UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐

 

Check the appropriate box:

 

Preliminary Proxy Statement
   
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
   
Definitive Proxy Statement
   
Definitive Additional Materials
   
Soliciting Material Pursuant to §240.14a-12

 

LMP Automotive Holdings, Inc.
(Name of Registrant as Specified in its Charter)
 
 
(Name of Person(s) Filing Proxy Statement if other than the Registrant)

 

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LMP AUTOMOTIVE HOLDINGS, INC.

500 East Broward Blvd., Suite 1900

Ft. Lauderdale, Florida 33394

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held Monday, December 21, 2020 at 10:30 A.M. (EST)

 

TO THE STOCKHOLDERS OF LMP AUTOMOTIVE HOLDINGS, INC.:

 

Notice is hereby given that the Annual Meeting of Stockholders (the “Annual Meeting”) of LMP Automotive Holdings, Inc. (the “Company”) will be held on Monday, December 21, 2020, at 10:30 A.M. EST, at the offices of LMP Automotive Holdings, Inc., 500 East Broward Blvd., Suite 1900, Ft. Lauderdale, Florida 33394, for the purposes of considering and acting on the following items:

 

  1. To elect one (1) person to our Board of Directors, to hold office until the 2023 annual meeting of stockholders and until his or her successor shall have been duly elected or appointed and qualify;
     
  2. To ratify the appointment of Grassi & Co., CPAs, P.C. as our independent registered public accounting firm for the fiscal year ending December 31, 2020;
     
  3. To amend the Company’s certificate of incorporation to reduce the number of authorized shares of the Company’s common stock from 100,000,000 to 29,000,000 and the Company’s preferred stock from 20,000,000 to 1,000,000;
     
  4. To hold an advisory vote on executive compensation; and
     
  5. To approve the amendment to the Company’s Bylaws to reduce the required stockholder vote threshold for the removal of a member of the Board of Directors from 66.66% to 50.01% of the voting power of the then-outstanding shares of the Company’s capital stock entitled to vote generally at an election of directors (the “Bylaws Amendment Proposal”).
     

The enclosed Proxy Statement includes information relating to these proposals. Additional purposes of the Annual Meeting are to transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

 

Only holders of record of our common stock as of the close of business on November 17, 2020 are entitled to notice of, and to vote at, the Annual Meeting. The holders of at least a majority of our outstanding shares of voting stock entitled to vote and present in person or by proxy are required for a quorum. You may vote electronically through the Internet or by telephone. The instructions on your proxy card describe how to use these convenient services. Of course, if you prefer, you can vote by mail by completing your proxy card and returning it to us in the enclosed envelope.

 

  By Order of the Board of Directors,
   
  /s/ Sam Tawfik
  Sam Tawfik
  President and Chief Executive Officer

 

November 27, 2020

Ft. Lauderdale, Florida

 

OUR BOARD OF DIRECTORS APPRECIATES AND ENCOURAGES YOUR PARTICIPATION IN OUR ANNUAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED. ACCORDINGLY, PLEASE AUTHORIZE A PROXY TO VOTE YOUR SHARES BY INTERNET, TELEPHONE OR MAIL. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY WITHDRAW YOUR PROXY, IF YOU WISH, AND VOTE IN PERSON. YOUR PROXY IS REVOCABLE IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN THIS PROXY STATEMENT.

 

 

 

 

LMP AUTOMOTIVE HOLDINGS, INC.

500 East Broward Blvd., Suite 1900

Ft. Lauderdale, Florida 33394

  

PROXY STATEMENT FOR

ANNUAL MEETING OF STOCKHOLDERS

To Be Held Monday, December 21, 2020 at 10:30 A.M. (EST)

 

ANNUAL MEETING AND PROXY SOLICITATION INFORMATION

 

General

 

This Proxy Statement is furnished in connection with the solicitation of proxies by the board of directors (the “Board of Directors”) of LMP Automotive Holdings, Inc., a Delaware corporation, for use at the Annual Meeting of Stockholders to be held on Monday, December 21, 2020, at 10:30 A.M. EST, at the offices of LMP Automotive Holdings, Inc., 500 East Broward Blvd., Suite 1900, Ft. Lauderdale, Florida 33394, and at any postponements or adjournments thereof (the “Annual Meeting”). This Proxy Statement, the Notice of Annual Meeting of Stockholders and the accompanying proxy cards are being mailed to stockholders on or about November 27, 2020.

 

Important Notice Regarding the Internet Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on December 21, 2020: The Proxy Statement and the Annual Report to Shareholders are available at www.lmpmotors.com. We encourage you to review all of the important information contained in the proxy materials contained herein or accessed via our website before voting.

 

Solicitation and Voting Procedures

 

Solicitation. The solicitation of proxies will be conducted by mail, and we will bear all attendant costs. These costs will include the expense of preparing and mailing proxy materials for the Annual Meeting and reimbursements paid to brokerage firms and others for their expenses incurred in forwarding solicitation materials regarding the Annual Meeting to beneficial owners of our shares entitled to vote at the Annual Meeting. We may conduct further solicitation personally, telephonically, electronically or by facsimile through our officers, directors and regular employees, none of whom would receive additional compensation for assisting with the solicitation. We do not intend, but reserve the right, to use the services of a third party solicitation firm to assist us in soliciting proxies.

 

Voting. Stockholders of record may authorize the proxies named in the enclosed proxy cards to vote their shares in the following manner:

 

  by mail, by marking the enclosed proxy card(s) applicable to you as the holder of shares of our common stock and/or our preferred stock, signing and dating it, and returning it in the postage-paid envelope provided; and
  through the Internet, by accessing the World Wide Website address http://onlineproxyvote.com/LMPX/. Stockholders voting by the Internet need not return the proxy card(s) applicable to them as the holder of shares of our common stock and/or our preferred stock.

 

Revocability of Proxies. Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is exercised in the same manner in which it was given, or by delivering to Sam Tawfik, the President and Chief Executive Officer of LMP Automotive Holdings, Inc., at 500 East Broward Blvd., Suite 1900, Ft. Lauderdale, Florida 33394, a written notice of revocation or a properly executed proxy bearing a later date, or by attending the Annual Meeting and giving notice of your intention to vote in person.

 

Voting Procedure. The presence at the Annual Meeting of a majority of our outstanding shares of voting stock entitled to vote and represented either in person or by proxy, will constitute a quorum for the transaction of business at the Annual Meeting. The close of business on November 17, 2020 has been fixed as the record date (the “Record Date”) for determining the holders of shares of our common stock entitled to notice of and to vote at the Annual Meeting. Each share of common stock outstanding on the Record Date is entitled to one vote on all matters.

 

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As of the Record Date, there were 10,022,002 shares of common stock outstanding, which shares were entitled to an aggregate of 10,022,002 votes at the Annual Meeting. Under Delaware law, stockholders will not have appraisal or similar rights in connection with any proposal set forth in this Proxy Statement.

 

Votes will be tabulated by the persons appointed by the Board of Directors to act as inspectors of election for the Annual Meeting. Shares represented by a properly executed and delivered proxy will be voted at the Annual Meeting and, when instructions have been given by the stockholder, will be voted in accordance with those instructions. If no instructions are given, the shares will be voted FOR Proposal Nos. 1, 2, 3, 4 and 5, as applicable.

 

Abstentions and broker non-votes will each be counted as present for the purpose of determining whether a quorum is present at the Annual Meeting. Abstentions will have no effect on the outcome of the election of directors (Proposal No. 1), but will be counted as a vote, AGAINST the ratification of Grassi & Co., CPAs, P.C. as our independent registered public accounting firm (Proposal No. 2), AGAINST the proposal to amend our certificate of incorporation to reduce the number of authorized shares of common stock (Proposal No. 3), AGAINST the approval of the advisory vote to approve the compensation of our named executive officers (Proposal No. 4) and AGAINST the Bylaws Amendment Proposal (Proposal No. 5).

 

Broker non-votes will have no effect on the outcome of the election of directors (Proposal No. 1), the ratification of Grassi & Co., CPAs, P.C. as our independent registered public accounting firm (Proposal No. 2), the proposal to amend our certificate of incorporation to reduce the number of authorized shares of common stock (Proposal No. 3) or the approval of the advisory vote to approve the compensation of our named executive officers (Proposal No. 4), and the Bylaws Amendment Proposal (Proposal No. 5).

 

A broker non-vote occurs when a broker submits a proxy card with respect to shares of common stock held in a fiduciary capacity (typically referred to as being held in “street name”), but declines to vote on a particular matter because the broker has not received voting instructions from the beneficial owner. If the beneficial owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. In the event that a broker, bank, or other agent indicates on a proxy that it does not have discretionary authority to vote certain shares on a non-routine proposal, then those shares will be treated as broker non-votes. We believe that all proposals in this proxy statement, other than the ratification of the independent registered public accounting firm, are non-routine proposals; therefore, your broker, bank or other agent will only be entitled to vote on Proposal No. 2 at the Annual Meeting without your instructions.

 

On each matter properly presented for consideration at the Annual Meeting, holders of common stock will be entitled to one vote for each share of common stock held. Stockholders do not have cumulative voting rights in the election of directors.

 

Vote Required.

 

For the election of directors (Proposal No. 1), the nominee who receives a plurality of votes from the shares present in person or by proxy and entitled to vote at the Annual Meeting will be elected.

 

For the ratification of our independent registered public accounting firm (Proposal No. 2) and the approval of the advisory vote to approve the compensation of our named executive officers (Proposal No. 4), the vote of a majority of the shares present in person or by proxy and entitled to vote on the matter at the Annual Meeting is required. Because your vote with respect to Proposal No. 4 is advisory, it will not be binding upon our Board of Directors.

 

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For the approval of the amendment of our certificate of incorporation to reduce the number of authorized shares of common stock (Proposal No. 3), the affirmative vote of the holders of a majority of the votes present in person or represented by proxy is required

 

For the approval of the Bylaws Amendment Proposal (Proposal No. 5), the affirmative vote of seventy five percent (75%) of the issued and outstanding shares of common stock is required.

 

If any other matters are properly presented for consideration at the Annual Meeting, the persons named in the enclosed proxy will have discretion to vote on those matters in accordance with their best judgment.

 

Householding. Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of this Proxy Statement or our annual report may have been sent to multiple shareholders in your household. We will promptly deliver a separate copy of either document to you if you call or write us at the following address or phone number: LMP Automotive Holdings, Inc., 500 East Broward Blvd., Suite 1900, Ft. Lauderdale, Florida 33394, phone: 954-895-0352, Attention: Chief Financial Officer. If you want to receive separate copies of our annual report and Proxy Statement in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee record holder, or you may contact us at the above address and phone number.

 

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PROPOSAL NO. 1

ELECTION OF DIRECTOR

 

General

 

Our Certificate of Incorporation provides that the Board of Directors of our Company shall consist of not less than one (1) member and not more than seven (7) members, as fixed by the Board of Directors. Currently, the Board of Directors consists of four (4) members.

 

At the Annual Meeting, one (1) director is to be elected to serve until the 2023 annual meeting of our stockholders and until such director’s successor is elected or appointed and qualify or until any such director’s earlier resignation or removal. The Board of Directors has nominated the person listed below for election to the Board of Directors at the Annual Meeting. The director nominee is currently a member of our Board of Directors.

 

Name   Age   Position   Director Since
William “Billy” Cohen(1)(2)(3)   63   Lead Independent Director   March 2018

 

(1) Chairman of Audit Committee.
(2) Chairman of Compensation Committee.
(3) Chairman of Nominating and Corporate Governance Committee.

 

If the nominee is unable or unwilling to serve as a director at the time of the Annual Meeting, the proxies may be voted for any substitute nominee designated by the current Board of Directors or the proxy holders to fill such vacancy, or the size of the Board of Directors may be reduced in accordance with our Bylaws.

 

Nominee

 

The following information is submitted concerning the nominee for election as directors based upon information received by us from such persons:

 

 

William “Billy” Cohen has served as a member of our board of directors and the Lead Independent Director since March 2018. He is the Chairman of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. He is currently the Vice Chairman at Newmark Knight Frank, a global commercial real estate advisory firm, and has been involved with commercial real estate acquisitions, conflict management, negotiation, fund raising, tenant representation, owner representation, leasing advisory services, property and asset management, and corporate advisory services over the last 38 years. Mr. Cohen holds a B.A. in Finance from the University of Miami.

 

Vote Required and Board of Directors’ Recommendation

 

Assuming a quorum is present, the affirmative vote of a plurality of the votes cast at the Annual Meeting, either in person or by proxy, is required for the election of a director. For purposes of the election of directors, abstentions and broker non-votes will have no effect on the result of the vote.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS

VOTE “FOR” THE NOMINEE NAMED IN PROPOSAL NO. 1.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

 

The following table sets forth certain information regarding the ownership of our common stock as of November 13, 2020 (the “Determination Date”) by: (i) each current director of our company; (ii) each of our Named Executive Officers; (iii) all current executive officers and directors of our company as a group; and (iv) all those known by us to be beneficial owners of more than five percent (5%) of our common stock.

 

Beneficial ownership and percentage ownership are determined in accordance with the rules of the SEC. Under these rules, beneficial ownership generally includes any shares as to which the individual or entity has sole or shared voting power or investment power and includes any shares that an individual or entity has the right to acquire beneficial ownership of within 60 days of the Determination Date, through the exercise of any option, warrant or similar right (such instruments being deemed to be “presently exercisable”). In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of our common stock that could be issued upon the exercise of presently exercisable options and warrants are considered to be outstanding. These shares, however, are not considered outstanding as of the Determination Date when computing the percentage ownership of each other person.

 

To our knowledge, except as indicated in the footnotes to the following table, and subject to state community property laws where applicable, all beneficial owners named in the following table have sole voting and investment power with respect to all shares shown as beneficially owned by them. Percentage of ownership is based on 10,019,856 shares of common stock outstanding as of the Determination Date. Unless otherwise indicated, the business address of each person in the table below is c/o LMP Automotive Holdings, Inc., 500 East Broward Blvd., Suite 1900, Ft. Lauderdale, Florida 33394. No shares identified below are subject to a pledge.

 

Name   Number of
Shares
    Percent of
Shares
Outstanding
(%)
 
Officers and Directors:                
Samer Tawfik, President, CEO, and Chairman of the Board of Directors     3,834,417 (1)     38.27 %
William “Billy” Cohen, Lead Independent Director     225,449 (2)     2.25 %
Robert “Bob” J. Morris, Jr., Director     15,479 (3)     *  
Elias Nader, Director     15,479 (4)     *  
Evan Bernstein, Chief Financial Officer     10,000       *  
Richard Aldahan, Chief Operating Officer     0       0 %
All directors and executive officers as a group (5 persons)     4,100,824 (5)     40.93 %

 

* Beneficial ownership of less than 1.0% is omitted.

 

(1) Includes 1,100,000 shares of common stock owned by ST RXR Investments, LLC, an entity wholly owned and controlled by Mr. Tawfik.
(2) The number of shares beneficially owned by Mr. Cohen includes 25,000 shares of common stock that Mr. Cohen can acquire within 60 days of the date hereof upon exercise of options issued pursuant to the Company’s 2018 Equity Incentive Plan at $3.33 per share and 15,000 shares of common stock that may be acquired by Mr. Cohen within 60 days of the date hereof upon the exercise of options issued pursuant to the Company’s 2018 Equity Incentive 2018 at $4.75 per share.
(3) The number of shares beneficially owned by Mr. Morris includes 15,479 shares of common stock that may be acquired by Mr. Morris within 60 days hereof upon the exercise of options issued pursuant to the Company’s 2018 Equity Incentive Plan at $4.75 per share.
(4) The number of shares beneficially owned by Mr. Nader includes 15,479 shares of common stock that may be acquired by Mr. Nader within 60 days hereof upon the exercise of options issued pursuant to the Company’s 2018 Equity Incentive Plan at $4.75 per share.
(5) See the information contained in footnotes (1) – (4) above.

 

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Biographical Information Concerning Executive Officers

 

Biographical information concerning our Chief Executive Officer, who also serves as a member of our Board of Directors, our Chief Financial Officer, and our Chief Operating Officer are set forth below.

 

Samer “Sam” Tawfik is the founder of LMP Automotive Holdings, Inc. and has served as our President, Chief Executive Officer and Chairman of the board of directors since January 2018. Prior to the founding of LMP Automotive Holdings, Inc., Mr. Tawfik was the founder and Chief Executive Officer of Telco Group, Inc. which was acquired by Leucadia National Corp. in 2007 with a valuation of $160,000,000. Mr. Tawfik also founded and was Chief Executive Officer of PT-1 Communications, Inc. which was acquired by Star Telecommunications Inc. in 1998 with a valuation of $590,000,000. From February 1999 through March 2000, Mr. Tawfik served as a Director of Star Telecommunications, Inc. Mr. Tawfik has extensive experience in technology, finance, banking and statistical science. Awards given to Mr. Tawfik and his prior companies include, Top 10 technology & communications CEO in the U.S., number 1 on Inc. 500’s fastest growing company list in the U.S. for two consecutive years, largest pre-paid Telecom company in the world, Consumer Reports’ best new product of the year, JPM / KPMG Top 25 private employers, number 1 fastest growing in N.Y., 10th largest private company in N.Y., 4th largest international and 8th largest long-distance telecom company in the U.S. behind AT&T, and many more.

 

Evan Bernstein has served as the Company’s Chief Financial Officer since September 2020. Prior to that, Mr. Bernstein had been serving as the Company’s Controller since August 2020. From 2001 to 2004, Mr. Bernstein was an auditor at Morrison, Brown, Argiz, and Farra, and a senior auditor at Crowe Horwath from 2004 to 2005. From 2005 to 2008, Mr. Bernstein served as Assistant Controller at the Braman Organization, rising to Controller from 2008 to 2009, Senior Controller from 2009 to 2015 and Chief Financial Officer and Treasurer of Braman Automotive Dealerships Miami from 2015 to 2019, a role in which he was responsible for 23 franchises generating approximately $2 billion in annual revenue.

 

Richard Aldahan has served as the Company’s Chief Operating Officer since July 2020. From 1993 to 2020, Mr. Aldahan held various positions as an Owner and Dealer Principal, General Manager and Treasurer for franchised dealership brands such as Toyota, Chevrolet, Hyundai and Nissan. Since January 2019, Mr. Aldahan served as the Owner and Dealer Principal of Nissan of Streetsboro, Ohio. From late 2013 to early 2019, Mr. Aldahan took time away from the automotive industry to focus on managing his personal real estate properties.

 

Director’s Qualifications

 

In selecting a particular candidate to serve on our Board of Directors, we consider the needs of our company based on particular experiences, qualifications, attributes and skills that we believe would be advantageous for our Board members to have and would qualify such candidate to serve on our Board given our business profile and the environment in which we operate. The table below sets forth such experiences, qualifications, attributes and skills, and identifies the ones that the director nominee possess.

 

Attributes     Mr. Cohen  
Financial Experience     X  
Public Board Experience     X  
Industry Experience        
Scientific Experience        
Commercial Experience        
Corporate Governance Experience     X  
Capital Markets Experience     X  
Management Experience     X  

 

Arrangements Regarding Director Nominations

 

There are no arrangements regarding the nomination of our directors.

 

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Family Relationships

 

There are no familial relationships between any of our executive officers and directors.

 

Director or Officer Involvement in Certain Legal Proceedings

 

Our directors and executive officers were not involved in any legal proceedings as described in Item 401(f) of Regulation S-K in the past ten years.

 

Independence of the Board of Directors

 

The Board of Directors utilizes NASDAQ’s standards for determining the independence of its members. In applying these standards, the Board considers commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, among others, in assessing the independence of directors, and must disclose any basis for determining that a relationship is not material. The Board has determined that William “Billy” Cohen is an independent director within the meaning of the NASDAQ independence standards. In making this independence determination, the Board did not exclude from consideration as immaterial any relationship potentially compromising the independence of the above director.

 

Meetings of the Board of Directors

 

The Board of Directors held eight meetings during 2020. During 2020, all directors attended more than 75% of the aggregate number of meetings of the Board of Directors that were held during the time that they served as members of the Board of Directors. We do not have a formal policy regarding attendance by members of the Board of Directors at the annual meeting of stockholders, but we strongly encourage all members of the Board of Directors to attend our annual meetings and expect such attendance except in the event of extraordinary circumstances.

 

Committees of the Board of Directors

 

The Board of Directors has established and currently maintains the following three standing committees: the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee (the “N&GC”). The Board of Directors has adopted written charters for each of these committees, which we make available free of charge on or through our Internet website, along with other items related to corporate governance matters, including our Code of Conduct and Ethics applicable to all employees, officers and directors. We maintain our Internet website at investors.lmpah.com. You can access our committee charters and code of conduct on our website by first clicking “Corporate Governance” and then “Governance Documents.”

 

We intend to disclose on our Internet website any amendments to or waivers from our Code of Conduct and Ethics, as well as any amendments to the charters of any of our standing committees. Any stockholder also may obtain copies of these documents, free of charge, by sending a request in writing to LMP Automotive Holdings, Inc., 500 East Broward Blvd., Suite 1900, Ft. Lauderdale, Florida 33394, Attn: Chief Executive Officer.

 

Currently, the Audit Committee consists of Mr. Cohen (Chair), Mr. Morris and Mr. Nader, the Compensation Committee consists of Mr. Cohen (Chair), Mr. Morris and Mr. Nader, and the N&GC consists of Mr. Cohen (Chair), Mr. Morris and Mr. Nader. It is anticipated that, following the Annual Meeting, Mr. Cohen will serve as Chair of the Audit Committee, and that he will also serve as a member of the Compensation Committee and the N&GC. During the 2019 fiscal year, none of the Audit Committee, the Compensation Committee nor the N&GC held any meetings.

 

Audit Committee. Among other functions, the Audit Committee authorizes and approves the engagement of the independent registered public accounting firm, reviews the results and scope of the audit and other services provided by the independent registered public accounting firm, reviews our financial statements, reviews and evaluates our internal control functions, approves or establishes pre-approval policies and procedures for all professional audit and permissible non-audit services provided by the independent registered public accounting firm and reviews and approves any proposed related party transactions. The Board of Directors has determined that each of the current members of the Audit Committee is an independent director within the meaning of the NASDAQ independence standards and Rule 10A-3 promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, the Board of Directors has determined that Mr. Cohen is an Audit Committee Financial Expert under applicable SEC Rules and that each of the members of the Audit Committee satisfies the NASDAQ standards of financial literacy and financial or accounting expertise or experience.

 

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Compensation Committee. The Compensation Committee’s functions include reviewing and approving the compensation and benefits for our executive officers, administering our equity compensation plans and making recommendations to the Board of Directors regarding these matters. Neither the Compensation Committee nor the Board of Directors retained any consultants to assist in the review and approval of the compensation and benefits for the executive officers of our company during 2019. The Board of Directors has determined that each current member of the Compensation Committee is an independent director within the meaning of the NASDAQ independence standards.

 

Nominating and Corporate Governance Committee. The N&CGC searches for and recommends to the Board of Directors potential nominees for director positions and makes recommendations to the Board of Directors regarding the size, composition and compensation of the Board of Directors and its committees. The Board of Directors has determined that each current member of the N&CGC is an independent director within the meaning of the NASDAQ independence standards.

 

Selection of Board Candidates

 

In selecting candidates for the Board of Directors, the Board (or, as used throughout this section, the N&GC, as applicable) begins by determining whether the incumbent directors whose terms expire at the annual meeting of stockholders desire and are qualified to continue their service on the Board of Directors. If there are positions on the Board of Directors for which the Board will not be re-nominating an incumbent director, or if there is a vacancy on the Board of Directors, the Board will solicit recommendations for nominees from persons whom the Board believes are likely to be familiar with qualified candidates, including members of our Board of Directors and our senior management. The Board may also engage a search firm to assist in the identification of qualified candidates. The Board will review and evaluate those candidates whom it believes merit serious consideration, taking into account all available information concerning the candidate, the existing composition and mix of talent and expertise on the Board of Directors and other factors that it deems relevant. In conducting its review and evaluation, the Board may solicit the views of management and other members of the Board, and may conduct interviews of proposed candidates.

 

The Board generally requires that all candidates for the Board of Directors be of the highest personal and professional integrity and have demonstrated exceptional ability and judgment. The Board will consider whether such candidate will be effective, in conjunction with the other members of the Board of Directors, in collectively serving the long-term interests of our stockholders. In addition, the Board requires that all candidates have no interests that materially conflict with our interests and those of our stockholders, have meaningful management, advisory or policy making experience, have a general appreciation of the major business issues facing us and have adequate time to devote to service on the Board of Directors.

 

The Board will consider stockholder recommendations for nominees to fill director positions, provided that the Board will not entertain stockholder nominations from stockholders who do not meet the eligibility criteria for submission of stockholder proposals under Rule 14a-8 of Regulation 14A under the Exchange Act. Stockholders may submit written recommendations for nominees to the Board of Directors, together with appropriate biographical information and qualifications of such nominees as required by our Bylaws, to our Secretary following the same procedures as described in “Stockholder Communications” in this Proxy Statement. In order for a nominee for directorship submitted by a stockholder to be considered, such recommendation must be received by the Corporate Secretary by the time period set forth in our most recent proxy statement for the submission of stockholder proposals under Rule 14a-8 of Regulation 14A under the Exchange Act. The Corporate Secretary shall then deliver any such communications to the Chairman of the Board or the N&GC, as applicable. The Board will evaluate stockholder recommendations for candidates for the Board of Directors using the same criteria as for other candidates, except that the Board may consider, as one of the factors in its evaluation of stockholder recommended candidates, the size and duration of the interest of the recommending stockholder or stockholder group in our equity.

 

8

 

 

Board Leadership Structure and Role in Risk Oversight

 

Our Board of Directors is currently chaired by Mr. Tawfik, who also serves as our Chief Executive Officer, having been engaged in such roles since the Company’s inception. The Board does not believe that it is appropriate to prohibit one person from serving as both Chairman of the Board and Chief Executive Officer. Our Board will continually evaluate our leadership structure and could in the future decide to separate the Chairman and Chief Executive Officer positions if it believes that doing so would serve the best interests of our company and its stockholders.

 

As noted above, our Board has determined that Mr. Cohen, our Lead Independent Director, is independent within the meaning of the NASDAQ independence standards. As such, and in his role as Lead Independent Director, we believe that Mr. Cohen can help to ensure that our independent directors have a strong voice in the leadership of our company, including having the ability to provide management with guidance and feedback on their performance. To further strengthen the voice of our independent directors, we provide that such directors meet on a regular basis, and we have provided that all of the members of the Audit Committee, the Compensation Committee and the N&GC are independent.

  

Our Board of Directors and the Audit Committee thereof is responsible for overseeing the risk management processes on behalf of our company. The Board and, to the extent applicable, the Audit Committee, receive and review periodic reports from management, auditors, legal counsel and others, as considered appropriate regarding our company’s assessment of risks. Where applicable, the Audit Committee reports regularly to the full Board of Directors with respect to risk management processes. The Audit Committee and the full Board of Directors focus on the most significant risks facing our company and our company’s general risk management strategy, and also ensure that risks undertaken by our company are consistent with the Board’s appetite for risk. While the Board oversees the risk management of our company, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our company and that our Board leadership structure supports this approach.

 

Stockholder Communications

 

All stockholder communications must: (i) be addressed to our Secretary at our address; (ii) be in writing either in print or electronic format; (iii) be signed by the stockholder sending the communication; (iv) indicate whether the communication is intended for the entire Board of Directors, a committee thereof, or the independent directors; (v) if the communication relates to a stockholder proposal or director nominee, identify the number of shares held by the stockholder, the length of time such shares have been held, and the stockholder’s intention to hold or dispose of such shares, provided that we will not entertain shareholder proposals or shareholder nominations from shareholders who do not meet the eligibility and procedural criteria for submission of shareholder proposals under Rule 14a-8 of Regulation 14A under the Exchange Act; and (vi) if the communication relates to a director nominee being recommended by the stockholder, must include appropriate biographical information of the candidate as is required by our Bylaws.

 

Upon receipt of a stockholder communication that is compliant with the requirements identified above, the Chief Financial Officer shall promptly deliver such communication to the appropriate member(s) of the Board of Directors or committee member(s) identified by the stockholder as the intended recipient of such communication by forwarding the communication to either the chairman of the Board of Directors and Chief Executive Officer, the chairman of the applicable committee, or to each of the independent directors, as the case may be.

 

The Chief Executive Officer may, in his sole discretion and acting in good faith, provide copies of any such stockholder communication to any one or more of our directors and executive officers, except that in processing any stockholder communication addressed to the independent directors, the Chief Executive Officer may not copy any member of management in forwarding such communications. In addition, the Chief Executive Officer may, in his sole discretion and acting in good faith, not forward certain items if they are deemed of a commercial or frivolous nature or otherwise inappropriate for consideration by the intended recipient and any such correspondence may be forwarded elsewhere in our company for review and possible response.

 

9

 

 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

Approval for Related Party Transactions

 

It is our practice and policy to comply with all applicable laws, rules and regulations regarding related-person transactions. The Related Party Transactions Policy adopted by our Board of Directors requires that all officers, directors and nominees disclose to the Chief Executive Officer the nature of any transaction that is entered into between the Company any related party of such officer, director or nominee (including any immediate family member of such employee, officer or director, and any entity owned or controlled by such persons). The Chief Executive Officer must bring the transaction to the attention of the Audit Committee, which must review and approve the transaction in advance. In considering such transactions, the Audit Committee takes into account the relevant available facts and circumstances.

 

Related Party Transactions

 

During 2018, the Company entered into a non-interest bearing revolving line of credit agreement with an entity related to Mr. Tawfik. Amounts drawn on the line of credit become due and payable on the earlier of written demand by the lender or May 21, 2020, as defined in the agreement. The line of credit was paid in full in December 2019.

 

During 2018, the Company entered into a lease with an entity wholly owned by Mr. Tawfik for its facilities in Plantation, Florida. The five-year, triple-net lease provides for monthly payments of $28,500 plus CAM and sales taxes, with annual escalations of 3%. The Company has an option to extend the lease for an additional five-year term, with annual escalations of 3%. The option to extend the lease is not recognized in the right-of-use asset or operating lease liability. On July 8, 2020, the Company purchased the building where its former headquarters in Plantation, Florida were located, from its landlord, ST RXR Investments, LLC, a related party owned by Mr. Tawfik, for $3,600,000 in cash.

 

The Company leases vehicles under its subscription and sales-type programs to certain officers and directors under 6-month contracts. Total payments made by officers and directors for the vehicle leases amounted to $60,869 and $84,459 for the three- and six-month period ended June 30, 2020.

 

10

 

 

PROPOSAL NO. 2

 

RATIFICATION OF APPOINTMENT OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We have appointed Grassi & Co., CPAs, P.C. (“Grassi”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2020. Grassi has served as our independent registered public accounting firm since 2018.

 

In the event that ratification of this appointment of independent registered public accounting firm is not approved by the affirmative vote of a majority of votes cast on the matter, then the appointment of our independent registered public accounting firm will be reconsidered by us.

 

Your ratification of the appointment of Grassi as our independent registered public accounting firm for the fiscal year ending December 31, 2020 does not preclude us from terminating our engagement of Grassi and retaining a new independent registered public accounting firm, if we determine that such an action would be in our best interest.

 

The following table sets forth the fees billed to us for professional services rendered by Grassi for the years ended December 31, 2019 and 2018:

 

Services   2019     2018  
Audit Fees (1)   $ 166,746     $ 117,266  
Audit-Related fees (2)     79,608       89,741  
Tax fees (3)     20,961       9,563  
Other fees (4)     -       50,519  
Total fees   $ 267,315     $ 267,089  

 

(1) Audit Fees Audit fees consist of fees billed for the audit of our annual consolidated financial statements and the review of the interim consolidated financial statements.
(2) Audit-Related Fees Audit-related fees consist of services that are normally provided in connection with registration statements, including the registration statement for our initial public offering.
(3) Tax Fees – Tax fees consist of aggregate fees for tax compliance and tax advice, including the review and preparation of our various jurisdictions’ income tax returns.
(4) Other fees – Other fees consist of consulting services associated with potential acquisition identification.

 

Pre-Approval Policies and Procedures

 

The Audit Committee has the authority to appoint or replace our independent registered public accounting firm (subject, if applicable, to stockholder ratification). The Audit Committee is also responsible for the compensation and oversight of the work of the independent registered public accounting firm (including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The independent registered public accounting firm was engaged by, and reports directly to, the Audit Committee.

 

The Audit Committee pre-approves all audit services and permitted non-audit services (including the fees and terms thereof) to be performed for us by our independent registered public accounting firm, subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act and Rule 2-01(c)(7)(i)(C) of Regulation S-X, provided that all such excepted services are subsequently approved prior to the completion of the audit. We have complied with the procedures set forth above, and the Audit Committee has otherwise complied with the provisions of its charter.

 

Vote Required and Board of Directors’ Recommendation

 

Assuming a quorum is present, the affirmative vote of a majority of the shares present at the Annual Meeting and entitled to vote, either in person or by proxy, is required for approval of Proposal No. 2. For purposes of the ratification of our independent registered public accounting firm, abstentions will have the same effect as a vote against this proposal and broker non-votes will have no effect on the result of the vote.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS

VOTE “FOR” PROPOSAL NO. 2.

 

11

 

 

PROPOSAL NO. 3

 

APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO REDUCE THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK AND PREFERRED STOCK

 

The Board unanimously recommends that our stockholders approve a proposal to amend Section 1 of Article IV of our certificate of incorporation to decrease the number of authorized shares of common stock from 100,000,000 shares to 29,000,000 shares and preferred stock from 20,000,000 shares to 1,000,000 shares. The full text of Section 1 of Article IV of the certificate of incorporation as proposed to be amended by this proposal is as follows:

 

Section 1. Authorized Shares. The aggregate number of shares which the Corporation shall have the authority to issue is 30,000,000; 1,000,000 shares of the par value of $0.00001 shall be designated as Preferred Stock and 29,000,000 shares of the par value of $0.00001 shall be designated Common Stock.”

 

If the proposed amendment to the certificate of incorporation is approved by the stockholders, it will become effective upon filing and recording of the Certificate of Amendment with the Delaware Secretary of State as required by the Delaware General Corporation Law.

 

Reasons for and Effect of the Proposed Amendment

 

The reason for the proposed decrease in the number of authorized shares is to effect a significant saving in the amount of franchise tax that the Company must pay each year in the State of Delaware. The Company pays franchise tax in Delaware based, in part, on the number of shares of common stock and preferred stock that are authorized in the certificate of incorporation. By reducing the authorized number of shares as proposed, the Company will reduce its annual franchise tax from approximately $102,000 prior to the authorized share reduction to approximately $30,000 after the authorized share reduction.

 

Impact of the Proposed Reduction

 

If approved, the proposed reduction of authorized shares will not impact issued and outstanding shares of common stock or outstanding warrants or options to purchase our common stock. As of November 13, 2020, 10,019,856 shares of common stock were issued and outstanding, and no shares of preferred stock were issued and outstanding. The Board believes that the new reduced level of authorized shares will be adequate to cover anticipated requirements in the foreseeable future. In the event that additional authorized shares are needed in the future, the stockholders will be asked to approve an amendment to the certificate of incorporation, as amended to increase the authorized shares to the level needed at that time.

 

Vote Required and Board of Directors’ Recommendation

 

Assuming a quorum is present, the affirmative vote of a majority of the votes entitled to be cast, either in person or by proxy, is required for approval of Proposal No. 3. For purposes of approval of Proposal No. 3, abstentions will have the same effect as a vote against this proposal.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS

VOTE “FOR” PROPOSAL NO. 3.

 

12

 

 

PROPOSAL NO. 4

 

ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

We are providing stockholders an advisory vote on executive compensation. This nonbinding vote is required under Section 14A of the Exchange Act. We intend to seek an advisory vote on executive compensation annually.

 

The section entitled “Executive Compensation” describes the compensation of our principal executive officers and our other most highly compensated executive officers during the 2019 fiscal year. Such executive officers are referred to in this Proposal No. 4 as our named executive officers.

 

Our Board of Directors believes that the policies, procedures and compensation articulated in the “Executive Compensation” section of this proxy statement were appropriate for our company with respect to our 2019 fiscal year, and that the compensation of our named executive officers in 2019 reflects and supports these compensation policies and procedures.

 

We are asking our stockholders to indicate their support at the Annual Meeting for the compensation of our named executive officers as described in this proxy statement. This vote is intended to provide an overall assessment of our policies and procedures relating to the compensation of our named executive officers with respect to our 2019 fiscal year, rather than focus on any specific item of compensation. Further, in evaluating this proposal, we note that: (i) one of our Named Executive Officers for the 2019 fiscal year, namely Bryan Silverstein, our former Chief Financial Officer, was terminated from his position with the Company on April 19, 2020; and (ii) Evan Bernstein, our current Chief Financial Officer since September 14, 2020 did not receive any compensation during the 2019 fiscal year.

 

Accordingly, we are recommending that our stockholders vote FOR the following resolution:

 

RESOLVED, that the stockholders of LMP Automotive Holdings, Inc. approve, on an advisory basis, the compensation of the named executive officers of LMP Automotive Holdings, Inc., as disclosed in this proxy statement for the 2020 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K with respect to our 2019 fiscal year, including, as applicable, the Summary Compensation Table and the other related tables and disclosures contained in the section of this proxy statement captioned “Executive Compensation”.

 

This advisory vote on executive compensation, commonly referred to as a ‘say-on-pay’ advisory vote, is not binding on our Board of Directors. However, our Board of Directors will take into account the result of the vote when determining future executive compensation arrangements.

 

Vote Required and Board of Directors’ Recommendation

 

Assuming a quorum is present, the affirmative vote of a majority of the shares present at the Annual Meeting, either in person or by proxy, and entitled to vote, is required for approval of this Proposal No. 4. Because your vote is advisory, it will not be binding upon our Board of Directors. For purposes of the approval of Proposal No. 4, abstentions will have the same effect as a vote against this proposal, and broker non-votes will have no effect on the result of the vote.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS

VOTE “FOR” PROPOSAL NO. 4.

 

13

 

 

PROPOSAL NO. 5

 

APPROVAL OF AN AMENDMENT TO REDUCE THE REQUIRED SHAREHOLDER VOTE THRESHOLD FOR THE REMOVAL OF A MEMBER OF THE BOARD OF DIRECTORS

 

The Company’s Bylaws (the “Bylaws”) currently provides that a member of the Board of Directors of the Company may only be removed by the affirmative vote of the holders of not less than two thirds (66.66%) of the voting power of the then-outstanding shares of capital stock of the Company entitled to vote generally at an election of directors.

 

The Board of Directors hereby requests that the Company’s stockholders decrease the required stockholder vote threshold for the removal of a member of the Board of Directors from 66.66% to 50.01%. The full text of Section 20 of the Bylaws as proposed to be amended by this proposal is as follows (the “Bylaws Amendment Proposal”):

 

Section 20. Removal. Subject to any limitations imposed by applicable law or the Certificate of Incorporation, the Board of Directors or any director may be removed from office at any time with or without cause by the affirmative vote of the holders of not less than 50.01% of the voting power of all then-outstanding shares of capital stock of the corporation entitled to vote generally at an election of directors.”

 

The Bylaws Amendment Proposal will not affect the Board of Director’s ability to fix the authorized number of directors within the authorized range.

 

The Board of Directors believes that reducing the stockholder vote threshold required to remove a member of the Board of Directors is in the best interests of the Company and its stockholders. The Board of Directors believes that the Bylaws Amendment Proposal will allow for greater flexibility and efficiency among the Board of Directors and will enhance the overall collective effectiveness of the Board of Directors.

 

Vote Required and Board of Directors’ Recommendation

 

Assuming a quorum is present, the affirmative vote of seventy five percent (75%) of the issued and outstanding shares of common stock is required for the approval of this Proposal No. 5. For purposes of approval of this Proposal No. 5, abstentions will have the same effect as a vote against this proposal.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT THE HOLDERS OF

PREFERED STOCK VOTE “FOR” THIS PROPOSAL NO. 5.

 

14

 

 

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

 

The Audit Committee of the Board of Directors, on behalf of the Board of Directors, serves as an independent and objective party to monitor and provide general oversight of the integrity of our financial statements, the independent registered public accounting firm’s qualifications and independence, the performance of the independent registered public accounting firm, the compliance by us with legal and regulatory requirements and our standards of business conduct. The Audit Committee performs these oversight responsibilities in accordance with its Audit Committee Charter.

 

Our management is responsible for preparing our financial statements and our financial reporting process. Our independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee’s responsibility is to administer and oversee these processes.

 

The Audit Committee met with the independent registered public accounting firm, with and without management present, to discuss the audit plan, the results of their examinations, and the overall quality of our financial reporting.

 

In this context, the Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2019 with management and with the independent registered public accounting firm. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, which includes, among other items, matters related to the conduct of the audit of our annual financial statements.

 

The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the issue of its independence from us and management. In addition, the Audit Committee has considered whether the provision of any non-audit services by the independent registered public accounting firm in 2019 is compatible with maintaining the registered public accounting firm’s independence and has concluded that it is.

 

Based on its review of the audited financial statements and the various discussions noted above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2019.

 

  Respectfully,
   
  William Cohen, Chairman
  Robert J. Morris, Jr.
  Elias Nader

 

The foregoing Audit Committee Report does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this Audit Committee Report by reference therein.

 

 

15

 

 

EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table sets forth information regarding compensation earned during 2019 and 2018 by our principal executive officers and our other most highly compensated executive officers as of the end of the 2019 fiscal year (“Named Executive Officers”).

 

Name and Principal Position   Year     Salary
($)
    Bonus
($)
    Stock
Awards
($)(1)
    Option Awards
($)(1)
    All Other Compensation
($)
    Total
($)
 
Samer Tawfik, Chairman,   2019     $ 120,000     $ -     $          -     $ -     $          -     $ 120,000  
President and CEO   2018     $ 120,000     $ -     $ -     $ -     $ -     $ 120,000  
                                                       
Bryan Silverstein, Former CFO   2019     $ 125,000     $ 36,000     $ -     $ -     $ -     $ 161,000  
    2018 (2)   $ 39,450     $ 12,000     $ -     $ 35,280     $ -     $ 86,730  
                                                       
Evan Bernstein, CFO   2019 (3)     -       -       -       -       -       -  
    2018       -       -       -       -       -       -  
                                                       
Richard Aldahan, COO   2019 (4)     -       -       -       -       -       -  
    2018       -       -       -       -       -       -  
                                                       
William Cohen   2019     $ 24,000     $ -     $ -     $ -     $ -     $ 24,000  
Board of Directors   2018     $ 20,000     $ -     $ -     $ 63,650     $ -     $ 83,650  
                                                       
Bob Morris   2019 (5)   $ 16,000     $ -     $ -     $ 39,000     $ -     $ 55,000  
Board of Directors   2018     $ -     $ -     $ -     $ -     $ -     $ -  
                                                       
Elias Nader   2019 (5)   $ 16,000     $ -     $ -     $ 39,000     $ -     $ 55,000  
Board of Directors   2018     $ -     $ -     $ -     $ -     $ -     $ -  
                                                       
Keith Locker   2019 (5)   $ -     $ -     $ -     $ 95,520     $ -     $ 95,520  
Former Member of Board of Directors   2018     $ -     $ -     $ -     $ -     $ -     $ -  

 

(1) Represents the aggregate grant date fair value of the award computed in accordance with the provisions of FASB ASC Topic 718. The assumptions used in calculating the aggregate grant date fair value of the awards reported in this column are set forth in Note 1 to our consolidated financial statements included in this annual report to Form 10-K.
(2) Mr. Silverstein began his employment with our company in September 2018 and was terminated in April 2020. Mr. Silverstein’s option awards have since been forfeited.
(3) Mr. Bernstein began his employment with our company in August 2020.
(4) Mr. Aldahan began his employment with our company in July 2020.
(5) Messrs. Morris, Nader, and Locker joined the Board of Directors in 2019. Mr. Locker resigned from the Board of Directors in April 2020, at which point his option awards were forfeited.

 

16

 

 

Narrative Disclosures Regarding Compensation; Employment Agreements

 

Samer Tawfik Employment Agreement

 

On February 20, 2018, our wholly owned subsidiary, LMPMotors.com, LLC, and our Chairman, President and Chief Executive Officer, Samer Tawfik, entered into an employment agreement, or the Tawfik agreement, pursuant to which Mr. Tawfik shall serve as Chief Executive Officer of LMPMotors.com, LLC. Pursuant to the Tawfik agreement, his annual salary is equal to $120,000.

 

Bryan Silverstein Employment Agreement

 

On August 31, 2018, our wholly owned subsidiary, LMPMotors.com, LLC, and our Chief Financial Officer, Bryan Silverstein, entered into an employment agreement, pursuant to which Mr. Silverstein’s annual salary is equal to $125,000. Mr. Silverstein’s employment agreement was terminated on April 19, 2020 pursuant to and in accordance with the terms thereof.

 

Evan Bernstein Employment Agreement

 

On August 8, 2020, the Company entered into an employment agreement and related options agreement with our Chief Financial Officer, Evan Bernstein. Pursuant to such agreements, Mr. Bernstein will receive an annual base salary of $240,000 per year plus 4% of the consolidated share of factory statement income in which the Company has an ownership interest (the “Revenue Share”), not to exceed $25,000 per month. Mr. Bernstein is also entitled to a guaranteed bonus of $20,000 per month for his first six months of employment, unless his Revenue Share is greater than $20,000 in any such month. In addition, Mr. Bernstein received options to purchase 40,000 shares of the Company’s common stock at an exercise price of $7.50. The options will vest pro rata on an annual basis over a two-year period.

 

Richard Aldahan Employment Agreement

 

Effective July 27, 2020, the Company entered into an employment agreement and related options agreement with our Chief Operating Officer, Richard Aldahan. Pursuant to such agreements, Mr. Aldahan will receive an annual base salary of $120,000 per year plus 3% of the Company’s pre-tax income, not to exceed $50,000 per month. In addition, Mr. Aldahan received options to purchase 40,000 shares of the Company’s common stock at an exercise price of $8.21. The options will vest pro rata on an annual basis over a two-year period.

 

As part of its designated duties, our Compensation Committee plans to review the salaries and option grants to our executive officers.

 

17

 

 

Outstanding Equity Awards at Fiscal Year End

 

2019 Outstanding Equity Awards at Fiscal Year-end Table

 

The following table sets forth information regarding the outstanding equity awards held by our Named Executive Officers as of the end of our 2019 fiscal year:

 

Name  

Number of Securities Underlying Unexercised Options

(#)

Exercisable

 

Number of Securities Underlying Unexercised Options

(#)

Unexercisable

  Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#)
  Option Exercise Price
($)
  Option Expiration
Date
  Number of Shares or Units of Stock That Have Not Vested
(#)
  Market Value of Shares or Units of Stock That Have Not Vested
($)
  Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)
  Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($)
Samer Tawfik   N/A   N/A   N/A   N/A   N/A        
Bryan Silverstein   4,940   13,060   N/A    $4.75   9/3/2023        

 

 

We have not engaged in any option re-pricings or other modifications to any of our outstanding equity awards to our Named Executive Officers during fiscal year 2019.

 

Compensation of Directors

 

2019 Director Compensation Table

 

The following Director Compensation Table sets forth information concerning compensation for services rendered by our independent directors for fiscal year 2019.

 

Name   Fees Earned
or
Paid in
Cash
($)
    Stock
Awards
($)
    Option
Awards
($)(1)
    All Other
Compensation
($)
    Total
($)
 
William Cohen (2)   $ 24,000           $     $     $ 24,000  
Robert J. Morris, Jr. (3)     16,000             39,000             55,000  
Elias Nader (4)     16,000             39,000             55,000  
Keith Locker (5)     -             95,520             95,520  
Total:   $ 56,000           $ 173,520           $ 229,520  

 

(1) Represents the aggregate grant date fair value under FASB ASC Topic 718 of options to purchase shares of our common stock granted during 2019.
(2) Mr. Cohen was appointed to serve as a member of the Board in March 2018. As of December 31, 2019, Mr. Cohen held options to purchase up to 40,000 shares of our common stock.
(3) Mr. Morris was appointed to serve as a member of the Board in May 2019. As of December 31, 2019, Mr. Morris held options to purchase up to 20,000 shares of our common stock.
(4) Mr. Nader was appointed to serve as a member of the Board in May 2019. As of December 31, 2019, Mr. Nader held options to purchase up to 20,000 shares of our common stock.
(5) Mr. Locker was appointed to serve as a member of the Board in December 2019. As of December 31, 2019, Mr. Locker held options to purchase up to 12,000 shares of our common stock.  Mr. Locker resigned from the Board of Directors on April 19, 2020.

  

Mr. Tawfik has not been included in the Director Compensation Table because he is a Named Executive Officer of our company, and all compensation paid to him during 2019 is reflected in the Summary Compensation Table above.

 

18

 

 

Director Compensation Program

 

Our compensation program for directors for the 2019 fiscal year consisted of: (i) a grant of options to purchase up to 20,000 shares of common stock, which options vested 50% three months following the Company’s initial public offering and the remainder vest pro rata over three years; and (ii) an annual cash payment of $24,000 per year, payable annually. In addition to the annual fee described in item (ii) of the immediately preceding sentence, we agreed to pay to the Lead Independent Director an annual amount of $4,000 in 2018 and $8,000 in 2019.

 

Equity Compensation Plan Information

 

The following table provides aggregate information as of the end of the 2019 fiscal year with respect to all of the compensation plans under which our common stock is authorized for issuance, including our 2018 Equity Incentive Plan:

 

Plan Category   Number of securities to be issued upon exercise of outstanding options, warrants and rights     Weighted-average exercise price of outstanding options, warrants and rights     Number of securities remaining available for future issuance under equity compensation plans (excluding securities to be issued upon exercise of outstanding options, warrants and rights)  
Equity compensation plans approved by security holders     711,000     $ 4.57       789,000  
Equity compensation plans not approved by security holders                  
Total:     711,000     $ 4.57       789,000  

 

19

 

 

SUBMISSION OF STOCKHOLDER PROPOSALS

 

We intend to hold our 2021 annual meeting of stockholders (the “2021 Annual Meeting”) in December 2021. To be considered for inclusion in our notice of annual meeting and proxy statement for, and for presentation at, the 2021 Annual Meeting, a stockholder proposal must be received by the Chief Financial Officer, LMP Automotive Holdings, Inc., 500 East Broward Blvd., Suite 1900, Ft. Lauderdale, Florida 33394, no later than July 30, 2021, and must otherwise comply with applicable rules and regulations of the SEC, including Rule 14a-8 of Regulation 14A under the Exchange Act.

 

Our Bylaws require advance notice of any proposal by a stockholder intended to be presented at an annual meeting that is not included in our notice of annual meeting and proxy statement because it was not timely submitted under the preceding paragraph, or made by or at the direction of any member of the Board of Directors, including any proposal for the nomination for election as a director. To be considered for such presentation at the 2021 Annual Meeting, any such stockholder proposal must be received by the Chief Financial Officer, LMP Automotive Holdings, Inc., no earlier than August 23, 2021 and no later than September 12, 2021, provided, that if the 2021 Annual Meeting is scheduled to be held on a date more than 30 days before the anniversary date of the 2020 annual meeting of stockholders or more than 30 days after the anniversary date of the 2020 annual meeting of stockholders, a stockholder’s proposal shall be timely if delivered to, or mailed to and received by, our company not later than the close of business on the later of (A) the 90th day prior to the scheduled date of the 2020 Annual Meeting (but in no event no earlier than the close of business on the 120th day prior to the scheduled date of the 2020 Annual Meeting), or (B) the 10th day following the day on which public announcement of the date of the 2020 Annual Meeting is first made by us, and in any case discretionary authority may be used if such proposal is untimely submitted.

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities (“Reporting Persons”), to file reports of ownership and changes in ownership with the SEC. Based solely on our review of the reports filed by Reporting Persons, and written representations from certain Reporting Persons that no other reports were required for those persons, we believe that, during the year ended December 31, 2019, the Reporting Persons met all applicable Section 16(a) filing requirements.

 

OTHER MATTERS

 

We will furnish without charge to each person whose proxy is being solicited, upon the written request of any such person, a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the SEC, including the financial statements. Requests for copies of such Annual Report on Form 10-K should be directed to LMP Automotive Holdings, Inc., 500 East Broward Blvd., Suite 1900, Ft. Lauderdale Florida 33394, Attn: Chief Financial Officer.

 

Our Board of Directors does not know of any other matters that are to be presented for action at the Annual Meeting. If any other matters are properly brought before the Annual Meeting or any adjournments thereof, the persons named in the enclosed proxy will have the discretionary authority to vote all proxies received with respect to such matters in accordance with their best judgment.

 

It is important that the proxies be returned promptly and that your shares are represented at the Annual Meeting. Stockholders are urged to mark, date, execute and promptly return the accompanying proxy card in the enclosed envelope.

 

  By order of the Board of Directors,
   
  /s/ Sam Tawfik
  Sam Tawfik
  Chief Executive Officer

November 27, 2020

Ft. Lauderdale, Florida

 

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