Exhibit 10.1
EXECUTIVE EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (the
“Agreement”) is entered into on August 28, 2008,
between Paul Raines (“Executive”) and GameStop Corp.
(the “Company”), collectively referred to as the
“Parties,” with an “Effective Date” of
September 7, 2008.
1.
Executive’s
Position/Duties .
During the term of this Agreement, Executive will be employed as
the Chief Operating Officer of the Company, and shall have all of
the duties and responsibilities of that position. Executive shall
be considered a key employee of the Company and shall be entitled
to all the Company benefits afforded to key employees. Executive
agrees to dedicate all of his working time during normal working
hours (other than during excused absences such as for illness or
vacation), skill and attention to the business of the Company,
agrees to remain loyal to the Company, and not to engage in any
conduct that creates a conflict of interest to, or damages the
reputation of, the Company. Executive shall abide by the
Company’s Code of Ethics and Code of Ethics for Senior
Financial Officers, copies of which are attached hereto and
incorporated herein. Executive shall relocate from Mableton,
Georgia to the area of the Company’s executive offices in
Grapevine, Texas as soon as reasonably practicable.
2.
Term of Employment . The term of this Agreement shall
be for a period of three years commencing on the Effective Date.
Executive’s employment under this Agreement will commence on
the Effective Date, and will continue for a period of three years,
unless terminated earlier in accordance with the provisions of this
Agreement. At the expiration (but not earlier termination) of the
term (including any renewal term), the term of this Agreement shall
automatically renew for an additional period of one year, unless
either party has given the other party written notice of
non-renewal at least six months prior to such
expiration.
a.
Base Salary . During the term of this Agreement, the
Company shall provide Executive with a base salary of no less than
nine hundred thousand dollars ($900,000.00) per year, as adjusted
from time to time, to be paid in accordance with the
Company’s normal payroll policies (“ Base Salary
”).
b.
Bonuses/Distributions . (i) The Executive shall be
entitled to a one million dollar ($1,000,000) cash signing bonus
(“Signing Bonus”) payable within two weeks following
the Effective Date. The Signing Bonus shall be considered earned
over the original three-year term of this Agreement. Accordingly,
in the event Executive’s employment with the Company is
terminated prior to the third anniversary of the Effective Date by
the Company for Cause (as defined below) or by Executive without
Good Reason (as defined below), then Executive shall repay the
Company the unearned portion of the Signing Bonus (i.e. the
prorated amount of the Signing Bonus relating to the remainder of
the original three-year term). At any given time, the amount of the
Signing Bonus Executive shall be entitled to retain shall be equal
to the amount of the Signing Bonus multiplied by a fraction, the
numerator of which is the aggregate number of days of employment
measured from the Effective Date during which Executive shall have
rendered services to the Company, and the denominator of which is
1,095.
(ii) In addition to the Signing
Bonus, during the term of this Agreement, the Company shall provide
Executive with an annual bonus for each fiscal year of the Company
based on the formula and targets established for such fiscal year
under and in accordance with the Company’s Supplemental
Compensation Plan as then in effect (the “Bonus Plan”),
a copy of the current version of which is attached hereto and
incorporated herein. Executive may receive additional bonuses at
the discretion of the Board of Directors of the Company (the
“Board”). Executive’s target annual bonus under
the Bonus Plan shall be no less than 100% of Base Salary, with up
to an additional 25% of the target annual bonus if the established
target is exceeded by a certain percentage, as provided in the
Bonus Plan. The annual bonus for the Company’s fiscal year
ending January 31, 2009 shall be prorated, based on the number of
days employed during such fiscal year, unless Executive shall have
commenced employment with the Company prior to September 7, 2008
(the commencement date of the Company’s National Store
Managers Conference).
c.
Benefits . Executive shall be entitled to all
benefits, including, but not limited to, insurance programs
(including any individual or group life insurance program the
Company adopts), pension plans and other retirement benefits, four
weeks paid vacation per year (with a year for these purposes being
July 1 to June 30, and with said four-weeks being pro rated for any
partial year of employment during the term), sick leave, and
expense accounts, in each instance equal to the greater of the
benefits afforded other management personnel or the amount the
Board determines. Benefits shall include relocation benefits in
accordance with Company policies, to reimburse Executive for his
costs in relocating to the Grapevine, Texas area, including legal
fees, realtor fees, moving costs, travel costs and other expenses
reasonably related to the sale of his residence in Mableton,
Georgia and his location of and acquisition of a residence in the
Grapevine, Texas area. If necessary, the Company will pay all
reasonable costs and expenses for a temporary residence for
Executive in the Grapevine, Texas area for up to one year in
connection with his relocation, including, but not limited to,
rent, homeowner’s or renter’s insurance and
utilities.
d.
Expenses . The Company shall reimburse Executive for
reasonable expenses incurred in the performance of his duties
hereunder and in furtherance of the business of the Company, in
accordance with the policies and procedures of the Company. The
Company shall also reimburse Executive for his reasonable legal
expenses incurred in connection with the negotiation and execution
of this Agreement. All reimbursements under this paragraph shall be
made promptly after submission to the Company of evidence in
reasonable detail of the incurrence of such expenses.
e.
Restricted Stock . On the Effective Date, Executive
will receive a grant of 60,000 shares of Company common stock under
and in accordance with the Company’s Incentive Plan then in
effect (the “Incentive Plan” ), a copy of the
current version of which is attached hereto and incorporated
herein, vesting in equal annual installments on the first, second,
and third anniversaries of the Effective Date (subject to
employment with the Company on each of such dates). In addition,
each year during the term of this Agreement, subject to approval
each year by the Compensation Committee of the Board, Executive
shall receive as part of the Company’s annual stock grant to
its employees, at least 40,000 shares of Company common stock under
and in accordance with the Incentive Plan, vesting in equal annual
installments on
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the first, second, and third
anniversaries of the date of grant (subject to employment with the
Company on each of such dates).
4.
Termination of Employment . Executive’s
employment with the Company may be terminated as
follows:
a.
Death . In the event of Executive’s death,
Executive’s employment will be terminated
immediately.
b.
Disability . In the event of Executive’s
Disability, as defined below, Executive’s employment will be
terminated immediately. “Disability” shall mean a
written determination by a physician mutually agreeable to the
Company and Executive (or, in the event of Executive’s total
physical or mental disability, Executive’s legal
representative) that Executive is physically or mentally unable to
perform his duties of Chief Operating Officer under this Agreement
and that such disability can reasonably be expected to continue for
a period of six consecutive months or for shorter periods
aggregating 180 days in any 12-month period.
c.
Termination by the Company for Cause . The Company
shall be entitled to terminate Executive’s employment at any
time if it has “Cause,” which shall mean any of
the following: (i) conviction of, or plea of nolo contendere
to, a felony or any crime involving fraud or dishonesty; (ii)
willful misconduct that results in a material and demonstrable
damage to the business or reputation of the Company; (iii) breach
by Executive of any of the covenants contained in Sections 7, 9(c),
9(d) or 9(e) below; or (iv) willful refusal by Executive to perform
his obligations under this Agreement or the lawful direction of the
Board that is not the result of Executive’s death,
Disability, physical incapacity or Executive’s termination of
the Agreement, and that is not corrected within 30 days following
written notice thereof to Executive by the Company, such notice to
state with specificity the nature of the willful
refusal.
d.
Without Cause . Either the Company or Executive may
terminate Executive’s employment at any time without cause
upon written notice.
e.
Termination by Executive with Good Reason . Executive
shall be entitled to terminate his employment within 12 months
after any of the following events (each of which shall constitute
“Good Reason” ):
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(i)
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a “Change in Control” of
the Company, as defined below;
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(ii)
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a reduction in Executive’s
compensation or a material reduction in Executive’s
benefits;
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(iii)
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a material reduction in his
responsibilities for the Company;
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(iv)
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other than the relocation to the
Grapevine, Texas area, the Company requires Executive to move to
another location of the Company or any affiliate of the Company and
the distance between Executive’s former
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residence and new job site is at
least 50 miles greater than the distance between Executive’s
former residence and former job site; or
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(v)
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the Executive is no longer
reporting to Richard Fontaine or Dan Dematteo, unless the
Executive instead is reporting directly to the Board or its
Chairman.
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“Change in
Control” of the
Company shall be deemed to have occurred if any of the following
occur:
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(A)
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any Person becomes the
“beneficial owner” (as defined in Rule 13d-3 or
otherwise under the Securities Exchange Act of 1934, as amended
(the “Act”)), directly or indirectly (including as
provided in Rule 13d-3(d)(1) of the Act), of greater than 50% of
the voting stock of the Company following any disposition,
transaction, transfer, or otherwise, including by judgment or
decree or otherwise, without the prior written consent of
Executive. As used in this Agreement, “Person” means an
individual, a partnership, a corporation, an association, a limited
liability company, a joint stock company, a trust, a joint venture,
an unincorporated organization, a governmental entity (or any
department, agency, or political subdivision thereof), or any other
entity or any successor or assign to any of the foregoing, and in
the case of this clause (A), a “Person” shall not be
deemed to include a Person (1) a majority of whose board of
directors immediately following such disposition, transaction,
transfer or otherwise is comprised of individuals constituting the
Board immediately prior to such disposition, transaction, transfer,
or otherwise or (2) for which a majority of the outstanding shares
of such Person immediately following such disposition, transaction,
transfer, or otherwise are held by the stockholders of the Company
immediately prior to such disposition, transaction, transfer, or
otherwise;
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(B)
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individuals who constitute the Board
on the date hereof (the “Incumbent Board”) cease for
any reason to constitute at least a majority thereof. Any Person
becoming a member of the Board subsequent to such date whose
election, or nomination for election, is, at any time, approved by
a vote of at least a majority of the members comprising the
Incumbent Board shall be considered as though he were a member of
the Incumbent Board;
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(C)
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the Company consummates a
transaction, whether through a merger, asset sale, reorganization,
or otherwise, that results in (1) any Person, or Persons acting as
group for purposes of Section 13(d)(3) of the Act, holding at any
time after such transaction greater than 50% of the voting stock of
the surviving entity, determined by reference to the voting stock
of the surviving entity, (2) the sale, lease, or other transfer or
disposition of all or substantially all of the assets of the
Company, in any such case, where the Company does not control the
buyer or surviving entity in such
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transaction, or (3) the Board as of
the date immediately before such transaction, constituting less
than a majority of the Board of Directors of the combined entity;
or
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(iv)
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the Incumbent Board determines that,
following the date of this Agreement, a Person who is neither a
stockholder of the Company nor a member of the Incumbent Board has
obtained the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of the
Company, whether through the ownership of vo
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