Document:

Blueprint

Exhibit 10.1

 

SENIOR
SECURED PROMISSORY NOTE

 

	

U.S.
$2,000,000

	

December
4, 2018

	
 

	

Charlotte,
North Carolina

 

FOR
VALUE RECEIVED, the undersigned, CURE BASED DEVELOPMENT, LLC, a North Carolina limited liability
company (the “Company”),
hereby unconditionally promises to pay LEVEL BRANDS, INC., a North Carolina
corporation (the “Holder”),
on the Maturity Date (as defined in Section 1 hereof) to the order
of the Holder, in lawful money of the United States of America and
in immediately available funds, the principal amount of Two Million
Dollars ($2,000,000) (the “Principal
Amount”). Interest shall be at the rate of 6% per
annum (“Interest”)
based on a 360 day year, shall be payable on the Maturity Date (as
defined below). This Note is being entered into in accordance with
the terms and conditions of that certain Agreement and Plan of
Merger dated December 3, 2018 by and among the Holder, AcqCo LLC, a
North Carolina limited liability company and a wholly owned
subsidiary of the Holder, cbdMD LLC, a North Carolina limited
liability company and wholly owned subsidiary of the Holder, and
the Company (the “Merger
Agreement”). All terms not otherwise defined herein
shall have the same meaning as in the Merger
Agreement.

 

1. Maturity; Acceleration. This
Note shall mature one (1) year from the date of this Note (such
date the “Maturity
Date”). On the Maturity Date any and all outstanding
Principal Amount and accrued and unpaid Interest due and owing
under the Note shall be immediately paid by the Company.

 

2. Seniority; Security
Interest.

 

(a) The indebtedness
evidenced by this Note and the payment of the Principal Amount and
Interest shall be Senior (as hereinafter defined) to, and have
priority in right of payment over, all indebtedness of Company now
outstanding or hereinafter incurred. “Senior,”
as used herein, shall be deemed to mean that, in the event of any
default in the payment of the obligations represented by this Note
(after giving effect to “cure” provisions, if any) or
of any liquidation, insolvency, bankruptcy, reorganization or
similar proceedings relating to the Company, all sums payable on
this Note shall first be paid in full, with Interest, if any,
before any payment is made upon any other indebtedness, now
outstanding or hereinafter incurred, and, in any such event, any
payment or distribution of any character which shall be made in
respect of any other indebtedness of Company shall be paid over to
Holder for application to the payment hereof, unless and until the
obligations under this Note (which shall mean the Principal Amount
and Interest shall have been paid and satisfied in
full.

 

(b) This Note, subject
to the provisions of (a) above, is secured by a first lien and
security interest in all of the assets of the Company pursuant to
the terms of a certain Security Agreement dated as of December 4,
2018 (the “Security
Agreement”), by the Company in favor of the
Holder.

 

(c) In the event of the
Closing of the Mergers, this Note shall automatically be deemed an
unsecured intercompany advance.

 

3. Prepayment. The Company shall
have the right to prepay all or a portion of the Note at any time
without notice to the Holder and without penalty.

 

4. Events of Default. The term
“Event of
Default” shall mean any of the events set forth in
this Section 4:

 

(a) the Company shall
default in the performance of, or violate any material covenants
and agreements contained in this Note or the Security Agreement,
including without limitation, the failure to pay amounts due under
this Note on its Maturity Date, or Interest when due;

 

 

1

 

 

(b) any representation,
warranty or certification made by or on behalf of the Company in
this Note shall have been incorrect in any material respect when
made;

 

(c) there shall be a
dissolution, termination of existence, suspension or discontinuance
of the Company’s business for a continuous period of
forty-five (45) days or it ceases to operate as going
concern;

 

(d) if the Parent shall
have terminated the Merger Agreement in accordance with Sections
9.01(d) or 9.01(e) thereof;

 

(e) if the Company
shall:

 

(i) admit in writing
its inability to pay its debts generally as they become
due;

 

(ii) file
a voluntary petition in bankruptcy or a petition to take advantage
of any insolvency act;

 

(iii) convey
any material portion of the assets of the Company to a trustee,
mortgage or liquidating agent or make an assignment for the benefit
of creditors;

 

(iv) consent
to the appointment of a receiver, trustee, custodian or similar
official, for the Company or any material portion of the property
or assets of the Company;

 

(v) on a petition in
bankruptcy filed against it, be adjudicated a
bankrupt;

 

(vi) file
a petition or answer seeking reorganization or arrangement under
the federal bankruptcy laws or any other applicable law or statute
of the United States of America or any State, district or territory
thereof; or

 

(vii) if
a court of competent jurisdiction shall enter an order, judgment,
or decree appointing, without the consent of the Company, a
receiver of the whole or any substantial part of the
Company’s assets, and such order, judgment or decree shall
not be vacated or set aside or stayed within 60 days from the date
of entry thereof.

 

If any
Event of Default described in clause (e) of Section 4 shall occur,
the Principal Amount of this Note, together with all accrued and
unpaid Interest shall automatically be and become immediately due
and payable, without notice or demand. If any Event of Default
(other than any Event of Default described in clause (e) of Section
4) shall occur for any reason, whether voluntary or involuntary,
the Holder, may, upon written notice to the Company, declare all or
any portion of the outstanding Principal Amount, together with all
accrued and unpaid Interest, to be due and payable, whereupon the
full unpaid Principal Amount hereof, together with all accrued and
unpaid Interest shall be so declared due and payable shall be and
become immediately due and payable if the default is not cured by
the Company within twenty (20) days of receipt of written notice,
without further notice, demand, or presentment.

 

5. Remedies. Subject to the terms
of the Security Agreement, in case any one or more of the Events of
Default specified in Section 4 hereof shall have occurred and be
continuing, the Holder may proceed to protect and enforce the
Holder’s rights either by suit in equity and/or by action at
law, whether for the specific performance of any covenant or
agreement contained in this Note or in aid of the exercise of any
power granted in this Note or may proceed to enforce the payment of
all sums due upon this Note or to enforce any other legal or
equitable right of the Holder.

 

 

2

 

 

6. Amendments and Waivers. The
terms of this Note may be amended and the observance of any term of
this Note may be waived (either generally or in a particular
instance and either retroactively or prospectively) with the
written consent of the Company and the Holder.

 

7. Notices.

 

(a) Any notice, request
or other document required or permitted to be given or delivered to
the Holder by the Company shall be delivered in accordance with the
notice provisions of the Merger Agreement.

 

(b) Any party may give
any notice, request, consent or other communication under this Note
using any other means (including personal delivery, messenger
service, telecopy, first class mail or electronic mail), but no
such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually
received by the party for whom it is intended. Any party may change
the address to which notices, requests, consents or other
communications hereunder are to be delivered by giving the other
parties notice in the manner set forth in this Section
7.

 

8. Severability. The
unenforceability or invalidity of any provision or provisions of
this Note as to any persons or circumstances shall not render that
provision or those provisions unenforceable or invalid as to any
other provisions or circumstances, and all provisions hereof, in
all other respects, shall remain valid and
enforceable.

 

9. Governing Law. This Note shall
be governed by and construed under the laws of the State of North
Carolina applicable to agreements made and to be performed entirely
within such jurisdiction. Any suit, action or proceeding arising
out of or relating to this Note shall be brought in any state or
federal courts sitting in Charlotte, North Carolina.

 

10. Waivers. The non-exercise by
either party of any of its rights hereunder in any particular
instance shall not constitute a waiver thereof in that or any
subsequent instance.

 

11. Attorneys’ Fees; Costs.
If any Event of Default occurs, the Company promises to pay all
costs of enforcement and collection, including but not limited to,
Holder’s reasonable attorneys’ fees, whether or not any
action or proceeding is brought to enforce the provisions
hereof.

 

12. Successor
and Assigns. This Note shall be binding upon the Company and
its successors and permitted assigns and shall inure to the benefit
of the Holder and its successors and assigns. The Company may not
assign or delegate any of its duties or obligations under this Note
without the written consent of the Holder.

 

IN WITNESS WHEREOF, the Company has
caused its duly authorized officers to execute this Note as of the
date first written above.

 

COMPANY:

 

CURE
BASED DEVELOPMENT, LLC

 

 

By:
/s/ R. Scott
Coffman

       R.
Scott Coffman, Manager

 

 

3Blueprint

Exhibit 10.2

 

Execution Version

 

SECURITY AGREEMENT

 

This
Security Agreement (the “Security
Agreement”) dated as of December 4, 2018 by and
between CURE BASED DEVELOPMENT, LLC, a Nevada limited liability
company (the “Company”),
and LEVEL BRANDS, INC., a North Carolina corporation (the
“Holder”).
This Note is being entered into in accordance with the terms and
conditions of that certain Agreement and Plan of Merger dated
December 3, 2018 by and among the Holder, AcqCo, LLC, a North
Carolina limited liability company and a wholly owned subsidiary of
the Holder, cbdMD LLC, a North Carolina limited liability company
and wholly owned subsidiary of the Holder, and the Company (the
“Merger
Agreement”).

 

BACKGROUND

 

The
Company is issuing the Holder a Senior Secured Promissory Note in
the aggregate principal amount of $2,000,000 (the
“Note”).
In order to induce Holder to lend the funds represented by the Note
to the Company, the Company has agreed to pledge and grant a
security interest in the collateral described herein to the Holder
on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the
premises and for other good and valuable consideration the receipt
of which is hereby acknowledged, the parties hereto agree as
follows:

 

1. Definitions.
All capitalized terms used herein which are not defined shall have
the meanings given to them in the Note.

 

2. Pledge and Grant of
Security Interest. To secure the full and punctual payment
and performance of all indebtedness obligations and liabilities of
the Company to Holder under the Note (the “Indebtedness”),
the Company hereby transfers, pledges, assigns, hypothecates,
transfers and grants to the Holder a security interest in the
personal property described on Schedule A annexed hereto
(collectively, the “Collateral”).

 

3. Representations and
Warranties of the Company. The Company represents and
warrants to the Holder (which representations and warranties shall
be deemed to continue to be made until all of the Indebtedness has
been paid in full in cash) that:

 

(a) The execution,
delivery and performance by the Company of this Security Agreement
and the pledge of the Collateral hereunder do not and will not
result in any violation of any agreement, indenture, instrument,
license, judgment, decree, order, law, statute, ordinance or other
governmental rule or regulation applicable to the
Company;

 

(b) This Security
Agreement constitutes the legal, valid, and binding obligation of
the Company enforceable against the Company in accordance with its
terms;

 

(c) No consent or
approval of any person, corporation, governmental body, regulatory
authority or other entity, is or will be necessary for the
execution, delivery and performance of this Security Agreement or,
the exercise by the Holder of any rights with respect to the
Collateral or for the pledge and assignment of, and the grant of a
security interest in, the Collateral hereunder;

 

(d) There are no
pending or, to the best of the Company’s knowledge,
threatened actions or proceedings before any court, judicial body,
administrative agency or arbitrator which may materially adversely
affect the Collateral;

 

(e) The Company has the
requisite power and authority to enter into this Security Agreement
and to pledge and assign the Collateral to Holder in accordance
with the terms of this Security Agreement;

 

 

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Execution Version

 

(f) The Company owns
each item of the Collateral set forth on Schedule A and, except for the
pledge and security interest granted to Holder hereunder, the
Collateral is free and clear of any other security interest,
pledge, claim, lien, charge, hypothecation, assignment, offset or
encumbrance whatsoever, except as otherwise set forth on
Schedule A
(collectively, “Liens”);
and

 

(g) The pledge and
assignment of the Collateral and the grant of a security interest
under this Security Agreement vests in the Holder all rights of the
Company in the Collateral as contemplated by this Security
Agreement.

 

4. Affirmative
Covenants. Until such time as all of the Indebtedness has
been paid in full in cash, the Company shall:

 

(a) Defend the
Collateral against the claims and demands of all other parties and
keep the Collateral free from all Liens and except for the Liens
granted to Holder under this Security Agreement or in the ordinary
course of business;

 

(b) In the event the
Company comes into possession of any portion of the Collateral in
violation of the terms of this Security Agreement, hold the same in
trust for Holder and deliver to Holder such Collateral in the form
received no later than two (2) business days following the
Company’s receipt thereof;

 

(c) In the event any
portion of the Collateral is held by a third party, take all action
that Holder may request so as to maintain the validity,
enforceability, perfection and priority of Holder’s security
interest in the Collateral;

 

(d) Within two (2)
business days of receipt thereof by the Company, deliver to Holder
all notices and statements relating to the Collateral received by
the Company or any third party holding the Collateral;

 

(e) Notify Holder
promptly of (a) any adverse event relating to the Collateral or any
adverse change in the value of the Collateral and (b) the
Company’s intention to commence a voluntary case under any
state or federal bankruptcy laws (as now or hereafter in
effect);

 

(f) At the written
request of Holder at any time and from time to time, at the
Company’s sole expense, promptly take such action and execute
and deliver such control agreements (and cause any financial
institution and/or brokerage company at which any of the Collateral
is maintained to enter into one or more control agreements in favor
of and on terms satisfactory to Holder) and further instruments and
documents as Holder may reasonably request in order to more fully
perfect, evidence or effectuate the pledge and assignment hereunder
and the security interest granted hereby and to enable Holder to
exercise and enforce its rights and remedies hereunder. Holder is
hereby authorized to file one or more financing or continuation
statements under the Uniform Commercial Code of North Carolina (as
in effect from time to time, the “UCC”)
relating to the Collateral, naming Holder as “secured
party”;

 

(g) Furnish to Holder
such other information relating to the Collateral as Holder may
from time to time reasonably request;

 

(h)           

Conduct its
business in the ordinary course of business consistent with past
practice in all material respects and in compliance in all material
respects with all applicable Laws (as that term is defined in the
Merger Agreement), use commercially reasonable efforts to preserve
intact its business organization and goodwill, keep available the
services of its present managers, officers, employees and
independent contractors, and preserve the goodwill and business
relationships with customers, suppliers, licensors, licensees and
others having business relationships with it; or

 

 

2

Execution Version

 

(i)           Except
as required by applicable law, the Company shall not sell, pledge,
assign, dispose of, transfer, lease, securitize, or encumber any
businesses, properties or assets of the Company outside of the
ordinary course of business consistent with past practices without
the prior written consent of the Holder (which consent shall not be
unreasonably withheld, conditioned or delayed) and which consent
shall not be required in the event that the withholding of the
Holder’s consent would cause a Material Adverse Effect (as
that term is defined in the Merger Agreement).

 

5. Events of
Default.

 

The
term “Event of
Default” wherever used herein shall mean the
occurrence of any one or more of the following events:

 

(a) An “Event of
Default” under the Note shall have occurred and shall not
have been cured during any applicable cure or grace
period;

 

(b) The Company’s
failure to comply with or perform any of its undertakings or
obligations under this Security Agreement or the Note which failure
has not been cured by the Company within ten (10) days of written
notice; or

 

(c) Any representation,
warranty, statement or covenant made or furnished to Holder by or
on behalf of the Company in connection with this Security Agreement
or the Note proves to have been false in any material respect when
made or furnished or is breached, violated or not complied with and
which failure has not been cured by the Company within ten (10)
days of written notice.

 

6. Remedies.

 

Upon
the occurrence of an Event of Default, the Holder may:

 

(a) Demand, collect,
receipt for, settle, compromise, adjust, sue for, foreclose,
realize upon the Collateral (or any part thereof) and/or otherwise
deal with the Collateral in any and all respects as the holder
thereof, in each case as Holder may determine in its sole
discretion;

 

(b) Transfer the
Collateral into its names or into the names of its nominee or
nominees;

 

(c) Subject to the
requirements of applicable law, sell, assign and deliver the whole
or, from time to time any part of the Collateral, with or without
demand, advertisement or notice of the time or place of sale or
adjournment thereof or otherwise (all of which are hereby waived,
except such notice as is required by applicable law and cannot be
waived), for such price or prices and on such terms as Holder in
its sole discretion may determine.

 

In
addition to the foregoing, Holder shall have all of the rights and
remedies of a secured party under applicable law and the
UCC.

 

7. Proceeds of
Collateral Agreement. The proceeds of any disposition of the
Collateral under this Security Agreement shall be applied as
follows:

 

(a) First, to the payment of all costs,
expenses and charges of Holder and to the reimbursement of Holder
for the prior payment of such costs, expenses and charges incurred
in connection with the care and safekeeping of the Collateral
(including, without limitation, the expenses of any sale or any
other disposition of any of the Collateral), the expenses of any
taking, attorneys’ fees and expenses, court costs, any other
fees or expenses incurred or expenditures or advances made by
Holder in the protection, enforcement or exercise of its rights,
powers or remedies hereunder, with interest on any such
reimbursement at the rate prescribed in the Note from the date of
payment;

 

 

3

Execution Version

 

(b) Second, to the payment of the Note, in
whole or in part, in such order as Holder may elect, whether or not
such Note is then due;

 

(c) Third, to such persons, firms
corporations or other entities as required by applicable law
including, without limitation the UCC; and

 

(d) Fourth, to the extent of any surplus to
the Company or as a court of competent jurisdiction may
direct.

 

In the
event that the proceeds of any collection, recovery, receipt,
appropriation, realization or sale are insufficient to satisfy the
Note, the Company shall be liable for the deficiency together with
interest thereon at the rate prescribed in the Note plus the costs
and fees of any attorneys employed by Holder to collect such
deficiency.

 

8. No Waiver.
Any and all of Holder’s rights with respect to the Liens
granted under this Security Agreement shall continue unimpaired,
and the Company shall be and remain obligated in accordance with
the terms hereof, notwithstanding (a) the bankruptcy, insolvency or
reorganization of the Company, (b) the release or substitution of
any item of the Collateral at any time, or of any rights or
interests therein, or (c) any delay, extension of time, renewal,
compromise or other indulgence granted by Holder in reference to
the Note. The Company hereby waives all notice of any such delay,
extension, release, substitution, renewal, compromise or other
indulgence, and hereby consents to be bound hereby as fully and
effectively as if the Company had expressly agreed thereto in
advance. No delay or extension of time by Holder in exercising any
power of sale, option or other right or remedy hereunder, and no
failure by Holder to give notice or make demand, shall constitute a
waiver thereof, or limit, impair or prejudice Holder’s right
to take any action against the Company or to exercise any other
power of sale, option or any other right or remedy.

 

9. Captions.
All captions in this Security Agreement are included herein for
convenience of reference only and shall not constitute part of this
Security Agreement for any other purpose.

 

10. Miscellaneous.

 

(a) This Security
Agreement constitutes the entire and final agreement among the
parties with respect to the subject matter hereof and may not be
changed, terminated or otherwise varied except by a writing duly
executed by the parties hereto.

 

(b) No waiver of any
term or condition of this Security Agreement, whether by delay,
omission or otherwise, shall be effective unless in writing and
signed by the party sought to be charged, and then such waiver
shall be effective only in the specific instance and for the
purpose for which given.

 

(c) In the event that
any provision of this Security Agreement or the application thereof
to the Company or any circumstance in any jurisdiction governing
this Security Agreement shall, to any extent, be invalid or
unenforceable under any applicable statute, regulation, or rule of
law, such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform
to such statute, regulation or rule of law, and the remainder of
this Security Agreement and the application of any such invalid or
unenforceable provision to parties, jurisdictions, or circumstances
other than to whom or to which it is held invalid or unenforceable
shall not be affected thereby, nor shall same affect the validity
or enforceability of any other provision of this Security
Agreement.

 

 

4

Execution Version

 

(d) This Security
Agreement shall be binding upon the Company, and the
Company’s successors and assigns, and shall inure to the
benefit of Holder and its successors and assigns.

 

(e) Any notice or other
communication required or permitted pursuant to this Security
Agreement shall be given in accordance with the notice provisions
of the Note.

 

(f) This Security
Agreement shall be governed by and construed and enforced in all
respects in accordance with the laws of the State of North
Carolina.

 

(g) EACH PARTY HERETO
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS SECURITY
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED
OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR ANY OTHER AGREEMENT EXECUTED OR DELIVERED BY THEM IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HERETO
HEREBY AGREES AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT
ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH
PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

 

(h) THE PARTIES HERETO
EXPRESSLY CONSENT TO THE JURISDICTION AND VENUE OF EACH COURT OF
COMPETENT JURISDICTION LOCATED IN THE STATE OF NORTH CAROLINA FOR
ALL PURPOSES IN CONNECTION WITH THIS SECURITY AGREEMENT. ANY
JUDICIAL PROCEEDING BY THE PARTIES AGAINST ANY OTHER PARTY
INVOLVING, DIRECTLY OR INDIRECTLY ANY MATTER OR CLAIM IN ANY WAY
ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS SECURITY
AGREEMENT SHALL BE BROUGHT IN A STATE OR FEDERAL COURT LOCATED IN
CHARLOTEE, NORTH CAORLINA. THE PARTIES HERETO WAIVES ANY OBJECTION
TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON AND SHALL
NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR
BASED UPON FORUM NON CONVENIENS.

 

(i) This Security
Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which when taken
together shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed an
original signature hereto.

 

(j) This Security
Agreement shall be governed by and construed under the law of the
State of North Carolina (the "Jurisdiction")
without regard to the Jurisdiction's conflict of laws principles,
except to the extent that the UCC requires the application of the
law of a different Jurisdiction.

 

 

5

Execution Version

 

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

 

	
 

	
 CURE
BASED DEVELOPMENT, LLC

 

 

By:/s/ R. Scott
Coffman

R.
Scott Coffman, Manager

	
HOLDER

 

LEVEL BRANDS, INC.

 

By:
/s/ Mark S.
Elliott

Mark S.
Elliott, Chief Financial Officer

and
Chief Operating Officer

	
 

 

 

 

 

 

 

 

 

 

 

 

SECURITY
AGREEMENT DATED DECEMBER 4, 2018

 

 

6

 

 

SCHEDULE
A

 

Description of Collateral

 

 

All
assets, copyrights, trademarks, intellectual property, and any
patents pending.

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