Item 5.02
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Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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Boris
Goldstein Employment Agreement
On
March 25, 2020, the Board of Directors the (“Board”) of Brain Scientific Inc. (the “Company”) approved
and ratified the Company entering into an employment agreement, dated as of January 30, 2020, with Boris Goldstein, the Company’s
Chairman, Secretary and Executive Vice President (the “Goldstein Employment Agreement”). Under the Goldstein Employment
Agreement, Mr. Goldstein will receive an initial annual base salary of $180,000, which shall be reviewed annually and may be increased,
but not decreased, by the Compensation Committee of the Board of Directors, or if there be no such Compensation Committee, the
Board of Directors (in either case, the “Committee”). In addition, Mr. Goldstein shall be eligible to receive an annual
cash bonus equal to a target of 50% of his annual base salary, based on the Company’s achievement of certain performance
metrics and goals as may be determined by the Committee in consultation with Mr. Goldstein prior to or promptly following the
beginning of each fiscal year. Mr. Goldstein shall also be entitled to participate in any stock option, performance share, performance
unit or other equity based long-term incentive compensation plan, program or arrangement generally made available to senior executive
officers of the Company, pursuant to which the Company issued to Mr. Goldstein options to purchase 800,000 shares of the Company’s
common stock at an exercise price of $0.75 per share, which shall vest ratably on a quarterly basis over the following two years.
In
the event Mr. Goldstein’s employment is terminated as a result of death or disability, Mr. Goldstein or his estate shall
be provided any earned base salary, any earned but unpaid annual bonus for the year prior to termination (the “Prior Year
Bonus”), a pro-rated annual bonus for the year of termination (the “Pro-Rated Bonus), if any, reimbursement of any
unpaid business expenses and accrued vacation, and, in the event of termination for disability, all benefits payable under any
employee benefit plan applicable at the time of termination.
In
the event Mr. Goldstein’s employment is terminated for cause or by Mr. Goldstein without good reason, Mr. Goldstein shall
forfeit the right to receive any and all further payments under the Goldstein Employment Agreement, other than the right to receive
any unpaid earned annual base salary, the Prior Year Bonus, reimbursement of business expenses and accrued vacation, if any, and
benefits payable under any employee benefit plan applicable at the time of termination, in each case as accrued through the date
of termination.
In
the event Mr. Goldstein’s employment is terminated by Mr. Goldstein for good reason or by the Company without cause, Mr.
Goldstein shall be paid (i) his accrued but unpaid annual base salary as of the termination date, (ii) his annual base salary
then in effect for a period of 24 months after the date of termination (or 60 months if the termination without cause or for good
reason occurs within 24 months of a change of control (as defined in the Goldstein Employment Agreement)), (iii) the target annual
bonus for the year of termination, if any, (iv) any unpaid Prior Year Bonus, (v) reimbursement of unpaid business expenses and
the dollar value of any unused and accrued vacation days, and (vi) 100% of the cost of premiums for COBRA for a period of 12 months
from the date of termination. In addition, 100% of any unvested portion of Mr. Goldstein’s outstanding option grants shall
immediately vest and become exercisable and remain exercisable for the periods specified in such option.
The
Goldstein Employment Agreement contains customary non-competition and non-solicitation provisions in favor of the Company. Mr.
Goldstein also agreed to customary terms regarding confidentiality and ownership of intellectual property.
Vadim
Sakharov Employment Agreement
Also
on March 25, 2020, the Board of the Company approved and ratified the Company entering into an employment agreement, dated as
of January 30, 2020, with Vadim Sakharov, the Company’s President and Chief Technology Officer (the “Sakharov Employment
Agreement”). Under the Sakharov Employment Agreement, Mr. Sakharov will receive an initial annual base salary of $60,000,
which shall be reviewed annually and may be increased, but not decreased, by the Committee. In addition, Mr. Sakharov shall be
eligible to receive an annual cash bonus equal to a target of 50% of his annual base salary, based on the Company’s achievement
of certain performance metrics and goals as may be determined by the Committee in consultation with Mr. Sakharov prior to or promptly
following the beginning of each fiscal year. Mr. Sakharov shall also be entitled to participate in any stock option, performance
share, performance unit or other equity based long-term incentive compensation plan, program or arrangement generally made available
to senior executive officers of the Company, pursuant to which the Company issued to Mr. Sakharov options to purchase 200,000
shares of the Company’s common stock at an exercise price of $0.75 per share, which shall vest ratably on a quarterly basis
over the following two years.
In
the event Mr. Sakharov’s employment is terminated as a result of death or disability, Mr. Sakharov or his estate shall be
provided any earned base salary, any earned but unpaid annual bonus for the year prior to termination (the “Prior Year Bonus”),
a pro-rated annual bonus for the year of termination (the “Pro-Rated Bonus), if any, reimbursement of any unpaid business
expenses and accrued vacation, and, in the event of termination for disability, all benefits payable under any employee benefit
plan applicable at the time of termination.
In
the event Mr. Sakharov’s employment is terminated for cause or by Mr. Sakharov without good reason, Mr. Sakharov shall forfeit
the right to receive any and all further payments under the Sakharov Employment Agreement, other than the right to receive any
unpaid earned annual base salary, the Prior Year Bonus, reimbursement of business expenses and accrued vacation, if any, and benefits
payable under any employee benefit plan applicable at the time of termination, in each case as accrued through the date of termination.
In
the event Mr. Sakharov’s employment is terminated by Mr. Sakharov for good reason or by the Company without cause, Mr. Sakharov
shall be paid (i) his accrued but unpaid annual base salary as of the termination date, (ii) his annual base salary then in effect
for a period of 4 months after the date of termination (or 6 months if the termination without cause or for good reason occurs
within 24 months of a change of control (as defined in the Sakharov Employment Agreement)), (iii) the target annual bonus for
the year of termination, if any, (iv) any unpaid Prior Year Bonus, (v) reimbursement of unpaid business expenses and the dollar
value of any unused and accrued vacation days, and (vi) 100% of the cost of premiums for COBRA for a period of 12 months from
the date of termination. In addition, 100% of any unvested portion of Mr. Sakharov’s outstanding option grants shall immediately
vest and become exercisable and remain exercisable for the periods specified in such option.
The
Sakharov Employment Agreement contains customary non-competition and non-solicitation provisions in favor of the Company. Mr.
Sakharov also agreed to customary terms regarding confidentiality and ownership of intellectual property.
The
foregoing are summaries only of the material terms of the Goldstein Employment Agreement and Sakharov Employment Agreement, and
is qualified in its entirety by reference to the full text of the Goldstein Employment Agreement and Sakharov Employment Agreement,
copies of which will be filed with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.