LOCK-UP LETTER AGREEMENT
Exhibit 10.1
September
10, 2019
ThinkEquity,
a Division of
Fordham
Financial Management, Inc.
00
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
As
Representative of the several Underwriters named on Schedule 1 to
the Underwriting Agreement referenced below
Ladies
and Gentlemen:
The
undersigned understands that you (the “Representative”)
and potentially certain other firms (the “Underwriters”)
propose to enter into an Underwriting Agreement (the
“Underwriting
Agreement”) providing for the purchase by the
Underwriters of securities (which will include shares of preferred
stock, par value $0.001 per share (the “Preferred
Stock”), that are convertible into shares of common
stock, par value $0.001 per share (“Common
Stock”), of cbdMD, Inc. (formerly known as Level
Brands, Inc.), a North Carolina corporation (the
“Company”),
and that the Underwriters propose to reoffer the Preferred Stock to
the public (the “Offering”).
In
consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the
undersigned hereby irrevocably agrees that, without the prior
written consent of the Representative, on behalf of the
Underwriters, the undersigned will not, directly or indirectly, (1)
offer for sale, sell, pledge, or otherwise transfer or dispose of
(or enter into any transaction or device that is designed to, or
could be expected to, result in the transfer or disposition by any
person at any time in the future of) any shares of Preferred Stock
or Common Stock (including, without limitation, shares of Preferred
Stock or Common Stock that may be deemed to be beneficially owned
by the undersigned in accordance with the rules and regulations of
the Securities and Exchange Commission and shares of Preferred
Stock or Common Stock that may be issued upon exercise of any
options or warrants) or securities convertible into or exercisable
or exchangeable for Preferred Stock or Common Stock, (2) enter into
any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks
of ownership of shares of Preferred Stock or Common Stock, whether
any such transaction described in clause (1) or (2) above is to be
settled by delivery of Preferred Stock or Common Stock or other
securities, in cash or otherwise, (3) except as
provided for below, make any demand for or exercise any right or
cause to be filed a registration statement, including any
amendments thereto, with respect to the registration of any shares
of Preferred Stock or Common Stock or securities convertible into
or exercisable or exchangeable for Preferred Stock or Common Stock
or any other securities of the Company, or (4) publicly disclose
the intention to do any of the foregoing for a period commencing on
the date hereof and ending on the 90th day after the date of the
Prospectus relating to the Offering (such 90-day period, the
“Lock-Up
Period”).
The
foregoing paragraph shall not apply to (a) transactions relating to
shares of Preferred Stock or Common Stock or other securities
acquired in the open market after the completion of the Offering,
provided that no filing
under Section 16(a) of the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”), shall be required or shall be voluntarily made
in connection with such transfers; (b)
bona fide gifts of shares of any class of the Company’s
capital stock or any security convertible into Preferred
Stock or Common Stock, in each case
that are made exclusively between and among the undersigned or
members of the undersigned’s family, or affiliates of the
undersigned, including its partners (if a partnership) or members
(if a limited liability company); (c) any transfer of shares of
Preferred Stock or Common Stock or any security convertible into
Preferred Stock or Common Stock by will or intestate succession
upon the death of the undersigned; (d) transfer of shares of
Preferred Stock or Common Stock or any security convertible into
Preferred Stock or Common Stock to an immediate family member (for
purposes of this Lock-Up Letter Agreement, “immediate
family” shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin) or any trust, limited
partnership, limited liability company or other entity for the
direct or indirect benefit of the undersigned or any immediate
family member of the undersigned; provided that, in the case of clauses (b) - (d) above, it
shall be a condition to any such transfer that (i) the
transferee/donee agrees to be bound by the terms of this Lock-Up
Letter Agreement (including, without limitation, the restrictions
set forth in the preceding sentence) to the same extent as if the
transferee/donee were a party hereto, (ii) each party (donor,
donee, transferor or transferee) shall not be required by law
(including without limitation the disclosure requirements of the
Securities Act of 1933, as amended, (the “Securities
Act”) and the Exchange
Act) to make, and shall agree to not voluntarily make, any filing
or public announcement of the transfer or disposition prior to the
expiration of the 90-day period referred to above, and (iii) the
undersigned notifies the Representative at least two business days
prior to the proposed transfer or disposition; (e) the transfer of
shares to the Company to satisfy withholding obligations for any
equity award granted pursuant to the terms of the Company’s
stock option/incentive plans, such as upon exercise, vesting, lapse
of substantial risk of forfeiture, or other similar taxable event,
in each case on a “cashless” or “net
exercise” basis (which, for the avoidance of doubt shall not
include “cashless” exercise programs involving a broker
or other third party), provided that as a condition of any transfer pursuant to
this clause (e), that if the undersigned is required to file a
report under Section 16(a) of the Exchange Act, reporting a
reduction in beneficial ownership of shares of Preferred Stock or
Common Stock or any securities convertible into or exercisable or
exchangeable for Preferred Stock or Common Stock during the Lock-Up
Period, the undersigned shall include a statement in such report,
and if applicable an appropriate disposition transaction code, to
the effect that such transfer is being made as a share delivery or
forfeiture in connection with a net value exercise, or as a
forfeiture or sale of shares solely to cover required tax
withholding, as the case may be; (f) transfers of shares of
Preferred Stock or Common Stock or any security convertible into or
exercisable or exchangeable for Preferred Stock or Common Stock
pursuant to a bona fide third party tender offer made to all
holders of the Preferred Stock or Common Stock, merger,
consolidation or other similar transaction involving a change of
control (as defined below) of the Company, including voting in
favor of any such transaction or taking any other action in
connection with such transaction, provided that in the event that such
merger, tender offer or other transaction is not completed, the
Preferred Stock and/or Common Stock and any security convertible
into or exercisable or exchangeable for Preferred Stock or Common
Stock shall remain subject to the restrictions set forth
herein; (g) the exercise of
warrants or the exercise of stock options granted pursuant to the
Company’s stock option/incentive plans or otherwise
outstanding on the date hereof; provided, that the restrictions shall
apply to shares of Common Stock issued upon such exercise or
conversion; (h) the establishment of any contract, instruction or
plan that satisfies all of the requirements of Rule 10b5-1 (a
“Rule
10b5-1 Plan”) under the Exchange Act; provided, however, that no sales of Preferred
Stock or Common Stock or securities convertible into, or
exchangeable or exercisable for, Preferred Stock or Common Stock,
shall be made pursuant to a Rule 10b5-1 Plan prior to the
expiration of the Lock-Up Period; provided further, that the Company is not
required to report the establishment of such Rule 10b5-1 Plan in
any public report or filing with the Commission under the Exchange
Act during the lock-up period and does not otherwise voluntarily
effect any such public filing or report regarding such Rule 10b5-1
Plan; and (i) any demands or requests for, exercise any right with
respect to, or take any action in preparation of, the registration
by the Company under the Securities Act of the undersigned’s
shares of Preferred Stock or Common Stock, provided that no
transfer of the undersigned’s shares of Preferred Stock or
Common Stock registered pursuant to the exercise of any such right
and no registration statement shall be filed under the Securities
Act with respect to any of the undersigned’s shares of
Preferred Stock or Common Stock during the Lock-Up Period. For
purposes of clause (f) above, “change of control” shall
mean the consummation of any bona fide third party tender offer,
merger, purchase, consolidation or other similar transaction the
result of which is that any “person” (as defined in
Section 13(d)(3) of the Exchange Act), or group of persons, becomes
the beneficial owner (as defined in Rules 13d-3 and 13d-5 of the
Exchange Act) of a majority of total voting power of the voting
stock of the Company.
The
undersigned also agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent and registrar
against the transfer of the undersigned’s securities subject
to this Lock-Up Letter Agreement except in compliance with this
Lock-Up Letter Agreement.
If the
undersigned is an officer or director of the Company, (i) the
undersigned agrees that the foregoing restrictions shall be equally
applicable to any shares of Preferred Stock that the undersigned
may purchase in the Offering; (ii) the Representative agrees that,
at least three (3) business days before the effective date of any
release or waiver of the foregoing restrictions in connection with
a transfer of securities subject to this Lock-Up Letter Agreement,
the Representative will notify the Company of the impending release
or waiver; and (iii) the Company has agreed in the Underwriting
Agreement to announce the impending release or waiver by press
release through a major news service at least two (2) business days
before the effective date of the release or waiver. Any release or
waiver granted by the Representative hereunder to any such officer
or director shall only be effective two (2) business days after the
publication date of such press release. The provisions of this
paragraph will not apply if (a) the release or waiver is effected
solely to permit a transfer of securities subject to this Lock-Up
Letter Agreement not for consideration and (b) the transferee has
agreed in writing to be bound by the same terms described in this
securities subject to this Lock-Up Letter Agreement to the extent
and for the duration that such terms remain in effect at the time
of such transfer.
It is
understood that, if the Company notifies the Underwriters that it
does not intend to proceed with the Offering, if the Underwriting
Agreement does not become effective, or if the Underwriting
Agreement (other than the provisions thereof which survive
termination) shall terminate or be terminated prior to payment for
and delivery of the securities, the undersigned will be released
from its obligations under this Lock-Up Letter
Agreement.
The
undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter
Agreement.
Whether
or not the Offering actually occurs depends on a number of factors,
including market conditions. Any Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are
subject to negotiation between the Company and the
Underwriters.
This
Lock-Up Letter Agreement shall automatically terminate upon the
earliest to occur, if any, of (1) the termination of the
Underwriting Agreement before the sale of any securities to the
Underwriters or (2) December 31, 2019, in the event that the
Underwriting Agreement has not been executed by that
date.
The
undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter
Agreement and that, upon request, the undersigned will execute any
additional documents necessary in connection with the enforcement
hereof. Any obligations of the undersigned shall be binding upon
the heirs, personal representative, successors and assigns of the
undersigned.
Very
truly yours,
By:
______________________________
Name:
Title:
