KIRKPATRICK & LOCKHART LLP               Exhibit 10.4
                        1800 Massachusetts Avenue, N.W.
                                  Second Floor
                             Washington, D.C. 20036



JOHN B. SPIRTOS
(202) 778-9271
spirtojb@kl.com

                                  May 15, 1998

                                                                 FOR PURPOSES OF
                                                          SETTLEMENT DISCUSSIONS

VIA FACSIMILE AND U.S. MAIL

Jeffrey L. Glassman
Riordan & McKinzie
California Plaza
300 South Grand Ave.
29th Floor
Los Angeles, CA 90071

      Re:   DEPARTURE OF SCOTT MEDNICK

Dear Mr. Glassman:

      Pursuant to Larry Kopald's  conversation with Scott Mednick with regard to
Mr.  Mednick's  separation from service with our client,  THINK New Ideas,  Inc.
("THINK"),  and the  resolution  of all disputes  arising under the terms of his
employment  agreement  ("Employment  Agreement"),  we propose that the following
serve  as a basis  for our  preparation  of a  definitive  settlement  agreement
("Settlement Agreement") between the parties:

          Over a 24-month  period,  THINK  would pay to Mr.  Mednick  the sum of
         $936,130,  which  represents  the  aggregate of Mr.  Mednick's  monthly
         compensation  during the number of months  remaining under the terms of
         the Employment  Agreement (exclusive of extensions and inclusive of the
         agreed-upon annual salary increases as set forth in Section 4(d) of the
         Employment Agreement) plus an additional 12 months of compensation.

          THINK would  purchase from Mr.  Mednick its  obligation to provide Mr.
         Mednick   with   participation   in  its  health   insurance   program.
         Alternatively,  Mr. Mednick may elect COBRA coverage,  the premiums for
         which would be paid by THINK.

          THINK  would  compensate  Mr.  Mednick  for the value of the number of
         "vacation"  days to which he is entitled  for the  current  fiscal year
         under the terms of the Employment Agreement, less any such days used by
         Mr.   Mednick  in  the  current  fiscal  year  and  recorded  with  the
         appropriate officer or administrator of THINK.

          Throughout  the  duration  of the  period  during  which  Mr.  Mednick
         received severance  compensation payments from THINK, Mr. Mednick would
         be bound by a  non-competition  clause of the type set forth in Section
         10 of the Employment Agreement.

          Ronald  Bloom,  Adam Curry and Mr.  Mednick would enter into a private
         lock-up agreement,  whereby each individual would agree to sell no more
         than 25,000 shares of THINK common stock ("THINK  Stock") in any single
         transaction  and in no event  more than  16.43% of his  shares of THINK
         Stock,  including his option  shares,  for a period of 120 days,  which
         period  shall  commence  on May 15,  1998,  the  effective  date of the
         Settlement  Agreement;  provided,  however, that such lock-up agreement
         would  terminate  if the average  fair market  value per share of THINK
         Stock fell below $25 for a period of 10 business days.


<PAGE>



Jeffrey L. Glassman
Riordan & McKinzie
May 15, 1998
Page 2



         THINK would pay the  premiums on the  $1,000,000  term life  insurance
         policy  on the life of Mr.  Mednick  for a period of four  months  and,
         thereafter,  such policy would be  transferred  to Mr.  Mednick and the
         premiums paid by him.

          THINK and Mr.  Mednick  would  agree to  release  each  other from all
         future  claims and settle all  disputes  arising  under the  Employment
         Agreement.

          Mr.  Mednick  would  enter into a  consulting  agreement  with  THINK,
         pursuant to which Mr. Mednick would provide advice and counsel to THINK
         on an as-needed basis in exchange for a consultation  fee of $3,000 per
         day.

          THINK and Mr.  Mednick would prepare a jointly  issued press  release,
         indicating  the  departure  of Mr.  Mednick and his  entering  into the
         above-referenced consulting agreement.

          THINK  would  include  Mr.  Mednick in any  secondary  offering of its
         securities  for a 24-month  period  commencing on the effective date of
         the Settlement Agreement.

          THINK would  obtain all  necessary  approvals  and take all actions to
         accelerate and vest Mr.  Mednick's 80,000 options to purchase shares of
         THINK Stock at an exercise price of $8.88 received  pursuant to THINK's
         Amended and Restated 1997 Stock Option Plan.

          Within  60 days of the  effective  date of the  Settlement  Agreement,
         THINK would register Mr. Mednick's 20,000 options to purchase shares of
         THINK  Stock at an  exercise  price of $4.05,  which were  received  in
         connection with Mr. Mednick's service as a director of THINK.

          Mr.  Mednick  would be allowed  his normal  access to the  premises of
         THINK and right to remove  personal  property  for a seven (7) calendar
         day  transitional  period,  such  period  commencing  the day after the
         release of the above-referenced press release.

          Mr.  Mednick's  current  assistant would remain an employee of THINK
         for at least 3 months, at her election,  following the effective date
         of the Settlement Agreement.
<PAGE>



Jeffrey L. Glassman
Riordan & McKinzie
May 15, 1998
Page 3




      If you have any  questions or comments,  please feel free to call.  If you
agree to these terms, please so indicate by signing this document below.

                                    Very truly yours,

                                    /s/ John B. Spirtos

                                    John B. Spirtos





Agreed and Accepted

By:  /s/ Scott Medwick
     -----------------
      Scott Mednick

Date:  May 15, 1998


THINK NEW IDEAS, INC.

By: /s/ Larry Kopald
    ----------------
      Larry Kopald, Chief Creative Officer

Date:  May 15, 1998