Document:

Exhibit 10.5

 

RESTRICTED STOCK
UNIT AGREEMENT

PURSUANT TO
THE

KARAT PACKAGING
INC. 2019 STOCK INCENTIVE PLAN

 

THIS
AGREEMENT made as of the ___ day of ___________ 2019, between Karat Packaging Inc., a Delaware corporation, (the “Company”),
and the individual whose name and signature appears on the signature page attached hereto (the “Participant”).
Capitalized terms not defined herein shall have the meaning ascribed thereto in the Karat Packaging Inc. Stock Incentive Plan (as
amended to date, the “Plan”). This Agreement shall be effective as of the date hereof (the “Effective Date”).

 

1. Award.

 

(a) Shares.
Pursuant to the Plan, the Company hereby grants to the Participant the right to receive the number of shares of the Company’s
Common Stock set forth opposite Participant’s name on the signature page hereto upon the satisfaction of certain conditions
(the “Restricted Stock Units”). Shares of the Company’s Common Stock shall be issued only upon vesting
of the Restricted Stock Units and only upon the satisfaction of the terms and conditions set forth herein and in the Plan (such
shares shall be referred to hereafter as the “Award Stock”).

 

(b) Plan
Incorporated. Participant acknowledges receipt of a copy of the Plan, and agrees that this Award of Restricted Stock Units
shall be subject to all of the terms and conditions set forth in the Plan, including future amendments thereto, if any, pursuant
to the terms thereof, which Plan is incorporated herein by reference as a part of this Agreement.

 

2. Restricted
Stock Units. Participant hereby accepts the Restricted Stock Units when issued and agrees as follows:

 

(a)
Initial Public Offering; Vesting. The vesting of the Restricted Stock Units issued hereunder is conditioned on the closing
of the initial public offering of the Company. For the avoidance of doubt, if the initial public offering of the Company does not
close for any reason whatsoever, any and all of the Restricted Stock Units issued hereunder shall not vest and shall expire and
be forfeited immediately and returned to the Company. No Award Stock shall be issued pursuant to the unvested Restricted Stock
Units. Except as otherwise provided for in the Plan and this Agreement, the Restricted Stock Units shall vest, provided that the
initial public offering of the Company shall have closed, upon the satisfaction of the time-based vesting requirements set forth
below:

 

	Date	 	Total Percentage Vested	 
	First year anniversary of the closing date of the initial public offering	 	33 1/3%	 
	Second year anniversary of the closing date of the initial public offering	 	33 1/3%	 
	Third year anniversary of the closing date of the initial public offering	 	33 1/3%	 

 

There shall be no
proportionate or partial vesting in the periods between the vesting dates and all vesting shall occur only on the aforementioned
vesting dates.

 

(b) Termination
of Employment or Other Service; Change in Control.

 

(i) General.
Except as otherwise provided for below, if Participant’s employment or other service with the Company terminates, all Restricted
Stock Units unvested at the time of termination shall expire and be forfeited immediately and returned to the Company.

 

     

     

    

 

(ii)
Death. In the event that the Participant dies while in the employment or other service of the Company, all Restricted Stock
Units which have not vested on the date of death shall immediately vest.

 

(iii)
Disability. In the event that the Participant’s employment or other service with the Company is terminated by reason
of Disability, the Committee may, in its sole discretion, provide that all Restricted Stock Units which have not vested at the
time of such termination shall immediately vest.

 

(iv)
Change in Control. In the event of a Change in Control all Restricted Stock Units which have not vested on the date of such
Change in Control shall immediately vest.

 

(c) Transferability.
The Restricted Stock Units may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or
disposed of unless the Plan so provides.

 

(d) Distribution.
Unless otherwise provided in the Restricted Stock Unit Deferral Election Form attached hereto as Appendix A, the Company shall
deliver a certificate evidencing shares of Award Stock to the Participant or direct its transfer agent to register such shares
in book entry form within thirty (30) days following the satisfaction of the time-based vesting requirements. Notwithstanding
the foregoing, if the Restricted Stock Units vest due to: (i) a Change in Control, the certificate evidencing shares of Award
Stock shall be delivered immediately upon the Change in Control, and (ii) a termination of employment due to death or Disability,
the certificate evidencing shares of Award Stock shall be delivered within thirty (30) days following such termination of
employment. For the Restricted Stock Unit Deferral Election Form to be effective, it must be received by the Company on the Effective
Date, or to the extent that none of the Restricted Stock Units vest within twelve (12) months of the Effective Date, no later than
thirty (30) days following the Effective Date.

 

3. Withholding.
To the extent that this Award or the delivery of any Award Stock causes the Participant to be subject to any tax withholding obligations,
the Participant shall meet such obligations as provided for in the Plan.

 

4. Status
as a Stockholder. Unless otherwise provided in the Plan, Participant shall have no rights of a stockholder with respect
to the Restricted Stock Units until Award Stock is issued to him or her pursuant to Section 2 above.

 

5. 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 Restricted Stock Units.

 

6. 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 Participant.

 

7. Governing
Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware.

 

8. Miscellaneous

 

(a) Provisions
of Plan and Other Agreements Control. This Agreement is subject to all the terms, conditions and provisions of the Plan, including,
without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan as
may be adopted by the Board and as may be in effect from time to time. The Plan is incorporated herein by reference. If and to
the extent that this Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall
control, and this Agreement shall be deemed to be modified accordingly.

 

     

     

    

 

(b) No Third-Party Beneficiaries.
This Agreement shall not confer any rights or remedies upon any person other than the parties and their respective successors and
permitted assigns.

 

(c) Section
409A Compliance. It is intended that all compensation payable pursuant to this Agreement are exempt from or, alternatively,
comply with Section 409A (and any legally binding guidance promulgated under Section 409A, including, without limitation,
the Final Treasury Regulations), and this Agreement will be interpreted, administered and operated accordingly. In the event that
any provision of this Agreement is inconsistent with Section 409A or such guidance, then the applicable provisions of Section 409A
shall supersede such inconsistent provision. Notwithstanding the foregoing, in no event will any of Company, its parent, its or
their respective subsidiaries, affiliates, or officers, directors, employees, or agents have any liability for failure of the form
of this Agreement to be exempt from or comply with Section 409A and none of the foregoing guarantees that the form of this
Agreement is exempt from or complies with Code Section 409A. For all purposes under Section 409A, Executive’s right
to receive any payments pursuant to this Agreement shall be treated as a right to receive a separate and distinct payment, and
any payments to be made in installments shall be deemed to be a series of separate payments. Whenever a payment under this Agreement
specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be
within the sole discretion of Company. A “termination of employment” under this Agreement shall mean a “separation
from service” under Section 409A. Notwithstanding any provisions of the Agreement to the contrary, to the extent the
that Section 409A would cause an adverse tax consequence to the Participant, a Change in Control shall not be deemed to occur
for purposes of this Agreement unless the Change in Control meets the definition ascribed to the phrase “Change in the Ownership
or Effective Control of a Corporation or in the Ownership of a Substantial Portion of the Assets of a Corporation” under
Treasury Department Regulation 1.409A-3(i)(5), as revised from time to time in either subsequent regulations or other
guidance.

 

(d) Entire
Agreement; Amendments. This Agreement (including the documents and exhibits referred to herein) and the Plan constitutes the
entire agreement among the parties and supersedes any prior understandings, agreements, or representations by or among the parties,
written or oral, that may have related in any way to the subject matter hereof. This Agreement may not be amended, supplemented,
or modified in whole or in part except by an instrument in writing signed by the party or parties against whom enforcement of any
such amendment, supplement, or modification is sought.

 

(e) Counterparts.
This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.

 

[Signature pages
follow]

 

     

     

    

 

IN
WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the
Participant has executed this Agreement, all as of the date first above written.

 

	 	KARAT PACKAGING INC.
	 	 
	 	By:	 
	 	Name:	              
	 	Title:	 
	 	 
	 	PARTICIPANT
	 	 
	 	 
	 	Name: [Participant Name]
	 	Number of Restricted Stock Units: [Number]

 

[Signature Page
to Restricted Stock Unit Agreement]

 

     

     

    

 

APPENDIX A:

KARAT PACKAGING
INC. STOCK INCENTIVE PLAN

RESTRICTED STOCK
UNIT

DEFERRAL ELECTION
FORM1

 

FOR THIS DEFERRAL
ELECTION TO BE EFFECTIVE, IT MUST BE RECEIVED BY THE COMPANY ON THE EFFECTIVE DATE, OR TO THE EXTENT THAT NONE OF THE RESTRICTED
STOCK UNITS VEST WITHIN 12 MONTHS OF THE EFFECTIVE DATE, NO LATER THAN 30 DAYS FOLLOWING THE EFFECTIVE DATE.

 

		A.	PARTICIPANT INFORMATION

 

Name:                                 [Participant
Name]

Address:                             [Participant
Address]

 

		B.	DEFERRAL ELECTION

 

For each
share of Common Stock to be issued to me pursuant to the Restricted Stock Unit Agreement effective                     
(insert the Effective Date), I hereby irrevocably elect to defer the receipt of such Common Stock as set forth below.

 

		C.	STOCK ISSUANCE DATE

 

As Restricted
Stock Units vest under your Award, the Company will issue you shares of Common Stock with respect to such vested Restricted Stock
Units following the satisfaction of such vesting requirements, in accordance with Section 2(d) of the Restricted Stock Unit
Agreement, unless you timely elect to receive the shares at a different time. If you elect a different date, Common Stock will
generally be issued to you on such date but only to the extent your Restricted Stock Units are vested and additional shares of
Common Stock (if any) will be issued to you when any remaining Restricted Stock Units vest.

 

I hereby
elect to receive my shares of Common Stock on the earlier of (check all that apply):

 

1.  ̈
                                         
                       ,
20         ; (enter date)

 

2.  ̈
my death;

 

3.  ̈
my Disability (as defined in Code Section 409A);

 

4.  ̈
a Change in Control (as defined in the Plan); and/or

 

5.  ̈
my “separation from service” (as defined in Code Section 409A) with the Company.

 

To the
extent you are a “specified employee” for purposes of Code Section 409A and to the extent Code Section 409A
is applicable to deferral of receipt of Common Stock pursuant to this Deferral Election Form (the “Form”), notwithstanding
any contrary provision which exists in the Plan or the Agreement, your distribution will be delayed for a period of 6 months as
required by Code Section 409A.

 

This
Form is subject to all the terms, conditions and provisions of the Plan and the Agreement including, without limitation, the amendment
provisions thereof. The Plan and the Agreement are incorporated herein by reference. If and to the extent that this Form conflicts
or is inconsistent with the terms, conditions and provisions of the Plan or the Agreement, the Plan and the Agreement shall control,
and this Form shall be deemed to be modified accordingly.

 

     

     

    

 

SIGNATURE:

 

	 	 	 	           /        /        
	 	 	 	 
	[Participant Name]	 	 	   Date

 

 

		1	Capitalized
                                         terms not defined herein shall have the meaning ascribed thereto in the Karat Packaging
                                         Inc. Stock Incentive Plan (as amended to date, the “Plan”).

 

     

     

    

  

INSTRUCTIONS
FOR

KARAT PACKAGING
INC. STOCK INCENTIVE PLAN

DEFERRAL ELECTION
FORM

 

This Form is to be
used to defer receipt of shares of Common Stock that are issuable under the Plan in connection with Restricted Stock Units. The
following instructions provide more information about the Form.

 

		A.	PARTICIPANT INFORMATION

 

Please complete all
items.

 

		B.	DEFERRAL ELECTION

 

Please identify the
Restricted Stock Units subject to this Form.

 

		C.	STOCK ISSUANCE DATE

 

You may elect the
timing of the issuance of your Common Stock to be issued pursuant to the Restricted Stock Units by checking the first box and inserting
a specific date in the future that you want such Common Stock issued to you. If you make such an election, you shall be issued
Common Stock with respect to any Restricted Stock Units that are vested on the date you elect and shall receive any remaining shares
of Common Stock with respect to any other Restricted Stock Units when they vest. Notwithstanding the date you elect to receive
your shares of Common Stock, you may choose by checking the corresponding boxes to receive shares of Common Stock corresponding
to any vested Restricted Stock Units earlier if and upon occurrence of any of the following events to the extent selected: (1) your
death; (2) your Disability; (3) a Change in Control; or (4) a separation from service. If you make no election,
the Company will issue you shares of Common Stock with respect to Restricted Stock Units following the satisfaction of such vesting
requirements, in accordance with Section 2(d) of the Restricted Stock Unit Agreement.Exhibit 10.6

 

KARAT PACKAGING INC.

2019 STOCK INCENTIVE PLAN

STOCK OPTION AGREEMENT

 

THIS OPTION AGREEMENT
(this “Agreement”), is made and effective as of this ____ day of ______________, 2019 (the “Grant Date”),
by and between Karat Packaging Inc., a Delaware corporation (“Company”), and _________________ (“Optionee”).

 

WITNESETH:

 

WHEREAS, the
Company is desirous of increasing the incentive of Optionee whose contributions are important to the continued success of the Company;

 

NOW, THEREFORE,
in consideration of the foregoing, and for other good and valuable consideration, the Company hereby grants Optionee options to
purchase shares of common stock, par value $0.001 (the “Common Stock”), of the Company pursuant to the Karat Packaging
Inc. 2019 Stock Incentive Plan (the “Plan”), upon the following terms and conditions. Capitalized terms not defined
herein shall have the meaning ascribed thereto in the Plan.

 

		1.	GRANT OF OPTION

 

Subject to the terms
and conditions of this Agreement and the Plan, the Company hereby grants to the Optionee an Option to purchase an aggregate of
five thousand (5,000) shares of the Company’s Common Stock.

 

		2.	EXERCISE PRICE

 

The exercise price
of this Option shall be Ten Dollars ($10.00) per share of Common Stock (the “Exercise Price”), which is no less than
the Fair Market Value of a share of Common Stock on the Grant Date.

 

		3.	TERM AND VESTING OF OPTION

 

(a)          Option
Period. This Option shall terminate and all rights to purchase shares hereunder shall cease on the tenth anniversary of the
Grant Date.

 

(b)          Vesting.
Subject to Section 5 and 6 hereof, this Option shall become vested on the first anniversary of the closing date of the initial
public offering of the Company.

 

		4.	EXERCISE AND PAYMENT

 

(a)          General.
When the Option has vested and any other conditions to the exercise of an Option have been satisfied, Optionee may exercise the
Option only in accordance with the following provisions. Optionee shall deliver to the Company a written notice stating that Optionee
is exercising the Option and specifying the number of shares of Common Stock which are to be purchased pursuant to the Option,
and such notice shall be accompanied by payment in full of the Exercise Price of the shares for which the Option is being exercised,
by one or more of the methods provided for in the Plan. Said notice must be delivered to the Company at its principal office and
addressed to the attention of Amy Tsen. An attempt to exercise any Option granted hereunder other than as set forth in the Plan
shall be invalid and of no force and effect.

 

     

     

    

 

(b)          Payment
of the Exercise Price. Payment of the Exercise Price for the shares of Common Stock purchased pursuant to the exercise of an
Option shall be made by one of the following methods:

 

(i)          by
cash, certified or cashier’s check, bank draft or money order;

 

(ii)         through
the delivery to the Company of shares of Common Stock which have been previously owned by Optionee for the requisite period necessary
to avoid a charge to the Company’s earnings for financial reporting purposes; such shares shall be valued, for purposes of
determining the extent to which the Exercise Price has been paid thereby, at their Fair Market Value on the date of exercise; without
limiting the foregoing, the Committee may require Optionee to furnish an opinion of counsel acceptable to the Committee to the
effect that such delivery would not result in the Company incurring any liability under Section 16(b) of the Exchange Act; or

 

(iii)        by
any other method which the Committee, in its sole and absolute discretion and to the extent permitted by applicable law, may permit,
including, but not limited to through a “cashless exercise sale and remittance procedure” pursuant to which Optionee
shall concurrently provide irrevocable instructions (1) to a brokerage firm approved by the Committee to effect the immediate sale
of the requisite number of the purchased shares and remit to Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable federal, state and
local income, employment, excise, foreign and other taxes required to be withheld by the Company by reason of such exercise and
(2) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the
sale.

 

		5.	TERMINATION OF EMPLOYMENT

 

Upon Optionee’s
termination of employment or other service with the Company, the Options shall be subject to the provisions set forth in Section
6(j) of the Plan.

 

		6.	CHANGE IN CONTROL

 

Upon a Change in Control,
all Options shall be subject to the provisions set forth in Section 11 of the Plan.

 

		7.	MISCELLANEOUS

 

(a)          Controlling
Law. This Agreement and all questions relating to its validity, interpretation, performance, and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by, and construed in accordance with the laws of the
State of Delaware.

 

    	 	2	 

     

    

 

(b)          Binding
Nature of Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns.

 

(c)          Provisions
of Plan Control. This Agreement is subject to all the terms, conditions and provisions of the Plan, including, without limitation,
the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan as may be adopted by
the Board and as may be in effect from time to time. The Plan is incorporated herein by reference. If and to the extent that this
Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall control, and this
Agreement shall be deemed to be modified accordingly.

 

(d)          Withholding.
In connection with the exercise of the Option, the Optionee agrees (a) to pay to the Company, or make arrangements satisfactory
to the Company regarding payment of, any federal, state or local, domestic or foreign taxes of any kind required by law to be withheld
with respect to such exercise, and (b) that the Company shall, to the extent permitted by law, have the right to deduct from any
payment of any kind otherwise due to the Optionee any federal, state or local taxes of any kind required by law to be withheld
with respect to the exercise of the Option.

 

(e)          No
Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any person other than the parties and
their respective successors and permitted assigns.

 

(f)          Entire
Agreement; Amendments. This Agreement (including the documents and exhibits referred to herein) constitutes the entire agreement
among the parties and supersedes any prior understandings, agreements, or representations by or among the parties, written or oral,
that may have related in any way to the subject matter hereof. This Agreement may not be amended, supplemented, or modified in
whole or in part except by an instrument in writing signed by the party or parties against whom enforcement of any such amendment,
supplement, or modification is sought.

 

(g)          No
Rights to Continued Employment. Nothing contained herein shall give the Optionee the right to be retained in the employment
or service of the Company or any of its subsidiaries or affiliates or affect the right of any such employer to terminate the Optionee.

 

(h)          Counterparts.
This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.

 

[SIGNATURES ON THE
FOLLOWING PAGE]

 

    	 	3	 

     

    

 

IN WITNESS WHEREOF,
the parties have executed this Agreement as of the day and year first above written.

 

	 	KARAT PACKAGING INC.
	 	 
	 	By:	
	 	Name:	 Alan Yu         
	 	Title:	Chief Executive Officer
	 	 	 
	 	OPTIONEE:
	 	 
	 	 
	 	Name:	 
	 	Address:	 
	 	 	 

 

    	 	4

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