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 intend to issue to Mr. Sakharov options to purchase 200,000 shares of the
Company’s common stock, upon approval of the Board of Directors of the Company.
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.