Exhibit 10.5

 

KAIVAL BRANDS INNOVATIONS GROUP, INC.

2020 Stock and Incentive Compensation Plan (“Plan”)

Restricted Stock Unit Agreement

 

This RESTRICTED STOCK UNIT AGREEMENT is entered into as of the Grant Date
specified on Exhibit A by and between KAIVAL BRANDS INNOVATIONS GROUP, INC., a
Delaware corporation (the “Company”), and the UNDERSIGNED EMPLOYEE (“Employee”).

 

1. Award of Restricted Stock Units.

 

(a) Number of Restricted Stock Units. The number of units set forth on Exhibit
A, each being equivalent to one Common Share as provided in Section 12(a)(i) of
the 2020 Stock and Incentive Compensation Plan (“Stock Units”), will be granted
to the Employee as of the Grant Date subject to the terms of the Plan and this
Agreement. The grant of the Stock Units is made in consideration of the services
to be rendered by the Employee to the Company.

 

(b) Grant of Stock Units. The Stock Units will be granted upon acceptance of
this Agreement by the Employee and the Common Shares underlying this Award shall
be issued upon satisfaction of the conditions of this Agreement. The Stock Units
shall be credited to a separate account maintained for the Employee on the books
and records of the Company. All amounts so credited shall continue for all
purposes to be part of the general assets of the Company. The number of Stock
Units is subject to adjustment and modification as provided in the Plan.
Accordingly, the total number of Stock Units granted pursuant to this Agreement
means, at any relevant time, the number of Stock Units set forth in (a), above,
as such number shall then have been adjusted pursuant to the Plan.

 

(c) Plan Incorporated. The Employee acknowledges receipt of a copy of the Plan
and agrees that this award of Stock Units is subject to the terms and conditions
set forth in the Plan, including future amendments thereto, if any, which Plan
is incorporated herein by reference as a part of this Agreement. Unless defined
in this Agreement, capitalized terms shall be as defined in the Plan. In the
event of any conflict between the terms of this Agreement and the terms of the
Plan, the terms of the Plan shall prevail and control.

 

2. Vesting and Payment. The Employee hereby accepts the Stock Units when granted
and agrees with respect thereto as follows:

 

(a) Forfeiture Restrictions. The Stock Units may not be sold, assigned, pledged,
exchanged, hypothecated or otherwise transferred, encumbered or disposed of to
the extent then subject to the Forfeiture Restrictions (as defined below). Any
purported sale, assignment, pledge, exchange transfer or other disposition or
encumbrance of the Stock Units in violation of this Agreement shall be null and
void. Further, in the event of the Employee’s Termination of Employment by the
Company or a Subsidiary for any reason, or in the event of the Employee’s death
or Disability, or the occurrence of a Change of Control of the Company, the
Employee shall forfeit all Stock Units to the extent then subject to the
Forfeiture Restrictions, except as otherwise provided herein or in Sections
13(c) and 15(b) of the Plan. The prohibition against transfer and the obligation
to forfeit Stock Units upon Termination of Employment before the Stock Units
vest are herein referred to as “Forfeiture Restrictions.” The Forfeiture
Restrictions shall be binding upon and enforceable against any transferee of
Stock Units.

 

(b) Lapse of Forfeiture Restrictions. The Forfeiture Restrictions shall lapse as
to the Stock Units subject to satisfaction of the conditions/achievement of the
performance goals set forth on Exhibit A, provided that the Employee has been in
continuous active service to the Company from the Grant Date through the
applicable lapse date. Notwithstanding the foregoing, a portion of the Stock
Units may be vested immediately (if so provided on Exhibit A) and the Forfeiture
Restrictions shall lapse as to a ratable portion of the unvested Stock Units,
which shall thereupon vest, on the date the Employee’s employment with the
Company is terminated by reason of death or Disability. The ratable portion that
vests shall be based upon the full months of the applicable vesting period
elapsed as of the end of the month in which the Termination of Employment due to
Disability or death occurs over the total number of months in such period, and
the balance of the Stock Units not vesting under this provision shall be
forfeited. In addition, in the event the Employee has a Termination of
Employment for any other reason, all unvested Stock Units subject to such
Forfeiture Restrictions shall be forfeited and the Company shall have no further
obligations to the Employee under this Agreement.

 

 

 

(c) Payment. A certificate evidencing the Common Shares underlying each vested
Stock Unit shall be issued by the Company in the Employee’s name on the date the
Employee’s Forfeiture Restrictions lapse with respect to such Stock Units, or as
soon as administratively practicable thereafter and within the same calendar
year. Until the Common Shares is issued to the Employee, the Employee shall have
no voting rights and no right to receive dividends or dividend equivalents with
respect to the Common Shares. Notwithstanding any provision of this Agreement to
the contrary, the issuance or delivery of any Common Shares may be postponed for
such period as may be required to comply with applicable requirements of any
national securities exchange or any requirements under any law or regulation
applicable to the issuance or delivery of such shares. The Company shall not be
obligated to issue or deliver any Common Shares if the issuance or delivery
thereof constitutes a violation of any provision of any law or of any regulation
of any governmental authority or any national securities exchange on which the
Common Shares are listed.

 

3. Tax Liability and Withholding. The Employee shall be required to pay to the
Company, and the Company shall have the right to deduct from any compensation
paid to the Employee pursuant to the Plan or otherwise, the amount of any
required withholding taxes in respect of the Stock Units and to take all such
other action as the Committee deems necessary to satisfy all obligations for the
payment of such withholding taxes. The Committee may permit the Employee to
satisfy any federal, state or local tax withholding obligation by any of the
following means, or by a combination of such means:

 

(i) tendering a cash payment or requesting the withholding to be made from other
cash compensation due to the Employee;

 

(ii) authorizing the Company to withhold Common Shares from the shares otherwise
issuable or deliverable to the Employee as a result of the vesting of the Stock
Units, provided, however, that no Common Shares shall be withheld with a value
exceeding the maximum amount of tax required to be withheld by law; and

 

(iii) delivering to the Company previously owned and unencumbered Common Shares.

 

Notwithstanding any action the Company takes with respect to any or all income
tax, social insurance, payroll tax, or other tax-related withholding
(“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and
remains the Employee’s responsibility and the Company makes no representation or
undertakings regarding the treatment of any Tax-Related Items in connection with
the grant, vesting or settlement of the Stock Units or the subsequent sale of
any shares; and does not commit to structure the Stock Units to reduce or
eliminate the Employee’s liability for Tax-Related Items.

 

4. Status of Common Shares. The Employee agrees that the Common Shares will not
be sold or otherwise disposed of in any manner that would constitute a violation
of any applicable federal or state securities laws. The Employee also agrees (i)
that the certificates representing the Common Shares may bear such legend or
legends as the Company deems appropriate in order to assure compliance with
applicable securities laws or Company policies, (ii) that the Company may refuse
to register the transfer of Common Shares on the stock transfer records of the
Company if such proposed transfer would, in the opinion of counsel satisfactory
to the Company, constitute a violation of any applicable securities law, and
(iii) that the Company may give related instructions to its transfer agent, if
any, to stop registration of the transfer of the Common Shares.

 

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5. Termination of Employment. For purposes of this Agreement, the Employee shall
be considered to be in the active service of the Company as long as the Employee
remains an employee of the Company or a parent or subsidiary corporation (as
defined in Section 424 of the Code) of the Company. Any question as to whether
and when there has been a Termination of Employment, and the cause of such
termination, shall be determined by the Committee, or its delegate, as
appropriate, and its determination shall be final and binding on all parties.
Neither the Plan nor this Agreement shall confer upon the Employee any right to
be retained in any position, as an Employee or otherwise, of the Company.
Further, nothing in the Plan or this Agreement shall be construed to limit the
discretion of the Company to terminate the Employee’s employment at any time,
with or without Cause.

 

6. Committee’s Powers. No provision contained in this Agreement shall in any way
terminate, modify or alter, or be construed or interpreted as terminating,
modifying or altering any of the powers, rights or authority vested in the
Committee or, to the extent delegated, in its delegate pursuant to the terms of
the Plan or resolutions adopted in furtherance of the Plan, including, without
limitation, the right to make certain determinations and elections with respect
to the Stock Units.

 

7. Binding Effect. This Agreement shall be binding upon and inure to the benefit
of any successors to the Company and all persons lawfully claiming under the
Employee.

 

8. Amendment or Termination. The Employee and the Company may amend this
Agreement in writing to the extent permitted under the terms of the Plan. The
Plan is discretionary and may be amended, cancelled or terminated by the Company
at any time, in its discretion. The grant of the Stock Units in this Agreement
does not create any contractual right or other right to receive any Stock Units
or other Awards in the future. Future Awards, if any, will be at the sole
discretion of the Company. Any amendment, modification, or termination of the
Plan shall not constitute a change or impairment of the terms and conditions of
the Employee’s employment with the Company.

 

9. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware. This Agreement is intended
to comply with Section 409A of the Code or an exemption thereunder and shall be
construed and interpreted in a manner that is consistent with the requirements
for avoiding additional taxes or penalties under Section 409A of the Code.
Notwithstanding the foregoing, the Company makes no representations that the
payments and benefits provided under this Agreement comply with Section 409A of
the Code and in no event shall the Company be liable for all or any portion of
any taxes, penalties, interest or other expenses that may be incurred by the
Employee on account of non-compliance with Section 409A of the Code.

 

10. Execution. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and same instrument. Execution by the Employee is an acceptance and
acknowledgement of receipt of a copy of the Plan and this Agreement. Employee
further acknowledges that he has been advised to consult his own tax advisor
regarding the tax consequences of the vesting or settlement of the Stock Units
or a disposition of the underlying shares.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
a duly authorized officer, and Employee has executed this Agreement, all as of
the Grant Date set forth on Exhibit A hereto.

 

EMPLOYEE:   COMPANY:       X   X       Printed Name:   Title:       Printed
Name:

 

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EXHIBIT A

 

Employee Name: Nirajkumar Patel

 

Grant Date: May 28, 2020

 

Restricted Stock Units Granted: 6,000,000

 

Fair Market Value: Average closing price of the common stock on the three (3)
trading days prior to the Vesting Date.

 

Forfeiture Restriction Lapse Terms: RSUs will vest if either of the following
two events occur on or before October 31, 2023: (i) a Change of Control (as that
term is defined in the Plan) or (ii) the Company generates gross revenues, in
the aggregate, in excess of $1 billion during the period between March 9, 2020
and October 31, 2023; provided, that, Awardee is still employed by the Company
at the date either of the events occur. For example, if the Company reported
gross revenues of $100 million in fiscal year 2020, $400 million in fiscal year
2021, and $600 million in fiscal year 2022, then these RSUs will vest because
the Company generated gross revenues, in the aggregate, in excess of $1 billion.
If neither of the events occur by October 31, 2023, or if Awardee is not
employed by the Company at such event date, then all RSUs shall be forfeited.

 

 

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