<PAGE> 1
As filed with the Securities and Exchange Commission on January 8, 1999.
Registration No. 333-_______________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THQ INC.
(Exact name of Registrant as specified in its Charter)
Delaware 13-3541686
(State or other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
5016 North Parkway Calabasas
Calabasas, California 91302
(818) 591-1310
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
--------------
BRIAN J. FARRELL
President and Chief Executive Officer
THQ Inc.
5016 North Parkway Calabasas
Calabasas, California 91302
(818) 591-1310
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
--------------
with a copy to:
KENNETH H. LEVIN, ESQ.
Sidley & Austin
555 West Fifth Street
Los Angeles, California 90013
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Section 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of this prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
--------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES AMOUNT TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE(1)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share......... 166,620 shares $29.10 $4,848,642 $1,348
===============================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 and was based
on the average of the high and low prices of the Common Stock on the
NASDAQ National Market on January 4, 1999 as reported by the National
Association of Securities Dealers Automated Quotation System.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
THQ INC.
----------
CROSS REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
Form S-3 Item Number and Caption Location in Registration Statement or Prospectus
-------------------------------- ------------------------------------------------
<S> <C> <C>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus................................... Facing Page; Cross-Reference Sheet; Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus................................................... Inside Front Cover Page and Outside Back Cover Page
of Prospectus; Available Information
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges....................................... Risk Factors
4. Use of Proceeds.................................................. Use of Proceeds
5. Determination of Offering Price.................................. Determination of Offering Price
6. Dilution......................................................... *
7. Selling Security Holders........................................ Selling Shareholder
8. Plan of Distribution............................................ Plan of Distribution
9. Description of Securities to be Registered...................... *
10. Interests of Named Experts and Counsel.......................... Legal Matters; Experts
11. Material Changes................................................ *
12. Incorporation of Certain Information by Reference............... Available Information
13. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities...................................... *
</TABLE>
- --------------
* Not applicable.
<PAGE> 3
PRELIMINARY, SUBJECT TO COMPLETION
DATED JANUARY 8, 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
THQ INC.
5016 North Parkway Calabasas
Calabasas, California 91302
(818) 591-1310
166,620 SHARES OF COMMON STOCK
This prospectus relates to the resale, from time to time, by the
Selling Shareholder named in this prospectus of up to 166,620 shares of our
common stock (the "Offered Shares"). We will not receive any of the proceeds
from the sale of the Offered Shares sold pursuant to this prospectus. The price
to the public for the Offered Shares and the proceeds to the Selling Shareholder
will depend upon the market price of such securities when sold. The Selling
Shareholder may, from time to time, sell the Offered Shares at market prices
prevailing on the NASDAQ National Market at the time of sale or in another
manner. The Selling Shareholder may engage brokers or dealers to sell the
Offered Shares and will be responsible for all commissions and discounts, if
any, it incurs.
The Selling Shareholder acquired the Offered Shares on December
2, 1998, in connection with the acquisition by us of Rushware
Microhandelsgesellschaft mbH and its two subsidiaries ("Rushware") from the
Selling Shareholder.
Our common stock is quoted on the Nasdaq Stock Market under the
trading symbol "THQI." On January ___, 1999, the last reported sale price of our
common stock was $_______ per share.
SEE "CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS;
RISK FACTORS" ON PAGE 3 FOR CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY YOU
BEFORE YOU INVEST IN OUR COMMON STOCK.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus is dated January __, 1999.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information.................................................... 2
Cautionary Statement Regarding Forward-looking Statements; Risk Factors................ 3
The Company............................................................................ 3
Use of Proceeds........................................................................ 3
Selling Shareholder.................................................................... 4
Plan of Distribution................................................................... 4
Legal Matters.......................................................................... 6
Experts................................................................................ 6
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC allows us to "incorporate by reference" the documents we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The documents incorporated by reference
contain important business and financial information about us that is not
included in this prospectus. Information that we file with the SEC after the
date of this prospectus will automatically update and supersede that
information. Accordingly, we incorporate by reference the documents listed
below and any future filings made by us with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until all of the
Offered Shares are sold:
o Annual Report on Form 10-K for the fiscal year ended December 31, 1997;
o Quarterly Report on Form 10-Q for the fiscal quarters ended March 31,
1998, June 30, 1998 and September 30, 1998;
o Current Reports on Form 8-K dated January 6, March 30, May 1, July 27,
August 12, September 8, 1998 and January 8, 1999; and
o The description of the common stock contained in the Registration
Statement on Form 8-A filed on September 23, 1991.
You may request a copy of these filings, at no cost to you, by writing
or telephoning us at the following address:
THQ Inc.
5016 North Parkway Calabasas
Calabasas, California 91302
Attention: Vice President - Finance and Administration
(818) 591-1310
You should rely only on the information provided or incorporated by
reference in this prospectus or in any prospectus supplement. We have not
authorized anyone else to provide you with different information. You should not
assume that the information in this prospectus or any prospectus supplement is
accurate as of any
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<PAGE> 5
date other that than the date on the front of those documents.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS; RISK FACTORS
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 define the concept of "forward-looking
statements." Our filings with the SEC, our press releases and our other public
statements may include, or may incorporate by reference, certain statements that
may be deemed "forward-looking statements." This may include all statements
relating to our objectives, strategies, plans, intentions and expectations, and
all statements (other than statements of historical facts) that address actions,
events or circumstances that we expect, believe or intend will occur in the
future.
We make no promise to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.
All forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from historical results or those implied by
the forward-looking statements.
You should carefully consider the risk factors and other information set
forth in our Current Report on Form 8-K dated January 8, 1999, before deciding
to acquire shares of our common stock.
THE COMPANY
We develop, publish and distribute interactive entertainment
software for the leading hardware platforms in the home video game market. We
currently publish titles for Sony's PlayStation, Nintendo 64, Nintendo Game Boy
and PC's in most software genres, including action, adventure, driving,
fighting, puzzle, role playing, simulation, sports and strategy. Our customers
include Wal-Mart, Toys "R" Us, Kay Bee Toys, Target, Electronics Boutique, Best
Buy and other national and regional retailers, discount store chains and
specialty retailers.
Our titles are developed both internally and under contract with
independent developers, and are typically based on properties licensed from
third parties. We continually seek to identify and develop titles based on
entertainment projects (such as movies, television programs and arcade games),
sports and entertainment personalities, or popular sports, trends or concepts
that have high public visibility or recognition or that reflect the trends of
popular culture. Other than titles that we may release on CD-ROM for use on
PC's, all of our products consist of cartridges and CD-ROMs manufactured for us
by Nintendo and Sony.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the
Offered Shares. All of such proceeds will be received by the Selling
Shareholder.
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<PAGE> 6
SELLING SHAREHOLDER
The Offered Shares are offered for the account of the Selling
Shareholder.
The following table and the notes thereto set forth information,
as of the date of this prospectus, relating to the beneficial ownership (as
defined in Rule 13d-3 of the Securities Exchange Act of 1934) of the Offered
Shares by the Selling Shareholder:
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Name of Selling Owned Prior to Shares Owned After
Shareholder Offering Being Offered the Offering
----------- -------- -------------- ------------
<S> <C> <C> <C>
Funsoft Holding GmbH(1) 166,620(2) 166,620 0 (3)
</TABLE>
- ----------------------------
(1) The issued shared capital of Funsoft Holding GmbH ("Funsoft") is held as
follows: (i) 37% by John Menzies plc, through its indirect, wholly owned
subsidiary, John Menzies Holding GmbH, (ii) 33.45% by Thomas Matzen,
(iii) 18.9% by Hans Rabe, and (iv) 10.65% by Jurgen Goeldner (the
"Beneficial Holders"). This prospectus also covers the sale of Offered
Shares by each of the Beneficial Holders in the event that Funsoft makes
a distribution of Offered Shares to any of such Beneficial Holders.
(2) Constitutes less than one percent of the aggregate number of shares of
common stock outstanding as of the date of this prospectus.
(3) Assumes that all of the Offered Shares are sold by the Selling
Shareholder.
PLAN OF DISTRIBUTION
The Selling Shareholder may offer the Offered Shares at various
times in one or both of the following transactions:
o through brokers or dealers, acting as principal or agent,
in transactions (which may involve block transactions) on
the NASDAQ National Market or on stock exchanges in
ordinary brokerage transactions, in negotiated
transactions or otherwise, at market prices prevailing at
the time of sale, at prices related to such prevailing
market prices, at negotiated prices or otherwise
(including without limitation sales in transactions that
comply with the volume and manner of sale provisions
contained in paragraphs (e) and (f) of Rule 144 under the
Securities Act); and/or
o directly or indirectly through brokers or agents in
private sales at negotiated prices, or in any combination
of such methods of sale.
This prospectus may be supplemented or amended from time to time
to describe a specific plan of distribution.
In connection with the distribution of the shares or otherwise,
the Selling Shareholder may:
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<PAGE> 7
o enter into hedging transactions with broker-dealers or
other financial institutions, and in connection with such
transactions, broker-dealers or other financial
institutions may engage in short sales of common stock in
the course of hedging the positions they assume with the
Selling Shareholder;
o sell common stock short and redeliver the shares to close
out such short positions; and/or
o enter into option or other transactions with
broker-dealers or other financial institutions that
require the delivery to such broker-dealer or other
financial institution of the shares, which shares such
broker-dealer or other financial institution may (subject
to any applicable transfer restriction contained in an
agreement between us and the Selling Shareholder) resell
pursuant to this prospectus as supplemented or amended to
reflect such transaction.
The Selling Shareholder may from time to time transfer shares to
a donee, successor or other person other than for value, and such transfers will
not be made pursuant to this prospectus. To the extent permitted by applicable
law, this prospectus shall cover sales by such transferee. We may in our
discretion supplement or amend this prospectus to include such transferee as an
additional named selling shareholder.
In effecting sales of the Offered Shares, brokers or dealers
engaged by the Selling Shareholder may arrange for other brokers or dealers to
participate. Brokers or dealers may receive compensation in the form of
commissions or discounts from the Selling Shareholder and may receive a
commission from the purchasers of the Offered Shares for whom such
broker-dealers may act as agents, all in amounts to be negotiated, including
immediately prior to the sale.
The Selling Shareholder and all dealers or agents, if any, who
participate in the distribution of the Offered Shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 in connection
with such sales, and any profit on the sale of such shares by such shareholder,
and all discounts, commissions or concessions received by such dealers or
agents, if any (whether received from the Selling Shareholder and/or from the
purchasers of the shares for whom those dealers or agents may act as agents),
may be deemed to be underwriting discounts and commissions under the Securities
Act of 1933.
Upon being notified by the Selling Shareholder that any agreement
or arrangement has been entered into with a broker-dealer for the sale of
Offered Shares through a block trade, special offering or secondary distribution
or a purchase by a broker-dealer, to the extent required by applicable law we
will distribute a supplement to this prospectus that will set forth the name(s)
of the participating underwriters, dealers or agents, the aggregate amount of
the shares being so offered and the terms of the offering, including all
underwriting discounts, commissions and other items constituting compensation
from, and the resulting net proceeds to, the Selling Shareholder, all discounts,
commissions or concessions allowed or re-allowed or paid to dealers, if any,
and, if applicable, the purchase price to be paid by any underwriter for the
shares purchased from the Selling Shareholder.
The Selling Shareholder and other persons participating in the
distribution of the Offered Shares will be subject to applicable provisions of
the Securities Exchange Act of 1934 and the rules and regulations of the SEC
thereunder, including, without limitation, Regulation M, which provisions may
limit the timing of the purchase and sale of shares by the Selling Shareholder.
Shares that qualify for sale pursuant to Rule 144 of the
Securities Act of 1933 may be sold under Rule 144 rather than pursuant to this
prospectus. In addition, the Selling Shareholder may devise, gift or otherwise
transfer the shares by means not described in this prospectus, in which event
such transfer will not be pursuant to this prospectus.
We have agreed to bear the expenses of registration of the
Offered Shares and other costs and expenses incurred by the Selling Shareholder
in connection with the sale of the Offered Shares, but excluding all discounts,
commissions or fees of selling brokers or similar securities industry
professionals and any fees and expenses of counsel and accountants for the
Selling Shareholder.
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<PAGE> 8
None of our directors, officers or agents are expected to be
involved in soliciting offers to purchase the Offered Shares, and no such person
will be compensated by us for the sale of any Offered Shares.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Offered
Shares will be passed upon for us by Sidley & Austin, Los Angeles, California.
Attorneys at Sidley & Austin participating in matters for us own approximately
22,750 shares of our common stock.
EXPERTS
The financial statements incorporated in this prospectus by
reference to our Annual Report on Form 10-K for the year ended December 31, 1997
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report thereon, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
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<PAGE> 9
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth an itemized statement of all fees
and expenses in connection with the distribution of the securities being
registered pursuant to this Registration Statement, all of which fees and
expenses will be paid by the Registrant:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee..... $ 1,348
Accountants' fees and expenses.......................... $15,000
Legal fees and expenses................................. $15,000
Miscellaneous........................................... $ 2,000
Total.............................................. $33,348
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Delaware General Corporation Law, directors and
officers, as well as other employees or persons, may be indemnified against
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation, i.e.,
a "derivative action"), and against expenses (including attorney's fees) in any
action (including a derivative action), if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. However, in the case of
a derivative action, a person cannot be indemnified for expenses in respect of
any matter as to which the person is adjudged to be liable to the corporation
unless and to the extent a court determines that such person is fairly and
reasonably entitled to indemnity for such expenses.
Delaware law also provides that, to the extent a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action or matter, the corporation must indemnify
such party against expenses (including attorneys' fees) actually and reasonably
incurred by such party in connection therewith.
Expenses incurred by a director or officer in defending any
action may be paid by a Delaware corporation in advance of the final disposition
of the action upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it is ultimately determined that such party is
not entitled to be indemnified by the corporation.
The Delaware General Corporation Law provides that the
indemnification and advancement of expenses provided thereby are not exclusive
of any other rights granted by bylaws, agreements or otherwise, and provides
that a corporation shall have the power to purchase and maintain insurance on
behalf of any person, whether or not the corporation would have the power to
indemnify such person under Delaware law.
Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
therefore unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
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<PAGE> 10
Brian J. Farrell, the President and Chief Executive Officer and a
director of the Company, has entered into an employment agreement with the
Company pursuant to which the Company has agreed to indemnify Mr. Farrell for
losses, liabilities, damages and expenses incurred as a result of his acting on
behalf of the Company, subject to certain conditions and limitations.
ITEM 16. EXHIBITS
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
2 Purchase Agreement among THQ Inc., Funsoft Holding GmbH,
John Menzies Holdings GmbH, Thomas Matzen, Hans Rabe and
Jurgen Goeldner.
5 Opinion of Sidley & Austin.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Sidley & Austin (included in Exhibit 5).
24 Power of Attorney (set forth on the signature page hereto).
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions described in Item 15 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(b) The undersigned Registrant hereby further undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) (Section 230-424(b) of 17
C.F.R.) if, in the aggregate, the changes in volume and price
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<PAGE> 11
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the Registrants
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby further undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant further undertakes that:
(i) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of Prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(ii) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
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<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Act, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Calabasas,
State of California on the 7th day of January, 1999.
THQ Inc.
By: /s/ Brian J. Farrell
----------------------------------
Brian J. Farrell
Chairman of the Board and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Brian J. Farrell and Fred A. Gysi, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the foregoing, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Brian J. Farrell Director, Chief Executive Officer January 7, 1999
- -------------------------- and President (Principal Executive
Brian J. Farrell Officer)
/s/ Lawrence Burstein Director January 7, 1999
- --------------------------
Lawrence Burstein
</TABLE>
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<PAGE> 13
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Bruce Jagid Director January 7, 1999
- --------------------------
Bruce Jagid
/s/ Jeffrey C. Lapin Director January 7, 1999
- --------------------------
Jeffrey C. Lapin
/s/ L. Michael Haller Director January 7, 1999
- --------------------------
L. Michael Haller
/s/ James L. Whims Director January 7, 1999
- --------------------------
James L. Whims
/s/ Fred A. Gysi Chief Financial Officer, Vice
- -------------------------- President - Finance and
Fred A. Gysi Administration and Secretary
(Principal Financial Officer and
Principal Accounting Officer)
</TABLE>
II-5
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION SEQUENTIAL PAGE NUMBER
- ------ ------------------- ----------------------
<S> <C> <C>
2 Purchase Agreement among THQ Inc., Funsoft Holding GmbH,
John Menzies Holdings GmbH, Thomas Matzen, Hans Rabe
and Jurgen Goeldner.
5 Opinion of Sidley & Austin.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Sidley & Austin (included in Exhibit 5). *
24 Power of Attorney (set forth on signature page hereto) *
</TABLE>
- --------------
* NOT APPLICABLE
<PAGE> 1
EXHIBIT 2
PURCHASE AGREEMENT
by and between
THQ Inc., Calabasas, California/USA
- hereinafter also referred to as "Buyer" -
and
Funsoft Holding GmbH, Kaarst
- hereinafter also referred to as "Seller" or "Funsoft" -
as well as
John Menzies Holding GmbH, Dusseldorf (HRB 32272),
Mr. Thomas Matzen,
Mr. Hans Rabe
and
Mr. Jurgen Goeldner
- hereinafter also together referred to as "Seller's shareholders" -
Purchase Agreement THQ/Funsoft Holding GmbH/011298
<PAGE> 2
- 2 -
Preamble:
John Menzies Holdings GmbH, Thomas Matzen, Hans Rabe and Jurgen Goeldner are the
sole shareholders of Funsoft Holding GmbH with registered offices in Kaarst and
registered with the commercial register of the local court of Neuss under no.
HRB 6703. The shareholders have decided to sell the subsidiaries of Funsoft and
have already sold most of them. Now, they have come to the conclusion to also
sell Funsoft's directly and indirectly held shares in Rushware
Microhandelsgesellschaft mbH, Kaarst (hereinafter also referred to as
"Rushware"), ABC Spielspa GmbH, Kaarst (hereinafter also referred to as "ABC"),
and SOFTGOLD Computerspiele GmbH, Kaarst (hereinafter also referred to as
"Softgold"). Softgold has been a subsidiary of Rushware for a certain period,
already, whereas the share in ABC has been held by Funsoft and has only been
transferred to Rushware on November 11, 1998 (notarial deed no. 4573/1998 of
notary Diethelm Linderhaus, Dusseldorf). Further, certain shareholder's loans
which Seller has granted to Rushware shall be assigned to Buyer.
NOW, THEREFORE, the parties hereto enter into the following agreement:
<PAGE> 3
- 3 -
Section 1
Sale of the Shares in Rushware
1. In Rushware Microhandelsgesellschaft mbH, registered with the commercial
register of the local court of Neuss under no. HRB 6764, which has a
stated capital of DM 1,000,000.--, Seller holds a share in the nominal
value of DM 1,000,000.--.
In ABC SpielspaB GmbH with registered offices in Kaarst, registered with
the commercial register of the local court of Neuss under no. HRB 6996,
which has a stated capital of DM 50,000.--, Rushware holds a share in the
nominal value of DM 50,000.--.
In SOFTGOLD Computerspiele GmbH with registered offices in Kaarst and
registered with the commercial register of the local court of Neuss under
no. HRB 6207 has a stated capital of DM 1,000,000.--. Rushware
Microhandelsgesellschaft mbH holds a share in Softgold in the nominal
value of DM 1,000,000.--.
2. The capital contributions regarding the abovementioned shares in Rushware,
ABC and Softgold have been fully paid in under the terms of and in
accordance with the Articles of Association. They have not been regranted.
The abovementioned shares are the unrestricted property of Funsoft and
Rushware, respectively, and are free of any third party rights. Neither do
any agreements with third parties under the law of obligations concerning
those shares, in particular no preemption rights, nor obligations to offer
for sale, voting commitments, fiduciary relationship or the like exist.
The shareholders' rights and obligations are exclusively subject to the
Articles of Association of the respective company.
<PAGE> 4
-4-
3. Seller shall sell to Buyer which hereby shall accept such sale the share
in Rushware owned by it as specified in Section 1 (1.) above (the "Share")
with all rights and obligations associated therewith, including the right
to participate in all distributions of profits not distributed sofar.
4. Since Seller is the sole shareholder of Rushware, neither do
co-shareholders exist who are entitled to pre-emptive rights nor is there
need of approval of the share transfer as contemplated herein by other
shareholders or the shareholders' meeting as generally provided by Section
6 of the Articles of Association of Rushware.
5. Seller warrants and represents to Buyer that
- the statements made in the foregoing paragraphs 1. and 2. are complete
and accurate;
- the stated share capital of Rushware, ABC and Softgold has been fully
paid in and was regranted neither to the shareholders or to any
companies associated with them nor to any persons close to them
(Section 30 GmbHG);
- Rushware, ABC and Softgold have not entered into any legal transaction
of a different business sector nor into any liabilities which, within
the ordinary course of business, can no longer be considered as
auxiliary or ancillary transactions in connection with their activities
as specified in the Articles of Association.
For the legal consequences of a violation of the above representations,
Section 7 (1.) - (9.) hereof shall apply.
6. The parties are aware that the above-stated contractual obligation to
transfer the Share and, thus, the entire present Agreement, has to be
notarized. The parties hereto are further aware that with the notarization
of the in-rem share transfer agreement the formal defect and, thus, the
defect of the entire present Agreement will be remedied.
<PAGE> 5
-5-
They will have this Purchase Agreement or the share transfer agreement
notarized immediately after having signed this Agreement.
Section 2
Sale and Assignment of Shareholder's Loans
1. Seller has granted shareholder's loans to Rushware in the amount of DM 9.5
million (say: Duetsche Mark nine million five hundred thousand)
(hereinafter also referred to as the "Shareholder's Loans"). Seller hereby
assigns the aforementioned Shareholder's Loans to Buyer conditional upon
the transfer and assignment of the Share to Buyer pursuant to Section 4.1,
and Buyer hereby accepts such assignment. Rushware has agreed to such
assignment by statement dated December 2, 1998, which is attached hereto
AS ANNEX 1.
2. Seller hereby guarantees that no loans other than those sold to Buyer
pursuant to para. 1 hereof have been granted by Seller, Seller's
shareholders or persons or companies related with them to, and are
outstanding from Rushware, Softgold or ABC .
Section 3
Purchase Price
1. The aggregate purchase price (the "Purchase Price") for the Share and the
Shareholder's Loans shall amount to DM 10,000,000.-- (say: Deutsche Mark
ten million). The Purchase Price shall be allocated as follows:
<PAGE> 6
-6-
- DM 500,000.-- shall be paid as consideration for the Share
- DM 9,500,000.-- shall be paid as consideration for the assigned
Shareholder's Loans
2. The Purchase Price shall become due and payable as follows:
a) DM 2,500,000.-- (say: Deutsche Mark two million five hundred thousand)
shall be paid in cash (via wire transfer) upon the execution of this
Agreement pursuant to Section 4.
b) DM 2,500,000.-- (say: Deutsche Mark two million five hundred thousand)
shall not be paid in cash but by assigning an amount of THQ Inc.
common stock representing a market value of DM 2,500,000.-- to Seller
upon the execution hereof. The number of THQ common shares to be
assigned in accordance with the foregoing sentence shall be calculated
based on the average closing stock price of THQ Inc. common stock on
NASDAQ and the DM-amount to be converted into US$ at the average
official closing exchange rate quoted in the Wall Street Journal for
the five trading days ending on the fourth trading day preceding the
date hereof, such price as calculated for each individual share
referred to as the "Share Price".
c) DM 5,000,000.-- (say: Deutsche Mark five million) shall not be paid in
cash but in common shares of THQ Inc. (the "Escrow Shares"). The
number of Escrow Shares shall be determined in accordance with the
provisions in paragraph (b). The Escrow Shares upon the execution
hereof shall not be delivered to Seller but instead shall be delivered
to State Street Bank and Trust Company of California, N.A., which
shall act as Escrow Agent for the Escrow in accordance with the Escrow
Agreement attached hereto as ANNEX 2. Seller shall have the right, at
any time after the Escrow Shares have been registered for sale by
<PAGE> 7
-7-
Seller under the U.S. Securities Act of 1933 and while such
registration is in effect, to request that all or part of the Escrow
Shares be sold, the net proceeds of such sale up to DM 5,000,000.-- to
be paid directly into the Escrow, and any amount in excess of DM
5,000,000.-- (in case of a sale of part of the Escrow Shares, the
amount in excess of the respective pro-rata amount of DM 5 mio.) to be
released to Seller. In the event of such a request, Buyer and Seller
shall give without undue delay ("unverzuglich") the Escrow Agent joint
instructions to deliver the Escrow Shares for sale, and shall
cooperate in effecting such sale and causing the net proceeds to be
returned to the Escrow and any excess over the abovementioned
threshold be paid out to Seller.
Ten business days after the 1998 Financial Statements and the
1998-Consolidated Financial Statements have been finally agreed
between the parties or are deemed accepted by Seller, or they have
become binding by experts' decision in accordance with Section 16,
whichever is the earlier, (the "Escrow Payment Date"), the Escrow
Shares and/or the cash in Escrow (plus any interest accrued thereon)
shall be delivered from the Escrow Agent to Seller, except for DM
3,000,000.-- cash (plus interest thereon), should there not be in the
Escrow such an amount in cash, the equivalent in Escrow Shares,
calculated on the average closing stock price on NASDAQ on and the
average US$/DM exchange rate as quoted in the Wall Street Journal for
the five trading days ending on the Escrow Payment Date (should the
Escrow Payment Date not be a trading day, the last trading day
immediately preceding the Escrow Payment Date), (the "Holdback
Cash/Shares"), which shall be released in accordance with paragraph
(d), infra, only, and except that any cash or shares due to Buyer
pursuant to Section 5 (6.) (c) hereof shall be delivered to Buyer.
Further, if Buyer has raised claims against Seller and/or Seller's
shareholders under and in accordance with this Agreement, cash in
Escrow (and interest accrued thereon), or - if insufficient - Escrow
Shares equivalent to the amount of such claims shall only be released
to Buyer or Seller, as the case may be,
<PAGE> 8
-8-
once these claims have been settled, be it by agreemenT agreemenT the
parties, or by final decision of a court or expert arbitration.
Pursuant to the Escrow Agreement, releases from the Escrow by the
Escrow Agent will take place upon written instruction of both parties
or final decision of a court or expert arbitration, only; each party
undertakes to instruct the Escrow Agent in writing to release shares,
cash and/or interest accrued in accordance with the terms of this
Agreement without undue delay if and when such release becomes due
pursuant to the terms of this Agreement.
d) The Holdback Cash/Shares shall be held in the Escrow and released as
provided in this paragraph. The Holdback Cash/Shares, and any interest
accrued thereon, shall be paid to Seller two years following the date
hereof, or ten days after assessments or amended assessments of the
tax authorities regarding all tax issues and fiscal charges (Section 3
AO) related to Rushware, ABC and Softgold for the period(s) ending on
or prior to December 31, 1998, have become res judicata, whichever is
the earlier, except for such amount (or shares) equivalent to the
value of any claims (plus interest accrued thereon) raised by Buyer
under and in accordance with this Agreement which have not been
settled upon such date; in no event, however, shall the Escrow by
releases to the Seller be reduced to an amount of less than DM
750,000.-- (plus claims raised at such time, including interest
accrued thereon) earlier than 6 months after the Escrow Payment Date.
The amount withheld for claims raised (in total or successively in
parts) shall be released to Buyer or Seller, as the case may be, once
the claims raised have been settled, be it by agreement of the parties
or by final decision of a court or expert arbitration. If cash amounts
referred to in this para. (d) need to be converted into quantities of
Holdback Shares, such calculation shall be based on the average
official closing DM/US$ exchange rate as quoted in the Wall Street
Journal for the five trading days ending on the fourth day preceding
the release date and the average closing stock price of
<PAGE> 9
-9-
THQ common stock on NASDAQ during such five-day period (should such
release date not be a trading day, the last trading day preceding such
date).
e) The THQ common stock to be assigned from Buyer to Seller under this
provision will not be registered upon the the date of the execution
hereof. Buyer shall make best efforts to procure that the stock
delivered to Seller under this provision shall be registered with the
U.S. Securities and Exchange Commission, thus making the stock freely
tradeable on NASDAQ. It is anticipated that such registration will
take place within three months after the date hereof. Should such
registration not have taken place 180 days after the date hereof,
Seller shall be entitled to request from Buyer payment of the total
Purchase Price in cash against contemporaneous (re-)assignment of the
THQ Inc.-common stock to Buyer, such cash payments to be made directly
to Seller or into the Escrow as provided in paras. (a) - (d), supra.
f) Seller is acquiring the shares of common stock of THQ Inc. issuable to
the Seller pursuant to this Agreement for its own account and not for
the purpose of or with a view to the distribution of such shares.
Seller acknowledges and agrees that (i) such shares will not upon
their issuance to Seller be registered under the United States
Securities Act of 1933, (ii) such shares may not be sold or
transferred by Seller in the absence of such registration or an
exemption from registration under such act, (iii) the certificate(s)
evidencing such shares will initially bear a restrictive legend to the
effect set forth in the preceding two clauses, and (iv) the
certificates evidencing the Escrow Shares will also bear a legend to
the effect that the Escrow Shares are subject to certain restrictions
upon transfer in accordance with the terms of this Agreement. Seller
has received and has had an opportunity to review the following
filings made by Seller with the United States Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934: Annual
Report on Form 10-K for the fiscal year ended December 31, 1997;
Quarterly Report on Form 10-Q for the
<PAGE> 10
-10-
fiscal quarters ended March 31, 1998 and June 30, 1998 and September
30, 1998, and Current Reports on Form 8-K dated January 6, March 30,
May 1, July 27, August 12 and September 8, 1998.
g) Buyer guarantees that the average market value of the THQ Inc. common
stock issued to Seller pursuant to this Section 3 (including the
Escrow Shares) on the (i) five trading days ending on February 26,
1999 (should February 26, 1999 not be a trading day, the trading day
immediately prior thereto), or (ii) the five trading days immediately
following registration of the THQ common stock issued to Seller,
should the stock not have been registered on February 26, 1998, does
not fall short of the Share Price (both calculated in DM). The average
market value of the THQ common stock for such period is to be
calculated based on the average closing stock price on NASDAQ and the
average official closing DM/US$ exchange rate as quoted in the Wall
Street Journal for the respective five-day period. Seller shall not be
entitled to claims under this guarantee with respect to such THQ
common shares which Seller has sold prior to the above-referenced
five-day period. Any payments under this guarantee relating to THQ
Inc. shares held in Escrow shall not be made directly to Seller but
into the Escrow and be subject to the above release provisions (paras.
c and d).
Section 4
Execution
Upon the execution, the following declarations shall be made and measures taken:
1. assignment of the Share pursuant to the Share Transfer Agreement attached
hereto as ANNEX 3;
<PAGE> 11
-11-
2. signing of the Escrow Agreement as provided in ANNEX 2;
3. payment of purchase price/transfer of THQ Inc. common stock pursuant to
Section 3 hereof;
4. provision of resignation statements of all managing directors of Rushware,
ABC and Softgold (except for Mr. Goeldner) by Seller
5. termination of the Profit and Loss Absorption Agreement between Seller and
ABC dated September 13, 1996;
6. termination of the management contract ("Umlagevertrag") between Funsoft
on the one side and - inter alia - Rushware, Softgold and ABC on the other
side dated March 8, 1992 as provided in ANNEX 4;
7. Provision to Seller of a legal opinion issued by Sidley & Austin, a draft
of which is attached hereto as ANNEX 5;
8. other declarations and measures in respect of which this Agreement or its
annexes provide the execution hereof as date of declaration and/or
performance.
Section 5
1998-Financial Statements/Purchase Price Adjustment/Rescission Right
1. Buyer shall ensure that financial statements (balance sheets and profit
and loss accounts) of Rushware, ABC and Softgold for the period starting
January 1, 1998 through December 31, 1998 24:00 hrs (hereinafter also
together referred to as the
<PAGE> 12
-12-
"1998-Financial Statements") are established. The 1998-Financial
Statements shall - besides and independently from the statutory annual
financial statements for the fiscal year of 1998 - be established in
compliance with the statutory provisions on the valuation and accounting
of large corporations and in accordance with the German generally accepted
accounting principles as well as in compliance with the principle of
balance sheet and valuation continuity and consistency (including the
application of the principle that the valuation method used in the tax
balance sheet must follow that used in the commercial balance sheet and -
to the extent provided in the Commercial Code - vice versa, "umgekehrtes
MaBgeblichkeitsprinzip"). They shall be complete and correct and give a
true and fair view of the actual assets, financial and income situation of
the companies as of the respective balance sheets date. In any case,
however, the 1998-Financial Statements shall be prepared in accordance
with the provisions provided for in ANNEX 6 which shall prevail in case of
deviations from the aforementioned general principles. Further, Buyer
shall ensure that consolidated financial statements of the three companies
based on the 1998-Financial Statements are established in accordance with
the above principles (the "1998-Consolidated Financial Statements").
2. Seller is entitled to review the audit by Buyer's/the companies' auditors
and to do additional auditing simultaneously with Buyer's/the companies'
auditors or thereafter, as Seller at its discretion considers necessary or
desirable. The parties assume that such simultaneous audit and review will
occur not only after but already at the time of the preparation of the
draft 1998-Financial Statements and 1998-Consolidated Financial
Statements. Seller will engage auditors or other advisors for such
purpose. Buyer shall ensure that Seller's auditors will have access to the
books and records of Rushware, ABC and Softgold, and to relevant personnel
and officers of the company, and that the companies' auditors will grant
access to their working papers concurrently with the audit by them; Seller
shall, vice versa, ensure that its auditors grant access to their working
papers to Buyer and its auditors at the same time. Both
<PAGE> 13
-13-
parties shall ensure that Seller's auditors, if any, and Buyer's/the
companies' auditors will coordinate their work. Seller shall receive a
copy of the final draft of the reports.
3. Buyer shall endeavour to submit the draft 1998-Financial Statements
including the auditor's reports and the draft 1998-Consolidated Financial
Statements to Seller not later than on February 28, 1999.
4. The 1998-Financial Statements and the 1998-Consolidated Financial
Statements shall become binding by written agreement of the parties. If
Seller does not notify Buyer of any objections within thirty days
following receipt of the draft 1998-Financial Statements the auditors'
reports thereon and the draft 1998-Consolidated Financial Statements, they
shall be deemed accepted by Seller. If Seller notifies Buyer within thirty
days following receipt of the above drafts of any objections, both parties
then shall try to amicably settle Seller's objections. If the parties
cannot reach (written) agreement within 10 days following the receipt
objections by Buyer, the disputed items shall be referred to the experts
following the procedure described in Section 16 below.
5. All costs arising out of and in connection with the establishment and
audit of the 1998-Financial Statements and the 1998-Consolidated Financial
Statements referred to in this section shall be borne by Buyer,
notwithstanding the fact that a provision is to be made in the
1998-Financial Statements and the 1998-Consolidated Financial Statements
for costs of the annual audits (including preparation of tax declarations)
in the total amount of DM 115,000.-- for all companies. Seller shall bear
all costs incurred in connection with the review of the audit of the
1998-Financial Statements and the 1998-Consolidated Financial Statements
by him and his advisers (including accountants). The costs of the expert
proceeding shall be allocated as described in Section 16 (5.) below.
<PAGE> 14
-14-
6. The Purchase Price shall be adjusted in accordance with the final
1998-Consolidated Financial Statements as follows (the "Adjusted Purchase
Price"):
(a) If and to the extent that as of December 31, 1998 the Net Value as
provided in the 1998-Consolidated Financial Statements amounts to less
than DM 10 million (say: Deutsche Mark ten million), Seller shall
within seven business days following the final determination of the
1998-Consolidated Financial Statements pay to Buyer in cash the amount
of the shortfall, in no event, however, more than DM 10,000,000.--.
(b) If and to the extent the Net Value exceeds DM 10 million, Buyer shall
within seven business days pay to Seller one third of the excess
amount, such payment, however, not to be made in cash but to be made
in common shares of THQ Inc. based on the average closing stock price
on NASDAQ on the five trading days ending on the Escrow Payment Date
and the average official closing US$/DM-exchange rate as quoted in the
Wall Street Journal for such period (should the Escrow Payment Date
not be a trading day, the last trading day immediately preceding the
Escrow Payment Date).
(c) If Seller fails to make the cash payment provided for in paragraph (a)
above, Buyer shall be entitled to request to be withheld from the
release of cash from the Escrow or - if not sufficient - of Escrow
Shares (as provided in Section 3.2 c) the amount of cash or the number
of Escrow Shares equal to the outstanding cash payment (as converted
into US$ utilizing the average official closing exchange rate as
quoted in the Wall Street Journal for the five trading days ending on
the Escrow Payment Date) divided by the lower of the Share Price or
the average closing stock price on NASDAQ on the five trading days
ending on the Escrow Payment Date (should the Escrow Payment Date not
be a trading day, the last trading day immediately preceding the
Escrow Payment Date).
<PAGE> 15
-15-
(d) Net Value is to be determined based on the 1998-Consolidated Financial
Statements, as the sum of net equity values, this to be the sum of
subscribed and paid-in share capital (Stammkapital), capital reserves
(Kapitalrucklagen) other revenue reserves (andere Gewinnrucklagen),
annual surplus or loss (JahresuberschuB oder -fehlbetrag), the profits
or losses carried forward (Gewinn- und Verlustvortrage), and the
Shareholder's Loans.
Any claims of Buyer or Seller for cash payments pursuant to this Section 5
shall bear interest at a rate of 5% p.a. as of the date hereof.
Should the Net Value become zero or negative, Buyer is entitled to rescind
this Agreement.
<PAGE> 16
-16-
Section 6
Representations and Warranties
Seller shall give the following representations and warranties to Buyer as of
the conclusion of this Agreement or such other date as provided hereinafter:
1. The statement on the corporate and ownership structure contained
in Section 1 hereof are correct. Seller is entitled to dispose of the
shares sold by it in accordance with this agreement without any limitation
and without violating any other obligations. Said shares also do not
constitute its total assets or almost its total assets as defined
in Section 419 BGB.
2. The audited annual financial statements of Rushware, ABC and Softgold for
the 1995, 1996 and 1997 fiscal years, and the 1998-Financial Statements
and the 1998-Consolidated Financial Statements have been, or will be,
prepared in compliance with the statutory provisions under valuation and
accounting of large corporations and in accordance with the German
generally accepted accounting principles as well as in compliance with the
principle of balance sheet and valuation continuity and consistency
(including the application of the principle that the valuation method used
in the tax balance sheet must follow that used in the commercial balance
sheet and - to the extent provided in the Commercial Code - vice versa
("umgekehrtes MaBgeblichkeitsprinzip") except as otherwise provided in
ANNEX 6 with respect to the 1998-Financial Statements and the
1998-Consolidated Financial Statements. They are complete and correct and
give a true and fair view of the actual asset positions, the financial
position and income position (Vermogens-, Finanz- und Ertragslage) of the
companies as of the respective balance sheet dates.
3. Except as set forth in ANNEX 7 the fixed and current assets shown in the
balance sheets were, or will be, on the respective balance sheet dates the
unrestricted
<PAGE> 17
-17-
property of Rushware, ABC and Softgold without being charged with any
third party rights, except for retentions of title and statutory liens
within the ordinary course of business. Save the liabilities considered in
the financial statements as of December 31, 1997, there were no further
liabilities as of December 31, 1997, and, save those that will be
considered in the 1998-Financial Statements and the 1998-Consolidated
Financial Statements, there will have been no further liabilities as of
December 31, 1998, not even for social security contributions or other
public-law contributions, charges or other duties. The trade accounts
receivable shown in the 1998-Financial Statements and the
1998-Consolidated Financial Statements will be collected after considering
the total of all provisions for bad debt up to June 30, 1999. On the date
hereof, Rushware, Softgold and ABC do not have debt or liabilities other
than debt and liabilities incurred in the ordinary course of business,
i.e. - on a consolidated basis - bank debt limited to up to DM 2.5 million
resulting from Sony disc manufacturing costs, DM 8,832,700.-- bank debt
resulting from the prepayment of LucasArts license fees and DM 585,000.--
bank debt resulting from prepaid development and license fees (DM
120,000.-- ANCO/Player Manager 1999; DM 160,000.-- Toka/Legend; DM
180,000.-- Synetic/Mercedes Trucks; DM 125,000.-- All Vision/Turricean 3D)
and DM 100,000.-- other bank debt, accruals and provisions, payments to
suppliers and customers, and other liabilities and payables in accordance
with German generally accepted accounting principles and in accordance
with past practice.
4. Guarantees and bonds or other in-rem or in-personam securities, except for
customary performance and warranty bonds, have not been granted by third
persons in favor of Rushware, Softgold and/or ABC nor by the letter in
favor of third persons (including the Seller and its shareholders and
companies affiliated therewith) except as provided in ANNEX 7.
5. Rushware, ABC and Softgold have obtained all public-law and private-law
licences and permits for their current business operations as well as for
the operational
<PAGE> 18
-18-
facilities, equipment and buildings used or occupied by them. They comply
with the public-law provisions and the requirements set by the
professional associations. The supply and disposal required for the
unlimited continuation of the business operations of Rushware, ABC and
Softgold, including the disposal of waste and sewage, is guaranteed.
Requirements and orders, in particular those issued by the building and
trade inspection offices, neither have been issued or threatened, nor are
any circumstances known which justify any such requirements and orders
which may cause substantial financial expenditure after the date hereof.
6. Rushware, Softgold and ABC to the best of Seller's knowledge do not
violate any patents, utility models or other industrial property rights of
third parties. Third parties also have not claimed such a violation or
asserted other rights with respect to the property rights used or filed by
Rushware, Softgold and ABC for registration and with respect to their know
how. The names of Rushware, ABC and Softgold, or parts thereof, have not
been granted under licence to any third party with the knowledge an
consent (formal or tacit) of Seller or its shareholders, and the names
have not been challenged by any third party, except that ABC Switzerland
has been granted the right to use the "ABC" trademark and logo in
connection with software rackjobbing distribution in Germany.
7. With the exception of the contracts, obligations, registration or
application documents which have been disclosed to Buyer and a copy of
which has been provided with its endorsement, Rushware, ABC and Softgold
have no further rights and/or obligations arising out of the following
legal relationships:
7.1 patents, trademarks, other industrial property rights;
7.2 licence and know how agreements, irrespective of whether they are
licensors or licensees;
<PAGE> 19
-19-
7.3 distribution agreements with commercial agents, traders on own
account, commercial travellers or other continuous contracts with
third parties as subcontractors, consultants, free lancers and the
like;
7.4 commitments to grant profit- or turnover-related remunerations or
fringe benefits to employees;
7.5 contracts, commitments and agreements with respect to a company or
other old-age or health insurance scheme;
7.6 non-competition arrangements in favor or to detriment of either
company;
7.7 loan agreements as borrowers or lenders, save usual employer loans
and advances up to the amount of one monthly salary;
7.8 skeleton and fix agreements containing purchase or delivery
obligations surviving December 31, 1998, and exceeding DM 500,000.--
p.a. for each contract partner, except for catalogue business;
7.9 employment contracts deviating from the standard employment
agreement provided in ANNEX 8; arrangements for redundancy payments
in favor of employees going beyond minimum rights under existing
statutory law;
7.10 agreements with works councils (Betriebsvereinbarungen) or customary
rights of the employees (betriebliche Ubung);
7.11 other contracts or obligations outside the ordinary course of
business leading to obligations exceeding DM 100,000 net p.a. in
each individual case;
7.12 as recipient of public benefits, subsidies or other financial aid
the receipt or maintenance of which is subject to the structure of
the group of shareholders or the legal structure of the company or
the continuation of its business in its current form or which have
to be repaid from future income.
8. ANNEX 9 correctly reflects all employees employed by or engaged in the
business of Rushware, Softgold and ABC as of December 1, 1998 and the
terms of their employment at those dates (employer, age, seniority, annual
salary, other fringe benefits not provided for in agreements with the
works council, function, special status). There are no deviations of the
employment conditions of the employees
<PAGE> 20
-20-
from the standard employment agreement provided in ANNEX 10 and the
agreements with the workers' council (Betriebsvereinbarungen) and
applicable law except as reflected in ANNEX 8. Collective bargaining
agreements are non-applicable.
<PAGE> 21
-21-
9. So far, only the following persons have been entitled to represent the
companies:
a) Rushware
as managing directors:
Hans Rabe and
Jurgen Goeldner
both of them entitled to solely represent the company and released
from the restrictions of self-dealing etc. under Section 181 German
Civil Code (BGB);
Walter Roller (until June 25, 1996)
Peter Becker
with joint power of attorney, released from the restrictions of
Section 181 BGB
as procurators:
Klaus Peter Paul Kuschke
with joint power of attorney
b) Softgold
as managing directors:
Hans Rabe and
Jurgen Goeldner
both of them entitled to solely represent the company and released
from the restrictions of Section 181 BGB
Marc Alexander Ullrich (until April 18, 1991)
with individual power of attorney and released from the restrictions
of Section 181 BGB
Ulrich Conrath (until May 27, 1998)
with joint power of attorney and released from the restrictions of
Section 181 BGB
as procurators:
Bernhard Morell (until April 8, 1994) and
Ulrich Conrath (until June 30, 1994)
both with joint power of attorney
<PAGE> 22
-22-
c) ABC
as managing directors:
Hans Rabe
Jurgen Goeldner
both with individual power of attorney and released from the
restrictions of Section 181 BGB
Klaus-Peter Kuschke,
with joint power of attorney and released from the restrictions of
Section 181 BGB
Takayuki Kamikura (until April 13, 1995),
Aki Kodama (until May 18, 1993) and
Shoichi Iida (until April 13, 1995)
all three with individual power of attorney and released from the
restrictions of Section 181 BGB
Only the persons listed in ANNEX 11 have sofar been authorized to sign
vis-a-vis the banks of Rushware, ABC and Softgold, with sole or joint
power as indicated in the list.
10. Legal disputes for and against Rushware, ABC and Softgold are neither
pending nor threatened except for those listed in ANNEX 12. There are also
no circumstances likely to give rise to any such disputes.
11. There are no claims and/or liabilities resulting from defective products,
including but not limited to product liability obligations or obligations
for recall of defective products, and there will be no such claims and/or
liabilities resulting from defective products except as fully provided for
in the 1998-Financial Statements and the 1998-Consolidated Financial
Statements, which are not covered by claims of Rushware, ABC and Softgold
under insurance policies. With respect to game software, this
representation and warranty is limited to the best of Seller's knowledge.
<PAGE> 23
-23-
12. The insurance policies listed in ANNEX 13 hereto are valid and effectively
entered into with such insurance companies and for the amounts and risks
as listed therein. All premiums due on the above policies have been duly
paid, and to the best knowledge of Seller, there are no circumstances
where any such policy might be voidable or which are likely to result in
an increase of premiums.
13. Rushware, ABC and Softgold to the best of Seller's knowledge are not in
default with the fulfillment of any private and public-law obligations,
and this case is also not likely to happen soon after the date hereof. The
operations and assets of the companies in all respects comply with
applicable statutory provisions and administrative orders. None of the
contracts concluded by Rushware, ABC and Softgold - with the exception of
those listed in ANNEX 14 - can be terminated or otherwise be cancelled
because the shareholder structure of Rushware and ABC changes. Upon
conclusion of this agreement, Seller is not aware of any other special
legal or actual circumstances which - singly or jointly - already today
give rise to the assumption that the operation and the unrestricted
continuation of the business of Rushware, Softgold and/or ABC and their
profitability are, or will be, persistently jeopardized.
14. Rushware, ABC and Softgold have filed in a due and proper manner all
declarations as to social security contributions to be submitted by them.
15. All assets and agreements necessary or useful for the business as operated
by Rushware, ABC and Softgold on and before (business year 1998) the date
hereof are owned by or assigned to the respective company and are free
from any third-party rights except as otherwise explicitly provided in
this agreement and in ANNEX 7 hereto. The assets owned by the companies
and the buildings and constructions used by them are in good working order
and do not show any defects affecting the operation of the business of the
companies exceeding normal wear and tear.
<PAGE> 24
-24-
16. From January 1, 1998 to the execution hereof, Rushware, ABC and Softgold
and their businesses have been operated and all transactions were
implemented in the ordinary course of business and in accordance with past
practice and with the diligence of an ordinary merchant (Sorgfalt eines
ordentlichen Kaufmannes); no extraordinary obligations were created; no
material adverse change, no material deterioration of the assets and
income situation of the companies has occurred after December 31, 1997. No
open or hidden distributions of profits to shareholders or any persons or
companies close to them have been made after December 31, 1997.
17. Neither Rushware nor Softgold or ABC are liable for or have to bear costs
or expenses in connection with any former subsidiaries or interests held
by them in other companies in the past, or in connection with the
liquidation of any such subsidiaries or companies, which are not accrued
or provided for in the 1998-Financial Statements and the 1998-Consolidated
Financial Statements.
18. Insofar as the above provisions are based on the knowledge of Seller, the
knowledge of any of the shareholders of Seller or of the managing
directors of Rushware, ABC and Softgold shall be attributable to the
Seller's knowledge. Where representations or warranties are made to the
best of Seller's knowledge, this shall imply due and careful inquiry. All
statements made by Seller are true, complete and correct and are not
misleading, neither by way of omission nor otherwise.
Section 7
Legal Consequences
1. Should one of the above warranties and representations be incorrect or
incomplete upon conclusion of this agreement, Seller shall - at Buyer's
option - put either Rushware, ABC or Softgold, as the case may be, or
Buyer in a position it would have
<PAGE> 25
-25-
been in if the corresponding representation or warranty had been correct
and complete. If the incorrectness or incompleteness consists in the
assumption of a contractual obligation or liability, Seller shall
indemnify and hold Rushware, ABC, Softgold or the Buyer harmless without
any limitation except as otherwise provided in this Agreement against the
assignment or other surrender of all rights and claims arising therefrom
for the respective company or Buyer. Buyer's claims under this provision
shall bear interest at a rate of 5% p.a. as of the date on which Purchaser
raised such claims against Seller; the foregoing shall not limit claims of
Purchaser for reimbursement of interest payable to third parties.
2. Warranty claims can only be asserted if and to the extent they exceed in
total an amount of DM 100,000.--. The parties agree that funds (cash or
shares) in Escrow which are available after settlement of claims according
to Section 5 (6.) (a), (c), if and to the extent available, shall be used
for settlement of warranty claims.
3. If and to the extent that claims are asserted by third parties against
Rushware, ABC, Softgold and/or Buyer which may lead to claims based on the
abovementioned warranties and representations, Seller shall be immediately
notified thereof and given an opportunity of defending any such claims.
Any costs associated therewith shall be advanced and borne by Seller.
4. Any Net Value as of December 31, 1998 in excess of the amount guaranteed
in accordance with Section 5 (6.) (a), and not paid out to Seller under
Section 5 (6.) (b) or taken into consideration pursuant to Section 8 (2.),
Section 9 (4.), shall be credited to Seller with respect to payments due
under and in accordance with this Section 7.
5. All claims of Buyer based on the abovementioned provisions shall become
statute-barred upon expiration of June 30, 2000.
<PAGE> 26
-26-
6. Buyer cannot assert any claims based on facts which are mentioned in the
due diligence reports of Deloitte & Touche, Dusseldorf, dated October 12,
1998, and Bruckhaus Westrick Heller Lober, dated November 30, 1998 in the
minutes of the meeting of the parties on November 11/12, 1998 as signed by
both parties or on circumstances or facts which have been brought to its
knowledge in writing at or prior to the time of the conclusion of this
agreement. In this context, all circumstances and facts explicitly
disclosed in the respective annex hereto shall be deemed to be known to
Buyer. Section 460 German Civil Code (BGB) is excluded.
7. Buyer shall not be entitled to claims under the above representations and
warranties if and to the extent such claims are based on acts or omissions
of or controlled by Buyer after the date hereof until December 31, 1998.
8. The right of repudiation, recission and compensation as well as any
statutory claims for reduction of the purchase price or damages - except
for claims under the law of torts (Sections 823 sqq. German Civil Code)
and except as explicitly provided otherwise in Section 5 (6.) - shall be
excluded.
9. Any defects of title shall be subject to the statutory provisions.
Section 8
Taxes and Other Public Contributions
1. Seller warrants to Buyer that, as of the date hereof, Rushware, ABC and
Softgold have duly and timely filed all tax returns and social security
statements. Seller and Buyer agree to immediately seek to have the
appropriate tax authorities conduct a (voluntary) tax audit of Rushware,
ABC and Softgold for the period(s) until December 31, 1998.
<PAGE> 27
-27-
2. If and to the extent that taxes, social security contributions or other
public contributions are or will be payable in respect of any period prior
to December 31, 1998 by Rushware, ABC, Softgold or their successors, which
have not been satisfied or are accrued or provided for as liabilities in
the 1998-Financial Statements and the 1998-Consolidated Financial
Statements, Seller shall pay the assessed amounts including any penalties
and interest thereon to Buyer. Any payments are to be treated as purchase
price adjustments of the total purchase price defined in Section 3. Buyer
shall with respect to taxable events which have occurred after the date
hereof until December 31, 1998 if such taxes have neither been paid prior
to December 31, 1998 nor have been accrued or provided for in the
1998-Financial Statements and the 1998-Consolidated Financial Statements
not be entitled to request reimbursements of any penalties or interest
becoming due. The same applies with respect to other public contributions.
Any Net Value as of December 31, 1998 in excess of the amount guaranteed
in accordance with Section 5 (6.) (a), and not paid out to Seller under
Section 5 (6.) (b) or taken into consideration pursuant to Section 7 (4.),
Section 9 (4.), shall be credited to Seller with respect to such tax
payments.
3. If and insofar as additional taxes (Mehrsteuern) are equalized by tax
reductions (Mindersteuern) which Buyer and/or Rushware, ABC or Softgold,
respectively, or their successors would not have obtained otherwise (e.g.
because of an allocation to different tax periods), while taking into
consideration reasonable discounting (5.5%), there shall be no obligation
to compensate the additional taxes.
4. Claims under this Section 8 shall be time-barred after six months starting
with the date upon which an additional assessment or amended assessment by
the competent authorities becomes res judicata.
5. Seller is - at its own cost - entitled to participate in the handling of
tax field audits (including the participation in meetings with the tax
authorities) covering the business
<PAGE> 28
-28-
years prior to and including 1998. Buyer will provide Seller without delay
full information concerning any tax or other public contribution audit of
Rushware, ABC or Softgold and of any attempt of the relevant authorities
to make any charge or to disallow any relief or allowance for any period
through December 31, 1998. Buyer shall give, or shall cause Rushware, ABC
and Softgold to give, to Seller or his advisors full access to the books
and records of the respective company. If no agreement can be reached with
the authorities with regard to a disputed tax or other public contribution
item, Buyer shall file, or shall cause Rushware, ABC or Softgold, as the
case may be, to file, any remedy and/or appeal against the decree or other
decision following the instructions of Seller. Seller, however, shall
exercise its rights to do so in good faith and with due regard to Buyer's
and/or Rushware's, ABC's, Softgold's or their successors' reasonable
interests. The costs of such proceedings shall be advanced and be borne by
Seller.
Section 9
Environmental Indemnity
1. Seller undertakes to indemnify and hold harmless Buyer or - at Buyer's
choice - Rushware, ABC, Softgold and/or their legal successors from any
liability (including survey and remediation costs) arising out of or in
connection with any contamination of soil or water, which has occurred on
the companies' former premises.
2. Seller undertakes to indemnify and hold harmless Buyer or - at Buyer's
choice - Rushware, ABC, Softgold and/or their legal successors from any
liability, reduction in value and/or other costs, expenses and damages
arising out of or in connection with any contamination of soil or water
(and/or the survey and remediation thereof) which has occurred on the
current premises of Rushware, ABC and Softgold, or which either of these
companies (or any of its predecessors) has caused on any other
<PAGE> 29
-29-
premises and the survey and remediation of which is required by law or
applicable regulation or can be or will be required by administrative
decree or by court decision in favor of a third party.
3. Section 7(2.), (3.) and (5.) shall apply.
4. Any Net Value as of December 31, 1998 in excess of the amount guaranteed
in accordance with Section 5 (6.) (a), and not paid out to Seller
under Section 5 (6.) (b) or taken into consideration pursuant to Section 7
(4.), Section 8(2.), shall be credited to Seller with respect to payments
due under and in accordance with this Section 9.
Section 10
Employment Agreement between Seller and Mr. Goeldner
Buyer and Seller agree that Seller shall agree to terminate the Service
Agreement of Mr. Goeldner with Seller with effect as of the date hereof
and that Seller shall release Mr. Goeldner from any post-contractual
non-compete undertaking, if any.
Section 11
Business Transformation
1. Seller has entered into a Domination and Profit and Loss Absorption
Agreement with ABC dated September 13, 1996. Seller will not exercise any
direction rights it may have under said Agreement with ABC after the date
hereof. Seller hereby waives any and all claims for a transfer of profits
by ABC as of the date hereof to it. Buyer undertakes to indemnify and hold
harmless as of the date hereof Seller from all claims
<PAGE> 30
-30-
for loss compensation resulting from and arising under the aforementioned
Profit and Loss Absorption Agreement as well as any claims for provision
of security in accordance with Section 303 German Stock Corporation Act
(Aktiengesetz) for claims caused after the date hereof. The parties
undertake to terminate the Profit and Loss Transfer Agreement with effect
as of December 31, 1998. Any costs associated with such termination shall
be borne by Seller.
2. Buyer shall operate the business of Rushware, Softgold and ABC from the
date hereof until December 31, 1998 in the ordinary course of business
with the diligence of an ordinary merchant (Sorgfalt eines ordentlichen
Kaufmannes) and - to the extent in compliance therewith - in accordance
with past practice. No extraordinary obligations shall be entered into in
said period. Seller is entitled to nominate a person who shall be given
the opportunity to monitor the business of Rushware, Softgold and ABC from
the date hereof until December 31, 1998.
3. Seller guarantees that the Agreement by and between Softgold and Peter
Ball regarding the Provision of Key Account Manager Services by Peter Ball
dated March 1. 1998 has been validly terminated with effect as of December
31, 1998, and that no claims for compensation or other extraordinary
payment will arise out of or in connection with such termination except as
provided for in the 1998-Financial Statements and the 1998-Consolidated
Financial Statements.
Section 12
Non-Competition Clause
Seller and Seller's shareholders undertake for a period of three years as of the
date hereof to refrain from any competition with Rushware, ABC and Softgold in
Germany, Austria or Switzerland, be it directly or indirectly, in particular
through the establishment of,
<PAGE> 31
-31-
participation in, conclusion of an employment contract with or consultation of
other companies engaged in the business field of Rushware, ABC or Softgold, i.e.
in the development, publishing, republishing and/or distribution of computer
games and console video games. With respect to John Menzies Holding GmbH,
however, such non-compete undertaking for the territory of Germany shall be
limited to a six months period as of the date hereof and shall not apply with
respect to Austria and Switzerland. Further, John Menzies Holding GmbH shall not
be subject to the non-compete undertaking for the existing "THE Games" business
of selling to and buying from Nintendo of Europe (based in Germany) computer
games and console video games. For any case of a violation of this
non-competition clause, Buyer may require payment of a contractual penalty in
the amount of DM 250.000,-- (say: Deutsche Mark: two hundred fifty thousand). A
violation exceeding a period of one month - by excluding the exception, that a
number of related and successive acts shall be considered as constituting one
single act only (Fortsetzungszusammenhang) - shall be deemed a new independent
violation of the non-competition clause. Buyer's right to assert cease and
desist claims - also by means of preliminary injunctions - as well as claims for
further damages shall remain unaffected thereby; any contractual penalty shall,
however, be set off against a claim for damages. Instead of raising a claim for
damages, Buyer may also demand that any legal transactions concluded by Seller
or its shareholders in violation of the preceding non-competition clause shall
be treated as having been affected for the account of Rushware, ABC, Softgold or
Buyer or that any proceeds Seller or its shareholders may derive therefrom shall
be immediately transferred to either of them.
Section 13
Total Limitation of Liability
The total liability ("Inanspruchnahme") of Seller - except for adjustments of
the Purchase Price as provided in Section 5 (6.) - under and in connection with
this Agreement shall be limited to the Adjusted Purchase Price. Beyond such
amount, Seller shall be obliged to reimburse,
<PAGE> 32
-32-
indemnify and/or hold harmless Buyer or, at Buyer's choice, Rushware, Softgold
or ABC, should Seller on the date hereof or thereafter use the credit lines
granted by Bayerische Landesbank, Westfalenbank and BHF-Bank to the three
companies (cf. the confirmations attached as ANNEX 15); the parties have agreed
that as of the date hereof Seller shall no longer make use of such credit lines.
<PAGE> 33
-33-
Section 14
Confidentiality/Press Release
No public announcement concerning the sale and purchase of the shares or the
other matters contemplated by this Agreement shall be made by any party unless
in the form and text such announcement shall first have been approved by the
others except that in the event that Buyer or its parent company is required by
law or by the regulations of NASDAQ or other security markets on which any of
its shares or other securities are listed to make any announcement or circular
it may do so after first consulting Seller as to the contents thereof if such
consultation is practicable.
Section 15
Costs and Taxes
1. Each party hereto shall bear its own costs and expenses which have been or
will be incurred by it in connection with the preparation and conclusion
of this Agreement, including the costs of its respective advisers. Buyer
shall also pay the costs of the advisers occupied - on its part - with the
preparation of this Agreement, in particular public accountants and
lawyers as well as the costs of this Agreement and its execution
(including the costs of recording in valid form and registration costs)
unless explicitly provided otherwise herein. Costs of audit proceedings
shall be borne in accordance with Section 5(5.), supra.
2. Each party shall pay its own taxes, in particular such taxes imposed on a
sales profit.
<PAGE> 34
Section 16
Expert Arbitration
1. If claims under and in accordance with this Agreement are subject to
disagreement of the parties, and if Seller and Buyer fail to reach an
agreement within a period of fourteen days from a corresponding request by
one of the parties with respect to certain values shown, individual items
or other valuation issues of the annual financial statements for the
fiscal years 1995, 1996 or 1997, the 1998-Financial Statements or the
1998-Consolidated Financial Statements, in particular in connection with
Section 5, Section 6(2.), (3.) and Section 8, each party shall appoint an
expert whose unanimous decision shall be binding for the parties. The
advisers who were charged by the parties in the preceding negotiations can
also be appointed as experts. The experts chosen shall be fluent in the
English language.
2. If the arbitrators fail to reach an agreement, they shall submit an expert
opinion giving reasons for their different opinions. Within the given
scope, a third expert acting as arbitrator shall render a binding and
final decision. This expert shall be appointed jointly by the parties.
3. Should one of the parties fail to appoint an expert within a period of
fourteen days from the corresponding request of the respective other
party, or should the parties fail to reach an agreement on the appointment
of a third expert within a period of fourteen days from receipt of the
experts' opinion, then, upon request of any party, the corresponding
expert will be appointed by the Wirtschaftspruferkammer (Chamber of Public
Accountants) of Dusseldorf. The third expert shall not have acted so far
for the parties hereto and companies associated with them. Upon request of
one of the parties, an auditor with sufficient professional knowledge and
employed by a large international public accountancy firm, who is fluent
in English, shall be designated as third expert.
<PAGE> 35
-35-
4. The parties shall be given an opportunity of presenting their opinion to
the experts in writing and orally in English. Witnesses shall be heard in
their native tongue. The experts shall comment on the submissions made by
the parties hereto in their expert opinions provided they hold different
views. They shall be bound by the arrangements made herein and in the
Annexes hereto.
5. The expenses and the remunerations of the experts shall be advanced by the
parties upon first request in equal shares and shall be borne wholly or
partially by the defeated party upon conclusion of the procedure. The own
costs of the parties and of their advisers, unless they act as experts,
shall be excluded from this provision. Such costs shall in any event be
borne by the parties themselves. The experts shall finally decide on the
allocation of such costs within the scope of the above principle at their
reasonable discretion.
Section 17
Notices
1. Notices in connection with this Agreement and its execution shall be
addressed to, and the parties shall be served at:
1.1 AS TO SELLER:
Funsoft Holding GmbH
- Geschaftsleitung -
Daimlerstr. 8
41564 Kaarst
with a copy to:
Deringer Tessin Herrmann & Sedemund
<PAGE> 36
-36-
Attn. Eckhard Martin, Esq.
Freiherr-vom-Stein-Str. 31
60323 Frankfurt
1.2 AS TO JOHN MENZIES HOLDING GMBH:
c/o Deringer Tessin Herrmann & Sedemund
Attn: Eckhard Martin, Esq.
Freiherr-vom-Stein-Str. 31
60323 Frankfurt
1.3 AS TO MR. THOMAS MATZEN:
c/o Deringer Tessin Herrmann & Sedemund
Attn: Eckhard Martin, Esq.
Freiherr-vom-Stein-Str. 31
60323 Frankfurt
1.4 AS TO MR. HANS RABE:
c/o Deringer Tessin Herrmann & Sedemund
Attn: Eckhard Martin, Esq.
Freiherr-vom-Stein-Str. 31
60323 Frankfurt
1.5 AS TO MR. JURGEN GOELDNER:
c/o Deringer Tessin Herrmann & Sedemund
Attn: Eckhard Martin, Esq.
Freiherr-vom-Stein-Str. 31
60323 Frankfurt
1.6 AS TO BUYER:
THQ Inc.
- Management -
5016 North Parkway Calabasas, Suite 100
Calabasas, California 91302
USA
<PAGE> 37
-37-
with a copy to:
Bruckhaus Westrick Heller Lober
Attn. Dr. Ruth Luttmann, Esq.
Freiligrathstr. 1
40479 Dusseldorf
2. The above addresses shall remain valid unless and until the other parties
have been notified in writing by any change of address, provided, however,
that a change of the address or the authorized receiving agent shall be
valid only if the respective party has a serving address within the
Federal Republic of Germany.
3. All notices in connection with this Agreement must be in writing, and
shall become effective upon receipt. Notices by telefax, telegram or telex
must be confirmed in writing.
Section 18
Final Provisions
1. Any changes of and supplements to this Agreement shall be made in writing,
unless notarization is required. This shall also apply to any waiver of
the written form.
2. Should any provision of this Agreement be or become invalid or should this
Agreement be found to contain a gap, the validity of the remaining
provisions shall not be affected thereby. The invalid provision or the gap
shall be automatically replaced or filled by such other provision coming,
if and to the extent legally permitted, as close as possible to what the
parties hereto have intended with the invalid provision, in particular
with any invalid measure of performance, time or period contained herein,
or they would have stipulated, if they had considered the issue to be
regulated.
<PAGE> 38
-38-
3. This Agreement is subject to, and shall be governed by, the laws of the
Federal Republic of Germany.
4. Court of venue for all disputes arising out of, or in connection with,
this Agreement shall - to the extent legally possible - be Frankfurt a.M..
<PAGE> 39
-39-
Dusseldorf, this day of 2 December 1998
THQ Inc.
by:
/s/ Brian J. Farrell
- ---------------------------
Brian J. Farrell
Funsoft Holding GmbH
by:
/s/ Hans Rabe
- ---------------------------
Hans Rabe
John Menzies Holding GmbH
by:
/s/ Eckhard Martin
- ---------------------------
Eckhard Martin
/s/ Thomas Matzen /s/ Hans Rabe
- --------------------------- ------------------------
Thomas Matzen Hans Rabe
/s/ Jurgen Goeldner
- ---------------------------
Jurgen Goeldner
<PAGE> 1
EXHIBIT 5
[SIDLEY & AUSTIN LETTERHEAD]
January 8, 1999
THQ Inc.
5016 N. Parkway Calabasas, Suite 100
Calabasas, CA 91302
Re: Registration Statement on form S-3
----------------------------------
Gentlemen/Ladies:
We have acted as counsel for THQ Inc., a Delaware corporation
(the "Company"), in connection with the registration under the Securities Act of
1933, as amended, pursuant to the above-captioned registration statement (the
"Registration Statement"), of the resale by the securityholder named therein of
166,620 shares (the "Shares") of common stock, par value $.01 per share, of the
Company issued pursuant to the Purchase Agreement among the Company, Funsoft
Holding GmbH, a German corporation, John Menzies Holdings GmbH, Thomas Matzen,
Hans Rabe and Jurgen Goeldner (the "Purchase Agreement").
In our capacity as counsel for the Company and for purpose of
this opinion letter, we have examined the originals, or copies identified to our
satisfaction as being true copies of the originals, of the following documents:
1. The Purchase Agreement;
2. The Registration Statement; and
3. Certain resolutions adopted by the Board of Directors
of the Company relating to the issuance and sale of the Shares and related
matters.
We have also examined originals, or copies certified or otherwise
identified to our satisfaction of such records of the Company and such other
agreements, instruments and documents as we have considered necessary or
appropriate to enable us to render the opinions expressed below.
<PAGE> 2
SIDLEY & AUSTIN LOS ANGELES
January 7, 1999
Page 2
In the course of our examinations and investigations, we have
assumed the legal capacity of all natural persons, the genuineness of all
signatures on original documents, the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents submitted
to us as certified, conformed or photostatic copies and the authenticity of the
originals of such latter documents. In making our examination of documents
executed or to be executed by parties other than the Company, we have assumed
that such parties had or will have the power, corporate, partnership or other,
to enter into and perform all obligations thereunder and we have also assumed
the due authorization by all requisite action, corporate, partnership or other,
the due execution and delivery by such parties of such documents and the
validity, binding effect and enforceability thereof. As to all facts material to
the opinions expressed herein that we have not independently established or
verified, we have relied upon statements and representations of officers and
other representatives of the Company and others.
Based upon and subject to the foregoing, it is our opinion that
the Shares are legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion letter as an
exhibit to the Registration Statement and to the reference to our firm under the
caption "Legal Matters" in the Registration Statement. In giving such consent,
we do not hereby admit that we come within the category of persons whose consent
is required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations thereunder. The opinions expressed herein are given as of
the date hereof, and we assume no obligation to advise you of changes that may
hereafter be brought to our attention.
Very truly yours,
/s/ SIDLEY & AUSTIN
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Registration
Statement of THQ Inc. on Form S-3 of our report dated February 20, 1998
appearing in the Annual Report on Form 10-K of THQ Inc. for the year ended
December 31, 1997 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Los Angeles, California
January 7, 1999
