Item
5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
On
May 7, 2021, the Board of Directors of Simplicity Esports and Gaming Company (the “Company”) appointed Laila Cavalcanti
Loss to serve as a member of the Company’s Board of Directors. Since 2017, Ms. Loss, age 40, has practiced law in private
practice at Cavalcanti Loss Sociedade Individual de Advocacia. From 2010 to 2016, Ms. Loss served as the Head of Legal in Latin
America and Agola for Expro Group, a leading global oil services company. Ms. Loss holds a Master of Laws from the University
of Texas at Austin. She is permitted to practice law in Brazil and is admitted to the New York State Bar Association.
On
May 10, 2021, Knicks Lau resigned as the Company’s Chief Financial Officer for personal reasons. On May 11, 2021, the Company’s
Board of Directors appointed Nancy Hennessey as the Company’s Chief Financial Officer, effective May 17, 2021.
Ms.
Hennessey, age 56, worked as the Senior Vice President of Financial Planning and Analysis and as a consultant to the Chief Executive
Officer of Travel and Leisure, formerly Wyndham Destinations, an NYSE listed $5 billion market cap company. From 1990 to 2011,
Ms. Hennessey served multiple companies as Vice President of Finance and Chief Financial Officer. Ms. Hennessey began her career
by working for Ernst & Young as a Senior Auditor from 1986 until 1990. Ms. Hennessey is a Certified Public Accountant and
holds a BBA and MBA in Public Accounting from the Lubin School of Business at Pace University.
In
connection with Ms. Hennessey’s appointment, on May 11, 2021, the Company entered into an employment agreement, dated as
of May 17, 2021 by and between the Company and Ms. Hennessey (the “Employment Agreement”). Pursuant to the terms of
the Hennessey Employment Agreement, in exchange for Ms. Hennessey’s services, the Company agreed to pay Ms. Hennessey an
annual base salary of $140,000. In addition, Ms. Hennessey is entitled to receive compensation in the form of an equity grant
of $5,000 in the Company’s common stock for each quarter during the term of the Hennessey Employment Agreement, which runs
for a period ending one year after May 17, 2021 and automatically renews for successive one year terms unless either party gives
60 days’ advance written notice of its intention not to review the Hennessey Employment Agreement. Ms. Hennessey is also
eligible to receive a quarterly bonus of up to $12,500 in the form of a cash bonus and/or equity grant of shares of the Company’s
common stock. Pursuant to the terms of the Hennessey Employment Agreement Ms. Hennessey will also receive (i) 5,000 shares of
common stock upon filing of the 2021 Annual Report on Form 10-K, if completed before July 31, 2021, and (ii) 5,000 shares of common
stock upon completion of an uplisting to a national exchange, such as The Nasdaq Stock Market or the NYSE NYSE American. Ms. Hennessey’s
eligibility for any bonus and the amount thereof will be determined solely at the discretion of the Board of Directors.
Ms.
Hennessey’s employment and the Hennessey Employment Agreement may be terminated by the Company with or without Cause (as
hereinafter defined), or by Ms. Hennessey with or without Good Reason (as hereinafter defined). In addition, in the event of Ms.
Hennessey’s death or total disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (“Disability”),
during the term of the Hennessey Employment Agreement, the term of the Hennessey Employment Agreement and Ms. Hennessey’s
employment will terminate on the date of death or Disability.
For
purposes of the Hennessey Employment Agreement, “Cause” means, subject to the provisions of the Hennessey Employment
Agreement:
|
(i)
|
Ms.
Hennessey’s willful failure to perform her duties (other than any such failure resulting from incapacity due to physical
or mental illness);
|
|
(ii)
|
Ms.
Hennessey’s willful failure to comply with any valid and legal directive of the Board of Directors; or
|
|
(iii)
|
Ms.
Hennessey’s willful engagement in dishonesty, illegal conduct, or gross misconduct, which is, in each case, materially
injurious to the Company or its affiliates; or
|
|
(iv)
|
Actions
by Ms. Hennessey constituting embezzlement, misappropriation, or fraud, whether or not related to Ms. Hennessey’s employment
with the Company; or
|
|
(v)
|
Ms.
Hennessey’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent)
or a crime that constitutes a misdemeanor involving moral turpitude; or
|
|
(vi)
|
Ms.
Hennessey’s material breach of any material obligation under the Hennessey Employment Agreement, which Ms. Hennessey
fails to correct within 10 days after Ms. Hennessey receives written notice from the Board of Directors of such breach.
|
For
purposes of the Hennessey Employment Agreement, “Good Reason” means the occurrence of any of the following, in each
case during the term of the Hennessey Employment Agreement:
|
(i)
|
A
material reduction in Ms. Hennessey’s base salary;
|
|
(ii)
|
A
material reduction in Ms. Hennessey’s target bonus opportunity;
|
|
(iii)
|
A
relocation of Ms. Hennessey’s principal place of employment from that set forth in the Hennessey Employment Agreement
by more than 35 miles;
|
|
(iv)
|
A
material breach by the Company of any material provision of the Hennessey Employment Agreement;
|
|
(v)
|
At
any time following a Change of Control (as defined in the Hennessey Employment Agreement), a material change in Ms. Hennessey’s
title or responsibilities, or a material diminution by the Company of compensation and benefits (taken as a whole) provided
to Ms. Hennessey immediately prior to a Change of Control.
|
Ms.
Hennessey may not terminate the Hennessey Employment Agreement for Good Reason pursuant to clause (i), (ii), (iii) or (iv) above
unless (x) Ms. Hennessey, within 30 days following the occurrence of the such condition giving rise to Good Reason, notifies the
Company in writing of her intent to terminate with Good Reason; (y) the Company fails to cure such condition within 30 days after
being so notified; and (z) Ms. Hennessey actually terminates no later than 30 days after the end of the cure period.
Solely
in the case of an event of Cause relating to Ms. Hennessey’s willful failure to perform her duties (other than any such
failure resulting from incapacity due to physical or mental illness), Ms. Hennessey’s willful failure to comply with any
valid and legal directive of the Board of Directors; or Ms. Hennessey’s material breach of any material obligation under
the Hennessey Employment Agreement, which Ms. Hennessey fails to correct within 10 days after Ms. Hennessey receives written notice
from the Board of Directors of such breach (each, a “Cause Capable of Cure”), the Company may not and will not terminate
the Hennessey Employment Agreement for Cause unless the Company has provided written notice to Ms. Hennessey of the existence
of the circumstances providing grounds for termination for a Cause Capable of Cure, and Ms. Hennessey has had at least 14 calendar
days to cure such circumstances to the reasonable satisfaction of the Company and has thereafter not cured such circumstance within
such 14 calendar day period.
Pursuant
to the terms of the Hennessey Employment Agreement, upon (i) termination by the Company for Cause, (ii) termination by Ms. Hennessey
without Good Reason, or (iii) a non-renewal by the Company, the Company will pay to Ms. Hennessey the following amounts (the “Lau
Accrued Amounts”):
|
(i)
|
Any
accrued but unpaid base salary, any accrued but unpaid equity grants and accrued but unused vacation;
|
|
(ii)
|
Any
bonus compensation awarded for the quarterly period preceding that in which termination occurs, but unpaid on the date of
termination (the “Prior Quarterly Period Bonus”);
|
|
(iii)
|
Reimbursement
for unreimbursed business expenses;
|
|
(iv)
|
Such
employee benefits, if any, to which Ms. Hennessey may be entitled under the Company’s employee benefit plans as of the
date of termination; provided that, in no event shall Ms. Hennessey be entitled to any payments in the nature of severance
or termination payments except as specifically provided in the Hennessey Employment Agreement; and
|
|
(v)
|
all
amounts otherwise required to be paid or provided by law.
|
Pursuant
to the terms of the Hennessey Employment Agreement, upon termination of the Hennessey Employment Agreement solely as a result
of Ms. Hennessey’s death or Disability, Ms. Hennessey or her estate will receive the Lau Accrued Amounts and the pro-rated
bonus as provided in the Hennessey Employment Agreement.
Upon
Ms. Hennessey’s termination by the Company without or other than for Cause, or (ii) resignation by Ms. Hennessey with Good
Reason, then:
|
(i)
|
the
Company will pay to Ms. Hennessey the Lau Accrued Amounts and a pro-rated bonus as provided in the Hennessey Employment Agreement;
|
|
(ii)
|
the
Company will pay to Ms. Hennessey $35,000 as a severance payment;
|
|
(iii)
|
the
Company will pay to Ms. Hennessey any salary that Ms. Hennessey would have earned through the end of the then-applicable initial
term or renewal term, as applicable;
|
|
(iv)
|
any
unvested incentive awards then held by Ms. Hennessey will immediately be vested in full; and
|
|
(v)
|
any
additional equity grants to which Ms. Hennessey would have been entitled pursuant to the terms of the Hennessey Employment
Agreement will be issued and paid in accordance with the terms of the Hennessey Employment Agreement.
|
The
foregoing description of the Hennessey Employment Agreement is qualified in its entirety by reference to the Hennessey Employment
Agreement, which is filed as Exhibit 10.1 hereto and incorporated herein by reference.