Form 8-K Kaival Brands Innovation For: Apr 20


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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: April 20, 2021

 

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 [X]

 

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. [ ]

 

 

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

 

On April 20, 2021, Kaival Brands Innovations Group,
Inc., a Delaware corporation (the “Company”), entered into a second amended and restated exclusive distribution agreement
(the “Second A&R Distribution Agreement”) with Bidi Vapor, LLC, a Florida limited liability company (“Bidi”),
which amended and restated the Amended and Restated Exclusive Distribution Agreement, dated May 21, 2020 (the “First A&R Distribution
Agreement”), which amended and restated the Exclusive Distribution Agreement, effective as of March 9, 2020 (the “Original
Distribution Agreement” and, together with the Second A&R Distribution Agreement and the First A&R Distribution Agreement,
the “Distribution Agreement”). Pursuant to the Distribution Agreement, Bidi granted the Company an exclusive worldwide right
to distribute electronic and non-electronic nicotine delivery systems and related components for sale and resale to both retail level
customers and non-retail level customers.

 

The Second A&R Distribution Agreement provides
the Company with a right of first refusal for future products of Bidi that (i) arise out of or relate to electronic nicotine delivery
systems and related components to electronic nicotine delivery systems; (ii) arise out of or relate to the synthetic nicotine industry;
or (iii) arise out of or relate to the tobacco-derived nicotine industry. Further, the Second A&R Distribution Agreement provides
the Company with a right of first refusal if Bidi receives an offer that would constitute a Change of Control Transaction (the “Bona
Fide Offer”). If Bidi wishes to accept such Bona Fide Offer, then Bidi must give written notice to the Company setting forth all
the terms, conditions, and obligations of the Bona Fide Offer. Kaival Brands has the irrevocable first right to accept such Bona Fide
Offer in place of the buyer on the same terms and conditions set forth in the notice. For purposes of the Second A&R Distribution
Agreement, the term “Change of Control Transaction” means any of the following: (w) any person, entity, or “group”
(within the meaning of Rules 13(d) and 14(d) under the Securities Exchange Act of 1934, as amended) become the beneficial owner (as defined
in Rules 13(d)-3 and 13(d)-5 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of more than 50% of any class
or equity interests or ownership interests of Bidi; (x) the existing members of Bidi (the “Existing Members of Bidi”) at the
time of the execution of the Second A&R Distribution Agreement, its affiliates and/or any trust established by the Existing Members
of Bidi solely for their own benefit and the benefit of their respective spouses and/or issue cease to own in the aggregate more than
50% of any class of outstanding equity interests or ownership interests in Bidi; (y) a sale, lease, or other disposition of all or substantially
all Bidi’s assets; or (z) any consolidation or merger of Bidi with or into any other person, entity, or any other corporate reorganization,
in which the Existing Members of Bidi own less than 50% of any class of equity interests or ownership interests of the surviving entity.
Finally, the Second A&R Distribution Agreement extended the term of the agreement from a one-year term that automatically renewed
for successive one-year renewal terms to a ten-year term that automatically renews for another five-year period if the Company satisfies
certain minimum purchase thresholds as set forth in the Second A&R Distribution Agreement. If these minimum purchase thresholds are
not met, then the term will automatically renew for two-year periods. Bidi is prohibited from not renewing the Second A&R Distribution
Agreement after the initial ten-year term if Kaival fulfills its minimum purchase obligations.

 

Bidi is considered a related party to the Company
because the Company’s Chief Executive Officer, Chief Financial Officer, and director, Mr. Nirajkumar Patel, owns and controls Bidi.
Mr. Patel is also a beneficial owner of the entity that is the Company’s largest controlling stockholder. Thus, the Company and
Bidi are under common control. The Audit Committee of the Company’s board of directors reviewed the terms of the Second A&R
Distribution Agreement and approved the Company entering into the agreement.

 

The above description of the Second A&R Distribution
Agreement does not purport to be complete and is qualified in its entirety by the full text of such Agreement, which is filed as Exhibit
10.1 hereto and incorporated herein by reference.

 

ITEM 7.01 REGULATION FD DISCLOSURE

 

On April 21, 2021, the Company issued a press release
announcing its entry into the Second A&R Distribution Agreement as described above under Item 1.01. A copy of the press release is
attached as Exhibit 99.1 to this Current Report on Form 8-K (“Current Report”).

 

The information in Exhibit 99.1 shall not be deemed
as “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability
of such Section, nor shall it be deemed incorporated by reference in any filing by the Company under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended, regardless of any general incorporation language in such filing, unless expressly
incorporated by specific reference in such filing.

 

FORWARD LOOKING STATEMENTS

 

This Current Report contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, that involve risks, uncertainties, and assumptions that are difficult to predict. All statements other than statements of historical
fact contained in this Current Report, including statements regarding future events, our future financial performance, business strategy,
and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking
statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,”
“estimates,” “expects,” “intends,” “may,” “plans,” “potential,”
“predicts,” or “should,” or the negative of these terms or other comparable terminology. The forward-looking statements
made herein are based on the Company’s current expectations. Actual results could differ materially from those described or implied
by such forward-looking statements as a result of various important factors, including, without limitation, its limited operating history,
competitive factors in the Company’s industry and market, and other general economic conditions. The forward-looking statements
made herein are based on the Company’s current expectations, assumptions, and projections, which could provide to be incorrect.
The forward-looking statements made herein speak only as of the date of this Current Report and the Company undertakes no obligation to
update publicly such forward-looking statements to reflect subsequent events or circumstances, except as otherwise required by law.

 

ITEM 9.01 FINANCIAL STATEMENTS

 

(d) Exhibits

 

 

*Schedules and Exhibits omitted pursuant to Item 601(b)(2)
of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission
upon request; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended, for any Schedule or Exhibit so furnished.

 

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, hereunto duly authorized.

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

Date: April 21, 2021

 

Exhibit 10.1

 

SECOND AMENDED AND
RESTATED

EXCLUSIVE DISTRIBUTION
AGREEMENT

THIS SECOND AMENDED
AND RESTATED EXCLUSIVE DISTRIBUTION AGREEMENT
(this “Agreement”) is entered into as of April 20, 2021 (the “Effective
Date
”) by and between BIDI VAPOR, LLC, a Florida limited liability company
(“Manufacturer”), and KAIVAL BRANDS INNOVATIONS GROUP, INC., a Delaware corporation (“Distributor”).
Manufacturer and Distributor are each referred to herein as a “Party” and collectively, the “Parties.”

RECITALS

WHEREAS, Manufacturer
is in the business of developing electronic and non-electronic nicotine delivery systems and related components (all such products whether
now or hereafter made available for sale by Manufacturer being hereinafter referred to as the “Products”).

WHEREAS, Distributor
wishes to obtain, and Manufacturer is willing to grant Distributor, an exclusive worldwide right to distribute the Products for sale and
resale to both retail level customers (“Retail Customers”) and non-retail level customers, including without limitation,
to wholesale customers and sub-distributors (“Non-Retail Customers”).

WHEREAS, Manufacturer
and Distributor previously entered into that certain Exclusive Distribution Agreement, effective as of March 9, 2020 (the “Original
Agreement
”).

WHEREAS, Manufacturer
and Distributor amended and restated the Original Agreement in its entirety on May 21, 2020 (the “Restated Agreement”).

WHEREAS, the Parties
wish to amend and restate the Restated Agreement for purposes of clarifying certain terms therein to more accurately reflect the Parties’
intentions for this Agreement.

NOW, THEREFORE,
in consideration of the foregoing premises and the mutual representations and agreements set forth herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, Manufacturer and Distributor, intending to be legally bound,
hereby agree as follows:

1.                  
APPOINTMENT; EXCLUSIVITY; MARKETING AND SUPPORT
.

A.                 
Appointment and Exclusivity.
Subject to the terms and conditions
set forth in this Agreement, Manufacturer hereby appoints Distributor as its exclusive worldwide distributor of the Products. Distributor
accepts the appointment as Manufacturer’s exclusive worldwide distributor of the Products and agrees to buy for resale, upon the
terms and conditions set forth herein, the Products in such quantities as Distributor shall need to properly service the market. Manufacturer
represents and warrants that the appointment of and sale of the Products to Distributor under this Agreement does not violate any obligations
or contracts of Manufacturer. As a condition of exclusivity, Distributor agrees not to represent or sell other products, which Manufacturer
may reasonably determine to be competitive with the Products, without written approval from Manufacturer. For purposes of clarification,
during the term of this Agreement, Manufacturer will not directly or indirectly sell any Products to any person (Retail Customer or Non-Retail
Customer) other than to Distributor.

 

B.                 
Marketing and Support
. Manufacturer will be solely responsible
to provide Distributor with all branding, logos, and marketing materials to be utilized by Distributor in connection with Distributor’s
marketing and promotion of the Products; provided, however, Distributor shall bear all expenses related to reproduction and distribution
of the same. Distributor agrees to use its best efforts to promote, develop a market, sell, and distribute the Products worldwide. Among
such other actions as may be necessary to generate sales of the Products, Distributor will perform at its expense and to the reasonable
satisfaction of Manufacturer the following duties:

i. Distributor will engage in sales promotion activities in which the Products
shall be designated by their correct names and identified as the Products of Manufacturer being marketed by Distributor as an independent
distributor.
ii. Distributor will provide all customer service and support (both to its Retail
Customers and Non-Retail Customers and to all end consumers of the Products).
iii. Distributor will process all sales by Distributor to Retail Customers and
Non-Retail Customers. All sales by Distributor to Retail Customers will be made through the domain www.bidivapor.com.
iv. Distributor shall maintain adequate inventory levels of the Product on-hand
to meet Retail Customer demand.
v. Distributor shall at all times conduct its business in a manner that will
reflect favorably on Manufacturer and the Products and will not engage in any deceptive, misleading, illegal, or unethical business practice.
In performing its obligations hereunder, Distributor agrees not to make any representations or give any warranties or guarantees to any
person with respect to the Products, other than in compliance with Section 7.A. hereof or otherwise expressly authorized in writing by
Manufacturer.
vi. Distributor shall provide to Manufacturer prior to the time of first use
five (5) copies of all of Distributor’s advertising and sales promotion materials in which any Products are mentioned and five (5) copies
of any translations of any manuals or other materials provided or sold to Distributor by Manufacturer.
vii. Distributor, not more often than every three (3) months, shall make reports
to Manufacturer, as reasonably requested by Manufacturer, with respect to sales and potential sales of the Products. Distributor also
shall report to Manufacturer such information as is necessary to enable Manufacturer to manufacture or supply the Products in compliance
with applicable laws and regulations throughout the world.
viii. Distributor will prepare and deliver to Manufacturer quarterly forecasts
of Distributor’s anticipated sales by Product during each month of the six-month period following the date of the forecast. It is understood
that said forecasts will be used for planning purposes only and will not constitute a commitment by either Party.
ix. Distributor will comply with all applicable laws and regulations and will
not assist or participate in any violation of laws or regulations applicable to Manufacturer or Distributor.

Distributor shall be responsible for all expenses
incurred by it in connection with the implementation and performance of its duties and obligations under this Agreement, including, without
limitation: (i) salaries or compensation for its personnel; (ii) costs and expenses associated with establishing and maintain its sales
organization and offices; and (iii) marketing, advertising, and promotion expenses.

2.                  
PURCHASE ORDERS; PRICING.

A.                 
Purchase Orders
. Distributor shall order the Products in
accordance with the terms and conditions of this Agreement. Each order for the purchase of the Products (a “Purchase Order”)
must be submitted to Manufacturer by Distributor by email or Manufacturer’s electronic data interchange (EDI) system. Each Purchase
Order shall specify: (i) whether the order is being made in connection with the sale by Distributor to Retail Customers or to Non-Retail
Customers, (ii) the quantity of the Products being ordered, (iii) the applicable Retail Minimum Price and/or Wholesale Minimum Price for
the Products ordered, (iv) the price to be paid by Distributor to Manufacturer for the Products ordered, (v) payment terms granted by
Manufacturer, and (vi) the requested receipt date and delivery instructions for the applicable Products ordered. Receipt dates must be
during the term of this Agreement, except Distributor may request, subject to Manufacturer’s acceptance in Manufacturer’s
sole and absolute discretion, a Purchase Order with a requested receipt date after the expiration or termination of this Agreement, in
which case, if accepted by Manufacturer, the terms and conditions of this Agreement shall apply to such purchase, but under no circumstances
should such purchase be deemed to be or construed as being a renewal or extension of this Agreement or the exclusivity rights granted
to Distributor herein. The Parties agree that to the extent that any of the terms and conditions of this Agreement conflict or are inconsistent
with the terms or conditions of any Purchase Order submitted by Distributor, the terms and conditions of this Agreement shall prevail
and control to the extent of any such conflict or inconsistency, unless the Purchase Order containing such conflicting or inconsistent
terms and conditions is countersigned by Manufacturer, in which case the terms and conditions set forth in such Purchase Order shall prevail
and control to the extent of any such conflict or inconsistency.

B.                 
Acceptance of Purchase Order
. A Purchase Order submitted
by Distributor shall be deemed to have been accepted by, and shall be binding upon, Manufacturer when it is countersigned by Manufacturer
or if it is not rejected by Manufacturer, in whole or in part, by written notice to Distributor sent within five (5) business days of
its receipt by Manufacturer. Notwithstanding anything contained herein to the contrary, Manufacturer may only reject, cancel, or delay
any Purchase Order placed by Distributor, whether or not such Purchase Order has been previously accepted by Manufacturer, pursuant to
Section 3.B. below. In the event Manufacturer is unable to fill all of a Purchase Order for any reason, it shall promptly notify Distributor
and Distributor shall have the right, in its discretion, to cancel the subject Purchase Order. Distributor may change or cancel any of
its Purchase Orders without penalty so long as Distributor provides written notice to Manufacturer and the Products have not yet been
shipped, or otherwise delivered to Distributor; provided, that Distributor shall pay to Manufacturer a fee of twenty-five percent (25%)
of the aggregate purchase price of the Products of which manufacturing has commenced that are subject to any Purchase Order, which has
been materially changed or canceled by Distributor.

C.                 
Invoices and Payment Terms
. Manufacturer shall send Distributor
invoices via mail or email for each Purchase Order, once the Products are shipped or otherwise delivered. Distributor shall notify Manufacturer
in writing if Distributor disputes any charges set forth on an invoice within five (5) calendar days after receipt of such invoice, specifying
in reasonable detail the items disputed and basis for the dispute. Thereafter, the Parties will work in good faith to resolve such dispute
as quickly as is reasonably possible. If any such dispute is not resolved within thirty (30) calendar days after Distributor’s receipt
of the applicable invoice, then Manufacturer may suspend any further shipments of the Products under this Agreement until such time as
the dispute is resolved and all amounts agreed upon by the Parties to be due are paid in full. All undisputed amounts on each invoice
are due and payable within thirty (30) calendar days from the date of Distributor’s receipt of the invoice. Payments due hereunder
must be made, at Distributor’s option, by ACH, wire transfer, certified check, or such other method as may be agreed to by the Parties.
Manufacturer reserves the right to change or modify payment terms upon sixty (60) calendar days’ written notice to Distributor at
any time following a default by Distributor of its payment obligations under this Agreement with such changes or modifications to be effective
for Purchase Orders submitted after such sixty (60) calendar day period. Invoices will be issued upon the earlier of: (i) shipment of
the Products from Manufacturer’s warehouse or production facility to Distributor or to Distributor’s customer via direct shipment
or (ii) the delivery of the Products to Distributor.

D.                 
Prices; Price Reductions
. Manufacturer has a legitimate
interest in ensuring that a minimum price be maintained for all sales by Distributor of its Products to Retail Customers and to Non-Retail
Customers. Accordingly, Manufacturer will establish minimum pricing for all sales by Distributor of its Products to Non-Retail Customers
(“Wholesale Minimum Price”) and minimum pricing for all sales by Distributor of its Products to Retail Customers (“Retail
Minimum Price
”) and Distributor will not sell any Products to Non-Retail Customers below the applicable Wholesale Minimum Price
or sell any Products to Retail Customers below the applicable Retail Minimum Price. The initial Wholesale Minimum Price and Retail Minimum
Price for the Products are included as Exhibit A attached hereto. Distributor agrees to pay Manufacturer the price per Product
identified in Exhibit A attached hereto. Manufacturer retains the right to make changes to Wholesale Minimum Pricing, Retail Minimum
Pricing, and Distributor pricing upon providing not less than three (3) days’ prior written notice to Distributor. Any price reduction
to the Wholesale Minimum Pricing, Retail Minimum Pricing, or Distributor pricing with respect to affected Products shall apply to Purchase
Orders that have not yet been accepted or deemed accepted by Manufacturer and Purchase Orders thereafter submitted by Distributor. Any
price increase to the Wholesale Minimum Pricing, Retail Minimum Pricing, or Distributor pricing with respect to affected Products shall
apply to Purchase Orders thereafter submitted by Distributor; provided, that Distributor shall have the right, at its option, to cancel,
in whole or in part, any outstanding Purchase Orders for affected Products not yet accepted by Manufacturer. Prices do not include, and
Manufacturer shall not be responsible for, any required federal, state, or local sales or other taxes, duties, export or custom charges,
VAT charges, brokerage, or other fees.

E.                 
Past Due Amounts
. If any undisputed amount due Manufacturer
by Distributor, for any reason, becomes past due, Manufacturer shall provide written notice to Distributor and, if such amounts remain
outstanding for fifteen (15) calendar days following receipt of such notice, Manufacturer may at its option and without further notice
withhold further shipments or deliveries of the Products under this Agreement until such past due invoices are paid in full.

F.                  
Taxes
. Distributor shall be responsible for any national,
state, or local sales, use, value added, or other tax, tariff, duty, or assessment levied or imposed by the United States or any foreign
governmental authority arising out of or related to any of the transactions contemplated by this Agreement, including sales of the Products
to Distributor, other than taxes based upon Manufacturer’s income. Distributor must pay directly, or reimburse Manufacturer for,
the amount of such sales, use, value added or other tax, tariff, duty, or assessment that Manufacturer is at any time obligated to pay
or collect with respect to or arising out of the sale of the Products under this Agreement.

3. SHIPMENTS; PRODUCTS; RIGHT OF FIRST REFUSAL ON CHANGE OF CONTROL TRANSACTIONS.

A.       Shipment
Terms; Title and Risk of Loss.
All of the Products purchased by Distributor under this Agreement will be packaged for shipment in
Manufacturer’s standard containers, marked for shipment or delivery to Distributor at the address specified by Distributor in the
Purchase Order (the applicable destination being hereinafter referred to as the “Destination”). All costs of shipment
shall be paid by Manufacturer for any purchase by Distributor of the Products from Manufacturer for sale to Retail and Non-Retail Customers.
Title and risk of loss will pass to Distributor upon the earlier of: (i) the delivery of the Products at the Destination or (ii) the tender
of the Products by Manufacturer to the first shipping carrier. Distributor shall be solely responsible for all costs of shipment for the
subsequent sale by Distributor to Retail Customers and Non-Retail Customers. Manufacturer shall ship or otherwise deliver the Products
on or before the requested receipt date designated in a Purchase Order (provided, that such receipt date is not less than twenty (20)
business days after the Purchase Order is received by Manufacturer) and shall promptly notify Distributor when Manufacturer knows or has
reason to believe that a shipment will not be delivered by the requested receipt date. Any expense for any special packaging or any special
delivery requested by Distributor shall be borne by Distributor.

B.       Manufacturer’s
Right to Delay or Cancel.
Notwithstanding Manufacturer’s obligations in this Agreement, Manufacturer may refuse, cancel, or
delay any shipment of the Products when Distributor is delinquent in any payment for more than (30) calendar days, or when Distributor
is in material breach of its obligations under this Agreement, which has not been cured pursuant to Section 11.A.

C.       Acceptance
of Shipments or Deliveries.
Distributor shall have ten (10) business days from the date of arrival of the shipment or delivery of
the Products at the applicable Destination or other shipping or delivery location agreed upon by the Parties to inspect the Products and
notify Manufacturer in writing of any discrepancies with respect to such Products, including but not limited to any discrepancies in the
quantity or quality of the Products. The Products with respect to which Distributor does not notify Manufacturer of any discrepancies
in writing shall be deemed accepted by Distributor.

D.        Adding
or Deleting the Products; Manufacturing Changes to the Products.
Manufacturer shall have the right at any time upon ninety (90) calendar
days’ prior written notice to Distributor to add or delete the Products. Should Manufacturer want to make any changes to the Products,
it shall first notify the Distributor at least ninety (90) calendar days before the change is implemented, and such changes shall be agreed
to by the Parties in writing before shipment or delivery of any Products that include any such changes. Notwithstanding the foregoing,
for changes required by regulatory or certification authorities or otherwise deemed necessary by Manufacturer for any reason, including
health, safety, welfare, technology, intellectual property, trade secret, competitive, materials sourcing, or other matters, Manufacturer
will notify Distributor at least thirty (30) calendar days before the change is implemented, but Distributor’s approval of such
changes shall not be required.

E.       Right
of First Refusal for Future Products
. The Manufacturer shall offer to the Distributor the right to be the exclusive distributor of
any and all future products that: (a) arise out of or relate to electronic nicotine delivery systems and related components to electronic
nicotine delivery systems; or (b) arise out of or relate to the synthetic nicotine industry; or (c) arise out of or relate to the tobacco-derived
nicotine industry (collectively, the “Future Products”). For the avoidance of doubt, Future Products shall include
only nicotine products distributed for commercial sale. At such time when the Manufacturer wishes to distribute any Future Products, it
will offer the opportunity to the Distributor and the parties must engage in good faith negotiations regarding the terms and conditions,
including but not limited to pricing, pursuant to which the Distributor will have the exclusive right to distribute Future Products. If
after 30 days the parties have been unable to reach an agreement and have acted in good faith, the Manufacturer may enter into negotiations
with third parties. If the Manufacturer intends to enter into an agreement with a third party with respect to distribution of the Future
Products, it shall first offer to the Distributor a right of first refusal with respect to such agreement. Distributor must exercise such
right of first refusal within ten (10) business days after the Manufacturer conveys the terms and conditions of such agreement. Exhibit
A
shall be amended to include any Future Products to be sold by the Distributor.

F.       Right
of First Refusal on Manufacturer Change of Control
. If the Manufacturer receives an offer that would constitute a Change of Control
Transaction (the “Bona Fide Offer”) and the Manufacturer wishes to accept such Bona Fide Offer, then the Manufacturer
shall give written notice (the “Seller’s Notice”) to the Distributor, which Seller’s Notice must contain
all the terms, conditions, and obligations of the Bona Fide Offer and the identification of the purchaser (the “Buyer”).
The Distributor shall have the irrevocable first right to accept such Bona Fide Offer in place of the Buyer on the same terms and conditions
set forth in the Seller’s Notice. The Distributor’s Right of First Refusal shall extend for a period of sixty (60) days after
delivery of the Seller’s Notice (the “Exercise Period”) to the Distributor. If the Distributor exercises its
rights hereunder and elects to accept the Bona Fide Offer in place of the Buyer, then: (a) the Distributor must send written notice during
the Exercise Period to the Manufacturer indicating the Distributor is accepting the Bona Fide Offer in place of the Buyer on the terms
and conditions set forth in the Seller’s Notice; and (b) the closing for the Distributor’s acceptance of the Bona Fide Offer
in place of the Buyer shall occur at the same time on the same terms and conditions set forth in the Seller’s Notice. For purposes
of this Agreement, the term “Change of Control Transaction” means any of the following: (w) any person, entity, or
“group” (within the meaning of Rules 13(d) and 14(d) under the Securities Exchange Act of 1934) become the beneficial owner
(as defined in Rules 13(d)-3 and 13(d)-5 under the Securities Exchange Act of 1934), directly or indirectly, of more than 50% of any class
of equity interests or ownership interests of Manufacturer; (x) the existing members of the Manufacturer at the time of the execution
of this Agreement (the “Existing Members of the Manufacturer”), its affiliates and/or any trust established by the
Existing Members of the Manufacturer solely for their own benefit and the benefit of their respective spouses and/or issue cease to own
in the aggregate more than 50% of any class of outstanding equity interests or ownership interests in Manufacturer; (y) a sale, lease,
or other disposition of all or substantially all the Manufacturer’s assets; or (z) any consolidation or merger of Manufacturer with
or into any other person, entity, or any other corporate reorganization, in which the Existing Members of the Manufacturer own less than
50% of any class of equity interests or ownership interests of the surviving entity.

4. INTELLECTUAL PROPERTY RIGHTS.

A.       Manufacturer’s
Marks.
Subject to the terms and conditions of this Agreement, during the term of this Agreement, Manufacturer hereby grants to Distributor
a revocable, sublicensable, non-transferable, non-exclusive, limited license to use Manufacturer’s logos, trademarks, and trade
names, together with all branding and marketing materials created by or on behalf of Manufacturer in connection with the Products, and
the domain www.bidivapor.com (collectively the “Manufacturer IP”), solely in connection with the marketing, advertisement,
and sale of the Products. Such license shall immediately terminate upon the expiration or termination of this Agreement. Distributor shall
strictly comply with all standards of use for the Manufacturer IP and must at all times display appropriate trademark and copyright notices
as instructed by Manufacturer. Distributor acknowledges and agrees that the Manufacturer IP and other intellectual property provided to
Distributor by Manufacturer, if any, are the sole and exclusive property of Manufacturer. Distributor shall not acquire any right, title,
or interest under this Agreement in any patent, copyright, Manufacturer IP, or other intellectual property right of any kind of Manufacturer.
No implied license, patent, copyright, or other intellectual property right of Manufacturer is granted under this Agreement or otherwise.
During the term of this Agreement and thereafter, Distributor shall not do anything that will in any manner infringe, impeach, dilute,
or lessen the value of the Manufacturer IP, patents, copyrights, or other intellectual property of Manufacturer or the goodwill associated
therewith or that will tend to prejudice the reputation of the Manufacturer or the sale of any Products.

B.       Distributor
Marks.
Subject to the terms and conditions of this Agreement, during the term of this Agreement, Distributor hereby grants Manufacturer
a non-exclusive, royalty free license to use Distributor’s logos, trademarks, and trade names (the “Distributor Marks”)
on Manufacturer’s web sites and marketing materials. Such license shall immediately terminate upon the expiration or termination
of this Agreement. Manufacturer shall strictly comply with all standards of use for the Distributor Marks and must at all times display
appropriate trademark and copyright notices as instructed by Distributor. Manufacturer acknowledges and agrees that the Distributor Marks
and other intellectual property provided to Manufacturer by Distributor, if any, are the sole and exclusive property of Distributor. Manufacturer
shall not acquire any right, title, or interest under this Agreement in any patent, copyright, Distributor Marks, or other intellectual
property right of any kind of Distributor. No implied license, patent, copyright, or other intellectual property right of Distributor
is granted under this Agreement or otherwise. During the term of this Agreement and thereafter, Manufacturer shall not do anything that
will in any manner infringe, impeach, dilute, or lessen the value of the Distributor Marks, patents, copyrights, or other intellectual
property of Distributor or the goodwill associated therewith or that will tend to prejudice the reputation of the Distributor.

 

5. CONFIDENTIAL INFORMATION.

A.                 
Confidential Information
. The Parties acknowledge and agree
that during the term of this Agreement, each may receive confidential information from the other Party. “Confidential Information
shall mean (i) information relating to a Party’s and its affiliates’ products or business including, but not limited to, the
business plans, financial records, customers, suppliers, products, product samples, strategies, inventions, procedures, sales aids or
literature, technical data, advice or knowledge, contractual agreements, pricing, price lists, product white papers, plans, designs, specifications,
and know-how or other intellectual property, that may be at any time furnished, communicated, or delivered by either Party to the other
Party whether in oral, tangible, electronic, or other form and (ii) all other non-public information provided by one Party to the other
including, but not limited, to financial, technical, and business information, and all non-promotional materials furnished by one Party
to another.

B.                 
Exceptions
. The “Receiving Party” shall
not have any obligations to preserve the confidential nature of any Confidential Information that: (i) Receiving Party can demonstrate
by competent evidence was rightfully in the Receiving Party’s possession before receipt from the “Disclosing Party”;
(ii) is or becomes a matter of public knowledge through no fault of the Receiving Party; (iii) is rightfully received by Receiving Party
from a third party without, to the best of Receiving Party’s knowledge, a duty of confidentiality; (iv) is independently developed
by Receiving Party without use of the Confidential Information; or (v) is disclosed by Receiving Party with Disclosing Party’s prior
written approval.

C.                 
Use of Confidential Information; Standard of Care
. The Receiving
Party shall maintain the Confidential Information in confidence and disclose the Confidential Information only to its employees, subcontractors,
and consultants who have a need to know such Confidential Information in order to fulfill the business affairs and transactions between
the Parties contemplated by this Agreement and who are under confidentiality obligations no less restrictive as, or who have been advised
of the confidentiality obligations set forth in this Agreement. The Receiving Party shall remain responsible for breaches of this Agreement
arising from the acts of its employees, subcontractors, and consultants to whom it provides the Disclosing Party’s Confidential
information. The Receiving Party shall protect Confidential Information by using the same degree of care as Receiving Party uses to protect
its own information of a like nature, but no less than a reasonable degree of care, to prevent the unauthorized use, disclosure, dissemination,
or publication of the Confidential Information. The Receiving Party agrees not to use the Disclosing Party’s Confidential Information
for its own purpose other than in connection with the transactions contemplated by this Agreement or for the benefit of any third party,
without the prior written approval of the Disclosing Party. The Receiving Party shall promptly return or certify destruction of all copies
of Confidential Information upon request by the Disclosing Party or upon the expiration or earlier termination of this Agreement.

D.                 
Equitable Relief.
The Receiving Party hereby agrees and
acknowledges that any breach or threatened breach of this Agreement regarding the treatment of the Confidential Information may result
in irreparable harm to the Disclosing Party for which there may be no adequate remedy at law. In addition to other remedies provided by
law or at equity, in such event the Disclosing Party shall be entitled to seek an injunction, without bond, preventing any further breach
of this Agreement by the Receiving Party.

6.                  
INSURANCE
. Manufacturer shall maintain, during the term
of this Agreement, Commercial General Liability Insurance with minimum limits, including under any General Liability Umbrella Policies,
of not less than $2,000,000 combined single limit for bodily injury and property damage on the Products purchased by Distributor for resale.
Manufacturer shall use commercially reasonable efforts to provide Distributor with thirty (30) calendar days’ prior written notice
of any change or cancellation in any applicable insurance policies.

Distributor shall maintain, during the term
of this Agreement, Commercial General Liability Insurance with minimum limits, including under any General Liability Umbrella Policies,
of not less than $2,000,000 combined single limit for bodily injury and property damage. Distributor shall use commercially reasonable
efforts to provide Manufacturer with thirty (30) calendar days’ prior written notice of any change or cancellation in any applicable
insurance policies.

7.                  
WARRANTY; RECALL
.

A.                 
Warranty
. Manufacturer warrants to Distributor, for a period
of one (1) year from the date of delivery by Manufacturer to the intended recipient thereof, that any Products delivered by Manufacturer
pursuant to this Agreement shall conform in all material respects to Manufacturer’s written specifications for such Products, a
copy of which is attached hereto as Exhibit B, and shall be free of defects in materials and workmanship. Manufacturer further
warrants to Distributor that it has title to the Products to be conveyed hereunder and has the right to sell the same and that at the
time of delivery, such Products shall be free of any security interest or other lien or any other encumbrances whatsoever (the warranties
provided in the preceding two sentences being hereinafter referred to as the “Limited Warranty”). Except for the Limited
Warranty, Manufacturer makes no warranties or representations to Distributor or any other person with respect to the Products or any services
provided to Distributor or any other person. Manufacturer may not change any of the terms of the Limited Warranty at any time, without
written consent from Distributor unless Manufacturer notifies Distributor in writing at least one hundred and twenty (120) calendar days
prior to any such change. Any such change shall not apply to any Products sold to or ordered by Distributor prior to the change. Distributor
will not alter the Limited Warranty, warranty disclaimers, and limitation of liability without the prior written authorization of Manufacturer,
nor extend or make any additional warranty or representation regarding the Products unless expressly authorized by Manufacturer.

THE LIMITED WARRANTY REFERRED TO IN THIS SECTION
IS THE ONLY WARRANTY, EXPRESS OR IMPLIED, THAT MANUFACTURER MAKES WITH RESPECT TO THE PRODUCTS. MANUFACTURER SPECIFICALLY DISCLAIMS ALL
OTHER IMPLIED WARRANTIES INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND
NON-INFRINGEMENT.

B.                 
Warranty Claims
. The Limited Warranty is effective only
if Distributor gives prompt written notice to Manufacturer of any alleged breach of the Limited Warranty, which notice shall specifically
describe the problem and shall state the date of sale and name and location of the recipient of the Product originally shipped by Manufacturer.
Notwithstanding anything to the contrary contained herein, Manufacturer shall have no obligation under the Limited Warranty unless it
receives such notice within thirty (30) days following the expiration of the warranty period. In the event of any breach of the Limited
Warranty Manufacturer’s sole obligation is to replace each non-conforming Product within a reasonable period of time and to pay
for the costs of shipment to the original recipient of the Product or as otherwise specified by Distributor.

 

C.                 
Recall
. In the event that: (i) any applicable federal, state
or foreign regulatory authority should issue a request, directive or order that a Product be recalled; (ii) a court of competent jurisdiction
orders such a recall; or (iii) Manufacturer determines that the Product represents a risk of injury or customer deception or is otherwise
defective and that the recall of a Product is appropriate (“Recall”), Manufacturer shall have sole right and responsibility
for implementing the Recall. Distributor will provide cooperation and assistance to Manufacturer in connection therewith, as may be reasonably
requested by Manufacturer. Manufacturer shall be solely responsible for all expenses affecting such Recall (including any reasonable out-of-pocket
expenses incurred by Distributor in connection with such cooperation, as directed in writing by Manufacturer).

 

 

A.                 
Indemnity Obligations for Intellectual Property Infringement
.
Manufacturer agrees to defend, indemnify, and hold harmless Distributor from and against any and all claims, losses, damages, suits, expenses
(including reasonable attorneys’ fees), and costs (collectively “Claims”) brought or alleged by a third party
that the Manufacturer IP or any Products sold to Distributor infringe any U.S. patent, trademark, or copyright. Distributor shall reasonably
cooperate with Manufacturer, its insurance company, and its legal counsel in its defense of such Claims. If the use or sale of any Products
furnished under this Agreement is enjoined as a result of a Claim, Manufacturer shall either obtain on behalf of the Distributor the right
to continue to use or sell such Products, substitute an equivalent product reasonably acceptable to Distributor in its place, or reimburse
Distributor the purchase price of the Products, costs incurred by Distributor as a result of such cancellation, and any and all losses
or costs incurred as a result of Distributor’s breach of any purchaser order or other agreement with its customers. Notwithstanding
the foregoing, this indemnity shall not apply or cover any Claims based upon any infringement or alleged infringement of any patent, trademark,
or copyright resulting from the alteration or unauthorized (by Manufacturer) use of any Manufacturer IP or the Products by Distributor
or a Distributor representative or the combination of any Products with any other products or the combination of any Manufacturer IP with
any other mark, if such infringement claim would have been avoided but for such alteration, combination, or unauthorized use by Distributor
or any Distributor representative. Distributor shall also have the right to participate in the defense of any such action and have the
right to hire its own legal counsel at Distributor’s expense. This indemnity shall not cover any Claims in which Distributor fails
to provide Manufacturer with prompt written notice of the Claim that lack of notice materially prejudices the defense of the Claim.

B.                 
Distributor agrees to defend, indemnify, and hold harmless Manufacturer from and against any
and all Claims brought or alleged by a third party based upon any infringement or alleged infringement of any patent, trademark, or copyright
resulting from the alteration or unauthorized (by Manufacturer) use of any Manufacturer IP or the Products by Distributor or a Distributor
representative or the combination of any Products with any other products or the combination of any Manufacturer IP with any other mark,
if such infringement claim would have been avoided but for such alteration, combination, or unauthorized use by Distributor or any Distributor
representative. Manufacturer shall reasonably cooperate with Distributor, its insurance company, and its legal counsel in its defense
of such Claims. Manufacturer shall also have the right to participate in the defense of any such action and have the right to hire its
own legal counsel at Distributor’s expense. This indemnity shall not cover any Claims in which Manufacturer fails to provide Distributor
with prompt written notice of the Claim which lack of notice materially prejudices the defense of the Claim.

C.                 
Manufacturer’s Additional Indemnity Obligations
. Notwithstanding
anything herein to the contrary, in addition to all other rights and remedies available at law or in equity, Manufacturer hereby agrees
to defend, indemnify, and hold harmless Distributor from and against any and all third party Claims (i) arising out of any defects in
any Products existing at the time such Products are sold by Manufacturer to Distributor, or (ii) arising out of the negligent acts or
omissions or willful misconduct of Manufacturer, its employees, agents, or representatives with respect to the Products or its performance
of this Agreement. Distributor shall reasonably cooperate with Manufacturer, its insurance company, and its legal counsel in its defense
of such Claims. Distributor shall also have the right to participate in the defense of any such action and have the right to hire its
own legal counsel at Distributor’s expense. This indemnity shall not cover any Claims in which Distributor fails to provide Manufacturer
with prompt written notice of the Claim which lack of notice materially prejudices the defense of the Claim.

D.                 
Distributor’s Indemnity Obligations to Manufacturer
.
Distributor hereby agrees to defend, indemnify, and hold harmless Manufacturer, its affiliates, and their respective officers directors,
employees, and agents from and against any and all Claims (i) arising out of the negligent acts or omissions or willful misconduct of
Distributor, its employees, agents, or representatives with respect to its performance of this Agreement, sale of the Products, or otherwise,
(ii) arising out of the alteration or modification of the Products or Manufacturer IP by Distributor or its employees, agents, or representatives,
or (iii) alleging that the Distributor Marks infringe or otherwise violate the intellectual property rights of a third party. This indemnity
shall not cover any Claims in which Manufacturer fails to provide Distributor with prompt written notice which lack of notice prejudices
the defense of the Claim. Manufacturer shall also have the right to participate in the defense of any such action and have the right to
hire its own legal counsel at Manufacturer’s expense.

E.                 
Settlement of Claims
. In no event shall a party seeking
or entitled to indemnification from a Party hereunder settle, compromise, agree to a judgment, or take any similar action with respect
to any Claim without the written consent of the Party from whom indemnification is sought.

9.                  
LIMITATION OF LIABILITY.

EXCEPT FOR THE PARTIES’ INDEMNIFICATION
OBLIGATIONS UNDER SECTION 8 OF THIS AGREEMENT AND CONFIDENTIALITY OBLIGATIONS UNDER SECTION 5 OF THIS AGREEMENT, IN NO EVENT SHALL EITHER
PARTY BY LIABLE UNDER THIS AGREEMENT TO THE OTHER PARTY FOR ANY INCIDENTAL, CONSEQUENTIAL, INDIRECT, STATUTORY, SPECIAL, OR PUNITIVE DAMAGES,
INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF USE, LOSS OF TIME, INCONVENIENCE, LOSS BUSINESS OPPORTUNITIES, DAMAGE TO GOODWILL
OR REPUTATION, OR LOSS OF DATA, REGARDLESS OF WHETHER SUCH LIABILITY IS BASED ON BREACH OF CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE,
AND EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR SUCH DAMAGES COULD HAVE BEEN REASONABLY FORESEEN.

 

10.               
TERM.
This Agreement shall commence on the Effective Date
and shall end on the tenth (10th) anniversary of the Effective Date (the “Initial Term”) unless earlier
terminated pursuant to Section 11 hereof. The Initial Term shall automatically renew for another five (5) years if Distributor satisfies
the Minimum Purchase Thresholds as set forth in Exhibit C during the Initial Term. If Distributor fails to satisfy the Minimum
Purchase Thresholds as set forth in Exhibit C during the Initial Term, then this Agreement shall automatically renew annually for
two (2) year periods (each, a “Renewal Term”), unless either Party provides the other Party with written notice of
its intention not to renew the Initial Term or Renewal Term, as applicable, at least sixty (60) days prior to the expiration of the then
current Initial Term or Renewal Term. For the avoidane of doubt, the Manufacturer is prohibited from not renewing the Agreement after
the Initial Term if Distributor fulfills the Minimum Purchase Thresholds as set forth in Exhibit C during the Initial Term.

11.               
TERMINATION
.

A.                 
Termination for Breach
. Either Party may terminate this
Agreement at any time in the event of a material breach by the other Party that remains uncured after thirty (30) calendar days following
written notice thereof. Such termination shall be effective immediately and automatically upon the expiration of the applicable notice
period, without further notice or action by either Party. Termination shall be in addition to any other remedies that may be available
to the non-breaching Party.

B.                 
Termination for Financial Insecurity
. Either Party may terminate
this Agreement and any outstanding Purchase Orders (to the extent the Products have not already been delivered to the carrier for shipment)
immediately at its option upon written notice if the other Party: (i) becomes or is declared insolvent or bankrupt; (ii) is the subject
of a voluntary or involuntary bankruptcy or other proceeding related to its liquidation or solvency, which proceeding is not dismissed
within sixty (60) calendar days after its filing; (iii) ceases to do business in the normal course; or (iv) makes an assignment for the
benefit of creditors. This Agreement shall terminate immediately and automatically upon any determination by a court of competent jurisdiction
that either Party is excused or prohibited from performing in full all obligations hereunder, including, without limitation, rejection
of this Agreement pursuant to 11 U.S.C. §365.

C.                 
Termination for Failure to Meet Minimum Purchase Commitments
.
Manufacturer may terminate this Agreement at any time upon written notice to Distributor if Distributor fails to satisfy the Minimum Purchase
Threshold (as defined in Exhibit C) for any applicable period as set forth on Exhibit C attached hereto and incorporated
herein by reference. At Manufacturer’s option, Manufacturer may elect to suspend a decision to terminate this Agreement as permitted
under this Section 11.C. for an indefinite period, but may, in the meantime upon written notice to Distributor, terminate Distributor’s
exclusive rights under Section 1.A. above.

D.                 
Obligations upon Termination
. Upon termination of this Agreement,
Distributor shall cease to be an authorized reseller of the Products and (i) all unaccepted Purchase Orders may be cancelled by Distributor
or Manufacturer without liability, and (ii) Distributor may, at its option, resell, and deliver to Manufacturer, free and clear of all
liens and encumbrances, any or all of the Products that (A) are subject to Purchase Orders accepted by Manufacturer whether or not the
applicable Products have been shipped as of the date of termination and (B) were manufactured, shipped, or received as of the date of
termination, in each case that are in new condition and in the original factory packaging at the original purchase price of any such Products
that Distributor elects to resell to Manufacturer less a restocking charge of 50% of such amount payable by Manufacturer upon receipt
of such Products. Restocking is waived in the event the Manufacturer terminates Distributor, other than if termination is a Termination
for Breach as outlined in 11.A. Within ninety (90) calendar days of termination of this Agreement, Distributor shall remove and not thereafter
use any sign, display, or other advertising or marketing means containing Manufacturer Marks, except as provided in this section. Distributor
may continue to use in-store materials containing the Manufacturer IP as reasonably required for the resale of the Products that may be
remaining in Distributor’s possession after termination, which materials Distributor may continue to utilize until all remaining
Products have been sold or one hundred eighty (180) calendar days after termination, whichever comes first, after which Distributor shall
cease the use of any such Manufacturer IP.

 

12.               
COMPLIANCE WITH LAWS
. Distributor acknowledges and understands
that the Products may be subject to restrictions upon export from the United States and upon resale after export. Distributor therefore
represents and warrants that it shall comply fully with all relevant regulations of the U.S. Department of Commerce, with the U.S. Export
Administration Act, and with any other import and/or export control laws or regulations of the United States or any other jurisdiction.

13.               
GENERAL TERMS
.

A.                 
Independent Contractors
. Nothing in this Agreement, and
no course of dealing between the Parties, shall be construed to create or imply an employment or agency relationship or a partnership
or joint venture relationship between the Parties or between one Party and the other Party’s employees or agents. Neither Manufacturer
nor Distributor has the authority to bind the other, to incur any liability, or otherwise act on behalf of the other. Each Party shall
be solely responsible for payment of its employees’ salaries (including withholding of income taxes and social security), workers’
compensation, and all other employment benefits.

B.                 
Assignment
. Neither this Agreement, nor any right or interest
herein, may be assigned, in whole or in part, without the express written consent of the other Party. Any assignment without such consent
shall be null and void. Notwithstanding the foregoing, the Distributor may subcontract its rights or obligations under this Agreement
with the prior written consent of Manufacturer. Either party may assign this Agreement if the assignment is carried out as part of a merger,
restructuring, or reorganization, or sale or transfer of all or substantially all of a Party’s assets. This Agreement shall be binding
upon and inure to the benefit of the Parties hereto, their successors and legal representatives. Except as set forth in Section 8, there
are no third-party beneficiaries to this Agreement.

C.                 
Notices
. Unless otherwise agreed to by the Parties, all
notices shall be deemed effective when received and made in writing by either (i) certified mail, return receipt requested, (ii) nationally
recognized overnight courier, or (iii) fax with confirmation, addressed to the party to be notified at the following address or to such
other address as such Party shall specify by like notice hereunder:

If to Manufacturer:

BIDI VAPOR, LLC

4460 OLD DIXIE HWY

GRANT-VALKARIE, FL 32949

Attn: BIDI VAPOR – CORPORATE
Email: ADMIN@BIDIVAPOR.COM

 

If to Distributor:

Kaival Brands Innovations Group, Inc.

401 N. WICKHAM RD.

MELBOURNE, FL 32935

Email: ADMIN@KAIVALBRANDS.COM

 

(with a copy to, which does not serve as notice):

 

Baker & Hostetler LLP

200 S. ORANGE AVE., STE 2300

ORLANDO, FL 32801

Attn: ALISSA LUGO & KEITH DURKIN

Email: alugo@bakerlaw.com

kdurkin@bakerlaw.com

Fax: 407-841-0168

 

Either Party, by written notice to the other pursuant to this section,
may change its address or designees for receiving such notices.

D.                 
Force Majeure
. Neither Party shall liable hereunder for
any failure or delay in the performance of its obligations under this Agreement if such failure or delay is on account of causes beyond
its control, including labor disputes, civil commotion, war, fires, floods, inclement weather, governmental regulations or controls, casualty,
government authority, strikes, or acts of God, in which event the non-performing Party shall be excused from its obligations for the period
of the delay and for a reasonable time thereafter. Each Party shall use reasonable efforts to notify the other Party of the occurrence
of such an event within three (3) business days of its occurrence. Notwithstanding anything to the contrary contained herein, in no event
shall the COVID-19 pandemic or government actions taken in connection with the same (or any future pandemic or government actions taken
in connection with the same) constitute an event of force majeure under this Section 13.D. or otherwise prohibit or restrict Manufacturer’s
rights to terminate this Agreement for failure of Distribute to meet the Minimum Purchase Threshold set forth under Section 11.C. hereof.

E.                 
Governing Law; Venue; Jury Waiver
. This Agreement shall
be governed by the laws of the State of Florida, without giving effect to the principles of conflicts of law of such state and shall be
binding upon the Parties hereto in the United States and worldwide. Any claims or legal actions by one Party against the other arising
under this Agreement or concerning any rights under this Agreement shall be commenced and maintained in any state or federal court located
in Orange County, Florida. Both Parties hereby submit to the jurisdiction and venue of any such court. THE PARTIES FURTHER AGREE, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, COUNTERCLAIM, OR ACTION ARISING FROM
THE TERMS OF THIS AGREEMENT.

F.                  
Attorney’s Fees
. If either Party incurs any legal
fees associated with the enforcement of this Agreement or any rights under this Agreement, the prevailing Party shall be entitled to recover
its reasonable attorney’s fees and any court, arbitration, mediation, or other litigation expenses from the other Party.

G.                
Survival
. The provisions of this Agreement, which by their
sense and context should survive any termination of expiration of this Agreement, including without limitation sections 5 (confidentiality),
7 (warranty), 8 (indemnification), 9 (limitation of liability), 12 (compliance with laws), and 13 (general terms) shall so survive.

H.                
Authorized Signatories
. It is agreed and warranted by the
Parties that the individuals signing this Agreement on behalf of the respective Parties are authorized to execute such an agreement. No
further proof of authorization shall be required.

I.                   
Severability
. If any provision or portion of this Agreement
shall be held by a court of competent jurisdiction to be illegal, invalid, or unenforceable, the remaining provisions or portions shall
remain in full force and effect.

J.                  
No Strict Construction
. This Agreement shall not be construed
more strongly against either Party regardless of which Party is more responsible for its preparation.

 

K.                
Counterparts
. This Agreement may be executed by facsimile
and in one or more counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the
same instrument, without necessity of production of the others.

L.                 
Entire Agreement; Modification; Waiver
. This Agreement is
the entire agreement between the Parties with respect to the subject matter and supersedes any prior agreement or communications between
the Parties hereto, whether written or oral. This Agreement may be modified only by a written amendment signed by authorized representatives
of both Parties. No waiver of any term or right in this Agreement shall be effective unless in writing, signed by an authorized representative
of the waiving Party. The failure of either Party to enforce any provision of this Agreement shall not be construed as a waiver or modification
of such provision, or impairment of its right to enforce such provision thereafter.

 

[SIGNATURES ON FOLLOWING PAGE]

 

IN WITNESS WHEREOF, the
Parties hereto have caused this Agreement to be duly executed by their duly authorized representatives as of the 20th day of
April, 2021.

MANUFACTURER

 

BIDI
VAPOR, LLC

By: /s/ Nirajkumar Patel

Name: Nirajkumar Patel

Title: Manager

 

DISTRIBUTOR

 

KAIVAL BRANDS INNOVATIONS GROUP, INC.

 

By: /s/ Eric Mosser

Name:     Eric Mosser

Title:       Chief Operating
Officer

 

 

 

 

Exhibit 99.1

 

 

Kaival Brands Innovations Group, Inc.

 

Kaival Brands (OTCQB: KAVL) Enters Into Second Amended
& Restated Distribution Agreement with Bidi Vapor

Kaival Brands signs
10-year exclusivity extension including distribution rights to future Bidi Vapor products.

 

GRANT,
FL, April 21uu, 2021 (PR Newswire) – Kaival Brands Innovations Group, Inc. (OTCQB: KAVL) (“Kaival Brands,”
the “Company,” or “we”),
is the exclusive global
distributor of all products manufactured by Bidi Vapor, LLC (“Bidi
Vapor”). Bidi
Vapor’s primary offering is the BIDI® Stick, which is intended exclusively for adults 21 and over. The tamper-resistant BIDI®
Stick is also the only electronic nicotine delivery system (“ENDS”) on the market with an ecologically friendly, mass-recycling
program called BIDI® Cares, and is the subject of a comprehensive Premarket Tobacco Product Application (“PMTA”) now under
review with the U.S. Food and Drug Administration (“FDA”).

 

Kaival Brands announced today
that its Audit Committee of the Board of Directors approved an amended and restated distribution agreement, which sets forth the terms
of the formal relationship between Kaival Brands and Bidi Vapor. The newly amended and restated distribution agreement extends the previous
one-year, annually renewable term to an initial term of ten years, which automatically renews for another five-year term; provided, that
Kaival Brands satisfies certain minimum purchase thresholds. The newly amended and restated distribution agreement also provides Kaival
Brands with a right of first refusal in the event Bidi Vapor receives an offer that would constitute a “change of control transaction,”
as well as a right of first refusal to act as the exclusive distributor of any and all future products of Bidi Vapor that arise out of
or related to ENDS and components related to ENDS, arise out of or relate to the synthetic nicotine industry, or arise out of or related
to the tobacco-derived nicotine industry.

 

“We believe the amendments
to the distribution agreement further bolsters the commitment between the two companies,” said Raj Patel, the Company’s President,
Chief Executive Officer and Chief Financial Officer. Mr. Patel continued, “The relationship between Kaival Brands and Bidi Vapor
during the past 12 months has been fruitful, with Kaival Brands generating approximately $100 million in revenues during the previous
12 months from the sale of the BIDI® Stick and expanding its distribution of the BIDI® Stock to more than 50,000 stores. With
the recent regulatory authorizations to launch distribution in 11 international markets, and the continued domestic growth, we felt like
it was the appropriate time to further solidify the relationship between Bidi Vapor and Kaival Brands with this amended and restated distribution
agreement to expand the term of the agreement and provide Kaival Brands with certain rights of first refusal.” Mr. Patel concluded,
“It has been an incredibly busy and successful first 12 months for us, and we have even more ambitious plans for the next six months.”

 

Mr. Patel owns and controls Bidi Vapor. As a result,
Bidi Vapor and the Company are considered under common control and Bidi Vapor is considered a related party.

 

 

For more information, visit www.bidivapor.com

– – – – –

 

ABOUT KAIVAL BRANDS

 

Based in Grant, Florida, Kaival Brands is a company
focused on growing and incubating innovative and profitable products into mature and dominant brands in their respective markets. Our
vision is to develop internally, acquire, own, or exclusively distribute these innovative products and grow each into dominant market-share
brands with superior quality and recognizable innovation. Kaival Brands is the exclusive global distributor of all products manufactured
by Bidi Vapor.

 

Learn more about Kaival Brands Innovations Group, Inc., at www.kaivalbrands.com

 

 

 

ABOUT BIDI VAPOR

 

Based in Melbourne, Florida, Bidi Vapor maintains
a commitment to responsible marketing, supporting age-verification standards and sustainability through its BIDI® Cares recycling
program. The company’s premiere device, the BIDI® Stick, is a premium product made with medical-grade components, a UL-certified
battery, and technology designed to deliver a consistent vaping experience for adult tobacco users. Bidi Vapor is also adamant about strict
compliance with all federal, state, and local guidelines and regulations. At Bidi Vapor, innovation is key to our mission, with the BIDI®
Stick promoting environmental sustainability, while providing a unique vaping experience to adult smokers.

 

For more information, visit www.bidivapor.com.

 

 

##

Forward-Looking Statements

 

This press release includes statements that constitute
“forward-looking statements” within the meaning of federal securities laws, which are statements other than historical facts
that frequently use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,”
“expect,” “forecast,” “intend,” “may,” “plan,” “position,” “should,”
“strategy,” “target,” “will,” and similar words. All forward-looking statements speak only as of the
date of this press release. Although we believe that the plans, intentions, and expectations reflected in or suggested by the forward-looking
statements are reasonable, there is no assurance that these plans, intentions, or expectations will be achieved. Therefore, actual outcomes
and results could materially differ from what is expressed, implied, or forecasted in such statements. Our business may be influenced
by many factors that are difficult to predict, involve uncertainties that may materially affect results, and are often beyond our control.
Factors that could cause or contribute to such differences include, but are not limited to, the approval of our application for listing
on the Nasdaq Capital Market; the duration and scope of the COVID-19 pandemic and impact on the demand for the products we distribute;
the actions governments, businesses, and individuals take in response to the pandemic, including mandatory business closures and restrictions
on onsite commercial interactions; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies
and economic activity; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertainty in key global markets and
a worsening of global economic conditions or low levels of economic growth; the effects of steps that we could take to reduce operating
costs; our inability to generate and sustain profitable sales growth; circumstances or developments that may make us unable to implement
or realize anticipated benefits, or that may increase the costs, of our current and planned business initiatives; changes in government
regulation or laws that affect our business; significant changes in our relationships with our distributor or sub-distributors; and those
factors detailed by us in our public filings with the Securities and Exchange Commission. All forward-looking statements included in this
press release are expressly qualified in their entirety by such cautionary statements. Except as required under the federal securities
laws and the Securities and Exchange Commission’s rules and regulations, we do not have any intention or obligation to update any
forward-looking statements publicly, whether as a result of new information, future events, or otherwise.

 

Investor & Public Relations:

Inflection Partners, LLC

New York | Philadelphia | New Orleans

www.inflectionpartnersllc.com

Office: (504) 381-4603

investors@kaivalbrands.com

 

 

 

 

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