Exhibit 10.2

 

AMENDMENT NO. 4 TO THE SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

 

THIS AMENDMENT NO. 4 TO THE SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(this “Amendment”) is entered into as of November __, 2019 (the Effective
Date”), by and between Stephen G. Berman (“Berman” or “Executive”) and JAKKS
Pacific, Inc., a Delaware Corporation (the “Company”). The Company and Executive
are sometimes referred to herein, each a “Party” and, collectively, the
“Parties.”

 

W I T N E S S E T H:

 

WHEREAS, Executive is currently employed by the Company pursuant to that certain
Second Amended and Restated Employment Agreement, dated November 11, 2010 (the
“2010 Amended and Restated Employment Agreement”), between Executive and the
Company, as modified by the October 20, 2011 letter amendment (the “2011
Amendment”), and as amended by Amendment Number One, dated September 12, 2012
(the “2012 Amendment”), Amendment Number Two, dated June 7, 2016 (the “2016
Amendment”), and Amendment Number Three, dated August 9, 2019 (the “2019
Amendment”) (the 2010 Amended and Restated Employment Agreement, together with
(and as amended by) the 2011 Amendment, the 2012 Amendment, the 2016 Amendment,
and the 2019 Amendment, the “Amended Employment Agreement”); and

 

WHEREAS, the Parties desire to further amend the terms of the Amended Employment
Agreement on the terms and subject to the conditions set forth in this Amendment
(the Amended Employment Agreement, as amended by this Amendment, referred to as
the “Employment Agreement”).

 

NOW THEREFORE, in consideration of the premises and the mutual covenants and
obligations contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties, intending
to be legally bound hereby, pursuant to Section 21 of the 2010 Amended and
Restated Employment Agreement and subject to the terms and conditions set forth
herein, agree as follows:

 

1.                  Definitions. All references in the Amended Employment
Agreement to “this Agreement” shall be deemed to refer to the Employment
Agreement (including as amended by this Amendment). Capitalized terms not
defined herein shall have the meanings set forth for such terms in the Amended
Employment Agreement.

 

2.                  Amendments. The Parties hereby agree that, effective upon
the Effective Date, the Amended Employment Agreement shall be deemed amended as
follows:

 

(a)               Section 2 of the Amended Employment Agreement is amended by
deleting the current provision in its entirety and inserting, in lieu thereof,
the following:

 

“2. Term. The term of this Agreement shall commence as of the date hereof and
the term of this Agreement and Executive’s employment hereunder shall end on
December 31, 2021, subject to earlier termination upon the terms and conditions
provided elsewhere herein (the “Term”). As used herein, “Termination Date” shall
mean the last day of the Term.”

 

 

 

(b)               The Amended Employment Agreement is further amended by adding
a new Section 3(d)(vii), to provide as follows:

 

vii. 2021 Performance Bonus Opportunity. For the fiscal year commencing on
January 1, 2021, Executive shall be eligible to receive a performance-based
bonus award in a range between Twenty-Five percent (25%) and Three Hundred
percent (300%) of the Base Salary, based upon the level of EBITDA (defined
below) achieved by the Company for such fiscal year prior to deduction of bonus
expenses and one-time non-recurring costs for initiatives approved by the Board
(each an “EBITDA Target Amount”), as determined by the Compensation Committee,
and subject to the terms and conditions set forth herein (the “2021 Performance
Bonus”).

 

For fiscal year 2021, if the Compensation Committee determines that the
Company’s EBITDA (as defined in the First Lien Term Loan Facility Credit
Agreement, dated as of [_____ ___,] 2019, by and among Cortland Capital Market
Services LLC, the Financial Institutions party thereto, the Company, Disguise,
Inc., JAKKS Sales LLC, Maui, Inc., Moose Mountain Marketing, Inc., and Kids
Only, Inc.) for fiscal year 2021 prior to deduction of bonus expenses and
one-time non-recurring costs for initiatives approved by the Board:

 

A. is less than $30,000,000.00, no 2021 Performance Bonus shall be paid;

 

B. equals $30,000,000.00, the 2021 Performance Bonus shall be in an amount equal
to Twenty-Five Percent (25%) of the Base Salary for such fiscal year;

 

C. equals $40,000,000.00, the 2021 Performance Bonus shall be in an amount equal
to One Hundred Percent (100%) of the Base Salary for such fiscal year;

 

D. equals $50,000,000.00, the 2021 Performance Bonus shall be in an amount equal
to Two Hundred Percent (200%) of the Base Salary for such fiscal year; OR

 

E. equals or exceeds $60,000,000.00, the 2021 Performance Bonus shall be in an
amount equal to Three Hundred Percent (300%) of the Base Salary for such fiscal
year.

 

To the extent that EBITDA exceeds $30,000,000.00, but falls between two EBITDA
Target Amounts set forth in Sections 3(d) vii. B. through E. above, the amount
of the 2021 Performance Bonus shall be determined by the Compensation Committee
through linear interpolation. For the avoidance of doubt, the calculation of any
2021 Performance Bonus shall be based upon only the highest EBITDA Target Amount
achieved by the Company for 2021, and shall not be a cumulative amount.

 

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ii. The Company shall pay any 2021 Performance Bonus due Executive hereunder for
the fiscal year commencing January 1, 2021 in cash, subject to any required tax
withholding, in 2022, not later than twenty-one (21) business days following the
date on which the Auditors’ final report on the Company’s financial statements
for fiscal year 2021 is issued and delivered to the Company and in any event not
later than April 30, 2022 (the “2021 Performance Bonus Award Date”). Except as
otherwise provided herein, Executive must be employed on the 2021 Performance
Bonus Award Date to be eligible to receive the 2021 Performance Bonus, or any
portion thereof, for such fiscal year.

 

(c)               The Amended Employment Agreement is further amended by
deleting Section 3.b.ii. of the Amended Employment Agreement in its entirety and
inserting in lieu thereof the following:

 

(ii) Pursuant to and subject to the terms of the Plan, the Company shall, to the
extent shares are available for award under the Plan, issue to Executive on each
of the first business days of 2020 and 2021 (provided that Executive remains
employed by the Company on such date(s), as applicable) that number of shares of
Restricted Stock that are equal to the lesser of (A) $3,500,000 in value (based
on the closing price of a share of the Company’s common stock on December 31,
2019 or December 31, 2020, as applicable), or (B) 1.5% of common shares
outstanding of the Company, which shall vest as set forth below in Section 3.b.
(iii); 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 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.

 

(iii) Granted shares will vest in four equal installments on each anniversary of
grant.

 

3.                  Ratification; Effect of Amendment. Except as expressly
provided herein, this Amendment shall not, by implication or otherwise, alter,
modify, amend or in any way affect any of the obligations, covenants or rights
contained in the Amended Employment Agreement, all of which are ratified and
confirmed in all respects by the Parties and shall continue in full force and
effect. Each reference to the Employment Agreement or Amended Employment
Agreement hereafter made in any document, agreement, instrument, notice or
communication shall mean and be a reference to the Employment Agreement, as
amended and modified hereby.

 

4.                  Reimbursement of Legal Fees. The Company shall reimburse
Executive for up to $10,000.00 of reasonable legal fees and disbursements
incurred by him to his counsel Choate, Hall & Stewart LLP in the negotiation of
this Amendment, promptly following presentation to the Company of documentation
demonstrating such fees and disbursements.

 

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5.                  Miscellaneous.

 

(a)               This Amendment shall be governed and construed as to its
validity, interpretation and effect by the laws of the State of California,
without reference to its conflicts of laws provisions.

 

(b)               The Section captions herein are for convenience of reference
only, do not constitute part of this Amendment and shall not be deemed to limit
or otherwise affect any of the provisions hereof.

 

(c)               Each party hereto acknowledges that it has had an opportunity
to consult with counsel and has participated in the preparation of this
Amendment. No party hereto is entitled to any presumption with respect to the
interpretation of any provision hereof or the resolution of any alleged
ambiguity herein based on any claim that the other party hereto drafted or
controlled the drafting of this Amendment.

 

(d)               This Amendment and the documents referenced herein, constitute
the entire agreement among the Parties with respect to this amendment of the
Amended Employment Agreement and supersede all prior agreements, negotiations,
drafts, and understandings among the Parties with respect to such subject
matter. This Amendment can only be changed or modified pursuant to a written
instrument referring explicitly hereto, and duly executed by each of the
Parties.

 

(e)               This Amendment may be executed and delivered (by facsimile or
PDF signature) in any number of counterparts, and each such counterpart shall be
deemed to be an original instrument, but all such counterparts together shall
constitute one and the same instrument.

 

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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of
the day and year first written above.

 

  THE COMPANY:         JAKKS PACIFIC, INC.         By:     Name:                
Title:                 EXECUTIVE:         Stephen G. Berman