JAKKS PACIFIC, INC. (NASDAQ:JAKK) Files An 8-K Entry into a Material Definitive Agreement

JAKKS PACIFIC, INC. (NASDAQ:JAKK) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01Entry into a Material Definitive Agreement.

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On November 7, 2017 we and Oasis Investments II Master Fund Ltd. (“Oasis”), entered into an Exchange Agreement (the “Exchange Agreement”) which provides for the exchange of $21,550,000 of our existing 4.25% Convertible Senior Notes due 2018 owned by Oasis for a Convertible Note due November 1, 2020 with an equal face value (the “Note”). Interest on the Note, payable on each May 1 and November 1 until maturity, is at an annual rate of 3.25% if paid in cash and 5% if paid in stock.

The Note provides, among other things, that the initial conversion price is $3.05. The conversion price will be reset on November 1, 2018 and November 1, 2019 (each, a “reset date”) to a price equal to 105% above the 5-day VWAP preceding the reset date; provided, however, that if the conversion price resulting from such reset is lower than 90 percent of the average VWAP during the 90 calendar days preceding the reset date, then the reset price shall be the 30-day VWAP preceding the reset date. Under no circumstances shall the reset result in a conversion price below the greater of the closing price on the reset date or 30% of the stock price at the date of the initial closing and will not be greater than the conversion price in effect immediately before such reset. In the event the reset price is less than 90% of the initial conversion price, Oasis may only convert the Note if the closing market price of our common stock is above 110% of the reset price. We may trigger a mandatory conversion of the Note if the market price exceeds 150% of the then conversion price for 20 consecutive days and may redeem the Note in cash if a person acquires shares of our common stock and as a result owns at least 49% of our issued and outstanding common stock, and Oasis may require repayment of the Note upon the occurrence of certain fundamental changes, as such term is defined in the Note.

The Note also provides that (i) it is nontransferable for 12 months, (ii) until November 1, 2018 we may not issue any convertible securities unless our stock price exceeds $6.00 for 20 consecutive trading days, and (iii) in the event we repurchase our outstanding convertible notes due in 2018 and 2020 for cash and/or stock, the stock component is limited to the amount of stock equal to the noteholder’s short position.

Until shareholder approval is obtained (which approval we are obligated to seek), limitations in place will prevent us from issuing to Oasis more than 19.9% of our pre-closing number of issued and outstanding shares. Another limitation will limit Oasis’ ability to submit for conversion any part of the Note if the potential number of shares of our stock issuable upon such conversion of the Note which, when added to all other shares of our stock deemed to be beneficially owned by Oasis, would result in their ownership of more than 9.99% of our issued and outstanding stock. We have the discretion to repay the Note and accrued interest thereon in stock, in cash and/or in a combination thereof, provided that any payment in stock is contingent upon the satisfaction of certain equity conditions.

to the terms of a Registration Rights Agreement with Oasis entered into concurrently with the Purchase Agreement and the Note, we also agreed to provide Oasis with customary registration rights with respect to any potential shares we determine to issue to the terms of the Note.

Alexander Shoghi, one of our directors, is a portfolio manager at a fund related to Oasis.

The foregoing description of the Exchange Agreement, Note and Registration Rights Agreement are qualified in their entirety by reference to the agreements, copies of which are filed as exhibits to this Form 8-K and are incorporated by reference in this Item 1.01.

Item 2.03.Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

As disclosed above, on November 7, 2017 we issued $21,550,000 principal amount of new convertible notes to Oasis in exchange for $21,550,000 principal amount of existing convertible notes.

Item 3.02.Unregistered Sales of Equity Securities.

As disclosed above, on November 7, 2017 we consummated the exchange of $21,550,000 principal amount of our convertible notes with Oasis. The exchange was exempt from registration to Section 3(a)(9) of the Securities Act of 1933.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

EX-10.1 2 tv478946_ex10-1.htm EXHIBIT 10.1   Exhibit 10.1    Execution Version   EXCHANGE AGREEMENT   Oasis Investments II Master Fund Ltd. (the “Holder”) enters into this Exchange Agreement (the “Agreement”) with JAKKS Pacific,…
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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.

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