EXHIBIT 10.33
FORM OF
RESTRICTED STOCK AWARD AGREEMENT
UNDER THE
JAKKS PACIFIC, INC.
2002 STOCK AWARD AND INCENTIVE PLAN
This RESTRICTED STOCK AWARD AGREEMENT (the "Agreement") is entered into
effective as of the [Date] by and between [Name] (the "Executive") and JAKKS
Pacific, Inc., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, the Company and the Executive are parties to that certain
Amended and Restated Employment Agreement, dated March 26, 2003 and effective as
of January 1, 2003 (the "Employment Agreement"); and
WHEREAS, the terms and conditions of the Employment Agreement call for
the Company to grant the Executive certain shares of Restricted Stock (as
defined below) in consideration for the Executive agreeing to enter into the
Employment Agreement and relinquish certain bonus compensation under his prior
employment agreement with the Company; and
WHEREAS, pursuant to the Company's 2002 Stock Award and Incentive Plan
(the "Plan"), the Compensation Committee of the Company's Board (the
"Compensation Committee") has approved, in accordance with the terms of the
Employment Agreement, the grant to the Executive of Restricted Stock set forth
herein, subject to the terms and conditions of this Agreement.
1. AWARD OF RESTRICTED STOCK
1.1 The Company hereby grants to the Executive an award of [___________]
shares of restricted common stock of the Company, par value $.001 per share (the
"Restricted Stock"), subject to, and in accordance with, the restrictions,
terms, and conditions set forth in this Agreement. The grant date of this award
of Restricted Stock is [Date] (the "Grant Date").
1.2 This Agreement shall be construed in accordance with, and subject
to, the provisions of the Plan (the provisions of which are incorporated herein
by reference) and, except as otherwise expressly set forth herein, the
capitalized terms used in this Agreement shall have the same definitions as set
forth in the Plan.
2. RESTRICTIONS
2.1 Subject to Sections 2.2, 3.1 and 3.2 below, and provided in all
instances that the
Executive's employment with the Company has not terminated in accordance with
the provisions of the Employment Agreement prior to the Final Vesting Date (as
defined below), that number of shares of Restricted Stock as set forth below on
each anniversary of the Grant Date (each such date shall be a "Vesting Date")
shall vest, such that on [December 31, 200_] (the "Final Vesting Date") all of
the shares of Restricted Stock shall be fully vested:
DATE NUMBER OF SHARES VESTED
---- -----------------------
December 31, 200_ ______ Shares (50%)
December 31, 200_ ______ Shares (50%)
On each Vesting Date, the Executive shall own the vested shares of
Restricted Stock free and clear of all restrictions imposed by this Agreement
(except those restrictions imposed by Section 4.4 below). The Company shall
deliver a certificate(s) for the vested shares of Restricted Stock to the
Executive as soon as practical after each Vesting Date.
2.2 Notwithstanding the Vesting Dates set forth in Section 2.1 above,
and in order for the Company to preserve the deductibility under Section 162(m)
of the Code of the grant of Restricted Stock provided hereby, as a condition
precedent to the effectiveness of the above-described vesting schedule, the
Company's Pre-Tax Income (as defined below) for the Company's fiscal year ending
December 31, 200_ must exceed $2,000,000 (the "Vesting Condition"). In the event
the Company does not meet the Vesting Condition, (i) the grant of Restricted
Stock pursuant to this Agreement shall be null and void, (ii) the Executive
shall forfeit any right to receive any Restricted Stock, (iii) any entries on
the stock books and ledgers of the Company with respect to the shares of
Restricted Stock shall be cancelled, and (iv) the Restricted Stock shall become
authorized but unissued shares of the Company's common stock, par value $.001
per share (the "Common Stock").
The term "Pre-Tax Income" shall mean for the Company's fiscal year
ended December 31, 200_, the Company's income before any deduction or reserve
for income taxes and without any adjustment for any extraordinary item. In
addition, the determination of Pre-Tax Income, including all estimates,
allocations or prorations required to be made in connection therewith, shall be
made by the Company's regularly-engaged independent certified public accountants
(the "Auditors") in accordance with U.S. generally accepted accounting
principles ("GAAP") applied on a basis consistent with past periods, which
determination, absent manifest error, shall be conclusive and binding upon the
Company and the Executive.
2.4 The Restricted Stock may not be sold, assigned, transferred,
pledged, or otherwise encumbered prior to the date, if ever, that the Restricted
Stock becomes vested in accordance with the terms of this Agreement.
2
3. ACCELERATION OF VESTING OF RESTRICTED STOCK
3.1 In the event that the Vesting Condition is achieved by the Company,
and the Company's Adjusted EPS Growth (as defined below) for the Company's
fiscal year ending December 31, 200_ shall increase as set forth in the table
immediately below, the vesting of certain amounts of the Restricted Stock (as
indicated in the below table) that would otherwise vest on the Final Vesting
Date shall be accelerated and shall be deemed vested for all purposes on the
date that is no later than ninety (90) days after the later of (i) the end of
such fiscal year or (ii) completion of an audit of such fiscal year by the
Company's then current Auditors, in accordance with the table immediately below.
----------------------------------------------------------------------------------------------
ADJUSTED EPS GROWTH % OF RESTRICTED STOCK NUMBER OF SHARES OF
SUBJECT TO ACCELERATED RESTRICTED STOCK SUBJECT TO
VESTING ACCELERATED VESTING
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
*1% 0%
----------------------------------------------------------------------------------------------
1--1.999% 10%
----------------------------------------------------------------------------------------------
2--4.999% 20%
----------------------------------------------------------------------------------------------
5--9.999% 30%
----------------------------------------------------------------------------------------------
10--19.999% 50%
----------------------------------------------------------------------------------------------
20--24.999% 75%
----------------------------------------------------------------------------------------------
**25% 100%
----------------------------------------------------------------------------------------------
----------
* = less than
** = greater than or equal to
For all purposes hereof, the term "Adjusted EPS" shall mean the net
income per share of the Company's Common Stock, calculated on a fully-diluted
basis as determined by the Company's then current Auditors in accordance with
GAAP, 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, or as otherwise may be permitted by the Plan, and such
determination by the Auditors, absent manifest error, as adjusted by the
Compensation Committee, shall be conclusive and binding upon the Company and
Executive.
3.2 Notwithstanding the other provisions of this Agreement with the
exception of Section 2.2, in the event of a Change in Control prior to the Final
Vesting Date, the Restricted Stock shall become fully vested and nonforfeitable
as of the time of the Change in Control. On the date of the Change in Control,
or as soon as practicable thereafter, the Company shall deliver to the Executive
a certificate(s) for the Restricted Stock, free and clear of any restrictions
imposed by this Agreement (except for those restrictions imposed by Section 4.4
below).
4. STOCK; DIVIDENDS; VOTING
3
4.1 The stock certificate(s) evidencing the Restricted Stock
shall be registered on the Company's books in the name of the Executive as of
the Grant Date. The Company may issue stock certificates or otherwise evidence
the Executive's interest by using a book entry account. Physical possession or
custody of such stock certificates shall be retained by the Company until such
time as the shares of Restricted Stock are vested in accordance with Article 2.
The Company reserves the right to place a legend on the stock certificate(s)
restricting the transferability of such certificates and referring to the terms
and conditions (including forfeiture) of this Agreement and the Plan.
4.2 During the period the Restricted Stock is not vested, the
Executive shall be entitled to receive dividends and/or other distributions
declared on such Restricted Stock and the Executive shall be entitled to vote
such Restricted Stock.
4.3 In the event of a change in capitalization, the number and
class of shares of Restricted Stock or other securities that the Executive shall
be entitled to, and shall hold, pursuant to this Agreement shall be
appropriately adjusted or changed to reflect such change in capitalization,
provided that any such additional shares of Restricted Stock or different shares
or securities shall remain subject to the restrictions contained in this
Agreement.
4.4 The Executive represents and warrants that he is acquiring
the Restricted Stock for investment purposes only, and not with a view to
distribution thereof. The Executive is aware that the Restricted Stock may not
be registered under the federal or any state securities laws and that, in
addition to the other restrictions on the shares of Restricted Stock, the
Restricted Stock will not be able to be transferred unless an exemption from
registration is available or the Restricted Stock becomes registered. By making
this award of Restricted Stock, the Company is not undertaking any obligation to
register the Restricted Stock under any federal or state securities laws.
5. NO RIGHT TO CONTINUED SERVICE AS AN EMPLOYEE
Nothing in this Agreement or the Plan shall be interpreted or
construed to confer upon the Executive any right with respect to continuance as
an employee of the Company or any subsidiary of the Company, nor shall this
Agreement or the Plan interfere in any way with the right of the Company or a
subsidiary of the Company or their respective stockholders to terminate the
Executive's service as a director at any time.
6. TAXES AND WITHHOLDING
The Executive shall be responsible for all federal, state, and
local income taxes payable with respect to this award of Restricted Stock. The
Executive shall have the right to make such elections under the Code as are
available in connection with this award of Restricted Stock. The Company and the
Executive agree to report the value of the Restricted Stock in a consistent
manner for federal income tax purposes. The Company shall have the right to
retain and withhold from any payment of Restricted Stock the amount of taxes (if
any) required by any
4
government to be withheld or otherwise deducted and paid with respect to such
payment. At its discretion, the Company may require the Executive to reimburse
the Company for any such taxes required to be withheld and may withhold any
distribution in whole or in part until the Company is so reimbursed. In lieu
thereof, the Company shall have the right to withhold from any other cash
amounts due to the Executive an amount equal to such taxes required to be
withheld or withhold and cancel (in whole or in part) a number of shares of
Restricted Stock having a market value not less than the amount of such taxes.
7. EXECUTIVE BOUND BY THE PLAN
The Executive hereby acknowledges receipt of a copy of the Plan
and agrees to be bound by all the terms and provisions thereof.
8. MODIFICATION OF AGREEMENT
Except as provided in Section 2.2 above, this Agreement may be
modified, amended, suspended, or terminated, or any of the terms or conditions
hereof waived, only by a written instrument executed by the parties hereto.
9. SEVERABILITY
Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.
10. GOVERNING LAW
The validity, interpretation, construction, and performance of
this Agreement shall be governed by the laws of the State of Delaware without
giving effect to the conflicts of laws principles thereof.
11. SUCCESSORS IN INTEREST
This Agreement shall inure to the benefit of, and be binding
upon, the Company and its successors and assigns, whether by merger,
consolidation, reorganization, sale of assets, or otherwise. This Agreement
shall inure to the benefit of the Executive's legal representatives. All
obligations imposed upon the Executive and all rights granted to the Company
under this Agreement shall be final, binding, and conclusive upon the
Executive's heirs, executors, administrators, and successors.
12. RESOLUTION OF DISPUTES
Any dispute or disagreement which may arise under, or as a result
of, or in any way relate to the interpretation, construction, or application of
this Agreement shall be determined by the Board. Any determination made
hereunder shall be final, binding, and conclusive on the Executive and the
Company for all purposes.
5
[SIGNATURE PAGE FOLLOWS]
6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
JAKKS PACIFIC, INC. EXECUTIVE
By:
-------------------------------- ------------------------------
Name: [Name]
Title:
7
