Item
5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
On
April 1, 2022, Clubhouse Media Group, Inc. (the “Company”) entered into an employment agreement with Amir Ben-Yohanan, the
Company’s Chief Executive Officer, effective April 11, 2022. The terms of the employment agreement are substantially similar to
the terms of Mr. Ben-Yohanan’s prior employment agreement with the Company. Accordingly, pursuant to the terms of the employment
agreement, Mr. Ben-Yohanan will continue to serve as Chief Executive Officer of the Company, reporting to the Board of Directors (the
“Board”). As compensation for Mr. Ben-Yohanan’s services, the Company agreed to pay Mr. Mr. Ben-Yohanan an annual base
salary of $400,000 (the “Base Salary”) comprised of two parts a “Cash Portion”, and an “Optional Portion”.
The Cash Portion is a monthly cash payment of $15,000. The remaining $220,000 per year – the Optional Portion – is payable
as follows:
| (i) | If
the Company’s Board determines that the Company has sufficient cash on hand to pay
all or a portion of the Optional Portion in cash, such amount shall be paid in cash. |
| (ii) | If
the Board determines that the Company does not have sufficient cash on hand to pay all of
the Optional Portion in cash, then the portion of the Optional Portion which the Board determines
that the Company has sufficient cash on hand to pay in cash will be paid in cash, and the
remainder (the “Deferred Portion”) will either: |
| a. | be
paid at a later date, when the Board determines that the Company has sufficient cash on hand
to enable the Company to pay the Deferred Portion; or |
| b. | will
not be paid in cash – and instead, the Company will issue shares of Company Common
Stock equal to (A) the Deferred Portion, divided by (B) the VWAP (as defined in the employment
agreement) as of the date of issuance of such shares of Company Common Stock. |
In
addition, pursuant to the employment agreement, Mr. Ben-Yohanan is entitled to be paid discretionary annual bonuses as determined by
the Board, and is also entitled to receive fringe benefits, such as, but not limited to, reimbursement for reimbursement for all reasonable
and necessary out-of-pocket business, entertainment and travel, vacation days, and certain insurances.
The
initial term of the employment agreement is one year from April 11, 2022, unless earlier terminated. Thereafter, the term is automatically
extended on an annual basis for terms of one year each, unless either the Company or Mr. Ben-Yohanan provides notice to the other party
of their desire to not so renew the term of the agreement (as applicable) at least 30 days prior to the expiration of the then-current
term.
Mr.
Ben-Yohanan’s employment with the Company shall be “at will,” meaning that either Mr. Ben-Yohanan or the Company may
terminate Mr. Ben-Yohanan’s employment at any time and for any reason, subject to certain terms and conditions.
The
Company may terminate the employment agreement at any time, with or without “cause”, as defined in the employment agreement
and Mr. Ben-Yohanan may terminate the employment agreement at any time, with or without “good reason”, as defined in the
employment agreement. If the Company terminates the employment agreement for cause or Mr. Ben-Yohanan terminates the employment agreement
without good reason, Mr. Ben-Yohanan will be entitled to be paid any unpaid salary owed or accrued, including the issuance of any shares
of Company Common Stock owed or accrued (as compensation) as of the termination date. In the event that there was any Deferred Portion
which had been agreed to be paid in cash, such Deferred Portion instead will be paid in shares of Company Common Stock as though such
amount had been agreed to be paid via the issuance of shares of Company Common Stock. Mr. Ben-Yohanan will also be entitled to payment
for any unreimbursed expenses as of the termination date. However, any unvested portion of any equity granted to Mr. Ben-Yohanan will
be immediately forfeited as of the termination date.
If
the Company terminates the employment agreement without cause or Mr. Ben-Yohanan terminates the employment agreement with good reason,
Mr. Ben-Yohanan will be entitled to receive the same compensation (unpaid accrued salary and unreimbursed expenses), and, in addition,
will be entitled to receive, in one lump sum, the remainder of Mr. Ben-Yohanan’s annual salary that has not yet been paid as of
the date of the termination – either in cash, or in shares of Company common stock. Further, any equity grant already made to Mr.
Ben-Yohanan shall, to the extent not already vested, be deemed automatically vested.
The
foregoing description of Mr. Ben-Yohanan’s employment agreement does not purport to be complete and is qualified in its entirety
by reference to the full text of Mr. Ben-Yohanan’s employment agreement, a copy of which is filed as Exhibit 10.1 to this Current
Report on Form 8-K and is incorporated herein by reference.