Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 11

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 1
Chunk 11
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 KBI as set forth in a Capital Contribution Agreement, dated June 10, 2022. The sublicense granted to PMPSA is exclusive in the PMI
Markets and neither KBI nor any of its affiliates can sell, promote, use, or distribute any competing products in the PMI Markets for
the duration of the term of the PMI License Agreement and any Sell-Out Period (as defined in the PMI License Agreement). PMSPA will be
responsible for any regulatory filings necessary to sell products in the PMI Markets. Both KBI and PMPSA agree to work together in the
registration and maintenance of the Intellectual Property, but KBI will bear all costs and expenses to implement the registration strategy.
Finally, PMPSA has agreed to potential future development services with KBI in the PMI Markets and has been granted certain rights with
respect to potential future products.

6

The initial term of the PMI License Agreement is five
(5) years and automatically renews for an additional five-year period unless PMPSA has failed to meet the agreed upon minimum key performance
indicators set forth in the PMI License Agreement, in which case the PMI License Agreement will automatically terminate at the end of
the initial license term.

In consideration for the grant of the licensed rights,
PMPSA agreed to pay to KBI a royalty payment for the sale of each unit of product manufactured and sold. In addition, before the launch
of the first product in a market and each anniversary of such launch, PMPSA agrees to pre-pay to KBI a guaranteed minimum royalty, equal
to a percentage of the estimated royalties payable by PMPSA to KBI in relation to all markets in the twelve (12)-month period following
the first launch or each successive anniversary of the first launch, subject to an aggregate maximum guaranteed royalty payment for all
markets for each applicable twelve (12)-month period. PMPSA may require modification of certain products to be sold under the PMI Licensing
Agreement to be modified for a PMI Market. Pursuant to the PMI Licensing Agreement, PMPSA has absolute discretion over sales, marketing,
product branding and packaging pertaining to sales in the PMI Markets, as well as the right to select the specific PMI Markets in which
to launch commercialization and determine what product types are to be promoted in each market, subject to sales and marketing plans and
annual business plans set by PMPSA and certain expansion criteria agreed between PMPSA