**EXHIBIT 10.2**

 

**CONFIDENTIAL SALARY AND BENEFITS CONTINUATION**

**AGREEMENT AND GENERAL RELEASE**

** **

This Confidential Salary and Benefits Agreement andGeneral Release (the “Agreement”) is made and entered into between THQ Inc.(“THQ”) and Fred A. Gysi (“EXECUTIVE”) upon the following terms and conditions:

 

**RECITALS**

 

WHEREAS, EXECUTIVE voluntarily resigned fromemployment with THQ, with such resignation to be effective on the earlier tooccur of (i) March 31, 2004 and (ii) the date 30 days after the commencement ofemployment of a new chief financial officer of THQ (the “Separation Date”);

 

WHEREAS, THQ and EXECUTIVE are parties to aConfidential Separation Agreement and General Release;

 

WHEREAS, pursuant to the Confidential SeparationAgreement and General Release, THQ is willing to continue EXECUTIVE’s salaryand benefits for a limited period and upon the terms and conditions set forthin this Agreement;

 

WHEREAS, THQ has no prior legal obligation to providethe post-separation consideration that is exchanged for the promises herein;

 

WHEREAS, EXECUTIVE has had the opportunity to consultwith counsel before signing this Agreement, has read this Agreement andunderstood its contents, and has signed this Agreement voluntarily;

 

NOW, THEREFORE, in consideration of the mutualpromises, consideration, covenants, and conditions provided for in thisAgreement, the adequacy and sufficiency of which are hereby acknowledged, THQand EXECUTIVE agree as follows:

 

**COVENANTS**

** **

1.     Post-SeparationConsideration.  In consideration for the agreements,covenants, and general release contained herein, THQ shall provide EXECUTIVEwith the following post-separation consideration:

 

1a.   Salary Continuation. Commencing on the first regular THQ payday following the SeparationDate, THQ shall provide EXECUTIVE with salary continuation payments in theaggregate equal to twelve months’ base salary based on his current base annualsalary of $241,500.  All salarycontinuation payments shall be payable in installments in accordance with THQ’sregular payroll practices, provided, however, that EXECUTIVE may elect, bywritten notice to THQ, to receive all remaining salary continuation paymentsfrom THQ in a single lump

 

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sum payment.  In addition,should EXECUTIVE become employed, as a salaried employee or paid consultant, bya business that is a “competitor” of THQ, THQ may elect to pay EXECUTIVE anyremaining amounts due to EXECUTIVE in a lump sum payment.  For the purposes of this Agreement, a“competitor” shall mean any person or entity engaged in the business ofdesigning, developing, publishing or distributing entertainment software, orcontent of any type to be distributed by means of wireless media.  Should the salary continuation obligation bepaid in a lump sum pursuant to this paragraph, such lump sum shall be an amountequal to $241,500 less the amount of all prior payments made pursuant to thisSection 1a (without giving effect to any required withholdings) on the fifthday after the election by EXECUTIVE or THQ to make a lump sum payment pursuantto this paragraph All salary continuation payments, including a lump sumpayment, if any, shall be paid less withholdings required by law.  EXECUTIVE agrees that, in the event hebecomes employed at any time while salary continuation payments are due toEXECUTIVE pursuant to this Agreement, he will promptly advise THQ of thefollowing: (i) the name and address of his employer; (ii) the business of hisemployer and (iii) his date of hire. The period during which THQ makes salary continuation payments toEXECUTIVE pursuant to this Section 1a is herein referred to as the “SalaryContinuation Period.”

 

1b.   Bonuses.  EXECUTIVEshall be eligible to receive (i) an annual bonus of $80,000 for the fiscal yearending March 31, 2004, and (ii) his designated profit sharing allocation underTHQ’s existing Profit Sharing Plan for the year ending March 31, 2004; prorated in each case to the extent the Separation Date occurs prior to March 31,2004.  Such bonus shall be paid inaccordance with THQ’s regular practice and shall be paid less withholdingsrequired by law.

 

1c.   Benefits.  During theSalary Continuation Period, EXECUTIVE shall be eligible to participate in THQ’smedical, disability, life insurance and other health and welfare benefits,including Exec-u-care, at the same level of coverage, upon the same terms andotherwise to the same extent as such policies and benefits shall have been ineffect immediately prior to the Separation Date.  THQ and EXECUTIVE shall share the costs of the continuation ofsuch insurance and benefits coverage in the same proportion as such costs wereshared immediately prior to the Separation Date.  .

 

1d.   Extension of Vesting and Exercise Periodfor Certain Existing Stock Options.

 

(i)    THQ and EXECUTIVE acknowledge thatEXECUTIVE currently holds options to purchase THQ common stock under one ormore of the following agreements (collectively, the “Option Agreements”): theAmended and Restated THQ Inc. 1997 Stock Option Plan Incentive Stock OptionAgreement dated November 3, 1999 between THQ and EXECUTIVE (the “1999 IncentiveOption”), the Amended and Restated THQ Inc. 1997 Stock Option PlanNon-Qualified Stock Option Agreement dated November 3, 1999 between THQ andEXECUTIVE (the “1999 Non-Qualified Option”), the Amended and Restated THQ Inc. 1997 Stock Option Plan Incentive StockOption Agreement dated July 21, 2000 between THQ and EXECUTIVE (the “2000Incentive Option”), the Amended and Restated THQ Inc. 1997  Stock Option Plan Non-Qualified Stock OptionAgreement dated July 21, 2000 between THQ and

 

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EXECUTIVE (the “2000 Non-Qualified Option”), the Amended and RestatedTHQ Inc. 1997 Stock Option Plan Incentive Stock Option Agreement dated October1, 2001 between THQ and EXECUTIVE (the “2001 Incentive Option”), the Amendedand Restated THQ Inc. 1997  Stock OptionPlan Non-Qualified Stock Option Agreement dated October 1, 2001 between THQ andEXECUTIVE (the “2001 Non-Qualified Option”), the Amended and Restated THQ Inc.1997 Stock Option Plan Incentive Stock Option Agreement dated February 28, 2002between THQ and EXECUTIVE (the “2002 Incentive Option”), the Amended andRestated THQ Inc. 1997 Stock Option Plan Non-Qualified Stock Option Agreementdated February 28, 2002 between THQ and EXECUTIVE (the “2002 Non-QualifiedOption”), the Amended and Restated THQ Inc. 1997 Stock Option Plan IncentiveStock Option Agreement dated February 24, 2003 between THQ and EXECUTIVE (the“2003 Incentive Option”), and the Amended and Restated THQ Inc. 1997 StockOption Plan Non-Qualified Stock Option Agreement dated February 24, 2003between THQ and EXECUTIVE (the “2003 Non-Qualified Option”);

 

(ii)   EXECUTIVE may exercise options vestedunder any of the Option Agreements no later than 90 days following theSeparation Date.  Any such options whichare not so exercised shall expire at the end of the ninetieth day following theSeparation Date;

 

(iii)  THQ shalltake all actions necessary to provide that all options unvested under theOption Agreements as of the Separation Date shall continue to vest during theSalary Continuation Period and shall be exercisable until the date 90 daysafter the end of the Salary Continuation Period with respect to the number ofshares of THQ common stock that are vested under the terms of the applicableOption as of the last day of the Salary Continuation Period; provided that nosuch Option shall vest or be exercisable later than five years after its dateof grant.  EXECUTIVE acknowledges thatthis extension of the vesting and exercisability periods under the 1999Incentive Option, the 2000 Incentive Option, the 2001 Incentive Option, the2002 Incentive Option and the 2003 Incentive Option constitutes a modificationof the applicable Option under the Internal Revenue Code of 1986, as amended,and therefore each such Option shall be taxable as a nonstatutory stock optioninstead of an incentive stock option.

 

1e.   Computer and Telephone. EXECUTIVE shall also be entitled to retain the laptop computer andcellular telephone that are owned by THQ and currently in EXECUTIVE’spossession, purged of all confidential proprietary information of THQ.  EXECUTIVE shall be responsible for allinternet service provider, internet connectivity, wireless service provider andother continuing charges relating to such devices from and after the SeparationDate

 

1f.    Email and Telephone Access.  During the Salary Continuation Period, THQ shallarrange for EXECUTIVE to have an email account and telephone extension, in eachcase subject to THQ’s regular policies and procedures.

 

1g.   Directors’ and Officers’ InsuranceCoverage.  EXECUTIVE shall continue to be covered underTHQ’s existing Directors’ and Officers’ insurance policy for his actions asSenior Vice President—Finance and Chief Financial Officer of THQ up to andincluding the Separation Date, in accordance with and subject to the terms andconditions of such policy.

 

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2.     ProprietaryInformation and Inventions.  Except asspecifically set forth in Section 1e of this Agreement, EXECUTIVE shallimmediately return to THQ all documents, information (whether stored oncomputer, computer disks, or other media), and other property belonging to THQ,including without limitation, credit cards, security key cards, telephonecards, computer software or hardware, THQ identification cards, THQ records andcopies of records, correspondence and copies of correspondence, other books ormanuals issued or owned by THQ, any and all information relating to THQ’s financialsituation, business plans, forecasts or strategy and all THQ intellectualproperty.

 

2a.   EXECUTIVE acknowledges that hisemployment with THQ created a relationship of confidence and trust betweenEXECUTIVE and THQ with respect to Confidential Information (as hereinafterdefined) disclosed to EXECUTIVE, or known or made available to EXECUTIVE as aresult of his relationship with THQ. “Confidential Information” includes, but is not limited to, customerlists, vendor lists, joint venture lists, databases, computer programs andsoftware, frameworks, designs, models, marketing programs and plans, sales,financial, marketing, training and technical information and plans, businessmethods, business policies, personnel information and policies, procedures, techniques,research or development projects or results, trade secrets (which EXECUTIVEagrees include THQ customer and prospective customer lists), pricing policies,intellectual property, any and all information relating to projectedacquisitions, dispositions, joint ventures or other business arrangementswhether involving THQ or third parties, properties or management agreements,management organization information (including data and other informationrelating to members of THQ’s Board of Directors and management), operatingpolicies or manuals, business plans, purchasing agreements, financial records,or other financial, commercial, business or technical information relating toTHQ or any of its subsidiaries or information designated as confidential or proprietarythat THQ or any of its subsidiaries may receive belonging to suppliers,customers or others who do business with THQ or any of its subsidiaries,information concerning how THQ creates, develops, acquires or maintains itsproducts and marketing plans, targets its potential customers, and operates itsbusinesses, other than information which is otherwise available in the publicdomain (other than by reason of the breach of EXECUTIVE of any confidentialityagreement with THQ) or which was known to EXECUTIVE prior to the date as ofwhich he commenced employment with THQ or any of its predecessors oraffiliates.

 

2b.   At all times following the SeparationDate, EXECUTIVE agrees that he will not disclose, use, disseminate, lectureupon, publish or use for the direct or indirect benefit of, any person(including EXECUTIVE), firm, association or other entity (other than THQ)Confidential Information unless EXECUTIVE first secures THQ’s writtenconsent.  EXECUTIVE will continue toabide by the confidential provisions of EXECUTIVE’s Confidential InformationAgreement signed by EXECUTIVE on October 25, 1997 (the “ConfidentialInformation Agreement”), which shall remain in full force and effect.

 

2c.   EXECUTIVE represents that, in the courseof his employment, he has not, solely or jointly with another or others,conceived or made any formulas, processes, techniques, test data, discoveries,improvements, innovations, concepts and ideas, whether patentable or not, withthe use of THQ’s facilities, materials, equipment, trade secrets, personnel, ortime, or

 

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suggested by or resulting from any task assigned to EXECUTIVE or workperformed by EXECUTIVE for, or on behalf of THQ relating to his employment.

 

3.     Securities Laws.

 

3a.   EXECUTIVE acknowledges and understandsthat any offer to purchase or sell, purchase, sale, transfer or assignment ofsecurities of THQ by EXECUTIVE is subject to the provisions of the SecuritiesAct of 1933, as amended (the “1933 Act”), the Securities Exchange Act of 1934,as amended (the “1934 Act”), and the rules promulgated thereunder including,without limitation, Rule 144 under the 1933 Act and Section 16 and Rule 10b-5under the 1934 Act.

 

3b.   EXECUTIVE will cease to be an “ExecutiveOfficer”  (as defined in Rule 3b-7promulgated under Section 16 of the 1934 Act) of THQ as of the Separation Date.EXECUTIVE acknowledges his continuing obligation to comply with Section 16 ofthe 1934 Act and the rules and regulations of the Securities and ExchangeCommission promulgated thereunder, including without limitation the obligationto file on a timely basis reports on Form 4 and Form 5 regarding certaintransactions in the securities of THQ.

 

3c.   THQ acknowledges and agrees that,following the Separation Date, EXECUTIVE will not be considered an officer,employee, or “Insider” for the purposes of the THQ Confidentiality and InsiderTrading Policy (the “Policy”), and will not be subject to the Policy.

 

4.     GeneralRelease.

 

4a.   Except for the obligations arising out ofthis Agreement and the Option Agreements, EXECUTIVE for himself and on behalfof each and all of his respective legal predecessors, successors, assigns,fiduciaries, heirs, parents, spouses, companies, affiliates, and each of theforegoing’s respective past, present, and future officers, principals,directors, partners, employees, agents, attorneys, trustees, administrators,executors, and representatives (all herein referred to as the “EXECUTIVERELEASORS”), does hereby fully and forever release, absolve, discharge, andcovenant not to sue THQ, and each and all of its legal predecessors,successors, assigns, owners, fiduciaries, divisions, parents, subsidiaries,affiliates, and related entities, and each of the foregoing’s respective past,present, and future officers, principals, directors, partners, employees,agents, attorneys, trustees, administrators, executors, and representatives(all herein referred to as the “THQ RELEASED PARTIES”) of, from, and for, anyand all claims, demands, damages, debts, controversies, liabilities, losses,accounts, reckonings, obligations, costs, expenses, attorneys’ fees, actions,liens, causes, and/or causes of action, at law or in equity, whether known orunknown (collectively, the “Executive’s Released Claims”), which the EXECUTIVERELEASORS now have, have ever had, or may have in the future against the THQRELEASED PARTIES based upon, arising out of, concerning, relating to, by virtueof, or resulting from any act, omission, matter, fact, occurrence, transaction,thing, state of facts, claim, contention, statement, or event occurring orexisting at any time from the beginning of the world up to and including theSeparation Date.  Without limiting thegenerality

 

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of the foregoing, this General Release applies to any and all claims,demands, damages, debts, controversies, liabilities, losses, accounts,reckonings, obligations, costs, expenses, attorneys’ fees, actions, liens,causes, and/or causes of action which in any way are based upon, concern,relate to, arise out of, are by virtue of, or result from, EXECUTIVE’semployment with THQ, including, but not limited to, any claims which could havebeen raised under any state’s Fair Employment and Housing Act, Title VII of theCivil Rights Act of 1964 as amended, the Age Discrimination in Employment Act(ADEA), the American’s with Disabilities Act (ADA), and the EmployeesRetirement Income Security Act (ERISA), or any other federal, state, or locallaw, regulation, ordinance, or common law claim.  Without limiting the generality of the foregoing, EXECUTIVEagrees, to the extent permitted by law, not to file against any of the THQRELEASED PARTIES any complaint or charge with the Equal Employment OpportunityCommission, the California Fair Employment and Housing Commission, the federalor California Department of Labor, or with any other local, state, or federalagency or court based upon, arising out of, concerning, relating to, by virtueof, or resulting from any of the Executive’s Released Claims, and that if anyagency or court assumes jurisdiction over any of the Executive’s ReleasedClaims, EXECUTIVE will request such agency or court to withdraw from thematter.  EXECUTIVE also acknowledgesthat, except for the payments and benefits required by paragraph 3 above,EXECUTIVE has been paid all wages, accrued vacation pay, severance andseparation pay, and all other monies and benefits to which EXECUTIVE wasentitled.

 

4b.   Except for the obligations arising out ofthis Agreement, the 1999 Incentive Option, the 1999 Non-Qualified Option, the2000 Incentive Option, the 2000 Non-Qualified Option, the 2001 IncentiveOption, the 2001 Non-Qualified Option, the 2002 Incentive Option, the 2002Non-Qualified Option, the 2003 Incentive Option and the 2003 Non-QualifiedOption, THQ for itself and on behalf of each and all of its legal predecessors,successors, assigns, owners, fiduciaries, divisions, parents, subsidiaries,affiliates, and related entities, and each of the foregoing’s respective past,present, and future officers, principals, directors, partners, employees,agents, attorneys, trustees, administrators, executors, and representatives(all herein referred to as the “THQ RELEASORS”), does hereby fully and forever release,absolve, discharge, and covenant not to sue EXECUTIVE, each and all of hisrespective legal predecessors, successors, assigns, fiduciaries, heirs,parents, spouses, companies, affiliates, and each of the foregoing’s respectivepast, present, and future officers, principals, directors, partners, employees,agents, attorneys, trustees, administrators, executors, and representatives(all herein referred to as the “EXECUTIVE RELEASED PARTIES”), of, from, andfor, any and all claims, demands, damages, debts, controversies, liabilities,losses, accounts, reckonings, obligations, costs, expenses, attorneys’ fees,actions, liens, causes, and/or causes of action, at law or in equity, whetherknown or unknown, which the THQ RELEASORS now have, have ever had, or may havein the future against the EXECUTIVE RELEASED PARTIES based upon, arising outof, concerning, relating to, by virtue of, or resulting from any act, omission,matter, fact, occurrence, transaction, thing, state of facts, claim,contention, statement, or event occurring or existing at any time from thebeginning of the world up to and including the Separation Date.  Without limiting the generality of theforegoing, this General Release applies to any and all claims, demands,damages, debts, controversies, liabilities, losses, accounts, reckonings,obligations, costs, expenses, attorneys’ fees, actions, liens, causes, and/orcauses of action which

 

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in any way are based upon, concern, relate to, arise out of, are byvirtue of, or result from EXECUTIVE’s employment with THQ.

 

5.     Waiverof Section 1542.  EXECUTIVE and THQ each acknowledge that heor it has read and understood the following language contained in Section 1542of the California Civil Code:

 

A GENERAL RELEASE DOESNOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST INHIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVEMATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

Havingreviewed this provision, EXECUTIVE and THQ each hereby voluntarily waives andrelinquishes any and all rights or benefits he or it may have under thisprovision, or any other provision of statutory or common law of similar effect,and each hereby fully releases the other from liability for any unknown claims.

 

6.     TaxConsequences.  The Company makes no representations orwarranties with respect to the tax consequences to EXECUTIVE of any of theseverance consideration provided under this Agreement.  EXECUTIVE shall be solely responsible forthe reporting and payment of local, state and/or federal taxes, if any,attributable to the severance consideration, and any penalties or assessmentsthereon.  EXECUTIVE agrees to defend,indemnify, and hold harmless THQ from any claims, demands, deficiencies,penalties, assessments, executions, judgments, or recoveries by any governmentagency against THQ for any amounts claimed due on account of EXECUTIVE’sfailure to pay federal or state taxes or damages sustained by THQ by reason ofany such claims, including reasonable attorneys’ fees.

 

7.     Cooperation. As a material term hereof, for a period of four (4) months after theSeparation Date, EXECUTIVE will in good faith voluntarily cooperate with THQand answer questions THQ may ask him regarding matters which EXECUTIVE oversawor worked on during his employment at THQ or at THQ’s predecessors oraffiliates.  EXECUTIVE shall not receiveany additional compensation for such cooperation.

 

8.     NoAdmission; Integration; Modification.  Neither thisAgreement nor anything contained in this Agreement shall be construed as anadmission of any fact, issue, liability or wrongdoing by either partyhereto.  With the exception of theConfidential Information Agreement and the Option, each of which shall remainin full force and effect, this Agreement supersedes all prior agreements andunderstandings and constitutes the only and entire agreement between THQ andEXECUTIVE concerning the terms of EXECUTIVE’s severance.  This Agreement shall govern in the event ofany inconsistency between this Agreement and the Confidential InformationAgreement.  THQ and EXECUTIVEacknowledge they have not executed this Agreement in reliance upon any promise,representation, statement,

 

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warranty or agreement other than those expressed herein.  This Agreement may be modified only in awriting signed by the parties hereto.

 

9.     BindingArbitration.  This Agreement shall be governed by andconstrued in accordance with the internal substantive laws of the State ofCalifornia.  Except for claims seekingprovisional or permanent injunctive relief, any and all disputes arising fromor in connection with this Agreement shall be submitted to final and bindingarbitration in Los Angeles County, California before an experienced employmentarbitrator licensed to practice law in California pursuant to the EmploymentDispute rules of the American Arbitration Association. The arbitrator shall beselected by both parties in accordance with California Code of Civil Proceduresection 1281.6 from (1) the American Arbitration Association; (2) JudicialArbitration and Mediation Services, Inc.; or (3) Action DisputeResolution.  Either party desiring toarbitrate shall give written notice to the other party within a reasonableperiod of time after the party becomes aware of the need for arbitration andwithin the applicable statute of limitations prescribed by law.  The decision of the arbitrator shall be finaland binding.  Judgment on any award renderedby such arbitrator may be entered in any court having jurisdiction over thesubject matter of the controversy.  Tothe extent permitted by applicable law, the prevailing party shall be entitledto recover its reasonable attorneys’ fees, costs and expenses related to thearbitration from the other party, in addition to any other relief to which theprevailing party may be entitled.  Thisarbitration provision does not prohibit a party from seeking and obtaininginjunctive relief from a court of competent jurisdiction pending the outcome ofarbitration.  A party bringing an actionfor injunctive relief shall not be deemed to have waived its right to demandarbitration of all disputes.

 

10.   Remedies; Attorneys’ Fees. EXECUTIVE agrees that THQ has the right to enforce this Agreement andany of its provisions by injunction, specific performance or other equitablerelief without prejudice to any other rights or remedies THQ may have at law orin equity for breach of this Agreement. If any action is brought to enforce the terms of this Agreement, theprevailing party will be entitled to recover its reasonable attorneys’ fees,costs and expenses from the other party, in addition to any other relief towhich the prevailing party may be entitled.

 

11.   Miscellaneous. THQ and EXECUTIVE agree that no waiver by any party of any particularprovision or right under this Agreement shall be deemed to be a waiver of anyother provision or right herein.  Theparties further agree that each provision or term of this Agreement is intendedto be severable from the others so that if any particular provision or termhereof is or determined to be illegal or invalid for any reason whatsoever,such illegality or invalidity shall not affect the legality or validity of theremaining provisions and terms hereof. The parties agree that the language of this Agreement shall be construedas a whole according to its fair meaning, and not strictly for or against anyof the parties hereto.

 

12.   ADEA Waiver and Notification. In compliance with the requirements of the Age Discrimination InEmployment Act (ADEA), as amended by the Older Workers’ Benefit Protection Actof 1990, EXECUTIVE acknowledges by his signature below that, with respect tothe Released Matters, and the rights and claims under the ADEA waived andreleased in this

 

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Agreement, he has read and understands this Agreement, including,without limitation, the following:

 

a.     That he is advised to consultwith an attorney before signing this Agreement;

 

b.     That he is releasing THQfrom, among other things, any claims which he may have against it pursuant tothe Age Discrimination In Employment Act as amended;

 

c.     That the releases containedin this Agreement do not cover rights or claims that may arise after he signsthis Agreement;

 

d.     That he has been given aperiod of twenty-one (21) days in which to consider this Agreement; and

 

e.     That he may revoke thisAgreement during the seven (7) day period following his execution of this Agreement.

 

13.   Counterparts. This Agreement may be signed in counterparts, and a facsimile signatureshall have the same force and effect as an original penned in ink.

 

IN WITNESS WHEREOF, the parties hereto have causedthis Agreement to be executed as of the day and year indicated below.

 
|                         | THQ INC.     |   |   |
|------------------------------|--------------|--------|--------|
|                         |         |   |   |
|                         |         |   |   |
| Dated:  March  31, 2004 |         |   |   |
|                         | By:          |   |   |   |
|                         | Title:       |   |   |   |
|                         |         |   |   |
|                         |         |   |   |
|                         | EXECUTIVE    |   |   |
|                         |         |   |   |
|                         |         |   |   |
| Dated:  March  31, 2004 |         |   |   |
|                         | Fred A. Gysi |   |   |

 

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**CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE**

 

This Confidential Separation Agreement and GeneralRelease (the “Agreement”) is made and entered into between THQ Inc. (“THQ”) andFred A. Gysi (“EXECUTIVE”) upon the following terms and conditions:

 

**RECITALS**

** **

WHEREAS, EXECUTIVE has voluntarily resigned fromemployment with THQ effective on the earlier to occur of (i) March 31, 2004 and(ii) the date 30 days after the commencement of employment of a new chieffinancial officer of THQ (the “Separation Date”);

 

WHEREAS, EXECUTIVE has agreed to continue to provideservices to THQ for a transitional period, as more fully described below;

 

WHEREAS, THQ and EXECUTIVE wish to agree to certainterms regarding EXECUTIVE’s transitional period with and ultimate separationfrom THQ;

 

WHEREAS, THQ has no prior legal obligation to provideor offer severance or other post-separation consideration to EXECUTIVE;

 

WHEREAS, EXECUTIVE has had the opportunity to consultwith counsel before signing this Agreement, has read this Agreement and understoodits contents, and has signed this Agreement voluntarily;

 

NOW, THEREFORE, in consideration of the mutualpromises, consideration, covenants, and conditions provided for in thisAgreement, the adequacy and sufficiency of which are hereby acknowledged, THQand EXECUTIVE agree as follows:

 

**COVENANTS**

** **

1.     EffectiveDate.  The “Effective Date” of this Agreement shallbe the day upon which this Agreement has been executed by both of the partieshereto.  If the parties sign thisAgreement on different dates, the Effective Date shall be the later of thosedates. This Agreement shall become binding upon and effective as to THQ andEXECUTIVE on the Effective Date.

 

2.     Resignation. Pursuant to EXECUTIVE’s resignation from THQ and THQ’s acceptancethereof,  EXECUTIVE’s last day ofemployment shall be the Separation Date.

 

3.     Transitional Period. Beginning on the Effective Date of this Agreement through the SeparationDate (the “Transitional Period”), EXECUTIVE shall continue to perform as theSenior Vice President-Finance, Chief Financial Officer and Treasurer of THQ andshall perform such other transitional responsibilities as directed by thePresident and/or the Board of

 

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Directors.  EXECUTIVE shallperform these duties diligently, to the best of his abilities, and on a fulltime basis, and shall act in THQ’s best interest.  During the Transitional Period, and in exchange for EXECUTIVE’sdiligent performance of his duties and the other promises and agreementsherein, EXECUTIVE shall continue to receive his current salary and benefits.

 

4.     Salaryand Benefits Continuation Offer.  In the eventEXECUTIVE faithfully performs his duties and obligations under this Agreement,on the Separation Date THQ shall offer EXECUTIVE a written Salary and BenefitsContinuation package in the form of Exhibit A attached hereto.  This Salary and Benefits Continuationpackage offer will become effective in accordance with its terms upon signatureby the parties.  In the event EXECUTIVEfails to perform his duties and obligations under this Agreement diligently andcompetently, or otherwise violates this Agreement or engages in misconduct, THQmay terminate EXECUTIVE’s employment prior to the Separation Date without anyfurther obligation hereunder.

 

5.     GeneralRelease.

 

5a.   Except for the obligations arising out ofthis Agreement, the Amended and Restated THQ Inc. 1997 Stock Option PlanIncentive Stock Option Agreement dated November 3, 1999 between THQ andEXECUTIVE (the “1999 Incentive Option”), the Amended and Restated THQ Inc. 1997Stock Option Plan Non-Qualified Stock Option Agreement dated November 3, 1999between THQ and EXECUTIVE (the “1999 Non-Qualified Option”), the Amended andRestated THQ Inc. 1997 Stock Option Plan Incentive Stock Option Agreement datedJuly 21, 2000 between THQ and EXECUTIVE (the “2000 Incentive Option”), theAmended and Restated THQ Inc. 1997 Stock Option Plan Non-Qualified Stock Option Agreement dated July 21,2000 between THQ and EXECUTIVE (the “2000 Non-Qualified Option”), the Amendedand Restated THQ Inc. 1997 Stock Option Plan Incentive Stock Option Agreementdated October 1, 2001 between THQ and EXECUTIVE (the “2001 Incentive Option”),the Amended and Restated THQ Inc. 1997 Stock Option Plan Non-Qualified Stock Option Agreement dated October 1,2001 between THQ and EXECUTIVE (the “2001 Non-Qualified Option”), the Amendedand Restated THQ Inc. 1997 Stock Option Plan Incentive Stock Option Agreementdated February 28, 2002 between THQ and EXECUTIVE (the “2002 IncentiveOption”), the Amended and Restated THQ Inc. 1997 Stock Option PlanNon-Qualified Stock Option Agreement dated February 28, 2002 between THQ andEXECUTIVE (the “2002 Non-Qualified Option”), the Amended and Restated THQ Inc.1997 Stock Option Plan Incentive Stock Option Agreement dated February 24, 2003between THQ and EXECUTIVE (the “2003 Incentive Option”), and the Amended andRestated THQ Inc. 1997 Stock Option Plan Non-Qualified Stock Option Agreementdated February 24, 2003 between THQ and EXECUTIVE (the “2003 Non-QualifiedOption”), EXECUTIVE for himself and on behalf of each and all of his respectivelegal predecessors, successors, assigns, fiduciaries, heirs, parents, spouses,companies, affiliates, and each of the foregoing’s respective past, present,and future officers, principals, directors, partners, employees, agents,attorneys, trustees, administrators, executors, and representatives (all hereinreferred to as the “EXECUTIVE RELEASORS”), does hereby fully and foreverrelease, absolve, discharge, and covenant not to sue THQ, and each and all ofits legal predecessors, successors, assigns, owners, fiduciaries, divisions,parents, subsidiaries,

 

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affiliates, and related entities, and each of the foregoing’srespective past, present, and future officers, principals, directors, partners,employees, agents, attorneys, trustees, administrators, executors, andrepresentatives (all herein referred to as the “THQ RELEASED PARTIES”) of,from, and for, any and all claims, demands, damages, debts, controversies,liabilities, losses, accounts, reckonings, obligations, costs, expenses,attorneys’ fees, actions, liens, causes, and/or causes of action, at law or inequity, whether known or unknown (collectively, the “Released Claims”), which theEXECUTIVE RELEASORS now have, have ever had, or may have in the future againstthe THQ RELEASED PARTIES based upon, arising out of, concerning, relating to,by virtue of, or resulting from any act, omission, matter, fact, occurrence,transaction, thing, state of facts, claim, contention, statement, or eventoccurring or existing at any time from the beginning of the world up to andincluding the Separation Date.  Withoutlimiting the generality of the foregoing, this General Release applies to anyand all claims, demands, damages, debts, controversies, liabilities, losses,accounts, reckonings, obligations, costs, expenses, attorneys’ fees, actions,liens, causes, and/or causes of action which in any way are based upon,concern, relate to, arise out of, are by virtue of, or result from EXECUTIVE’semployment with THQ, including, but not limited to, any claims which could havebeen raised under any state’s Fair Employment and Housing Act, Title VII of theCivil Rights Act of 1964 as amended, the Age Discrimination in Employment Act(ADEA), the American’s with Disabilities Act (ADA), and the EmployeesRetirement Income Security Act (ERISA), or any other federal, state, or locallaw, regulation, ordinance, or common law claim.  Without limiting the generality of the foregoing, EXECUTIVEagrees, to the extent permitted by law, not to file against any of the THQRELEASED PARTIES any complaint or charge with the Equal Employment OpportunityCommission, the California Fair Employment and Housing Commission, the federalor California Department of Labor, or with any other local, state, or federalagency or court based upon, arising out of, concerning, relating to, by virtueof, or resulting from any of the Released Claims, and that if any agency orcourt assumes jurisdiction over any of the Released Claims, EXECUTIVE willrequest such agency or court to withdraw from the matter.

 

5b.   Except for the obligations arising out ofthis Agreement, the 1999 Incentive Option, the 1999 Non-Qualified Option, the2000 Incentive Option, the 2000 Non-Qualified Option, the 2001 IncentiveOption, the 2001 Non-Qualified Option, the 2002 Incentive Option, the 2002Non-Qualified Option, the 2003 Incentive Option and the 2003 Non-QualifiedOption, THQ for itself and on behalf of each and all of its legal predecessors,successors, assigns, owners, fiduciaries, divisions, parents, subsidiaries,affiliates, and related entities, and each of the foregoing’s respective past,present, and future officers, principals, directors, partners, employees,agents, attorneys, trustees, administrators, executors, and representatives(all herein referred to as the “THQ RELEASORS”), does hereby fully and foreverrelease, absolve, discharge, and covenant not to sue EXECUTIVE, each and all ofhis respective legal predecessors, successors, assigns, fiduciaries, heirs,parents, spouses, companies, affiliates, and each of the foregoing’s respectivepast, present, and future officers, principals, directors, partners, employees,agents, attorneys, trustees, administrators, executors, and representatives(all herein referred to as the “EXECUTIVE RELEASED PARTIES”), of, from, andfor, any and all claims, demands, damages, debts, controversies, liabilities,losses, accounts, reckonings, obligations, costs, expenses, attorneys’ fees,actions, liens, causes, and/or causes of action, at law or in equity, whetherknown or unknown, which the THQ RELEASORS now have, have ever

 

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had, or may have in the future against the EXECUTIVE RELEASED PARTIESbased upon, arising out of, concerning, relating to, by virtue of, or resultingfrom any act, omission, matter, fact, occurrence, transaction, thing, state offacts, claim, contention, statement, or event occurring or existing at any timefrom the beginning of the world up to and including the Separation Date.  Without limiting the generality of theforegoing, this General Release applies to any and all claims, demands,damages, debts, controversies, liabilities, losses, accounts, reckonings,obligations, costs, expenses, attorneys’ fees, actions, liens, causes, and/orcauses of action which in any way are based upon, concern, relate to, arise outof, are by virtue of, or result from EXECUTIVE’s employment with THQ.

 

6.     Waiverof Section 1542.  EXECUTIVE and THQ each acknowledge that heor it has read and understood the following language contained in Section 1542of the California Civil Code:

 

A GENERAL RELEASE DOESNOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST INHIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVEMATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

Havingreviewed this provision, EXECUTIVE and THQ each hereby voluntarily waives andrelinquishes any and all rights or benefits he or it may have under thisprovision, or any other provision of statutory or common law of similar effect,and each hereby fully releases the other from liability for any unknown claims.

 

7.     Return of Company Property. On or before the Separation Date, EXECUTIVE will return to THQ alldocuments, inventions, information (whether stored on computer, computer disks,or other media), and other property belonging to THQ in EXECUTIVE’s possession,including without limitation, (i) any and all information relating to THQ’sfinancial situation, business plans, forecasts or strategy; and (ii) all THQintellectual property.

 

8.     Cooperation. As a material term hereof, for a period of four (4) months after theSeparation Date, EXECUTIVE will in good faith voluntarily cooperate with THQand answer questions THQ may ask him regarding matters which EXECUTIVE oversawor worked on during his employment at THQ or at THQ’s predecessors oraffiliates.  EXECUTIVE shall not receiveany additional compensation for such cooperation.

 

9.     NoAdmission; Integration; Modification.  Neither thisAgreement nor anything contained in this Agreement shall be construed as anadmission of any fact, issue, liability or wrongdoing by either partyhereto.  With the exception of theConfidential Information Agreement signed by EXECUTIVE on October 25, 1997, the1999 Incentive Option, the 1999 Non-Qualified Option, the 2000 IncentiveOption, the 2000 Non-Qualified Option, the 2001 Incentive Option, the 2001Non-Qualified Option, the 2002 Incentive Option,

 

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the 2002 Non-Qualified Option, the 2003 Incentive Option and the 2003Non-Qualified Option, each of which shall remain in full force and effect, thisAgreement supersedes all prior agreements and understandings and constitutesthe only and entire agreement between THQ and EXECUTIVE concerning the terms ofEXECUTIVE’s transitional employment with and resignation from THQ.  THQ and EXECUTIVE acknowledge they have notexecuted this Agreement in reliance upon any promise, representation,statement, warranty or agreement other than those expressed herein.  This Agreement may be modified only in awriting signed by the parties hereto.

 

10.   GoverningLaw; Binding Arbitration.  This Agreement shall begoverned by and construed in accordance with the substantive laws of the Stateof California.  Except for claimsseeking provisional or permanent injunctive relief, any and all disputesarising from or in connection with this Agreement shall be submitted to finaland binding arbitration in Los Angeles County, California before an experiencedemployment arbitrator licensed to practice law in California pursuant to theEmployment Dispute rules of the American Arbitration Association. The arbitratorshall be selected by both parties in accordance with California Code of CivilProcedure section 1281.6 from (1) the American Arbitration Association; (2)Judicial Arbitration and Mediation Services, Inc.; or (3) Action DisputeResolution.  Either party desiring toarbitrate shall give written notice to the other party within a reasonableperiod of time after the party becomes aware of the need for arbitration andwithin the applicable statute of limitations prescribed by law.  The decision of the arbitrator shall befinal and binding.  Judgment on anyaward rendered by such arbitrator may be entered in any court havingjurisdiction over the subject matter of the controversy.  To the extent permitted by applicable law,the prevailing party shall be entitled to recover its reasonable attorneys’fees, costs and expenses related to the arbitration from the other party, inaddition to any other relief to which the prevailing party may beentitled.  This arbitration provisiondoes not prohibit a party from seeking and obtaining injunctive relief from acourt of competent jurisdiction pending the outcome of arbitration.  A party bringing an action for injunctiverelief shall not be deemed to have waived its right to demand arbitration ofall disputes.

 

11.   Miscellaneous. THQ and EXECUTIVE agree that no waiver by any party of any particularprovision or right under this Agreement shall be deemed to be a waiver of anyother provision or right herein.  Theparties further agree that each provision or term of this Agreement is intendedto be severable from the others so that if any particular provision or termhereof is or determined to be illegal or invalid for any reason whatsoever,such illegality or invalidity shall not affect the legality or validity of theremaining provisions and terms hereof. The parties agree that the language of this Agreement shall be construedas a whole according to its fair meaning, and not strictly for or against anyof the parties hereto.

 

12.   Counterparts. This Agreement may be signed in counterparts, and a facsimile signatureshall have the same force and effect as an original penned in ink.

 

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IN WITNESS WHEREOF, the parties hereto have causedthis Agreement to be executed as of the day and year indicated below.

 
|                                                                                                                           |   | THQ INC.     |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|
|                                                                                                                           |   |         |   |
|                                                                                                                           |   |         |   |
| Date:                   ,  2004 |   |         |   |
|                                                                                                                           |   | By:          |   |   |
|                                                                                                                           |   | Title:       |   |   |
|                                                                                                                           |   |         |   |
|                                                                                                                           |   |         |   |
|                                                                                                                           |   | EXECUTIVE    |   |
|                                                                                                                           |   |         |   |
|                                                                                                                           |   |         |   |
| Date:                   ,  2004 |   |         |   |
|                                                                                                                           |   | Fred A. Gysi |   |

 

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**Exhibit Ato**

**Confidential SeparationAgreementand General Release**

 

**CONFIDENTIAL SALARY AND BENEFITS CONTINUATION**

**AGREEMENT AND GENERAL RELEASE**

 

This Confidential Salary and Benefits Agreement andGeneral Release (the “Agreement”) is made and entered into between THQ Inc.(“THQ”) and Fred A. Gysi (“EXECUTIVE”) upon the following terms and conditions:

 

**RECITALS**

** **

WHEREAS, EXECUTIVE voluntarily resigned fromemployment with THQ, with such resignation to be effective on the earlier tooccur of (i) March 31, 2004 and (ii) the date 30 days after the commencement ofemployment of a new chief financial officer of THQ (the “Separation Date”);

 

WHEREAS, THQ and EXECUTIVE are parties to aConfidential Separation Agreement and General Release;

 

WHEREAS, pursuant to the Confidential SeparationAgreement and General Release, THQ is willing to continue EXECUTIVE’s salaryand benefits for a limited period and upon the terms and conditions set forthin this Agreement;

 

WHEREAS, THQ has no prior legal obligation to providethe post-separation consideration that is exchanged for the promises herein;

 

WHEREAS, EXECUTIVE has had the opportunity to consultwith counsel before signing this Agreement, has read this Agreement andunderstood its contents, and has signed this Agreement voluntarily;

 

NOW, THEREFORE, in consideration of the mutualpromises, consideration, covenants, and conditions provided for in thisAgreement, the adequacy and sufficiency of which are hereby acknowledged, THQand EXECUTIVE agree as follows:

 

**COVENANTS**

** **

1.     Post-SeparationConsideration.  In consideration for the agreements,covenants, and general release contained herein, THQ shall provide EXECUTIVEwith the following post-separation consideration:

 

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1a.   Salary Continuation. Commencing on the first regular THQ payday following the SeparationDate, THQ shall provide EXECUTIVE with salary continuation payments in theaggregate equal to twelve months’ base salary based on his current base annualsalary of $241,500.  All salarycontinuation payments shall be payable in installments in accordance with THQ’sregular payroll practices, provided, however, that EXECUTIVE may elect, bywritten notice to THQ, to receive all remaining salary continuation paymentsfrom THQ in a single lump sum payment. In addition, should EXECUTIVE become employed, as a salaried employee orpaid consultant, by a business that is a “competitor” of THQ, THQ may elect topay EXECUTIVE any remaining amounts due to EXECUTIVE in a lump sumpayment.  For the purposes of thisAgreement, a “competitor” shall mean any person or entity engaged in thebusiness of designing, developing, publishing or distributing entertainmentsoftware, or content of any type to be distributed by means of wireless media.  Should the salary continuation obligation bepaid in a lump sum pursuant to this paragraph, such lump sum shall be an amountequal to $241,500 less the amount of all prior payments made pursuant to thisSection 1a (without giving effect to any required withholdings) on the fifthday after the election by EXECUTIVE or THQ to make a lump sum payment pursuantto this paragraph All salary continuation payments, including a lump sumpayment, if any, shall be paid less withholdings required by law.  EXECUTIVE agrees that, in the event hebecomes employed at any time while salary continuation payments are due toEXECUTIVE pursuant to this Agreement, he will promptly advise THQ of thefollowing: (i) the name and address of his employer; (ii) the business of hisemployer and (iii) his date of hire. The period during which THQ makes salary continuation payments toEXECUTIVE pursuant to this Section 1a is herein referred to as the “SalaryContinuation Period.”

 

1b.   Bonuses.  EXECUTIVEshall be eligible to receive (i) an annual bonus of $80,000 for the fiscal yearending March 31, 2004, and (ii) his designated profit sharing allocation underTHQ’s existing Profit Sharing Plan for the year ending March 31, 2004; prorated in each case to the extent the Separation Date occurs prior to March 31,2004.  Such bonus shall be paid inaccordance with THQ’s regular practice and shall be paid less withholdingsrequired by law.

 

1c.   Benefits.  During theSalary Continuation Period, EXECUTIVE shall be eligible to participate in THQ’smedical, disability, life insurance and other health and welfare benefits,including Exec-u-care, at the same level of coverage, upon the same terms andotherwise to the same extent as such policies and benefits shall have been ineffect immediately prior to the Separation Date.  THQ and EXECUTIVE shall share the costs of the continuation ofsuch insurance and benefits coverage in the same proportion as such costs wereshared immediately prior to the Separation Date.  .

 

1d.   Extension of Vesting and Exercise Periodfor Certain Existing Stock Options.

 

(i)    THQ and EXECUTIVE acknowledge thatEXECUTIVE currently holds options to purchase THQ common stock under one ormore of the following agreements (collectively, the “Option Agreements”): theAmended and Restated THQ Inc. 1997 Stock Option Plan Incentive Stock OptionAgreement dated November 3, 1999 between THQ and

 

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EXECUTIVE (the “1999 Incentive Option”), the Amended and Restated THQInc. 1997 Stock Option Plan Non-Qualified Stock Option Agreement dated November3, 1999 between THQ and EXECUTIVE (the “1999 Non-Qualified Option”),  the Amended and Restated THQ Inc. 1997 StockOption Plan Incentive Stock Option Agreement dated July 21, 2000 between THQand EXECUTIVE (the “2000 Incentive Option”), the Amended and Restated THQ Inc.1997  Stock Option Plan Non-QualifiedStock Option Agreement dated July 21, 2000 between THQ and EXECUTIVE (the “2000Non-Qualified Option”), the Amended and Restated THQ Inc. 1997 Stock OptionPlan Incentive Stock Option Agreement dated October 1, 2001 between THQ andEXECUTIVE (the “2001 Incentive Option”), the Amended and Restated THQ Inc.1997  Stock Option Plan Non-QualifiedStock Option Agreement dated October 1, 2001 between THQ and EXECUTIVE (the“2001 Non-Qualified Option”), the Amended and Restated THQ Inc. 1997 StockOption Plan Incentive Stock Option Agreement dated February 28, 2002 betweenTHQ and EXECUTIVE (the “2002 Incentive Option”), the Amended and Restated THQInc. 1997 Stock Option Plan Non-Qualified Stock Option Agreement dated February28, 2002 between THQ and EXECUTIVE (the “2002 Non-Qualified Option”), theAmended and Restated THQ Inc. 1997 Stock Option Plan Incentive Stock OptionAgreement dated February 24, 2003 between THQ and EXECUTIVE (the “2003Incentive Option”), and the Amended and Restated THQ Inc. 1997 Stock OptionPlan Non-Qualified Stock Option Agreement dated February 24, 2003 between THQand EXECUTIVE (the “2003 Non-Qualified Option”);

 

(ii)   EXECUTIVE may exercise options vestedunder any of the Option Agreements no later than 90 days following theSeparation Date.  Any such options whichare not so exercised shall expire at the end of the ninetieth day following theSeparation Date;

 

(iii)  THQ shalltake all actions necessary to provide that all options unvested under theOption Agreements as of the Separation Date shall continue to vest during theSalary Continuation Period and shall be exercisable until the date 90 daysafter the end of the Salary Continuation Period with respect to the number ofshares of THQ common stock that are vested under the terms of the applicableOption as of the last day of the Salary Continuation Period; provided that nosuch Option shall vest or be exercisable later than five years after its dateof grant.  EXECUTIVE acknowledges thatthis extension of the vesting and exercisability periods under the 1999Incentive Option, the 2000 Incentive Option, the 2001 Incentive Option, the2002 Incentive Option and the 2003 Incentive Option constitutes a modificationof the applicable Option under the Internal Revenue Code of 1986, as amended,and therefore each such Option shall be taxable as a nonstatutory stock optioninstead of an incentive stock option.

 

1e.   Computer and Telephone. EXECUTIVE shall also be entitled to retain the laptop computer andcellular telephone that are owned by THQ and currently in EXECUTIVE’spossession, purged of all confidential proprietary information of THQ.  EXECUTIVE shall be responsible for allinternet service provider, internet connectivity, wireless service provider andother continuing charges relating to such devices from and after the SeparationDate

 

1f.    Email and Telephone Access.  During the Salary Continuation Period, THQ shallarrange for EXECUTIVE to have an email account and telephone extension, in eachcase subject to THQ’s regular policies and procedures.

 

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1g.   Directors’ and Officers’ InsuranceCoverage.  EXECUTIVE shall continue to be covered underTHQ’s existing Directors’ and Officers’ insurance policy for his actions asSenior Vice President—Finance and Chief Financial Officer of THQ up to andincluding the Separation Date, in accordance with and subject to the terms andconditions of such policy.

 

2.     ProprietaryInformation and Inventions.  Except asspecifically set forth in Section 1e of this Agreement, EXECUTIVE shallimmediately return to THQ all documents, information (whether stored oncomputer, computer disks, or other media), and other property belonging to THQ,including without limitation, credit cards, security key cards, telephonecards, computer software or hardware, THQ identification cards, THQ records andcopies of records, correspondence and copies of correspondence, other books ormanuals issued or owned by THQ, any and all information relating to THQ’sfinancial situation, business plans, forecasts or strategy and all THQintellectual property.

 

2a.   EXECUTIVE acknowledges that hisemployment with THQ created a relationship of confidence and trust betweenEXECUTIVE and THQ with respect to Confidential Information (as hereinafterdefined) disclosed to EXECUTIVE, or known or made available to EXECUTIVE as aresult of his relationship with THQ. “Confidential Information” includes, but is not limited to, customerlists, vendor lists, joint venture lists, databases, computer programs andsoftware, frameworks, designs, models, marketing programs and plans, sales,financial, marketing, training and technical information and plans, businessmethods, business policies, personnel information and policies, procedures,techniques, research or development projects or results, trade secrets (whichEXECUTIVE agrees include THQ customer and prospective customer lists), pricingpolicies, intellectual property, any and all information relating to projectedacquisitions, dispositions, joint ventures or other business arrangementswhether involving THQ or third parties, properties or management agreements,management organization information (including data and other informationrelating to members of THQ’s Board of Directors and management), operatingpolicies or manuals, business plans, purchasing agreements, financial records,or other financial, commercial, business or technical information relating toTHQ or any of its subsidiaries or information designated as confidential orproprietary that THQ or any of its subsidiaries may receive belonging tosuppliers, customers or others who do business with THQ or any of itssubsidiaries, information concerning how THQ creates, develops, acquires ormaintains its products and marketing plans, targets its potential customers,and operates its businesses, other than information which is otherwiseavailable in the public domain (other than by reason of the breach of EXECUTIVEof any confidentiality agreement with THQ) or which was known to EXECUTIVEprior to the date as of which he commenced employment with THQ or any of itspredecessors or affiliates.

 

2b.   At all times following the SeparationDate, EXECUTIVE agrees that he will not disclose, use, disseminate, lectureupon, publish or use for the direct or indirect benefit of, any person(including EXECUTIVE), firm, association or other entity (other than THQ)Confidential Information unless EXECUTIVE first secures THQ’s writtenconsent.  EXECUTIVE will continue toabide by the confidential provisions of EXECUTIVE’s Confidential InformationAgreement signed by EXECUTIVE on October 25, 1997 (the “Confidential InformationAgreement”), which shall remain in full force and effect.

 

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2c.   EXECUTIVE represents that, in the courseof his employment, he has not, solely or jointly with another or others,conceived or made any formulas, processes, techniques, test data, discoveries,improvements, innovations, concepts and ideas, whether patentable or not, withthe use of THQ’s facilities, materials, equipment, trade secrets, personnel, ortime, or suggested by or resulting from any task assigned to EXECUTIVE or work performedby EXECUTIVE for, or on behalf of THQ relating to his employment.

 

3.     Securities Laws.

 

3a.   EXECUTIVE acknowledges and understandsthat any offer to purchase or sell, purchase, sale, transfer or assignment ofsecurities of THQ by EXECUTIVE is subject to the provisions of the SecuritiesAct of 1933, as amended (the “1933 Act”), the Securities Exchange Act of 1934,as amended (the “1934 Act”), and the rules promulgated thereunder including,without limitation, Rule 144 under the 1933 Act and Section 16 and Rule 10b-5under the 1934 Act.

 

3b.   EXECUTIVE will cease to be an “ExecutiveOfficer”  (as defined in Rule 3b-7promulgated under Section 16 of the 1934 Act) of THQ as of the Separation Date.EXECUTIVE acknowledges his continuing obligation to comply with Section 16 ofthe 1934 Act and the rules and regulations of the Securities and ExchangeCommission promulgated thereunder, including without limitation the obligationto file on a timely basis reports on Form 4 and Form 5 regarding certaintransactions in the securities of THQ.

 

3c.   THQ acknowledges and agrees that,following the Separation Date, EXECUTIVE will not be considered an officer,employee, or “Insider” for the purposes of the THQ Confidentiality and InsiderTrading Policy (the “Policy”), and will not be subject to the Policy.

 

4.     GeneralRelease.

 

4a.   Except for the obligations arising out ofthis Agreement and the Option Agreements, EXECUTIVE for himself and on behalfof each and all of his respective legal predecessors, successors, assigns,fiduciaries, heirs, parents, spouses, companies, affiliates, and each of theforegoing’s respective past, present, and future officers, principals,directors, partners, employees, agents, attorneys, trustees, administrators,executors, and representatives (all herein referred to as the “EXECUTIVERELEASORS”), does hereby fully and forever release, absolve, discharge, andcovenant not to sue THQ, and each and all of its legal predecessors,successors, assigns, owners, fiduciaries, divisions, parents, subsidiaries,affiliates, and related entities, and each of the foregoing’s respective past,present, and future officers, principals, directors, partners, employees,agents, attorneys, trustees, administrators, executors, and representatives(all herein referred to as the “THQ RELEASED PARTIES”) of, from, and for, anyand all claims, demands, damages, debts, controversies, liabilities, losses,accounts, reckonings, obligations, costs, expenses, attorneys’ fees, actions,liens, causes, and/or causes of action, at law or in equity, whether known orunknown (collectively, the “Executive’s Released Claims”), which the EXECUTIVERELEASORS now have, have ever had, or may have in the

 

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future against the THQ RELEASED PARTIES based upon, arising out of,concerning, relating to, by virtue of, or resulting from any act, omission,matter, fact, occurrence, transaction, thing, state of facts, claim,contention, statement, or event occurring or existing at any time from the beginningof the world up to and including the Separation Date.  Without limiting the generality of the foregoing, this GeneralRelease applies to any and all claims, demands, damages, debts, controversies,liabilities, losses, accounts, reckonings, obligations, costs, expenses,attorneys’ fees, actions, liens, causes, and/or causes of action which in anyway are based upon, concern, relate to, arise out of, are by virtue of, orresult from, EXECUTIVE’s employment with THQ, including, but not limited to, anyclaims which could have been raised under any state’s Fair Employment andHousing Act, Title VII of the Civil Rights Act of 1964 as amended, the AgeDiscrimination in Employment Act (ADEA), the American’s with Disabilities Act(ADA), and the Employees Retirement Income Security Act (ERISA), or any otherfederal, state, or local law, regulation, ordinance, or common law claim.  Without limiting the generality of theforegoing, EXECUTIVE agrees, to the extent permitted by law, not to fileagainst any of the THQ RELEASED PARTIES any complaint or charge with the EqualEmployment Opportunity Commission, the California Fair Employment and HousingCommission, the federal or California Department of Labor, or with any otherlocal, state, or federal agency or court based upon, arising out of,concerning, relating to, by virtue of, or resulting from any of the Executive’sReleased Claims, and that if any agency or court assumes jurisdiction over anyof the Executive’s Released Claims, EXECUTIVE will request such agency or courtto withdraw from the matter.  EXECUTIVEalso acknowledges that, except for the payments and benefits required byparagraph 3 above, EXECUTIVE has been paid all wages, accrued vacation pay,severance and separation pay, and all other monies and benefits to whichEXECUTIVE was entitled.

 

4b.   Except for the obligations arising out ofthis Agreement, the 1999 Incentive Option, the 1999 Non-Qualified Option, the2000 Incentive Option, the 2000 Non-Qualified Option, the 2001 IncentiveOption, the 2001 Non-Qualified Option, the 2002 Incentive Option, the 2002Non-Qualified Option, the 2003 Incentive Option and the 2003 Non-QualifiedOption, THQ for itself and on behalf of each and all of its legal predecessors,successors, assigns, owners, fiduciaries, divisions, parents, subsidiaries,affiliates, and related entities, and each of the foregoing’s respective past,present, and future officers, principals, directors, partners, employees,agents, attorneys, trustees, administrators, executors, and representatives(all herein referred to as the “THQ RELEASORS”), does hereby fully and foreverrelease, absolve, discharge, and covenant not to sue EXECUTIVE, each and all ofhis respective legal predecessors, successors, assigns, fiduciaries, heirs,parents, spouses, companies, affiliates, and each of the foregoing’s respectivepast, present, and future officers, principals, directors, partners, employees,agents, attorneys, trustees, administrators, executors, and representatives(all herein referred to as the “EXECUTIVE RELEASED PARTIES”), of, from, andfor, any and all claims, demands, damages, debts, controversies, liabilities,losses, accounts, reckonings, obligations, costs, expenses, attorneys’ fees,actions, liens, causes, and/or causes of action, at law or in equity, whetherknown or unknown, which the THQ RELEASORS now have, have ever had, or may havein the future against the EXECUTIVE RELEASED PARTIES based upon, arising outof, concerning, relating to, by virtue of, or resulting from any act, omission,matter, fact, occurrence, transaction, thing, state of facts, claim,contention, statement, or event occurring

 

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or existing at any time from the beginning of the world up to andincluding the Separation Date.  Withoutlimiting the generality of the foregoing, this General Release applies to anyand all claims, demands, damages, debts, controversies, liabilities, losses,accounts, reckonings, obligations, costs, expenses, attorneys’ fees, actions,liens, causes, and/or causes of action which in any way are based upon,concern, relate to, arise out of, are by virtue of, or result from EXECUTIVE’semployment with THQ.

 

5.     Waiverof Section 1542.  EXECUTIVE and THQ each acknowledge that heor it has read and understood the following language contained in Section 1542of the California Civil Code:

 

A GENERAL RELEASE DOESNOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST INHIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVEMATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

Havingreviewed this provision, EXECUTIVE and THQ each hereby voluntarily waives andrelinquishes any and all rights or benefits he or it may have under thisprovision, or any other provision of statutory or common law of similar effect,and each hereby fully releases the other from liability for any unknown claims.

 

6.     TaxConsequences.  The Company makes no representations orwarranties with respect to the tax consequences to EXECUTIVE of any of theseverance consideration provided under this Agreement.  EXECUTIVE shall be solely responsible forthe reporting and payment of local, state and/or federal taxes, if any,attributable to the severance consideration, and any penalties or assessmentsthereon.  EXECUTIVE agrees to defend,indemnify, and hold harmless THQ from any claims, demands, deficiencies,penalties, assessments, executions, judgments, or recoveries by any governmentagency against THQ for any amounts claimed due on account of EXECUTIVE’sfailure to pay federal or state taxes or damages sustained by THQ by reason ofany such claims, including reasonable attorneys’ fees.

 

7.     Cooperation. As a material term hereof, for a period of four (4) months after theSeparation Date, EXECUTIVE will in good faith voluntarily cooperate with THQand answer questions THQ may ask him regarding matters which EXECUTIVE oversawor worked on during his employment at THQ or at THQ’s predecessors oraffiliates.  EXECUTIVE shall not receiveany additional compensation for such cooperation.

 

8.     NoAdmission; Integration; Modification.  Neither thisAgreement nor anything contained in this Agreement shall be construed as anadmission of any fact, issue, liability or wrongdoing by either partyhereto.  With the exception of theConfidential Information Agreement and the Option, each of which shall remainin full force and effect, this Agreement supersedes all prior agreements andunderstandings and constitutes the only and entire agreement between THQ andEXECUTIVE concerning the terms of EXECUTIVE’s

 

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severance.  This Agreement shallgovern in the event of any inconsistency between this Agreement and theConfidential Information Agreement.  THQand EXECUTIVE acknowledge they have not executed this Agreement in relianceupon any promise, representation, statement, warranty or agreement other thanthose expressed herein.  This Agreementmay be modified only in a writing signed by the parties hereto.

 

9.     BindingArbitration.  This Agreement shall be governed by andconstrued in accordance with the internal substantive laws of the State ofCalifornia.  Except for claims seekingprovisional or permanent injunctive relief, any and all disputes arising fromor in connection with this Agreement shall be submitted to final and bindingarbitration in Los Angeles County, California before an experienced employmentarbitrator licensed to practice law in California pursuant to the EmploymentDispute rules of the American Arbitration Association. The arbitrator shall beselected by both parties in accordance with California Code of Civil Proceduresection 1281.6 from (1) the American Arbitration Association; (2) JudicialArbitration and Mediation Services, Inc.; or (3) Action DisputeResolution.  Either party desiring toarbitrate shall give written notice to the other party within a reasonableperiod of time after the party becomes aware of the need for arbitration andwithin the applicable statute of limitations prescribed by law.  The decision of the arbitrator shall befinal and binding.  Judgment on anyaward rendered by such arbitrator may be entered in any court havingjurisdiction over the subject matter of the controversy.  To the extent permitted by applicable law,the prevailing party shall be entitled to recover its reasonable attorneys’fees, costs and expenses related to the arbitration from the other party, inaddition to any other relief to which the prevailing party may be entitled.  This arbitration provision does not prohibita party from seeking and obtaining injunctive relief from a court of competentjurisdiction pending the outcome of arbitration.  A party bringing an action for injunctive relief shall not bedeemed to have waived its right to demand arbitration of all disputes.

 

10.   Remedies; Attorneys’ Fees. EXECUTIVE agrees that THQ has the right to enforce this Agreement andany of its provisions by injunction, specific performance or other equitablerelief without prejudice to any other rights or remedies THQ may have at law orin equity for breach of this Agreement. If any action is brought to enforce the terms of this Agreement, theprevailing party will be entitled to recover its reasonable attorneys’ fees,costs and expenses from the other party, in addition to any other relief towhich the prevailing party may be entitled.

 

11.   Miscellaneous. THQ and EXECUTIVE agree that no waiver by any party of any particularprovision or right under this Agreement shall be deemed to be a waiver of anyother provision or right herein.  Theparties further agree that each provision or term of this Agreement is intendedto be severable from the others so that if any particular provision or termhereof is or determined to be illegal or invalid for any reason whatsoever,such illegality or invalidity shall not affect the legality or validity of theremaining provisions and terms hereof. The parties agree that the language of this Agreement shall be construedas a whole according to its fair meaning, and not strictly for or against anyof the parties hereto.

 

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12.   ADEA Waiver and Notification. In compliance with the requirements of the Age Discrimination InEmployment Act (ADEA), as amended by the Older Workers’ Benefit Protection Actof 1990, EXECUTIVE acknowledges by his signature below that, with respect tothe Released Matters, and the rights and claims under the ADEA waived andreleased in this Agreement, he has read and understands this Agreement,including, without limitation, the following:

 

a.     That he is advised to consultwith an attorney before signing this Agreement;

 

b.     That he is releasing THQfrom, among other things, any claims which he may have against it pursuant tothe Age Discrimination In Employment Act as amended;

 

c.     That the releases containedin this Agreement do not cover rights or claims that may arise after he signsthis Agreement;

 

d.     That he has been given aperiod of twenty-one (21) days in which to consider this Agreement; and

 

e.     That he may revoke thisAgreement during the seven (7) day period following his execution of thisAgreement.

 

13.   Counterparts. This Agreement may be signed in counterparts, and a facsimile signatureshall have the same force and effect as an original penned in ink.

 

IN WITNESS WHEREOF, the parties hereto have causedthis Agreement to be executed as of the day and year indicated below.

 
|                                                                                                                                   | THQ INC.     |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------------|--------|
|                                                                                                                                   |         |   |
|                                                                                                                                   |         |   |
| Date:                      ,  2004 |         |   |
|                                                                                                                                   | By:          |   |   |
|                                                                                                                                   | Title:       |   |   |
|                                                                                                                                   |         |   |
|                                                                                                                                   |         |   |
|                                                                                                                                   | EXECUTIVE    |   |
|                                                                                                                                   |         |   |
|                                                                                                                                   |         |   |
| Date:                      ,  2004 |         |   |
|                                                                                                                                   | Fred A. Gysi |   |

 

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