|
Item 5.02
|
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
|
Entry Into Amended & Restated Employment Agreements
On December 7, 2020, Genius Brands International,
Inc. (the “Company”) entered into amended and restated employment agreements with each of Andrew Heyward, the Company’s
Chief Executive Officer (the “CEO Employment Agreement”), Michael Jaffa, the Company’s General Counsel and now
Chief Operating Officer (the “General Counsel Employment Agreement”), and Robert Denton, the Company’s Chief
Financial Officer (the “CFO Employment Agreement”) (together with Messrs. Heyward and Jaffa the “Key Employees”),.
Mr. Jaffa, 54, who previously served as
General Counsel & Senior Vice President of Business Affairs of the Company since 2018, was also appointed Chief Operating Officer
of the Company, effective as of December 7, 2020. Mr. Jaffa’s responsibilities as Chief Operating Officer will include overseeing
the business operations of production, consumer products, global distribution, as well as the legal, human resources and diversity
divisions of the Company. Mr. Jaffa will continue to oversee the business and legal operations of the Company’s digital channels.
Mr. Jaffa has no family relationships with any director, executive officer, or person nominated or chosen by the Company to become
a director or executive officer. Prior to joining the Company, Mr. Jaffa served as General Counsel and Head of Business Affairs
of the Thoughtful Media Group, a global media and technology company, from 2017-2018, and as Head of Business Affairs for DreamWorks
Animation Television, an animation studio and subsidiary of Universal Pictures, from 2013-2016. Mr. Jaffa had no direct or indirect
material interest in any transaction in which the Company participated where the amount involved exceeded $120,000 over the last
fiscal year, nor does he nor will he have any such interest in any such transaction that is currently proposed.
Andrew Heyward
The CEO Employment Agreement extends and
modifies Mr. Heyward’s current employment agreement such that Mr. Heyward is eligible to receive, during the five year term
of the CEO Employment Agreement (i) an annualized base salary of $440,000, (ii) quarterly performance bonuses of up to $55,000,
and (iii) producer fees of up to $12,500 per one-half hour episode produced by the Company for up to 52 one-half hour episodes.
The CEO Employment Agreement also entitles
Mr. Heyward to separation payments in certain circumstances. In the event Mr. Heyward’s employment terminates due to his
death or retirement, in addition to accrued amounts, he is entitled to receive (i) any unpaid quarterly bonus for the fiscal quarter
preceding the fiscal quarter in which such termination occurs and (ii) if earned, a pro-rated quarterly bonus for the fiscal quarter
in which such termination occurs. In the event Mr. Heyward’s employment terminates due to his permanent disability, in addition
to accrued amounts, he is entitled to receive (i) any unpaid quarterly bonus for the fiscal quarter preceding the fiscal quarter
in which such termination occurs, (ii) if earned, a pro-rated quarterly bonus for the fiscal quarter in which such termination
occurs and (iii) six monthly payments equal to the amount, if any, of his monthly base salary in excess of any disability benefits
being received by Mr. Heyward.
Additionally, the CEO Employment Agreement
contains certain restrictive covenants regarding confidential information, intellectual property, non-competition and non-solicitation.
This summary of the CEO Employment Agreement is qualified in its entirety by reference to the full text of the CEO Employment Agreement,
which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Michael Jaffa
The General Counsel Employment Agreement
provides Mr. Jaffa with, during the three year term of the General Counsel Employment Agreement (i) an annualized base salary of
$325,000 for the first year of the term, $350,000 for the second year of the term and $375,000 for the third year of the term,
(ii) discretionary annual bonuses determined in the sole discretion of the Compensation Committee of the Board of Directors of
the Company (the “Compensation Committee”), and (iii) eligibility to receive renewal bonuses of $50,000 beginning within
60 days following the effective date of the General Counsel Employment Agreement and each anniversary thereafter during the term,
subject to Mr. Jaffa’s continued employment.
The General Counsel Employment Agreement
also entitles Mr. Jaffa to separation payments in certain circumstances. In the event Mr. Jaffa’s employment terminates due
to his death or retirement, in addition to accrued amounts, he is entitled to receive any unpaid annual bonus for the fiscal year
preceding the fiscal year in which such termination occurs. In the event Mr. Jaffa’s employment terminates due to his permanent
disability, in addition to accrued amounts, he is entitled to receive (i) any unpaid annual bonus for the fiscal year preceding
the fiscal year in which such termination occurs, and (iii) two monthly payments equal to the amount, if any, of his monthly base
salary in excess of any disability benefits being received by Mr. Jaffa.
Additionally, the General Counsel Employment
Agreement contains certain restrictive covenants regarding confidential information, intellectual property, non-competition and
non-solicitation. This summary of the General Counsel Employment Agreement is qualified in its entirety by reference to the full
text of the General Counsel Employment Agreement, which is attached hereto as Exhibit 10.2 and incorporated herein by reference.
Robert Denton
The CFO Employment Agreement provides Mr.
Denton with, during the one year term of the CFO Employment Agreement (i) an annualized base salary of $300,000, (ii) discretionary
annual bonuses determined in the sole discretion of the Compensation Committee, and (iii) eligibility to receive renewal bonuses
of $50,000 beginning within 60 days following the effective date of the CFO Employment Agreement and continuing on each anniversary
thereafter during the term, subject to Mr. Denton’s continued employment.
The CFO Employment Agreement also entitles
Mr. Denton to separation payments in certain circumstances. In the event Mr. Denton’s employment terminates due to his death
or retirement, in addition to accrued amounts, he is entitled to receive any unpaid annual bonus for the fiscal year preceding
the fiscal year in which such termination occurs. In the event Mr. Denton’s employment terminates due to his permanent disability,
in addition to accrued amounts, he is entitled to receive (i) any unpaid annual bonus for the fiscal year preceding the fiscal
year in which such termination occurs, and (ii) two monthly payments equal to the amount, if any, of his monthly base salary in
excess of any disability benefits being received by Mr. Denton.
Additionally, the CFO Employment Agreement
contains certain restrictive covenants regarding confidential information, intellectual property, non-competition and non-solicitation.
This summary of the CFO Employment Agreement is qualified in its entirety by reference to the full text of the CFO Employment Agreement,
which is attached hereto as Exhibit 10.3 and incorporated herein by reference.
Key Employee Equity Grants
On December 7, 2020, the Compensation Committee
approved (i) a form of award agreement for the grant of non-qualified stock options (“Options”) (the “Form
Option Grant”) and (ii) a form of award agreement for the grant of restricted stock units (“RSUs”) (the “Form
RSU Grant”) in each case, which the Company may use to grant awards to certain eligible individuals pursuant to the Genius
Brands International, Inc. 2020 Incentive Plan, as amended (the “Incentive Plan”).
The foregoing descriptions of the Form
Option Grant and Form RSU Grant are qualified in their entirety by reference to the full text of each such agreement, which are
attached hereto as Exhibit 10.4 and Exhibit 10.5, respectively.
On
the same date, the Compensation Committee approved awards under the Incentive Plan to the Key Employees (the “Key Employee
Equity Grants”). The Key Employee Equity Grants were each granted pursuant to the Form Option Grant and Form RSU Grant,
as applicable, except as described below.
The Options granted to Messrs. Heyward were
fully vested on the date of grant. The Options granted to Mr. Jaffa and Mr. Denton were partially vested on the date of grant,
and vest with respect to the unvested amounts in substantially equal installments on the first three anniversaries of the grant
date, subject to continued employment. One-half of the RSUs granted to Mr. Heyward vest over time subject to Mr. Heyward’s
continued employment, and one-half vest in equal installments on the first, second, third and fourth anniversaries of the date
of grant, subject to the achievement of certain performance criteria, to be determined by the Compensation Committee, and subject
to Mr. Heyward’s continued employment. The RSUs granted to Mr. Jaffa and Mr. Denton vest in three equal installments on the
first three anniversaries of the date of grant, subject to continued employment. Any unvested Options or RSUs held by an applicable
Key Employee will vest upon the Key Employee’s termination of employment without Cause or resignation for Good Reason, each
as defined in the Form Option Grant and Form RSU Grant agreement. Provided, however, for Mr. Denton, only unvested Options and
RSUs that would have otherwise vested during the then current term of the CFO Employment Agreement will vest upon Mr. Denton’s
termination of employment without Cause or resignation for Good Reason, each as defined in the Form Option Grant and Form RSU Grant.