Document:

Exhibit

SPROUT SOCIAL, INC. 
2019 CLASS B INCENTIVE AWARD PLAN

RESTRICTED STOCK UNIT AWARD GRANT NOTICE AND RESTRICTED STOCK UNIT AGREEMENT

Sprout Social, Inc., a Delaware corporation (the “Company”), pursuant to its 2019 Class B Incentive Award Plan, as amended from time to time (the “Plan”), hereby grants to the holder listed below (“Participant”) the number of Restricted Stock Units set forth below (the “RSUs”).  The RSUs are subject to the terms and conditions set forth in this Restricted Stock Unit Grant Notice (the “Grant Notice”), the Restricted Stock Unit Agreement attached hereto as Exhibit A (the “Agreement”) and the Plan, each of which is incorporated herein by reference.  Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in the Grant Notice and the Agreement.
	
		
	Participant:
	 

	Grant Date:
	 

	Number of RSUs:
	 

	Type of Shares Issuable:
	Class B Common Stock

	 
	The RSUs shall be vested in full as of the Grant Date.

By Participant’s signature below, Participant agrees to be bound by the terms and conditions of the Plan, the Agreement and the Grant Notice.  Participant has reviewed the Agreement, the Plan and the Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing the Grant Notice and fully understands all provisions of the Grant Notice, the Agreement and the Plan.  Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, the Grant Notice or the Agreement. 

	
				
	SPROUT SOCIAL, INC.
	PARTICIPANT

	By:
	            
	By:
	            

	Print Name:
	 
	Print Name:
	 

	Title:
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

EXHIBIT A
TO RESTRICTED STOCK UNIT AWARD GRANT NOTICE
RESTRICTED STOCK UNIT AWARD AGREEMENT
Pursuant to the Grant Notice to which this Agreement is attached, the Company has granted to Participant the number of RSUs set forth in the Grant Notice.  
ARTICLE I. 
GENERAL
Section 1.1    Defined Terms.  Capitalized terms not specifically defined herein shall have the meanings specified in the Plan or the Grant Notice. For purposes of this Agreement,
(a)    “Cause” shall mean, unless such term or an equivalent term is otherwise defined by any employment agreement or offer letter between a Participant and a Participating Company, any of the following: (i) the Participant’s theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any Participating Company documents or records; (ii) the Participant’s material failure to abide by a Participating Company’s code of conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct); (iii) the Participant’s unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of a Participating Company (including, without limitation, the Participant’s improper use or disclosure of a Participating Company’s confidential or proprietary information); (iv) any intentional act by the Participant which has a material detrimental effect on a Participating Company’s reputation or business or which brings the Participant into widespread public disrepute; (v) the Participant’s repeated failure or inability to perform any reasonable assigned duties after written notice from a Participating Company of, and a reasonable opportunity to cure, such failure or inability; (vi) any material breach by the Participant of any employment or service agreement between the Participant and a Participating Company, which breach is not cured pursuant to the terms of such agreement; or (vii) the Participant’s commission or conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the Participant’s ability to perform his or her duties with a Participating Company. For purposes of this Agreement, whether or not an event giving rise to “Cause” occurs will be determined by the Board in its sole discretion.
(b)    “Participating Company” shall mean the Company or any of its parents or Subsidiaries.
Section 1.2    Incorporation of Terms of Plan.  The RSUs and the shares of Class B Common Stock issued to Participant hereunder (“Shares”) are subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.
ARTICLE II.     
AWARD OF RESTRICTED STOCK UNITS AND DIVIDEND EQUIVALENTS
Section 2.1    Award of RSUs and Dividend Equivalents 
(a)    In consideration of Participant’s past and/or continued employment with or service to a Participating Company and for other good and valuable consideration, effective as of the grant date set forth in the Grant Notice (the “Grant Date”), the Company has granted to Participant the number of RSUs set forth in the Grant Notice, upon the terms and conditions set forth in the Grant Notice, the Plan and this Agreement, subject to adjustment as provided in Section 12.2 of the Plan.  Each RSU represents the right to receive one Share at the times and subject to the conditions set forth herein.  However, unless and until the RSUs have vested, Participant will have no right to the payment of any Shares subject thereto.  Prior to the actual delivery of any Shares, the RSUs will represent an unsecured obligation of the Company, payable only from the general assets of the Company.  
(b)    The Company hereby grants to Participant an Award of Dividend Equivalents with respect to each RSU granted pursuant to the Grant Notice for all ordinary cash dividends that are paid to all or substantially all holders of the outstanding Shares between the Grant Date and the date when the applicable RSU is distributed or paid to Participant or is forfeited or expires.  The Dividend Equivalents for each RSU shall be equal to the amount of cash that is paid as a dividend on one Share.  All such Dividend Equivalents shall be credited to Participant and be deemed to be reinvested in additional RSUs as of the date of payment of any such dividend based on the Fair Market Value of a Share on such date.  Each additional RSU that results from such deemed reinvestment of Dividend Equivalents granted hereunder shall be subject to the same vesting, distribution or payment, adjustment and other provisions that apply to the underlying RSU to which such additional RSU relates.
Section 2.2    Vesting of RSUs and Dividend Equivalents.  
Subject to Participant’s continued employment with or service to a Participating Company on each applicable vesting date and subject to the terms of this Agreement, the RSUs shall vest in such amounts and at such times as are set forth in the Grant Notice.  Each additional RSU that results from deemed reinvestments of Dividend Equivalents pursuant to Section 2.1(b) shall vest whenever the underlying RSU to which such additional RSU relates vests.
Section 2.3    
(a)    Distribution or Payment of RSUs.  Participant’s RSUs shall be distributed in Shares (either in book-entry form or otherwise) as soon as administratively practicable following the vesting of the applicable RSU pursuant to  Section 2.2, and, in any event, within sixty (60) days following such vesting (for the avoidance of doubt, this deadline is intended to comply with the “short-term deferral” exemption from Section 409A).  Notwithstanding the foregoing, the Company may delay a distribution or payment in settlement of RSUs if it reasonably determines that such payment or distribution will violate federal securities laws or any other Applicable Law, provided that such distribution or payment shall be made at the earliest date at which the Company reasonably determines that the making of such distribution or payment will not cause such violation, as required by Treasury Regulation Section 1.409A-2(b)(7)(ii), and provided further that no payment or distribution shall be delayed under this Section 2.3(a) if such delay will result in a violation of Section 409A.
(b)    All distributions shall be made by the Company in the form of whole Shares, and any fractional share shall be distributed in cash in an amount equal to the value of such fractional share determined based on the Fair Market Value as of the date immediately preceding the date of such distribution.
Section 2.4    Conditions to Issuance of Certificates.  The Company shall not be required to issue or deliver any certificate or certificates for any Shares or to cause any Shares to be held in book-entry form prior to the fulfillment of all of the following conditions:  (a) the admission of the Shares to listing on all stock exchanges on which such Shares are then listed, (b) the completion of any registration or other qualification of the Shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable, (c) the obtaining of any approval or other clearance from any state or federal governmental agency that the Administrator shall, in its absolute discretion, determine to be necessary or advisable, (d) the receipt by the Company of full payment for such Shares, which may be in one or more of the forms of consideration permitted under Section 2.5, and (e) the receipt of full payment of any applicable withholding tax in accordance with Section 2.5 by the Participating Company with respect to which the applicable withholding obligation arises.
Section 2.5    Tax Withholding.  Notwithstanding any other provision of this Agreement:
(a)    The Company or any other Participating Company, as applicable, have the authority to deduct or withhold, or require Participant to remit to the applicable Participating Company, an amount sufficient to satisfy any applicable federal, state, local and foreign taxes (including the employee portion of any FICA obligation) required by Applicable Law to be withheld with respect to any taxable event arising pursuant to this Agreement.  A Participating Company may withhold or Participant may make such payment in one or more of the forms specified below:
(i)    by cash or check made payable to the Participating Company with respect to which the withholding obligation arises;
(ii)    by the deduction of such amount from other compensation payable to Participant;
(iii)    with respect to any withholding taxes arising in connection with the distribution of the RSUs, with the consent of the Administrator, by requesting that the Participating Companies withhold a net number of vested Shares otherwise issuable pursuant to the RSUs having a then current Fair Market Value not exceeding the amount necessary to satisfy the withholding obligation of the Participating Companies based on the maximum statutory withholding rates in Participant’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such taxable income;
(iv)    with respect to any withholding taxes arising in connection with the distribution of the RSUs, with the consent of the Administrator, by tendering to the Company vested Shares held for such period of time as may be required by the Administrator in order to avoid adverse accounting consequences and having a then current Fair Market Value not exceeding the amount necessary to satisfy the withholding obligation of the Participating Companies based on the maximum applicable statutory withholding rates in Participant’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such taxable income; 
(v)    with respect to any withholding taxes arising in connection with the distribution of the RSUs, through the delivery of a notice that Participant has placed a market sell order with a broker acceptable to the Company with respect to Shares then issuable to Participant pursuant to the RSUs, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Participating Company with respect to which the withholding obligation arises in satisfaction of such withholding taxes; provided that payment of such proceeds is then made to the Company or other applicable Participating Company at such time as may be required by the Administrator, but in any event not later than the settlement of such sale; or
(vi)    in any combination of the foregoing.
(b)    With respect to any withholding taxes arising in connection with the RSUs, in the event Participant fails to provide timely payment of all sums required pursuant to Section 2.5(a), the Company shall have the right and option, but not the obligation, to treat such failure as an election by Participant to satisfy all or any portion of Participant’s required payment obligation pursuant to  Section 2.5(a)(ii) or  Section 2.5(a)(iii) above, or any combination of the foregoing as the Company may determine to be appropriate. The Company shall not be obligated to deliver any certificate representing Shares issuable with respect to the RSUs to, or to cause any such Shares to be held in book-entry form by, Participant or his or her legal representative unless and until Participant or his or her legal representative shall have paid or otherwise satisfied in full the amount of all federal, state, local and foreign taxes applicable with respect to the taxable income of Participant resulting from the vesting or settlement of the RSUs or any other taxable event related to the RSUs.
(c)    In the event any tax withholding obligation arising in connection with the RSUs will be satisfied under Section 2.5(a)(iii), then the Company may elect to instruct any brokerage firm determined acceptable to the Company for such purpose to sell on Participant’s behalf a whole number of Shares from those Shares then issuable to Participant pursuant to the RSUs as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the tax withholding obligation and to remit the proceeds of such sale to the Participating Company with respect to which the withholding obligation arises.  Participant’s acceptance of this Award constitutes Participant’s instruction and authorization to the Company and such brokerage firm to complete the transactions described in this  Section 2.5(c), including the transactions described in the previous sentence, as applicable.  The Company may refuse to issue any Shares in settlement of the RSUs to Participant until the foregoing tax withholding obligations are satisfied, provided that no payment shall be delayed under this  Section 2.5(c) if such delay will result in a violation of Section 409A.
(d)    Participant is ultimately liable and responsible for all taxes owed in connection with the RSUs, regardless of any action the Company or any other Participating Company takes with respect to any tax withholding obligations that arise in connection with the RSUs.  No Participating Company makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or payment of the RSUs or the subsequent sale of Shares.  The Participating Companies do not commit and are under no obligation to structure the RSUs to reduce or eliminate Participant’s tax liability.
Section 2.6    Rights as Stockholder.  Neither Participant nor any Person claiming under or through Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares (which may be in book-entry form) will have been issued and recorded on the records of the Company or its transfer agents or registrars and delivered to Participant (including through electronic delivery to a brokerage account).  Except as otherwise provided herein, after such issuance, recordation and delivery, Participant will have all the rights of a stockholder of the Company with respect to such Shares, including, without limitation, the right to receipt of dividends and distributions on such Shares.
Section 2.7    Restrictive Covenants.  The Participant hereby acknowledges and agrees that he or she is a party to an agreement related to proprietary rights, confidentiality and restrictive covenants by and between Participant and the Company (the “Restrictive Covenant Agreement”), which is incorporated herein by reference, and that such agreement remains in full force and effect. In the event the Participant materially breaches the Restrictive Covenant Agreement or any other written covenants between such Participant and any Participating Company, the Participant shall immediately forfeit any and all RSUs and Dividend Equivalents granted under this Agreement (whether or not vested), and Participant’s rights in any such RSUs and Dividend Equivalents shall lapse and expire.

ARTICLE III.    
OTHER PROVISIONS
Section 3.1    Administration.  The Administrator shall have the power to interpret the Plan, the Grant Notice and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan, the Grant Notice and this Agreement as are consistent therewith and to interpret, amend or revoke any such rules.  All actions taken and all interpretations and determinations made by the Administrator will be final and binding upon Participant, the Company and all other interested Persons.  To the extent allowable pursuant to Applicable Law, no member of the Committee or the Board will be personally liable for any action, determination or interpretation made with respect to the Plan, the Grant Notice or this Agreement.
Section 3.2    RSUs Not Transferable.  The RSUs may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution, unless and until the Shares underlying the RSUs have been issued, and all restrictions applicable to such Shares have lapsed.  No RSUs or any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence.  Notwithstanding the foregoing, with the consent of the Administrator, the RSUs may be transferred to Permitted Transferees, pursuant to any such conditions and procedures the Administrator may require.
Section 3.3    Adjustments.  The Administrator may accelerate the vesting of all or a portion of the RSUs in such circumstances as it, in its sole discretion, may determine.  Participant acknowledges that the RSUs and the Shares subject to the RSUs are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan, including Section 12.2 of the Plan. 
Section 3.4    Notices.  Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the Company’s principal office, and any notice to be given to Participant shall be addressed to Participant at Participant’s last address reflected on the Company’s records.  By a notice given pursuant to this Section 3.4, either party may hereafter designate a different address for notices to be given to that party.  Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.
Section 3.5    Titles.  Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.
Section 3.6    Governing Law.   The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.
Section 3.7    Conformity to Securities Laws.  Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws, including, without limitation, the provisions of the Securities Act and the Exchange Act, and any and all regulations and rules promulgated thereunder by the Securities and Exchange Commission, and state securities laws and regulations.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the RSUs are granted, only in such a manner as to conform to Applicable Law.  To the extent permitted by Applicable Law, the Plan, the Grant Notice and this Agreement shall be deemed amended to the extent necessary to conform to Applicable Law.
Section 3.8    Amendment, Suspension and Termination.  To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator or the Board, provided that, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall adversely affect the RSUs in any material way without the prior written consent of Participant.
Section 3.9    Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer set forth in Section 3.2 and the Plan, this Agreement shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.
Section 3.10    Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the RSUs (including RSUs that result from the deemed reinvestment of Dividend Equivalents), the Dividend Equivalents, the Grant Notice and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule.  To the extent permitted by Applicable Law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
Section 3.11    Not a Contract of Employment.  Nothing in this Agreement or in the Plan shall confer upon Participant any right to continue to serve as an employee or other service provider of any Participating Company or shall interfere with or restrict in any way the rights of any Participating Company, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between a Participating Company and Participant.
Section 3.12    Entire Agreement.  The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.
Section 3.13    Section 409A.  This Award is not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A.  However, notwithstanding any other provision of the Plan, the Grant Notice or this Agreement, if at any time the Administrator determines that this Award (or any portion thereof) may be subject to Section 409A, the Administrator shall have the right in its sole discretion (without any obligation to do so or to indemnify Participant or any other Person for failure to do so) to adopt such amendments to the Plan, the Grant Notice or this Agreement, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Administrator determines are necessary or appropriate for this Award either to be exempt from the application of Section 409A or to comply with the requirements of Section 409A.
Section 3.14    Agreement Severable.  In the event that any provision of the Grant Notice or this Agreement is held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.
Section 3.15    Limitation on Participant’s Rights.  Participation in the Plan confers no rights or interests other than as herein provided.  This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust.  Neither the Plan nor any underlying program, in and of itself, has any assets.  Participant shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the RSUs and Dividend Equivalents.
Section 3.16    Counterparts.  The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which shall be deemed an original and all of which together shall constitute one instrument.
Section 3.17    Broker-Assisted Sales.  In the event of any broker-assisted sale of Shares in connection with the payment of withholding taxes as provided in Section 2.5(a)(iii) or Section 2.5(a)(v): (a) any Shares to be sold through a broker-assisted sale will be sold on the day the tax withholding obligation arises or as soon thereafter as practicable; (b) such Shares may be sold as part of a block trade with other participants in the Plan in which all participants receive an average price; (c) Participant will be responsible for all broker’s fees and other costs of sale, and Participant agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale; (d) to the extent the proceeds of such sale exceed the applicable tax withholding obligation, the Company agrees to pay such excess in cash to Participant as soon as reasonably practicable; (e) Participant acknowledges that the Company or its designee is under no obligation to arrange for such sale at any particular price, and that the proceeds of any such sale may not be sufficient to satisfy the applicable tax withholding obligation; and (f) in the event the proceeds of such sale are insufficient to satisfy the applicable tax withholding obligation, Participant agrees to pay immediately upon demand to the Company or other Participating Company with respect to which the withholding obligation arises an amount in cash sufficient to satisfy any remaining portion of the Company’s or such other applicable Participating Company’s withholding obligation.
* * * * *

US-DOCS\111439344.3Blueprint

Exhibit 10.1

Execution Version

 

DISTRIBUTION AGREEMENT

 

THIS DISTRIBUTION AGREEMENT (the
“Agreement”)
is made and entered as of the 29th day of February, 2020 by and
among cbdMD, Inc., a North Carolina corporation, with its principal
place of business located at 8845 Red Oak Boulevard, Charlotte, NC
28217 (the “Corporation”),
CBD Holding, LLC, a North Carolina limited liability company, with
its principal place of business located at 8845 Red Oak Boulevard,
Charlotte, NC 28217 (the “CBDH”),
and the members of CBDH set forth on the signature page hereto
(each, a “Member”
and collectively the “Members”).
The Corporation, CBDH and the Members are sometimes referred to as
the “Parties.”

 

W I T N E S E T H:

 

WHEREAS, on December 3, 2018, the
Corporation, its wholly-owned subsidiaries, and Cure Based
Development, LLC, a North Carolina limited liability company
(“Cure Based
Development”), entered into that certain Agreement and
Plan of Merger (the “Merger
Agreement”).

 

WHEREAS, on December 20, 2018 the
transactions contemplated by the Merger Agreement closed (the
“Closing
Date”).

 

WHEREAS, pursuant to the terms of the
Merger Agreement, and following the approval of the
Corporation’s shareholders, on April 22, 2019 CBDH received,
as partial consideration for the transactions contemplated by the
Merger Agreement: (i) 8,750,000 shares of the Corporation’s
common stock (the “Second Tranche
Shares”); and (ii) contractual rights (the
“Earnout
Rights”) to receive up to an additional 15,250,000
shares of the Corporation’s common stock (the
“Earnout
Shares”) upon the achievement of certain earnout
targets as set forth in the Merger Agreement.

 

WHEREAS, the Second Tranche Shares are
held by CBDH in book entry form and the Earnout Shares have not
been issued.

 

WHEREAS, it is expected that an
aggregate of 5,127,792 Earnout Shares (the “First Marking
Period Earnout Shares”) will be issued for the First
Marking Period pursuant to the terms of the Merger
Agreement.

 

WHEREAS, after the issuance of the First
Marking Period Earnout Shares, Earnout Rights (the
“Remaining Earnout
Rights”) for the possible issuance of an aggregate of
10,122,208 Earnout Shares (the “Remaining Earnout
Shares”) will remain for possible issuance under the
terms of the Merger Agreement.

 

WHEREAS, upon issuance the Second
Tranche Shares became subject to an irrevocable voting proxy (the
“Voting Proxy
Agreement”) until the unrestricted voting rights to
those shares vest in accordance with the terms of the Merger
Agreement.

 

 

 

 

WHEREAS,
pursuant to the terms of the Voting Proxy Agreement the
unrestricted voting rights to the Second Tranche Shares are held by
the independent chairman of the Audit Committee of the
Corporation’s Board of Directors until such unrestricted
voting rights vest in accordance with the Merger
Agreement.

 

WHEREAS, as of the date of this
Agreement, unrestricted voting rights to 2,187,500 of the Second
Tranche Shares have vested and the unrestricted voting rights to
the balance of the Second Tranche Shares will vest as follows:
(i) 2,187,500 shares will
vest on December 20, 2020; (ii) an additional 2,187,500 shares will
vest on June 30, 2022; and (iii) the remaining 2,187,500 shares
will vest on December 20, 2023.

 

WHEREAS,
the Second Tranche Shares are also subject to a Leak-Out Agreement
dated as of the Closing Date (the “Leak
Out Agreement”).

 

WHEREAS, CBDH has advised the
Corporation that in connection with a dissolution and liquidation
of that entity that it wishes to distribute the Second Tranche
Shares and the First Marking Period Earnout Shares and assign the
Remaining Earnout Rights to the Remaining Earnout Shares and, if
issued, distribute the Remaining Earnout Shares to its members on a
pro rata basis.

 

WHEREAS, the Corporation has agreed to
such distribution and assignment upon the terms and conditions of
this Agreement.

 

NOW, THEREFORE, in consideration of the
mutual covenants and agreements contained in this Agreement, the
Parties hereto agree as follows:

 

1.           

Recitals.
The foregoing recitals are true and correct and are incorporated
herein by such reference.

 

2. 

Distribution of the
Second Tranche Shares, the First Marking Period Earnout Shares, and
Assignment of the Remaining Earnout Rights.

 

(a)              Distribution
and Assignment. At Closing (as hereinafter defined), and for
no consideration, CBDH (i) hereby directs the Corporation to
distribute the Second Tranche Shares and the First Marking Period
Earnout Shares, and (ii) hereby assigns all of its right, title and
interest in and to the Remaining Earnout Rights, on a pro rata
basis to the Members in accordance with Schedule A hereto.

 

(b)           Closing.
The closing (“Closing”)
of the transactions contemplated by this Agreement shall be held at
the principal offices of the Corporation (the “Closing
Date”) immediately following the satisfaction of all
conditions precedent to Closing as set forth in Section 7 of this
Agreement. All actions taken at the Closing shall be deemed to have
been taken simultaneously at the time the last of any such actions
is taken or completed.

 

 

2

 

 

3.           Representations
and Warranties of CBDH. CBDH hereby represents and
warrants to the Corporation and the Members as of the date of this
Agreement and with the same force and effect on the Closing Date as
if then made, as follows:

 

(a)           CBDH
is an entity duly organized, validly existing and in good standing
under the laws of the State of North Carolina, with full limited
liability company power and authority to own, lease and operate its
business and properties and to carry on its business in the places
and in the manner as presently conducted or proposed to be
conducted. CBDH has taken all limited liability company action
necessary for the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and assuming
this Agreement has been duly executed by the Corporation and the
Members, this Agreement constitutes the valid and binding
obligation of CBDH, enforceable against it in accordance with its
terms, except as may be affected by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and subject to the qualification
that the availability of equitable remedies is subject to the
discretion of the court before which any proceeding therefor may be
brought.

 

(b)           The
Members constitute all the membership interests (the
“Membership
Interests”) in CBDH in the names and percentage
amounts set forth on Schedule A. The Membership
Interests have been duly authorized, are duly and validly issued,
fully paid, and nonassessable. There is no outstanding security of
any kind convertible into or exchangeable for Membership
Interests.

 

(c)           
The execution and performance of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance
with the provisions of this Agreement will not (i) conflict with or
violate the formation documents or operating agreement of CBDH,
(ii) conflict with or violate any statute, ordinance, rule,
regulation, judgment, order, writ, injunction, decree or law
applicable to CBDH, or by which either CBDH or its properties or
assets may be bound or affected, or (iii) result in a violation or
breach of or constitute a default (or an event which with or
without notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in any loss of any
benefit under, any contract, agreement or arrangement to which CBDH
is a party, or the creation of liens on any of the property or
assets of CBDH. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental entity,
is required by CBDH in connection with the execution of this
Agreement or the consummation by it of the transactions
contemplated hereby, except for such other consents, approvals,
orders, authorizations, registrations, declarations or filings, the
failure of which to obtain would not individually or in the
aggregate have a material adverse effect.

 

(d)           Consents
of Third Parties. The execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated hereby by CBDH does not require the consent of any
person, company, corporation, partnership, association, trust or
any unincorporated organization (collectively, a
“Person”)
other than the Corporation.

 

 

3

 

 

(e)           Actions
Pending. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of CBDH, threatened against
CBDH, which questions the validity of this Agreement or the
transactions contemplated hereby or any action taken or to be taken
pursuant hereto or thereto.

 

(f)           Ownership
of the Second Tranche Shares, the First Marking Period Earnout
Shares and the Remaining Earnout Rights. There are no liens,
encumbrances, pledges or hypothecations on either the Second
Tranche Shares, the First Marking Period Earnout Shares or the
Remaining Earnout Rights. There are no outstanding subscriptions,
rights, options, warrants or other agreements obligating CBDH to
sell or transfer to any Person any of the Second Tranche Shares,
the First Marking Period Earnout Shares, the Remaining Earnout
Rights or the Remaining Earnout Shares underlying the Remaining
Earnout Rights, if issued, or any interest therein. Subject to the
terms of this Agreement, CBDH has full power and authority to
exchange, transfer, assign and deliver to the Members the Second
Tranche Shares, the First Marking Period Earnout Shares, and the
Remaining Earnout Rights. After the Closing, CBDH shall have no
further right, title or interest in the Second Tranche Shares, the
First Marking Period Earnout Shares, the Remaining Earnout Rights
or, if issued, the Remaining Earnout Shares.

 

(g)           No
Liability. Notwithstanding anything to the contrary in this
Agreement, CBDH represents, warrants and covenants that the
Corporation shall not be liable to CBDH for any matter related to
the transactions contemplated by this Agreement.

 

(h)          
Tax Obligation.
CBDH shall be solely responsible for any and all federal or state
taxes which may be payable by it as a result of the transactions
contemplated by this Agreement.

 

(i)           Disclosure.
The representations, warranties and acknowledgments of CBDH set
forth herein are true, complete and accurate in all material
respects, do not omit to state any material fact, or omit any fact
necessary to make such representations, warranties and
acknowledgments, in light of the circumstances under which they are
made, not misleading. Such representations, warranties and
acknowledgements of CBDH shall survive the Closing
Date.

 

4.           

Representations
and Warranties of the Members.
Each Member hereby represents and warrants to the Corporation and
CBDH, as of the date of this Agreement and with the same force and
effect on the Closing Date as if then made, as
follows:

 

(a)           Power
and Authority. The execution and delivery of this Agreement
and each instrument required hereby to be executed and delivered by
such Member prior to or at the Closing, the performance of such
Member’s obligations hereunder and thereunder, and the
consummation by such Member of the transactions contemplated hereby
have been duly and validly authorized by all necessary action on
the part of such Member, and no other proceedings on the part of
such Member are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed by such Member, and, assuming this
Agreement has been duly executed by the Corporation, the other
Members and CBDH, this Agreement constitutes a valid and binding
agreement of such Member, enforceable against such Member in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.

 

 

4

 

 

(b)           Ownership
of Membership Interests. The Member is the sole record and
beneficial owner of the Membership Interests set forth opposite
such Member’s name on Schedule A, which such
Membership Interest is owned free and clear of all liens and
encumbrances, and has not been sold, pledged, assigned or otherwise
transferred. The Questionnaire (as hereinafter defined) fully
discloses all direct and indirect beneficial ownership interest in
such Member.

 

(c)           Consents
and Approvals. The execution and performance of this
Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the provisions of this
Agreement will not (a) conflict with or violate any statute,
ordinance, rule, regulation, judgment, order, writ, injunction,
decree or law applicable to such Member, or (b) by which such
Member or its properties or assets may be bound or affected, or
result in a violation or breach of or constitute a default (or an
event which with or without notice or lapse of time or both would
become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result
in any loss of any benefit under, any contract, agreement or
arrangement to which such Member is a party. No consent, approval, order or authorization of,
or registration, declaration or filing with, any governmental
entity, is required in connection with the execution of this
Agreement by such Member or the consummation by it of the
transactions contemplated hereby.

 

(d)           Remaining
Earnout Shares. The Member
acknowledges its understanding that the issuance of the Remaining
Earnout Shares remains subject to the terms of the Merger Agreement
such that all or any portion of such shares may never be issued.
The Member has no rights to the Remaining Earnout Shares until such
shares are issued by the Corporation.

 

(e)           
Securities
Representations. The Member
acknowledges its understanding that at Closing the Second Tranche
Shares and the First Marking Period Earnout Shares will be treated
as transferred to such Member by CBDH in a private transaction
exempt from registration under the Securities Act of 1933, as
amended (the “Securities
Act”) by reason of an
exemption available under Section 4(a)(1). In addition, at such
time, if ever, that the Remaining Earnout Shares are issued to such
Member, such shares will be issued by the Corporation in a private
transaction exempt from registration under the Securities Act by
reason of an exemption available under Section 4(a)(2). The
certificates evidencing the Second Tranche Shares and the First
Marking Period Earnout Shares when issued to such Member shall
include legends contained in the Voting Proxy Agreement (as to the
Second Tranche Shares), and the Leak-Out Agreement, as applicable,
in addition to a legend substantially in the following
form:

 

“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.”

 

 

5

 

 

(f)           Investment
Representations. While the Corporation’s common stock
is currently listed on the NYSE American, the Member acknowledges
that there are no assurances that such listing will be continued or
that a liquid public market for the Corporation’s common
stock will be sustained. The Member is acquiring the Second Tranche
Shares, the First Marking Period Earnout Shares, the Remaining
Earnout Rights and the Remaining Earnout Shares, if issued, for its
own account with the present intention of holding such securities
for purposes of investment, and it has no intention of distributing
either the Second Tranche Shares, the First Marking Period Earnout
Shares, the Remaining Earnout Rights and/or the Remaining Earnout
Shares, if issued, or selling, transferring or otherwise disposing
of such securities in a public distribution, in any of such
instances, in violation of the federal securities laws of the
United States of America. The Member understands that (a) the
Second Tranche Shares, the First Marking Period Earnout Shares, the
Remaining Earnout Rights and the Remaining Earnout Shares, if
issued, will be “restricted securities,” as defined in
Rule 144 promulgated under the Securities Act; (b) such securities
will be subject to restrictions on transfer as set forth in the
Securities Act and this Agreement; (c) the Corporation has no
obligation or present intention to register the securities for
resale; and (d) the Second Tranche Shares, the First Marking Period
Earnout Shares, the Remaining Earnout Rights and the Remaining
Earnout Shares, if issued, 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 each such security becomes
eligible for resale by such Member. The Member acknowledges that
upon any future distribution by it of the Second Tranche Shares,
the First Marking Period Earnout Shares, the Remaining Earnout
Rights and/or the Remaining Earnout Shares, if issued, to any other
third party, as a condition precedent to such distribution, the
receiving party(ies) will be required to execute agreements for the
benefit of the Corporation in a form and substance satisfactory to
it acknowledging and consenting to the foregoing investment
representations and the restrictions on transfer. There are no
certificates being issued to evidence the Remaining Earnout
Rights.

 

(g)           Information
on the Corporation. The Member has been provided access via
the public website of the U.S. Securities and Exchange Commission
(the “Commission”)
at www.sec.gov/EDGAR
to copies of the Merger Agreement, the Corporation's Annual Report
on Form 10-K for the fiscal year 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. The Member is either an
“accredited investor” as that term is defined in Rule
405 of the Securities Act or a 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, this
Agreement and the distribution of the Second Tranche Shares, the
First Marking Period Earnout Shares, the Remaining Earnout Rights
and the Remaining Earnout Shares, if issued, to it. The Member,
either alone or together with its advisors, has such knowledge and
experience in financial, tax, and business matters, and, in particular, investments in unregistered
securities, so as to enable it to utilize the information made
available to it in connection with the transactions contemplated
hereby, to evaluate the merits and risks of an investment in the
securities being distributed to it under the terms of this
Agreement, and to make an informed investment decision with respect
thereto. The Member understands that its acquisition of the Second
Tranche Shares, the First Marking Period Earnout Shares, and the
Remaining Earnout Rights is a speculative investment, and the
Member represents that it is able to bear the risk of such
investment for an indefinite period, and can afford a complete loss
thereof. The Member further understands that there are no
assurances the Remaining Earnout Shares will be issued, but if
issued, its acquisition of the Remaining Earnout Shares will be a
speculative investment, and the Member represents that it is able
to bear the risk of such investment for an indefinite period, and
can afford a complete loss thereof.

 

 

 

6

 

 

(h)           No
Liability. Notwithstanding anything to the contrary in this
Agreement, the Member represents, warrants and covenants that the
Corporation shall not be liable to the Member for any matter
related to the transactions contemplated by this
Agreement.

 

(i)           
Tax Obligation. The
Member shall be solely responsible for any and all federal or state
taxes which may be payable by it as a result of the transactions
contemplated by this Agreement.

 

(j)           Disclosure.
The representations, warranties and acknowledgments of the Member
set forth herein are true, complete and accurate in all material
respects, do not omit to state any material fact, or omit any fact
necessary to make such representations, warranties and
acknowledgments, in light of the circumstances under which they are
made, not misleading. Such representations, warranties and
acknowledgements of such Member shall survive the
Closing.

 

5.           Representations
and Warranties of the Corporation. The Corporation hereby
warrants and represents to CBDH and the Members, as of the date of
this Agreement and with the same force and effect on the Closing
Date as if then made, as follows:

 

(a)           Organization
and Good Standing. The Corporation is an entity duly
incorporated, validly existing and in good standing under the laws
of the State of North Carolina, with full corporate power and
authority to own, lease and operate its business and properties and
to carry on its business in the places and in the manner as
presently conducted or proposed to be conducted.

 

(b)           Authority
and Enforcement. The Corporation has all requisite corporate
power and authority to execute and deliver this Agreement, and to
consummate the transactions contemplated hereby. The Corporation
has taken all corporate action necessary for the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, and this Agreement constitutes the valid and
binding obligation of the Corporation, enforceable against it in
accordance with its terms, except as may be affected by bankruptcy,
insolvency, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally and subject to the
qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding
therefor may be brought.

 

(c)           No
Conflicts or Defaults . The execution and
delivery of this Agreement by the Corporation and the consummation
of the transactions contemplated hereby do not and shall not (a)
contravene its articles of incorporation or bylaws, or (b) with or
without the giving of notice or the passage of time (i) violate,
conflict with, or result in a material breach of, or a material
default or loss of rights under, any covenant, agreement, mortgage,
indenture, lease, instrument, permit
or license to which it is a party or by which it is bound, or any
judgment, order or decree, or any law, rule or regulation to which
it is subject, (ii) result in the creation of, or give any party
the right to create, any lien upon any assets or properties of the
Corporation, or (iii) terminate or give any party the right to
terminate, amend, abandon or refuse to perform, any material
agreement, arrangement or commitment relating to which the
Corporation is a party.

 

 

7

 

 

(d)           Disclosure.
The representations, warranties and acknowledgments of the
Corporation set forth herein are true, complete and accurate in all
material respects, do not omit to state any material fact, or omit
any fact necessary to make such representations, warranties and
acknowledgments, in light of the circumstances under which they are
made, not misleading. Such representations, warranties and
acknowledgements of the Corporation shall survive the
Closing.

 

6.           Representations
and Warranties of CBDH, Members and the
Corporation.

 

(a)           No
Payments. CBDH, each Member and the Corporation hereby
represent and warrant that there has been no act or omission by
CBDH, the Member or the Corporation which would give rise to any
valid claim against any of the Parties for a brokerage commission,
finder’s fee, or other like payment in connection with the
transactions contemplated hereby.

 

(b)           Transfer
Taxes. The Member shall (a) be responsible for (and shall
indemnify and hold harmless the Corporation and CBDH against) any
and all liabilities for any sales, use, stamp, value added, documentary, filing,
recording, transfer, stock transfer, gross receipts, registration,
duty, securities transactions or similar fees or taxes or
governmental charges (together with any interest or penalty,
addition to tax or additional amount imposed) as levied by any
governmental entity in connection with the transactions
contemplated by this Agreement (collectively,
“Transfer
Taxes”), regardless of
the Person liable for such Transfer Taxes under applicable
law.

 

(c)           Further
Assurances. If, at any time after the Closing, the Parties
shall consider or be advised that any further deeds, assignments or
assurances in law or that any other things are necessary or proper
to complete the transactions contemplated hereby in accordance with
the terms of this Agreement or to vest, perfect or confirm, of
record or otherwise, the title to any property or rights of the
Parties hereto, the Parties agree that their proper representatives
shall execute and deliver all such proper deeds, assignments and
assurances in law and do all things necessary or proper to vest,
perfect or confirm title to such property or rights and otherwise
to carry out the purpose of this Agreement, and that the proper
representatives of the Parties are fully authorized to take any and
all such action.

 

(d)           Press
Releases and Communications. No press release or public
announcement related to this Agreement or the transactions
contemplated herein, shall be issued or made by any Party without
the prior written approval of the Corporation; provided, however, that the Corporation
shall be entitled to make such press releases and public
announcements as it deems necessary to comply with all federal and
state securities laws and the rules of the NYSE American
LLC.

 

7.           Closing
Conditions.

 

(a)           Conditions
Precedent to CBDH’s Obligation to Close. The
obligation of CBDH to consummate the transactions contemplated by
this Agreement is subject to satisfaction of the following
conditions on or prior to the Closing Date:

 

 

8

 

 

(i)           The
representations and warranties of Members set forth in Sections 4
and 6 above and the representations and warranties of the
Corporation set forth in Sections 5 and 6 above shall be true and
correct in all material respects at and as of the Closing Date with
the same effect as though made at and as of the date
hereof;

 

(ii)           No
action, suit, or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent or adversely affect the
Members' and the Corporation’s consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect); and

 

(iii)           All
actions to be taken by the Members and the Corporation in
connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby
will be reasonably satisfactory in form and substance to
CBDH.

 

(b)              Conditions
Precedent to Each Member’s Obligation to Close. The
obligation of each Member to consummate the transactions
contemplated by this Agreement is subject to satisfaction of the
following conditions on or prior to the Closing Date:

 

(i)           The
representations and warranties of CBDH set forth in Sections 3 and
6 above and the representations and warranties of the Corporation
set forth in Sections 5 and 6 above shall be true and correct in
all material respects at and as of the Closing Date with the same
effect as though made at and as of the date hereof (except those
representations and warranties that address matters only as of a
specified date, the accuracy of which shall be determined as of
that specified date in all respects);

 

(ii)           No
action, suit, or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent or adversely affect
CBDH’s and the Corporation’s consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);

 

(iii)           CBDH
shall have delivered irrevocable instructions to the Corporation
(the “CBDH
Instructions”) in the form attached hereto as
Exhibit A;
and

 

(iv)           All
actions to be taken by CBDH and the Corporation in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Member.

 

 

9

 

 

(a)           Conditions
Precedent to the Corporation’s Obligation to Close.
The obligation of the Corporation to consummate the transactions
contemplated by this Agreement is subject to satisfaction of the
following conditions on or prior to the Closing Date:

 

(i)           The
representations and warranties of CBDH set forth in Sections 3 and
6 above and the representations and warranties of the Members set
forth in Sections 4 and 6 above shall be true and correct in all
material respects at and as of the Closing Date with the same
effect as though made at and as of the date hereof (except those
representations and warranties that address matters only as of a
specified date, the accuracy of which shall be determined as of
that specified date in all respects);

 

(ii)           No
action, suit, or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent or adversely affect the
Members’ and CBDH’s consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);

 

(iii)           CBDH
shall have delivered the CBDH Instructions;

 

(iv)           each
Member shall have delivered to the Corporation a completed and
executed CBDH Membership Questionnaire (the “Questionnaire”)
in the form attached hereto as Exhibit B;

 

(v)           each
Member shall have delivered to the Corporation a Voting Proxy
Agreement (the “Member Voting Proxy
Agreement”) in the form attached hereto as
Exhibit C covering
the number of Second Tranche Shares to which unrestricted voting
rights have not vested in the amounts set forth opposite such
Member’s name on Schedule A;

 

(vi)           each
Member shall have delivered to the Corporation a Leakout Agreement
(the “Member Leakout
Agreement”) in the form attached hereto as
Exhibit D covering
the number of Second Tranche Shares and First Marking Period
Earnout Shares set forth opposite such Member’s name on
Schedule A;
and

 

(vii)           All
actions to be taken by the Members and the Corporation in
connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby
will be reasonably satisfactory in form and substance to the
Corporation.

 

 

10

 

 

8.           Documents
To Be Delivered at Closing; Post-Closing Certificate
Delivery.

 

(a)           Documents
to be Delivered by the Members. At Closing, each
Member shall deliver to the Corporation the following:

 

(i)           a
Questionnaire;

 

(ii)         
a Member Voting Proxy Agreement;

 

(iii)        
a Member Leakout Agreement; and

 

(iv)        
such other customary instruments of transfer, assumption, filings
or other documents, in form and substance satisfactory to the
Corporation, as may be required to give effect to this
Agreement.

 

(b)           Documents
to be Delivered by CBDH. At Closing, CBDH shall deliver to
the Corporation the CBDH Transfer Instructions together with one
(1) stock power bearing the medallion guaranteed signature of R.
Scott Coffman as Manager of Coffman Management, LLC, the sole
manager of CBDH.

 

(c)           Documents
to be Delivered by the Corporation. At Closing, the
Corporation shall deliver to each Member a copy of the written
instructions (the “Corporation
Transfer Instructions”) to the Transfer Agent in the
form attached hereto as Exhibit E to transfer the
Second Tranche Shares and the First Marking Period Earnout Shares
to such Member pursuant to Schedule A hereto.

 

9.           Miscellaneous.

 

(a)           Expenses. Except
as otherwise expressly provided herein, all costs and expenses,
including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with
this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.

 

(b)           Notices.
All notices, requests, consents, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to
have been given: (i) when delivered by hand (with written
confirmation of receipt); (ii) when received by the addressee if
sent by a nationally recognized overnight courier (receipt
requested); (iii) on the date sent by facsimile or e-mail of a .PDF
document (with confirmation of transmission) if sent during normal
business hours of the recipient, and on the next business day if
sent after normal business hours of the recipient; or (iv) on the
third (3rd) day after the date mailed, by certified or registered
mail, return receipt requested, postage prepaid. Such
communications must be sent to the respective parties at the
following addresses (or at such other address for a party as shall
be specified in a notice given in accordance with this Section
9(b):

 

 

11

 

   

	

If to
CBDH:

	

c/o
Coffman Management, LLC

	
 

	

8845
Red Oak Boulevard

	
 

	

Charlotte,
NC 28217

	
 

	

Attention:
R. Scott Coffman

	
 

	

email:
scott@cbdmd.com

	
 

	
 

	

with a
copy to:

	

Gavigan
Law, PLLC

10700
Sikes Place

Suite
375

Charlotte,
NC 28277

Attention:
Timothy B. Gavigan, Esq.

email:
tim@gavigan.law

 

	
 

	
 

	

If to
the Corporation:

	

cbdMD,
Inc.

8845
Red Oak Boulevard

Charlotte,
NC 28217

Attention:
Mark S. Elliott,

Chief
Financial Officer and Chief Operating Officer

email:
mark.elliott@cbdMD.com

	
 

	
 

	

with a
copy to:

	

Pearlman
Law Group LLP

200 S.
Andrews Avenue

Suite
901

Fort
Lauderdale, FL 33301

Attention:
Brian A. Pearlman, Esq.

email:
brian@pslawgroup.net

	
 

	
 

	

If to
the Members:

	

To the
names, addresses and email addresses set forth on the signature
page hereof

 

(c)           Headings.
The headings in this Agreement are for reference only and shall not
affect the interpretation of this Agreement.

 

(d)           Severability.
If any term or provision of this Agreement is invalid, illegal or
unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or
provision in any other jurisdiction. Upon such determination that
any term or other provision is invalid, illegal or unenforceable,
the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that
the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.

 

 

12

 

 

(e)           Entire
Agreement. This Agreement constitutes the entire agreement
of the parties to this Agreement with respect to the subject matter
contained herein, and supersedes all prior and contemporaneous
understandings and agreements, both written and oral, with respect
to such subject matter.

 

(f)           Successors
and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party may assign its rights or
obligations hereunder without the prior written consent of the
other parties, which consent shall not be unreasonably withheld or
delayed.

 

(g)           No
Third-party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their respective successors and
permitted assigns and nothing herein, express or implied, is
intended to or shall confer upon any other person or entity any
legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

 

(h)           Amendment
and Modification; Waiver. This Agreement may only be
amended, modified or supplemented by an agreement in writing signed
by each party hereto. No waiver by any party of any of the
provisions hereof shall be effective unless explicitly set forth in
writing and signed by the party so waiving. No waiver by any party
shall operate or be construed as a waiver in respect of any
failure, breach or default not expressly identified by such written
waiver, whether of a similar or different character, and whether
occurring before or after that waiver. No failure to exercise, or
delay in exercising, any right, remedy, power or privilege arising
from this Agreement shall operate or be construed as a waiver
thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power
or privilege.

 

(i)           Specific
Performance. The parties agree that irreparable damage would
occur if any provision of this Agreement were not performed in
accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition
to any other remedy to which they are entitled at law or in
equity.

 

(j)           Counterparts
and Electronic Signatures. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which together shall be deemed to be one and the same agreement.
Documents executed, scanned and transmitted electronically and
electronic signatures shall be deemed original signatures for
purposes of this Agreement and all matters related thereto, with
such scanned and electronic signatures having the same legal effect
as original signatures. The Parties agree that this Agreement or
any other document necessary for the consummation of the
transactions contemplated by this Agreement may be accepted,
executed or agreed to through the use of an electronic signature in
accordance with the Electronic Signatures in Global and National
Commerce Act ("E-Sign
Act"), Title 15, United States Code, Sections 7001 et seq.,
the Uniform Electronic Transaction Act ("UETA") and
any applicable state law. Any document accepted, executed or agreed
to in conformity with such laws will be binding on all Parties the
same as if it were physically executed and each Party hereby
consents to the use of any third party electronic signature capture
service providers as may be chosen by the Corporation.

 

 

 

13

 

 

(k)           Jurisdiction
and Governing Law. This Agreement and all disputes or
controversies arising out of or relating to this Agreement or the
transactions contemplated hereby shall be governed by, and
construed in accordance with, the internal laws of the State of
North Carolina, without regard to the laws of any other
jurisdiction that might be applied because of the conflicts of laws
principles of the State of North Carolina. Each of the parties hereto expressly and
irrevocably: (1) agree that any legal suit, action or proceeding
arising out of or relating to this Agreement will be instituted
exclusively in United States District Court for the Western
District of North Carolina; (2) waive any objection they may have
now or hereafter to the venue of any such suit, action or
proceeding; and (3) consent to the in personam jurisdiction of
United States District Court for the Western District of North
Carolina in any such suit, action or proceeding. Each of the
parties hereto further agrees to accept and acknowledge service of
any and all process which may be served in any such suit, action or
proceeding in the United States District Court for the Western
District of North Carolina and agree that service of process upon
it mailed by certified mail to its address will be deemed in every
respect effective service of process upon it, in any such suit,
action or proceeding.

 

(l)           Role
of Counsel. The Parties acknowledge their understandings
that this Agreement was prepared at the request of the Corporation
by Pearlman Law Group LLP, its counsel, and that such firm did not
represent CBDH or the Members in conjunction with this Agreement or any of the related transactions. CBDH
and the Members, as further evidenced by their signatures below,
acknowledges that they have had the opportunity to obtain the
advice of independent counsel of their choosing prior to their
execution of this Agreement and that they have availed themselves
of this opportunity to the extent they deemed necessary and
advisable.

 

[signature
pages follow]

 

14

Execution Version

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

 

	
 

	

CBD HOLDING, LLC

	
 

	

By:
Coffman Management, LLC, its Manager

	
 

	
 

	
 

	
 

	

By:

	

_______________________________

	
 

	
 

	

R.
Scott Coffman

	
 

	
 

	

Title:
Manager

	
 

	
 

	
 

	
 

	

CBDMD, INC.

	
 

	
 

	
 

	
 

	

By:

	

_______________________________

	
 

	
 

	

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

	
 

	
 

	
 

	
 

	

Members:

	
 

	
 

	
 

	
 

	

COFFMAN FAMILY OFFICE, LLC, a North Carolina limited
liability company

	
 

	

By:
Coffman Management, LLC, its Manager

	
 

	
 

	
 

	

By:

	

________________________________

	
 

	
 

	

R.
Scott Coffman, Manager

	
 

	
 

	
 

	
 

	

JUSTICE FAMILY OFFICE, LLC, a North Carolina limited
liability company

	
 

	
 

	
 

	
 

	

By:

	

_________________________________

	
 

	

Shannon
L. Justice, Manager

  

 

Signature
Page Distribution Agreement

 

 

15

 

 

	
 

	
 

	
 

	
 

	

SUMICHRAST 2017 FAMILY TRUST

	
 

	
 

	
 

	
 

	

By:

	

	
 

	
 

	

Martin
A. Sumichrast, Trustee

	
 

	
 

	
 

	
 

	

BCEZ INVESTMENTS, LLC, a North Carolina limited liability
company

	
 

	
 

	
 

	
 

	

By:

	

__________________________________

	
 

	
 

	

Caryn
Dunayer, Manager

	
 

	
 

	
 

	
 

	

CBD NOW, LLC, a North Carolina limited liability
company

	
 

	
 

	
 

	
 

	

By:

	

__________________________________

	
 

	
 

	

Thomas
E. Wicker, Manager

	
 

	
 

	
 

	
 

	

A NEW TANK, LLC, a North Carolina limited liability
company

	
 

	
 

	
 

	
 

	

By:

	

	
 

	

Cameron
S. Coffman, Manager

	
 

	
 

	
 

  

 

Signature
Page Distribution Agreement

 

 

16

 

 

	
 

	

	
 

	

Paul G. Porter

	
 

	
 

	
 

	
 

	

W61, LLC, a South Carolina limited liability
company

	
 

	
 

	
 

	
 

	

By:

	

	
 

	
 

	

Linnie
Manos, Manager

 

   

 

 

 

 

 

 

 

Signature
Page Distribution Agreement

 

 

17

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