UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
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by the Registrant ☒
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by a Party other than the Registrant ☐
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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☒
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Definitive
Proxy Statement
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☐
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Definitive
Additional Materials
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☐
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Soliciting
Material Pursuant to Section 240.14a-12
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SIMPLICITY
ESPORTS AND GAMING COMPANY
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Title
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Aggregate
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(3)
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Per
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filing fee is calculated and state how it was determined):
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(4)
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Proposed
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SIMPLICITY
ESPORTS AND GAMING COMPANY
7000
W. Palmetto Park Road, Suite 505
Boca
Raton, Florida 33433
September
15, 2021
Dear
Stockholders:
Simplicity
Esports and Gaming Company is holding a Virtual Annual Meeting (the “Annual Meeting”) on Thursday, October 21, 2021 at 10:00
a.m., Eastern Time. You may attend the Annual Meeting, vote and submit a question during the Annual Meeting by visiting https://www.cstproxy.com/simplicityesports/2021.
You will need to provide your 12-digit control number that is on your proxy card. The formal Notice of Annual Meeting is set forth
in the enclosed material.
The
matters expected to be acted upon at the Annual Meeting are described in the attached Notice of Annual Meeting and Proxy Statement. Holders
of record of Simplicity’s common stock at the close of business on August 24, 2021 are entitled to vote at the Annual Meeting.
It
is important that your views be represented. Even if you plan to virtually attend the Annual Meeting, please vote on the matters to be
considered in advance of the Annual Meeting. You may vote your proxy by telephone or via the Internet or by completing and returning
the enclosed proxy card. Although we encourage you to complete and return a proxy prior to the Annual Meeting to ensure that your vote
is counted, you can cast your vote at the virtual Annual Meeting. If you vote by proxy and also participate in the virtual Annual Meeting,
there is no need to vote again at the Annual Meeting unless you wish to change your vote.
We
appreciate your investment and interest in Simplicity Esports and Gaming Company and urge you to cast your vote as soon as possible.
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Sincerely,
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/s/
Jed Kaplan
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Chairman
of the Board
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SIMPLICITY ESPORTS AND GAMING COMPANY
7000
W. Palmetto Park Road, Suite 505
Boca
Raton, Florida 33433
NOTICE
OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
Notice
is hereby given that Simplicity Esports and Gaming Company, a Delaware corporation (“Simplicity”), will hold a Virtual 2021
Annual Meeting of Stockholders (the “Annual Meeting”) on Thursday, October 21, 2021, beginning at 10:00 a.m., Eastern Time,
for the following purposes, which are described more fully in the accompanying Proxy Statement:
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1.
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To
elect four directors nominated by Simplicity’s Board of Directors, based on the recommendation of Simplicity’s independent
directors, to serve for a two-year term following approval by the stockholders at the Annual Meeting;
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2.
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To
ratify the appointment of Prager Metis CPAs, LLC as Simplicity’s independent registered public accounting firm for the fiscal
year ending May 31, 2022; and
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3.
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To
transact such other business as may properly come before the Annual Meeting and/or any adjournment thereof.
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Simplicity’s
Board of Directors has fixed the close of business on August 24, 2021 (the “Record Date”) as the record date for the
determination of the stockholders entitled to vote at the Annual Meeting or any adjournments or postponements thereof. Only stockholders
of record at the close of business on the Record Date will be entitled to notice of, and to vote at, the Annual Meeting.
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By
order of the Board of Directors,
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/s/
Jed Kaplan
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Chairman
of the Board
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September
15, 2021
Your
vote is very important. Even if you plan to virtually attend the Annual Meeting, we hope that you will read the Proxy Statement and vote
on the matters to be considered in advance of the Annual Meeting. You may vote your proxy by telephone or via the Internet or by completing
and returning the enclosed proxy card.
TABLE
OF CONTENTS
SIMPLICITY
ESPORTS AND GAMING COMPANY
7000
W. Palmetto Park Road, Suite 505
Boca
Raton, Florida 33433
PROXY
STATEMENT
GENERAL
INFORMATION
This
Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the “Board”) of Simplicity Esports
and Gaming Company, a Delaware corporation (the “Company,” “Simplicity,” “we,” “our”
or “us”), of proxies to be voted at our 2021 Virtual Annual Meeting of Stockholders (the “Annual Meeting”) and
at any adjournment or postponement of the Annual Meeting. The Annual Meeting will take place on Thursday, October 21, 2021, beginning
at 10:00 a.m., Eastern Time, at https://www.cstproxy.com/simplicityesports/2021. You will need to provide your 12-digit control
number that is on your proxy card to gain access to the Annual Meeting. The Board of Directors of the Company urges you to promptly execute
and return your proxy in the enclosed envelope, even if you plan to attend the Annual Meeting. This is designed to authenticate stockholders’
identities, to allow stockholders to give their voting instructions and to confirm that stockholders’ instructions have been recorded
properly.
Any
stockholder submitting a proxy may revoke such proxy at any time prior to its exercise by notifying the Secretary of the Company, in
writing, prior to the Annual Meeting. Any stockholder attending the Annual Meeting may revoke his or her proxy and vote personally by
notifying the Secretary of the Company at the Annual Meeting.
This
Proxy Statement, the Notice of Annual Meeting, and accompanying proxy are being furnished to holders of our common stock, par value $0.0001
per share, at the close of business on August 24, 2021 (the “Record Date”), the record date for the Annual Meeting.
Web links and addresses contained in this Proxy Statement are provided for convenience only, and the content on the referenced websites
does not constitute a part of this Proxy Statement.
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Which
items will be voted on at the Annual Meeting?
Stockholders
will vote on the following items at the Annual Meeting:
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1.
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To
elect four directors nominated by the Company’s Board, based on the recommendation of the Company’s independent directors,
to serve for a two-year term following approval by the stockholders at the Annual Meeting;
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2.
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To
ratify the appointment of Prager Metis CPAs, LLC (“Prager Metis”) as the Company’s independent registered
public accounting firm for the fiscal year ending May 31, 2022; and
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3.
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To
transact such other business as may properly come before the Annual Meeting and/or any adjournment thereof.
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How
does the Board recommend I vote on each of the proposals presented in this Proxy Statement?
The
Board recommends a vote FOR the election of each of the director nominees to be members of the Board; and FOR
Proposal 2 (ratification of the appointment of Prager Metis as our independent registered public accounting firm for the
fiscal year ending May 31, 2022).
Who
is entitled to vote at the Annual Meeting?
Holders
of our common stock as of the Record Date are entitled to receive the Notice of Annual Meeting and to vote their shares of common stock
at the Annual Meeting. Holders of our common stock are entitled to one vote for each share of common stock held of record on the Record
Date.
How
many shares of common stock are outstanding?
As
of the Record Date, there were 1,463,470 shares of common stock issued and outstanding and entitled to be voted at the Annual Meeting.
What
is the difference between holding common stock as a stockholder of record and as a beneficial owner?
If
your common stock is registered in your name with our transfer agent, Continental Stock Transfer & Trust Company (“Continental
Stock”), you are the “stockholder of record” of those shares. The Notice of Annual Meeting, this Proxy Statement and
any accompanying materials have been provided directly to you by Simplicity.
If
your shares of common stock are held through a broker, bank or other holder of record, you hold your common stock in “street name”
and you are considered the “beneficial owner” of those shares of common stock. This Notice of Annual Meeting and Proxy Statement
and any accompanying documents have been provided to you by your broker, bank or other holder of record. As the beneficial owner, you
have the right to direct your broker, bank or other holder of record how to vote your common stock by using the voting instruction card
or by following their instructions for voting by telephone or on the Internet.
If
you do not give instructions to your broker, your broker can vote your shares with respect to “routine” items, but not with
respect to “non-routine” items. On non-routine items for which you do not give your broker instructions, the shares will
be treated as broker non-votes. Our management believes that Proposal 2 (ratification of the appointment of Prager Metis as the
Company’s independent registered public accounting firm for the fiscal year ending May 31, 2022) is a “routine” matter
for which brokers will have authority to vote your shares of common stock at the Annual Meeting if you do not give instruction on how
to vote your shares. Consequently, if customers do not give any direction, brokers will be permitted to vote shares of common stock at
the Annual Meeting in relation to Proposal 2. However, Proposal 1 is a non-routine matter for which brokers do not have authority to
vote your shares at the Annual Meeting if you do not provide instructions on how to vote your shares. Therefore, we encourage you to
submit your voting instructions to your broker to ensure your shares of common stock are voted on all proposals at the Annual Meeting.
How
do I vote?
You
can vote your shares in one of two ways: either by proxy or in person (virtually) at the Annual Meeting. If you choose to vote by proxy,
you may do so via the Internet or by telephone, or by signing and returning the proxy card enclosed therein. Each of these procedures
is explained below. Even if you plan to attend (virtually) the Annual Meeting, the Board recommends that you vote by proxy so your shares
of common stock will be voted as directed by you if you are unable to attend the virtual Annual Meeting.
Because
many stockholders will not attend the virtual Annual Meeting personally, it is necessary that a large number of stockholders be represented
by proxy. By following the procedures for voting via the Internet or by telephone, or by signing and returning the enclosed proxy card,
your shares can be voted at the virtual Annual Meeting in the manner indicated. If you sign and return your proxy card, but do not specify
how you want your shares to be voted, they will be voted, in accordance with the Board’s recommendation on Proposals 1 and 2, and
with respect to any other matter that may be presented at the Annual Meeting, in the discretion of the proxy holders named in your proxy
card.
Voting
via the Internet
You
can vote your shares via the Internet by accessing https://www.cstproxy.com/simplicityesports/2021 and following the instructions
contained on that website. The Internet voting procedures are designed to authenticate your identity and to allow you to vote your shares
and confirm that your voting instructions have been properly recorded. If you vote via the Internet, you do not need to mail a proxy
card.
Voting
by Telephone
You
can vote your shares by telephone by calling the number provided on the voting website (https://www.cstproxy.com/simplicityesports/2021)
and on the proxy card. The telephone voting procedures are designed to authenticate your identity and to allow you to vote your shares
and confirm that your voting instructions have been properly recorded. If you vote via the telephone, you do not need to mail a proxy
card.
Voting
by Mail
You
can vote by mail by filling out the enclosed proxy card and returning it per the instructions on the card.
What
can I do if I change my mind after I vote?
If
you are a stockholder of record, you can revoke your proxy before it is exercised by:
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Giving
written notice to the Corporate Secretary of the Company;
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Delivering
a valid, later-dated proxy in a timely manner; or
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Voting
at the virtual Annual Meeting.
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If
you are a beneficial owner of common stock, you may submit new voting instructions by contacting your broker, bank or other holder of
record. All shares of common stock for which proxies have been properly submitted and not revoked will be voted at the Annual Meeting.
Where
can I find the voting results?
We
intend to announce the preliminary voting results at the Annual Meeting and will publish the final results in a Current Report on Form
8-K, which we will file with the Securities and Exchange Commission (the “SEC”) no later than four business days following
the Annual Meeting. If the final voting results are unavailable in time to file a Form 8-K with the SEC within four business days after
the Annual Meeting, we intend to file a Form 8-K to disclose the preliminary results and, within four business days after the final results
are known, will file an additional Form 8-K with the SEC to disclose the final voting results.
What
is a quorum for the Annual Meeting?
The
presence of the holders of 731,736 shares of common stock, in person (virtually) or by proxy at the Annual Meeting, representing a majority
of the voting power of all outstanding shares of capital stock of the Company entitled to vote at the Annual Meeting is necessary to
constitute a quorum. If you have returned valid proxy instructions or attend the virtual Annual Meeting, your common stock will be counted
for the purpose of determining whether there is a quorum. Proxies that are marked “abstain” and proxies relating to “street
name” common stock that are returned to us but marked by brokers as “not voted” will be treated as shares of common
stock present for purposes of determining the presence of a quorum on all matters. If there is no quorum, the chairman of the Annual
Meeting may adjourn the Annual Meeting to another date. Abstentions are counted as present and entitled to vote for purposes of determining
a quorum.
What
are broker non-votes?
Generally,
a broker non-vote occurs when a bank, broker or other nominee that holds shares of common stock in “street name” for customers
is precluded from exercising voting discretion on a particular proposal because (i) the beneficial owner has not instructed the bank,
broker or other nominee how to vote, and (ii) the bank, broker or other nominee lacks discretionary voting power to vote the common stock.
A bank, broker or other nominee does not have discretionary voting power with respect to the approval of “non-routine” matters
absent specific voting instructions from the beneficial owners of the common stock.
On
non-routine items for which you do not give your broker instructions, the shares will be treated as broker non-votes. Proposal 1 (election
of directors) is a non-routine item. If you do not give your broker instructions with regard to this proposal, brokers will not be permitted
to vote your shares of common stock at the Annual Meeting in relation to this proposal.
Our
management believes that Proposal 2 (ratification of the appointment of Prager Metis as our independent registered public
accounting firm for the fiscal year ending May 31, 2022) is a “routine” matter for which brokers will have authority to vote
your shares of common stock at the virtual Annual Meeting if you do not give instruction on how to vote your shares. Consequently, if
customers do not give any direction, brokers will be permitted to vote shares of common stock at the Annual Meeting in relation to Proposal
2. Nevertheless, we encourage you to submit your voting instructions to your broker to ensure your shares of common stock are voted at
the Annual Meeting.
How
many votes are required to approve each of the proposals presented in this Proxy Statement, and how are votes counted?
Proposal
1
With
respect to Proposal 1 (election of directors), directors shall be elected by a plurality of the votes cast (meaning that the four director
nominees who receive the highest number of shares voted “for” their election are elected). “Withhold” votes and
broker non-votes are not considered votes cast for the foregoing purpose, and will have no effect on the election of the director nominees.
Proposal
2
With
respect to Proposal 2 (ratification of auditors), adoption of Proposal 2 requires the affirmative vote of the majority of the votes present
and entitled to vote at the Annual Meeting (meaning the number of shares voted “for” a proposal must exceed the number of
shares voted “against” such proposal). With respect to Proposal 2, you may vote “for,” “against”
or “abstain” from voting on such proposal. Abstentions will have the effect of a vote “against” Proposal 2. Because
broker non-votes are not considered present for the foregoing purpose, they will have no effect on the vote for Proposal 2.
How
will my common stock be voted at the Annual Meeting?
At
the Annual Meeting, the Board (the persons named in the proxy card or, if applicable, their substitutes) will vote your shares of common
stock as you instruct. If you submit a proxy but do not indicate how you would like to vote your common stock, your shares will be voted
as the Board recommends, which is as follows:
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FOR
Proposal 1 (election of directors proposal); and
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FOR
Proposal 2 (ratification of auditors).
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What
happens if stockholders approve one or more proposals but not others?
Approval
of any one proposal is not dependent on stockholders approving any other proposal. Therefore, if stockholders approve one proposal, but
not others, the approved proposal would still take effect. Note, however, if Proposal 2 (ratification of auditors) is not approved, the
Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm. Even if the
selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at
any time during the fiscal year if it determines that such a change would be in the best interests of the Company and its stockholders.
Who
will pay for the cost of the Annual Meeting and this proxy solicitation?
We
will pay the costs associated with the Annual Meeting and solicitation of proxies, including the costs of transmitting the proxy materials.
In addition to these mailed proxy materials, our directors and officers may also solicit proxies in person, by telephone or by other
means of communication. Our directors and officers will not be paid any additional compensation for soliciting proxies. We may also reimburse
brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
MATTERS
TO COME BEFORE THE ANNUAL MEETING
PROPOSAL
1—ELECTION OF DIRECTORS
Officers,
Directors and Director Nominees
Our
Board is comprised of nine directors, divided into two classes—Class I and Class II—with only one class of directors being
elected in each year and each class serving a two-year term. Four of the directors are designated as Class I directors, and five are
designated as Class II directors. However, as of September 15, 2021, there is a Class II Board vacancy. The Board is conducting
a search for a replacement director to fill the vacancy. Once a suitable replacement is found, he or she will serve as a Class II director
until the 2022 annual meeting of stockholders.
Donald
R. Caldwell, Roman Franklin, Edward Leonard Jaroski and Frank Leavy currently serve as the Class I directors, with terms expiring at
the 2021 Annual Meeting. Jed Kaplan, William H. Herrmann, Jr., Max Hooper and Laila Cavalcanti Loss serve as the Class II directors,
with terms expiring at the 2022 annual meeting of stockholders. Our Board has determined in its business judgment that five of our directors
(Messrs. Caldwell, Herrmann, Jaroski, Leavy and Dr. Hooper) are independent. Although we are not currently a listed issuer, our Board
has evaluated and determined director independence in accordance with The Nasdaq Capital Market (“Nasdaq Capital Market”),
the NYSE American rules for U.S. Companies, the Sarbanes-Oxley Act and related SEC rules.
Based
on the recommendation of the Company’s independent directors, the Board recommends a vote FOR Messrs. Caldwell, Franklin, Jaroski
and Leavy. If re-elected, Messrs. Caldwell, Franklin, Jaroski and Leavy will serve until the 2023 annual meeting of stockholders or until
their successors are duly elected and qualified, or their earlier death, resignation or removal. If any of these nominees is unavailable
for election, an event which the Board does not presently anticipate, the persons named in the enclosed proxy intend to vote the proxies
solicited hereby FOR the election of such other nominee or nominees as may be nominated by the Board.
Vote
Required
Directors
shall be elected by a plurality of the votes cast (meaning that the four director nominees who receive the highest number of shares voted
“for” their election are elected). “Withhold” votes and broker non-votes are not considered votes cast for the
foregoing purpose, and will have no effect on the election of the director nominees.
Recommendation
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” EACH OF MESSRS. CALDWELL, FRANKLIN, JAROSKI AND LEAVY.
Below
is biographical and other information about the nominees for election as director and each current director whose term continues after
the Annual Meeting, including information concerning the particular experience, qualifications, attributes and/or skills that led the
independent directors and the Board to determine that the nominee should serve as a director, or each director should continue to serve
as a director, as the case may be.
Class
I Directors—Terms Expiring in 2021 and Standing for Re-election at the Annual Meeting
Name
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Age
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Positions
with the Company and Biography
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Donald
R. Caldwell
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75
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Class
I Director
Mr.
Caldwell has been an independent director since August 16, 2017, and he served as Chairman of the Board from August 16, 2017 until
March 29, 2021. Mr. Caldwell, an experienced investor, co-founded Cross Atlantic Capital Partners, Inc., a venture capital management
company, where he has served as its Chairman and Chief Executive Officer since 1999. At Cross Atlantic Capital Partners, Inc., Mr.
Caldwell has raised four investment funds totaling over $500 million of committed capital and is responsible for the firm’s
operations, building the investment team, and growing the Cross Atlantic franchise through fundraising, network development, and
deal flow generation. Prior to founding Cross Atlantic Capital Partners, Inc. in March 1999, Mr. Caldwell was President and Chief
Operating Officer of Safeguard Scientifics, Inc. (NYSE: SFE) (“Safeguard”) from 1996 to 1999, where he also previously
served as Executive Vice President from 1993 to 1996. In addition to his service on our Board, Mr. Caldwell currently serves on the
board of directors of three public companies: InsPro Technologies Corporation (OTC: ITCC) since 2008, where he serves as chairman
of the board and member of the audit committee; Lightning Gaming, Inc., since June 2015, where he serves as a director and chairman
of the audit committee; and Quaker Chemical Corporation (NYSE: KWR) since 1997, where he serves as lead director, as chairman of
the executive committee and member of the compensation and audit committees; Mr. Caldwell was previously a member of the board of
directors of Diamond Cluster International, Inc. from 1994 to 2010 and has served as a director for several private companies and
non-profit organizations, including software and money management firms as well as the Pennsylvania Academy of the Fine Arts and
the Committee for Economic Development. Mr. Caldwell is a Certified Public Accountant (Retired) and holds a Bachelor of Science degree
from Babson College and a Master of Business Administration from the Graduate School of Business at Harvard University.
We
believe Mr. Caldwell’s deep financial, entrepreneurial and business expertise and extensive experience as a member of the boards
and board committees of other public companies qualifies him to serve on our Board of Directors.
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Roman
Franklin
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38
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Chief
Executive Officer and Class
I Director
Mr.
Franklin has been a member of our Board of Directors since August 16, 2017 and our Chief Executive Officer since March 29, 2021.
From December 31, 2018 until March 31, 2021, Mr. Franklin served as our President. Mr. Franklin was Chief Investment Officer of
SMC Global USA from March 2016 until December 31, 2016, and prior, President of Franklin Financial Planning from 2005 to 2016. Roman
Franklin is a 16-year veteran of the financial services industry. By the age of 22 he held FINRA Series 7, Series 66, and Life, Health,
and Variable Insurance Licenses. In 2005, he founded a fee-only registered investment advisory firm. In 2008, he was one of the youngest
recipients of the National Association of Financial Advisors (“NAPFA”) Registered Financial Advisor (RFA) designation.
In 2015, he was elected as a Board Member of the NAPFA, South Region Board of Directors, overseeing more than a dozen states from
Texas, to Florida, to North Carolina. Mr. Franklin has experience in domestic and international investment, and has been involved
in multiple business transactions tied to India. Mr. Franklin holds a Bachelor of Science degree in Management from Barry University and an M.B.A. in
Finance from the Graduate School of Business at Stetson University. His civic organization roles include School Advisory Council
for Volusia County Schools, City of DeLand Economic Development Committee, and the Boys’ and Girls’ Clubs of Central
Florida.
We
believe Mr. Franklin’s strong expertise in finance and international and domestic business transactions qualifies him to serve
on our Board of Directors.
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Edward
Leonard Jaroski
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74
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Class I Director
Mr. Jaroski has been an independent member of
our Board of Directors since October 2017. Mr. Jaroski was the founder of Fixed Income Portfolio Manager at Capstone Asset Management
Company and has served as its President and Chief Executive Officer since 1987. Mr. Jaroski has been Chairman, Chief Executive Officer
and President of various Capstone/Steward Funds in the fund complex from 1987 through 2016. Mr. Jaroski was at Tenneco Financial Services
from 1981 to 1987, where he was the Executive Vice President. He started his career at Philadelphia Life Insurance Company as Manager
of Investments in 1969, where he served until 1981 and also served as its Vice President of Finance. He also served as a Director of
Philadelphia Life Asset Management Company. Mr. Jaroski holds the insurance industry professional designations of Chartered Life Underwriter,
Charter Financial Consultant and Fellow Life Management Institute. He holds a B.B.A. degree in Accounting from Temple University.
We
believe Mr. Jaroski’s experience in investments and asset management qualify him to serve on our Board of Directors.
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Frank
Leavy
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68
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Class I Director
Mr. Leavy has been an independent member of
our Board of Directors since August 16, 2017. From 2007 to 2019, Mr. Leavy served as the Senior Vice President and Director of Finance and
Administration for Blake’s All Natural Foods, a manufacturer of “better for you” frozen entrees. Prior to that, he
held various financial officer positions at member companies of Group Rossignol, a world leading company in the winter sports
industry. Specifically, he was Controller of Rossignol Ski Company from 1982 to 2006 and Vice President of Finance of Skis Dynastar,
Inc. and Skis Dynastar Canada from 2000 to 2006. He also served as Chief Operating Officer at Roger Cleveland Golf Company, a
subsidiary of Group Rossignol from 1999 to 2000 and was elected a director of the company from 2003 to 2005. Mr. Leavy holds a
Bachelor of Arts degree from the College of the Holy Cross and a Master of Science degree in accounting from the Graduate School of
Professional Accounting at Northeastern University.
We
believe Mr. Leavy’s extensive experience in corporate finance qualify him to serve on our Board of Directors.
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Class
II Directors—Terms Expiring in 2022
Name
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Age
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Positions
with the Company and Biography
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Jed
Kaplan
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57
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Chairman
of the Board and Class II Director
Mr.
Kaplan has been a member of our Board of Directors since December 31, 2018 and as Chairman of the Board since March 29, 2021. He
served as our sole Chief Executive Officer and interim Chief Financial Officer from February 8, 2019 to March 29, 2021. From December
31, 2018 to February 8, 2019, Mr. Kaplan served as our co-Chief Executive Officer. He founded and serves as the Chief Executive Officer
of Shearson Financial Services, a FINRA-registered broker dealer, since May 1995. As a natural leader possessing a passion for sports
management, Mr. Kaplan has been involved in a wide variety of professional sports ventures. Most recently Mr. Kaplan successfully
sold the NBA G League Team, Iowa Energy to the Minnesota Timberwolves. Currently Mr. Kaplan is also a minority owner of both the
Memphis Grizzlies and Swansea City of the English Championship League. Mr. Kaplan’s insight, vision and knowledge are all represented
as an appointed founding member of the NBA G League leadership committee. Mr. Kaplan graduated from City University of New York in
1989 with a Bachelor of Business Administration degree.
The
Company believes Mr. Kaplan’s strong expertise in the financial services and sports management industries qualifies him to
serve on its Board of Directors.
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William
H. Herrmann, Jr.
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75
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Class II Director
Mr. Herrmann has been an independent member
of our Board of Directors since October 2017. Mr. Herrmann has over 45 years of experience in financial services, and insurance and
investment planning industries. Presently, Mr. Herrmann is the Owner of Herrmann &Associates, a financial services firm
affiliated with Hudson Heritage Capital Management, Inc., a registered investment advisor, since 2006. Mr. Herrmann has also served
as an Independent Director of Steward Funds from 2011 until 2017. Mr. Herrmann served as Chairman of the Nominating and Corporate
Governance Committee and also Chairman of the Contracts Committee. He previously served as the Independent Lead Director of Steward
Funds. Mr. Herrmann was also an Independent Director of Church Capital Fund, where he served as Chairman of the Nominating and
Corporate Governance Committees. He also served as the Lead Independent Director of Church Capital Fund. Mr. Herrmann is a member of
the Advisory Committee to the Liquidation Trustee for the Church Capital Fund Liquidation Trust under TMI Trust Company. Mr.
Herrmann was also a Trustee of LuLu Shriners Investment Advisory Committee and Chairman of Beta Rho Property Company, Inc. Mr.
Herrmann holds a B.A. from the University of Pennsylvania, MBA from Temple University, and the Chartered Life Underwriter (CLU)
designation from the American College. Mr. Herrmann hold series 7, 63, and 65 securities licenses, as well as insurance licenses in
multiple states.
We believe Mr. Herrmann’s experience in
financial services and the investment planning industry qualify him to serve on our Board of Directors.
|
Max
Hooper
|
|
74
|
|
Class II Director
Dr. Hooper, who has been an independent member
of our Board of Directors since August 16, 2017, serves as Managing Director of Merging Traffic, a web-based crowdsourcing portal, since
September 2015 and Head of Investment Banking and Senior Vice President of Triloma Securities, a subsidiary of Triloma Financial Group
LLC, since January 2016. Dr. Hooper is also the founder and owner of Partners Advisory Group and Partners Capital Group, two financial
advisory firms since January 2014. Since February 2018, Dr. Hooper’s primary focus has been as Managing Director/CEO of Managing
Traffic and co-owner of Triloma Financial Group. Prior to that, Dr. Hooper was co-founder of Equity Broadcasting Corporation, a media
company that owned and operated more than one hundred television stations across the United States. Dr. Hooper is an accomplished entrepreneur
and has started multiple businesses in technology/internet, lodging, and services industries. Dr. Hooper has served on the investment
committee of several venture capital and angel funds, and has completed “work out” transactions as a Certified Debt Arbitrator
representing banks and private transactions. Dr. Hooper also has prior experience with SPACs such as transaction structuring, administration,
research, and execution. Dr. Hooper has earned five doctorate degrees from a variety of institutions.
We
believe Dr. Hooper’s expertise in investment, management and mergers and acquisitions over various industries qualify him to
serve on our Board of Directors.
|
Laila
Cavalcanti Loss
|
|
40
|
|
Class II Director
Ms. Loss has been a member of our Board of Directors since
May 2021. From 2010 to 2016, Ms. Loss was the Head of Legal in Latin America and Angola for Expro Group, a leading global oil services
company. Since 2017, Ms. Loss has practiced law in private practice at Cavalcanti Loss Sociedade Individual de Advocacia. Ms. Loss
holds a Master of Laws (LLM) from the University of Texas at Austin, and is permitted to practice law in Brazil and is admitted to
the New York State Bar Association.
|
There
are no family relationships among any of the Company’s directors or executive officers.
Our
officers and directors are well qualified as leaders. In their prior positions, they have gained experience in core management skills,
such as strategic and financial planning, public company financial reporting, compliance, risk management, and leadership development.
Our officers and directors also have experience serving on boards of directors and board committees of other public companies and private
companies, and have an understanding of corporate governance practices and trends, which provides an understanding of different business
processes, challenges, and strategies.
Our
officers are elected by the Board and serve at the discretion of the Board, rather than for specific terms of office. Our Board is authorized
to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that our officers may consist of
a Chief Executive Officer, President, Chief Financial Officer, Vice Presidents, Secretary, Assistant Secretaries, Treasurer and such
other offices as may be determined by the Board.
Corporate
Governance
Director
Independence
Our
common stock is presently quoted on the OTCQB under the symbol “WINR.” Our warrants issued in connection with our initial
public offering in August 2017 are currently quoted on the OTCQB under the symbol “WINRW.” Under the rules of the OTCQB,
we are not required to maintain a majority of independent directors on our Board and we are not required to establish committees of the
Board consisting of independent directors. However, we intend to apply to list our common stock and our warrants on a national securities
exchange such as the Nasdaq Capital Market or the NYSE American. There is no assurance that our listing application will be approved
by the Nasdaq Capital Market or the NYSE American. In order to list our common stock and our warrants on a national securities exchange,
we are required to comply with listing standards relating to corporate governance, requiring, among other things, that:
|
●
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A
majority of our Board consist of “independent directors” as defined by the applicable rules and regulations of the relevant
national securities exchange;
|
|
●
|
The
compensation of our executive officers to be determined, or recommended to the Board for determination, by independent directors
constituting a majority of the independent directors of the Board in a vote in which only independent directors participate or by
a compensation committee comprised solely of independent directors;
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|
●
|
That
director nominees to be selected, or recommended to the Board for selection, by independent directors constituting a majority of
the independent directors of the Board in a vote in which only independent directors participate or by a nomination committee comprised
solely of independent directors; and
|
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●
|
Establishment
of an audit committee with at least three independent directors as well as composed entirely of independent directors, where at least
one of the independent directors qualifies as an audit committee financial expert under SEC rules and as a financially sophisticated
audit committee member under the listing rules of the national securities exchange.
|
In
order to be considered independent for purposes of Rule 10A-3 promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), a member of an audit committee of a listed company may not, other than in his or her capacity as a member
of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory,
or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company
or any of its subsidiaries. Our Board has determined in its business judgment that each of Messrs. Caldwell, Leavy, Jaroski, Herrmann
and Dr. Hooper is independent. Although we are not currently a listed issuer, our Board has determined director independence in accordance
with the Nasdaq Capital Market, the NYSE American rules for U.S. Companies, the Sarbanes-Oxley Act and related SEC rules. Therefore,
a majority of the members of our Board of Directors is independent.
Our
Board of Directors and its Committees
During
the fiscal year ended May 31, 2021, the Board held approximately six meetings. Each of our directors attended at
least 75% of all the meetings of the Board and those committees on which he or she served during the fiscal year ended May 31, 2021,
either in person or telephonically . The Board of Directors encourages all members to attend stockholder meetings, but has not adopted
a formal policy regarding attendance. All of the Company’s directors then serving attended the 2020 annual stockholders
meeting.
Our
Board of Directors has two standing committees: the Audit Committee and the Compensation Committee. Both our Audit Committee and our
Compensation Committee are composed solely of independent directors. Each of these committees operates pursuant to a written charter
setting forth the functions and responsibilities of the committee. Copies of our Audit Committee charter and our Compensation Committee
charter are included as Appendices I and II, respectively, to this Proxy Statement. The charters may also be reviewed on
our website at www.ggsimplicity.com and are available to stockholders in print upon request.
Audit
Committee
Messrs.
Caldwell, Leavy and Dr. Hooper serve as members of our Audit Committee. Mr. Caldwell serves as chairman of the Audit Committee. Under
national securities exchange listing standards and applicable SEC rules, we are required to have three members of the Audit Committee,
all of whom must be independent. Messrs. Caldwell, Leavy and Dr. Hooper are independent. Each member of the Audit Committee is financially
literate and our Board of Directors has determined that Mr. Caldwell qualifies as an “audit committee financial expert” as
defined in applicable SEC rules.
We
have adopted an Audit Committee charter, a copy of which is included as Appendix I to this Proxy Statement. Our Audit Committee
charter details the principal functions and responsibilities of the Audit Committee, including:
|
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the
appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent
registered public accounting firm engaged by us;
|
|
|
|
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|
pre-approving
all audit and non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged
by us, and establishing pre-approval policies and procedures;
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|
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●
|
reviewing
and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued independence;
|
|
|
|
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setting
clear hiring policies for employees or former employees of the independent auditors;
|
|
●
|
setting
clear policies for audit partner rotation in compliance with applicable laws and regulations;
|
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●
|
obtaining
and reviewing a report, at least annually, from the independent auditors describing (i) the independent auditor’s internal
quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review,
of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within, the preceding five years
respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;
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|
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●
|
reviewing
and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC
prior to us entering into such transaction; and
|
|
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|
reviewing
with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including
any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues
regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated
by the Financial Accounting Standards Board, the SEC or other regulatory authorities.
|
The
Audit Committee held approximately two meetings during the fiscal year ended May 31, 2021.
Compensation
Committee
The
members of our Compensation Committee are Messrs. Caldwell, Jaroski and Dr. Hooper. Mr. Caldwell serves as chairman of the Compensation
Committee. We have adopted a Compensation Committee charter, a copy of which is included as Appendix II to this Proxy Statement.
Our Compensation Committee charter details the principal functions of the Compensation Committee, including:
|
●
|
reviewing
and approving the compensation of all of our other executive officers;
|
|
|
|
|
●
|
reviewing
our executive compensation policies and plans;
|
|
|
|
|
●
|
implementing
and administering our incentive compensation equity-based remuneration plans;
|
|
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●
|
assisting
management in complying with our proxy statement and annual report disclosure requirements;
|
|
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●
|
approving
all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers
and employees;
|
|
|
|
|
●
|
producing
a report on executive compensation to be included in our annual proxy statement; and
|
|
|
|
|
●
|
reviewing,
evaluating and recommending changes, if appropriate, to the remuneration for directors.
|
The
charter also provides that the Compensation Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant,
legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such
adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the
Compensation Committee will consider the independence of each such adviser, including the factors required by the relevant national securities
exchange, if the Company’s common stock is listed thereon, and the SEC. Neither the Compensation Committee nor management engaged
a compensation consultant to provide advice or recommendations on the amount or form of executive and director compensation during the
fiscal year ended May 31, 2021.
The
Compensation Committee meets at least once each fiscal year to determine and recommend to the Board for approval the compensation packages
for executive officers in light of the Company’s compensation philosophy and objectives. The Compensation Committee considers recommendations
from the Chief Executive Officer as to compensation for each executive officer based upon their performance against Company and personal
objectives, other than himself. The Compensation Committee has full responsibility to recommend to the independent directors of the Board
the compensation package of the Chief Executive Officer and the named executive officers. The Compensation Committee may not delegate
its authority regarding executive compensation.
The
Compensation Committee held approximately two meetings during the fiscal year ended May 31, 2021.
Director
Nominations
We
do not have a standing nominating committee. In accordance with the listing standards of national securities exchanges, a majority of
the independent directors may recommend a director nominee for selection by the Board of Directors. The Board of Directors believes that
the independent directors can satisfactorily carry out the responsibility of properly selecting or approving director nominees without
the formation of a standing nominating committee. The directors who shall participate in the consideration and recommendation of director
nominees are Messrs. Caldwell, Jaroski, Leavy and Herrmann, and Dr. Hooper. All such directors are independent. As there is no standing
nominating committee, we do not have a nominating committee charter in place.
The
Board of Directors will also consider director candidates recommended for nomination by our stockholders during such times as they are
seeking proposed nominees to stand for election. Our stockholders that wish to nominate a director for election to the Board of Directors
should follow the procedures set forth in our bylaws.
We
have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess.
In general, in identifying and evaluating nominees for director, the Board of Directors considers educational background, diversity of
professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent
the best interests of our stockholders.
Separation
of Chairman of the Board and Chief Executive Officer Positions
Consistent
with the Company’s bylaws, the roles of Chairman of the Board and Chief Executive Officer may be separated. The Board has determined
that it is appropriate at this time to separate the roles of Chairman and Chief Executive Officer in recognition of the differences between
the two roles, and to better serve the interests of the stockholders. The Chief Executive Officer, in conjunction with senior management,
is responsible for developing and recommending to the Board the strategic direction for the Company, and for the day-to-day leadership
of the Company, and he is responsible, together with senior management, for the overall performance of the Company, with such performance
measurement based on operating and strategic plans ratified at various times by the Board.
In
carrying out his responsibilities, the Chairman preserves the distinction between management and Board oversight by maintaining management’s
responsibility for: (i) developing and frequently updating corporate strategy, and recommending such strategy to the Board for critique
and ratification, (ii) taking such actions as necessary to minimize risks to the Company and the stockholders, and (iii) the overall
performance of the Company.
The
Board believes that there are advantages to the separate Chairman and Chief Executive Officer positions, including:
|
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Enhanced
communications and relations between the Board, the Chief Executive Officer and other members of senior management,
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●
|
Assisting
the Board in reaching consensus on particular strategies and policies, and
|
|
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|
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●
|
Facilitating
robust director, Board and Chief Executive Officer evaluation processes.
|
Code
of Ethics
We
have adopted a Code of Ethics applicable to our directors, officers and employees, including our principal executive officer, principal
financial officer, principal accounting officer or controller, or persons performing similar functions. We previously filed a copy of
our form of Code of Ethics as an exhibit to our registration statement on Form S-1 (File 333-219251). You will be able to review these
documents by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, we will provide a copy of the
Code of Ethics to you without charge upon request. In order to request a copy of the Code of Ethics, please write to Simplicity Esports
and Gaming Company, 7000 W. Palmetto Park Road, Suite 505, Boca Raton, Florida 33433, Attention: Corporate Secretary, or call (855) 345-9467.
We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K. See “Where
You Can Find Additional Information.”
Limitation
on Liability and Indemnification of Officers and Directors
Our
third amended and restated certificate of incorporation, as amended, provides that our officers and directors will be indemnified by
us to the fullest extent authorized by Delaware law, as it now exists or may in the future be amended. In addition, our restated certificate
provides that our directors will not be personally liable for monetary damages to us for breaches of their fiduciary duty as directors,
except to the extent such exemption from liability or limitation thereof is not permitted by the Delaware General Corporation Law (the
“DGCL”).
We
have entered into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification
provided for in our third amended and restated certificate. Our bylaws also permit us to maintain insurance on behalf of any officer,
director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit such indemnification.
We have purchased a policy of directors’ and officers’ liability insurance that insures our officers and directors against
the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our
officers and directors.
Our
officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account,
and have agreed to waive any right, title, interest or claim of any kind they may have in the future as a result of, or arising out of,
any services provided to us and will not seek recourse against the trust account for any reason whatsoever. Accordingly, any indemnification
we provide to our officers and directors will only be able to be satisfied by us if we have sufficient funds outside of the trust account.
These
provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions
also may have the effect of reducing the likelihood of derivative litigation against officers and directors, even though such an action,
if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected
to the extent we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.
We
believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced
officers and directors.
The
Board’s Role in Risk Oversight
Although
our management is primarily responsible for managing our risk exposure on a daily basis, our Board of Directors oversees the risk management
processes. Our Board, as a whole, determines the appropriate level of risk for our Company, assesses the specific risks that we face,
and reviews management’s strategies for adequately mitigating and managing the identified risks. Although our Board administers
this risk management oversight function, our Audit Committee supports our Board in discharging its oversight duties and addresses risks
inherent in its area.
Communications
with the Board of Directors
Stockholders
may communicate directly with the Board of Directors, as a group, or any individual director by submitting written correspondence addressed
to the Board or an individual director at Simplicity Esports and Gaming Company, 7000 W. Palmetto Park Rd., Suite 505, Boca Raton, FL
33433. All communications are relayed to the appropriate Board member or members.
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires our officers, directors and persons
who beneficially own more than 10% of our common stock to file reports of ownership and changes in ownership with the SEC. These reporting
persons are also required to furnish us with copies of all Section 16(a) forms they file.
Based
solely upon a review of such forms, we believe that except as set forth herein, no Section 16(a) reporting persons failed to timely file
their required Section 16(a) reports during the year fiscal ended May 31, 2021. During the fiscal year ended May 31, 2021, (i) Mr. Caldwell
failed to timely file one Form 4 relating to one transaction; (ii) Mr. Franklin failed to timely file six Form 4s, each relating
to one transaction, and two Form 4s, each relating to two transactions; (iii) Ms. Hennessey failed to timely file her Form 3; (iv)
Dr. Hooper failed to timely file one Form 4 relating to one transaction; (v) Mr. Kaplan failed to timely file seven Form 4s, each
relating to one transaction, and four Form 4s, each relating to two transactions; (vi) Mr. Leavy failed to file one Form 4s relating
to one transaction; and (vii) Ms. Loss failed to timely file her Form 3.
In addition, the following
persons failed to timely file certain Section 16(a) forms that were due in prior fiscal years. Mr. Caldwell failed to timely file one
Form 4 relating to two transactions. Mr. Franklin failed to timely file one Form 4 relating to two transactions, and three Form 4s, each
relating to one transaction. Stephen Grossman failed to timely file a Form 3 and three Form 4s, each relating to one transaction. Mr.
Herrmann failed to timely file one Form 4 relating to three transactions, one Form 4 relating to two transactions, and three Form 4s,
each relating to one transaction. Dr. Hooper failed file one Form 4 relating to three transactions. Mr. Jaroski failed to timely file
one Form 4 relating to three transactions, one Form 4 relating to two transactions, and one Form 4 relating to one transaction. Mr. Kaplan
failed to timely file a Form 3, one Form 4 relating to three transactions, one Form 4 relating to four transactions, one Form 4 relating
to five transactions, one Form 4 relating to two transactions, and one Form 4s relating to one transaction. Mr. Leavy failed to file
one Form 4 relating to three transactions.
Director
Compensation
During
the fiscal year ended May 31, 2021, each non-employee director, other than our Chairman of the Board, received a grant of 2,500
shares of the Company’s common stock as compensation for services as a member of the Board. Our Chairman of the Board received
an annual grant of 5,000 shares of the Company’s common stock in exchange for his services in that capacity. Effective
March 29, 2021, Jed Kaplan resigned as Chief Executive Officer and Interim Chief Financial Officer and was appointed as Chairman of the
Board. In addition to his equity grant, Mr. Kaplan receives $4,000 per month in exchange for his services as Chairman of the Board.
During
the fiscal year ended May 31, 2021, executive officers who are also directors do not receive any additional compensation for their services
as directors. Compensation for members of the Board is reviewed annually by the Compensation Committee. The Compensation Committee may
not delegate its authority regarding director compensation, and, except as described above, no executive officer plays a role in determining
the amount of director compensation. The Compensation Committee considers the amount of time directors dedicate to Company matters and
the need to attract and retain qualified directors when determining Board compensation.
Fiscal
Year Ended May 31, 2021 Director Compensation Table
Name
|
|
Fees
earned
or
paid
in
cash
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
|
|
Non-equity
incentive
plan
compensation
($)
|
|
Nonqualified
deferred
compensation
earnings
($)
|
|
All
Other
Compensation
($)
|
|
Total
($)
|
Donald R. Caldwell
|
|
$
|
--
|
|
|
$
|
30,938
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
30,938
|
|
Edward Leonard Jaroski
|
|
$
|
--
|
|
|
$
|
17,330
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
17,330
|
|
Frank Leavy
|
|
$
|
--
|
|
|
$
|
17,330
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
17,330
|
|
William H. Herrmann, Jr.
|
|
$
|
--
|
|
|
$
|
17,330
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
17,330
|
|
Max Hooper
|
|
$
|
--
|
|
|
$
|
17,330
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
17,330
|
|
Laila Cavalcanti Loss
|
|
$
|
--
|
|
|
$
|
|
(1)
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
-
|
|
Jed Kaplan (2)
|
|
$
|
8,000
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
8,000
|
|
|
(1)
|
Ms. Loss received common
stock valued at $55,366 for legal services provided to the Company. In addition, Ms. Loss earned $27,500 for legal services provided
to the Company. A portion of the $27,500 has not yet been paid to Ms. Loss.
|
|
(2)
|
Mr.
Kaplan ceased to be an executive officer on March 29, 2021. On March 25, 2021, the Company’s board of directors appointed Mr.
Kaplan as Chairman of the Board, effective March 29, 2021. Mr. Kaplan resigned as Chief Executive Officer and Interim Chief Financial
Officer effective March 29, 2021.
|
EXECUTIVE
COMPENSATION
The
following table summarizes all compensation recorded by us in the past two fiscal years ended May 31, 2021 for:
|
●
|
our
principal executive officer or other individual serving in a similar capacity, and
|
|
|
|
|
●
|
our
two most highly compensated executive officers, other than our principal executive officer, who were serving as corporate officers
at May 31, 2021.
|
For
definitional purposes, these individuals are sometimes referred to as the “named executive officers.”
2021
Summary Compensation Table
Name
and Principal Position
|
|
Fiscal
Year Ended
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards ($)
|
|
|
Option
Awards ($)
|
|
|
All
Other Compensation ($)
|
|
|
Total
($)
|
|
Roman Franklin,
|
|
|
5/31/2021
|
|
|
$
|
197,737
|
|
|
$
|
125,000
|
|
|
$
|
1,032,243
|
(3)
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
1,354,980
|
|
Chief Executive Officer and Former President
(1)
|
|
|
5/31/2020
|
|
|
$
|
100,000
|
|
|
$
|
75,000
|
(2)
|
|
$
|
245,215
|
(4)
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
420,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jed Kaplan,
|
|
|
5/31/2021
|
|
|
$
|
85,308
|
(5)
|
|
$
|
125,000
|
|
|
$
|
1,201,465
|
(6)
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
1,411,773
|
|
Former Chief Executive Officer and former interim
Chief Financial Officer (7)
|
|
|
5/31/2020
|
|
|
$
|
--
|
|
|
$
|
75,000
|
(8)
|
|
$
|
311,925
|
(4)
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
386,925
|
|
|
(1)
|
Mr.
Franklin was appointed Chief Executive Officer on March 29, 2021, and ceased to be President on March 29, 2021.
|
|
(2)
|
This
amount was accrued as of May 31, 2020. During the fiscal year ended May 31, 2021, Mr. Franklin received $40,000 of the accrued bonus
from the fiscal year ended May 31, 2020. As of May 31, 2021, the Company still owes Mr. Franklin $35,000 of this amount.
|
|
(3)
|
Represents
the aggregate grant date fair value for all restricted stock granted to Mr. Franklin vested in the current fiscal year, computed
in accordance with Topic 718. Assumptions used to determine the aggregate grant date fair value of the restricted stock include per
share grant date fair values ranging from $6.56 to $19.75, based on the closing stock price of the Company’s
common stock as reported on OTC Markets on various dates.
|
|
(4)
|
Represents
the aggregate grant date fair value for all restricted stock granted to the named executive officer vested in the current fiscal
year, computed in accordance with Topic 718. Assumptions used to determine the aggregate grant date fair value of the restricted
stock include a per share grant date fair values ranging from $6.96 to $11.20, based on the closing stock prices of the Company’s
common stock as reported on OTC Markets on various dates.
|
|
(5)
|
Of this amount, $8,000 was paid for Mr. Kaplan’s
services as Chairman of the Board.
|
|
(6)
|
Represents
the aggregate grant date fair value for all restricted stock granted to Mr. Kaplan vested in the current fiscal year, computed in
accordance with Topic 718. Assumptions used to determine the aggregate grant date fair value of the restricted stock include per
share grant date fair values ranging from $6.56 to $19.75, based on the closing stock price of the Company’s
common stock as reported on OTC Markets on various dates.
|
|
(7)
|
Mr.
Kaplan ceased to be an executive officer on March 29, 2021. On March 25, 2021, the Company’s board of directors appointed Mr.
Kaplan as Chairman of the Board, effective March 29, 2021. Mr. Kaplan resigned as Chief Executive Officer and Interim Chief Financial
Officer effective March 29, 2021. Beginning March 29, 2021, Mr. Kaplan is paid $4,000 per month for his services as Chairman of
the Board. In addition, Mr. Kaplan received a grant of 5,000 shares of the Company’s common stock for his services as Chairman
of the Board.
|
|
(8)
|
This amount was accrued as of May 31, 2020. During the
fiscal year ended May 31, 2021, Mr. Kaplan received $40,000 of the accrued bonus from the fiscal year ended May 31, 2020. As of May
31, 2021, the Company still owes Mr. Kaplan $35,000 of this amount.
|
Outstanding
Equity Awards at 2021 Fiscal Year-End
The
following table sets forth information on outstanding options and stock awards held by the named executive officers as of May 31, 2021.
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
|
|
Number
of Securities Underlying Unexercised Options (#) Exercisable
|
|
|
Number
of Securities Underlying Unexercised Options (#) Unexercisable
|
|
|
Option
Exercise Price ($)
|
|
|
Option
Expiration Date
|
|
|
Number
of Shares or Units Of Stock that Have Not Vested (#) (1)
|
|
|
Market
Value Of Shares Or Units of Stock That Have Not
Vested ($) (1)
|
|
Roman
Franklin
|
|
|
--
|
|
|
|
--
|
|
|
$
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jed
Kaplan
|
|
|
--
|
|
|
|
--
|
|
|
$
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
--
|
|
2021
Option Exercises and Stock Vested Table
The
following table sets forth the vesting of restricted stock during the fiscal year ended May 31, 2021 for the named executive officers:
|
|
Stock Awards
|
|
Name
|
|
Number of Shares Acquired on
Vesting
|
|
|
Value Realized on Vesting
|
|
Roman Franklin
|
|
|
91,067
|
|
|
$
|
1,032,243
|
|
|
|
|
|
|
|
|
|
|
Jed Kaplan
|
|
|
106,875
|
|
|
$
|
1,201,465
|
|
Executive
Officer and Director Compensation
The
Company intends to develop an executive compensation program that is consistent with its existing compensation policies and philosophies,
which are designed to align compensation with our business objectives and the creation of stockholder value, while enabling us to attract,
motivate and retain individuals who contribute to the long-term success of the Company.
Decisions
on the executive compensation program will be made by the compensation committee. The following discussion is based on the present expectations
as to the executive compensation program to be adopted by the compensation committee. The executive compensation program actually adopted
will depend on the judgment of the members of the compensation committee and may differ from that set forth in the following discussion.
We
anticipate that decisions regarding executive compensation will reflect our belief that the executive compensation program must be competitive
in order to attract and retain our executive officers. We anticipate that the compensation committee will seek to implement our compensation
policies and philosophies by linking a significant portion of our executive officers’ cash compensation to performance objectives
and by providing a portion of their compensation as long-term incentive compensation in the form of equity awards.
We
anticipate that compensation for our executive officers will have three primary components: base salary, an annual cash incentive bonus
and long-term incentive compensation in the form of share-based awards, if any.
Base
Salary
Our
compensation committee will determine base salaries and manage the base salary review process, subject to existing employment agreements.
Annual
Bonuses
We
intend to use annual cash incentive bonuses for the executive officers to tie a portion of their compensation to financial and operational
objectives achievable within the applicable fiscal year. We expect that, near the beginning of each year, the compensation committee
will select the performance targets, target amounts, target award opportunities and other term and conditions of annual cash bonuses
for the executive officers, subject to the terms of any employment agreement. Following the end of each year, the compensation committee
will determine the extent to which the performance targets were achieved and the amount of the award that is payable to the executive
officers.
On
July 29, 2020, the board of directors approved a cash bonus to each of Messrs. Kaplan and Franklin in the amount of $75,000 in
return for services provided during the 2020 fiscal year. Such bonuses will be deferred and paid when the Company has sufficient funds
available to pay such bonuses, as to be reasonably determined by the board of directors and the respective executives. During the
fiscal year ended May 31, 2021, the Company paid $40,000 of such bonus amount to each of Messrs. Kaplan and Franklin. As of May 31, 2021,
the Company owed $35,000 to each of Messrs. Kaplan and Franklin for the bonus granted for the fiscal year ended May 31, 2020.
In December
2020, the board of directors approved a cash bonus to each of Messrs. Kaplan
and Franklin in the amount of $125,000. Such bonuses have been deferred and will be paid when the Company has sufficient funds available
to pay such bonuses, to be reasonably determined by the board of directors and the respective executives.
Stock-Based
Awards
We
intend to use stock-based awards to reward long-term performance of the executive officers. We believe that providing a meaningful portion
of the total compensation package in the form of stock-based awards will align the incentives of its executive officers with the interests
of its stockholders and serve to motivate and retain the individual executive officers. Stock-based awards will be awarded under the
Incentive Plan, which has been adopted by our Board of Directors and is being submitted to our shareholders for approval at the special
meeting in lieu of an annual meeting.
Restricted
Stock Awards
On
July 29, 2020, the Board issued 41,875 shares of common stock to Jed Kaplan, our then-Chief Executive Officer and Interim Chief Financial
Officer and a member of our board of directors. Of these shares, (i) 31,250 shares of common stock related to services provided by Mr.
Kaplan to the Company during the 2020 fiscal year, (ii) 8,750 shares of common stock related to grants that should have been, but were
not, made pursuant to the Kaplan 2018 Agreement (as hereinafter defined), and (iii) 1,875 shares of common stock related to grants made
pursuant to the Kaplan 2020 Agreement (as hereinafter defined). Mr. Kaplan currently serves as our Chairman of the Board. The Kaplan
2018 Agreement provided for the grant to Mr. Kaplan of 1,250 shares of common stock per month. For the months of January 2020 through
July 2020, however, such shares had not been granted. Accordingly, the July 29, 2020 grant included an aggregate of 8,750 shares of common
stock that should have been granted for the months of January 2020 through July 2020. The Kaplan 2020 Agreement provides for the grant
to Mr. Kaplan of 1,875 shares of common stock per month. Such shares were fully vested and earned as of the issuance thereof.
On
July 29, 2020, the Board also issued 34,813 shares of common stock to Roman Franklin, our then-President and a member of our board of
directors. Of these shares, (i) 31,250 shares of common stock related to services provided by Mr. Franklin to the Company during the
2020 fiscal year, (ii) 2,625 shares of common stock related to grants that should have been, but were not, made pursuant to the Franklin
2018 Agreement (as hereinafter defined), and (iii) 938 shares of common stock related to grants made pursuant to the Franklin 2020 Agreement
(as hereinafter defined). Mr. Franklin currently serves as our Chief Executive Officer and a member of the board of directors. The Franklin
2018 Agreement provided for the grant to Mr. Franklin of 375 shares of common stock per month. For the months of January 2020 through
July 2020, however, such shares had not been granted. Accordingly, the July 29, 2020 grant included an aggregate of 2,625 shares of common
stock that should have been granted for the months of January 2020 through July 2020. The Franklin 2020 Agreement provides for the grant
to Mr. Franklin of 782 shares of common stock per month. Such shares were fully vested and earned as of the issuance thereof.
Executive
Employment Agreements
On
December 31, 2018, the Company entered into an employment agreement (the “Kaplan 2018 Agreement”) with Jed Kaplan, pursuant
to which the parties agreed that he would serve as the Co-Chief Executive Officer of the Company until March 31, 2019, at which point
he automatically became the sole Chief Executive Officer of the Company. Under the terms of the Kaplan 2018 Agreement, Mr. Kaplan did
not receive a salary or other monetary compensation and in lieu thereof he will receive an equity grant of 1,250 shares of Common Stock
per month, which shares will be fully vested upon grant.
On
July 29, 2020, the Company entered into a new employment agreement (the “Kaplan 2020 Agreement”) with Mr. Kaplan. Such employment
agreement replaced the Kaplan 2018 Agreement. As a result, the Kaplan 2018 Agreement was terminated and is of no further force or effect.
Pursuant to the terms of the Kaplan 2020 Agreement, the Company agreed to pay Mr. Kaplan a monthly base salary of $5,000; provided, however,
that the parties agreed that such base salary will be deferred and will accumulate until the Company has sufficient cash available to
make such payments, to be reasonably determined by the Board of Directors and Mr. Kaplan, at which time all accrued and unpaid base salary
will be paid. In addition, Mr. Kaplan will receive an equity grant of 1,875 shares of common stock per month, which shares will be fully
vested upon grant. Mr. Kaplan will also be eligible to receive a quarterly bonus in the form of cash or an equity grant of shares and
will be entitled to participate in the Company’s employee benefit plans. In addition, if, during the term of the Kaplan 2020 Agreement,
the Company’s shares are approved for listing on a U.S. national securities exchange, the Company will pay Mr. Kaplan a $50,000
cash bonus, to be paid upon such listing begin effective.
The
term of the Kaplan 2020 Agreement is for an initial one-year term, which shall automatically renew for successive one-year terms unless
either party provides 60 days’ advance written notice of its intention not to renew the Kaplan 2020 Agreement at the conclusion
of the then applicable term. The term of the Kaplan 2020 Agreement may be terminated by the Company with or without cause or by Mr. Kaplan
with or without good reason, as such terms are defined therein.
On
March 25, 2021, the board of directors appointed Mr. Kaplan as Chairman of the Board, effective March 29, 2021, and he ceased to be the
Company’s Chief Executive Officer and Interim Chief Financial Officer.
On
December 31, 2018, the Company also entered into an employment agreement (the “Franklin 2018 Agreement”) with Roman Franklin,
pursuant to which the parties agreed that he will serve as the President of the Company. Pursuant to the terms of the Franklin 2018 Agreement,
the Company agreed to that Mr. Franklin will receive (i) a monthly base salary of $8,333.33 and (ii) an equity grant of 375 shares of
Common Stock per month, which shares will be fully vested upon grant.
On
July 29, 2020, the Company entered into a new employment agreement (the “Franklin 2020 Agreement”) with Mr. Franklin. Such
employment agreement replaced the Franklin 2018 Agreement. As a result, the Franklin 2018 Agreement was terminated and is of no further
force or effect. Pursuant to the terms of the Franklin 2020 Agreement, the Company agreed to pay Mr. Franklin a monthly base salary of
$12,500; provided, however, that the parties agreed that such base salary will be deferred and will accumulate until the Company has
sufficient cash available to make such payments, to be reasonably determined by the Board of Directors and Mr. Franklin, at which time
all accrued and unpaid base salary will be paid. In addition, Mr. Franklin will receive an equity grant of 782 shares of common stock
per month, which shares will be fully vested upon grant. Mr. Franklin will also be eligible to receive a quarterly bonus in the form
of cash or an equity grant of shares and will be entitled to participate in the Company’s employee benefit plans. In addition,
if, during the term of the Franklin 2020 Agreement, the Company’s shares are approved for listing on a U.S. national securities
exchange, the Company will pay Mr. Franklin a $50,000 cash bonus, to be paid upon such listing begin effective.
Each
of the Kaplan 2020 Agreement and the Franklin 2020 Agreement contains customary non-competition and non-solicitation covenants for a
period of one year after the termination of the executive’s employment.
On
March 25, 2021, the board of directors appointed Mr. Franklin as the Company’s Chief Executive Officer, effective March 29, 2021.
Mr. Kaplan ceased to be the Company’s President on such date. Mr. Franklin continues to be a member of our board of directors.
In connection with Mr. Franklin’s appointment, on March 25, 2021, the Company entered into an employment agreement, dated as of
March 29, 2021 by and between the Company and Mr. Franklin (the “2021 Franklin Employment Agreement”). Pursuant to the terms
of the 2021 Franklin Employment Agreement, in exchange for Mr. Franklin’s services, the Company agreed to pay Mr. Franklin an annual
base salary of $250,000. Mr. Franklin is also eligible to receive a quarterly bonus of up to $15,000 in the form of a cash bonus and/or
equity grant of shares of the Company’s common stock. Mr. Franklin’s eligibility for any bonus and the amount thereof will
be determined solely at the discretion of the Board of Directors.
Mr.
Franklin’s employment and the 2021 Franklin Employment Agreement may be terminated by the Company with or without Cause (as hereinafter
defined), or by Mr. Franklin with or without Good Reason (as hereinafter defined). In addition, in the event of Mr. Franklin’s
death or total disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (“Disability”),
during the term of the 2021 Franklin Employment Agreement, the term of the 2021 Franklin Employment Agreement and Mr. Franklin’s
employment will terminate on the date of death or Disability.
For
purposes of the 2021 Franklin Employment Agreement, “Cause” means, subject to the provisions of the 2021 Franklin Employment
Agreement:
|
(i)
|
Mr.
Franklin’s willful failure to perform his duties (other than any such failure resulting from incapacity due to physical or
mental illness);
|
|
(ii)
|
Mr.
Franklin’s willful failure to comply with any valid and legal directive of the Board of Directors; or
|
|
(iii)
|
Mr.
Franklin’s willful engagement in gross misconduct, which is, in each case, materially injurious to the Company or its affiliates;
or
|
|
(iv)
|
Actions
by Mr. Franklin constituting embezzlement, misappropriation, or fraud, whether or not related to Mr. Franklin’s employment
with the Company; or
|
|
(v)
|
Mr.
Franklin’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent)
or a crime that constitutes a misdemeanor involving moral turpitude; or
|
|
(vi)
|
Mr.
Franklin’s material breach of any material obligation under the 2021 Franklin Employment Agreement, which Mr. Franklin fails
to correct within 10 days after Mr. Franklin receives written notice from the Board of Directors of such breach.
|
For
purposes of the 2021 Franklin Employment Agreement, “Good Reason” means the occurrence of any of the following, in each case
during the term of the 2021 Franklin Employment Agreement:
|
(i)
|
A
material reduction in Mr. Franklin’s base salary;
|
|
(ii)
|
A
material reduction in Mr. Franklin’s target bonus opportunity;
|
|
(iii)
|
A
relocation of Mr. Franklin’s principal place of employment from that set forth in the Franklin Employment Agreement by more
than 35 miles;
|
|
(iv)
|
A
material breach by the Company of any material provision of the Franklin Employment Agreement;
|
|
(v)
|
At
any time following a Change of Control (as defined in the Franklin Employment Agreement), a material change in Mr. Franklin’s
title or responsibilities, or a material diminution by the Company of compensation and benefits (taken as a whole) provided to Mr.
Franklin immediately prior to a Change of Control.
|
Mr.
Franklin may not terminate the 2021 Franklin Employment Agreement for Good Reason pursuant to clause (i), (ii), (iii) or (iv) above unless
(x) Mr. Franklin, within 30 days following the occurrence of the such condition giving rise to Good Reason, notifies the Company in writing
of his intent to terminate with Good Reason; (y) the Company fails to cure such condition within 30 days after being so notified; and
(z) Mr. Franklin actually terminates no later than 30 days after the end of the cure period.
Solely
in the case of an event of Cause relating to Mr. Franklin’s willful failure to perform his duties (other than any such failure
resulting from incapacity due to physical or mental illness), Mr. Franklin’s willful failure to comply with any valid and legal
directive of the Board of Directors; or Mr. Franklin’s material breach of any material obligation under the Franklin Employment
Agreement, which Mr. Franklin fails to correct within 10 days after Mr. Franklin receives written notice from the Board of Directors
of such breach (each, a “Cause Capable of Cure”), the Company may not and will not terminate the Franklin Employment Agreement
for Cause unless the Company has provided written notice to Mr. Franklin of the existence of the circumstances providing grounds for
termination for a Cause Capable of Cure, and Mr. Franklin has had at least 14 calendar days to cure such circumstances to the reasonable
satisfaction of the Company and has thereafter not cured such circumstance within such 14 calendar day period.
Pursuant
to the terms of the 2021 Franklin Employment Agreement, upon (i) termination by the Company for Cause, (ii) termination by Mr. Franklin
without Good Reason, or (iii) a non-renewal by the Company, the Company will pay to Mr. Franklin the following amounts (the “Franklin
Accrued Amounts”):
|
(i)
|
Any
accrued but unpaid base salary;
|
|
(ii)
|
Any
bonus compensation awarded for the quarterly period preceding that in which termination occurs, but unpaid on the date of termination
(the “Prior Quarterly Period Bonus”);
|
|
(iii)
|
Reimbursement
for unreimbursed business expenses;
|
|
(iv)
|
Such
employee benefits, if any, to which Mr. Franklin may be entitled under the Company’s employee benefit plans as of the date
of termination; provided that, in no event shall Mr. Franklin be entitled to any payments in the nature of severance or termination
payments except as specifically provided in the 2021 Franklin Employment Agreement; and
|
|
(v)
|
all
amounts otherwise required to be paid or provided by law.
|
Pursuant
to the terms of the 2021 Franklin Employment Agreement, upon termination of the 2021 Franklin Employment Agreement solely as a result
of Mr. Franklin’s death or Disability, Mr. Franklin or his estate will receive the 2021 Franklin Accrued Amounts and the pro-rated
bonus as provided in the 2021 Franklin Employment Agreement.
Upon
Mr. Franklin’s termination by the Company without or other than for Cause, or (ii) resignation by Mr. Franklin with Good Reason,
then:
|
(i)
|
the
Company will pay to Mr. Franklin the Franklin Accrued Amounts and a pro-rated bonus as provided in the Franklin Employment Agreement;
|
|
(ii)
|
the
Company will pay to Mr. Franklin $125,000 as a severance payment;
|
|
(iii)
|
the
Company will pay to Mr. Franklin any salary that Mr. Franklin would have earned through the end of the then-applicable initial term
or renewal term, as applicable; and
|
|
(iv)
|
any
unvested incentive awards then held by Mr. Franklin will immediately be vested in full.
|
Also
on March 25, 2021, the Board appointed Knicks Lau to serve as the Company’s Chief Financial Officer, effective March 29, 2021.
In connection with Mr. Lau’s appointment, on March 23, 2021, the Company entered into an employment agreement, dated as of March
29, 2021 by and between the Company and Mr. Lau (the “Lau Employment Agreement”). Pursuant to the terms of the Lau Employment
Agreement, in exchange for Mr. Lau’s services, the Company agreed to pay Mr. Lau an annual base salary of $140,000. In addition,
Mr. Lau was entitled to receive compensation in the form of an equity grant of $5,000 in the Company’s common stock for each quarter
during the term of the Lau Employment Agreement. On May 10, 2021, Knicks Lau resigned as the Company’s Chief Financial Officer
for personal reasons. Upon Mr. Lau’s resignation, the Lau Employment Agreement was terminated under mutual agreement of the parties
with no payouts made other than the salary paid for the time served.
On
May 11, 2021, the Board appointed Nancy Hennessey to serve as the Company’s Chief Financial Officer, effective May 17, 2021.
In connection with Ms. Hennessey’s appointment
as the Company’s Chief Financial officer, the Company entered into an employment agreement, dated as of May 17, 2021 by
and between the Company and Ms. Hennessey (the “Hennessey Employment Agreement”). Pursuant to the terms of the Hennessey
Employment Agreement, in exchange for Ms. Hennessey’s services, the Company agreed to pay Ms. Hennessey an annual base salary of
$140,000. In addition, Ms. Hennessey is entitled to receive compensation in the form of an equity grant of $5,000 in the Company’s
common stock for each quarter during the term of the Hennessey Employment Agreement, which runs for a period ending one year after May
17, 2021 and automatically renews for successive one year terms unless either party gives 60 days’ advance written notice of its
intention not to renew the Hennessey Employment Agreement. Ms. Hennessey is also eligible to receive a quarterly bonus of up to $12,500
in the form of a cash bonus and/or equity grant of shares of the Company’s common stock. Pursuant to the terms of the Hennessey
Employment Agreement, Ms. Hennessey will also receive (i) 5,000 shares of common stock upon filing of the 2021 Annual Report on Form
10-K, if completed before July 31, 2021, and (ii) 5,000 shares of common stock upon completion of an uplisting to a national exchange,
such as The Nasdaq Stock Market or the NYSE American. Ms. Hennessey’s eligibility for any bonus and the amount thereof will be
determined solely at the discretion of the Board of Directors.
Ms.
Hennessey’s employment and the Hennessey Employment Agreement may be terminated by the Company with or without Cause (as hereinafter
defined), or by Ms. Hennessey with or without Good Reason (as hereinafter defined). In addition, in the event of Ms. Hennessey’s
death or total disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (“Disability”),
during the term of the Hennessey Employment Agreement, the term of the Hennessey Employment Agreement and Ms. Hennessey’s employment
will terminate on the date of death or Disability.
For
purposes of the Hennessey Employment Agreement, “Cause” means, subject to the provisions of the Hennessey Employment Agreement:
|
(i)
|
Ms.
Hennessey’s willful failure to perform her duties (other than any such failure resulting from incapacity due to physical or
mental illness);
|
|
(ii)
|
Ms.
Hennessey’s willful failure to comply with any valid and legal directive of the Board of Directors; or
|
|
(iii)
|
Ms.
Hennessey’s willful engagement in dishonesty, illegal conduct, or gross misconduct, which is, in each case, materially injurious
to the Company or its affiliates; or
|
|
(iv)
|
Actions
by Ms. Hennessey constituting embezzlement, misappropriation, or fraud, whether or not related to Ms. Hennessey’s employment
with the Company; or
|
|
(v)
|
Ms.
Hennessey’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent)
or a crime that constitutes a misdemeanor involving moral turpitude; or
|
|
(vi)
|
Ms.
Hennessey’s material breach of any material obligation under the Hennessey Employment Agreement, which Ms. Hennessey fails
to correct within 10 days after Ms. Hennessey receives written notice from the Board of Directors of such breach.
|
For
purposes of the Hennessey Employment Agreement, “Good Reason” means the occurrence of any of the following, in each case
during the term of the Hennessey Employment Agreement:
|
(i)
|
A
material reduction in Ms. Hennessey’s base salary;
|
|
(ii)
|
A
material reduction in Ms. Hennessey’s target bonus opportunity;
|
|
(iii)
|
A
relocation of Ms. Hennessey’s principal place of employment from that set forth in the Hennessey Employment Agreement by more
than 35 miles;
|
|
(iv)
|
A
material breach by the Company of any material provision of the Hennessey Employment Agreement;
|
|
(v)
|
At
any time following a Change of Control (as defined in the Hennessey Employment Agreement), a material change in Ms. Hennessey’s
title or responsibilities, or a material diminution by the Company of compensation and benefits (taken as a whole) provided to Ms.
Hennessey immediately prior to a Change of Control.
|
Ms.
Hennessey may not terminate the Hennessey Employment Agreement for Good Reason pursuant to clause (i), (ii), (iii) or (iv) above unless
(x) Ms. Hennessey, within 30 days following the occurrence of the such condition giving rise to Good Reason, notifies the Company in
writing of her intent to terminate with Good Reason; (y) the Company fails to cure such condition within 30 days after being so notified;
and (z) Ms. Hennessey actually terminates no later than 30 days after the end of the cure period.
Solely
in the case of an event of Cause relating to Ms. Hennessey’s willful failure to perform her duties (other than any such failure
resulting from incapacity due to physical or mental illness), Ms. Hennessey’s willful failure to comply with any valid and legal
directive of the Board of Directors; or Ms. Hennessey’s material breach of any material obligation under the Hennessey Employment
Agreement, which Ms. Hennessey fails to correct within 10 days after Ms. Hennessey receives written notice from the Board of Directors
of such breach (each, a “Cause Capable of Cure”), the Company may not and will not terminate the Hennessey Employment Agreement
for Cause unless the Company has provided written notice to Ms. Hennessey of the existence of the circumstances providing grounds for
termination for a Cause Capable of Cure, and Ms. Hennessey has had at least 14 calendar days to cure such circumstances to the reasonable
satisfaction of the Company and has thereafter not cured such circumstance within such 14 calendar day period.
Pursuant
to the terms of the Hennessey Employment Agreement, upon (i) termination by the Company for Cause, (ii) termination by Ms. Hennessey
without Good Reason, or (iii) a non-renewal by the Company, the Company will pay to Ms. Hennessey the following amounts (the “Hennessey
Accrued Amounts”):
|
(i)
|
Any
accrued but unpaid base salary, any accrued but unpaid equity grants and accrued but unused vacation;
|
|
(ii)
|
Any
bonus compensation awarded for the quarterly period preceding that in which termination occurs, but unpaid on the date of termination
(the “Prior Quarterly Period Bonus”);
|
|
(iii)
|
Reimbursement
for unreimbursed business expenses;
|
|
(iv)
|
Such
employee benefits, if any, to which Ms. Hennessey may be entitled under the Company’s employee benefit plans as of the date
of termination; provided that, in no event shall Ms. Hennessey be entitled to any payments in the nature of severance or termination
payments except as specifically provided in the Hennessey Employment Agreement; and
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(v)
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all
amounts otherwise required to be paid or provided by law.
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Pursuant
to the terms of the Hennessey Employment Agreement, upon termination of the Hennessey Employment Agreement solely as a result of Ms.
Hennessey’s death or Disability, Ms. Hennessey or her estate will receive the Hennessey Accrued Amounts and the pro-rated bonus
as provided in the Hennessey Employment Agreement.
Upon
Ms. Hennessey’s termination by the Company without or other than for Cause, or (ii) resignation by Ms. Hennessey with Good Reason,
then:
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(i)
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the
Company will pay to Ms. Hennessey the Hennessey Accrued Amounts and a pro-rated bonus as provided in the Hennessey Employment Agreement;
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(ii)
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the
Company will pay to Ms. Hennessey $35,000 as a severance payment;
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(iii)
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the
Company will pay to Ms. Hennessey any salary that Ms. Hennessey would have earned through the end of the then-applicable initial
term or renewal term, as applicable;
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(iv)
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any
unvested incentive awards then held by Ms. Hennessey will immediately be vested in full; and
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(v)
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any
additional equity grants to which Ms. Hennessey would have been entitled pursuant to the terms of the Hennessey Employment Agreement
will be issued and paid in accordance with the terms of the Hennessey Employment Agreement.
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2020
Omnibus Incentive Plan
The
board and shareholders of the Company approved of the Simplicity Esports and Gaming Company 2020 Omnibus Incentive Plan (the “2020
Plan”) on April 22, 2020 and June 23, 2020, respectively. We believe that the 2020 Plan serves as an essential element of our compensation
program and is critical to our ability to attract and retain the highly qualified employees essential for the execution of our business
strategy. We believe the 2020 Plan will (i) attract and retain key personnel, and (ii) provide a means whereby directors, officers, employees,
consultants, and advisors of the Company and its subsidiaries can acquire and maintain an equity interest in the Company, or be paid
incentive compensation, including incentive compensation measure by reference to the value of the Company’s common stock, thereby
strengthening their commitment to the welfare of the Company and its subsidiaries and aligning their interests with those of the Company’s
stockholders. The 2020 Plan provides for various stock-based incentive awards, including incentive and nonqualified stock options, stock
appreciation rights (“SARs”), restricted stock and restricted stock units (“RSUs”), and other equity-based or
cash-based awards. On June 4, 2021, the Company filed a registration statement on Form S-8 for the purpose of resale or reoffer thereof,
of 1,000,000 shares of the Company’s common stock reserved for issuance pursuant to the 2020 Plan.
2020 Plan Highlights
Highlights of the 2020 Plan are as follows:
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The
Compensation Committee, which is comprised solely of independent directors, administers the 2020 Plan.
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The
total number of shares of common stock authorized for issuance under the 2020 Plan is 1,000,000 shares.
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No
non-employee director may be granted awards under the 2020 Plan during any calendar year if such awards, taken together with any
cash fees paid to such non-employee director would exceed a total value of $250,000 (calculated in accordance with the terms of the
2020 Plan).
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●
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The
exercise price of options and SARs may not be less than the fair market value of the common stock on the date of grant.
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In
addition to other vesting requirements, the Compensation Committee may condition the vesting of awards on the achievement of specific
performance targets.
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Material
Features of the 2020 Plan
Term
The
2020 Plan was effective June 23, 2020. The 2020 Plan will terminate on June 23, 2030, unless the Board terminates it earlier.
Purpose
The
purpose of the 2020 Plan is to provide a means through with the Company and its subsidiaries may attract and retain key personnel, and
to provide a means whereby directors, officer, employees, consultants, and advisors of the Company and its subsidiaries can acquire and
maintain an equity interest in the Company, or be paid incentive compensation, thereby strengthening their commitment to the welfare
of the Company and its subsidiaries and aligning their interests with those of the Company’s stockholders.
Administration
Pursuant
to the terms of the 2020 Plan, a committee of the Board or any properly delegated subcommittee, or, if no such committee or subcommittee
thereof exists, the Board, shall administer the 2020 Plan. The Compensation Committee, which is comprised entirely of independent directors,
administers the 2020 Plan. The Compensation Committee will have the sole and plenary authority to (i) designate participants; (ii) determine
the type or types of awards; (iii) determine the number of shares to be covered by, or with respect to which payments, rights, or other
matters are to be calculated in connection with, awards; (iv) determine the terms and conditions of any award; (v) determine whether,
to what extent, and under what circumstances awards may be settled in, or exercised for, cash, shares of Company common stock, other
securities, other awards, or other property, or canceled, forfeited, or suspended and the method or methods by which awards may be settled,
exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances the delivery of cash,
shares of Company common stock, other securities, other awards, or other property and other amounts payable with respect to an award
shall be deferred either automatically or at the election of the participant or of the Compensation Committee; (vii) interpret, administer,
reconcile any inconsistency in, correct any defect in, and/or supply any omission in the 2020 Plan and any instrument or agreement relating
to, or award granted under, the 2020 Plan; (viii) establish, amend, suspend, or waive any rules and regulations and appoint such agents
as the Compensation Committee shall deem appropriate for the proper administration of the 2020 Plan; (ix) adopt sub-plans; and (x) make
any other determination and take any other action that the Compensation Committee deems necessary or desirable for the administration
of the 2020 Plan.
The
Compensation Committee may delegate its authority to administer the 2020 Plan as permitted by law, except for award grants to non-employee
directors.
The
Compensation Committee will have the discretion to select particular performance targets in connection with awards under the 2020 Plan.
Under the 2020 Plan, performance targets are specific levels of performance of the Company (and/or subsidiaries, divisions or operational
and/or business units, product lines, brands, business segments, administrative departments, or any combination of the foregoing), which
may be determined in accordance with GAAP or on a non-GAAP basis on the specified measures, including, but not limited to:
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debt
ratings;
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pre-tax
margin;
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debt
to capital ratio;
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share
price;
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generation
of cash;
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total
stockholder return;
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issuance
of new debt;
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acquisition
or disposition of assets;
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establishment
of new credit facilities;
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acquisition
or disposition of companies, entities or businesses;
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retirement
of debt;
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creation
of new performance and compensation criteria for key personnel;
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return
measures (including, but not limited to, return on assets, return on capital, return on equity);
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recruiting
and retaining key personnel;
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attraction
of new capital;
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customer
satisfaction;
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cash
flow;
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employee
morale;
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earnings
per share;
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hiring
of strategic personnel;
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net
income;
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development
and implementation of Company policies, strategies and initiatives;
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pre-tax
income;
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creation
of new joint ventures;
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pre-tax
pre-bonus income;
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increasing
the Company’s public visibility and corporate reputation;
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operating
income;
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development
of corporate brand name;
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gross
revenue;
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overhead
cost reductions; or
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net
revenue;
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any
combination of or variations on the foregoing.
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net
margin;
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Eligibility
Employees,
directors and independent contractors (except those performing services in connection with the offer or sale of the Company’s securities
in a capital raising transaction, or promoting or maintaining a market for the Company’s securities) of the Company or its subsidiaries
will be eligible to receive awards under the 2020 Plan.
Maximum
Shares Available
Awards
granted under the 2020 Plan are subject to the following limitations: (i) no more than 1,000,000 shares of common stock (the “Absolute
Share Limit”) will be available for awards under the 2020 Plan; (ii) no more than the number of shares of common stock equal to
the Absolute Share Limit may be issued in the aggregate pursuant to the exercise of incentive stock options granted under the 2020 Plan;
and (iii) the maximum number of shares of common stock subject to awards granted during a single calendar year to any non-employee director,
taken together with any cash fees paid to such non-employee director during such calendar year, shall not exceed a total value of $250,000
(calculating the value of any such awards based on the grant date fair value of such awards for financial reporting purposes).
When
(i) an option or SAR is granted under the 2020 Plan, the maximum number of shares subject to the option or SAR will be counted against
the Absolute Share Limit as one share for every share subject to such option or SAR, regardless of the actual number of shares (if any)
used to settle such option or SAR upon exercise; and (ii) an award other than an option or SAR is granted under the 2020 Plan, the maximum
number of shares subject to the award will be counted against the Absolute Share Limit as two shares for every share subject to such
award, regardless of the actual number of shares (if any) used to settle such award. The issuance of shares or the payment of cash upon
the exercise of an award or in consideration of the cancellation or termination of an award shall reduce the total number of shares available
under the 2020 Plan, as applicable. If shares are not issued or are withheld from payment of an award to satisfy tax obligations with
respect to the award, such shares will not be added back to the Absolute Share Limit, but rather will count against the Absolute Share
Limit.
To
the extent that an award granted under the 2020 Plan or a prior plan award expires or is canceled, forfeited or terminated, in whole
or in part without issuance to the holder thereof of shares of common stock to which the award or prior plan award related or cash or
other property in lieu thereof, the unissued shares of common stock will again be available for grant under the 2020 Plan; provided that,
in any such case, the number of shares again available for grant under the 2020 Plan shall be the number of shares previously counted
against the Absolute Share Limit (or, in the case of prior plan award, the number of shares that would have been counted against the
Absolute Share Limit if such prior plan award had been granted under this 2020 Plan) with respect to such unissued shares of common stock
to which such award or prior plan award related, as determined in accordance with the terms of the 2020 Plan.
Awards
may, in the sole discretion of the Compensation Committee, be granted under the 2020 Plan in assumption of, or in substitution for, outstanding
awards previously granted by an entity directly or indirectly acquired by the Company or with which the Company combines (“Substitute
Awards”). Substitute Awards will not be counted against the Absolute Share Limit; provided, that Substitute Awards issued in connection
with the assumption of, or in substitution for, outstanding options intended to qualify as “incentive stock options” within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) will be counted against the aggregate
number of shares of common stock available for awards of incentive stock options under the 2020 Plan. Subject to applicable stock exchange
requirements, available shares of common stock under a stockholder-approved plan of an entity directly or indirectly acquired by the
Company or with which the Company combines (as appropriately adjusted to reflect the acquisition or combination transaction) may be used
for awards under the 2020 Plan and will not reduce the number of shares of common stock available for issuance under the 2020 Plan.
Adjustments
In
the event of a merger, consolidation, reorganization, recapitalization, reorganization, stock split or dividend, or similar event affecting
the common stock, the number (including limits on shares of common stock granted) and kind of shares granted under the 2020 Plan, the
Compensation Committee will make such proportionate substitution or adjustment, if any, as it deems equitable, to any or all of the Absolute
Share Limit, the number of shares of common stock or other securities of the Company that may be issued in respect of awards or with
respect to which awards may be granted and the terms of any outstanding award.
Restricted
Stock
The
Compensation Committee will be authorized to award restricted stock under the 2020 Plan. Awards of restricted stock will be subject to
the terms and conditions established by the Compensation Committee. Restricted stock is common stock that is subject to such restrictions
as may be determined by the Compensation Committee for a specified period.
RSU
Awards
The
Compensation Committee will be authorized to award RSUs in lieu of or in addition to any restricted stock awards. RSUs will be subject
to the terms and conditions established by the Compensation Committee. Each RSU will have an initial value that is at least equal to
the fair market value of a share of Company common stock on the date of grant. RSUs may be paid at such time as the Compensation Committee
may determine in its discretion, and payments may be made in a lump sum or in installments, in cash, shares of common stock, or a combination
thereof, as determined by the Compensation Committee in its discretion.
Options
The
Compensation Committee will be authorized to grant options to purchase shares of common stock that are either “qualified,”
meaning they are intended to satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”)
for incentive stock options, or “nonqualified,” meaning they are not intended to satisfy the requirements of Section 422
of the Code. Options granted under the 2020 Plan will be subject to the terms and conditions established by the Compensation Committee.
Under the terms of the 2020 Plan, the exercise price of the options will not be less than the fair market value of our common stock at
the time of grant. Options granted under the 2020 Plan will be subject to such terms, including the exercise price and the conditions
and timing of exercise, as may be determined by the Compensation Committee and specified in the applicable award agreement. The maximum
term of an option granted under the 2020 Plan will be 10 years from the date of grant (or five years in the case of a qualified option
granted to a 10% stockholder). Payment in respect of the exercise of an option may be made in cash or by check, by surrender of unrestricted
shares (at their fair market value on the date of exercise), or through a “net exercise,” or the Compensation Committee may,
in its discretion and to the extent permitted by law, allow such payment to be made through a broker-assisted cashless exercise mechanism
or by such other method as the Compensation Committee may determine to be appropriate.
Stock
Appreciation Rights
The
Compensation Committee will be authorized to award SARs under the 2020 Plan. SARs will be subject to the terms and conditions established
by the Compensation Committee and reflected in the award agreement. A SAR is a contractual right that allows a participant to receive,
in the form of either cash, shares or any combination of cash and shares, the appreciation, if any, in the value of a share over a certain
period of time. An option granted under the 2020 Plan may include SARs, and SARs may also be awarded to a participant independent of
the grant of an option. SARs granted in connection with an option shall be subject to terms similar to the option corresponding to such
SARs.
Other
Stock-Based Awards
The
Compensation Committee will be authorized to award other stock-based awards having terms and conditions as determined by the Compensation
Committee. These awards may be granted either alone or in tandem with other awards.
Qualified
Performance-Based Awards
Restricted
stock and RSUs granted to officers and employees of the Company may depend on the degree of achievement of one or more performance goals
relative to a pre-established targeted level or levels using one or more identified performance targets. The applicable performance period
may not be less than three months nor more than 10 years.
Dividends
and Voting Rights
Participants
awarded stock options and SARs will not receive dividends or dividend equivalents or have any voting rights with respect to shares of
common stock underlying these awards prior to the issuance of any such shares. Participants that hold unearned awards subject to performance
vesting conditions (other than or in additional to the passage of time) will not receive dividends or dividend equivalents or have any
voting rights with respect to shares of common stock underlying these awards prior to the issuance of any such shares; provided, however,
that dividends and dividend equivalents may be accumulated in respect of unearned awards and paid within 30 days after such awards
are earned and become payable or distributable.
Transferability
Awards
granted under the 2020 Plan generally will be transferable only by will or the applicable laws of descent and distribution. In certain
limited circumstances, the Compensation Committee may authorize stock options, other than incentive stock options, to be transferred
to family members or trusts controlled by family members of the participant. Restricted stock may not be sold, transferred, assigned,
pledged or otherwise encumbered or disposed of until the applicable restrictions lapse.
Change
in Control
In
the event of a Change in Control (as defined in the 2020 Plan), options become immediately exercisable in full. In addition, in such
event the Compensation Committee may accelerate the termination date of the option to a date no earlier than 30 days after notice of
such acceleration is given to the participant. Upon the giving of any such acceleration notice, the option shall become immediately exercisable
in full.
A
participant’s right to SARs under an SAR agreement immediately vest as to 100% of the total number of shares covered by the grant
(i) upon termination of the grantee’s employment on account of the grantee’s death or permanent disability; or (ii) upon
the occurrence of a Change in Control.
With
respect to restricted stock and RSUs, in the event that the grantee’s status as an employee is terminated following a Change in
Control, then all unvested shares of restricted stock and RSUs will immediately vest.
Clawback
All
awards under the 2020 Plan are subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i)
any clawback, forfeiture or other similar policy adopted by the Board or the Compensation Committee and as in effect from time to time;
and (ii) applicable law.
Amendment
and Termination
The
Board may terminate or amend the 2020 Plan or any portion thereof at any time; provided, however, that the Board may not, without
stockholder approval, amend the 2020 Plan if:
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Such
approval is necessary to comply with any regulatory requirement applicable to the 2020 Plan;
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●
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It
would materially increase the number of securities which may be issued under the 2020 Plan (except for increases expressly provided
for in the 2020 Plan; or
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●
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It
would materially modify the requirements for participation in the 2020 Plan.
|
In
addition, any such amendment that would materially and adversely affect an award holder’s rights with respect to a previously granted
and outstanding award will not to that extent be effective without the consent of the affected holder of such award.
The
Compensation Committee may terminate or amend any award agreement, to the extent consistent with the terms of the 2020 Plan and any applicable
award agreement and so long as such termination or amendment would not materially and adversely affect an award holder’s rights
with respect to a previously granted and outstanding award (unless the affected holder consents thereto); provided, however that
the Compensation Committee may not, without stockholder approval, amend or terminate an award or award agreement to:
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●
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Reduce
the exercise price of any option or the strike price of any SAR,
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●
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To
cancel any outstanding option or SAR and replace it with a new option or SAR (with a lower exercise price or strike price, as the
case may be) or other award or cash payment that is greater than the intrinsic value (if any) of the canceled option or SAR; and
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●
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Take
any other action which is considered a “repricing” for purposes of the stockholder approval rules of any securities exchange
or inter-dealer quotation system on which the securities of the Company are listed or quoted.
|
U.S.
Federal Income Tax Consequences
The
following is a general summary of the material U.S. federal income tax consequences to 2020 Plan participants and the Company of the
grant, vesting and exercise of awards under the 2020 Plan and the disposition of shares acquired pursuant to the exercise of such awards
and is based upon an interpretation of the current federal income tax laws and regulations and may be inapplicable if such laws and regulations
are changed. This summary is not intended to be a complete statement of applicable law or constitute tax advice, nor does it address
foreign, state, local and payroll tax considerations. Moreover, the U.S. federal income tax consequences to any particular participant
may differ from those described herein by reason of, among other things, the particular circumstances of such participant. To the extent
that any awards under the 2020 Plan are subject to Section 409A of the Code (“Section 409A”), the following discussion assumes
that such awards will be designed to conform to the requirements of Section 409A and the regulations promulgated thereunder (or an exception
thereto). The 2020 Plan is not subject to the protective provisions of the Employee Retirement Income Security Act of 1974, as amended,
and is not qualified under Section 401(a) of the Code.
Incentive
Stock Options. Options issued under the 2020 Plan and designated as incentive stock options are intended to qualify as such under
Section 422 of the Code. Under the provisions of Section 422 of the Code and the related regulations, holders of incentive stock options
will generally incur no federal income tax liability at the time of grant or upon exercise of those options, and the Company will not
be entitled to a deduction at the time of the grant or exercise of the option. However, the difference between the value of the common
stock received on the exercise date and the exercise price paid will be an “item of tax preference,” which may give rise
to “alternative minimum tax” liability to the holder for the taxable year in which the exercise occurs. The taxation of gain
or loss upon the sale of the common stock acquired upon exercise of an incentive stock option depends, in part, on whether the holding
period of the shares of our common stock acquired through the exercise of an incentive stock option is at least (i) two years from the
date of grant of the option and (ii) one year from the date the option was exercised. If these holding period requirements are satisfied,
any gain or loss realized on a subsequent disposition of the shares will constitute long-term capital gain or loss, as the case may be.
Assuming both holding periods are satisfied, no deduction will be allowed to us for federal income tax purposes in connection with the
grant or exercise of the incentive stock option. If these holding periods requirements are not met, then, upon such “disqualifying
disposition” of the shares, the participant will generally realize compensation, taxable as ordinary income, at the time of such
disposition in an amount equal to the difference between the fair market value of the share on the date of exercise over the exercise
price, limited to the gain on the sale, and that amount will generally be deductible by us for federal income tax purposes, subject to
the possible limitations on deductibility under Section 162(m)of the Code for compensation paid to certain executives designated thereunder.
Finally, if an otherwise qualified incentive stock option becomes first exercisable in any one year for shares having an aggregate value
in excess of $100,000 (based on the grant date value), the portion of the incentive stock option in respect of those excess shares will
be treated as a non-qualified stock option for federal income tax purposes.
Non-qualified
Stock Options. No income will generally be realized by a participant upon grant of a non-qualified stock option. Upon the exercise
of a non-qualified stock option, the participant will recognize ordinary compensation income in an amount equal to the excess, if any,
of the fair market value of the underlying exercised shares over the option exercise price paid at the time of exercise. We will be able
to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Section 162(m) of the Code for
compensation paid to certain executives designated thereunder. Upon a subsequent disposition of the shares acquired under a non-qualified
stock option, the participant will realize short-term or long-term capital gain (or loss) depending on the holding period. The capital
gain (or loss) will be short-term if the shares are disposed of within one year after the non-qualified stock option is exercised, and
long-term if shares were held more than 12 months as of the sale date.
Restricted
Stock. A participant will normally not be required to recognize income for federal income tax purposes upon the grant of an award
of restricted stock, nor is the Company entitled to any deduction, to the extent that the shares awarded have not vested (i.e., are no
longer subject to a substantial risk of forfeiture). On the date an award of restricted stock is no longer subject to a substantial risk
of forfeiture, the participant will compensation taxable as ordinary income in an amount equal to the difference between the fair market
value of the vested shares on that date and the amount the participant paid for such shares, if any, unless the participant made an election
under Section 83(b) of the Code to be taxed at the time of grant. The participant may, however, make an election under Section 83(b)
of the Code, within 30 days following the grant of the restricted stock award, to be taxed at the time of the grant of the award based
on the difference between the fair market value of the shares on the date of grant and the amount the participant paid for such shares,
if any. If the shares subject to such election are subsequently forfeited, the participant will not be entitled to any deduction, refund
or loss for tax purposes with respect to the forfeited shares. We will be able to deduct, at the same time as it is recognized by the
participant, the amount of taxable compensation to the participant for U.S. federal income tax purposes, but such deduction may be limited
under Section 162(m) of the Code for compensation paid to certain executives designated thereunder. Upon the sale of the vested shares,
the participant will realize short-term or long-term capital gain or loss depending on the holding period. The holding period generally
begins when the restriction period expires. If the recipient timely made a Section 83(b) election, the holding period commences on the
date of the grant.
Deferred
Stock Units and Restricted Stock Units. A participant will not be subject to federal income tax upon the grant of a deferred stock
unit award or a restricted stock unit award, and the Company is not entitled to a deduction at the time of grant. Rather, upon the delivery
of shares or cash pursuant to a deferred stock unit award or a restricted stock unit award, the participant will generally have compensation
taxable at ordinary income rates in an amount equal to the fair market value of the number of shares (or the amount of cash) actually
received with respect to the settlement of the award of such units. We will generally be able to deduct the amount of the ordinary income
realized by the participant for U.S. federal income tax purposes, but the deduction may be limited under Section 162(m) of the Code for
compensation paid to certain executives designated thereunder. If the participant receives shares upon settlement then, upon disposition
of such shares, appreciation or depreciation after the settlement date is treated as either short-term or long-term capital gain or loss,
depending on how long the shares have been held.
SARs.
SARs are treated very similarly to non-qualified options for tax purposes. No income will normally be realized by a participant upon
grant of a SAR. Upon the exercise of a SAR, the participant will recognize compensation taxable as ordinary income in an amount equal
to either: (i) the cash received upon exercise; or (ii) if shares are received upon the exercise of the SAR, the fair market value of
the shares received in respect of the SAR. We will be able to deduct this same amount for U.S. federal income tax purposes, but such
deduction may be limited under Section 162(m) of the Code for compensation paid to certain executives designated thereunder.
Performance
Awards. A participant generally will not recognize income upon the grant of a performance award. Upon payment of the performance
award, the participant will recognize ordinary income in an amount equal to the cash received or, if the performance award is payable
in shares, the fair market value of the shares received. When the participant recognizes ordinary income upon payment of a performance
award, the Company generally will be entitled to a tax deduction in the same amount.
Other
Stock-Based Awards. A participant will generally have compensation taxable as ordinary income for federal income tax purposes in
an amount equal to the difference between the fair market value of the shares on the date the award is settled (whether in shares or
cash, or both) over the amount the participant paid for such shares, if any. We will generally be able to deduct, at the same time as
it is recognized by the participant, the amount of taxable compensation to the participant for U.S. federal income tax purposes, but
such deduction may be limited under Section 162(m) for compensation paid to certain executives designated thereunder.
Consequences
of Change of Control. If a change of control of the Company causes awards under the 2020 Plan to accelerate vesting or is deemed
to result in the attainment of performance goals, certain participants could, in some cases, be considered to have received “excess
parachute payments,” which could subject certain participants to a 20% excise tax on the excess parachute payments and result in
a disallowance of the Company’s deductions under Section 280G of the Code.
Section
409A. Section 409A applies to compensation that individuals earn in one year but that is not paid until a future year. This is referred
to as non-qualified deferred compensation. Section 409A, however, does not apply to qualified plans (such as a Section 401(k) plan) and
certain welfare benefits. If deferred compensation covered by Section 409A meets the requirements of Section 409A, then Section 409A
has no effect on the individual’s taxes. The compensation is taxed in the same manner as it would be taxed if it were not covered
by Section 409A. If a deferred compensation arrangement does not meet the requirements of Section 409A, the compensation is subject to
accelerated taxation in the year in which such compensation is no longer subject to a substantial risk of forfeiture and certain additional
taxes, interest and penalties, including a 20% additional income tax. Awards of stock options, SARs, restricted stock units and performance
awards under the 2020 Plan may, in some cases, result in the deferral of compensation that is subject to the requirements of Section
409A. Awards under the 2020 Plan are intended to comply with Section 409A, the regulations issued thereunder or an exception thereto.
Notwithstanding, Section 409A may impose upon a participant certain taxes or interest charges for which the participant is responsible.
Section 409A does not impose any penalties on the Company and does limit the Company’s deduction with respect to compensation paid
to a participant.
Section
162(m). The Company generally may deduct any compensation or ordinary income recognized by the recipient of an award under the 2020
Plan when recognized, subject to the limits of Section 162(m) of the Code (“Section 162(m)”). Prior to 2018, Section 162(m)
imposed a $1 million limit on the amount a public company may deduct for compensation paid to a Company’s Chief Executive Officer
or any of the Company’s three other most highly compensated executive officers (other than the Chief Financial Officer) who were
employed as of the end of the year. This limitation did not apply to compensation that met Code requirements for “qualified performance-based
compensation.” The performance-based compensation exemption, the last day of the year determination date, and the exemption of
the Chief Financial Officer from Code Section 162(m)’s deduction limit have all been repealed under the Tax Cuts and Jobs Act of
2017 (“Tax Reform”), effective for taxable years beginning after December 31, 2017, such that awards paid under the 2020
Plan to our covered executive officers may not be deductible for such taxable years due to the application of the $1 million deduction
limitation. However, under Tax Reform transition relief, compensation provided under a written binding contract in effect on November
2, 2017 that is not materially modified after that date continues to be subject to the performance-based compensation exception. As in
prior years, while deductibility of executive compensation for federal income tax purposes is among the factors the Compensation Committee
considers when structuring our executive compensation, it is not the sole or primary factor considered. Our Board and the Compensation
Committee retain the flexibility to authorize compensation that may not be deductible if they believe it is in our best interests.
Tax
Withholding. The Company and its affiliates have the right to deduct or withhold, or require a participant to remit to the Company
and its affiliates, an amount sufficient to satisfy federal, state and local taxes (including employment taxes) required by law to be
withheld with respect to any exercise, lapse of restriction or other taxable event arising with respect to awards under the 2020 Plan.
Equity
Compensation Plan Information
The
table below sets forth information as of May 31, 2021.
Plan Category
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity compensation plans approved by security holders
|
|
|
—
|
|
|
|
N/A
|
|
|
|
—
|
|
Equity compensation plans not approved by security holders
|
|
|
—
|
|
|
|
N/A
|
|
|
|
838,933
|
(1)
|
Total
|
|
|
—
|
|
|
|
N/A
|
|
|
|
838,933
|
|
(1)
This represents (i) 62,500 shares of common stock issuable pursuant to the 2018 Equity Incentive Plan (the “2018 Plan”) (the
Company has not made, and does not intend to make, any future grants under the 2018 Plan), and (ii) 776,433 shares of common
stock issuable pursuant to the Simplicity Esports and Gaming Company 2020 Omnibus Incentive Plan (the “2020 Plan”).
The
Company’s stockholders approved the 2018 Plan on October 4, 2018. Under the 2018 Plan, 62,500 shares of common stock are authorized
for issuance to employees, officers, directors, consultants. The 2018 Plan authorizes the grant of nonqualified stock options and incentive
stock options, restricted stock awards, restricted stock units, stock appreciation rights, other stock bonus awards, and performance
compensation awards. There were 62,500 shares available for award as of May 31, 2021 under the 2018 Plan. The Company has not
made, and does not intend to make, any grants under the 2018 Plan.
The
Board of Directors and stockholders of the Company approved the 2020 Plan on April 22, 2020 and June 23, 2020, respectively. Under the
2020 Plan, 1,000,000 shares of common stock are authorized for issuance to employees, directors and independent contractors (except
those performing services in connection with the offer or sale of the Company’s securities in a capital raising transaction, or
promoting or maintaining a market for the Company’s securities) of the Company or its subsidiaries. The 2020 Plan authorizes equity-based
and cash-based incentives for participants. There were 776,433 shares available for award as of May 31, 2021 under the 2020 Plan.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Our
Audit Committee must review and approve any related person transaction we propose to enter into. Our Audit Committee charter details
the policies and procedures relating to transactions that may present actual, potential or perceived conflicts of interest and may raise
questions as to whether such transactions are consistent with the best interest of our company and our stockholders. A summary of such
policies and procedures is set forth below.
Any
potential related party transaction that is brought to the Audit Committee’s attention will be analyzed by the Audit Committee,
in consultation with outside counsel or members of management, as appropriate, to determine whether the transaction or relationship does,
in fact, constitute a related party transaction. At its meetings, the Audit Committee will be provided with the details of each new,
existing or proposed related party transaction, including the terms of the transaction, the business purpose of the transaction and the
benefits to us and to the relevant related party.
In
determining whether to approve a related party transaction, the Audit Committee must consider, among other factors, the following factors
to the extent relevant:
|
●
|
whether
the terms of the transaction are fair to us and on the same basis as would apply if the transaction did not involve a related party;
|
|
|
|
|
●
|
whether
there are business reasons for us to enter into the transaction;
|
|
|
|
|
●
|
whether
the transaction would impair the independence of an outside director; and
|
|
|
|
|
●
|
whether
the transaction would present an improper conflict of interest for any director or executive officer.
|
Any
member of the Audit Committee who has an interest in the transaction under discussion must abstain from any voting regarding the transaction,
but may, if so requested by the chairman of the Audit Committee, participate in some or all of the Audit Committee’s discussions
of the transaction. Upon completion of its review of the transaction, the Audit Committee may determine to permit or to prohibit the
transaction.
Kaplan
Promissory Note
On
May 12, 2020 (the “Issue Date”), the Company issued a promissory note (the “Kaplan Note”) in the principal sum
of $90,000 in favor of Jed Kaplan, the Company’s Chief Executive Officer, interim Chief Financial Officer, member of the Company’s
Board of Directors and greater than 5% stockholder of the Company. The Kaplan Note matures on the first business day following the 150-day
anniversary of the Issue Date (the “Maturity Date”). The Company will use the proceeds of the Kaplan Note to fund the operations
of Simplicity One Brasil Ltda, the Company’s majority owned subsidiary (“Simplicity Brasil”). As of May 31, 2020, advances
under the terms of this note were $64,728. In consideration for a 10% equity stake in Brasil Ltda., the Kaplan Note was retired
during the year ended May 31, 2021.
Equity
Sales
On
May 7, 2020, we authorized the sale of 2,867 shares of our restricted Common Stock at $8.72 per share to William H. Herrmann, Jr. a member
of our board of directors for $25,000.
Cash
Balance
The
Company maintains its cash balance at a financial services company that is owned by an officer of the Company.
PROPOSAL
2—RATIFICATION OF THE APPOINTMENT OF
THE
COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Prager
Metis acted as our independent registered public accounting firm for the fiscal year ended May 31, 2021. The Audit Committee has
appointed Prager Metis to act in that capacity for the fiscal year ending May 31, 2022. A representative of Prager Metis
is not expected to be present at the Annual Meeting.
Although
the Company is not required to submit this appointment to a vote of the stockholders, the Audit Committee believes that it is appropriate
as a matter of policy to request that stockholders ratify the appointment of Prager Metis as principal independent registered
public accounting firm. If the stockholders do not ratify the appointment, the Audit Committee will investigate the reasons for stockholder
rejection and consider whether to retain Prager Metis or will appoint another independent registered public accounting firm. Even
if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered
public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company
and its stockholders.
The
aggregate fees billed for the fiscal years ended May 31, 2021 and 2020 for:
|
●
|
Professional
services rendered by our principal accountant for the audit of our annual financial statements and review of financial statements
included in our Quarterly Reports on Form 10-Q (“Audit Fees”),
|
|
●
|
Assurance
and related services by the principal accountant that are reasonably related to the performance of the audit or review of the financial
statements and not reportable under Audit Fees (the “Audit Related Fees”),
|
|
●
|
Tax
compliance, advice, and planning (“Tax Fees”), and
|
|
●
|
Other
products or services provided (“Other Fees”)
|
were
as follows:
|
|
Fiscal Year Ended
May 31, 2021
|
|
|
Fiscal Year Ended
May 31, 2020
|
|
Audit Fees
|
|
$
|
88,000
|
|
|
$
|
45,000
|
|
Audit Related Fees (1)
|
|
$
|
—
|
|
|
$
|
—
|
|
Tax Fees
|
|
$
|
—
|
|
|
$
|
—
|
|
All Other Fees
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
|
$
|
88,000
|
|
|
$
|
45,000
|
|
Our
Audit Committee has determined that the services provided by Prager Metis are compatible with maintaining the independence of
the auditor as our independent registered public accounting firm.
Pre-Approval
Policy
The
Audit Committee reviews and approves the audit and non-audit services to be provided by our independent registered public accounting
firm during the year, considers the effect that performing those services might have on audit independence and approves management’s
engagement of our independent registered public accounting firm to perform those services. The Audit Committee reserves the right to
appoint a different independent registered public accounting firm at any time during the year if the Board of Directors of the Company
and the Audit Committee believe that a change is in the best interest of the Company and our stockholders.
The
Company is asking its stockholders to ratify the selection of Prager Metis as the Company’s independent registered public
accounting firm. Although ratification is not required by our bylaws or otherwise, the Board is submitting the selection of Prager Metis
to our stockholders for ratification as a matter of good corporate practice. If the selection is not ratified, the Audit Committee
will consider whether it is appropriate to select another independent registered public accounting firm. Even if the selection is ratified,
the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the fiscal
year if it determines that such a change would be in the best interests of the Company and its stockholders.
REPORT
OF THE AUDIT COMMITTEE
The
Audit Committee assists the Board in providing oversight of the systems and procedures relating to the integrity of the Company’s
financial statements, the Company’s financial reporting process, its systems of internal accounting and financial controls, the
internal audit process, risk management, the annual independent audit process of the Company’s annual financial statements, the
Company’s compliance with legal and regulatory requirements, and the qualification and independence of the Company’s independent
registered public accounting firm. The Audit Committee reviews with management the Company’s major financial risk exposures and
the steps management has taken to monitor, mitigate, and control such exposures. Management has the responsibility for the implementation
of these activities. In fulfilling its oversight responsibilities, the Committee reviewed and discussed with management the audited financial
statements in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2021, including a discussion of the quality
and the acceptability of the Company’s financial reporting and controls.
The
Company’s independent registered public accounting firm is responsible for expressing an opinion on the conformity of those audited
financial statements with U.S. generally accepted accounting principles. The Committee reviewed with the independent registered public
accounting firm the firm’s judgments as to the quality and the acceptability of the Company’s financial reporting and such
other matters as are required to be discussed with the Audit Committee under auditing standards of the Public Company Accounting Oversight
Board (the “PCAOB”) (United States), including the matters required to be discussed by the Statement on Auditing Standards
No. 1301 (Communication with Audit Committees). In addition, the Audit Committee has discussed with the independent registered public
accounting firm the firm’s independence, including the impact of non-audit-related services provided to the Company, and has received
the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of
the PCAOB regarding the independent accounting firm’s communications with the Audit Committee concerning independence.
The
Audit Committee also discussed with the Company’s internal auditors and the independent registered public accounting firm in advance
the overall scope and plans for their respective audits. The Audit Committee meets regularly with the independent registered public accounting
firm, with and without management present, to discuss the results of their examinations, and the overall quality of the Company’s
financial reporting.
In
reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements
be included in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2021 for filing with the SEC.
The
primary function of the Audit Committee is to assist the Board of Directors in its oversight of the Company’s financial reporting
processes. Management is responsible for the Company’s financial statements and overall reporting process, including the system
of internal controls. The independent auditors are responsible for conducting annual audits and quarterly reviews of the Company’s
financial statements and expressing an opinion as to the conformity of the annual financial statements with generally accepted accounting
principles.
The
Audit Committee submits the following report pursuant to the SEC rules:
The
Audit Committee has reviewed and discussed with management and with Prager Metis, the Company’s independent registered public
accounting firm, the audited consolidated financial statements of the Company for the fiscal year ended May 31, 2021 (the “2021
Financial Statements”).
Prager
Metis has advised the management of the Company and the Audit Committee that it has discussed with them all the matters required
to be discussed by PCAOB Auditing Standard No. 1301, “Communications with Audit Committees.”
The
Audit Committee has received from Prager Metis the written disclosures and the letter required by applicable requirements of the
PCAOB regarding the communications of Prager Metis with the Audit Committee concerning independence and has discussed the
independence of Prager Metis with them.
Based
upon the aforementioned review, discussions and representations of Prager Metis, and the audit opinion presented by Prager Metis
on the 2021 Financial Statements, the Audit Committee recommended to the Board of Directors that the 2021 Financial Statements be
included in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2021 and that Prager Metis be selected
as the independent registered public accounting firm for the Company for the fiscal year ending May 31, 2022.
|
Submitted
by the Audit Committee of the Board of Directors:
|
|
|
|
Donald
R. Caldwell (Chairman)
|
|
Max
Hooper
|
|
Frank
Leavy
|
Vote
Required
The
affirmative vote of the shares present and entitled to vote at the Annual Meeting is required to ratify the appointment of Prager Metis
as our independent registered public accounting firm. You may vote “for,” “against” or “abstain”
from voting on Proposal 2. Abstentions will have the effect of a vote “against” Proposal 2. Because broker non-votes are
not considered present for the foregoing purpose, they will have no effect on the vote on Proposal 2.
Recommendation
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” RATIFICATION OF PRAGER METIS AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information regarding the beneficial ownership of our common stock as of the Record Date by:
|
●
|
each
person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
|
|
|
|
|
●
|
each
of our current named executive officers and directors that beneficially own shares of our common stock; and
|
|
|
|
|
●
|
all
our executive officers and directors as a group.
|
Information
with respect to beneficial ownership has been furnished by each director, named executive officer or 5% or more stockholder, as the case
may be. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect
to all shares of common stock beneficially owned by them.
Name of Beneficial Owner (1)
|
|
Amount of Beneficial Ownership
|
|
|
Percent of Outstanding
Common Stock (2)
|
|
Directors and Executive Officers:
|
|
|
|
|
|
|
|
|
Jed Kaplan
|
|
|
271,953
|
(3)
|
|
|
18.5
|
%
|
Roman Franklin
|
|
|
123,133
|
(4)
|
|
|
8.4
|
%
|
Donald R. Caldwell
|
|
|
17,125
|
(5)
|
|
|
1.2
|
%
|
Max Hooper
|
|
|
6,188
|
(6)
|
|
|
*
|
|
Frank Leavy
|
|
|
5,954
|
(7)
|
|
|
*
|
|
Edward Leonard Jaroski
|
|
|
18,938
|
(8)
|
|
|
1.3
|
%
|
William H. Herrmann, Jr.
|
|
|
9,790
|
(9)
|
|
|
*
|
%
|
Laila Cavalcanti Loss
|
|
|
6,563
|
|
|
|
*
|
|
All directors and officers as a group (9 persons) (10)
|
|
|
459,644
|
(11)
|
|
|
31.0
|
%
|
|
|
|
|
|
|
|
|
|
Principal Shareholders (more than 5%):
|
|
|
|
|
|
|
|
|
AQR Capital Management, LLC (11)
|
|
|
101,605
|
(12)
|
|
|
6.5
|
%
|
*
Less than 1%.
|
(1)
|
Unless
otherwise indicated, the business address of each of the stockholders is 7000 W. Palmetto Park Road, Suite 505, Boca Raton, Florida
33433.
|
|
|
|
|
(2)
|
The
calculation in this column is based upon 1,463,470 shares of common stock outstanding as of the Record Date. Beneficial ownership
is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.
Shares of common stock that are currently convertible or exercisable within 60 days of August 24, 2021, the Record Date, are
deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of
such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
|
|
|
|
|
(3)
|
Includes
2,440 shares of common stock owned indirectly through Mr. Kaplan’s wife, Jamie Kaplan, and 6,250 shares of common stock issuable
upon exercise of warrants that have vested or will vest within 60 days of the Record Date. The warrants have an exercise price of
$92.00 and expire on May 31, 2024.
|
|
|
|
|
(4)
|
Includes
6,375 shares of common stock owned indirectly through Mr. Franklin’s wife, Alyssia Franklin.
|
|
|
|
|
(5)
|
Includes
2,500 shares of our common stock issuable upon exercise of warrants that have vested or will vest within 60 days of the Record Date.
The warrants have an exercise price of $92.00 and expire on May 22, 2024.
|
|
|
|
|
(6)
|
Represents
(i) 1,813 shares of common stock owned directly by Merging Traffic, Inc., (ii) 1,250 shares of our common stock issuable upon exercise
of warrants that have vested or will vest within 60 days of the Record Date (such warrants are owned directly by Merging Traffic,
Inc., have an exercise price of $92.00 and expire on May 22, 2024), and (iii) 3,125 shares of our common stock owned directly
by Dr. Hooper. Dr. Hooper is Managing Director of Merging Traffic, Inc.
|
|
(7)
|
Includes
938 shares of our common stock issuable upon exercise of warrants that have vested or will vest within 60 days of the Record Date.
The warrants have an exercise price of $92.00 and expire on May 22, 2024.
|
|
|
|
|
(8)
|
Includes
7,500 shares of our common stock issuable upon exercise of warrants that have vested or will vest within 60 days of the Record Date.
The warrants have an exercise price of $92.00 and expire on May 22, 2024.
|
|
|
|
|
(9)
|
Includes
1,250 shares of our common stock issuable upon exercise of warrants that have vested or will vest within 60 days of the Record Date.
The warrants have an exercise price of $92.00 and expire on May 22, 2024.
|
|
|
|
|
(10)
|
Represents
Jed Kaplan, Roman Franklin, Nancy Hennessey, Donald R. Caldwell, Max Hooper, Frank Leavy, Edward Leonard Jaroski, William H. Herrmann,
Jr., and Laila Cavalcanti Loss.
|
|
|
|
|
(11)
|
Includes
19,688 shares of our common stock issuable upon exercise of warrants that have vested or will vest within 60 days of the Record Date.
|
|
|
|
|
(12)
|
Represents
warrants to purchase shares of the Company’s common stock. AQR Capital Management, LLC (“AQR”) is a wholly owned
subsidiary of AQR Capital Management Holdings, LLC (“AQR Holdings”). CNH Partners, LLC (“CNH”) is deemed
to be controlled by AQR. AQR serves as the investment manager to the AQR Diversified Arbitrage Fund, an open-end registered investment
company. AQR, AQR Holdings and CNH share voting and dispositive power over such shares. The principal office of AQR, AQR Holdings
and CNH is Two Greenwich Plaza, Greenwich, CT 06830.
|
On September 1, 2021, subsequent
to the Record Date, the Company issued an aggregate of 82,500 shares to its officers and directors, as follows:
Name
|
|
No. of Shares
|
|
Jed Kaplan
|
|
|
10,000
|
|
Roman Franklin
|
|
|
25,000
|
|
Donald R. Caldwell
|
|
|
7,500
|
|
Max Hooper
|
|
|
5,000
|
|
Frank Leavy
|
|
|
5,000
|
|
Edward Leonard Jaroski
|
|
|
5,000
|
|
William H. Herrmann, Jr.
|
|
|
5,000
|
|
Laila Cavalcanti Loss
|
|
|
5,000
|
|
Nancy Hennessey
|
|
|
15,000
|
|
OTHER
MATTERS
Management
does not know of any other business that may be considered at the Annual Meeting. However, if any matters other than those referred to
above should properly come before the Annual Meeting, it is the intention of the persons named in the accompanying form of proxy to vote
the proxies held by them in accordance with their best judgment. Stockholders are urged to vote on the matters to be considered
in advance of the Annual Meeting. You may vote your proxy by telephone or via the Internet or by completing and returning the enclosed
proxy card.
The
Company will bear the costs of its solicitation of proxies. In addition to the use of the mail, proxies may be solicited by electronic
mail, personal interview, telephone, telegram and telefax by the directors, officers and employees of the Company. Arrangements will
also be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of stock held of record by such persons, and the Company may reimburse such custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred by them in connection therewith.
ANNUAL
REPORT
A
copy of our Annual Report on Form 10-K for the fiscal year ended May 31, 2021, including the financial statements filed as part of the
Annual Report (the “2021 Form 10-K”), accompanies this Proxy Statement. We will provide stockholders with additional copies
of the 2021 Form 10-K, without charge, upon written request to Corporate Secretary, Simplicity Esports and Gaming Company, 7000 W. Palmetto
Park Road, Suite 505, Boca Raton, Florida 33433. The 2021 Form 10-K and the exhibits thereto also are available, free of charge, from
the SEC’s website (http://www.sec.gov.).
“HOUSEHOLDING”
OF PROXY MATERIALS
The
SEC has adopted rules that permit companies and intermediaries (e.g. brokers) to satisfy the delivery requirements for proxy statements
and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual
report addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means
extra convenience for stockholders and cost savings for companies.
A
number of brokers with accountholders who are stockholders will be householding our proxy materials. As indicated in the notice previously
provided by these brokers to stockholders, a single proxy statement and annual report will be delivered to multiple stockholders sharing
an address unless contrary instructions have been received from an affected stockholder. Once you have received notice from your broker
or us that they will be householding communications to your address, householding will continue until you are notified otherwise.
Stockholders
who currently receive multiple copies of the proxy materials at their address and would like to request householding of their communications
should contact their broker or, if a stockholder is a direct holder of shares of our common stock, they should submit a written request
to our transfer agent, Continental Stock Transfer & Trust Company, 1 State Street, 30th Floor, New York, NY 10004-1561.
To
delist yourself from householding in the future you may write us at Simplicity Esports and Gaming Company, 7000 W. Palmetto Park Road,
Suite 505, Boca Raton, Florida 33433, Attention: Corporate Secretary, or call (855) 345-9467. Upon written or oral request directed to
the Company at the address or phone number listed above, we will deliver promptly a separate copy of the proxy materials.
STOCKHOLDER
PROPOSALS FOR 2022 ANNUAL MEETING OF STOCKHOLDERS
Stockholder
proposals submitted for inclusion in the proxy statement and form of proxy for the 2021 Annual Meeting of Stockholders must be received
at the corporate offices of the Company, addressed to the attention of Corporate Secretary, Simplicity Esports and Gaming Company, 7000
W. Palmetto Park Road, Suite 505, Boca Raton, Florida 33433 no later than May 13, 2022. The proposals must comply with the rules of the
SEC relating to stockholder proposals.
Our
bylaws provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election
as directors at our annual meeting of stockholders must provide timely notice of their intent in writing. To be timely, a stockholder’s
notice will need to be received by the secretary to our principal executive offices not later than the close of business on the 90th
day nor earlier than the opening of business on the 120th day prior to the scheduled date of the annual meeting of stockholders. If our
annual meeting is called for a date that is not within 45 days before or after such anniversary date, a stockholder’s notice will
need to be received not earlier than the opening of business on the 120th day before the meeting and not later than the later of (x)
the close of business on the 90th day before the meeting or (y) the close of business on the 10th day following the day on which we first
publicly announce the date of the annual meeting. Our bylaws also specify certain requirements as to the form and content of a stockholder’s
notice for an annual meeting. A copy of the full text of these bylaw provisions may be obtained by writing to our Secretary at the address
indicated above.
|
By
Order of the Board of Directors,
|
|
|
|
/s/
Roman Franklin
|
|
Chief
Executive Officer
|
September
15, 2021
APPENDIX
I
SIMPLICITY
ESPORTS AND GAMING COMPANY
AUDIT
COMMITTEE CHARTER
1.
STATUS
The
Audit Committee (the “Committee”) is a committee of the Board of Directors (the “Board’’) of Simplicity
Esports and Gaming Company (the “Company”).
2.
PURPOSE
The
Committee is appointed by the Board for the primary purposes of:
|
|
●
|
Performing the Board’s oversight
responsibilities as they relate to the Company’s accounting policies and internal controls, financial reporting practices and
legal and regulatory compliance, including, among other things:
|
|
|
|
|
|
|
|
●
|
the quality
and integrity of the Company’s financial statements;
|
|
|
|
|
|
|
|
|
●
|
the Company’s compliance
with legal and regulatory requirements;
|
|
|
|
|
|
|
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review of the independent
auditors’ qualifications and independence; and
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the performance of the
Company’s internal audit function and the Company’s independent auditors;
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Maintaining, through regularly scheduled meetings, a line of communication between the Board and the Company’s financial management, internal auditors and independent auditors, and
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Preparing the report to be included in
the Company’s annual proxy statement, as required by the Securities and Exchange Commission’s (“SEC”) rules.
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3.
COMPOSITION AND QUALIFICATIONS
The
Committee shall be appointed by the Board and shall be comprised of three or more Directors (as determined from time to time by the Board),
each of whom shall meet the independence requirements of the Sarbanes-Oxley Act of 2002 (the “Act”), the Nasdaq Stock Market
LLC (‘‘NASDAQ”) and all other applicable laws, except as permitted by NASDAQ Listing Rule 5615.
Each
member of the Committee shall be financially literate and at least one member of the Committee shall have past employment experience
in finance or accounting, requisite professional certification in accounting or any other comparable experience or background which results
in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer
or other senior officer with financial oversight responsibilities, as each such qualification is interpreted by the Board in its business
judgment. In addition, at least one member of the Committee shall be an “audit committee financial expert” as such term is
defined by the SEC.
4.
RESPONSIBILITIES
The
Committee will:
1.
Review and discuss the annual audited financial statements and the Company’s disclosures under “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” with management, the senior internal auditing
executive, if any, and the independent auditors. In connection with such review, the Committee will:
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Discuss with
the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61 (as may be modified or supplemented)
and the matters in the written disclosures required by the applicable Requirements of the Public Company Accounting Oversight Board
regarding the independent accountant’s communications with the audit committee concerning independence;
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Review significant changes
in accounting or auditing policies;
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Review with the independent
auditors any problems or difficulties encountered in the course of their audit, including any change in the scope of the planned
audit work and any restrictions placed on the scope of such work and management’s response to such problems or difficulties;
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Review with the independent
auditors, management and the senior internal auditing executive, if any, the adequacy of the Company’s internal controls, and
any significant findings and recommendations with respect to such controls;
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Review reports required
to be submitted by the independent auditor concerning: (a) all critical accounting policies and practices used; (b) all alternative
treatments of financial information within generally accepted accounting principles (“GAAP”) that have been discussed
with management, the ramifications of such alternatives, and the accounting treatment preferred by the independent auditors; and
(c) any other material written communications with management;
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Review (a) major issues
regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection
or application of accounting principles, and major issues as to the adequacy of the Company’s internal controls and any special
audit steps adopted in light of material control deficiencies; and (b) analyses prepared by management and/or the independent auditor
setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements,
including analysis of the effects of alternative GAAP methods on the financial statements and the effects of regulatory and accounting
initiatives, as well as off-balance sheet structures, on the financial statements of the Company; and
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Discuss policies and procedures
concerning earnings press releases and review the type and presentation of information to be included in earnings press releases
(paying particular attention to any use of “pro forma” or “adjusted” non-GAAP information), as well as financial
information and earnings guidance provided to analysts and rating agencies.
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2.
Review and discuss the quarterly financial statements and the Company’s disclosures provided in periodic quarterly reports
including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” with management,
the senior internal auditing executive, if any, and the independent auditor.
3.
Oversee the external audit coverage. The Company’s independent auditors are ultimately accountable to the Committee, which has
the direct authority and responsibility to appoint, retain, compensate, terminate, select, evaluate and, where appropriate, replace
the independent auditors. In connection with its oversight of the external audit coverage, the Committee will have authority
to:
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Appoint and
replace (subject to stockholder approval, if deemed advisable by the Board) the independent auditors;
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Approve the engagement
letter and the fees to be paid to the independent auditors;
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Pre-approve all audit and
non-audit services to be performed by the independent auditors and the related fees for such services other than prohibited nonauditing
services as promulgated under rules and regulations of the SEC (subject to the inadvertent de minimus exceptions set forth
in the Act and the SEC rules);
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Monitor and obtain confirmation
and assurance as to the independent auditors’ independence, including ensuring that they submit on a periodic basis (not less
than annually) to the Committee a formal written statement delineating all relationships between the independent auditors and the
Company. The Committee is responsible for actively engaging in a dialogue with the independent auditors with respect to any disclosed
relationships or services that may impact the objectivity and independence of the independent auditors and for taking appropriate
action in response to the independent auditors’ report to satisfy itself of their independence;
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At least annually, obtain
and review a report by the independent auditors describing: the firm’s internal quality-control procedures; any material issues
raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental
or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm,
and any steps taken to deal with any such issues; and to assess the independent auditors’ independence, all relationships between
the independent auditors and the Company;
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Meet with the independent
auditors prior to the annual audit to discuss planning and staffing of the audit;
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Review and evaluate the
performance of the independent auditors, as the basis for a decision to reappoint or replace the independent auditors;
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Set clear hiring policies
for employees or former employees of the independent auditors, including but not limited to, as required by all applicable laws and
listing rules; and
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Assure regular rotation
of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing
the audit, as required by the Act, and consider whether rotation of the independent auditor is required to ensure independence.
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4.
Oversee internal audit coverage. In connection with its oversight responsibilities, the Committee will:
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Review
the appointment or replacement of the senior internal auditing executive, if one exists;
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Review,
in consultation with management, the independent auditors and the senior internal auditing executive, if one exists, the plan and
scope of internal audit activities;
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Review
internal audit activities, budget and staffing; and
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Review
significant reports to management prepared by the internal auditing department and management’s responses to such reports.
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5.
Review with the independent auditors and the senior internal auditing executive, if any, the adequacy of the Company’s internal
controls, and any significant findings and recommendations with respect to such controls.
6.
Resolve any differences in financial reporting between management and the independent auditors.
7.
Establish procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal
accounting controls or auditing matters and (ii) the confidential, anonymous submission by employees of concerns regarding questionable
accounting or auditing matters.
8.
Discuss policies and guidelines to govern the process by which risk assessment and risk management is undertaken.
9.
Meet periodically and at least four times per year with management to review and assess the Company’s major financial risk exposures
and the manner in which such risks are being monitored and controlled.
10.
Meet periodically (not less than annually) in separate executive session with each of the chief financial officer, the senior internal
auditing executive, if any, and the independent auditors.
11.
Review and approve all “related party transactions” requiring disclosure under SEC Regulation S-K, Item 404, in accordance
with the policy set forth in Section 6 below.
12.
Review periodically with the Company’s outside legal counsel (i) legal and regulatory matters which may have a material effect
on the financial statements, and (ii) corporate compliance policies or codes of conduct.
13.
As it determines necessary to carry out its duties, engage and obtain advice and assistance from outside legal, accounting or other advisers.
14.
Report regularly to the Board with respect to Committee activities.
15.
Prepare the report of the Committee required by the rules of the SEC to be included in the proxy statement for each annual meeting.
16.
Review and reassess annually the adequacy of this Charter and recommend any proposed changes to the Board.
17.
Monitor compliance, on a regularly scheduled basis, with the terms of the Company’s initial public offering (the “Offering”)
and, if any noncompliance is identified, promptly take all action necessary to rectify such noncompliance or otherwise cause the Company
to come into compliance with the terms of the Offering.
18.
Inquire and discuss with management the Company’s compliance with applicable laws and regulations.
19.
Determine the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management
and the independent auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or related work.
20.
On a quarterly basis, review and approve all payments made to the Company’s existing holders, executive officers or directors and
their respective affiliates.
5.
PROCEDURES
1.
Action.
A
majority of the members of the entire Committee shall constitute a quorum. The Committee shall act on the affirmative vote a majority
of members present at a meeting at which a quorum is present. Without a meeting, the Committee may act by unanimous written consent of
all members. However, the Committee may delegate to one or more of its members the authority to grant pre- approvals of audit and non-audit
services, provided the decision is reported to the full Committee at its next scheduled meeting.
2.
Fees.
The
Company shall provide for appropriate funding, as determined by the Committee, for payment of compensation: (a) to outside legal, accounting
or other advisors employed by the Committee; and (b) for ordinary administrative expenses of the Committee that are necessary or appropriate
in carrying out its duties.
3.
Limitations.
While
the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits
or to determine that the Company’s financial statements are complete and accurate and are in accordance with GAAP. This is the
responsibility of management and the independent auditors.
6.
RELATED PARTY TRANSACTIONS POLICY
1.
Definitions.
A
“Related Party Transaction” is any transaction directly or indirectly involving any Related Party that would need to be disclosed
under Item 404(a) of Regulation S-K. Under Item 404(a), the Company is required to disclose any transaction occurring since the beginning
of the Company’s last fiscal year, or any currently proposed transaction, involving the Company where the amount involved exceeds
$120,000, and in which any related person had or will have a direct or indirect material interest. “Related Party Transaction”
also includes any material amendment or modification to an existing Related Party Transaction.
“Related
Party” means any of the following:
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a
director (which term when used herein includes any director nominee);
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an
executive officer;
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a
person known by the Company to be the beneficial owner of more than 5% of the Company’s common stock (a “5% stockholder”);
or
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a
person known by the Company to be an immediate family member of any of the foregoing.
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“Immediate
family member” means a child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law of such director, executive officer, nominee for director or beneficial owner, and any person (other
than a tenant or employee) sharing the household of such director, executive officer, nominee for director or beneficial owner.
2.
Identification of Potential Related Party Transactions.
Related
Party Transactions will be brought to management’s and the Board’s attention in a number of ways. Each of the Company’s
directors and executive officers shall inform the Chairman of the Committee of any potential Related Party Transactions. In addition,
each such director and executive officer shall complete a questionnaire on an annual basis designed to elicit information about any potential
Related Party Transactions.
Any
potential Related Party Transactions that are brought to the Committee’s attention shall be analyzed by the Committee, in consultation
with outside counsel or members of management, as appropriate, to determine whether the transaction or relationship does, in fact, constitute
a Related Party Transaction requiring compliance with this Policy.
3.
Review and Approval of Related Party Transactions.
At
each of its meetings, the Committee shall be provided with the details of each new, existing or proposed Related Party Transaction, including
the terms of the transaction, any contractual restrictions that the Company has already committed to, the business purpose of the transaction,
and the benefits to the Company and to the relevant Related Party. In determining whether to approve a Related Party Transaction, the
Committee shall consider, among other factors, the following factors to the extent relevant to the Related Party Transaction:
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whether the
terms of the Related Party Transaction are fair to the Company and on the same basis as would apply if the transaction did not involve
a Related Party;
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whether there are business
reasons for the Company to enter into the Related Party Transaction;
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whether the Related
Party Transaction would impair the independence of an outside director;
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whether
the Related Party Transaction would present an improper conflict of interest for any director or executive officer of the Company, taking
into account the size of the transaction, the overall financial position of the director, executive officer or Related Party, the direct
or indirect nature of the director’s, executive officer’s or Related Party’s interest in the transaction and the ongoing
nature of any proposed relationship, and any other factors the Committee deems relevant; and
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any
pre-existing contractual obligations.
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Any
member of the Committee who has an interest in the transaction under discussion shall abstain from voting on the approval of the Related
Party Transaction, but may, if so requested by the Chairman of the Committee, participate in some or all of the Committee’s discussions
of the Related Party Transaction. Upon completion of its review of the transaction, the Committee may determine to permit or to prohibit
the Related Party Transaction.
A
Related Party Transaction entered into without pre-approval of the Committee shall not be deemed to violate this Policy, or be invalid
or unenforceable, so long as the transaction is brought to the Committee as promptly as reasonably practical after it is entered into
or after it becomes reasonably apparent that the transaction is covered by this Policy.
A
Related Party Transaction entered into prior to the effective date of this Charter shall not be required to be reapproved by the Committee.
APPENDIX
II
SIMPLICITY
ESPORTS AND GAMING COMPANY
COMPENSATION
COMMITTEE CHARTER
The
following Compensation Committee Charter (the “Charter”) was adopted by the Board of Directors (the “Board”)
of Simplicity Esports and Gaming Company, a Delaware corporation (the “Company”), on the date indicated above.
1.
Members. The Board shall appoint the members of the Compensation Committee (the “Committee”). The Committee shall
be comprised of at least three “independent” directors of the Board who shall also satisfy such other criteria imposed on
members of the Committee pursuant to the federal securities laws and the rules and regulations of the Securities and Exchange Commission
(“SEC”), the listing standards of any exchange or national listing market system upon which the Company’s securities
are listed or quoted for trading (including, without limitation, The NASDAQ Stock Market) (the “Principal Market”), any other
applicable laws or regulations, and any additional requirements that the Board deems appropriate. The term “independent director”
means a director who (i) meets the definition of “independence” under the rules and regulations of the SEC and the Principal
Market, (ii) is a “non-employee director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and (c) is an “outside director” under the regulations promulgated under Section 162(m)
of the Internal Revenue Code of 1986, as amended. Each appointed member of the Committee may be removed by the Board at any time, with
or without cause. Unless the Board elects a Chair of the Committee, the Committee shall elect a Chair by majority vote. Each Committee
member shall have one vote.
2.
Purpose. In addition to such other duties as may be assigned to the Committee by the Board from time to time, the purpose of the Committee
is to represent and assist the Board in (a) discharging its responsibilities for approving and evaluating the officer compensation plans,
policies and programs of the Company, (b) reviewing and recommending to the Board regarding compensation to be provided to the Company’s
employees and directors, and (c) administering the equity compensation plans of the Company. The Committee shall ensure that the Company’s
compensation programs are competitive, designed to attract and retain highly qualified directors, officers and employees, encourage high
performance, promote accountability and assure that employee interests are aligned with the interests of the Company’s stockholders.
3.
Duties and Responsibilities. The Committee shall, among its duties and responsibilities as may be delegated to the Committee by the Board,
and in addition to any duties and responsibilities imparted to the Committee by the SEC or any applicable Principal Market or any other
applicable laws or regulations:
(a)
Determine, in executive session at which the Chief Executive Officer of the Company (the “CEO”) is not present, the compensation
for the Company’s CEO or President, if such person is acting as the CEO.
(b)
Review and determine the compensation of the executive officers of the Company other than the CEO based upon the recommendation of the
CEO and such other customary factors that the Committee deems necessary or appropriate.
(c)
Recommend awards and/or bonuses to be granted to executive officers of the Company under the Company’s equity plans and other compensation
or benefit plans or policies as approved by the Board or the Committee.
(d)
Approve the overall amount or percentage of plan and/or bonus awards to be granted to all Company employees and delegate to the Company’s
executive management the right and power to specifically grant such awards to each Company employee within the aggregate limits and parameters
set by the Committee.
(e)
Review and evaluate the performance of the CEO and the other executive officers of the Company;
(f)
Review and approve the design of other benefit plans pertaining to executives and employees of the Company.
(g)
Assist management in complying with the proxy statement and annual report disclosure requirements and produce report on compensation
to be included in the annual proxy statement.
(h)
Review, recommend to the Board, and administer all plans that require “disinterested administration” under Rule 16b-3 under
the Exchange Act.
(i)
Approve the amendment or modification of any compensation or benefit plan pertaining to executives or employees of the Company that does
not require stockholder approval.
(j)
Review and recommend to the Board the adoption of or changes to the compensation of the Company’s independent directors.
(k)
Retain (at the Company’s expense) outside consultants and obtain assistance from members of management as the Committee deems appropriate
in the exercise of its authority.
(1)
Make reports and recommendations to the Board within the scope of its functions and advise the officers of the Company regarding various
personnel matters as may be raised with the Committee.
(m)
Approve all special perquisites, special cash payments and other special compensation and benefit arrangements for the Company’s
executive officers and employees.
(n)
Review the form, terms and provisions of employment and similar agreements with the Company’s executive officers and any amendments
thereto.
(o)
To the extent the same has been adopted, review, at least annually, the compensation philosophy of the Company.
The
powers and responsibilities delegated by the Board to the Committee in this Charter or otherwise shall be exercised and carried out by
the Committee as it deems appropriate without requirement of Board approval, and any decision made by the Committee (including any decision
to exercise or refrain from exercising any of the powers delegated to the Committee hereunder) shall be at the Committee’s sole
discretion. While acting within the scope of the powers and responsibilities delegated to it, the Committee shall have and may exercise
all the powers and authority of the Board. To the fullest extent permitted by law, the Committee shall have the power to determine which
matters are within the scope of the powers and responsibilities delegated to it. To the extent that the Company’s securities are
not listed or quoted on a Principal Market, the Committee shall determine which of the aforementioned duties and responsibilities it
shall undertake or shall be applicable to the Committee.
4.
Meetings: Reports. The Committee will meet as often as it deems necessary or appropriate, in its judgment, either in person or telephonically,
and at such times and places as the Committee members determine. Face to face meetings shall be encouraged at least twice each year.
The majority of the members of the Committee constitutes a quorum and shall be empowered to act on behalf of the Committee. Minutes will
be kept of each meeting of the Committee. The Chairman of the Committee shall report to the Board following meetings of the Committee
and as otherwise requested by the Chairman of the Board. The Committee shall also make reports and recommendations to the Board within
the scope of its functions.
5.
Advisers. The Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other
adviser. The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation
consultant, legal counsel and other adviser retained by the Committee. The Company shall provide for appropriate funding, as determined
by the Committee, for payment of reasonable compensation to a compensation consultant, legal counsel or any other adviser retained by
the Committee.
Before
engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the Committee shall consider
the independence of each such adviser by taking into account the following factors and any other factors required by the Principal Market
or the SEC and corresponding rules that may be amended from time to time, including any exceptions permitted by such rules:
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the provision
of other services to the Company by the person that employs the compensation consultant, legal counsel or other adviser (the “Advisory
Firm”);
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(ii)
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the amount of fees received
from the Company by the Advisory Firm, as a percentage of the total revenue of the Advisory Firm;
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(iii)
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the policies and
procedures of the Advisory Firm or other adviser that are designed to prevent conflicts of interest;
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(iv)
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any business or personal
relationship of the compensation consultant, legal counsel or adviser with a member of the Committee;
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(v)
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any stock of the
Company owned by the compensation consultant, legal counsel or other adviser; and
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(vi)
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any business or personal
relationship of the compensation consultant, legal counsel, other adviser or the Advisory Firm.
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6.
Review of Charter. The Committee shall review this Charter at least annually and recommend any changes thereto to the Board.
7.
Self Assessment. The Committee will annually evaluate the Committee’s own performance and report that it has done so to the Board.
8.
Self Assessment. The Committee will annually evaluate the Committee’s own performance and report that it has done so to the Board.
9.
Delegation by Committee. The Committee may delegate authority consistent with this Charter to one or more Committee members or subcommittees
comprised of one or more Committee members when appropriate. Any such member, members or subcommittee shall be subject to this Charter.
The decisions of any such member, members or subcommittees to which authority is delegated under this paragraph shall be presented to
the full Committee at its next regularly scheduled meeting.
10.
Amendment. Any amendment or other modification of this Charter shall be made and approved by the full Board.
11.
Disclosure of Charter. If required by the rules of the SEC or any Principal
Market, this Charter, as amended from time to time, shall be made available to the public on the Company’s website.
###
Simplicity Esports and G... (CE) (USOTC:WINR)
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Simplicity Esports and G... (CE) (USOTC:WINR)
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