Exhibit 10.23

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (1) NOT MATERIAL AND (2) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF DISCLOSED.

THIRD AMENDED AND RESTATED
EXCLUSIVE DISTRIBUTION AGREEMENT

THIS THIRD AMENDED AND RESTATED EXCLUSIVE DISTRIBUTION AGREEMENT (this “Agreement”) is entered into as of June 10, 2022 (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, other than Excluded Products, being hereinafter referred to as the “Products”). A list of the currently available products is listed on Exhibit A.

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amended and restated the Original Agreement in its entirety on May 21, 2020 (the “First Restated Agreement”), which superseded the Original Agreement, and then subsequently amended and restated the First Restated Agreement in its entirety pursuant to that certain Second Amended and Restated Exclusive Distribution Agreement, dated effective as of April 20, 2021 (the “Second Restated Agreement”), which superseded the First Restated Agreement.

WHEREAS, the Parties wish to amend and restate the Second Restated Agreement in its entirety for purposes of modifying various terms and provisions thereof.

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 and the carve-out for, and exclusion of, the PMI Markets as set forth in Section 1.A.i. below (the “PMI Exclusion”), Manufacturer hereby appoints Distributor as its exclusive worldwide distributor of the Products, and Manufacturer cannot sell to anyone except Distributor or its designated parties (i.e., KBI (as defined below)) (“Designees”) any Products covered by this Agreement. Distributor accepts the appointment as Manufacturer’s exclusive worldwide distributor of the Products (subject only to the PMI Exclusion) 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 and its Designees. Notwithstanding anything to the contrary set forth in this Agreement, “Products” does not include the Excluded Products.

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:

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 price to be paid by Distributor to Manufacturer for the Products ordered, (iv) payment terms granted by Manufacturer (not to be inconsistent with the requirements of this Agreement), (v) the requested receipt date and delivery instructions for the applicable Products ordered, and (vi) that the quantity of Products includes at least one (1) full container of Products (i.e., at least 504,000 units of Products, as 70 pallets of 7,200 units each pallet can be contained in a container), with any orders for any one flavor of Product being in one pallet quantity denominations (7,200 units per pallet). 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 (but with respect to that order only).

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 (which Manufacturer will not unreasonably withhold, condition, or delay) or if it is not rejected by Manufacturer, in whole or in part, by written notice to Distributor that is received by Distributor within ten (10) business days after the receipt of the Purchase Order by Manufacturer (the “Consideration Period”). Notwithstanding anything contained herein to the contrary, Manufacturer may take the following actions with respect to an applicable Purchase Order placed by Distributor:

In the event Manufacturer is unable to fill all of a Purchase Order for any reason, it shall promptly notify Distributor in writing and Distributor shall have the right, in its discretion to cancel the subject Purchase Order within five (5) business after its receipt of such written notice. Moreover, if Manufacturer delivers to Distributor updated Written Specifications with respect to Products that are the subject to a Purchase Order at any time at or prior to Manufacturer’s acceptance of that Purchase Order, Distributor shall have the right, in its discretion to cancel the subject Purchase Order within five (5) business after its receipt of such written update.

C.       Invoices and Payment Terms. Manufacturer shall send Distributor invoices via email for each whole or partial Purchase Order shipped. Manufacturer shall send such invoices to Distributor once the Products are in the possession of the shipping carrier, if shipped by sea, or if shipped by air, then once the Products are delivered to the Destination (as defined in Section 4.A. below). 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 either fourteen (14) calendar days from the date the Product is received at the Destination (as defined in Section 4.A. below) if the Product was shipped by air, or thirty (30) calendar days from the date the shipping carrier has taken possession of the Product if shipped by sea. 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.

D.       Prices; Price Reductions; Minimum Purchase Thresholds.

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.

3.       Taxes. Unless otherwise expressly stated in this Section 3: (a) Distributor shall be responsible for any national, state, or local sales, use, value added, or other tax, tariff or duty (a “Tax”) (except as set forth below as being Manufacturer’s responsibility), 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 (a “Tax”), other than taxes based upon Manufacturer’s income or to the extent resulting from Manufacturer’s failure to establish applicable tax exemptions within its control; and (b) Distributor must pay directly, or reimburse Manufacturer for, the amount of any Tax 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, excluding taxes based upon Manufacturer’s income or to the extent resulting from Manufacturer’s failure to establish applicable tax exemptions within its control. Notwithstanding the provisions of the immediately preceding sentence to the contrary, Manufacturer shall be responsible for all Taxes that are import tariffs and duties resulting from Manufacturer’s sale of the Products to Distributor. For the avoidance of doubt, each Party is responsible for its own income tax; and Manufacturer (and not Distributor) shall be responsible for and pay any and all import duties (and other taxes and fees relating to importation) and any cargo insurance costs.

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”).

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. Manufacturer shall provide Distributor with proposed inspection procedures for quality checking the Products upon receipt of the Product, and shall keep such proposed procedures up to date. Distributor shall maintain the necessary resources (including qualified personnel available) to conduct such inspections within the time allowed. Manufacturer shall compensate Distributor for any manufacturing and design defects according to the following process: (i) if less than three percent (3.0%) of the items in a “production batch” are so defective, then notwithstanding anything to the contrary set forth in this Agreement, Manufacturer shall not be obligated to provide any reimbursement or replacement of those Products to Distributor or its customers; (ii) if at least three percent (3.0%), but less than ten percent (10.0%), of the items in a production batch are so defective, Manufacturer shall replace the specific defective items; and (iii) if ten percent (10.0%) or more of the items in a production batch are so defective, Manufacturer shall replace the entire production batch. With respect to each Product that is replaced by Manufacturer pursuant to the immediately foregoing sentence, at Manufacturer’s request Distributor shall use commercially reasonable efforts to obtain all replaced Products and destroy them. Notwithstanding anything to the contrary set forth in this Agreement, Manufacturer shall not be responsible for any damage to Products caused: (a) by Distributor or any subsequent person in possession of Products failing to store them in accordance with Manufacturer’s written specifications provided to Distributor in advance; and (b) while they are in a shipping carrier’s custody or control, but only where (i) the shipping carrier has rejected Manufacturer’s claim for damage against the shipping carrier and (ii) Manufacturer’s claim against the shipping carrier was materially prejudiced because Distributor did not perform a brief (but reasonable) visible inspection of the outside of the cargo containers holding the Products at the time after delivery to Distributor at the Destination and report such claimed damage on the bill of lading, shipment invoice, or similar instrument delivered with the cargo. For purposes of this Section 4(C), a production batch is the sum total of the Products bearing the same unique production batch number, which inventory, tracking, and other information shall be maintained by Manufacturer in its ordinary course and which can be reviewed by Distributor if Distributor reasonably believes there may be defects in a production batch.

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 (including any variations thereto (e.g., pods)); or (b) arise out of or relate to the nicotine industry (including but not limited to pouches and other accessories) (collectively, the “Future Products”). For the avoidance of doubt, Future Products shall include all flavors and variants of a product, but only such products as are, or are to be, distributed for commercial sale. Notwithstanding the foregoing provisions of this Section 4.E to the contrary, the products or product types listed at Exhibit C as attached hereto are excluded from the definition of Future Products and this right of first refusal for all purposes (the “Excluded Products”). 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 and Minimum Purchase Thresholds, pursuant to which the Distributor will have the exclusive right to distribute Future Products (the “Right of First Offer”). If after ninety (90) days the parties have been unable to reach an agreement and have acted in good faith, the Manufacturer may enter 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 (each, a “Right of First Refusal”). Distributor must exercise any such Right of First Refusal within twenty (20) 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. Notwithstanding anything to the contrary in this Section 4.E., (i) to the extent that, and only to the extent that, PMI is granted a right of first offer or refusal with respect to Future Products in the Markets for which Distributor would otherwise have a Right of First Offer or Right of First Refusal under this Section 4.E., then Distributor’s right shall be a right of second offer/refusal, subordinate only to PMI’s right in the PMI Licensing Agreement (as defined above) and/or as set forth in the Deed Letter in the Markets which shall not arise or accrue unless and until PMI no longer has a right to such New Property under the PMI License Agreement; (ii) any Rights of First Refusal may be exercised on a country by country basis; . For the avoidance of doubt, Distributor’s Right of First Offer and Rights of First Refusal shall not be subordinate to PMI for any country that is not identified as a “Market” in the PMI Licensing Agreement.

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 ninety (90) 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.

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. Without limiting the generality of the foregoing provisions of this Section 5.A, any domain name created by Distributor that incorporates any Manufacturer IP shall be the sole and exclusive property of Manufacturer, and Distributor hereby assigns, transfers, and conveys such domain name to Manufacturer, free and clear of any lien, claim, or encumbrance, subject only to the license set forth above in this Section 5.A.

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.

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.

7.       INSURANCE. Manufacturer shall maintain, during the term of this Agreement, Commercial General Liability Insurance and Product Liability Policy with minimum limits, including under any General Liability Umbrella Policies, of not less than $2,000,000 per occurrence 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. Manufacturer shall make Distributor an additional insured under each policy.

Distributor shall maintain, during the term of this Agreement, Commercial General Liability Insurance and Products Liability Policy with minimum limits, including under any General Liability Umbrella Policies, of not less than $2,000,000 per occurrence 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. Distributor shall make Manufacturer an additional insured under each policy.

8.       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 most recent written specifications for such Products that were delivered prior to Manufacturer’s acceptance of a Purchase Order (“Written Specifications”), and shall be free of defects in materials and workmanship. Manufacturer further warrants to Distributor that (i) 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, (ii) such Products shall be free of any security interest or other lien or any other encumbrances whatsoever, (iii) Manufacturer has the appropriate legal approvals and/or legal authority (including but not limited to any regulatory approvals or licensures that may be required) at the time of the sale of Products to sell those Products to Distributor; and (iv) on an on-going basis, Manufacturer must notify Distributor within three (3) business days after its receipt of any Notice of Illegality, provided, that if Manufacturer fails to do so but an officer of Distributor (other than Nirajjkumar Patel) separately has knowledge of some or all of the information contained in that Notice of Illegality, Distributor shall be responsible for the portion of those losses that a court, tribunal, or arbitrator with jurisdiction over the Parties finds could have been avoided as a result of that officer’s knowledge, and Manufacturer shall be responsible for the remainder of those losses that could have been avoided by providing the Notice of Illegality to Distributor (the warranties provided in (i), (ii), (iii), and (iv) 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. 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. Manufacturer covenants to use commercially reasonable efforts to limit changes to Written Specifications to those that are necessary or otherwise consistent with its ordinary course of business.

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) calendar 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 the 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), in the event that the Recall is necessitated by a design, manufacturing, or marketing defect caused by Manufacturer, in which case Manufacturer will compensate Distributor for all Product stock held by Distributor subject to the Recall at the price paid by Distributor for those Products, with the compensation being paid one-half (1/2) in cash within sixty (60) days after the Recall and the remaining one-half (1/2) as a credit on future orders. With respect to each Product that is the subject of a Recall, at Manufacturer’s request Distributor shall use commercially reasonable efforts to obtain all recalled Products and destroy them, at Manufacturer’s expense unless resulting from a manufacturing, design, or marketing defect caused by Distributor, in which case the same shall be at Distributor’s expense.

D.       Marketing Denial Orders.  If a Marketing Denial Order or equivalent restriction is declared enforceable or is enforced by the U.S. Food and Drug Administration or any other U.S. governmental agency, court, or tribunal with jurisdiction (collectively, an “Enforcement Action”) with respect to any of the Products (the “Affected Products”), and Manufacturer has exhausted all available legal remedies to reverse the Enforcement Action, then Manufacturer shall repurchase the Affected Products held by, or returned to, Distributor at the price paid by Distributor to Manufacturer therefor within sixty (60) days after the exhaustion of all legal remedies (and Distributor shall, at Manufacturer’s direction, either return (at Manufacturer’s expense) the Products repurchased or destroy them). The foregoing repurchase obligation shall be: (a) subject to a cap of Two Million Dollars ($2,000,000.00) (the “Repurchase Cap”); and (b) such Repurchase Cap shall be reduced by fifty percent (50%) of Manufacturer’s attorneys’ fees, and other relevant out of pocket costs and expenses (including, without limitation, expert fees), in challenging the Enforcement Action up to One Million Dollars ($1,000,000.00).

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 worldwide patent, trademark, or copyright. Notwithstanding any provisions of this Section 9(A) to the contrary, Manufacturer shall have no indemnity, defense, hold harmless, or other obligation for any Claims under this Section 9(A) if: (i) Manufacturer concludes that Manufacturer’s IP may infringe another party’s intellectual property as the result of the Freedom to Operate analysis rendered before selling Products in another country; and (ii) Manufacturer notifies Distributor in writing of the potential infringement, and Distributor proceeds to sell Products in the country after receiving such written notice. 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 or relating to any manufacturing defects and/or design defects in any Products sold by Manufacturer to Distributor that are caused by Manufacturer; (ii) arising out of or relating to any marketing defects in any Products sold by Manufacturer to Distributor where Manufacturer produced, made, wrote, or instituted such marketing material giving rise to the marketing defect; (iii) arising out of or relating to 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; (iv) arising out of or relating to the breach of the Limited Warranty set forth in Section 8(A)(iii). 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 or relating to 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 or relating to the alteration or modification of the Products or Manufacturer IP by Distributor or its employees, agents, or representatives, or their failure to transport, store, or use the Products in conformance with Manufacturer’s commercially reasonable written specifications provided to Distributor; (iii) arising out of or relating to any marketing defects in any Products sold by Manufacturer to Distributor where Distributor produced, made, wrote, or instituted such marketing material giving rise to the marketing defect; or (iv) 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.

10.       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 BE 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 OF 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.

11.       TERM. This Agreement shall commence on the Effective Date and shall end on the tenth annual (10^th) anniversary of the Effective Date (the “Initial Term”) unless earlier terminated pursuant to Section 11 hereof. The Initial Term shall automatically renew for another ten (10) years (the “Renewal Term”) unless earlier terminated pursuant to Section 11 hereof.

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. A Minimum Purchase Threshold for a given year shall not include any SKUs for which an MGO has not been granted. If any required Minimum Purchase Thresholds are not met, and such failure to meet the Minimum Purchase Thresholds, after a commercially reasonable effort by Distributor, is due to factors reasonably beyond Distributor’s control (including, but not limited to, shipping delays, force majeure, Enforcement Actions, Manufacturer’s refusal or inability to accept Purchase Orders, or Product defects), then the Minimum Purchase Threshold for the year(s) in which such factors exist shall be reduced to the extent that Distributor’s sale of Products are directly affected by such factors. If after taking into account such reduction in a given year, the required Minimum Purchase Threshold is not met for that year, then Manufacturer may provide notice to Distributor that the Agreement’s exclusivity provisions are no longer applicable, and such provisions shall thereafter no longer be applicable and the rights granted to Distributor in this Agreement shall become non-exclusive for all purposes; provided, however, that if Distributor’s first missed Minimum Purchase Threshold is missed by less than fifty percent (50.0%), the Agreement’s exclusivity provisions shall remain applicable unless and until such deficiency remains uncured within 12 months following written notice thereof. For clarity, Distributor shall only have one (1) opportunity to cure any failure to meet a Minimum Purchase Threshold, and any subsequent failure with respect to any Minimum Purchase Threshold shall not be subject to a cure right. If there is a failure to cure such deficiency within such 12 months, then on the day after the cure period has expired, the rights granted to Distributor in this Agreement shall become non-exclusive for all purposes. Notwithstanding the foregoing, at Manufacturer’s option in its sole discretion, Manufacturer may elect to suspend the conversion of certain of Distributor’s exclusive rights where permitted under this Section 12.C. upon written notice to Distributor.

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. Notwithstanding anything herein to the contrary, the Parties agree that the PMI Distribution Rights contributed to KBI as set forth in Section 1(A) or the Distributor’s requirement to grant the PMI Distribution Rights directly to PMI as required by Deed Letter shall survive the termination of this Agreement for the duration of the Term including any Extension Period and Sell-Out Period.

13.       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.

14.       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. Except for: (a) the contribution of the PMI Distribution Rights by Distributor to KBI and/or the transfer of the PMI Distribution Rights from KBI to Distributor; and (b) Distributor providing the PMI Distribution Rights directly to PMI as may be required pursuant to the Deed of Letter dated even date herewith, 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 assign its subcontract its rights or obligations under this Agreement with the prior written consent of Manufacturer, provided however, that the foregoing does not prohibit the sales and distribution of the Product as contemplated in this Agreement. 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

401 N. WICKHAM RD.

MELBOURNE, FL 32935

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

Nelson Mullins Riley & Scarborough LLP

390 N. Orange Ave., Suite 1400

Orlando, FL 32801

Attention: Matt Armstrong

E-Mail: matt.armstrong@nelsonmullins.com

Fax: 407-425-8377

If to Distributor:

Kaival Brands Innovations Group, Inc.

4460 OLD DIXIE HWY

GRANT-VALKARIE, FL 32949

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

Baker & Hostetler LLP

200 S. ORANGE AVE., STE 2300

ORLANDO, FL 32801

Attn: KEITH DURKIN

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 be 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, endemic, pandemic, 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 14.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 12.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 6 (confidentiality), 8 (warranty), 9 (indemnification), 10 (limitation of liability), 13 (compliance with laws), and 14 (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 electronically by DocuSign or digital signature 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 last date written below, to be effective on the Effective Date.

As of the Effective Date of this Agreement, the current flavors are the following (each at 1.4 mL and 6% Nicotine):

EXHIBIT B 

Specifications

[***]

EXHIBIT C 

Excluded Products from Future Products

[***]

 28

EXHIBITS 10.24

OFFICE / WAREHOUSE / EQUIPMENT LEASE

(NNN)

THIS OFFICE / WAREHOUSE / EQUIPMENT LEASE (the “Lease”) is made and entered into as of June 10, 2022 (the “Effective Date”), by and between JUST PICK, LLC, a Florida limited liability company (“Landlord”), as landlord, and KAIVAL BRANDS INNOVATIONS GROUP, INC., a Delaware corporation (“Tenant”), as tenant.

WHEREAS, Landlord owns the premises located on the property legally described on Exhibit A hereto and by this reference incorporated herein with an address of 4460 Old Dixie Highway, Grant Valkaria, FL 32949 (the “Land”) and certain furniture, fixtures, and equipment located therein; and

WHEREAS, Landlord desire to lease to Tenant, and Tenant desires to lease from Landlord, the Land and all improvements thereon, and certain furniture, fixtures, and equipment located thereat, pursuant to the terms and conditions set forth herein;

NOW THEREFORE, in consideration of the mutual covenants and conditions contained in this Lease, the Parties agree as follows:

Article 1.

LEASE OF PROPERTY

1.1          Lease of Premises. Landlord leases to Tenant, and Tenant leases from Landlord, on the terms and conditions set forth in this Lease, the Land and all improvements located thereon (collectively, the “Premises”), such improvements including, without limitation, the following: (a) an office building containing approximately one thousand five hundred ninety-five (1,595) square feet, the location of which is generally depicted on Exhibit B attached hereto and by this reference incorporated herein as the “Office” (the “Office Building”); and (b) a warehouse building consisting of approximately nineteen thousand seven hundred thirty-seven (19,737) square feet, the location of which is generally depicted on Exhibit B as the “Warehouse” (the“Warehouse Building”, and together with the Office Building, each a “Building”, and collectively the “Buildings”).

1.2                Lease of Personal Property. Landlord leases to Tenant, and Tenant leases from Landlord, on the terms and conditions set forth in this Lease, the furniture, fixtures, and equipment specifically listed on Exhibit C attached hereto and by this reference incorporated herein (the “Personal Property”, and together with the Premises, collectively the “Property”). Tenant acknowledges and agrees that the Personal Property shall be located at all times during the Term at the Premises, and shall not be moved without Landlord’s prior written consent in each instance, in its sole discretion. Notwithstanding anything to the contrary set forth in this Lease, Landlord shall not be obligated to replace any Personal Property, whether due to permanent damaged, obsolescence, or otherwise, and Tenant shall be solely responsible for obtaining and maintaining its own replacement personal property to satisfy its needs at the Premises, which replacement personal property shall be and remain the property of Tenant if obtained by Tenant.

Article 2.

TERM

2.1                Initial Term. The Property are leased to Tenant for an initial term (the “Initial Term”) of one (1) year, commencing at 12:01 A.M. on the Effective Date and ending at 11:59 PM on the day immediately prior to the first (1^st) anniversary of the Effective Date (the “Initial Expiration Date”), unless sooner terminated in accordance with the provisions of this Lease.

2.2                Renewal. This Lease shall automatically renew beyond the Initial Term as follows:

(a)                 Unless Tenant delivers a written notice of termination to Landlord at least thirty (30) days prior to the Initial Expiration Date, then subject only to Section 2.2(c), this Lease shall automatically extend for a period of five (5) additional years (the “First Renewal Term”), commencing at 12:01 A.M. on the first (1^st) anniversary of the Effective Date and ending at 11:59 PM on the day immediately prior to the sixth (6^th) anniversary of the Effective Date (the “First Renewal Expiration Date”), subject to under the terms and conditions contained in this Lease.

(b)                 Tenant, in its sole and absolute discretion, shall have one (1) option to extend the Term for a period of five (5) years immediately following the First Renewal Term (the “Second Renewal Term”, and together with the First Renewal Term, each a “Renewal Term”) for a period of five (5) additional years commencing at 12:01 AM on the sixth (6^th) anniversary of the Effective Date and ending at 11:59 PM on the date immediately prior to the eleventh (11^th) anniversary of the Effective Date, subject to under the terms and conditions contained in this Lease. Tenant’s option to renew this Lease for the Second Renewal Term must be exercised by Tenant delivering written notice of its election to Landlord at least four (4) months prior to the First Renewal Expiration Date. Base Rent for the Second Renewal Term shall be adjusted to an amount equal to the current fair market rental rate for reasonably-comparable premises in similarly situated rental areas in the rental market of Brevard County, Florida, at the time that the Second Renewal Term is to commence, together with reasonably forecasted annual adjustments (“Market Annual Rent”). With reasonable promptness following Tenant’s timely delivery of a written notice to extend the Term for the Second Renewal Term, Landlord and Tenant shall cooperate in good-faith to determine the Market Annual Rent, and if Landlord and Tenant cannot agree on Annual Market Rent during the thirty (30) day period after delivery of that notice to Landlord, then a qualified independent certified appraiser shall be promptly employed to determine the Market Annual Rent (the “Appraiser”). If Landlord and Tenant do not promptly agree on the identity of the Appraiser, both Landlord and Tenant shall each appoint a qualified independent certified appraiser, and the two appointed appraisers shall select a third qualified independent certified appraiser to serve as the Appraiser. An appraisal made by the Appraiser pursuant to this Section 2.2(b) shall be final and binding on both Landlord and Tenant, absent manifest error or mistake of fact. The cost of the Appraiser shall be borne equally by Landlord and Tenant. Once Landlord and Tenant agree on Market Annual Rent, or Market Annual Rent is determined by the Appraiser, Landlord and Tenant agree to promptly execute an amendment to this Lease in reasonable form and substance to reflect the amount of Market Rent for the applicable portion of the Additional Term if one party requests such an amendment.

(c)                 Notwithstanding the foregoing provisions of this Section 2.2 to the contrary:

(i)                   If any Event of Default exists and is continuing at any time within the thirty (30) day period immediately prior to the commencement of the applicable Renewal Term, Landlord may (but is not required to) reject a Renewal Term by delivering written notice thereof to Tenant, in which case the Lease shall not be renewed for such Renewal Term and shall terminate upon the conclusion of the then-current Term.

(ii)                 If at any time during the Term, the U.S. Food and Drug Administration issues one or more non-appealable and binding enforcement orders mandating that all eleven (11) current stock keeping units (or “SKUs”) for the “Bidi Stick” manufactured by Bidi Vapor, LLC (i.e., all eleven (11) current flavors) must be removed from the U.S. market, then Tenant may terminate this Lease by delivering a written notice of termination to Landlord at least thirty (30) days prior to the desired date of termination.

(d)                 References in this Lease to the “Term” shall mean the Initial Term and, to the extent exercised, each Renewal Term, and references in this Lease to the “Expiration Date” shall mean the last day of the Term.

2.3                Lease Year. As used herein, the term “Lease Year” shall mean a period of one (1) year. Each Lease Year shall commence on the Effective Date (in the case of the first (1^st) Lease Year) or an anniversary of the Effective Date (in the case of all subsequent Lease Years), and end on the date immediately prior to the next anniversary of the Effective Date.

Article 3.

RENT

3.1                Base Rent. Tenant shall pay base rent for the Property (“Base Rent”) during the Term as follows, without demand, deduction, or offset, plus all sales, use, transaction privilege, or other excise tax that may at any time be levied or imposed upon, or measured by, any amount payable by Tenant under this Lease:

3.1                Payment of Base Rent. Base Rent shall be payable in equal monthly installments in advance, commencing on the first full calendar month of the Term, and continuing on the first (1^st) day of each subsequent calendar month until the Expiration Date; provided, however, that in the event that: (a) the Effective Date falls on any date other than the first day of a calendar month, the Base Rent will be prorated for that month and shall be due and payable on the Effective Date; and (b) the Expiration Date falls on any date other than the last day of a calendar month, the Base Rent will be prorated for that month and shall be due and payable on the first day of that month.

3.2                Operating Expenses.

(a)                 Tenant shall pay one hundred percent (100%) of all costs, fees, charges, and expenses incurred by, or charged to, Landlord in connection with the ownership, operation, maintenance and repair of, and services provided to, the Property, except for the costs, fees, charges, expenses, and obligations assumed by Landlord pursuant to this Lease or set forth in Section 3.3(b) (collectively, “Operating Expenses”), which shall constitute additional rent hereunder. Operating Expenses include, without limitation, all of the fees, charges, and expenses incurred by, or charged to, Landlord in connection with the following: (i) the Insurance Premiums, together with the cost of any deductible paid by Landlord in connection with an insured loss (provided, that any such deductible shall be amortized over the entire period of the estimated economic useful life of any improvement replaced by the insurance proceeds associated with that deductible, determined in accordance with generally accepted accounting principles); (ii) Taxes; (iii) Landlord’s cost to maintain the Property, except as otherwise expressly set forth in this Lease; (iv) the annual amortization (over their estimated economic useful life determined pursuant to generally accepted accounting principles) of the costs (including reasonable financing charges) of capital improvements or replacements to the Premises on a straight-line basis pursuant to generally accepted accounting principles: (v) a management and administrative fee not to exceed three percent (3%) of annual Base Rent for the Lease Year in question; and (vi) exterior painting of the Buildings.

(b)                 Notwithstanding the foregoing provisions of this Section 3.2 to the contrary, Operating Expenses will not include the following: (i) depreciation on the Buildings or the Property; (ii) financing and refinancing costs (except as provided above), interest on debt or amortization payments on any mortgage, or rental under any ground or underlying lease; (iii) leasing commissions, advertising expenses, tenant improvements or other costs directly related to the leasing of the Property; (iv) income, excess profits or corporate capital stock tax imposed or assessed upon Landlord, unless such tax or any similar tax is levied or assessed in lieu of all or any part of any taxes includable in Operating Expenses above; (v) salaries and overhead of personnel employed by Landlord; (vi) expenses for repair or replacement covered by warranties, and any costs due to casualty that are covered by insurance carried by Landlord or that would have been covered by insurance that Landlord is required to carry under this Lease; (vii) repairs or replacements caused by Landlord’s negligence or willful misconduct, or the negligence or willful misconduct of Landlord’s servants, agents, or employees; (viii) rent and other payments by Landlord under any ground lease or other lease underlying this Lease; (ix) payments to servants, agents, or employees of Landlord for services to the Property for supplies or other materials to the extent that the cost of such services, supplies, or materials exceed the cost which would have been paid had the services, supplies or materials been provided by unaffiliated parties on a competitive basis; (x) expense reserves; and (xi) tax or assessment expenses in excess of the amount which would be payable if such tax or assessment expense were paid in installments over the longest possible term. To the extent it is property qualified, licensed, and insured, as applicable, Landlord shall have the right to directly perform (by itself or through an affiliate) any services provided under this Lease provided that the Landlord’s charges included in Operating Expenses for any such services shall not exceed competitive market rates for comparable services.

3.3                Payment of Operating Expenses; Reconciliation. Operating Expenses shall be payable in equal monthly installments, commencing on the first (1^st) full month of the Term, and continuing on the first day of each subsequent month until the Expiration Date. In the event that the Effective Date falls on any date other than the first (1^st) day of a calendar month, Operating Expenses will be prorated for that month and shall be due and payable on the Effective Date, and Operating Expenses will be prorated for the last month of the Term if the Expiration Date falls on any date other than the last day of a calendar month. In Landlord’s discretion, it may elect to charge Operating Expenses once per Lease Year, in arrears, when Landlord delivers the statement set forth in Section 3.2(c) (in which case the reconciliation set forth in that section shall not be necessary except to the extent necessary as a result of a permissible audit).

(a)                 By April 30th of each Lease Year (and as soon as practical after the expiration or termination of this Lease), Landlord shall provide Tenant with a statement of the Operating Expenses for the preceding Lease Year or part thereof. Within thirty (30) days after delivery of the statement to Tenant, Landlord or Tenant shall pay to the other the amount of any overpayment or deficiency then due from one to the other. Landlord’s and Tenant’s obligation to pay any overpayment or deficiency due the other pursuant to this Section shall survive the expiration or termination of this Lease. In the event that all Operating Expenses for any Lease Year are more than five percent (5%) greater than the actual Operating Expenses for the immediately preceding Lease Year, then within thirty (30) days after Tenant’s receipt of Landlord’s statement setting forth actual Operating Expenses for the Lease Year in question, Tenant shall have the right to review and inspect, at Landlord’s local offices and at Tenant’s expense, Landlord’s accounts and records relating to those Operating Expenses; provided, however, that for this purpose a partial Lease Year’s Operating Costs shall be considered to be the total Operating Costs that would have been charged for an entire calendar year based on the actual Operating Costs for such partial Lease Year).

3.4                Late Payment; Interest. In the event that any payment of Base Rent, Operating Expenses, or any other sum due hereunder is not paid within ten (10) days after the date that such payment is due, Tenant shall be responsible for, and shall pay: (a) a late payment fee equal to five percent (5%) of the amount due (except when Tenant pays the administrative charge set forth in Section 15.2(a)); and (b) interest on such unpaid portion at a rate equal to the lesser of the highest rate permitted by applicable law or ten (10.0%) (the “Interest Rate”) with interest commencing on the date that the payment was due (provided, however, that no interest is due and payable if the amount is paid within ten (10) days after the date it is due).

Article 4.

INSURANCE

4.1                Liability Insurance. Tenant agrees to procure and maintain a policy or policies of liability insurance, at its own cost and expense, insuring Landlord and Tenant from all claims, demands, or actions for injury, death, or damage to property sustained by one or more persons as a result of any one occurrence in the amount of One Million Dollars ($1,000,000.00) combined single limit per occurrence and Two Million Dollars ($2,000,000.00) in the aggregate arising from, related to, or connected with the conduct and operation of Tenant’s business at the Premises. The policy limits requirement may be satisfied by primary general liability insurance or a combination of primary general and excess umbrella liability insurance. Such insurance shall: (a) be endorsed to name Landlord as named insured and this status shall be reflected on the Tenant’s certificate of insurance delivered to the Landlord; (b) not be subject to cancellation except after at least ten (10) days’ prior written notice to Landlord; and (c) be written on an “occurrence” basis and not on a “claims made” basis and shall be endorsed to provide that it is primary to and not contributory to any policies carried by Landlord. The policy or policies, or duly executed certificate or certificates for the same, together with satisfactory evidence of the payment of premium thereon, shall be deposited with Landlord both before Tenant takes possession of the Premises, as well as upon any renewal of said insurance, not less than thirty (30) days prior to the expiration of the term of such insurance.

4.2               Property Insurance. Landlord shall maintain a policy or policies of insurance, in the amount of the full replacement value of the Buildings and the other improvements on the Land, and insuring the Buildings and the other improvements on the Land against loss or damage by fire, wind and storm damage, explosion or other such hazards or risks in a standard extended coverage policy. In Landlord’s discretion, Landlord may include the Property in such policy or policies as covered property. Landlord shall provide to Tenant a detailed accounting of the cost of all premiums with respect to such policy or policies (each, an “Insurance Premium”). The cost of each Insurance Premium for such policy or policies that is attributable to the Term shall be payable by Tenant to Landlord as an Operating Expense.

4.3                Tenant’s Personal Property Insurance; Other Insurance. Tenant shall be solely liable hereunder for insuring Tenant’s personal property. Tenant shall also maintain a policy of business interruption insurance so as to cover Tenant’s obligations hereunder.

4.4                Subrogation. Landlord and Tenant hereby waive any rights each may have against the other on account of any loss or damage occasioned by either Landlord or Tenant, as the case may be, their respective property, the Premises, or its contents or to other portions of the Buildings or the Land, or to the Property, arising from any risk actually covered or to be covered by the insurance policies required hereunder. Landlord and Tenant hereby release each other from any and all liability or responsibility to the other or anyone claiming through or under them by way of subrogation or otherwise for any loss or damage to property caused by fire or any of the extended coverage or supplementary contract casualties, even if such fire or other casualty shall have been caused by the fault or negligence of the other party, or anyone for whom such party may be responsible. If required by either party, Landlord or Tenant shall use commercially reasonable efforts to have all such property insurance policies which may be carried by it endorsed with a clause providing that any release from liability of, or waiver of claim for recovery from, the other party entered into in writing by the insured thereunder prior to any loss or damage shall not affect the validity of said policy or the right of the insured to recover thereunder, and providing, further that the insurer waives all rights of subrogation which such insured may have against the other party.

Article 5.

UTILITIES, AND TAXES AND ASSESSMENTS

5.1                Utilities. Landlord at its expense agrees to make available to Tenant water, sewer, phone and electrical services to the Premises as of the Effective Date. Tenant shall be liable and agrees to pay the charges for all public utility services rendered or furnished to the Premises, including, but not limited to heat, water, electricity, sewer, and sewage treatment facilities, and shall obtain all such service in its own name and timely pay all charges directly to the provider. Landlord shall not be responsible or liable for any interruption in such services except to the extent caused by the negligence or willful misconduct of Landlord, nor shall such interruption affect the continuation or validity of this Lease. Any wiring, cabling or other equipment necessary to connect Tenant’s telecommunications equipment shall be Tenant’s responsibility and shall be installed in a manner approved by Landlord, such approval not to be unreasonably withheld, conditioned, or delayed.

5.2                Taxes and Assessments. For purposes hereof, “Taxes” shall mean all real estate and/or property taxes, rates, levies, charges and assessments, general and special, ordinary and extraordinary, of every kind and nature whatsoever, whether now known to law or hereafter created, which are levied, assessed, imposed or become due and payable during the Term (and, if attributable to a period of time, to the extent attributed to the Term) upon: (a) the Land; (b) the Buildings and the other improvements located on the Land; (c) the Property; (d) the leasehold estate hereby created; and/or (e) or arising with respect to the occupancy, use, or possession of the Premises, and/or the use and possession of the Personal Property, by Tenant. Landlord shall use commercially reasonable efforts to minimize, reduce, protest, negotiate or otherwise adjust Taxes. Any cost incurred by Landlord in an effort to minimize, reduce, protest, negotiate or otherwise adjust any real estate tax bill, tax assessment or assessed valuation, including the cost of appraisals, witness fees and attorneys’ fees related thereto, shall be included in the definition of Taxes (provided, however, that such costs shall not result in a net overall increase to the amount of Taxes). If a special assessment is payable in installments, Taxes for any year shall include the installment of such assessment for that year to the extent of the length of the Term that occurs during such year. If at any time during the Term, the methods of taxation prevailing at the commencement of the Term shall be changed or altered so that in lieu of, in addition to, or as a substitute for the whole or any part of the taxes now levied, assessed or imposed on real estate, there shall be levied, assessed or imposed a different method of taxation, then the same shall be included in the definition and computation of Taxes hereunder. Anything contained in this Lease to the contrary notwithstanding, Tenant shall not be obligated to pay, and Operating Expenses shall not include, any succession, transfer, gift, franchise, income, estate, or inheritance taxes or impositions which may be levied upon, required to be collected by, or assessed against Landlord. Expiration of the Term shall not affect Tenant’s obligation to pay Taxes with respect to any deficiency in Tenant’s payment thereof for the final Lease Year.