EX-10.3 3 ex10-3.htm

Exhibit 10.3

AMENDED AND RESTATED FIRST AMENDMENT TO THE AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED FIRST AMENDMENT TO THE AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Amended and Restated First Amendment”) is entered into as of July 26, 2023 (the “Amended and Restated First Amendment Effective Date”) by and between Nicholas Alvarez, an individual and resident of the State of New York, (the “Employee”) and LifeMD, Inc. (formerly known as Conversion Labs, Inc.), (the “Company”), a Delaware Corporation. The Employee and the Company are also each hereinafter referred to individually as a “Party” and together as the “Parties”.

RECITALS

WHEREAS, on December 8, 2020 (“Effective Date”), the Company and the Employee entered into an Amended and Restated Employment Agreement (the “Amended and Restated Employment Agreement”) whereby Employee was hired to serve the Company in the capacity as Chief Acquisition Officer, with a base salary of $172,400, an equity grant of 200,000 options subject to monthly vesting over a period of 36 months, and a grant of 300,000 performance-based restricted shares subject to vesting upon the achievement of certain milestones as described in more detail therein;

WHEREAS, on or about March 2, 2022, the Company changed Employee’s base salary to $300,000.

WHEREAS, for avoidance of doubt, other than the amendments set forth below in this Amended and Restated First Amendment, all other provisions of the Amended and Restated Employment Agreement remain in effect today and moving further, unless and until amended in the future.

WHEREAS, the Parties desire to further amend the Amended and Restated Employment Agreement to: (i) cancel the 200,000 stock options previously awarded under Section 4(f) [sic] of the Amended and Restated Employment Agreement (all of which carry a $7.92 exercise price and are underwater); (ii) restructure the milestones and vesting for the 300,000 restricted shares previously awarded under Section 4(e) [sic] of the Amended and Restated Employment Amendment (none of which have become earned and vested); (iii) replace the cancelled awards with a new grant of 300,000 shares of restricted stock subject to vesting and other terms as described below; (iv) add an express indemnification provision and agreement; and (v) add an express percentage for the target amount of the Performance Bonus.

WHEREAS, for the avoidance of doubt, the mention above and the amendments set forth further below concerning the restructure of the milestones and vesting for the 300,000 restricted shares previously awarded under Section 4(e) [sic] of the Amended and Restated Employment Amendment supersede and void any references and amendments set forth in the July 12, 2023 First Amendment to the Amended and Restated Employment concerning these specific 300,000 restricted shares (i.e., (a) the WHEREAS clause sub-paragraph (ii); (b) the Paragraph 1(a) reference to 300,000 restricted shares; and (c) the Paragraph 2 reference to 300,000 restricted shares and three bulleted references to 100,000 restricted shares, therein).

NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereby agree as follows:

1. Preamble.

| a. | The 200,000 stock options previously awarded under Section 4(f) [sic] of the Amended and Restated Employment Agreement are hereby cancelled.

2. Amendments. The Amended and Restated Employment Agreement shall be further amended as follows, in accordance with the terms and conditions of Section 8 thereof:

| a. | Section 4(e) of the Amended and Restated Employment Agreement is hereby added (i.e., to supersede and replace previously existing Sections 4(f) and 4(e) [sic]):

4(e) Replacement of Stock Option and Restructure of Long-Term Equity Incentive. In exchange for the cancellation of the 200,000 stock options previously granted under Section 4(f) [sic], pursuant to the Company’s 2020 Equity and Incentive Plan (the “Plan”) and any amendments thereto, Employee has received, upon the July 12, 2023 First Amendment Effective Date, an award of 300,000 restricted shares of the Company’s common stock (“Restricted Shares”), with

(i) 300,000 restricted shares vesting as follows:

| ● | 25,000 restricted shares vesting immediately upon the First Amendment Effective Date;
| ● | 50,000 restricted shares vest on January 1, 2024 (or, if earlier, vesting immediately upon the resignation or removal of Justin Schreiber as CEO of the Company or as Chairman of the Board of the Company); and
| ● | 75,000 restricted shares vest on January 1, 2025 (or, if earlier, vesting immediately upon the resignation or removal of Justin Schreiber as CEO of the Company or as Chairman of the Board of the Company);
| ● | 75,000 restricted shares vest on 3/1/24 based on the performance of Employee in the 2023 calendar year, at the discretion of the CEO and approval by the Board of Directors; and
| ● | 75,000 restricted shares vest on 3/1/25 based on the performance of Employee in the 2024 calendar year, at the discretion of the CEO and approval by the Board of Directors.

The three hundred thousand (300,000) restricted shares—as originally described in the December 8, 2020 First Amended and Restated Employment Agreement—are now subject to the following restructured milestones and vesting:

| ● | 100,000 restricted shares vest upon the healthcare business achieving $100,000,000 in net revenue (defined as gross healthcare sales minus healthcare-related refunds and returns) with a 5% adjusted EBITDA margin, on or before December 31, 2025;
| ● | 100,000 restricted shares vest upon the healthcare business achieving $150,000,000 in net revenue with a 10% adjusted EBITDA margin, on or before December 31, 2026; and
| ● | 100,000 restricted shares vest upon the healthcare business achieving $200,000,000 in net revenue with a 10% adjusted EBITDA margin, on or before December 31, 2027.

2

Except as otherwise set forth herein or in the associated Restricted Stock Agreement, vesting of the Restricted Shares will cease upon the termination of Employee’s employment with the Company subject to the terms of the Amended and Restated Employment Agreement and any amendments thereto. All Restricted Shares vest immediately and become exercisable in full upon a Change in Control, regardless of whether or not any performance milestone has been met at the time of the Change in 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. The foregoing grant of Restricted Shares shall be made on the Company’s customary form of restricted stock award for employees. All applicable awards under this Amended and Restated First Amendment shall be subject to forfeiture or other penalties under any clawback or recoupment policy of the Company in effect from time to time.

| b. | Paragraph 17 of the Amended and Restated Employment Agreement, “Indemnification”, was added on July 12, 2023 pursuant to the First Amendment Effective Date:

17. The Company agrees to indemnify the Employee for his activities as an Officer of the Company, 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.

| c. | Section 4(b)(iii) is added:

4(b)(iii) There is a target amount of 40% of Employee’s Base Salary for the Performance Bonus.

3. Governing Law; Jurisdiction. This Amended and Restated First Amendment shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction). Any legal proceeding arising out of or based upon this Amended and Restated First Amendment shall be instituted in the federal courts or the courts of the State of New York and each party irrevocably submits to the exclusive jurisdiction of such courts in any such proceeding.

4. Counterparts. This Amended and Restated First Amendment may be executed in several counterparts, each of which shall be deemed to be an original copy and all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all the parties shall not have signed the same counterpart.

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IN WITNESS WHEREOF, each of the undersigned hereby (a) executes this Amended and Restated First Amendment to the Amended and Restated Employment Agreement; (b) confirms its agreement with the provisions and covenants herein provided; and (c) agrees to be bound by this Amended and Restated First Amendment to the Amended and Restated Employment Agreement.

EXECUTED as of the Amended and Restated First Amendment Effective Date, as set forth above.

LIFEMD, INC. |
| /s/ Justin Schreiber |
By: | Justin Schreiber, Chairman & CEO |
EMPLOYEE |
| /s/ Nicholas Alvarez |
By: | Nicholas Alvarez, Chief Acquisition Officer |

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