Form of Lock-Up Agreement
Exhibit 10.1
Form of Lock-Up Agreement
January
_________, 2020
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 Common Stock, par value $0.001 per share (the
“Common
Stock”), and may also
include warrants to purchase shares of 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 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 Common Stock (including, without limitation, shares of 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 Common Stock that
may be issued upon exercise of any options or warrants) or
securities convertible into or exercisable or exchangeable for
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 Common
Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of 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 Common Stock or securities convertible into or exercisable or
exchangeable for 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 45th day after the date of the Prospectus relating to the
Offering (such 45-day period, the “Lock-Up
Period”).
1
The foregoing paragraph shall not apply to (a)
transactions relating to shares of 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
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 Common Stock or any security convertible into
Common Stock by will or intestate succession upon the death of the
undersigned; (d) transfer of shares of Common Stock or any security
convertible into 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 45-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 Common Stock or any
securities convertible into or exercisable or exchangeable for
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 Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock
pursuant to a bona fide third party tender offer made to all
holders of the 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 Common
Stock and any security convertible into or exercisable or
exchangeable for 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 Common Stock or securities
convertible into, or exchangeable or exercisable for, 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
Common Stock, provided that no transfer of the undersigned’s
shares of 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 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.
2
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 Common 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) March 31, 2020, 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:
______________________________
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