Senior Facility Commitment Letter

 

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                                                                    EXHIBIT 10.4

 

CITICORP NORTH AMERICA,     BANC OF AMERICA SECURITIES      MERRILL LYNCH CAPITAL

        INC.                          LLC                        CORPORATION

CITIGROUP GLOBAL MARKETS      BANC OF AMERICA BRIDGE        MERRILL LYNCH, PIERCE,

        INC.                          LLC                   FENNER & SMITH INCOR -

                                                                  PORATED

  390 GREENWICH STREET        9 WEST 57TH STREET           4 World Financial Center

                                                               North Tower

NEW YORK, NEW YORK 10013    NEW YORK, NEW YORK 10019         New York, NY 10080

 

                                                                   April 17, 2005

 

GameStop Corp.

2250 William D. Tate Ave.

Grapevine, Texas 76501

 

Attention: Mr. David Carlson

           Chief Financial Officer

 

                                 Senior Facility

                                Commitment Letter

 

Ladies and Gentlemen:

 

GameStop Corp. ("you") has advised Citigroup (as defined below), Banc of America

Securities LLC ("BAS"), Banc of America Bridge LLC ("Banc of America Bridge"),

Merrill Lynch Capital Corporation ("Merrill Lynch") and Merrill Lynch, Pierce,

Fenner & Smith Incorporated ("MLPF&S") that upon consummation of the Acquisition

(as defined below) a holding company (the "Borrower") will wholly-own you and

the Acquired Business (as defined below) and that you desire that the Borrower

establish the senior credit facility described herein (the "Facility"), the

proceeds of which would be used to finance the transactions described in Exhibit

A hereto (the "Transaction Description"). Capitalized terms used in this letter

agreement but not defined herein shall have the meanings given to them in the

Exhibits (as defined below) hereto.

 

Subject to the terms and conditions described in this letter agreement and the

attached Exhibits A, B and C (collectively, the "Exhibits" and, together with

the Fee Letter referred to below, this "Commitment Letter"), (i) Citigroup

Global Markets Inc. ("CGMI") is pleased to inform you of CGMI's commitment on

behalf of Citicorp North America, Inc. ("CNAI"), Citibank N.A. and/or any of

their affiliates to provide one-third of the principal amount of the Facility,

(ii) Banc of America Bridge is pleased to inform you of Banc of America Bridge's

commitment to provide one-third of the principal amount of the Facility and

(iii) Merrill Lynch is pleased to inform you of Merrill Lynch's commitment to

provide one-third of the principal amount of the Facility.

 

For purposes of this Commitment Letter, (i) "Citigroup" shall mean Citicorp

North America, Inc. and/or any affiliate thereof, including CGMI, as Citigroup

shall determine to be appropriate to provide the services contemplated herein,

(ii) the "Initial Lenders" shall mean CNAI, Banc of America Bridge and Merrill

Lynch, (iii) the "Lead Arrangers" shall mean CGMI, BAS and MLPF&S and (iv) "we"

or "us" shall mean the Initial Lenders and the Lead Arrangers.

 

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1.     CONDITIONS PRECEDENT

 

The respective commitments of Citigroup, Banc of America Bridge and Merrill

Lynch hereunder is subject to:

 

            (a) The preparation, execution and delivery of definitive

      documentation with respect to the Facility, including credit agreements

      and guarantees incorporating substantially the terms and conditions

      outlined in this Commitment Letter and otherwise reasonably satisfactory

      to the Lead Arrangers and their counsel (the "Operative Documents").

 

            (b) The absence of any change, effect, event, occurrence or state of

      facts that is materially adverse to the business, financial condition, or

      results of operations of the Acquired Business, other than any changes,

      effects, events, occurrences or state of facts relating to (i) the economy

      or financial markets in general, (ii) negotiation and entry into the

      Acquisition Agreement, the announcement of the Acquisition Agreement or

       the undertaking and performance or observance of the obligations

      contemplated by the Acquisition Agreement or necessary to consummate the

      transactions contemplated hereby (including adverse effects on results of

      operations attributable to the uncertainties associated with the period

      between the date hereof and the Closing Date), (iii) fluctuation in your

      or the Acquired Business' stock price (iv) the effect of incurring and

      paying Expenses (as defined in the Acquisition Agreement) in connection

      with negotiating, entering into, performing and consummating the

      transactions contemplated by the Acquisition Agreement, (v) changes in

      GAAP after the date hereof and (vi) product shortages and delays in

      product introductions consistent with those that occurred in 2004;

      provided, that with respect to clause (i) such changes, effects, events,

      occurrences or state of facts do not disproportionately affect such

      Persons (as defined in the Acquisition Agreement) relative to the other

      participants in the industries in which such Persons operate; provided,

      further, that, for the avoidance of doubt, compliance with (and the

      consequences thereof) the terms of the Acquisition Agreement (including

      Section 6.5, except for Section 6.5(a)(vi), thereof) shall not be taken

      into account in determining whether a material adverse effect shall have

      occurred or shall be expected to occur for any and all purposes.

 

            (c) The accuracy and completeness in all material respects of all

      representations that you, the Acquired Business and their respective

      affiliates make to the Lead Arrangers and all information (other than

      financial projections) that you, the Acquired Business and their

      respective affiliates furnish to the Lead Arrangers.

 

            (d) The payment in full of all fees, expenses and other amounts

      payable under this Commitment Letter and the Fee Letter.

 

            (e) The execution, delivery and compliance with the terms of (A) the

      letter agreement dated the date hereof (the "Engagement Letter") among

      you, Citigroup, BAS and MLPF&S, (B) this Commitment Letter, and (C) the

      Fee Letter, each in form and substance satisfactory to the Lead Arrangers.

 

Please note that the terms and conditions of the Initial Lenders' respective

commitments hereunder that are not covered or made clear in this Commitment

Letter are subject to mutual agreement of the parties.

 

2.     COMMITMENT TERMINATION

 

Each Initial Lender's respective commitment set forth in this Commitment Letter

will terminate on the earliest of (A) October 31, 2005; provided that such date

shall be automatically extended to December 31, 2005 to the extent the Outside

Date (as defined in the Acquisition Agreement) is extended to December 31, 2005

pursuant to Section 8.1(b)(i) of the Acquisition Agreement (as in effect on the

date of its execution), (B) the date the Operative Documents become effective

and (C) the date the Acquisition Agreement is terminated (such earliest date,

the "Termination Date").

 

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3.     SYNDICATION

 

Each Initial Lender reserves the right, before or after the execution of the

Operative Documents, to syndicate all or a portion of its commitment to one or

more other financial institutions reasonably acceptable to the Initial Lenders

that will become parties to the Operative Documents (the financial institutions

becoming parties to the Operative Documents being collectively referred to

herein as the "Lenders"). You understand that (i) each Initial Lender intends to

commence such syndication efforts promptly and (ii) the Lead Arrangers may elect

to appoint one or more agents to assist them in such syndication efforts.

 

Citigroup will act as the joint Lead Arranger and joint Book Runner, "on the

left," and Administrative Agent with respect to the Facility and will manage all

aspects of the syndication of the Facility in consultation with BAS, MLPF&S and

Borrower, including the timing of all offers to potential Lenders, the

determination of all amounts offered to potential Lenders, the selection of

Lenders, the allocation of commitments among the Lenders, the assignment of any

titles and the compensation to be provided to the Lenders. BAS will act as joint

Lead Arranger and joint Book Runner and Syndication Agent with respect to the

Facility. MLPF&S will act as joint Lead Arranger and joint Book Runner with

respect to the Facility

 

You shall take all actions that any Lead Arranger may reasonably request to

assist it in forming a syndicate acceptable to the Lead Arrangers and you.

 

To ensure an orderly and effective syndication of the Facility, you agree that,

until the termination of the syndication (as determined by the Lead Arrangers),

you will not, and will not permit any of your affiliates to, syndicate or issue,

attempt to syndicate or issue, announce or authorize the announcement of the

syndication or issuance of, or engage in discussions concerning the syndication

or issuance of, any debt security or commercial bank or other debt facility

(including any renewals thereof) other than the Asset Based Facility or other

working capital facility of the Borrower meeting the conditions set forth in

paragraph 6 of Exhibit C hereto, without the prior written consent of the Lead

Arrangers.

 

You agree that no additional agents, co-agents or lead arrangers will be

appointed, or other titles conferred, without the consent of the Lead Arrangers

(such consent not to be unreasonably withheld). You agree that no Lender will

receive any compensation of any kind for its participation in the Facility,

except as expressly provided in the Fee Letter or in the Exhibits.

 

4.     FEES

 

In addition to the fees described in the Exhibits, you will pay (or cause to be

paid) the nonrefundable fees set forth in the letter agreement dated the date

hereof (the "Fee Letter") among you and the Lead Arrangers. The terms of the Fee

Letter are an integral part of the Initial Lenders' respective commitments

hereunder and constitute part of this Commitment Letter for all purposes hereof.

Each of the fees described in the Fee Letter and Exhibits B and C shall be

nonrefundable when paid.

 

5.     INDEMNIFICATION

 

You agree to indemnify and hold harmless each Lead Arranger, each Lender and

each of their respective affiliates and each of their respective officers,

directors, employees, agents, advisors and representatives (each, an

"Indemnified Person") from and against any and all claims, damages, losses,

liabilities and expenses (including, without limitation, reasonable fees and

disbursements of counsel), joint or several, that may be incurred by or asserted

or awarded against any Indemnified Person (including, without limitation, in

connection with, any investigation, litigation or proceeding or the preparation

of any defense in connection therewith) in each case arising out of or in

connection with or relating to this Commitment Letter or the Operative Documents

or the transactions contemplated hereby or thereby, or any use made or proposed

to be made with the proceeds of the Facilities, except to the extent such claim,

damage, loss, liability or expense is found in a final, non-appealable judgment

by a court of competent jurisdiction to have resulted primarily from such

Indemnified Person's gross negligence or willful misconduct. In the case of an

investigation, litigation or proceeding to which the indemnity in

 

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this paragraph applies, such indemnity shall be effective, whether or not such

investigation, litigation or proceeding is brought by you, Borrower, the

Acquired Business, any of their respective securityholders or creditors, an

Indemnified Person or any other person, or an Indemnified Person is otherwise a

party thereto and whether or not the transactions contemplated hereby are

consummated.

 

No Indemnified Person shall have any liability (whether direct or indirect, in

contract, tort or otherwise) to you, Borrower, the Acquired Business or any of

their securityholders or creditors for or in connection with the transactions

contemplated hereby, except to the extent such liability is determined in a

final, nonappealable judgment by a court of competent jurisdiction to have

resulted primarily from such Indemnified Person's gross negligence or willful

misconduct. In no event, however shall any Indemnified Person be liable for any

special, indirect, consequential or punitive damages (including, without

limitation, any loss of profits, business or anticipated savings).

 

6.     COSTS AND EXPENSES

 

Borrower shall pay or reimburse the Lead Arrangers on demand for all reasonable

costs and expenses incurred by the Lead Arrangers (whether incurred before or

after the date hereof) in connection with the Facility, but not the syndication

thereof, and the preparation, negotiation, execution and delivery of this

Commitment Letter, the Operative Documents, including, without limitation, the

reasonable fees and disbursements of counsel, regardless of whether any of the

transactions contemplated hereby are consummated. Borrower further agrees to pay

all costs and expenses of the Lead Arrangers (including, without limitation,

reasonable fees and disbursements of counsel) incurred in connection with the

enforcement of any of their rights or remedies hereunder.

 

7.     CONFIDENTIALITY

 

By accepting delivery of this Commitment Letter, you agree that this Commitment

Letter is for your confidential use only and that neither its existence nor the

terms hereof will be disclosed by you to any person other than the officers,

directors, employees, accountants, attorneys and other legal advisors of yours

and Borrower, and then only on a confidential and "need to know" basis in

connection with the transactions contemplated hereby. Notwithstanding the

foregoing, (i) you may disclose this Commitment Letter (other than the Fee

Letter) to the Acquired Business and its officers, directors, employees,

accountants, attorneys and other legal advisors on a confidential and "need to

know" basis in connection with the Acquisition, (ii) you may disclose this

Commitment Letter (other than the Fee Letter) to each lender under the Asset

Based Facility (as defined below) and its officers, directors, employees,

accountants, attorneys and other legal advisors on a confidential and "need to

know" basis in connection with the Acquisition (iii) you may file a copy of any

portion of this Commitment Letter (other than the Fee Letter) in any public

record in which it is required by law to be filed and (iv) you may make such

other public disclosures of any of the terms and conditions hereof as such

Company is required by law, in the opinion of your counsel, to make.

 

8.     REPRESENTATIONS AND WARRANTIES

 

You represent and warrant that (i) all information (other than financial

projections) that has been or will hereafter be made available to the Lead

Arrangers, any Lender or any potential Lender by or on behalf of you and, to

your knowledge, the Acquired Business or any of their respective representatives

in connection with the transactions contemplated hereby is and will be complete

and correct in all material respects and does not and will not contain any

untrue statement of a material fact or omit to state a material fact necessary

in order to make the statements contained therein not misleading in light of the

circumstances under which such statements were or are made and (ii) all

financial projections, if any, that have been or will be prepared by or on

behalf of you and, to your knowledge, the Acquired Business or any of their

respective representatives and made available to the Lead Arrangers, any Lender

or any potential Lender have been or will be prepared in good faith based upon

reasonable assumptions. If, at any time from the date hereof until the execution

and delivery of the Operative Documents, any of the representations and

warranties in the preceding sentence would be incorrect if the information or

financial projections were being furnished, and such representations and

warranties were being made,

 

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at such time, then you will promptly supplement the information and the

financial projections so that such representations and warranties will be

correct under those circumstances.

 

In issuing this Commitment Letter and in arranging the Facility, including the

syndications of the Facility, we will be entitled to use, and to rely on the

accuracy of, the information furnished to us by or on behalf of you, the

Acquired Business or any of their respective representatives without

responsibility for independent verification thereof.

 

9.     NO THIRD PARTY RELIANCE; SHARING INFORMATION

 

The agreements of the Lead Arrangers and Initial Lenders hereunder and of any

Lender that issues a commitment to provide financing under the Facility are made

solely for your benefit and may not be relied upon or enforced by any other

person. This Commitment Letter is not intended to create a fiduciary

relationship among the parties hereto.

 

You acknowledge that we may provide debt financing, equity capital or other

services (including financial advisory services) to parties whose interests

regarding the transactions described herein or otherwise may conflict with your

interests. Consistent with each Lender's respective policies to hold in

confidence the affairs of its clients, no Lender will furnish confidential

information obtained from you or your affiliates to any other clients of such

Lenders and such Lenders shall treat all such confidential information in

accordance with such Lenders' customary practices with respect to confidential

information. Furthermore, we will not use in connection with the transactions

contemplated hereby, or furnish to you, confidential information obtained by us

from any other person.

 

10.    ASSIGNMENTS

 

You may not assign or delegate any of your rights or obligations under this

Commitment Letter or any Initial Lender's commitment hereunder without each

Initial Lender's prior written consent, and any attempted assignment without

such consent shall be void ab initio.

 

11.    AMENDMENTS

 

This Commitment Letter may not be amended or any provision hereof waived or

modified except by an instrument in writing signed by each party hereto.

 

12.    GOVERNING LAW, ETC.

 

This Commitment Letter shall be governed by, and construed in accordance with,

the laws of the State of New York. This Commitment Letter sets forth the entire

agreement among the parties with respect to the matters addressed herein and

supersedes all prior communications, written or oral, with respect hereto. This

Commitment Letter may be executed in any number of counterparts, each of which,

when so executed, shall be deemed to be an original and all of which, taken

together, shall constitute one and the same Commitment Letter. Delivery of an

executed counterpart of a signature page to this Commitment Letter by telecopier

shall be as effective as delivery of a manually executed counterpart of this

Commitment Letter. Sections 4 through 7, 12 and 13 shall survive the termination

of Citigroup's commitment hereunder. You acknowledge that information and

documents relating to the Facility may be transmitted through Intralinks, the

internet or similar electronic transmission systems.

 

13.    WAIVER OF JURY TRIAL, ETC.

 

Each party hereto irrevocably waives all right to trial by jury in any action,

proceeding or counterclaim (whether based on contract, tort or otherwise)

arising out of or relating to this Commitment Letter or the transactions

contemplated hereby or the actions of the parties hereto in the negotiation,

performance or enforcement hereof.

 

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With respect to all matters relating to this Commitment Letter, the Exhibits,

the Fee Letter and the Engagement Letter, you hereby irrevocably (i) submit to

the non-exclusive jurisdiction of any New York State or Federal court sitting in

the State of New York, County of New York, and any appellate court from any

thereof, (ii) agree that all claims related hereto may be heard and determined

in such courts, (iii) waive, to the fullest extent you may effectively do so,

the defense of an inconvenient forum, (iv) agree that a final judgment of such

courts shall be conclusive and may be enforced in other jurisdictions by suit on

the judgment or in any other manner provided by law and (v) waive any immunity

(sovereign or otherwise) from jurisdiction of any court or from any legal

process or setoff to which you or your properties or assets may be entitled.

 

14.    PATRIOT ACT

 

We hereby notify you that pursuant to the requirements of the UBA Patriot Act,

Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the "Patriot

Act"), the Lead Arrangers and the Lenders are required to obtain, verify and

record information that identifies you, which information includes the name,

address, tax identification number and other information regarding you that will

allow the Lead Arrangers or such Lender to identify you in accordance with the

Patriot Act. This notice is given in accordance with the requirements of the

Patriot Act and is effective as to the Lead Arrangers and the Lenders.

 

Please indicate your acceptance of the provisions hereof by signing the enclosed

copy of this Commitment Letter and the Fee Letter and returning them to (i) John

McAuley, Director, Citigroup Global Markets Inc., 390 Greenwich Street, New

York, New York 10013 (facsimile: (212) 723-8590), (ii) Lex Maultsby, Managing

Director, Banc of America Securities LLC, 9 West 57th Street, New York, New York

10019 (facsimile: (212) 415-9634) and (iii) Barry Price, Managing Director,

Merrill Lynch & Co., 4 World Financial Center,

 

North Tower, New York, New York 10080 (facsimile: (212) 449-7750), at or before

5:00 p.m. (New York City time) on April 18, 2005, the time at which the

commitment of the Initial Lenders set forth above (if not so accepted prior

thereto) will terminate.

 

                            [Signature Page Follows]

 

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If you elect to deliver this Commitment Letter by telecopier, please arrange for

the executed original to follow by next-day courier.

 

                                          Very truly yours,

 

                                          CITICORP NORTH AMERICA, INC.

 

                                          By: /s/ John McAuley

                                               ----------------------------------

                                              Name:   John McAuley

                                              Title: Vice President

 

                                          CITIGROUP GLOBAL MARKETS INC.

 

                                          By: /s/ John McAuley

                                              ----------------------------------

                                              Name:   John McAuley

                                               Title: Director

 

                                          BANC OF AMERICA BRIDGE LLC

 

                                          By: /s/ Lex Maultsby

                                              ----------------------------------

                                               Name:   Lex Maultsby

                                              Title: Managing Director

 

                                          BANC OF AMERICA SECURITIES LLC

 

                                          By: /s/ Lex Maultsby

                                               ----------------------------------

                                              Name:   Lex Maultsby

                                              Title: Managing Director

 

                                           MERRILL LYNCH CAPITAL CORPORATION

 

                                          By: /s/ Barry S. Price

                                              ----------------------------------

                                              Name:   Barry S. Price

                                               Title: Vice President

 

                                          MERRILL LYNCH, PIERCE, FENNER & SMITH

                                             INCORPORATED

 

                                          By: /s/ Barry S. Price

                                              ----------------------------------

                                              Name:   Barry S. Price

                                              Title: Managing Director

 

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Accepted and agreed to