**Exhibit10.35**

 

SECOND AMENDMENT

TO

AMENDED AND RESTATEDREVOLVING CREDIT AGREEMENT

AND

THIRD AMENDMENT TOSECURITY AGREEMENT

 

This Amendment, dated asof May 30, 2003, is entered into by (1) THQ INC., a Delaware corporation (the “Borrower”),(2) UNION BANK OF CALIFORNIA, N.A., as sole lender (the “Lender”), and(3) UNION BANK OF CALIFORNIA, N.A., as administrative agent (the “Agent”)for the Lender.

 

Recitals

 

A.                                   TheBorrower, the Lender and Union Bank of California, N.A., as administrativeagent, syndication agent and arranger, are party to an Amended and RestatedRevolving Credit Agreement dated as of September 27, 2002, as amended by aFirst Amendment to Amended and Restated Revolving Credit Agreement datedNovember 21, 2002 (said Amended and Restated Revolving Credit Agreement, as soamended, herein called the “Credit Agreement”), and the Borrower hasexecuted a Security Agreement dated as of August 31, 2000 in favor of theAgent, as amended by a Seventh Amendment to Revolving Credit Agreement andFirst Amendment to Security Agreement dated as of January 8, 2002 and a SecondAmendment to Security Agreement dated September 27, 2002 (said SecurityAgreement, as so amended, herein called the “Security Agreement”).  Terms defined in the Credit Agreement and nototherwise defined herein have the same respective meanings when used herein,and the rules of interpretation set forth in Sections 1.2 and 1.3 ofthe Credit Agreement are incorporated herein by reference.

 

B.                                     TheBorrower, the Lender and the Agent wish to (1) amend the Credit Agreement to,among other things, reduce the maximum Facility Amount to $25,000,000,eliminate the Advance Sublimit and replace the current financial covenants and(2) amend certain provisions of the Security Agreement relating to investmentproperty.  Accordingly, the Borrower,the Lender and the Agent hereby agree as set forth below.

 

Section 1.  Amendmentsto Credit Agreement.  Effective asof the date hereof but subject to satisfaction of the conditions precedent setforth in Section 3, the Credit Agreement is hereby amended as set forthbelow.

 

## (a)                                  Section1.1 of the Credit Agreement is amended by adding the following definition inappropriate alphabetical order:

 

“‘Marketable Securities’ means securities freely tradable on theNew York Stock Exchange, the American Stock Exchange, Nasdaq or another U.S.national securities exchange.”

 

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## (b)                                 Section5.5 of the Credit Agreement is amended in full to read as follows:

##  

“Section5.5                             FinancialInformation.  The consolidatedbalance sheet of the Borrower and its Subsidiaries as of December 31, 2002, andthe related consolidated statements of income and retained earnings of theBorrower and its Subsidiaries for the fiscal year then ended, certified byDeloitte & Touche LLP, independent public accountants, fairly present theconsolidated financial condition of the Borrower and its Subsidiaries as ofsuch date and the consolidated results of the operations of the Borrower andits Subsidiaries for the fiscal year ended on such date, all in accordance withGAAP applied on a consistent basis. Since December 31, 2002 there has been no material adverse change in thebusiness, condition (financial or otherwise), operations, performance,properties or prospects of the Borrower and its Subsidiaries taken as awhole.  The Borrower and itsSubsidiaries taken as a whole have no material contingent liabilities except asdisclosed in such consolidated balance sheet or the notes thereto.”

##  

## (c)                                  Section6.1(a)(i) of the Credit Agreement is amended by deleting the reference to“Sections 6.2(i), (j), (l) and (m)” and substituting “Sections 6.2(i) and (j).”

 

## (d)                                 Section6.1(a)(ii) of the Credit Agreement is amended by deleting the reference to“Sections 6.2(i), (j), (k), (l) and (m)” and substituting “Sections 6.2(i) and(j).”

##  

## (e)                                  Sections6.2(i), (j), (k), (l) and (m) of the Credit Agreement are deleted and replacedby the following:

 

“(i)                               Liquidity.  The Borrower will not permit the sum ofconsolidated cash, Cash Equivalents and Marketable Securities of the Borrowerand its Subsidiaries as of the end of any fiscal quarter of the Borrower,commencing with the quarter ended on March 31, 2003, to be less than$50,000,000, as determined by reference to the financial statements to bedelivered pursuant to Sections 6.1(a)(i) and (ii).”

 

“(j)                               OperatingProfit.  The Borrower will notpermit the consolidated Operating Profit of it and its Subsidiaries for thefour-quarter period ended as of the last day of any fiscal quarter of theBorrower, commencing with the quarter ended on March 31, 2003, to be less than(i) $10,000,000 for the four-quarter periods ended on March 31, 2003, June 30,2003 and September 30, 2003 and (ii) $15,000,000 for any such four-quarterperiod ended thereafter, as determined by reference to the financial statementsto be delivered pursuant to Sections 6.1(a)(i) and (ii); provided, however,that, for purposes of this covenant, $21,964,000 of nonrecurring costs incurredin the quarter ended on December 31, 2002 shall be added back to OperatingProfit for the four-quarter periods ended on March 31, 2003, June 30, 2003 andSeptember 30, 2003.”

 

“(k)                            [INTENTIONALLYOMITTED.]”

 

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“(l)                               [INTENTIONALLYOMITTED.]”

 

“(m)                         [INTENTIONALLYOMITTED.]”

 

## (f)                                    Schedules1 and 2 to the Credit Agreement are deleted and replaced by Schedules 1 and 2,respectively, attached hereto.

 

# Section 2.  Amendments to Security Agreement.  Effective as of the date hereof but subjectto satisfaction of the conditions precedent set forth in Section 3, theSecurity Agreement is hereby amended as set forth below.

 

## (a)                                  Section1(d) of the Security Agreement is amended in full to read as follows:

##  

“(d)                           thesecurities accounts described in Schedule 1 and all other investment propertyof any type, all certificates and instruments representing or evidencing suchinvestment property, and all dividends, interest, distributions, cash,instruments and other property from time to time received, receivable orotherwise distributed in respect of or in exchange for any or all of theforegoing (any and all such investment property, certificates, instruments,dividends, interest, distributions, cash, instruments and other property hereincalled the ‘Investment Property’); provided, however, thatthe security interest granted hereby in stock or other equity interests in anyPerson organized under the laws of any jurisdiction outside the United Statesof America shall be limited to 65% of the outstanding stock or other equityinterests in such Person;.”

 

## (b)                                 Section4 of the Security Agreement is amended in full to read as follows (and theAdministrative Agent and the Lender hereby waive any failure by the Borrower tocomply with that section before the date hereof):

 

“Section 4.  [INTENTIONALLY OMITTED.]”

 

## (c)                                  Section6(f) of the Security Agreement is amended in full to read as follows:

 

“(f)                              Validand Perfected First-Priority Security Interest.  This Agreement and the UCC-1 financing statement filed againstthe Borrower in the State of Delaware create a valid and perfectedfirst-priority security interest in the Collateral.  All filings and other actions necessary or desirable to perfectand protect such security interest have been duly made or taken (other than theAgent’s obtaining control over any investment property owned by the Borrower).”

 

## (d)                                 Section10(a)(ii) of the Security Agreement is amended by deleting the phrase “PledgedEquity or Pledged Debt” and the words “Pledged Equity” wherever they appear

 

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in that section and substituting the phrase “Investment Propertypledged hereunder” in each instance.

 

# Section 3.  Conditionsto Effectiveness.  This Amendmentshall become effective as of the date first set forth above when the Agent hasreceived an amendment fee of $5,000, for the account of the Lender, and all ofthe following documents, each dated the date hereof, in form and substancesatisfactory to the Agent and in the number of originals requested by theAgent:

 

## (a)                                  thisAmendment, duly executed by the Borrower and the Lender; and

 

## (b)                                 suchother approvals, evidence and documents as the Lender through the Agent mayreasonably request.

 

Section 7.  Representationsand Warranties of Borrower.  TheBorrower represents and warrants to the Lender and the Agent as set forthbelow.

 

## (a)                                  Theexecution, delivery and performance by the Borrower of this Amendment and eachCredit Document, as amended hereby, to which the Borrower is a party, and theconsummation of the transactions contemplated hereby and thereby, are withinthe Borrower’s corporate powers, have been duly authorized by all necessarycorporate action and do not (i) contravene the Borrower’s certificate ofincorporation or bylaws, (ii) violate any Governmental Rule, (iii) conflictwith or result in the breach of, or constitute a default under, any loanagreement, indenture, mortgage, deed of trust or lease, or any other contractor instrument, binding on or affecting the Borrower or any of its properties,the conflict, breach or default of which could reasonably be expected to have amaterial and adverse effect on the business, condition (financial orotherwise), operations, performance, properties or prospects of the Borrower orany Subsidiary or on the ability of the Borrower to perform its obligationsunder any of the Credit Documents, or (iv) result in or require the creation orimposition of any Lien upon or with respect to any of the properties of theBorrower, other than in favor of the Agent.

 

## (b)                                 NoGovernmental Action is required for the due execution, delivery or performanceby the Borrower of this Amendment or any of the Credit Documents, as amendedhereby, to which the Borrower is a party, or for the consummation of thetransactions contemplated hereby or thereby.

 

## (c)                                  ThisAmendment and each Credit Document, as amended hereby, to which the Borrower isa party have been duly executed and delivered by the Borrower.  The Credit Documents, as amended hereby, arelegal, valid and binding obligations of the Borrower, enforceable against theBorrower in accordance with their respective terms, except as theenforceability thereof may be limited by bankruptcy, insolvency, moratorium,reorganization or other similar laws affecting creditors’ rights generally orby equitable principles relating to enforceability.

 

## (d)                                 Theconsolidated balance sheet of the Borrower and its Subsidiaries as of December31, 2002, and the related consolidated statements of income, retained earningsand cash flows of the Borrower and its Subsidiaries for the fiscal year thenended, certified by

 

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Deloitte & Touche LLP, independent public accountants, fairlypresent the consolidated financial condition of the Borrower and itsSubsidiaries as of such date and the consolidated results of the operations ofthe Borrower and its Subsidiaries for the fiscal year ended on such date, allin accordance with GAAP applied on a consistent basis.  Since December 31, 2002 there has been nomaterial adverse change in the business, condition (financial or otherwise),operations, performance, properties or prospects of the Borrower and itsSubsidiaries taken as a whole.  TheBorrower and its Subsidiaries taken as a whole have no material contingent liabilitiesexcept as disclosed in such consolidated balance sheet or the notes thereto.

 

## (e)                                  Thereis no action, suit, investigation, litigation or proceeding affecting theBorrower or any Subsidiary pending or, to the best knowledge of the Borrower,threatened before any Governmental Person, arbitrator or referee (i) that couldreasonably be expected to have a material and adverse effect on the business,condition (financial or otherwise), operations, performance, properties orprospects of the Borrower and its Subsidiaries taken as a whole or (ii) thatpurports to affect the legality, validity or enforceability of this Amendmentor any of the Credit Documents, as amended hereby, to which the Borrower is aparty or the consummation of the transactions contemplated hereby or thereby.

 

## (f)                                    Theexecution, delivery and performance of this Amendment do not adversely affectthe Lien of the Security Agreement.

 

## (g)                                 Therehas been no amendment, supplement or other modification to the certificate ofincorporation or bylaws of the Borrower on or after September 27, 2002.  The representations and warranties of theCredit Parties contained in the Credit Documents are correct in all materialrespects on and as of the date of this Amendment, before and after givingeffect to the same, as if made on and as of such date.  No event has occurred and is continuing, orwould result from the effectiveness of this Amendment, that constitutes aDefault.

 

# Section 8.  Reference to and Effect on CreditDocuments.

 

## (a)                                  Onand after the effective date of this Amendment, each reference in the CreditAgreement to “this Agreement,” “hereunder,” “hereof,” “herein” or any otherexpression of like import referring to the Credit Agreement, and each referencein the other Credit Documents to “the Credit Agreement,” “thereunder,” “thereof,”“therein” or any other expression of like import referring to the CreditAgreement, shall mean and be a reference to the Credit Agreement as amended bythis Amendment.

 

## (b)                                 Exceptas specifically amended above, the Credit Agreement and the other Credit Documentsshall remain in full force and effect and are hereby ratified andconfirmed.  Without limiting thegenerality of the foregoing, the Security Agreement and all of the Collateraldescribed therein do and shall continue to secure the payment of all obligationsstated to be secured thereby under the Credit Documents, as amended hereby.

 

## (c)                                  Exceptas expressly set forth herein, the execution, delivery and effectiveness ofthis Amendment shall not operate as a waiver of any right, power or remedy of

 

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the Agent or the Lender under any of the Credit Documents or constitutea waiver of any provision of any of the Credit Documents.

 

Section 9.  Costsand Expenses.  The Borrower agreesto pay on demand all costs and expenses of the Agent in connection with thepreparation, execution and delivery of this Amendment and the other instrumentsand documents to be delivered hereunder, including the reasonable fees andout-of-pocket expenses of counsel for the Agent with respect thereto and withrespect to advising the Agent as to its rights and responsibilities hereunderand thereunder.

 

Section 10.  Executionin Counterparts.  This Amendment maybe executed in any number of counterparts and by the parties hereto in separatecounterparts, each of which when so executed and delivered shall be deemed tobe an original and all of which taken together shall constitute one and thesame agreement.

 

[THIS SPACE HAS BEEN LEFTBLANK INTENTIONALLY.]

 

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Section 11.  GoverningLaw.  THIS AMENDMENT SHALL BEGOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THESTATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OFCALIFORNIA.

 

 
|   | THQ INC.                            |
|--------|-------------------------------------|
|   |                                |
|   |                                |
|   | By:                                 | /s/Fred A. Gysi |   |
|   |                                |   | Fred Gysi |
|   |                                |   | Senior  Vice President,  Finance & Administration |
|   |                                |
|   |                                |
|   | UNION BANK OF  CALIFORNIA, N.A.,    |
|   | as  Administrative Agent and Lender |
|   |                                |
|   |                                |
|   | By:                                 | /s/John C. Kase |   |
|   |                                |   | John C. Kase |
|   |                                |   | Vice  President &  Senior Credit Executive |
|        |                                     |  |  |  |  |  |

 

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SCHEDULE 1

 

FACILITY AMOUNT AND ADVANCE SUBLIMIT

 

I.                                         FacilityAmount

 
| **Month**      |   | **Amount** |
|----------------|--------|------------|
|           |   |       |
| August 2002    |   | $          | 20,000,000 |
| September 2002 |   | $          | 35,000,000 |
| October 2002   |   | $          | 35,000,000 |
| November 2002  |   | $          | 35,000,000 |
| December 2002  |   | $          | 35,000,000 |
| January 2003   |   | $          | 35,000,000 |
| February 2003  |   | $          | 20,000,000 |
| March 2003     |   | $          | 20,000,000 |
| April 2003     |   | $          | 20,000,000 |
| May 2003       |   | $          | 20,000,000 |
| June 2003      |   | $          | 20,000,000 |
| July 2003      |   | $          | 20,000,000 |
| August 2003    |   | $          | 20,000,000 |
| September 2003 |   | $          | 25,000,000 |
| October 2003   |   | $          | 25,000,000 |
| November 2003  |   | $          | 20,000,000 |
| December 2003  |   | $          | 20,000,000 |
| January 2004   |   | $          | 20,000,000 |
| February 2004  |   | $          | 20,000,000 |
| March 2004     |   | $          | 20,000,000 |
| April 2004     |   | $          | 20,000,000 |
| May 2004       |   | $          | 20,000,000 |
| June 2004      |   | $          | 20,000,000 |
| July 2004      |   | $          | 20,000,000 |
| August 2004    |   | $          | 20,000,000 |

 

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II.                                     AdvanceSublimit

 
| **Month**      |   | **Amount** |
|----------------|--------|------------|
|           |   |       |
| August 2002    |   | $          | 10,000,000 |
| September 2002 |   | $          | 10,000,000 |
| October 2002   |   | $          | 10,000,000 |
| November 2002  |   | $          | 20,000,000 |
| December 2002  |   | $          | 20,000,000 |
| January 2003   |   | $          | 20,000,000 |
| February 2003  |   | $          | 10,000,000 |
| March 2003     |   | $          | 10,000,000 |
| April 2003     |   | $          | 10,000,000 |
| May 2003       |   | nil        |
| June 2003      |   | nil        |
| July 2003      |   | nil        |
| August 2003    |   | nil        |
| September 2003 |   | nil        |
| October 2003   |   | nil        |
| November 2003  |   | nil        |
| December 2003  |   | nil        |
| January 2004   |   | nil        |
| February 2004  |   | nil        |
| March 2004     |   | nil        |
| April 2004     |   | nil        |
| May 2004       |   | nil        |
| June 2004      |   | nil        |
| July 2004      |   | nil        |
| August 2004    |   | nil        |

 

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SCHEDULE 2

 

SUBSIDIARIES

 
| **Subsidiary**                        |   | **Jurisdiction of  Organization** |   | **Direct  Owner**               |   | **Percentage  Ownership** |   |
|---------------------------------------|--------|-----------------------------------|--------|---------------------------------|--------|---------------------------|--------|
|                                  |   |                              |   |                            |   |                      |   |
| Genetic Anomalies, Inc.               |   | Delaware                          |   | THQ Inc.                        |   | 100                       | %      |
|                                  |   |                              |   |                            |   |                      |   |
| Pacific Coast Power and Light Company |   | California                        |   | THQ Inc.                        |   | 100                       | %      |
|                                  |   |                              |   |                            |   |                      |   |
| Rainbow Multimedia Group, Inc.        |   | Arizona                           |   | THQ Inc.                        |   | 100                       | %      |
|                                  |   |                              |   |                            |   |                      |   |
| THQ/Jakks Pacific, LLC                |   | Delaware                          |   | THQ Inc.                        |   | 50                        | %      |
|                                  |   |                              |   |                            |   |                      |   |
| THQ Wireless Inc.                     |   | Delaware                          |   | THQ Inc.                        |   | 100                       | %      |
|                                  |   |                              |   |                            |   |                      |   |
| Volition, Inc.                        |   | Delaware                          |   | THQ Inc.                        |   | 100                       | %      |
|                                  |   |                              |   |                            |   |                      |   |
| THQ (Holdings) Ltd.                   |   | England                           |   | THQ Inc.                        |   | 100                       | %      |
|                                  |   |                              |   |                            |   |                      |   |
| T. HQ International Ltd.              |   | England                           |   | THQ Inc.                        |   | 100                       | %      |
|                                  |   |                              |   |                            |   |                      |   |
| THQ International Operations Ltd.     |   | England                           |   | THQ Inc.                        |   | 100                       | %      |
|                                  |   |                              |   |                            |   |                      |   |
| THQ Entertainment GmbH                |   | Germany                           |   | THQ (Holdings)                  |   | 100                       | %      |
|                                  |   |                              |   |                            |   |                      |   |
| THQ Asia Pacific Pty Ltd.             |   | Australia                         |   | THQ (Holdings)                  |   | 100                       | %      |
|                                  |   |                              |   |                            |   |                      |   |
| THQ Australia Studios Pty Ltd.        |   | Australia                         |   | THQ Inc.                        |   | 100                       | %      |
|                                  |   |                              |   |                            |   |                      |   |
| THQ Korea Ltd.                        |   | Korea                             |   | THQ Inc.                        |   | 100                       | %      |
|                                  |   |                              |   |                            |   |                      |   |
| THQ France Sarl                       |   | France                            |   | THQ (Holdings)                  |   | 100                       | %      |
|                                  |   |                              |   |                            |   |                      |   |
| THQ Wireless International Sarl       |   | Luxembourg                        |   | THQ Wireless Inc.               |   | 100                       | %      |
|                                  |   |                              |   |                            |   |                      |   |
| THQ Wireless Cayman Inc.              |   | Cayman Islands                    |   | THQ Wireless International Sarl |   | 100                       | %      |

 

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