ycbd_ex101





 







Exhibit 10.1

 






ENDORSEMENT AGREEMENT

 


THIS
ENDORSEMENT AGREEMENT (the “Agreement”) is made and
entered into as of July 7, 2020, with an effective date of July 1,
2020, by and between Gerry L. “Bubba” Watson
(“Professional”) on the one
side and cbdMD, Inc., a North Carolina corporation and its
wholly-owned subsidiary CBD Industries LLC,
a North Carolina limited liability company on the other side
(collectively referred to as the “Company”).

 



Recitals:

 

A. The
Company or its subsidiaries produces and sells industrial hemp
derived consumables and topicals with cannabinoids, including but
not limited to, cannabidiol (“CBD”), and hemp products,
under the brand cbdMD, including but not limited to CBD oil
tincture drops, CBD oil tincture sprays, CBD oil capsules, CBD
gummies, CBD topicals, CBD products for animals and CBD bath bombs
(collectively, the “Products”).

 

B. Professional is a
famous professional golfer whose endorsement has commercial value
to the Company and its sale of the Products.

 

C. The Company and the
Professional have previously entered into an Endorsement Agreement
dated May 1, 2019 (the “Original
Agreement”).

 

D. The Company and the
Professional desire to restructure the terms of the Original
Agreement and enter into a new agreement which revokes, replaces
and supersedes the Original Agreement in its entirety, subject to
the terms and conditions of this Agreement.

 



Agreements:

 


NOW,
THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valid consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

 

1. Term. The term of this
Agreement shall begin as of July 7, 2020, and end on December 31,
2022 (the “Term”), unless otherwise
terminated as provided herein.

 

2. Name, Image, and Likeness.
Professional grants to the Company, and the Company hereby accepts,
a personal, non-exclusive, worldwide license during the Term to use
Professional’s name, image, and likeness (collectively, the
“Image”) for advertising
or marketing the Products or disclosing the Products in the
Company’s filings with the Securities and Exchange
Commission. Professional shall, prior to production or
distribution, be given the opportunity to approve any and all uses
of the Image, including but not limited to products and marketing
materials which include the Image, which approval shall not be
unreasonably withheld. If Professional or his representative does
not respond to any request for approval within 48 hours, such use
of the Image shall be deemed approved. The Company shall not use
the Image in any way or in any format without Professional’s
prior written approval. Images which have been previously approved
may be used by the Company for any purposes authorized under this
Agreement without the need to seek new approvals; provided, that if Professional
notifies the Company of any change in Professional’s
sponsors, any images which were previously approved and include the
logo, name or other mark of any prior sponsor shall no longer be
used by the Company.

 

3. Services. During the Term,
Professional shall provide the following services (the
“Services”) to the
Company:

 

a. Wear the cbdMD logo
on each of the left and right side of Professional’s headwear
in a size and depiction mutually agreed by the parties but not to
exceed three inches in length and one inch in height; Professional
warrants he shall wear such headwear at all competitive PGA Tour
golf competitions (“PGA Tour Events”), photo
and film shoots and all other appropriate public events worldwide
where he wears golf attire; provided, however, that if it is
necessary or appropriate for Professional to wear alternative
headwear or no headwear in connection with the representation of
any team (e.g. Ryder Cup or President’s Cup) or any lifestyle
photo shoot or appearance, then Professional shall use his best
efforts to timely notify the Company and such actions shall not be
a breach of this Agreement;

 

b. Each
calendar year during the Term, attend three production days of
eight hours in duration each, to be held at locations and at times
mutually agreed upon by the parties, with such location to be near
Professional’s location pursuant to his travel schedule;
notwithstanding that a production day can also be replaced with
another, mutually agreeable use of Professional’s time,
limited to a maximum of eight hours in duration, such as an 18 hole
round of golf with Professional.

 



 

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c. Make a minimum of
18 posts regarding the Products during each calendar year during
the Term to one or more of Professional’s official social
media accounts, which may include accounts on Facebook, Twitter,
Instagram and/or accounts on other social media platforms;
Professional shall cooperate with the Company to post items and
content as reasonably requested by the Company, which shall at a
minimum include the Company designated platform alias or other
identifiers as may be reasonably requested by the
Company;

 

d. Each calendar year
during the Term, attend four retail visits or meet and greets at
golf events, in duration of no more than 30 minutes each (not
including travel time to and from), to be held at locations and at
times mutually agreed upon by the parties, with such location to be
near Professional’s location pursuant to his travel
schedule;

 

e. Carry one or more
Products (e.g., cbdMD Gummies) of Professional’s choice in
Professional’s golf bag during play at PGA Tour
Events;

 

f. Subject to
Section 4(b), play
in at least 18 total PGA Tour Events, four of which shall be the
four majors (the “Majors”) and 14 of which
shall be other PGA Tour Events, wearing the headwear required in
Section 3(a) of
this Agreement, in each of calendar years 2020, 2021 and
2022;

 

g. Cause
Professional’s caddie to wear the cbdMD logo on the collar of
his shirt in a size and depiction mutually agreed by the parties at
all PGA Tour Events in which Professional competes during the
Term;

 

h. Provide the Company
with admission tickets to PGA Tour Events in which Professional is
playing when such tickets are available from time to
time;

 

i. Provide the Company
with 25 autographed items, per calendar year, to include cbdMD
branded visors; and

 

j. Subject to
Section 8, the
Company shall be permitted to publish an official announcement or
press release on PR Newswire and other media outlets of its
choosing, declaring the Company as “The Official CBD partner
of Bubba Watson”; as well as make additional announcements
during the Term as mutually agreed.

 




4. Company and Professional
Obligations.

 

a. In exchange for the
Services and the license granted to the Company in Section 2, during the Term
the Company shall pay the Professional an aggregate fee (the
“Fee”)
of Four Million Nine Hundred Sixty-Seven Dollars ($4,967,000),
payable as follows:

 

i. An aggregate of Two
Million One Hundred Thousand Dollars ($2,100,000) shall be paid as
follows:

 

A. $240,000 shall be
paid for the period beginning on the Effective Date and ending on
the December 31, 2020, in six monthly installments of $40,000
each;

 

B. $300,000 shall be
paid for the period beginning on January 1, 2021 and ending on June
30, 2021 in six monthly installments of $50,000 of
each;

 

C. $450,000 shall be
paid for the period beginning on July 1, 2021 and ending on
December 31, 2021 in six monthly installments of $75,000
each;

 

D. $510,000 shall be
paid for the period beginning on January 1, 2022 and ending on June
30, 2022 in six monthly installments of $85,000 each;
and

 

E. $600,000 shall be
paid for the period beginning on July 1, 2022 and ending on
December 31, 2022 in six monthly installments of $100,000
each.

 

ii. An aggregate of Two
Million Eight Hundred Sixty-Seven Thousand Dollars ($2,867,000)
shall be paid as follows:

 

A. $1,400,000 shall be
paid through the issuance of 700,000 restricted shares (the
“Stage 1
Payment”) of the common stock, par value $0.001 per
share, of cbdMD, Inc. (the “Common Stock”) as soon as
practicable following the date of this Agreement but no later than
July 15, 2020;

 

B. $800,000 shall be
paid between July 1, 2021 and December 31, 2021 (the
“Stage 3
Payment”), which such amount is payable in the sole
discretion of the Company either in cash or in restricted shares of
Common Stock with a per share value based upon the VWAP of the
Common Stock as reported on the NYSE American LLC or the principal
exchange on which its Common Stock is then listed or quoted for the
10 trading days ending five trading days prior to the date of
issuance. No later than July 1, 2021, the Company shall notify
Professional as to whether the Stage 3 Payment will be paid in cash
or in stock. If the Stage 3 payment will be paid in cash, then it
shall be paid in six equal monthly installments beginning on July
1, 2021. If the Stage 3 Payment will be paid in shares of Common
Stock, then the shares of Common Stock shall be issued no later
than July 15, 2021. When used herein, “VWAP” shall mean
calculated by adding up the total dollars traded for every trade
(price multiplied by the number of shares traded) and then dividing
by the total shares traded; and

 



 

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C. $667,000 shall be
paid between July 1, 2022 and December 31, 2022 (the
“Stage 5
Payment”), which such amount is payable in the sole
discretion of the Company either in cash or in restricted shares of
Common Stock with a per share value based upon the VWAP of the
Common Stock as reported on the NYSE American LLC or the principal
exchange on which its Common Stock is then listed or quoted for the
10 trading days ending five trading days prior to the date of
issuance. No later than July 1, 2022, the Company shall notify
Professional as to whether the Stage 5 Payment will be paid in cash
or in stock. If the Stage 5 payment will be paid in cash, then it
shall be paid in six equal monthly installments beginning on July
1, 2022. If the Stage 5 Payment will be paid in shares of Common
Stock, then the shares of Common Stock shall be issued no later
than July 15, 2022.

 

iii. Each
monthly installment of the Fee during the Term if paid in cash
pursuant to Sections 4(a)(ii)(B) and 4(a)(ii)(C) hereof shall be
due on the first business day of each calendar month and shall be
paid by wire transfer of immediately available funds to an account
designated by Professional, except as provided below under Section
4(b). The Stage 1 Payment together with the Stage 3 Payment and/or
the Stage 5 Payment, if paid in shares of Common Stock, shall be
issued to Pro-Sport Productions LLC, a Florida limited liability
company (the “Share
Recipient”). Prior to the issuance of the stock
certificates representing the Stage 1 Payment and the Stage 3
Payment and/or Stage 5 Payment if made through the issuance of
shares of Common Stock to the Share Recipient, the Share Recipient
shall execute a letter agreement in the form attached hereto as
Exhibit A (the
“Letter
Agreement”) and incorporated herein by such reference
containing customary investment representations and a leak-out
agreement restricting the Share Recipient’s ability to sell,
transfer or otherwise dispose of shares of Common Stock except as
set forth therein. Professional acknowledges and affirms the
representations and warranties made by the Share Recipient under
the Letter Agreement.

 

b. In the event
Professional plays in fewer than: (i) from 7/01/20 to 12/31/20
– 11 PGA Tour Events, three of which shall be Majors and (ii)
in each of calendar year 2021 and 2022 - 18 PGA Tour Events, four
of which shall be Majors and 14 of which shall be other PGA Tour
Events, the portion of the Fee due to Professional in such year
shall be reduced pro rata based upon the number of PGA Tour Events
played; provided,
however, that in
the event Professional does not play in one or more Majors in a
calendar year, Professional may instead play in two additional PGA
Tour Events per missed Major during such calendar year as a
replacement to each such missed Major. As an example only, if
Professional plays in the four Majors and 12 additional PGA Tour
Events during calendar year 2021, the portion of the Fee due to
Professional for such calendar year would be reduced to $666,666.67
($750,000 x 16/18 = $666,666.67). As an example only, if
Professional does not play in the British Open in 2021, but plays
in the other three Majors and 16 additional PGA Tour Events, the
portion of the Fee due in 2021 shall not be reduced. As an example
only, if Professional plays in only one Major and 18 other PGA Tour
Events in 2021, the portion of the Fee due to Professional for such
calendar year would be reduced to $708,333.33 ($750,000 x 17/18 =
$708,333.33). If a portion of the Fee is required to be reduced
pursuant to this Section 4(b), such reduction shall be made
proportionately from the amount of cash paid to Professional and
the value of the shares of Common Stock issued to Professional, if
any. In the event the Fee is reduced by shares of Common Stock
issued under the terms of Section 4(a)(ii), then such shares shall
be cancelled and returned to the Company during the same calendar
year such shares were issued, and shall be valued at the subject
shares initial issuance VWAP. Fee payments under Section 4(a)(i)
above for November and December shall be payable on or before
February 1 to account for any adjustments under this Section
4(b).

 

c. The Company shall
provide to Professional, at no charge, such quantities of Products
as may be reasonably requested by Professional during the Term. The
Products shall not contain tetrahydrocannabinol
(“THC”)
or any banned substance in an amount that may put Professional at
risk of violating the rules or policies of the PGA Tour or any
other governing body and must be as advertised and best-in-class
products. The Company agrees that Professional shall have the right
to independently test the Products, at an accredited and
ISO-certified laboratory with experience in testing cannabinoid
products, to determine whether they contain THC or other banned
substances and are as advertised by the Company. In the event any
test result shows unacceptable levels of THC or any other banned
substance, the Company shall have the right to have a sample of the
same Product tested. Any detection of THC in the products shall be
re-tested a reasonable number of times in an ISO-certified lab.
Further, any detection of THC shall be subject to the applicable
margin of error and shall not be considered to contain THC if
within the margin of error.

 

d. For each production
day described in Section
3(b) of this Agreement, the Company shall reimburse
Professional for the costs of his travel and accommodations in an
amount not to exceed $10,000, with such costs to be pre-approved by
the Company.

 

e. In exchange for the
services provided by Professional’s caddie in Section 3(g), during the Term,
the Company shall pay Professional’s caddie $2,000 per month
by wire transfer of immediately available funds to the account
designated by Professional on behalf of his caddie.

 

5. Exclusivity; Ownership. During
the Term, Professional agrees not to endorse or permit the use of
the Image in connection with the advertising or marketing of the
Products made by or for an individual or entity other than the
Company. Except as set forth in this Section 5, nothing in this
Agreement shall be construed to prevent Professional from granting
any other licenses for the use of the Image in any manner which do
not violate the provisions of this Agreement, and Professional
specifically reserves all rights not herein granted. The Company
acknowledges and agrees that the Company shall have no right, title
or interest in and to the Image except as expressly set forth in
this Agreement.

 

6. Termination.

 

a. Professional may
terminate this Agreement immediately in the event any of the
following occurs: (i) the rules or policies of the PGA Tour or any
other governing body prohibit or restrict the use of CBD products
or any other substances contained in the Products in such a manner
that Professional can no longer fulfill his obligations under this
Agreement; (ii) the Company is adjudicated guilty by any government
agency which causes material injury to Professional’s
reputation; (iii) the Company commits a material violation of state
or federal law; (iv) the Company is involved in any activity which
causes material injury to Professional’s reputation or the
Company’s reputation; (v) any Products are found to contain
THC or any banned substance in an amount that may put Professional
at risk of violating the rules or policies of the PGA Tour or any
other governing body, or the Products are not as advertised by the
Company; or (vi) the Company fails to make any payment to
Professional by the date due, after notice and subject to a cure
period of five business days. The Company may terminate this
Agreement immediately in the event any of the following occurs: (A)
Professional commits a material violation of state or federal law
which causes material injury to Professional’s reputation;
(B) Professional is involved in any activity which causes material
injury to Professional’s reputation or the Company’s
reputation; (C) Professional disparages the Company or the
Products.

 



 

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b. Subject to
Section 6(a),
either party may terminate or suspend this Agreement early in the
event the other party breaches or is in default of any of the
provisions of this Agreement if, during a 30 day period following
the breaching party’s receipt of the non-breaching
party’s written notice identifying the alleged breach of this
Agreement, the breaching party fails to cure such alleged breach,
or if not curable within a 30 day period, fails to diligently and
reasonably continue to take all appropriate steps to cure such
breach until such breach is cured.

 

c. Upon termination of
this Agreement for any reason, no further payments shall be
required, any monies paid in advance shall be returned to Company,
all rights granted to the Company hereunder shall forthwith revert
to Professional, and the Company shall cease any and all use of the
Image and immediately remove the Image from the Company’s
website, marketing materials, and any and all other products or
materials. Notwithstanding anything to the contrary contained
herein, Company shall not be required to remove materials
containing the Image from Company’s social media accounts
including, but not limited, to Facebook, Twitter, or Instagram
channels; provided that Company may not republish, retweet, repost,
highlight, comment upon, refresh, or otherwise draw attention to
such posts beyond the Term; and provided, further, that the Company
shall remove any posts containing the Image from the
Company’s social media accounts as specifically identified
and requested in writing by Professional. Company shall be
permitted to continue to use the Image beyond the Term for purely
internal purposes (provided the same do not create or imply a
then-current relationship between Professional and Company) and
shall be permitted to continue to use previously approved uses of
the Image within “B2B” media kits for historical and
archival purposes and historical filings with the Securities and
Exchange Commission (provided the same do not create or imply a
then-current relationship between Professional and
Company).

 

7. Confidentiality. The parties
understand and acknowledge that during the Term of this Agreement,
each party may have access to and become acquainted with various
pieces of Confidential Information relating to the other party.
Accordingly, as a condition of this Agreement, the parties agree
that they and their employees, agents, and representatives will at
all times hold in strict confidence and not disclose Confidential
Information to any third party unless authorized to do so by the
other party in writing in advance. “Confidential
Information” shall include all of Professional’s
private information including, without limitation, the names,
social security numbers, birth dates, anniversary dates, addresses,
telephone numbers, fax numbers, business or employment information,
banking information, financial information, credit information,
personal references, and all other information regarding
Professional or his family members which is not publicly known. In
addition, “Confidential Information” shall include each
party’s business and technical information, proprietary
ideas, copyrights, and trade secrets; the terms of this Agreement;
the communications and negotiations between the parties; and any
other information either party receives or learns in the course of
the personal or business relationship between the parties which is
not publicly known. Notwithstanding anything to the contrary,
Professional understands Company is publicly traded on the NYSE
American LLC and subject to certain disclosure rules, and
Professional agrees Company may make any required disclosures under
such rules and regulations, including Securities and Exchange
Commission rules and regulations.

 

8. Publicity. Neither party shall
make or allow to be made any public announcement or statement
concerning this Agreement or the business relationship between
Professional and the Company without the prior written approval of
the other party of the contents and circumstances of such
announcement or except as otherwise required by law, including
Securities and Exchange Commission rules and
regulations.

 

9. No Assignment or Sublicense.
This Agreement and all rights and duties hereunder may not be
assigned, mortgaged, sublicensed or otherwise encumbered by either
party, except with consent of the other party, which consent will
not be unreasonably withheld.

 

10. Indemnification. Professional
shall defend, indemnify and hold the Company, its affiliates and
their respective shareholders, members, officers, managers,
directors, employees and agents harmless against any losses,
expenses, damages, claims, suits, actions, judgments and costs,
including reasonable attorneys’ fees (collectively,
“Losses”), arising out of
claims, suits, or actions brought by third parties for any injury
or damages resulting from activities performed by Professional
under this Agreement or relating to the breach of any covenants,
agreements, representations or warranties made by Professional in
this Agreement. The Company shall defend, indemnify, and hold
harmless Professional and his affiliates from all Losses arising
out of any claims, suits or actions resulting from the manufacture,
distribution, sale or use of the Products, or relating to the
breach of any covenants, agreements, representations or warranties
made by the Company in this Agreement.

 

11. Force Majeure. Neither party
will be liable for, or will be considered to be in breach of or
default under this Agreement on account of any delay or failure to
perform as required by this Agreement as a result of any causes or
conditions that are beyond such party’s reasonable control
and that such Party is unable to overcome through the exercise of
commercially reasonable efforts.

 

12. Relationship of the Parties.
Professional is an independent contactor. Nothing in this Agreement
shall be deemed to create or establish a joint venture,
employer-employee relationship, partnership, principal-agent
relationship, or the like between the parties. Professional shall
be solely responsible for the payment of all foreign, federal,
state and local sales taxes, use taxes, value added tax,
withholding taxes, income tax, unemployment and workers’
compensation insurance premiums, and similar taxes and charges of
any kind with respect to the compensation and the services provided
under this Agreement. Further, nothing in this Agreement will give
either party the power to bind the other without the other’s
prior written consent, nor to make any representation that it has
any such power.

 

13. Notices. All notices required
or permitted to be given hereunder shall be in writing and shall be
deemed given and received when delivered in person or three days
after being mailed by U.S. mail, postage prepaid, certified or
registered or on the date when the notice, communication,
statement, payment, or legal service of process is transmitted by
confirmed electronic transmission to the following
addresses:

 


	

If to
Professional:

	

Gerry
L. “Bubba” Watson


	
 

	

c/o Pro
Sport Management


	
 

	

6157 E.
Indian School Road


	
 

	

Scottsdale,
AZ 85251


	
 

	

Email:
jmb@prosportmanagement.com






 



 

4







 





 


	
 

	
 


	

With a
copy to:

	

Ballard
Spahr, LLP


	
 

	


Attn: Laura C. Giles


	
 

	


1 E. Washington Street, Suite 2300


	
 

	


Phoenix, AZ 85004


	
 

	

Email:
gilesl@ballardspahr.com


	
 

	
 


	

If to
the Company:

	

cbdMD,
Inc.


	
 

	


CBD Industries LLC


	
 

	


Legal Department


	
 

	


8845 Red Oak Blvd


	
 

	


Charlotte, NC 28217


	
 

	

Email:
lance@cbdmd.com


	
 

	
 


	

With a
copy to:

	

cbdMD,
Inc.


	
 

	


Chief Financial Officer


	
 

	


8845 Red Oak Blvd


	
 

	


Charlotte, NC 28217


	
 

	

Email:
mark@cbdmd.com







 

14. Governing Law; Consent to
Jurisdiction. This Agreement shall be governed by and
interpreted in accordance with the laws of Arizona without regard
to conflicts of law principles. The state or federal courts located
in Arizona will be the exclusive venue for any action arising under
this Agreement and the parties specifically consent to be subject
to the personal jurisdiction of said courts.

 

15. Attorneys’ Fees. The
prevailing party in any action under this Agreement shall be
entitled to recover its reasonable attorneys’ fees and costs
in addition to any other damages or relief awarded by the
court.

 

16. Entire Agreement; No Waiver.
This Agreement revokes, replaces and supersedes the Original
Agreement in its entirety and the parties acknowledge that no fees
or obligations are outstanding under the Original Agreement. This
Agreement contains the entire understanding and between the
parties, and supersedes any and all prior agreements,
representations, or promises. No modification, amendment, or waiver
of or with respect to any provisions of this Agreement, nor consent
to any departure by the parties from any of the terms or conditions
thereof, shall be effective unless it shall be in writing and
signed by the parties. No single or partial exercise of any right
or remedy will preclude other or further exercise of such right or
remedy or the exercise of any other right or remedy.

 

17. Severability. In the event any
provision of this Agreement is found to be unenforceable, that
provision will be severed and the remaining provisions of this
Agreement shall continue to remain fully valid and
effective.

 

18. Counterparts. This Agreement
may be executed in one or more counterparts and may be delivered by
fax or email with the same enforceability as if such signature
pages were originals delivered in person.

 

19. Survival. Upon the expiration
of this Agreement, all of the obligations of the parties set forth
in this Agreement intended by their nature to survive the Term
shall so survive and continue for the maximum period allowed by
law.

 



 

5







 





 



Agreed to and Accepted:


 


	


Professional


 



/s/   
Gerry L,
Watson                       




Gerry
L. “Bubba” Watson

	


cbdMD, Inc.


 


By: 
/s Martin A. Sumichrast           
                                    




Name:  Martin
A. Sumichrast


	
 

	


Title: co-Chief Executive Officer


	
 

	
 


	
 

	


CBD Industries LLC



By: cbdMD, Inc., Managing Member


	
 

	
 


	
 

	


By:  /s Martin A. Sumichrast 
         
    



	
 

	


Name: Martin A. Sumichrast


	
 

	


Title: co-Chief Executive Officer











 





 

6







 






 



Exhibit A

 



Letter Agreement

 


	
 

	
July 7, 2020







 


cbdMD,
Inc.


CBD
Industries LLC


8845
Red Oak Boulevard


Charlotte,
NC 28217


 


Ladies
and Gentlemen:


 


In
connection with that certain Endorsement Agreement dated July 7,
2020 (the “Endorsement
Agreement”) by and among Gerry L. “Bubba”
Watson (the “Professional”),
cbdMD, Inc., a North Carolina corporation (the “Corporation”)
and its wholly-owned subsidiary CBD Industries LLC, a North
Carolina limited liability company (together, with the Corporation,
the “Company”),
the Professional has directed that a portion of Fee payable to him
pursuant to the terms of the Endorsement Agreement through the
issuance of shares of the Corporation’s Common Stock be paid
to Pro-Sport Productions LLC, a Florida limited liability company
(“Pro-Sport”).
Pursuant to the terms of the Endorsement Agreement, and for other
good and valuable consideration, Pro-Sport hereby represents,
warrants and covenants to the Company as follows:


 



1.           

The undersigned is
acquiring the shares of Common Stock its own account with the
present intention of holding such securities for purposes of
investment, and it has no intention of distributing such shares of
Common Stock, or selling, transferring or otherwise disposing of
such shares of Common Stock in a public distribution, in any of
such instances, in violation of the federal securities laws of the
United States of America. The undersigned understands that (a) the
shares of Common Stock will be “restricted securities,”
as defined in Rule 144 promulgated under the Securities Act of
1933, as amended (the “Securities
Act”); (b) such shares of Common Stock will be subject
to restrictions on transfer and will be issued in reliance on
exemptions for private offerings contained in Section 4(a)(2) of
the Securities Act; (c) the Corporation has no obligation to so
register the shares of Common Stock for resale; and (d) the shares
of Common Stock may not be distributed, re-offered or resold except
through a valid and effective registration statement or pursuant to
a valid exemption from the registration requirements under the
Securities Act at such time as the shares of Common Stock become
eligible for resale by the undersigned.






 



2.           

The undersigned has
been provided access via the public website of the Securities and
Exchange Commission (the “Commission”)
at www.sec.gov/EDGAR
with access to copies of the Corporation’s Annual Report on
Form 10-K for the period ended September 30, 2019 and its other
filings with the Commission (collectively, the “SEC
Reports”), and represents and warrants that it has
read and reviewed the SEC Reports.






 



3.           

The undersigned is
an accredited or otherwise sophisticated investor who has such
knowledge and experience in financial, tax and other business
matters as to enable it to evaluate the merits and risks of, and to
make an informed investment decision with respect to, the shares of
Common Stock. The undersigned, either alone or together with its
advisors, has such knowledge and experience in financial, tax, and
business matters, and, in particular,
investments in securities, so as to enable it to utilize the
information made available to it in connection with the issuance of
the shares of Common Stock, to evaluate the merits and risks of an
investment in the shares of Common Stock and to make an informed
investment decision with respect thereto. The undersigned
understands that its acquisition of the shares of Common Stock is a
speculative investment, and the undersigned represents that it is
able to bear the risk of such investment for an indefinite period,
and can afford a complete loss thereof.






 



4.           

All
documents, records, and books pertaining to the investment in the
shares of Common Stock have been made available for inspection by
the undersigned and its advisors, if any. The undersigned and its
advisors, if any, have had a reasonable opportunity to ask
questions of and receive answers from a person or persons acting on
behalf of the Corporation concerning the Common Stock and the
business, financial condition, and results of operations of the
Corporation, and all such questions have been answered by
representatives of the Corporation to the full satisfaction of the
undersigned and its advisors, if any. In evaluating the suitability
of an investment in the Corporation, the undersigned has not relied
upon any representation or other information (oral or written)
other than as stated in the SEC Reports.






 



5.           

The undersigned
hereby irrevocably agrees that at such time as it is able to sell,
transfer or otherwise dispose of the shares of Common Stock
pursuant to the Securities Act, without the prior written consent
of the Company the undersigned will limit such sale, transfer or
other disposition of any nature of the shares of Common Stock to
not more than 150,000 shares per calendar month.






 




7.


The
undersigned hereby agrees that each outstanding certificate
representing the shares of Common Stock shall, in addition to any
other legends as may be required in compliance with Federal
securities laws, bear legends reading substantially as
follows:






 



“THE SHARES OF COMMON STOCK EVIDENCED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”). SUCH SHARES MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS THEY HAVE BEEN SO REGISTERED OR CBDMD, INC. SHALL HAVE
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT TO THE EFFECT
THAT REGISTRATION THEREOF FOR PURPOSES OF TRANSFER IS NOT REQUIRED
UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY
STATE.”


 



 

7







 






 


“THE SALE OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
CONDITIONS OF A LETTER AGREEMENT DATED JULY 7, 2020 BY AND BETWEEN
CBDMD, INC., CBD INDUSTRIES LLC AND THE SHAREHOLDER LISTED ON THE
FACE HEREOF. NO TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE
BOOKS OF CBDMD, INC. UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE
WITH THE TERMS OF SUCH LETTER AGREEMENT WHICH ARE SATISFACTORY TO
CBDMD, INC. IN ITS SOLE DISCRETION.”


 



8.           

The undersigned
acknowledges that the terms of the Endorsement Agreement provide
that all or a portion of the shares of Common Stock to be issued to
Pro-Sport at the direction of the Professional are subject to
return to the Corporation. The undersigned irrevocably convents
that it will promptly cooperate with the Corporation and the
Professional in the event any or all of such shares of Common Stock
are to be returned to the Corporation for cancellation, and that it
will promptly deliver such documents as the Corporation may
reasonably request to effect such return and
cancellation.






 


A copy
of this Agreement shall be filed with Corporation’s transfer
agent of record.


 


All
terms not defined herein shall have the same meaning as in the
Endorsement Agreement. The undersigned hereby represents and
warrants that the undersigned has full power and authority to enter
into this 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,


 


Pro-Sport
Productions LLC


 


By:
/s/ Jens
Beck                       




Jens
Beck, Manager


 


Address:


 


_______________________________


 


_______________________________


 


Taxpayer
ID No: _________________


 


 




 

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