Exhibit 2.4
EXECUTION COPY
JAKKS Pacific, Inc.
and
Xxxxx Xxxxxx and Others
SETTLEMENT AGREEMENT
Exhibit 2.4
This Agreement is made on August 2004 between:
(1) JAKKS Pacific, Inc., a corporation organised under the laws of the State
of Delaware, U.S. (JAKKS Pacific); and
(2) XXXXX XXXXXX, of Castillan House, Xxx Xxxxx, Xxxxx, Xxxxxx XX00 0XX,
Xxxxxx Xxxxxxx and others, details of which are set out in Schedule 1 (the
"SHAREHOLDERS").
Whereas:
(A) JAKKS Pacific and the Shareholders entered into a Stock Purchase Agreement
on 27 December 2001 (the "SPA") whereby JAKKS Pacific acquired the entire
issued share capital of Kidz Biz Limited and Kidz Biz Far East Limited in
consideration for payment of an initial closing purchase price and
additional earn out consideration, details of which are set out in the
SPA.
(B) The parties have agreed to accelerate the payment by JAKKS Pacific of a
portion of its remaining Earn-Out Payment obligations under the SPA and to
address that portion of the Holdback relating to Dragon Xxxx Z Claims,
amongst other matters, in accordance with this Agreement.
It is agreed as follows:
1 INTERPRETATION
1.1 In this Agreement, capitalized terms used, but not otherwise defined,
herein shall have the respective meanings assigned to them in the SPA,
and, unless the context otherwise requires:
"BUSINESS DAY" means a day excluding a Saturday or Sunday on which banks
in London are open for business;
"COMPROMISE AGREEMENT" means the compromise agreement to be made between
JAKKS Pacific/Kidz Biz Limited, an affiliate of JAKKS Pacific and Xxxxx
Xxxxxx relating to the termination of his employment by such company;
"COMPLETION" means completion of this Agreement in accordance with Clause
3;
"REGISTRABLE SECURITIES" has the meaning assigned to such term in the
Registration Rights Agreement;
"REGISTRATION RIGHTS AGREEMENT" means that certain Registration Rights
Agreement, dated 27 December 2001, by and among the Shareholders and JAKKS
Pacific; and
"SHARES" means shares of the common stock, par value $.001 per share, of
JAKKS Pacific.
1.2 References to this Agreement include its Schedules and references to
Clauses and Schedules are to Clauses of, and Schedules to, this Agreement.
1.3 Headings shall be ignored in construing this Agreement.
2 NO WAIVER OF RIGHTS UNDER THE SPA
Each of the parties agrees with the others that save as specifically and
expressly provided in this Agreement, with effect from and conditional
upon Completion, the provisions of the
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SPA shall remain in full force and effect in accordance with its terms and
in particular it is agreed that the covenants, warranties, indemnities and
obligations of the Shareholders (or any of them) contained in the SPA in
favour of JAKKS Pacific shall remain fully effective and enforceable as
against the Shareholders or any of them, except as provided in this
Agreement and in the Compromise Agreement.
3 SETTLEMENT OBLIGATIONS AND COMPLETION
3.1 Completion shall take place within five (5) business days following the
execution of this Agreement.
3.2 On Completion, JAKKS Pacific shall issue to the Agent (for the benefit and
account of the Shareholders) an aggregate of 25,749 Shares, which Shares
represent the maximum Earn-Out Payment payable for the 2005 Earn-Out Year.
These Shares shall be allocated among the Shareholders as follows:
3.2.1 19,826 to Mr. Xxxxx Xxxxxx, and by her signature below Xxx. Xxxxxxx
Xxxxxx acknowledges having directed JAKKS Pacific to issue that
portion of such Shares to which she would otherwise have been
entitled to Xxxxx Xxxxxx
3.2.2 5,923 to Xx. Xxxx Xxxxx
It being acknowledged by the Shareholders that these amounts may not
represent their respective Payment Factors and proportionate entitlements
to Earn-Out Payments under the SPA.
For the avoidance of doubt, these Shares shall be deemed Registrable
Securities and subject to the terms and conditions of the Registration
Rights Agreement and the parties shall comply with their respective
obligations under the Registration Rights Agreement in relation to the
Shares referred to in Clause 3.2.
3.3 In consideration of the issue of the Shares to be made pursuant to Clause
3.1 above, each of the Shareholders hereby irrevocably (i) accepts the
issue of the Shares set out in Clause 3.2 in full and final settlement of
any claim, right or entitlement which they may have to the Earn-Out and
the Earn-Out Payments in respect of the 0000 Xxxx-Xxx Year only, and not
with respect to the 2004 Earn-Out Year. The entitlement to the Earn-Out
Payment for the 2004 Earn-Out Year shall continue to be determined and be
payable in accordance with the provisions of Clause 2.3 of the SPA, but
allocated in the manner provided for in Clause 3.2 (and disputes regarding
its calculation resolved in accordances with Clause 7.5 of the SPA),
except that each of the Shareholders hereby waives any and all rights or
claims which they have or might have (whether in their capacity as Agent
or a Shareholder) to acceleration of the Earn-Out Payment for the 2004
Earn-Out Year under clause 2.3(d) of the SPA as a result of the
modification of Xxxxx Xxxxxx'x employment under the Compromise Agreement.
JAKKS Pacific shall cause the Company to operate its business through
December 31, 2004 in a manner consistent with JAKKS Pacific's normal
business practices and policies used in the operation of its other
subsidiaries and divisions and acting in good faith, and JAKKS Pacific
shall procure that the Company shall not take any action that would have
the reasonably foreseeable consequence of reducing the Earn-Out Payment
for Earn-Out Year 2004 under the SPA or limiting or adversely affecting
the ability of the Company to achieve the financial conditions for payment
of the Earn-Out Payment.
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3.4 The Parties acknowledge that they have not resolved issues regarding the
distribution of the Holdback with respect to the Dragon Ball Z Claims and
Golden Express Trading and that the Holdback Period with respect thereto
shall continue until resolution of such issues.
3.5 Concurrently with the signing of this Agreement, Xx. Xxxxxx shall enter
into the Compromise Agreement with JAKKS Pacific/Kidz Biz Limited
concerning his present and future obligations to JAKKS Pacific/Kidz Biz
Limited.
4 CONFIDENTIALITY
4.1 Subject to Clause 4.2, the parties shall treat as confidential and not
disclose or use any confidential information received or obtained as a
result of entering into this Agreement (or any agreement entered into
pursuant to this Agreement) which relates to:
(i) the provisions of this Agreement and any agreement entered
into pursuant to this Agreement;
(ii) the negotiations relating to this Agreement (and such other
agreements); or
(iii) any other party's business, financial or other affairs
(including the business, financial or other affairs of any
group company and including, in each case, future plans and
targets).
4.2 Clause 4.1 (i) to (iii) (inclusive) shall not prohibit disclosure of any
such information received by a party (the "receiving party") from another
party (the "disclosing party") if and to the extent:
4.2.1 the disclosure or use is required by law, any regulatory body or the
rules and regulations of any recognised stock exchange;
4.2.2 the disclosure or use is required for the purpose of any Judicial
proceedings arising out of this Agreement or any other agreement
entered into under or pursuant to this Agreement or the disclosure
is reasonably required to be made to a taxation authority in
connection with the taxation affairs of the disclosing party;
4.2.3 the disclosure is made to professional advisers on terms that such
professional advisers undertake to comply with the provisions of
Clause 4.1 in respect of such information as if they were a party to
this Agreement;
4.2.4 the information to or becomes publicly available (other than by
breach of this Agreement by the receiving party);
4.2.5 the disclosing party has given prior written approval to the
disclosure or use;
4.2.6 the information is independently developed after the date hereof by
the receiving party,
4.3 provided that prior to disclosure or use by a receiving party of any
confidential information of a disclosing party pursuant to Clause 4.2.1 or
4.2.2, the receiving party concerned shall promptly notify the relevant
disclosing party of such requirement and the disclosing party may seek a
protective order from the relevant authority to prevent or limit
disclosure (at the sole cost, expense and liability of such disclosing
party) or waive compliance with the terms of this Agreement, except that
JAKKS Pacific shall not be required to give such
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notice if it determines on the advice of counsel that disclosure is
required under the securities laws of the United States or the
regulations of any recognized stock exchange.
5 RELEASE AND WAIVER
5.1 Any liability to a party under this Agreement may in whole or in part be
released, compounded or compromised or time or indulgence given by the
relevant party in its absolute discretion under such liability without in
any way prejudicing or affecting its rights against any other party under
the same or a like liability, whether joint and several or otherwise.
5.2 No failure of a party to exercise, and no delay by it in exercising, any
right, power or remedy in connection with this Agreement (each a "RIGHT")
will operate as a waiver thereof, nor will any single or partial exercise
of any Right preclude any other or further exercise of such Right or the
exercise of any other Right.
6 WHOLE AGREEMENT, VARIATION, ASSIGNMENT
6.1 This Agreement shall together with the Compromise Agreement entered into
between JAKKS Pacific/Kidz Biz Limited and Xx. Xxxxxx, when signed,
supersede any previous written or oral agreement between the parties in
relation to the matters dealt with in this Agreement and contains the
whole agreement between the parties relating to the subject matter of this
Agreement at the date hereof to the exclusion of any terms implied by law
which may be excluded by contract. Each party acknowledges that it has not
been induced to enter into this Agreement by any representation, warranty
or undertaking not expressly incorporated into it. So far as permitted by
law and except in the case of fraud, each party agrees and acknowledges
that its only rights and remedies in relation to any representation,
warranty or undertaking made or given in connection with this Agreement
shall be for breach of the terms of this Agreement, to the exclusion of
all other rights and remedies (including those in tort or arising under
statute). In this sub-Clause "this Agreement" includes all documents
entered into pursuant to this Agreement. The provisions of the SPA shall
continue to survive, however, except to the extent specifically modified
by this Agreement.
6.2 No variation of this Agreement shall be effective unless in writing and
signed by or on behalf of each of the parties.
6.3 This Agreement shall be binding on and enure to the benefit of the parties
and their successors and permitted assigns, but the parties may not assign
or transfer all or any part of their rights or obligations under this
Agreement without the prior written consent of the other parties.
7 FURTHER ASSURANCE
At any time after the date of this Agreement, each party shall, and shall
use all reasonable endeavours to procure that any necessary third party
shall, execute such documents and do such acts and things as the other
party may reasonably require for the purpose of giving to such party the
full benefit of all the provisions of this Agreement.
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8 INVALIDITY
If any provision in this Agreement shall be held to be illegal, invalid or
unenforceable, in whole or in part, under the law of any jurisdiction, the
legality, validity or enforceability of such provision or part under the
law of any other jurisdiction and the legality, validity and
enforceability of the remainder of this Agreement shall not be affected.
9 COUNTERPARTS
This Agreement may be entered into in any number of counterparts, all of
which taken together shall constitute one and the same instrument. Any
party may enter into this Agreement by signing any such counterpart.
10 NOTICES
Any notice required or permitted to be given under this Agreement shall be
given in accordance with the provisions of Section 9.4 of the SPA, except
with the deletion of Altheimer & Xxxx.
11 COSTS
Each party shall bear its own costs, fees and expenses incurred in
connection with the preparation, negotiation and entry into this Agreement
and the documents to be entered into pursuant to it.
12 GOVERNING LAW AND SUBMISSION TO JURISDICTION
12.1 This Agreement shall be governed by and construed in accordance with the
law of the state of New York, United States of America and the enforcement
of rights under this Agreement and choice of forum to enforce such rights
shall be governed by the provisions of Section 9.8 of the SPA.
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SCHEDULE 1
The Shareholders
Xxxxx Xxxxxx
Castillan House, Xxx Xxxxx, Xxxxx, Xxxxxx XX00 0XX, Xxxxxx Xxxxxxx
Xxxxxxx Xxxxxx
Xxxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxx, Xxxxxx XX00 0XX, Xxxxxx Xxxxxxx
Xxxx Xxxxx
Morwell, 0 Xxxxx Xxxx, Xxxxxxx, Xxxxxx, XX00 0XX, Xxxxxx Xxxxxxx
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In witness whereof this Agreement has been entered into on the date stated at
the begining.
SIGNED by on behalf of
JAKKS Pacific, Inc. in the presence of:
SIGNED by Xxxxx Xxxxxx [Illegible]
in the presence of:
[Illegible]
SIGNED by Xxxxxxx Xxxxxx [Illegible]
in the presence of:
[Illegible]
SIGNED by Xxxx Xxxxx [Illegible]
in the presence of:
[Illegible]
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