Item 1.01 Entry into a Material Definitive Agreement.
On August 31, 2020, the Company and Mr. John Rhee entered into an Executive
Services Consulting Agreement (the “ESCA”).
Mr. Rhee is also a member of the Company’s
Board of Directors, having been appointed on July 1, 2020. Mr. Rhee has more than 20 years of experience helping businesses in
a variety of industries in the areas of strategic financing, mergers and acquisitions and portfolio management. Since 2013, Mr.
Rhee has served as Chairman and Managing Director of Stratis Impact a Private Equity firm located in Hong Kong. From 2009 to 2013,
Mr. Rhee served the Korean Ministry of Culture as a Senior Adviser and from 2004 to 2010 in various roles including Executive Director
for Investment at Softbank. Mr. Rhee holds a J.D from Yale Law School and undergraduate degree from Cornell University.
Pursuant to the ESCA, Mr. Rhee will provide
executive consulting services to the Company, and its directly and indirectly owned subsidiaries, in connection with the Company’s
efforts to establish an operating presence in the Republic of Korea for
active outreach to established commercial businesses for collaborations, partnerships, joint ventures, and other such commercially
advantageous engagements in Asia, including the Republic of Korea, in addition
to the United States of America and elsewhere. Capitalized terms used in this Item 1.01 and not otherwise defined shall have the
meaning ascribed to such terms in the ESCA.
It is expected
that Mr. Rhee will provide the Services contemplated by the ESCA primarily from the Company’s newly established offices in
the Republic of Korea
Subject to earlier termination
(as discussed below) the Initial Term of the ESCA is three years, expiring on August 31, 2023. The Initial Term may be extended
annually thereafter provided that neither Party provides the other Party with written notice, at least 30 days prior to the expiration
of the Initial Term or Extended Term, as the case may be, of its intention not to further extend the Consulting Term.
Mr. Rhee’s
engagement pursuant to the ESCA is an “at-will” engagement. As such it may be terminated by either Party, at any time
during the Consulting Term, upon written notice, for any reason or no reason, with or without Cause. It is acknowledged
that Mr. Rhee’s engagement is on a part-time basis; however, he has agreed to, devote as much of his time, efforts, professional
attention, knowledge, and experience as may be necessary to carry on fully his duties and responsibilities under the ESCA, including,
without limitation, his performance of the Services and achievement of the Performance Goals.
The ESCA also
contains provisions regarding Mr. Rhee’s obligations, during the Consulting Term and for a specified period thereafter, to
(i) protect the Company’s Confidential Information and intellectual property, (ii) refrain from the solicitation of the Company
officers, directors or employees, and (iii) refrain from engaging in activities that are competitive to the business being conducted
by the Company and its subsidiaries.
In consideration for the Services and other obligations of Mr. Rhee
pursuant to the ESCA, Mr. Rhee:
(a) Shall
receive a base monthly fee as follows (the “Base Monthly Fee”) of US$10,000 per month payable on the first day
of each calendar month in arrears. The Base Monthly Fee shall be prorated for any portion of the Consulting Term that is not a
full calendar month.
(b) Shall
be reimbursed for all pre-approved, legitimate business expenses reasonably incurred by Consultant in carrying out the responsibilities
and obligations under the ESCA and promoting the Company’s business will be reimbursed, including mileage and travel expenses
in accordance with IRS guidelines. Mr. Rhee shall be reimbursed for all such legitimate business expenses upon submission to the
Company of appropriate documentation of such expenses and a description of the purpose of such expenses.
(c) Has
been granted, on August 31, 2020 (the “Grant Date”) a non-statutory stock option (the “Option”)
pursuant to the Company’s 2006 Incentive Stock Option Plan to purchase up to 2,500,000 shares (the “Shares”)
of the Company’s common stock (the “Stock”) in accordance with and subject to the terms and conditions
of the Stock Option Agreement dated August 31, 2020 between Mr. Rhee and the Company (the “SOA”),
The Option shall vest and be exercisable at initial exercise prices,
as follows:
|
Vesting Date
|
Number of Shares Vesting
|
Initial Exercise Price
|
|
Effective Date
|
500,000
|
$3.66
|
|
Six Month Anniversary of the Effective Date
|
800,000
|
$6.00
|
|
One-year Anniversary of the Effective Date
|
700,000
|
$8.00
|
|
Eighteen Month Anniversary of the Effective Date
|
500,000
|
$3.66
|
The term of the Option commenced on the
Grant Date and shall expire, and all rights to purchase the Shares pursuant to the Option shall terminate, on the three-year anniversary
date of the Grant Date (the “Option Expiration Date”).
To the extent that all or a portion of the Option has vested, it may
be exercised as to such vested amount, in whole or in part and from time to time, during the term, by delivery to the Company of
a written or electronic notice, stating the number of whole Shares to be purchased; the Exercise Notice shall be accompanied by
payment of the Aggregate Exercise Price of the Shares to be purchased. The term “Aggregate Exercise Price” shall
mean the dollar amount obtained by multiplying (i) the Per Share Exercise Price by (ii) the number of Shares being
purchased.
Subject to the provisions of the SOA, The Aggregate Exercise Price of the Options shall be
paid:
(i) in cash or by certified check
or bank draft payable to the order of the Company;
(ii) to
the extent permitted by applicable law, through a broker-assisted cashless exercise by delivering, along with a properly executed
exercise notice to the Company, a copy of irrevocable instructions to a broker to deliver promptly to the Company the aggregate
exercise price and, if requested by the Participant, the amount of any applicable federal, state, local or foreign withholding
taxes required to be withheld by the Company, provided, however, that such exercise may be implemented solely under a program or
arrangement established and approved by the Company with a brokerage firm selected by the Company;
(iii) at any time
prior to the Company’s listing of any of its securities for trading on a “national stock exchange,” pursuant
to “a net issue” or “cashless” exercise;
(iv) by any other method approved by the Board
or its Compensation Committee, if any, or
(v) by a combination of the foregoing.
The SOA contains such other provisions
as are typically included in such agreements including but not limited to, early termination (in the event of the termination of
the ESCA for Cause or Poor Performance), vesting acceleration (in the event of a change of control or otherwise in the discretion
of the Company’s Board of Directors) and option forfeiture provisions (in the event of the termination of the ESCA for Cause
or, with respect to unvested Options, for Poor Performance).
THE
FOREGOING DESCRIPTIONS, OF THE OF EACH OF THE ESCA AND THE SOA, DO NOT PURPORT TO BE COMPLETE AND ARE QUALIFIED IN THEIR ENTIRETY
BY REFERENCE TO THE COMPLETE TEXT OF EACH OF THE ESCA AND THE SOA, COPIES OF WHICH ARE FILED, RESPECTIVELY, AS EXHIBITS
10.1 AND 10.2 TO THIS CURRENT REPORT ON FORM 8-K, AND EACH SUCH EXHIBIT IS INCORPORATED HEREIN BY REFERENCE.