Exhibit 10.1

 

EXECUTION COPY

 

COOPERATION AGREEMENT

 

This Agreement dated September 25, 2015 is by and among Oasis Management Company
Ltd. (“Oasis”), JAKKS Pacific, Inc. (the “Company”) and, solely for purposes of
Section 8(b), Alexander Azim Shoghi (the “Nominee”). In consideration of and
reliance upon the mutual covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

 

1. Representations and Warranties of the Company. The Company represents and
warrants to Oasis that this Agreement has been duly authorized, executed and
delivered by the Company, and is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. As of the date of
this Agreement, the Company has 22,692,246 shares of common stock, par value
$0.001 per share (the “Common Stock”), issued and outstanding (which, for the
avoidance of doubt, does not include the shares of Common Stock issuable upon
conversion of the Convertible Senior Notes (as defined below) beneficially owned
by Oasis on the date hereof).

 

2. Representations and Warranties of Oasis. Oasis represents and warrants to the
Company that this Agreement has been duly authorized, executed and delivered by
Oasis, and is a valid and binding obligation of Oasis, enforceable against Oasis
in accordance with its terms. As of the date of this Agreement, Oasis
beneficially owns 3,286,038 shares of Common Stock, including 1,276,332 shares
of Common Stock issuable upon conversion of 4.25% Convertible Senior Notes due
2018 and 1,063,553 shares of Common Stock issuable upon conversion of 4.875%
Convertible Senior Notes due 2020 (collectively, the "Convertible Senior
Notes").

 

3. Board Nomination and Other Company Matters.

 

(a) The Company hereby agrees that:

 

(1) prior to the date hereof, the board of directors of the Company (the
“Board”) has approved the nomination of the Nominee for election as a director
at the Company’s 2015 annual meeting of stockholders (the “2015 Annual Meeting”)
with a term expiring at the Company’s 2016 annual meeting of stockholders (“2016
Annual Meeting”);

 

(2) the Board will (x) name the Nominee as a nominee for election as a director
of the Company at the 2015 Annual Meeting in its definitive proxy statement to
be filed with the Securities and Exchange Commission (the “SEC”) in connection
therewith and (y) recommend that the stockholders of the Company vote to elect
the Nominee as a director of the Company at the 2015 Annual Meeting; and

 

 

 

 

 

(3) the Company shall use its reasonable best efforts (which shall include the
solicitation of proxies) to obtain the election of the Nominee at the 2015
Annual Meeting (it being understood that such efforts shall be not less than the
efforts used by the Company to obtain the election of any other independent (as
determined under Section 5605(a) (2) of the NASDAQ Listing Rules) director
nominee nominated by it to serve as a director on the Board at the 2015 Annual
Meeting).

 

(b) The Company agrees that if the Nominee resigns as a director or otherwise is
unable or unwilling to serve as a director at any time prior to the 2016 Annual
Meeting, including as a result of death or disability, Oasis shall be entitled
to designate as a replacement director an individual who would be considered an
independent director of the Company under Section 5605(a)(2) of the NASDAQ
Listing Rules, is reasonably acceptable to the Board as a replacement director
and is in equally good standing in all material respects, as the Nominee being
replaced. For the avoidance of doubt, the substitute director shall thereafter
be deemed the Nominee for purposes of this Agreement and Oasis shall be entitled
to the same rights and subject to the same requirements under this Agreement
applicable to the resigning Nominee prior to his resignation, and such
individual shall be appointed to the Board to serve the unexpired term, if any,
of the Nominee.

 

(c) Other than the Nominee the Board may nominate up to an additional six (6)
individuals for election at the 2015 Annual Meeting.

 

(d) Until the 2016 Annual Meeting, the Company shall not increase the size of
the Board in excess of seven (7) members, and shall not decrease the size of the
Board if such decrease would require the resignation of the Nominee. Other than
for vacancies filled pursuant to Section 3(b), nothing in this Agreement shall
prevent the Company from filling all vacancies in accordance with the Amended
and Restated By-Laws of the Company (the “By-Laws”).

 

4. Cooperation Period.

 

(a) From the date of this Agreement until the earliest of (i) the date that is
thirty (30) calendar days prior to any applicable deadline by which a
stockholder must give notice to the Company of its intention to nominate a
director for election at or bring other business before the 2016 Annual Meeting
and (ii) any material breach of this Agreement by the Company (provided that the
Company shall have fifteen (15) business days following written notice from
Oasis of any such material breach to remedy such material breach if capable of
remedy) (such period, the “Cooperation Period”), Oasis will not, and shall cause
its affiliates (as such term is defined below) to not, directly or indirectly,
without the prior written consent of the Company: (i) sell or otherwise dispose
of any shares of Common Stock or Convertible Senior Notes beneficially owned by
Oasis if such sale or other disposition would cause Oasis’s aggregate beneficial
ownership to decrease below 1,251,606 shares of Common Stock (which, for the
avoidance of doubt, represents 5% of the 25,032,131 shares of Common Stock
outstanding as of the date hereof (taking into account the 2,339,885 shares of
Common Stock issuable upon conversion of the Convertible Senior Notes
beneficially owned by Oasis as of the date hereof)); provided, that such number
of outstanding shares of Common Stock shall be adjusted to take into account any
stock split, stock dividend or distribution, reclassification, restructuring,
combination, exchange of shares or similar transaction with respect to the
Common Stock (if any) that occurs after the date hereof; or (ii) engage in any
short sale of the Common Stock.

 

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(b) During the Cooperation Period, Oasis shall cause all Voting Securities (as
defined below) that it is entitled to vote at the 2015 Annual Meeting (whether
held of record or beneficially) to be present for quorum purposes and to be
voted in favor of the election of each of the Board's incumbent nominees and the
additional nominee, referred to in paragraph 3(d) hereof, if any is proposed by
the Company, for election as a director.

 

(c) During the Cooperation Period, Oasis shall not and shall cause its
affiliates, associates and Representatives (as such terms are defined below) not
to:

 

(i) effect or seek, offer or propose (whether publicly or otherwise) to effect,
or announce any intention to effect or cause or participate in or in any way
assist, facilitate or encourage any other individual, general or limited
partnership, corporation, limited liability or unlimited liability company,
joint venture, estate, trust, group, association or other entity of any kind or
structure (collectively, a "Person") to effect or seek, offer or propose
(whether publicly or otherwise) to effect or participate in, any "solicitation"
of "proxies" (as such terms are used in the proxy rules of the SEC) to vote any
Voting Securities of the Company or consent to any action from any holder of any
Voting Securities of the Company or conduct or suggest any binding or nonbinding
referendum or resolution or seek to advise, encourage or influence any Person
with respect to the voting of or the granting of any consent with respect to any
Voting Securities of the Company; provided, however, that the foregoing shall
not in any way limit the ability of Oasis, or any of its affiliates, to vote or
tender any Voting Securities pursuant to any solicitation by a third party,
subject to the provisions of Section 4(b) hereof;

  

(ii) propose (except as permitted by Section 3(b) hereof) or nominate, or cause
or encourage any Person to propose or nominate, any candidates to stand for
election to the Board, or seek the removal of any member of the Board;

  

(iii) form, join or otherwise participate in any "partnership, limited
partnership, syndicate or other group" (other than any group among some or all
of the affiliates of Oasis) within the meaning of Section 13(d)(3) of the
Exchange Act (as such term is defined below) with respect to the Common Stock,
or deposit any shares of Common Stock in a voting trust or similar arrangement,
or subject any shares of Common Stock to any voting agreement or pooling
arrangement, or grant any proxy with respect to any shares of Common Stock
(other than to a designated representative of the Company pursuant to a proxy
statement of the Company) or otherwise act in concert with any Person with
respect to the Common Stock (other than affiliates of Oasis);

  

(iv) seek to call, or to request the call of, or call a special meeting of the
stockholders of the Company, or make a request for a list of the Company's
stockholders or other Company records;

  

(v) otherwise publicly act, alone or in concert with others, to control or seek
to control, to seek representation on, or to influence or seek to influence,
whether through litigation or otherwise, the management, the Board or the
policies of the Company; provided, however, that nothing herein shall prohibit
Oasis from complying with legal or regulatory requirements, including, without
limitation, the filing of any report or schedule required to be filed with the
SEC; provided, further, that Oasis, acting alone, may privately communicate its
views to members of the Company's management team or to members of the Board; or

 

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(vi) otherwise take, or solicit, cause or encourage others to take, any action
inconsistent with any of the foregoing.

  

Notwithstanding anything in this Agreement to the contrary, nothing in this
Section 4 shall be deemed to in any way restrict or otherwise limit the Nominee
from (i) performing his fiduciary duties as a director of the Company, once
elected, or (ii) exercising his rights as a director of the Company, once
elected, in a manner that is not inconsistent with Section 4(c) hereof.

 

5. SEC Filings.

 

(a) The Company shall promptly prepare and file a Form 8-K with a copy of this
Agreement attached as an exhibit thereto (the "8-K"). The 8-K shall be
consistent with the terms of this Agreement.

 

(b) Oasis shall promptly prepare and file an amendment (the “13D Amendment”) to
its Schedule 13D with respect to the Company filed with the SEC on June 3, 2015
reporting the entry into this Agreement and amending applicable items to conform
to its obligations hereunder. The 13D Amendment shall be consistent with the
terms of this Agreement.

 

(c) The Company shall provide Oasis with a copy of the 8-K within a reasonable
period in advance of filing the 8-K with the SEC in order to provide Oasis with
a reasonable opportunity to review and comment thereon, and Oasis shall provide
the Company with a copy of the 13D Amendment within a reasonable period in
advance of filing the 13D Amendment with the SEC in order to provide the Company
with a reasonable opportunity to review and comment thereon. Each party shall,
in good faith, take into consideration the comments received from the other
party on such 8-K or 13D Amendment, as applicable, and shall take reasonable
efforts to incorporate such comments into the applicable materials.

 

6. Definitions. For purposes of this Agreement:

 

(a) the terms “affiliate” and “associate” shall have the respective meanings set
forth in Rule 12b-2 promulgated by the SEC under the Securities Exchange Act of
1934, as amended (the “Exchange Act”);

 

(b) the terms “beneficial owner” and “beneficially own” shall have the same
meanings as set forth in Rule 13d-3 promulgated by the SEC under the Exchange
Act except that a Person shall also be deemed to be the beneficial owner of all
shares of Common Stock which such person has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to
the exercise of any rights in connection with any securities or any agreement,
arrangement or understanding (whether or not in writing), regardless of when
such rights may be exercised and whether they are conditional, and all shares of
Common Stock which such Person or any of such Person’s affiliates or associates
has or shares the right to vote or dispose;

 

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(c) the term “Representatives” shall mean, with respect to any Person, such
Person's officers, directors, members, general partners, employees, counsel and
financial advisors; and

 

(d) the term "Voting Securities" shall mean the shares of the Company's Common
Stock and any other securities of the Company entitled to vote in the election
of directors, or securities convertible into, or exercisable or exchangeable
for, the Common Stock or such other securities, whether or not subject to the
passage of time or other contingencies.

 

7. Notices. All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto shall
be in writing and shall be deemed validly given, made or served, if given (a) by
telecopy and email, when such telecopy is transmitted to the telecopy number set
forth below and sent to the email address set forth below and the appropriate
confirmation is received or (b) by any other means, when actually received
during normal business hours at the address specified in this Section:

 

if to the Company:

JAKKS Pacific, Inc.

2951 28th St.,

Santa Monica, CA 90405

Attention: Joel Bennett, EVP, CFO

Facsimile: (310) 455-6398

Email: joelb@jakks.net

 

with a copy to:

Feder Kaszovitz LLP

845 Third Avenue

New York, NY 10022

Attention: Geoffrey A. Bass

Facsimile: (212) 888-7776

Email: gbass@fedkas.com

 

if to Oasis:

Oasis Management Company Ltd.

c/o Oasis Management (Hong Kong) LLC

21/F Man Yee Building

68 Des Voeux Road, Central

Hong Kong
Attention: Phillip Meyer

Facsimile: +852 2868 3155

Email: pmeyer@hk.oasiscm.com

 

with a copy to:

Schulte Roth & Zabel

919 Third Avenue

New York, NY 10022

Attention: Eleazer Klein

Facsimile: (212) 593-5955

Email: eleazer.klein@srz.com

 

 

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8. Specific Performance; Remedies.

 

(a) In furtherance and not in limitation of Section 8(b), the parties hereto
shall be entitled to seek an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement, in addition to any other remedy to which they are entitled at law or
in equity. Furthermore, each of the parties hereto agrees to waive any bonding
requirement under any applicable law, in case any other party seeks to enforce
the terms OF THIS AGREEMENT by way of equitable relief. THIS AGREEMENT SHALL BE
GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE
LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE CHOICE OF LAW
PRINCIPLES OF SUCH STATE.

 

(b) Notwithstanding any other Section in this Agreement and without limiting any
other remedies the Company may have in law or equity, in the event that Oasis
(or any affiliate or associate of Oasis) fails to perform or otherwise fulfill
its obligations set forth in Section 4(a), and shall not have remedied such
failure or non-fulfillment if capable of being remedied or fulfilled within
three (3) business days following written notice from the Company of such
failure or non-fulfillment, the Company shall not be required to perform or
fulfill its obligations set forth in Section 3 and the Nominee shall promptly
tender his resignation as a member of the Board effective immediately upon its
acceptance by the Company; provided that, for the avoidance of doubt, nothing
herein shall require the Board to accept such resignation tendered by the
Nominee.

 

9. Severability. If at any time subsequent to the date hereof, any provision of
this Agreement shall be held by any court of competent jurisdiction to be
illegal, void or unenforceable, such provision shall be of no force and effect,
but the illegality or unenforceability of such provision shall have no effect
upon the legality or enforceability of any other provision of this Agreement.

 

10. Termination. This Agreement shall terminate on the expiry of the Cooperation
Period.

 

11. Counterparts. This Agreement may be executed in two (2) or more counterparts
which together shall constitute a single agreement.

 

12. No Third Party Beneficiaries. This Agreement is solely for the benefit of
the parties hereto and is not enforceable by any other persons.

 

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13. No Waiver. No failure or delay by either party in exercising any right or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial waiver thereof preclude any other or further exercise thereof or the
exercise of any other right or remedy hereunder.

 

14. Entire Understanding. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof and may be amended only by
an agreement in writing executed by the parties hereto.

 

15. Interpretation and Construction.

 

(a) The Company acknowledges that its Board is bound by the obligations of the
Company hereunder.

 

(b) Each of the parties hereto acknowledges that it has been represented by
counsel of its choice throughout all negotiations that have preceded the
execution of this Agreement, and that it has executed the same with the advice
of said counsel. Each party and its counsel cooperated and participated in the
drafting and preparation of this Agreement and the documents referred to herein,
and any and all drafts relating thereto exchanged among the parties shall be
deemed the work product of all of the parties and may not be construed against
any party by reason of its drafting or preparation. Accordingly, any rule of law
or any legal decision that would require interpretation of any ambiguities in
this Agreement against any party that drafted or prepared it is of no
application and is hereby expressly waived by each of the parties hereto, and
any controversy over interpretations of this Agreement shall be decided without
regard to events of drafting or preparation.

 

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized signatories of the parties as of the date hereof.

 

 

JAKKS Pacific, inc.     oasis management company ltd.                          
    By: /s/ Stephen Berman    By: /s/ Phillip Meyer   Name:

Stephen Berman

  Name: Phillip Meyer   Title: CEO       Title: General Counsel                
                      By his signature below, Alexander Azim Shoghi agrees to
comply solely with the provisions of Section 8(b) of this Agreement:            
            /s/  Alexander Azim Shoghi           Name: Alexander Azim Shoghi