EXHIBIT 10.1
SEPARATION AGREEMENT
This SEPARATION AGREEMENT (the "Agreement") is made and entered into as
of January 1, 2002, by and between Xxxxxx & Xxxxx, Inc., a Delaware corporation
("Xxxxxx & Noble"), and GameStop Corp., a Delaware corporation and a wholly
owned subsidiary of Xxxxxx & Xxxxx ("GameStop"). Certain capitalized terms used
herein are defined in Section 1 of this Agreement.
W I T N E S S E T H
WHEREAS, Xxxxxx & Noble currently owns all of the issued and
outstanding GameStop Common Stock;
WHEREAS, GameStop has filed the IPO Registration Statement with the SEC
but it has not yet become effective;
WHEREAS, the parties currently contemplate that, reasonably promptly
following the execution of this Agreement, GameStop shall consummate the Initial
Public Offering;
WHEREAS, immediately following the consummation of the Initial Public
Offering, Xxxxxx & Xxxxx shall own 100% of the outstanding Class B Common Stock
of GameStop, which will constitute in excess of 90% (by vote) of the outstanding
GameStop Capital Stock;
WHEREAS, concurrently with the execution of this Agreement, Xxxxxx &
Noble and GameStop are entering into the Registration Rights Agreement;
WHEREAS, Xxxxxx & Xxxxx currently intends to evaluate its strategic
options with respect to its entire ownership interest in GameStop remaining
after the Initial Public Offering, including Xxxxxx & Noble's divestiture of its
entire ownership of GameStop in a Distribution by means of a split-off, a
spin-off or some combination thereof;
WHEREAS, Xxxxxx & Xxxxx and GameStop intend that the Distribution, if
it occurs, will be tax-free to Xxxxxx & Noble and its stockholders under Section
355 of the Code; and
WHEREAS, the parties intend in this Agreement to set forth the
principal arrangements between them regarding the Initial Public Offering and
the Distribution;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereby agree as follows:
1. Definitions. Capitalized terms used in this Agreement shall have the
following meaning:
"AAA" means the American Arbitration Association or any successor
organization thereto.
"Active Trade or Business" means the active conduct of the trade or
business (as defined in Section 355(b)(2) of the Code) conducted by GameStop
immediately prior to the applicable Distribution Date.
"Affiliate" means a GameStop Affiliate or a Xxxxxx & Xxxxx Affiliate,
as the case may be.
"Annual Financial Statements" means (A) the consolidated financial
statements of GameStop (and notes thereto) for such year, setting forth in each
case in comparative form the consolidated figures (and notes thereto) for the
previous fiscal year and all in reasonable detail and prepared in accordance
with Regulation S-X and (B) a discussion and analysis by management of
GameStop's and its Subsidiaries' financial condition and results of operations
for such year, including an explanation of any material adverse change, all in
reasonable detail and prepared in accordance with Item 303(a) of Regulation S-K.
"Xxxxxx & Xxxxx Affiliate" means a Person that, after giving effect to
the Distribution, directly or indirectly through one or more intermediaries, is
Controlled by Xxxxxx & Noble.
"Xxxxxx & Xxxxx Annual Statements" means Xxxxxx & Noble's audited
annual financial statements.
"Xxxxxx & Xxxxx Auditors" means Xxxxxx & Noble's independent certified
public accountants. As of the date of this Agreement, the Xxxxxx & Xxxxx
Auditors are BDO Xxxxxxx, LLP.
"Xxxxxx & Xxxxx Business" means any business or operations of Xxxxxx &
Noble or any Xxxxxx & Xxxxx Affiliates other than the GameStop Business.
"Xxxxxx & Noble Common Stock" means the common stock, par value $0.001
per share, of Xxxxxx & Xxxxx.
"Xxxxxx & Noble Disclosure Portions" means all material set forth in,
or incorporated by reference into, either the IPO Registration Statement or the
Distribution Registration Statement, as applicable, to the extent relating
exclusively to (i) Xxxxxx & Xxxxx and the Xxxxxx & Noble Affiliates (excluding
GameStop and the GameStop Affiliates), (ii) the Xxxxxx & Xxxxx Business, (iii)
Xxxxxx & Noble's intentions with respect to the Distribution or (iv) the terms
of the
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Distribution, including the form, structure and terms of any transaction(s)
and/or offering(s) to effect the Distribution and the timing of and conditions
to the consummation of the Distribution.
"Xxxxxx & Xxxxx Public Filings" means public earnings releases,
quarterly reports on Form 10-Q, Annual Reports to Shareholders, Annual Reports
on Form 10-K, any Current Reports on Form 8-K and any other proxy, information
and registration statements, reports, notices, prospectuses and any other
filings made by Xxxxxx & Noble with the SEC, any national securities exchange or
otherwise made publicly available.
"Xxxxxx & Xxxxx Transfer Agent" means The Bank of New York, or any
successor transfer agent and registrar for the Xxxxxx & Noble Common Stock, in
its capacity as the transfer agent and registrar for the Xxxxxx & Xxxxx Common
Stock.
"Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions located in the State of New York are authorized or
obligated by law or executive order to close.
"Business" means the GameStop Business or the Xxxxxx & Noble Business,
as the case may be.
"Class A Common Stock" means the Class A Common Stock, par value $.001
per share, of GameStop.
"Class B Common Stock" means the Class B Common Stock, par value $.001
per share, of GameStop.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, together with the rules and regulations promulgated thereunder.
"Control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Dispute Notice" means written notice of any dispute between Xxxxxx &
Xxxxx and GameStop arising out of or relating to this Agreement, which shall set
forth, in reasonable detail, the nature of the dispute.
"Distribution Registration Statement" means any and all registration
statements, information statements or other documents filed by any party with
the SEC in connection with any transaction constituting part of the
Distribution, in each case as supplemented or amended from time to time.
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"Distribution Date" means any date or dates, as the case may be,
determined by Xxxxxx & Noble, in its sole and absolute discretion, to be a date
on which shares of GameStop Common Stock held by Xxxxxx & Xxxxx are distributed
in connection with the Distribution.
"Distribution" means the distribution of GameStop Common Stock by
Xxxxxx & Noble in one or more transactions occurring after the Initial Public
Offering that collectively have the effect that shares of GameStop Common Stock
held by Xxxxxx & Xxxxx constituting Tax Control are distributed to Xxxxxx &
Noble stockholders, whenever such transaction(s) shall occur.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, together with the rules and regulations promulgated
thereunder.
"GAAP" means generally accepted accounting principles, consistently
applied.
"GameStop Auditors" means GameStop's independent certified public
accountants. As of the date of this Agreement, the GameStop Auditors are BDO
Xxxxxxx, LLP.
"GameStop Transfer Agent" means The Bank of New York, or any successor
transfer agent and registrar for the Class A Common Stock, in its capacity as
the transfer agent and registrar for the Class A Common Stock.
"GameStop Affiliate" means a Person that, after giving effect to the
Distribution, directly or indirectly through one or more intermediaries, is
Controlled by, or is under common Control with GameStop.
"GameStop Public Documents" means (x) all reports, notices and proxy
and information statements to be sent or made available by GameStop or any of
its Subsidiaries to their security holders, (y) all regular, periodic and other
reports to be filed under Sections 13, 14 and 15 of the Exchange Act (including
Reports on Forms 10-K, 10-Q and 8-K and Annual Reports to Shareholders), and (z)
all registration statements and prospectuses to be filed by GameStop or any of
its Subsidiaries with the SEC or any securities exchange pursuant to the listed
company manual (or similar requirements) of such exchange.
"GameStop Common Stock" means collectively, the Class A Common Stock
and the Class B Common Stock.
"GameStop Capital Stock" means all classes or series of capital stock
of GameStop.
"GameStop Business" means any business or operations of GameStop or any
GameStop Affiliates, including, in all cases, any predecessor entities.
"Indemnifying Party" means a Person that is obligated to provide
indemnification under this Agreement.
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"Indemnitee" means a Person that is entitled to seek indemnification
under this Agreement.
"Indemnity Payment" means an amount that an Indemnifying Party is
required to pay to an Indemnitee under this Agreement.
"Initial Public Offering" means the initial public offering by GameStop
of shares of GameStop Common Stock as contemplated by the IPO Registration
Statement.
"Insurance Proceeds" means the payment received by an insured from an
insurance carrier or paid by an insurance carrier on behalf of the insured, net
of any applicable premium adjustment and tax effect.
"IPO Registration Statement" means the Registration Statement on Form
S-1, Registration No. 333-68294 of GameStop, as supplemented and amended from
time to time.
"IRS" means Internal Revenue Service of the U.S. Department of Treasury
or any successor agency.
"Losses" means all losses, liabilities, claims, obligations, demands,
judgments, damages, dues, penalties, assessments, fines (civil or criminal),
costs, liens, expenses, forfeitures, settlements, or fees, reasonable attorneys'
fees and court costs, of any nature or kind, whether or not the same would
properly be reflected on a balance sheet, and "Loss" means any of these.
"Negotiation Period" means the period of 20 Business Days following the
initial meeting of the representatives of Xxxxxx & Noble and GameStop following
the receipt of a Dispute Notice.
"Notice" means any notice, request, claim, demand, or other
communication under this Agreement.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Pre-Distribution Period" means the period of time from the date hereof
until the completion of the Distribution.
"Proposed Acquisition Transaction" means a transaction or series of
transactions as a result of which one or more Persons would (directly or
indirectly) acquire, or have the right to acquire, from GameStop or one or more
holders of outstanding shares of GameStop Capital Stock, a number of shares of
GameStop Capital Stock that would, when combined with the number of shares of
GameStop Capital Stock sold pursuant to the Initial Public Offering,
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comprise 50% or more of (A) the value of all outstanding shares of GameStop
Capital Stock as of the date of such transaction, or in the case of a series of
transactions, the date of the last transaction of such series, or (B) the total
combined voting power of all outstanding shares of Voting Stock of GameStop as
of the date of such transaction, or in the case of a series of transactions, the
date of the last transaction of such series.
"Quarterly Financial Statements" means (A) the consolidated financial
statements of GameStop and its Subsidiaries (and notes thereto) for such quarter
period and for the period from the beginning of the current fiscal year to the
end of such quarter, setting forth in each case in comparative form for each
such fiscal quarter of GameStop the consolidated figures (and notes thereto) for
the corresponding quarter and periods of the previous fiscal year and all in
reasonable detail and prepared in accordance with Article 10 of Regulation S-X,
and (B) a discussion and analysis by management of GameStop's and its
Subsidiaries' financial condition and results of operations for such fiscal
period, including an explanation of any material adverse change, all in
reasonable detail and prepared in accordance with Item 303(b) of Regulation S-K.
"Registration Rights Agreement" means the Registration Rights Agreement
to be entered into between Xxxxxx & Xxxxx and GameStop concurrently with the
execution and delivery of this Agreement.
"Regulation S-K" means Regulation S-K of the General Rules and
Regulations promulgated by the SEC.
"Regulation S-X" means Regulation S-X of the General Rules and
Regulations promulgated by the SEC.
"Representation Date" means any date on which GameStop makes any
representation (i) to the IRS or to counsel selected by Xxxxxx & Xxxxx for the
purpose of obtaining a Subsequent Tax Opinion/Ruling, or (ii) to Xxxxxx & Noble
for the purpose of any determination required to be made by Xxxxxx & Xxxxx
pursuant to Section 4.1.
"Representation Letters" means the representation letters and any other
materials (including the ruling request and the related supplemental submissions
to the IRS) delivered or deliverable by Xxxxxx & Noble and others in connection
with the rendering by Xxxxxx & Xxxxx'x tax counsel and the issuance by the IRS
of the Tax Opinions/Rulings, which to the extent related to GameStop shall be in
form and substance reasonably satisfactory to GameStop.
"Representative" means, with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants or attorneys.
"SEC" means the United States Securities and Exchange Commission.
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"Securities Act" means the Securities Act of 1933, as amended from time
to time, together with the rules and regulations promulgated thereunder.
"Subsequent Tax Opinion/Ruling" means either (i) an opinion of counsel
selected by Xxxxxx & Noble, in its sole and absolute discretion, confirming, in
form and substance reasonably satisfactory to Xxxxxx & Xxxxx, that, as a
consequence of the consummation of a subsequent transaction, no income, gain or
loss for U.S. federal income tax purposes will be recognized by Xxxxxx & Noble,
the stockholders or former stockholders of Xxxxxx & Xxxxx, or any Xxxxxx & Noble
Affiliate with respect to the Distribution, or (ii) an IRS private letter ruling
to the same effect.
"Subsidiary" means with respect to any specified Person, any
corporation or other legal entity of which such Person or any of its
Subsidiaries Controls or owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote with respect to the election of
members to the board of directors or similar governing body; provided, however,
that for the purposes of this Agreement, neither GameStop nor any of the
Subsidiaries of GameStop shall be deemed to be Subsidiaries of Xxxxxx & Xxxxx or
of any of the Subsidiaries of Xxxxxx & Noble.
"Tax Opinions/Rulings" means any opinions of Tax Counsel and any
rulings by the IRS deliverable to Xxxxxx & Xxxxx in connection with the
Distribution.
"Tax Agreements" means, collectively, the (i) Tax Disaffiliation
Agreement between Xxxxxx & Noble and GameStop, dated as of January 1, 2002, as
amended from time to time and (ii) this Agreement.
"Tax Control" means the definition of "control" set forth in Section
368(c) of the Code (or in any successor statute or provision), as such
definition may be amended from time to time.
"Tax-Free Status of the Distribution" means the nonrecognition of
taxable gain or loss for U.S. federal income tax purposes to Xxxxxx & Xxxxx,
Xxxxxx & Xxxxx Affiliates and Xxxxxx & Noble's stockholders in connection with
the Distribution.
"Tax-Related Losses" means (i) all federal, state and local Taxes
(including interest and penalties thereon) imposed pursuant to any settlement,
final determination, judgment or otherwise; (ii) all accounting, legal and other
professional fees, and court costs incurred in connection with such taxes; and
(iii) all costs and expenses that may result from adverse tax consequences to
Xxxxxx & Xxxxx or Xxxxxx & Xxxxx'x stockholders (including all costs, expenses
and damages associated with stockholder litigation or controversies) payable by
Xxxxxx & Noble or Xxxxxx & Xxxxx Affiliates.
"Tax" means (i) any income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Section 59A of the Code), customs duties,
capital stock, franchise, profits, withholding, social
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security (or similar),unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on, minimum, estimated, or other tax, assessment, or governmental charge of
any kind whatsoever imposed by any governmental authority, including any
interest, penalty, or addition thereto, whether disputed or not; (ii) liability
for the payment of any amounts of the type described in clause (i) above arising
as a result of being (or having been) a member of any group or being (or having
been) included or required to be included in any Tax Return related thereto; and
(iii) liability for the payment of any amounts of the type described in clause
(i) above as a result of any express or implied obligation to indemnify or
otherwise assume or succeed to the liability of any other Person.
"Third-Party Claim" means any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, governmental or other
regulatory or administrative agency or commission or any arbitration tribunal
asserted by a Person other than Xxxxxx & Xxxxx or any Xxxxxx & Noble Affiliate
or GameStop or any GameStop Affiliate which gives rise to a right of
indemnification hereunder.
"Underwriting Agreement" means the Underwriting Agreement between
GameStop and the underwriters relating to the Initial Public Offering, as
amended from time to time.
"Value" means with respect to any trade or business (or portion
thereof), the fair market value of the assets constituting such trade or
business (or portion thereof), less the current liabilities associated with such
trade or business (or portion thereof), in each case determined as of the
applicable Distribution Date.
"Voting Stock" means with respect to any Person, all classes and series
of the capital stock of such Person entitled to vote generally in the election
of directors.
2. The Initial Public Offering And The Distribution.
2.1 The Initial Public Offering. GameStop shall consult with,
and cooperate in all respects with, Xxxxxx & Xxxxx in connection with the
pricing of the GameStop Common Stock to be offered in the Initial Public
Offering and shall, at Xxxxxx & Noble's direction, promptly take any and all
actions necessary or desirable to consummate the Initial Public Offering as
contemplated by the IPO Registration Statement and the Underwriting Agreement.
2.2 The Distribution. Xxxxxx & Xxxxx currently intends, from
time to time following the consummation of the Initial Public Offering, to
evaluate its strategic options with respect to its remaining ownership interest
in GameStop, including to effect the Distribution by means of a split-off, a
spin-off or some combination thereof. Xxxxxx & Noble shall, in its sole and
absolute discretion, determine whether to proceed with all or any part of the
Distribution and all terms of the Distribution, including the form, structure
and terms of any transaction(s) and/or offering(s) to effect the Distribution
and the timing of and conditions to the consummation of the Distribution. In
addition, if Xxxxxx & Xxxxx decides to proceed with the Distribution, Xxxxxx &
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Noble may at any time and from time to time until the completion of the
Distribution modify or change the terms of the Distribution, including by
accelerating or delaying the timing of the consummation of all or part of the
Distribution. GameStop shall use its best efforts to cooperate with Xxxxxx &
Xxxxx in all respects to accomplish the Distribution and shall, at Xxxxxx &
Noble's direction, promptly take any and all actions necessary or desirable to
effect the Distribution, including the registration under the Securities Act of
GameStop Common Stock on an appropriate registration form or forms to be
designated by Xxxxxx & Xxxxx. Xxxxxx & Xxxxx shall have the right to select any
investment banker(s) and manager(s) in connection with the Distribution, as well
as any financial printer, solicitation and/or exchange agent and outside counsel
for Xxxxxx & Noble; provided that nothing herein shall prohibit GameStop from
engaging (at its own expense) its own financial, legal, accounting and other
advisors in connection with the Distribution.
2.3 Certain Stockholder Matters. From and after the
distribution of GameStop Common Stock in connection with any transaction(s)
included as part of the Distribution and until such time as GameStop Common
Stock is duly transferred in accordance with applicable law, GameStop shall
regard the Persons receiving GameStop Common Stock in such transaction(s) as
record holders of GameStop Common Stock in accordance with the terms of such
transaction(s) without requiring any action on the part of such Persons.
GameStop agrees that, subject to any transfers of such stock, (a) each such
holder shall be entitled to receive all dividends payable on, and exercise
voting rights and all other rights and privileges with respect to, the shares of
GameStop Common Stock then held by such holder and (b) each such holder shall be
entitled, without any action on the part of such holder, to receive one or more
certificates representing, or other evidence of ownership of, the shares of
GameStop Common Stock then held by such holder. Xxxxxx & Xxxxx shall cooperate,
and shall instruct the Xxxxxx & Noble Transfer Agent to cooperate, with GameStop
and the GameStop Transfer Agent, and GameStop shall cooperate, and shall
instruct the GameStop Transfer Agent to cooperate, with Xxxxxx & Xxxxx and the
Xxxxxx & Noble Transfer Agent, in connection with all aspects of the
Distribution and all other matters relating to the issuance and delivery of
certificates representing, or other evidence of ownership of, the shares of
GameStop Common Stock distributed to the holders of Xxxxxx & Xxxxx Common Stock
in connection with any transaction(s) included as part of the Distribution.
Following the Distribution, Xxxxxx & Noble shall instruct the Xxxxxx & Xxxxx
Transfer Agent to deliver to the GameStop Transfer Agent true, correct and
complete copies of the stock and transfer records reflecting the holders of
Xxxxxx & Noble Common Stock receiving shares of GameStop Common Stock in
connection with any transaction(s) included as part of the Distribution.
2.4 Prior Relationship. Except as mutually agreed between the
parties hereto, GameStop, with respect to GameStop and all of the GameStop
Affiliates, and Xxxxxx & Xxxxx, with respect to Xxxxxx & Noble and all of the
Xxxxxx & Xxxxx Affiliates, agree to take all commercially reasonable action as
promptly as is commercially reasonable to discontinue their respective uses of
any printed material that indicates an ownership or other relationship between
or among Xxxxxx & Noble and GameStop or any of their respective Affiliates that
has changed as
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a result of the Initial Public Offering, the Distribution or any other
transactions contemplated hereby; provided that this Section 2.4 shall not
prohibit the use of printed material containing appropriate and accurate
references to such relationship.
2.5 Further Assurances Regarding the Distribution. In addition
to the actions specifically provided for elsewhere in this Agreement, if Xxxxxx
& Xxxxx decides to proceed with the Distribution, GameStop shall, at Xxxxxx &
Noble's direction, use all commercially reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things commercially
reasonably necessary, proper or expeditious under applicable laws, regulations
and agreements in order to consummate and make effective the Distribution as
promptly as reasonably practicable. Without limiting the generality of the
foregoing, GameStop shall, at Xxxxxx & Xxxxx'x direction, cooperate with Xxxxxx
& Noble, and execute and deliver, or use all commercially reasonable efforts to
cause to have executed and delivered, all instruments, including instruments of
conveyance, assignment and transfer, and to make all filings with, and to obtain
all consents, approvals or authorizations of, any domestic or foreign
governmental or regulatory authority requested by Xxxxxx & Xxxxx in order to
consummate and make effective the Distribution.
2.6 Abandonment of the Distribution. The parties expressly
acknowledge and agree that Xxxxxx & Noble from time to time intends to evaluate
its strategic options with respect to its ownership interest in GameStop
remaining after the Initial Public Offering, including the Distribution. The
parties further acknowledge and agree that, should Xxxxxx & Xxxxx decide to
pursue the Distribution, Xxxxxx & Noble will not be obligated in any respect to
proceed with or complete the Distribution and that Xxxxxx & Xxxxx may, in its
sole and absolute discretion, at any time abandon its plans to proceed with or
complete the Distribution.
3. Expenses.
3.1 General. Except as otherwise provided in this Agreement or
any other agreement entered into between the parties relating to the Initial
Public Offering or the Distribution, all costs and expenses of either party
hereto in connection with the Initial Public Offering and the Distribution shall
be paid by the party that incurs such costs and expenses.
3.2 Certain Expenses Relating to the Initial Public Offering.
GameStop shall be responsible for the payment of all costs, fees and expenses
relating to the Initial Public Offering, including the payment of (a) the costs,
fees and expenses of all of Xxxxxx & Noble's financial, legal, accounting and
other advisors incurred in connection with the Initial Public Offering and (b)
any internal fees, costs and expenses incurred by Xxxxxx & Xxxxx or any Xxxxxx &
Noble Affiliate in connection with the Initial Public Offering. Xxxxxx & Xxxxx
shall be entitled to any and all amounts received from the underwriters as
reimbursement for any costs, fees and expenses relating to the Initial Public
Offering.
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3.3 Certain Expenses Relating to the Distribution. Xxxxxx &
Noble shall generally be responsible for the payment of all costs, fees and
expenses relating to the Distribution; provided that GameStop shall be
responsible for the payment of (a) the costs, fees and expenses of all of
GameStop's financial, legal, accounting and other advisors incurred in
connection with the Distribution and (b) any internal fees, costs and expenses
incurred by GameStop or any GameStop Affiliate in connection with the
Distribution.
4. Covenants to Preserve Tax-free Status of the Distribution. GameStop
and Xxxxxx & Xxxxx hereby represent and warrant to, and covenant and agree with,
each other as follows:
4.1 Restrictions on GameStop.
(a) Pre-Distribution Period. GameStop shall not take
any action (such action to include, if relevant, the issuance of GameStop
Capital Stock upon the exercise by the holders thereof of all options or
convertible securities issued by GameStop) during the Pre-Distribution Period
if, as a result of taking such action, GameStop would issue a number of shares
of GameStop Capital Stock (including by way of the exercise of stock options or
the issuance of restricted stock) that would cause Xxxxxx & Noble to cease to
have Tax Control of GameStop, unless prior to the consummation of such
transaction Xxxxxx & Xxxxx has determined, in its sole and absolute discretion,
that such transaction would not jeopardize the Tax-Free Status of the
Distribution. Notwithstanding the foregoing provisions of this Section 4.1(a),
GameStop shall be permitted to issue stock options and restricted stock awards
to its employees so long as (i) GameStop repurchases sufficient shares of issued
and outstanding GameStop Capital Stock on or prior to the date such options are
exercisable or restricted stock is vested (or deemed vested) to insure that,
assuming the exercise of all exercisable options and vesting of such restricted
stock, Xxxxxx & Noble would not cease to have Tax Control of GameStop and (ii)
GameStop provides Xxxxxx & Xxxxx with prior written notification of the
procedures by which GameStop intends to comply with its obligation described in
clause (i) above and Xxxxxx & Noble approves of such procedures (which approval
shall not be unreasonably withheld).
(b) Proposed Acquisition Transactions. From the date
of this Agreement until the first day after the two-year anniversary of the
latest Distribution Date, GameStop shall not enter into any Proposed Acquisition
Transaction or, to the extent GameStop has the right to prohibit any Proposed
Acquisition Transaction, permit any Proposed Acquisition Transaction to occur
unless prior to the consummation of such Proposed Acquisition Transaction,
Xxxxxx & Xxxxx has determined, in its sole and absolute discretion, that such
Proposed Acquisition Transaction would not jeopardize the Tax-Free Status of the
Distribution.
(c) Continuation of Active Trade or Business. From
the date of this Agreement until the first day after the two-year anniversary of
the latest Distribution Date:
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(i) GameStop shall continue to conduct the
Active Trade or Business;
(ii) subject to clause (c)(iii) below,
GameStop shall not (A) liquidate, dispose of, or otherwise discontinue the
conduct of any portion of the Active Trade or Business with a Value in excess of
$25 million or (B) dispose of any business or assets that would cause GameStop
to be operated in a manner inconsistent in any material respect with the
business purposes for the Distribution as set forth in the Representation
Letters and any Tax Opinions/Rulings, in each case unless Xxxxxx & Noble has
determined, in its sole and absolute discretion, that such liquidation,
disposition or discontinuance would not jeopardize the Tax-Free Status of the
Distribution;
(iii) GameStop shall not under any
circumstances liquidate, dispose of, or otherwise discontinue the conduct of any
portion of the Active Trade or Business if such liquidation, disposition or
discontinuance would breach Section 4.1(d). GameStop shall continue the active
conduct of the Active Trade or Business primarily through officers and employees
of GameStop or its Subsidiaries (and not primarily through independent
contractors) who are not also officers or employees of Xxxxxx & Xxxxx or of any
Xxxxxx & Noble Affiliates. Notwithstanding the foregoing, (A) except with
respect to any corporation or other entity the status of which as the direct
owner of an active trade or business is material to the Tax-Free Status of the
Distribution, liquidations of any of GameStop's Subsidiaries into GameStop or
one or more Subsidiaries directly or indirectly controlled by GameStop shall not
be deemed to breach this Section 4.1(c) and (B) GameStop shall not be prohibited
from liquidating, disposing of or otherwise discontinuing the conduct of one or
more trades or businesses that constituted part of the Active Trade or Business,
or any portion thereof, provided that, in the case of this clause (B), the
aggregate Value of such trades or businesses, or portions thereof, so
liquidated, disposed of or discontinued shall not exceed $25 million. For
purposes of the foregoing, asset retirements, sale-leaseback arrangements and
discontinuances of product lines within a trade or business the active conduct
of which is continued shall not be deemed a liquidation, disposition or
discontinuance of a trade or business or portion thereof;
(iv) solely for purposes of this Section
4.1(c), GameStop shall not be treated as directly or indirectly controlling a
Subsidiary unless GameStop owns, directly or indirectly, shares of capital stock
of such Subsidiary constituting Tax Control.
(d) Continuity of Business.
(i) From the date of this Agreement until
the first day after the two-year anniversary of the Distribution Date, (A)
GameStop shall not voluntarily dissolve or liquidate, and (B) except in the
ordinary course of business, neither GameStop nor any Subsidiaries directly or
indirectly controlled by GameStop shall sell, transfer, or otherwise dispose of
or agree to dispose of assets (including, for such purpose, any shares of
capital stock of such Subsidiaries) that, in the aggregate, constitute more than
(x) 60% of the gross assets of
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GameStop or (y) 60% of the consolidated gross assets of GameStop and such
Subsidiaries, unless prior to the consummation of such transaction Xxxxxx &
Xxxxx has determined, in its sole and absolute discretion, that such transaction
would not jeopardize the Tax-Free Status of the Distribution. The amount of
gross assets of GameStop and such Subsidiaries shall be based on the fair market
value of each such asset as of the applicable Distribution Date.
(ii) Sales, transfers or other dispositions
by GameStop or any of its Subsidiaries to GameStop or one or more Subsidiaries
directly or indirectly controlled by GameStop shall not be included in any
determinations under this Section 4.1(d) of whether such 60% or more of the
gross assets of GameStop or 60% of the consolidated gross assets of GameStop and
such Subsidiaries have been sold, transferred or otherwise disposed of.
(iii) Solely for purposes of this Section
4.1(d), GameStop shall not be treated as directly or indirectly controlling a
Subsidiary unless GameStop owns, directly or indirectly, shares of capital stock
of such Subsidiary constituting Tax Control.
(e) Discharge of Intra-company Indebtedness. Prior to
the first Distribution Date, GameStop shall fully discharge and satisfy all of
the then existing indebtedness owed to Xxxxxx & Xxxxx or any Xxxxxx & Noble
Affiliate (other than payables incurred in the ordinary course of the business).
From such date until the first day after the two-year anniversary of the latest
Distribution Date, GameStop shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or allow to exist any indebtedness with
Xxxxxx & Xxxxx or any Xxxxxx & Noble Affiliate.
(f) Miscellaneous Actions. From the date of this
Agreement until the first day after the two-year anniversary of the latest
Distribution Date, GameStop shall not take, or permit any of its Subsidiaries to
take, any other actions or enter into any transaction or series of transactions
or agree to enter into any other transactions that would be reasonably likely to
jeopardize the Tax-Free Status of the Distribution, including any action or
transaction that would be reasonably likely to be inconsistent with any
representation made in the Representation Letters, unless prior to the
consummation of such action or transaction Xxxxxx & Xxxxx has determined, in its
sole and absolute discretion, that such action or transaction would not
jeopardize the Tax-Free Status of the Distribution. Notwithstanding the
foregoing, if and to the extent that any action or transaction is described in
and permitted pursuant to Sections 4.1(a), (b), (c), (d) and (e), such action or
transaction shall not be prohibited by this Section 4.1(f).
(g) Permitted Actions and Transactions.
Notwithstanding the foregoing, the provisions of Section 4.1 shall not prohibit
GameStop from implementing any transaction upon which the IRS has granted a
favorable ruling in, or which is described in reasonable detail in, any Tax
Opinions/Rulings.
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4.2 Cooperation and Other Covenants.
(a) Notice of Subsequent GameStop Actions. Each of
GameStop and Xxxxxx & Noble shall furnish the other with a copy of any ruling
requests or other documents delivered to the IRS that relates to the
Distribution or that could otherwise be reasonably expected to have an effect on
the Tax-Free Status of the Distribution.
(b) Cooperation.
(i) Each of GameStop and Xxxxxx & Xxxxx
shall cooperate with the other and shall take (or refrain from taking) all such
actions as the other may reasonably request in connection with obtaining any
Xxxxxx & Noble determination referred to in Section 4.1. Such cooperation shall
include providing any information and/or representations reasonably requested by
the other to enable either party (or counsel for such party) to obtain and
maintain any Subsequent Tax Opinion/Ruling that would permit any action
described in Section 4.1 to be taken by GameStop or a GameStop Affiliate. From
and after any Representation Date in connection with obtaining any such
determination or the receipt of a Subsequent Tax Opinion/Ruling and until the
first day after the two-year anniversary of the date of such determination or
receipt, neither party shall take (nor shall it refrain from taking) any action
that would have caused such representation to be untrue unless the other party
has determined, in its sole and absolute discretion, that such action would not
jeopardize the Tax-Free Status of the Distribution.
(ii) In the event that GameStop notifies
Xxxxxx & Xxxxx that it desires to take one of the actions described in Section
4.1 and Xxxxxx & Noble concludes that such action might jeopardize the Tax-Free
Status of the Distribution, Xxxxxx & Xxxxx shall, at the request of GameStop,
elect either to (i) use all commercially reasonable efforts to obtain a
Subsequent Tax Opinion/Ruling that would permit GameStop to take the specified
action, and GameStop shall cooperate in connection with such efforts, or (ii)
provide all reasonable cooperation to GameStop in connection with GameStop
obtaining such a Subsequent Tax Opinion/Ruling in form and substance reasonably
satisfactory to Xxxxxx & Noble; provided, however, that the reasonable costs and
expenses incurred by Xxxxxx & Xxxxx of obtaining any such Subsequent Tax
Opinion/Ruling shall be borne by Xxxxxx & Noble.
(iii) In the event that Xxxxxx & Xxxxx, at
any time prior to the latest Distribution Date, ceases to own GameStop Capital
Stock constituting Tax Control and such failure was not caused by any breach by
GameStop of any of its representations, warranties, covenants or other
agreements made pursuant to this Agreement or otherwise, GameStop shall
cooperate with Xxxxxx & Noble and shall take (or refrain from taking) all
actions as Xxxxxx & Xxxxx may reasonably request so as to permit Xxxxxx & Noble
to regain ownership of GameStop Capital Stock which constitutes Tax Control and
would not jeopardize the Tax-Free Status of the Distribution.
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(iv) In the event that Xxxxxx & Xxxxx, at
any time prior to the latest Distribution Date, ceases to own GameStop Capital
Stock constituting Tax Control and such failure was caused by any breach by
GameStop of any of its representations, warranties, covenants or other
agreements made pursuant to this Agreement or otherwise, in addition to any
monetary damages or other indemnification obligations owing pursuant to Section
4.3 hereof, GameStop shall promptly take (or refrain from taking) all actions,
including the purchase of GameStop Capital Stock in the open market, necessary
so as to permit Xxxxxx & Noble to regain ownership of GameStop Capital Stock
which constitutes Tax Control and would not jeopardize the Tax-Free Status of
the Distribution.
(c) Notice.
(i) Until all restrictions set forth in
Section 4.1 have expired, GameStop shall give Xxxxxx & Xxxxx written notice of
any intention to effect or permit an action or transaction described in Section
4.1 and which is prohibited thereunder at such time within a period of time
reasonably sufficient to enable Xxxxxx & Noble (A) to make the determination
referred to in Section 4.1 or (B) to prepare and seek any Subsequent Tax
Opinion/ Ruling in connection with such proposed action or transaction. Each
such notice by GameStop shall set forth the terms and conditions of the proposed
action or transaction, including, as applicable, the nature of any related
action proposed to be taken by the Board of Directors of GameStop, the
approximate number of shares of GameStop Capital Stock proposed to be
transferred or issued, the approximate Value of GameStop's assets (or assets of
any of GameStop's Subsidiaries) proposed to be transferred, the proposed
timetable for such action or transaction, and the number of shares of GameStop
Capital Stock otherwise then owned by the other party to the proposed action or
transaction, all with sufficient particularity to enable Xxxxxx & Xxxxx to make
any such required determination, including information required to prepare and
seek a Subsequent Tax Opinion/Ruling in connection with such proposed action or
transaction.
(ii) Promptly, but in any event within 30
Business Days after Xxxxxx & Noble receives such written notice from GameStop,
Xxxxxx & Xxxxx shall evaluate such information and notify GameStop in writing of
(A) such determination or (B) of Xxxxxx & Noble's intent to seek a Subsequent
Tax Opinion/Ruling and the proposed date for submission of the request therefor,
which date shall not be more than 45 days after the date Xxxxxx & Xxxxx so
notifies GameStop of Xxxxxx & Noble's intent to seek a Subsequent Tax
Opinion/Ruling, provided that such 45-day period shall be appropriately extended
for any period of noncompliance by GameStop with Section 4.2(b). If Xxxxxx &
Xxxxx makes a determination that an action or transaction described in Section
4.1 would jeopardize the Tax-Free Status of the Distribution, such notice to
GameStop shall set forth, in reasonable detail, the reasons therefor. Xxxxxx &
Noble shall notify GameStop promptly, but in any event within two Business Days,
after the receipt of a Subsequent Tax Opinion/Ruling.
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4.3 Indemnification For Tax Liabilities.
(a) Indemnification. Notwithstanding any other
provision of this Agreement or any provision of any of the Tax Agreements to the
contrary but subject to Section 4.3(b), GameStop shall indemnify, defend and
hold harmless Xxxxxx & Xxxxx and each Xxxxxx & Noble Affiliate (or any successor
to any of them) against any and all Tax-Related Losses incurred by Xxxxxx &
Xxxxx in connection with any proposed tax assessment or tax controversy with
respect to the Distribution to the extent caused by any breach by GameStop of
any of its representations, warranties or covenants made pursuant to this
Agreement. All interest or penalties incurred in connection with such
Tax-Related Losses shall be computed for the time period up to and including the
date that GameStop pays its indemnification obligation in full.
(b) Exceptions to GameStop's Indemnification. If
Xxxxxx & Noble (i) makes a determination pursuant to any clause of Section 4.1,
on the basis of a Subsequent Tax Opinion/Ruling or otherwise, and (ii) delivers
to GameStop written notice of such determination pursuant to Section 4.2(c)(ii),
GameStop shall have no obligation pursuant to Section 4.3(a), except to the
extent that any Tax-Related Losses so incurred resulted from the inaccuracy,
incorrectness or incompleteness of any representation provided by GameStop upon
which such Subsequent Tax Opinion/Ruling and/or determination was based.
(c) Timing and Method of Tax Indemnification
Payments. GameStop shall pay any amount due and payable to Xxxxxx & Xxxxx
pursuant to this Section 4.3 on or before the 15th day following the earlier of
agreement or determination that such amount is due and payable to Xxxxxx &
Noble. All payments pursuant to this Section 4.3 shall be made by wire transfer
to the bank account designated by Xxxxxx & Xxxxx for such purpose, and on the
date of such wire transfer GameStop shall give Xxxxxx & Noble notice of the
transfer.
4.4 Procedure for Indemnification for Tax Liabilities.
(a) Notice of Claim. If Xxxxxx & Xxxxx receives
notice of the assertion of any Third-Party Claim with respect to which GameStop
may be obligated under Section 4.3 to provide indemnification, Xxxxxx & Noble
shall give GameStop notice thereof (together with a copy of such Third-Party
Claim, process or other legal pleading) promptly after becoming aware of such
Third-Party Claim; provided, however, that the failure of Xxxxxx & Xxxxx to give
notice as provided in this Section shall not relieve GameStop of its obligations
under Section 4.3, except to the extent that GameStop is actually prejudiced by
such failure to give notice. Such notice shall describe such Third-Party Claim
in reasonable detail.
(b) Obligation of Indemnifying Party.
(i) Xxxxxx & Noble and GameStop shall
jointly control the defense of, and cooperate with each other with respect to
defending, any Third-Party Claim with respect to which GameStop is obligated
under Section 4.3 to provide indemnification, provided
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that GameStop shall forfeit such joint control right with respect to a
particular Third-Party Claim if GameStop or any GameStop Affiliate makes any
public statement or filing, or takes any action (including the filing of any
submission or pleading, or the giving of a deposition or production of
documents, in any administrative or court proceeding) in connection with such
Third-Party Claim that is inconsistent in any material respect with any
representation or warranty made by GameStop in this Agreement, the Tax
Opinions/Rulings, or the Representation Letters.
(ii) GameStop and Xxxxxx & Xxxxx shall
exercise their rights to jointly control the defense of any such Third-Party
Claim solely for the purpose of defeating such Third-Party Claim and, unless
required by applicable law, neither GameStop nor Xxxxxx & Noble shall make any
statements or take any actions that could reasonably result in the shifting of
liability for any Losses arising out of such Third-Party Claim from the party
making such statement or taking such action (or any of its Affiliates) to the
other party (or any of its Affiliates).
(iii) Statements made or actions taken by
either GameStop or Xxxxxx & Xxxxx in connection with the defense of any such
Third-Party Claim shall not prejudice the rights of such party in any subsequent
action or proceeding between the parties.
(iv) If either Xxxxxx & Noble or GameStop
fails to jointly defend any such Third-Party Claim, the other party shall solely
defend such Third-Party Claim and the party failing to jointly defend shall use
commercially reasonable efforts to cooperate with the other party in its defense
of such Third-Party Claim; provided, however, that Xxxxxx & Xxxxx may not
compromise or settle any such Third-Party Claim without the prior written
consent of GameStop, which consent shall not be unreasonably withheld or
delayed. All costs and expenses of either party in connection with, and during
the course of, the joint control of the defense of any such Third-Party Claim
shall be initially paid by the party that incurs such costs and expenses. Such
costs and expenses shall be reallocated and reimbursed in accordance with the
respective indemnification obligations of the parties at the conclusion of the
defense of such Third-Party Claim.
4.5 Arbitration. Any dispute between the parties arising out
of or relating to this Section 4, including the interpretation of this Section
4, or any actual or purported breach of this Section 4, shall be resolved only
in accordance with the following provisions:
(a) Negotiation. Xxxxxx & Noble and GameStop shall
attempt in good faith to resolve any such dispute promptly through negotiations
of the parties. In the event of any such dispute, either party may deliver a
Dispute Notice to the other party, and within 20 Business Days after the receipt
of such Dispute Notice, the appropriate representatives of Xxxxxx & Xxxxx and
GameStop shall meet to attempt to resolve such dispute. If such dispute has not
been resolved within the Negotiation Period, or if one of the parties fails or
refuses to negotiate such dispute, the issue shall be settled by arbitration
pursuant to Section 4.5(b). The results of such arbitration shall be final and
binding on the parties.
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(b) Arbitration Procedure. Either party may initiate
arbitration with regard to such dispute by giving the other party written notice
either (i) at any time following the end of the Negotiation Period, or (ii) if
the parties do not meet within 20 Business Days after the receipt of the Dispute
Notice, at any time thereafter. The arbitration shall be conducted by three
arbitrators in accordance with the applicable rules of the AAA then in force and
effect, except as otherwise provided in this Section 4.5. Within 20 days
following receipt of the written notice of arbitration, Xxxxxx & Noble and
GameStop shall each appoint one arbitrator. The two arbitrators so appointed
shall appoint the third arbitrator. If either Xxxxxx & Xxxxx or GameStop shall
fail to appoint an arbitrator within such 20-day period, the arbitration shall
be by the sole arbitrator appointed by the other party. Whether selected by
Xxxxxx & Noble and GameStop or otherwise, each arbitrator selected to resolve
such dispute shall be a tax attorney or tax accountant who is generally
recognized in the tax community as a qualified and competent tax practitioner
with experience in the tax area involved in the issue or issues to be resolved.
Such arbitrators shall be empowered to determine whether GameStop is required to
indemnify Xxxxxx & Xxxxx pursuant to Section 4.3 and to determine the amount of
the related indemnification payment. Each of Xxxxxx & Noble and GameStop shall
bear 50% of the aggregate expenses of the arbitrators. The arbitration shall be
governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-14. The place
of arbitration shall be New York, New York. The final decision of the
arbitrators shall be rendered no later than one year from the date of the
written notice of arbitration.
4.6 Exclusive Remedies. Except for the right to pursue
equitable remedies, the remedies provided in this Section 4 shall be deemed the
sole and exclusive remedies of the parties with respect to the subject matters
of the indemnification provisions of this Section 4.
5. Certain Other Covenants.
5.1 Financial and Other Information.
(a) Financial Information. GameStop agrees that, for
so long as Xxxxxx & Xxxxx is required to consolidate GameStop's results of
operations and financial position or to account for its investment in GameStop
under the equity method of accounting (determined in accordance with generally
accepted accounting principles consistently applied):
(i) GameStop shall, and shall cause each of
its Subsidiaries to, maintain a system of internal accounting controls that will
provide reasonable assurance that: (A) GameStop's and such Subsidiaries' books,
records and accounts fairly reflect all transactions and dispositions of assets
and (B) the specific objectives of accounting control are achieved.
(ii) GameStop shall, and shall cause each of
its Subsidiaries to, maintain a fiscal year comprised of 52 or 53 weeks, ending
on the Saturday closest to the last day of January.
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(iii) GameStop shall deliver to Xxxxxx &
Noble a trial balance submission, which shall include amounts relating to each
of its Subsidiaries, in such format and detail as Xxxxxx & Xxxxx may request,
(A) with respect to each month (other than the last month of each fiscal year),
within nine Business Days following the last day of each such month, and (B)
with respect to each fiscal year, within 14 Business Days following the end of
such fiscal year.
(iv) As soon as practicable, and in any
event within nine Business Days after the end of each of the first three fiscal
quarters in each fiscal year of GameStop and within 14 Business Days after the
end of each such fiscal year, GameStop shall deliver to Xxxxxx & Noble a
consolidated income statement and balance sheet for GameStop and its
Subsidiaries for such fiscal quarter or year, as the case may be.
(v) As soon as practicable, and in any event
within 35 days after the end of each of the first three fiscal quarters in each
fiscal year of GameStop and no later than five days before GameStop intends to
file its Quarterly Financial Statements with the SEC, GameStop shall deliver to
Xxxxxx & Xxxxx drafts of such Quarterly Financial Statements. No later than the
earlier of (x) two Business Days prior to the date GameStop publicly files the
Quarterly Financial Statements with the SEC or otherwise makes such Quarterly
Financial Statements publicly available or (y) two Business Days prior to the
date on which Xxxxxx & Noble has notified GameStop that it intends to file its
quarterly financial statements with the SEC, GameStop shall deliver to Xxxxxx &
Xxxxx the final form of the Quarterly Financial Statements, certified by the
chief financial officer of GameStop as presenting fairly, in all material
respects, the financial condition and results of operations of GameStop and its
Subsidiaries; provided that GameStop may continue to revise such Quarterly
Financial Statements prior to the filing thereof in order to make corrections
and non-substantive changes which corrections and changes shall be delivered by
GameStop to Xxxxxx & Noble as soon as practicable, and in any event within eight
hours thereafter; and, provided, further, that Xxxxxx & Xxxxx and GameStop
financial representatives shall actively consult with each other regarding any
changes (whether or not substantive) which GameStop may consider making to its
Quarterly Financial Statements and related disclosures during the three Business
Days immediately prior to any anticipated filing with the SEC, and GameStop
shall obtain Xxxxxx & Noble's consent prior to making any change to GameStop's
Quarterly Financial Statements or related disclosures which would have an effect
upon Xxxxxx & Xxxxx'x financial statements or related disclosures. In addition
to the foregoing, no Quarterly Financial Statement or any other document which
refers, or contains information with respect, to the ownership of GameStop by
Xxxxxx & Noble, the separation of GameStop from Xxxxxx & Xxxxx or the
Distribution shall be filed with the SEC or otherwise made public by GameStop or
any of its Subsidiaries without the prior written consent of Xxxxxx & Noble.
(vi) GameStop shall deliver to Xxxxxx &
Xxxxx as soon as practicable, and in any event within 45 days after the end of
each fiscal year of GameStop and no later than 10 days before GameStop intends
to file its Annual Financial Statements with the SEC,
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drafts of the Annual Financial Statements. GameStop shall deliver to Xxxxxx &
Noble all revisions to such drafts as soon as any such revisions are prepared or
made. No later than the earlier of (1) five Business Days prior to the date
GameStop publicly files the Annual Financial Statements with the SEC or
otherwise makes such Annual Financial Statements publicly available or (2) five
Business Days prior to the date on which Xxxxxx & Xxxxx has notified GameStop
that it intends to file its annual financial statements with the SEC, GameStop
shall deliver to Xxxxxx & Noble the final form of the Annual Financial
Statements certified by the chief financial officer of GameStop as presenting
fairly, in all material respects, the financial condition and results of
operations of GameStop and its Subsidiaries; provided that GameStop may continue
to revise such Annual Financial Statements prior to the filing thereof in order
to make corrections and non-substantive changes which corrections and changes
shall be delivered by GameStop to Xxxxxx & Xxxxx as soon as practicable, and in
any event within eight hours thereafter; and, provided, further, that Xxxxxx &
Noble and GameStop financial representatives shall actively consult with each
other regarding any changes (whether or not substantive) which GameStop may
consider making to its Annual Financial Statements and related disclosures
during the three Business Days immediately prior to any anticipated filing with
the SEC, and GameStop shall obtain Xxxxxx & Xxxxx'x consent prior to making any
change to GameStop's Annual Financial Statements or related disclosures which
would have an effect upon Xxxxxx & Noble's financial statements or related
disclosures. In addition to the foregoing, no Annual Financial Statement or any
other document which refers, or contains information with respect, to the
ownership of GameStop by Xxxxxx & Xxxxx, the separation of GameStop from Xxxxxx
& Noble or the Distribution shall be filed with the SEC or otherwise made public
by GameStop or any of its Subsidiaries without the prior written consent of
Xxxxxx & Xxxxx. In any event, GameStop shall deliver to Xxxxxx & Noble, no later
than 80 days after the end of each fiscal year of GameStop, the final form of
the Annual Financial Statements accompanied by an opinion thereon by GameStop's
independent certified public accountants.
(vii) GameStop shall deliver to Xxxxxx &
Xxxxx all Quarterly and Annual Financial Statements of each Subsidiary of
GameStop which is itself required to file financial statements with the SEC or
otherwise make such financial statements publicly available, with such financial
statements to be provided in the same manner and detail and on the same time
schedule as those financial statements of GameStop required to be delivered to
Xxxxxx & Noble pursuant to this Section 5.1.
(viii) All information provided by GameStop
or any of its Subsidiaries to Xxxxxx & Xxxxx pursuant to Sections 5.1(a)(iii)
through (vii) inclusive shall be consistent in terms of format and detail and
otherwise with the procedures in effect on the date hereof with respect to the
provision of such financial information by GameStop and its Subsidiaries, as
applicable, to Xxxxxx & Noble (and, where appropriate, as presently presented in
financial reports to Xxxxxx & Xxxxx'x Board of Directors), with such changes
therein as may be requested by Xxxxxx & Noble from time to time consistent with
changes in reporting by sectors and Subsidiaries of Xxxxxx & Xxxxx.
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(ix) GameStop and each of its Subsidiaries
which files information with the SEC shall deliver to Xxxxxx & Noble: (A) as
soon as the same are prepared, substantially final drafts of GameStop Public
Documents, and (B) as soon as practicable, but in no event later than four
Business Days prior to the date the same are printed, sent or filed, whichever
is earliest, final copies of all such GameStop Public Documents; provided that
GameStop may continue to revise such GameStop Public Documents prior to the
filing thereof in order to make corrections and non-substantive changes which
corrections and changes shall be delivered by GameStop to Xxxxxx & Xxxxx as soon
as practicable, and in any event within eight hours thereafter; and, provided,
further, that Xxxxxx & Noble and GameStop financial representatives shall
actively consult with each other regarding any changes (whether or not
substantive) which GameStop may consider making to any of its GameStop Public
Documents and related disclosures prior to any anticipated filing with the SEC,
and GameStop shall obtain Xxxxxx & Xxxxx'x consent prior to making any change to
its GameStop Public Documents or related disclosures which would have an effect
upon Xxxxxx & Noble's financial statements or related disclosures. In addition
to the foregoing, no GameStop Public Document or any other document which
refers, or contains information with respect, to the ownership of GameStop by
Xxxxxx & Xxxxx, the separation of GameStop from Xxxxxx & Noble or the
Distribution shall be filed with the SEC or otherwise made public by GameStop or
any of its Subsidiaries without the prior written consent of Xxxxxx & Xxxxx.
(x) GameStop shall, as promptly as
practicable, deliver to Xxxxxx & Noble copies of all annual and other budgets
and financial projections (consistent in terms of format and detail and
otherwise with the procedures in effect on the date hereof) relating to GameStop
or any of its Subsidiaries and shall provide Xxxxxx & Xxxxx an opportunity to
meet with management of GameStop to discuss such budgets and projections.
(xi) With reasonable promptness, GameStop
shall deliver to Xxxxxx & Noble such additional financial and other information
and data with respect to GameStop and its Subsidiaries and their business,
properties, financial positions, results of operations and prospects as from
time to time may be reasonably requested by Xxxxxx & Xxxxx.
(xii) Not later than one day prior to
issuance, GameStop shall deliver to Xxxxxx & Noble copies of substantially final
drafts of all press releases and other statements to be made available by
GameStop or any of its Subsidiaries to employees of GameStop or any of its
Subsidiaries or to the public concerning material developments in the business,
properties, earnings, results of operations, financial condition or prospects of
GameStop or any of its Subsidiaries or the relationship between (A) GameStop or
any of its Subsidiaries and (B) Xxxxxx & Xxxxx or any of its Affiliates. In
addition, prior to the issuance of any such press release or public statement,
GameStop shall consult with Xxxxxx & Noble regarding any changes (other than
typographical or other similar minor changes) to such substantially final
drafts. Immediately following the issuance thereof, GameStop shall deliver to
Xxxxxx & Xxxxx copies of final drafts of all press releases and other public
statements. GameStop and Xxxxxx & Noble will consult with each other as to the
timing of their annual and
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quarterly earnings releases and will give each other an opportunity to review
the information therein relating to GameStop and its Subsidiaries and to comment
thereon.
(xiii) GameStop shall cooperate fully, and
cause its accountants to cooperate fully, with Xxxxxx & Xxxxx to the extent
requested by Xxxxxx & Noble in the preparation of Xxxxxx & Xxxxx Public Filings.
GameStop agrees to provide to Xxxxxx & Noble all information that Xxxxxx & Xxxxx
reasonably requests in connection with any Xxxxxx & Noble Public Filings or
that, in the judgment of Xxxxxx & Xxxxx'x legal department, is required to be
disclosed or incorporated by reference therein under any law, rule or
regulation. Such information shall be provided by GameStop in a timely manner on
the dates requested by Xxxxxx & Noble (which may be earlier than the dates on
which GameStop otherwise would be required hereunder to have such information
available) to enable Xxxxxx & Xxxxx to prepare, print and release all Xxxxxx &
Noble Public Filings on such dates as Xxxxxx & Xxxxx shall determine. GameStop
shall cause its accountants to consent to any reference to them as experts in
any Xxxxxx & Noble Public Filings required under any law, rule or regulation. If
and to the extent requested by Xxxxxx & Xxxxx, GameStop shall diligently and
promptly review all drafts of such Xxxxxx & Noble Public Filings and prepare in
a diligent and timely fashion any portion of such Xxxxxx & Xxxxx Public Filing
pertaining to GameStop. Prior to any printing or public release of any Xxxxxx &
Noble Public Filing, an appropriate executive officer of GameStop shall, if
requested by Xxxxxx & Xxxxx, certify that the information relating to GameStop,
any GameStop Affiliate or the GameStop Business in such Xxxxxx & Noble Public
Filing is accurate, true and correct in all material respects. Unless required
by law, rule or regulation, GameStop shall not publicly release any financial or
other information which conflicts with the information with respect to GameStop,
any GameStop Affiliate or the GameStop Business that is included in any Xxxxxx &
Xxxxx Public Filing without Xxxxxx & Noble's prior written consent. Prior to the
release or filing thereof, Xxxxxx & Xxxxx shall provide GameStop with a draft of
any portion of a Xxxxxx & Noble Public Filing containing information relating to
GameStop and its Subsidiaries and shall give GameStop an opportunity to review
such information and comment thereon; provided that Xxxxxx & Xxxxx shall
determine in its sole discretion the final form and content of all Xxxxxx &
Noble Public Filings.
(b) Auditors and Audits; Annual Statements and
Accounting. GameStop agrees that, for so long as Xxxxxx & Xxxxx is required to
consolidate GameStop's results of operations and financial position or to
account for its investment in GameStop under the equity method of accounting (in
accordance with generally accepted accounting principles):
(i) GameStop shall use its best efforts to
enable the GameStop Auditors to complete their audit such that they will date
their opinion on GameStop's audited annual financial statements on the same date
that the Xxxxxx & Noble Auditors date their opinion on Xxxxxx & Xxxxx Annual
Statements and to enable Xxxxxx & Noble to meet its timetable for the printing,
filing and public dissemination of the Xxxxxx & Xxxxx Annual Statements.
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(ii) GameStop shall provide to Xxxxxx &
Noble on a timely basis all information that Xxxxxx & Xxxxx reasonably requires
to meet its schedule for the preparation, printing, filing, and public
dissemination of the Xxxxxx & Noble Annual Statements. Without limiting the
generality of the foregoing, GameStop will provide all required financial
information with respect to GameStop and its Subsidiaries to GameStop's Auditors
in a sufficient and reasonable time and in sufficient detail to permit
GameStop's Auditors to take all steps and perform all reviews necessary to
provide sufficient assistance to Xxxxxx & Xxxxx'x Auditors with respect to
information to be included or contained in the Xxxxxx & Noble Annual Statements.
(iii) GameStop shall authorize GameStop's
Auditors to make available to Xxxxxx & Xxxxx'x Auditors both the personnel who
performed or are performing the annual audit of GameStop and work papers related
to the annual audit of GameStop, in all cases within a reasonable time prior to
GameStop's Auditors' opinion date, so that the Xxxxxx & Noble Auditors are able
to perform the procedures they consider necessary to take responsibility for the
work of the GameStop Auditors as it relates to the Xxxxxx & Xxxxx Auditors'
report on Xxxxxx & Noble Annual Statements, all within sufficient time to enable
Xxxxxx & Xxxxx to meet its timetable for the printing, filing and public
dissemination of the Xxxxxx & Noble Annual Statements.
(iv) GameStop shall provide Xxxxxx & Xxxxx'x
internal auditors access to GameStop's and its Subsidiaries' books and records
so that Xxxxxx & Noble may conduct reasonable audits relating to the financial
statements provided by GameStop pursuant hereto as well as to the internal
accounting controls and operations of GameStop and its Subsidiaries.
(v) GameStop shall give Xxxxxx & Xxxxx as
much prior notice as reasonably practical of any proposed determination of, or
any significant changes in, its accounting estimates or accounting principles
from those in effect on the date hereof. GameStop will consult with Xxxxxx &
Noble and, if requested by Xxxxxx & Xxxxx, GameStop will consult with Xxxxxx &
Noble's independent public accountants with respect thereto. GameStop will not
make any such determination or changes without Xxxxxx & Xxxxx'x prior written
consent if such a determination or a change would be sufficiently material to be
required to be disclosed in GameStop's financial statements as filed with the
SEC or otherwise publicly disclosed therein.
(vi) Notwithstanding clause (vi) above,
GameStop shall make any changes in its accounting estimates or accounting
principles that are requested by Xxxxxx & Noble in order for GameStop's
accounting estimates and principles to be consistent with those of Xxxxxx &
Xxxxx.
Nothing in this Section 5.1 shall
require GameStop to violate any agreement with any of its customers regarding
the confidentiality of commercially sensitive information relating to that
customer or its business; provided that in the event that GameStop is required
under this Section 5.1 to disclose any such information, GameStop shall
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use all commercially reasonable efforts to seek to obtain such customer's
consent to the disclosure of such information.
5.2 Other Covenants. GameStop hereby covenants and agrees
that, for so long as Xxxxxx & Noble beneficially owns at least 50% (by vote) of
the outstanding shares of GameStop Common Stock:
(a) GameStop shall not, without the prior written
consent of Xxxxxx & Xxxxx (which it may withhold in its sole and absolute
discretion), take, or cause to be taken, directly or indirectly, any action,
including making or failing to make any election under the law of any state,
which has the effect, directly or indirectly, of restricting or limiting the
ability of Xxxxxx & Noble to freely sell, transfer, assign, pledge or otherwise
dispose of shares of GameStop Common Stock or would restrict or limit the rights
of any transferee of Xxxxxx & Xxxxx as a holder of GameStop Common Stock.
Without limiting the generality of the foregoing, GameStop shall not, without
the prior written consent of Xxxxxx & Noble (which it may withhold in its sole
and absolute discretion), take any action, or take any action to recommend to
its stockholders any action, which would among other things, limit the legal
rights of, or deny any benefit to, Xxxxxx & Xxxxx as a GameStop stockholder in a
manner not applicable to GameStop stockholders generally.
(b) GameStop shall not, without the prior written
consent of Xxxxxx & Noble (which it may withhold in its sole and absolute
discretion), issue any shares of GameStop Capital Stock or any rights, warrants
or options to acquire GameStop Capital Stock (including securities convertible
or exchangeable for GameStop Capital Stock), if after giving effect to such
issuances and considering all of the shares of GameStop Capital Stock acquirable
pursuant to such rights, warrants and options to be outstanding on the date of
such issuance (whether or not then exercisable), Xxxxxx & Xxxxx would own less
than 50% (by vote) of the then outstanding shares of GameStop Common Stock.
(c) To the extent that Xxxxxx & Noble now or
hereafter is a party to any contracts or agreements that provide that certain
actions of Xxxxxx & Xxxxx'x Subsidiaries may result in Xxxxxx & Noble being in
breach of or in default under such agreements and Xxxxxx & Xxxxx has advised
GameStop of the existence, and has furnished GameStop with copies, of such
contracts or agreements (or the relevant portions thereof), GameStop shall not
take any actions that reasonably could result in Xxxxxx & Noble being in breach
of or in default under any such contract or agreement. GameStop hereby
acknowledges and agrees that Xxxxxx & Xxxxx has furnished it with copies of each
such contract or agreement (or the relevant portion thereof) currently in
effect. The parties acknowledge and agree that, after the date hereof, Xxxxxx &
Noble may in good faith (and not solely with the intention of imposing
restrictions on GameStop pursuant to this covenant) enter into additional
contracts or agreements that provide that certain actions of Xxxxxx & Xxxxx'x
Subsidiaries may result in Xxxxxx & Noble being in breach of or in default under
such agreements. GameStop agrees to keep confidential and not to disclose any
information provided to it pursuant to this Section 5.2(c).
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6. Indemnification.
6.1 Indemnification by GameStop. Subject to Section 6.3,
GameStop shall indemnify, defend and hold harmless Xxxxxx & Xxxxx, all Xxxxxx &
Xxxxx Affiliates and each of their respective directors, officers and employees
(in their capacities as such), from and against (i) all Losses relating to,
arising out of, or due to, directly or indirectly, any breach by GameStop or any
GameStop Affiliate of any of the provisions of this Agreement; (ii) all Losses
relating to, arising out of, or due to, directly or indirectly, any incorrect,
inaccurate or incomplete financial or other information provided by GameStop or
any GameStop Affiliate to Xxxxxx & Noble pursuant to Section 5.1 of this
Agreement; (iii) all Losses relating to, arising out of, or due to any untrue
statement or alleged untrue statement of a material fact contained in, or
incorporated by reference into, the IPO Registration Statement or the omission
or alleged omission to state (whether pursuant to direct statement or
incorporation by reference) in the IPO Registration Statement a material fact
required to be stated therein or necessary to make the statements therein not
misleading other than with respect to the Xxxxxx & Xxxxx Disclosure Portions;
and (iv) all Losses relating to, arising out of, or due to any untrue statement
or alleged untrue statement of a material fact contained in, or incorporated by
reference into, the Distribution Registration Statement or the omission or
alleged omission to state (whether pursuant to direct statement or incorporation
by reference) in the Distribution Registration Statement a material fact
required to be stated therein or necessary to make the statements therein not
misleading other than with respect to the Xxxxxx & Noble Disclosure Portions.
6.2 Indemnification by Xxxxxx & Xxxxx. Subject to Section 6.3,
Xxxxxx & Noble shall indemnify, defend, and hold harmless GameStop, all GameStop
Affiliates, and each of their respective directors, officers and employees (in
their capacities as such), from and against (i) all Losses relating to, arising
out of, or due to, directly or indirectly, any breach by Xxxxxx & Xxxxx or any
Xxxxxx & Noble Affiliate of any of the provisions of this Agreement; (ii) all
Losses relating to, arising out of, or due to any untrue statement or alleged
untrue statement of a material fact contained in, or incorporated by reference
into, the Xxxxxx & Xxxxx Disclosure Portions of the IPO Registration Statement
or the omission or alleged omission to state (whether pursuant to direct
statement or incorporation by reference) in the Xxxxxx & Noble Disclosure
Portions of the IPO Registration Statement a material fact required to be stated
therein or necessary to make the statements therein not misleading; and (iii)
all Losses relating to, arising out of, or due to any untrue statement or
alleged untrue statement of a material fact contained in, or incorporated by
reference into, the Xxxxxx & Xxxxx Disclosure Portions of the Distribution
Registration Statement or the omission or alleged omission to state (whether
pursuant to direct statement or incorporation by reference) in the Xxxxxx &
Noble Disclosure Portions of the Distribution Registration Statement a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
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6.3 Other Liabilities.
(a) Except as provided in Section 6.4, this Section 6
shall not be applicable to any Tax-Related Losses, which shall be governed by
Section 4 of this Agreement.
(b) This Section 6 shall not be applicable to any
Losses relating to, arising out of, or due to any breach of the provisions of
any other contract, agreement or understanding between Xxxxxx & Xxxxx or any
Xxxxxx & Noble Affiliate and GameStop or any GameStop Affiliate, which Losses
shall be governed by the terms of such contract, agreement or understanding.
6.4 Tax Effects of Indemnification.
(a) Any indemnification payment made under this
Agreement shall be characterized for tax purposes as if such payment were made
immediately prior to the latest Distribution Date, and shall therefore be
treated, to the extent permitted by law, as either (i) a distribution from
GameStop to Xxxxxx & Xxxxx or (ii) a capital contribution from Xxxxxx & Noble to
GameStop.
(b) The amount of any Loss or Tax-Related Losses for
which indemnification is provided under this Agreement shall be (i) increased to
take account of net Tax cost, if any, incurred by the Indemnitee arising from
the receipt or accrual of an Indemnity Payment hereunder (grossed up for such
increase) and (ii) reduced to take account of net Tax benefit, if any, realized
by the Indemnitee arising from incurring or paying such Loss or Tax-Related
Losses. In computing the amount of any such Tax cost or Tax benefit, the
Indemnitee shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the receipt or
accrual of any Indemnity Payment hereunder or incurring or paying any
indemnified Loss or Tax-Related Losses. Any Indemnity Payment hereunder shall
initially be made without regard to this Section 6.4 and shall be increased or
reduced to reflect any such net Tax cost (including gross-up) or net Tax benefit
only after the Indemnitee has actually realized such cost or benefit. For
purposes of this Agreement, an Indemnitee shall be deemed to have "actually
realized" a net Tax cost or a net Tax benefit to the extent that, and at such
time as, the amount of Taxes payable by such Indemnitee is increased above or
reduced below, as the case may be, the amount of Taxes that such Indemnitee
would be required to pay but for the receipt or accrual of the Indemnity Payment
or the incurrence or payment of such Loss or Tax-Related Losses, as the case may
be. The amount of any increase or reduction hereunder shall be adjusted to
reflect any final determination (which shall include the execution of Form
870-AD or successor form) with respect to the Indemnitee's liability for Taxes,
and payments between Xxxxxx & Xxxxx and GameStop to reflect such adjustment
shall be made if necessary.
6.5 Effect of Insurance Upon Indemnification. The amount which
an Indemnifying Party is required to pay to any Indemnitee pursuant to this
Section 6 shall be
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reduced (including retroactively) by any Insurance Proceeds and other amounts
actually recovered by such Indemnitee in reduction of the related Loss, it being
understood and agreed that each of GameStop and Xxxxxx & Noble shall use
commercially reasonable efforts to collect any such proceeds or other amounts to
which it or any of its Affiliates is entitled, without regard to whether it is
the Indemnifying Party hereunder. No Indemnitee shall be required, however, to
collect any such proceeds or other amounts prior to being entitled to
indemnification from an Indemnifying Party hereunder. If an Indemnitee receives
an Indemnity Payment in respect of a Loss and subsequently receives Insurance
Proceeds or other amounts in respect of such Loss, then such Indemnitee shall
pay to such Indemnifying Party an amount equal to the difference between (a) the
sum of the amount of such Indemnity Payment and the amount of such Insurance
Proceeds or other amounts actually received and (b) the amount of such Loss, in
each case adjusted (at such time as appropriate adjustment can be determined) to
reflect any premium adjustment attributable to such claim.
6.6 Procedure for Indemnification Involving Third-party
Claims.
(a) Notice of Claim. If any Indemnitee receives
notice of the assertion of any Third-Party Claim with respect to which an
Indemnifying Party is obligated under this Agreement to provide indemnification
(other than pursuant to Section 4), such Indemnitee shall give such Indemnifying
Party notice thereof (together with a copy of such Third-Party Claim, process or
other legal pleading) promptly after becoming aware of such Third-Party Claim;
provided, however, that the failure of any Indemnitee to give notice as provided
in this Section shall not relieve any Indemnifying Party of its obligations
under this Section 6, except to the extent that such Indemnifying Party is
actually prejudiced by such failure to give notice. Such notice shall describe
such Third-Party Claim in reasonable detail.
(b) Obligation of Indemnifying Party. An Indemnifying
Party, at such Indemnifying Party's own expense and through counsel chosen by
such Indemnifying Party (which counsel shall be reasonably acceptable to the
Indemnitee), may elect to defend any Third-Party Claim. If an Indemnifying Party
elects to defend a Third-Party Claim, then, within ten Business Days after
receiving notice of such Third-Party Claim (or sooner, if the nature of such
Third-Party Claim so requires), such Indemnifying Party shall notify the
Indemnitee of its intent to do so, and such Indemnitee shall cooperate in the
defense of such Third-Party Claim. Such Indemnifying Party shall pay such
Indemnitee's reasonable out-of-pocket expenses incurred in connection with such
cooperation. Such Indemnifying Party shall keep the Indemnitee reasonably
informed as to the status of the defense of such Third-Party Claim. After notice
from an Indemnifying Party to an Indemnitee of its election to assume the
defense of a Third-Party Claim, such Indemnifying Party shall not be liable to
such Indemnitee under this Section 6 for any legal or other expenses
subsequently incurred by such Indemnitee in connection with the defense thereof
other than those expenses referred to in the preceding sentence; provided,
however, that such Indemnitee shall have the right to employ one law firm as
counsel, together with a separate local law firm in each applicable jurisdiction
("Separate Counsel"), to represent such Indemnitee in any action or group of
related actions (which firm or firms shall be reasonably
-27-
acceptable to the Indemnifying Party) if, in such Indemnitee's reasonable
judgment at any time, either a conflict of interest between such Indemnitee and
such Indemnifying Party exists in respect of such claim, or there may be
defenses available to such Indemnitee which are different from or in addition to
those available to such Indemnifying Party and the representation of both
parties by the same counsel would be inappropriate, and in that event (i) the
reasonable fees and expenses of such Separate Counsel shall be paid by such
Indemnifying Party (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one Separate Counsel
(excluding local counsel) with respect to any Third-Party Claim (even if against
multiple Indemnitees) and (ii) each of such Indemnifying Party and such
Indemnitee shall have the right to conduct its own defense in respect of such
claim. If an Indemnifying Party elects not to defend against a Third-Party
Claim, or fails to notify an Indemnitee of its election as provided in this
Section 6 within the period of ten Business Days described above, the Indemnitee
may defend, compromise, and settle such Third-Party Claim and shall be entitled
to indemnification hereunder (to the extent permitted hereunder); provided,
however, that no such Indemnitee may compromise or settle any such Third-Party
Claim without the prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed. Notwithstanding the foregoing,
the Indemnifying Party shall not, without the prior written consent of the
Indemnitee, (i) settle or compromise any Third-Party Claim or consent to the
entry of any judgment which does not include as an unconditional term thereof
the delivery by the claimant or plaintiff to the Indemnitee of a written release
from all liability in respect of such Third-Party Claim or (ii) settle or
compromise any Third-Party Claim in any manner that would be reasonably likely
to have a material adverse effect on the Indemnitee.
(c) Joint Defense of Certain Claims. Notwithstanding
the provisions of Section 6.6(b), Xxxxxx & Xxxxx and GameStop shall jointly
control the defense of, and cooperate with each other with respect to defending,
any Third-Party Claim with respect to which each party is claiming that it is
entitled to indemnification under Section 6.1 or 6.2. If either Xxxxxx & Noble
or GameStop fails to defend jointly any such Third-Party Claim, the other party
shall solely defend such Third-Party Claim and the party failing to defend
jointly shall use all commercially reasonable efforts to cooperate with the
other party in its defense of such Third-Party Claim; provided, however, that
neither party may compromise or settle any such Third-Party Claim without the
prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed. All costs and expenses of either party in
connection with, and during the course of, the joint control of the defense of
any such Third-Party Claim shall be initially paid by the party that incurs such
costs and expenses. Such costs and expenses shall be reallocated and reimbursed
in accordance with the respective indemnification obligations of the parties at
the conclusion of the defense of such Third-Party Claim.
6.7 Procedure for Indemnification Not Involving Third-party
Claims.
(a) If any Indemnitee desires to assert against an
Indemnifying Party any claim for indemnification under this Section 6 other than
a Third-Party Claim (a "Claim"), the Indemnitee shall deliver to the
Indemnifying Party notice of its demand for satisfaction of
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such Claim (a "Request"), specifying in reasonable detail the amount of such
Claim and the basis for asserting such Claim. Within 30 days after the
Indemnifying Party has been given a Request, the Indemnifying Party shall either
(i) satisfy the Claim requested to be satisfied in such Request by delivering to
the Indemnitee payment by wire transfer or a certified or bank cashier's check
payable to the Indemnified Party in immediately available funds in an amount
equal to the amount of such Claim, or (ii) notify the Indemnitee that the
Indemnifying Party contests such Claim by delivering to the Indemnitee a Dispute
Notice, stating that the Indemnifying Party objects to such Claim and specifying
in reasonable detail the basis for contesting such Claim.
(b) If, within 20 Business Days after the delivery of
a Dispute Notice, the Indemnitee and the Indemnifying Party are unable to agree
to a resolution to the Request at issue, either party may submit the dispute to
arbitration. The results of such arbitration shall be final and binding on the
parties. The arbitration shall be conducted by three arbitrators in accordance
with the applicable rules of the AAA then in force and effect. Within 20 days
following receipt of the written notice of arbitration, each party shall each
appoint one arbitrator. The two arbitrators so appointed shall appoint the third
arbitrator. If either party shall fail to appoint an arbitrator within such
20-day period, the arbitration shall be by the sole arbitrator appointed by the
other party.
(c) Such arbitrators shall be empowered to determine
whether indemnification is required under this Section 6 and to determine the
amount of the related indemnification payment. Each of the parties shall bear
50% of the aggregate expenses of the arbitrators. The arbitration shall be
governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-14. The place
of arbitration shall be New York, New York. The final decision of the
arbitrators shall be rendered no later than one year from the date of the
written notice of arbitration. The arbitration award shall be final and binding
upon the parties and judgment thereon may be entered in any court of the State
of New York and federal courts in said state, the jurisdiction of which courts
is hereby consented to by the parties for such purposes. The service of any
notice, process, motion or other documents in connection with an arbitration
award hereunder may be effectuated either by personal service upon a party or by
certified or registered mail. The arbitrator shall not have the right to modify
or amend any of the terms or provisions of this Agreement.
6.8 Exclusive Remedies. Except for the right to pursue
equitable remedies, the remedies provided in this Section 6 shall be deemed the
sole and exclusive remedies of the parties with respect to the subject matters
of the indemnification provisions of this Section 6.
7. Miscellaneous.
7.1 Entire Agreement; Amendments; Waivers. This Agreement
constitutes the entire Agreement of the parties hereto with respect to the
subject matter hereof and shall supersede all prior agreements and
understandings, whether written or oral, between the parties with respect to
such subject matter and shall not be modified, amended or terminated, nor shall
any provisions hereof be waived except by a writing signed by the parties
hereto.
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7.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be wholly performed in the State of New York.
7.3 Jurisdiction; Venue. Subject to arbitration requirements
of Sections 4.5 and Section 6.7, each party hereto hereby irrevocably submits to
the jurisdiction of any New York State or United States Federal Court sitting in
the Southern District of New York over any action or proceeding arising out of
this Agreement, and each party hereby irrevocably agrees that all claims in
respect of such action or proceeding may be held and determined in such New York
State or Federal Court. Each party hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in any other
jurisdiction by suit on the judgment or in any other manner provided by law.
Each party hereto hereby further waives, to the fullest extent permitted by law,
any objection which he or it may now or hereafter have to the laying of venue in
such State and any objection to any action or proceeding in such State on the
basis of an inconvenient forum.
7.4 Notices. All notices required or permitted to be given
hereunder shall be given in writing and shall be delivered by hand, by
nationally recognized overnight courier, or by certified or registered first
class United States mail, return receipt requested, postage prepaid, addressed
as follows:
If to Xxxxxx & Xxxxx, to:
Xxxxxx & Noble, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chief Financial Officer
If to GameStop to:
GameStop Corp.
0000 Xxxxxxx X. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxx 00000
Attn: Chief Financial Officer
Any party may change its address for notices in the manner set forth in
this Section 7.4.
7.5 Assignment; Binding Effect. No party to this Agreement may
assign any of its rights or obligations hereunder without the prior written
consent of the other parties hereto. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their permitted successors
and assigns.
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7.6 Third Party Beneficiaries. The Indemnitees and their
respective successors shall be third party beneficiaries of the indemnification
provisions of Sections 4 and 6, as applicable, and shall be entitled to enforce
those provisions in each such case as fully and to the same extent as if they
were parties to this Agreement. Except as provided in the previous sentence,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any Person any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, and no Person (other than as
provided in the previous sentence) shall be deemed a third party beneficiary
under or by reason of this Agreement.
7.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same Agreement.
7.8 Invalidity. If any provision of this Agreement is held to
be unenforceable by a court of competent jurisdiction, then such provision shall
be deemed modified so that such provision is enforceable to the maximum extent
possible, and any such invalidity shall not affect any of the other provisions
of this Agreement.
7.9 Headings. The Section headings used in this Agreement are
for the convenience of the parties only, are not substantive, and shall not be
used to interpret or construe any of the provisions of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement,
unless otherwise specifically provided, they shall be deemed to be followed by
the words "without limitation." This Agreement shall be construed without regard
to any presumption or rule requiring construction or interpretation against the
party drafting or causing the document to be drafted.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
XXXXXX & XXXXX, INC.
/s/ Xxxxxxx X'Xxxxxxx
By:__________________________
Name: Xxxxxxx X'Xxxxxxx
Title: Chief Financial Officer
GAMESTOP CORP.
/s/ Xxxxx Xxxxxxx
By:_________________________
Name: Xxxxx Xxxxxxx
Title: Chief Financial Officer
10762-00007/910076.6
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