2020 was a pivotal year for Kidoz Inc.
During the year Kidoz became the market leader for safe mobile contextual
advertising; usage on the Kidoz network surged to over 340 million monthly
active users; the Company posted record revenues and realized an annual
profit. To achieve these feats in the midst of the global COVID pandemic
was very satisfying and the Kidoz team remains focused on achieving even
greater heights in the months and years ahead as its strategy, technology
and market position are perfectly aligned.
Kidoz owns the Kidoz Connect Advertising
Network which is a widely adopted safe contextual mobile network reaching
more than 340 million users each month. After years of dedicated software
and business development the Kidoz system is the market leader across
thousands of apps who have integrated our technology in order to access the
premium advertising campaigns from a long list of renowned Kidoz
advertisers. As the Kidoz brand continues to build in the global AdTech
economy and as our latest software products are released, management
believes our trajectory of growth will continue.
The mobile advertising market is forecast to
exceed $400 billion in 2026, exhibiting a growth rate of 32.5% according to
Fortune Business Insights. Mobile devices are the primary tool used for all
digital activities in everyday life across the entire world. The
predominance of mobile is firmly established and Kidoz is positioned to
benefit as mobile usage increases and advertisers invest in digital
marketing to reach their customers.
Kidoz is first and foremost a software
company and we are creating advanced technology to build upon our leadership
position for safe and private contextual mobile ad monetization. Our
technology teams are building programmatic connections to leading app
developers and integrating with the leading ad tech platforms so that we
ensure our centrality in the wider advertising eco-system. During 2020, the
Kidoz team made strides to achieve this vision and have positioned its
technology to expand to new market segments, increase the number of
available impressions we can fill, and scale our revenues quickly as we
on-board new advertisers and new app publishers in the global marketplace.
Our vision is to create a free and safe
mobile experience by enabling content producers to monetize with safe,
relevant, and fun advertising. We connect our users to the brands that
people love. Without a safe advertising eco-system, mobile content cannot
be free. The Kidoz Connect Safe Advertising Network is increasingly
popular with app developers and brand advertisers because of several
powerful trends that are occurring in the marketplace.
- First, government regulations to
protect children online have been implemented in many countries including
America (COPPA), Europe (GDPR), and Brazil (LGPD). Many other countries
including China and India are expected to adopt their own child-safe privacy
regulations soon.
- Second, country regulators are
beginning to initiate significant fines to companies that violate data
privacy regulations.
- Third, traditional television is in
rapid decline and children are shifting their entertainment time to apps on
mobile devices.
- Fourth, Google and Apple, the App
store owners, have enacted their own kid-safe policies that app developers,
kids brands, and advertising networks must follow.
- Fifth, advertising as the preferred
option for enabling free content for the game player is increasingly
embraced by consumers globally.
- Sixth, advertising budgets are
following kids to mobile and shifting away from television and other
non-interactive media channels.
The decline of traditional linear television
creates a difficult challenge for advertisers and they are turning to mobile
networks to fill this advertising void. In the report "Deconstructing
Mobile & Tablet Gaming" published by The NDP Group Inc. it was found that,
of the 303.7 million total mobile users in the US and Canada in 2020, 238.7
million were active mobile gamers. This represents 79% of the North
American population who use mobile devices to play mobile apps.
2020 saw Kidoz succeed amongst a global
shift in consumer and commercial behaviours. Our strategies, teams, and
products have proven to be successful in the wider advertising ecosystem and
Kidoz technology now reaches hundreds of millions of kids and families every
month. Mobile continues to grow and Kidoz's proprietary products are only
beginning to show their potential in the high-growth global market of in-app
advertising.
For 2021, Kidoz is well positioned to
increase market share and continue on a path of rapid revenue growth. The
Kidoz strategy to create high performing mobile digital advertising free of
data tracking is succeeding. As a new age of digital advertising begins,
free of IDFA and other persistent trackers, Kidoz stands to benefit.
Presently, only a small portion of Kidoz's growing, accessible inventory of
impressions is utilized and the Company is launching new programmatic
technology to fill hundreds of millions of additional advertising
impressions each month. Furthermore, with the expansion of our Safe Ad
network to include the teen and parent market segments which are already
gaining traction, we anticipate 2021 to produce outstanding results.
We are pleased to invite you to the Annual
Meeting of Stockholders (the "Annual Meeting") of Kidoz Inc., which will be
held on Wednesday November 24, 2021, starting at 11:00 a.m., Eastern
Caribbean Time Zone, at Ground Floor, Hansa Bank Building, Landsome Road,
The Valley, Anguilla, British West Indies and virtually via live webcast
online at Zoom.
Important information concerning the matters
to be acted upon at the meeting is contained in the accompanying Notice of
Annual Meeting of Stockholders and Proxy Statement. The business to be
conducted at the Annual Meeting includes the election of directors;
ratification of the appointment of Davidson & Company LLP, Chartered
Accountants, as independent auditors for the Company for its 2021 fiscal
year; ratification and confirmation of the 2015 Stock Option Plan of the
Company, and consideration of any other matter that may properly come before
the meeting and any adjournment or postponement thereof.
Our Board of Directors has fixed the close
of business on October 5, 2021, as the record date for determining those
stockholders who are entitled to notice of and to vote at the Annual Meeting
and any adjournment or postponement thereof.
Your vote is important. Registered
stockholders can vote their shares by mailing back the accompanying proxy
card or voting electronically. Voting by proxy will ensure your
representation at the Annual Meeting if you do not attend in person. Mailing
your completed proxy card or voting online will not prevent you from voting
in person at the Annual Meeting, if you wish to do so.
A copy of our Annual Report on Form 10-K and
Audited Financial Statements for the year ended December 31, 2020, is
available on the Company's website at https://investor.kidoz.net and will be
mailed to shareholders who have elected to receive our Annual Report.
J. M.
Williams
E. Ben Tora
Co-Chief Executive
Officer Co-Chief Executive
Officer
PROXY STATEMENT
Information Concerning the Solicitation of
Proxies
This Proxy Statement and the accompanying
Proxy is furnished to the shareholders of KIDOZ INC. (the "Company") in
connection with the solicitation of proxies for use at the Company's Annual
Meeting of Shareholders (the "Annual Meeting"). The Annual Meeting will be
held on Wednesday, November 24, 2021, in the Boardroom of the Company's
Anguilla office, located at Ground Floor, Hansa Bank Building, Landsome
Road, The Valley, Anguilla, British West Indies, and virtually via live
webcast online at Zoom at 11:00 am. (Eastern Caribbean Time Zone). Form 10-K
was made available to shareholders electronically via filing on EDGAR and
SEDAR on March 31, 2021.
Questions and answers about our Annual
Meeting and voting
Q: What is the purpose of Annual Meeting?
A: We will hold the Annual Meeting to enable
stockholders to vote on the following matters:
Proposal 1. To elect the six
director nominees identified in this Proxy Statement to serve as directors
of the Company until the 2022 Annual Meeting of Stockholders;
Proposal 2. To appoint auditors
for the Company for the ensuing financial year and to authorize the
directors to fix the remuneration to be paid to the auditors;
Proposal 3. To consider, and if
thought fit, ratify and approve, by an ordinary resolution, the Company's
10% rolling stock option plan, as more particularly set out in Schedule B
attached;
Proposal 4. To transact such
other business as may properly come before the Annual Meeting and/or any
adjournment or postponement thereof.
Stockholders will be asked to vote for
nominees for all director seats on the Board as of the Annual Meeting. The
term of office for directors elected at the Annual Meeting will continue
until their respective duly qualified successors are duly elected at the
2022 Annual Meeting of Shareholders of the Company or until their earlier
removal, resignation or death.
The nominees for election are:
Mr. T. M. Williams, Mr. J. M. Williams, Mr.
E. Ben Tora, Mr. C. Kalborg, Ms. F. Curtis, and Mr. M. David.
Q: What is a proxy?
A: A proxy is a document by which
you authorize someone else to vote for you at a stockholder meeting in the
way that you want to vote. That document is called a "proxy" or, if your
shares are held in "street name" (i.e., through a bank, broker or other
nominee) and you give instructions to the record holder of your shares, is
called a "voting instruction card." You also may choose to abstain from
voting.
This Proxy Statement and the accompanying
proxy or voting instruction card are furnished in connection with the
solicitation by the Board of proxies for use at the Annual Meeting to be
held on Wednesday, November 24, 2021 starting at 11:00 a.m., Anguillian
Time, at Ground Floor, Hansa Bank Building, Landsome Road, The Valley,
Anguilla, British West Indies and virtually via live webcast online at Zoom
and at any adjournment or postponement thereof. The Notice Regarding the
Availability of Proxy Materials, this Proxy Statement and our 2020 Annual
Report are first being made available to stockholders on or about October 5,
2021.
Q: How are proxies being solicited
and who pays the related expenses?
A: Proxies are being solicited
principally by mail, by telephone and through the Internet. In addition to
sending you these materials, some of our directors and officers, as well as
management employees, may contact you by telephone, mail, email or in
person. You may also be solicited by means of news releases issued by the
Company, postings on our website,
https://investor.kidoz.net and print
advertisements. None of our officers or employees will receive any extra
compensation for soliciting you.
Q: Who is entitled to vote?
A: Only record holders of shares
of our Common Stock at the close of business on the record date for the
Annual Meeting are entitled to vote at the Annual Meeting. The Board has
fixed the close of business on October 5, 2021, as the record date (the
"Record Date") for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting.
Page 5
Our authorized capital stock consists of an
unlimited number of common shares without par value ("Common Stock"). As of
October 5, 2021, 131,424,989 shares of Common Stock were issued and
outstanding. Each share of Common Stock is entitled to notice of, and one
vote on all matters submitted for shareholder approval.
Q: How can I access the proxy
materials on the Internet?
A: In accordance with the rules
of the SEC, we are using the Internet as the primary means of furnishing
proxy materials to stockholders. Accordingly, most stockholders will not
receive paper copies of our proxy materials. We instead sent stockholders a
Notice Regarding the Availability of Proxy Materials (the "Notice") with
instructions for accessing the proxy materials via the Internet and voting
via the Internet or by telephone. The Notice will be mailed on or about
October 12, 2021. The Notice also provides information on how stockholders
may obtain paper copies of our proxy materials if they so choose.
The Notice provides you with instructions
regarding how to:
Choosing to receive future proxy materials
by e-mail will save us the cost of printing and mailing documents to you and
will reduce the impact of our annual meetings on the environment. If you
choose to receive future proxy materials by e-mail, you will receive an
e-mail next year with instructions containing a link to those materials and
a link to the proxy voting website. Your election to receive proxy materials
by e-mail will remain in effect until you terminate it.
Q: How do I receive a copy of
the Annual report?
A: The 2020 Form 10-K is being
mailed with this Proxy Statement to those stockholders that received a copy
of the proxy materials in the mail. For those stockholders that received the
Notice, this Proxy Statement and our 2020 Form 10-K are available at our
website at https://investor.kidoz.net.
Upon written request by any stockholder to the Company, Hansa Bank Building,
Ground Floor, Landsome Road, The Valley, AI 2640, The Valley, Anguilla,
British West Indies, Attention: H. Bromley, CFO, we will furnish, without
charge, a copy of the 2020 Form 10-K. You can also obtain copies of our Form
10-K and any other reports we file with SEDAR at www.sedar.com or on our
website at https://investor.kidoz.net.
Q: How do I vote?
A: You can vote either in person
at the Annual Meeting or by proxy, whether or not you attend the Annual
Meeting. You can vote by proxy in three ways:
-
By mail-If you are a
stockholder of record, you can submit a proxy by completing, dating, signing
and returning your proxy in the postage paid envelope provided. You should
sign your name exactly as it appears on the proxy. If you are signing in a
representative capacity (for example, as a guardian, executor, trustee,
custodian, attorney or officer of a corporation), please indicate your name
and title or capacity. If you are a beneficial owner, you have the right to
direct your brokerage firm, bank or other similar organization on how to
vote your shares, and the brokerage firm, bank or other similar organization
is required to vote your shares in accordance with your instructions. To
provide instructions to your brokerage firm, bank or other similar
organization by mail, please complete, date, sign and return your voting
instruction card in the postage paid envelope provided by your brokerage
firm, bank or other similar organization.
-
By telephone-If you are a
stockholder of record, you can submit a proxy by telephone by calling the
toll-free number listed on the proxy, entering your control number located
on the proxy or voting instruction card and following the prompts. If you
are a beneficial owner and if the brokerage firm, bank or other similar
organization that holds your shares offers telephone voting, you will
receive instructions from the brokerage firm, bank or other similar
organization that you must follow in order to submit a proxy by telephone.
-
By Internet-If you are a
stockholder of record, you can submit a proxy over the Internet by logging
on to the website listed on the proxy, entering your control number located
on the proxy or voting instruction card and submitting a proxy by following
the on-screen prompts. If you are a beneficial owner, and if the brokerage
firm, bank or other similar nominee that holds your shares offers Internet
voting, you will receive instructions from the brokerage firm, bank or other
similar organization that you must follow in order to submit your proxy over
the Internet.
Your vote is important. The Board urges you
to submit a proxy for your shares as soon as possible by following the
instructions provided on the enclosed proxy or voting instruction card you
receive from your brokerage firm, bank or other similar organization.
Internet and telephone submission of proxies is available 24 hours a day,
and, if you use one of those methods, you do not need to return a proxy or
voting instruction card. Unless you are planning to vote at the Annual
Meeting in person, your proxy must be received by 11:59 p.m., Eastern
Caribbean Time Zone, on Sunday, November 21, 2021. Even if you submit your
proxy or voting instructions by one of the methods listed above, you still
may vote at the Annual Meeting in person if you are the record holder of
your shares. If you are a beneficial owner, you must obtain a "legal proxy"
from the record holder in order to vote your shares at the Annual Meeting.
Your vote at the Annual Meeting will constitute a revocation of your earlier
proxy or voting instructions.
Q: What happens if I do not
provide instructions on how to vote or if other matters are presented for
determination at the Annual meeting?
A: If you vote by proxy, your
shares will be voted at the Annual Meeting in the manner you indicate. If
your shares are held
Page 6
in your name (i.e., not in "street name" through a
broker) and if you sign your proxy card, but do not specify how you want
your shares to be voted, the persons named as proxy holders on the proxy
card will vote as the Board recommends.
As of the date of this Proxy Statement, we
do not know of any other matters that may be presented for action at the
meeting. Should any other business properly come before the meeting, the
proxy holders will vote as the Board recommends or, if no recommendation is
given, in accordance with their best judgment.
Q: What does it mean if I get
more than one proxy or voting instruction card?
A: If you get more than one proxy
or voting instruction card, it means that your shares are registered in more
than one way. Sign and return all proxy or voting instruction cards or vote
each group of shares by mail, telephone or over the Internet to ensure that
all your shares are voted.
Q: Who are the proxyholders
named by the Board for the Annual Meeting?
A: Mr. T. M. Williams was
selected by the Board to serve as proxyholder for the Annual Meeting of
stockholders voting on proxy or voting instruction cards. Each properly
executed and returned proxy or voting instruction card will be voted by the
proxyholders in accordance with the directions indicated thereon or, if no
directions are indicated, in accordance with the recommendations of the
Board. In voting by proxy with regard to the election of directors,
stockholders may vote in favor of all nominees, vote in favor of one or more
specific nominee(s), withhold their vote as to all nominees or withhold
their vote as to one or more specific nominee(s). Each stockholder giving a
proxy has the power to revoke it at any time before the shares it represents
are voted. Revocation of a proxy is effective upon receipt of a later vote
by telephone, Internet, receipt by the Corporate Secretary or inspectors of
election of either an instrument revoking the proxy or a duly executed proxy
card bearing a later date. Additionally, a stockholder may change or revoke
a previously executed proxy by voting in person at the Annual Meeting.
Q: Will my shares be voted if I
do not provide my proxy?
A: If you hold your shares
directly in your own name, your shares will not be voted if you do not vote
them or provide a proxy.
If your shares are held in the name of a
brokerage firm or other nominee, your broker may vote your shares on
"routine" matters even if you do not provide a proxy. The only routine
matter to be voted on at the Annual Meeting is the ratification of the
appointment of our independent registered public accounting firm for the
year ended December 31, 2021. If a brokerage firm votes your shares on a
routine matter in accordance with these rules, your shares will count as
present at the Annual Meeting for purposes of establishing a quorum and will
count as "FOR" votes or "AGAINST" votes, as the case may be, depending on
how the broker votes. Your broker does not have discretionary authority to
vote on non-routine matters without instructions from you, in which case a
"broker non-vote" will occur and your shares will not be voted on these
matters.
Q. How many shares must be
present to hold the Annual Meeting?
A: The presence at the Annual
Meeting, in person or by proxy, of the holders of one third of the shares of
Common Stock outstanding and entitled to vote on the record date will
constitute a quorum entitled to conduct business at the Annual Meeting.
Abstentions and broker non-votes will be included in the calculation of the
number of shares of Common Stock considered to be present at the Annual
Meeting. Broker non-votes refer to shares held by brokers and other nominees
or fiduciaries that are present at the Annual Meeting but not voted on a
matter. Directors are elected by plurality vote of the votes cast at the
Annual Meeting. Abstentions and broker non-votes will have no effect on the
election of directors.
Q: What vote is needed to elect
directors and approve other proposals?
A: At the Annual Meeting,
directors will be elected and other proposals approved by a majority of the
votes cast.
If you do not instruct your broker how to
vote with respect to this item, your broker may not vote with respect to
this proposal. For your vote to be counted, you must submit your voting
instructions to your broker or custodian. Abstentions and broker non-votes
will not be counted as votes cast and therefore will have no effect in
determining whether the required majority vote has been attained.
Q: How will the votes be
tabulated?
A: The inspectors of election
appointed for the Annual Meeting will tabulate the votes cast, in person or
by proxy, at the Annual Meeting and will determine whether a quorum is
present.
Q: How do I revoke a proxy?
A: If you hold your shares
registered in your name, you may revoke your proxy by submitting a revised
one at any time before the vote to which the proxy relates. You may also
revoke it by submitting a ballot at the Annual Meeting.
If your shares are held in street name,
there are special procedures that you must follow to revoke a proxy
submitted via the Internet or by telephone or by marking, signing and
returning a vote instruction card.
-
Revoking your vote and
submitting a new vote before the deadline of 11:00 a.m., Eastern Caribbean
Time Zone, on November 22, 2021. If you submit a proxy via the Internet, by
telephone or by marking, signing and returning a vote instruction card, you
may revoke your proxy at any time and by any method before the deadline.
-
Revoking your vote and
submitting a new vote after the deadline of 11:00 a.m., Eastern Caribbean
Time Zone, on
Page 7
November 22, 2021. If you submit a proxy via the Internet, by
telephone or by marking, signing and returning a vote instruction card and
wish to revoke it and submit a new proxy after the deadline has passed, you
must contact your brokerage firm, bank or other similar organization and
follow its requirements. We cannot assure you that you will be able to
revoke your proxy and vote your shares by any of the methods described
above.
-
Revoking your vote and
submitting a new vote by ballot at the Annual Meeting. If you submit a proxy
via the Internet, by telephone or by marking, signing and returning a vote
instruction card and wish to revoke it and vote at the Annual Meeting, you
must contact your brokerage firm, bank or other similar organization and
follow its requirements. We cannot assure you that you will be able to
revoke your proxy or attend and vote at the Annual Meeting.
-
If you receive more than one
proxy or voting instruction card on or about the same time, it generally
means you hold shares registered in more than one account. In order to vote
all of your shares, please sign and return each proxy or voting instruction
card or, if you vote via the internet or telephone, vote once for each proxy
or voting instruction card you receive.
Q: Where can I find the results of
the Annual Meeting?
A: We intend to announce
preliminary voting results at the Annual Meeting and announce final results
in a Current Report on Form 8-K that we will file with the SEC and SEDAR
within four business days of the Annual Meeting.
Q: How can I attend the Annual
Meeting?
A: Only stockholders and certain
other permitted attendees may attend the Annual Meeting. Please note that
space limitations make it necessary to limit attendance in person to
stockholders and one guest. Admission to the Annual Meeting will be on a
first-come, first-served basis. Proof of Kidoz Inc. stock ownership as of
the record date, along with photo identification, will be required for
admission. Stockholders holding stock in an account at a brokerage firm,
bank, broker-dealer or other similar organization ("street name" holders)
will need to bring a copy of a brokerage statement reflecting their stock
ownership as of the record date. No cameras, recording equipment, electronic
devices, use of cell phones or other mobile devices, large bags or packages
will be permitted at the Annual Meeting.
The Meeting will be held in person and
virtually via the Zoom meeting platform. In order to access the Meeting,
shareholders will have two options: through the Zoom application, which
requires internet connectivity; or via teleconference.
Attending via Zoom Video Conference:
In order to access the Meeting through the
Zoom application, shareholders will need to download the application onto
their computer or smartphone and then, once the application is loaded, open
the following link or enter the Meeting ID below:
https://us02web.zoom.us/j/85477116886?pwd=K0hyYzIxbzRZU1o0OW5CVXJTa3A5dz09
Meeting ID: 854 7711 6886
Password: 695437
Shareholders will have the option through
the application to join the video and audio or simply view and listen.
It is the shareholders' responsibility to
ensure connectivity during the meeting and the Company encourages its
shareholders to allow sufficient time to log in to the Meeting before it
begins.
Attending via Teleconference
In order to dial into the Meeting by
telephone, shareholders may phone:
Canada: 855 703 8985 (Toll Free)
US: 888 788 0099 (Toll Free) or 877 853 5247
(Toll Free)
or to a local phone number that can be
obtained on the following website:
https://us02web.zoom.us/u/kdrJcVj7Pl
Meeting ID: 854 7711 6886
Password: 695437
Q: How do I submit a proposal
or nominate a director candidate for the 2022 annual meeting of
stockholders?
A: Stockholder Proposals
Stockholder proposals intended to be
presented at the next Annual Meeting of Stockholders of the Company must
meet the requirements of Rule 14a-8 promulgated by the Securities and
Exchange Commission and must be received by the Company at its principal
executive offices by February 28, 2022, in order to be considered for
inclusion in the Company's proxy statement relating to such meeting.
No Stockholder proposals were received for
the 2021 Annual Meeting of Stockholders of the Company.
Record Date and
Voting Rights
The record date for determination of
shareholders who are entitled to notice of and to vote at the Annual Meeting
is October 5, 2021. This Proxy Statement and the accompanying Proxy are
being sent to shareholders on or about October 12, 2021.
Page 8
Interest of Insiders
in Material Transactions
Mr. T. M. Williams, is a director and the
Executive Chairman of the Company. Mr. T. M. Williams holds 12.57% of the
share capital of the Company with 16,515,316 directly owned common shares.
It is the intention of the proposed nominees of management of the Company
for election as directors of the Company, should they be elected, to
re-appoint Mr. T. M. Williams as Executive Chairman of the Company.
Mr. E. Ben Tora is a director and Co-CEO of
the Company. He holds 3.97% of the share capital of the Company with
5,214,965 indirectly owned common shares. It is the intention of the
proposed nominees of management of the Company for election as directors of
the Company, should they be elected, to confirm the continued appointment of
Mr. E. Ben Tora as Co-CEO of the Company.
Mr. J. M. Williams is a director and Co-CEO
of the Company. He holds 0.69% of the share capital of the Company with
908,200 directly owned common shares. It is the intention of the proposed
nominees of management of the Company for election as directors of the
Company, should they be elected, to confirm the continued appointment Mr. J.
M. Williams as Co-CEO of the Company. Mr. J. M. Williams is the son of Mr.
T. M. Williams.
Pendinas Ltd. is the largest single
shareholder in the Company, holding 21.18% of the share capital of the
Company, with 27,839,464 directly owned common shares. Pendinas Ltd. is
wholly owned by Mr. G. R. Williams, a resident of the Isle of Man. Mr. G.
R. Williams is not related to either Mr. T.M. Williams or Mr. J. M.
Williams.
Interest of Certain
Persons in Matters to be Acted Upon
No director or senior officer of the Company
or any proposed nominee of management of the Company for election as a
director of the Company, nor any associate or affiliate of any of the
foregoing persons, has any material interest, direct or indirect, by way of
beneficial ownership of securities or otherwise, in any matter to be acted
upon at the Annual Meeting other than the election of directors, except as
otherwise disclosed herein.
BUSINESS OF THE MEETING
There are three matters being presented for
consideration by the shareholders at the Annual Meeting: election of
directors of the Company; approval of ratification of the appointment of
Davidson & Company LLP, Chartered Accountants, as independent auditors for
the Company for the 2021 fiscal year and authorization of the Board of
Directors to fix their remuneration; and ratification of the Company's
rolling stock option plan, as previously constituted and approved, but with
the addition of an Israeli Taxpayers Appendix, as hereinafter described.
Any other matter that may properly come before the meeting and any
adjournment or postponement thereof will also be considered.
OTHER MATTERS
Transfer Agent
Computershare Investor Services Ltd. located
at 3rd Floor, 510 Burrard Street, Vancouver, BC, V6C 3B9, Canada,
is the transfer agent for the shares of Common Stock of the Company.
Voting
A Shareholder may vote their shares via
telephone by calling: 1-866-732-VOTE (8683) Toll Free or via the internet at
www.investorvote.com. To vote by telephone or internet you will need your
control number listed on the proxy card.
Action on Other
Matters
The board of directors knows of no other
matters to be brought before the shareholders at the Annual Meeting. In the
event other matters are presented for a vote at the Annual Meeting, the
proxy holders will vote shares represented by properly executed proxies in
their discretion in accordance with their judgment on such matters.
At the Annual Meeting, management will
report on the Company's business and shareholders will have the opportunity
to ask questions.
KIDOZ INC.
By Order of the Board of Directors
/s/ "J. M. Williams"
/s/ "E. Ben Tora
J. M.
Williams
E. Ben Tora
Co-Chief Executive
Officer
Co-Chief Executive Officer
Anguilla, British West Indies
October 5, 2021
Page 20
SCHEDULE "A"
KIDOZ INC.
Disclosure of Corporate Governance
Practices
DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES
1. Board of Directors
Disclose the identity of the directors
who are independent.
Of the six proposed members of the Board of
Directors, three members are considered by the Board to be independent
Directors. In reaching this conclusion, the Board of Directors took the view
that C. Kalborg, F. Curtis, and M. David are independent directors.
Disclose the identity of directors who
are not independent and describe the basis for that determination.
T. M. Williams, the Executive Chairman of
the Company, J. M. Williams and Mr. Eldad Ben Tora, The Co-CEO's, are
members of management and, accordingly, are not considered to be independent
of the Company.
If a director is presently a director of
any other issuer that is a reporting issuer (or the equivalent) in a
jurisdiction of Canada or a foreign jurisdiction, identify both the director
and the other issuer.
Mr. J. M. Williams is a Non-Executive
Director of Adventurebox Technology AB (publ).
Mr. C. Kalborg is a Non-Executive Director
of Flexion Mobile Plc, Fragbite, LL
Games and Adventurebox Technology AB
(publ).
There is no other director who is a director
of any other issuer.
2. Board Mandate
Disclose the text of the board's written
mandate. If the board does not have a written mandate, describe how the
board delineates its role and responsibilities.
The Board of Directors is responsible for
supervising the management of the business and affairs of the Company and to
act with a view to the best interests of the Company. The Board of Directors
has adopted a written mandate to formalize its oversight responsibilities, a
copy of which is attached to this circular as Appendix "I". The Board of
Directors' mandate is fulfilled in part through its standing Audit
Committee, Corporate Governance and Compensation Committee. The Board
discharges its responsibilities directly and indirectly through these three
standing committees, and acts with a view to the best interests of the
Company and its shareholders with the primary objective of creating value
for its shareholders commensurate with a recognition of the Company's
obligations to its other stakeholders including its licensors and employees.
At no less than quarterly meetings, the
members of the Board (i) review and discuss operational, financial and other
reports which they have received in advance of the meeting; (ii) receive
reports from the Chief Executive Officer; (iii) discuss issues and
developments relating to current Company business; (iv) receive and discuss
reports from the committees of the Board; and (v) approve and make such
recommendations as are appropriate and required. In addition, at least once
a year the Board reviews the annual business plan of the Company.
All major decisions involving material
contracts, acquisitions, divestitures, significant capital expenditures,
investments and strategic alliances are subject to approval by the Board. As
well, any decisions concerning the Company's capital, the issue,
appointments to Board committees and the approval of all continuous and
public disclosure documents are made by the Board.
In fulfilling its mandate, the Board of
Directors, directly or through one of its committees, is responsible for the
following:
3. Position Descriptions
Disclose whether or not the board has
developed written position descriptions for the chair and the chair of each
committee. If the board has not developed written position descriptions for
the chair and/or the chair of each board committee, briefly described how
the board delineates the role and responsibilities of each such position.
Pursuant to the Board's written mandate, the
Board is responsible for developing position descriptions for the Chair of
the Board and the chair of each Board committee:
The Chairman of the Board is responsible for
overseeing the performance by the Board of its duties, for communicating
periodically with Committee chairs regarding the activities of their
respective Committees, for assessing the effectiveness of the Board as a
whole as well as individual Board members and for overseeing the management
of the Company's business.
Page A - 1
The Chairman of the Audit Committee is
responsible for overseeing the performance by the Audit Committee of its
duties, for assessing the effectiveness of the Audit Committee and
individual committee members and for reporting periodically to the Board.
The Chairman of the Corporate Governance
Committee is responsible for overseeing the performance by the Corporate
Governance Committee of its duties, for assessing the effectiveness of the
Corporate Governance Committee and individual committee members and for
reporting periodically to the Board.
The Chairman of the Compensation Committee
is responsible for overseeing the performance by the Compensation Committee
of its duties, for assessing the effectiveness of the Compensation Committee
and individual committee members and for reporting periodically to the
Board.
Disclose whether or not the board and
CEO's have developed a written position description for the CEO. If the
board and CEO's have not developed such a position description, briefly
describe how the board delineates the roles and responsibilities of the
CEO's.
The Company's Co-Chief Executive Officers
are the principal officers of the Company and are charged with the
responsibility for managing the strategic and operational agenda of the
Company and for the execution of the directives and policies of the Board of
Directors. The roles and responsibilities of the Co-Chief Executive Officers
include, among other things:
-
developing, together with the Board of
Directors, the Company's strategic direction;
-
directing the overall business
operations of the Company;
-
ensuring that the Board of Directors is
kept appropriately informed of the overall business operations of the
Company and major issues facing the Company;
-
having responsibility for the day-to-day
operations of the Company, including the annual planning process,
capital management, financial management, acquisitions, divestitures,
etc., all of which must be accomplished within the strategic framework
of the Company established by the Board of Directors;
-
representing the Company to its major
shareholders, including investment and financial communities,
governments, customers and the public;
-
bringing the following material
decisions to the Board of Directors for their review and approval: (i)
disposition of assets other than in the ordinary and normal course of
business; (ii) acquisition of assets or the assumption of any
commitment, obligation or liability other than in the ordinary and
normal course of business; (iii) issuance or sale of securities of the
Company; (iv) redemption or repurchase of securities of the Company; (v)
declaration or payment of a dividend or other distribution in respect of
any securities of the Company; (vi) any transaction, contract,
agreement, undertaking or arrangement with a person with whom the
Company does not act at arm's length; and (vii) any other transaction,
contract, agreement, undertaking, commitment or arrangement, not in the
ordinary and normal course of business which is or would be material in
relation to the Company; and
-
presenting to the Board of Directors any
material business issues resulting from communications with
shareholders.
4. Orientation and Continuing Education
Briefly describe what measures the board
takes to orient new directors regarding
i.
The role of the board, its committees and its directors; and
ii.
The nature and operation of the issuer's business.
No formal orientation program has been
developed by the Board. However, new directors have the opportunity to meet
with and participate in work sessions with senior management to obtain
insight into the operations of the Company. It is expected that new
directors will generally have been executives with extensive business or
other senior level experience and have directorship responsibilities on
other public and private company boards and institutions. Orientation for
these individuals is provided through a review of past Board of Director
materials and other private and public documents concerning the Company.
Given the level of experience of those joining the Board and the relatively
short history of the Company, a formal orientation and education program has
not been viewed as necessary.
Briefly describe what measures, if any, the
board takes to provide continuing education for its directors. If the board
does not provide continuing education, describe how the board ensures that
its directors maintain the skill and knowledge necessary to meet their
obligations as directors.
The Company has no formal policy of
providing professional development courses to Board members, though
educational sessions are occasionally presented to the Board by the
Company's outside advisors. Board members are experienced business people
with in-depth knowledge of the industry in which the Company operates. The
Company will engage consultants on an as-needed basis to make presentations
to the Board on matters relevant to the Company.
Page A - 2
5. Ethical Business Conduct
Disclose whether or not the board has
adopted a written code for the directors, officers and employees. If the
board has adopted a written code disclose how a person or company may obtain
a copy of the code;
On December 21, 2006, the Board adopted a
new Code of Business Conduct and Ethics (the "Code"), which applies to the
Company's directors, officers and employees. The Code was adopted to further
strengthen the Company's internal compliance program. The Code addresses
among other things, honesty and integrity, fair dealing, conflicts of
interest, compliance with laws, regulations and policies, including
disclosure requirements under the federal securities laws, and
administration of the code. The code is available at the Company's website
at https://investor.kidoz.net in the Corporate section under Corporate
Governance. A copy of our Code of Ethics is available upon request at no
charge to any shareholder.
Describe how the board monitors compliance
with its code, or if the board does not monitor compliance, explain whether
and how the board satisfies itself regarding compliance with its code;
The Board is ultimately responsible for the
implementation and administration of the Code of Business Conduct and Ethics
and, given the nature and size of the Company, the Board is of the view that
it can effectively monitor the day-to-day implementation and administration
of the Code.
Provide a cross-reference to any material
change report filed since the beginning of the issuer's most recently
completed financial year that pertains to any conduct of a director or
executive officer that constitutes a departure from the code.
There are no such reports.
Describe any steps the board takes to
ensure directors exercise independent judgment in considering transactions
and agreements in respect of which a director or executive officer has a
material interest.
A director or officer of the Company must
declare the nature of any interest that he or she has in a material
contract, whether made or proposed, with the Company. Following such a
declaration, Board members will abstain from voting on any resolution in
which they may have a potential conflict of interest.
Describe any other steps the board takes to
encourage and promote a culture of ethical business conduct.
The Board monitors management on a regular
basis. The Company is dedicated to the maintenance of good corporate
governance and ethical business conduct. In particular, the Board takes
special efforts, and engages outside counsel where necessary, to ensure that
all legal and stock exchange requirements are addressed in a timely and
effective manner. The Board is responsible for ensuring the independent
functioning of the Board and ensuring the integrity of the Company's
internal control and management function.
6. Compensation
Describe the process by which the board
determines the compensation for the issuer's directors and officers.
The Compensation Committee recommends
compensation policies to the Board and sets the compensation of the Co-Chief
Executive Officers of the Company. The Committee's guiding philosophy is to
establish executive compensation based on corporate performance.
If the board has a compensation committee,
describe the responsibilities, powers and operation of the compensation
committee.
The mandate of the Compensation Committee is
to establish and monitor the Company's policies for attracting, retaining,
developing and motivating senior employees. The compensation policies are
designed to support the Company's strategic objectives, ensure that
incentive programs are designed to motivate senior managers to achieve or
exceed corporate objectives and to enhance shareholder value and to ensure
that there is reasonable consistency in the application of the compensation
policies. The Company's responsibilities include reviewing annually the
performance of the Co-Chief Executive Officers (or more frequently if deemed
necessary by the Compensation Committee), setting the Co-Chief Executive
Officer's compensation and, in consultation with the Co-Chief Executive
Officer, establishing his personal objectives, reviewing the performance and
approving the compensation of executive officers of the Company on the
recommendation of the Co-Chief Executive Officer, establishing incentive
compensation programs and monitoring their effectiveness and developing and
documenting the compensation policy and philosophy of the Company for
approval by the Board of Directors.
If a compensation consultant or advisor has,
at any time since the beginning of the issuer's most recently completed
financial year, been retained to assist in determining compensation for any
of the issuer's directors and officers, disclose the identity of the
consultant or advisor and briefly summarize the mandate for which they have
been retained. If the consultant or advisor has been retained to perform any
other work for the Issuer, state that fact and briefly describe the nature
of the work.
Not Applicable.
Other Board Committees
If the board has standing committees other
than the audit, compensation and nominating committees, identify the
committees and describe their function.
The Board's three standing committees are
the Audit Committee, the Corporate Governance Committee, and the
Compensation Committee. The Audit Committee has a written mandate, a copy of
which is attached hereto as Appendix II.
Page A - 3
7. Assessments
Disclose whether or not the board, its
committees and individual directors are regularly assessed with respect to
their effectiveness and contribution. If assessments are regularly
conducted, describe the process used for the assessments. If assessments are
not regularly conducted, describe dhow the board satisfies itself that the
board, its committees, and its individual directors are performing
effectively.
The Board of Directors as a whole annually
reviews and assesses its effectiveness and the effectiveness of the Board
committees.
Page A - 4
APPENDIX "I"
KIDOZ INC.
Mandate of the Board of Directors
Introduction
The term "Company" herein shall refer to
Kidoz Inc. And the term "Board" shall refer to the board of directors of the
Company. The Board is elected by the shareholders and is responsible for the
stewardship of the business and affairs of the Company. The Board seeks to
discharge such responsibility by reviewing, discussing and approving the
Company's strategic planning and organizational structure and supervising
management to oversee that the foregoing enhances and preserve the
underlying value of the Company.
Although directors may be elected by the
shareholders to bring special expertise or a point of view to Board
deliberations, they are not chosen to represent a particular constituency.
The best interests of the Company as a whole must be paramount at all times.
Duties of Directors
The Board discharges its responsibility for
overseeing the management of the Company's business and delegates
responsibility to the Company's senior officers for day-to-day management of
the Company. The Board discharges its responsibilities, including those
listed below, either directly or through one of its committees: the Audit
Committee, the Corporate Governance Committee and the Compensation
Committee. In addition to these regular committees, the Board may appoint ad
hoc committees periodically to address certain issues of a more short-term
nature. In addition to the Board's primary roles of overseeing corporate
performance and providing quality, depth and continuity of management to
meet the Company's strategic objectives, principal duties include, but are
not limited to, the following categories:
Appointment of Management
1. The Board has the responsibility for
approving the appointment of Chief Executive Officer ("CEO") and all other
senior management, and approving their compensation, following a review of
the recommendations of the Corporate Governance Committee and the
Compensation Committee. To the extent feasible, the Board shall satisfy
itself as to the integrity of the executive officers and that the executive
officers create a culture of integrity throughout the Company.
2. The Board from time to time delegates to
senior management the authority to enter into certain types of transactions,
including financial transactions, subject to specified limits. Investments
and other expenditures above the specified limits and material transactions
outside the ordinary course of business are reviewed by and subject to the
prior approval of the Board.
3. The Board oversees that succession
planning programs are in place, including programs to appoint, train,
develop and monitor management.
Board Organization
4. The Board will respond to recommendations
received from the Audit Committee, the Corporate Governance Committee and
the Compensation Committee, but retains the responsibility for managing its
own affairs by giving its approval for its composition and size, the
selection of the Chair of the Board, candidates nominated for election to
the Board, committee and committee chair appointments, committee charters
and director compensation.
5. The Board may delegate to Board
committees matters it is responsible for, including the approval of
compensation of the Board and management, the conduct of performance
evaluations and oversight of internal controls systems, but the Board
retains its oversight function and ultimate responsibility for these matters
and all other delegated responsibilities.
Strategic Planning
6. The Board has oversight responsibility to
participate directly, and through its committees, in reviewing, questioning
and approving the mission of the business and its objectives and goals.
7. The Board is responsible for adopting a
strategic planning process and approving and reviewing, on at least an
annual basis, the business, financial and strategic plans by which it is
proposed that the Company may reach those goals, and such strategic plans
will take into account, among other things, the opportunities and risk of
the business.
8. The Board has the responsibility to
provide input to management on emerging trends and issues and on strategic
plans, objectives and goals that management develops.
Monitoring of Financial Performance and
Other Financial Reporting Matters
9. The Board is responsible for enhancing
congruence between shareholder expectations, corporate plans and management
performance.
Page I - 1
10. The Board is responsible for:
(a) adopting processes for monitoring the
Company's progress toward its strategic and operational goals, and to revise
and alter its direction to management in light of changing circumstances
affecting the Company; and
(b) taking action when Company performance
falls short of its goals or other special circumstances warrant.
11. The Board shall be responsible for
approving the audited financial statements, interim financial statements and
the notes and Management's Discussion and Analysis accompanying such
financial statements.
12. The Board is responsible for reviewing
and approving material transactions outside the ordinary course of business
and those matters which the Board is required to approve under the Company's
governing statute, including the payment of dividends, issuance, purchase
and redemptions of securities, acquisitions and dispositions of material
capital assets and material capital expenditures.
Risk Management
13. The Board has responsibility for the
identification of the principal risks of the Company's business and ensuring
the implementation of appropriate systems to effectively monitor and manage
such risks with a view to the long-term viability of the Company and
achieving a proper balance between the risks incurred and the potential
return to the Company's shareholders.
14. The Board is responsible for the
Company's internal control and management information systems.
Policies and Procedures
15. The Board is responsible for:
(a) developing the Company's approach to
corporate governance, including developing a set of corporate governance
guidelines for the Company and approving and monitoring compliance with all
significant policies and procedures related to corporate governance; and
(b) approving policies and procedures
designed to ensure that the Company operates at all times within applicable
laws and regulations and to the highest ethical and moral standards.
16. The Board enforces its policy respecting
confidential treatment of the Company's proprietary information and Board
deliberations.
Communications and Reporting
17. The Board is responsible for:
(a) overseeing the accurate reporting of the
financial performance of the Company to shareholders, other security holders
and regulators on a timely and regular basis;
(b) overseeing that the financial results
are reported fairly and in accordance with generally accepted accounting
standards and related legal disclosure requirements;
(c) taking steps to enhance the timely
disclosure of any other developments that have a significant and material
impact on the Company;
(d) reporting annually to shareholders on
its stewardship for the preceding year; and
(e) overseeing the Company's implementation
of systems which accommodate feedback from stakeholders.
Position Descriptions
18. The Board is responsible for:
(a) developing position descriptions for the
Chair of the Board, the chair of each Board committee and the Co-CEO's
(which will include delineating management's responsibilities);
(b) approving the corporate goals and
objectives that the Co-CEO's is responsible for meeting; and
(c) developing a description of the
expectations and responsibilities of directors, including basic duties and
responsibilities with respect to attendance at Board meetings and advance
review of meeting materials.
Orientation and Continuing Education
19. The Board is responsible for:
(a) ensuring that all new directors receive
a comprehensive orientation, that they fully understand the role of the
Board and its committees, as well as the contribution individual directors
are expected to make (including the commitment of time and resources that
the Company expects from its directors) and that they understand the nature
and operation of the Company's business; and
Page I - 2
(b) providing continuing education
opportunities for all directors, so that individuals may maintain or enhance
their skills and abilities as directors, as well as to ensure that their
knowledge and understanding of the Company's business remains current.
Nomination of Directors
20. In connection with the nomination or
appointment of individuals as directors, the Board is responsible for:
(a) considering what competencies and skills
the Board, as a whole, should possess;
(b) assessing what competencies and skills
each existing director possesses; and
(c) considering the appropriate size of the
Board, with a view to facilitating effective decision making.
In carrying out each of these
responsibilities, the Board will consider the advice and input of the
Corporate Governance Committee.
Board Evaluation
21. The Board is responsible for ensuring
that the Board, its committees and each individual director are regularly
assessed regarding his, her or its effectiveness and contribution. An
assessment will consider, in the case of the Board or a Board committee, its
mandate or charter and in the case of an individual director, any applicable
position description, as well as the competencies and skills each individual
director is expected to bring to the Board.
Annual Review
The Chairman of the Board together with the
lead director, if any, shall be responsible for overseeing the performance
by the Board of its duties, for communicating periodically with the
Committee chairs regarding the activities of their respective Committees,
for assessing the effectiveness of the Board as a whole as well as
individual Board members and for overseeing the management of the Company's
business.
Page I - 3
APPENDIX "II"
KIDOZ INC.
Mandate of the
Audit Committee
1. General
The board of directors (the "Board") of
Kidoz Inc. (the "Company") has delegated the responsibilities, authorities
and duties described below to the audit committee (the "Audit Committee").
For the purpose of these terms of reference, the term "Company" shall
include the Company and its subsidiaries.
The Audit Committee shall be directly
responsible for overseeing the accounting and financial reporting processes
of the Company, the fraud programs and controls, and audits of the financial
statements of the Company. The Audit Committee shall also be directly
responsible for the appointment, compensation, and oversight of the work of
any registered external auditor employed by the Company (including
resolution of disagreements between management of the Company and the
external auditor regarding financial reporting) for the purpose of preparing
or issuing an audit report or related work. In so doing, the Audit Committee
will comply with all applicable Securities laws, rules and guidelines, any
applicable stock exchange requirements or guidelines and any other
applicable regulatory rules.
2. Members
The Audit Committee shall be composed of a
minimum of three members. Members of the Audit Committee shall be appointed
by the Board. Each member shall serve until such member's successor is
appointed, unless that member resigns or is removed by the Board or
otherwise ceases to be a director of the Company. The Board shall fill any
vacancy if the membership of the Committee is less than three directors. The
Chair of the Committee may be designated by the Board or, if it does not do
so, the members of the Committee may elect a Chair by vote of a majority of
the full Committee membership.
All members of the Audit Committee must
satisfy the independence, financial literacy and experience requirements of
applicable Securities laws, rules and guidelines, any applicable stock
exchange requirements or guidelines and any other applicable regulatory
rules. In particular:
(a) each member shall be "independent" and
"financially literate" or "financially sophisticated".
(b) at least one member must be an "audit
committee financial expert" within the meaning of that term under the United
States Securities Exchange Act of 1934, as amended, and the rules adopted by
the United States Securities and Exchange Commission thereunder.
3. Meetings
The Audit Committee shall meet at least
quarterly at such times and at such locations as the Chair of the Audit
Committee shall determine, provided that meetings shall be scheduled so as
to permit the timely review of the Company's quarterly and annual financial
statements and related management discussion and analysis. The external
auditor or any two members of the Audit Committee may also request a meeting
of the Audit Committee.
The Chair of the Audit Committee shall hold
in camera sessions of the Audit Committee, without management present, at
every meeting.
The Audit Committee shall submit the minutes
of all meetings to the Board, and when requested to, shall discuss the
matters discussed at each Audit Committee meeting with the Board.
4. Committee Charter
The Audit Committee shall have a written
charter that sets out its mandate and responsibilities and the Audit
Committee shall review and reassess the adequacy of such charter at least
annually or otherwise, as it deems appropriate, and propose recommended
changes to the Board.
5. Duties of the Audit Committee:
The Audit Committee shall have the following
duties:
Financial Information and Reporting
1. The Audit Committee shall review with
management and the external auditor, and recommend to the Board for
approval, the annual and interim financial statements of the Company and
related financial reporting, including management's discussion and analysis
and earnings press releases.
2. The Audit Committee shall review with
management and the external auditor, and recommend to the Board for
approval, any financial statements of the Company which have not previously
been approved by the Board and which are to be included in a prospectus or
other public disclosure document of the Company.
3. The Audit Committee shall consider and be
satisfied that adequate policies and procedures are in place for the review
of the Company's disclosure of financial information extracted or derived
from the Company's financial statements (other than disclosure referred to
in clause (a)(i) above), and periodically assess the adequacy of such
procedures.
Page II - 1
Internal Controls
4. The Audit Committee shall review, as
appropriate, the Company's internal system of audit controls and the results
of internal audits.
5. The Audit Committee shall establish
procedures for the receipt, retention and treatment of any complaint
regarding accounting, internal accounting controls or auditing matters; and
the confidential, anonymous submissions by employees of concerns regarding
questionable accounting or auditing matters.
6. The Audit Committee shall oversee the
assessment of fraud risk performed by management.
External Auditors
7. The Audit Committee shall be directly
responsible for overseeing the work of the external auditor engaged for the
purpose of preparing or issuing an auditor's report or performing other
audit, review or attest services for the Company, including the resolution
of disagreements between management and the external auditor regarding
financial reporting.
8. The external auditor shall report
directly to the Audit Committee and the Audit Committee should have a clear
understanding with the external auditor that such external auditor must
maintain an open and transparent relationship with the Audit Committee, and
that the ultimate accountability of the external auditor is to the
shareholders of the Company.
9. The Audit Committee shall recommend to
the Board the external auditor to be nominated for the purpose of preparing
or issuing an auditor's report or performing other audit, review or attest
services for the Company; and the compensation of the external auditor.
10. The Audit Committee will ensure the
rotation of partners on the audit engagement team of the external auditor in
accordance with applicable law.
11. The Audit Committee shall meet with the
external auditor, as the Audit Committee may deem appropriate, to consider
any matter which the Audit Committee or external auditor believes should be
brought to the attention of the Board or the shareholders of the Company.
12. The Audit Committee shall meet with the
external auditor, as the Audit Committee may deem appropriate to review and
discuss a report from the external auditor at least quarterly regarding:
(a) All critical accounting policies and
practices to be used
(b) The potential for fraud
(c) All alternative treatments within
generally accepted accounting principles for policies and practices related
to material items that have been discussed with management, including the
ramifications of the use of such alternative disclosures and treatments, and
the treatment preferred by the external auditor, and
(d) Other material written communications
between the external auditor and management, such as any management letter
or schedule of unadjusted differences.
Pre-Approval of Non-Audit Services
13. The Audit Committee shall pre-approve
all non-audit services to be provided to the Company or its subsidiary
entities by the Company's external auditor.
Complaints procedure
14. The Audit Committee shall establish
procedures for the receipt, retention and treatment of complaints received
by the Company regarding accounting, internal accounting controls, or
auditing matters; and the confidential, anonymous submission by employees of
the Company of concerns regarding questionable accounting or auditing
matters.
15. The Audit Committee shall review and
approve the Company's hiring policies regarding partners, employees and
former partners and employees of the present and former external auditor of
the Company.
Reporting
16. The Audit Committee shall report
regularly to the Board about any issues that arise with respect to the
quality or integrity of the Company's financial statements, the Company's
compliance with legal or regulatory requirements, the performance and
independence of the external auditor, or the internal audit function.
6. Authority to engage independent
counsel and advisors
The Audit Committee has the authority to
engage independent counsel and other advisors as it determines necessary to
carry out its duties, to set and pay the compensation for any advisors
employed by the audit committee, and to communicate directly with the
internal and external auditors.
The Company shall provide appropriate
funding, as determined by the Audit Committee, in its capacity as a
committee of the board of directors, for payment of compensation (a) to the
external auditors employed by the issuer for the purpose of rendering or
issuing an audit report, and (b) to any advisers employed by the Audit
Committee.
Page II - 2
SCHEDULE B
KIDOZ INC.
Hansa Bank Building, Ground Floor
Landsome Road, The Valley
AI 2640, Anguilla, BWI
Telephone 264 461-2646
Fax: 1 264-498-3805
2015
STOCK OPTION PLAN
Schedule B - Page 1
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
As used herein, unless anything in the subject matter or context is
inconsistent therewith, the following terms shall have the meanings set
forth below:
"Administrator"
means such director or other senior officer, or employee
of the Company as may be designated as Administrator by the Board from
time to time;
"Award Date"
means the date on which the Board grants and announces a
particular Option;
"Board"
means the Board of Directors of the Company;
"Company"
means Kidoz Inc. and any subsidiary thereof, (within the
meaning of the Securities Act), as the context may apply;
"Consultant"
means an individual (or a company wholly owned by the
individual) who (i) provides ongoing consulting, technical, management
or other services to the Company (excluding services provided in
relation to a distribution of the Company's securities); (ii) possesses
technical, business or management expertise of value to the Company;
(iii) provides the services under a written contract with the Company;
(iv) spends a significant amount of time and attention to the business
and affairs of the Company; and (v) has a relationship with the Company
that enables the individual to be knowledgeable about the business and
affairs of the Company;
"Director"
means a director, senior officer and Management Company
Employee of the Company;
"Employee"
means (i) an individual considered an employee under the
Income Tax Act, Canada (i.e. for whom income tax and other deductions
are made by the Company); (ii) an individual who works full-time for the
Company providing services normally provided by an employee of the
Company but for whom income tax and other deductions are not made by the
Company; and (iii) an individual who works for the Company on a
continuing and regular basis for a minimum amount of time per week, but
for whom income tax and other deductions are not made by the Company;
"Exchange"
means the TSX Venture Exchange;
"Exercise Notice"
means the notice respecting the exercise of an Option,
in the form set out as Schedule "B" hereto, duly executed by the Option
Holder;
"Exercise Period"
means the period during which a particular Option may
be exercised, being the period from and including the Award Date through
to and including the Expiry Date;
"Exercise Price"
means the price at which an Option may be exercised as
determined in accordance with section 3.6;
"Expiry Date"
means the date determined in accordance with section 3.3
and after which a particular Option cannot be exercised;
"Insider"
means a Director, a director or senior officer of a company
that is an Insider or subsidiary of the Company, or a person that
beneficially owns or controls, directly or indirectly, voting shares
carrying more than 10% of the voting rights attached to all outstanding
voting shares of the Company;
"Investor Relations Activities"
has the meaning ascribed thereto in the
Exchange's corporate finance manual;
"Management Company Employee"
means an individual employed by a company
providing management services to the Company, which are required for the
ongoing successful operation of the business enterprise of the Company,
but excluding a person engaged in Investor Relations Activities;
"Option"
means an option to acquire Shares, awarded to a Director,
Employee or Consultant pursuant to the Plan;
"Option Certificate"
means the certificate, substantially in the form
set out as Schedule "A" hereto, evidencing
Schedule B - Page 2
an Option;
"Option Holder"
means a current or former Director, Employee or
Consultant who holds an unexercised and unexpired Option or, where
applicable, the Personal Representative of such person;
"Personal Representative"
means (i) in the case of a deceased Option
Holder, the executor or administrator of the deceased duly appointed by
a court or public authority having jurisdiction to do so; and (ii) in
the case of an Option Holder who for any reason is unable to manage his
or her affairs, the person entitled by law to act on behalf of such
Option Holder;
"Plan"
means the Company's stock option plan as embodied herein and as
from time to time amended;
"Securities Act"
means the Securities Act (British Columbia); and
"Share"
or "Shares" means, as the case may be, one or more common shares
without par value in the capital of the Company.
1.2 CHOICE OF LAW
The Plan is established under, and the provisions of the Plan shall be
interpreted and construed solely in accordance with, the laws of the
Province of British Columbia.
1.3 HEADINGS
The headings used herein are for convenience only and are not to affect
the interpretation of the Plan.
ARTICLE II
PURPOSE AND PARTICIPATION
2.1 PURPOSE
The purpose of the Plan is to provide the Company with a Share-related
mechanism to attract, retain and motivate Directors, Employees and
Consultants, to reward such of those persons by the grant of options
under the Plan by the Board from time to time for their contributions
toward the long term goals of the Company and to enable and encourage
such persons to acquire Shares as long term investments.
2.2 PARTICIPATION
The Board shall, from time to time, in its sole discretion determine
those Directors, Employees and Consultants, if any, to whom Options are
to be awarded. If the Board elects to award an Option to a Director,
the Board shall, in its sole discretion but subject to section 3.2,
determine the number of Shares to be acquired on the exercise of such
Option. If the Board elects to award an Option to an Employee or
Consultant, the number of Shares to be acquired on the exercise of such
Option shall be determined by the Board in its sole discretion, and in
so doing the Board may take into account the following criteria:
(a) the person's remuneration as at the Award Date in relation to
the total remuneration payable by the Company to all of its Employees
and Consultants as at the Award Date;
(b) the length of time that the person has provided services to
the Company; and
(c) the nature and quality of work performed by the person.
2.3 NOTIFICATION OF AWARD
Following the approval by the Board of the awarding of an Option, the
Administrator shall notify the Option Holder in writing of the award and
shall enclose with such notice the Option Certificate representing the
Option so awarded.
2.4 COPY OF PLAN
Each Option Holder, concurrently with the notice of the award of the
Option, shall be provided with a copy of this Plan. A copy of any
amendment to the Plan shall be promptly provided by the Administrator to
each Option Holder.
Schedule B - Page 3
2.5 LIMITATION
This Plan does not give any Option Holder who is a Director the right to
serve or continue to serve as a Director, nor does it give any Option
Holder who is an Employee or Consultant the right to be or to continue
to be employed or engaged by the Company.
ARTICLE III
TERMS AND CONDITIONS OF OPTIONS
3.1 BOARD TO ALLOT SHARES
The Shares to be issued to Option Holders upon the exercise of Options
shall be allotted and authorized for issuance by the Board prior to the
exercise thereof.
3.2 NUMBER OF SHARES
The maximum number of Shares issuable under the Plan shall not exceed
10% of the number of Shares of the Company issued and outstanding as of
each Award Date, inclusive of all Shares presently reserved for issuance
pursuant to previously granted stock options, unless shareholder
approval is obtained in advance in accordance with section 6.5 hereof.
Options that have been cancelled or that have expired without being
exercised in full shall continue to be issuable under the Plan. Subject
to the provisions of section 6.5, Options that have been exercised will
reduce the total number of Options available to be granted hereunder.
3.3 TERM OF OPTION
Subject to section 3.5, the Expiry Date of an Option shall be the date
so fixed by the Board at the time the particular Option is awarded,
provided that such date shall not be later than the tenth anniversary of
the Award Date of the Option, or such other maximum amount of time as
may be allowable under the policies of the Exchange.
3.4 LIMITATIONS AND REQUIREMENTS
The total number of Options awarded to any one individual in any
twelve-month period shall not exceed 5% of the issued and outstanding
Shares of the Company at the Award Date (unless the Company has obtained
disinterested shareholder approval).
The total number of Options awarded to any one Consultant for the
Company shall not exceed 2% of the issued and outstanding Shares of the
Company at the Award Date without consent being obtained from the
Exchange.
The total number of Options awarded to all persons employed by the
Company who perform Investor Relations Activities for the Company shall
not exceed 2% of the issued and outstanding Shares of the Company, in
any twelve-month period, calculated at the Award Date without consent
being obtained from the Exchange.
The Company shall issue a press release at the time of grant for all
Options issued to Insiders of the Company and investor relations service
providers.
All Options granted to Insiders of the Company or granted at any
discount to the market price of the Company's shares will be subject to
a four month hold period which commences on the date that the Options
are granted.
3.5 TERMINATION OF OPTION
An Option Holder may exercise an Option in whole or in part at any time
or from time to time during the Exercise Period provided that, with
respect to the exercise of part of an Option, the Board may at any time
and from time to time fix limits, vesting requirements or restrictions
in respect of which an Option Holder may exercise part of any Option
held by him. Any Option or part thereof not exercised within the
Exercise Period shall terminate and become null, void and of no effect
as of 5:00 p.m. (Vancouver time) on the Expiry Date. The Expiry Date of
an Option shall be the earlier of the date so fixed by the Board on the
Award Date referred to in section 3.3 above, and the date established,
if applicable, in subsections (a) to (c) below.
Schedule B - Page 4
(a) Death
In the event that the Option Holder should die while he or she is still
(i) a Director or Employee, (other than an Employee performing Investor
Relations Activities) the Expiry Date shall be 12 months from the date
of death of the Option Holder; or (ii) a Consultant, or an Employee
performing Investor Relations Activities, the Expiry Date shall be one
month from the date of death of the Option Holder.
(b) Ceasing to Hold Office
Unless otherwise determined by the Board of Directors in writing, in the
event that the Option Holder holds his or her Option as Director and
such Option Holder ceases to be a Director of the Company other than by
reason of death, the Expiry Date of the Option shall be the 90th day
following the date the Option Holder ceases to be a Director of the
Company unless the Option Holder continues to be engaged by the Company
as an Employee or Consultant, in which case the Expiry Date shall remain
unchanged. However, if the Option Holder ceases to be a Director
of the Company as a result of:
(i) ceasing to meet the qualifications set forth in s.114 of the
Business Corporations Act (British Columbia) or section 40 of the
International Business Companies Act of Anguilla; or
(ii) a special resolution having been passed by the members of the
Company pursuant to the Company's bylaws,
then the Expiry Date shall be the date the Option Holder ceases to be a
Director of the Company.
(c) Ceasing to be Employed
Unless otherwise determined by the Board of Directors in writing, in the
event that the Option Holder holds his or her Option as an Employee or
Consultant of the Company (other than an Employee or Consultant
performing Investor Relations Activities) and such Option Holder ceases
to be an Employee or Consultant of the Company other than by reason of
death, the Expiry Date of the Option shall be the 30th day following the
date the Option Holder ceases to be an Employee or Consultant of the
Company unless the Option Holder ceases to be such as a result of:
(i) termination for cause; or
(ii) an order of the British Columbia Securities Commission, the
Exchange, or any regulatory body having jurisdiction to so order,
in which case the Expiry Date shall be the date the Option Holder ceases
to be an Employee or Consultant of the Company.
(d) Ceasing to Perform
Investor Relations Activities
Notwithstanding the paragraph (c) immediately above, and unless
otherwise determined by the Board of Directors in writing, in the event
that the Option Holder holds his or her Option as an Employee or
Consultant of the Company who provides Investor Relations Activities on
behalf of the Company, and such Option Holder ceases to be an Employee
or Consultant of the Company other than by reason of death, the Expiry
Date shall be the date the Option Holder ceases to be an Employee or
Consultant of the Company.
3.6 EXERCISE PRICE
The Exercise Price shall be that price per Share, as determined by the
Board in its sole discretion, and announced as of the Award Date, at
which an Option Holder may purchase a Share upon the exercise of an
Option, provided that it shall not be less than the closing price of the
Company's Shares traded through the facilities of the Exchange (or, if
the Shares are no longer listed for trading on the Exchange, then such
other exchange or quotation system on which the Shares are listed or
quoted for trading) on the day preceding the Award Date, less any
discount permitted by the Exchange, or such other price as may be
required or permitted by the Exchange.
Schedule B - Page 5
3.7 ASSIGNMENT OF OPTIONS
Options may not be assigned or transferred, and all Option Certificates
will be so legended, provided however that the Personal Representatives
of an Option Holder may, to the extent permitted by section 4.1,
exercise the Option within the Exercise Period.
3.8 PAYROLL WITHHOLDING
If the Company is required under the Income Tax Act (Canada) or any
other applicable law to make source deductions in respect of employee
stock option benefits and to remit to the applicable governmental
authority an amount on account of tax on the value of the taxable
benefit associated with the issuance of Common Shares on exercise of
Options, then the Option Holder shall:
(a) pay
to the Company, in addition to the exercise price for the Options,
sufficient cash as is reasonably determined by the Company to be the
amount necessary to permit the required tax remittance;
(b)
authorize the Company, on behalf of the Option Holder, to sell in the
market on such terms and at such time or times as the Company determines
a portion of the Common Shares being issued upon exercise of the Options
to realize cash proceeds to be used to satisfy the required tax
remittance; or
(c) make
other arrangements acceptable to the Company to fund the required tax
remittance.
3.9 ADJUSTMENTS
If prior to the complete exercise of any Option the Shares are
consolidated, subdivided, converted, exchanged or reclassified or in any
way substituted for (collectively the "Event"), the Option, to the
extent that it has not been exercised, shall be adjusted by the Board in
accordance with such Event in the manner the Board deems appropriate.
No fractional Shares shall be issued upon the exercise of the Options
and accordingly, if as a result of the Event an Option Holder would
become entitled to a fractional share, such Option Holder shall have the
right to purchase only the next lowest whole number of shares and no
payment or other adjustment will be made with respect to the fractional
interest so disregarded. Additionally, no lots of Shares in an amount
less than 500 Shares shall be issued upon the exercise of the Options
unless such amount of Shares represents the balance left to be exercised
under the Options.
3.10 EXERCISE RESTRICTIONS
The Board may, at the time an Option is awarded or upon renegotiation of
the same, attach restrictions relating to the exercise of the Option,
including vesting provisions. Any such restrictions shall be recorded
on the applicable Option Certificate.
Notwithstanding the above, Options issued to Consultants performing
Investor Relations Activities must vest in stages over at least twelve
months with not more than one-quarter of the Options vesting in any
three-month period.
3.11 REPRESENTATIONS
For Options granted to Employees, Consultants or Management Company
Employees, both the Company and the Option Holder will represent that
the Option Holder is a bona fide Employee, Consultant or Management
Company Employee, as the case may be.
ARTICLE IV
EXERCISE OF OPTION
4.1 EXERCISE OF OPTION
An Option may be exercised only by the Option Holder or his Personal
Representative. An Option Holder or his Personal Representative may
exercise an Option in whole or in part, subject to any applicable
exercise restrictions, at any time or from time to time during the
Exercise Period up to 5:00 p.m. (Vancouver time) on the Expiry Date by
delivering to the Administrator an Exercise Notice, the applicable
Option Certificate and a certified cheque or bank draft payable to the
Company in an amount equal to the aggregate Exercise Price of the Shares
to be purchased pursuant to the exercise of the Option.
Schedule B - Page 6
4.2 ISSUE OF SHARE CERTIFICATES
As soon as practicable following the receipt of the Exercise Notice, the
Administrator shall cause to be delivered to the Option Holder a
certificate for the Shares so purchased. If the number of Shares so
purchased is less than the number of Shares subject to the Option
Certificate surrendered, the Administrator shall forward a new Option
Certificate to the Option Holder concurrently with delivery of the
aforesaid share certificate for the balance of the Shares available
under the Option.
4.3 CONDITION OF ISSUE
The issue of Shares by the Company pursuant to the exercise of an Option
is subject to this Plan and compliance with the laws, rules and
regulations of all regulatory bodies applicable to the issuance and
distribution of such Shares and to the listing requirements of any stock
exchange or exchanges on which the Shares may be listed. The Option
Holder agrees to comply with all such laws, rules and regulations and
agrees to furnish to the Company any information, report and/or
undertakings required to comply with and to fully cooperate with the
Company in complying with such laws, rules and regulations.
4.4 MONITORING OF TRADES
An Option Holder who performs Investor Relations Activities shall
provide written notice to the Board of each of his trades of securities
of the Company, within five business days of each trade.
ARTICLE V
ADMINISTRATION
5.1 ADMINISTRATION
The Plan shall be administered by the Board, or an Administrator on the
instructions of the Board or such committee of the Board formed in
respect of matters relating to the Plan. The Board or such committee
may make, amend and repeal at any time and from time to time such
regulations not inconsistent with this Plan as it may deem necessary or
advisable for the proper administration and operation of this Plan and
such regulations shall form part of this Plan. The Board may delegate
to the Administrator or any Director, Employee or officer of the Company
such administrative duties and powers as it may see fit.
5.2 INTERPRETATION
The interpretation by the Board or its authorized committee of any of
the provisions of this Plan and any determination by it pursuant thereto
shall be final and conclusive and shall not be subject to any dispute by
any Option Holder. No member of the Board or any person acting pursuant
to authority delegated by the Board hereunder shall be liable for any
action or determination in connection with this Plan made or taken in
good faith and each member of the Board and each such person shall be
entitled to indemnification with respect to any such action or
determination in the manner provided for by the Company.
ARTICLE VI
APPROVALS, AMENDMENTS AND TERMINATION
6.1 APPROVALS REQUIRED FOR PLAN
Prior to its implementation by the Company, this Plan is subject to the
receipt of approval by the shareholders of the Company at a general
meeting and approval of the Exchange.
6.2 PROSPECTIVE AMENDMENT
Subject to applicable regulatory approval, the Board may from time to
time amend this Plan and the terms and conditions of any Option
thereafter to be awarded and, without limiting the generality of the
foregoing, may make such amendments for the purpose of meeting any
changes in any relevant law, Exchange policy, rule or regulation
applicable to this Plan, any Option or the Shares, or for any other
purpose which may be permitted by all relevant laws, rules and
regulations, provided always that any such amendment shall not alter the
terms or conditions of any Option or impair any right of any Option
Holder pursuant to any Option awarded prior to such amendment.
Schedule B - Page 7
6.3 RETROACTIVE AMENDMENT
Subject to applicable regulatory approval, the Board may from time to
time retroactively amend this Plan and may also, with the consent of the
affected Option Holders, retroactively amend the terms and conditions of
any Options which have been previously awarded.
6.4 EXCHANGE APPROVAL
With the consent of affected Option Holders, the Board may amend the
terms of any outstanding Option so as to reduce the number of optioned
Shares, increase the Exercise Price, or cancel an Option without
Exchange approval. Any other amendment will be subject to receiving
prior Exchange approval.
6.5 SHAREHOLDER APPROVAL
This Plan must be approved by the Company's shareholders annually, at a
duly called meeting of the shareholders. Disinterested shareholder
approval (as defined in Exchange policy) will be required for: (i) any
reduction in the exercise price of Options granted to Insiders, if the
Option Holder is an Insider of the Company at the time of the proposed
amendment; and (ii) the situations where the Plan, together with all
other outstanding options, could result at any time in:
(a) the
number of shares reserved for issuance under stock options granted to
Insiders exceeding 10% of the Company's issued Shares;
(b) the
grant to Insiders, within a 12-month period, of a number of options
exceeding 10% of the Company's issued Shares;
(c) the
issuance to any one Option Holder, within a 12-month period, of a number
of Shares exceeding 5% of the Company's Shares, or
(d)
such other maximum amounts as may allowable under the policies of the
Exchange.
6.6 TERMINATION
The Board may terminate this Plan at any time provided that such
termination shall not alter the terms or conditions of any Option or
impair any right of any Option Holder pursuant to any Option awarded
prior to the date of such termination and notwithstanding such
termination the Company, such Options and such Option Holders shall
continue to be governed by the provisions of this Plan.
6.7 AGREEMENT
The Company and every person to whom an Option is awarded hereunder
shall be bound by and subject to the terms and conditions of this Plan.
Schedule B - Page 8
APPENDIX - ISRAELI TAXPAYERS
to
KIDOZ INC. STOCK OPTION PLAN (2015)
1. SPECIAL PROVISIONS FOR ISRAELI TAXPAYERS
1.1 From and after the earliest date (the
"Effective Date") on which
all corporate action required to be taken on the part of the Company to
authorize and approve the inclusion of the provisions herein set out
(this "Appendix") in the Kidoz Inc. Stock Option Plan (2015) (the "Plan"), and to amend the Plan accordingly, has been taken, this
Appendix shall be included in and shall form part of the Plan.
1.2 The provisions of this Appendix apply only to persons who are
deemed to be residents of the State of Israel for tax purposes or who
are otherwise subject to taxation in Israel with respect to Options
granted pursuant to the Plan and/or Shares acquired upon exercise of
such Options.
1.3 The purpose of this Appendix is to establish certain rules and
limitations applicable to Options that may be granted under the Plan
from time to time in compliance with the securities and other applicable
laws currently in force in the State of Israel. Except as otherwise
provided by this Appendix, all grants made pursuant to this Appendix
shall be governed by the terms of the Plan. This Appendix is applicable
only to grants made after the Effective Date. This Appendix complies
with and is subject to the ITO and Section 102.
1.4 The Plan and this Appendix shall be read together. In any case
of contradiction, whether explicit or implied, between the provisions of
this Appendix and the provisions of the Plan, the provisions of this
Appendix shall govern.
2. DEFINITIONS
Capitalized terms not otherwise defined herein shall have the meaning
assigned to them in the Plan; in particular, the terms "Options" and
"Shares" shall have the meanings there assigned to them. The following
additional definitions will apply to grants made pursuant to this
Appendix:
"3(i) Option" means an Option which is subject to taxation pursuant to
Section 3(i) of the ITO which has been granted to any person who is not
an Eligible 102 Participant.
"102 Capital Gains Track" means the tax alternative set forth in Section
102(b)(2) of the ITO pursuant to which income resulting from the sale of
Shares acquired upon exercise of Options is taxed as a capital gain.
"102 Capital Gains Track Grant" means a 102 Trustee Grant qualifying for
the special tax treatment under the 102 Capital Gains Track.
"102 Ordinary Income Track" means the tax alternative set forth in
Section 102(b)(1) of the ITO pursuant to which income resulting from the
sale of Shares acquired upon exercise of Options is taxed as ordinary
income.
"102 Ordinary Income Track Grant" means a 102 Trustee Grant qualifying
for the ordinary income tax treatment under the 102 Ordinary Income
Track.
"102 Trustee Grant" means an Option granted pursuant to Section 102(b)
of the ITO and held in trust by a Trustee for the benefit of the
applicable Participant, and includes both 102 Capital Gains Track Grants
and 102 Ordinary Income Track Grants.
"Affiliate" means an "employing company" as defined in Section 102(a) of
the ITO.
"Controlling Shareholder" of a company, as defined under Section 32(9)
of the ITO, means a person who, prior to the grant of or as a result of
the exercise of any option granted to that person to acquire shares of
the
Schedule B - Page 9
company holds or would hold, directly or indirectly, in his name or
with a relative (as defined in the ITO): (i) 10% of the outstanding
shares of the company, (ii) 10% of the voting power of the company,
(iii) the right to hold or purchase 10% of the outstanding equity or
voting power of the company, (iv) the right to obtain 10% of the
"profit" of the company (as defined in the ITO), or (v) the right to
appoint a director of the company.
"Election"
means the Company's choice of the type (as between capital
gains track or ordinary income track) of 102 Trustee Grants it will make
under the Plan, as filed with the ITA.
"Eligible 102 Participant"
means a person who is employed by the Company
or an Affiliate of the Company, including an individual who is serving
as a director or an office holder, who is not a Controlling Shareholder
of the Company.
"Fair Market Value"
shall mean with respect to 102 Capital Gains Track
Grants only, for the sole purpose of determining tax liability pursuant
to Section 102(b)(3) of the ITO, if at the date of grant the Company's
shares are listed on any established stock exchange or a national market
system or if the Company's shares will be registered for trading within
ninety (90) days following the date of grant, the fair market value of
the Shares at the date of grant shall be determined in accordance with
the average value of the Company's shares on the thirty (30) trading
days preceding the date of grant or on the thirty (30) trading days
following the date of registration for trading, as the case may be.
"ITA"
means the Israeli Tax Authorities.
"ITO"
means the Israeli Income Tax Ordinance (New Version) 1961 and the
rules, regulations, orders or procedures promulgated thereunder and any
amendments thereto, including specifically the Rules, all as may be
amended from time to time.
"Non-Trustee Grant"
means an Option granted to an Eligible 102
Participant pursuant to Section 102(c) of the ITO and not held in trust
by a Trustee.
"Option Certificate"
means, with respect to an Option granted pursuant
to the Plan and this Appendix, the certificate evidencing such Option,
substantially in the form set out as Schedule "A" to the Plan but
modified to include the information required to be included pursuant to
Section 3.4 of this Appendix and confirmation thereof by the signature
of the Participant to whom the Option was granted.
"Participant"
means the recipient of an Option granted pursuant to the
Plan and this Appendix who has executed the Option Certificate
evidencing such Option.
"Required Holding Period"
means, with respect a 102 Trustee Grant, the
requisite period prescribed by the ITO and the Rules or such other
period as may be required by the ITA during which the subject Option and
any Shares acquired upon exercise thereof must be held by the Trustee
for the benefit of the Eligible 102 Participant to whom it was granted.
"Rules"
means the Income Tax Rules (Tax Benefits in Stock Issuance to
Employees) 5763-2003 promulgated under the ITO.
"Section 102"
means the provisions of Section 102 of the ITO, as amended
from time to time, including by the Law Amending the Income Tax
Ordinance (Number 132), 2002, effective as of January 1, 2003 and by the
Law Amending the Income Tax Ordinance (Number 147), 2005.
"Trustee"
means a person or entity designated by the Board of Directors
to serve as a trustee and approved by the ITA in accordance with the
provisions of Section 102(a) of the ITO.
Schedule B - Page 10
3. TYPES OF OPTION GRANTS AND SECTION 102 ELECTION
3.1 Options granted under the Plan and this Appendix pursuant to
Section 102 shall be made pursuant to either (a) Section 102(b)(2) of
the ITO as 102 Capital Gains Track Grants or (b) Section 102(b)(1) of
the ITO as 102 Ordinary Income Track Grants. The Election of the
Company regarding the type of 102 Trustee Grant it chooses to make shall
be filed with the ITA. Once the Company has filed such Election, it may
change the type of 102 Trustee Grant that it chooses to make only after
the passage of at least 12 months from the end of the calendar year in
which the first grant was made in accordance with the previous Election,
in accordance with Section 102. For the avoidance of doubt, such
Election shall not prevent the Company from granting Non-Trustee Grants
to Eligible 102 Participants at any time.
3.2 Eligible 102 Participants may receive only 102 Trustee Grants or
Non-Trustee Grants under the Plan and this Appendix. Participants who
are not Eligible 102 Participants may only be granted 3(i) Options under
the Plan and this Appendix.
3.3 No 102 Trustee Grants may be made effective pursuant to this
Appendix until 30 days after the requisite filings required by the ITO
and the Rules have been made with the ITA.
3.4 The Option Certificate evidencing an Option granted pursuant to
the Plan and this Appendix shall indicate whether the Option is a 102
Trustee Grant, a Non-Trustee Grant or a 3(i) Grant; and, if the Option
is a 102 Trustee Grant, whether it is a 102 Capital Gains Track Grant or
a 102 Ordinary Income Track Grant.
4. TERMS AND CONDITIONS OF 102 TRUSTEE GRANTS
4.1 Each 102 Trustee Grant will be deemed to have been made on the
date stated in a written notice by the Company, provided that on or
before such date: (i) the Company has provided such notice to the
Trustee and (ii) the Participant has signed all documents required
pursuant to this Section 4.
4.2 Each Option that is a 102 Trustee Grant made to an Eligible 102
Participant and each certificate for Shares acquired upon the exercise
of such Option shall be issued to and registered in the name of a
Trustee and shall be held in trust for the benefit of the Eligible 102
Participant for the Required Holding Period. After termination of the
Required Holding Period, the Trustee may release such Option and any
Shares so acquired, provided that: (i) the Trustee has received an
acknowledgment from the ITA that the Eligible 102 Participant has paid
any and all applicable tax due pursuant to the ITO or (ii) the Trustee
and/or the Company or its applicable Affiliate withholds any applicable
tax due pursuant to the ITO. The Trustee shall not release any Option
that is a 102 Trustee Grant or any Shares acquired upon exercise of such
an Option prior to the full payment of the tax liabilities of the
applicable Eligible 102 Participant.
4.3 Each 102 Trustee Grant (whether a 102 Capital Gains Track Grant
or a 102 Ordinary Income Track Grant, as applicable) shall be subject to
the relevant terms of Section 102 and the ITO, which shall be deemed an
integral part of the Option granted and shall prevail over any term
contained in the Plan, this Appendix or any agreement that is not
consistent therewith. Any provision of the ITO and any approvals by the ITA not expressly specified in this Plan, this Appendix or the
applicable Option Certificate which are necessary to receive or maintain
any tax benefit pursuant to the Section 102 shall be binding on the
Eligible 102 Participant. The Trustee and the Eligible 102 Participant
granted a 102 Trustee Grant shall comply with the ITO, and the terms and
conditions of the trust agreement entered into between the Company and
the Trustee. For avoidance of doubt, it is reiterated that compliance
with the ITO specifically includes compliance with the Rules. Further,
the Eligible 102 Participant agrees to execute any and all documents
which the Company or the Trustee may reasonably determine to be
necessary in order to comply with the provisions of any applicable law,
and, particularly, of Section 102.
4.4 During the Required Holding Period for each 102 Trustee Grant,
the Eligible 102 Participant shall not require the Trustee to release or
sell the subject Option or any Shares acquired upon exercise thereof or
any other securities received upon realization of rights attaching to
such Option or Shares (including share dividends) to the
Schedule B - Page11
Eligible 102
Participant or to a third party, unless permitted to do so by applicable
law. Notwithstanding the foregoing, the Trustee may, pursuant to a
written request and subject to applicable law, release and transfer
Shares acquired upon exercise of an Option that is a 102 Trustee Grant
to a designated third party, provided that both of the following
conditions have been fulfilled prior to such transfer: (i) all taxes
required to be paid upon the release and transfer of the subject Shares
have been withheld for remittance to the ITA and (ii) the Trustee has
received written confirmation from the Company that all requirements for
such release and transfer have been fulfilled according to the terms of
the corporate documents of the Company, the Plan, any applicable
agreement and any applicable law. To avoid doubt, such sale or release
during the Required Holding Period will result in different tax
ramifications to the Eligible 102 Participant under Section 102 of the
ITO and the Rules and/or any other regulations or orders or procedures
promulgated thereunder, which shall apply to and shall be borne solely
by such Eligible 102 Participant.
4.5 In the event a share dividend is declared on Shares acquired upon
exercise of an Option that is a 102 Trustee Grant, such dividend shall
also be subject to the provisions of this Section 4 and the Required
Holding Period for such dividend shares shall be measured from the
commencement of the Required Holding Period for the Option that was
exercised to acquire the Shares in respect of which the dividend was
declared. In the event a cash dividend is paid on such Shares, the
Trustee shall transfer the dividend proceeds to the Eligible 102
Participant, after deduction of taxes and mandatory payments in
compliance with applicable withholding requirements.
4.6 If an Option that is a 102 Trustee Grant is exercised during the
Required Holding Period therefor, the Shares issued upon exercise
thereof shall be issued in the name of the applicable Trustee for the
benefit of the Eligible 102 Participant. If such an Option is exercised
after the Required Holding Period therefor has ended, the Shares issued
upon exercise thereof shall, at the election of the Eligible 102
Participant, either: (i) be issued in the name of the applicable
Trustee, or (ii) be issued to the Eligible 102 Participant directly,
provided that the Eligible 102 Participant first complies with all
applicable provisions of the Plan.
4.7 For as long as Shares are registered in the name of a Trustee for
the benefit of a Participant, the Trustee shall provide to the
Participant prompt written notice of all shareholder meetings or other
communications to shareholders of the Company received by the Trustee,
and if so requested in writing by the Participant, the Trustee shall
execute a proxy in a form acceptable to the Company to enable the
Participant to vote such Shares.
5. ASSIGNABILITY
As long as Options or Shares are held by a Trustee on behalf of an
Eligible 102 Participant, all rights of the Eligible 102 Participant
over such securities are personal and cannot be transferred, assigned,
pledged or mortgaged, other than by will or laws of descent and
distribution.
6. TAX CONSEQUENCES
6.1 Any tax consequences arising from the grant, sale or exercise of
any Option, from the payment for Shares covered thereby, or from any
other event or act (of the Company and/or its applicable Affiliate
and/or the applicable Trustee and/or the applicable Participant),
hereunder shall be borne solely by the applicable Participant. The
Company and/or its applicable Affiliate and/or the Trustee shall
withhold taxes according to the requirements under the applicable laws,
rules, and regulations, including withholding taxes at source.
Furthermore, the applicable Participant shall agree to indemnify the
Company and/or its applicable Affiliate and/or the applicable Trustee
and hold them harmless against and from any and all liability for any
such tax or interest or penalty thereon, including without limitation,
liabilities relating to the necessity to withhold, or to have withheld,
any such tax from any payment made to the applicable Participant. The
Company and/or its applicable Affiliate(s) and/or the applicable
Trustee(s) may make such provisions and take such steps as it or they
may deem necessary or appropriate for the withholding of all taxes
required by law to be withheld with respect to Options granted under the
Plan and the exercise thereof, including, but not limited, to:
(i) deducting the amount so required to be withheld from any other
amount (or Shares issuable) then or thereafter to be provided to the
Participant, including
Schedule B - Page 12
by deducting any such amount from a Participant's
salary or other amounts payable to the Participant, to the maximum
extent permitted under law, and/or (ii) requiring the Participant to pay
to the Company or its applicable Affiliate the amount so required to be
withheld as a condition of the issuance, delivery, distribution or
release of any Shares and/or (iii) by causing the exercise and sale of
any Options or Shares held by on behalf of the applicable Participant to
cover such liability, up to the amount required to satisfy minimum
statutory withholding requirements. In addition, the applicable
Participant will be required to pay any amount due in excess of the tax
withheld and transferred to the tax authorities, pursuant to applicable
tax laws, regulations and rules.
6.2 With respect to Non-Trustee Grants, if the applicable Participant
ceases to be employed by the Company or an Affiliate of the Company, the
applicable Participant shall provide to the Company and/or its
applicable Affiliate(s) a security or guarantee for the payment of tax
due at the time of sale of Shares acquired upon exercise of the
applicable Option to the satisfaction of the Company, all in accordance
with the provisions of Section 102 of the ITO and the Rules.
7. GOVERNING LAW AND JURISDICTION
Notwithstanding any other provision of the Plan, with respect to
Participants subject to this Appendix, the Plan and all instruments
issued thereunder or in connection therewith shall be governed by, and
interpreted in accordance with, the laws of the State of Israel
applicable to contracts made and to be performed therein.
END OF DOCUMENT
Schedule B - Page 13
Schedule A
KIDOZ INC.
STOCK OPTION PLAN
Option Certificate
This certificate is issued pursuant to the provisions of the Kidoz Inc. (the "Company") Stock Option Plan (the "Plan") and evidences that (Name
of Optionee) ____________________________________ ____________________ is
the holder of an option (the "Option") to purchase up to _________________
(Number of Shares) common shares (the "Shares") in the capital stock of the
Company at a purchase price of $_________ per Share. Subject to the
provisions of the Plan:
(a) the Award Date of this Option is
______________________________ (insert date of grant); and
(b) the Expiry Date of this Option is
______________________________ (insert date of expiry).
The right to purchase Shares under the Option will vest in the Holder in
increments over the term of the Option as follows:
Date
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Cumulative Number of Shares
which may be Purchased
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This Option may be exercised in accordance with its terms at any time and
from time to time from and including the Award Date through to and including
up to 5:00 p.m. (Vancouver time) on the Expiry Date, by delivering to the
Company an Exercise Notice, in the form provided in the Plan, together with
this certificate and a certified cheque or bank draft payable to the Company
in an amount equal to the aggregate of the Exercise Price of the Shares in
respect of which this Option is being exercised.
IMPORTANT INFORMATION
REGARDING
INCOME TAX WITHHOLDING
REQUIREMENTS
The Company shall not be obligated to cause the issuance, transfer or
delivery of a certificate or certificates representing Optioned Shares
to the Optionee, until provision has been made by the Optionee, to the
satisfaction of the Company, for the payment of the aggregate exercise
price for all Optioned Shares for which the Option shall have been
exercised, and for satisfaction of any tax withholding obligations
associated with such exercise.
This certificate and the Option evidenced hereby is not assignable,
transferable or negotiable and is subject to the detailed terms and
conditions contained in the Plan. This certificate is issued for
convenience only and in the case of any dispute with regard to any matter in
respect hereof, the provisions of the Plan and the records of the Company
shall prevail.
Resale of the
Shares acquired upon exercise of the Options is restricted until
____________________, 20___.
By countersigning this Option
Certificate:
(a) the Option Holder
acknowledges that the Option Holder has read and understands the Plan and
agrees to the terms and conditions of the Plan and this Option Certificate;
(b)
The undersigned hereby consents to:
(i) the disclosure of Personal
Information by the undersigned to the Exchange (as defined in Appendix 6A of
the policies of the Exchange attached hereto) pursuant to this Form; and
(ii) the collection, use and
disclosure of Personal Information by the Exchange for the purposes
described in the attached Appendix 6A or as otherwise identified by the
Exchange, from time to time.
IN WITNESS WHEREOF the parties hereto have executed this Option
Certificate as of the _____ day of ______________, 20____.
Name, Option Holder
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Per:
Authorized Signatory
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Schedule B
EXERCISE NOTICE
To: The Administrator, Stock Option Plan
Kidoz Inc. (the "Company")
The undersigned hereby irrevocably gives notice, pursuant to the Company's
Stock Option Plan (the "Plan"), of the exercise of the Option to acquire and
hereby subscribes for (cross out inapplicable item):
(a) all of
the Shares; or
(b)
________________________ of the Shares, which are the subject of the Option
Certificate attached hereto.
Calculation of total Exercise Price:
(i) number of Shares to be acquired on
exercise: _________________ Shares
(ii) multiplied by the Exercise Price per
Share: $___________
TOTAL EXERCISE PRICE, enclosed
herewith: $___________
The undersigned tenders herewith a certified cheque or bank draft in an
amount equal to the total Exercise Price of the aforesaid Shares, as
calculated above, and directs the Company to issue the share certificate
evidencing said Shares in the name of the undersigned to be mailed to the
undersigned at the following address:
_____________________________________________
_____________________________________________
_____________________________________________
DATED the ______ day of _____________________, 20___.
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Signature of Option Holder
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Name of Option Holder (please print)
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