Exhibit 10.3

 

NUGENE INTERNATIONAL, INC.

RESTRICTED STOCK UNITS AGREEMENT

 

THIS RESTRICTED STOCK UNITS AGREEMENT (the “Agreement”) is made and entered into
as of the 22nd day of September, 2016 (the “Grant Date”), by and between NUGENE
INTERNATIONAL, INC., a Nevada corporation (the “Company”); and, ALI KHARAZMI
(the “Grantee”), the Chairman of the Company’s Board of Directors. The Company
has granted to the Grantee an award (the “Award”) consisting of two million
(2,000,000) Restricted Stock Units (the “Total Number of Units”), subject to the
terms and conditions of this Agreement. Each Unit represents a right to receive
upon settlement one (1) share of Stock. The Award has not been granted pursuant
to any compensatory, bonus, or similar plan maintained or otherwise sponsored by
the Company (collectively, the “Plan”), and the shares of Stock that may become
issuable upon settlement the Units shall not reduce the number of shares of
Stock available for issuance under any Plan. The Company and Grantee are
sometimes referred to collectively herein as the “Parties”, and each
individually as a “Party”.

 

1.DEFINITIONS AND INTERPRETATION.

 

1.1           Definitions. In addition to other capitalized terms defined
elsewhere in this Agreement, the following capitalized terms shall have the
following meanings:

 

“Board” means the Board of Directors of the Company. If one or more committees
of the Board of Directors have been appointed by the Board to administer this
Agreement, “Board” also means such committee(s).

 

“Cause” shall have the same meaning as under the Chairman Agreement executed
concurrently by and between the Parties (the “Chairman Agreement”).

 

“Change in Control” shall have the same meaning as under the Chairman Agreement.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any applicable
regulations and administrative guidelines promulgated thereunder.

 

“Complete Disability” shall have the same meaning as under the Chairman
Agreement.

 

“Dividend Equivalent Units” mean additional Restricted Stock Units credited
pursuant to Section 2.3, below.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Expiration Date” means the seventh (7th) anniversary of the Grant Date.

 

“Fair Market Value” means as of any date, the value of a share of Stock or other
property as determined by the Board, in its discretion, or by the Company, in
its discretion, if such determination is expressly allocated to the Company
herein, subject to the following:

 

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(a)          If, on such date, the Stock is listed or quoted on a national or
regional securities exchange or quotation system, the Fair Market Value of a
share of Stock shall be the closing price of a share of Stock as quoted on the
national or regional securities exchange or quotation system constituting the
primary market for the Stock, as reported in The Wall Street Journal or such
other source as the Board deems reliable. If the relevant date does not fall on
a day on which the Stock has traded on such securities exchange or quotation
system, the date on which the Fair Market Value shall be established shall be
the last day on which the Stock was so traded or quoted prior to the relevant
date, or such other appropriate day as shall be determined by the Board, in its
discretion.

 

(b)          If, on such date, the Stock is not listed or quoted on a national
or regional securities exchange or quotation system, the Fair Market Value of a
share of Stock shall be as determined by the Board in good faith without regard
to any restriction other than a restriction which, by its terms, will never
lapse.

 

“Participating Company” means the Company and any subsidiary of the Company.

 

“Restricted Stock Unit” or “Unit” means a right to receive on the applicable
Settlement Date and in accordance with this Agreement one (1) share of Stock,
and includes the Total Number of Units originally granted pursuant to this
Agreement and the Dividend Equivalent Units credited pursuant to Section 2.3, as
both may be adjusted from time to time pursuant to Section 7.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Service” means the Grantee’s service to the Company as a director or
consultant. The Grantee’s Service shall not be deemed to have been interrupted
or terminated if the Grantee takes any sick leave, or other bona fide leave of
absence approved by the Company’s Board of Directors.

 

“Service Condition” means the condition to the vesting of the Award. The Service
Condition is satisfied based on the duration of the Grantee’s continuous Service
from the Grant Date, as provided by Section 3.1.

 

“Settlement Date” means, for each Vested Unit, the earliest of (i) the six-month
anniversary of the date the Service Condition is satisfied with respect to such
Vested Unit (or, at the sole discretion of the Board, at such later date during
the same calendar year); (ii) the date the Grantee’s Service ceases for any
reason and such cessation constitutes a “separation from service” within the
meaning of Section 409A of the Code; or (iii) the date of a Change in Control
that constitutes a “change in control event” within the meaning of Section 409A
of the Code.

 

“Stock” means the common stock of the Company, subject to adjustment as provided
by Section 7.

 

“Trading Compliance Policy” means the written policy of the Company pertaining
to the purchase, sale, transfer or other disposition of the Company’s equity
securities by directors, officers, employees or other service providers who may
possess material, nonpublic information regarding the Company or its securities.

 

“Vested Unit” means a Unit that has vested in accordance with Section 3 and
ceased to be subject to the Company Reacquisition Right described in
Section 4.1.

 

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1.2Interpretation.

 

1.2.1.          Provision Not Construed Against Drafting Party. This Agreement
is the result of negotiations by and between the Parties, and each Party has had
the opportunity to be represented by independent legal counsel of its choice.
This Agreement is the product of the work and efforts of all Parties, and shall
be deemed to have been drafted by all Parties. In the event of a dispute, no
Party shall be entitled to claim that any provision should be construed against
any other Party by reason of the fact that it was drafted by one particular
Party.

 

1.2.2.          Agreement Provisions, Exhibits, and Schedules. When a reference
is made in this Agreement to an Article, Section, Subsection, Exhibit, or
Schedule, such reference shall be to said item of this Agreement unless
otherwise indicated. The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof as if set out in full
herein.

 

1.2.3.          Entire Agreement. This Agreement, and all references, documents,
or instruments referred to herein, contains the entire agreement and
understanding of the Parties in respect to the subject matter contained herein.
The Parties have expressly not relied upon any promises, representations,
warranties, agreements, covenants, or undertakings, other than those expressly
set forth or referred to herein. This Agreement supersedes (i) any and all prior
written or oral agreements, understandings, and negotiations between the Parties
with respect to the subject matter contained herein; and, (ii) any course of
performance and/or usage of the trade inconsistent with any of the terms hereof.

 

1.2.4.          Severability. Each and every provision of this Agreement is
severable and independent of any other term or provision of this Agreement. If
any term or provision hereof is held void or invalid for any reason by a court
of competent jurisdiction, such invalidity shall not affect the remainder of
this Agreement.

 

1.2.5.          Successors and Assigns. Except as expressly provided in this
Agreement, each and all of the covenants, terms, provisions, conditions, and
agreements herein contained shall be binding upon and shall inure to the benefit
of the successors and assigns of the Parties.

 

1.2.6.          Time. All Parties agree that time is of the essence as to this
Agreement.

 

1.2.7.          Governing Law. This Agreement shall be governed by the laws of
the State of California, without giving effect to any choice or conflict of law
provision or rule (whether of the State of California or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of California. If any court action is necessary to enforce the terms and
conditions of this Agreement, the Parties hereby agree that the Superior Court
of California, County of Orange, shall be the sole jurisdiction and venue for
the bringing of such action.

 

1.3           Additional Definitions and Interpretation Provisions. For purposes
of this Agreement, (i) those words, names, or terms which are specifically
defined herein shall have the meaning specifically ascribed to them; (ii)
wherever from the context it appears appropriate, each term stated either in the
singular or plural shall include the singular and plural; (iii) wherever from
the context it appears appropriate, the masculine, feminine, or neuter gender,
shall each include the others; (iv) the words “hereof”, “herein”, “hereunder”,
and words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole, and not to any particular provision of this Agreement; (v)
all references to “Dollars” or “$” shall be construed as being United States
Dollars; (vi) the term “including” is not limiting and means “including without
limitation”; and, (vii) all references to all statutes, statutory provisions,
regulations, or similar administrative provisions shall be construed as a
reference to such statute, statutory provision, regulation, or similar
administrative provision as in force at the date of this Agreement and as may be
subsequently amended.

 

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2.THE AWARD.

 

2.1           Grant of Units. On the Grant Date, the Grantee shall acquire,
subject to the provisions of this Agreement, the Total Number of Units, subject
to adjustment as provided in Section 7. Each Unit represents a right to receive
one (1) share of Stock on the applicable Settlement Date and in accordance with
this Agreement.

 

2.2           No Monetary Payment Required. The Grantee is not required to make
any monetary payment (other than applicable tax withholding, if any) as a
condition to receiving the Units or shares of Stock issued upon the vesting or
settlement of the Units, the consideration for which shall be services to be
rendered to a Participating Company or for its benefit. Notwithstanding the
foregoing, if required by applicable law, the Grantee shall furnish
consideration in the form of cash or past services rendered to a Participating
Company or for its benefit having a value not less than the par value of the
shares of Stock issued upon settlement of the Units.

 

2.3           Dividend Equivalent Units. On the date that the Company pays a
cash dividend or other cash distribution to holders of Stock generally, the
Grantee shall be credited with a number of additional whole Dividend Equivalent
Units determined by dividing (a) the product of (i) the dollar amount of the
cash dividend or distribution paid per share of Stock on such date and (ii) the
total number of Units previously credited to the Grantee pursuant to this
Agreement which have not been settled or forfeited pursuant to the Company
Reacquisition Right (as defined below) as of such date, by (b) the Fair Market
Value per share of Stock on such date. Any resulting fractional Dividend
Equivalent Unit shall be rounded to the nearest whole number. Such additional
Dividend Equivalent Units shall be subject to the same terms and conditions and
shall be settled or forfeited in the same manner and at the same time as the
Units originally subject to this Agreement with respect to which they have been
credited.

 

2.4           Termination of the Award. The Award shall terminate upon the first
to occur of (a) the final settlement of all Vested Units in accordance with
Section 5 (including a final settlement upon the cessation of Grantee’s
Services) or (b) the Expiration Date if settlement has not occurred on or before
the Expiration Date.

 

3.VESTING OF UNITS.

 

3.1           Satisfaction of Service Condition. Except as provided by
Section 3.2 below and subject to the Grantee’s continuous Service through the
applicable date set forth in the table below (each a “Service Date”), the
Service Condition will be satisfied in accordance with the following schedule:

 

Service Date  Percentage of Units        22 August 2017   33.34% 22 August 2018 
 33.33% 22 August 2019   33.33%

 

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3.2           Vesting Upon Change in Control or Upon Removal Without Cause or
Due to Death, or Complete Disability. Upon the Occurrence of a Change in
Control, the Service Condition will be satisfied with respect to one-hundred
percent (100%) of the Total Number of Units effective as of the date of such
Change in Control. If the Grantee’s Service is involuntarily ceased by the
Company for any reason other than Cause or the Grantee’s Service ends as a
result of the Grantee’s death or Complete Disability, then the Service Condition
will be satisfied with respect to one-hundred percent (100%) of the Total Number
of Units effective as of the date of such end of Service. If the Grantee
voluntarily terminates his Service there shall be no acceleration of the Service
Condition.

 

3.3           Effect of the End of Service. Subject to the vesting provisions in
Sections 3.1 and 3.2 above, upon the end of Grantee’s Service (whether by the
Company or by Grantee and whether for Cause or for any or no reason), then:

 

(a)          all Units for which the Service Condition has not been satisfied as
of the date of such end of Service shall be subject to the Company Reacquisition
Right (as defined in Section 4.1) immediately upon the end of Grantee’s Service;
and

 

(b)          all Units for which the Service Condition has been satisfied as of
the date of such end of Service (including as a result of Section 3.2) shall not
be subject to the Company Reacquisition Right, but instead shall remain Vested
Units.

 

3.4           Payments Upon Vesting. On the day of Vesting of any Units pursuant
to Section 3.1, above, the Company shall:

 

(a)          if Grantee is an employee at the time of Vesting, withhold, on
behalf of Grantee, the Federal Insurance Contributions Act tax imposed pursuant
to Sections 3101 and 3121(v)(2) of the Code on the Vested Units (the “FICA
Amount”). In addition, the Company shall pay Grantee an amount equal to the sum
of (A) the FICA Amount, plus (B) a tax gross-up payment (computed at the highest
applicable marginal rate) in an amount that, after payment of all federal,
state, and local income and employment taxes, results in the Grantee’s receipt
and retention, on an after-tax basis, of an amount equal to all federal, state,
and local taxes payable by Grantee on the FICA Amount.

 

(b)          if Grantee is a director or consultant at the time of Vesting, pay
Grantee an amount equal to the sum of (A) the taxes imposed pursuant to
Section 1401 of the Code on the Vested Units that are treated as
“self-employment income” (as defined in Section 1402(b) of the Code), plus (B) a
tax gross-up payment (computed at the highest applicable marginal rate) in an
amount that, after payment of all federal, state, and local income and
employment taxes, results in the Grantee’s receipt and retention, on an
after-tax basis, of an amount equal to all federal, state, and local taxes
payable by Grantee on the amount specified in Section 3.4(ii)(A).

 

The Company shall make any payments due to Grantee pursuant to this Section 3.4
within 24 hours of the Vesting of any Units by wire transfer to the account
designated by Grantee.

 

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3.5Federal Excise Tax Under Section 4999 of the Code.

 

3.5.1.          Excess Parachute Payment. If any acceleration of vesting
pursuant to the Award and any other payment or benefit (collectively,
the “Payments”) received or to be received by the Grantee would, but for this
Section, subject the Grantee to any excise tax pursuant to Section 4999 of the
Code or any similar or successor provision (the “Excise Tax”) due to the
characterization of such acceleration of vesting, payment or benefit as an
“excess parachute payment” under Section 280G of the Code, then the aggregate
amount of the Payments will be either fully payable or reduced to the largest
portion of the Payments that would result in no portion of the Payments (after
reduction) being subject to the Excise Tax, whichever results in the Grantee
receiving the greatest amount of Payments, on an after-tax basis (accounting for
federal, state, and local income taxes and the Excise Tax), even if some or all
of the Payments are subject to the Excise Tax. Any reduction in the Payments
required by this Section will be made in the following order: (i) reduction of
cash payments; (ii) reduction of accelerated vesting of equity awards other than
stock options; (iii) reduction of accelerated vesting of stock options; and
(iv) reduction of other benefits paid or provided to the Grantee. In the event
that acceleration of vesting of equity awards is to be reduced, such
acceleration of vesting will be cancelled in the reverse order of the date of
grant of the Grantee’s equity awards. If two or more equity awards are granted
on the same date, each award will be reduced on a pro-rata basis.

 

3.5.2.          Determination by Tax Firm. No later than the date of the
occurrence of any event that might reasonably be anticipated to result in an
“excess parachute payment” to the Grantee, the Company shall request a
determination in writing by the professional firm engaged by the Company for
general tax purposes, or, if the tax firm so engaged by the Company is serving
as accountant or auditor for the acquiror, the Company will appoint a regionally
recognized tax firm to make the determinations required by this Section
(the “Tax Firm”). As soon as practicable thereafter, the Tax Firm shall
determine the Grantee the amount of such acceleration of vesting, payments and
benefits to be reduced, if any. For the purposes of such determination, the Tax
Firm may rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code. The Company and the Grantee
shall furnish to the Tax Firm such information and documents as the Tax Firm may
reasonably request in order to make its required determination. The Company
shall bear all reasonable fees and expenses the Tax Firm charges in connection
with its services contemplated by this Section.

 

4.COMPANY REACQUISITION RIGHT.

 

4.1           Grant of Company Reacquisition Right. In the event that the
Grantee’s Service ends for any reason, the Grantee shall forfeit and the Company
shall automatically reacquire all Units for which the Service Condition has not
been satisfied as of the time of such end of Grantee’s Service in accordance
with Section 3 (the “Unvested Units”), and the Grantee shall not be entitled to
any payment therefor (the “Company Reacquisition Right”).

 

4.2           Dividends, Distributions, and Adjustments. Upon the occurrence of
a dividend or distribution to the stockholders of the Company paid in shares of
Stock or other property, or any other adjustment upon a change in the capital
structure of the Company as described in Section 7, any and all new, substituted
or additional securities or other property to which the Grantee is entitled by
reason of the Grantee’s ownership of Unvested Units shall be immediately subject
to the Company Reacquisition Right and included in the terms “Units” and
“Unvested Units” for all purposes of the Company Reacquisition Right with the
same force and effect as the Unvested Units immediately prior to the dividend,
distribution or adjustment, as the case may be. For purposes of determining the
number of Units for which the Service Condition has been satisfied following a
dividend, distribution or adjustment, credited Service shall include all Service
with any corporation which is a Participating Company at the time the Service is
rendered, whether or not such corporation is a Participating Company both before
and after any such event.

 

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5.SETTLEMENT OF THE UNITS.

 

5.1           Issuance of Shares of Stock. Subject to the provisions of
Section 5.3 below, the Company shall issue to the Grantee on the Settlement Date
with respect to each Vested Unit to be settled on such date one (1) share of
Stock.

 

5.2           Beneficial Ownership of Shares. A certificate for the shares
acquired by the Grantee shall be registered in the name of the Grantee, or, if
applicable, in the names of the heirs of the Grantee.

 

5.3           Restrictions on Grant of the Units and Issuance of Shares. As of
the date of this Agreement, the grant of the Units and issuance of shares of
Stock upon settlement of the Units have not been registered under federal or
state securities laws, and as a result, shall be subject to compliance with all
applicable requirements of federal, state or foreign law with respect to such
securities. No shares of Stock may be issued hereunder if the issuance of such
shares would constitute a violation of any applicable federal, state, or foreign
securities laws or other law or regulations or the requirements of any stock
exchange or market system upon which the Stock may then be listed. The inability
of the Company to obtain from any regulatory body having jurisdiction the
authority, if any, deemed by the Company’s legal counsel to be necessary to the
lawful issuance of any shares subject to this Agreement shall relieve the
Company of any liability in respect of the failure to issue such shares as to
which such requisite authority shall not have been obtained. As a condition to
the settlement of the Units, the Company may require the Grantee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.

 

5.4           Transfer of Shares. The Grantee may not transfer the shares of
Stock issued upon settlement of the Units except in compliance with applicable
federal and state securities laws and the Company’s insider trading policy.

 

5.5           Fractional Shares. The Company shall not be required to issue
fractional shares upon the settlement of the Units.

 

6.TAX WITHHOLDING.

 

6.1           In General. Grantee understands and agrees that the Grantee is an
independent contractor and not an employee of the Company. As a result, the
Company will not make deductions for taxes from any amounts payable to Grantee
as a result of his Services to the Company or as a result of the vesting or
settlement of the Units (except as otherwise specified in Section 3.4(i) or
required by applicable law or regulation). Any taxes imposed on the Grantee due
to Services to the Company (including upon the issuance, vesting and settlement
of the Units) will be the sole responsibility of the Consultant (except as
otherwise specified in Section 3.4(i)).

 

6.2           Cancellation of Shares. The Company shall, upon request by the
Grantee, allow Grantee to satisfy all or any portion of the Grantee’s tax
obligations upon the settlement of the Units by having the Company cancel the
shares of Stock otherwise deliverable to the Grantee in settlement of the Units
in an amount equal to the number of whole shares having a fair market value, as
determined by the Company as of the date on which the tax obligations arise, not
in excess of the amount of such tax obligations determined by the applicable
minimum statutory withholding rates. Upon cancellation of the shares, the
Company shall pay the fair market value of such cancelled shares to the Grantee
in cash so that the Grantee can satisfy his tax obligations.

 

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6.3           Notice and Payment. On our before the date of each settlement of
Units, the Grantee shall notify the Company of his election to cancel shares of
Stock pursuant to Section 6.2 upon the settlement of such Units. The Company
shall make the payment due to Grantee pursuant to Section 6.2 within 24-hours of
the date of the settlement of the Units for which Grantee has elected to cancel
shares of Stock pursuant to Section 6.2 by wire transfer to the account
designated by Grantee.

 

7.          ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. Subject to any
required action by the stockholders of the Company and the requirements of
Section 409A of the Code to the extent applicable, in the event of any change in
the Stock effected without receipt of consideration by the Company, whether
through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, split-up, split-off, spin-off, combination of shares, exchange of shares,
or similar change in the capital structure of the Company, or in the event of
payment of a dividend or distribution to the stockholders of the Company in a
form other than Stock (other than regular, periodic cash dividends paid on Stock
pursuant to the Company’s dividend policy) that has a material effect on the
Fair Market Value of shares of Stock, appropriate and proportionate adjustments
shall be made in the number of Units subject to this Agreement and/or the number
and kind of shares or other property to be issued in settlement of the Units, in
order to prevent dilution or enlargement of the Grantee’s rights under this
Agreement. For purposes of the foregoing, conversion of any convertible
securities of the Company shall not be treated as “effected without receipt of
consideration by the Company.” Any and all new, substituted or additional
securities or other property (other than regular, periodic cash dividends paid
on Stock pursuant to the Company’s dividend policy) to which the Grantee is
entitled by reason of ownership of Units acquired pursuant to this Agreement
will be immediately subject to the provisions of this Agreement on the same
basis as all Units originally acquired hereunder. Any fractional Unit or share
resulting from an adjustment pursuant to this Section shall be rounded down to
the nearest whole number. Such adjustments shall be determined by the Board, and
its determination shall be final, binding, and conclusive.

 

8.          RIGHTS AS A STOCKHOLDER OR DIRECTOR. The Grantee shall have no
rights as a stockholder with respect to any shares which may be issued in
settlement of the Units until the date of the issuance of such shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). No adjustment shall be made for
dividends, distributions or other rights for which the record date is prior to
the date the shares of Stock are issued, except as provided in Section 2.3 or
Section 7. The Grantee understands and acknowledges that the Grantee’s Services
to the Company is dictated by the Chairman Agreement. Nothing in this Agreement
shall confer upon the Grantee any right to continue in the Service of a
Participating Company or interfere in any way with any right of a Participating
Company to end the Grantee’s Service at any time.

 

9.          LEGENDS. The Company may at any time place legends referencing any
applicable federal, state or foreign securities law restrictions on all
certificates representing shares of stock issued pursuant to this Agreement. The
Grantee shall, at the request of the Company, promptly present to the Company
any and all certificates representing shares acquired pursuant to this Agreement
in the possession of the Grantee in order to carry out the provisions of this
Section. Unless otherwise specified by the Company, legends placed on such
certificates may include, but shall not be limited to, the following:

 

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR
RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT.”

 

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10.         COMPLIANCE WITH SECTION 409A. The Parties intend that any election,
payment, or benefit which is made or provided pursuant to or in connection with
this Agreement that may result in or relate to the deferral of compensation
within the meaning of Section 409A of the Code (“Section 409A Deferred
Compensation”) shall comply in all respects with the applicable requirements of
Section 409A of the Code (including applicable regulations or other
administrative guidance thereunder, as determined by the Board in good faith) to
avoid the unfavorable tax consequences provided therein for non-compliance. In
connection with compliance with Section 409A of the Code, the following shall
apply:

 

10.1         Separation from Service; Required Delay in Payment to Specified
Grantee. Notwithstanding anything set forth herein to the contrary, no amount
payable pursuant to this Agreement on account of the Grantee’s end of Service
which constitutes Section 409A Deferred Compensation shall be paid unless and
until the Grantee has incurred a “separation from service” within the meaning of
Section 409A of the Code. Furthermore, to the extent that the Grantee is a
“specified employee” within the meaning of the Section 409A as of the date of
the Grantee’s separation from service, no amount that constitutes a deferral of
compensation which is payable on account of the Grantee’s separation from
service shall be paid to the Grantee before the date (the “Delayed Payment
Date”) which is first day of the seventh month after the date of the Grantee’s
separation from service or, if earlier, the date of the Grantee’s death
following such separation from service. All such amounts that would, but for
this Section, become payable prior to the Delayed Payment Date will be
accumulated and paid on the Delayed Payment Date.

 

10.2         Other Changes in Time of Payment. Neither the Grantee nor the
Company shall take any action to accelerate or delay the payment of any benefits
under this Agreement in any manner which would not be in compliance with
Section 409A of the Code.

 

10.3         Amendments to Comply with Section 409A;
Indemnification. Notwithstanding any other provision of this Agreement to the
contrary, the Company is authorized to amend this Agreement, to void or amend
any election made by the Grantee under this Agreement and/or to delay the
payment of any monies and/or provision of any benefits in such manner as may be
determined by the Company, in its discretion, to be necessary or appropriate to
comply with Section 409A of the Code without prior notice to or consent of the
Grantee. The Grantee hereby releases and holds harmless the Company, its
directors, officers and stockholders from any and all claims that may arise from
or relate to any tax liability, penalties, interest, costs, fees or other
liability incurred by the Grantee in connection with this Agreement, including
as a result of the application of Section 409A of the Code.

 

10.4         Advice of Independent Tax Advisor. The Company has not obtained a
tax ruling or other confirmation from the Internal Revenue Service with regard
to the application of Section 409A to this Agreement, and the Company does not
represent or warrant that this Agreement will avoid adverse tax consequences to
the Grantee, including as a result of the application of Section 409A of the
Code. The Grantee hereby acknowledges that he or she has been advised to seek
the advice of his or her own independent tax advisor prior to entering into this
Agreement and is not relying upon any representations of the Company or any of
its agents as to the effect of or the advisability of entering into this
Agreement.

 

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11.         ADMINISTRATION. All questions of interpretation concerning this
Agreement or any other form of agreement or other document employed by the
Company in the administration of this Agreement shall be determined by the
Board. All such determinations by the Board shall be final, binding and
conclusive upon all persons having an interest in this Agreement, unless
fraudulent or made in bad faith. Any and all actions, decisions, and
determinations taken or made by the Board in the exercise of its discretion
pursuant to this Agreement or other agreement thereunder (other than determining
questions of interpretation pursuant to the preceding sentence) shall be final,
binding, and conclusive upon all persons having an interest in this Agreement.
Any officer of the Company shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, or election which is the
responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
or election.

 

12.         REPRESENTATIONS AND WARRANTIES OF THE GRANTEE. In connection with
the acquisition of securities pursuant to this Agreement, the Grantee hereby
agrees, represents, and warrants as follows:

 

12.1         Investment Intent. The Grantee is acquiring shares of Stock
pursuant to this Agreement solely for the Grantee’s own account for investment
and not with a view to or for sale in connection with any distribution of the
shares or any portion thereof and not with any present intention of selling,
offering to sell or otherwise disposing of or distributing the shares or any
portion thereof in any transaction other than a transaction exempt from
registration under the Securities Act. The Grantee further represents that the
entire legal and beneficial interest of the shares is being acquired, and will
be held, for the account of the Grantee only and neither in whole nor in part
for any other person.

 

12.2         Absence of Solicitation. The Grantee was not presented with or
solicited by any form of general solicitation or general advertising, including,
but not limited to, any advertisement, article, notice, or other communication
published in any newspaper, magazine, or similar media, or broadcast over
television, radio or similar communications media, or presented at any seminar
or meeting whose attendees have been invited by any general solicitation or
general advertising.

 

12.3         Capacity to Protect Interests. The Grantee has either (a) a
preexisting personal or business relationship with the Company or any of its
officers, directors, or controlling persons, consisting of personal or business
contacts of a nature and duration to enable the Grantee to be aware of the
character, business acumen and general business and financial circumstances of
the person with whom such relationship exists, or (b) such knowledge and
experience in financial and business matters (or has relied on the financial and
business knowledge and experience of the Grantee’s professional advisor who is
unaffiliated with and who is not, directly or indirectly, compensated by the
Company or any affiliate or selling agent of the Company) as to make the Grantee
capable of evaluating the merits and risks of the investment in shares acquired
pursuant to this Agreement and to protect the Grantee’s own interests in the
transaction, or (c) both such relationship and such knowledge and experience.

 

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12.4         Restricted Securities. The Grantee understands and acknowledges
that:

 

(a)          The issuance to Grantee of shares pursuant to this Agreement has
not been registered under the Securities Act, and the shares must be held
indefinitely unless a transfer of the shares is subsequently registered under
the Securities Act or an exemption from such registration is available, and that
the Company is under no obligation to register the shares; and

 

(b)          The Company will make a notation in its records of the
aforementioned restrictions on transfer and legends.

 

12.5         Disposition Under Rule 144. The Grantee understands that if the
shares acquired pursuant to this Agreement are not registered prior to the
Company’s issuance of such shares, the share will be restricted securities
within the meaning of Rule 144 promulgated under the Securities Act (“Rule
144”). In addition, Grantee understands that he is an “affiliate” for purposes
of Rule 144, and as such, remains subject to the “affiliate” restrictions set
forth in Rule 144. As a result, Grantee understands and agrees that any future
transfers of the Stock must be conducted in compliance with Rule 144.

 

12.6         Reliance by the Company. The Grantee understands that the shares
acquired pursuant to this Agreement have not been registered under the
Securities Act or under applicable state securities laws by reason of specific
exemptions therefrom, which exemptions may depend upon, among other things, the
bona fide nature of the Grantee’s representations as expressed herein. The
Grantee understands that the Company is relying on the Grantee’s representations
and warrants that the Company is entitled to rely on such representations and
that such reliance is reasonable.

 

13.ADDITIONAL PROVISIONS.

 

13.1         Executed Counterparts. This Agreement may be executed in any number
of counterparts, all of which when taken together shall be considered one and
the same agreement, it being understood that all Parties need not sign the same
counterpart. In the event that any signature is delivered by Fax or by E-Mail,
such signature shall create a valid and binding obligation of that Party (or on
whose behalf such signature is executed) with the same force and effect as an
original thereof. Any photographic, photocopy, or similar reproduction copy of
this Agreement, with all signatures reproduced on one or more sets of signature
pages, shall be considered for all purposes as if it were an executed
counterpart of this Agreement.

 

13.2         Enforcement. The Parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Accordingly, it
is agreed that the Parties shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity. The remedies of the
Parties under this Agreement are cumulative and shall not exclude any other
remedies to which any person may be lawfully entitled.

 

13.3         Waiver. No failure by any Party to insist on the strict performance
of any covenant, duty, agreement, or condition of this Agreement or to exercise
any right or remedy on a breach shall constitute a waiver of any such breach or
of any other covenant, duty, agreement, or condition.

 

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13.4         Recovery of Fees by Prevailing Party. In the event of any legal
action (including arbitration) to enforce or interpret the provisions of this
Agreement, the non-prevailing Party shall pay the reasonable attorneys’ fees,
costs, and expenses (including expert witness fees) of the prevailing Party in
such amount as the court shall determine. In addition, such non-prevailing Party
shall pay reasonable attorneys’ fees incurred by the prevailing Party in
enforcing, or on appeal from, a judgment in favor of the prevailing Party. The
preceding sentence is intended by the Parties to be severable from the other
provisions of this Agreement and to survive and not be merged into such
judgment.

 

13.5         Termination or Amendment. The Board may terminate or amend this
Agreement at any time; provided, however, no such termination or amendment may
adversely affect the Grantee’s rights under this Agreement without the consent
of the Grantee unless such termination or amendment is necessary to comply with
applicable law or government regulation, including, but not limited to,
Section 409A of the Code. No amendment or addition to this Agreement shall be
effective unless in writing.

 

13.6         Nontransferability of Units. Prior to the issuance of shares of
Stock on the applicable Settlement Date, neither this Agreement nor any Units
subject to this Agreement shall be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Grantee or the Grantee’s beneficiary, except
transfer by will or by the laws of descent and distribution. All rights with
respect to this Agreement shall be exercisable during the Grantee’s lifetime
only by the Grantee or the Grantee’s guardian or legal representative.

 

13.7         Further Assurances. Each Party agrees (i) to furnish upon request
to each other Party such further information; (ii) to execute and deliver to
each other Party such other documents; and, (iii) to do such other acts and
things, all as another Party may reasonably request for the purpose of carrying
out the intent of this Agreement and the transactions envisioned hereunder.
However, this provision shall not require that any additional representations or
warranties be made and no Party shall be required to incur any material expense
or potential exposure to legal liability pursuant to this Section 13.7.

 

13.8         Notices.

 

13.8.1.          Method and Delivery. All notices, requests and demands
hereunder shall be in writing and delivered by hand, by Electronic Transmission,
by mail, or by recognized commercial over-night delivery service (such as
Federal Express or UPS), and shall be deemed given (a) if by hand delivery, upon
such delivery; (b) if by Electronic Transmission, upon telephone confirmation of
receipt of same; (c) if by mail, forty-eight (48) hours after deposit in the
United States mail, first class, registered or certified mail, postage prepaid;
or, (d) if by recognized commercial over-night delivery service, upon such
delivery.

 

13.8.2.          Consent to Electronic Transmission. Each Party hereby expressly
consents to the use of Electronic Transmission for communications and notices
under this Agreement. For purposes of this Agreement, “Electronic Transmission”
means a communication (i) delivered by Fax or E-Mail when directed to the Fax
number or E-Mail address, respectively, for that recipient on record with the
sending Party; and, (ii) that creates a record that is capable of retention,
retrieval, and review, and that may thereafter be rendered into clearly legible
tangible form.

 

13.8.3.          Address Changes. Any party may alter the Fax number, E-Mail
address, physical address, or postage address to which communications or copies
are to be sent by giving notice of such change of address to the other Parties
in accordance with the provisions of this Section 13.11.

 

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13.9         Best Efforts. Each Party shall cooperate in good faith with the
other Parties generally, and in particular, the Parties shall use and exercise
their best efforts, taking all reasonable, ordinary and necessary measures to
ensure an orderly and smooth relationship under this Agreement, and further
agree to work together and negotiate in good faith to resolve any differences or
problems which may arise in the future. However, the obligations under this
Section 13.9 shall not include any obligation to incur substantial expense or
liability.

 

XIV

EXECUTION

 

IN WITNESS WHEREOF, this RESTRICTED STOCK UNITS AGREEMENT has been duly executed
by the Parties in Orange County, California, and shall be effective as of and on
the Grant Date. The Company hereby represents and warrants that it (i) has the
requisite power and authority to enter into and carry out the terms and
conditions of this Agreement, as well as all transactions contemplated
hereunder; and, (ii) it is duly authorized and empowered to execute and deliver
this Agreement.

 

  NUGENE:       NUGENE INTERNATIONAL, INC.,   a Nevada corporation

 

  BY: /s/ M. Saeed Kharazmi

 

  NAME:  M. Saeed Kharami       TITLE:  CFO/Secretary       DATED:  22 September
2016

 

XV

ACCEPTANCE

 

The Grantee represents that the Grantee has read and is familiar with the terms
and provisions of this Agreement and hereby accepts the Award subject to all of
the terms and provisions hereof. The Grantee hereby agrees to accept as binding,
conclusive, and final all decisions or interpretations of the Board of Directors
of the Company upon any questions arising under this Agreement.

 

DATED: 22 September 2016 /s/ Ali Kharzmi   ALI KHARAZMI

 

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