Annual report pursuant to Section 13 and 15(d)

Note M - Employment Contract and Consulting Agreements

v3.19.1
Note M - Employment Contract and Consulting Agreements
12 Months Ended
Dec. 31, 2018
Notes to Financial Statements  
Employment and Consulting Agreements [Text Block]
NOTE M–EMPLOYMENT CONTRACT AND CONSULTING AGREEMENTS
 
Employment Contracts
 
As of
September 1, 2009,
Milestone Scientific entered into a
five
-year employment agreement with Leonard Osser as its then Chief Executive Officer (the
"2009
Agreement"). The terms of the
2009
Agreement are automatically extended for successive
one
-year periods unless prior to
August 1
of any year, either party notifies the other that he or it chooses
not
to extend the term. Under the
2009
Agreement, the CEO receives base compensation of
$300,000
per year. In addition, the CEO,
may
earn annual bonuses up to an aggregate of
$400,000,
payable
one
half in cash and
one
half in common stock, contingent upon achieving targets set for each year by the Compensation Committee. In addition, if in any year of the term of the agreement the CEO earns a bonus, he shall also be granted
five
-year stock options to purchase twice the number of bonus shares earned. Each such option is to be exercisable at a price per share equal to the fair market value of a share on the date of grant
110%
of the fair market value if the CEO is a
10%
or greater stockholder on the date of grant). On the grant date
one
-
third
of options are vested, the remaining options shall be vested over a
3
years period, with
one
-
third
vesting each year on the grant date but shall only be exercisable while the CEO is employed by Milestone Scientific or within
30
days after the termination of his employment. In addition, the CEO also receives other compensation represents payments made for health insurance coverage
$4,900
and car allowance
$7,200,
pension payment
$203,111.
 
In accordance with the
2009
Agreement,
1,055,135
shares of common stock were to be paid out at the end of the term in settlement of
$1,205,707
 of deferred compensation accrued at
December 31, 2018
and
886,866
 shares of common stock are to be paid out at the end of the contract in settlement of
$1,030,875
of deferred compensation accrued at
December 31, 2017
and, accordingly, such shares have been classified in stockholders' equity with the common stock classified as to be issued.
 
On 
December 1, 2016,
Wand Dental and Gian Domenico Trombetta (“Trombetta”) entered into an Amended and Restated Employment Agreement (the “Agreement”), pursuant to which Trombetta receives base compensation of
$280,000
per year and is eligible to receive annual bonuses in the sole discretion of the Compensation Committee. Pursuant to the Agreement, Trombetta will continue to serve as the Chief Executive Officer of Wand Dental for a period of
one
-year beginning on
September 1, 2016
through
August 31, 2017 (
the “Employment Term”). The Employment Term automatically renews for a
one
-year period, from
September 1
st
 through
August 31
st
 of each successive year (each a “Renewal Term”), unless prior to
June
1st
of the Employment Term or any Renewal Term, as applicable, either party notifies the other that he or it chooses
not
to extend the term of employment in accordance with the terms of the Agreement.
 
In
July 2017,
Milestone Scientific entered into a
three
-year employment agreement with Daniel Goldberger to serve as President and Chief Executive Officer of Milestone Scientific. Under the agreement, Mr. Goldberger would receive base compensation of
$300,000
per annum and
may
additionally earn annual bonuses of up to an aggregate of
$400,000,
payable
one
half in cash and
one
half in Milestone Scientific common stock (“Bonus Shares”) contingent upon achieving performance benchmarks periodically set for each year by the compensation committee of the Board. In addition to any such shares of common stock, Mr. Goldberger was entitled to receive stock options (“Bonus Options”) to acquire twice the number of any Bonus Shares earned, pursuant to a non-qualified stock option grant agreement under Milestone Scientific’s then existing equity compensation plan. The Bonus Options had a
five
-year term and were to vest in equal annual installments on each of the first,
second
and
third
anniversary of the grant date, subject to continued employment on such vesting date and accelerated vesting upon the occurrence of certain events. The exercise price of the Bonus Options was based on the fair market value of per share of common stock on the date of grant.
 
In
July 2017,
Milestone Scientific granted to Mr. Goldberger non-qualified stock options to purchase
921,942
shares of common stock at an exercise price of
$2.00
per share. Those options had a
five
-year term and were to vest in equal annual installments on each of the first,
second
and
third
anniversaries of the grant date, subject to his continued employment on the vesting date and accelerated vesting upon the occurrence of certain events.
 
On
October 2, 2017,
Milestone Scientific accepted the resignation of the then CEO, Daniel Goldberger. Subsequent to that date, Mr. Goldberger through his attorney advised Milestone Scientific’s attorneys, that Mr. Goldberger was entitled, based on the circumstances he asserted with respect to his resignation after acceptance of such resignation, to his basic salary (
$300,000
) for
one
year and certain other benefits (health and disability insurance for
one
year (
$30,000
estimated) and a car allowance of
$1,200
per month), in accordance with his employment contract dated
July 10, 2017. 
 
In
February 2018,
Milestone Scientific and Daniel Goldberger, the Company’s former President and Chief Executive Officer, who resigned effective
October 2, 2017,
signed a Settlement and Release Agreement with respect to Mr. Goldberger’s leaving the Company. The gross settlement was
$175,000,
which was paid in full as of
December 31, 2018.
 
In
July 2017,
Milestone Scientific entered into a
ten
-year new employment agreement with Leonard Osser, who previously served as the Company’s President and Chief Executive Officer, to serve as Managing Director – China Operations. This new agreement provides for annual compensation of
$300,000
consisting of
$100,000
in cash and
$200,000
in the Company’s common stock valued at the average closing price of the Company’s common stock on the NYSE or such other market or exchange on which its shares are then traded during the
first
fifteen
(
15
) trading days of the last full calendar month of each year during the term of this agreement. This agreement supersedes all prior employment agreements between Mr. Osser and Milestone Scientific. If the Company terminates Mr. Osser’s employment “Without Cause,” other than due to his death or disability, or if Mr. Osser terminates his employment for “Good Reason” (both as defined in the agreement), Mr. Osser is entitled to be paid in
one
lump sum payment as soon as practicable following such termination: an amount equal to the aggregate present value (as determined in accordance with Section
280G
(d)(
4
) of the Code) of all compensation pursuant to this agreement from the effective date of termination hereunder through the remainder of the Employment Term.
 
In
July 2017,
Mr. Osser also resigned from his positions of Chairman of the Board, Chief Executive Office and President of Milestone Medical. Upon his resignation, Milestone Medical entered in a consulting agreement with U.S. Asian Consulting Group LLC, an entity controlled by Mr. Osser, pursuant to which he will provide specific services to Milestone Medical for a
ten
- year term. Pursuant to the consulting agreement, U.S. Asian Consulting Group, LLC, is entitled to receive
$100,000
per year for Mr. Osser's services.
 
On
October 5, 2017,
Milestone Scientific Inc. announced that Daniel Goldberger had resigned as President and Chief Executive Officer effective
October 2, 2017,
upon which the previously described stock options granted to him in
July 2017
terminated prior to vesting.  All previous compensation expense recorded to the date of the resignation, related to the stock options, was reversed as of the resignation date.
 
On
October 5, 2017,
Milestone Scientific also announced the appointment of Leslie Bernhard, the Company’s current Chairman of the Board, as the Company’s Interim Chief Executive Officer, to serve in such role until the appointment of a new Chief Executive Officer. In connection with her appointment to serve as the Company’s Interim Chief Executive Officer, Ms. Bernhard was paid an annual salary of
$200,000
 received a
one
-time bonus of
100,000
shares of the Company’s Common Stock.  In addition, at the completion of her service as Interim Chief Executive Officer, Ms. Bernhard shall be entitled to receive a cash bonus in an amount to be determined by the Board of Directors at that time. On
December 19 ,2017
the Board of Directors appointed Leonard Osser Interim Chief Executive Officer, replacing Leslie Bernhard. Ms. Bernhard agreed to accept
25,000
shares of Milestone Scientific stock for her services as Interim Chief Executive Officer in-lieu of the
100,000
shares she was previously awarded.
 
On
December 19, 2017
the Board of Directors appointed Leonard Osser Interim Chief Executive Office, replacing Leslie Bernhard. Mr. Osser will enter into a similar  employment contract that he received in
2017
 before he resigned his position as CEO of the company. Mr. Osser placed on hold his position as Managing Director-China Operations and his consulting agreement with Milestone Medical to rejoined Milestone Scientific Inc. as Interim Chief Executive Officer and will
not
receive or earn any compensation under those agreements until he is
no
longer Interim Chief Executive Officer.