Exhibit 10.5

 

AMENDED AND RESTATED EXCLUSIVE DISTRIBUTION AGREEMENT

THIS AMENDED AND RESTATED EXCLUSIVE DISTRIBUTION AGREEMENT (this “Agreement”) is
entered into as of the 21ST of May, 2020, and is effective as of the 9TH day of
March, 2020 (the “Effective Date”) by and between BIDI VAPOR, LLC, a Florida
limited liability company (“Manufacturer”), and KAIVAL BRANDS INNOVATONS 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 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 “Prior
Agreement”).

WHEREAS, the Parties wish to amend and restate the Prior Agreement for purposes
of clarifying certain terms therein to more accurately reflect the Parties’
intentions and desire for this Agreement to be effective as of the date the
Prior Agreement was entered into.

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 sell any Products to any person
(Retail Customer or Non-Retail Customer) other than to Distributor.

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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.

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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.

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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.

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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.

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.

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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.

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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.

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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 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.

 

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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).

 

8.INDEMNIFICATION.

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.

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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.

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10.              TERM. This Agreement shall commence on the Effective Date and
shall end on the first anniversary of the Effective Date (the “Initial Term”)
unless earlier terminated pursuant to Section 11 hereof. The Initial Term shall
automatically renew for successive renewal terms of one (1) year each (each, a
“Renewal Term”), unless either Party provides the other Party with written
notice of its intention not to renew the Initial Term or any Renewal Term, as
applicable, at least sixty (60) days prior to the expiration of the then current
Initial Term or Renewal 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 the 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.

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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:

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If to Manufacturer:

BIDI VAPOR, LLC

4460 OLD DIXIE HWY

GRANT-VALKARIE, FL 32949

Attn:BIDI VAPOR - CORPORATE

Email:ADMIN@BIDIVAPOR.COM

Fax:833-367-2434

 

If to Distributor:

Kaival Brands Innovations Group, Inc.

401 N. WICKHAM RD.

MELBOURNE, FL 32935

Attn:KAVL - CORPORATE

Email:ADMIN@KAIVALBRANDS.COM

Fax:833-452-4825

 

(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.

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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]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives as of the 21ST day of May,
2020, to be effective as of the the Effective Date.

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

 

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