JAKKS PACIFIC, INC. (NASDAQ:JAKK) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02.

Explanatory Note: This Amendment is being filed solely to correct the tables and corresponding narrative and examples in the original filing on April 4, 2019.

Employment agreements for Stephen Berman, our President and Chief Executive Officer, for John (Jack) McGrath, our Chief Operating Officer, and for Brent Novak, our Chief Financial Officer, provide, inter alia, that for fiscal year 2019, their respective Annual Performance Bonuses will depend on our achieving certain performance criteria. The performance measures are based upon net revenues and EBITDA (earnings before interest, taxes, depreciation and amortization) with each performance measure weighted 50%. The specific performance criteria is to be determined by the Compensation Committee of our Board of Directors (the “Board”) before the end of the Company’s first fiscal quarter. The performance criteria for Messrs. Berman and McGrath’s respective 2019 Annual Performance Bonuses have been established by the Compensation Committee, and are set forth below: (i) if the minimum EBITDA threshold of $22.3 million is not met no Annual Performance Bonus will be earned regardless of the amount of net revenue, subject to the discretion of the Committee described below, and (ii) the net revenue criteria used to calculate the Annual Performance Bonus cannot be higher than two tiers above the EBITDA tier actually achieved, subject to the Committee’s exercise of its discretion to make adjustments to such conditions as described below. The following examples are provided as an illustration of the foregoing conditions: (1) if the Company achieves net revenue of $700 million and EBITDA of $22 million, the Annual Performance Bonus would be zero because the threshold EBITDA target was not achieved; and, as another example, (2) if the Company achieves net revenue of $700 million and EBITDA of $28 million, the portion of the Annual Performance Bonus calculated according to the net revenue criteria would be limited to 140% (i.e. two higher than the EBITDA level achieved) and the pay-out for the portion calculated according to the EBITDA criteria would be 50%; subject to the Committee’s exercise of its discretion to make adjustments to such conditions as provided below. The employment agreement for our Chief Financial Officer, Brent Novak, provides that the performance criteria for determination of his Annual Performance Bonus will be the same as for Mr. McGrath, and the maximum bonus for Mr. Novak will be $631,250.00, which is 125% of his base salary of $505,000.00. EBITDA is calculated after including Bonuses as an expense. The above notwithstanding, no Annual Performance Bonus will be paid if such payment will cause EBITDA to be less than $25.75 million, and in such event, the reduction in the Bonus payable will be allocated pro rata among the three named executives.

The performance criteria, bonus targets and bonus percentages may be adjusted in the sole discretion of the Compensation Committee to take account of extraordinary or special items, or as otherwise may be permitted by the Plan, and the Compensation Committee also specifically reserved the right to modify the performance criteria, bonus targets and bonus percentages in the exercise of its negative discretion to take account of investment banking, accounting and legal fees incurred in connection with transactions regarding the expression of interest received from Hong Kong Meisheng Cultural Company Limited, including related transactions with convertible debt holders and other similar recapitalization and strategic transactions and unforeseen market and general economic conditions.

The criteria for the 2019 bonuses have been established by the Compensation Committee, after discussion with its consultant, Willis Towers Watson, as follows, subject to the conditions described in the preceding paragraphs:

About JAKKS PACIFIC, INC. (NASDAQ:JAKK)

JAKKS Pacific, Inc. is a multi-line, multi-brand toy company. The Company designs, produces, markets and distributes toys and related products, pet toys, consumables and related products, electronics and related products, kids indoor and outdoor furniture, and other consumer products. The Company operates through two business segments: traditional toys and electronics, and role play, novelty and seasonal toys. The traditional toys and electronics segment includes action figures, vehicles, playsets, plush products, dolls, accessories, electronic products, construction toys, infant and pre-school toys, foot to floor ride-on vehicles, wagons and pet products and related products. The role play, novelty and seasonal segment includes role play and dress-up products, novelty toys, seasonal and outdoor products, indoor and outdoor kids’ furniture and Halloween and everyday costume play.