Exhibit 10.1

 
LOCK-UP LETTER AGREEMENT
 
 
September 10, 2019
 
ThinkEquity, a Division of
 
Fordham Financial Management, Inc.
 
17 State Street, 22nd Floor
 
New York, NY 10004
 
 
As Representative of the several Underwriters named on Schedule 1 to the
Underwriting Agreement referenced below
 
 
Ladies and Gentlemen:
 
The undersigned understands that you (the “Representative”) and potentially
certain other firms (the “Underwriters”) propose to enter into an Underwriting
Agreement (the “Underwriting Agreement”) providing for the purchase by the
Underwriters of securities (which will include shares of preferred stock, par
value $0.001 per share (the “Preferred Stock”), that are convertible into shares
of common stock, par value $0.001 per share (“Common Stock”), of cbdMD, Inc.
(formerly known as Level Brands, Inc.), a North Carolina corporation (the
“Company”), and that the Underwriters propose to reoffer the Preferred Stock to
the public (the “Offering”).
 
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of the
Representative, on behalf of the Underwriters, the undersigned will not,
directly or indirectly, (1) offer for sale, sell, pledge, or otherwise transfer
or dispose of (or enter into any transaction or device that is designed to, or
could be expected to, result in the transfer or disposition by any person at any
time in the future of) any shares of Preferred Stock or Common Stock (including,
without limitation, shares of Preferred Stock or Common Stock that may be deemed
to be beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and shares of Preferred
Stock or Common Stock that may be issued upon exercise of any options or
warrants) or securities convertible into or exercisable or exchangeable for
Preferred Stock or Common Stock, (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of shares of Preferred Stock or Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Preferred Stock or Common Stock or other securities, in
cash or otherwise, (3) except as provided for below, make any demand for or
exercise any right or cause to be filed a registration statement, including any
amendments thereto, with respect to the registration of any shares of Preferred
Stock or Common Stock or securities convertible into or exercisable or
exchangeable for Preferred Stock or Common Stock or any other securities of the
Company, or (4) publicly disclose the intention to do any of the foregoing for a
period commencing on the date hereof and ending on the 90th day after the date
of the Prospectus relating to the Offering (such 90-day period, the “Lock-Up
Period”).
 
 

 
 
The foregoing paragraph shall not apply to (a) transactions relating to shares
of Preferred Stock or Common Stock or other securities acquired in the open
market after the completion of the Offering, provided that no filing under
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), shall be required or shall be voluntarily made in connection with such
transfers; (b) bona fide gifts of shares of any class of the Company’s capital
stock or any security convertible into Preferred Stock or Common Stock, in each
case that are made exclusively between and among the undersigned or members of
the undersigned’s family, or affiliates of the undersigned, including its
partners (if a partnership) or members (if a limited liability company); (c) any
transfer of shares of Preferred Stock or Common Stock or any security
convertible into Preferred Stock or Common Stock by will or intestate succession
upon the death of the undersigned; (d) transfer of shares of Preferred Stock or
Common Stock or any security convertible into Preferred Stock or Common Stock to
an immediate family member (for purposes of this Lock-Up Letter Agreement,
“immediate family” shall mean any relationship by blood, marriage or adoption,
not more remote than first cousin) or any trust, limited partnership, limited
liability company or other entity for the direct or indirect benefit of the
undersigned or any immediate family member of the undersigned; provided that, in
the case of clauses (b) - (d) above, it shall be a condition to any such
transfer that (i) the transferee/donee agrees to be bound by the terms of this
Lock-Up Letter Agreement (including, without limitation, the restrictions set
forth in the preceding sentence) to the same extent as if the transferee/donee
were a party hereto, (ii) each party (donor, donee, transferor or transferee)
shall not be required by law (including without limitation the disclosure
requirements of the Securities Act of 1933, as amended, (the “Securities Act”)
and the Exchange Act) to make, and shall agree to not voluntarily make, any
filing or public announcement of the transfer or disposition prior to the
expiration of the 90-day period referred to above, and (iii) the undersigned
notifies the Representative at least two business days prior to the proposed
transfer or disposition; (e) the transfer of shares to the Company to satisfy
withholding obligations for any equity award granted pursuant to the terms of
the Company’s stock option/incentive plans, such as upon exercise, vesting,
lapse of substantial risk of forfeiture, or other similar taxable event, in each
case on a “cashless” or “net exercise” basis (which, for the avoidance of doubt
shall not include “cashless” exercise programs involving a broker or other third
party), provided that as a condition of any transfer pursuant to this clause
(e), that if the undersigned is required to file a report under Section 16(a) of
the Exchange Act, reporting a reduction in beneficial ownership of shares of
Preferred Stock or Common Stock or any securities convertible into or
exercisable or exchangeable for Preferred Stock or Common Stock during the
Lock-Up Period, the undersigned shall include a statement in such report, and if
applicable an appropriate disposition transaction code, to the effect that such
transfer is being made as a share delivery or forfeiture in connection with a
net value exercise, or as a forfeiture or sale of shares solely to cover
required tax withholding, as the case may be; (f) transfers of shares of
Preferred Stock or Common Stock or any security convertible into or exercisable
or exchangeable for Preferred Stock or Common Stock pursuant to a bona fide
third party tender offer made to all holders of the Preferred Stock or Common
Stock, merger, consolidation or other similar transaction involving a change of
control (as defined below) of the Company, including voting in favor of any such
transaction or taking any other action in connection with such transaction,
provided that in the event that such merger, tender offer or other transaction
is not completed, the Preferred Stock and/or Common Stock and any security
convertible into or exercisable or exchangeable for Preferred Stock or Common
Stock shall remain subject to the restrictions set forth herein; (g) the
exercise of warrants or the exercise of stock options granted pursuant to the
Company’s stock option/incentive plans or otherwise outstanding on the date
hereof; provided, that the restrictions shall apply to shares of Common Stock
issued upon such exercise or conversion; (h) the establishment of any contract,
instruction or plan that satisfies all of the requirements of Rule 10b5-1 (a
“Rule 10b5-1 Plan”) under the Exchange Act; provided, however, that no sales of
Preferred Stock or Common Stock or securities convertible into, or exchangeable
or exercisable for, Preferred Stock or Common Stock, shall be made pursuant to a
Rule 10b5-1 Plan prior to the expiration of the Lock-Up Period; provided
further, that the Company is not required to report the establishment of such
Rule 10b5-1 Plan in any public report or filing with the Commission under the
Exchange Act during the lock-up period and does not otherwise voluntarily effect
any such public filing or report regarding such Rule 10b5-1 Plan; and (i) any
demands or requests for, exercise any right with respect to, or take any action
in preparation of, the registration by the Company under the Securities Act of
the undersigned’s shares of Preferred Stock or Common Stock, provided that no
transfer of the undersigned’s shares of Preferred Stock or Common Stock
registered pursuant to the exercise of any such right and no registration
statement shall be filed under the Securities Act with respect to any of the
undersigned’s shares of Preferred Stock or Common Stock during the Lock-Up
Period. For purposes of clause (f) above, “change of control” shall mean the
consummation of any bona fide third party tender offer, merger, purchase,
consolidation or other similar transaction the result of which is that any
“person” (as defined in Section 13(d)(3) of the Exchange Act), or group of
persons, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 of
the Exchange Act) of a majority of total voting power of the voting stock of the
Company.
 
 

 
 
The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent and registrar against the
transfer of the undersigned’s securities subject to this Lock-Up Letter
Agreement except in compliance with this Lock-Up Letter Agreement.
 
If the undersigned is an officer or director of the Company, (i) the undersigned
agrees that the foregoing restrictions shall be equally applicable to any shares
of Preferred Stock that the undersigned may purchase in the Offering; (ii) the
Representative agrees that, at least three (3) business days before the
effective date of any release or waiver of the foregoing restrictions in
connection with a transfer of securities subject to this Lock-Up Letter
Agreement, the Representative will notify the Company of the impending release
or waiver; and (iii) the Company has agreed in the Underwriting Agreement to
announce the impending release or waiver by press release through a major news
service at least two (2) business days before the effective date of the release
or waiver. Any release or waiver granted by the Representative hereunder to any
such officer or director shall only be effective two (2) business days after the
publication date of such press release. The provisions of this paragraph will
not apply if (a) the release or waiver is effected solely to permit a transfer
of securities subject to this Lock-Up Letter Agreement not for consideration and
(b) the transferee has agreed in writing to be bound by the same terms described
in this securities subject to this Lock-Up Letter Agreement to the extent and
for the duration that such terms remain in effect at the time of such transfer.
 
It is understood that, if the Company notifies the Underwriters that it does not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the securities, the undersigned will be released
from its obligations under this Lock-Up Letter Agreement.
 
The undersigned understands that the Company and the Underwriters will proceed
with the Offering in reliance on this Lock-Up Letter Agreement.
 
Whether or not the Offering actually occurs depends on a number of factors,
including market conditions. Any Offering will only be made pursuant to an
Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.
 
This Lock-Up Letter Agreement shall automatically terminate upon the earliest to
occur, if any, of (1) the termination of the Underwriting Agreement before the
sale of any securities to the Underwriters or (2) December 31, 2019, in the
event that the Underwriting Agreement has not been executed by that date.
 
The undersigned hereby represents and warrants that the undersigned has full
power and authority to enter into this Lock-Up Letter Agreement and that, upon
request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representative, successors and assigns of
the undersigned.
 
Very truly yours,
 
By: ______________________________
Name:
 
Title: