Item 3.02 Unregistered Sales of Equity Securities.
On November 16, 2022, we granted an award of 2,550,000 shares of our common
stock as a "restricted award" under our 2020 Equity Incentive Plan to certain
directors, officers and employees.
Of these restricted awards: (i) 2,450,000 vest as to 50% on the grant date and
50% on the six month anniversary of the grant date; and (ii) 100,000 vest as to
50% on the six month anniversary of the grant date and 50% on the one year
anniversary of the grant date.
We granted the award of these shares to 13 U.S. Persons and 1 non-U.S. Person
(as that term is defined in Regulation S of the Securities Act of 1933) and in
granting this award we relied on the registration exemption provided for in
Section 4(a)(2) of the Securities Act of 1933.
On November 16, 2022, we granted an aggregate of 900,000 stock options to
certain directors, officers and employees for the purchase of up to 900,000
shares of our common stock pursuant to our 2020 Equity Incentive Plan. Each
stock option is exercisable at a price of US$0.25 per share until November 16,
2032.
Of these stock options, 900,000 vest as to 50% on each of the first and second
anniversary of the grant date.
We granted the awards of these shares to 6 U.S. Persons and in granting these
awards we relied on the registration exemption provided for in Regulation S
and/or Section 4(a)(2) of the Securities Act of 1933.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Employment Agreement with David Guarino
On November 16, 2022, we entered into an employment agreement with David
Guarino, our secretary, treasurer, chief financial officer and director,
pursuant to which, as of the effective date of October 1, 2022 (the "Effective
Date"), we have agreed to employ Mr. Guarino and Mr. Guarino has agreed to
perform such duties as are regularly and customarily performed by the chief
financial officer of a corporation, and any other duties consistent with Mr.
Guarino's position in our company. Pursuant to the terms of the employment
agreement, we have agreed to pay Mr. Guarino US$252,000 annually or such other
amount as may be determined by our board of directors from time to time,
commencing on the Effective Date.
In addition, during each of our fiscal years during the term of the employment
agreement (beginning with the fiscal year of April 1, 2022 to March 31, 2023
(the "Fiscal 2023"), Mr. Guarino will be eligible for the following annual
bonuses: (i) up to 50% of Mr. Guarino's salary, with the exact amount of the
bonus to be determined within 30 days of the end of each fiscal year by the
compensation committee of our board of directors, based upon 90% of Mr.
Guarino's performance during the immediately preceding fiscal year as measured
by certain key performance indicators (the "KPIs"), and 10% upon the discretion
of the compensation committee. During the term of the employment agreement,
these KPIs (i) will be updated within 30 days of the end of each fiscal year,
with the first update being April 30, 2023; and (ii) will be set and established
in the sole discretion of the compensation committee of our board of directors.
However, the KPIs for the Fiscal 2023 will be for the period from October 1,
2022 through March 31, 2023 due to Mr. Guarino's start date and transition time
required.
In addition, Mr. Guarino will be entitled to participate in all of our employee
benefit plans provided by our company to our senior officers. If we do not
provide such plans at any time or if Mr. Guarino elects to remain on his current
insurance coverage, we agreed to reimburse Mr. Guarino for the actual cost of
any such plans obtained privately for Mr. Guarino and his spouse. We have also
agreed to (i) provide Mr. Guarino with a US$750 per month automobile allowance
during the term of the employment agreement; and (ii) reimburse Mr. Guarino for
any expenses that he incurs in connection with his duties under his employment
agreement. Mr. Guarino will be entitled in each year to five weeks' paid
vacation, in addition to weekends and statutory holidays, to be taken in
installments of no more than two consecutive weeks of paid time off.
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The initial term of the employment agreement is two years from the Effective
Date and, on the second anniversary of the Effective Date and on each annual
anniversary date thereafter, the term of the employment agreement will
automatically be extended by one additional year unless either party gives 90
days' written notice to the other of its intention not to renew the employment
agreement.
If, within 90 days of the occurrence of a change of control event, Mr. Guarino
resigns from his employment relationship with our company or our company
terminates his employment agreement for any reason other than for just cause and
Mr. Guarino signs a broad based general release in favor of our company (the
"Release"), then we have agreed to pay Mr. Guarino severance in an amount equal
to the 12 months' salary.
We may terminate Mr. Guarino's employment at any time for other than just cause
by delivering to Mr. Guarino written notice of termination. In such a case,
provided that Mr. Guarino signs the Release, we have agreed to pay Mr. Guarino
severance in an amount equal to the 12 months' salary.
Subject to applicable employment laws or similar legislation, we may terminate
Mr. Guarino's employment in the event he has been unable to perform his duties
for a period of eight consecutive months or a cumulative period of 12 months in
any consecutive 24 month period, because of a physical or mental disability.
Mr. Guarino's employment will automatically terminate on his death. In the
event Mr. Guarino's employment with our company terminates by reason of Mr.
Guarino's death or disability, then upon and immediately effective on the date
of termination we agreed to promptly pay and provide Mr. Guarino (or in the
event of Mr. Guarino's death, Mr. Guarino's estate); any unpaid salary and any
outstanding and accrued regular and special vacation pay through the date of
termination; reimbursement for any unreimbursed expenses incurred through to the
date of termination; and any outstanding amounts due under any awards which will
be dealt with in accordance with the Plan and the award agreement. In the event
Mr. Guarino's employment is terminated due to a disability, we have agreed to
pay to Mr. Guarino the severance referred to above.
We may terminate Mr. Guarino's employment for just cause at any time by
delivering to Mr. Guarino written notice of termination. In the event that Mr.
Guarino's employment with our company is terminated by our company for just
cause, Mr. Guarino will not be entitled to any additional payments or benefits
(except as otherwise provided in his employment agreement), other than for
amounts due and owing to Mr. Guarino by our company as of the date of
termination, except for any awards under the Plan will be dealt with in
accordance with the Plan and award agreement.
Provided that Mr. Guarino has acted within the scope of his authority, we have
agreed to indemnify and save harmless Mr. Guarino (including his heirs and legal
representatives) against any and all costs, claims and expenses (including any
amounts paid to settle any actions or satisfy any judgments) which: he may
suffer or incur by reason of any matter or thing which he may in good faith do
or have done or caused to be done as an employee, officer or director of our
company, any of its subsidiaries or of any of their respective affiliates; or
was reasonably incurred by him in respect of any civil, criminal or
administrative action or proceeding to which he is made a party by reason of
being or having been an employee, officer or director of our company, any of its
subsidiaries or of any of their respective affiliates; provided that, the
foregoing indemnification will apply only if: he acted honestly and in good
faith with a view to the best interests of our company, any of its subsidiaries
or any of their respective affiliates; and in the case of a criminal or
administrative action or proceeding that is enforced by a monetary penalty, he
had reasonable grounds for believing that his conduct was lawful.
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Mr. Guarino has agreed to indemnify and save harmless our company against, and
has agreed to hold it harmless from, any and all damages, injuries, claims,
demands, actions, liability, costs and expenses (including reasonable legal
fees) incurred or made against our company arising from or connected with the
performance or non-performance of his employment by him or the breach of any
warranty, representation or covenant herein by him, other than claims by him
pursuant to his employment agreement.
If and to the extent we maintain directors' and officers' liability insurance
for the protection of our executives in connection with acts and omissions
occurring during their employment with our company, we have agreed that Mr.
Guarino will be included as an officer and director who is covered by such
policy on a basis no less favorable than made available to other executives of
our company.
Appointment of Director
On November 16, 2022, we appointed David Rauch as a director of our company. We
also appointed Mr. Rauch as a member of our audit committee and out compensation
committee.
Family Relationships
No family relationships exist between any of our directors or executive
officers.
Certain Related Transactions and Relationships
We have not been party to any transaction with Mr. Rauch since April 1, 2020 or
any currently proposed transaction with Mr. Guarino in which we were or will be
a participant and where the amount involved exceeds $120,000, being the lesser
of $120,000 or one percent of the average of our total assets at our year end
for the last two completed fiscal years, and in which Mr. Rauch had or will have
a direct or indirect material interest.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
10.1 Employment Agreement dated as of November 16, 2022 with David Guarino
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