Exhibit 10.2

GENERAL CANNABIS CORP. STOCK OPTION AWARD

NOTICE OF STOCK OPTION AWARD

Grantee’s Name and Address:

 

Michael Feinsod

 

 

 

 

 

 

As an incentive to Michael Feinsod (the “Grantee”) to continue his service to
General Cannabis Corp., the Grantee has been granted an option to purchase
shares of Common Stock, subject to the terms and conditions of this Notice of
Stock Option Award (the “Notice”) and the Stock Option Award Agreement (the
“Option Agreement”) attached hereto, as follows.  Unless otherwise defined
herein, the terms defined in the Option Agreement shall have the same defined
meanings in this Notice.

Date of Award

 

 

Vesting Commencement Date

 

 

Exercise Price per Share

 

 

Total Number of Shares Subject to the Option (the “Shares”)

 

600,000

Total Exercise Price

 

$

Type of Option:

 

Non-Qualified Stock Option

Expiration Date:

 

Tenth Anniversary of Date of Award

Post-Termination Exercise Period:

 

Three (3) Months

Vesting Schedule:

Subject to the Grantee’s Continuous Service and other limitations set forth in
this Notice and the Option Agreement, the Option may be exercised, in whole or
in part, in accordance with the following schedule:

One-third (1/3) of the Shares subject to the Option shall become exercisable on
each annual anniversary of the Vesting Commencement Date. Notwithstanding the
foregoing, upon a termination of the Grantee’s Continuous Service (i) by the
Company without Cause, (ii) by the Grantee for Good Reason or (iii) due to death
or Disability, 100% of the Shares subject to the Option shall become exercisable
immediately prior to such termination, subject to the Release Condition.

IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and
agree that the Option is to be governed by the terms and conditions of this
Notice and the Option Agreement.

 

General Cannabis Corp.
a Colorado corporation

 

 

 

 

By:

 

 

Title:

 

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE’S CONTINUOUS SERVICE (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES
HEREUNDER).  THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
NOTICE OR THE OPTION AGREEMENT SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH
RESPECT TO FUTURE AWARDS OR CONTINUATION OF THE GRANTEE’S CONTINUOUS SERVICE,
NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE’S RIGHT OR THE RIGHT OF THE
COMPANY OR RELATED ENTITY TO WHICH THE GRANTEE PROVIDES SERVICES TO TERMINATE
THE GRANTEE’S CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT
NOTICE.  THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN
AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE GRANTEE’S STATUS IS AT WILL.

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The Grantee acknowledges receipt of a copy of the Option Agreement, and
represents that he or she is familiar with the terms and provisions thereof, and
hereby accepts the Option subject to all of the terms and provisions hereof and
thereof.  The Grantee has reviewed this Notice and the Option Agreement in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Notice, and fully understands all provisions of this Notice and
the Option Agreement.  The Grantee hereby agrees that all questions of
interpretation and administration relating to this Notice and the Option
Agreement shall be resolved by the Administrator in accordance with Section 15
of the Option Agreement.  The Grantee further agrees to the venue selection in
accordance with Section 16 of the Option Agreement.  The Grantee further agrees
to notify the Company upon any change in the residence address indicated in this
Notice.

Dated:

 

 

Signed:

 

 

 

 

 

Grantee

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GENERAL CANNABIS CORP. STOCK OPTION AWARD

STOCK OPTION AWARD AGREEMENT

1.

Grant of Option.  As an incentive to the continued service of Grantee (the
“Grantee”) named in the Notice of Stock Option Award (the “Notice”) to General
Cannabis Corp., a Colorado corporation (the “Company”), the Company hereby
grants to the Grantee  an option (the “Option”) to purchase the Total Number of
Shares of Common Stock subject to the Option (the “Shares”) set forth in the
Notice, at the Exercise Price per Share set forth in the Notice (the “Exercise
Price”) subject to the terms and provisions of this Stock Option Award Agreement
(the “Option Agreement”) and the Notice which are incorporated herein by
reference.

2.

Exercise of Option.

(a)

Right to Exercise.  The Option shall be exercisable during its term in
accordance with the Vesting Schedule set out in the Notice and with the
applicable provisions of this Option Agreement.  The Option shall be subject to
the provisions of Section 17 of this Option Agreement relating to the
exercisability or termination of the Option in the event of a Corporate
Transaction or Change in Control.  The Grantee shall be subject to reasonable
limitations on the number of requested exercises during any monthly or weekly
period as determined by the Administrator.  In no event shall the Company issue
fractional Shares.  

(b)

Method of Exercise.  The Option shall be exercisable by delivery of an exercise
notice (a form of which is attached as Exhibit A) or by such other procedure as
specified from time to time by the Administrator which shall state the election
to exercise the Option, the whole number of Shares in respect of which the
Option is being exercised, and such other provisions as may be required by the
Administrator.  The exercise notice shall be delivered in person, by certified
mail, or by such other method (including electronic transmission) as determined
from time to time by the Administrator to the Company accompanied by payment of
the Exercise Price and all applicable income and employment taxes required to be
withheld.  The Option shall be deemed to be exercised upon receipt by the
Company of such notice accompanied by the Exercise Price and all applicable
withholding taxes, which, to the extent selected by Grantee, shall be deemed to
be satisfied by use of the broker-dealer sale and remittance procedure to pay
the Exercise Price provided in Section 4(e) below to the extent such procedure
is available to the Grantee at the time of exercise and such an exercise would
not violate any Applicable Law.

(c)

Taxes.  No Shares will be delivered to the Grantee or other person pursuant to
the exercise of the Option until the Grantee or other person has made
arrangements acceptable to the Administrator for the satisfaction of applicable
income tax and employment tax withholding obligations, including, without
limitation, such other tax obligations of the Grantee incident to the receipt of
Shares (the “Tax Withholding Obligation”).  Notwithstanding the foregoing, at
any time not less than five (5) business days (or such fewer number of business
days as determined by the Administrator) before any Tax Withholding Obligation
arises (e.g., an exercise date), the Grantee may elect to satisfy the Grantee’s
Tax Withholding Obligation that the Company determines is sufficient by, if
permissible under Applicable Law, directing the Company to withhold from those
Shares otherwise issuable to the Grantee the whole number of Shares sufficient
to satisfy the minimum applicable Tax Withholding Obligation.  The Grantee
acknowledges that the withheld Shares may not be sufficient to satisfy the
Grantee’s minimum Tax Withholding Obligation.  Accordingly, the Grantee agrees
to pay to the Company or any Related Entity as soon as practicable, including
through additional payroll withholding, any amount of the Tax Withholding
Obligation that is not satisfied by the withholding of Shares described above.
Upon exercise of the Option, the Company or the Grantee’s employer may offset or
withhold (from any amount owed by the Company or the Grantee’s employer to the
Grantee) or collect from the Grantee or other person an amount sufficient to
satisfy the Tax Withholding Obligation.  Furthermore, in the event of any
determination that the Company and/or a Related Entity has failed to withhold a
sum sufficient to pay all withholding taxes due in connection with the Option,
the Grantee agrees to pay the Company and/or the Related Entity the amount of
such deficiency in cash within five (5) days after receiving a written demand
from the Company and/or the Related Entity to do so, whether or not the Grantee
is an employee of the Company and/or the Related Entity at that time..

(d)

Section 16(b).  Notwithstanding any provision of this Option Agreement to the
contrary, other than termination of the Grantee’s Continuous Service for Cause,
if a sale within the applicable time periods set forth in Sections 6, 7 or 8
herein of Shares acquired upon the exercise of the Option would subject the
Grantee to suit under Section 16(b) of the Exchange Act, the Option shall remain
exercisable until the earliest to occur of (i) the tenth (10th) day following
the date on which a sale of such Shares by the Grantee would no longer be
subject to such suit, (ii) the one hundred and ninetieth (190th) day after the
Grantee’s termination of Continuous Service, or (iii) the date on which the
Option expires.

3.

RESERVED.

4.

Method of Payment.  Payment of the Exercise Price shall be made by any of the
following, or a combination thereof, at the election of the Grantee; provided,
however, that such exercise method does not then violate any Applicable Law:

(a)

cash;

(b)

check;

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(c)

surrender of Shares held for the requisite period, if any, necessary to avoid a
charge to the Company’s earnings for financial reporting purposes, or delivery
of a properly executed form of attestation of ownership of Shares as the
Administrator may require which have a Fair Market Value on the date of
surrender or attestation equal to the aggregate Exercise Price of the Shares as
to which the Option is being exercised;

(d)

payment through a “net exercise” such that, without the payment of any funds,
the Grantee may exercise the Option and receive the net number of Shares subject
to the Option equal to (i) the number of Shares as to which the Option is being
exercised, multiplied by (ii) a fraction, the numerator of which is the Fair
Market Value per Share (on such date as is determined by the Administrator) less
the Exercise Price per Share, and the denominator of which is such Fair Market
Value per Share (the number of net Shares to be received shall be rounded down
to the nearest whole number of Shares); or

(e)

payment through a broker-dealer sale and remittance procedure pursuant to which
the Grantee (i) shall provide written instructions to a Company-designated
brokerage firm to effect the immediate sale of some or all of the purchased
Shares and remit to the Company sufficient funds to cover the aggregate exercise
price payable for the purchased Shares and (ii) shall provide written directives
to the Company to deliver the certificates for the purchased Shares directly to
such brokerage firm in order to complete the sale transaction.

5.

Restrictions on Exercise.  The Option may not be exercised if the issuance of
the Shares subject to the Option upon such exercise would constitute a violation
of any Applicable Laws or if the Shares subject to the Option have not been
registered under the Securities Act of 1933 pursuant to an effective
Registration Statement on Form S-8.  Grantee acknowledges that the Company makes
no representation or warranty regarding the eligibility of the Option for
inclusion on a Registration Statement on Form S-8 or the likelihood that any
such Registration Statement on Form S-8 will be declared effective.  If the
exercise of the Option within the applicable time periods set forth in
Section 6, 7 and 8 of this Option Agreement is prevented by the provisions of
this Section 5, the Option shall remain exercisable until one (1) month after
the date the Grantee is notified by the Company that the Option is exercisable,
but in any event no later than the Expiration Date set forth in the Notice.

6.

Termination or Change of Continuous Service.  In the event the Grantee’s
Continuous Service terminates, other than for Cause, the Grantee may, but only
during the Post-Termination Exercise Period, exercise the portion of the Option
that was vested at the date of such termination (the “Termination Date”).  The
Post-Termination Exercise Period shall commence on the Termination Date.  In the
event of termination of the Grantee’s Continuous Service for Cause, the
Grantee’s right to exercise the Option shall, except as otherwise determined by
the Administrator, terminate concurrently with the termination of the Grantee’s
Continuous Service (also the “Termination Date”).  In no event, however, shall
the Option be exercised later than the Expiration Date set forth in the Notice.
 Except as provided in Sections 7 and 8 below, to the extent that the Option was
unvested on the Termination Date, or if the Grantee does not exercise the vested
portion of the Option within the Post-Termination Exercise Period, the Option
shall terminate.

7.

Disability of Grantee.  In the event the Grantee’s Continuous Service terminates
as a result of his or her Disability, the Grantee may, but only within twelve
(12) months commencing on the Termination Date (but in no event later than the
Expiration Date), exercise the portion of the Option that was vested on the
Termination Date.  To the extent that the Option was unvested on the Termination
Date, or if the Grantee does not exercise the vested portion of the Option
within the time specified herein, the Option shall terminate.  

8.

Death of Grantee.  In the event of the termination of the Grantee’s Continuous
Service as a result of his or her death, or in the event of the Grantee’s death
during the Post-Termination Exercise Period or during the twelve (12) month
period following the Grantee’s termination of Continuous Service as a result of
his or her Disability, the person who acquired the right to exercise the Option
pursuant to Section 9 may exercise the portion of the Option that was vested at
the date of termination within twelve (12) months commencing on the date of
death (but in no event later than the Expiration Date).  To the extent that the
Option was unvested on the date of death, or if the vested portion of the Option
is not exercised within the time specified herein, the Option shall terminate.

9.

Transferability of Option.  The Option may not be transferred in any manner
other than by will or by the laws of descent and distribution, provided,
however, that the Option may be transferred during the lifetime of the Grantee
to the extent and in the manner authorized by the Administrator.
 Notwithstanding the foregoing, the Grantee may designate one or more
beneficiaries of the Grantee’s Option in the event of the Grantee’s death on a
beneficiary designation form provided by the Administrator.  Following the death
of the Grantee, the Option, to the extent provided in Section 8, may be
exercised (a) by the person or persons designated under the deceased Grantee’s
beneficiary designation or (b) in the absence of an effectively designated
beneficiary, by the Grantee’s legal representative or by any person empowered to
do so under the deceased Grantee’s will or under the then applicable laws of
descent and distribution.  The terms of the Option shall be binding upon the
executors, administrators, heirs, successors and transferees of the Grantee.

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10.

Term of Option.  The Option must be exercised no later than the Expiration Date
set forth in the Notice or such earlier date as otherwise provided herein.
 After the Expiration Date or such earlier date, the Option shall be of no
further force or effect and may not be exercised.

11.

Tax Consequences.  The Grantee may incur tax liability related to the Option,
including as a result of the Grantee’s purchase or disposition of the Shares.
 THE GRANTEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR
DISPOSING OF THE SHARES.

12.

Entire Agreement: Governing Law.  The Notice, the Option Agreement and the
Executive Agreement constitute the entire agreement of the parties with respect
to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and the Grantee with respect to the
subject matter hereof, and may not be modified adversely to the Grantee’s
interest except by means of a writing signed by the Company and the Grantee.
 Nothing in the Notice and this Option Agreement (except as expressly provided
therein) is intended to confer any rights or remedies on any persons other than
the parties.  The Notice and this Option Agreement are to be construed in
accordance with and governed by the internal laws of the State of Colorado
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
Colorado to the rights and duties of the parties.  Should any provision of the
Notice or this Option Agreement be determined to be illegal or unenforceable,
such provision shall be enforced to the fullest extent allowed by law and the
other provisions shall nevertheless remain effective and shall remain
enforceable.  The Grantee acknowledges that Section 3(b)(iii) of the Executive
Agreement is null and void and that neither the Company nor any Related Entity,
nor any of their  Affiliates or Associates or service providers or agents, have
any obligation to Grantee under such former Section 3(b)(iii).

13.

Construction.  The captions used in the Notice and this Option Agreement are
inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.  Except when otherwise indicated by the context,
the singular shall include the plural and the plural shall include the singular.
 Use of the term “or” is not intended to be exclusive, unless the context
clearly requires otherwise.

14.

Adjustments Upon Changes in Capitalization.  Subject to any required action by
the stockholders of the Company and Section 17 hereof, the number of Shares
covered by the Option, the Exercise Price per Share, as well as any other terms
that the Administrator determines require adjustment shall be proportionately
adjusted for (i) any increase or decrease in the number of issued Shares
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Shares, or similar transaction affecting the Shares,
(ii) any other increase or decrease in the number of issued Shares effected
without receipt of consideration by the Company, or (iii) as the Administrator
may determine in its discretion, any other transaction with respect to Common
Stock including a corporate merger, consolidation, acquisition of property or
stock, separation (including a spin-off or other distribution of stock or
property), reorganization, liquidation (whether partial or complete) or any
similar transaction; provided, however that conversion of any convertible
securities of the Company shall not be deemed to have been “effected without
receipt of consideration.”  In the event of any distribution of cash or other
assets to stockholders other than a normal cash dividend, the Board shall also
make such adjustments as provided in this Section 14 or substitute, exchange or
grant an award to effect such adjustments (collectively “adjustments”).  Any
such adjustments to the Option will be effected in a manner that precludes the
enlargement of rights and benefits under the Option.  In connection with the
foregoing adjustments, the Administrator may, in its discretion, prohibit the
exercise of the Option or other issuance of Shares, cash or other consideration
pursuant to the Option during certain periods of time.  Such adjustment shall be
made by the Administrator and its determination shall be final, binding and
conclusive.  Except as the Administrator determines, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason hereof shall be made
with respect to, the number or price of Shares subject to the Option.

15.

Administration and Interpretation.  Any question or dispute regarding the
administration or interpretation of the Notice or this Option Agreement shall be
submitted by the Grantee or by the Company to the Administrator.  The resolution
of such question or dispute by the Administrator shall be final and binding on
all persons.  

16.

Venue.  The Company, the Grantee, and the Grantee’s assignees pursuant to
Section 9 (the “parties”) agree that any suit, action, or proceeding arising out
of or relating to the Notice or this Option Agreement shall be brought in the
United States District Court for the District of Colorado (or should such court
lack jurisdiction to hear such action, suit or proceeding, in a Colorado state
court) and that the parties shall submit to the jurisdiction of such court.  The
parties irrevocably waive, to the fullest extent permitted by law, any objection
the party may have to the laying of venue for any such suit, action or
proceeding brought in such court.  If any one or more provisions of this
Section 16 shall for any reason be held invalid or unenforceable, it is the
specific intent of the parties that such provisions shall be modified to the
minimum extent necessary to make it or its application valid and enforceable.

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17.

Corporate Transaction or Change in Control

(a)

Termination of Option to Extent Not Assumed in Corporate Transaction.  Effective
upon the consummation of the Corporate Transaction, the Option shall terminate
unless Assumed by the successor entity or its Parent.

(b)

Acceleration of Award Upon Corporate Transaction or Change in Control.  The
shares subject to the Option shall automatically vest in full upon a Change of
Control or Corporate Transaction.      

18.

Definitions.  As used herein, the following definitions shall apply:

(a)

“Administrator” means the Board or any of the Committees appointed to administer
this Option Agreement.

(b)

“Affiliate” and “Associate” shall have the respective meanings ascribed to such
terms in Rule 12b-2 promulgated under the Exchange Act.

(c)

“Applicable Laws” means the legal requirements applicable to the Option under
applicable provisions of federal securities laws, state corporate and securities
laws, the Code, the rules of any applicable stock exchange or national market
system, and the rules of any non-U.S. jurisdiction applicable to stock options
granted to residents therein.

(d)

“Assumed” means that pursuant to a Corporate Transaction either (i) the Option
is expressly affirmed by the Company or (ii) the contractual obligations
represented by the Option are expressly assumed (and not simply by operation of
law) by the successor entity or its Parent in connection with the Corporate
Transaction with appropriate adjustments to the number and type of securities of
the successor entity or its Parent subject to the Option and the exercise or
purchase price thereof which at least preserves the compensation element of the
Option existing at the time of the Corporate Transaction as determined in
accordance with the instruments evidencing the agreement to assume the Option.

(e)

“Board” means the Board of Directors of the Company.

(f)

“Cause” has the meaning set forth in the Executive Agreement.

(g)

“Change in Control” means a change in ownership or control of the Company
effected through either of the following transactions:

(i)

the direct or indirect acquisition by any person or related group of persons
(other than an acquisition from or by the Company or by a Company-sponsored
employee benefit plan or by a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) of beneficial
ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company’s outstanding securities pursuant to a tender or exchange offer made
directly to the Company’s stockholders which a majority of the Continuing
Directors who are not Affiliates or Associates of the offeror do not recommend
such stockholders accept, or

(ii)

a change in the composition of the Board over a period of thirty six (36) months
or less such that a majority of the Board members (rounded up to the next whole
number) ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who are Continuing Directors.  

(h)

“Code” means the Internal Revenue Code of 1986, as amended.

(i)

“Common Stock” means the common stock of the Company.

(j)

“Company” means General Cannabis Corp., a Colorado corporation, or any successor
entity that adopts this Option Agreement in connection with a Corporate
Transaction.

(k)

“Consultant” means any person (other than an Employee or a Director, solely with
respect to rendering services in such person’s capacity as a Director) who is
engaged by the Company or any Related Entity to render consulting or advisory
services to the Company or such Related Entity.  

(l)

“Continuing Directors” means members of the Board who either (i) have been Board
members continuously for a period of at least thirty-six (36) months or
(ii) have been Board members for less than thirty-six (36) months and were
elected or nominated for election as Board members by at least a majority of the
Board members described in clause (i) who were still in office at the time such
election or nomination was approved by the Board.

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(m)

“Continuous Status as an Employee, Director or Consultant” means that the
provision of services to the Company or a Related Entity in any capacity of
Employee, Director or Consultant, is not interrupted or terminated.  Continuous
Status as an Employee, Director or Consultant shall be deemed to have terminated
either upon an actual termination of Continuous Service or upon the entity for
which the Grantee provides services ceasing to be a Related Entity.  Continuous
Status as an Employee, Director or Consultant shall not be considered
interrupted in the case of (i) any approved leave of absence, (ii) transfers
between locations of the Company or among the Company, any Related Entity, or
any successor in any capacity of Employee, Director or Consultant or (iii) any
change in status as long as the Grantee remains in the service of the Company or
a Related Entity in any capacity of Employee, Director or Consultant.  An
approved leave of absence shall include sick leave, military leave, or any other
authorized personal leave.  

(n)

“Corporate Transaction” means any of the following transactions, provided,
however, that the Administrator shall determine under parts (iv) and (v) whether
multiple transactions are related, and its determination shall be final, binding
and conclusive:  

(i)

a merger or consolidation in which the Company is not the surviving entity,
except for a transaction the principal purpose of which is to change the state
in which the Company is incorporated;

(ii)

the sale, transfer or other disposition of all or substantially all of the
assets of the Company;

(iii)

the complete liquidation or dissolution of the Company;

(iv)

any reverse merger or series of related transactions culminating in a reverse
merger (including, but not limited to, a tender offer followed by a reverse
merger) in which the Company is the surviving entity but (A) the shares of
Common Stock outstanding immediately prior to such merger are converted or
exchanged by virtue of the merger into other property, whether in the form of
securities, cash or otherwise, or (B) in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Company’s
outstanding securities are transferred to a person or persons different from
those who held such securities immediately prior to such merger or the initial
transaction culminating in such merger, but excluding any such transaction or
series of related transactions that the Administrator determines shall not be a
Corporate Transaction; or

(o)

acquisition in a single or series of related transactions by any person or
related group of persons (other than the Company or by a Company-sponsored
employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3
of the Exchange Act) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Company’s outstanding securities but
excluding any such transaction or series of related transactions that the
Administrator determines shall not be a Corporate Transaction.

(p)

“Director” means a member of the Board.

(q)

“Disability” means as defined under the long-term disability policy of the
Company or the Related Entity to which the Grantee provides services regardless
of whether the Grantee is covered by such policy.  If the Company or the Related
Entity to which the Grantee provides service does not have a long-term
disability plan in place, “Disability” means that the Grantee is unable to carry
out the responsibilities and functions of the position held by the Grantee by
reason of any medically determinable physical or mental impairment for a period
of not less than ninety (90) consecutive days.  The Grantee will not be
considered to have incurred a Disability unless he or she furnishes proof of
such impairment sufficient to satisfy the Administrator in its discretion.

(r)

“Employee” means any person, including an Officer or Director, who is in the
employ of the Company or any Related Entity, subject to the control and
direction of the Company or any Related Entity as to both the work to be
performed and the manner and method of performance.  The payment of a director’s
fee by the Company or a Related Entity shall not be sufficient to constitute
“employment” by the Company.

(s)

“Executive Agreement” means the Executive of Board and Director Agreement
entered into between the Grantee and the Company, dated August 4, 2014, as may
be amended from time to time.  

(t)

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

(u)

“Fair Market Value” means, as of any date, the value of Common Stock determined
as follows:

(i)

If the Common Stock is listed on one or more established stock exchanges or
national market systems, including without limitation The NASDAQ Global Select
Market, The NASDAQ Global Market or The NASDAQ Capital Market of The NASDAQ
Stock Market LLC, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on the
principal exchange or system on which the Common Stock is listed (as determined
by the Administrator) on the date of determination (or, if no closing sales
price or closing bid was reported on that date, as applicable, on the last
trading date such closing sales price or closing bid was reported), as reported
in The Wall Street Journal or such other source as the Administrator deems
reliable;

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(ii)

If the Common Stock is regularly quoted on an automated quotation system
(including the OTC Bulletin Board) or by a recognized securities dealer, its
Fair Market Value shall be the closing sales price for such stock as quoted on
such system or by such securities dealer on the date of determination, but if
selling prices are not reported, the Fair Market Value of a share of Common
Stock shall be the mean between the high bid and low asked prices for the Common
Stock on the date of determination (or, if no such prices were reported on that
date, on the last date such prices were reported), as reported in The Wall
Street Journal or such other source as the Board deems reliable; or

(iii)

In the absence of an established market for the Common Stock of the type
described in (i) and (ii), above, the Fair Market Value thereof shall be
determined by the Administrator in good faith.

(v)

“Good Reason” has the meaning set forth in the Executive Agreement.

(w)

“Non-Qualified Stock Option” means an Option not intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

(x)

“Officer” means a person who is an officer of the Company or a Related Entity
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

(y)

“Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

(z)

“Release Condition” has the meaning set forth in the Executive Agreement.

(aa)

“Related Entity” means any Parent or Subsidiary of the Company.

(bb)

“Share” means a share of the Common Stock.

(cc)

 “Subsidiary” means a “subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Code.

END OF AGREEMENT

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EXHIBIT A

EXERCISE NOTICE

[Address]

1.

Exercise of Option.  Effective as of today, ______________, ___ the undersigned
(the “Grantee”) hereby elects to exercise the Grantee’s option to purchase
___________ shares of the Common Stock (the “Shares”) of General Cannabis Corp.
(the “Company”) under and pursuant to the Stock Option Award Agreement (the
“Option Agreement”) and Notice of Stock Option Award (the “Notice”) dated [•].
 Unless otherwise defined herein, the terms defined in the Notice or the Option
Agreement shall have the same defined meanings in this Exercise Notice.

2.

Representations of the Grantee.  The Grantee acknowledges that the Grantee has
received, read and understood the Notice and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.  

3.

Rights as Stockholder.  Until the stock certificate evidencing such Shares is
issued (as evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Shares, notwithstanding the exercise of the Option.  The Company shall issue (or
cause to be issued) such stock certificate promptly after the Option is
exercised.  No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in Section 14 of the Option Agreement.

4.

Delivery of Payment.  The Grantee herewith delivers to the Company the full
Exercise Price for the Shares, which, to the extent selected and permitted,
shall be deemed to be satisfied by use of the broker-dealer sale and remittance
procedure to pay the Exercise Price provided in Section 4(e) of the Option
Agreement.

5.

Tax Consultation.  The Grantee understands that the Grantee may suffer adverse
tax consequences as a result of the Grantee’s purchase or disposition of the
Shares.  The Grantee represents that the Grantee has consulted with any tax
consultants the Grantee deems advisable in connection with the purchase or
disposition of the Shares and that the Grantee is not relying on the Company for
any tax advice.

6.

Taxes.  The Grantee agrees to satisfy all applicable foreign, federal, state and
local income and employment tax withholding obligations and herewith delivers to
the Company the full amount of such obligations or has made arrangements
acceptable to the Company to satisfy such obligations.    

7.

Successors and Assigns.  The Company may assign any of its rights under this
Exercise Notice to single or multiple assignees, and this agreement shall inure
to the benefit of the successors and assigns of the Company.  This Exercise
Notice shall be binding upon the Grantee and his or her heirs, executors,
administrators, successors and assigns.

8.

Construction.  The captions used in this Exercise Notice are inserted for
convenience and shall not be deemed a part of this agreement for construction or
interpretation.  Except when otherwise indicated by the context, the singular
shall include the plural and the plural shall include the singular.  Use of the
term “or” is not intended to be exclusive, unless the context clearly requires
otherwise.

9.

Administration and Interpretation.  The Grantee hereby agrees that any question
or dispute regarding the administration or interpretation of this Exercise
Notice shall be submitted by the Grantee or by the Company to the Administrator.
 The resolution of such question or dispute by the Administrator shall be final
and binding on all persons.  

10.

Governing Law; Severability.  This Exercise Notice is to be construed in
accordance with and governed by the internal laws of the State of Colorado
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
Colorado to the rights and duties of the parties.  Should any provision of this
Exercise Notice be determined by a court of law to be illegal or unenforceable,
such provision shall be enforced to the fullest extent allowed by law and the
other provisions shall nevertheless remain effective and shall remain
enforceable.

11.

Notices.  Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery, upon deposit for
delivery by an internationally recognized express mail courier service or upon
deposit in the United States mail by certified mail (if the parties are within
the United States), with postage and fees prepaid, addressed to the other party
at its address as shown below beneath its signature, or to such other address as
such party may designate in writing from time to time to the other party.

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12.

Further Instruments.  The parties agree to execute such further instruments and
to take such further action as may be reasonably necessary to carry out the
purposes and intent of this agreement.

13.

Entire Agreement.  The Notice and the Option Agreement are incorporated herein
by reference and together with this Exercise Notice constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and the
Grantee with respect to the subject matter hereof, and may not be modified
adversely to the Grantee’s interest except by means of a writing signed by the
Company and the Grantee.  Nothing in the Notice, the Option Agreement and this
Exercise Notice (except as expressly provided therein) is intended to confer any
rights or remedies on any persons other than the parties.

Submitted by:

 

Accepted by:

 

 

 

GRANTEE:

 

GENERAL CANNABIS CORP.

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Title:

 

(Signature)

 

 

 

 

 

 

 

Address:

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

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