Exhibit 10.3


 


AGREEMENT


 


This
Agreement (the “Agreement”) is entered into as of December 22, 2009, by
and between JAKKS Pacific, Inc. (“JAKKS”) and THQ Inc. (“THQ”)
(collectively, the “Parties”).


 


WHEREAS, THQ and JAKKS are equal owners and
co-members of THQ/JAKKS Pacific, LLC (the “LLC”), a limited liability company,
and are parties to an LLC operating agreement dated October 25, 1999, as
amended (the “LLC Agreement”);


 


WHEREAS, the LLC publishes videogames pursuant to a
videogame license agreement with WWE dated June 10, 1998 as subsequently
amended (the “WWE License”);


 


WHEREAS, pursuant to the WWE License, the LLC holds
the exclusive right to manufacture and sell WWE videogames through December 31,
2009, with an option to renew for an additional five year term commencing on January 1,
2010 (the “Renewal Term”);


 


WHEREAS, WWE desires to execute a new license
agreement with THQ effective as of January 1, 2010, pursuant to which THQ
would be licensed to publish WWE videogames independent and outside of the LLC;


 


WHEREAS, THQ desires to execute a new license
agreement with WWE to be effective January 1, 2010, pursuant to which THQ
is to publish WWE videogames independent and outside of the LLC;


 


WHEREAS, JAKKS contends that under the WWE License
the LLC has the exclusive right to manufacture and sell WWE videogames during
the Renewal Term, and under the LLC Agreement, THQ is precluded from
independently seeking a license with WWE, and WWE is precluded from negotiating
or issuing a license to THQ, now and through the Renewal Term; however, subject
to the terms and conditions herein and for the consideration recited below,
JAKKS is willing to terminate the LLC Agreement and to permit THQ and WWE to
execute a license outside of the LLC;


 


WHEREAS, simultaneously herewith JAKKS, THQ and the LLC are
entering into a Settlement Agreement and Mutual Release (the “JAKKS/THQ/LLC
Agreement”);


 


NOW, THEREFORE, for good and favorable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:


 


1.  Payments.  THQ shall pay JAKKS a total of U.S.
$20,000,000 (Twenty Million U.S. Dollars) according to the schedule set forth
below:


 

















 


(i)            $6 million on or
before June 30, 2010;


 


(ii)           $6 million on or
before June 30, 2011;


 


(iii)          $4
million on or before June 30, 2012; and


 


(iv)          $4
million on or before June 30, 2013.


 


2.             THQ’s obligation to make the
foregoing payments is unconditional and absolute, and may not be reduced or
offset by any amounts asserted by THQ to be owing by JAKKS for any reason, and
shall not be subject to any defenses, set-offs or counterclaims.


 


3.             Default.  In the event that THQ fails to make (i) any
payment due hereunder, or (ii) the Preferred Return payment referenced in Section 5(iv) below,
THQ shall owe interest thereon from the date of default until the date of
payment in full at the rate of eighteen percent (18%) per annum,
notwithstanding any statutory pre- or post-judgment interest rates.  For avoidance of doubt, this interest
obligation does not apply if THQ in good faith makes the Preferred Payment
referenced in Section 5(iv) below but JAKKS subsequently challenges
the amount of the Preferred Return payment.


 


4.             Termination of the WWE
License.  THQ and JAKKS agree that the
LLC shall not renew the WWE License and that any notice of renewal heretofore
sent to WWE shall be of no force and effect. 
Accordingly, on December 31, 2009, the WWE License shall terminate.


 


5.             Termination of the LLC
Agreement.  As of December 31,
2009, THQ and JAKKS agree that the LLC Agreement shall terminate and be of no
further force or effect whatsoever (the “LLC Termination”).  It is further understood and agreed that:


 


(i)            The Parties will promptly take all steps
and execute all documents necessary and sufficient to dissolve the LLC as of December 31,
2009.


 


(ii)           Ownership of, and all right, title and
interest in and to, all assets, obligations and liabilities of the LLC,
including, but not limited to, intellectual property belonging to the LLC shall
vest fully and automatically in THQ, effective January 1, 2010, without
any further act or action required by the Parties.  To the extent the Parties need to execute
other documents to effectuate the terms of this provision, the Parties agree
promptly to execute any such documents.


 


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(iii)          Notwithstanding any principle of law or
provision in the LLC Agreement that might be argued to the contrary, THQ is
free to enter into a videogame license with WWE effective January 1, 2010
on any terms and conditions that THQ may deem, in its sole and absolute
discretion, appropriate.


 


(iv)          For the avoidance of doubt, THQ will, on
behalf of the LLC, continue to pay JAKKS a “Preferred Return” of 6% with
respect to the LLC’s sales of WWE videogames through, but only through December 31,
2009 pursuant to paragraph 5 of the LLC Agreement.  JAKKS has no right, however, to a Preferred
Return, or to otherwise participate in any revenues or profits, with respect to
sales of WWE videogames occurring on or after January 1, 2010.  THQ will provide a final accounting and
payment to JAKKS of said Preferred Return for sales from October 1, 2009
through and including December 31, 2009, by no later than March 31,
2010.


 


6.             Representations and
Warranties.  The Parties
make the following representations and warranties to one another:


 


6.1           Each of the Parties hereto
acknowledges that no other Party, nor any agent or attorney of any other Party,
has made any promise, representation, or warranty, whatsoever, express or
implied, not contained herein, concerning the subject matter hereof, to induce
it to execute this instrument.  Each of
the Parties acknowledges that it has not executed this instrument in reliance
on any such promise, representation, or warranty not contained herein.


 


6.2           Each of the Parties hereto
has read this Agreement carefully and knows and understands the contents
thereof.  Each of the Parties is fully
aware of the legal and binding effect of this Agreement.  Each of the Parties has made such an
investigation of the facts pertinent to this Agreement and of all the matters
pertaining thereto as it deemed necessary.


 


6.3           Each of the Parties hereto
acknowledges that it has been represented by counsel in the preparation,
negotiation and execution of this Agreement and that it has executed this
document with the consent and the advice of such legal counsel.


 


6.4           Each of the Parties hereto
acknowledges and agrees that the terms of this Agreement are contractual and
not merely recitals and are the result of negotiations between Parties of equal
bargaining positions.  All recitals are
incorporated by reference into this Agreement.


 


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6.5           Each individual signing this
Agreement warrants and represents that he or she has full authority to execute
the same on behalf of the Party on whose behalf he or she signs.  Each of the Parties hereto agrees to execute
all documents and instruments necessary to implement this Agreement.


 


7.             Notices.  All notices required and/or permitted hereunder
must be given in writing and shall be sent, by personal or overnight delivery
(including but not limited to, by messenger service) addressed as follows:


 


	
  To
  JAKKS:

  	
  Michael
  Dwyer

  
	
   

  	
  JAKKS
  Pacific, Inc.

  
	
   

  	
  22619
  Pacific Coast Hwy

  
	
   

  	
  Malibu,
  CA 90265-5080

  
	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
  Jonathan J. Lerner

  
	
   

  	
  Skadden, Arps, Slate, Meagher &
  Flom LLP

  
	
   

  	
  Four
  Times Square

  
	
   

  	
  New
  York, NY 10036

  
	
   

  	
   

  
	
  To
  THQ:

  	
  Executive
  Vice President, Business and Legal Affairs

  
	
   

  	
  THQ
  Inc.

  
	
   

  	
  29903
  Agoura Road

  
	
   

  	
  Agoura
  Hills, CA 91301

  
	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
  Steven A. Marenberg

  
	
   

  	
  Irell & Manella LLP

  
	
   

  	
  1800
  Avenue of the Stars, Suite 900

  
	
   

  	
  Los
  Angeles, CA 90067

  



 


8.             Miscellaneous Provisions.


 


8.1           Successors and Assigns.  This Agreement shall inure to the benefit of,
and shall be binding upon, each Party’s respective successors, assigns,
affiliates, subsidiaries, parent companies, predecessors, successors,
divisions, operating companies, officers, directors, agents, employees,
representatives, shareholders, heirs, partners, investors, accountants, and
attorneys, individually and in the capacity indicated.


 


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8.2           Integration.  This Agreement and the JAKKS/THQ/LLC
Agreement, including any exhibits(s) hereto, constitutes the entire
agreement and understanding between the Parties concerning the subject matter
hereof, and supersedes and replaces all prior negotiations, proposed agreements
and agreements, written or oral, between the Parties relating thereto.  This Agreement may be amended, modified,
canceled, and/or waived only by a written instrument that expressly refers to
this Agreement and is executed subsequent to this Agreement by duly authorized
representatives of each of the Parties.


 


8.3           Modifications.  No modification, amendment, or waiver of any
of the provisions contained in this Agreement, nor any future representation,
promise, or condition in connection with the subject matter of this Agreement,
shall be binding upon any Party unless made in writing and signed by such
Party.


 


8.4           Joint Preparation.  This Agreement shall be construed without
regard to the Party or Parties responsible for their preparation, and shall be
deemed as prepared jointly by the Parties hereto.  In resolving any ambiguity and/or uncertainty
existing herein, the Parties agree that no consideration and/or weight shall be
given to the identity of the Party drafting said documents.


 


8.5           Severability.  If any part, term, and/or provision of this
Agreement is held by a court or other tribunal to be invalid, illegal, and/or
otherwise unenforceable, such part, term and/or provision shall be inoperative
and void insofar as it is in conflict with law, but the validity of the
remaining parts, terms, and/or provisions shall not be affected and the rights
and obligations of the Parties shall be construed and enforced as if this
Agreement did not contain the particular part, term and/or provision held to be
invalid and/or unenforceable.  This
provision shall not apply to Sections [1, 2, 3, 4, 5 and 8.8] of this Agreement,
said terms being integral and non-severable parts of this Agreement, without
which it would not have been entered into by the Parties.


 


8.6           Governing Law.  This Agreement shall be construed in
accordance with the laws of the State of California applicable to agreements
that are executed and fully performed within the State of California.


 


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8.7           Dispute Resolution.  Except as provided in Section 8.8 below,
any disputes regarding or relating to any aspect of this Agreement’s formation,
meaning, performance or breach, or arising out of or relating in any way to
this Agreement, shall be determined exclusively by arbitration before a single
arbitrator pursuant to the commercial arbitration procedures of the American
Arbitration Association (“AAA”), and administered by AAA in accordance with its
Commercial Arbitration Rules.  The
Parties shall endeavor in good faith first to attempt to resolve the
controversy or claim through mediation administered by the AAA, before
commencing any arbitration.  Any mediation
or arbitration shall be confidential (except as may be required in any judicial
proceeding brought to enforce these arbitration provisions or any award
rendered hereunder) and shall be conducted in Los Angeles County and the
parties hereto irrevocably submit to the jurisdiction of the state and federal
courts of California for any proceedings incidental to arbitration or for the
confirmation and enforcement of any award. 
The prevailing party in such arbitration shall be entitled to recover
its reasonable costs and attorneys’ fees as shall be determined by the
arbitrator.


 


8.8           JAKKS’ Right to Commence
Expedited Arbitration Proceeding.  In the event that THQ fails to make any of the
payments referenced in Sections 1-3 or 5(iv) herein, no earlier than five (5) days
after the default, JAKKS shall have the right to commence an expedited
arbitration proceeding in either New York County or Los Angeles County and have
its claim finally and exclusively determined in accordance with the Expedited
Procedures of the AAA’s Commercial Arbitration Rules in effect as of the
Effective Date (the “Rules”), except that Rule E-10 regarding compensation
of the arbitrators shall not apply and Rule E-4 shall be modified as
follows: (i) within five (5) business days of the service of JAKKS’
Demand for Arbitration, the parties shall attempt to agree on a single
arbitrator to adjudicate JAKKS’ claim, and (ii) if the parties cannot
agree, the AAA will appoint a single arbitrator within five (5) business
days thereafter.  The parties irrevocably
submit to the jurisdiction of the state and federal courts of New York and
California for any proceedings incidental to arbitration or for the
confirmation and enforcement of any award. 
Unless the arbitrator finds that THQ was not in default of any of its
payment obligations referenced in Sections 1-3 or 5(iv) herein, THQ shall
reimburse JAKKS for all attorneys fees and/or costs incurred in connection with
the expedited arbitration proceeding including, without limitation, (i) all
AAA fees and the arbitrator’s compensation and (ii) any attorneys fees
and/or costs incurred in connection with the arbitration proceeding,
confirmation of the Arbitration Award and/or enforcement of the resulting judgment.  In the event that the arbitrator finds that
THQ was 


 


6

















 


not in default of any of its payment obligations referenced in Sections
1-3 or 5(iv) herein, JAKKS shall reimburse THQ for all attorneys fees
and/or costs incurred in connection with the expedited arbitration proceeding.  For avoidance of doubt, the procedures set
forth herein do not apply if THQ in good faith makes the Preferred Payment
referenced in Section 5(iv) below but JAKKS subsequently challenges
the amount of the Preferred Return payment; in that event, the parties shall
follow the dispute resolution procedures in the LLC Agreement.


 


8.9           Counterparts.  This Agreement may be executed in
counterparts and by facsimile or PDF signature, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.


 


IN WITNESS WHEREOF, the
Parties have executed this Agreement dated as of December 22, 2009.


 


	
   

  	
  THQ INC.

  	
   

  	
  JAKKS PACIFIC, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  



 


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