Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 3

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 1
Chunk 3
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 distributed to advisors), respectively,
of the Pubco Ordinary Shares immediately after the closing of the Business Combination (the “Closing”).

In addition, after the Closing, the holders of Delta
Shares (inclusive of shares to be distributed to financial advisors) will be entitled to receive an earnout of an additional $30,000,000
in Pubco Ordinary Shares (based on a share price equal to $31 million divided the number of our outstanding shares immediately prior to
the Closing) based on Pubco’s consolidated revenue, net income and EBITDA for the fiscal year ended December 31, 2025.

Representations and Warranties;
Covenants

Pursuant to the Merger Agreement, the parties (other
than Merger Sub) made customary representations and warranties for transactions of this type. All of the representations and warranties
of the parties will not survive Closing. The covenants and agreements of the Parties Sellers that by their terms are to be performed at
or after the Closing shall, in each case, survive until fully performed. In addition, the parties to the Merger Agreement agreed to be
bound by certain covenants that are customary for transactions of this type, including obligations of the parties during the period (the
“Interim Period”) between the date of the execution of the Merger Agreement and the Closing to use commercially reasonable
efforts to operate their respective businesses in the ordinary course, and to refrain from taking certain specified actions without the
prior written consent of the other party, in each case, subject to certain exceptions and qualifications. The covenants and agreements
of the parties that are by their terms to be performed prior to the Closing will not survive the Closing. The covenants and agreements
of the parties that by their terms are to be performed at or after the Closing shall, in each case, survive until fully performed.

2

Closing Conditions

Pursuant to the Merger Agreement, the obligations
of the parties to consummate the Business Combination are subject to the satisfaction or waiver of certain customary closing conditions
of the respective parties, including, without limitation: (i) the representations and warranties of the Company, Delta, Pubco and Sellers
being true and correct subject to the materiality standards contained in the Merger Agreement; (ii) material compliance by the Parties
of their respective pre-closing covenants and agreements, subject to the standards contained in the Merger Agreement; (iii) the approval
by the Company’s stockholders