LFMD 8-K
LifeMD, Inc. (LFMD)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date
of Report (Date of earliest event reported):
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code)
Check the appropriate box below if the 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
| Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The Capital Market | ||||
| The Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging
growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Resignation of Stefan Galluppi from the Board of Directors
On June 20, 2023, Stefan Galluppi resigned from the Board of Directors of LifeMD, Inc. (the “Company”) effective immediately. Mr. Galluppi’s resignation was not due to a disagreement with the Company on any matter relating to its operations, policies or practices, and he will continue to serve as the Company’s Chief Innovation Officer.
Appointment of William J. Febbo to the Board of Directors
On June 20, 2023, William J. Febbo was appointed to the Board of Directors.
Mr. Febbo is Chief Executive Officer and a Director of OptimizeRx Corporation (Nasdaq: OPRX). OptimizeRx is a leading provider of digital point-of-care technology solutions that help patients start and stay on therapy. For more than 25 years Mr. Febbo has built and managed health services and financial businesses, starting in M&A and international business development at multinational companies. In 1999 he co-founded and subsequently served as Chief Executive Officer of MedPanel, a market intelligence and communication provider to the life sciences and financial industries. In 2007 MedPanel was acquired by Merriman Capital, where he served as Chief Operating Officer of investment banking and as Chief Executive Officer of the firm’s Digital Capital Network. In 2016 Mr. Febbo joined OptimizeRx, where he helped transform the firm into a leading digital health company enabling care-focused engagement between life sciences organizations, healthcare providers, and patients at critical junctures throughout the patient care journey. Mr. Febbo serves as a faculty member for the Massachusetts Institute of Technology linQ program, a collaborative initiative increasing the potential of innovative biomedical research to benefit society and the economy. He also serves on the board of the United Nations of Greater Boston, a non-profit organization focused on building a stronger network of global citizens in the Boston area.
In connection with Mr. Febbo’s appointment to the Board, the Company and Mr. Febbo entered into a Director Agreement, whereby Mr. Febbo received (i) a grant of 75,000 restricted shares of the Company’s common stock, with 37,500 restricted shares vesting immediately and 37,500 restricted shares vesting on the two-year anniversary of the Director Agreement, pursuant to a Restricted Stock Award Agreement under the LifeMD, Inc. 2020 Equity and Incentive Plan, as amended (the “Plan”), and (ii) a stock option to purchase 37,500 shares of the Company’s common stock, vesting on the two-year anniversary of the Director Agreement, pursuant to a Non-Qualified Stock Option Agreement under the Plan. Unvested restricted shares will vest immediately in the event that Mr. Febbo is removed as a director or not asked to stand for re-election for reasons other than for “Cause,” as defined in the Plan, or immediately prior to the closing of a “Change in Control,” as defined in the award agreement. All unvested options shall be forfeited, but Mr. Febbo shall have the right to exercise vested options for a period of three months after his departure from the Board, a period which would be extended to 12 months in the case of death or disability. The awards may be forfeited in the event of Mr. Febbo’s breach of certain covenants contained in the respective award agreements.
On May 30, 2023, prior to his appointment to the Board of Directors, Mr. Febbo entered into a Consulting Services Agreement with the Company, pursuant to which he provides certain investor relations and strategic business development services, in consideration for 375,000 restricted shares of the Company’s common stock, which will vest in quarterly installments from August 30, 2023 through November 30, 2024. Either Party may, upon 14 days written notice to the other Party, terminate this Agreement at any time for any reason, at which time, any unvested restricted shares will be forfeited. Unvested restricted shares will vest immediately prior to the closing of a “Change in Control,” as defined in the Consulting Services Agreement.
Item 5.02 of this Current Report on Form 8-K contains only a brief description of the material terms of and does not purport to be a complete description of the rights and obligations of the parties to the Consulting Services Agreement, Director Agreement, Restricted Stock Award Agreement and Non-Qualified Stock Option Agreement, and such description is qualified in its entirety by reference to the full text of the agreements, which are filed as Exhibits and incorporated by reference into this Current Report on Form 8-K.
Item 8.01 Other Events
On June 20, 2023, the Company issued a press release announcing the appointment of William J. Febbo to its Board of Directors. A copy of the press release is filed as Exhibit 99.1 and is incorporated by reference into this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
| Exhibit | Description | |
| 10.1 | Director Agreement, dated June 20, 2023 between LifeMD, Inc. and William J. Febbo | |
| 10.2 | Restricted Stock Award Agreement, dated June 20, 2023, between LifeMD, Inc. and William J. Febbo | |
| 10.3 | Non-Qualified Stock Option Agreement, dated June 20, 2023, between LifeMD, Inc. and William J. Febbo | |
| 10.4 | Consulting Services Agreement, dated May 30, 2023, between LifeMD, Inc. and William J. Febbo | |
| 99.1 | Press Release, dated June 20, 2023 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LIFEMD, INC. | |||
| Dated: | June 22, 2023 | By: | /s/ Eric Yecies |
| Eric Yecies | |||
| General Counsel and Chief Compliance Officer | |||
Exhibit 10.1
DIRECTOR AGREEMENT
This DIRECTOR AGREEMENT is made as of June 20, 2023 (the “Agreement”), by and between LifeMD, Inc., a Delaware corporation (the “Company”), and William Febbo, an individual with an address of 142 Calle Violeta, San Juan, Puerto Rico 00927 (the “Director”).
WHEREAS, the Company and the Director desire to enter with respect to the appointment of the Director;
WHEREAS, the Director is willing to serve the Company on the terms set forth herein and in accordance with the provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:
1. Position. Subject to the terms and provisions of this Agreement, the Director hereby agrees to serve the Company as a member of the Company’s Board of Directors (the “Board”), upon the terms and conditions hereinafter set forth, provided, however, that the Director’s service on the Board after the next annual stockholders’ meeting shall be subject to approval by the Company’s stockholders.
2. Duties.
(a) During the Directorship Term (as defined herein), the Director shall make reasonable business efforts to attend all Board meetings, serve on appropriate committees and subcommittees as reasonably requested by the Board, make himself available to the Company at mutually convenient times and places, attend external meetings and presentations as appropriate and convenient, and perform such duties, services, and responsibilities—and have the authority—commensurate with such position.
(b) The Director will make reasonable efforts to promote the interests of the Company. The Company recognizes that the Director (i) is or may become a full-time executive employee of another entity, and that her responsibilities to such entity must have priority and (ii) sits or may sit on the board of directors of other entities. Notwithstanding the same, the Director will make reasonable efforts to coordinate her respective commitments so as to fulfill her obligations to the Company and, in any event, will fulfill her legal obligations as a Director. Other than as set forth above, the Director will not, without prior notification to the Board, engage in any other business activity which could reasonably be expected to materially interfere with the performance of her duties, services, and responsibilities hereunder or which is in violation of the reasonable policies established from time to time by the Company and of which the Director has been provided copies, provided that the foregoing shall in no way limit her activities on behalf of (i) any current or future employer and its affiliates or (ii) the board of directors of any entities on which she currently sits or hereafter joins. At such time as the Board receives such notification, the Board may require—upon a majority vote of the remaining Directors—the resignation of the Director if it determines that such business activity does in fact materially interfere with the performance of the Director’s duties, services, and responsibilities hereunder.
3. Compensation.
(a) Equity Compensation. Pursuant to the Company’s 2020 Equity and Incentive Plan (the “Plan”) and any amendments thereto, the Director shall receive, upon complete execution of this Agreement, a grant of Seventy Five Thousand (75,000) restricted shares of the Company’s common stock, with Thirty Seven Thousand Five Hundred (37,500) shares vesting immediately upon execution of this Agreement; and an additional Thirty Seven Thousand Five Hundred (37,500) restricted shares vesting on the two-year anniversary of this Agreement, so long as it has not been previously terminated by the Company. The Director shall also receive a stock option to purchase Thirty Seven Thousand Five Hundred (37,500) shares of the Company’s common stock with an exercise price equal to the closing share price on the grant date (which shall be the date the Director joins the Board). The stock option shall vest on the two-year anniversary of this Agreement and shall be governed by the Plan. The foregoing grants of restricted shares and options shall be made on the Company’s customary form of restricted stock award and stock option award for directors.
| 1 |
(b) Independent Contractor. The Director’s status during the Directorship Term shall be that of an independent contractor and not, for any purpose, that of an employee or agent with authority to bind the Company in any respect. All payments and other consideration made or provided to the Director under this Section 3 shall be made or provided without withholding or deduction of any kind, and the Director shall assume sole responsibility for discharging all tax or other obligations associated therewith.
(c) Expense Reimbursements. During the Directorship Term, the Company shall reimburse the Director for (i) all reasonable out-of-pocket expenses incurred by the Director in attending any in-person meetings, provided that the Director complies with the generally applicable policies, practices, and procedures of the Company for submission of expense reports, receipts, or similar documentation of such expenses, and (ii) any costs associated with filings required to be made by the Director or any of the entities managed or controlled by the Director to report beneficial ownership or the acquisition or disposition of securities of the Company. Any reimbursements for material expenses (as compared to reasonable out-of-pocket expenses of the Director) must be approved in advance by the Company.
4. Directorship Term. The “Directorship Term” as used in this Agreement, shall mean the period commencing on the date hereof and terminating on the earlier of the date of the next annual stockholders meeting or the earliest of the following to occur:
(a) the death of the Director;
(b) the termination of the Director from her membership on the Board by the mutual agreement of the Company and the Director;
(c) the removal of the Director from the Board by the majority stockholders of the Company; or
(d) the resignation by the Director from the Board.
5. Director’s Representation and Acknowledgment. The Director represents to the Company that her execution and performance of this Agreement shall not be in violation of any agreement or obligation (whether or not written) that she has with or to any person or entity, including without limitation, any prior or current employer. The Director hereby acknowledges and agrees that this Agreement (and any other agreement or obligation referred to herein) shall be an obligation solely of the Company, and the Director shall have no recourse whatsoever against any officer, director, employee, stockholder, representative, or agent of the Company or any of their respective affiliates with regard to this Agreement.
6. Director Covenants.
(a) Unauthorized Disclosure. The Director agrees and understands that in the Director’s position with the Company, the Director has been and will be exposed to and receive information relating to the confidential affairs of the Company, including, but not limited to, technical information, business and marketing plans, strategies, customer information, other information concerning the Company’s products, services, promotions, development, financing, expansion plans, business policies and practices, and other forms of information considered by the Company to be confidential and proprietary, and in the nature of trade secrets. The Director agrees that during the Directorship Term and thereafter, the Director will keep such information confidential and will not disclose such information, either directly or indirectly, to any third person or entity without the prior written consent of the Company; provided, however, that (i) the Director shall have no such obligation to the extent such information is or becomes publicly known or generally known in the Company’s industry other than as a result of the Director’s breach of her obligations hereunder and (ii) the Director may, after giving prior notice to the Company to the extent practicable and lawful under the circumstances, disclose such information to the extent required by applicable laws or governmental regulations or judicial or regulatory process. This confidentiality covenant has no temporal, geographical, or territorial restriction. Upon termination of the Directorship Term, the Director will promptly return to the Company and/or destroy—at the Director’s direction, unless the Company expresses that specific returns are material and necessary—all property, keys, notes, memoranda, writings, lists, files, reports, customer lists, correspondence, tapes, disks, cards, surveys, maps, logs, machines, technical data, other product or document, and any summary or compilation of the foregoing, in whatever form, including, without limitation, in electronic form, which has been produced by, received by, or otherwise submitted to the Director in the course or otherwise as a result of the Director’s position with the Company during or prior to the Directorship Term, provided that the Company shall retain such materials and make them available to the Director if requested by him/her in connection with any litigation against the Director under circumstances in which (i) the Director demonstrates to the reasonable satisfaction of the Company that the materials are necessary to her defense in the litigation and (ii) the confidentiality of the materials is preserved to the reasonable satisfaction of the Company. Nothing contained herein shall be deemed to preclude or restrict the Director from making any legally required disclosures or from making disclosures pursuant to any whistleblower or similar statutory or regulatory regime.
| 2 |
(b) Non-Solicitation. During the Directorship Term and for a period of one (1) year thereafter, the Director shall not interfere with the Company’s relationship with, or endeavor to entice away from the Company, any person who, on the date of the termination of the Directorship Term and/or at any time during the one year period prior to the termination of the Directorship Term, was an employee or customer (including those reasonably expected to be a customer) of the Company or otherwise had a material business relationship with the Company. Notably, Director has pre-existing relationships, as well as those created through the ordinary course of business, from Director’s work with the Boston Children’s Hospital, Harvard Medical School, iSelect Fund, Virtue Foundation, and others—none of which will be deemed a violation of this provision or this Agreement now or into the future, so long as there is no malicious intent to violate this Agreement through such pre-existing relationships.
(c) Non-Compete. During the Directorship Term and for a period of one (1) year thereafter, without the Board’s approval, the Director shall not in any manner, through any person, firm, or corporation, alone or as a member of a partnership or as an officer, director, stockholder, investor, or employee of or consultant to any other corporation or enterprise, directly engage in the business of developing, marketing, selling, or supporting technology to or for businesses in which the Company engages in or in which the Company has an actual intention, as evidenced by the Company’s written business plans created during the Directorship Term, to engage in, within any geographic area in which the Company is then conducting such business. Nothing in this Section 6 shall prohibit the Director from being (i) a stockholder in a mutual fund or a diversified investment company or (ii) a passive owner of the outstanding stock of any class of securities of a corporation, which is publicly traded, so long as the Director has no active participation in the business of such corporation. Notably, Director has pre-existing relationships with the Boston Children’s Hospital, Harvard Medical School, iSelect Fund, Virtue Foundation, and others—none of which will be deemed a violation of this provision or this Agreement now or into the future, so long as there is no malicious intent to violate this Agreement through such pre-existing relationships.
(d) Insider Trading. The Director understands and acknowledges that the securities of the Company are publicly traded and subject to the Securities Act of 1933 and the Securities Exchange Act of 1934. As a result, the Director agrees to: (i) refrain from trading in securities of the Company while in possession of material nonpublic information, (ii) refrain from disclosing any material nonpublic information to anyone except as permitted in connection with the performance of the Director’s duties hereunder or as required by law, and (iii) communicate to any person who, to the Director’s knowledge, receives any material nonpublic information, that such information is material nonpublic information and that the trading and disclosure restrictions in clause (i) above also apply to such person.
(e) Remedies. The Director agrees that any breach of the terms of this Section 6 would result in irreparable injury and damage to the Company for which the Company would have no adequate remedy at law. The Director, therefore, also agrees that in the event of said breach or any threat of breach, the Company shall be entitled to an immediate injunction and restraining order to prevent such breach and/or threatened breach and/or continued breach by the Director and/or any and all entities acting for and/or with the Director, without having to prove damages or paying a bond, in addition to any other remedies to which the Company may be entitled at law or in equity. The terms of this paragraph shall not prevent the Company from pursuing any other available remedies for any breach or threatened breach hereof, including, but not limited to, the recovery of damages from the Director. The Director acknowledges that the Company would not have entered into this Agreement had the Director not agreed to the provisions of this Section 6.
(f) The provisions of this Section 6 shall survive any termination of the Directorship Term, and the existence of any claim or cause of action by the Director against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements of this Section 6.
| 3 |
7. Termination for Cause. The Company may terminate the engagement of the Director if the Board determines—upon a majority vote of the remaining Directors—that the Director has:
(a) materially breached any provision hereof or habitually neglected the duties which the Director was required to perform under any provision of this Agreement;
(b) misappropriated funds or property of the Company or otherwise engaged in acts of dishonesty, fraud, misrepresentation, or other acts of moral turpitude, even if not in connection with the performance of the Director’s duties hereunder, which could reasonably be expected to result in serious prejudice to the interests of the Company if the Director was retained as a director;
(c) secured any personal profit not completely disclosed to and approved by the Company in connection with any transaction entered into on behalf of or with the Company or any affiliate of the Company; or
(d) failed to carry out and perform duties assigned to the Director in accordance with the terms hereof in a manner acceptable to the Board after a written demand for substantial performance is delivered to the Director which identifies the manner in which the Director has not substantially performed the Director’s duties and provided further that the Director shall be given a reasonable opportunity to cure such failure.
For purposes of this section, the Director shall not be terminated for Cause without: (i) reasonable notice to the Director setting forth the reasons for the Company’s intention to Terminate for Cause and a reasonable opportunity to cure such situation (if capable of cure), (ii) an opportunity for the Director, together with counsel, to be heard before the Board, and (iii) delivery to the Director of a notice of termination from the Board of the Company, finding that, in the good faith opinion of the Board, the Director had engaged in the conduct set forth above and specifying the particulars thereof in detail.
8. Indemnification. The Company agrees to indemnify the Director for her activities as a member of the Board as set forth in the Director and Officer Indemnification Agreement attached hereto as Exhibit A. In addition, the Company shall exercise its best efforts to increase the coverage limit of its directors’ and officers’ liability insurance policy (and not otherwise diminish the scope or value of such coverage) based on market conditions and advice received from the Audit Committee of the Board of Directors and shall thereafter maintain in effect such coverage with a coverage limit of at least that amount and containing not materially less favorable provisions.
9. Non-Waiver of Rights. The failure to enforce at any time the provisions of this Agreement or to require at any time performance by the other party hereto of any of the provisions hereof shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement or any part hereof, or the right of either party hereto to enforce each and every provision in accordance with its terms. No waiver by either party hereto of any breach by the other party hereto of any provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions at that time or at any prior or subsequent time.
10. Notices. Every notice relating to this Agreement shall be in writing and shall be given by personal delivery, overnight delivery, registered or certified mail—all with postage prepaid and return receipt requested—or email with read receipt confirmation, to:
If to the Company:
LifeMD, Inc.
236 5th Avenue, 4th Floor
New York, NY 10001
| Attn: | Justin Schreiber, CEO | |
| [email protected] | ||
| and/or | ||
| Eric H. Yecies, GC & CCO | ||
| [email protected] or [email protected] |
If to the Director:
William Febbo
Either of the parties hereto may change their address for purposes of notice hereunder by giving notice in writing to such other party pursuant to this Section 10.
| 4 |
11. Binding Effect/Assignment. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, personal representatives, estates, successors (including, without limitation, by way of merger), and assigns, as applicable. Notwithstanding the provisions of the immediately preceding sentence, neither the Director nor the Company shall assign all or any portion of this Agreement without the prior written consent of the other party.
12. Entire Agreement. This Agreement (together with the other agreements referred to herein) sets forth the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, written or oral, between them as to such subject matter.
13. Severability. If any provision of this Agreement, or any application thereof to any circumstances, is invalid, in whole or in part, such provision or application shall to that extent be severable and shall not affect other provisions or applications of this Agreement.
14. Governing Law. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules.
15. Dispute Resolution. In the event of any dispute arising under or pursuant to this Agreement, the parties agree to attempt to resolve the dispute in a commercially reasonable fashion before instituting any litigation (with the exception of emergency injunctive relief). If the parties are unable to resolve the dispute within thirty (30) days, then the parties agree to mediate the dispute with a mutually agreed upon mediator in New York, NY. If the parties cannot agree upon a mediator within ten (10) days after either party shall first request commencement of mediation, each party will select a mediator within five (5) days thereof, and those mediators shall select the mediator to be used. The mediation shall be scheduled within thirty (30) days following the selection of the mediator. The parties further agree that any applicable statute of limitations will be tolled for the period of time from the date mediation is requested until 14 days following the mediation. If the mediation does not resolve the dispute, then the parties irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
16. Legal Fees. The parties hereto agree that the non-prevailing party in any dispute, claim, action, or proceeding between the parties hereto arising out of or relating to the terms and conditions of this Agreement or any provision thereof (a “Dispute”), shall reimburse the prevailing party for reasonable attorney’s fees and expenses incurred by the prevailing party in connection with such Dispute; provided, however, that the Director shall only be required to reimburse the Company for its fees and expenses incurred in connection with a Dispute if the Director’s position in such Dispute was found by the court, arbitrator, or other person or entity presiding over such Dispute to be frivolous or advanced not in good faith.
17. Mutual Non-Disparagement. The parties mutually agree to forbear from making, causing to be made, publishing, ratifying, or endorsing any and all disparaging remarks, derogatory statements or comments made to any party with respect to either of them. Nothing herein shall prohibit Director from enforcing her rights under the restricted stock award agreement and the stock option award agreement.
18. Modifications. Neither this Agreement nor any provision hereof may be modified, altered, amended, or waived except by an instrument in writing duly signed by the party to be charged.
19. Tense and Headings. Whenever any words used herein are in the singular form, they shall be construed as though they were also used in the plural form in all cases where they would so apply. The headings contained herein are solely for the purposes of reference, are not part of this Agreement and shall not in any way affect the meaning or interpretation of this Agreement.
20. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
[-Signature Page Follows-]
| 5 |
IN WITNESS WHEREOF, the Company has caused this Director Agreement to be executed by authority of its Board, and the Director has hereunto set her hand, on the day and year first above written.
| LIFEMD, INC. | ||
| By: | /s/ Justin Schreiber | |
| Justin Schreiber | ||
| Chief Executive Officer | ||
| DIRECTOR | ||
| By: | /s/ William Febbo | |
| William Febbo, an individual | ||
[Signature Page To Director Agreement]
| 6 |
EXHIBIT A
LIFEMD, INC.
DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT
This Director and Officer Indemnification Agreement, dated as of June 20, 2023 (the “Agreement”), is made by and between LifeMD, Inc., a Delaware corporation (the “Company”), and William Febbo (the “Indemnitee”).
RECITALS:
A. The Delaware General Corporation Law provides that the business and affairs of a corporation shall be managed by or under the direction of its board of directors.
B. By virtue of the managerial prerogatives vested in the directors and officers of a Delaware corporation, directors, and officers act as fiduciaries of the corporation and its stockholders.
C. It is critically important to the Company and its stockholders that the Company be able to attract and retain the most capable persons reasonably available to serve as directors and officers of the Company.
D. In recognition of the need for corporations to be able to induce capable and responsible persons to accept positions in corporate management, Delaware law authorizes (and in some instances requires) corporations to indemnify their directors and officers, and further authorizes corporations to purchase and maintain insurance for the benefit of their directors and officers.
E. Courts have recognized that indemnification by a corporation serves the dual policies of (1) allowing corporate officials to resist unjustified lawsuits, secure in the knowledge that, if vindicated, the corporation will bear the expense of litigation, and (2) encouraging capable women and men to serve as corporate directors and officers, secure in the knowledge that the corporation will absorb the costs of defending their honesty and integrity.
F. The number of lawsuits challenging the judgment and actions of directors and officers of corporations, the costs of defending those lawsuits, and the threat to personal assets have all materially increased over the past several years, chilling the willingness of capable women and men to undertake the responsibilities imposed on corporate directors and officers.
G. Recent federal legislation and rules adopted by the Securities and Exchange Commission and the national securities exchanges have exposed such directors and officers to new and substantially broadened civil liabilities.
H. Under Delaware law, a director’s or officer’s right to be reimbursed for the costs of defense of criminal actions, whether such claims are asserted under state or federal law, does not depend upon the merits of the claims asserted against the director or officer and is separate and distinct from any right to indemnification the director may be able to establish.
I. Indemnitee is, or will be, a director of the Company and her or her willingness to serve in such capacity is predicated, in substantial part, upon the Company’s willingness to indemnify him or her in accordance with the principles reflected above, to the fullest extent permitted by the laws of the State of Delaware, and upon the other undertakings set forth in this Agreement.
J. In recognition of the need to provide Indemnitee with substantial protection against personal liability, in order to procure Indemnitee’s service as a director of the Company and to enhance Indemnitee’s ability to serve the Company in an effective manner, and in order to provide such protection pursuant to express contract rights (intended to be enforceable irrespective of, among other things, any amendment to the Company’s certificate of incorporation or bylaws (collectively, the “Constituent Documents”), any change in the composition of the Company’s Board of Directors (the “Board”), or any change-in-control or business combination transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification and advancement of Expenses (as defined herein) to Indemnitee on the terms, and subject to the conditions, set forth in this Agreement.
K. In light of the considerations referred to in the preceding recitals, it is the Company’s intention and desire that the provisions of this Agreement be construed liberally, subject to their express terms, to maximize the protections to be provided to Indemnitee hereunder.
| 1 |
AGREEMENT:
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Certain Definitions. In addition to terms defined elsewhere herein, the following terms have the following meanings when used in this Agreement:
(a) “Change in Control” shall have occurred at such time, if any, as Incumbent Directors cease for any reason to constitute a majority of the directors. For purposes of this Section 1(a), “Incumbent Directors” means the individuals who, as of the date hereof, are directors of the Company and any individual becoming a director subsequent to the date hereof whose election, nomination for election by the Company’s stockholders, or appointment, was approved by a vote of at least a majority of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination); provided, however, that an individual shall not be an Incumbent Director if such individual’s election or appointment to the Board occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) of the Securities Exchange Act of 1934, as amended) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.
(b) “Claim” means (i) any threatened, asserted, pending, or completed claim, demand, action, suit, or proceeding—whether civil, criminal, administrative, arbitrative, investigative, or other, and whether made pursuant to federal, state or other law; and (ii) any inquiry or investigation—whether made, instituted, or conducted by the Company or any other Person—including, without limitation, any federal, state, or other governmental entity that Indemnitee reasonably determines might lead to the institution of any such claim, demand, action, suit or proceeding. For the avoidance of doubt, the Company intends the indemnity to be provided hereunder for acts or failure to act prior to, on, or after the date hereof.
(c) “Controlled Affiliate” means any corporation, limited liability company, partnership, joint venture, trust, or other entity or enterprise, whether or not for profit, that is directly or indirectly controlled by the Company. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an entity or enterprise, whether through the ownership of voting securities, through other voting rights, by contract, or otherwise; provided that direct or indirect beneficial ownership of capital stock or other interests in an entity or enterprise entitling the holder to cast 15% or more of the total number of votes generally entitled to be cast in the election of directors (or persons performing comparable functions) of such entity or enterprise shall be deemed to constitute control for purposes of this definition.
(d) “Disinterested Director” means a director of the Company who is not and was not a party to the Claim in respect of which indemnification is sought by Indemnitee.
(e) “Expenses” means reasonable attorneys’ and experts’ fees and expenses, and all other costs and expenses paid or payable in connection with investigating, defending, being a witness in, or participating in (including on appeal), or preparing to investigate, defend, be a witness in or participate in (including on appeal), any Claim.
(f) “Indemnifiable Claim” means any Claim based upon, arising out of or resulting from (i) any actual, alleged or suspected act or failure to act by Indemnitee in her capacity as a director, officer, employee, or agent of the Company or as a director, officer, employee, member, manager, trustee, or agent of any other corporation, limited liability company, partnership, joint venture, trust, or other entity or enterprise, whether or not for profit, as to which Indemnitee is or was serving at the request of the Company, (ii) any actual, alleged or suspected act or failure to act by Indemnitee in respect of any business, transaction, communication, filing, disclosure or other activity of the Company or any other entity or enterprise referred to in clause (i) of this sentence, or (iii) Indemnitee’s status as a current or former director, officer, employee, or agent of the Company or as a current or former director, officer, employee, member, manager, trustee, or agent of the Company or any other entity or enterprise referred to in clause (i) of this sentence or any actual, alleged, or suspected act or failure to act by Indemnitee in connection with any obligation or restriction imposed upon Indemnitee by reason of such status. In addition to any service at the actual request of the Company, for purposes of this Agreement, Indemnitee shall be deemed to be serving or to have served at the request of the Company as a director, officer, employee, member, manager, trustee, or agent of another entity or enterprise if Indemnitee is or was serving as a director, officer, employee, member, manager, agent, trustee or other fiduciary of such entity or enterprise and (i) such entity or enterprise is, or at the time of such service was, a Controlled Affiliate, (ii) such entity or enterprise is or at the time of such service was an employee benefit plan (or related trust) sponsored or maintained by the Company or a Controlled Affiliate, or (iii) the Company or a Controlled Affiliate (by action of the Board, any committee thereof or the Company’s Chief Executive Officer (“CEO”) (other than as the CEO himself)) caused or authorized Indemnitee to be nominated, elected, appointed, designated, employed, engaged, or selected to serve in such capacity.
| 2 |
(g) “Indemnifiable Losses” means any and all Losses relating to, arising out of or resulting from any Indemnifiable Claim; provided, however, that Indemnifiable Losses shall not include Expenses incurred by Indemnitee in respect of any Indemnifiable Claim (or any matter or issue therein) as to which Indemnitee shall have been adjudged liable to the Company (where such adjudication must be final and non-appealable), unless and only to the extent that the court in which such Indemnifiable Claim was brought shall have determined upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such Expenses as the court shall deem proper (i.e., there was no bad faith, gross negligence, and/or willful misconduct by the Director).
(h) “Independent Counsel” means a nationally recognized law firm, or a member of a nationally recognized law firm, that is experienced in matters of Delaware corporate law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company (or any subsidiary) or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements) or (ii) any other named (or, as to a threatened matter, reasonably likely to be named) party to the Indemnifiable Claim giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
(i) “Losses” means any and all Expenses, damages, losses, liabilities, judgments, fines, penalties (whether civil, criminal, or other), and amounts paid or payable in settlement, including, without limitation, all interest, assessments, and other charges paid or payable in connection with or in respect of any of the foregoing.
(j) “Person” means any individual, entity, or group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended.
(k) “Standard of Conduct” means the standard for conduct by Indemnitee that is a condition precedent to indemnification of Indemnitee hereunder against Indemnifiable Losses relating to, arising out of, or resulting from an Indemnifiable Claim. The Standard of Conduct is (i) good faith and a reasonable belief by Indemnitee that her action was in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, that Indemnitee had no reasonable cause to believe that her conduct was unlawful, or (ii) any other applicable standard of conduct that may hereafter be substituted under the Delaware General Corporation Law.
2. Indemnification Obligation. Subject only to Section 7 and to the proviso in this Section, the Company shall indemnify, defend and hold harmless Indemnitee, to the fullest extent permitted by the laws of the State of Delaware in effect on the date hereof or as such laws may from time to time hereafter be amended to increase the scope of such permitted indemnification, against any and all Indemnifiable Claims and Indemnifiable Losses; provided, however, that, except as provided in Section 5, Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with (i) any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has joined in or consented to the initiation of such Claim or the Claim relates to or arises from the enforcement or prosecution of a right to indemnification under this Agreement, or (ii) the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended. Nothing herein is intended to limit the scope of permitted indemnification to Indemnitee under the laws of the State of Delaware.
3. Advancement of Expenses. Indemnitee shall have the right to advancement by the Company, prior to the final disposition of any Indemnifiable Claim, of any and all actual and reasonable Expenses relating to, arising out of, or resulting from any Indemnifiable Claim paid or incurred by Indemnitee. Without limiting the generality or effect of any other provision hereof, Indemnitee’s right to such advancement is not subject to the satisfaction of any Standard of Conduct. Without limiting the generality or effect of the foregoing, within ten business days after any request by Indemnitee that is accompanied by supporting documentation for specific reasonable Expenses to be reimbursed or advanced, the Company shall, in accordance with such request (but without duplication), (a) pay such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse Indemnitee for such Expenses; provided that Indemnitee shall repay, without interest, any amounts actually advanced to Indemnitee that, at the final disposition of the Indemnifiable Claim to which the advance related, were in excess of amounts paid or payable by Indemnitee in respect of Expenses relating to, arising out of or resulting from such Indemnifiable Claim. In connection with any such payment, advancement, or reimbursement, at the request of the Company, Indemnitee shall execute and deliver to the Company an undertaking, which need not be secured and shall be accepted without reference to Indemnitee’s ability to repay the Expenses, by or on behalf of the Indemnitee, to repay any amounts paid, advanced, or reimbursed by the Company in respect of Expenses relating to, arising out of, or resulting from any Indemnifiable Claim in respect of which it shall have been determined, following the final disposition of such Indemnifiable Claim and in accordance with Section 7, that Indemnitee is not entitled to indemnification hereunder.
| 3 |
4. Indemnification for Additional Expenses. Without limiting the generality or effect of the foregoing, the Company shall indemnify and hold harmless Indemnitee against and, if requested by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within ten business days of such request accompanied by supporting documentation for specific Expenses to be reimbursed or advanced, any and all actual and reasonable Expenses paid or incurred by Indemnitee in connection with any Claim made, instituted, or conducted by Indemnitee for (a) indemnification or reimbursement or advance payment of Expenses by the Company under any provision of this Agreement, or under any other agreement or provision of the Constituent Documents now or hereafter in effect relating to Indemnifiable Claims, and/or (b) recovery under any directors’ and officers’ liability insurance policies maintained by the Company; provided, however, if it is ultimately determined that the Indemnitee is not entitled to such indemnification, reimbursement, advance or insurance recovery, as the case may be, then the Indemnitee shall be obligated to repay any such Expenses to the Company; provided further, that, regardless in each case of whether Indemnitee ultimately is determined to be entitled to such indemnification, reimbursement, advance, or insurance recovery, as the case may be, Indemnitee shall return, without interest, any such advance of Expenses (or portion thereof) which remains unspent at the final disposition of the Claim to which the advance related.
5. Partial Indemnity. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any Indemnifiable Loss but not for the entire amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
6. Procedure for Notification. To obtain indemnification under this Agreement in respect of an Indemnifiable Claim or Indemnifiable Loss, Indemnitee shall submit to the Company a written request therefore, including a brief description (based upon information then available to Indemnitee) of such Indemnifiable Claim or Indemnifiable Loss. If, at the time of the receipt of such request, the Company has directors’ and officers’ liability insurance in effect under which coverage for such Indemnifiable Claim or Indemnifiable Loss is potentially available, the Company shall give prompt written notice of such Indemnifiable Claim or Indemnifiable Loss to the applicable insurers in accordance with the procedures set forth in the applicable policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all Indemnifiable Claims and Indemnifiable Losses in accordance with the terms of such policies. The Company shall provide to Indemnitee a copy of such notice delivered to the applicable insurers, substantially concurrently with the delivery thereof by the Company. The failure by Indemnitee to timely notify the Company of any Indemnifiable Claim or Indemnifiable Loss shall not relieve the Company from any liability hereunder unless, and only to the extent that, the Company did not otherwise learn of such Indemnifiable Claim or Indemnifiable Loss and to the extent that such failure results in forfeiture by the Company of substantial defenses, rights, or insurance coverage.
7. Determination of Right to Indemnification.
(a) To the extent that Indemnitee shall have been successful on the merits or otherwise in defense of any Indemnifiable Claim or any portion thereof or in defense of any issue or matter therein, including, without limitation, dismissal without prejudice, Indemnitee shall be indemnified against all Indemnifiable Losses relating to, arising out of or resulting from such Indemnifiable Claim in accordance with Section 2 and no Standard of Conduct Determination (as defined in Section 7(b)) shall be required.
(b) To the extent that the provisions of Section 7(a) are inapplicable to an Indemnifiable Claim that shall have been finally disposed of, any determination required to be made under the laws of the State of Delaware as to whether Indemnitee has satisfied the applicable Standard of Conduct (a “Standard of Conduct Determination”) shall be made as follows: (i) if a Change in Control shall not have occurred, or if a Change in Control shall have occurred but Indemnitee shall have requested that the Standard of Conduct Determination be made pursuant to this clause (i), (A) by a majority vote of the Disinterested Directors, even if less than a quorum of the Board, (B) if such Disinterested Directors so direct, by a majority vote of a committee of Disinterested Directors designated by a majority vote of all Disinterested Directors, or (C) if there are no such Disinterested Directors, or if a majority of the Disinterested Directors so direct, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to Indemnitee; and (ii) if a Change in Control shall have occurred and Indemnitee shall not have requested that the Standard of Conduct Determination be made pursuant to clause (i) above, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to Indemnitee.
| 4 |
(c) If (i) Indemnitee shall be entitled to indemnification hereunder against any Indemnifiable Losses pursuant to Section 7(a), (ii) no determination of whether Indemnitee has satisfied any applicable standard of conduct under Delaware law is a legally required condition precedent to indemnification of Indemnitee hereunder against any Indemnifiable Losses, or (iii) Indemnitee has been determined or deemed pursuant to Section 7(b) to have satisfied the applicable Standard of Conduct, then the Company shall pay to Indemnitee, within ten business days after the later of (x) the notification date in respect of the Indemnifiable Claim or portion thereof to which such Indemnifiable Losses are related, out of which such Indemnifiable Losses arose or from which such Indemnifiable Losses resulted, and (y) the earliest date on which the applicable criterion specified in clause (i), (ii) or (iii) above shall have been satisfied, an amount equal to the amount of such Indemnifiable Losses. Nothing herein is intended to mean or imply that the Company is intending to use the Delaware General Corporations Law to dispense with a requirement that Indemnitee meet the applicable Standard of Conduct where it is otherwise required by such statute.
(d) If a Standard of Conduct Determination is required to be, but has not been, made by Independent Counsel pursuant to Section 7(b)(i), the Independent Counsel shall be selected by the Board or a committee of the Board, and the Company shall give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected. If a Standard of Conduct Determination is required to be, or to have been, made by Independent Counsel pursuant to Section 7(b)(ii), the Independent Counsel shall be selected by Indemnitee, and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either case, Indemnitee or the Company, as applicable, may, within ten business days after receiving written notice of selection from the other, deliver to the other a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not satisfy the criteria set forth in the definition of “Independent Counsel” in Section 1(h), and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the Person so selected shall act as Independent Counsel. If such written objection is properly and timely made and substantiated, (i) the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit and (ii) the non-objecting party may, at its option, select an alternative Independent Counsel and give written notice to the other party advising such other party of the identity of the alternative Independent Counsel so selected, in which case the provisions of the two immediately preceding sentences and clause (i) of this sentence shall apply to such subsequent selection and notice. If applicable, the provisions of clause (ii) of the immediately preceding sentence shall apply to successive alternative selections. If no Independent Counsel that is permitted under the foregoing provisions of this Section 7(d) to make the Standard of Conduct Determination shall have been selected within 30 calendar days after the Company gives its initial notice pursuant to the first sentence of this Section 7(d) or Indemnitee gives its initial notice pursuant to the second sentence of this Section 7(d), as the case may be, either the Company or Indemnitee may petition the courts of the State of Delaware for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person or firm selected by such court or by such other person as such Court shall designate, and the person or firm with respect to whom all objections are so resolved or the person or firm so appointed will act as Independent Counsel. In all events, the Company shall pay all of the actual and reasonable fees and expenses of the Independent Counsel incurred in connection with the Independent Counsel’s determination pursuant to Section 7(b).
8. Cooperation. Indemnitee shall cooperate with reasonable requests of the Company in connection with any Indemnifiable Claim and any individual or firm making such Standard of Conduct Determination, including providing to such Person documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to defend the Indemnifiable Claim or make any Standard of Conduct Determination without incurring any unreimbursed cost in connection therewith. The Company shall indemnify and hold harmless Indemnitee against and, if requested by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within ten business days of such request accompanied by supporting documentation for specific costs and expenses to be reimbursed or advanced, any and all costs and expenses (including reasonable attorneys’ and experts’ fees and expenses) actually and reasonably incurred by Indemnitee in so cooperating with the Person defending the Indemnifiable Claim or making such Standard of Conduct Determination.
| 5 |
9. Presumption of Entitlement. Notwithstanding any other provision hereof, in making any Standard of Conduct Determination, the Person making such determination shall presume that Indemnitee has satisfied the applicable Standard of Conduct.
10. No Other Presumption. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, will not create a presumption that Indemnitee did not meet any applicable Standard of Conduct or that indemnification hereunder is otherwise not permitted.
11. Non-Exclusivity. The rights of Indemnitee hereunder will be in addition to any other rights Indemnitee may have under the Constituent Documents, or the substantive laws of the State of Delaware, any other contract or otherwise (collectively, “Other Indemnity Provisions”); provided, however, that (a) to the extent that Indemnitee otherwise would have any greater right to indemnification under any Other Indemnity Provision, Indemnitee will without further action be deemed to have such greater right hereunder, and (b) to the extent that any change is made to any Other Indemnity Provision which permits any greater right to indemnification than that provided under this Agreement as of the date hereof, Indemnitee will be deemed to have such greater right hereunder. The Company may not, without the consent of Indemnitee, adopt any amendment to any of the Constituent Documents the effect of which would be to deny, diminish, or encumber Indemnitee’s right to indemnification under this Agreement.
12. Liability Insurance and Funding. For the duration of Indemnitee’s service as a director of the Company and for a reasonable period of time thereafter, which such period shall be determined by the Company in its sole discretion but shall in no event be less than two (2) years, the Company shall cause to be maintained in effect policies of directors’ and officers’ liability insurance providing coverage for directors and/or officers of the Company, that is substantially comparable in scope and amount to that provided by the Company’s current policies of directors’ and officers’ liability insurance. Upon reasonable request, the Company shall provide Indemnitee or her or her counsel with a copy of all directors’ and officers’ liability insurance applications, binders, policies, declarations, endorsements, and other related materials. In all policies of directors’ and officers’ liability insurance obtained by the Company, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits, subject to the same limitations, as are accorded to the Company’s directors and officers most favorably insured by such policy. Notwithstanding the foregoing, the Company may, but shall not be required to, create a trust fund, grant a security interest, or use other means, including, without limitation, a letter of credit, to ensure the payment of such amounts as may be necessary to satisfy its obligations to indemnify and advance expenses pursuant to this Agreement. The Company understands and acknowledges that the Director may resign from all positions with the Company if it fails to timely implement, or to thereafter maintain in place, such increased coverages.
13. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the related rights of recovery of Indemnitee against other Persons (other than Indemnitee’s successors), including any entity or enterprise referred to in clause (i) of the definition of “Indemnifiable Claim” in Section 1(f). Indemnitee shall execute all papers reasonably required to evidence such rights (all of Indemnitee’s reasonable Expenses, including reasonable attorneys’ fees and charges, related thereto to be reimbursed by or, at the option of Indemnitee, advanced by the Company).
14. No Duplication of Payments.
(a) The Company shall not be liable under this Agreement to make any payment to Indemnitee in respect of any Indemnifiable Losses to the extent Indemnitee has otherwise already actually received payment (net of Expenses incurred in connection therewith) under any insurance policy, the Constituent Documents and Other Indemnity Provisions or otherwise (including from any entity or enterprise referred to in clause (i) of the definition of “Indemnifiable Claim” in Section 1(f)) in respect of such Indemnifiable Losses otherwise indemnifiable hereunder.
(b) Notwithstanding anything to the contrary contained in Section 14(a) above, the Company hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement of expenses, and/or insurance provided by one or more venture capital funds, the general partners, managing members, or other control persons and/or any affiliated management companies of such venture capital funds, and certain of its or their affiliates (collectively, the “Fund Indemnitors”). The Company hereby agrees that in connection with any Indemnifiable Claim, (i) it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), (ii) it shall be required to advance the full amount of expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines, and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement and the Company’s Constituent Documents (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Fund Indemnitors, and, (iii) it irrevocably waives, relinquishes, and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company. The Company and Indemnitee agree that the Fund Indemnitors are express third party beneficiaries of the terms of this Section 14(b).
| 6 |
15. Defense of Claims. Subject to the provisions of applicable policies of directors’ and officers’ liability insurance, if any, the Company shall be entitled to participate in the defense of any Indemnifiable Claim or to assume or lead the defense thereof with counsel reasonably satisfactory to the Indemnitee; provided that if Indemnitee determines, after consultation with counsel selected by Indemnitee, that (a) the use of counsel chosen by the Company to represent Indemnitee would present such counsel with an actual or potential conflict, (b) the named parties in any such Indemnifiable Claim (including any impleaded parties) include both the Company and Indemnitee, and Indemnitee shall conclude that there may be one or more legal defenses available to him or her that are different from or in addition to those available to the Company, (c) any such representation by such counsel would be precluded under the applicable standards of professional conduct then prevailing, or (d) Indemnitee has interests in the claim or underlying subject matter that are different from or in addition to those of other Persons against whom the Claim has been made or might reasonably be expected to be made, then Indemnitee shall be entitled to retain separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any particular Indemnifiable Claim for all indemnitees in Indemnitee’s circumstances) at the Company’s expense. The Company shall not be liable to Indemnitee under this Agreement for any amounts paid in settlement of any threatened or pending Indemnifiable Claim effected without the Company’s prior written consent. The Company shall not, without the prior written consent of the Indemnitee, effect any settlement of any threatened or pending Indemnifiable Claim to which the Indemnitee is or could have been a party unless such settlement solely involves the payment of money and includes a complete and unconditional release of the Indemnitee from all liability on any claims that are the subject matter of such Indemnifiable Claim. Neither the Company nor Indemnitee shall unreasonably withhold its consent to any proposed settlement; provided that Indemnitee may withhold consent to any settlement that does not provide a complete and unconditional release of Indemnitee.
16. Mutual Acknowledgment. Both the Company and the Indemnitee acknowledge that in certain instances, Federal law or applicable public policy may prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise. Indemnitee understands and acknowledges that the Company may be required in the future to undertake to the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify Indemnitee and, in that event, the Indemnitee’s rights and the Company’s obligations hereunder shall be subject to that determination.
17. Successors and Binding Agreement.
(a) This Agreement shall be binding upon and inure to the benefit of the Company and any successor to the Company, including, without limitation, any Person acquiring directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, reorganization, or otherwise (and such successor will thereafter be deemed the “Company” for purposes of this Agreement), but shall not otherwise be assignable or delegable by the Company.
(b) This Agreement shall inure to the benefit of and be enforceable by the Indemnitee’s personal or legal representatives, executors, administrators, heirs, distributees, legatees, and other successors.
(c) This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 17(a) and 17(b). Without limiting the generality or effect of the foregoing, Indemnitee’s right to receive payments hereunder shall not be assignable, whether by pledge, creation of a security interest, or otherwise, other than by a transfer by the Indemnitee’s will or by the laws of descent and distribution, and, in the event of any attempted assignment or transfer contrary to this Section 17(c), the Company shall have no liability to pay any amount so attempted to be assigned or transferred.
| 7 |
18. Notices. For all purposes of this Agreement, all communications, including without limitation notices, consents, requests, or approvals, required or permitted to be given hereunder must be in writing and shall be deemed to have been duly given when hand delivered, email with read receipt ([email protected]), or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or one business day after having been sent for next-day delivery by a nationally recognized overnight courier service, addressed to the Company (to the attention of the General Counsel of the Company) and to Indemnitee at the applicable address shown on the signature page hereto, or to such other address as any party hereto may have furnished to the other in writing and in accordance herewith, except that notices of changes of address will be effective only upon receipt.
19. Governing Law. The validity, interpretation, construction, and performance of this Agreement shall be governed by and construed in accordance with the substantive laws of the State of Delaware, without giving effect to the principles of conflict of laws of such State. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement, waive all procedural objections to suit in that jurisdiction, including, without limitation, objections as to venue or inconvenience, agree that service in any such action may be made by notice given in accordance with Section 18 and also agree that any action instituted under this Agreement shall be brought only in the Chancery Court of the State of Delaware.
20. Dispute Resolution. In the event of any dispute arising under or pursuant to this Agreement, the parties agree to attempt to resolve the dispute in a commercially reasonable fashion before instituting any litigation (with the exception of emergency injunctive relief). If the parties are unable to resolve the dispute within thirty (30) days, then the parties agree to mediate the dispute with a mutually agreed upon mediator in New York, NY. If the parties cannot agree upon a mediator within ten (10) days after either party shall first request commencement of mediation, each party will select a mediator within five (5) days thereof, and those mediators shall select the mediator to be used. The mediation shall be scheduled within thirty (30) days following the selection of the mediator. The parties further agree that any applicable statute of limitations will be tolled for the period of time from the date mediation is requested until 14 days following the mediation. If the mediation does not resolve the dispute, then the parties irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
20. Validity. If any provision of this Agreement or the application of any provision hereof to any Person or circumstance is held invalid, unenforceable, or otherwise illegal, the remainder of this Agreement and the application of such provision to any other Person or circumstance shall not be affected, and the provision so held to be invalid, unenforceable, or otherwise illegal shall be reformed to the extent, and only to the extent, necessary to make it enforceable, valid, or legal. In the event that any court or other adjudicative body shall decline to reform any provision of this Agreement held to be invalid, unenforceable, or otherwise illegal as contemplated by the immediately preceding sentence, the parties hereto shall take all such action as may be necessary or appropriate to replace the provision so held to be invalid, unenforceable, or otherwise illegal with one or more alternative provisions that effectuate the purpose and intent of the original provisions of this Agreement as fully as possible without being invalid, unenforceable, or otherwise illegal.
| 8 |
21. Miscellaneous. No provision of this Agreement may be waived, modified, or discharged unless such waiver, modification or discharge is agreed to in writing signed by Indemnitee and the Company. No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, expressed or implied with respect to the subject matter hereof have been made by either party hereto that is not set forth expressly in this Agreement.
22. Certain Interpretive Matters. Unless the context of this Agreement otherwise requires, (1) “it” or “its” or words of any gender include each other gender, (2) words using the singular or plural number also include the plural or singular number, respectively, (3) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement, (4) the terms “Article,” “Section,” “Annex” or “Exhibit” refer to the specified Article, Section, Annex, or Exhibit of or to this Agreement, (5) the terms “include,” “includes” and “including” will be deemed to be followed by the words “without limitation” (whether or not so expressed), and (6) the word “or” is disjunctive but not exclusive. Whenever this Agreement refers to a number of days, such number will refer to calendar days unless business days are specified and whenever action must be taken (including the giving of notice or the delivery of documents) under this Agreement during a certain period of time or by a particular date that ends or occurs on a non-business day, then such period or date will be extended until the immediately following business day. As used herein, “business day” means any day other than Saturday, Sunday, or a United States federal holiday.
23. Entire Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter of this Agreement. Any prior agreements or understandings between the parties hereto with respect to indemnification are hereby terminated and of no further force or effect. This Agreement is not the exclusive means of securing indemnification rights of Indemnitee and is in addition to any rights Indemnitee may have under any Constituent Documents or Delaware Law.
24. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together shall constitute one and the same agreement.
25. Duration of Agreement. This Agreement shall continue until and terminate upon the later of: (a) six years after the date that the Indemnitee shall have ceased to serve as a director, officer, employee, agent, or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise which the Indemnitee served at the request of the Company; (b) the expiration of the applicable statutes of limitations pertaining to any and all potential proceedings covered by the indemnification provided for herein; or (c) the final termination of all pending proceedings in respect of which the Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by the Indemnitee pursuant to this Agreement relating thereto.
[-Signature Page Follows-]
| 9 |
IN WITNESS WHEREOF, Indemnitee has executed, and the Company has caused its duly authorized representative to execute this Agreement as of the date first above written.
| LIFEMD, INC. | ||
| By: | /s/ Justin Schreiber | |
| Justin Schreiber | ||
| Chief Executive Officer | ||
| INDEMNITEE: | ||
| By: | /s/ William Febbo | |
| William Febbo, an individual | ||
[Signature Page To Director And Officer Indemnification Agreement]
| 10 |
Exhibit 10.2
LIFEMD, INC.
RESTRICTED STOCK AWARD AGREEMENT
DIRECTORS
THIS RESTRICTED STOCK AWARD (this “Agreement”) is granted as of June 20, 2023 (the “Grant Date”), and reflected in this RESTRICTED STOCK AWARD AGREEMENT (the “Agreement”) between LifeMD, Inc. (the “Company”), and William Febbo (the “Director”).
WHEREAS, the Company desires to grant the Director, shares of the Company’s Common Stock, $0.01 par value (“Shares”), subject to certain restrictions as set forth in this Agreement (this “Restricted Stock Award”), pursuant to the LifeMD, Inc. 2020 Equity Incentive Plan (the “Plan”) and any Amendments thereto (capitalized terms not otherwise defined herein shall have the same meanings as in the Plan);
WHEREAS, the Board of Directors (the “Board”) has determined that it would be to the advantage and best interest of the Company and its stockholders to grant the Shares herein to the Director; and
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Grant of Restricted Shares. Subject to the terms and conditions of the Plan and the additional terms and conditions set forth in this Agreement, the Company hereby grants to the Director a restricted Shares award of Seventy Five Thousand (75,000) Shares (the “Restricted Shares”). The Restricted Shares shall vest in accordance with Section 2 hereof.
2. Vesting.
(a) Thirty-Seven Thousand Five Hundred (37,500) Restricted Shares shall vest upon the execution of the Director Agreement dated June 20, 2023 between the Company and the Director, and Thirty-Seven Thousand Five Hundred (37,500) Restricted Shares shall vest on the two-year anniversary of the Grant Date, subject to the terms herein and the Director continuing in service on the Board through each applicable vesting date. Notwithstanding the foregoing, the Restricted Shares shall vest upon the termination of the services provided to the Company by the Director in her capacity as a director of the Company on account of being removed from such role or otherwise not being asked to stand for re-election for reasons other than Cause (as that term is defined in a service and/or director agreement of such Director, or if such term or terms is not defined in a service and/or director agreement or there is not a service agreement, as defined by the Plan). If terminated for Cause, the Restricted Shares shall vest in a pro rata fashion up until the point of time that served as the basis for termination for Cause. Similarly, in the case of death or disability, the Restricted Shares shall vest in a pro rata fashion up until the point in time of death or disability. In lieu of fractional vesting, the number of Restricted Shares shall be rounded up each time until fractional Restricted Shares are eliminated.
All of the Compensation to the extent it is then unvested, shall vest immediately prior to the closing for any Change of Control. As used herein, “Change of Control” means: (i) a bona fide transfer or series of related transfers of Shares to any person or Group in which, or as a result of which, such person or Group obtains the direct or indirect right to elect a majority of the board of directors of the Company; or (ii) a sale of all or substantially all of the assets of the Company. As used herein, “Group” means any group or syndicate that would be considered a “person” for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended.
(b) However, notwithstanding any other provisions of this Agreement, at the option of the Board in its sole and absolute discretion, all Restricted Shares shall be immediately forfeited in the even any of the following events occur:
(i) The Director purchases or sells securities of the Company without written authorization in accordance with the Company’s insider trading policy then in effect, if any;
(ii) The Director (A) discloses, publishes or authorizes anyone else to use, disclose or publish, without the prior written consent of the Company, any proprietary or confidential information of the Company, including, without limitation, any information relating to existing or potential customers, business methods, financial information, trade or industry practices, sales and marketing strategies, employee information, vendor lists, business strategies, intellectual property, trade secrets or any other proprietary or confidential information or (B) directly or indirectly uses any such proprietary or confidential information for the individual benefit of the Director or the benefit of a third party;
(iii) During the term of the Director’s service and for a period of one (1) year thereafter, the Director disrupts or damages, impairs, or interferes with the business of the Company or its Affiliates by recruiting, soliciting or otherwise inducing any of their respective directors or employees to enter into employment or other relationship with any other business entity, or terminate or materially diminish their relationship with the Company or its Affiliates, as applicable. Notably, Director has pre-existing relationships, as well as those created through the ordinary course of business, from Director’s work with the Boston Children’s Hospital, Harvard Medical School, iSelect Fund, Virtue Foundation, and others—none of which will be deemed a violation of this provision or this Agreement now or into the future, so long as there is no malicious intent to violate this Agreement through such pre-existing relationships;
(iv) During the term of the Director’s service and for a period of one (1) year thereafter, the Director solicits or directs business of any person or entity who is (A) a customer of the Company or its Affiliates at any time or (B) solicited to be a “prospective customer” of the Company or its Affiliates, in any case either for such Director or for any other person or entity. For purposes of this clause (v), “prospective customer” means a person or entity who contacted, or is contacted by, the Company or its Affiliates regarding the provision of services to or on behalf of such person or entity; provided that the Director has actual knowledge of such prospective customer. Notably, Director has pre-existing relationships, as well as those created through the ordinary course of business, from Director’s work with the Boston Children’s Hospital, Harvard Medical School, iSelect Fund, Virtue Foundation, and others—none of which will be deemed a violation of this provision or this Agreement now or into the future, so long as there is no malicious intent to violate this Agreement through such pre-existing relationships.
(v) The Director fails to reasonably cooperate to effect a smooth transition of the Director’s duties and to ensure that the Company is apprised of the status of all matters the Director is managing or is unavailable for consultation after termination of the Director’s service if such availability is a condition of any agreement to which the Company and the Director are parties;
| - 2 - |
(vi) The Director fails to assign all of such Director’s rights, title and interest in and to any and all ideas, inventions, formulas, source codes, techniques, processes, concepts, systems, programs, software, computer data bases, trademarks, service marks, brand names, trade names, compilations, documents, data, notes, designs, drawings, technical data and/or training materials, including improvements thereto or derivatives therefrom, whether or not patentable or subject to copyright or trademark or trade secret protection, developed and produced by the Director used or intended for use by or on behalf of the Company or the Company’s clients; or
(vii) The Director acts in a disloyal manner to the Company, such as making comments, whether oral or in writing, that tend to disparage or injure (i) the reputation or business of the Company or its Affiliates, or is likely to result in discredit to, or loss of business, reputation or goodwill of, the Company or its Affiliates or (ii) its directors, officers, or stockholders.
In addition, all of the Restricted Shares shall, to the extent it is then unvested, vest immediately prior to the closing for any Change of Control. As used herein, “Change of Control” means (i) a bona fide transfer or series of related transfers of Shares to any person or Group in which, or as a result of which, such person or Group obtains the direct or indirect right to elect a majority of the board of directors of the Company; or (ii) a sale of all or substantially all of the assets of the Company. As used herein, “Group” means any group or syndicate that would be considered a “person” for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended.
(c) For purposes of this Agreement, “Affiliate” means with respect to a person or entity, any other person or entity controlled by, in control of or under common control with such person or entity, and “controlled,” “controlled by,” and “under common control with” shall mean direct or indirect possession of the power to direct or cause the direction of management policies (whether through ownership of voting securities, by contract or otherwise, of a person or entity.
3. Representations and Warranties; Acknowledgements. In connection with the grant of the Restricted Shares hereunder, the Director represents and warrants to the Company that:
(a) The Director is acquiring Restricted Shares for Director’s own account, not as a nominee or agent, for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof.
(b) The Director understands that: (a) the Restricted Shares have not been registered under the Securities Act of 1933 as amended (the “Securities Act”), or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder or (B) sold in reliance on an exemption therefrom; and (b) neither the Company nor any other person is under any obligation to register such securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. In this regard, the Director represents that the Director is familiar with SEC Rule 144, and understands the resale limitations imposed thereby and by the Securities Act.
| - 3 - |
(c) The Director is able to bear the economic risk of the Director’s investment in the Shares for an indefinite period of time because the Restricted Shares have not been registered under the Securities Act and, therefore, cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available.
(d) The Director and the Director’s advisers have had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Shares as the Director and the Director’s advisers have requested and have had full and free access and opportunity to inspect, review, examine, and inquire about such other information concerning the Company and its Affiliates as they have requested. The Director and the Director’s advisers have also been provided with an opportunity to review and ask questions about the Plan.
(e) The Director has had an opportunity to consult with independent legal counsel regarding the Director’s rights and obligations under this Agreement and the Plan, and fully understands the terms and conditions contained herein. The Director is not relying on the Company or any of its employees, agents, or representatives with respect to the legal, tax, economic, and related considerations of an investment in the Shares. The Director understands that in the future the Shares may significantly increase or decrease in value, and the Company has not made any representation to the Director about the potential future value of the Shares.
4. The Director understands and agrees that the investment in the Company involves a high degree of risk and that no guarantees have been made or can be made with respect to the future value of the Restricted Shares or the future profitability or success of the Company.
5. Termination of Relationship. Upon the termination of the Director’s service on the Board, all unvested Shares of Restricted Shares shall be automatically and irrefutably forfeited. If such forfeiture occurs, the Director shall execute and deliver to the Company any and all further documents (including an Assignment Separate From Certificate) as the Company reasonably requests to further document the forfeiture. As used in this Agreement, “service”, “termination of service” and like terms shall be construed to include any employment or consulting relationship with the Company or its Affiliates. For purposes of this Agreement, a change from performing service on the Board to such an employment or consulting relationship or vice versa shall not be treated as a termination of employment.
6. Redemption. If any of the events specified in Section 2(b) of this Agreement occur within one (1) year from the last date of the Director’s service (the “Termination Date”), all Restricted Shares that vested during the one (1) year period ending on the Termination Date shall be forfeited and forthwith surrendered by the Director to the Company within ten (10) days after the Director receives written demand from the Company for such Restricted Shares.
7. Certificates. Certificates evidencing the Restricted Shares shall be issued by the Company and shall be registered in the Director’s name promptly after the date the shares are vested. No certificates shall be issued for fractional shares, but rather rounded up to the next whole share.
| - 4 - |
8. Rights as a Stockholder. Neither the Director, the Director’s estate, nor the Transferee have any rights as a shareholder with respect to any Common Stock covered by the Restricted Shares unless and until such Restricted Shares have vested. “Transferee” shall mean an individual to whom such Director’s vested Restricted Shares are transferred by will or by the laws of descent and distribution.
9. Legend on Certificates. The certificates representing the vested Restricted Shares delivered to the Director as contemplated by Section 5 shall bear such legends, and be subject to such stop transfer orders, as the Company may deem advisable to give notice of restrictions imposed by this Agreement, the Plan, the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares are listed, or any applicable law. The Company may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
10. Transferability. To the extent that the Restricted Shares are then unvested, the Director shall not transfer, sell, assign, pledge, hypothecate or otherwise dispose of the Restricted Shares.
11. Retention by the Company. Nothing contained in this Agreement or in any other agreement entered into by the Company and the Director contemporaneously with the execution of this Agreement (i) shall be deemed to obligate the Company or any of its Affiliates to employ or retain the Director in any capacity whatsoever, or (ii) shall prohibit or restrict the Company or any of its Affiliates from terminating the service, if any, of the Director at any time or for any reason whatsoever, and the Director hereby acknowledges and agrees that neither the Company nor any other Person has made any representations or promises whatsoever to the Director concerning the Director’s service or continued service by the Company.
12. Sale of Shares Acquired. If the Director is an officer (as defined by Section 16(b) of the Securities Exchange Act of 1934, as amended (“Section 16(b)”), any shares of the Company’s Common Stock acquired pursuant to Restricted Stock Awards granted hereunder cannot be sold by the Director, subject to registration or an exemption from registration such as to Rule 144 promulgated under the Securities Act, until at least six (6) months elapse from the date of grant of this Restricted Stock Award, except in the case of death or disability or if the grant was exempt from the short-swing profit provisions of Section 16(b).
13. Withholding. The Director acknowledges that the Director is responsible for all liability for applicable tax related to the issuance or vesting of this Restricted Stock Award. Unless the Director uses a designated broker to sell Shares with an aggregate fair market value sufficient to cover the amount required to be withheld by the Company, or the Director delivers in cash or certified check the amount required to be withheld by the Company, the Company will issue the number of Shares owed to the Director under this Restricted Stock Award less a number of Shares equal to, in the aggregate, the amount of applicable tax related to the delivery of such Shares.
14. Adjustments. The Restricted Shares under this Agreement shall be subject to the terms of the Plan, including but not limited to Section 3(b) (Changes in Stock) and 3(c) (Sale Events) of the Plan.
| - 5 - |
15. Limitation on Obligations. The Company’s obligation with respect to the Restricted Shares granted hereunder is limited solely to the delivery to the Director of Shares on the date when such Shares are due to be delivered hereunder, and in no way shall the Company become obligated to pay cash in respect of such obligation. This Restricted Stock Award shall not be secured by any specific assets of the Company, nor shall any assets of the Company be designated as attributable or allocated to the satisfaction of the Company’s obligations under this Agreement. In addition, the Company shall not be liable to the Director for damages relating to any delays in issuing the share certificates to him/her (or her designated entities), any loss of the certificates, or any mistakes or errors in the issuance of the certificates or in the certificates themselves.
16. Securities Laws. Upon the vesting of any Restricted Shares, the Company may require the Director to make or enter into such written representations, warranties and agreements as the Committee may reasonably request solely to comply with applicable securities laws or with this Agreement. The granting of the Restricted Shares hereunder shall be subject to all applicable laws, rules, and regulations and to such approvals of any governmental agencies as may be required.
17. Arbitration. Any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties hereto are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in New York County, New York (unless the parties agree in writing to a different location), before a single arbitrator in accordance with the rules of the American Arbitration Association then in effect. The decision and award made by the arbitrator shall be final, binding, and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.
18. Governing Law. This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance, shall be governed or interpreted according to the laws of the State of Delaware without regard to choice of law considerations.
19. Restricted Shares Award Subject to Plan. This Restricted Stock Award shall be subject to the terms and provisions of the Plan. In the event of any conflict between this Agreement and the Plan, the terms of this Agreement shall control.
20. Signature in Counterparts. This Agreement may be signed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be deemed one and the same instrument.
21. Copy of Plan. By execution of this Agreement, the Director acknowledges receipt of a copy of the Plan.
22. New Shares.
(a) Any shares of capital stock of the Company or any successor thereto (“New Shares”) issued by the Company from time to time (including without limitation in any stock split or stock dividend) with respect to Restricted Shares (“Old Shares”) shall also be treated as Restricted Shares for all purposes of this Agreement.
(b) The New Shares so issued shall at all times be vested in the same proportion as the Old Shares are vested. For example: (i) if none of the Old Shares are vested as of the date that the New Shares are issued, then none of the New Shares will be vested when issued, (ii) if, from time to time, 25% of the Old Shares become vested at any later date, then 25% of the New Shares shall also become vested on that date; and (ii) if all of the Old Shares are vested on a date, then all of the New Shares shall be vested on that date.
(c) The New Shares shall be subject to this Agreement, including without limitation Section 3 thereof, to the same extent as the Old Shares.
| - 6 - |
IN WITNESS WHEREOF, the parties hereto have executed this Restricted Stock Award Agreement as of the date first above written.
| COMPANY: | ||
| LIFEMD, INC. | ||
| By: | /s/ Justin Schreiber | |
| Name: | Justin Schreiber | |
| Its: | Chief Executive Officer | |
| DIRECTOR: | ||
| /s/ William Febbo | ||
| William Febbo | ||
| [email protected] | ||
| - 7 - |
Exhibit 10.3
LIFEMD, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
DIRECTOR
THIS NON-QUALIFIED STOCK OPTION is granted as of June 20, 2023 (the “Grant Date”), and reflected in this NON-QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) by and between LifeMD, Inc. (the “Company”) and William Febbo the “Optionee”).
WHEREAS, pursuant to the authority of the Board of Directors (the “Board”), the Company has granted the Optionee the right to purchase common stock, $0.01 par value per share (“Common Stock”) of the Company pursuant to stock options, at not less than 100% of fair market value, granted under the LifeMD, Inc. 2020 Equity and Incentive Plan and any Amendments thereto, approved by the Board (the “Plan”).
NOW THEREFORE, in consideration of the mutual covenants and promises hereafter set forth and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. Grant of Non-Qualified Options. The Company hereby irrevocably grants to the Optionee, as a matter of separate agreement and not in lieu of salary or other compensation for services, the right and option to purchase all or any part of an aggregate of Thirty Seven Thousand Five Hundred (37,500) shares of authorized but unissued or treasury common stock of the Company (the “Options”) on the terms and conditions herein set forth. The Options are not intended to be Incentive Stock Options as defined by Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).
2. Price. The exercise price of the shares of Common Stock subject to the Options granted hereunder shall be $3.37 (closing price day of execution; or, if executed pre-market, the prior business day’s closing price).
3. Vesting.
(a) The Options shall vest on the two-year anniversary of the Grant Date, subject to the terms herein and the Optionee continuing to perform services for the Company on each applicable vesting date. Notwithstanding the foregoing, the Options shall vest upon the termination of the services provided to the Company by Optionee in her capacity as a director of the Company on account of being removed from such role or otherwise not being asked to stand for re-election for reasons other than Cause (as that term is defined in a service and/or director agreement of such Optionee, or if such term or terms is not defined in a service and/or director agreement or there is not a service agreement, as defined by the Plan). If terminated for Cause, the Options shall vest in a pro rata fashion up until the point of time that served as the basis for termination for Cause. Similarly, in the case of death or disability, the Options shall vest in a pro rata fashion up until the point in time of death or disability. In lieu of fractional vesting, the number of Options shall be rounded up each time until fractional Options are eliminated. In addition, all of the Options shall, to the extent it is then unvested, vest immediately prior to the closing for any Change of Control. As used herein, “Change of Control” means: (i) a bona fide transfer or series of related transfers of Shares to any person or Group in which, or as a result of which, such person or Group obtains the direct or indirect right to elect a majority of the board of directors of the Company; or (ii) a sale of all or substantially all of the assets of the Company. As used herein, “Group” means any group or syndicate that would be considered a “person” for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended.
(b) Subject to Sections 3(c) and 4 of this Agreement, Options may be exercised by providing to the Company the Notice of Option Exercise in the form attached hereto as Exhibit A after vesting and remain exercisable until 5:30 p.m. New York time on the date that is the fifth (5th) year anniversary of the date of this Agreement.
| 1 |
(c) However, notwithstanding any other provision of this Agreement, at the option of the Board in its sole and absolute discretion, all Options shall be immediately forfeited in the event any of the following events occur:
(i) The Optionee purchases or sells securities of the Company without written authorization in accordance with the Company’s insider trading policy then in effect, if any;
(ii) The Optionee (A) discloses, publishes or authorizes anyone else to use, disclose or publish, without the prior written consent of the Company, any proprietary or confidential information of the Company, including, without limitation, any information relating to existing or potential customers, business methods, financial information, trade or industry practices, sales and marketing strategies, employee information, vendor lists, business strategies, intellectual property, trade secrets or any other proprietary or confidential information or (B) directly or indirectly uses any such proprietary or confidential information for the individual benefit of the Optionee or the benefit of a third party;
(iii) During the term of service and for a period of one (1) year thereafter, the Optionee disrupts or damages, impairs, or interferes with the business of the Company or its Affiliates by recruiting, soliciting or otherwise inducing any of their respective employees to enter into employment or other relationship with any other business entity, or terminate or materially diminish their relationship with the Company or its Affiliates, as applicable. Notably, Director has pre-existing relationships, as well as those created through the ordinary course of business, from Director’s work with the Boston Children’s Hospital, Harvard Medical School, iSelect Fund, Virtue Foundation, and others—none of which will be deemed a violation of this provision or this Agreement now or into the future, so long as there is no malicious intent to violate this Agreement through such pre-existing relationships;
(iv) During the term of employment and for a period of one (1) year thereafter, the Optionee solicits or directs business of any person or entity who is (A) a customer of the Company or its Affiliates at any time or (B) solicited to be a “prospective customer” of the Company or its Affiliates, in any case either for such Optionee or for any other person or entity. For purposes of this clause (v), “prospective customer” means a person or entity who contacted, or is contacted by, the Company or its Affiliates regarding the provision of services to or on behalf of such person or entity; provided that the Optionee has actual knowledge of such prospective customer. Notably, Director has pre-existing relationships, as well as those created through the ordinary course of business, from Director’s work with the Boston Children’s Hospital, Harvard Medical School, iSelect Fund, Virtue Foundation, and others—none of which will be deemed a violation of this provision or this Agreement now or into the future, so long as there is no malicious intent to violate this Agreement through such pre-existing relationships.
(iii) The Optionee fails to reasonably cooperate to effect a smooth transition of the Optionee’s duties and to ensure that the Company is apprised of the status of all matters the Optionee is handling or is unavailable for consultation after termination of employment of the Optionee if such availability is a condition of any agreement to which the Company and the Optionee are parties;
(iv) The Optionee fails to assign all of such Optionee’s rights, title and interest in and to any and all ideas, inventions, formulas, source codes, techniques, processes, concepts, systems, programs, software, computer data bases, trademarks, service marks, brand names, trade names, compilations, documents, data, notes, designs, drawings, technical data and/or training materials, including improvements thereto or derivatives therefrom, whether or not patentable or subject to copyright or trademark or trade secret protection, developed and produced by the Optionee used or intended for use by or on behalf of the Company or the Company’s clients; or
(v) The Optionee acts in a disloyal manner to the Company, such as making comments, whether oral or in writing, that tend to disparage or injure (i) the reputation or business of the Company or its Affiliates, or is likely to result in discredit to, or loss of business, reputation, or goodwill of, the Company or its Affiliates or (ii) its directors, officers, or stockholders.
In addition, all of the Options shall, to the extent then unvested, vest immediately prior to the closing for any Change of Control. As used herein, “Change of Control” means (i) a bona fide transfer or series of related transfers of shares of Common Stock to any person or Group in which, or as a result of which, such person or Group obtains the direct or indirect right to elect a majority of the board of directors of the Company; or (ii) a sale of all or substantially all of the assets of the Company. As used herein, “Group” means any group or syndicate that would be considered a “person” for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended.
| 2 |
(d) For purposes of this Agreement, “Affiliate” means with respect to a person or entity, any other person or entity controlled by, in control of or under common control with such person or entity, and “controlled,” “controlled by,” and “under common control with” shall mean direct or indirect possession of the power to direct or cause the direction of management or policies (whether through ownership of voting securities, by contract or otherwise) of a person or entity.
4. Representations and Warranties; Acknowledgements. In connection with the grant of the Award Shares hereunder, Optionee represents and warrants to the Company that:
(a) Optionee is able to bear the economic risk of Optionee’s investment in the Shares for an indefinite period of time because the Award Shares have not been registered under the Securities Act and, therefore, cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available.
(b) Optionee and Optionee’s advisers have had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Shares as Optionee and Optionee’s advisers have requested and have had full and free access and opportunity to inspect, review, examine, and inquire about such other information concerning the Company and its Affiliates as they have requested. Optionee and Optionee’s advisers have also been provided an opportunity to review and ask questions about the Plan.
(c) Optionee has had an opportunity to consult with independent legal counsel regarding Optionee’s rights and obligations under this Agreement and the Plan, and fully understands the terms and conditions contained herein. Optionee is not relying on the Company or any of its Optionees, agents, or representatives with respect to the legal, tax, economic, and related considerations of an investment in the Shares. Optionee understands that in the future the Shares may significantly increase or decrease in value, and the Company has not made any representation to the Optionee about the potential future value of the Shares.
(d) Optionee understands and agrees that the investment in the Company involves a high degree of risk and that no guarantees have been made or can be made with respect to the future value of the Award Shares or the future profitability or success of the Company.
5. Termination of Relationship. Upon the Optionee’s termination of service, all unvested Options shall be automatically and irrefutably forfeited. For purposes of this Agreement, terms like “service” and “termination of service” refer to service with the Company and all Affiliates of the Company.
(a) If for any reason, except death or disability as provided below, the Optionee ceases to perform the services for which the Options were granted, the Optionee shall have the right within three (3) months from the date of cessation to exercise the Optionee’s vested Options, subject to Section 3(c) hereof.
(b) If the Optionee shall die while performing services for the Company, such Optionee’s estate or any Transferee (as defined hereinafter) shall have the right within twelve (12) months from the date of death to exercise the Optionee’s vested Options, subject to Section 3(c) hereof. For the purpose of this Agreement, “Transferee” shall mean an individual to whom such Optionee’s vested Options are transferred by will or by the laws of descent and distribution.
(c) If the Optionee shall become disabled while performing services for the Company within the meaning of Section 22(e)(3) of the Code, the three-month period referred to in Section 4(a) of this Agreement shall be extended to one year.
(d) For purposes of this Agreement, a change from performing service on the Board to an employment or consulting relationship or vice versa shall not be treated as a termination of service.
| 3 |
6. Profits on the Sale of Certain Shares; Redemption. If any of the events specified in Section 3(c) of this Agreement occur within one (1) year from the last date the Optionee performed services for which the Options were granted (the “Termination Date”), all profits earned from the sale of the Company’s securities, including the sale of shares of Common Stock underlying the Options, during the two (2) year period commencing one (1) year prior to the Termination Date shall be forfeited and forthwith paid by the Optionee to the Company within ten (10) days after the Optionee receives written demand from the Company for such payment and a copy of the documentation of the sale, including, without limitation, the purchase price therefor. Further, in such event, the Company may at its option redeem shares of Common Stock acquired upon exercise of the Options by payment of the exercise price to the Optionee. The Company’s rights under this Section 5 do not lapse one year from the Termination Date, but are a contract right subject to any appropriate statutory limitation period.
7. Transfer. No transfer of the Options by the Optionee by will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and a copy of the letters testamentary or such other evidence as the Board may deem necessary to establish the authority of the estate and the acceptance by the Transferee or Transferees of the terms and conditions of the Options.
8. Method of Exercise. The Options shall be exercisable by a written notice in the manner and form identified on Exhibit A hereto which information shall include:
(a) state the election to exercise the Options, the number of shares to be exercised, the natural person in whose name the stock certificate or certificates for such shares of Common Stock is to be registered and such person’s address and social security number (or if more than one, the names, addresses and social security numbers of such persons);
(b) contain such representations and agreements as to the holder’s investment intent with respect to such shares of Common Stock as set forth in Section 11 hereof;
(c) be signed by the person or persons entitled to exercise the Options and, if the Options are being exercised by any person or persons other than the Optionee, be accompanied by proof, satisfactory to counsel for the Company, of the right of such person or persons to exercise the Options; and
(d) be accompanied by full payment of the purchase or exercise price and all applicable required tax withholding in United States dollars in cash or by bank or cashier’s check, certified check or money order or (i) by executing a “sell-to-cover cashless exercise” through the Company’s designated broker to promptly deliver to the Company the amount of proceeds from the sale of shares having a fair market value equal to the purchase price and all applicable required tax withholding on the date of exercise; (ii) by executing a “net cashless exercise” by having the Company withhold Option shares equivalent in value to the exercise price and all applicable required tax withholding; or (iii) by tendering shares of Common Stock equivalent in value to the exercise price and all applicable required tax withholding, subject to applicable securities laws and share holding period requirements necessary to avoid a charge to the Company’s earnings for financial accounting purposes.
Any certificate or certificates for shares of Common Stock as to which the Options shall be exercised shall be registered in the name of the person or persons exercising the Options.
9. Sale of Shares Acquired Upon Exercise of Options. If the Optionee is an officer (as defined by Section 16(b) of the Securities Exchange Act of 1934, as amended (“Section 16(b)”), any shares of the Company’s Common Stock acquired pursuant to Options granted hereunder cannot be sold by the Optionee, subject to registration or an exemption from registration such as to Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), until at least six (6) months elapse from the date of grant of the Options, except in the case of death or disability or if the grant was exempt from the short-swing profit provisions of Section 16(b).
10. Adjustments. The Options under this Agreement shall be subject to the terms of the Plan, including but not limited to, Sections 3(b) (Changes in Stock) and 3(c) (Sale Events) of the Plan.
| 4 |
11. Necessity to Become Holder of Record. Neither the Optionee, the Optionee’s estate, nor the Transferee have any rights as a shareholder with respect to any shares of Common Stock covered by the Options until such Optionee, estate or Transferee, as applicable, shall have become the holder of record of such shares of Common Stock. No adjustment shall be made for cash dividends or cash distributions, ordinary or extraordinary, in respect of such shares of Common Stock for which the record date is prior to the date on which such Optionee, estate or Transferee, as applicable, shall become the holder of record thereof.
12. Conditions to Exercise of Options.
(a) In order to enable the Company to comply with the Securities Act and relevant state law, the Company may require the Optionee, the Optionee’s estate or any Transferee, as a condition of the exercise of the Options granted hereunder, to give written assurance satisfactory to the Company that the shares of Common Stock subject to the Options are being acquired for such Optionee’s, estate’s or Transferee’s, as applicable, own account, for investment only, with no view to the distribution of same, and that any subsequent resale of any such shares of Common Stock either shall be made pursuant to a registration statement under the Securities Act and applicable state law which has become effective and is current with regard to the shares of Common Stock being sold, or shall be pursuant to an exemption from registration under the Securities Act and applicable state law.
(b) The Options are subject to the requirement that, if at any time the Board shall determine, in its sole and absolute discretion, that the listing, registration or qualification of the shares of Common Stock subject to the Options upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary as a condition of, or in connection with the issue or purchase of such shares of Common Stock under the Options, the Options may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected.
13. Severability. In the event any parts of this Agreement are found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void parts were deleted.
14. Arbitration. Any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties hereto are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in New York County, New York (unless the parties agree in writing to a different location), before a single arbitrator in accordance with the rules of the American Arbitration Association then in effect. The decision and award made by the arbitrator shall be final, binding, and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.
15. Benefit. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their legal representatives, successors, and assigns.
16. Notices and Addresses. All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by FedEx or similar receipted delivery, or by facsimile delivery as follows:
| The Optionee: | William Febbo | |
| [email protected] | ||
| The Company: | LifeMD, Inc. | |
| 236 Fifth Avenue, Suite 400 | ||
| New York, NY 10001 | ||
| [email protected] |
or to such other address as either of them, by notice to the other, may designate from time to time. The transmission confirmation receipt from the sender’s facsimile machine shall be evidence of successful facsimile delivery. Time shall be counted to, or from, as the case may be, the delivery in person or by mail.
| 5 |
17. Attorney’s Fees. In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach, or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled from the non-prevailing party to its reasonable attorneys’ fee, costs, and expenses.
18. Governing Law. This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance, shall be governed or interpreted according to the laws of the State of Delaware without regard to choice of law considerations.
19. Oral Evidence. This Agreement, along with the Plan, a director and/or employment agreement, and any amendment thereto, constitute the entire agreement between the parties hereto and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. Neither this Agreement nor any provision hereof may be changed, waived, discharged, or terminated except by a statement in writing signed by the party or parties against which enforcement or the change, waiver discharge or termination is sought.
20. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be made by facsimile signature, which shall be deemed to be an original.
21. Section Headings. Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part, any of the terms or provisions of this Agreement.
| 6 |
IN WITNESS WHEREOF the parties hereto have set their hand the day and year first above written.
| LIFEMD, INC. | ||
| By: | /s/ Justin Schreiber | |
| Name: | Justin Schreiber | |
| Title: | Chief Executive Officer | |
| OPTIONEE: | ||
| By: | /s/ William Febbo | |
| Name: | William Febbo | |
[Signature page to Non-qualified Stock Option Agreement]
| 7 |
EXHIBIT A
FORM OF NOTICE OF OPTION EXERCISE
To: LifeMD, Inc. (the “Company”)
(1) The undersigned hereby elects to purchase __________ shares of Common Stock of the Company (the “Shares”) pursuant to the terms of the Option Agreement by and between the Company and the undersigned dated as of __________ ___, 20__, and tenders herewith payment of the exercise price in full as set forth below.
(2) Payment shall take the form of (check applicable box):
| [ ] | in lawful money of the United States in the form of cash or by a bank check or cashier’s check made payable by the undersigned to the Company; | |
| [ ] | in lawful money of the United States in the form of a wire transfer to the account specified by the Company; | |
| [ ] | in the form of shares of a “broker-assisted cashless exercise” as described in Section 7(d) of the Option Agreement; | |
| [ ] | in the form of shares of a “net cashless exercise” as described in Section 7(d) of the Option Agreement; or | |
| [ ] | in the form of shares of Common Stock (a “stock-for-stock exercise”) as described in Section 7(d) of the Option Agreement. |
(3) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
The Shares shall be delivered via overnight courier (with tracking information to be provided to the undersigned) to the following address:
_______________________________ |
||
| _______________________________ | ||
| _______________________________ | ||
| Attn: __________________________ | ||
| Tel: ___________________________ |
OPTIONEE | |
| __________________________________ |
[Exhibit A to Non-qualified Stock Option Agreement]
| 8 |
Exhibit 10.4
CONSULTING SERVICES AGREEMENT
This Consulting Services Agreement (“Consulting Agreement” or the “Agreement”) is made effective as of May 30, 2023 (the “Effective Date”), by and between William Febbo, having an address at 142 Calle Violeta, San Juan, Puerto Rico 00927 (the “Consultant”) and LifeMD, Inc., a corporation with an address of 236 Fifth Avenue, Suite 400, New York, NY 10001 (the “Company”) (the Company and Consultant together the “Parties” or individually a “Party”).
WHEREAS, the Company and the Consultant desire to enter into this Consulting Agreement, pursuant to which the Consultant will provide services as a Consultant to the Company, subject to the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, the Company and the Consultant, intending to be legally bound, hereby agree as follows:
A. Engagement
The Consultant shall provide the Services defined below in Section C herein for the Company, reporting to Justin Schreiber, Chairman & CEO of LifeMD (the “Engagement”). In this capacity, the Consultant agrees to devote its best efforts, energies, and skill to the full discharge of its duties and responsibilities.
B. Commencement, Initial & Extended Terms, and Termination
1. Commencement; Initial & Extended Terms
Services under this Consulting Agreement commenced on May 30, 2023 (the “Commencement Date”) and shall continue until November 30, 2024 (the “Initial Term”) unless terminated. The Parties, through mutual consent to do so, may choose to renew this Agreement for the same length of time as the Initial Term or some other mutually agreed upon length of time on or before the expiration of the then existing Term (the “Extended Term”).
2. Termination
Either Party may, upon 14 days written notice to the other Party, terminate this Agreement at any time for any reason.
C. Services to be Performed
1. During the Term of this Consulting Agreement, the Consultant shall serve the Company for board services, including but not limited to providing the following services:
| ● | Investor Relations |
| ○ | Introductions to institutional investors |
| ○ | Guidance on the Company’s investor relations strategy, investor positioning, and materials used for presentations to investors |
| 1 |
| ● | Strategic Business Development |
| ○ | Introductions to pharmaceutical and other healthcare product companies |
| ○ | Introductions to pharma services providers, agencies, and other entities that can support the enterprise sales objectives of LifeMD |
| ○ | Guidance around positioning of LifeMD’s enterprise offering, pricing strategy, and overall commercialization strategy within the healthcare product world |
2. The Consultant will use the highest degree of skill and expertise to accomplish the Services within the Initial Term, and any Extended Term(s), of this Agreement professionally and ethically, and to project a positive image of the Company, in accordance with the Company’s policies and procedures, and applicable law.
D. Compensation for Services
1. Compensation for Consulting Services. The Company shall pay Consultant 375,000 shares of LifeMD restricted common stock, according to the following schedule:
| ● | 62,500 shares on August 30, 2023 | |
| ● | 62,500 shares on November 30, 2023 | |
| ● | 62,500 shares on February 30, 2024 | |
| ● | 62,500 shares on May 30, 2024 | |
| ● | 62,500 shares on August 30, 2024 |
62,500 shares on November 30, 2024 All of the Compensation to the extent it is then unvested, shall vest immediately prior to the closing for any Change of Control. As used herein, “Change of Control” means: (i) a bona fide transfer or series of related transfers of Shares to any person or Group in which, or as a result of which, such person or Group obtains the direct or indirect right to elect a majority of the board of directors of the Company; or (ii) a sale of all or substantially all of the assets of the Company. As used herein, “Group” means any group or syndicate that would be considered a “person” for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended.
2. Entire Compensation. Consultant acknowledges that the foregoing provisions of this Section D constitute the sole and entire compensation payable to it for the Engagement and the provision of the Services of Consultant, and the Parties specifically agree that no compensation, benefits, or other reimbursements of any other nature are required to be paid or payable to Consultant as a result of the provision of Services hereunder.
E. Ownership of Materials
1. Ownership. All materials, reports, plans, information, ideas, inventions, discoveries, improvements, methods, processes, drawings, renditions, mock-ups, prototypes, creative execution, advertising ideas, creative concepts, or other works conceived, created, reduced to practice, delivered, or disclosed to the Company or produced or otherwise arising out of the Services, in whole or in part and whether alone or in conjunction with others (whether or not during work hours devoted to the Services) (collectively, the “Creative Materials”), and all rights, title, and interests (including copyrights) in and to such Creative Materials throughout the world, are hereby assigned to the Company and shall be the sole and exclusive property of the Company.
| 2 |
2. Works Made for Hire. All copyrightable works comprising the Creative Materials shall be considered “works made for hire” as defined in the United States Copyright Act, whether published or unpublished, and all rights, title, and interest to all such copyrightable works shall be the exclusive property of the Company, and the Company shall be deemed to be the author and owner of such copyrightable works. Consultant shall not distribute the copyrightable works, in part or in entirety, to any third party without the express written consent of the Company.
3. Disclosure; Cooperation. Consultant shall promptly disclose all such Creative Materials to the Company, and the Company shall have full power and authority to file any patent or copyright registrations, or other intellectual property submissions, applications, or registrations throughout the world thereon and to procure and maintain any patents, copyrights, or other intellectual property rights thereon. Consultant agrees, at the Company’s reasonable request and expense, to execute any applications, assignments, instruments, and other documents, and perform such acts, as the Company may deem necessary or advisable to confirm and vest in the Company all such rights, title and interests throughout the world in and to such Creative Materials and all intellectual property rights pertaining thereto, and to assist the Company in procuring, maintaining, enforcing, and defending such intellectual property rights and protection throughout the world thereon. To the extent not covered by the foregoing, The Company shall have the fully paid-up and irrevocable right to use and disclose freely and for any purpose all information and ideas disclosed by Consultant to the Company in performing the Services hereunder.
4. Consultant’s Obligations. With respect to any Creative Materials, Consultant shall:
| (a) | Treat all information with respect thereto as Confidential Information of the Company; |
| (b) | Keep complete and accurate records thereof, which records shall be the property of the Company; and |
| (c) | From time to time, upon the request and at the expense of the Company, but without payment to Consultant by the Company of additional consulting fees, execute all assignment or other instruments required to transfer and assign to the Company (or as it may direct) all Creative Materials, and all patents and applications for patents, copyrights, or applications for registration of copyrights, covering such inventions or otherwise required to protect the rights and interests of the Company. |
F. Confidentiality
1. Confidential Information. Consultant acknowledges that it may be necessary for the Company during the course of the Engagement, to disclose certain confidential and proprietary information (“Confidential Information”) to Consultant, in order for Consultant to perform the Services pursuant to this Agreement. Consultant shall not disclose or use, at any time either during or after the Term of this Agreement, for their own benefit or for the benefit of any third party, any Confidential Information without the Company’s prior written permission except to the extent necessary to perform the Services on the Company’s behalf. Confidential Information includes, without limitation:
| (a) | The written, printed, graphic, or electronically recorded materials furnished by the Company for Consultant to use; |
| 3 |
| (b) | Any written or tangible information stamped “confidential,” “proprietary,” or with a similar legend or any information that the Company makes reasonable efforts to maintain its secrecy; |
| (c) | Business, research and development, regulatory, and marketing plans; objectives and/or strategies; financial information; corporate initiatives; contractual and business arrangements; customer and supplier lists; sales projections; product information and launch plans; regulatory submissions; and pricing information of the Company and its affiliates; |
| (d) | Information, data, test results, patent applications, methodologies, operating procedures, trade secrets, design formulas, know-how, techniques, analyses, technology, processes, protocols, specifications, and instructions relating to the Company’s proprietary products, including safety data and reference standards, investigators brochures, documents and reports, computer programs and inventories, discoveries and improvements of any kind, sales projections, product information, and pricing information of the Company and its affiliates; |
| (e) | Information, know-how, trade secrets, materials, and tangible property belonging to customers and suppliers of the Company and other third parties who have disclosed such confidential and proprietary information to the Company about whom Consultant gained knowledge as a result of providing Services to the Company; |
| (f) | Any data, deliverables, or other work product or information generated or developed by Consultant in connection with the performance of Services under this Agreement, including all Creative Materials; and |
| (g) | Any copies, extracts, notes, or summaries of any information described in clauses (a) through (f). |
Notwithstanding any of the foregoing, Confidential Information shall not include any information that:
| (a) | is or becomes available in the public domain through no fault of, or act or failure to act on the part of, Consultant; |
| (b) | is rightfully in Consultant’s possession at the time of disclosure by the Company, as evidenced by Consultant’s written records maintained in the ordinary course of business; or |
| (c) | is obtained, after the Effective Date, by Consultant from any third party that is lawfully in possession of such Confidential Information and not in violation of any contractual or legal obligation with respect to such Confidential Information. |
| 4 |
2. At any time upon request of the Company or upon Termination of this Agreement, Consultant shall promptly deliver to the Company: (i) all Confidential Information (and all copies thereof) and all other property furnished to Consultant, by the Company and all other materials prepared by Consultant, containing any Confidential Information; and (ii) a certification that all Confidential Information has been delivered to the Company.
3. Notwithstanding the return of Confidential Information or the Termination of this Agreement, Consultant, will continue to be bound by the obligations of confidentiality pursuant to this Section F. In addition to its other legal rights, the Company shall be entitled to temporary and permanent injunctive relief and specific performance to remedy any breach or attempted breach of this Section F of the Agreement, and in the event the Company prevails in any action brought under this Section F, the Company shall also be entitled to recover its reasonable attorney’s fees and costs expended in such action from Consultant.
G. Non-Solicitation; Non-Disparagement
1. Non-Solicitation. Consultant covenants and agrees that during the term of this Agreement, and for a two (2) year period immediately following the termination of this Agreement, regardless of the reason therefor, the Consultant shall not solicit, induce, aid, or suggest to: (a) any employee to leave such employ, (b) any contractor, consultant, or other service provider to terminate such relationship, or (b) any customer, agency, vendor, or supplier of the Company to cease doing business with the Company.
2. Non-Disparagement. The Consultant will not make any remarks or adverse statements, in any and all media (e.g., in writing, orally or on the internet via, among other things, blogs, message boards and social networks), about the Company or its affiliates that could reasonably be construed as disparaging or defamatory, or to cast the Company or any of its affiliates in a negative light or harm the Company’s or any of its affiliates’ current or prospective business plans.
H. RESERVED.
I. Indemnification
1. The Company agrees to defend, indemnify, and hold Consultant harmless from and against any and all claims, liabilities, losses, damages, and expenses arising out of: (a) any breach by the Company of its warranties, representations, covenants, and obligations outlined in this Agreement; and (b) the gross negligence or willful misconduct of the Company; and (c) the failure of the Company to comply with all legal requirements to the best of its knowledge at the time.
2. Consultant agrees to defend, indemnify, and hold the Company harmless from and against any and all claims, liabilities, losses, damages, and expenses arising out of: (a) any breach by Consultant of his warranties, representations, covenants, and obligations outlined in this Agreement; (b) the gross negligence or willful misconduct of Consultant; and (c) the failure of Consultant to comply with all legal requirements to the best of his knowledge at the time.
| 5 |
3. The Parties further agree that they shall not, without the prior written consent of the other Party, settle, compromise, or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which defense and/or indemnification may be sought hereunder unless such settlement, compromise, or consent includes an unconditional release of the Party seeking defense and/or indemnity from all liability arising out of such claim, action, suit, or proceeding.
4. The Party seeking defense or indemnification hereunder shall: (i) promptly notify the other Party of the matter for which defense or indemnification is sought; (ii) subject to the immediately preceding sentence of this paragraph, provide the other Party with sole control over the defense and/or settlement thereof, including but not limited to the selection of counsel; and (iii) at the request of the Party providing defense and/or indemnification, fully cooperate in the provision of full and complete information and reasonable assistance with respect to the defense of such matter.
J. Survival
The obligations of the Parties pursuant to Sections E, F, G, and J shall survive the Termination of this Agreement, regardless of the reason for such Termination, along with any and all other provisions that expressly provide for survival of Termination.
K. Relationship of the Parties; Independent Contractor Status
The Parties agree that the relationship created by this Engagement is one of an independent contractor. The Parties further agree that Consultant, are not and shall not be considered employees of the Company and are not and shall not be entitled to any of the rights and/or benefits that the Company provides for the Company’s employees (including any employee pension, health, vacation pay, sick pay, or other fringe benefits offered by the Company under plan or practice) by virtue of the Services being rendered by Consultant. Consultant acknowledges and agrees that the Company does not, and shall not, maintain or procure any workers’ compensation or unemployment compensation insurance for or on behalf of Consultant, and shall make no state temporary disability or family leave insurance payments on behalf of Consultant, and Consultant agrees that Consultant will not be entitled to these benefits in connection with performance of the Services under this Agreement. Consultant acknowledges and agrees that it shall be solely responsible for paying all salaries, wages, benefits, and other compensation which Consultant, may be entitled to receive in connection with the performance of the Services under this Agreement. Consultant is responsible for all taxes, if any, imposed on it in connection with its performance of Services under this Agreement, including any federal, state, and local income, sales, use, excise, and other taxes or assessments thereon.
L. Binding Nature; Assignments
This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors, representatives, administrators, heirs, executors, and permitted assigns, except that the duties of Consultant are personal and shall not be assigned or subcontracted without the Company’s prior written consent and any purported assignment without such written consent shall be deemed void and unenforceable.
| 6 |
M. Entire Agreement; Amendments
This Agreement contains the entire understanding between the Parties with respect to its subject matter and supersedes all previous negotiations, agreements, or understandings between the Parties—as well as between Consultant and Cleared—whether written or verbal. This Agreement may not be amended or modified, except in writing, executed by duly authorized representatives of the Parties hereto.
N. Governing Law; Consent to Jurisdiction and Venue
This Agreement shall be governed by and construed in accordance with the laws of New York, without giving effect to principles of conflicts of laws. The Parties agree that any dispute concerning or arising under this Agreement shall be subject to the exclusive jurisdiction of the state and federal courts of New York, and each Party agrees to submit to the personal and exclusive jurisdiction and venue of such courts.
O. Notices
All notices required or permitted to be delivered under this Agreement shall be in writing and sent to the principal place of business of the Party to whom they are addressed. Notices to Consultant shall be delivered to the attention of Consultant. Notices to the Company shall be delivered to the attention of the CEO and General Counsel ([email protected]). All notices under this Agreement shall be deemed delivered only if sent by overnight mail or courier with return receipt, or email with read receipt.
P. Severability
If any provision of this Agreement is found to be invalid or unenforceable for any reason by a court of competent jurisdiction, that provision shall be stricken from this Agreement and that finding shall not invalidate any other terms of this Agreement, which terms shall remain in full force and effect according to the surviving terms of this Agreement. In such an event, the Parties shall negotiate with one another to agree on a provision which the Parties would have agreed if they had known of the defect when they signed this Agreement, in order to achieve the same commercial outcome and objectives of this Agreement that were intended upon its execution.
Q. Dispute Resolution
In the event of any dispute arising under or pursuant to this Agreement, the Parties agree to attempt to resolve the dispute in a commercially reasonable fashion before instituting any litigation or arbitration (except for emergency injunctive relief). If the parties are unable to resolve the dispute within thirty (30) days, then the parties agree to mediate the dispute with a mutually agreed upon mediator in New York, NY. If the parties cannot agree upon a mediator within ten (10) days after either party shall first request commencement of mediation, each party will select a mediator within five (5) days thereof, and those mediators shall select the mediator to be used. The mediation shall be scheduled within thirty (30) days following the selection of the mediator. The parties further agree that any applicable statute of limitations will be tolled for the period from the date mediation is requested until 14 days following the mediation. If the mediation does not resolve the dispute, then the parties irrevocably and unconditionally agree to the arbitration provisions in Paragraph R below.
| 7 |
R. Arbitration
To ensure the rapid and economical resolution of disputes that may arise in connection with this Agreement, Consultant and the Company agree that any and all disputes, claims, or causes of action, in law or equity, including but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation of this Agreement, Consultant’s consulting with the Company, or the termination of this Agreement, shall be resolved pursuant to the employment arbitration rules and procedures under the Federal Arbitration Act, 9 U.S.C. § 1-16, to the fullest extent permitted by law, by final, binding and confidential arbitration conducted by JAMS or its successor, under JAMS’ then applicable rules and procedures for disputes (available upon request and also currently available at http://www.jamsadr.com/rules-employment-arbitration/ ). Consultant agrees that the use of the JAMS rules and procedures does not change Consultant’s classification to that of an employee. To the contrary, Consultant reaffirms that the Consultant is an independent contractor. The arbitration will take place in New York, NY unless otherwise agreed to by the Parties. Consultant acknowledges that by agreeing to this arbitration procedure, both Consultant and the Company waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding. In addition, all claims, disputes, or causes of action under this section, whether by Consultant or the Company, must be brought in an individual capacity, and shall not be brought as a plaintiff (or claimant) or class member in any purported class or representative proceeding, nor joined or consolidated with the claims of any other person or entity. The arbitrator may not consolidate the claims of more than one person or entity and may not preside over any form of representative or class proceeding. To the extent that the preceding description regarding class claims or proceedings are found to violate applicable law or are otherwise found unenforceable, any claim(s) alleged or brought on behalf of a class shall proceed in a court of law rather than by arbitration. This paragraph shall not apply to any action or claim that cannot be subject to mandatory arbitration as a matter of law, including, without limitation, claims brought pursuant to the California Private Attorneys General Act of 2004, as amended, the California Fair Employment and Housing Act, as amended, and the California Labor Code, as amended, to the extent such claims are not permitted by applicable law(s) to be submitted to mandatory arbitration and the applicable law(s) are not preempted by the Federal Arbitration Act or otherwise invalid (collectively, the “Excluded Claims”). In the event Consultant intends to bring multiple claims, including one of the Excluded Claims listed above, the Excluded Claims may be filed with a court, while any other claims will remain subject to mandatory arbitration. Consultant will have the right to be represented by legal counsel at any arbitration proceeding. The arbitrator shall: (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (b) issue a written statement signed by the arbitrator regarding the disposition of each claim and the relief, if any, awarded as to each claim, the reasons for the award, and the arbitrator’s essential findings and conclusions on which the award is based. The arbitrator shall be authorized to award all relief that Consultant or the Company would be entitled to seek in a court of law. Nothing in this Agreement is intended to prevent either Consultant or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.
| 8 |
S. Fees, Costs, & Damages
If any action is necessary to enforce the provisions of this Agreement, including any claims or demands, or to interpret this Agreement, the prevailing Party shall be entitled to reasonable attorneys’ fees, costs, and disbursements in addition to any other relief to which it may otherwise he entitled.
If any legal action or other proceeding is brought for the enforcement of this Agreement or any agreement or instrument delivered under or in connection with this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing Party or Parties shall be entitled to recover reasonable attorneys’ fees and other costs incurred in that action.
T. Counsel
The Parties acknowledge and represent that, prior to the execution of this Agreement, they have had an opportunity to consult with their respective counsel concerning the terms and conditions set forth herein. Additionally, Consultant represents that it has had an opportunity to receive independent legal advice concerning the taxability of any consideration received under this Agreement. Consultant has not relied upon any advice from the Company and/or its attorneys with respect to the taxability of any consideration received under this Agreement. Consultant further acknowledges that the Company has not made any representations to Consultant with respect to tax issues.
U. Force Majeure
Neither of the Parties shall be liable to the other for any delay or failure to perform hereunder, which delay or failure is due to causes beyond the control of said Party, including, but not limited to acts of God; acts of the public enemy; acts of the United States of America or any state, territory, or political subdivision thereof or of the District of Columbia; fires; floods; epidemics; quarantine restrictions; strike; or freight embargoes. Notwithstanding the foregoing provisions of this Section, in every case the delay or failure to perform must be beyond the control and without the fault or negligence of the Party claiming excusable delay.
V. Counterparts
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which when taken together shall be construed as a single instrument. This Agreement may be executed by facsimile or other electronic transmissions, and signatures on any facsimile or electronic transmission copy hereof shall be deemed authorized original signatures.
[Signature Page Follows]
| 9 |
IN WITNESS WHEREOF, this Consulting Agreement has been duly executed by or on behalf of the Parties as of its Effective Date.
| CONSULTANT | LIFEMD, INC. | |
| /s/ William Febbo | /s/ Justin Schreiber | |
| William Febbo | Justin Schreiber | |
| Chairman & CEO |
| 10 |
Exhibit 99.1
LifeMD Appoints William J. Febbo to its Board of Directors
NEW YORK, June 20, 2023 – LifeMD, Inc. (Nasdaq: LFMD), a leading provider of virtual primary care services, today announced the appointment of William (Will) J. Febbo, Chief Executive Officer and Director of OptimizeRx Corporation (Nasdaq: OPRX) to its Board of Directors. OptimizeRx is a leading provider of digital point-of-care technology solutions that help patients start and stay on therapy.
“We are extremely pleased to welcome Will to our Board. He brings to LifeMD a depth of experience in building and managing healthcare companies, and pioneering technology to improve the experience for healthcare providers and patients,” said Justin Schreiber, Chairman and Chief Executive Officer of LifeMD. “Will’s success in leading OptimizeRx’s growth with investment in AI-driven optimization, real-time marketing, and personalized patient engagement offers a particularly valuable perspective as we continue to scale our primary-care business and pursue our mission to increase access to high-quality and affordable virtual care.”
“I know firsthand that providing patients with access to exceptional healthcare when and where they need it requires best-in-class technology, clinical resources, and patient engagement,” said Mr. Febbo. “I am impressed by LifeMD’s continued success with launching new product offerings, building a B2B pipeline, and strengthening the balance sheet – each of which is necessary to help remove the complex barriers that stand between a patient and appropriate healthcare provider. I look forward to collaborating with LifeMD’s Board and leadership to help make the delivery of healthcare services more accessible, affordable, and patient-centric.”
For more than 25 years Mr. Febbo has built and managed health services and financial businesses, starting in M&A and international business development at multinational companies. In 1999 he co-founded and subsequently served as Chief Executive Officer of MedPanel, a market intelligence and communication provider to the life sciences and financial industries. In 2007 MedPanel was acquired by Merriman Capital, where he served as Chief Operating Officer of investment banking and as Chief Executive Officer of the firm’s Digital Capital Network. In 2016 Mr. Febbo joined OptimizeRx, where he helped transform the firm into a leading digital health company enabling care-focused engagement between life sciences organizations, healthcare providers, and patients at critical junctures throughout the patient care journey.
Mr. Febbo serves as a faculty member for the Massachusetts Institute of Technology linQ program, a collaborative initiative increasing the potential of innovative biomedical research to benefit society and the economy. He also serves on the board of the United Nations of Greater Boston, a non-profit organization focused on building a stronger network of global citizens in the Boston area.
About LifeMD
LifeMD is a leading provider of virtual primary care. The Company offers telemedicine, laboratory and pharmacy services, and specialized treatment across more than 200 conditions including primary care, men’s health, women’s health, allergy & asthma, and dermatology. Leveraging a vertically-integrated, proprietary digital care platform, a 50-state affiliated medical group, and a US-based patient care center, LifeMD is simplifying healthcare by increasing access to top-notch and affordable care. For more information, please visit LifeMD.com.
Media Contact
Investor Contact
Marc Benathen, CFO
# # #