Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
Departure
of Interim Chief Financial Officer
On
October 5, 2020, NanoVibronix, Inc. (the “Company”) and James Cardwell, the Company’s Interim Chief Financial
Officer, agreed by mutual understanding that Mr. Cardwell’s employment as an officer and employee of the Company will cease
as of October 5, 2020, in accordance with the terms of his CFO Consulting Agreement with the Company dated June 1, 2019. Mr. Cardwell
served as the Company’s principal financial and accounting officer.
Appointment
of Chief Financial Officer
On
October 5, 2020, the Company entered into an Employment Agreement (the “Employment Agreement”) with Stephen Brown,
pursuant to which the Company appointed Mr. Brown as Chief Financial Officer, effective October 5, 2020, with a term to continue
in effect until terminated by either party. Mr. Brown will act as the Company’s principal financial and accounting officer.
Mr.
Brown, age 64, served as the Company’s Chief Financial Officer from February 3, 2015 through April 30, 2019, and has continued
to serve as a financial consultant for the Company until his appointment as Chief Financial Officer on October 5, 2020. Mr. Brown
previously served as Chief Financial Officer for IDT Corporation (NYSE: IDT) from April 1995 to January 2009, during which time
he oversaw the initial public offering of a start-up telecommunications company and guided it through the spin-offs of two subsidiaries,
various public offerings and bank facilities. During his tenure at IDT, Mr. Brown also served on IDT’s board of directors
for six years and on the board of directors of Net2Phone Inc. for five years. Mr. Brown was also the founder and chairman of IDT
Entertainment Inc., a movie studio and media subsidiary of IDT. From 2009 to the present, Mr. Brown has served as a managing partner
of The Mcguffin Group Financial, a financial and business consulting firm concentrating on advising early stage and micro-cap
companies. He is also a partner in an accounting and tax practice, Brown, Brown and Associates. Mr. Brown was formerly a certified
public accountant, is a member of the Academy of Television Arts and Sciences and serves on the board of directors for several
educational institutions, including on the Board of Governors for Touro College.
As
consideration for his services as Chief Financial Officer, Mr. Brown will be entitled to receive (i) an annual base salary of
$200,000, less applicable payroll deductions and tax; (ii) reimbursement of any reasonable and customary, documented out-of-pocket
expenses actually incurred by Mr. Brown in connection with the performance of his services under the Employment Agreement; and
(iii) an annual bonus of $25,000, if earned, as determined by the Company in its sole discretion. Mr. Brown may also be eligible
to receive certain grants of incentive stock options to purchase shares of common stock of the Company.
Either
party may terminate the Employment Agreement at any time upon ninety (90) days written notice. Upon termination of Mr. Brown’s
employment, the Company shall pay Mr. Brown (i) any unpaid salary accrued through the date of termination, (ii) any accrued and
unpaid vacation or similar pay to which Mr. Brown is entitled as a matter of law or Company policy, and (iii) any unreimbursed
expenses properly incurred prior to the date of termination (the “Accrued Obligations”).
In
the event the Company terminates Mr. Brown’s employment for cause, the Company shall have no further liability or obligation
to Mr. Brown under the Employment Agreement or in connection with Mr. Brown’s employment, except for the Accrued Obligations.
The
Employment Agreement also contains certain standard non-competition, non-solicitation, confidentiality, and assignment of inventions
requirements for Mr. Brown.
There
is no arrangement or understanding between Mr. Brown and any other persons pursuant to which Mr. Brown was selected as an officer.
There
are no family relationships between Mr. Brown and any director, executive officer or person nominated or chosen by the Company
to become a director or executive officer of the Company within the meaning of Item 401(d) of Regulation S-K under the U.S. Securities
Act of 1933 (“Regulation S-K”).
From
July 2019 through September 2020, the Company paid The Mcguffin Group Financial $12,500 per month for financial consulting, in
addition to a bonus of $25,000 in September 2020 after the Company’s two successful capital raises. Mr. Brown is a managing
partner of The Mcguffin Group Financial.
The
foregoing summary of the Employment Agreement does not purport to be complete and is subject to, and qualified in its entirety
by, the full text of the 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.