THQ 2010 Annual Report Download - page 84

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Rights Agreement, dated as of April 9, 2002 (collectively, the “Rights Agreement”). Pursuant to the Rights
Agreement, and as adjusted pursuant to Section 11(p) of the Rights Agreement as a result of the stock splits
which occurred on April 9, 2002 and on September 1, 2005, each share of THQ common stock held on
March 31, 2010 was accompanied by four-ninths (4/9) of a preferred stock purchase right (“Right”), which
entitled the registered holder to purchase four nine-thousandths (4/9000) of a share of Series A Junior
Participating Preferred Stock at an exercise price of $44.44. The Rights would have become exercisable
10 days after any person or group, subject to certain exceptions, acquired, or 10 business days after any
person or group, subject to certain exceptions, announced its intention to commence a tender offer for, 15%
or more of the outstanding common stock of THQ. In the event that any such person or group acquired 15%
or more of our outstanding common stock, each holder of a Right (other than such person or group) would
have been entitled to purchase, at the exercise price, the number of shares of common stock having a
current market value equal to two times the exercise price of the Right.
Pursuant to the Second Amendment to the Amended and Restated Rights Agreement, dated May 12, 2010,
the Rights expired on May 12, 2010 and on the same date, the Company and Computershare Trust
Company, N.A., as rights agent, entered into a Section 382 Rights Agreement (the “382 Rights Agreement”).
Pursuant to the 382 Rights Agreement, each holder of THQ’s common stock on May 24, 2010 received a
right to purchase one one-thousandth of a share of Series A Junior Participating Preferred Stock of the
Company, par value $.01 (the “Preferred Stock”), at a purchase price of $35.00. If issued, each such
fractional share of Preferred Stock would give the stockholder approximately the same dividend, voting and
liquidation rights as does one share of the Company’s common stock. However, prior to exercise, a right does
not give its holder any rights as a stockholder of the Company, including, without limitation, any dividend,
voting or liquidation rights. The rights will not be exercisable until the earlier of (i) ten business days after a
public announcement that a person has become an “Acquiring Person” by acquiring beneficial ownership of
4.9% or more of the Company’s outstanding common stock (or, in the case of a person that had beneficial
ownership of 4.9% or more of the Company’s outstanding common stock as of the close of business on
May 12, 2010, by obtaining beneficial ownership of additional shares of the Company’s common stock
representing one-tenth of one percent (0.1%) of the common stock then outstanding) and (ii) ten business
days (or such later date as may be specified by the Company’s board prior to such time as any person
becomes an Acquiring Person) after the commencement of a tender or exchange offer by or on behalf of a
person that, if completed, would result in such person becoming an Acquiring Person.
21. Commitments and Contingencies
A summary of annual minimum contractual obligations and commercial commitments as of March 31,
2010 is as follows (in thousands):
Contrac tual Obligations and Commercial Commitments(6)
Fiscal
Years
Ending
March 31,
License /
Software
Development
Commitments(1)
Ad vertising(2)
Leases(3)
Debt(4)
Other(5)
Total
2011 ...................................................... $112,478 $5,798 $14,905 $13,249 $6,653 $153,083
2012 ...................................................... 59,963 14,207 14,209 — 6,582 94,961
2013 ...................................................... 16,600 2,676 11,217 — 4,000 34,493
2014 ...................................................... 12,000 1,325 10,043 — 4,000 27,368
2015 ...................................................... 10,000 577 8,850 100,000 — 119,427
Thereafter ............................................. 22,500 1,000 11,560 — — 35,060
$233,541 $25,583 $70,784 $113,249 $21,235 $464,392
(1)
Licenses and Software Development.
We enter into contractual arrangements with third parties for the rights to
exploit intellectual property and for the development of products. Under these agreements, we commit to provide
specified payments to an intellectual property holder or developer. Assuming all contractual provisions are met,
the total future minimum contract commitments for such agreements in place as of March 31, 2010 are
$233.5 million. License/software development commitments in the table above include $111.2 million of
commitments to licensors/developers that are included in our consolidated balance sheet as of March 31, 2010
because the licensors do not have any significant performance obligations to us. These commitments were
included in both current and long-term licenses and accrued royalties/current and long-term software
development and accrued liabilities.
(2)
Advertising.
We have certain minimum advertising commitments under most of our major license agreements.
These minimum commitments generally range from 2% to 12% of net sales related to the respective license.