UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report: May 28, 2020

 

Kaival Brands Innovations Group, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   000-56016   83-3492907
(State or other jurisdiction of incorporation)   (Commission File Number)   (I.R.S. Employer Identification No.)

 

4460 Old Dixie Highway

Grant, Florida 32949

(Address of principal executive office, including zip code)

 

Telephone: (833) 452-4825

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
None   None   None

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

 

Kaival Brands Innovations Group, Inc.
Form 8-K

 

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

 

On June 2, 2020 (the “Amendment Date”), Kaival Brands Innovations Group, Inc., a Delaware corporation (the “Company”), entered into the First Amendment to Service Agreement (the “First Amendment”) with QuikfillRx LLC, a Florida limited liability company (the “QuikfillRx”), which amended that certain Service Agreement, dated March 31, 2020, with QuikfillRx (the “Service Agreement”).

 

Pursuant to the terms of the First Amendment, the parties agreed to modify the amount of General Compensation (as defined below) to be paid to QuikfillRx. As a result of the First Amendment, “General Compensation” consists of the following: (i) for the Services (as defined in the Service Agreement) provided in March 2020, the Company paid QuikfillRx an amount equal to $86,000; (ii) for the Services provided in April 2020, the Company paid QuikfillRx an amount equal to $100,000; (iii) each calendar month commencing May 2020 through October 2020, the Company will pay QuikfillRx an amount equal to $125,000 per month for the Services to be performed during such calendar month; (iv) if the parties agree to extend the term of the Service Agreement beyond the original expiration date of October 31, 2020, then for the period between November 1, 2020 and October 31, 2021, the Company will pay QuikfillRx $125,000 per month for the Services to be performed during such calendar month; and (iv) if the parties agree to extend the term of the Service Agreement beyond October 31, 2021, then for the period between November 1, 2021 and October 31, 2022, the Company will pay QuikfillRx $150,000 per month for the Services to be performed during such calendar month.

 

The above description of the First Amendment does not purport to be complete and is qualified in its entirety by the full text of the First Amendment, which is filed as Exhibit 10.1 hereto and incorporated herein by reference.

 

ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

 

Adoption of 2020 Stock and Incentive Compensation Plan

 

On May 28, 2020, the Board of Directors (the “Board”) of the Company adopted the 2020 Stock and Incentive Compensation Plan (the “Incentive Plan”). The following is a summary of the principal features of the Incentive Plan. The summary of the Incentive Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the Incentive Plan, which is included as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Background. The purpose of the Incentive Plan is to enhance stockholder value by linking the compensation of the Company’s employees, officers, directors, and consultants to increases in the price of the Company’s common stock and the achievement of other performance objectives and to encourage ownership in the Company by key personnel whose long-term employment is considered essential to the Company’s continued progress and success. The Incentive Plan is also intended to assist the Company in recruiting new employees and to motivate, retain, and encourage such employees and directors to act in stockholders’ interest and share in the Company’s success. The various types of incentive awards that may be provided under the Incentive Plan are intended to enable the Company to respond to changes in compensation practices, tax laws, accounting regulations, and the size and diversity of its business. The Company will not offer incentive stock options under the Incentive Plan. All of the Company’s employees, officers, directors, and consultants will be eligible to be granted awards under the Incentive Plan.

 

The Incentive Plan will be administered by the Board. All awards made under the Incentive Plan will be subject to the recommendations and approvals of the Board.

 

Stock Subject to the Incentive Plan. Subject to the terms of the Incentive Plan, the maximum aggregate number of shares of the Company’s common stock that may be subject to or delivered under awards granted pursuant to the Incentive Plan is 100,000,000 shares. Shares subject to awards that have been canceled, expired, settled in cash, or not issued or forfeited for any reason (in whole or in part) will not reduce the aggregate number of shares that may be subject to or delivered under awards granted under the Incentive Plan and be available for future awards granted under the Incentive Plan.

 

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Eligibility. The Company may grant awards under the Incentive Plan to employees, officers, directors, and consultants.

 

Types of Awards. The Incentive Plan provides for options not qualifying as “incentive” stock options, as defined in Section 422 of the Internal Revenue Code of 1986, as amended, stock appreciation rights, shares of restricted stock, and other stock-based awards.

 

Award Limitation. Non-employee directors may not be grated awards in excess of the 200,000 shares of the Company’s common stock in any calendar year.

 

Term and Amendments. Unless terminated by the Board, the Incentive Plan will continue to remain effective until no further awards may be granted and all granted and all awards granted under the Incentive Plan are no longer outstanding. The Board may at any time, and from time to time, amend the Incentive Plan; provided, that no amendment will be made that would impair the rights of a holder under any agreement entered into pursuant to the Incentive Plan without the holder’s consent.

 

Approval of Compensation and Awards

 

Base Salary

 

On May 28, 2020, the Board approved an annual base salary equal to $144,000 for the Company’s Chief Executive Officer and an annual base salary equal to $120,000 for the Company’s Chief Operating Officer. The annual base salaries will be reviewed by the Board on an annual basis.

 

Restricted Stock Unit Awards

 

On May 28, 2020, the Board approved the award of 3 million restricted stock units (“RSUs”) under the Incentive Plan to each of the Chief Executive Officer and the Chief Operating Officer. The RSUs were awarded pursuant to restricted stock unit agreements (“RSU Agreement”), which provide for vesting over the course of three years, with a portion of the RSUs vesting every three months. The vesting schedules are set forth in the applicable RSU Agreements, which are filed herewith as Exhibits 10.3 and 10.4. The fair market value of the RSUs is based upon the average of the closing price of the Company’s common stock on the three trading days immediately the grant date of the RSUs.

 

On May 28, 2020, the Board also approved a bonus award (“RSU Bonus Award”) of an additional 6 million RSUs under the Incentive Plan to the Chief Executive Officer and 4 million RSUs under the Incentive Plan to the Chief Operating Officer. The RSU Bonus Awards only vest in the event of a change of control (as such term is defined in the Incentive Plan) or the Company achieves in excess of $1 billion in accumulated total gross revenues during the period beginning on March 9, 2020 (the day the Company commenced business operations) and ending on October 31, 2023 (the end of the Company’s fiscal year 2023).

 

Restricted Stock Award

 

On May 28, 2020, the Board approved an equity bonus award for each of the Chief Executive Officer and the Chief Operating Officer. With respect to the Chief Executive Officer, the Board approved an award of 90,000 restricted shares of the Company’s common stock for every $50 million in accumulated gross revenues generated by the Company. With respect to the Chief Operating Officer, the Board approved an award of 75,000 restricted shares of the Company’s common stock for every $50 million in accumulated gross revenues generated by the Company. The Company’s accumulated gross revenues will be evaluated on a quarterly basis, beginning with this second quarter of fiscal year 2020. The Company anticipates that the shares will be issued, if earned, once the Company’s financial results for such quarter have been publicly released.

 

Cash Bonus Award

 

On May 28, 2020, the Board approved cash bonus awards to each of the Chief Executive Officer and the Chief Operating Officer. With respect to the Chief Executive Officer, the Board approved a cash bonus award equal to $30,000 for every $25 million in gross revenues generated by the Company. With respect to the Chief Operating Officer, the Board approved a cash bonus award equal to $20,000 for every $25 million in gross revenues generated by the Company. The Company’s accumulated gross revenues will be evaluated on a quarterly basis, beginning with the second quarter of fiscal year 2020. The Company anticipates that the cash bonus award will be paid, if earned, once the Company’s financial results for each quarter have been publicly released.

  

The above descriptions of the Incentive Plan and the RSU Agreements do not purport to be complete and are qualified in their entirety by the full text of such documents, which are filed as Exhibits hereto and incorporated herein by reference.

 

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ITEM 9.01 FINANCIAL STATEMENTS.

 

(d) Exhibits

 

Exhibit Number   Description of Exhibit
10.1*   First Amendment to Service Agreement by and between Kaival Brands Innovations Group, Inc. and QuikfillRx LLC, dated June 2, 2020.
10.2*   2020 Stock and Incentive Compensation Plan, which is filed herewith.
10.3*   Form of Restricted Stock Unit Agreement by and between Kaival Brands Innovations Group, Inc. and Nirajkumar Patel, which is filed herewith.
10.4*   Form of Restricted Stock Unit Agreement by and between Kaival Brands Innovations Group, Inc. and Eric Mosser, which is filed herewith.
10.5*   Form of Restricted Stock Unit Agreement by and between Kaival Brands Innovations Group, Inc. and Nirajkumar Patel, which is filed herewith.
10.6*   Form of Restricted Stock Unit Agreement by and between Kaival Brands Innovations Group, Inc. and Eric Mosser, which is filed herewith.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  Kaival Brands Innovations Group, Inc.
     
Dated: June 3, 2020 By: /s/ Nirajkumar Patel
    Nirajkumar Patel
    Chief Executive Officer,
Chief Financial Officer, and a Director

 

 

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Exhibit 10.1

 

FIRST AMENDMENT TO SERVICE AGREEMENT

 

This First Amendment to Service Agreement (this “First Amendment”), effective as of June 2, 2020 (“First Amendment Effective Date”), is by and between KAIVAL BRANDS INNOVATIONS GROUP, INC., a Delaware corporation (the “Client”), and QUIKFILLRX LLC, a Florida limited liability company (the “Contractor”).

 

WHEREAS, the Client and the Contractor entered into that certain Service Agreement effective as of March 31, 2020 (the “Agreement”); and

 

WHEREAS, the Client and the Contractor desire to amend the Agreement as set forth in this First Amendment.

 

NOW, THEREFORE, in consideration of the premises set forth above and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Client and the Contractor agree as follows:

 

AMENDMENT AND AGREEMENT

 

1. Defined Terms. Capitalized terms used and not otherwise defined herein will have the respective meanings ascribed to them in the Agreement.

 

2. Amendments. The Agreement is amended as follows:

 

  2.1 Schedule “B” – Compensation of the Agreement is amended and restated in its entirety as follows:

 

General Compensation: The following constitutes “General Compensation”:

 

  For the Services provided in March 2020, the Client remitted the following payments to the Contractor:

 

o $36,000, which amount was paid prior to the Effective Date, and

 

o $50,000, which was paid no later than three (3) business days after the Effective Date.

 

  For the Services provided in April 2020, the Client remitted a payment in the amount of $100,000 to the Contractor.

 

  For each calendar month commencing May 2020 through October 2020, on or before the ninth (9th) day of such month, the Client shall pay the Contractor an amount equal to $125,000 for the Services to be performed during such calendar month.

 

 

 

 

  In the event the Parties agree to extend the term of this Agreement beyond the original expiration date of October 31, 2020 by mutual agreement as set forth in Section 1 of this Agreement and such extension is agreed to on or before October 15, 2020, but in any event subject to the express terms of any such mutual extension or renewal and in the event of any inconsistency between the terms hereof and the terms of such extension or renewal the terms of such extension or renewal shall control to the extent of such inconsistency, (i) this Agreement shall renew for an additional term of one year commencing November 1, 2020 through October 31, 2021, and (ii) for each calendar month commencing during such renewal term, on or before the ninth (9th) day of such month, the Client shall pay the Contractor an amount equal to $125,000 for the Services to be performed during such calendar month.

 

  In the event the Parties further agree to extend the term of this Agreement beyond the initial annual extension contemplated in the immediately preceding bullet by mutual agreement as set forth in Section 1 and such extension is agreed to on or before October 15, 2021, but in any event subject to the express terms of any such mutual extension or renewal and in the event of any inconsistency between the terms hereof and the terms of such extension or renewal the terms of such extension or renewal shall control to the extent of such inconsistency, (i) this Agreement shall renew for an additional term of one year commencing November 1, 2021 through October 31, 2022, and (ii) for each calendar month commencing during such renewal term, on or before the ninth (9th) day of such month, the Client shall pay the Contractor an amount equal to $150,000 for Services to be performed during such calendar month.

 

Gross Revenue Quarterly Bonus Compensation: The following constitute “Bonus Compensation”:

 

During the initial Term of this Agreement expiring October 31, 2020, and during any extension or renewal of this Agreement as may be mutually agreed upon by the Parties in writing, but in any event subject to the express terms of any such mutual extension or renewal and in the event of any inconsistency between the terms hereof and the terms of such extension or renewal the terms of such extension or renewal shall control to the extent of such inconsistency, the Client shall pay the Contractor bonus compensation based on the Client’s gross quarterly sales during each applicable fiscal quarter that are attributable to the Services provided by the Contractor hereunder, as the same may be reasonably determined by the Client (such amount being hereinafter referred to as the “Applicable Gross Quarterly Sales”), which determination shall be made by the Client within fifteen (15) calendar days following the end of any applicable fiscal quarter and the amount of such bonus shall be paid on or before the thirtieth (30th) day of such calendar month as follows:

 

  An amount equal to 0.9% of the Applicable Gross Quarterly Sales, which amount shall, at the Client’s option be paid in (a) cash or (b) shares of the Client’s common stock, par value $0.001 per share (“Common Stock”), or (c) a combination of cash and Common Stock, subject to the following:

 

o If the Client determines to issue shares of Common Stock in lieu of cash payment, then the number of shares to be issued shall be based upon a per share price equal to the average closing price of the Client’s Common Stock as reported by the OTC Markets Group, Inc. on the three (3) trading days immediately preceding the date of issuance of such shares of Common Stock.

 

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o The shares of Common Stock issued to the Contractor shall be issued with a restrictive legend. Unless the shares of Common Stock are covered by an effective registration statement pursuant to the Securities Act of 1933, as amended (the “Securities Act”), an event that is not currently anticipated, the shares of Common Stock shall constitute “restricted securities,” as such term is defined in Rule 144 promulgated under Rule 144 of the Securities Act. The Contractor acknowledges and agrees that: (i) the shares of the Common Stock will not have been registered under the Securities Act or the securities laws of any state, (ii) there may not exist a market for resale of the shares of Common Stock, and (iii) such shares of Common Stock may need to be held indefinitely unless the shares of Common Stock are subsequently registered under the Securities Act or an exemption from registration is available. The Client has no obligation to register the shares of Common Stock under the Securities Act or otherwise. In connection with any transfer of the shares of Common Stock by the Contractor, the Client may require the Contractor to provide to the Client, at its expense, an opinion of counsel, satisfactory to the Client, that such transfer is in compliance with all applicable federal and state securities laws (including, without limitation, the Securities Act). Any attempted disposition of the shares of Common Stock not in accordance with the terms and conditions set forth in this Schedule “B”, shall be null and void, and the Company shall not reflect on its records any change in record ownership of any shares of Common Stock as a result of any such disposition, shall otherwise refuse to recognize any such disposition, and shall not in any way give effect to any such disposition of any shares of Common Stock.

 

o In no event shall the Client be permitted to exercise its option to issue the Client’s Common Stock in lieu of a cash payment for such Bonus Compensation (i) in excess of an aggregate amount of 12,000,000 shares of Common Stock for any such Bonus Compensation payable in connection with the period commencing on the Effective Date and ending October 31, 2020, (ii) subject to the express terms of any such mutual extension or renewal and in the event of any inconsistency between the terms hereof and the terms of such extension or renewal the terms of such extension or renewal shall control to the extent of such inconsistency, in excess of an aggregate amount of 12,000,000 shares of Common Stock for either renewal term for the periods commencing November 1, 2020 through October 31, 2021, or commencing November 1, 2021 through October 31, 2022, and (iii) subject to the express terms of any such mutual extension or renewal and in the event of any inconsistency between the terms hereof and the terms of such extension or renewal the terms of such extension or renewal shall control to the extent of such inconsistency, the maximum amount of the Client’s Common Stock issuable in connection with any such Bonus Compensation for the period through October 31, 2022 shall not exceed an amount equal to 30,000,000 shares of Common Stock.

 

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o Notwithstanding anything to the contrary contained herein, if the Client suffers a Change of Control Transaction, within five (5) business days of the closing of such Change of Control Transaction the Client shall issue the Contractor a number of shares of Common Stock equal to 12,000,000 shares less the number of shares of Common Stock previously issued to the Contractor during the applicable period, if any, in which such Change of Control Transaction occurs (with the applicable period being the period commencing on the Effective Date and ending October 31, 2020, the period commencing November 1, 2020 through October 31, 2021, or the period commencing November 1, 2021 through October 31, 2022). If the Client terminates this Agreement as part of such Change of Control Transaction, no further Bonus Compensation shall be payable by the Client to the Contractor for the fiscal quarter in which the Change of Control Transaction occurs. If this Agreement continues following such Change of Control Transaction, the Client shall be credited the value of such Common Stock against any obligation to pay Bonus Compensation for the fiscal quarter in which the Change of Control Transaction occurs. Notwithstanding anything to the contrary above, in no event shall the Client be obligated to issue the Contractor any shares of Common Stock pursuant hereto if the Client provides notice to the Contractor of termination of this Agreement prior to the consummation of the Change of Control Transaction with (for) cause. A “Change of Control Transaction” means any of the following: (i) any sale, lease or other disposition of all or substantially all of the Client’s assets, (ii) any merger, consolidation, equity exchange, reorganization, or other similar transaction or series of transactions in which the equity holders of the Client as of the Effective Date collectively own fifty percent (50%) or less of the voting power in the resulting entity immediately after such event, and (iii) any purchase or purchases by any person or persons of equity interests of the Client, the effect of which is that the equity holders of the Client as of the Effective Date collectively own fifty percent (50%) or less of the voting power in the Client immediately after such event.

 

An amount equal to 0.27% of the Applicable Gross Quarterly Sales, which amount must be paid in cash.

 

Reimbursement of Certain Expenses: The following constitute “Reimbursable Expenses”:

 

The Client shall reimburse the Contractor for any actual out-of-pocket, third-party expenses incurred by the Contractor so long as the same are pre-approved by the Client in writing, which approval may be given or withheld in the Client’s sole discretion. In no event shall the Client be obligated to reimburse the Contractor for any internal expenses, including staff, overhead or allocation of resources or for any other costs incurred by the Contractor in the performance of Services.”

 

3. No Other Amendment; Effective Date. Except as expressly set forth herein, this First Amendment shall not by implication or otherwise alter, modify or amend or in any way affect any of the terms, conditions, obligations, covenants, or agreements contained in the Agreement, all of which are revived in all respects and shall be in full force and effect. This First Amendment will be deemed effective as of the First Amendment Effective Date.

 

4. Governing Law. This First Amendment shall be deemed executed and delivered in the State of Florida and shall be governed and enforced by and interpreted in accordance with the laws of the State of Florida, without giving effect to its conflicts of laws rules and principles.

 

5. Counterparts. This First Amendment may be executed in counterparts; each of which when so executed and delivered shall be deemed an original and such counterparts shall constitute one instrument.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties have executed this First Amendment as of the First Amendment Effective Date:

 

CLIENT
     
  KAIVAL BRANDS INNOVATIONS GROUP, INC.
     
  By: /s/ Eric Mosser
  Name: Eric Mosser
  Title: Chief Operating Officer
     
CONTRACTOR
     
  QUIKFILLRX LLC
     
  By: /s/ Russell Quick
  Name: Russell Quick
  Title: Manager

 

 

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Exhibit 10.2

 

KAIVAL BRANDS INNOVATIONS GROUP, INC.
2020 STOCK AND INCENTIVE COMPENSATION PLAN

 

1. Purpose of the Plan.

 

The purpose of this Plan is to enhance shareholder value by linking the compensation of officers, directors, key employees and consultants of the Company to increases in the price of Kaival Brands Innovations Group, Inc. common stock and the achievement of other performance objectives, and to encourage ownership in the Company by key personnel whose long-term employment is considered essential to the Company’s continued progress and success. The Plan is also intended to assist the Company in the recruitment of new employees and to motivate, retain and encourage such employees and directors to act in the shareholders’ interest and share in the Company’s success.

 

2. Definitions.

 

As used herein, the following definitions shall apply:

 

(a) “Administrator” means the Board, any Committee or such delegates as shall be administering the Plan in accordance with Section 4 of the Plan.

 

(b) “Affiliate” means any Subsidiary or other entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant ownership interest as determined by the Administrator. The Administrator shall, in its sole discretion, determine which entities are classified as Affiliates and designated as eligible to participate in this Plan.

 

(c) “Applicable Law” means the requirements relating to the administration of stock option plans under U.S. federal and state laws, any stock exchange or quotation system on which the Company has listed or submitted for quotation the Common Shares to the extent provided under the terms of the Company’s agreement with such exchange or quotation system and, with respect to Awards subject to the laws of any foreign jurisdiction where Awards are, or will be, granted under the Plan, the laws of such jurisdiction.

 

(d) “Award” means a Stock Award, Option, Stock Appreciation Right, Stock Unit, or Other Stock-Based Award granted in accordance with the terms of the Plan, or any other property (including cash) granted pursuant to the provisions of the Plan.

 

(e) “Awardee” means an Employee, Director or Consultant who has been granted an Award under the Plan.

 

(f) “Award Agreement” means a Stock Award Agreement, Option Agreement, Stock Appreciation Right Agreement, Restricted Stock Unit Agreement or Other Stock-Based Award Agreement, which may be in written or electronic format, in such form and with such terms as may be specified by the Administrator, evidencing the terms and conditions of an individual Award. Each Award Agreement is subject to the terms and conditions of the Plan. The Award Agreement shall be delivered to the Participant receiving such Award upon, or as promptly as is reasonably practicable following, the grant of such Award. The effectiveness of an Award shall not be subject to the Award Agreement’s being signed by the Company and/or the Participant receiving the Award unless specifically so provided in the Award Agreement.

 

(g) “Board” means the Board of Directors of the Company.

 

 

 

 

(h) “Change of Control” shall mean, except as otherwise provided in an Award Agreement, one of the following shall have taken place after the date of this Agreement:

 

(i) any one person, or group of owners of another corporation who, acting together through a merger, consolidation, purchase, acquisition of stock or the like (a "Group"), acquires ownership of Shares of the Company that, together with the Shares held by such person or Group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the Shares of the Company (or other voting securities of the Company then outstanding). However, if such person or Group is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the Shares (or other voting securities of the Company then outstanding) before this transfer of the Company's Shares (or other voting securities of the Company then outstanding), the acquisition of additional Shares (or other voting securities of the Company then outstanding) by the same person or Group shall not be considered to cause a Change of Control of the Company; or

 

(ii) any one person or Group acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of Shares (or other voting securities of the Company then outstanding) of the Company possessing thirty percent (30%) or more of the total voting power of the Shares (or other voting securities then outstanding) of the Company where such person or Group is not merely acquiring additional control of the Company; or

 

(iii) a majority of the members of the Company's Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Company's Board prior to the date of the appointment or election (the “Incumbent Board”), but excluding, for purposes of determining whether a majority of the Incumbent Board has endorsed any candidate for election to the Board, any individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person or Group other than the Company’s Board; or

 

(iv) any one person or Group acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or Group) all or substantially all of the assets from the Company that have a total gross fair market value equal to or more than forty percent (40%) of the total fair market value of all assets of the Company immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. A transfer of assets by the Company will not result in a Change of Control if the assets are transferred to:

 

  (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;

 

  (2) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company immediately after the transfer of assets;

 

  (3) a person or Group that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company; or

 

  (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned directly or indirectly, by a person described in subparagraph (h)(i), above; or

 

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(v) Shareholders of the Company approve a plan of complete liquidation or dissolution of the Company.

 

Notwithstanding the foregoing, if any payment or distribution event applicable to an Award is subject to the requirements of Section 409A(a)(2)(A) of the Code, the determination of the occurrence of a Change of Control shall be governed by applicable provisions of Section 409A(a)(2)(A) of the Code and regulations and rulings issued thereunder for purposes of determining whether such payment or distribution may then occur.

 

(i) “Code” means the United States Internal Revenue Code of 1986, as amended, and any successor thereto, the Treasury Regulations thereunder and other relevant interpretive guidance issued by the Internal Revenue Service or the Treasury Department. Reference to any specific section of the Code shall be deemed to include such regulations and guidance, as well as any successor provision of the Code.

 

(j) “Committee” means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan or, in the absence of any such special appointment, the Compensation Committee of the Board. If there is no Compensation Committee, the full Board shall constitute the Committee.

 

(k) “Common Shares” means the Common Stock of the Company, $.001 par value, or any security of the Company issued in substitution, exchange or lieu thereof.

 

(l) “Company” means Kaival Brands Innovations Group, Inc., a Delaware corporation, or, except as utilized in the definition of Change of Control, its successor.

 

(m) “Consultant” means an individual providing services to the Company or any of its Affiliates as an independent contractor, and includes prospective consultants who have accepted offers of consultancy for the Company or any of its Affiliates, so long as such person (i) renders bona fide services that are not in connection with the offer and sale of the Company’s securities in a capital-raising transaction, (ii) does not directly or indirectly promote or maintain a market for the Company’s securities, and (iii) otherwise qualifies as a consultant under the applicable rules of the SEC for registration of shares of stock on a Form S-8 registration statement.

 

(n) “Conversion Award” has the meaning set forth in Section 4(b)(xii) of the Plan.

 

(o) “Director” means a member of the Board. Any Director who does not serve as an employee of the Company is referred to herein as a “Non-employee Director.”

 

(p) “Disability” means (i) “Disability” as defined in any employment, consulting or similar agreement to which the Participant is a party, or (ii) if there is no such agreement or it does not define “Disability,” (A) permanent and total disability as determined under the Company’s long-term disability plan applicable to the Participant, or (B) if there is no such plan applicable to the Participant or the Committee determines otherwise in an applicable Award Agreement, “Disability” shall mean the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, as determined by the Committee. Notwithstanding the above, with respect to any Award that constitutes “nonqualified deferred compensation” within the meaning of Section 409A of the Code, the foregoing definition shall apply for purposes of vesting of such Award, provided that such Award shall not be settled until the earliest of: (x) the Participant’s “disability” within the meaning of Section 409A of the Code, (y) the Participant’s “separation from service” within the meaning of Section 409A of the Code and (z) the date such Award would otherwise be settled pursuant to the terms of the Award Agreement.

 

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(q) “Disaffiliation” means a Subsidiary’s or Affiliate’s ceasing to be a Subsidiary or Affiliate for any reason (including, without limitation, as a result of a public offering, or a spin-off or sale by the Company, of the stock of the Subsidiary or Affiliate) or a sale of a division of the Company and its Affiliates.

 

(r) “Employee” means a regular, active employee of the Company or any Affiliate, including an Officer or Director who is also a regular, active employee of the Company or any Affiliate. The Administrator shall determine whether the Chairman of the Board qualifies as an “Employee.” For any and all purposes under the Plan, the term “Employee” shall not include a person hired as a leased employee, Consultant or a person otherwise designated by the Administrator, the Company or an Affiliate at the time of hire as not eligible to participate in or receive benefits under the Plan or not on the payroll, even if such ineligible person is subsequently determined to be a common law employee of the Company or an Affiliate or otherwise an employee by any governmental or judicial authority. Unless otherwise determined by the Administrator in its sole discretion, for purposes of the Plan, an Employee shall be considered to have terminated employment and to have ceased to be an Employee if his or her employer ceases to be an Affiliate, even if he or she continues to be employed by such employer.

 

(s) “Exchange Act” means the United States Securities Exchange Act of 1934, as amended and any successor thereto.

 

(t) “Fair Market Value” means the closing price for the Common Shares reported on a consolidated basis on the primary national securities exchange on which such Common Shares are traded on the date of measurement, or if the Common Shares were not traded on such measurement date, then on the next preceding date on which Common Shares were traded, all as reported by such source as the Committee may select. If the Common Shares are not listed on a national securities exchange, Fair Market Value shall be determined by the Committee in its good faith discretion, taking into account, to the extent appropriate, the requirements of Section 409A of the Code and bid and offered prices on any applicable over the counter market.

 

(u) “Grant Date” means, with respect to each Award, the date upon which the Award is granted to an Awardee pursuant to this Plan, which may be a designated future date as of which such Award will be effective, as determined by the Committee.

 

(v) “Incentive Stock Option” means an Option that is identified in the Option Agreement as intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder, and that actually does so qualify.

 

(w) “Nonqualified Stock Option” means an Option that is not an Incentive Stock Option.

 

(x) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

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(y) “Option” means a right granted under Section 8 of the Plan to purchase a number of Shares at such exercise price, at such times, and on such other terms and conditions as are specified in the agreement or other documents evidencing the Award (the “Option Agreement”). Only Nonqualified Stock Options may be granted under the Plan.

 

(z) “Other Stock-Based Award” means an Award granted pursuant to Section 11 of the Plan on such terms and conditions as are specified in the agreement or other documents evidencing the Award (the “Other Stock-Based Award Agreement”).

 

(aa) “Participant” means the Awardee or any person (including any estate) to whom an Award has been assigned or transferred as permitted hereunder.

 

(bb) “Performance Criteria” shall have the meaning set forth in Section 12(b) of the Plan.

 

(cc) “Plan” means this 2020 Stock and Incentive Compensation Plan, as set forth herein and as hereafter amended from time to time.

 

(dd) “Securities Act” means the United States Securities Act of 1933, as amended.

 

(ee) “Share” means a Common Share, as adjusted in accordance with Section 14 of the Plan.

 

(ff) “Stock Appreciation Right” means a right granted under Section 9 of the Plan on such terms and conditions as are specified in the agreement or other documents evidencing the Award (the “Stock Appreciation Right Agreement”).

 

(gg) “Stock Award” means an award or issuance of Shares made under Section 10 of the Plan, the grant, issuance, retention, vesting and/or transferability of which is subject during specified periods of time to such conditions (including, without limitation, continued employment or performance conditions) and terms as are expressed in the agreement or other documents evidencing the Award (the “Stock Award Agreement”).

 

(hh) “Stock Unit” means a bookkeeping entry representing an amount equivalent to the Fair Market Value of one Share, payable in cash, property or Shares. Stock Units represent an unfunded and unsecured obligation of the Company, except as otherwise provided for by the Administrator.

 

(ii) “Stock Unit Award” means an award or issuance of Stock Units made under Section 11 of the Plan, the grant, issuance, retention, vesting and/or transferability of which is subject during specified periods of time to such conditions (including, without limitation, continued employment or performance conditions) and terms as are expressed in the agreement or other documents evidencing the Award (the “Stock Unit Award Agreement”).

 

(jj) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, provided each company in the unbroken chain (other than the Company) owns, at the time of determination, stock possessing 50% or more of the total combined voting power of all classes of stock, in one of the other corporations in such chain.

 

(kk) “Termination for Cause” means, unless otherwise provided in an Award Agreement, Termination of Employment on account of any act of fraud or intentional misrepresentation or embezzlement, misappropriation or conversion of assets of the Company or any Affiliate, or the intentional and repeated violation of the written policies or procedures of the Company, provided that, for an Employee who is party to an individual severance or employment agreement defining Cause, “Cause” shall have the meaning set forth in such agreement except as may be otherwise provided in such agreement. For purposes of this Plan, a Participant’s Termination of Employment shall be deemed to be a Termination for Cause if, after the Participant’s employment has terminated, facts and circumstances are discovered that would have justified, in the opinion of the Committee, a Termination for Cause.

 

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(ll) “Termination of Employment” means, for purposes of this Plan, unless otherwise determined by the Administrator, ceasing to be an Employee (as determined in accordance with Section 3401(c) of the Code and the regulations promulgated thereunder) of the Company and any of its Subsidiaries or Affiliates. Unless otherwise determined by the Committee in the terms of an Award Agreement or otherwise, if a Participant’s employment with the Company and its Affiliates terminates but such Participant continues to provide services to the Company and its Affiliates in a Non-employee Director capacity, such change in status shall not be deemed a Termination of Employment. A Participant employed by, or performing services for, a Subsidiary or an Affiliate or a division of the Company and its Affiliates shall be deemed to incur a Termination of Employment if, as a result of a Disaffiliation, such Subsidiary, Affiliate, or division ceases to be a Subsidiary, Affiliate or division, as the case may be, and the Participant does not immediately thereafter become an Employee of (or service provider for), or member of the board of directors of, the Company or another Subsidiary or Affiliate. Temporary absences from employment because of illness, vacation or leave of absence and transfers among the Company and its Subsidiaries and Affiliates shall not be considered Terminations of Employment. In addition, Termination of Employment shall mean a “separation from service” as defined in regulations issued under Code Section 409A whenever necessary to ensure compliance therewith for any payment or settlement of a benefit conferred under this Plan that is subject to such Code section, and, for such purposes, shall be determined based upon a reduction in the bona fide level of services performed to a level equal to twenty percent (20%) or less of the average level of services performed by the Employee during the immediately preceding 36-month period.

 

3. Stock Subject to the Plan.

 

(a) Aggregate Limit. Subject to the provisions of Section 14(a) of the Plan, the maximum aggregate number of Shares which may be subject to or delivered under Awards granted under the Plan is 100,000,000 Shares. Shares subject to or delivered under Conversion Awards shall not reduce the aggregate number of Shares which may be subject to or delivered under Awards granted under this Plan. The Shares issued under the Plan may be either Shares reacquired by the Company, including Shares purchased in the open market, or authorized but unissued Shares.

 

(b) Limit on Awards to Directors. Subject to the provisions of Section 14(a) of the Plan, and notwithstanding any other provision of the Plan to the contrary, the aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Awards granted to any Non-employee Director during any single calendar year shall not exceed 200,000 Shares.

 

(c) Share Counting Rules.

 

(i) For purposes of this Section 3 of the Plan, Shares subject to Awards that have been canceled, expired, settled in cash, or not issued or forfeited for any reason (in whole or in part) shall not reduce the aggregate number of Shares which may be subject to or delivered under Awards granted under this Plan and shall be available for future Awards granted under this Plan.

 

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(ii) Shares subject to Awards that have been retained by the Company in payment or satisfaction of the purchase price of an Award or the tax withholding obligation of an Awardee, and Shares that have been delivered (either actually or constructively by attestation) to the Company in payment or satisfaction of the purchase price of an Award or the tax withholding obligation of an Awardee, shall again be available for grant under the Plan.

 

(iii) Conversion Awards shall not reduce the Shares authorized for grant under the Plan or the limitations on Awards to a Participant under subsection (b), above, nor shall Shares subject to a Conversion Award again be available for an Award under the Plan as provided in this subsection (c).

 

4. Administration of the Plan.

 

(a) Procedure.

 

(i) Multiple Administrative Bodies. The Plan shall be administered by the Board, a Committee designated by the Board to so administer this Plan and/or their respective delegates.

 

(ii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3 promulgated under the Exchange Act (“Rule 16b-3”), Awards to Officers and Directors shall be made by the entire Board or a Committee of two or more “non-employee directors” within the meaning of Rule 16b-3.

 

(iii) Other Administration. To the extent required by the rules of the principal U.S. national securities exchange on which the Shares are traded, if applicable, the members of the Committee shall also qualify as “independent directors” as set forth in such rules. Except to the extent prohibited by Applicable Law, the Board or a Committee may delegate to a Committee of one or more Directors or to authorized officers of the Company the power to approve Awards to persons eligible to receive Awards under the Plan who are not subject to Section 16 of the Exchange Act.

 

(iv) Awards to Directors. The Board shall have the power and authority to grant Awards to Non-employee Directors, including the authority to determine the number and type of awards to be granted; determine the terms and conditions, not inconsistent with the terms of this Plan, of any award; and to take any other actions the Board considers appropriate in connection with the administration of the Plan.

 

(v) Delegation of Authority for the Day-to-Day Administration of the Plan. Except to the extent prohibited by Applicable Law, the Administrator may delegate to one or more individuals the day-to-day administration of the Plan and any of the functions assigned to it in this Plan. Such delegation may be revoked at any time.

 

(b) Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee or delegates acting as the Administrator, subject to the specific duties delegated to such Committee or delegates, the Administrator shall have the authority, in its discretion:

 

(i) to select the Non-employee Directors, Consultants and Employees of the Company or its Affiliates to whom Awards are to be granted hereunder;

 

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(ii) to determine the number of Common Shares to be covered by each Award granted hereunder;

 

(iii) to determine the type of Award to be granted to the selected Employees, Consultants and Non-employee Directors;

 

(iv) to approve forms of Award Agreements;

 

(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise and/or purchase price, the time or times when an Award may be exercised (which may or may not be based on Performance Criteria), the vesting schedule, any vesting and/or exercisability provisions, terms regarding acceleration of Awards or waiver of forfeiture restrictions, the acceptable forms of consideration for payment for an Award, the term, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine and may be established at the time an Award is granted or thereafter;

 

(vi) to correct administrative errors;

 

(vii) to construe and interpret the terms of the Plan (including sub-plans and Plan addenda) and Awards granted pursuant to the Plan;

 

(viii) to adopt rules and procedures relating to the operation and administration of the Plan to accommodate the specific requirements of local laws and procedures. Without limiting the generality of the foregoing, the Administrator is specifically authorized (A) to adopt rules and procedures regarding the conversion of local currency, the shift of tax liability from employer to employee (where legally permitted) and withholding procedures and handling of stock certificates which vary with local requirements, and (B) to adopt sub-plans and Plan addenda as the Administrator deems desirable, to accommodate foreign laws, regulations and practice;

 

(ix) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans and Plan addenda;

 

(x) to modify or amend each Award, including, but not limited to, the acceleration of vesting and/or exercisability, provided, however, that any such modification or amendment (A) is subject to the minimum vesting provisions under the Plan, if any, and the plan amendment provisions set forth in Section 15 of the Plan, and (B) may not materially impair any outstanding Award unless agreed to in writing by the Participant, except that such agreement shall not be required if the Administrator determines in its sole discretion that such modification or amendment either (Y) is required or advisable in order for the Company, the Plan or the Award to satisfy any Applicable Law or to meet the requirements of any accounting standard, or (Z) is not reasonably likely to significantly diminish the benefits provided under such Award, or that adequate compensation has been provided for any such diminishment, except following a Change of Control;

 

(xi) to allow or require Participants to satisfy withholding tax amounts by electing to have the Company withhold from the Shares to be issued upon exercise of a Nonqualified Stock Option or vesting of a Stock Award or Stock Unit Award that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined in such manner and on such date that the Administrator shall determine or, in the absence of provision otherwise, on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may provide;

 

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(xii) to authorize conversion or substitution under the Plan of any or all stock options, stock appreciation rights or other stock awards held by awardees of an entity acquired by the Company (the “Conversion Awards”). Any conversion or substitution shall be effective as of the close of the merger or acquisition. The Conversion Awards shall be Nonqualified Stock Options with respect to options granted by the acquired entity;

 

(xiii) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;

 

(xiv) to impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resale by a Participant or of other subsequent transfers by the Participant of any Shares issued as a result of or under an Award or upon the exercise of an Award, including, without limitation, (A) restrictions under an insider trading policy, (B) restrictions as to the use of a specified brokerage firm for such resale or other transfers, and (C) institution of “blackout” periods on exercises of Awards;

 

(xv) to provide, either at the time an Award is granted or by subsequent action, that an Award shall contain as a term thereof, a right, either in tandem with the other rights under the Award or as an alternative thereto, of the Participant to receive, without payment to the Company, a number of Shares, cash or a combination thereof, the amount of which is determined by reference to the value of the Award; and

 

(xvi) to make all other determinations deemed necessary or advisable for administering the Plan and any Award granted hereunder.

 

(c) Effect of Administrator’s Decision. All questions arising under the Plan or under any Award shall be decided by the Administrator in its total and absolute discretion. All decisions, determinations and interpretations by the Administrator regarding the Plan, any rules and regulations under the Plan and the terms and conditions of any Award granted hereunder, shall be final and binding on all Participants. The Administrator shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations, including, without limitation, the recommendations or advice of any officer or other employee of the Company and such attorneys, consultants and accountants as it may select.

 

(d) Indemnity. To the extent allowable under Applicable Law, each member of the Committee or of the Board and any person to whom the Committee has delegated any of its authority under the Plan shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan, and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company’s Articles of Incorporation or By-laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

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5. Eligibility.

 

Awards may be granted only to Directors, Employees and Consultants of the Company or any of its Affiliates.

 

6. Term of Plan.

 

The Plan shall become effective upon its approval by shareholders of the Company. It shall continue in effect from the date the Plan is approved by the shareholders of the Company (the “Effective Date”) until terminated under Section 15 of the Plan.

 

7. Term of Award.

 

Subject to the provisions of the Plan, the term of each Award shall be determined by the Administrator and stated in the Award Agreement and may extend beyond the termination of the Plan. In the case of an Option or a Stock Appreciation Right, the term shall be ten (10) years from the Grant Date or such shorter term as may be provided in the Award Agreement. Notwithstanding the foregoing, the term of Awards shall be extended automatically if the Award would expire at a time when trading in Common Shares is prohibited by law or the Company’s insider trading policy to the 30th day after the expiration of the prohibition.

 

8. Options.

 

The Administrator may grant an Option or provide for the grant of an Option, either from time to time in the discretion of the Administrator or automatically upon the occurrence of specified events, including, without limitation, the achievement of performance goals. Only Nonqualified Stock Options may be issued under this Plan.

 

(a) Option Agreement. Each Option Agreement shall contain provisions regarding (i) the number of Shares that may be issued upon exercise of the Option, (ii) the exercise price of the Option and the means of payment of such exercise price, (iii) the term of the Option, (iv) such terms and conditions regarding the vesting and/or exercisability of an Option as may be determined from time to time by the Administrator, (v) restrictions on the transfer of the Option and forfeiture provisions, and (vi) such further terms and conditions, in each case not inconsistent with this Plan, as may be determined from time to time by the Administrator.

 

(b) Exercise Price. The per share exercise price for the Shares to be issued upon exercise of an Option shall be determined by the Administrator, except that the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the Grant Date, except with respect to Conversion Awards.

 

(c) No Option Repricings. Subject to Section 14(a) of the Plan, the exercise price of an Option may not be reduced without shareholder approval, nor may outstanding Options be cancelled in exchange for cash, other Awards or Options with an exercise price that is less than the exercise price of the original Option without shareholder approval.

 

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(d) No Reload Grants. Options shall not be granted under the Plan in consideration for and shall not be conditioned upon the delivery of Shares to the Company in payment of the exercise price and/or tax withholding obligation under any other employee stock option.

 

(e) Vesting Period and Exercise Dates. Options granted under this Plan shall vest and/or be exercisable at such time and in such installments during the period prior to the expiration of the Option’s term as determined by the Administrator and as specified in the Option Agreement. The Administrator shall have the right to make the timing of the ability to exercise any Option granted under this Plan subject to continued active employment, the passage of time and/or such performance requirements as deemed appropriate by the Administrator. At any time after the grant of an Option, the Administrator may reduce or eliminate any restrictions surrounding any Participant’s right to exercise all or part of the Option.

 

(f) Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment, either through the terms of the Option Agreement or at the time of exercise of an Option. Acceptable forms of consideration may include:

 

(i) cash;

 

(ii) check or wire transfer (denominated in U.S. Dollars);

 

(iii) subject to any conditions or limitations established by the Administrator, other Shares which were held for a period of more than six (6) months on the date of surrender and which have a Fair Market Value on the date of surrender equal to or greater than the aggregate exercise price of the Shares as to which said Option shall be exercised (it being agreed that the excess of the Fair Market Value over the aggregate exercise price, if any, shall be refunded to the Awardee in cash);

 

(iv) subject to any conditions or limitations established by the Administrator, the Company withholding Shares otherwise issuable upon exercise of an Option;

 

(v) consideration received by the Company under a broker-assisted sale and remittance program acceptable to the Administrator and in compliance with Applicable Law;

 

(vi) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Law; or

 

(vii) any combination of the foregoing methods of payment.

 

(g) Procedure for Exercise; Rights as a Shareholder.

 

(i) Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the applicable Option Agreement.

 

(ii) An Option shall be deemed exercised when (A) the Company receives (1) written or electronic notice of exercise (in accordance with the Option Agreement or procedures established by the Administrator) from the person entitled to exercise the Option and (2) full payment for the Shares with respect to which the related Option is exercised, and (B) provisions acceptable to the Administrator have been made for payment of all applicable withholding taxes.

 

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(iii) Unless provided otherwise by the Administrator or pursuant to this Plan, until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option.

 

(iv) The Company shall issue (or cause to be issued) such Shares as soon as administratively practicable after the Option is exercised. An Option may not be exercised for a fraction of a Share.

 

9. Stock Appreciation Rights.

 

A “Stock Appreciation Right” or “SAR” is a right that entitles the Awardee to receive, in cash or Shares (as determined by the Administrator), value equal to or otherwise based on the excess of (i) the Fair Market Value of a specified number of Shares at the time of exercise over (ii) the aggregate exercise price of the right, as established by the Administrator on the Grant Date. All Stock Appreciation Rights under the Plan shall be granted subject to the same terms and conditions applicable to Options as set forth in Section 8 of the Plan. Stock Appreciation Rights may be granted to Awardees either alone (“freestanding”) or in addition to or in tandem with other Awards granted under the Plan and may, but need not, relate to a specific Option granted under Section 8 of the Plan. However, any Stock Appreciation Right granted in tandem with an Option may be granted at the same time such Option is granted or at any time thereafter before exercise or expiration of such Option, and shall be based on the Fair Market Value of one Share on the Grant Date or, if applicable, on the Grant Date of the Option with respect to a Stock Appreciation Right granted in exchange for or in tandem with, but subsequent to, the Option (subject to the requirements of Section 409A of the Code). Subject to the provisions of Section 8 of the Plan, the Administrator may impose such other conditions or restrictions on any Stock Appreciation Right as it shall deem appropriate.

 

10. Stock Awards.

 

(a) Stock Award Agreement. Each Stock Award Agreement shall contain provisions regarding (i) the number of Shares subject to such Stock Award or a formula for determining such number, (ii) the purchase price of the Shares, if any, and the means of payment for the Shares, (iii) the Performance Criteria, if any, and level of achievement versus these criteria that shall determine the number of Shares granted, issued, retainable and/or vested, (iv) such terms and conditions on the grant, issuance, vesting and/or forfeiture of the Shares as may be determined from time to time by the Administrator, (v) restrictions on the transferability of the Stock Award, and (vi) such further terms and conditions, in each case not inconsistent with this Plan, as may be determined from time to time by the Administrator. The Committee may, in its sole discretion, waive the vesting restrictions and any other conditions set forth in any Award Agreement under such terms and conditions as the Committee shall deem appropriate.

 

(b) Restrictions and Performance Criteria. The grant, issuance, retention and/or vesting of Stock Awards issued to Employees may be subject to such Performance Criteria and level of achievement versus these criteria as the Administrator shall determine, which criteria may be based on financial performance, the occurrence of a specified corporate event, personal performance evaluations and/or completion of service by the Awardee. Awards with vesting conditions that are based upon Performance Criteria and level of achievement versus such criteria are referred to as “Performance Stock Awards” and Awards with vesting conditions that are based upon continued employment or the passage of time are referred to as “Restricted Stock Awards.”

 

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(c) Rights as a Shareholder. Unless otherwise provided for by the Administrator, the Participant shall have the rights equivalent to those of a shareholder and shall be a shareholder only after Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) to the Participant. Any certificate issued in respect of a Restricted Stock Award shall be registered in the name of the applicable Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award. The Committee may require that the certificates evidencing such Shares be held in custody by the Company until the restrictions thereon shall have lapsed and that, as a condition of any Award of Restricted Stock, the applicable Participant shall have delivered a stock power, endorsed in blank, relating to the Common Shares covered by such Award. The Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber a Stock Award.

 

11. Stock Unit Awards and Other Stock-Based Awards.

 

(a) Stock Unit Awards. Each Stock Unit Award Agreement shall contain provisions regarding (i) the number of Shares subject to such Stock Unit Award or a formula for determining such number, (ii) the Performance Criteria, if any, and level of achievement versus these criteria that shall determine the number of Shares granted, issued, and/or vested, (iii) such terms and conditions on the grant, issuance, vesting and/or forfeiture of the Shares as may be determined from time to time by the Administrator, (iv) restrictions on the transferability of the Stock Unit Award, and (v) such further terms and conditions, in each case not inconsistent with this Plan, as may be determined from time to time by the Administrator. The Committee may, in its sole discretion, waive the vesting restrictions and any other conditions set forth in any Award Agreement under such terms and conditions as the Committee shall deem appropriate.

 

(b) Restrictions and Performance Criteria. The grant, issuance, retention and/or vesting of Stock Unit Awards issued to Employees may be subject to such Performance Criteria and level of achievement versus these criteria as the Administrator shall determine, which criteria may be based on financial performance, the occurrence of a specified corporate event, personal performance evaluations and/or completion of service by the Awardee. Awards with vesting conditions that are based upon Performance Criteria and level of achievement versus such criteria are referred to as “Performance Stock Unit Awards” and Awards with vesting conditions that are based upon continued employment or the passage of time are referred to as “Restricted Stock Unit Awards.”

 

(c) Rights as a Shareholder. Unless otherwise provided for by the Administrator, the Participant shall have the rights equivalent to those of a shareholder and shall be a shareholder only after Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) to the Participant.

 

(d) Other Stock-Based Award. An “Other Stock-Based Award” means any other type of equity-based or equity-related Award not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted Shares), as well as any cash based bonus based on the attainment of Performance Criteria as described in Section 13(b), in such amount and subject to such terms and conditions as the Administrator shall determine. Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares or pursuant to attainment of a performance goal. Each Other Stock-Based Award will be evidenced by an Award Agreement containing such terms and conditions as may be determined by the Administrator.

 

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(e) Value of Other Stock-Based Awards. Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares or a target amount of cash, as determined by the Administrator. The Administrator may establish Performance Criteria in its discretion. If the Administrator exercises its discretion to establish Performance Criteria, the number and/or value of Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the performance goals are met.

 

(f) Payment of Other Stock-Based Awards. Payment, if any, with respect to Other Stock-Based Awards shall be made in accordance with the terms of the Award, in cash or Shares as the Administrator determines.

 

12. Other Provisions Applicable to Awards.

 

(a) Non-Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by beneficiary designation, will or by the laws of descent or distribution, including but not limited to any attempted assignment or transfer in connection with the settlement of marital property or other rights incident to a divorce or dissolution, and any such attempted sale, assignment or transfer shall be of no effect prior to the date an Award is vested and settled. The Administrator may only make an Award transferable to an Awardee’s family member or any other person or entity provided the Awardee does not receive consideration for such transfer. If the Administrator makes an Award transferable, either as of the Grant Date or thereafter, such Award shall contain such additional terms and conditions as the Administrator deems appropriate, and any transferee shall be deemed to be bound by such terms upon acceptance of such transfer.

 

(b) Performance Criteria. For purposes of this Plan, the term “Performance Criteria” shall mean any one or more criteria based on financial performance, the occurrence of a specified corporate event (such as an acquisition or merger), personal performance evaluations and/or completion of service, either individually, alternatively or in any combination, applied, as applicable, to either the Company as a whole or to a Subsidiary, business unit, Affiliate or business segment, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee in the Award or by duly adopted resolution. The Administrator may establish specific performance targets (including thresholds and whether to exclude certain extraordinary, non-recurring, or similar items) and Award amounts, subject to the right of the Administrator to exercise discretion to adjust payment amounts, either up or down, following the conclusion of the performance period on the basis of such further considerations as the Administrator in its sole discretion shall determine. Extraordinary, non-recurring items that may be the basis of adjustment include, but are not limited to, acquisitions or divestitures, restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, an event either not directly related to the operations of the Company, Subsidiary, division, business segment or business unit or not within the reasonable control of management, the cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles, and foreign exchange gains or losses.

 

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(c) Termination of Employment or Board Membership. The Administrator shall determine as of the Grant Date (subject to modification subsequent to the Grant Date) the effect a termination from membership on the Board by a Non-employee Director for any reason or a Termination of Employment due to Disability, death, or otherwise (including Termination for Cause) shall have on any Award. Unless otherwise provided in the Award Agreement:

 

(i) Upon termination from membership on the Board by a Non-employee Director for any reason other than Disability or death, any Option or SAR held by such Director that (1) has not vested and is not exercisable as of the effective date of such termination from membership on the Board shall be subject to immediate cancellation and forfeiture, or (2) is vested and exercisable as of the effective date of such termination shall remain exercisable for one year thereafter, or the remaining term of the Option or SAR, if less. Any unvested Stock Award, Stock Unit Award or Other Stock Based Award held by a Non-employee Director at the time of termination from membership on the Board for a reason other than Disability or death shall be immediately cancelled and forfeited.

 

(ii) Termination from membership on the Board by a Non-employee Director due to Disability or death shall result in full vesting of any outstanding Options or SARs and vesting of a prorated portion of any Stock Award, Stock Unit Award or Other Stock Based Award based upon the full months of the applicable performance period, vesting period or other period of restriction elapsed as of the end of the month in which the termination from membership on the Board by a Non-employee Director due to Disability or death occurs over the total number of months in such period. Any Options or SARs that vest upon Disability or death shall remain exercisable for one year thereafter, or the remaining term of the Option or SAR, if less. In the case of any Stock Award, Stock Unit Award or Other Stock Based Award that vests on the basis of attainment of Performance Criteria, the pro-rata vested amount shall be based upon the target award.

 

(iii) Upon Termination of Employment due to Disability or death, any Option or SAR held by an Employee shall, if not already fully vested, become fully vested and exercisable as of the effective date of such Termination of Employment and shall remain exercisable for one year after such Termination of Employment due to Disability or death, or, in either case, the remaining term of the Option or SAR, if less. Termination of Employment due to Disability or death shall result in vesting of a prorated portion of any Stock Award, Stock Unit Award or Other Stock Based Award based upon the full months of the applicable performance period, vesting period or other period of restriction 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. In the case of any Stock Award, Stock Unit Award or Other Stock Based Award that vests on the basis of attainment of Performance Criteria, the pro-rata vested amount shall be based upon the target award.

 

(iv) Any other Termination of Employment shall result in immediate cancellation and forfeiture of all outstanding Awards that have not vested as of the effective date of such Termination of Employment, and any vested and exercisable Options and SARs held at the time of such Termination of Employment shall remain exercisable for ninety (90) days thereafter, or the remaining term of the Option or SAR, if less. Notwithstanding the foregoing, all outstanding and unexercised Options and SARs shall be immediately cancelled in the event of a Termination for Cause.

 

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13. Dividends and Dividend Equivalents.

 

Awards other than Options and Stock Appreciation Rights may provide the Awardee with the right to receive dividend payments or dividend equivalent payments on the Shares subject to the Award, whether or not such Award is vested. Notwithstanding the foregoing, dividends or dividend equivalents shall not be paid with respect to Stock Awards, Stock Unit Awards or Other Stock-Based Awards that vest based on the achievement of performance goals prior to the date the performance goals are satisfied and the Award is earned, and then shall be payable only with respect to the number of Shares or Stock Units actually earned under the Award. Such payments may be made in cash, Shares or Stock Units or may be credited as cash or Stock Units to an Awardee’s account and later settled in cash or Shares or a combination thereof, as determined by the Administrator. Such payments and credits may be subject to such conditions and contingencies as the Administrator may establish.

 

14. Adjustments upon Changes in Capitalization, Organic Change or Change of Control.

 

(a) Adjustment Clause. In the event of (i) a stock dividend, extraordinary cash dividend, stock split, reverse stock split, share combination, or recapitalization or similar event affecting the capital structure of the Company (each, a “Share Change”), or (ii) a merger, consolidation, acquisition of property or shares, separation, spin-off, reorganization, stock rights offering, liquidation, Disaffiliation, or similar event affecting the Company or any of its Subsidiaries (each, an “Organic Change”), the Administrator or the Board shall make such substitutions or adjustments as it deems appropriate and equitable to (i) the Share limitations set forth in Section 3 of the Plan, (ii) the number and kind of Shares covered by each outstanding Award, and (iii) the price per Share subject to each such outstanding Award. In the case of Organic Changes, such adjustments may include, without limitation, (x) the cancellation of outstanding Awards in exchange for payments of cash, property or a combination thereof having an aggregate value equal to the value of such Awards, as determined by the Administrator or the Board in its sole discretion (it being understood that in the case of an Organic Change with respect to which shareholders receive consideration other than publicly traded equity securities of the ultimate surviving entity, any such determination by the Administrator that the value of an Option or Stock Appreciation Right shall for this purpose be deemed to equal the excess, if any, of the value of the consideration being paid for each Share pursuant to such Organic Change over the exercise price of such Option or Stock Appreciation Right shall conclusively be deemed valid); (y) the substitution of other property (including, without limitation, cash or other securities of the Company and securities of entities other than the Company) for the Shares subject to outstanding Awards; and (z) in connection with any Disaffiliation, arranging for the assumption of Awards, or replacement of Awards with new awards based on other property or other securities (including, without limitation, other securities of the Company and securities of entities other than the Company), by the affected Subsidiary, Affiliate, or division or by the entity that controls such Subsidiary, Affiliate, or division following such Disaffiliation (as well as any corresponding adjustments to Awards that remain based upon Company securities). The Committee may adjust in its sole discretion the Performance Criteria applicable to any Awards to reflect any Share Change and any Organic Change and any unusual or non-recurring events and other extraordinary items, impact of charges for restructurings, discontinued operations, and the cumulative effects of accounting or tax changes, each as defined by generally accepted accounting principles or as identified in the Company’s financial statements, notes to the financial statements, management’s discussion and analysis or the Company’s other SEC filings. Any adjustment under this Section 14(a) need not be the same for all Participants.

 

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(b) Change of Control. In the event of a Change of Control, unless otherwise determined by the Administrator as of the Grant Date of a particular Award (or subsequent to the Grant Date), the following acceleration, exercisability and valuation provisions shall apply:

 

(i) On the date that such Change of Control occurs, any or all Options and Stock Appreciation Rights awarded under this Plan not previously exercisable and vested shall, if not assumed, or substituted with a new award, by the successor to the Company, become fully exercisable and vested, and if the successor to the Company assumes such Options or Stock Appreciation Rights or substitutes other awards for such Awards, such Awards (or their substitutes) shall become fully exercisable and vested if the Participant’s employment is terminated (other than a Termination for Cause) within two years following the Change of Control.

 

(ii) Except as may be provided in an individual severance or employment agreement (or severance plan) to which an Awardee is a party, in the event of an Awardee’s Termination of Employment within two years after a Change of Control for any reason other than because of the Awardee’s death, Disability or Termination for Cause, each Option and Stock Appreciation Right held by the Awardee (or a transferee) that is vested following such Termination of Employment shall remain exercisable until the earlier of the third anniversary of such Termination of Employment (or any later date until which it would remain exercisable under such circumstances by its terms) or the expiration of its original term. In the event of an Awardee’s Termination of Employment more than two years after a Change of Control, or within two years after a Change of Control because of the Awardee’s death, Disability or Termination for Cause, the provisions of Section 12(c) of the Plan shall govern (as applicable).

 

(iii) On the date that such Change of Control occurs, the restrictions and conditions applicable to any or all Stock Awards, Stock Unit Awards and Other Stock-Based Awards that are not assumed, or substituted with a new award, by the successor to the Company shall lapse and such Awards shall be fully vested. Unless otherwise provided in an Award Agreement at the Grant Date, upon the occurrence of a Change of Control without assumption or substitution of the Awards by the successor, any performance based Award shall be deemed fully earned at the target amount as of the date on which the Change of Control occurs. All Stock Awards, Stock Unit Awards and Other Stock-Based Awards shall be settled or paid within thirty (30) days of vesting hereunder. Notwithstanding the foregoing, if the Change of Control would not qualify as a permissible date of distribution under Section 409A(a)(2)(A) of the Code, and the regulations thereunder, the Awardee shall be entitled to receive the Award from the Company on the date that would have applied absent this provision. If the successor to the Company does assume (or substitute with a new award) any Stock Awards, Stock Unit Awards and Other Stock-Based Awards, all such Awards shall become fully vested if the Participant’s employment is terminated (other than a Termination for Cause) within two years following the Change of Control, and any performance based Award shall be deemed fully earned at the target amount effective as of such Termination of Employment.

 

(iv) The Committee, in its discretion, may determine that, upon the occurrence of a Change of Control of the Company, each Option and Stock Appreciation Right outstanding shall terminate within a specified number of days after notice to the Participant, and/or that each Participant shall receive, with respect to each Share subject to such Option or Stock Appreciation Right, an amount equal to the excess of the Fair Market Value of such Share immediately prior to the occurrence of such Change of Control over the exercise price per Share of such Option and/or Stock Appreciation Right; such amount to be payable in cash, in one or more kinds of stock or property (including the stock or property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine, and if there is no excess value, the Committee may, in its discretion, cancel such Awards.

 

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(v) An Option, Stock Appreciation Right, Stock Award, Stock Unit Award or Other Stock-Based Award shall be considered assumed or substituted for if following the Change of Control the Award confers the right to purchase or receive, for each Share subject to the Option, Stock Appreciation Right, Stock Award, Stock Unit Award or Other Stock-Based Award immediately prior to the Change of Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change of Control by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the transaction constituting a Change of Control is not solely common stock of the successor company, the Committee may, with the consent of the successor company, provide that the consideration to be received upon the exercise or vesting of an Option, Stock Appreciation Right, Stock Award, Stock Unit Award or Other Stock-Based Award, for each Share subject thereto, will be solely common stock of the successor company with a fair market value substantially equal to the per Share consideration received by holders of Shares in the transaction constituting a Change of Control. The determination of whether fair market value is substantially equal shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding.

 

(c) Section 409A. Notwithstanding the foregoing: (i) any adjustments made pursuant to Section 14(a) of the Plan to Awards that are considered “deferred compensation” within the meaning of Section 409A of the Code shall be made in compliance with the requirements of Section 409A of the Code; (ii) any adjustments made pursuant to Section 14(a) of the Plan to Awards that are not considered “deferred compensation” subject to Section 409A of the Code shall be made in such a manner as to ensure that, after such adjustment, the Awards either continue not to be subject to Section 409A of the Code or comply with the requirements of Section 409A of the Code; (iii) the Administrator shall not have the authority to make any adjustments pursuant to Section 14(a) of the Plan to the extent that the existence of such authority would cause an Award that is not intended to be subject to Section 409A of the Code to be subject thereto; and (iv) if any Award is subject to Section 409A of the Code, Section 14(b) of the Plan shall be applicable only to the extent specifically provided in the Award Agreement and permitted pursuant to Section 23 of the Plan in order to ensure that such Award complies with Code Section 409A.

 

15. Amendment and Termination of the Plan.

 

(a) Amendment and Termination. The Administrator may amend, alter or discontinue the Plan or any Award Agreement, but any such amendment shall be subject to approval of the shareholders of the Company to the extent required by Applicable Law. In addition, unless approved by the Board (and the shareholders of the Company to the extent required by Applicable Law) and subject to Section 15(b), no such amendment shall be made that would:

 

(i) increase the maximum aggregate number of Shares which may be subject to Awards granted under the Plan;

 

(ii) reduce the minimum exercise price for Options or Stock Appreciation Rights granted under the Plan; or

 

(iii) reduce the exercise price of outstanding Options or Stock Appreciation Rights, as prohibited by Section 8(c) without shareholder approval.

 

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(b) Effect of Amendment or Termination. No amendment, suspension or termination of the Plan shall impair the rights of any Participant with respect to an outstanding Award, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company, except that no such agreement shall be required if the Administrator determines in its sole discretion that such amendment either (i) is required or advisable in order for the Company, the Plan or the Award to satisfy any Applicable Law or to meet the requirements of any accounting standard, or (ii) is not reasonably likely to significantly diminish the benefits provided under such Award, or that any such diminishment has been adequately compensated, except that this exception shall not apply following a Change of Control. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

 

(c) Effect of the Plan on Other Arrangements. Neither the adoption of the Plan by the Board or a Committee nor the submission of the Plan to the shareholders of the Company for approval, if required, shall be construed as creating any limitations on the power of the Board or any Committee to adopt such other incentive arrangements as it or they may deem desirable, including without limitation, the granting of restricted shares or restricted share units or stock options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

 

16. Designation of Beneficiary.

 

(a) An Awardee may file a written designation of a beneficiary who is to receive the Awardee’s rights pursuant to Awardee’s Awards or the Awardee may include his or her Awards in an omnibus beneficiary designation for all benefits under the Plan. To the extent that Awardee has completed a designation of beneficiary while employed with the Company or an Affiliate, such beneficiary designation shall remain in effect with respect to any Award hereunder until changed by the Awardee to the extent enforceable under Applicable Law.

 

(b) Such designation of beneficiary may be changed by the Awardee at any time by written notice. In the event of the death of an Awardee and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Awardee’s death, the Company shall allow the legal representative of the Awardee’s estate to exercise the Award.

 

17. No Right to Awards or to Employment.

 

No person shall have any claim or right to be granted an Award and the grant of any Award shall not be construed as giving an Awardee the right to continue in the employ of the Company or its Affiliates. Further, the Company and its Affiliates expressly reserve the right, at any time, to dismiss any Employee or Awardee at any time without liability or any claim under the Plan, except as provided herein or in any Award Agreement entered into hereunder.

 

18. Legal Compliance.

 

Shares shall not be issued pursuant to an Option, Stock Appreciation Right, Stock Award, Stock Unit Award or Other Stock-Based Award unless such Option, Stock Appreciation Right, Stock Award or Other Stock-Based Award and the issuance and delivery of such Shares shall comply with Applicable Law and shall be further subject to the approval of counsel for the Company with respect to such compliance. Unless the Awards and Shares covered by this Plan have been registered under the Securities Act or the Company has determined that such registration is unnecessary, each person receiving an Award and/or Shares pursuant to any Award may be required by the Company to give a representation in writing that such person is acquiring such Shares for his or her own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.

 

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19. Inability to Obtain Authority.

 

To the extent the Company is unable to or the Administrator deems it unfeasible to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be advisable or necessary to the lawful issuance and sale of any Shares hereunder, the Company shall be relieved of any liability with respect to the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

20. Reservation of Shares.

 

The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

 

21. Notice.

 

Any written notice to the Company required by any provisions of this Plan shall be addressed to the Secretary of the Company and shall be effective when received. Any notice to a Participant hereunder shall be addressed to the last address of record with the Company and shall be effective when sent via first class mail, courier service, or electronic mail to such last address of record.

 

22. Governing Law; Interpretation of Plan and Awards.

 

(a) This Plan and all determinations made and actions taken pursuant hereto shall be governed by the substantive laws, but not the choice of law rules, of the state of Delaware, except as to matters governed by U.S. federal law.

 

(b) In the event that any provision of the Plan or any Award granted under the Plan is declared to be illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, such provision shall be reformed, if possible, to the extent necessary to render it legal, valid and enforceable, or otherwise deleted, and the remainder of the terms of the Plan and/or Award shall not be affected except to the extent necessary to reform or delete such illegal, invalid or unenforceable provision.

 

(c) The headings preceding the text of each section hereof are inserted solely for convenience of reference, and shall not constitute a part of the Plan, nor shall they affect its meaning, construction or effect.

 

(d) The terms of the Plan and any Award shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, beneficiaries, successors and assigns.

 

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23. Section 409A.

 

It is the intention of the Company that no Award shall be “deferred compensation” subject to Section 409A of the Code, unless and to the extent that the Administrator specifically determines otherwise, and the Plan and the terms and conditions of all Awards shall be interpreted accordingly. The terms and conditions governing any Awards that the Administrator determines will be subject to Section 409A of the Code, including any rules for elective or mandatory deferral of the delivery of cash or Shares pursuant thereto and any rules regarding treatment of such Awards in the event of a Change of Control, shall be set forth in the applicable Award Agreement, deferral election forms and procedures, and rules established by the Administrator, and shall comply in all respects with Section 409A of the Code. The following rules will apply to Awards intended to be subject to Section 409A of the Code (“409A Awards”):

 

(a) If a Participant is permitted to elect to defer an Award or any payment under an Award, such election will be permitted only at times in compliance with Code Section 409A.

 

(b) The Company shall have no authority to accelerate distributions relating to 409A Awards in excess of the authority permitted under Section 409A.

 

(c) Any distribution of a 409A Award following a Termination of Employment that would be subject to Code Section 409A(a)(2)(A)(i) as a distribution following a separation from service of a “specified employee” as defined under Code Section 409A(a)(2)(B)(i), shall occur no earlier than the expiration of the six-month period following such Termination of Employment.

 

(d) In the case of any distribution of a 409A Award, if the timing of such distribution is not otherwise specified in the Plan or an Award Agreement or other governing document, the distribution shall be made not later than the end of the calendar year during which the settlement of the 409A Award is specified to occur.

 

(e) In the case of an Award providing for distribution or settlement upon vesting or the lapse of a risk of forfeiture, if the time of such distribution or settlement is not otherwise specified in the Plan or an Award Agreement or other governing document, the distribution or settlement shall be made not later than March 15 of the year following the year in which the Award vested or the risk of forfeiture lapsed.

 

(f) Notwithstanding anything herein to the contrary, neither the Company nor the Administrator makes any representation or guarantee that the Plan or its administration shall comply with Code Section 409A, and in no event shall the Company or the Administrator be liable for the payment of, or any gross up payment in connection with, any taxes or penalties owed by the Participant pursuant to Code Section 409A.

 

24. Limitation on Liability.

 

The Company and any Affiliate which is in existence or hereafter comes into existence shall not be liable to a Participant, an Employee, an Awardee or any other persons as to:

 

(a) The Non-Issuance of Shares. The non-issuance or sale of Shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any shares hereunder; and

 

(b) Tax or Exchange Control Consequences. Any tax consequence expected, but not realized, or any exchange control obligation owed, by any Participant, Employee, Awardee or other person due to the receipt, exercise or settlement of any Option or other Award granted hereunder.

 

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25. Unfunded Plan.

 

Insofar as it provides for Awards, the Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Awardees who are granted Stock Awards, Stock Unit Awards or Other Stock-Based Awards under this Plan, any such accounts will be used merely as a bookkeeping convenience. The Company shall not be required to segregate any assets which may at any time be represented by Awards, nor shall this Plan be construed as providing for such segregation. Neither the Company nor the Administrator shall be deemed to be a trustee of Shares or cash to be awarded under the Plan. Any liability of the Company to any Participant with respect to an Award shall be based solely upon any contractual obligations which may be created by the Plan; no such obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Administrator shall be required to give any security or bond for the performance of any obligation which may be created by this Plan.

 

26. Foreign Employees and Consultants.

 

Awards may be granted hereunder to Employees and Consultants who are foreign nationals, who are located outside the United States or who are not compensated from a payroll maintained in the United States, or who are otherwise subject to (or could cause the Company to be subject to) legal or regulatory provisions of countries or jurisdictions outside the United States, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Administrator, be necessary or desirable to foster and promote achievement of the purposes of the Plan, and, in furtherance of such purposes, the Administrator may make such modifications, amendments, procedures, or subplans as may be necessary or advisable to comply with such legal or regulatory provisions.

 

27. Tax Withholding.

 

Each Participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to any Award under the Plan no later than the date as of which any amount under such Award first becomes includible in the gross income of the Participant for any tax purposes with respect to which the Company has a tax withholding obligation. Unless otherwise determined by the Company, withholding obligations may be settled with Shares, including Shares that are part of the Award that gives rise to the withholding requirement; provided, however, that not more than the maximum statutory withholding requirement may be settled with Shares that are part of the Award. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any vested Shares or any other payment due to the Participant at that time or at any future time. The Administrator may establish such procedures as it deems appropriate, including making irrevocable elections, for the settlement of withholding obligations with Shares.

 

28. Cancellation of Award; Forfeiture of Gain.

 

Notwithstanding anything to the contrary contained herein, an Award Agreement may provide that the Award will be cancelled and the Participant will forfeit the Shares or cash received or payable on the vesting or exercise of the Award, and that the amount of any proceeds of the sale or gain realized on the vesting or exercise of the Award must be repaid to the Company, under such conditions as may be required by Applicable Law or established by the Committee in its sole discretion.

 

 

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Exhibit 10.3

 

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 over the period or periods from the Grant Date, as 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.

 

2

 

 

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
     
    Title:
Printed Name  

 

3

 

 

EXHIBIT A

 

Employee Name: Nirajkumar Patel

 

Grant Date: May 28, 2020

 

Restricted Stock Units Granted: 3,000,000

 

Fair Market Value: FMV of the shares at the vesting date is based on the average closing price of the 3 trading days prior to the vesting date.

 

Forfeiture Restriction Lapse Schedule:

 

Vesting Date Percentage or Number of Stock Units as to which Forfeiture Restrictions Lapse
May 28, 2020 150,000
August 5, 2020 150,000
November 5, 2020 150,000
February 5, 2021 200,000
May 5, 2021 200,000
August 5, 2021 200,000
November 5, 2021 250,000
February 5, 2022 250,000
May 5, 2022 250,000
August 5, 2022 300,000
November 5, 2022 300,000
February 5, 2023 300,000
May 5, 2023 300,000
   
Total 3,000,000

 

4

Exhibit 10.4

 

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 over the period or periods from the Grant Date, as 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.

 

2

 

 

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
     
    Title:
Printed Name  

 

3

 

 

EXHIBIT A

 

Employee Name: Eric Mosser

 

Grant Date: May 28, 2020

 

Restricted Stock Units Granted: 3,000,000

 

Fair Market Value: FMV of the shares at the vesting date is based on the average closing price of the 3 trading days prior to the vesting date.

 

Forfeiture Restriction Lapse Schedule:

 

Vesting Date Percentage or Number of Stock Units as to which Forfeiture Restrictions Lapse
May 28, 2020 150,000
August 5, 2020 150,000
November 5, 2020 150,000
February 5, 2021 200,000
May 5, 2021 200,000
August 5, 2021 200,000
November 5, 2021 250,000
February 5, 2022 250,000
May 5, 2022 250,000
August 5, 2022 300,000
November 5, 2022 300,000
February 5, 2023 300,000
May 5, 2023 300,000
   
Total 3,000,000

 

4

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.

 

2

 

 

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:

 

3

 

 

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.

 

 

4

 

Exhibit 10.6

 

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: Eric Mosser

 

Grant Date: May 28, 2020

 

Restricted Stock Units Granted: 4,000,000

 

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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