Document:

lmfa-ex102_18.htm

 

Exhibit 10.2

LM FUNDING AMERICA, INC. 

 

Non-Employee DIRECTOR COMPENSATION PROGRAM

 

(Effective October 27, 2021)

 

Non-employee members of the board of directors (the “Board”) of LM Funding America, Inc. (the “Company”) shall receive cash and equity compensation as set forth in this Non-Employee Director Compensation Program (this “Program”).  This Program has been adopted under the Company’s 2021 Omnibus Incentive Plan (the “Equity Plan”).  The cash and equity compensation described in this Program shall be paid or be made, as applicable, automatically and without further action of the Board, to each member of the Board who is not an employee of the Company or any parent or subsidiary of the Company (each, a “Non-Employee Director”) who is entitled to receive such cash or equity compensation, unless such Non-Employee Director declines the receipt of such cash or equity compensation by written notice to the Company.  This Program shall remain in effect until it is revised or rescinded by further action of the Board.  This Program may be amended, modified or terminated by the Board at any time in its sole discretion.  The terms and conditions of this Program shall supersede any prior cash and/or equity compensation arrangements for service as a member of the Board between the Company and any of its Non-Employee Directors.  No Non-Employee Director shall have any rights hereunder, except with respect to equity awards to be automatically granted pursuant to the Program.  Capitalized terms not otherwise defined herein shall have the meanings ascribed in the Equity Plan.

1.Cash Compensation. 

(a)Annual Retainers.  Each Non-Employee Director shall receive an annual cash retainer of $60,000 for service on the Board.

 (b)Additional Annual Retainers for Audit Committee Service.  In addition, a Non-Employee Director serving as a member of the Audit Committee shall receive an additional annual retainer of $30,000 for such service.

(c)Payment of Retainers.  The annual retainers described in Sections 1(a) and 1(b) shall be earned on a quarterly basis based on a calendar quarter and shall be paid by the Company in arrears not later than the fifteenth day following the end of each calendar quarter.  In the event a Non-Employee Director does not serve as a Non-Employee Director, or in the applicable positions described in Section 1(a) or 1(b), for an entire calendar quarter, the retainer paid to such Non-Employee Director shall be prorated for the portion of such calendar quarter actually served as a Non-Employee Director, or in such position, as applicable.  

 

2.Equity Compensation.  Non-Employee Directors shall be granted the equity awards described below.  The awards described below shall be granted under and shall be subject to the terms and provisions of the Equity Plan, or any other applicable Company equity incentive plan then-maintained by the Company, and shall be granted subject to the execution and delivery of award agreements, including attached exhibits, in substantially the forms previously approved by the Board.  All applicable terms of the Equity Plan apply to this Program as if fully set forth herein, and all grants of stock awards hereby are subject in all respects to the terms of the Equity Plan and the applicable award agreement.  

(a)Initial Awards.  Each Non-Employee Director who is initially elected or appointed to the Board shall be automatically granted a number of stock options to purchase shares of the Company’s common stock under the Equity Plan, or any other applicable Company equity incentive plan then-

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maintained by the Company, equal to (i) $25,000, divided by (ii) the exercise price of the option.  Such options will have an exercise price equal to the Fair Market Value (as defined in the Equity Plan) of the Company’s common stock on the date of grant.  The awards described in this Section 2(a) shall be referred to as “Initial Awards.”  No Non-Employee Director shall be granted more than one Initial Award. 

(b)Subsequent Awards for All Non-Employee Directors.  A Non-Employee Director who (i) is serving on the Board as of the date of any annual meeting of the Company’s stockholders and has been serving as a Non-Employee Director for at least three months as of the date of such meeting, and (ii) will continue to serve as a Non-Employee Director immediately following such meeting, shall be automatically granted a number of stock options to purchase shares of the Company’s common stock under the Equity Plan, or any other applicable Company equity incentive plan then-maintained by the Company, equal to (A) $60,000 (or $90,000 for Non-Employee Directors who are members of the Audit Committee on the date of option grant), less the dollar value of any Initial Award paid during the preceding 12 months, divided by (B) the exercise price of the option.  Such options will have an exercise price equal to the Fair Market Value (as defined in the Equity Plan) of the Company’s common stock on the date of grant.  The awards described in this Section 2(b) shall be referred to as “Subsequent Awards.”  A Non-Employee Director elected for the first time to the Board at an annual meeting of the Company’s stockholders shall only receive a Subsequent Award in connection with such election, and shall not receive any Initial Award on the date of such meeting. 

(c)Termination of Employment of Employee Directors.  Members of the Board who are employees of the Company or any parent or subsidiary of the Company who subsequently terminate their employment with the Company and any parent or subsidiary of the Company and remain on the Board will not receive an Initial Award pursuant to Section 2(a) above, but to the extent that they are otherwise entitled, will receive, after termination from employment with the Company and any parent or subsidiary of the Company, Subsequent Awards as described in Section 2(b) above.  

(d)Vesting of Awards Granted to Non-Employee Directors.  Each Initial Award and Subsequent Award shall vest and become exercisable as follows:  one-half the shares subject to the award shall vest within 180 days of the grant date, and one half of the shares subject to the award shall vest on the first anniversary of the grant date.  Unvested awards shall become fully vested upon a Change of Control.

(e)Awards for Fourth Quarter 2021. For the fourth quarter 2021, Non-Employee Directors will receive a cash retainer of $15,000 not later than the fifteenth day following the end of such quarter, and on the first day following the adoption date of the Program, the Non-Employee Directors will receive an option to purchase a number of shares of common stock equal to (i) $60,000 (or $75,000 for Non-Employee Directors who are members of the Audit Committee on the date of option grant), divided by (ii) exercise price of the option (the “2021 Options”).  The 2021 Options will have an exercise price equal to the Fair Market Value (as defined in the Equity Plan) of the Company’s common stock on the date of grant.  The 2021 Options shall not constitute an Initial Award and shall not impact the amount of the Subsequent Award granted in 2022.  In addition to the vesting provisions described above, unvested 2021 Options granted pursuant to this paragraph will vest in full if the closing price of the Company’s common stock exceeds $12.00 per share (subject to adjustment for stock splits, stock dividends, reverse stock splits, and the like) for ten (10) consecutive trading days after the date of grant.  

(f)Stockholder Approval of Equity Plan.  No stock options granted under this Program shall be exercisable unless and until the Equity Plan is approved by the Company’s stockholders. 

3.Compensation Limits.  Notwithstanding anything to the contrary in this Program, all compensation payable under this Program will be subject to any limits on the maximum amount of Non-Employee Director compensation set forth in the Equity Plan, as in effect from time to time.

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4.Reimbursements. The Company shall reimburse each Non-Employee Director for all reasonable, documented, out-of-pocket travel and other business expenses incurred by such Non-Employee Director in the performance of his or her duties to the Company in accordance with the Company’s applicable expense reimbursement policies and procedures as in effect from time to time. 

* * * * *

 

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Exhibit 10.3

LM FUNDING AMERICA, INC.

2021 OMNIBUS INCENTIVE PLAN

STOCK OPTION AWARD

 

[PARTICIPANTID]

[FIRSTNAME] [LASTNAME]

 

You have been granted an option (your “Option”) to purchase shares (“Shares”) of Common Stock of LM Funding America, Inc. (the “Company”) under the LM Funding America, Inc. 2021 Omnibus Incentive Plan (the “Plan”), effective as of the Grant Date, with the following terms and conditions:

 

		
	
Grant Date:
	
[_____________], [___]

 

	
Vesting Commencement Date
	
[_________], 20[____]

	
 

Type of Option:
	
 

[Nonqualified Stock Option]

[Incentive Stock Option]

 

	
Number of Option Shares:
	
[SHARES GRANTED]

 

	
Exercise Price per Share:  
	
U.S. $[______]

 

	
Vesting:
	
The Option will vest and become exercisable as follows [____________], provided that you remain in continuous employment or service with the Company or an Affiliate until the applicable vesting date.    

 

Upon your termination of employment, or cessation of services to, the Company and its Affiliates prior to the date the Option is fully vested, you will forfeit the unvested portion of the Option.

 

[Notwithstanding anything in this Option to the contrary, no portion of this Option may be exercised unless and until the Company’s stockholders have voted to approve Plan within one (1) year of the Grant Date.  This Option shall be deemed cancelled and void without any further action by the Company or you if the Company’s stockholders have not approved the Plan on or before the first anniversary of the Grant Date.]1

 

 

	
Termination Date:
	
Your Option expires at, and cannot be exercised after, the earliest to occur of:

 

•The tenth (10th) anniversary of the Grant Date;

 

•12 months after your termination of employment or service as a result of death or disability (as determined by the Administrator);

 

•Your termination of employment or service for Cause; or

 

•90 days after your termination of employment or service for any other reason, provided that if you die during this 90-day period, the exercise period will be extended until 12 months after the date of your death.

 

If the date this Option terminates as specified above falls on a day on which the stock market is not open for trading or on a date on which you are prohibited by Company policy (such as an insider trading policy) from exercising the Option, the termination date shall be automatically extended to the first available trading day following the original termination date, but not beyond the tenth (10th) anniversary of the Grant Date.

 

	
	 

	
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 To be included in grants made before stockholder approval of Plan.

4892-3907-0208.1

 

		
	
Manner of Exercise:
	
You may exercise your Option only to the extent vested and only if it has not terminated.  To exercise your Option, you must complete the “Notice of Stock Option Exercise” form provided by the Company and return it to the address or send it via facsimile or email as indicated on the form, or use the equity platform or other exercise procedure prescribed by the Company.  The  exercise will not be completed until you pay the total exercise price and all applicable withholding taxes due as a result of the exercise to the Company and, to the extent prescribed by the Company, until you have executed a joinder agreement to any stockholders agreement or similar agreement maintained by the Company and provided any investment representation required by the Company.

 

If someone else wants to exercise your Option after your death, that person must contact the Company and prove to the Company’s satisfaction that he or she is entitled to do so.  

 

Your ability to exercise your Option may be restricted by the Company if required by applicable law.  

 

No fractional Shares shall be issued pursuant to the grant or exercise of this Option.  The Administrator shall determine whether the cash value of such fraction shall be paid or whether the fraction shall be canceled for no consideration.

 

	
Market Stand-Off:

 
	
In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, you agree that you shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Stock Option Award without the prior written consent of the Company.  Such restriction shall be in effect for such period of time following the date of the final prospectus for the offering as may be determined by the Company.  In no event, however, shall such period exceed one hundred eighty (180) days.

 

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Restrictions on Transfer:
	
Your Option and all rights hereunder shall be non-assignable and non-transferable other than by will or the laws of descent and distribution and shall be exercisable during your lifetime only by you or your guardian or legal representative. 

 

	
Taxes:
	
You (and not the Company or any Affiliate) shall be responsible for your federal, state, local or foreign tax liability and any of your other tax consequences that may arise as a result of the transactions contemplated by this Option.  You shall rely solely on the determinations of your own tax advisors or your own determinations, and not on any statements or representations by the Company or any of its agents, with regard to all such tax matters.  To the extent that the receipt, vesting or exercise of this Option, or other event, results in income to you for federal, state or local income tax purposes, you shall deliver to the Company or its Affiliate at the time the Company or its Affiliate is obligated to withhold taxes in connection with such receipt, vesting, exercise or other event, as the case may be, such amount as the Company or its Affiliate requires to meet its withholding obligation under applicable tax laws or regulations, and if you fail to do so, the Company shall not be obligated to deliver any Shares to you and shall have the right and authority to deduct or withhold from other compensation payable to you an amount sufficient to satisfy its withholding obligations.

 

To the extent permitted by the Company at the time a tax withholding requirement arises, you may satisfy the withholding requirement in whole or in part, by electing to have the Company withhold for its own account that number of Shares otherwise deliverable to you upon exercise having an aggregate Fair Market Value on the date the tax is to be determined equal to the tax that the Company must withhold in connection with the exercise; provided that the amount so withheld shall not exceed the maximum statutory rate to the extent necessary to avoid an accounting charge. The Fair Market Value of any fractional Share not used to satisfy the withholding obligation (as determined on the date the tax is determined) will be paid to you in cash.

 

	
Miscellaneous:
	
•Neither the Plan nor the grant of the Option shall constitute or be evidence of any agreement or understanding, express or implied, that you have a right to continue as an employee of the Company or any of its Affiliates for any period of time, or at any particular rate of compensation.

•The Plan and this Option constitute the entire understanding of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements between you and the Company with respect to the subject matter hereof.  You expressly warrant that you are not accepting this Option in reliance on any promises, representations, or inducements other than those contained herein.

•By accepting the grant of your Option, you agree not to sell any Shares acquired in connection with your Option other than as set forth in the Plan and at a time when applicable laws, Company policies or an agreement between the Company and its underwriters do not prohibit a sale.  

•As a condition of the granting of your Option, you agree, for yourself and your legal representatives or guardians, that this Stock Option Award shall be interpreted by the Committee and that any interpretation by the Committee of the terms of this Stock Option Award or the Plan and any determination made by the Committee pursuant to this Stock Option Award or the Plan shall be final, binding and conclusive.  

•Subject to the terms of the Plan, the Committee may modify or amend this Stock Option Award without your consent as permitted by Section 15(c) of the Plan or: (i) to the extent such action is deemed necessary by the Committee to comply with any applicable law or the listing requirements of any principal securities exchange or market on which Shares are then traded; (ii) to the extent the action is deemed necessary by the Committee to preserve favorable accounting or tax treatment of any award for the Company; or (iii) to the extent the Committee determines that such action does not materially and adversely affect the value of this Stock Option Award or that such action is in the best interest of you or any other person who may then have an interest in this Stock Option Award.

•This Stock Option Award may be executed in counterparts.

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Your Option is granted under and governed by the terms and conditions of the Plan, including provisions of the Plan relating to the right of the Company to repurchase Shares issued pursuant to the Plan.  The terms of the Plan to the extent not stated herein are expressly incorporated herein by reference and in the event of any conflict between this Option and the Plan, the terms of the Plan shall govern, control and supersede over the provisions of this Option.  Capitalized terms used in this Option and not defined shall have the meanings given in the Plan.

 

BY ACCEPTING THIS STOCK OPTION AWARD, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED HEREIN AND IN THE PLAN.  YOU ALSO ACKNOWLEDGE RECEIPT OF THE PLAN.

 

LM FUNDING AMERICA, INC.OPTIONEE

 

 

By:__________________________________________________________

[EXECUTIVE][OPTIONEE]

[POSITION]

 

Date: _______________________

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LM FUNDING AMERICA, INC.

NOTICE OF STOCK OPTION EXERCISE

 

Your completed form should be delivered to: _________________________, ____________________________.  

Phone: _________________ Fax: ____________________ Email: _____________________

Incomplete forms may cause a delay in processing your option exercise.

 

OPTIONEE INFORMATION

Please complete the following.  PLEASE WRITE YOUR FULL LEGAL NAME SINCE THIS NAME MAY BE ON YOUR SHARES. 

 

Name: ______________________________________________________________________

 

Street Address: _______________________________________________________________

 

City: _____________________State: _________________Zip Code: _______________

 

Work Phone #: (_____) - _______- ________ Home Phone #: (_____) - _______- __________

 

Social Security #: ______ - _____ - _______

 

DESCRIPTION OF OPTION(S) BEING EXERCISED

Please complete the following for each option that you wish to exercise.  

 

				
	
Grant Date

 
	
Exercise Price Per Share
	
Number of Option Shares Being Purchased 
	
Total Exercise Price (multiply Exercise Price Per Share by Number of Option Shares Being Purchased)

	
 

 
	
$
	
 
	
$

	
 

 
	
$
	
 
	
$

	
 

 
	
$
	
 
	
$

	
 

 
	
$
	
 
	
$

	
 

 
	
$
	
 
	
$

	
Aggregate Exercise Price
	
$

 

 

 

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