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SEVENTH AMENDMENT TO REVOLVING CREDIT AGREEMENT
AND
FIRST AMENDMENT TO SECURITY AGREEMENT
among
THQ INC.,
Each of
UNION BANK OF CALIFORNIA, N.A.,
and
BNP PARIBAS
and
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent
January 8, 2002
CLOSING DOCUMENTS
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TABLE OF CONTENTS
(All documents dated January 8, 2002 unless otherwise specified below.)
1. Seventh Amendment to Revolving Credit Agreement and First Amendment to
Security Agreement among THQ Inc. (the "Borrower"), each of Union Bank
of California, N.A. and BNP Paribas (collectively, the "Lenders"), and
Union Bank of California, N.A., as Administrative Agent (the "Agent")
for the Lenders
2. Consent of THQ/JAKKS Pacific, LLC
3. Letter dated December 21, 2001 among the Borrower, the Lenders and the
Agent whereby the Lenders consent to the Borrower's acquisition of
Rainbow Multimedia Group, Inc.
SEVENTH AMENDMENT TO REVOLVING CREDIT AGREEMENT
AND
FIRST AMENDMENT TO SECURITY AGREEMENT
This Amendment, dated as of January 8, 2002, is entered into by (1) THQ
INC., a Delaware corporation (the "Borrower"), (2) each of UNION BANK OF
CALIFORNIA, N.A. and BNP PARIBAS (the "Lenders"), and (3) UNION BANK OF
CALIFORNIA, N.A., as administrative agent (the "Agent") for the Lenders.
Recitals
A. The Borrower, the Lenders and the Agent are parties to a Revolving
Credit Agreement dated as of August 31, 2000, as amended by a First Amendment to
Revolving Credit Agreement dated October 23, 2000, a Second Amendment to
Revolving Credit Agreement dated February 20, 2001, a Third Amendment to
Revolving Credit Agreement dated June 12, 2001, a Fourth Amendment to Revolving
Credit Agreement dated as of July 31, 2001, a Fifth Amendment to Revolving
Credit Agreement dated August 28, 2001 and a Sixth Amendment to Revolving Credit
Agreement dated October 26, 2001 (said Revolving Credit Agreement, as so
amended, herein called the "Credit Agreement"). Terms defined in the Credit
Agreement and not otherwise defined herein have the same respective meanings
when used herein, and the rules of interpretation set forth in Sections 1.2 and
1.3 of the Credit Agreement are incorporated herein by reference.
B. The Borrower, the Lenders and the Agent wish to (1) amend the Credit
Agreement to accommodate the Borrower's acquisition of Rainbow Multimedia Group,
Inc., an Arizona corporation, and (2) amend the Security Agreement to revise the
representation therein concerning investment property. Accordingly, the
Borrower, the Lenders and the Agent agree as set forth below.
Section 1. Amendments to Credit Agreement. Effective as of the date hereof
but subject to satisfaction of the conditions precedent set forth in Section 3,
the Credit Agreement is hereby amended as set forth below.
(a) Section 1.1 of the Credit Agreement is amended by adding the
following defined terms in appropriate alphabetical order:
"'Equity Offering' means the sale or issuance by the Borrower or
any Subsidiary of any equity interest (including common stock, preferred
stock, membership interests and partnership interests) or any options,
warrants, convertible securities or other rights to purchase such equity
interests."
"`Net Cash Proceeds' means, with respect to any Equity Offering,
the difference between (a) the aggregate amount received by the offeror in
cash (including any cash received by way of deferred payment pursuant to a
note receivable, other noncash consideration or otherwise, but only as and
when such cash is so received) in connection with such Equity Offering
minus (b) the reasonable fees, commissions and other out-of-pocket expenses
incurred by the offeror in connection with such Equity Offering (other than
amounts payable to Affiliates of the offeror)."
"`Rainbow Multimedia' means Rainbow Multimedia Group, Inc., an
Arizona corporation."
(b) Section 6.2(c) of the Credit Agreement is amended by deleting
the amount "$2,250,000" therein and substituting "$3,000,000."
(c) Section 6.2(d) of the Credit Agreement is amended by deleting the
word "and" at the end of Section 6.2(d)(i) and inserting the following
immediately before the period at the end of Section 6.2(d):
"and (iii) the Borrower may acquire all of the stock of Rainbow Multimedia,
solely with stock of the Borrower, for an effective purchase price not
exceeding $53,100,000."
(d) Section 6.2(k) of the Credit Agreement is amended in full to read
as follows:
"(k) Maintenance of Net Worth. The Borrower will not permit the
consolidated net worth of it and its Subsidiaries as of the end of any
fiscal year to be less than the sum of (i) $130,000,000 plus (ii) the Net
Cash Proceeds received by the Borrower or any Subsidiary from any Equity
Offering made after November 13, 2001 plus (iii) $53,045,465 plus (iv) for
each fiscal year ending after December 31, 2000, on a cumulative basis, the
greater of (A) 90% of any positive net income of the Borrower and its
Subsidiaries on a consolidated basis for such fiscal year and (B)
$15,000,000."
(e) Schedule 2 to the Credit Agreement is amended in full to be in
the form attached hereto as Schedule 2.
Section 2. Amendments to Security Agreement. Effective as of the date
hereof but subject to satisfaction of the conditions precedent set forth in
Section 3, the Security Agreement is hereby amended as set forth below.
(a) Section 6(d) of the Security Agreement is amended by deleting the
words "the date hereof" and substituting "January 8, 2002."
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(b) Schedule 1 to the Security Agreement is amended in full to be in
the form attached hereto as Schedule 1.
Section 3. Conditions to Effectiveness. This Amendment shall become
effective as of the date first set forth above when the Agent has received all
of the following documents, each dated the date hereof, in form and substance
satisfactory to the Agent and in the number of originals requested by the Agent:
(a) this Amendment, duly executed by the Borrower and the Lenders;
(b) a consent to this Amendment, duly executed by THQ/Jakks;
(c) control agreements for the purpose of perfecting the Agent's
security interest in such securities accounts of the Borrower as the Agent may
specify, in each case duly executed by the Borrower, the Agent and the
institution with which the securities account is maintained; and
(d) such other approvals, opinions, evidence and documents as any
Lender through the Agent may reasonably request.
Section 4. Representations and Warranties of Borrower. The Borrower
represents and warrants to the Lenders and the Agent as set forth below.
(a) The execution, delivery and performance by the Borrower of this
Amendment and the Credit Documents, as amended hereby, to which the Borrower is
a party are within the Borrower's corporate powers, have been duly authorized by
all necessary corporate action and do not (i) contravene the articles of
incorporation or bylaws of the Borrower, (ii) contravene any Governmental Rule
or contractual restriction binding on or affecting the Borrower or (iii) result
in or require the creation or imposition of any Lien (other than any created by
the Credit Documents) upon or with respect to any of the properties of the
Borrower.
(b) No Governmental Action is required for the due execution,
delivery or performance by the Borrower of this Amendment or any of the Credit
Documents, as amended hereby, to which the Borrower is a party.
(c) This Amendment and each of the Credit Documents, as amended
hereby, to which the Borrower is a party constitute legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting creditors' rights generally.
(d) The Security Agreement, as amended hereby, and the Guarantor
Security Agreement constitute valid and perfected first-priority Liens on the
Collateral specified therein, enforceable against all third parties in all
jurisdictions, and secure the payment of all obligations of the Borrower and
THQ/Jakks, respectively, under the Credit
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Documents, as amended hereby, and the execution, delivery and performance of
this Amendment do not adversely affect the Lien of the Security Agreement, as
amended hereby, or the Guarantor Security Agreement.
(e) The unaudited consolidated balance sheet of the Borrower and its
Subsidiaries as of September 30, 2001, and the related unaudited consolidated
statements of income, retained earnings and cash flows of the Borrower and its
Subsidiaries for the 9-month fiscal period then ended, certified (subject to
normal year-end audit adjustments) by the chief financial officer or chief
accounting officer of the Borrower, fairly present the consolidated financial
condition of the Borrower and its Subsidiaries as of such date and the
consolidated results of the operations of the Borrower and its Subsidiaries for
the 9-month fiscal period ended on such date, all in accordance with generally
accepted accounting principles applied on a consistent basis. Since September
30, 2001 there has been no material adverse change in the business, condition
(financial or otherwise), operations, performance, properties or prospects of
the Borrower or any of its Subsidiaries. The Borrower and its Subsidiaries have
no material contingent liabilities except as disclosed in such financial
statements or the notes thereto.
(f) There is no pending or, to the knowledge of the Borrower,
threatened action or proceeding affecting the Borrower or any Subsidiary before
any Governmental Person or arbitrator that could reasonably be expected to have
a material adverse effect on the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Borrower or any
Subsidiary or that purports to affect the legality, validity or enforceability
of this Amendment or any of the Credit Documents, as amended hereby.
(g) There has been no amendment to the articles of incorporation or
bylaws of the Borrower, or to the certificate of formation or operating
agreement of THQ/Jakks, on or after August 31, 2000. The representations and
warranties of the Credit Parties contained in the Credit Documents are correct
on and as of the date hereof as though made on and as of such date. No event has
occurred and is continuing, or would result from the effectiveness of this
Amendment, that constitutes a Default.
(h) Neither the Borrower nor THQ/Jakks has any bank account, deposit
account, investment account or other such account other than (i) the four
securities accounts of the Borrower specified in Schedule 1 to the Security
Agreement, as amended hereby, (ii) the six accounts of the Borrower at UBOC
specified in Schedule 2 to the Security Agreement and (iii) the one account of
the Borrower at Xxxxx Fargo Bank, N.A. specified in Schedule 2 to the Security
Agreement.
(i) All of the Borrower's equipment and inventory are located at the
places therefore specified in Schedule 3 to the Security Agreement.
Section 5. Reference to and Effect on Credit Documents.
(a) On and after the effective date of this Amendment, (i) each
reference in the Credit Agreement to "this Agreement," "hereunder," "hereof,"
"herein" or any other
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expression of like import referring to the Credit Agreement, and each reference
in the other Credit Documents to "the Credit Agreement," "thereunder,"
"thereof," "therein" or any other expression of like import referring to the
Credit Agreement, shall mean and be a reference to the Credit Agreement as
amended by this Amendment and (ii) each reference in the Security Agreement to
"this Agreement," "hereunder," "hereof," "herein" or any other expression of
like import referring to the Security Agreement, and each reference in the other
Credit Documents to "the Security Agreement," "thereunder," "thereof," "therein"
or any other expression of like import referring to the Security Agreement,
shall mean and be a reference to the Security Agreement as amended by this
Amendment.
(b) Except as specifically amended above, the Credit Agreement, the
Security Agreement and the other Credit Documents shall remain in full force and
effect and are hereby ratified and confirmed. Without limiting the generality of
the foregoing, the Security Agreement, as amended hereby, and the Guarantor
Security Agreement and all of the Collateral described therein do and shall
continue to secure the payment of all obligations stated to be secured thereby
under the Credit Documents, as amended hereby.
(c) Except as expressly set forth herein, the execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of the Agent or the Lenders under any of the Credit Documents or
constitute a waiver of any provision of any of the Credit Documents.
Section 6. Costs and Expenses. The Borrower agrees to pay on demand all
costs and expenses of the Agent in connection with the preparation, execution
and delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including the reasonable fees and out-of-pocket expenses of
counsel for the Agent with respect thereto and with respect to advising the
Agent as to its rights and responsibilities hereunder and thereunder.
Section 7. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute one and the same agreement.
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Section 8. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OF CALIFORNIA.
THQ INC.
By: /s/ XXXX XXXX
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Xxxx Xxxx
Senior Vice President,
Finance & Administration
& Chief Financial Officer
UNION BANK OF CALIFORNIA, N.A.,
as Agent and Lender
By:
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Xxx X. Xxxxxx
Vice President &
Senior Credit Executive
BNP PARIBAS
By:
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Name:
-----------------------------------
Title:
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By:
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Name:
-----------------------------------
Title:
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Section 8. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OF CALIFORNIA.
THQ INC.
By:
-------------------------------------
Xxxx Xxxx
Senior Vice President,
Finance & Administration
& Chief Financial Officer
UNION BANK OF CALIFORNIA, N.A.,
as Agent and Lender
By: /s/ XXX X. XXXXXX
-------------------------------------
Xxx X. Xxxxxx
Vice President &
Senior Credit Executive
BNP PARIBAS
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
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Section 8. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OF CALIFORNIA.
THQ INC.
By:
-------------------------------------
Xxxx Xxxx
Senior Vice President,
Finance & Administration
& Chief Financial Officer
UNION BANK OF CALIFORNIA, N.A.,
as Agent and Lender
By:
-------------------------------------
Xxx X. Xxxxxx
Vice President &
Senior Credit Executive
BNP PARIBAS
By: /s/ XXXXX XXXX
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Name: Xxxxx Xxxx
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Title: Vice President
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By: /s/ XXXXX XXXXXXX
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Name: Xxxxx Xxxxxxx
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Title: Vice President
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