabilities
January 29,
January 31,
2005
2004
(In thousands)
$
35,213
$
26,797
9,484
7,255
6,090
7,378
5,750
6,525
5,129
5,033
33,317
26,851
$
94,983
$
79,839
7.
Goodwill
Goodwill
(In thousands)
$
317,957
2,869
320,826
62
$
320,888
8.
Debt
Table of Contents
9.
Comprehensive Income
52 Weeks
52 Weeks
52 Weeks
Ended
Ended
Ended
January 29,
January 31,
February 1,
2005
2004
2003
(In thousands)
$
60,926
$
63,467
$
52,404
271
296
$
61,197
$
63,763
$
52,404
10.
Leases
52 Weeks
52 Weeks
52 Weeks
Ended
Ended
Ended
January 29,
January 31,
February 1,
2005
2004
2003
(In thousands)
$
77,058
$
58,016
$
47,316
4,471
7,418
10,704
$
81,529
$
65,434
$
58,020
Table of Contents
Year Ended
Amount
(In thousands)
$
70,045
63,084
57,756
53,162
45,689
154,646
$
444,382
11.
Litigation
Table of Contents
12.
Income Taxes
52 Weeks
52 Weeks
52 Weeks
Ended
Ended
Ended
January 29,
January 31,
February 1,
2005
2004
2003
(In thousands)
$
24,330
$
21,671
$
22,945
4,455
4,733
5,736
(634
)
(98
)
28,151
26,306
28,681
4,578
4,690
3,768
6
1,023
942
168
4,752
5,713
4,710
5,082
9,702
1,906
$
37,985
$
41,721
$
35,297
52 Weeks
52 Weeks
52 Weeks
Ended
Ended
Ended
January 29,
January 31,
February 1,
2005
2004
2003
35.0
%
35.0
%
35.0
%
3.5
4.6
5.2
0.4
(0.1
)
0.0
(0.5
)
0.2
0.0
38.4
%
39.7
%
40.2
%
Table of Contents
January 29,
January 31,
2005
2004
(In thousands)
$
59
$
62
1,827
1,694
3,640
4,200
32
1,511
273
1,124
1,912
3,438
1,353
(196
)
(480
)
11,435
9,014
(20,131
)
(15,814
)
(2,561
)
(368
)
(200
)
(4,073
)
(4,170
)
876
1,100
(26,257
)
(19,084
)
$
(14,822
)
$
(10,070
)
$
5,435
$
7,661
$
(20,257
)
$
(17,731
)
13.
Stock Option Plan
Table of Contents
Weighted-Average
Shares
Exercise Price
(Thousands
of shares)
8,811
$
4.03
4,545
$
18.02
(287
)
$
3.53
(309
)
$
12.10
12,760
$
8.83
1,119
$
12.19
(1,943
)
$
3.55
(629
)
$
16.55
11,307
$
9.63
1,676
$
18.40
(1,196
)
$
7.93
(381
)
$
16.81
11,406
$
10.86
Options Outstanding
Options Exercisable
Weighted-
Weighted-
Weighted-
Number
Average
Average
Number
Average
Outstanding
Remaining
Contractual
Exercisable
Exercise
Range of Exercise Prices
(000s)
Life
Price
(000s)
Price
5,643
6.26
$
4.31
5,643
$
4.31
740
8.18
$
11.89
194
$
11.84
199
8.98
$
15.28
43
$
15.53
4,824
7.66
$
18.19
2,220
$
18.03
11,406
7.03
$
10.86
8,100
$
8.31
14.
Employees Defined Contribution Plan
Table of Contents
15.
Certain Relationships and Related Transactions
16.
Supplemental Cash Flow Information
52 Weeks
52 Weeks
52 Weeks
Ended
Ended
Ended
January 29,
January 31,
February 1,
2005
2004
2003
(In thousands)
$
1,447
$
308
$
47,236
19,903
56,555
14,641
62
2,869
252
158
$
62
$
3,279
$
$
$
$
150,000
Table of Contents
17.
Repurchase of Equity Securities
18.
Shareholders Equity
Table of Contents
19.
Unaudited Quarterly Financial Information
Fiscal Year Ended January 29, 2005
Fiscal Year Ended January 31, 2004
1st
2nd
3rd
4th
1st
2nd
3rd
4th
Quarter
Quarter
Quarter
Quarter
Quarter
Quarter
Quarter
Quarter
(In thousands)
$
371,736
$
345,593
$
416,737
$
708,740
$
321,741
$
305,674
$
326,042
$
625,381
105,540
107,207
120,330
181,118
85,441
88,983
98,474
163,676
10,770
12,545
19,852
55,980
10,689
10,849
17,891
64,955
6,678
7,672
12,059
34,517
6,611
6,606
10,693
39,557
0.12
0.14
0.22
0.68
0.12
0.12
0.19
0.71
0.11
0.13
0.21
0.64
0.11
0.11
0.18
0.67
(1)
Includes the following pre-tax charges:
$2,750 in the first quarter of the fiscal year ended
January 29, 2005 attributable to the California labor
litigation settlement,
$2,800 in the third quarter of the fiscal year ended
January 29, 2005 attributable to the professional fees
related to the spin-off by Barnes & Noble of the
Companys Class B common shares, and
$5,373 in the fourth quarter of the fiscal year ended
January 29, 2005 attributable to correcting the
Companys method of accounting for rent expense and
depreciation expense on leasehold improvements for those leases
that do not contain a renewal option.
Table of Contents
(2)
Includes the following after-tax charges:
$1,708 in the first quarter of the fiscal year ended
January 29, 2005 attributable to the California labor
litigation settlement,
$1,739 in the third quarter of the fiscal year ended
January 29, 2005 attributable to the professional fees
related to the spin-off by Barnes & Noble of the
Companys Class B common shares, and
$3,312 in the fourth quarter of the fiscal year ended
January 29, 2005 attributable to correcting the
Companys method of accounting for rent expense and
depreciation expense on leasehold improvements for those leases
that do not contain a renewal option.
(3)
Includes the following charges per basic and diluted share:
$0.03 per basic and diluted share in the first quarter of
the fiscal year ended January 29, 2005 attributable to the
California labor litigation settlement,
$0.03 per basic and diluted share in the third quarter of
the fiscal year ended January 29, 2005 attributable to the
professional fees related to the spin-off by Barnes &
Noble of the Companys Class B common shares, and
$0.07 and $0.06 per basic and diluted share, respectively,
in the fourth quarter of the fiscal year ended January 29,
2005 attributable to correcting the Companys method of
accounting for rent expense and depreciation expense on
leasehold improvements for those leases that do not contain a
renewal option.
Table of Contents
Exhibit
Number
Description
3
.1
Amended and Restated Certificate of Incorporation.(1)
3
.2
Bylaws.(1)
3
.3
Certificate of Designation of Preferences and Rights of
Preferred Stock, Series A of the Company.(2)
4
.1
Rights Agreement, dated October 25, 2004, between the
Company and The Bank of New York, as Rights Agent.(2)
10
.1
Separation Agreement, dated as of January 1, 2002, between
Barnes & Noble and GameStop Corp.(3)
10
.2
Tax Disaffiliation Agreement, dated as of January 1, 2002,
between Barnes & Noble and GameStop Corp.(1)
10
.3
Insurance Agreement, dated as of January 1, 2002, between
Barnes & Noble and GameStop Corp.(1)
10
.4
Operating Agreement, dated as of January 1, 2002, between
Barnes & Noble and GameStop Corp.(1)
10
.5
Amended and Restated 2001 Incentive Plan.
10
.6
Supplemental Compensation Plan.
10
.7
Form of Option Agreement.
10
.8
Lease, dated as of March 6, 1997, between RREEF Mid-Cities
Industrial L.P. and Babbages Etc. LLC.(1)
10
.9
First Amendment to Lease, dated as of December 30, 1999,
between RREEF Mid-Cities Industrial L.P. and Babbages Etc.
LLC.(1)
10
.10
Amended and Restated Credit Agreement, dated as of June 21,
2004.(4)
10
.11
Amended and Restated Security Agreement, dated as of
June 21, 2004.(4)
10
.12
Amended and Restated Securities Collateral Pledge Agreement,
dated as of June 21, 2004, between GameStop Corp. and Fleet
Retail Group, Inc., as Administrative Agent.(4)
10
.13
Amended and Restated Securities Collateral Pledge Agreement,
dated as of June 21, 2004, between GameStop, Inc. and Fleet
Retail Group, Inc., as Administrative Agent.(4)
10
.14
Securities Collateral Pledge Agreement, dated as of
June 21, 2004, between GameStop of Texas (GP), LLC and
Fleet Retail Group, Inc., as Administrative Agent.(4)
10
.15
Securities Collateral Pledge Agreement, dated as of
June 21, 2004, between GameStop (LP), LLC and Fleet Retail
Group, Inc., as Administrative Agent.(4)
10
.16
Amended and Restated Patent and Trademark Securities Agreement,
dated as of June 21, 2004.(4)
10
.17
Stock Purchase Agreement, dated as of October 1, 2004, by
and among the Company, B&N Gamestop Holding Corp. and
Barnes & Noble.(5)
10
.18
Promissory Note, dated as of October 1, 2004, made by the
Company in favor of B&N GameStop Holding Corp.(5)
14
.1
Code of Ethics for Senior Financial Officers.(6)
21
.1
Subsidiaries.
23
.1
Consent of BDO Seidman, LLP
31
.1
Certification of Chief Executive Officer pursuant to
Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31
.2
Certification of Chief Financial Officer pursuant to
Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Table of Contents
Exhibit
Number
Description
32
.1
Certification of Chief Executive Officer pursuant to
Rule 13a-14(b) under the Securities Exchange Act of 1934
and 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32
.2
Certification of Chief Financial Officer pursuant to
Rule 13a-14(b) under the Securities Exchange Act of 1934
and 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(1)
Incorporated by reference to the Registrants Amendment
No. 3 to Form S-1 filed with the Securities and
Exchange Commission on January 24, 2002 (No. 333-68294).
(2)
Incorporated by reference to the Registrants Form 8-K
filed with the Securities and Exchange Commission on
October 28, 2004.
(3)
Incorporated by reference to the Registrants Amendment
No. 4 to Form S-1 filed with the Securities and
Exchange Commission on February 5, 2002 (No. 333-68294).
(4)
Incorporated by reference to the Registrants
Form 10-Q for the fiscal quarter ended July 31, 2004
filed with the Securities and Exchange Commission on
September 7, 2004.
(5)
Incorporated by reference to the Registrants Form 8-K
filed with the Securities and Exchange Commission on
October 5, 2004.
(6)
Incorporated by reference to the Registrants
Form 10-K for the fiscal year ended January 31, 2004
filed with the Securities and Exchange Commission on
April 14, 2004.
Exhibit 10.5
AMENDED AND RESTATED
GAMESTOP CORP.
2001 INCENTIVE PLAN
GAMESTOP CORP. , a Delaware corporation (the Company), hereby establishes and adopts the following 2001 Incentive Plan (the Plan).
RECITALS
WHEREAS, the Company desires to encourage high levels of performance by those individuals who are key to the success of the Company or any parent, subsidiary or affiliate of the Company, to attract new individuals who are highly motivated and who will contribute to the success of the Company and to encourage such individuals to remain as officers, employees, consultants, advisors and/or directors of the Company and its parent, subsidiaries and affiliates by increasing their proprietary interest in the Companys growth and success.
WHEREAS, to attain these ends, the Company has formulated the Plan embodied herein to authorize the granting of incentive awards through grants of options to purchase shares (Options), grants of share appreciation rights, grants of Stock Purchase Awards (hereafter defined), grants of Restricted Share Awards (hereafter defined), or any other award made under the Plan to those persons (each such person a Participant) whose judgment, initiative and efforts are, have been, or are expected to be responsible for the success of the Company or any parent, subsidiary or affiliate of the Company.
NOW, THEREFORE, the Company hereby constitutes, establishes and adopts the following Plan and agrees to the following provisions:
ARTICLE 1.
PURPOSE OF THE PLAN
1.1. Purpose . The purpose of the Plan is to assist the Company or any parent, subsidiary or affiliate of the Company in attracting and retaining selected individuals to serve as directors, officers, consultants, advisors, and employees of the Company or any parent, subsidiary or affiliate of the Company who will contribute to the Companys success and to achieve long-term objectives which will inure to the benefit of all shareholders of the Company through the additional incentive inherent in the ownership of the Companys Class A Common Stock, par value $.01 per share (the Shares). Options granted under the Plan will be either incentive stock options, intended to qualify as such under the provisions of section 422 of the Internal Revenue Code of 1986, as from time to time amended (the Code), or nonqualified stock options. For purposes of the Plan, the terms subsidiary and parent shall mean subsidiary corporation and parent corporation, respectively, as such terms are defined in sections 424(f) and 424(e) of the Code, and affiliate shall have the meaning set forth in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the Exchange Act). For purposes of the Plan, the term Award shall include a grant of an Option, a grant of a share appreciation right, a grant of a Stock Purchase Award, a grant of a Restricted Share Award, or any other award made under the terms of the Plan.
1
ARTICLE 2.
SHARES SUBJECT TO AWARDS
2.1. Number of Shares . Subject to the adjustment provisions of Section 9.9 hereof, the aggregate number of Shares which may be issued under Awards under the Plan, whether pursuant to Options, Stock Purchase Awards, Restricted Share Awards or any other award under the Plan shall not exceed 20,000,000 Shares. No Options to purchase fractional Shares shall be granted and no fractional shares shall be issued under the Plan. For purposes of this Section 2.1, the Shares that shall be counted toward such limitation shall include all Shares:
(1) issued or issuable pursuant to Options that have been or may be exercised;
(2) issued or issuable pursuant to Stock Purchase Awards;
(3) issued as, or subject to issuance as a Restricted Share Award; and
(4) issued or issuable under any other award granted under the terms of the Plan.
2.2. Shares Subject to Terminated Awards . The Shares covered by any unexercised portions of terminated Options granted under Articles 4 and 6, Shares forfeited as provided in Section 8.2(a) and Shares subject to any Awards which are otherwise surrendered by the Participant without receiving any payment or other benefit with respect thereto may again be subject to new Awards under the Plan, other than grants of Options intended to qualify as incentive stock options. In the event the purchase price of an Option is paid in whole or in part through the delivery of Shares, the number of Shares issuable in connection with the exercise of the Option shall not again be available for the grant of Awards under the Plan. Shares subject to Options, or portions thereof, which have been surrendered in connection with the exercise of share appreciation rights shall not again be available for the grant of Awards under the Plan.
2.3. Character of Shares . Shares delivered under the Plan may be authorized and unissued Shares or Shares acquired by the Company, or both.
2.4. Limitations on Grants to Individual Participant . Subject to adjustments pursuant to the provisions of Section 9.9 hereof, the maximum number of Shares with respect to which Options or stock appreciation rights may be granted hereunder to any employee during any fiscal year of the Company shall be 4,500,000 Shares (the Limitation). If an Option is canceled, the canceled Option shall continue to be counted toward the Limitation for the year granted. An Option (or a share appreciation right) that is repriced during any fiscal year is treated as the cancellation of the Option (or share appreciation right) and a grant of a new Option (or share appreciation right) for purposes of the Limitation for that fiscal year.
ARTICLE 3.
ELIGIBILITY AND ADMINISTRATION
3.1. Awards to Employees, Directors and Others . (a) Participants who receive Options under Articles 4 and 6 hereof (including share appreciation rights under Article 5) (Optionees), Stock Purchase Awards under Article 7 or Restricted Share Awards or other Share-based awards under Article 8 (in either case, a Participant) shall consist of such key officers, employees, consultants, advisors and directors of the Company or any parent, subsidiary or affiliate of the Company as the Committee (hereinafter defined) shall select from time to time. The Committees designation of an Optionee or Participant in any year shall not require the Committee to designate such person to receive Awards or grants in any other year. The designation of an Optionee or Participant to receive Awards or grants under one portion of the Plan shall not require the Committee to include such Optionee or Participant under other portions of the Plan.
2
(b) No Option that is intended to qualify as an incentive stock option may be granted (x) to any individual that is not an employee of the Company or any parent, subsidiary or affiliate thereof, or (y) to any employee who, at the time of such grant, owns, directly or indirectly (within the meaning of Sections 422(b)(6) and 424(d) of the Code), shares possessing more than 10% of the total combined voting power of all classes of shares of the Company or any parent, subsidiary or affiliate of the Company, unless at the time of such grant, (i) the option price is fixed at not less than 110% of the Fair Market Value (as defined below) of the Shares subject to such Option, determined on the date of the grant, and (ii) the exercise of such Option is prohibited by its terms after the expiration of five years from the date such Option is granted.
3.2. Administration . (a) The Plan shall be administered by a committee (the Committee) consisting of not fewer than two directors of the Company (the directors of the Company being hereinafter referred to as the Directors), as designated by the Directors. The Directors may remove from, add members to, or fill vacancies in the Committee. Unless otherwise determined by the Directors, each member of the Committee is intended to be a Non-Employee Director within the meaning of Rule 16b-3 (or any successor rule) of the Exchange Act and an outside director within the meaning of Section 162(m)(4)(C)(i) of the Code and the regulations thereunder.
Any Award to a member of the Committee shall be on terms consistent with Awards made to other Directors who are not members of the Committee and who are not employees, except where the Award is approved or ratified by the Compensation Committee (excluding persons who are also members of the Committee) of the Board of Directors of the Company.
(b) The Committee is authorized, subject to the provisions of the Plan, to establish such rules and regulations as it may deem appropriate for the conduct of meetings and proper administration of the Plan. All actions of the Committee shall be taken by majority vote of its members. The Committee is also authorized, subject to the provisions of the Plan, to make provisions in various Awards pertaining to a change of control of the Company and to amend or modify existing Awards.
(c) Subject to the provisions of the Plan, the Committee shall have authority, in its sole discretion, to interpret the provisions of the Plan and any Award thereunder and, subject to the requirements of applicable law, including Rule 16b-3 of the Exchange Act, to prescribe, amend, and rescind rules and regulations relating to the Plan or any Award thereunder as it may deem necessary or advisable. All decisions made by the Committee pursuant to the provisions of the Plan shall be final, conclusive and binding on all persons, including the Company, its shareholders, Directors and employees, and Plan participants and beneficiaries.
3.3. Designation of Consultants/Liability . (a) The Committee may designate employees of the Company and professional advisors to assist the Committee in the administration of this Plan and may grant authority to employees to execute agreements or other documents on behalf of the Committee.
(b) The Committee may employ such legal counsel, consultants and agents as it may deem desirable for the administration of this Plan and may rely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent. Expenses incurred by the Committee or the Board in the engagement of any such counsel, consultant or agent shall be paid by the Company. The Committee, its members and any person designated pursuant to Section 3.3(a) shall not be liable for any action or determination made in good faith with respect to this Plan. To the maximum extent permitted by applicable law, no officer or former officer of the Company or member or former member of the Committee or of the Board shall be liable for any action or determination made in good faith with respect to this Plan or any Award granted under it. To the maximum extent permitted by applicable law and to the extent not covered by insurance, each officer or former officer and member or former member of the Committee or of the Board shall be indemnified and held harmless by the Company against any cost or expense (including reasonable fees of counsel reasonably acceptable to the Company) or liability (including any sum paid in settlement of a claim with the approval of the Company), and advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act or omission
3
to act in connection with this Plan, except to the extent arising out of such officers or former officers, members or former members own fraud or bad faith. Such indemnification shall be in addition to any rights of indemnification the officers, directors or members or former officers, directors or members may have under applicable law. Notwithstanding anything else herein, this indemnification will not apply to the actions or determinations made by an individual with regard to Awards granted to him or her under this Plan.
ARTICLE 4.
OPTIONS
4.1. Grant of Options . The Committee shall determine, within the limitations of the Plan, those key officers, employees, consultants, advisors and Directors of the Company or any parent, subsidiary or affiliate of the Company to whom Options are to be granted under the Plan, the number of Shares that may be purchased under each such Option, the option price and other terms of each such Option, and shall designate such Options at the time of the grant as either incentive stock options or nonqualified stock options; provided, however, that Options granted to employees of an affiliate (that is not also a parent or a subsidiary) or to non-employees of the Company may only be nonqualified stock options.
All Options granted pursuant to this Article 4 and Article 6 herein shall be authorized by the Committee and shall be evidenced in writing by share option agreements (Share Option Agreements) in such form and containing such terms and conditions as the Committee shall determine that are not inconsistent with the provisions of the Plan, and, with respect to any Share Option Agreement granting Options that are intended to qualify as incentive stock options, are not inconsistent with Section 422 of the Code. The granting of an Option pursuant to the Plan shall impose no obligation on the recipient to exercise such Option. Any individual who is granted an Option pursuant to this Article 4 and Article 6 herein may hold more than one Option granted pursuant to such Articles at the same time and may hold both incentive stock options and nonqualified stock options at the same time. To the extent that any Option does not qualify as an incentive stock option (whether because of its provisions, the time or manner of its exercise or otherwise) such Option or the portion thereof which does not so qualify shall constitute a separate nonqualified stock option.
4.2. Option Price . (a) Subject to Section 3.1(b), the option exercise price per each Share purchasable under any incentive stock option granted pursuant to this Article 4, any nonqualified stock option granted pursuant to Article 6 herein, or Options intended to be performance-based compensation under Section 162(m) of the Code shall not be less than 100% of the Fair Market Value (as hereinafter defined) of such Share on the date of the grant of such Option.
(b) The option price per share of each Share purchasable under any nonqualified stock option that is not intended to be performance-based compensation under Section 162(m) of the Code and is granted pursuant to this Article 4 shall be such amount as the Committee shall determine at the time of the grant of such Option.
4.3. Conditions . Certain Options to be granted under the Plan (the Replacement Options) are intended to provide Optionees with Options that are the economic equivalent of options received by such Optionees between December 5, 2000 and the date of the adoption of this Plan from GameStop, Inc. to purchase shares of Class B Common Stock of GameStop, Inc. (collectively, the Prior Options). Any Replacement Option shall be in lieu of, and shall replace in its entirety, the equivalent Prior Option, which Prior Option shall be null and void and of no further force or effect, and any Share Option Agreement granting any Replacement Option shall so provide.
4.4. Other Provisions . Options granted pursuant to this Article 4 shall be made in accordance with the terms and provisions of Article 9 hereof and any other applicable terms and provisions of the Plan.
4
ARTICLE 5.
SHARE APPRECIATION RIGHTS
5.1. Grant and Exercise . Share appreciation rights may be granted in conjunction with all or part of any Option granted under the Plan provided such rights are granted at the time of the grant of such Option. A share appreciation right is a right to receive cash or whole Shares, as provided in this Article 5, in lieu of the purchase of a Share under a related Option. A share appreciation right or applicable portion thereof shall terminate and no longer be exercisable upon the termination or exercise of the related Option, and a share appreciation right granted with respect to less than the full number of Shares covered by a related Option shall not be reduced until, and then only to the extent that, the exercise or termination of the related Option exceeds the number of Shares not covered by the share appreciation right. A share appreciation right may be exercised by the holder thereof (the Holder), in accordance with Section 5.2 of this Article 5, by giving written notice thereof to the Company and surrendering the applicable portion of the related Option. Upon giving such notice and surrender, the Holder shall be entitled to receive an amount determined in the manner prescribed in Section 5.2 of this Article 5. Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent the related share appreciation rights have been exercised.
5.2. Terms and Conditions . Share appreciation rights shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, including the following:
(a) Share appreciation rights shall be exercisable only at such time or times and to the extent that the Options to which they relate shall be exercisable in accordance with the provisions of the Plan.
(b) Upon the exercise of a share appreciation right, a Holder shall be entitled to receive up to, but no more than, an amount in cash or whole Shares equal to the excess of the then Fair Market Value of one Share over the option exercise price per Share specified in the related Option multiplied by the number of Shares in respect of which the share appreciation right shall have been exercised. The Holder shall specify in his written notice of exercise, whether payment shall be made in cash or in whole Shares (unless otherwise provided in the agreement governing the share appreciation right). Each share appreciation right may be exercised only at the time and so long as a related Option, if any, would be exercisable or as otherwise permitted by applicable law.
(c) Upon the exercise of a share appreciation right, the Option or part thereof to which such share appreciation right is related shall be deemed to have been exercised for the purpose of the limitation of the number of Shares to be issued under the Plan, as set forth in Section 2.1 of the Plan.
(d) With respect to share appreciation rights granted in connection with an Option that is intended to be an incentive stock option, the following shall apply:
(i) No share appreciation right shall be transferable by a Holder otherwise than by will or by the laws of descent and distribution, and share appreciation rights shall be exercisable, during the Holders lifetime, only by the Holder.
(ii) Share appreciation rights granted in connection with an Option may be exercised only when the Fair Market Value of the Shares subject to the Option exceeds the option exercise price at which Shares can be acquired pursuant to the Option.
5
ARTICLE 6.
RELOAD OPTIONS
6.1. Authorization of Reload Options . Concurrently with the award of any Option (such Option hereinafter referred to as the Underlying Option) to any Participant in the Plan, the Committee may grant one or more reload options (each, a Reload Option) to such Participant to purchase for cash or Shares (held for at least six months or such other period to avoid accounting charges against the Companys earnings) a number of Shares as specified below. A Reload Option shall be exercisable for an amount of Shares equal to (i) the number of Shares delivered by the Optionee to the Company to exercise the Underlying Option, and (ii) to the extent authorized by the Committee, the number of Shares used to satisfy any tax withholding requirement incident to the exercise of the Underlying Option, subject to the availability of Shares under the Plan at the time of such exercise. Any Reload Option may provide for the grant, when exercised, of subsequent Reload Options to the extent and upon such terms and conditions consistent with this Article 6, as the Committee in its sole discretion shall specify at or after the time of grant of such Reload Option. Except as otherwise determined by the Committee, a Reload Option will vest and become exercisable six months after the exercise of an Underlying Option or Reload Option whereby the Participant delivers to the Company Shares held by the Optionee for at least six months in payment of the exercise price and/or tax withholding obligations. Notwithstanding the fact that the Underlying Option may be an incentive stock option, a Reload Option is not intended to qualify as an incentive stock option under Section 422 of the Code.
6.2. Reload Option Amendment . Each Share Option Agreement shall state whether the Committee has authorized Reload Options with respect to the Underlying Option. Upon the exercise of an Underlying Option or other Reload Option, the Reload Option will be evidenced by an amendment to the underlying Share Option Agreement.
6.3. Reload Option Price . The option exercise price per Share deliverable upon the exercise of a Reload Option shall be the Fair Market Value of a Share on the date the corresponding Underlying Option is exercised.
6.4. Term and Exercise . Except as otherwise determined by the Committee, each Reload Option vests and is fully exercisable six months after its grant (i.e., six months after the corresponding Underlying Option is exercised). The term of each Reload Option shall be equal to the remaining option term of the Underlying Option.
6.5. Termination of Employment . No additional Reload Options shall be granted to an Optionee when Options and/or Reload Options are exercised pursuant to the terms of this Plan following termination of the Optionees employment unless the Committee, in its sole discretion, shall determine otherwise.
6.6. Applicability of Other Sections . Except as otherwise provided in this Article 6, the provisions of Article 9 applicable to Options shall apply equally to Reload Options.
ARTICLE 7.
STOCK PURCHASE AWARDS
7.1. Grant of Stock Purchase Award . The term Stock Purchase Award means the right to purchase Shares of the Company and to pay for such Shares through a loan made by the Company to the Participant (a Purchase Loan) as set forth in this Article 7. Unless otherwise permitted by law, no executive officer or director of the Company shall be eligible to receive a Stock Purchase Award.
7.2. Terms of Purchase Loans . (a) Purchase Loan . Each Purchase Loan shall be evidenced by a promissory note. The term of the Purchase Loan shall be for a period of years, as determined by the Committee, and the proceeds of the Purchase Loan shall be used exclusively by the Participant for purchase
6
of Shares from the Company at a purchase price equal to the Fair Market Value on the date of the Stock Purchase Award.
(b) Interest on Purchase Loan. A Purchase Loan shall be non-interest bearing or shall bear interest at whatever rate the Committee shall determine (but not in excess of the maximum rate permissible under applicable law), payable in a manner and at such times as the Committee shall determine. Those terms and provisions as the Committee shall determine shall be incorporated into the promissory note evidencing the Purchase Loan.
(c) Forgiveness of Purchase Loan. Subject to Section 7.4 hereof, the Company may forgive the repayment of up to 100% of the principal amount of the Purchase Loan, subject to such terms and conditions as the Committee shall determine and set forth in the promissory note evidencing the Purchase Loan. A Participants Purchase Loan can be prepaid at any time, and from time to time, without penalty.
7.3. Security for Loans . (a) Stock Power and Pledge. Purchase Loans granted to Participants shall be secured by a pledge of the Shares acquired pursuant to the Stock Purchase Award. Such pledge shall be evidenced by a pledge agreement (the Pledge Agreement) containing such terms and conditions as the Committee shall determine. The share certificates for the Shares purchased by a Participant pursuant to a Stock Purchase Award shall be issued in the Participants name, but shall be held by the Company as security for repayment of the Participants Purchase Loan together with a stock power executed in blank by the Participant (the execution and delivery of which by the Participant shall be a condition to the issuance of the Stock Purchase Award). Unless otherwise determined by the Committee, the Participant shall be entitled to exercise all rights applicable to such Shares, including, but not limited to, the right to vote such Shares and the right to receive dividends and other distributions made with respect to such Shares. When the Purchase Loan and any accrued but unpaid interest thereon has been repaid or otherwise satisfied in full, the Company shall deliver to the Participant the share certificates for the Shares purchased by a Participant under the Stock Purchase Award. Purchase Loans shall be recourse or non-recourse with respect to a Participant, as determined by the Committee.
(b) Release and Delivery of Share Certificates During the Term of the Purchase Loan. The Company shall release and deliver to each Participant certificates for Shares purchased by a Participant pursuant to a Stock Purchase Award, in such amounts and on such terms and conditions as the Committee shall determine, which shall be set forth in the Pledge Agreement.
(c) Release and Delivery of Share Certificates Upon Repayment of the Purchase Loan. The Company shall release and deliver to each Participant certificates for the Shares purchased by the Participant under the Stock Purchase Award and then held by the Company, provided the Participant has paid or otherwise satisfied in full the balance of the Purchase Loan and any accrued but unpaid interest thereon. In the event the balance of the Purchase Loan is not repaid, forgiven or otherwise satisfied within 90 days after (i) the date repayment of the Purchase Loan is due (whether in accordance with its term, by reason of acceleration or otherwise), or (ii) such longer time as the Committee, in its discretion, shall provide for repayment or satisfaction, the Company shall retain those Shares then held by the Company in accordance with the Pledge Agreement.
(d) Recourse Purchase Loans. Notwithstanding Sections 7.3(a), (b) and (c) above, in the case of a recourse Purchase Loan, the Committee may make a Purchase Loan on such terms as it determines, including without limitation, not requiring a pledge of the acquired Shares.
7.4. Termination of Employment . (a) Termination of Employment by Death, Disability or by the Company Without Cause; Change of Control. In the event of a Participants termination of employment by reason of death, disability or by the Company without cause, or in the event of a change of control, the Committee shall have the right (but shall not be required) to forgive the remaining unpaid amount (principal and interest) of the Purchase Loan in whole or in part as of the date of such occurrence. Change of Control, disability and cause shall have the respective meanings as set forth in the promissory note evidencing the Purchase Loan.
7
(b) Termination of Employment. Subject to Section 7.4(a) above, in the event of a Participants termination of employment for any reason, the Participant shall repay to the Company the entire balance of the Purchase Loan and any accrued but unpaid interest thereon, which amounts shall become immediately due and payable, unless otherwise determined by the Committee.
7.5. Restrictions on Transfer . No Stock Purchase Award or Shares purchased through such an Award and pledged to the Company as collateral security for the Participants Purchase Loan (and accrued and unpaid interest thereon) may be otherwise pledged, sold, assigned or transferred (other than by will or by the laws of descent and distribution).
ARTICLE 8.
SHARE AWARDS
8.1. Restricted Share Awards . (a) A grant of Shares made pursuant to Sections 8.1 and 8.2 is referred to as a Restricted Share Award. The Committee may grant to any Participant an amount of Shares in such manner, and subject to such terms and conditions relating to vesting, forfeitability and restrictions on delivery and transfer (whether based on performance standards, periods of service or otherwise) as the Committee shall establish (such Shares, Restricted Shares). The terms of any Restricted Share Award granted under this Plan shall be set forth in a written agreement (a Restricted Share Agreement) which shall contain provisions determined by the Committee and not inconsistent with this Plan. The provisions of Restricted Share Awards need not be the same for each Participant receiving such Awards.
(b) Issuance of Restricted Shares. As soon as practicable after the date of grant of a Restricted Share Award by the Committee, the Company shall cause to be transferred on the books of the Company Shares registered in the name of the Company, as nominee for the Participant, evidencing the Restricted Shares covered by the Award; provided, however, such Shares shall be subject to forfeiture to the Company retroactive to the date of grant if a Restricted Share Agreement delivered to the Participant by the Company with respect to the Restricted Shares covered by the Award is not duly executed by the Participant and timely returned to the Company. All Restricted Shares covered by Awards under this Article 8 shall be subject to the restrictions, terms and conditions contained in the Plan and the Restricted Share Agreement entered into by and between the Company and the Participant. Until the lapse or release of all restrictions applicable to an Award of Restricted Shares, the share certificates representing such Restricted Shares shall be held in custody by the Company or its designee.
(c) Shareholder Rights. Beginning on the date of grant of the Restricted Share Award and subject to execution of the Restricted Share Agreement as provided in Sections 8.1(a) and (b), unless the Restricted Share Agreement provides otherwise, the Participant shall become a shareholder of the Company with respect to all Shares subject to the Restricted Share Agreement and shall have all of the rights of a shareholder, including, but not limited to, the right to vote such Shares and the right to receive distributions made with respect to such Shares; provided, however, that any Shares distributed as a dividend or otherwise with respect to any Restricted Shares as to which the restrictions have not yet lapsed shall be subject to the same restrictions as such Restricted Shares and shall be represented by book entry and held as prescribed in Section 8.1(b).
(d) Restriction on Transferability. None of the Restricted Shares may be assigned or transferred (other than by will or the laws of descent and distribution), pledged or sold prior to lapse or release of the restrictions applicable thereto.
(e) Delivery of Shares Upon Release of Restrictions. Upon expiration or earlier termination of the forfeiture period without a forfeiture and the satisfaction of or release from any other conditions prescribed by the Committee, the restrictions applicable to the Restricted Shares shall lapse. As promptly as administratively feasible thereafter, subject to the requirements of Section 10.1, the Company shall
8
8.2. Terms of Restricted Shares . (a) Forfeiture of Restricted Shares. Subject to Section 8.2(b), all Restricted Shares shall be forfeited and returned to the Company and all rights of the Participant with respect to such Restricted Shares shall terminate unless the Participant continues in the service of the Company as an employee (or Director, consultant or advisor, as the case may be) until the expiration of the forfeiture period for such Restricted Shares and satisfies any and all other conditions set forth in the Restricted Share Agreement. The Committee in its sole discretion, shall determine the forfeiture period (which may, but need not, lapse in installments) and any other terms and conditions applicable with respect to any Restricted Share Award and the Committee has the discretion to modify the terms and conditions of a Restricted Share Award as long as the rights of the Participant are not impaired.
(b) Waiver of Forfeiture Period. Notwithstanding anything contained in this Article 8 to the contrary, the Committee may, in its sole discretion and subject to the limitations imposed under Code Section 162(m) and the Treasury Regulations thereunder in the case of a Restricted Share Award intended to comply with the performance-based compensation exception under Code Section 162(m), waive the forfeiture period and any other conditions set forth at grant in any Restricted Share Agreement under appropriate circumstances (including the death, disability or retirement of the Participant or a material change in circumstances arising after the date of an Award) as determined by the Committee in its sole discretion and subject to such terms and conditions (including forfeiture of a proportionate number of the Restricted Shares) as the Committee shall deem appropriate.
8.3. Other Share-Based Awards . The Committee is authorized to grant other Share-based awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to Shares, including but not limited to, Shares awarded purely as a bonus and not subject to any restrictions or conditions, Shares in payment of the amounts due under an incentive or performance plan sponsored or maintained by the Company or any parent, subsidiary or affiliate of the Company, share appreciation rights (in tandem with Options), stock equivalent units, and Awards valued by reference to book value of Shares. Subject to the provisions of this Plan, the Committee shall have authority to determine the persons to whom and the time or times at which such Awards shall be made, the number of Shares to be awarded pursuant to or referenced by such Awards, and all other conditions of the Awards. Grants of other Share-based awards may be subject to such conditions, restrictions and contingencies as the Committee may determine which may include, but are not limited to, continuous service with the Company or any parent, subsidiary or affiliate of the Company and/or the achievement of performance goals.
8.4. Objective Performance Goals, Formulae or Standards . If the grant of Restricted Shares or other Share-based awards or the lapse of restrictions or vesting of Restricted Shares or other Share-based awards is based on the attainment of performance goals, the Committee shall establish the performance goals and the applicable vesting percentage of the Restricted Share Award or other Share-based award applicable to each Participant or class of Participants in writing prior to the beginning of the applicable fiscal year or at such later date as otherwise determined by the Committee and while the outcome of the performance goals are substantially uncertain. Such performance goals may incorporate provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances. With regard to a Restricted Share Award or other Share-based award that is intended to comply with Section 162(m) of the Code, to the extent any such provision would create impermissible discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or effect. The applicable performance goals shall be based on one or more of the Performance Criteria set forth in Exhibit A hereto. Other performance goals may be used to the extent such goals satisfy Section 162(m) of the Code or the Award is not intended to satisfy the requirements of Section 162(m) of the Code.
8.5. Annual Limitation on Grants of Shares . Subject to adjustments pursuant to the provisions of Section 9.9 hereof, the maximum number of Shares subject to specified performance goals intended to
9
satisfy the requirements of Section 162(m) of the Code and in accordance with Section 8.4 hereof that may be granted as Restricted Shares to any employee or subject to any other Share-based awards to any employee during any fiscal year of the Company shall be 4,500,000 Shares.
ARTICLE 9.
GENERALLY APPLICABLE PROVISIONS
9.1. Option Period . Subject to Section 3.1(b), the period for which an Option is exercisable shall be set by the Committee and shall not exceed ten years from the date such Option is granted, provided, however, in the case of an Option that is not intended to be an incentive stock option, the Committee may prescribe a period in excess of ten years. After the Option is granted, the option period may not be reduced, subject to expiration due to termination of employment.
9.2. Fair Market Value . If the Shares are listed or admitted to trading on a securities exchange registered under the Exchange Act, unless otherwise required by any applicable provision of the Code the Fair Market Value of a Share as of a specified date shall mean the average of the high and low price of the shares for the day immediately preceding the date as of which Fair Market Value is being determined (or if there was no reported sale on such date, on the last preceding date on which any reported sale occurred) reported on the principal securities exchange on which the Shares are listed or admitted to trading. If the Shares are not listed or admitted to trading on any such exchange but are listed as a national market security on the Nasdaq Stock Market, Inc. (NASDAQ), traded in the over-the-counter market or listed or traded on any similar system then in use, the Fair Market Value of a Share shall be the average of the high and low sales price for the day immediately preceding the date as of which the Fair Market Value is being determined (or if there was no reported sale on such date, on the last preceding date on which any reported sale occurred) reported on such system. If the Shares are not listed or admitted to trading on any such exchange, are not listed as a national market security on NASDAQ and are not traded in the over-the-counter market or listed or traded on any similar system then in use, but are quoted on NASDAQ or any similar system then in use, the Fair Market Value of a Share shall be the average of the closing high bid and low asked quotations on such system for the Shares on the date in question. If the Shares are not publicly traded, the method for determining Fair Market Value shall be determined in good faith by the Committee in its sole discretion. An Option shall be considered granted on the date the Committee acts to grant the Option or such later date as the Committee shall specify.
9.3. Exercise of Options . Vested Options granted under the Plan shall be exercised by the Optionee thereof (or by his or her executors, administrators, guardian or legal representative, or by a Permitted Assignee, as provided in Sections 9.4, 9.6 and 9.7 hereof) as to all or part of the Shares covered thereby, by the giving of written notice of exercise to the Company, specifying the number of Shares to be purchased, accompanied by payment of the full purchase price for the Shares being purchased. Full payment of such purchase price shall be made at the time of exercise and shall be made (i) in cash or by certified check or bank check or wire transfer of immediately available funds, (ii) with the consent of the Committee, unless otherwise prohibited by law, by delivery of a promissory note in favor of the Company upon such terms and conditions as determined by the Committee, (iii) with the consent of Committee, by tendering previously acquired Shares (valued at their Fair Market Value, as determined by the Committee as of the date of tender) that have been owned for a period of at least six months (or such other period to avoid accounting charges against the Companys earnings), or (iv) if Shares are traded on a national securities exchange, the NASDAQ or quoted on a national quotation system sponsored by the National Association of Securities Dealers, Inc. and the Committee authorizes this method of exercise, through the delivery of irrevocable instructions to a broker approved by the Committee to deliver promptly to the Company an amount equal to the purchase price, or (v) with the consent of the Committee, any combination of (i), (ii), (iii) and (iv). In connection with a tender of previously acquired Shares pursuant to clause (iii) above, the Committee, in its sole discretion, may permit the Optionee to constructively exchange Shares already owned by the Optionee in lieu of actually tendering such Shares to the Company, provided that adequate documentation concerning the ownership of the Shares to be constructively tendered is furnished in a form satisfactory to the Committee. The notice of exercise, accompanied by such payment, shall be delivered to
10
the Company at its principal business office or such other office as the Committee may from time to time direct, and shall be in such form, containing such further provisions consistent with the provisions of the Plan, as the Committee may from time to time prescribe. In no event may any Option granted hereunder be exercised for a fraction of a Share. The Company shall, subject to Section 10.4 herein, effect the transfer of Shares purchased pursuant to an Option as soon as practicable, and, within a reasonable time thereafter, such transfer shall be evidenced on the books of the Company. No person exercising an Option shall have any of the rights of a holder of Shares subject to an Option until certificates for such Shares shall have been issued following the exercise of such Option. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such issuance.
9.4. Non-Transferability . Except as otherwise specifically provided herein, no Award shall be transferable by the Participant otherwise than by will or by the laws of descent and distribution. All Options shall be exercisable, during the Participants lifetime, only by the Participant. Any attempt to transfer any Award, except as specifically provided herein, shall be void, and no such Award shall in any manner be subject to the debts, contracts, liabilities, engagements or torts of any person who shall be entitled to such Award, nor shall it be subject to attachment or legal process for or against such person. Notwithstanding the foregoing, the Committee may determine at the time of grant or thereafter that an Award (other than (x) an Option that is intended to be an incentive stock option, (y) a share appreciation right covered by Section 5.2(d)(i) and (z) a Restricted Share Award) that is otherwise not transferable pursuant to this Section 9.4 is transferable to a Family Member (defined below) in whole or in part and in such circumstances, and under such conditions as specified by the Committee. An Award that is transferred to a Family Member pursuant to the preceding sentence (i) may not be subsequently transferred otherwise than by will or by the laws of descent and distribution and (ii) remains subject to the terms of this Plan and the Award agreement. Family Member means, solely to the extent provided for in Securities Act Form S-8, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the employees household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the employee) control the management of assets, and any other entity in which these persons (or the employee) own more than 50% of the voting interests or as otherwise defined in Securities Act Form S-8.
9.5 Termination of Employment . Unless the Committee otherwise determines, in the event of the termination of employment with the Company or any parent, subsidiary or affiliate of the Company of an Optionee who is an employee or the termination or separation from service with the Company or any parent, subsidiary or affiliate of the Company of an advisor, consultant or a Director (who is an Optionee) for any reason (other than death or disability as provided below), any Option(s) granted to such Optionee (or its Permitted Assignee) under this Plan and not previously exercised or expired, to the extent vested on the date of such termination or separation, shall be exercisable as of such termination for a period not to exceed three months after the date of such termination or separation, provided, however, that in no instance may the term of the Option, as so extended, exceed the maximum term established pursuant to Section 3.1(b)(ii) or 9.1 above.
9.6 Death . In the event an Optionee dies while employed by the Company or any parent, subsidiary or affiliate of the Company or while serving as a Director, advisor or consultant of the Company or any parent, subsidiary of the Company, as the case may be, any Option(s) held by such Optionee (or its Permitted Assignee) and not previously expired or exercised shall, to the extent exercisable on the date of death, be exercisable by the estate of such Optionee or by any person who acquired such Option by bequest or inheritance, or by the Permitted Assignee at any time within one year after the death of the Optionee, unless earlier terminated pursuant to its terms, provided, however, that in no instance may the term of the Option, as so extended, exceed the maximum term established pursuant to Section 3.1(b)(ii) or 9.1 above.
9.7. Disability . In the event of the termination of employment with the Company or any parent, subsidiary or affiliate of the Company of an Optionee or separation from service with the Company or any parent, subsidiary or affiliate of the Company of an Optionee who is a Director, advisor or consultant of the Company or any parent, subsidiary or affiliate of the Company due to total disability, the Optionee, or his
11
guardian or legal representative, or a Permitted Assignee shall have the unqualified right to exercise any Option that has not expired or been previously exercised and that the Optionee was eligible to exercise as of the first date of total disability (as determined by the Committee), at any time within one year after such termination or separation, unless earlier terminated pursuant to its terms, provided, however, that in no instance may the term of the Option, as so extended, exceed the maximum term established pursuant to Section 3.1(b)(ii) or 9.1 above. The term total disability shall, for purposes of this Plan, be defined in the same manner as such term is defined in Section 22(e)(3) of the Code.
9.8 Terms of Grant . Notwithstanding anything in Section 9.5, 9.6 or 9.7 to the contrary, the Committee may grant an Option under such terms and conditions as may be provided in the Share Option Agreement given to the Optionee and the Committee has the discretion to modify the terms and conditions of an Option after grant as long as no rights of the Participant are impaired, provided, however, that in no instance may the term of the Option, as so extended, exceed the maximum term established pursuant to Section 3.1(b)(ii) or 9.1 above.
9.9. Adjustments . In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities, the issuance of warrants or other rights to purchase Shares or other securities, or other similar corporate transaction or event affects the Shares with respect to which Options have been or may be issued under the Plan, such that an adjustment is determined in good faith by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as the Committee may deem equitable, adjust any or all of (i) the number and type of Shares that thereafter may be made the subject of Awards, (ii) the number and type of Shares subject to outstanding Awards, and (iii) the grant or exercise price with respect to any Option, or, if deemed appropriate, make provision for a cash payment to the holder of any outstanding Option; provided, in each case, that with respect to incentive stock options, no such adjustment shall be authorized to the extent that such adjustment would cause such options to violate Section 422(b) of the Code or any successor provision; and provided further, that the number of Shares subject to any Option denominated in Shares shall always be a whole number. In the event of any reorganization, merger, consolidation, split-up, spin-off, or other business combination involving the Company (each, a Reorganization), the Committee may cause any Award outstanding as of the effective date of the Reorganization to be canceled in consideration of a cash payment made to or an alternate Award (whether from the Company or another entity that is a party to the Reorganization), or a combination thereof, the holder of such canceled Award substantially equivalent in value to the fair market value of such canceled Award. The determination of fair market value shall be made by the Committee in its sole discretion.
9.10. Amendment and Modification of the Plan . The Compensation Committee of the Board of Directors of the Company may, from time to time, alter, amend, suspend or terminate the Plan as it shall deem advisable, subject to any requirement for shareholder approval imposed by applicable law, including without limitation Sections 162(m) and 422 of the Code, or any rule of any stock exchange or quotation system on which Shares are listed or quoted; provided that such Compensation Committee may not amend the Plan, without the approval of the Companys shareholders, to increase the number of Shares that may be the subject of Options under the Plan (except for adjustments pursuant to Section 9.9 hereof). In addition, no amendments to, or termination of, the Plan shall in any way impair the rights of an Optionee or a Participant (or a Permitted Assignee thereof) under any Award previously granted without such Optionees or Participants consent.
9.11. Validity of Awards . The validity of any Award or grant of Options made pursuant to this Plan shall remain in full force and effect and shall not be affected by the compliance or noncompliance with Section 162(m) of the Code or Rule 16b-3 of the Exchange Act.
12
ARTICLE 10.
MISCELLANEOUS
10.1. Tax Withholding . The Company or any parent, subsidiary or affiliate of the Company shall have the right to make all payments or distributions made pursuant to the Plan to an Optionee or Participant (or a Permitted Assignee thereof) net of any applicable federal, state and local taxes required to be paid as a result of the grant of any Award, exercise of an Option or stock appreciation rights or any other event occurring pursuant to this Plan. The Company or any parent, subsidiary or affiliate of the Company shall have the right to withhold from wages or other payments otherwise payable to such Optionee or Participant (or a Permitted Assignee thereof) such withholding taxes as may be required by law, or to otherwise require the Optionee or Participant (or a Permitted Assignee thereof) to pay such withholding taxes. If the Optionee or Participant (or a Permitted Assignee thereof) shall fail to make such tax payments as are required, the Company or any parent, subsidiary or affiliate of the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to such Optionee or Participant or to take such other action as may be necessary to satisfy such withholding obligations. In satisfaction of the requirement to pay required withholding taxes, the Optionee or Participant (or Permitted Assignee) may make a written election, which may be accepted or rejected in the discretion of the Committee, to have withheld a portion of the Shares then issuable to the Optionee (or Permitted Assignee) pursuant to the Plan, having an aggregate Fair Market Value equal to the required withholding taxes.
10.2. Right of Discharge Reserved . Nothing in the Plan nor the grant of an Award hereunder shall confer upon any employee, Director, consultant, advisor or other individual the right to continue in the employment or service of the Company or any parent, subsidiary or affiliate of the Company or affect any right that the Company or any parent, subsidiary or affiliate of the Company may have to terminate the employment or service of (or to demote or to exclude from future Awards under the Plan) any such employee, Director, consultant, advisor or other individual at any time for any reason. Except as specifically provided by the Committee, the Company shall not be liable for the loss of existing or potential profit with respect to an Award in the event of termination of an employment or other relationship even if the termination is in violation of an obligation of the Company or any parent, subsidiary or affiliate of the Company to the Optionee or Participant.
10.3. Unfunded Plan . Unless otherwise determined by the Committee, the Plan shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Plan shall not establish any fiduciary relationship between the Company or any parent, subsidiary or affiliate of the Company and any Optionee, Participant or other person. To the extent any Optionee or Participant holds any rights by virtue of any grant or award made under the Plan, such rights shall constitute general unsecured liabilities of the Company or any parent, subsidiary or affiliate of the Company and shall not confer upon any participant any right, title, or interest in any assets of the Company or any parent, subsidiary or affiliate of the Company.
10.4. Legend . All certificates for Shares delivered under this Plan shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed or any national securities association system upon whose system the Shares are then quoted, any applicable Federal or state securities law, and any applicable corporate law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
10.5. Listing and Other Conditions . (a) As long as the Shares are listed on a national securities exchange or system sponsored by a national securities association, the issue of any Shares pursuant to an Award shall be conditioned upon such Shares being listed on such exchange or system. The Company shall have no obligation to deliver such Shares unless and until such Shares are so listed; provided, however, that any delay in the delivery of such Shares shall be based solely on a reasonable business decision and the
13
right to exercise any Option with respect to such Shares shall be suspended until such listing has been effected.
(b) If at any time counsel to the Company shall be of the opinion that any sale or delivery of Shares pursuant to any Award is or may in the circumstances be unlawful or result in the imposition of excise taxes on the Company under the statutes, rules or regulations of any applicable jurisdiction, the Company shall have no obligation to make such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act of 1933, as amended, or otherwise with respect to Shares or Award, and the right to any Award shall be suspended until, in the opinion of said counsel, such sale or delivery shall be lawful or will not result in the imposition of excise taxes on the Company.
(c) Upon termination of any period of suspension under this Section 10.5, any Award affected by such suspension which shall not then have expired or terminated shall be reinstated as to all shares available before such suspension and as to shares which would otherwise have become available during the period of such suspension, but no such suspension shall extend the term of any Option.
(d) A Participant shall be required to supply the Company with any certificates, representations and information that the Company requests and otherwise cooperate with the Company in obtaining any listing, registration, qualification, exemption, consent or approval the Company deems necessary or appropriate.
10.6. Dissolution or Liquidation . In the event of the proposed dissolution or liquidation of the Company, the Committee shall notify each Optionee and Participant as soon as practicable prior to the effective date of such proposed transaction. The Committee in its sole discretion may permit an Optionee to exercise an Option until ten days prior to such transaction with respect to all vested and exercisable Shares covered thereby and with respect to such number of unvested Shares as the Committee shall determine. In addition, the Committee may provide that any forfeiture provision or Company repurchase option applicable to any Restricted Share Award shall lapse as to such number of Shares as the Committee shall determine, contingent upon the occurrence of the proposed dissolution or liquidation at the time and in the manner contemplated. To the extent an Option has not been previously exercised, the Option shall terminate automatically immediately prior to the consummation of the proposed action. To the extent a forfeiture provision applicable to a Restricted Share Award has not been waived by the Committee, the related Restricted Share Award shall be forfeited automatically immediately prior to the consummation of the proposed action.
10.7. Severability . If any provision of the Plan shall be held unlawful or otherwise invalid or unenforceable in whole or in part, such unlawfulness, invalidity or unenforceability shall not affect any other provision of the Plan or part thereof, each of which shall remain in full force and effect. If the making of any payment or the provision of any other benefit required under the Plan shall be held unlawful or otherwise invalid or unenforceable, such unlawfulness, invalidity or unenforceability shall not prevent any other payment or benefit from being made or provided under the Plan, and if the making of any payment in full or the provision of any other benefit required under the Plan in full would be unlawful or otherwise invalid or unenforceable, then such unlawfulness, invalidity or unenforceability shall not prevent such payment or benefit from being made or provided in part, to the extent that it would not be unlawful, invalid or unenforceable, and the maximum payment or benefit that would not be unlawful, invalid or unenforceable shall be made or provided under the Plan.
10.8. Gender and Number . In order to shorten and to improve the understandability of the Plan document by eliminating the repeated usage of such phrases as his or her and any masculine terminology herein shall also include the feminine, and the definition of any term herein in the singular shall also include the plural except when otherwise indicated by the context.
10.9. Effective Date of Plan; Termination of Plan . The Plan shall be effective on the date of the approval of the Plan by the holders of a majority of the shares entitled to vote thereon, provided such approval is obtained within 12 months after the date of adoption of the Plan by the Board of Directors.
14
Awards may be granted under the Plan at any time and from time to time after the effective date of the Plan and on or prior to August 21, 2011, on which date the Plan will expire except as to Awards and related share appreciation rights then outstanding under the Plan. Such outstanding Awards and stock appreciation rights shall remain in effect until they have been exercised or terminated, or have otherwise expired.
10.10. Nature of Payments . All Awards made pursuant to the Plan are in consideration of services performed for the Company and any parent, subsidiary or affiliate of the Company. Any income or gain realized pursuant to Awards under the Plan and any share appreciation rights constitutes a special incentive payment to the Optionee, Participant or Holder and shall not be taken into account, to the extent permissible under applicable law, as compensation for purposes of any of the employee benefit plans of the Company or any parent, subsidiary or affiliate of the Company, except as may be determined by the Committee or by the Directors or directors of the applicable parent, subsidiary or affiliate of the Company.
10.11. Captions . The captions in this Plan are for convenience of reference only, and are not intended to narrow, limit or affect the substance or interpretation of the provisions contained herein.
10.12. Successors and Assigns . This Plan shall be binding upon and inure to the benefit of the respective successors and permitted assigns of the Company and the Participants.
10.13 Governing Law . The Plan and all determinations made and actions taken thereunder, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed accordingly.
ARTICLE 11.
PUBLIC OFFERING
11.1. General . In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act of 1933, including the Companys initial public offering, the Committee may, in its discretion, determine that a person shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose of or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to any Shares issued pursuant to an Award granted under the Plan without the prior written consent of the Company or its underwriters. Such limitations shall be in effect for such period of time as may be requested by the Company or such underwriters and agreed to by the Companys officers and directors with respect to their Shares; provided, however, that in no event shall such period exceed 180 days. The limitations of this Article 11 shall in all events terminate two years after the effective date of the Companys initial public offering. Holders of Shares issued pursuant to an Award granted under the Plan shall be subject to the provisions of this Article 11 only if the officers and directors of the Company are also subject to similar arrangements.
11.2. Subsequent Changes . In the event of any stock split, stock dividend, recapitalization, combination of shares, exchange of Shares or other change affecting the Companys outstanding common stock effected as a class without the Companys receipt of consideration, any new, substituted or additional securities distributed with respect to the purchased shares shall be immediately subject to the provisions of this Article 11, to the same extent the purchased shares are at such time covered by such provisions.
11.3. Stop-Transfer . In order to enforce the limitations of this Article 11, the Company may impose stop-transfer instructions with respect to the purchased Shares until the end of the applicable period .
15
EXHIBIT A
PERFORMANCE CRITERIA
Subject to the last sentence of Section 8.4 of the Plan, performance goals established for purposes of conditioning the grant of an Award of Restricted Shares or other Share-based awards based on performance or the vesting of performance-based Awards of Restricted Shares shall be based on one or more of the following performance criteria (Performance Criteria): (i) the attainment of certain target levels of, or a specified percentage increase in, revenues, income before income taxes and extraordinary items, net income, earnings before income tax, earnings before interest, taxes, depreciation and amortization, or a combination of any or all of the foregoing; (ii) the attainment of certain target levels of, or a percentage increase in, after-tax or pre-tax profits including, without limitation, that attributable to continuing and/or other operations; (iii) the attainment of certain target levels of, or a specified increase in, operational cash flow; (iv) the achievement of a certain level of, reduction of, or other specified objectives with regard to limiting the level of increase in, all or a portion of, the Companys bank debt or other long-term or short-term public or private debt or other similar financial obligations of the Company, which may be calculated net of such cash balances and/or other offsets and adjustments as may be established by the Committee; (v) the attainment of a specified percentage increase in earnings per share or earnings per share from continuing operations; (vi) the attainment of certain target levels of, or a specified increase in, return on capital employed or return on invested capital; (vii) the attainment of certain target levels of, or a percentage increase in, after-tax or pre-tax return on stockholders equity; (viii) the attainment of certain target levels of, or a specified increase in, economic value added targets based on a cash flow return on investment formula; (ix) the attainment of certain target levels in the fair market value of the shares of the Companys stock; and (x) the growth in the value of an investment in the Companys stock assuming the reinvestment of dividends. For purposes of item (i) above, extraordinary items shall mean all items of gain, loss or expense for the fiscal year determined to be extraordinary or unusual in nature or infrequent in occurrence or related to a corporate transaction (including, without limitation, a disposition or acquisition) or related to a change in accounting principle, all as determined in accordance with standards established by Opinion No. 30 of the Accounting Principles Board.
In addition, such Performance Criteria may be based upon the attainment of specified levels of Company (or affiliate, division or other operational unit of the Company) performance under one or more of the measures described above relative to the performance of other similar companies. To the extent permitted under Code Section 162(m) (including, without limitation, compliance with any requirements for stockholder approval), the Committee may: (i) designate additional business criteria on which the Performance Criteria may be based or (ii) adjust, modify or amend the aforementioned business criteria.
16
Exhibit 10.6
GAMESTOP CORP.
SUPPLEMENTAL COMPENSATION PLAN
GameStop Corp., a Delaware corporation (the Company), hereby adopts the GameStop Corp. Supplemental Compensation Plan (the Plan). The Company intends that bonus compensation payable pursuant to this Plan shall constitute performance-based compensation within the meaning of Section 162(m) (Section 162(m)) of the Internal Revenue Code of 1986, as amended (the Code), and the regulations from time to time promulgated thereunder.
1. Purposes of Plan . The purposes of the Plan are to provide personal incentive and financial rewards to senior management who, because of the extent of their responsibilities, can and do make significant contributions to the success of the Corporation by their ability, industry, loyalty and exceptional services, by making them participants in that success.
2. Eligible Employees . The Companys Chief Executive Officer (the CEO), the Companys Chief Operating Officer (the COO), and such other executive officers of the Company as may from time to time be designated as Plan participants by the Committee (as defined herein), shall be eligible to receive cash bonus awards under the Plan. The CEO, the COO and each other executive officer designated by the Committee concurrently with or prior to the establishment of the applicable Target pursuant to Section 6 below for any Plan Year (or, if later, prior to the commencement of such individuals service as an executive officer or such other time as shall be specified under Section 162(m)) shall be an Eligible Participant for such Plan Year. The Committees designation of a participant in any year shall not require the Committee to designate such person to be a participant in any other year.
3. Plan Year . The Plan Year shall be the fiscal year of the Company. The Companys fiscal year ending January 31, 2004 shall be the first Plan Year.
4. Effective Date . The Plan was adopted by the Board of Directors on May 14, 2003 and shall become effective upon approval of the material terms hereof by the Companys stockholders in accordance with the requirements of Section 162(m).
5. Administration .
(a) The Committee. The term Committee as used herein shall mean the Committee of the Board of Directors or such other committee of the Board of Directors designated to administer this Plan, in either case consisting of two or more members of the Board and with each such member qualifying as an outside director as defined under Section 162(m).
(b) Authority. Subject to the provisions of the Plan, the Committee shall interpret the Plan and the awards granted under the Plan, shall make all other determinations necessary or advisable for the administration of the Plan and shall correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any award, in the manner and to the extent the Committee deems desirable to carry the Plan or award into effect.
(c) Procedure. All determinations of the Committee shall be made by not less than a majority of its members at a meeting at which a quorum is present. A majority of the entire Committee shall constitute a quorum for the transaction of business. Any action required or permitted to be taken at a meeting of the Committee may be taken without a meeting, if a unanimous written consent which sets forth the action is signed by each member of the Committee and filed with the minutes of the proceedings of the Committee. No member of the Committee shall be liable, in the absence of bad faith, for any act or omission with respect to his services. Without limiting the generality of the foregoing or the scope of any applicable provision of the Companys Certificate of Incorporation or Bylaws or any indemnification
1
agreement, no member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any award granted thereunder.
6. Awards . Not later than 90 days after the commencement of each Plan Year (and before 25% of the relevant period of service for each Eligible Participant has elapsed), the Committee shall establish in writing separately for each Eligible Participant (a) the percentage of such Eligible Participants base salary that shall be the subject of an award and (b) a performance target (the Target), the attainment of which shall be substantially uncertain.
The Committee may establish performance targets based on one or more of the following performance measures (either individually or in any combination): net sales; pretax income before allocation of corporate overhead and bonus; budget; earnings per share; net income; division, group or corporate financial goals; return on stockholders equity; return on assets; attainment of strategic and/or operational initiatives; appreciation in and/or maintenance of the price of the Class A common stock or any other publicly-traded securities of the Company; market share; gross profits; earnings before taxes; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; economic value-added models; comparisons with various stock market indices and/or similar companies; and/or reductions in costs.
Targets which are based in whole or part on per share amounts, such as earnings per share, shall be, and, at the discretion of the Committee, any other Targets may be, subject to adjustment for recapitalizations, dividends, stock splits and reverse splits, reorganizations, issuances of additional shares, redemptions of shares, option or warrant exercises, reclassifications, significant acquisitions and divestitures or other extraordinary events.
Each Eligible Participant will receive a cash bonus in the amount of the pre-determined
percentage of his or her base salary (the Target Bonus) as follows:
Notwithstanding the foregoing, in no event shall the maximum cash bonus payable to any
Eligible Participant under the Plan exceed $1,500,000 with respect to any Plan Year. Cash bonuses
will not become payable and will not be paid until the Committee certifies the extent to which the
Target has been attained.
Then the Percentage of the
If the Plan Year Results were:
Target Bonus Received is:
None
50
%
75
%
100
%
110
%
125
%
The pre-determined percentage for any one participant and/or the performance measures or targets relating thereto may be different than or the same as that of any other participant and, as for each participant, may be different than or the same as applied to such participant in any prior year.
7. Form and Payment of Awards . Awards to Eligible Participants shall be made only when the Committee has certified that the Targets have been attained. Awards shall be made in cash and shall be payable in a lump sum.
All awards shall be paid from the general funds of the Company and no special or separate fund shall be established and no other segregation of assets shall be made to assure the payment of awards hereunder. An Eligible Participant shall have no right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations hereunder. Nothing contained in this instrument, and no action taken pursuant to its provisions, shall create or be construed to create a trust of
2
any kind, or a fiduciary relationship, between the Company and an Eligible Participant or any other person. To the extent that any person acquires a right to receive payments from the Company, such right shall be no greater than the right of an unsecured creditor.
If an Employee dies or becomes incapacitated, any award so made shall be paid to his estate or legal representative at such time and in such manner as if he were living or not incapacitated.
8. Amendment . The Board retains the authority to amend the Plan, subject to the stockholder approval requirements of Section 162(m) of the Code.
3
Exhibit 10.7
STOCK OPTION CERTIFICATE
For «Number» Shares
Issued Pursuant to the
Amended and Restated 2001 Incentive Plan of
GAMESTOP CORP.
THIS CERTIFIES that on ___, 20___, (the Issuance Date), «Name» (the Holder) was granted an option (the Option) to purchase, at the option price of $ ___ per share (the Exercise Price), up to «Number» fully paid and non-assessable shares of the Class A Common Stock, $.001 par value per share (the Shares), of GAMESTOP CORP., a Delaware corporation (the Company), upon and subject to the following terms and conditions:
(a) Terms of the Plan . The Option is granted pursuant to, and is subject to the terms and conditions of, the Amended and Restated 2001 Incentive Plan of the Company (the Plan), the terms, conditions and definitions of which are hereby incorporated herein as though set forth at length, and the receipt of a copy of which the Holder hereby acknowledges by his signature below. Capitalized terms used herein shall have the meanings set forth in the Plan, unless otherwise defined herein.
(b) Expiration . This Option shall expire at 11:59 p.m., ___, 20___[Tenth Anniversary of Issuance Date], unless earlier terminated in accordance with this Option Certificate or the Plan.
(c) Exercise . This Option may be exercised or surrendered during the Holders lifetime only by the Holder or his/her guardian or legal representative or by a Permitted Assignee, as provided in Sections 9.4, 9.6 and 9.7 of the Plan. THIS OPTION SHALL NOT BE TRANSFERABLE BY THE HOLDER OTHERWISE THAN BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION, SUBJECT TO THE TERMS AND CONDITIONS OF THE PLAN.
This Option shall vest and be exercisable as set forth below:
(i) If the Holder has been continuously employed by the Company or any of its subsidiaries or affiliates on ___, 20___[First Anniversary of Issuance Date] (the First Vesting Date), this Option shall vest and be exercisable in accordance with its terms with respect to [One-Third] of the Shares.
(ii) If the Holder has been continuously employed by the Company or any of its subsidiaries or affiliates on ___, 20___[Second Anniversary of Issuance Date], this Option shall vest and be exercisable in accordance with its terms with respect to an additional [One-Third] of the Shares.
(iii) If the Holder has been continuously employed by the Company or any of its subsidiaries or affiliates on ___, 20___[Third Anniversary of Issuance Date], this Option shall vest and be exercisable. in accordance with its terms with respect to an additional [One-Third] of the Shares.
(iv) All unvested portions of this Option shall vest in full and be fully exercisable in accordance with the terms hereunder, notwithstanding any vesting restrictions to the contrary, immediately prior to the occurrence of a Change in Control, as hereinafter defined. A Change in Control shall be defined as and shall be deemed to occur if: (i) any person or entity, or any persons or entities acting as a group, acquire beneficial ownership of
more than 35% by vote of the voting securities of the Company; or (ii) there shall have occurred a change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended, as in effect on the date hereof, whether or not the Company is then subject to such reporting requirement, or (iii) the Company has merged or consolidated with, or sold substantially all of its assets to, another company.
This Option shall be exercised by the Holder (or by his/her executors, administrators, guardian or legal representative or by a Permitted Assignee, as provided in Sections 9.4, 9.6 and 9.7 of the Plan) as to all or part of the Shares, by the giving of written notice of exercise to the Company, specifying the number of Shares to be purchased, accompanied by payment of the full Exercise Price for the Shares being purchased. Full payment of such purchase price shall be made at the time of exercise and shall be made (i) in cash or by certified check or bank check or wire transfer of immediately available funds, (ii) with the consent of the Committee, by delivery of a promissory note in favor of the Company upon such terms and conditions as determined by the Committee, (iii) with the consent of the Committee, by tendering previously acquired Shares (valued at its Fair Market Value, as determined by the Committee as of the date of tender) that have been owned for a period of at least six months (or such other period to avoid accounting charges against the Companys earnings), (iv) if Shares are traded on a national securities exchange, the Nasdaq Stock Market, Inc. or quoted on a national quotation system sponsored by the National Association of Securities Dealers, Inc. and the Committee authorizes this method of exercise, through the delivery of irrevocable instructions to a broker approved by the Committee to deliver promptly to the Company an amount equal to the purchase price, or (v) with the consent of the Committee, any combination of (i), (ii), (iii) and (iv). In connection with a tender of previously acquired Shares pursuant to clause (iii) above, the Committee, in its sole discretion, may permit the Holder to constructively exchange Shares already owned by the Holder in lieu of actually tendering such Shares to the Company, provided that adequate documentation concerning the ownership of the Shares to be constructively tendered is furnished in form satisfactory to the Committee. The notice of exercise, accompanied by such payment, shall be delivered to the Company at its principal business office or such other office as the Committee may from time to time direct, and shall be in such form, containing such further provisions consistent with the provisions of the Plan, as the Committee may from time to time prescribe. In no event may any Option granted hereunder be exercised for a fraction of a Share. The Company shall effect the transfer of Shares purchased pursuant to an Option as soon as practicable, and, within a reasonable time thereafter, such transfer shall be evidenced on the books of the Company. No person exercising an Option shall have any of the rights of a holder of Shares subject to an Option until certificates for such Shares shall have been issued following the exercise of such Option. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such issuance.
(d) Termination of Employment . In the event of the termination of the Holders employment or separation from service for any reason (other than death, disability or termination for cause as provided below), this Option, to the extent not previously exercised or expired, to the extent vested on the date of such termination shall be exercisable as of such termination for a period not to exceed three months after the date of such termination, provided, however, that the Committee shall have the absolute discretion to increase such period or to decrease such period to a period of not less than two weeks.
2
In the event of the termination of the Holders employment for cause, the Option and all rights granted hereunder shall be forfeited and deemed canceled and no longer exercisable on the day of such termination of employment. For the purposes of this Stock Option Certificate, the term cause shall be defined as: (i) any act of fraud or embezzlement in respect of the Company or any of their respective funds, properties or assets; (ii) conviction of the Holder of a felony under the laws of the United States or any state thereof; (iii) willful misconduct or gross negligence by the Holder in connection with the performance of his or her duties to the Company; (iv) intentional dishonesty by the Holder in the performance of his or her duties to the Company; (v) engagement by the Holder in the use of illegal substances or alcohol, which use has impaired the Holders ability, as determined by the Board of Directors of the Company, on an ongoing basis, to perform his or her duties to the Company; and (vi) breach by the Holder of any terms and conditions set forth in any non-competition, non-solicitation and/or non-disclosure agreement executed by the Holder. A determination of cause shall be made by the Board of Directors of the Company.
(e) In the event (i) the Holder dies while in the service of the Company or any of its subsidiaries or affiliates or (ii) the Holders service with the Company or any of its subsidiaries or affiliates is terminated due to his total disability, the terms and conditions of Sections 9.6 and 9.7 of the Plan shall apply.
(f) Adjustments . The number of Shares subject to this Option, and the exercise price, shall be subject to adjustment in accordance with Section 9.9 of the Plan.
(g) Delivery of Share Certificates . Within a reasonable time after the exercise of this Option, the Company shall cause to be delivered to the person entitled thereto a certificate for the Shares purchased pursuant to the exercise of this Option. If this Option shall have been exercised with respect to less than all of the Shares subject to this Option, the Company shall also cause to be delivered to the person entitled thereto a new Option Certificate in replacement of this Option Certificate if surrendered at the time of the exercise of this Option, indicating the number of Shares with respect to which this Option remains available for exercise, or this Option Certificate shall be endorsed to give effect to the partial exercise of this Option.
(h) Withholding . In the event that the Holder elects to exercise this Option or any part thereof, and if the Company or any subsidiary or affiliate of the Company shall be required to withhold any amounts (the Withholding Taxes) by reason of any federal, state or local tax laws, rules or regulations in respect of the issuance of Shares to the Holder pursuant to the Option or the exercise or disposition (in whole or in part) of the Option, the Company or such subsidiary or affiliate shall be entitled to deduct and withhold such amounts from any payments to be made to the Holder. In any event, the Holder shall make available to the Company or such subsidiary or affiliate, promptly when requested by the Company or such subsidiary or affiliate, sufficient funds to meet the requirements of such withholding; and the Company or such subsidiary or affiliate shall be entitled to take and authorize such steps as it may deem advisable in order to have such funds available to the Company or such subsidiary or affiliate out of any funds or property due or to become due to the Holder.
(i) Reservation of Shares . The Company hereby agrees that at all times there shall be reserved for issuance and/or delivery upon exercise of this Option such number of Shares as shall be required for issuance or delivery upon exercise hereof.
3
(j) Rights of Holder . Nothing contained herein shall be construed to confer upon the Holder any right to be continued in the employ of the Company and/or any subsidiary or affiliate of the Company or derogate from any right of the Company and/or any subsidiary or affiliate of the Company to retire, request the resignation of, or discharge the Holder at any time, with or without cause. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or in equity, and the rights of the Holder are limited to those expressed herein and are not enforceable against the Company except to the extent set forth herein.
(k) Registration; Legend . The Company may postpone the issuance and delivery of Shares upon any exercise of this Option until (a) the admission of such Shares to listing on any stock exchange or exchanges on which Shares of the Company of the same class are then listed and (b) the completion of such registration or other qualification of such Shares under any state or federal law, rule or regulation as the Company shall determine to be necessary or advisable. The Holder shall make such representations and furnish such information as may, in the opinion of counsel for the Company, be appropriate to permit the Company, in light of the then existence or non-existence with respect to such Shares of an effective Registration Statement under the Securities Act of 1933, as amended, to issue the Shares in compliance with the provisions of that or any comparable act.
The Company may cause the following or a similar legend to be set forth on each certificate representing Shares or any other security issued or issuable upon exercise of this Option unless counsel for the Company is of the opinion as to any such certificate that such legend is unnecessary:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS ESTABLISHED BY AN OPINION FROM COUNSEL TO THE COMPANY.
(l) Amendment . The Company may at any time or from time to time amend the terms and conditions of this Option in accordance with the Plan.
(m) Notices . Any notice which either party hereto may be required or permitted to give to the other shall be in writing, and may be delivered personally or by mail, postage prepaid, or overnight courier, addressed as follows: if to the Company, at the office of GameStop Corp., 2250 William D. Tate Avenue, Grapevine, Texas 76051, or at such other address as the Company by notice to the Holder may designate in writing from time to time; and if to the Holder, at the address shown below his/her signature on this Option Certificate, or at such other address as the Holder by notice to the Company may designate in writing from time to time. Notices shall be effective upon receipt.
(n) Interpretation . A determination of the Committee, in its sole discretion, as to any questions which may arise with respect to the interpretation of the provisions of this Option and
4
of the Plan shall be final and binding. The Committee, in its sole discretion, may authorize and establish such rules, regulations and revisions thereof as it may deem advisable.
5
Exhibit 21.1
GAMESTOP CORP.
SUBSIDIARIES
GameStop, Inc., a Minnesota corporation, is a wholly-owned subsidiary of GameStop Corp.
GameStop.com, Inc., a Delaware corporation, is a wholly-owned subsidiary of GameStop Corp.
Marketing Control Services, Inc., a Virginia corporation, is a wholly-owned subsidiary of GameStop Corp.
Sunrise Publications, Inc., a Minnesota corporation, is a wholly-owned subsidiary of GameStop, Inc.
GameStop Brands, Inc., a Delaware corporation, is a wholly-owned subsidiary of GameStop, Inc.
GameStop of Texas (GP), LLC, a Delaware limited liability company, is a wholly-owned subsidiary of GameStop, Inc.
GameStop (LP), LLC, a Delaware limited liability company, is a wholly-owned subsidiary of GameStop, Inc.
Babbages Etc. LLC, a Delaware limited liability company, is a wholly-owned subsidiary of GameStop, Inc.
GameStop Texas LP, a Texas limited partnership, is a 1% owned subsidiary of GameStop of Texas (GP), LLC and a 99% owned subsidiary of GameStop (LP), LLC
GameStop Group Limited, an Ireland company, is a 51% owned subsidiary of GameStop, Inc.
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
GameStop Corp.
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 No.
333-82652 of GameStop Corp. of our reports dated March 30, 2005, relating to the consolidated
financial statements and the effectiveness of GameStop Corp.s internal control over financial
reporting, which appear in the Annual Report to Shareholders, which is incorporated by reference in
this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report
dated March 30, 2005 relating to the financial statement schedule which appears in this Form 10-K.
Dallas, Texas
Grapevine, Texas
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
April
8
, 2005
Exhibit 31.1
CERTIFICATION PURSUANT TO
I, R. Richard Fontaine, certify that:
Date: April 11, 2005
17 CFR 240.13a-14(a)/15(d)-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
1.
I have reviewed this report on Form 10-K of GameStop Corp.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which
this report is being prepared;
b.
designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles:
c.
evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
d.
disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting; and
5.
The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of registrants board of directors (or persons performing
the equivalent function):
a.
all significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the registrants ability to record, process, summarize and report financial
information; and
b.
Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal control over financial
reporting.
By:
/s/
R. Richard Fontaine
R. Richard Fontaine
Chairman of the Board and
Chief Executive Officer
GameStop Corp.
Exhibit 31.2
CERTIFICATION PURSUANT TO
I, David W. Carlson, certify that:
Date: April 11, 2005
17 CFR 240.13a-14(a) /15(d)-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
1.
I have reviewed this report on Form 10-K of GameStop Corp.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which
this report is being prepared;
b.
designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles:
c.
evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
d.
disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting; and
5.
The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of registrants board of directors (or persons performing
the equivalent function):
a.
all significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the registrants ability to record, process, summarize and report financial
information; and
b.
any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal control over financial
reporting.
By:
/s/
David W. Carlson
David W. Carlson
Executive Vice President and
Chief Financial Officer
GameStop Corp.
Exhibit 32.1
CERTIFICATION PURSUANT TO
In connection with the annual report of GameStop Corp. (the Company) on Form 10-K for the
period ending January 29, 2005 as filed with the Securities and Exchange Commission on the date
hereof (the Report), I, R. Richard Fontaine, Chairman of the Board and Chief Executive Officer of
the Company, certify, to the best of my knowledge, pursuant to Rule 13a-14(b) under the Securities
Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
A signed original of this written statement required by Section 906, or other document
authenticating, acknowledging, or otherwise adopting the signature that appears in typed form
within the electronic version of this written statement required by Section 906, has been provided
to the Company and will be retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934
AND 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.
/s/
R. Richard Fontaine
R. Richard Fontaine
Chairman of the Board and Chief Executive
Officer
GameStop Corp.
April 11, 2005
Exhibit 32.2
CERTIFICATION PURSUANT TO
In connection with the annual report of GameStop Corp. (the Company) on Form 10-K for the
period ending January 29, 2005 as filed with the Securities and Exchange Commission on the date
hereof (the Report), I, David W. Carlson, Executive Vice President and Chief Financial Officer of
the Company, certify, to the best of my knowledge, pursuant to Rule 13a-14(b) under the Securities
Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
A signed original of this written statement required by Section 906, or other document
authenticating, acknowledging, or otherwise adopting the signature that appears in typed form
within the electronic version of this written statement required by Section 906, has been provided
to the Company and will be retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934
AND 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.
/s/
David W. Carlson
David W. Carlson
Executive Vice President and Chief Financial Officer
GameStop Corp.
April 11, 2005