Exhibit 10.1
FORM OF LEAK-OUT AGREEMENT
 
 
December 20, 2018
 
 
Level Brands, Inc.
4521 Sharon Road
Suite 450
Charlotte, NC 28211
 
Re: 
Agreement and Plan of Merger dated December 3, 2018 (the “Merger Agreement”) by
and among Level Brands, Inc., a North Carolina corporation (the “Parent”), AcqCo
LLC, a North Carolina limited liability company and a wholly owned subsidiary of
the Parent (“Merger Sub”), cbdMD LLC, a North Carolina limited liability company
and wholly owned subsidiary of the Parent (“Sub LLC”) and Cure Based
Development, LLC, a Nevada limited liability company (the “Company”).
 
Ladies and Gentlemen:
 
The undersigned is a Member of the Company and upon the Closing of the Mergers,
the undersigned received certain contractual rights to receive shares of Parent
Common Stock in the amounts and upon the events set forth Merger Agreement. In
consideration of the execution of the Merger Agreement by the Company and the
consummation of the Mergers, and for other good and valuable consideration, the
undersigned hereby irrevocably agrees that, without the prior written consent of
the Parent, the undersigned agrees that following the issuance of the Parent
Common Stock to the undersigned [and the vesting of the Second Tranche Shares in
accordance with the terms of the Merger Agreement], and subject to compliance
with Rule 144 promulgated under the Securities Act of 1933, as amended (the
“Securities Act”) and the terms and conditions of the Merger Agreement, to limit
the 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 Parent Common Stock; or (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 any shares of Parent Common Stock, whether any
such transaction described in clause (1) or (2) above is to be settled by
delivery of shares of Parent Common Stock or other securities, in cash or
otherwise (clauses (1) and (2) collectively, a “Transfer”), to the lesser of (i)
the volume limitations set forth in Rule 144(e) of the Securities Act, or (ii)
twenty percent (20%) of such shares in any ninety (90) day period (the
“Leak-Out”).
 
The foregoing paragraphs shall not apply to:
 
(a)           bona fide gifts of shares of Parent Common Stock or any security
convertible into shares of Parent Common Stock, in each case that are made
exclusively between and among the undersigned or members of the undersigned’s
Immediate Family or Affiliates of the undersigned, including its partners (if a
partnership) or members (if a limited liability company); or
 
(b)           any Transfer of shares of Parent Common Stock or any security
convertible into shares of Parent Common Stock by will or intestate succession
upon the death of the undersigned.
 
Provided that, in the case of clauses (a) and (b) above, it shall be a condition
to any such transaction that (i) the transferee/donee agrees to be bound by the
terms of this Leak-Out 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 and the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) to make, and shall agree to not
voluntarily make, any filing or public announcement of the transfer or
disposition prior, and (iii) the undersigned notifies the Parent at least five
(5) business days prior to the proposed transfer or disposition;
 
 
1

Exhibit 10.1
 
 
(c)           transfers of shares of Parent Common Stock or any security
convertible into or exercisable or exchangeable for shares of Parent Common
Stock pursuant to a bona fide third party tender offer made to all holders of
the Parent Common Stock, merger, consolidation or other similar transaction
involving a Change of Control of the Parent, 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 shares of Parent Common Stock and any security convertible
into or exercisable or exchangeable for shares of Parent Common Stock shall
remain subject to the restrictions set forth herein.
 
When used herein:
 
“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act;
 
“Change of Control” means 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;
 
“Immediate Family” means 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; and
 
“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
 
The undersigned hereby agrees that each outstanding certificate representing the
shares of Parent Common Stock shall, in addition to any other legends as may be
required in compliance with the Merger Agreement and Federal securities laws,
bear a legend reading substantially as follows:
 
“THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE TERMS AND CONDITIONS OF A LEAK OUT AGREEMENT DATED DECEMBER 20,
2018 BY AND BETWEEN LEVEL BRANDS, INC. AND THE SHAREHOLDER LISTED ON THE FACE
HEREOF. NO TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF LEVEL
BRANDS, INC. UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH
LEAK-OUT AGREEMENT WHICH ARE SATISFACTORY TO LEVEL BRANDS, INC. IN ITS SOLE
DISCRETION.”
 
A copy of this Agreement shall be filed with Parent's transfer agent of record.
 
The undersigned hereby represents and warrants that the undersigned has full
power and authority to enter into this Leak-Out 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. All terms not otherwise defined herein shall have the same
meaning as in the Merger Agreement.
 
 
2

Exhibit 10.1
 
The undersigned further acknowledges his understanding that this Agreement was
prepared at the request of the Parent by Pearlman Law Group LLP, its counsel,
and that such firm did not represent the Company or the undersigned in
conjunction with this Agreement, the Mergers or any of the related transactions.
The undersigned, as further evidenced by his signature below, acknowledges that
he has had the opportunity to obtain the advice of independent counsel of his
choosing prior to his execution of this Agreement and that he has availed
himself of this opportunity to the extent he deemed necessary and advisable.
 
 
Very truly yours,
 
 
By:______________________________ 
Name:
Title:
 
 
3