Exhibit
10.1


 


Certain
portions of this Exhibit have been redacted pursuant to Item 601(b)(10) of Regulation S-K and, where applicable, have been
marked with “[***]” to indicate where redactions have been made.


 


FOURTH
AMENDMENT TO SERVICE AGREEMENT


 


THIS
FOURTH AMENDMENT TO SERVICE AGREEMENT (the “Amendment”) is entered into this 9th day of November, 2022 (the “Execution
Date”) and is between KAIVAL BRANDS INNOVATIONS GROUP, INC., a Delaware corporation (the “Company”) and
QUIKFILLRX, LLC, a Florida limited liability company (the “Contractor”) (Contractor and Company are each a “Party”
and collectively referred to as the “Parties”).


 


R
E C I T A L S


 


WHEREAS,
Company and Contractor are parties to the Service Agreement dated March 31, 2020 as amended by a First Amendment dated June 2, 2020 and
a Second Amendment dated March 16, 2021 and a Third Amendment dated September 17, 2021 (collectively, the “Agreement”)
wherein Contractor agreed to provide certain services, including, but not limited to business planning, staffing and recruitment, training
and onboarding, direct sales, marketing, and various other services as set forth on Exhibit “A” to the Agreement;


 


WHEREAS,
the Company and Contractor desire to further amend the Agreement as set forth in this Amendment, effective as of the Effective Date.


 


NOW,
THEREFORE, in consideration of the mutual obligations set forth in the Agreement and the Amendment, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Parties, intending to be legally bound, agree to amend the Agreement
as follows:


 


1.             Recitals.
The recitals are true, correct, and incorporated by this reference into the Agreement by this Amendment.


 


2.             Effective
Date. The amendments to the Agreement implemented by this Amendment shall be effective as of November 1, 2022 (the “Effective
Date”).


 


3.             Section
1 Revision. Section 1 of the Agreement is deleted in its entirety and replaced with the following:


 


“1.         TERM
OF AGREEMENT; NAME CHANGE


 


A.            Term.
The initial term (“Term”) of this Agreement will commence on the Effective Date and, unless terminated as provided
herein, shall continue and remain in full force and effect until October 31, 2025. The Term shall automatically on renew for successive
one (1) year periods beginning November 1, 2025, on the same terms and conditions set forth in this Agreement unless terminated by either
Party as set forth in this Agreement.


 


B.             Name
Change. Contractor agrees to change its “doing business as” name to “Kaival Marketing Services” within thirty
(30) days following the Effective Date.


 






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4.             Section
10 Revision. The first sentence of Section 10 is deleted in its entirety and replaced with the following:


 


“Either
Party may terminate this Agreement without cause upon not less than ninety (90) days prior written notice to the other Party.”


 


5.             Schedule
B General Compensation Revision. The section titled “General Compensation” on Schedule B is deleted in its entirety and
replaced with the following:


 


“General
Compensation: The following constitute “General Compensation”:


 


		●	For
                                            each calendar month commencing on the Effective Date and continuing on the first (1st)
                                            of each month thereafter throughout the Term, the Client shall pay the Contractor an amount
                                            equal to $125,000 for the Services to be performed during such calendar month. Client must
                                            remit this monthly payment no later than the ninth (9th) day of such month.



 


		●	If
                                            the Agreement automatically renews at the expiration of the Term, the Parties agree to negotiate
                                            a new General Compensation package in good-faith within sixty (60) days after the expiration
                                            of the Term with the Contractor being paid the General Compensation in such interim period.



 


Non-Qualified
Stock Options (“NSOs”) to Vest During Term as Part of General Compensation:


 


		●	Client
                                            hereby grants Contractor Two Hundred and Fifty Thousand (250,000) NSOs (the “Initial
                                            NSOs”) for services rendered at a strike price equal to the fair market value of
                                            the Client’s common stock on the date of grant (meaning, the closing price of such
                                            common stock on the Nasdaq Stock Market). The Initial NSOs date of grant and date of vesting
                                            shall be the Execution Date.



 


6.             Schedule
B Bonus Compensation Addition. The following is added as a part of the “Bonus Compensation” set forth on Schedule B and
is to appear after the section titled “Total Revenues Annual Bonus Compensation” and before the section titled “Reimbursement
of Certain Expenses”


 


Total
Revenues Annual Bonus Compensation. The following is added to the Section titled Bonus Compensation and will be additional bonus
compensation as follows:


 


		●	Client
                                            hereby grants Three Million (3,000,000) NSOs (the “Bonus NSOs”) that shall
                                            vest to Contractor on the schedule set forth below. The Bonus NSOs date of grant shall be
                                            the Execution Date.



 


[***]


 






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		●	Gross
                                            Profit Margin. For purposes of this Bonus Compensation, based on annual audited financial
                                            statements as reported on the Client’s Annual Report on Form 10-K financial filings
                                            (a “Form 10-K”), the term Gross Profit Margin (“GPM”) shall be computed
                                            as follows: Gross Profit (“GP”) divided by Total Revenues, Net
                                            (“TR”), i.e., GPM=GP/TR.



 


		●	The
                                            Bonus NSOs shall be subject to an annual testing period commensurate with the Client’s
                                            annual audited financial statements reported on the Client’s Annual Report on Form
                                            10-K financial filings (a “Form 10-K”). The Bonus NSOs shall vest on the date
                                            of the Client’s actual Form 10-K filings and vest one (1) NSO for each $[***]
                                            of reported TR on the Client’s filed Form 10-K, if Client’s GPM meets
                                            or exceeds [***] ([***]%)
                                            for such year. For the avoidance of doubt, none of the Bonus NSOs shall vest, regardless
                                            of Client’s TR, if Client’s GPM during any year is below [***]
                                            percent ([***]%). All fractional
                                            Bonus NSO calculations shall be rounded down if below .5 and rounded up if .5 or above.



 


		●	Market
                                            Event. A (“Market Event”) may occur if all Bidi Vapor, LLC, flavors (excluding
                                            tobacco flavor) distributed by Client are removed from the market, or issued a marketing
                                            denial order, by the FDA or any other governmental agency. Based upon an occurrence of a
                                            Market Event, the metric in determining vesting shall be reduced (“Reduced Metric”),
                                            by [***]% to one (1) NSO for each
                                            $[***] of reported TR on the Client’s
                                            filed Form 10-K if GPM meets or exceeds [***]
                                            percent ([***]%). The Reduced
                                            Metric shall be applied from the date of the Market Event for each applicable testing period
                                            until the expiration of the Term, or until such Market Event is no longer in effect.



 


		●	of
                                            this Bonus Compensation, the term TR shall be computed and reflected in the Client’s
                                            Form 10-K filings, and, by way of example, if the Client has $[***]
                                            of TR in Form 10-K filing, and the GPM is computed to meet or exceed [***]%,
                                            then [***] Bonus NSOs shall vest
                                            to Contractor as of the Form 10-K filing date ([***]),
                                            which is rounded down.



 


		●	True-Up
                                            for Year 2 and Year 3: The GPM shall be subject to a true-up calculation in years 2 and 3
                                            of this Agreement based on the blended average GPM of years 1 and 2, and of years 1 and 2
                                            and 3, or as follows;



 


		●	Testing
                                            Period for Year 2. If Contractor does not attain GPM of [***]
                                            percent ([***]%) or higher
                                            in year 1, but attains a GPM of [***]
                                            percent ([***]%) or higher
                                            in year 2, then the blended average GPM for years 1 and 2 shall be calculated and if the
                                            blended average GPM for years 1 and 2 equals or exceeds [***]
                                            percent ([***]%), then
                                            Contractor shall be entitled to receive the unvested NSOs based on TR for years 1 and 2.



 


		●	Testing
                                            Period for Year 3. If Contractor does not attain GPM of [***]
                                            percent ([***]%) or higher
                                            in either years 1 or 2 or both years 1 and 2, but attains a GPM of [***]percent
                                            ([***]%) or higher in year 3,
                                            then the blended average GPM for years 1 and 2 and 3 shall be calculated and if the blended
                                            average GPM for years 1 and 2 and 3 equals or exceeds [***]
                                            percent ([***]%), then
                                            Contractor shall be entitled to receive the unvested NSOs based on TR for years 1 and 2 and
                                            3.



 






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		●	Blended
                                            Average. The blended average for GPM shall be determined based on cumulative calculations
                                            of TR and GPM in any of the applicable testing periods. For example, the initial testing
                                            period for year 2 for a year 1 + year 2 calculation would be the cumulative GP derived by
                                            Client in years 1 and 2 divided by the cumulative TR in years 1 and 2. The blended average
                                            for GPM is not subject to any rounding.



 


		●	All
                                            unvested Bonus NSOs shall immediately vest to Contractor if Client undergoes a Change of
                                            Control regardless of GPM or TR. The vesting date shall be the actual date the Change of
                                            Control occurs. For purposes of this Total Revenues Annual Bonus Compensation vesting only,
                                            a “Change of Control” shall mean any of the following: (i) any sale, lease or
                                            other disposition of all or substantially all of the Client’s assets or (ii) any merger,
                                            consolidation, equity exchange, reorganization, or other similar transaction or series of
                                            transactions in which Eric Mosser, Nirajkumar Patel, the family members of Nirajkumar Patel,
                                            the family members of Eric Mosser, trusts established for the primary benefit of Nirajkumar
                                            Patel, Eric Mosser, or their family members, or closely held business organizations organized,
                                            formed, or incorporated and that are owned by Nirajkumar Patel, Eric Mosser, the family members
                                            of Nirajkumar Patel, the family members of Eric Mosser, trusts established for the primary
                                            benefit of Nirajkumar Patel, Eric Mosser, or their family members (collectively, the “Founders”)
                                            collectively own fifty percent (50%) or less of the voting power in the resulting entity
                                            immediately after such event, or (iii) any purchase or purchases by any person or persons
                                            of equity interests of the Client directly from one or more of the Founders, the effect of
                                            which is, following such purchase or purchasers, that the Founders collectively own fifty
                                            percent (50%) or less of the voting power in the Client. For the avoidance of doubt, a Change
                                            of Control shall not occur under clause (iii) above if the purchase of the equity interests
                                            arises out of or relate to a securities offering by the Client pursuant to which new capital
                                            is raised by the Client.



 


		●	All
                                            unvested Bonus NSOs shall be void if Client terminates this Agreement as the result of Contractor’s
                                            breach pursuant to Section 10 of this Agreement or if Contractor voluntarily elects to terminate
                                            this Agreement pursuant to Section 10 of this Agreement.



 


		●	All
                                            unvested Bonus NSOs shall be adjusted accordingly if Client undergoes a reverse stock split
                                            or stock split.



 


		●	If
                                            the Agreement automatically renews at the expiration of the Term, the Parties agree to negotiate
                                            a new Bonus Compensation package in good-faith within sixty (60) days after the expiration
                                            of the Term.



 






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7.             Effect
of Amendment. Except as otherwise expressly and specifically provided herein, the Agreement shall remain unchanged and shall continue
in full force and effect. From and after the date hereof, any references to the Agreement, in the Agreement or otherwise, shall be deemed
to be references to the Agreement as amended by this Amendment.


 


8.             Entire
Agreement; Successors and Assigns. This Amendment constitutes the entire agreement among the Parties with respect to the subject
matter of this Amendment and supersedes all prior agreements, understandings, and discussions, whether written or oral, with respect
thereto. This Amendment shall be binding upon, and shall inure to the benefit of, and shall be enforceable by, the Parties and their
respective successors and permitted assigns.


 


9.             Counterparts.
This Amendment may be executed in any number of counterparts, including, but not limited to electronically signed by DocuSign, each of
which shall be deemed to be an original and all of which together shall be deemed to be a single agreement. The signatures to this Amendment
need not all be on a single copy of this Amendment, and may be facsimiles rather than originals, and shall be fully as effective as though
all signatures were originals on the same copy.


 


10.           Governing
Law. This Amendment shall be governed by, and construed in accordance with, the substantive laws of the State of Florida, without
reference to conflict of law principles.


 


(SIGNATURES
ON FOLLOWING PAGES)


 






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IN
WITNESS WHEREOF, the Parties have signed this Amendment as of the date first written above.


 





	 
   	KAIVAL
  BRANDS INNOVATIONS GROUP, Inc., a Delaware corporation
	 	 
	 	By:	/s/
  Eric Mosser  
	 	 	Eric
Mosser, Chief Operating Officer



  


	 	QUIKFILLRX,
LLC, a Florida limited liability company
	 	 
	 	By:	/s/
  Russell Quick  
	 	 	Russell
Quick, Manager









 


6