What changed in this filing

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Item 9A. Controls and Procedures

2022-03-16 compared with 2021-03-19 · 180 added, 383 removed, 732 unchanged (43% of the section changed)

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Positions with the Company

Chairman, Chief Executive Officer, President, Secretary and Director

Chairman, Chief Executive Officer, President, Secretary and Class I Director

Executive Vice President and Chief Financial Officer

Chief Operating Officer

Alexander Shoghi

Zhao Xiaoqiang

Andrew Axelrod

Matthew Winkler

Class I Director

Alexander Shoghi

Class II Director

Joshua Cascade

Class II Director

Carole Levine

Class II Director

Matthew Winkler

Class III Director

Lori MacPherson

Class III Director

Berman has been our Chief Operating Officer (until August 23, 2011) and Secretary and one of our Directors since co-founding JAKKS in January 1995.

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From 1988 to 1991, he was President and an owner of Balanced Approach, Inc., a distributor of personal fitness products and services.

Zhao Xiaoqiang has been a Director since April 27, 2017.

Since 2002 Mr.

Zhao has been the Chairman of Meisheng Holding Co., a private holding company selling cultural products, and since 2007 he has been the Chairman of Meisheng Culture & Creative Corp.

Ltd., a public company (listed on the Shenzhen Stock Exchange in 2012) with 23 subsidiaries in the areas of manufacturing, animation, games, movies, online video, stage performance art, e-commerce and overseas investments.

Zhao is also a director of two of the Company’s subsidiaries, JAKKS Meisheng Animation (H.K.) Limited and JAKKS Meisheng Trading (Shanghai) Limited.

Zhao holds an EMBA from Zhejiang University.

Alexander Shoghi has been a Director since December 18, 2015.

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Shoghi holds a Bachelor of Science of Business Administration in Finance and International Business degree from Georgetown University.

Zhao Xiaoqiang has been a Director since April 27, 2017.

Since 2002 Mr.

Zhao has been the Chairman of Meisheng Holding Co., a private holding company selling cultural products, and since 2007 he has been the Chairman of Meisheng Culture & Creative Corp.

Ltd., a public company (listed on the Shenzhen Stock Exchange in 2012) with 25 subsidiaries in the areas of manufacturing, animation, games, movies, online video, stage performance art, e-commerce and overseas investments.

Zhao is also a director of two of the Company’s subsidiaries, JAKKS Meisheng Animation (H.K.) Limited and JAKKS Meisheng Trading (Shanghai) Limited.

Zhao holds an EMBA from Zhejiang University.

Andrew Axelrod is the Managing Partner and Portfolio Manager of Axar Capital Management LP, an investment management firm that he founded in April 2015.

Before founding Axar Capital Management, Mr.

Axelrod worked at Mount Kellett Capital Management LP, a private equity investment firm, from 2009 to 2014.

At Mount Kellett Capital Management, he was promoted to Co-Head of North America Investments in 2011 and became a Partner in 2013.

Prior to joining Mount Kellett Capital Management, Mr.

Axelrod worked at Kohlberg Kravis Roberts & Co.

from 2007 to 2008 and The Goldman Sachs Group, Inc.

from 2005 to 2006.

Axelrod has served as chairman of the board of directors of Livestyle Holdings LLC since December 2016, Terra Capital Partners since February 2018 and StoneMor Partners LP (NYSE:

STON) since June 2019.

Axelrod graduated magna cum laude from Duke University with a Bachelor of Science degree in Economics.

Matthew Winkler is currently a Managing Director at Benefit Street Partners (“BSP”), a leading credit-focused alternative asset management firm with approximately $27 billion in assets under management.

BSP is a wholly owned subsidiary of Franklin Resources, Inc.

that, together with its various subsidiaries, operates as Franklin Templeton.

Winkler joined Benefit Street Partners in July 2014.

Prior thereto, from November 2009 to March 2014, he worked in the Special Assets Group at Goldman Sachs.

From July 2003 to November 2009, Mr.

Winkler held analyst positions at different firms, focusing on areas such as special situations, distressed debt, and mergers and acquisitions.

He holds a Bachelor of Arts in Public and Private Sector Organization from Brown University.

Joshua Cascade is a private equity investor with over two decades of private equity experience.

Joshua Cascade has been a director since August 9, 2019.

Cascade is a private equity investor with over two decades of private equity experience.

From 2014 to 2018 he was a Managing Partner at Wellspring Capital Management, an American private equity firm focused on leveraged buyout investments in middle-market companies, where he previously served as a Partner from 2007 to 2014 and a Principal from 2002 to 2006.

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Cascade graduated with highest distinction from the University of Michigan, Ann Arbor, with a Bachelor of Arts degree in Business Administration.

Carole Levine is currently a Consumer Products Marketing & Sales Consultant, where she works with clients in a range of industries, including toy manufacturing, entertainment, and food and beverage.

Carole Levine has been a director since September 27, 2019.

Levine is currently a Consumer Products Marketing & Sales Consultant, where she works with clients in a range of industries, including toy manufacturing, entertainment, and food and beverage.

From 1994 to 2017, she held a number of positions at Mattel, Inc., an American multinational toy manufacturing company, including Vice President, Sales, Mattel & Fisher-Price Emerging Channels (from 2005 to 2012), Vice President, Global Marketing (from 2012 to 2015), Vice President, Interim General Manager, RoseArt (from 2015 to 2017) and Vice President, Retail Business Development - Mattel Consumer Products (from 2015 to 2017).

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She holds a Bachelor of Arts degree in Sociology from the University of Colorado, Boulder and participated in the Accelerated Executive Marketing Program at Northwestern University’s Kellogg School of Business.

Matthew Winkler has been a director since August 9, 2019.

Winkler is currently a Managing Director at Benefit Street Partners (“BSP”), a leading credit-focused alternative asset management firm.

Winkler joined Benefit Street Partners in July 2014.

Prior thereto, from November 2009 to March 2014, he worked in the Special Assets Group at Goldman Sachs.

From July 2003 to November 2009, Mr.

Winkler held analyst positions at different firms, focusing on areas such as special situations, distressed debt, and mergers and acquisitions.

He holds a Bachelor of Arts in Public and Private Sector Organization from Brown University.

Lori MacPherson has been a director since September 27, 2021.

MacPherson was an entertainment and consumer products executive with over two decades of experience at the Walt Disney Company, a multinational media and entertainment conglomerate.

From 2010-2014 she served as Executive Vice President, Global Product Management for The Walt Disney Studios.

Prior thereto she was Executive Vice President and General Manager of the global Walt Disney Studios Home Entertainment division (2009-2010), Senior Vice President and General Manager of Walt Disney Studios Home Entertainment North America (2006-2009) and held a variety of senior Marketing and Product Management positions (1991-2006).

MacPherson currently sits of the Board of Trustees at Polytechnic School in Pasadena, California.

She holds a Bachelor of Arts degree in French Literature from Pomona College.

Classification of Directors

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Cascade) may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director, in each case, solely in accordance with the recommendation of the Nominating Committee, with an individual selected by the Nominating Committee from the Preapproved List (as defined in the Nominating Committee Charter);

and (iii) any vacancy in our Board of Directors relating to a Series A Preferred Director (Messrs.

Axelrod and Winkler) may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director, in each case, solely with an individual selected by the Required Preferred Holders (as defined in the Nominating Committee Charter).

and (iii) any vacancy in our Board of Directors relating to a Series A Preferred Director (Mr.

Winkler and Ms.

MacPherson) may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director, in each case, solely with an individual selected by the Required Preferred Holders (as defined in the Nominating Committee Charter).

Any such director elected in accordance with our Second Amended and Restated By-laws to fill a vacancy on our Board of Directors will serve in accordance with our Second Amended and Restated By-laws until the next election of the class for which such director shall have been chosen and until his or her successor is elected and qualified or until his or her earlier death, disability, retirement, resignation or removal.

Berman and Zhao are Class I Directors, Messrs.

Berman and Zhao are Class I Directors;

Shoghi and Cascade, and Ms.

Levine are Class II Directors, and Messrs.

Axelrod and Winkler are Class III Directors.

Levine are Class II Directors;

Winkler and Ms.

MacPherson are Class III Directors.

Qualifications for All Directors

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The Board does not have a specific diversity policy, but considers diversity of race, ethnicity, gender, age, cultural background and professional experiences in evaluating candidates for board membership.

However, California law requires that by the end of 2021 California-headquartered public companies with a board of directors the size of the Company have at least three female directors on its board and at least one director on its board who is from an underrepresented community, defined as “an individual who self identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self identifies as gay, lesbian, bisexual, or transgender.” In the event the size of the Company’s board remains the same, the law mandates that by the end of calendar 2022 the number of directors from underrepresented communities on the Company’s board be increased to have at least two directors from underrepresented communities.

Nasdaq has also adopted board diversity requirements and the Company believes that it is in compliance with the Nasdaq requirements.

As of December 31, 2021 the composition of the Company’s board was not in compliance with all of California’s applicable diversity requirements as the Company is required to appoint another female to its board.

The Board is engaged in a search for a new Board member to satisfy such requirement.

While the validity of the California law is currently being challenged in court and regulations with respect thereto have not been promulgated, the law does provide for substantial penalties for non-compliance.

The Board has identified the following qualifications, attributes, experience and skills that are important to be represented on the Board as a whole:

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The Board has determined that five of seven directors who serve on the Board as of the date hereof (Messrs.

Axelrod, Cascade, Shoghi and Winkler and Ms.

Levine) are “independent,” as defined under the applicable rules of Nasdaq.

Cascade, Shoghi and Winkler and Ms.

Levine and Ms.

MacPherson) are “independent,” as defined under the applicable rules of Nasdaq.

In making this determination, the Board or the Nominating Committee, as applicable, considered the standards of independence under the applicable rules of Nasdaq and all relevant facts and circumstances (including, without limitation, commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships) to ascertain whether any such person had a relationship that, in its opinion, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

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Our officers are elected annually by the Board and serve at its discretion.

None of our current independent directors has served as such for more than the past five years.

Our current independent directors were selected for their experience as businesspeople (Ms.

Levine) and financial management expertise (Messrs.

Axelrod, Cascade, Shoghi and Winkler).

None of our current independent directors, other than Mr.

Shoghi, has served as such for more than the past five years.

Our current independent directors were selected for their financial management expertise (Messrs.

Cascade, Shoghi and Winkler) and general business and industry specific experience (Ms.

Levine and Ms.

We believe that the Board is best served by benefiting from this blend of business and financial expertise and experience.

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Zhao, who contributes his business experience, including experience in manufacturing and his experience with Chinese markets, to the Board.

California recently passed a law which requires publicly held companies headquartered in the state (such as the Company) to include board members from underrepresented communities.

The action follows passage of a similar law in 2018 mandating that public companies headquartered in the state have at least one woman on their board of directors by the end of 2019, with further future increases required depending on board size.

The new law requires that by the end of 2021 California-headquartered public companies have at least one director on their board who is from an underrepresented community, defined as “an individual who self‑identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self‑identifies as gay, lesbian, bisexual, or transgender.” In addition to that initial 2021 requirement, the law mandates that the number of directors from underrepresented communities be increased by the end of calendar year 2022, depending on the size of the board.

The Company is currently in compliance with both laws, but the Board will have to take further action in order to be in compliance in 2022.

In October 2019 and February 2020, Mr.

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In addition to risk oversight functions, the Compensation Committee makes recommendations to the Board regarding compensation of management employees and administers plans and programs relating to employee benefits, incentives, compensation and awards under the 2002 Stock Award and Incentive Plan (the “2002 Plan”).

Axelrod (Chair), Winkler and Shoghi are the members of the Compensation Committee.

Shoghi (Chair) and Winkler are the members of the Compensation Committee.

The Board has determined that each of them is “independent,” as defined under the applicable rules of Nasdaq.

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In addition to risk oversight functions, the Nominating Committee develops our corporate governance system and reviews proposed new members of the Board, including those recommended by our stockholders.

Winkler (Chair), Axelrod and Cascade are the members of the Nominating Committee, which operates pursuant to a written charter adopted by the Board, the full text of which is available on our website at www.jakks.com.

Winkler (Chair), Cascade and MacPherson are the members of the Nominating Committee, which operates pursuant to a written charter adopted by the Board, the full text of which is available on our website at www.jakks.com.

The Board has determined that each member of the Nominating Committee is “independent,” as defined under the applicable rules of Nasdaq.

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Prior to joining the Company, Mr.

McGrath was a Brand Marketer for Hot Wheels®

at Mattel Inc.

McGrath was a Brand Marketer for Hot Wheels® at Mattel Inc.

and part of its Asia Pacific marketing team.

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Section 16(a) Beneficial Ownership Reporting Compliance

Based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to us during and for 2020, all Forms 3, 4 and 5 required to be filed during 2020 by our Directors and executive officers were timely filed.

Based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to us during and for 2021, all Forms 3, 4 and 5 required to be filed during 2021 by our Directors and executive officers were timely filed, except for one Form 4 filed late by each of our CEO and COO.

Stockholder Communications

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Executive Compensation

Compensation Discussion and Analysis

We believe that a strong management team comprised of highly talented individuals in key positions is critical to our ability to deliver sustained growth and profitability, and our executive compensation program is an important tool for attracting and retaining such individuals.

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With this in mind, we have consistently sought to employ the most talented, accomplished and energetic people available in the industry.

Therefore, we believe it is vital that our named executive officers receive an aggregate compensation package that is both highly competitive with the compensation received by similarly-situated executive officers at peer group companies, and also reflective of each individual named executive officer’s contributions to our success on both a long-term and short-term basis.

As discussed in greater depth below, the objectives of our compensation program are designed to execute this philosophy by compensating our executives at the top quartile of their peers.

Our executive compensation program is designed with three main objectives:

to offer a competitive total compensation opportunity that will allow us to continue to retain and motivate highly talented individuals to fill key positions;

to align a significant portion of each executive’s total compensation with our annual performance and the interests of our stockholders;

reflect the qualifications, skills, experience and responsibilities of our executives.

Administration and Process

Therefore, we believe it is vital that our named executive officers receive an aggregate compensation package that is both highly competitive with the compensation received by similarly-situated executive officers, and also reflective of each individual named executive officer’s contributions to our success on both a long-term and short-term basis.

Our executive compensation program is administered by the Compensation Committee.

The Compensation Committee receives legal advice from our outside general counsel and in previous years has retained a compensation consulting firm, such as Willis Towers Watson (“WTW”) and Lipis Consulting, Inc.

(“LCI”), which provides advice directly to the Compensation Committee.

Historically, the base salary, bonus structure and long-term equity compensation of our executive officers are governed by the terms of their individual employment agreements (see “Employment Agreements and Termination of Employment Arrangements”) and we expect that to continue in the future.

With respect to our chief executive officer and president and our chief operating officer, the Compensation Committee, with input from WTW, establishes target performance levels for incentive bonuses based on a number of factors that are designed to further our executive compensation objectives, including our performance, the compensation received by similarly-situated executive officers at peer group companies, the conditions of the markets in which we operate and the relative earnings performance of peer group companies.

The chief financial officer also received a bonus based upon performance criteria established by the Compensation Committee.

Historically, factors given considerable weight in establishing bonus performance criteria are Net Sales, Adjusted EPS, which is the net income per share of our common stock calculated on a fully-diluted basis in accordance with GAAP, and Adjusted EBITDA applied on a basis consistent with past periods, as adjusted in the sole discretion of the Compensation Committee to take account of extraordinary or special items.

As explained in greater detail below (see “Employment Agreements and Termination of Employment Arrangements”), on June 7, 2016 we further amended Mr.

Berman’s employment agreement to provide, among other things, for (i) extension of the term to December 31, 2020;

(ii) modification of the performance and vesting standards for each $3.5 million Annual Restricted Stock Grant (“Berman Annual Stock Grant”) provided for under Section 3(b) of his Employment Agreement, effective as of January 1, 2017, so that 40% ($1.4 million) of each Berman Annual Stock Grant will be subject to time vesting in four equal annual installments over four years and 60% ($2.1 million) of each Berman Annual Stock Grant will be subject to three year “cliff vesting” (i.e.

payment is based upon performance at the close of the three year performance period), with vesting of each Berman Annual Stock Grant determined by the following performance measures:

(a) total shareholder return as compared to the Russell 2000 Index (weighted 50%), (b) net revenue growth as compared to our peer group (weighted 25%) and (c) EBITDA growth as compared to our peer group (weighted 25%);

and (iii) modification of the performance measures for award of his Annual Performance Bonus equal to up to 300% of Base Salary (“Berman Annual Bonus”) provided for under Section 3(d) of his Employment Agreement, effective as of January 1, 2017, so that the performance measures will be based only upon net revenues and EBITDA, with each performance measure weighted 50%, and with the specific performance criteria applicable to each Berman Annual Bonus determined by the Compensation Committee during the first quarter of each fiscal year;

and (iv) increase Mr.

Berman’s base salary to $1,450,000 effective June 1, 2016 subject to annual increases of at least $25,000 per year thereafter.

On August 9, 2019, we further amended Mr.

Berman’s Employment Agreement as follows:

(i) increase of Mr.

Berman’s Base Salary to $1,700,000, effective immediately;

(ii) addition of a 2020 performance bonus opportunity in a range between twenty-five percent (25%) and three hundred percent (300%) of Base Salary, based upon the level of EBITDA achieved by the Company for the fiscal year, as determined by the Compensation Committee, and subject to additional terms and conditions as set forth therein;

(iii) addition of a special sale transaction bonus equal to $1,000,000 if the Company enters into and consummates a Sale Transaction on or before February 15, 2020, subject to additional terms and conditions as set forth therein;

modification of the Berman Annual Stock Grant provided for under section 3(b) of the Employment Agreement, effective as of January 2020, so that the number of shares of Restricted Stock granted pursuant to the Berman Annual Stock Grant equal the lesser of (a) $3,500,000 in value (based on the closing price of a share of Common Stock on December 31, 2019), or (b) 1.5% of outstanding shares of Common Stock, which shall vest in four equal installments on each anniversary of grant;

(v) waiver of certain “Change of Control”, Liquidity Event, and other provisions under the Employment Agreement with respect to certain Specified Transactions;

and (vi) modification of the definition of “Good Reason Event” to include a change in membership of the Board such that following such change, a majority of the directors are not Continuing Directors.

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Employment Agreement, as amended by the third amendment.

On November 18, 2019, we further amended Mr.

Berman’s Employment Agreement as follows:

(i) to extend the term of the Employment Agreement for an additional year through December 31, 2021;

(ii) addition of a 2021 performance bonus opportunity in a range between twenty-five percent (25%) and three hundred percent (300%) of Base Salary, based upon the level of EBITDA achieved by the Company for the fiscal year, as determined by the Compensation Committee, which shall be payable in cash and is subject to additional terms and conditions as set forth therein;

(iii) modification of the Berman Annual Stock Grant provided for under section 3(b) of the Employment Agreement, effective as of January 2020, so that the number of shares of Restricted Stock granted pursuant to the Berman Annual Stock Grant equal the lesser of (a) $3,500,000 in value (based on the closing price of a share of Common Stock on the last business day of the prior year), or (b) 1.5% of outstanding shares of Common Stock, which shall vest in four equal installments on each anniversary of grant, provided, that no such award under (a) or (b) above shall be made to Executive (and no cash substitute shall be provided to Executive) to the extent shares are not available for grant under the Company’s 2002 Plan as of such date;

and, provided, further, that we shall not be obligated to amend the 2002 Plan and/or seek shareholder approval of any amendment to increase the amount of available shares under the 2002 Plan.

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Employment Agreement, as amended by the fourth amendment.

On February 18, 2021, we further amended Mr.

Berman’s Employment Agreement as follows:

(i) extension of the Term of the Employment Agreement for an additional three years through December 31, 2024;

(ii) addition of a performance bonus opportunity for 2022 – 2024 in a range between twenty-five percent (25%) and three hundred percent (300%) of Base Salary, based upon the level of EBITDA achieved by the Company for the fiscal year, as determined by the Compensation Committee, which shall be payable in cash and is subject to additional terms and conditions as set forth therein;

and (iii) modification of the Annual Restricted Stock Grant provided for under section 3(b) of the Employment Agreement, effective as of January 2022, so that the number of shares of Restricted Stock granted pursuant to such Annual Restricted Stock Grant equal the lesser of (a) $3,500,000 in value (based on the closing price of a share of Common Stock on the last business day of the prior year), or (b) 2.25% of outstanding shares of Common Stock, which shall vest in three equal installments on each anniversary of grant, provided, that no such award under (a) or (b) above shall be made to Mr.

Berman (and no cash substitute shall be provided to Mr.

Berman) to the extent shares are not available for grant under the Plan as of such date;

and, provided, further, that the Company shall not be obligated to amend the Plan and/or seek shareholder approval of any amendment to increase the amount of available shares under the Plan.

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Employment Agreement, as amended by the fifth amendment.

On August 23, 2011 we entered into an amended employment agreement with John J.

(Jack) McGrath whereby he became Chief Operating Officer.

As disclosed in greater detail below, Mr.

McGrath’s employment agreement also provides for fixed and adjustable bonuses payable based upon adjusted EPS targets set in the agreement, based upon input from our outside consulting firm, with the adjustable bonus capped at a maximum of 125% of base salary.

On September 29, 2016 we entered into a Fourth Amendment to the employment agreement with Mr.

McGrath which provides, among other things, for (i) extension of the term to December 31, 2020;

(i) modification of the performance and vesting standards for each Annual Restricted Stock Grant (“McGrath Annual Stock Grant”) provided for under Section 3(d) of his Employment Agreement, effective as of January 1, 2017, as follows:

each McGrath Annual Stock Grant will be equal to $1 million, and 40% ($0.4 million) of each McGrath Annual Stock Grant will be subject to time vesting in four equal annual installments over four years, and 60% ($0.6 million) of each McGrath Annual Stock Grant will be subject to three year “cliff vesting” (i.e.

vesting is based upon satisfaction of the performance measures at the close of the three year performance period), determined by the following performance measures:

(A) total shareholder return as compared to the Russell 2000 Index (weighted 50%), (B) net revenue growth as compared to our peer group (weighted 25%) and (C) growth in Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) as compared to our peer group (weighted 25%);

and (iii) modification of the Annual Performance Bonus (“McGrath Annual Bonus”) provided for under Section 3(e) of his Employment Agreement, effective as of January 1, 2017, as follows:

the McGrath Annual Bonus will be equal to up to 125% of base salary, and the actual amount will be determined by performance measures based upon net revenues and EBITDA, each performance measure weighted 50%, and with the specific performance criteria applicable to each McGrath Annual Bonus determined by the Compensation Committee during the first quarter of each fiscal year, and payable in cash (up to 100% of base salary) and shares of our common stock (any excess over 100% of base salary) with the shares of stock vesting over three years in equal quarterly installments.

Effective December 31, 2019 we amended Mr.

McGrath’s employment agreement as follows:

(i) to extend the term of the employment agreement for an additional year through December 31, 2021;

(ii) a 2020 and 2021 performance bonus opportunity in a range between twenty-five percent (25%) and one hundred twenty-five percent (125%) of Base Salary, based upon the level of EBITDA achieved for the fiscal year, as determined by the Compensation Committee, which shall be payable in cash and is subject to additional terms and conditions as set forth therein;

(iii) modification of the McGrath Annual Stock Grant provided for under section 3(d) of his Employment Agreement, effective as of January 2020, so that the number of shares of Restricted Stock granted pursuant to the McGrath Annual Stock Grant equal the lesser of (a) $1,000,000 in value (based on the closing price of a share of Common Stock on the last business day of the prior year), or (b) 0.5% of outstanding shares of Common Stock, which shall vest in four equal installments on each anniversary of grant, provided, that no such award under (a) or (b) above shall be made to Executive (and no cash substitute shall be provided to Executive) to the extent shares are not available for grant under the 2002 Plan as of such date;

and, provided, further, that we shall not be obligated to amend the 2002 Plan and/or seek shareholder approval of any amendment to increase the amount of available shares under the 2002 Plan.

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Employment Agreement, as amended by such amendment.

Effective April 1, 2018, we entered into an employment agreement with Brent T.

Novak whereby he became our Executive Vice President and Chief Financial Officer.

As disclosed in greater detail below, Mr.

Novak’s employment agreement provides for a performance-based bonus award equal to up to 125% of his base salary for the 2018-2020 fiscal years, which annual bonus shall be determined by the same performance criteria as established by the Compensation Committee of the Board for the applicable fiscal year for the Company’s Chairman/CEO and its Chief Operating Officer each year pursuant to their respective employment agreements, and shall be payable in cash and Restricted Stock Units in the same proportions and calculated in the same manner as provided for the Company’s Chief Operating Officer under such officer’s employment agreement, or if no such employment agreement is in effect, then as provided for in the employment agreement with the Company’s Chairman/CEO, except that the portion payable in Restricted Stock would be payable in Restricted Stock Units.

On October 17, 2019, we further amended Mr.

Novak’s Amended Employment Agreement to provide for, among other things, the following:

(i) payment of a special additional bonus pursuant to Section 2(d) of his Amended Employment Agreement;

(ii) if a Sale Transaction is consummated, that will constitute Good Reason for Mr.

Novak’s termination of the Amended Employment Agreement, entitling him to receive the severance benefits provided for under Section 4 of the Amended Employment Agreement upon a termination by him for Good Reason;

(iii) if an agreement for a Sale Transaction is entered into and publicly announced but is not closed by January 31, 2020, that will constitute Good Reason for Mr.

Novak’s termination of the Amended Employment Agreement, entitling him to receive the severance benefits provided for under Section 5 of the Amended Employment Agreement upon a termination by him for Good Reason;

and (iv) upon a termination of Mr.

Novak’s employment that is not described in Sections 4 or 5 of the Amended Employment Agreement, he will be entitled to receive twelve (12) months of health care coverage paid by the Company.

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in Mr.

Novak’s Amended Employment Agreement, as amended by Amendment Number Two.

Effective November 20, 2019, we entered into a letter agreement with John L.

Kimble (the “Kimble Employment Agreement”).

The Kimble Employment Agreement provides that Mr.

Kimble will be our Executive Vice President and Chief Financial Officer as an at-will employee at an annual salary of $500,000.

Kimble will also receive a grant of $250,000 restricted stock units (“RSUs”) on the date hereof and annual grants of $250,000 of RSUs for the initial year and $500,000 annual grants of RSUs for every year thereafter.

The number of shares in each annual grant of RSUs will be determined by the closing price of our common stock on the last trading day prior to the day of each annual grant.

60% ($150,000 for the first year and $300,000 thereafter) of each annual grant of RSUs will be subject to three year “cliff vesting” (i.e.

vesting is based upon performance at the close of the three year performance period), with vesting of each annual grant of RSUs determined by the following performance measures:

(i) Total shareholder return as compared to the Russell 2000 Index (weighted 50%);

(ii) Net revenue growth as compared to the Company’s peer group (weighted 25%), and (iii) EBITDA growth as compared to the Company’s peer group (weighted 25%).

40% ($100,000 for the first year and $200,000 thereafter) of each annual grant of RSUs will vest in 3 equal annual installments commencing on the first anniversary of the date of grant and on the second and third anniversaries thereafter.

The Kimble Employment Agreement also contains provisions relating to benefits, change of control, and an annual performance-based bonus award equal to up to 125% of base salary.

On February 18, 2021, we amended the Kimble Employment Agreement as follows:

(i) changing Mr.

Kimble’s status from an “employee at will” by providing for a term extending through December 31, 2024;

(ii) increase in annual salary to $520,000 effective immediately and annual increases of at least 4% commencing January 1, 2022;

(iii) modification of the cash performance bonus opportunity for 2021 – 2024 to provide for a range between twenty-five percent (25%) and one hundred twenty five percent (125%) of Base Salary, based upon the level of EBITDA achieved by the Company for the fiscal year, as determined by the Compensation Committee, which shall be payable in cash and is subject to additional terms and conditions as set forth therein;

(iv) modification of the provision of the Kimble Employment Agreement captioned “Restricted Stock Awards”, effective as of January 2022, to provide for the annual grant of a number of shares of Restricted Stock equal to the lesser of (a) his Base Salary in value (based on the closing price of a share of Common Stock on the last business day of the prior year), or (b) 1.05% of outstanding shares of Common Stock, which shall vest in three equal installments on each anniversary of grant, provided, that no such award under (a) or (b) above shall be made to Mr.

Kimble (and no cash substitute shall be provided to Mr.

Kimble) to the extent shares are not available for grant under the Plan as of such date;

and, provided, further, that the Company shall not be obligated to amend the Plan and/or seek shareholder approval of any amendment to increase the amount of available shares under the Plan;

and (v) as described above, inasmuch as this first amendment changes Mr.

Kimble’s status as an employee at will, the Kimble Employment Agreement has also been revised to include provisions regarding minimum stock ownership requirements, “clawback” provisions and termination provisions for “Cause” and “Good Reason”, all of which new provisions, are similar to the provisions in the employment agreements of the Company’s other executive officers .

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Kimble Employment Agreement, as amended by the first amendment.

While the Compensation Committee did not establish target performance levels for our former Chief Financial Officer, Joel Bennett, it did consider similar factors when determining such officer’s bonus.

On December 27, 2017, we entered into a letter agreement with Mr.

Bennett (the “Letter Agreement”), which provided for his stepping down from his position following completion of our annual report for the 2017 fiscal year or such earlier date that a successor has been named and transitioned to the office of Chief Financial Officer.

The Letter Agreement provides, among other things, that Mr.

Bennett will receive a severance payment in a maximum amount of up to 15 month’s salary, accelerated vesting of a portion of his restricted stock units and continued health care coverage for up to 12 months, and it requires Mr.

Bennett to comply with confidentiality, non-disparagement and cooperation obligations.

Factors given considerable weight in establishing bonus performance criteria are Net Sales, Adjusted EPS, which is the net income per share of our common stock calculated on a fully-diluted basis in accordance with GAAP, and Adjusted EBITDA applied on a basis consistent with past periods, as adjusted in the sole discretion of the Compensation Committee to take account of extraordinary or special items.

The current employment agreements with our named executive officers also give the Compensation Committee the authority to award additional compensation to each of them as it determines in the Committee’s sole discretion based upon criteria it establishes.

The Compensation Committee also annually reviews the overall compensation of our named executive officers for the purpose of determining whether discretionary bonuses should be granted.

The Compensation Committee annually reviews the base salaries, annual bonuses, total cash compensation, long-term compensation and total compensation of our senior executive officers relative to those companies.

The performance comparison utilized by the Compensation Committee includes a comparison of our total shareholder return, earnings per share growth, sales, net income (and one-year growth of both measures) to the peer group companies.

The Compensation Committee reviews this information along with details about the components of each named executive officer’s compensation.

In 2018, after consultation with WTW, the Compensation Committee determined to continue using the performance criteria presented in WTW’s 2017 report to the Compensation Committee comparing our performance, size and executive compensation levels to those of peer group companies.

The Compensation Committee did not consult with, or retain, a compensation consultant in 2020.

One of the factors considered by the Compensation Committee is the relative performance and the compensation of executives of peer group companies, which are comprised of a group of companies selected in conjunction with WTW that we believe provides relevant comparative information and represent a cross-section of publicly-traded companies with product lines and businesses similar to our own throughout the comparison period.

The composition of the peer group is reviewed annually and adjusted as circumstances warrant.

For the last fiscal year, the peer group companies utilized for executive compensation analysis, which remained the same as in the previous year, were:

Activision Blizzard, Inc.

Deckers Outdoor Corporation

Electronic Arts, Inc.

Take-Two Interactive, Inc.

Elements of Executive Compensation

The Compensation Committee annually reviews the base salaries, annual bonuses, total cash compensation, long-term compensation and total compensation of our senior executive officers.

The compensation packages for the Company’s senior executives have both performance-based and non-performance based elements.

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Berman has been an executive officer at least since his entry into his employment agreement in 2010, Mr.

McGrath became an executive officer on August 23, 2011 pursuant to the terms of an amendment to his employment agreement, Mr.

Novak became an executive officer when he entered into an employment agreement on April 1, 2018 through his resignation on December 6, 2019, and Mr.

McGrath became an executive officer on August 23, 2011 pursuant to the terms of an amendment to his employment agreement, and Mr.

Kimble became an executive officer when he entered into a letter employment agreement on November 20, 2019.

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The employment agreements for our chief financial officers do not provide for automatic annual increases in base salary.

Any further increase in base salary, as the case may be above the contractually required minimum increase, is determined by the Compensation Committee based on the Committee’s analysis of a combination of two factors:

the salaries paid in peer group companies to executives with similar responsibilities, and evaluation of the executive’s unique role, job performance and other circumstances.

Evaluating both of these factors allows us to offer a competitive total compensation value to each individual named executive officer that takes into account the unique attributes of and circumstances relating to each individual and marketplace factors.

This approach has allowed us to continue to meet our objective of offering a competitive total compensation value and attracting and retaining key personnel.

Based on its review of these factors, the Compensation Committee determined not to increase the base salary of each of Messrs.

McGrath and Bennett above the contractually required minimum increase in 2017-2019 as unnecessary to maintain our competitive total compensation position in the marketplace.

Pursuant to the 2019 amendment to his employment agreement, Mr.

Berman’s base salary as of August 9, 2019 was increased to $1,700,000.

Annual Cash Incentive Compensation

Any increase or further increase in base salary, as the case may be above the contractually required minimum increase, is determined by the Compensation Committee.

The function of the annual cash bonus is to establish a direct correlation between the annual incentives awarded to the participants and our financial performance.

This purpose is in keeping with our compensation program’s objective of aligning a significant portion of each executive’s total compensation with our annual performance and the interests of our shareholders.

The employment agreements in effect during 2019 for Messrs.

Berman, McGrath, Novak and Kimble provided for an incentive bonus award (payable in cash and restricted stock for Messrs.

Berman and McGrath, and in cash and restricted stock units for Messrs.

Novak and Kimble) based on a percentage of each participant’s base salary if the performance goals set by the Compensation Committee are met for that year.

The employment agreements for Messrs.

Berman and McGrath mandated that the specific criteria to be used is growth in net sales, EBITDA and total shareholder return, and the Committee sets the various target thresholds to be met to earn increasing amounts of the bonus up to a maximum of 300% of base salary for Mr.

Berman and 125% for Messrs.

McGrath, Novak and Kimble, although the Compensation Committee has the ability to increase the maximum in its discretion.

The employment agreements for Messrs.

Novak and Kimble provide for their criteria to be similar to Mr.

Commencing in 2012, the Committee is required to meet to establish criteria for earning the annual performance bonus (and with respect to Mr.

Berman, any additional annual performance bonus) during the first quarter of the year.

As described elsewhere herein, Mr.

Berman’s employment agreement was further amended in 2016, 2019 and 2021, Mr.

McGrath’s employment agreement was further amended in 2011 and 2019 and Mr.

Kimble’s employment agreement was amended in 2021.

The employment agreements in effect on January 1, 2017 for Messrs.

Berman, McGrath and our chief executive officers contemplated that the Compensation Committee may grant discretionary bonuses in situations where, in its sole judgment, it believes they are warranted.

The Committee approaches this aspect of the particular executive’s compensation package by looking at the other components of the executive’s aggregate compensation and then evaluating if any additional compensation is appropriate to meet our compensation goals.

As part of this review, the Committee, with information from WTW, collects information about the total compensation packages in and various indicia of performance by the peer group such as sales, one-year sales growth, net income, one-year net income growth, market capitalization, size of companies, one- and three-year stockholder returns, etc.

and then compares such data to our corresponding performance data.

Based upon our philosophy of executive compensation described above, the Committee did not approve discretionary bonuses for 2018, approved discretionary bonuses of $750,000 and $138,000 to Messrs.

Berman and McGrath, respectively, for 2019.

Kimble received a $100,000 discretionary bonus for 2020.

Long-Term Compensation

Berman, McGrath and Kimble contemplated that the Compensation Committee may grant discretionary bonuses in situations where, in its sole judgment, it believes they are warranted.

Kimble received a $284,685 and $100,000 discretionary bonus for 2021 and 2020, respectively.

Long-term compensation is an area of particular emphasis in our executive compensation program because we believe that these incentives foster the long-term perspective necessary for our continued success.

This emphasis is in keeping with our compensation program objective of aligning a significant portion of each executive’s total compensation with our long-term performance and the interests of our shareholders.

Historically, our long-term compensation program has focused on the granting of stock options that vested over time.

However, commencing in 2006 we began shifting the emphasis of this element of compensation, and we currently favor the issuance of restricted stock awards or units.

We currently favor the issuance of restricted stock awards or units over granting stock options.

The Compensation Committee believes that the award of full-value shares that vest over time is consistent with our overall compensation philosophy and objectives, as the value of the restricted stock and units vary based upon the performance of our common stock, thereby aligning the interests of our executives with our shareholders.

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As explained in greater detail below (see “Employment Agreements and Termination of Employment Arrangement”), it was changed to $1,000,000 of restricted stock effective January 1, 2017 subject in part to time vesting over four years and in part to performance milestones with cliff vesting spread over three years.

Novak’s employment agreement provided for annual grants of $750,000 of RSUs subject in part to time vesting over three years and in part to performance milestones with cliff vesting spread over three years.

Kimble’s employment agreement provided for a grant of $250,000 of RSU for the initial year and annual grants of $500,000 of RSUs thereafter subject in part to time vesting over three years and in part to performance milestones with cliff vesting spread over three years.

Kimble’s employment agreement provided for a grant of $250,000 of restricted stock units (“RSU”) for the initial year and annual grants of $500,000 of RSUs thereafter subject in part to time vesting over three years and in part to performance milestones with cliff vesting spread over three years.

The milestone targets for each of these employment agreements are established by the Compensation Committee during the first quarter of each year.

The Company did not meet the vesting requirements contained in any of the employment agreements for 2017, so both Messrs.

Berman and McGrath forfeited their stock awards for that year.

As explained in greater detail below (see “Employment Agreements and Termination of Employment Arrangements”), the employment agreements for Messrs.

Berman and McGrath also provide for an annual performance bonus based upon net revenue and EBITDA criteria.

Commencing in 2012 for Mr.

Berman and 2017 for Mr.

McGrath, the criteria for earning such bonus are to be established by the Compensation Committee.

The employment agreements for Messrs.

Berman, McGrath and Kimble also provide for an annual performance bonus based upon net revenue and EBITDA criteria.

This bonus, if earned, is payable partially in cash and partially in shares of restricted common stock.

Berman and McGrath earned 75% of the bonus based upon EBITDA criteria in 2020.

Berman and McGrath did not earn this bonus for 2019 or 2018.

Berman’s and McGrath's employment agreement also provide for an additional bonus solely in the discretion of the Compensation Committee.

After a review of all of the factors discussed above, the Compensation Committee determined that, in keeping with our compensation objectives, Mr.

Berman and McGrath were awarded $762,500 and $200,000 of discretionary bonus, respectively, for 2019.

Kimble received a $100,000 discretionary bonus for 2020.

Other Benefits and Perquisites

Berman and McGrath earned 75% of the bonus based upon EBITDA criteria for 2020;

and, along with Mr.

Kimble, earned 75% of the bonus based upon EBITDA criteria for 2021.

On September 27, 2021, we amended the employment agreements of all of our executive officers, to change the issuance, past and future, of all restricted stock awards to restricted stock units.

All other material terms of the respective employment agreements remain the same, including without limitation, the terms of all such grants including the timing of all vesting periods and the vesting benchmarks.

Berman’s, McGrath's and Kimble’s employment agreement also provide for an additional bonus solely in the discretion of the Compensation Committee.

After a review of all of the factors discussed above, the Compensation Committee determined that, in keeping with our compensation objectives.

Kimble received a $284,685 and $100,000 discretionary bonus for 2021 and 2020, respectively.

Our executive officers participate in the health and dental coverage, life insurance, paid vacation and holidays, 401(k) retirement savings plans and other programs that are generally available to all of the Company’s employees.

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Historically, these perquisites include payment of an automobile allowance and matching contributions to a 401(k) defined contribution plan.

In 2018 - 2020, the named executive officers were granted the following perquisites:

In 2020 and 2021, the named executive officers were granted the following perquisites:

automobile allowance and 401(k) plan matching contribution for Messrs.

Berman, McGrath, Kimble, Novak and Bennett;

Berman, McGrath and Kimble;

and a life insurance benefit for Mr.

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Such benefits and perquisites serve our objective of offering competitive compensation that allows us to continue to attract, retain and motivate highly talented people to these critical positions, ultimately providing a substantial benefit to our shareholders.

Change of Control/Termination Agreements

We recognize that, as with any public company, it is possible that a change of control may take place in the future and that the threat or occurrence of a change of control can result in significant distractions of key management personnel because of the uncertainties inherent in such a situation.

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Additional details of the terms of the change of control agreements and termination provisions outlined above are provided below.

Compensation Risk Management

As part of its annual review of our executive compensation program, the Compensation Committee reviews with management the design and operation of our incentive compensation arrangements for senior management, including executive officers, to determine if such programs might encourage inappropriate risk-taking that could have a material adverse effect on the Company.

The Committee considers, among other things, the features of the Company’s compensation program that are designed to mitigate compensation-related risk, such as the performance objectives and target levels for incentive awards (which are based on overall Company performance), and its compensation recoupment policy.

The Compensation Committee also considers our internal control structure which, among other things, limits the number of persons authorized to execute material agreements, requires approval of our Board of Directors for matters outside of the ordinary course and its whistle blower program.

Based upon the above, the Committee concluded that any risks arising from the Company’s compensation plans, policies and practices are not reasonably likely to have a material adverse effect on the Company.

Impact of Shareholder Advisory Vote

At our 2021 annual meeting, our shareholders approved our current executive compensation with over 66% of all shares actually voting on the issue affirmatively giving their approval.

Accordingly, we believe that this vote ratifies our executive compensation philosophy and policies, as currently adopted and implemented, and we intend to continue such philosophy and policies.

Pay Ratio Disclosure Rule

Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd – Frank Act”), the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer ("PEO").

Our PEO is Mr.

Our calculation of the ratio of the median employee compensation to our PEO’s compensation for the year ended December 31, 2020 is set forth below.

Median Employee total annual compensation (excluding Mr.

Berman’s total annual compensation

Ratio of PEO to Median Employee Compensation

Berman’s total annual compensation used in the calculation above represents the gross amount reported on Form W-2 for 2020.

This amount significantly differs from the 2020 amount of $3.5 million shown on the Summary Compensation Table.

The Summary Compensation table includes $0.5 million of restricted stock awards granted on January 1, 2020, none of which were earned and vested as of December 31, 2020.

The total amount of compensation earned by Mr.

Berman in 2020 related to vested restricted stock awards and included in his total annual compensation above approximated $ 368,455.

In determining the median employee, a listing was prepared of all employees that received compensation for the year ended December 31, 2020.

The median amount was selected from the annualized list.

As of December 31, 2020, the Company employed 476 persons, of which 195 are based outside of the United States.

Summary Compensation Table – 2020-2021

Incentive Plan

Principal Position

Chief Executive Officer,

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Chief Operating Officer

Former Executive Vice President

and Chief Financial Officer

Former Executive Vice President

and Chief Financial Officer

Executive Vice President

and Chief Financial Officer

Berman, the grant-date fair value of the awards assuming 100% achievement of the applicable performance conditions totaled the lesser of (a) $3.5 million in value (based on the closing price of a share of Common Stock on the last business day of the prior year), or (b) 1.5% of outstanding shares of Common Stock in 2020, and $3.5 million in 2019 and 2018, respectively.

McGrath, the grant-date fair value of the awards assuming 100% achievement of the applicable performance conditions totaled the lesser of (a) $1.0 million in value (based on the closing price of a share of Common Stock on the last business day of the prior year), or (b) 0.5% of outstanding shares of Common Stock in 2020, and $1.0 million in 2019 and 2018, respectively.

Bennett, the grant-date fair value of the awards assuming 100% achievement of the applicable performance conditions totaled $750,000 in 2018.

Novak, the grant-date fair value of the awards assuming 100% achievement of the applicable performance conditions totaled $750,000 in 2019 and 2018.

The 2019 award granted to Mr.

Novak was forfeited in the same year due to his departure.

Kimble the grant-date fair value of the awards assuming 100% achievement of the applicable performance conditions totaled $500,000 in 2020 and 2019 respectively.

Kimble the grant-date fair value of the awards assuming 100% achievement of the applicable performance conditions totaled $500,000 in 2021 and 2020.

The awards to Mr.

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Berman for 2021 and 2020, respectively, $14,400 and $8,400 for Mr.

McGrath for 2020, 2019 and 2018, respectively, $7,000 and $1,500 for Mr.

Kimble for 2020 and 2019, respectively, $11,000 and $9,000 for Mr.

Novak for 2019 and 2018, respectively, and $14,500 for Mr.

Bennett for 2018.

The amounts include matching contributions made by us to the Named Executive Officer’s 401(k) defined contribution plan in the amount of nil, $14,000 and $13,750, respectively, for 2020, 2019 and 2018, for Mr.

The amounts include matching contributions made by us to the Named Executive Officer’s 401(k) defined contribution plan in the amount of nil, $9,344 and $13,750, respectively, for 2020, 2019 and 2018, for Mr.

McGrath, and includes $2,745, $14,015 and $7,985 related to a life insurance policy for Mr.

McGrath for 2021 and 2020, respectively, and $12,000 and $7,000 for Mr.

Kimble for 2021 and 2020, respectively.

The amounts include matching contributions made by us to the Named Executive Officer’s 401(k) defined contribution plan in the amount of $14,500 and nil, respectively, for 2021 and 2020, for Mr.

The amounts include matching contributions made by us to the Named Executive Officer’s 401(k) defined contribution plan in the amount of $14,500, for 2021, for Mr.

The amounts include $25,265 and $2,745 related to a life insurance policy for Mr.

Berman in 2021 and 2020, respectively.

See “Employee Pension Plan.”

Bennett’s employment terminated in March 2018.

Compensation in 2019 consists of severance pay of $126,250.

Compensation in 2018 consists of $105,208 of salary, vacation and personal day payout of $71,863 and severance pay of $505,000.

Novak's employment terminated in December 2019.

Compensation in 2019 consists of $472,628 of salary, vacation and personal day payout of $41,933.

Kimble commenced employment on November 20, 2019.

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The potential payments listed below assume that there is no earned but unpaid base salary at December 31, 2021.

Restricted Stock (1)

Annual Cash Incentive

Restricted Stock Units (1)

Annual Cash Incentive Award (2)

(1) The product of (x) $10.16 (the closing sale price of the common stock on December 31, 2021) multiplied by (y) the number of unvested restricted shares outstanding.

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Berman is terminated without “Cause” or quits for “Good Reason,” then he has the right to receive a payment equal to 2.99 times his then current base amount as defined in section 280(G) of the Code (which was $3,383,365 in 2021) and continued health care coverage.

Restricted Stock (1)

Annual Cash Incentive

Restricted Stock Units (1)

Annual Cash Incentive Award (2)

(1) The product of (x) $10.16 (the closing sale price of the common stock on December 31, 2021) multiplied by (y) the number of unvested restricted shares outstanding.

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Restricted Stock Units (1)

Annual Cash Incentive

Annual Cash Incentive Award (2)

(1) The product of (x) $10.16 (the closing sale price of the common stock on December 31, 2021) multiplied by (y) the number of unvested restricted shares outstanding.

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As changes in securities laws require greater involvement by, and places additional burdens on, a company’s Directors, it becomes even more necessary to locate and retain highly qualified Directors.

As such, after consulting with Lipis Consulting Inc., the Compensation Committee developed and the Board approved a structure for the compensation package of our non- employee Directors so that the total compensation package of our non-employee Directors would be at approximately the median total compensation package for non-employee Directors in our peer group.

In December 2009, our Board of Directors, after consulting with our prior consultant, changed the compensation package for non-employee Directors as of January 1, 2010 by (i) increasing the annual cash stipend to $75,000, (ii) eliminating meeting fees for attendance at both Board and committee meetings, (iii) increasing the annual fees paid to committee chairs and the members of the audit committee, (iv) decreasing by $25,000 the value of the annual grant of restricted shares of our common stock to $100,000 and (v) imposing minimum shareholding requirements.

Specifically, the chair of the Audit Committee receives an annual fee of $30,000, each member of the Audit Committee receives a $15,000 annual fee (including the chair), the chair of the Compensation Committee and the Nominating and Governance Committee each receives an annual fee of $15,000, and each member of such committees (including the chair) receives an annual fee of $10,000.

Newly-elected non-employee Directors will receive a portion of the foregoing annual consideration, prorated according to the portion of the year in which they serve in such capacity.

Following the Recapitalization, our Board of Directors changed the compensation payable to non-employee Directors to provide that (i) each director receives an annual cash fee of $100,000 paid quarterly, (ii) each member of a Committee receives an annual cash fee of $5,000, (iii) the chair of the Audit Committee receives an additional cash fee of $15,000 and (iv) the chair of the other Committees receives an additional $10,000.

In August 2019, following the Recapitalization, our Board of Directors changed the compensation payable to non-employee Directors to provide that (i) each director receives an annual cash fee of $100,000 paid quarterly, (ii) each member of a Committee receives an annual cash fee of $5,000, (iii) the chair of the Audit Committee receives an additional cash fee of $15,000 and (iv) the chair of the other Committees receives an additional $10,000.

Winkler, pursuant to the internal rules of his employer, does not receive any fees as a director.

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To illustrate:

if an average Director wishes to sell shares in 2021, he will have to hold shares with a market value of at least $215,844 prior to and following any sale of shares calculated as of the date of the sale, such $215,844 minimum calculated by taking the average cash stipend of $107,922 paid during the prior two years multiplied by two.

The following table sets forth the compensation we paid to our non-employee Directors for our fiscal year ended December 31, 2020:

if an average Director wishes to sell shares in 2022, he/she will have to hold shares with a market value of at least $184,167 prior to and following any sale of shares calculated as of the date of the sale, such $184,167 minimum calculated by taking the average cash stipend of $92,083 paid during the prior two years multiplied by two.

The following table sets forth the compensation earned by our non-employee Directors for our fiscal year ended December 31, 2021:

Director Compensation

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Andrew Axelrod

Carole Levine

Joshua Cascade

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We entered into a new employment agreement with Mr.

Novak on April 1, 2018 when he became our Chief Financial Officer.

We entered into a new employment agreement with Mr.

Kimble on November 20, 2019 when he became our Chief Financial Officer.

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All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Employment Agreement, as amended by such amendment.

Effective April 1, 2018, we entered into an employment agreement with Brent T.

Novak which provides that Mr.

Novak will be our Executive Vice President and Chief Financial Officer at an annual salary of $505,000.

Novak will also receive annual grants of $750,000 of restricted stock units (“RSUs”).

The number of shares in each annual grant of RSUs will be determined by the closing price of our common stock on the last trading day prior to the day of each annual grant.

Forty percent (40%), or $300,000 of each annual grant of RSUs, will be subject to three year “cliff vesting” (i.e., vesting is based upon performance at the close of the three year performance period), with vesting of each annual grant of RSUs determined by the following performance measures:

(i) Total shareholder return as compared to the Russell 2000 Index (weighted 50%);

(ii) Net revenue growth as compared to the Company’s peer group (weighted 25%), and (iii) EBITDA growth as compared to the Company’s peer group (weighted 25%).

The remaining sixty percent (60%), or $450,000 of each annual grant of RSUs, will vest in three equal annual installments commencing on the first anniversary of the date of grant and on the second and third anniversaries thereafter.

The employment agreement also contains provisions relating to benefits, change of control, and an annual performance-based bonus award equal to up to 125% of base salary for the 2018-2020 fiscal years.

The annual performance bonus shall be determined by the same performance criteria as established by the Compensation Committee of the Board for the applicable fiscal year for the Company’s Chairman/CEO and its Chief Operating Officer each year pursuant to their respective employment agreements, and shall be payable in cash and Restricted Stock Units in the same proportions and calculated in the same manner as provided for the Company’s Chief Operating Officer under such officer’s employment agreement, or if no such employment agreement is in effect, then as provided for in the employment agreement with the Company’s Chairman/CEO, except that the portion payable in Restricted Stock would be payable to Mr.

Novak in RSUs.

On October 17, 2019, we further amended Mr.

Novak’s Amended Employment Agreement to provide for, among other things, the following:

(i) payment of a special additional bonus pursuant to Section 2(d) of his Amended Employment Agreement;

(ii) if a Sale Transaction is consummated, that will constitute Good Reason for Mr.

(iii) if an agreement for a Sale Transaction is entered into and publicly announced but is not closed by January 31, 2020, that will constitute Good Reason for Mr.

and (iv) upon a termination of Mr.

Novak’s employment that is not described in Sections 4 or 5 of the Amended Employment Agreement, he will be entitled to receive twelve (12) months of health care coverage paid by the Company.

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in Mr.

Novak’s Amended Employment Agreement, as amended by Amendment Number Two.

On November 7, 2019, Brent T.

Novak notified us of his decision to resign from his position as the Company’s Executive Vice President and Chief Financial Officer, effective December 6, 2019.

On June 18, 2021, the Company amended the employment agreement between the Company and Mr.

John (a/k/a Jack) McGrath, our Chief Operating Officer, and entered into Amendment No.

McGrath’s Employment Agreement, dated March 4, 2010 which was effective January 1, 2010 (the “McGrath Employment Agreement”).

The terms of Mr.

McGrath’s Employment Agreement have been amended as follows:

(i) to extend the Term of the McGrath Employment Agreement for an additional two years through December 31, 2023;

(ii) to set the Base Salary, effective January 1, 2022, at the rate of $520,000 per annum;

(iii) addition of a performance bonus opportunity for fiscal years 2022 and 2023 in a range between twenty-five percent (25%) and one hundred twenty five percent (125%) of Base Salary, based upon the level of EBITDA achieved by the Company for the fiscal year, as determined by the Compensation Committee, which shall be payable in cash and is subject to additional terms and conditions as set forth therein;

and (iv) addition of a provision for the issuance on the first business day of each of calendar years 2022 and 2023 of that number of Restricted Stock Units that are equal to the lesser of (A) an amount in value (determined as provided below) equal to Mr.

McGrath’s Base Salary then in effect or (B) 1.05% of common shares outstanding of the Company, which shall vest in two equal installments on each anniversary of grant;

provided, that no such award shall be made (and no cash substitute shall be provided) to the extent shares are not available for grant under the Company’s 2002 Stock Award and Incentive Plan (as in effect on the date hereof and as subsequently may be amended, from time to time, or any successor plan, the “Plan”) as of such date;

and provided, further, that the Company shall not be obligated to amend the Plan and/or seek shareholder approval of any amendment to increase the amount of available shares under the Plan.

The number of Shares in each annual grant of Restricted Stock Units will be determined by the closing price of a share of the Company's common stock on December 31, 2021 with respect to the 2022 award, and December 31, 2022 with respect to the 2023 award.

Effective November 20, 2019, we entered into a letter agreement with John L.

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All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Kimble Employment Agreement, as amended by the first amendment.

On September 27, 2021, the Company amended the employment agreements between the Company and each of Mr.

Berman, our Chief Executive Officer, Mr.

John (a/k/a Jack) McGrath, our Chief Operating Officer, and Mr.

John Kimble, our Chief Financial Officer.

The purpose of the amendments was to change the issuance, past and future, of all restricted stock awards to restricted stock units.

The foregoing is only a summary of the material terms of our employment agreements with the Named Executive Officers.

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We eliminated the match on March 31, 2019.

Company matching contributions, which vested immediately, totaled nil, $1.1 million, and $2.4 million for the year ended December 31, 2020, 2019 and 2018, respectively.

Company matching contributions, which vested immediately, totaled $1.9 million, nil, and $1.1 million for the year ended December 31, 2021, 2020 and 2019, respectively.

The Company resumed the match on contributions effective January 1, 2021.

Compensation Committee Interlocks and Insider Participation

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Beneficial Owner (1)(2)

Oasis Management Company Ltd.

Hong Kong Meisheng Cultural Company Limited

Benefit Street Partners, L.L.C.

Hong Kong Meisheng Cultural Company Limited

Alexander Shoghi

Zhao Xiaoqiang

Andrew Axelrod

Matthew Winkler

Lori MacPherson

Joshua Cascade

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Except as otherwise indicated, exercises sole voting power and sole investment power with respect to such shares.

All share amounts have been adjusted to reflect the 1-10 reverse split effective July 9, 2020.

Based upon 9,569,903 shares outstanding on March 10, 2022.

Does not include, unless noted otherwise, any shares of common stock issuable upon the conversion of any outstanding convertible senior notes or Restricted Stock Units (“RSUs”).

All share amounts reflect the 1-for-10 Reverse Stock Split, effective July 9, 2020.

The address of Oasis Management Company Ltd.

is c/o Oasis Management (Hong Kong) LLC, 21/F Man Yee Building, 68 Des Voeux Road, Central, Hong Kong.

Possesses shared voting and dispositive power of such shares.

Does not include 2,101,423 shares of common stock underlying convertible senior notes.

If all such notes were currently converted this beneficial owner would own 28.5% of the outstanding stock.

Information presented in this Item with respect to this beneficial owner was extracted from the Schedule 13D/A filed on May 16, 2019.

Does not include, unless noted otherwise, any shares of common stock issuable upon the conversion of any Restricted Stock Units (“RSUs”).

The address of Benefit Street Partners, L.L.C.

is c/o Benefit Street Partners L.L.C., 9 West 57th Street, Suite 4920, New York, NY 10019.

Possesses shared voting and dispositive power with respect to all of such shares.

Information presented in this Item with respect to this beneficial owner was extracted solely from the Schedule 13D/A filed on August 2, 2021.

Matthew Winkler is a managing director of this entity.

The address of Hong Kong Meisheng Culture Company Ltd is Room 1901, 19/F, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong.

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All the information presented in this Item with respect to this beneficial owner was extracted solely from the Schedule 13D/A filed on January 26, 2018.

The address of Benefit Street Partners, L.L.C.

is c/o Benefit Street Partners L.L.C., 9 West 57th Street, Suite 4920, New York, NY 10019.

Possesses shared voting and dispositive power with respect to all of such shares.

Does not include 1,952,072 shares of common stock underlying convertible senior notes.

If all such notes were currently converted this beneficial owner would own 27.9% of the outstanding stock.

Information presented in this Item with respect to this beneficial owner was extracted solely from the Schedule 13D filed on March 3, 2021.

The address of Mr.

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Possesses shared voting and dispositive power with respect to all of such shares.

All the information presented in this Item with respect to this beneficial owner was extracted solely from the Schedule 13G/A filed on March 3, 2021.

All of such shares were issued pursuant to the terms of Mr.

Berman’s January 1, 2003 Employment Agreement (as amended to date) and all of such shares are subject to the terms of Restricted Stock Award Agreements with Mr.

Berman (the “Berman Agreements”).

The Berman Agreements provide that Mr.

Berman will forfeit his rights to up to 232,222 shares unless certain performance conditions are met, as described in the Berman Agreements, whereupon the forfeited shares will become authorized but unissued shares of our common stock and 160,828 shares are subject to vesting over time.

Unvested shares have no voting rights and may not be sold, mortgaged, pledged, transferred or otherwise encumbered prior to vesting.

All the information presented in this Item with respect to this beneficial owner was extracted solely from a Form 4 filed on March 10, 2022.

Does not include an aggregate of 471,362 shares of common stock underlying unvested RSUs issued pursuant to the terms of Mr.

Berman’s January 1, 2003 Employment Agreement (as amended to date) which RSUs are further subject to the terms of Restricted Stock Unit Award Agreements with Mr.

Berman (the “Berman Agreement”).

The Berman Agreement provides that Mr.

Berman will forfeit his rights to some or all of such 471,362 RSUs unless certain conditions precedent are met, as described in the Berman Agreement.

Certain of these shares may be restricted from transfer pursuant to the minimum stock ownership provisions adopted by the Company's Board of Directors.

Does not include 125,691 shares underlying currently unvested restricted stock units (“RSUs”) which will vest pursuant to the terms of Mr.

Kimble’s November 18, 2019 Employment Agreement, which RSUs are further subject to the terms of our Restricted Stock Unit Award Agreements with Mr.

Does not include 178,919 shares underlying currently unvested RSUs which will vest pursuant to the terms of Mr.

Kimble’s November 18, 2019 Employment Agreement (as amended to date), which RSUs are further subject to the terms of our Restricted Stock Unit Award Agreements with Mr.

Certain of these shares may be restricted from transfer pursuant to the minimum stock ownership provisions adopted by the Company's Board of Directors.

All of such shares were issued pursuant to the terms of Mr.

McGrath’s March 4, 2010 Employment Agreement (as amended to date) and all of such shares are subject to the terms of Restricted Stock Award Agreements with Mr.

McGrath (the “McGrath Agreements”).

The McGrath Agreements provide that Mr.

McGrath will forfeit his rights to up to 66,351shares unless certain performance conditions are met, as described in the McGrath Agreements, whereupon the forfeited shares will become authorized but unissued shares of our common stock and 48,466 shares are subject to vesting over time.

Unvested shares have no voting rights and may not be sold, mortgaged, pledged, transferred or otherwise encumbered prior to vesting.

Does not include an aggregate of 128,962 shares of common stock underlying RSUs issued pursuant to the terms of Mr.

McGrath’s March 4, 2010 Employment Agreement (as amended to date) which RSUs are further subject to the terms of a Restricted Stock Unit Award Agreement with Mr.

McGrath (the “McGrath Agreement”).

The McGrath Agreement provides that Mr.

McGrath will forfeit his rights to some or all of such 128,962 shares unless certain conditions precedent are met, as described in the McGrath Agreement.

Certain of these shares may be restricted from transfer pursuant to the minimum stock ownership provisions adopted by the Company's Board of Directors.

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Certain of these shares may be restricted from transfer pursuant to the minimum stock ownership provisions adopted by the Company's Board of Directors.

Does not include the 2,325,227 shares (including shares underlying convertible senior notes) owned by Oasis Management Company Ltd.

reported above, of which entity Alex Shoghi is a portfolio manager.

Consists of 9,629 shares of common stock issued pursuant to our 2002 Plan.

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Does not include the 523,954 shares owned by Hong Kong Meisheng Cultural Company Limited reported above, of which entity Zhao Xiaoqiang is executive director.

Does not include 1,476,523 shares of common stock and 145,788 shares of preferred stock owned by entities controlled, directly or indirectly, by Mr.

Does not Include any shares underlying RSUs.

Does not include the 523,954 shares owned by Hong Kong Meisheng Cultural Company Limited reported above, of which entity Zhao Xiaoqiang is executive director, or the 2,278,508 shares reported above as owned by Oasis Management Company Ltd, of which entity Alex Shoghi is a portfolio manager, or the 2,188,364 shares reported above as owned by Benefit Street Partners, L.L.C., of which entity Matthew Winkler is a managing director.

Does not include the 523,954 shares owned by Hong Kong Meisheng Cultural Company Limited reported above, of which entity Zhao Xiaoqiang is executive director, or the 1,476,523 shares reported above as owned by Benefit Street Partners, L.L.C., of which entity Matthew Winkler is a managing director.

Certain Relationships and Related Transactions, and Director Independence

(a) Transactions with Related Persons

A former director of the Company, who resigned on August 9, 2019 is a partner in a law firm that acts as counsel to the Company.

The Company incurred legal fees and expenses to the law firm in the amount of approximately $1.5 million in 2019 and $1.3 million in 2018.

As of December 31, 2019, legal fees and reimbursable expenses of $0.1 million was payable to this law firm.

The owner of NantWorks, the Company’s DreamPlay Toys joint venture partner, beneficially owned more than 5.0% of the Company’s outstanding common stock.

Pursuant to the joint venture agreements, the Company is obligated to pay NantWorks a preferred return on joint venture sales.

This agreement expired on September 30, 2018.

The owner of NantWorks sold all of its holdings of the Company's shares on December 30, 2019.

In November 2014, the Company entered into a joint venture with Meisheng Cultural & Creative Corp., Ltd., for the purpose of providing certain JAKKS licensed and non-licensed toys and consumer products to agreed-upon territories of the People’s Republic of China.

In November 2014, the Company entered into a joint venture with Meisheng Cultural & Creative Corp., Ltd., (“MC&C”) for the purpose of providing certain JAKKS licensed and non-licensed toys and consumer products to agreed-upon territories of the People’s Republic of China.

The joint venture includes a subsidiary in the Shanghai Free Trade Zone that sells, distributes and markets these products, which include dolls, plush, role play products, action figures, costumes, seasonal items, technology and app-enhanced toys, based on top entertainment licenses and JAKKS’ own proprietary brands.

The Company owns fifty-one percent of the joint venture and consolidates the joint venture since control rests with the Company.

The non-controlling interest’s share of the income (loss) from the joint venture for the year ended December 31, 2020, 2019 and 2018 was $130,000, $169,000 and ($57,000), respectively.

The non-controlling interest’s share of the income from the joint venture for the year ended December 31, 2021, 2020 and 2019 was $120,000, $130,000 and $169,000, respectively.

In October 2016, the Company entered into a joint venture with Hong Kong Meisheng Cultural Company Limited (“Meisheng”), a Hong Kong-based subsidiary of Meisheng Culture & Creative Corp, for the purpose of creating and developing original, multiplatform content for children including new short-form series and original shows.

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The results of operations of the joint venture are consolidated with the Company’s results.

The non-controlling interest’s share of the loss from the joint venture for the years ended December 31, 2020, 2019, and 2018 was nil.

As of December 31, 2020, Meisheng beneficially owns 9.2% of the Company’s outstanding common stock.

In March 2017, the Company entered into an agreement to issue 366,089 shares of its common stock at an aggregate price of $19.3 million to a Hong Kong affiliate of its China joint venture partner.

The non-controlling interest’s share of the income (loss) from the joint venture for the years ended December 31, 2021, 2020 and 2019 was nil.

MC&C is an affiliate of Meisheng and Meisheng holds shares of the Company’s outstanding common stock.

In March 2017, the Company entered into an agreement with a Hong Kong affiliate of its China joint venture partner.

After their shareholder and China regulatory approval, the transaction closed on April 27, 2017.

Upon the closing, the Company added a representative of Meisheng Culture & Creative Corp as a non-employee director and issued 1,332 shares of restricted stock at a value of $0.1 million, which vested in January 2018.

In 2018, the Company issued 4,158 shares of restricted stock at a value of $0.1 million to the non-employee director, which vested in January 2019.

In 2019, the Company issued 5,471 shares of restricted stock at a value of $0.1 million to the non-employee director, which vested in January 2020.

In March 2017, the Company entered into an equity purchase agreement with Meisheng which provided, among other things, that as long as Meisheng and its affiliates hold 10% or more of the issued and outstanding shares of common stock of the Company, Meisheng shall have the right from time to time to designate a nominee (who currently is Mr.

Xiaoqiang Zhao) for election to the Company’s board of directors.

Meisheng also serves as a significant manufacturer of the Company.

In the first quarter of 2019, Meisheng acquired New Time Group, which was a third-party manufacturer of the Company.

For the year ended December 31, 2021, 2020 and 2019, the Company made inventory-related payments to Meisheng of approximately $77.7 million, $64.8 million and $94.3 million respectively.

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A director of the Company is a portfolio manager at Oasis Management.

In August 2017, the Company agreed with Oasis Management and Oasis Investments II Master Fund Ltd., the holder of approximately $21.6 million face amount of its 4.25% convertible senior notes due in 2018, to exchange and extend the maturity date of these notes to November 1, 2020.

The transaction closed on November 7, 2017.

In July 2018, the Company closed a transaction with Oasis Management and Oasis Investments II Master Fund Ltd., to exchange $8.0 million face amount of the 4.25% convertible senior notes due in August 2018 with convertible senior notes similar to those issued in November 2017.

In August 2019, the Company entered into the Recapitalization Transaction.

In connection with the Recapitalization Transaction, the Company issued (i) amended and restated notes with respect to the $21.6 million Oasis Note issued on November 7, 2017, and the $8.0 million Oasis Note issued on July 26, 2018, and (ii) a new $8.0 million convertible senior note having the same terms as such amended and restated notes.

Interest on the New Oasis Notes is payable on each May 1 and November 1 until maturity and accrues at an annual rate of (i) 3.25% if paid in cash or 5.00% if paid in stock plus (ii) 2.75% payable in kind.

The New Oasis Notes mature 91 days after the amounts outstanding under the New Term Loan are paid in full, and in no event later than July 3, 2023.

(see Item 8 “Consolidated Financial Statements and Supplementary Data Note 10 - Debt”)

A director of the Company is a director at Benefit Street Partners.

As of December 31, 2020, Benefit Street Partners held $61.1 million in principal amount (including $2.3 million in payment-in-kind interest) of the New Term Loan.

On February 5, 2021, Benefit Street Partners and Oasis Investment II Master Funds Ltd, both related parties, entered into a purchase and sale agreement wherein Benefit Street Partners purchased $11.0 million of principal amount, plus all accrued and unpaid interest thereon, of the New Oasis Notes from Oasis Investment II Master Funds Ltd.

The transaction closed on February 8, 2021 (see Item 8 "Consolidated Financial Statements and Supplementary Data Note 10 - Debt”).

A director of the Company is the managing Partner and portfolio manager at Axar Capital Management.

As of December 31, 2020, Axar Capital Management held $24.3 million in principal amount (including $0.9 million in payment-in-kind interest) of the New Term Loan.

(see see Item 8 “Consolidated Financial Statements and Supplementary Data Note 10 - Debt”)

Amounts outstanding under the 2021 BSP Term Loan will bear interest at either (i) LIBOR plus 6.50% - 7.00% (determined by reference to a net leverage pricing grid), subject to a 1.00% LIBOR floor, or (ii) base rate plus 5.50% - 6.00% (determined by reference to a net leverage pricing grid), subject to a 2.00% base rate floor.

The 2021 BSP Term Loan matures in June 2027.

The 2021 BSP Term Loan Agreement contains negative covenants, events of default, and the obligations under the 2021 BSP Term Loan Agreement are guaranteed by the Company.

The terms, covenants, events of default, and Company obligations are described in more detail in Note 10 – Debt, as well as in the 2021 BSP Term Loan Agreement.

As of December 31, 2021, Benefit Street Partners held $98.5 million in principal amount of the 2021 BSP Term Loan.

Beginning August 9, 2019 and continuing until September 27, 2021, the managing partner and portfolio manager at Axar Capital Management was a director at the Company.

As of December 31, 2020, Axar Capital Management held $24.3 million in principal amount (including $0.9 million in payment-in-kind interest) of the 2019 Recap Term Loan.

(b) Review, Approval or Ratification of Transactions with Related Persons

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Before our principal accountant is engaged by us to render audit or non-audit services, as required by the rules and regulations promulgated by the Securities and Exchange Commission and/or Nasdaq, such engagement is approved by the Audit Committee.

The following are the fees of BDO USA, LLP, our principal accountant, for the two years ended December 31, 2020, for services rendered in connection with the audit for those respective years (all of which have been pre-approved by the Audit Committee):

The following are the fees of BDO USA, LLP, our principal accountant (PCAOB ID:

243 ), for the two years ended December 31, 2021, for services rendered in connection with the audit for those respective years (all of which have been pre-approved by the Audit Committee):

Audit Related Fees

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Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019

Consolidated Statements of Other Comprehensive Income (Loss) for the years ended December 31, 2020, 2019 and 2018

Consolidated Statements of Other Comprehensive Loss for the years ended December 31, 2021, 2020 and 2019

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021, 2020 and 2019

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Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (34)

Amended and Restated By-Laws of the Company (2)

Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (37)

Second Amended and Restated By-Laws of the Company (28)

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2008 Amendment to 2002 Stock Award and Incentive Plan (9)

2021 Amendment to 2002 Stock Award and Incentive Plan (38 )

Second Amended and Restated Employment Agreement between the Company and Stephen G.

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Berman’s Second Amended and Restated Employment Agreement (36)

Amendment Number Six dated September 27, 2021 to Mr.

Berman’s Second Amended and Restated Employment Agreement (39)

Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (14)

Form of Restricted Stock Agreement (10)

Form of Restricted Stock Unit Agreement (39)

Employment Agreement between the Company and Joel M.

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Sixth Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated December 31, 2019 (29)

Seventh Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated June 18, 2021 (41)

Eighth Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated September 27, 2021 (39)

Exchange Agreement dated November 7, 2017 between the Company and Oasis Investments II Master Fund Ltd.

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Kimble dated February 18, 2021 (36)

Second Amendment to Employment Agreement between the Company and John L.

Kimble dated September 27, 2021 (39)

Transaction Agreement, dated as of August 7, 2019, by and among the Company, certain of the Company’s affiliates and subsidiaries, certain holders of the Company’s 4.875% Convertible Senior Notes due 2020 and Oasis Investments II Master Fund Ltd.

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and Oasis Investments II Master Fund Ltd.

Credit Agreement, dated as of June 2, 2021, by and among JAKKS Pacific, Inc., Disguise, Inc., JAKKS Sales LLC, and Moose Mountain Marketing, Inc., as borrowers, other Loan Parties hereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (40)

First Lien Term Loan Facility Credit Agreement, dated as of June 2, 2021, by and among JAKKS Pacific, Inc.

and its subsidiaries parties thereto as borrowers, the lenders party thereto, as lenders, and BSP Agency, LLC, as agent (40)

Code of Ethics (18)

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Filed previously as an exhibit to the Company’s Schedule 14A Proxy Statement, filed August 20, 2008, and incorporated herein by reference.

Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed April 2, 2014 and incorporated herein by reference.

Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2002, filed March 31, 2003, and incorporated herein by reference.

Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed November 17, 2010, and incorporated herein by reference.

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Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed February 19, 2021 and incorporated herein by reference.

Filed previously as an annex to the Company’s Schedule 14A filed March 16, 2021 and incorporated herein by reference.

Filed previously as an annex to the Company’s Schedule 14A filed October 8, 2021 and incorporated herein by reference.

Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed October 1, 2021 and incorporated herein by reference.

Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed June 3, 2021 and incorporated herein by reference.

Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed June 24, 2021 and incorporated herein by reference.

Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K under the Securities Act.

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Alexander Shoghi

/s/ ANDREW AXELROD

/s/ LORI MACPHERSON

March 16, 2022

Andrew Axelrod

Lori MacPherson

/s/ ZHAO XIAOQIANG

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures