Document:

Blueprint

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:

 

 

3Blueprint

 
Exhibit 10.2

 

VOTING PROXY AGREEMENT

 

This
Voting Proxy Agreement (thee "Agreement")
is entered into this 20th day of December, 2018, by and between the
undersigned (the "Grantee"),
Level Brands, Inc., a North Carolina corporation (the
“Parent”)
and Seymour G. Siegel who is appointed proxy hereunder (the
"Proxyholder").

 

WHEREAS, on December 3, 2018 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”)
entered into that certain Agreement and Plan of Merger (the
“Merger
Agreement”) pursuant to which the Merge Sub was merged
into the Company and the Company was merged into the Sub LLC (the
“Mergers”).

 

WHEREAS, the Grantee was a Company
Member of the Company prior to the Merger.

 

WHEREAS, the Grantee will receive
certain contractual rights to receive an aggregate of 8,750,000
shares of the Parent’s common stock representing the Second
Tranche Shares (as such term is defined in the Merger Agreement) in
the amounts, and upon the events, set forth in the Merger Agreement
(the “Parent Common
Stock”).

 

WHEREAS, execution and delivery of this
Agreement by the Grantee is a condition to the execution and
delivery of the Merger Agreement by the Parent, the Merger Sub and
the Sub LLC, and by the Company, respectively.

 

NOW, THEREFORE, in order to induce the
Parent, the Merger Sub, the Sub LLC and the Company to enter into
the Merger Agreement and in consideration of the mutual covenants
and agreements set forth herein, the parties hereto agree as
follows:

 

1.           

Recitals; Definitions. The
foregoing recitals are true and correct and are incorporated herein
by such reference. Capitalized terms not otherwise defined herein
shall have the same meaning ascribed to them in that certain Merger
Agreement, of even date herewith.

 

2.           

Irrevocable Proxy. The Grantee
hereby irrevocably constitutes and appoints the Proxyholder the
true and lawful attorney, agent and proxy, with full power of
substitution, for the Grantee for the the shares of the Parent
Common Stock that the Grantee has a contractual right to receive
set forth on Exhibit
A attached hereto and incorporated herein, and for the
respective periods set forth in such exhibit (the
“Proxy
Periods”), for and in the name, place and stead of the
Grantee, and to vote such shares of Parent Common Stock at any and
all meetings of the shareholders of the Parent, whether regular or
special, and at any adjournment or adjournments thereof, and to
execute with respect to said shares of Parent Common Stock any and
all instruments, consents, directions or other documents relative
to the corporate affairs of the Parent or calling for the approval
or disapproval of any corporate act or transaction by the
shareholders of the Parent, and the Grantee does hereby authorize
and empower the Proxyholder to vote or otherwise act, as aforesaid,
upon any and all matters and questions relating to the Parent of
whatsoever nature and kind, with all powers the Grantee would
possess as a shareholder if this proxy had not been granted. During
the applicable Proxy Periods, the Proxyholder shall vote the Parent
Common Stock in accordance with the recommendation of a majority of
the independent members of the Parent’s Board of
Directors.

 

1

 

 

3.           

Prior Proxies. The Grantee
hereby ratifies, confirms and approves everything lawful that the
Proxyholder may do by virtue hereof. The Grantee hereby represents
the Grantee has not executed prior proxies covering any shares of
Parent Common Stock.

 

4.           

Proxy Coupled with an Interest.
This proxy is being given simultaneously with closing of the
Mergers. It is uunderstood and agreed by the Grantee that this
proxy is being given as a material part of the consideration for
the consummation of the Mergers and that the consummation of the
Mergers is conditioned upon the execution and delivery of this
Agreement. All power and authority hereby conferred is coupled with
an interest and is irrevocable, shall not be terminated by any act
of Grantee or by operation of law, by lack of appropriate power or
authority, or by the occurrence of any other event or events and
shall be binding upon all beneficiaries, heirs at law, legatees,
distributees, successors, assigns and legal representatives of
Grantee. If after the execution of this Agreement the Grantee shall
cease to have appropriate power or authority, or if any other such
event or events shall occur, the Proxyholder is nevertheless
authorized and directed to vote the Parent Common Stock in
accordance with the terms of this Agreement as if such lack of
appropriate power or authority or other event or events had not
occurred and regardless of notice thereof.

 

5.           

Scope of Proxy. Until the
termination of this Agreement and the proxy granted hereby, the
Proxyholder shall possess in respect of the Parent Common Stock
deposited hereunder, and shall be entitled to, in his sole,
absolute and uncontrolled discretion, all of the rights and powers
granted hereunder, including but not by way of limitation, the
right to consent for every purpose and to vote or otherwise act
with respect to any and all matters and questions of whatsoever
kind and nature, including, but not by way of limitation: (i) the
purchase, sale, acquisition or other disposition of all or any part
of the assets and business of the Parent; (ii) the readjustment of
its capital structure; or (iii) the reorganization of the
Parent.

 

6.           

Relationship; Delegation. The
Proxyholder is the Chairman of the Audit Committee of the Parent
and is deemed to be an “independent director” under the
rules and regulations of the NYSE America, LLC. The Proxyholder may
appoint aany other person or persons who is then currently serving
on the Parent’s Board of Directors and meets the definition
of an “independent director” under the rules and
regulations of the NYSE American, LLC, or any successor stock
exchange on which the Parentt’s securities are then listed,
to represent him at any meeting of the shareholders of the Parent
and at such meeting to vote and otherwise to exercise all rights
appurtenant to the proxy granted hereby; and such person or persons
appointment shall be deemed the proxy and power of attorney for the
Grantee. The Proxyholder may also cause the Parent Common Stock
subject to the proxy granted hereunder to be voted and the rights
appurtenant thereto to be exercised in any other appropriate and
lawful manner.

 

7.           

Liability. In voting the Parent
Common Stock subject to the proxy granted hereunder, or acting with
respect to this Agreement, the Proxyholder assumes no
responsibility and shall incur no liability because of any act
which he may do or omit to do while acting in good faith. Any act
done or omitted by the Proxyholder pursuant to the advice of his
own attorneys shall be conclusive evidence of such good faith. The
Proxyholder in his individual capacity or any concern in which he
may have an interest may deal with the Parent as if he in fact were
not a Proxyholder hereunder and, without limiting the generality of
the foregoing, any such dealing approved by a majority of the
independent directors of the Parent (as that term is defined in the
rules of the stock exchange on which the Parent’s securities
are there listed) shall be conclusively presumed to be fair to the
Parent.

 

2

 

 

8.           Legend.
The Grantee hereby agrees that each outstanding certificate
representing the shares Parent Common Stock shall during the
applicable Proxy Period, in addition to any other legends as may be
required in compliance with the Merger Agreement Federal securities
laws, bear a legend reading substantially as follows:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO THE TERMS AND CONDITIONS OF A VOTING PROXY AGREEMENT
DATED DECEMBER 20, 2018 BY AND BETWEEN LEVEL BRANDS, INC., THE
SHAREHOLDER LISTED ON THE FACE HEREOF AND THE
PROXYHOLDER.”

 

A copy
of this Agreement shall be filed with Parent's transfer agent of
record.

 

9.           

Power and Authority. The
Grantee has the right, power and authority to execute and deliver
this Agreement and to perform his or her obligations hereunder;
such execution, delivery and performance will not violate any
applicable law, rule or regulation or any outstanding agreement or
instrument to which the Grantee is a party. This Agreement
constitutes a legal, valid and binding agreement on the part of the
Grantee enforceable against the Grantee in accordance with its
terms.

 

10.           

Effect of Invalidity. Any term
or provision of this Agreement which is invalid or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such invalidity or unenforceability without rendering
invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable,
such provision shall be interpreted to be only so broad as is
enforceable.

 

11.           

Counterparts. This Agreement
may be executed in two or more counterparts, each of which shall be
an original, but all of which together shall constitute one and the
same agreement.

 

12.           

Governing Law; Jurisdiction.
This Agreement shall be governed by and construed in accordance
with the laws of the North Carolina without giving effect to the
conflicts of laws principles thereof. The parties agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. Accordingly, the
Proxyholder shall be entitled to specific performance of the terms
hereof, including an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any state or federal court sitting
in Charlotte, North Carolina, this being in addition to any other
remedy to which such party is entitled at law or in equity. Each of
the parties hereby further waives (a) any defense in any action for
specific performance that a remedy at law would be adequate and (b)
any requirement under any law to post security as a prerequisite to
obtaining equitable relief.

 

 

3

 

 

 

13.           

Binding Effect. This Agreement
shall inure to the benefit of and shall be binding upon the parties
hereto and their respective heirs, legal representatives,
successors and assigns.

 

14.           Role
of Counsel. The Grantee 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 Grantee in conjunction with this
Agreement, the Mergers or any of the related transactions. The
Grantee, 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.

 

[signature
page to follow]

 

 

4

 

 

IN WITNESS WHEREOF, the parties have
executed this Agreement as of the date first above
written.

 

	
 

	

Parent:

	
 

	
 

	
 

	

Level
Brands, Inc.

	
 

	

By:

	

/s/ Mark S.
Elliott

	
 

	
 

	

Mark S.
Elliott, Chief Financial Officer and Chief Operating
Officer

	
 

	
 

	
 

	
 

	

Grantee:

	
 

	
 

	
 

	
 

	

CBD
Holding, LLC

	
 

	
 

	
 

	
 

	

By:

	

/s/ R. Scott
Coffman

	
 

	
 

	

R.
Scott Coffman, Manager

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Proxyholder:

	
 

	
 

	
 

	
 

	

/s/ Seymour G.
Siegel

	
 

	

Seymour
G. Siegel

 

5

 

Exhibit A

 

	

Number of Shares

	

Proxy Period Expires

	
 

	
 

	

2,187,500

	

December
20, 2019

	
 

	
 

	

2,187,500

	

December
20, 2020

	
 

	
 

	

2,187,500

	

December
20, 2022

	
 

	
 

	

2,187,500

	

December
20, 2024

	

8,750,000

	
 

 

 

 

6

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