Terms and Conditions
KAIVAL BRANDS INNOVATION GROUP INC.
TERMS AND CONDITIONS OF SALE
1.1 The sales agreement consists of, in order of precedence: the Kaival Brands Innovations Group Inc. (“Kaival”) quotation, offer or order confirmation (typed portions control over pre-printed portions) (each, an “Offer”), the Product Specifications, and these Terms and Conditions (collectively, the “Sales Agreement”). Any conflicting terms contained in Customer’s purchase order, or other method of acceptance or order, constitutes a proposal to amend the Sales Agreement. The proposal will not govern unless expressly accepted in writing by an authorized agent of Kaival, and expressly acknowledged as an amendment to this Sales Agreement. If the Sales Agreement is deemed an acceptance to Customer’s offer, it is conditioned on Customer assent to the Sales Agreement.
2. Orders, Payment and Delivery
2.1 Sale of Goods. Customer agrees to purchase from Kaival the goods, products and services described in the Offer (“Goods”).
2.2 Purchase Price, Payment Terms. Prices and time of payment for the Goods are as described in the Offer. Unless otherwise stated, all prices are in U.S. dollars. Customer will pay Kaival at the location and manner indicated in the Offer. Kaival’s standard method of payment is via ACH transfer, per the ACH Authorization in effect at the time of sale. Kaival’s standard payment terms (which shall control in the absence of conflicting terms in Kaival’s order confirmation) are 2% 5 net 15, meaning that payment is due on the 15th day following the issuance of an order confirmation, and the Customer receives a 2% discount for making payment within 5 days following the issuance of an order confirmation. Kaival reserves the right to require Customer to prepay for all or part of the Goods. Unless indicated in the Offer, prices do not include applicable federal, state and local taxes of any kind. Customer must pay any such taxes, unless Customer provides a valid tax exemption certificate authorized by the applicable taxing authority. If Customer does not pay Kaival on the applicable due date, Kaival reserves the right to apply a finance charge to the outstanding balance of 1.5% per month, not to exceed the maximum amount of interest permitted by law. Customer may not set off any amounts due from Customer to Kaival under the Sales Agreement against any other amounts which may be due from Kaival to Customer.
2.3 Shipment and Delivery. Kaival will pack and ship the Goods in accordance with its then-current practices, unless Kaival and Customer agree otherwise in writing. Customer will pay all transportation, shipping and handling charges for the Goods. Goods will be deemed delivered when they are (a) turned over to the carrier for shipment or (b) put into storage for the Customer’s benefit, whichever occurs first. Kaival will endeavor to meet all estimated delivery times; availability of Goods and delivery times are estimates, however, and not guaranteed. Kaival is not and will not be liable for any loss, injury, damage or other expense that Customer or any other party may suffer if Goods are shipped after the estimated shipment date. Delivery may be subject to issuance of required licensing and approvals by local, state and federal regulatory bodies.
2.4 Acceptance. Goods will be deemed accepted upon delivery unless Customer rejects the Goods by written notice to Kaival within 48 hours of arrival at Customer’s designated destination. Claims for shortages, damage, or visible defects must be made in writing within that time period.
2.5 Storage; Consignment. If Customer refuses or otherwise declines to accept delivery of Goods, Kaival may, as Customer’s agent and without liability to Kaival, store or arrange for storage of such declined Goods at Customer’s expense. Such Goods will be deemed delivered at the time they are either put into storage or turned over to the carrier for shipment, whichever occurs first. Any consignment arrangement must be specified in the Offer or in an addendum to the Sales Agreement.
2.6 Title. Title and risk of loss to the Goods will pass to Customer at the time Goods are delivered to Customer. Customer, however, grants to Kaival a security interest in the Goods until payment in full and performance by Customer under the Sales Agreement. Kaival may document this security interest in a security agreement and a UCC financing statement.
3. Warranties and Indemnities
3.1 Limited Warranty. Subject to the terms of the Purchase Agreement, Kaival warrants that: (a) the Goods will be manufactured and packaged in accordance with good manufacturing practices; (b) the Goods, when delivered, will conform to their written specifications in all material respects; (c) the Goods will be safe for their intended use from the delivery date to the applicable expiration date; and (d) the Goods will be free from defects in materials, workmanship and packaging. Customer must notify Kaival in writing of any defects within 20 days of the end of the warranty period. Unless otherwise stated, the warranty period is one (1) year from the delivery of the relevant Goods.
3.2 Warranty Claims. Kaival will, at its option, replace or refund the price paid for any Goods that do not conform to the warranty under Section 3.1. Kaival may require inspection of the defective or non-conforming Goods. Customer may not return any Goods to Kaival unless such return is first authorized in writing by Kaival.
3.3 Misuse of Goods. Kaival disclaims liability that may arise: if the Customer or any third party modifies, misuses, improperly installs or repairs the Goods; if the Goods suffer an accident, neglect, or adverse conditions; or if the Goods are used contrary to published specifications or instructions of use.
3.4 WARRANTY LIMITATIONS. THE WARRANTY UNDER SECTION 3.1 IS EXCLUSIVE AND MADE IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. NO MODIFICATION OR ALTERATION OF THE FOREGOING WARRANTY SHALL BE VALD OR ENFORCEABLE UNLESS SET FORTH IN A WRITTEN AGREEMENT SIGNED BY KAIVAL AND CUSTOMER
3.5 Customer Indemnity. Customer will indemnify and hold harmless Kaival, its affiliates and their respective officers, directors, employees and agents from and against any claims, losses, damages, liability and costs arising out of any claim, suit or action alleging (a) a breach by Customer of the Sales Agreement, or (b) personal injury or property damage arising from the use, operation, or failure to operate the Goods, except to the extent caused by negligence of Kaival, the breach of warranty under Section 3.1, or willful misconduct of Kaival.
3.6 Kaival Indemnity. Kaival will indemnify and hold harmless Customer from and against any claims, losses, damages, liability and costs arising out of any claim, suit or action alleging (a) defective manufacture, design or labeling of the Goods, (b) failure of the Goods to meet the applicable written specifications, or (c) the breach of the warranty set forth in Section 3.1. Kaival has the right to assume full control of the defense and settlement of any such claim, suit or action.
4. LIABILITY LIMITATION
4.1 IN NO EVENT SHALL KAIVAL BE LIABLE FOR ANY INDIRECT, SPECIAL, PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES, OR FOR LOSS OF PROFITS, REVENUE, OR USE, INCURRED BY CUSTOMER OR ANY THIRD PARTY, WHETHER IN AN ACTION IN CONTRACT, OR TORT, OR OTHERWISE EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. KAIVAL’S LIABILITY FOR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT SHALL IN NO EVENT EXCEED THE PURCHASE PRICE OF THE DEFECTIVE GOODS.
5. Compliance; Insurance
5.1 Compliance with Laws. With respect to all activities under the Sales Agreement, Customer shall comply with all applicable federal, state and local laws, government regulations and orders, including without limitation concerning: (a) delivery, use, or sale of the Goods, including but not limited to the sale of the goods to appropriately aged parties; (b) tax and any other registration required by any governmental authority in the jurisdiction or jurisdictions in which Customer conducts business; (c) the timely and complete payment of 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 Goods to Customer, and arising out of Customer’s ownership and sale of the Goods, other than taxes based upon Kaival’s income (collectively, “Taxes”) (c) occupational health and safety, and protection of persons and property from death, injury or damage; (d) labor and employment, including equal employment opportunity; (e) tax; (f) export control; (g) the environment and the use, handling, storage, labeling, and disposal of toxic or hazardous materials; and (h) money laundering, bribery, anti-terrorism, trade embargos, and economic sanctions. Customer represents that it holds all applicable licenses and permits, and has made all required registrations, to purchase and sell Goods and warrants that it shall maintain said licenses and permits (and obtain any additional licensing that may be required in the future) throughout the term of this Sales Agreement. Upon request, Customer hereby agrees to provide Kaival with copies of any applicable license or permit, or proof of registration, as requested. Kaival reserves the right, in its sole discretion, to require Customer to apply for and maintain a specific license in order to purchase Goods.
5.2 Hazardous Goods. Customer acknowledges that there may be hazards associated with the storage, use and disposal of Goods. Customer agrees that only qualified and trained individuals who have been made aware of these potential hazards will handle the Goods. Customer also assumes all risk and liability resulting from its use or disposal of Goods.
5.3 Compliance Indemnity and Covenant. Customer shall indemnify, defend and hold harmless Kaival, its affiliates and their respective officers, directors, employees and agents from and against any claims, losses, damages, liability and costs arising out of any claim, suit or action alleging Customer’s conduct, or the conduct of Customer’s counterparties or any parties downstream of Customer which is in breach of the covenants under this Section 5. In addition, Customer shall bind all of its counterparties to the obligations contained in this Section 5, and shall not sell the Goods to a counterparty that is in breach of any of the obligations contained in this Section 5.
5.4 Diligence Responsibilities. Customer acknowledges and agrees that, in the event it or its counterparties sell the Goods to parties who have not obtained the requisite certifications, credentials, authorizations, licenses, and permits materially necessary to conduct business in the jurisdictions in which they operate or who have not paid the requisite Tax to the appropriate taxing authorities, Kaival may be subject to adverse action leading to a prohibition of sales (and thereby to damage affecting both parties). Therefore, Customer agrees to perform strict due diligence on its counterparties (and their counterparties, if applicable) and to obtain documentary verification that all parties in its stream of commerce are in compliance with the covenant contained in Section 5 hereof.
6. Intellectual Property
6.1 Ownership. Subject to the express rights and licenses granted by Distributor in this Agreement, Sub-Distributor acknowledges and agrees that any and all intellectual property rights, including all patents, trademarks, works of authorship, trade names, trade secrets, and any and all related rights, pertaining to the Goods (“Kaival IP”) are the sole and exclusive property of Kaival, subject to the following limited license. Kaival hereby grants Customer a non-exclusive, non-transferable, revocable and non-sublicensable license to use Kaival’s trademarks in the during the Term solely on or in connection with the promotion, advertising, and resale of the Goods, and in accordance with the terms and conditions of this Agreement. Kaival may revoke this license at any time, for any reason or no reason, by written notice to Customer.
6.2 Prohibited Acts. Customer shall not: (a) take any action that may interfere with the Kaival IP or Kaival’s ownership or exercise thereof; (b) challenge Kaival’s right to the Kaival IP; (c) make any claim adverse to Kaival’s ownership of the Kaival IP; (d) use any mark, anywhere, that is confusingly similar to the Kaival IP; (e) alter, obscure, or remove any of Kaival’s trademarks, copyright notices, or other proprietary notices placed on the Goods; (f) place Kaival’s name or the name of any of its brands or affiliates on any vehicle or place of business without Kaival’s prior written consent; (g) purchase, store, possess, sell, consign, or otherwise traffic in goods that constitute imitations, unauthorized copies, or counterfeit versions, of the Goods (collectively, “Counterfeit Goods”)
6.3 Strict Liability for IP and Counterfeit Goods. Customer shall be strictly liable for any and all actions, damages, costs and expenses, whether foreseeable or unforeseeable, and whether brought by a third party, a governmental entity, or otherwise (“IP Claims”), arising from Customer’s breach of Customer’s responsibilities set forth in this Section 6, and shall be strictly liable for any IP Claims related to Counterfeit Goods purchased, stored, possessed, sold, consigned, or otherwise trafficked by Customer, whether or not Customer was aware of the status or provenance of Counterfeit Goods at the time of purchase or sale.
6.4 Specific Indemnity. Customer shall indemnify, defend, and hold harmless Kaival, its affiliates and their respective officers, directors, employees and agents from and against any and all IP Claims brought in any manner by a third party or governmental entity and arising from Customer’s breach of its obligations under this Section 6.
6.5 Penalty for Trafficking in Counterfeit Goods. In the event Customer is found, by any means including Kaival’s Inspection Rights, to be in possession of, or in the business of trafficking in, Counterfeit Goods, Kaival shall have the right to charge Customer a fee of $100 per unit of Counterfeit Goods purchased, stored, possessed, sold, consigned, or otherwise trafficked by Customer, whether or not Customer was aware of the counterfeit status thereof, and in addition to any other remedy available to Kaival at law or in equity
6.6 Inspection Rights. On reasonable request, during the Term and within one year after the expiration or earlier termination of this Agreement, Kaival may audit Customer’s files relating to its sales, marketing, and inventory of Goods regarding transactions that took place in the immediately preceding 12 months. In addition, during the Term and within one year after the expiration or earlier termination of this Agreement, Customer shall make available to Kaival, on reasonable request, but without requirement of prior notice, make available for physical inspection by Distributor at any time during regular business hours (a) any and all Goods (or Counterfeit Goods) in Customer’s inventory; and (b) the Customer’s stores, storage rooms, principal place of business, marketing offices, and distribution center(s).
7. Governing Law, Arbitration and Venue
7.1 Governing Law. The Sales Agreement will be construed in accordance with and governed solely by the laws of the State of Florida, without regard to its conflict of laws rules.
7.2 Mediation and Venue. Kaival and Customer will first endeavor to resolve through good faith negotiations any dispute arising under or relating to the Sales Agreement. If a dispute cannot be resolved through good faith negotiations within a reasonable time, any actions brought under the Sales Agreement will have venue solely in the state and federal courts located in Orlando, Florida, and Customer waives any and all objection to venue and jurisdiction of such courts.
7.3 Arbitration. Kaival and Customer may agree to resolve any dispute arising out of this Purchase Agreement by binding arbitration administered and resolved by the American Arbitration Association (“AAA”). Any such arbitration must be conducted by a single arbitrator in accordance with the Commercial Arbitration Rules of the AAA, including the Optional Rules for Emergency Measures of Protection, in effect at the time the arbitration is commenced (except as modified in this Purchase Agreement). Any arbitration award must be issued within one year from the date claimant files its notice of intention to arbitrate (i.e. the demand), and the arbitrator must agree to comply with this schedule before accepting appointment. Any evidentiary hearing must be held on consecutive hearing days. Any monetary award in the arbitration must include pre-award interest at the rate of one and a half percent (1.5%) per month from the time of the acts giving rise to the award. Judgment on the award rendered by the arbitrator may be entered in any court having appropriate jurisdiction.
8. Force Majeure.
8.1 If Kaival’s ability to perform its obligations under the Sales Agreement is limited, delayed or prevented in whole or in part by any reason whatsoever not reasonably within the control of Kaival, or its suppliers, including, but not limited to, act of God, war, invasion, act of foreign enemy, hostilities, civil war, rebellion, civil strife, pandemic or disease, strikes or industrial dispute, insolvency or bankruptcy of a supplier, or by any law, rule, regulation, order or other action by any public authority, transportation delays or the refusal of any necessary license, then Kaival will be excused, discharged, and released from performance to the extent such performance is so limited, delayed or prevented, without liability of any kind.
9.1 Unless otherwise noted, all notices or correspondence pursuant to the Sales Agreement must be sent (or faxed with a follow up copy sent) to the address or number and to the contact on the Offer or to such other address as may be designated by Kaival.
10.1 If any provision of the Sales Agreement is prohibited by law, or held by a court of competent jurisdiction to be illegal, invalid or unenforceable, the remaining provisions will remain in full force and effect.
11.1 No failure by Kaival or Customer to enforce or take advantage of any provision under this Purchase Agreement will constitute a waiver of the right subsequently to enforce or take advantage of such provision.
12.1 Headings. The headings contained in the Sales Agreement are for reference only and are not to be construed to affect construction or interpretation of the Sales Agreement.
12.2 Entire Agreement. The Sales Agreement, and the documents referenced in the Sales Agreement, including any specifications, constitute the entire understanding and agreement between Kaival and Customer, and supersede all prior oral or written negotiations and agreements with respect to the subject matter of the Sales Agreement. Conflicts in terms will be resolved in the following order of precedence: (a) customized terms of the Offer; (b) the Sales Agreement; and (c) any written agreement signed by authorized representatives of Kaival and Customer expressly amending the Sales Agreement. No modification, change or amendment of the Sales Agreement will be valid unless made in writing and signed on behalf of Kaival and Customer by its duly authorized officer or representative.
12.3 No Third-Party Beneficiaries; Assignment. The Sales Agreement is entered into solely for the benefit of Kaival and Customer, and no other person will acquire the right to enforce any provision of the Sales Agreement against either party. Neither Kaival nor Customer may assign the Sales Agreement to a third party without the prior written consent of the other party except, with prior notice: (a) to an affiliate; or (b) to a third party who will acquire, by sale of assets, merger or otherwise, all or substantially all of the assets of such party. The assigning party will remain obligated to perform under the Sales Agreement notwithstanding such assignment.
12.4 Survival. All provisions that are continuing in nature, including but not limited to those involving indemnity, will survive termination of the Sales Agreement.
12.5 Remedies. Kaival’s rights and remedies are cumulative and in addition to any other rights and remedies provided by law or equity (or provided under the Uniform Commercial Code except to the extent modified herein).
12.6 No Partnership. Nothing in this Sales Contract may be construed to create a partnership, joint venture or agency relationship between Kaival and Customer.