What changed in this filing

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Item 9A. Controls and Procedures

2023-04-14 compared with 2022-03-16 · 115 added, 86 removed, 826 unchanged (20% of the section changed)

12 unchanged sentences

We believe that, as of December 31, 2022, our internal control over financial reporting was effective based upon those criteria.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance

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At our 2020 Annual Meeting we elected directors pursuant to a class system, directors in Class I were elected to a one-year term and directors in Class II were elected to a two-year term.

The directors in Class III were designated and identified in the Certificate of Designations with their initial terms expiring at the annual meeting of our stockholders to be held in 2023, and thereafter the directors in Class III will be elected to a three-year term solely by the holders of our Series A Senior Preferred Stock and the common stockholders have no right to vote with respect to the election of such Class III directors.

The directors in Class III were initially designated and identified in the Certificate of Designations with their initial terms expiring at the annual meeting of our stockholders to be held in 2023, and thereafter the directors in Class III were to be elected to a three-year term solely by the holders of our Series A Senior Preferred Stock and the common stockholders had no right to vote with respect to the election of such Class III directors.

However, pursuant to the terms of an agreement entered into as of August 3, 2022 between us and the holders of our Series A Preferred Stock, special rights granted to the preferred holders with respect to the election and/or nomination of certain directors have been terminated and the election of all of our directors are now voted on solely by our common stockholders.

At each Annual Meeting of Stockholders following the 2020 Annual Meeting the successors of the class of directors whose term expires shall be elected to hold office for a term expiring at the Annual Meeting of Stockholders to be held in the third year following the year of their election, with each director in each such class to hold office until his or her successor is duly elected and qualified.

Pursuant to our Second Amended and Restated By-laws, vacancies on our Board of Directors may only be filled as follows:

(i) any vacancy in our Board of Directors relating to a Common Director (Messrs.

Berman, Zhao and Shoghi) 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;

(ii) any vacancy in our Board of Directors relating to a New Independent Common Director (Ms.

Levine and Mr.

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 (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;

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Qualifications for All Directors

In considering potential candidates for election to the Board, and subject to the exclusive right of holders of Series A Senior Preferred Stock to elect the Class III Directors and the terms of our Second Amended and Restated By-Laws and the Nominating Committee Charter, the Nominating Committee observes the following guidelines, among other considerations:

In considering potential candidates for election to the Board, the Nominating Committee observes the following guidelines, among other considerations:

(i) the Board must include a majority of independent directors;

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With respect to nominating existing directors, the Nominating Committee reviews relevant information available to it, including the most recent individual director evaluations for such candidates, the number of meetings attended, his or her level of participation, biographical information, professional qualifications and overall contributions to the Company.

In addition, effective as of August 9, 2019, the Nominating Committee Charter provides, among other things, that (i) the Nominating Committee has exclusive authority, on the terms set forth therein, to select nominees to stand for election as the New Independent Common Directors and persons to fill vacancies in the New Independent Common Directors;

(ii) that the Nominating Committee will continue to nominate Mr.

Cascade and Ms.

Levine until no shares of Series A Senior Preferred Stock are outstanding or their earlier death, disability, retirement, resignation or removal;

and (iii) that any future replacements for the New Independent Common Directors (or their successors) will be selected by the Nominating Committee from a list of preapproved persons as further described in such Charter.

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.

Nasdaq has also adopted board diversity requirements, but the Company believes that by complying with the California diversity requirements it will be in compliance with the Nasdaq requirements.

The California diversity requirements have been found unconstitutional and are not currently applicable.

The Company’s board is currently in compliance with all applicable diversity requirements.

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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We have an Audit Committee, a Compensation Committee and a Nominating Committee.

In connection with the Recapitalization, the Capital Allocation Committee, which was established as a standing committee in February 2016, has been dissolved.

In August 2019 the Capital Allocation Committee, which was established as a standing committee in February 2016, was dissolved.

Audit Committee.

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The Company provides the appropriate funding to such persons as determined by the Compensation Committee, which also conducts an independence assessment of its outside advisors using the six factors contained in Exchange Act Rule 10C-1.

The Compensation Committee receives legal advice from our outside general counsel and has retained Willis Towers Watson (“WTW”), a compensation consulting firm, to directly advise the Compensation Committee from time to time.

The Compensation Committee historically receives legal advice from our outside general counsel and has retained Willis Towers Watson (“WTW”), a compensation consulting firm, to directly advise the Compensation Committee from time to time.

The Compensation Committee also annually reviews the overall compensation of our executive officers to determine whether discretionary bonuses should be granted.

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The Nominating Committee established the position of Chairman of the Board in 2015.

In the ordinary course, absent special circumstances or a change in the criteria for Board membership, and subject to the exclusive right of holders of Series A Senior Preferred Stock to elect the Series A Preferred Directors, the Nominating Committee will re-nominate incumbent directors who continue to be qualified for Board service and are willing to continue as directors.

If the Nominating Committee thinks it is in the Company’s best interests to nominate a new individual for director in connection with an annual meeting of stockholders, or if a vacancy on the Board occurs between annual stockholder meetings or an incumbent director chooses not to run, and subject to the exclusive right of holders of Series A Senior Preferred Stock to elect the Series A Preferred Directors, and the terms of the Second Amended and Restated By-Laws and Nominating Committee Charter, the Nominating Committee will seek out potential candidates for Board appointment who meet the criteria for selection as a nominee and have the specific qualities or skills being sought.

Except as described below with respect to the New Independent Common Directors, and subject to the exclusive right of holders of Series A Senior Preferred Stock to elect the Series A Preferred Directors, and the terms of the Second Amended and Restated By-Laws and Nominating Committee Charter, director candidates will be selected based on input from members of the Board, our senior management and, if the Nominating Committee deems appropriate, a third-party search firm.

In the ordinary course, absent special circumstances or a change in the criteria for Board membership, the Nominating Committee will re-nominate incumbent directors who continue to be qualified for Board service and are willing to continue as directors.

Director candidates will be selected based on input from members of the Board, our senior management and, if the Nominating Committee deems appropriate, a third-party search firm.

The Nominating Committee will evaluate each candidate’s qualifications and check relevant references, and each candidate will be interviewed by at least one member of the Nominating Committee.

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Based on this input, the Nominating Committee will evaluate whether a prospective candidate is qualified to serve as a director and whether the Nominating Committee should recommend to the Board that this candidate be appointed to fill a current vacancy on the Board, or be presented for the approval of the stockholders, as appropriate.

In addition, effective as of the closing date of the Recapitalization, the Amended and Restated Nominating Committee Charter provides, among other things, that (i) the Nominating Committee has exclusive authority, on the terms set forth therein, to select nominees to stand for election as the New Independent Common Directors and persons to fill vacancies in the New Independent Common Directors;

(ii) that the Nominating Committee will continue to nominate Mr.

Cascade and Ms.

Levine until no shares of Series A Senior Preferred Stock are outstanding or their earlier death, disability, retirement, resignation or removal;

and (iii) that any future replacements for the New Independent Common Directors (or their successors) will be selected by the Nominating Committee from the Preapproved List (as defined in the Nominating Committee Charter).

Stockholder recommendations for director nominees are welcome and should be sent to our Chief Financial Officer, who will forward such recommendations to the Nominating Committee, and should include the following information:

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Kimble received his Bachelor’s Degree in Management Science, Concentration in Finance, Minor in Economics from the Sloan School, Massachusetts Institute of Technology (M.I.T.) and has a Master of Business Administration (MBA) from the Wharton School of the University of Pennsylvania.

Bennett was our Executive Vice President (from May 2000) and our Chief Financial Officer (from September 1995) until his departure in March 2018.

Novak was our Executive Vice President and Chief Financial Officer from April 1, 2018 until December 6, 2019.

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 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.

Based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to us during and for 2022, all Forms 3, 4 and 5 required to be filed during 2022 by our Directors and executive officers were timely filed, except for one Form 4 filed late by our CFO and two Forms 4 filed by our CEO.

Stockholder Communications

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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.

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.

Factors given considerable weight in establishing bonus performance criteria are Net Sales, Adjusted EPS, which is the net earnings 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.

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

Pursuant to the terms of their employment agreements as in effect on December 31, 2013, Messrs.

Berman and McGrath each receive a base salary which is increased automatically each year by at least $25,000 for Mr.

Berman and $15,000 for Mr.

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

Pursuant to the terms of Mr.

Berman’s employment agreement in effect as of January 1, 2023, Mr.

Berman receives a base salary which is increased automatically each year by at least $25,000.

The employment agreement for Mr.

Kimble provides for an automatic 4% annual increases in base salary.

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.

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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.

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.

The Committee has also determined that awards of restricted stock awards and units are anti-dilutive as compared to stock options inasmuch as it feels that less restricted awards have to be granted to match the compensation value of stock options.

We currently favor the issuance of restricted stock 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 units vary based upon the performance of our common stock, thereby aligning the interests of our executives with our shareholders.

The Committee has also determined that awards of restricted stock units are anti-dilutive as compared to stock options inasmuch as it feels that less restricted units have to be granted to match the compensation value of stock options.

Berman’s 2010 amended and restated employment provided for annual grants of $500,000 of restricted stock which vest in equal annual installments through January 1, 2017, which was one year following the life of the agreement, subject to meeting the 3% vesting condition, as defined in the agreement.

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and, along with Mr.

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

Kimble, earned 100% of the bonus based on Total Shareholders Return, EBITDA, and 50% of the bonus based on Net Revenue in 2022, and 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.

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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.

Kimble received a nil, $284,685 and $100,000 discretionary bonus for 2022, 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 2020 and 2021, the named executive officers were granted the following perquisites:

In 2020 to 2022, the named executive officers were granted the following perquisites:

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

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

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.

At our 2022 annual meeting, our shareholders approved our current executive compensation with over a majority 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.

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McGrath, the grant-date fair value of the awards assuming 100% achievement of the applicable performance conditions totaled the lesser of (a) $0.5 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) 1.05% of outstanding shares of Common Stock in 2022 and 2021, 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.

Kimble the grant-date fair value of the awards assuming 100% achievement of the applicable performance conditions totaled $540,800 and $520,000 in 2022 and 2021.

The awards to Mr.

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Represents automobile allowances paid in the amount of $22,528 and $22,643 for Mr.

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

Berman for 2022 and 2021, respectively, $14,400 for Mr.

McGrath for 2022 and 2021, respectively, and $13,000 and $12,000 for Mr.

Kimble for 2022 and 2021, 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 matching contributions made by us to the Named Executive Officer’s 401(k) defined contribution plan in the amount of $15,250 and $14,500, respectively, for 2022 and 2021, for Mr.

The amounts include $33,700 and $25,265 related to a life insurance policy for Mr.

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See “Employee Pension Plan.”

Kimble commenced employment on November 20, 2019.

The following table sets forth certain information regarding all equity-based compensation awards outstanding as of December 31, 2022 by the Named Officers:

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The potential payments listed below assume that there is no earned but unpaid base salary at December 31, 2022.

In Connection

“Good Reason”

of Control (7)

Restricted Stock Units (1)

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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 $4,488,710 in 2022) and continued health care coverage.

Termination For

In Connection

“Good Reason”

of Control (6)

Restricted Stock Units (1)

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McGrath is terminated without “Cause” or quits for “Good Reason”, then he has the right to receive a payment equal to the greater of two times his then current base salary or the payments due for the remainder of the term of his employment agreement.

Termination For

In Connection

“Good Reason”

of Control (5)

Restricted Stock Units (1)

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Zhao Xiaoqiang

Andrew Axelrod

Joshua Cascade

Carole Levine

Employment Agreements and Termination of Employment Arrangements

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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.

On October 25, 2022, the Company amended the employment agreement between the Company and Mr.

Berman, Chief Executive Officer and President, and entered into Amendment NO.

Berman’s Second Amended and Restated Employment Agreement, dated as of November 11, 2010 (the “Berman Agreement”).

The terms of Mr.

Berman’s Employment Agreement have been amended as follows:

(i) to extend the Terms of the Berman Employment Agreement for an additional two years through December 31, 2026;

(ii) addition of a performance bonus opportunity for 2025-2026 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 herein;

(iii) provision of an Annual Restricted Stock Unit Grant as provided for under section 3(b) of the Berman Employment Agreement, effective as of January 2025, if a number of shares of Restricted Stock Units granted pursuant to such Annual Restricted Stock Unit 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;

and (iv) in consideration of Mr.

Berman agreeing to extend the term of his employment agreement, a grant of 183,748 Restricted Stock Units, which shall vest in two equal installments of 91,874 Restricted Stock Units each on October 25, 2025 and October 25, 2026 (provided that Executive remains employed by the Company on such date(s), as applicable.) All capitalized terms used but not defined in the two previous sentences have the meanings ascribed thereto in the Berman Employment Agreement, as amended by the seventh amendment.

On October 25, 2022, the Company amended the employment letter agreement between the Company and Mr.

Kimble, Chief Financial Officer and Executive Vice President, and entered into Amendment No.

Kimble’s Letter Employment Agreement, dated as of November 18, 2019 (the “Kimble Employment Agreement”).

The terms of Mr.

Kimble’s Employment Agreement have been amended as follows:

(i) ) to extend the Term of the Kimble Employment Agreement for an additional two years through December 31, 2026;

(ii) modification of existing cash performance bonus opportunity for 2023 – 2026 in a range between twenty-five percent (25%) and two hundred percent (200%) 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 Kimble Employment Agreement captioned “Restricted Stock Awards”, effective as of January 2023, to provide for the annual grant of a number of shares of Restricted Stock Units equal to the lesser of (a) 150% of 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) 1.50% 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 (iv) in consideration of Mr.

Kimble agreeing to extend the term of his employment agreement, a grant of 41,988 Restricted Stock Units, which shall vest in two equal installments of 20,994 Restricted Stock Units each on October 25, 2025 and October 25, 2026 (provided that Executive remains employed by the Company on such date(s), as applicable.) 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 March 31, 2023, the Company amended the employment agreement between the Company and Mr.

Berman, Chief Executive Officer and President, and entered into Amendment No.

8 to the Berman Agreement.

The terms of Mr.

Berman’s Employment Agreement have been amended to increase Mr.

Berman’s Base Salary to an annual rate of $1,800,000, effective January 1, 2023, and for each subsequent calendar year during the Term at an annual rate to be determined by the Compensation Committee of the Company’s Board of Directors, but is at least $25,000 more than the annual rate in the immediately preceding year.

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 $1.9 million, nil, and $1.1 million for the year ended December 31, 2021, 2020 and 2019, respectively.

Company matching contributions, which vested immediately, totaled $2.1 million, $1.9 million, and nil for the year ended December 31, 2022, 2021 and 2020, respectively.

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

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information as of March 10, 2022 with respect to the beneficial ownership of our common stock by (1) each person known by us to own beneficially more than 5% of the outstanding shares of our common stock, (2) each of our directors, (3) each of our named executive officers, and (4) all our directors and executive officers as a group.

The following table sets forth certain information as of April 14, 2023 with respect to the beneficial ownership of our common stock by (1) each person known by us to own beneficially more than 5% of the outstanding shares of our common stock, (2) each of our directors, (3) each of our named executive officers, and (4) all our directors and executive officers as a group.

Name and Address of

Beneficial Owner (1)(2)

Benefit Street Partners, L.L.C.

Ownership (3)

Hong Kong Meisheng Cultural Company Limited

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Under such rules, beneficial ownership includes any shares as to which the person or entity has sole or shared voting power or investment power.

The percentage of our outstanding shares is calculated by including among the shares owned by such person any shares which such person or entity has the right to acquire within 60 days after March 10, 2022.

The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of such shares.

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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.

Based upon 9,870,927 shares outstanding on April 14, 2023.

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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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 a Form 4 filed on March 10, 2022.

All the information presented in this Item with respect to this beneficial owner was extracted solely from a Form 5 filed on January 26, 2023.

Does not include an aggregate of 512,250 shares of common stock underlying unvested RSUs issued pursuant to the terms of Mr.

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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.

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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.

Kimble (the “Kimble Agreement”).

The Kimble Agreement provides that Mr.

Kimble will forfeit his rights to some or all of such 168,699 RSUs unless certain conditions precedent are met, as described in the Kimble 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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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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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 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 1,476,523 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.

Certain Relationships and Related Transactions, and Director Independence

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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 from the joint venture for the year ended December 31, 2021, 2020 and 2019 was $120,000, $130,000 and $169,000, respectively.

The non-controlling interest’s share of the income (loss) from the joint venture for the year ended December 31, 2022, 2021 and 2020 was ($330,000), $120,000 and $130,000, 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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(see Item 8 “Consolidated Financial Statements and Supplementary Data Note 10 - Debt”)

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

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

A director of the Company is a director at Benefit Street Partners, who owns 145,788 shares of the Series A Preferred Stock (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.

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As of December 31, 2022, Benefit Street Partners held $68.9 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

26 unchanged sentences

Financial Statement Schedules (included in Item 8):

Schedule II — Valuation and Qualifying Accounts

Amended and Restated Certificate of Incorporation of the Company (1)

4 unchanged sentences

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

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (42)

Amended and Restated Certificate of Designations of Series A Senior Preferred Stock (42)

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

Third Amended and Restated By-Laws of the Company (42)

Indenture dated July 24, 2013 by and between the Registrant and Wells Fargo Bank, N.A (3)

37 unchanged sentences

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

Amendment Number Seven dated October 25, 2022 to Mr.

Berman’s Second Amended and Restated Employment Agreement (43)

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

28 unchanged sentences

Kimble dated September 27, 2021 (39)

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

Kimble dated October 25, 2022 (43)

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.

17 unchanged sentences

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

First Amendment to 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 (44)

Termination of Voting Agreement dated August 3, 2022 between the Company and its Preferred Stockholders (45)

At Market Issuance Sales Agreement between Registrant and B.

Riley Securities, Inc.

dated October 20, 2022 (46)

Code of Ethics (18)

56 unchanged sentences

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

Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed November 15, 2022 and incorporated herein by reference.

Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed October 28, 2022 and incorporated herein by reference.

Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed May 2, 2022 and incorporated herein by reference.

Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed August 4, 2022 and incorporated herein by reference.

Filed previously as an exhibit to the Company’s Registration Statement on Form S-3/A filed on October 27, 2022 and incorporated herein by reference.

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

3 unchanged sentences

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

March 16, 2022

April 14, 2023

JAKKS PACIFIC, INC.

3 unchanged sentences

/s/ STEPHEN G.

March 16, 2022

April 14, 2023

Chief Executive Officer

1 unchanged sentence

(Principal Financial Officer and

March 16, 2022

April 14, 2023

Principal Accounting Officer)

/s/ CAROLE LEVINE

March 16, 2022

April 14, 2023

Carole Levine

/s/ JOSHUA CASCADE

March 16, 2022

April 14, 2023

Joshua Cascade

/s/ MATTHEW WINKLER

March 16, 2022

April 14, 2023

Matthew Winkler

/s/ ALEXANDER SHOGHI

March 16, 2022

April 14, 2023

Alexander Shoghi

/s/ LORI MACPHERSON

March 16, 2022

April 14, 2023

Lori MacPherson

/s/ ZHAO XIAOQIANG

March 16, 2022

April 14, 2023

Zhao Xiaoqiang

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