RC2 Corporation (NASDAQ: RCRC) today announced that it has signed an agreement with HIT Entertainment which modifies existing license agreements and provides a release to RC2 in connection with past indemnification claims related to the recall of certain products and other legal matters.

The agreement provides an extension to the license term on the Thomas & Friends Wooden Railway product line, along with an immediate reduction in licensing payments on this product line, and a shortening of the license term on the Take Along Thomas & Friends die-cast product line. In addition, RC2 will pay HIT Entertainment a one-time cash payment of $15 million in exchange for a release from indemnification claims. RC2 expects the one-time payment and reduced future profits from the shortening of the Take Along Thomas & Friends product line will over time be offset by the reduction in licensing payments and licensing term extension on the Thomas & Friends Wooden Railway product line.

In addition, this agreement clarifies that there are no contractual restrictions related to the development of toy products for Chuggington™, a new preschool animated train series in which an RC2 affiliate holds an ownership position and has an option for a worldwide master toy license.