Document:

Exhibit 10.1

Exhibit 10.1

GENERAL CANNABIS CORP.

SECURITIES PURCHASE AGREEMENT

October 9, 2017

GENERAL CANNABIS CORP.

SECURITIES

PURCHASE AGREEMENT

This Securities Purchase Agreement (the “Agreement”) is made as of the 9th day of October 2017 by and between General Cannabis Corp., a Colorado corporation (the “Company”) and each of the purchasers listed on Schedule A attached to this Agreement (each a “Purchaser” and together the “Purchasers”).

RECITALS

The Company desires to issue and sell, and each Purchaser desires to purchase, the number of shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), set forth opposite such Purchaser’s name on Schedule A hereto, and warrants to purchase shares of the Company’s Common Stock (the “Warrants”), in substantially the form attached to this Agreement as Exhibit A. The Shares, the Warrants and the shares of Common Stock issuable upon exercise thereof are collectively referred to herein as the “Securities.” The Company is proposing to issue and sell (the “Offering”) up to 3,000,000 Units (as defined below).

AGREEMENT

In consideration of the mutual promises contained herein and other good and valuable consideration, receipt of which is hereby acknowledged, the parties to this Agreement agree as follows:

1.

Purchase and Sale of Common Stock and Warrants.

(a)

Subject to the terms and conditions of this Agreement, each Purchaser agrees to purchase at the Closing (as defined below) and the Company agrees to sell and issue to each Purchaser (i) the number of Shares set forth opposite such Purchaser’s name on Schedule A hereto and (ii) the number of Warrants set forth opposite such Purchaser’s name on Schedule A hereto, exercisable for the number of shares of Common Stock equal to 100% of the Common Stock purchased by such Purchaser pursuant to clause (i) above, at a per share exercise price equal to $0.50. Each Warrant shall be exercisable for a period of two (2) years after the Closing. The purchase price of each share of Common Stock purchased by a Purchaser together with a Warrant, each entitling the Purchaser to purchase one share of Common Stock (together, a “Unit”) shall be $1.00 per Unit. The total purchase price payable by each Purchaser shall be the amount set forth opposite such Purchaser’s name on Schedule A. The Company’s agreements with each of the Purchasers are separate agreements, and the sales of the Common Stock and Warrants to each of the Purchasers are separate sales.

2.

Closing; Delivery.

(a)

The purchase and sale of the Shares and Warrants shall take place remotely via the exchange of documents and signatures, or at such other place as the Company and the Purchasers mutually agree upon, orally or in writing, as soon as practicable following such time that the Purchasers have agreed to purchase at such closing an aggregate amount of Units equal to at least $250,000 (which time and place are designated as the “Initial Closing”). The Initial Closing shall occur by October 9, 2017 unless extended for a period of up to 60 days at the Company’s discretion. Officers, directors and their affiliates may purchase securities in the Offering and existing holders of debt may convert their indebtedness to purchase Common Stock and Warrants hereunder and such purchases may be counted towards the Initial Closing. In the event there is more than one closing, the term “Closing” shall apply to each such closing, unless otherwise specified herein.

(i)

At each Closing, the Company shall deliver to each Purchaser Common Stock and Warrants to be purchased by such Purchaser against (A) payment of the purchase price therefor by check payable to the Company, by wire transfer to a bank designated by the Company, cancellation of indebtedness, or any combination thereof and (B) delivery of counterpart signature pages to this Agreement. In the event that payment by a Purchaser is made, in whole or in part, by cancellation of indebtedness, then such Purchaser shall surrender to the Company for cancellation at such Closing any evidence of such indebtedness or shall execute an instrument of cancellation in form and substance acceptable to the Company. In addition, at such Closing the Company shall deliver to any Purchaser choosing to pay any part of the purchase price of the Units by cancellation of indebtedness, a check in the amount of any interest accrued on such indebtedness through such Closing.

(ii)

Until such time as the aggregate proceeds from the Offering equal a total of three million dollars ($3,000,000.00), the Company may sell additional Units to such persons or entities as determined by the Company, or to any Purchaser who desires to acquire additional Units. All such sales shall be made on the terms and conditions set forth in this Agreement. The Company, in its sole discretion, shall determine the time and place of each Closing subsequent to the Initial Closing. For purposes of this Agreement, and all other agreements contemplated hereby, any additional purchaser so acquiring Units shall be deemed to be a “Purchaser” for purposes of this Agreement, and any shares of common stock and warrants so acquired by such additional purchaser shall be deemed to be “Common Stock,” “Warrants” and “Securities,” as applicable.

3.

Representations and Warranties of the Company. The Company hereby represents and warrants to each Purchaser that, as of the date hereof and except as set forth on a Schedule of Exceptions delivered separately by the Company to each Purchaser, which exceptions shall be deemed to be representations and warranties as if made hereunder:

(a)

Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado and has all requisite corporate power and authority to carry on its business as described in the Company’s public filings with the Securities and Exchange Commission (the “Commission”). The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect on its business or properties.

(b)

Capitalization. The authorized capital of the Company consists, or will consist immediately prior to the Initial Closing, of

(i)

Common Stock: 100,000,000 shares of Common Stock, par value $0.001 per share, of which 20,851,815 shares are issued and outstanding.

(ii)

Valid Issuance.  The outstanding shares of Common Stock are all duly and validly authorized and issued, fully paid and nonassessable, and were issued in accordance with the registration or qualification provisions of the Securities Act of 1933, as amended (the “Act”), and any relevant state securities laws, or pursuant to valid exemptions therefrom.

(iii)

Other Rights. Except for (A) the exercise provisions of the Warrants, (B)  the exercise provisions of the warrants issued pursuant to a promissory note and warrant purchase agreement dated, September 21, 2016 (the “2016 Purchase Agreement”), and (C) currently outstanding options to purchase 8,537,450 shares of Common Stock granted pursuant to the Company’s 2014 Equity Incentive Plan (the “Incentive Plan”), there are 2,734,200 warrants for the purchase from the Company of shares of Common Stock, and a commitment to issue 224,359 shares of Common Stock upon the completion of a vesting period ending August 21, 2018. Prior to or concurrent with the Initial Closing, the Company has reserved an aggregate of 10,000,000 shares of Common Stock for issuance upon exercise of options pursuant to the Incentive Plan; from this reserve, the Company has issued 490,450 shares of Common Stock upon exercise of options.  After taking into account the aforementioned currently outstanding options granted under the Incentive Plan and the shares of Common Stock issued upon exercise of options granted under the Incentive Plan, there remains an additional 972,100 shares of Common Stock reserved for issuance upon exercise of options to be granted in the future pursuant to the Incentive Plan.  The Company is not a party or subject to any agreement or understanding, and, to the Company’s knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company.

(c)

Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder, and the authorization, issuance (or reservation for issuance), sale and delivery of the Common Stock and Warrants being sold hereunder and the Common Stock issuable upon exercise of the Warrants has been taken or will be taken prior to the Initial Closing. This Agreement and the Warrants, when executed and delivered by the Company, shall constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

(d)

Valid Issuance of Common Stock and Warrant Shares. The shares of Common Stock that are being purchased by the Purchasers hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and under applicable state and federal securities laws or liens or encumbrances created by or imposed by a Purchaser.  The Common Stock issuable upon exercise of the Warrants purchased hereunder has been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Warrant, will be duly and validly issued, fully paid, and nonassessable and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and under applicable state and federal securities laws or liens or encumbrances created by or imposed by a Purchaser.

(e)

Effect of Agreement. The execution, delivery and performance by the Company of this Agreement and the Warrants, will not violate the charter documents, bylaws or formation documents of the Company or any law to which the Company is subject, or any judgment, award or decree or any material indenture, material agreement or other material instrument to which the Company is a party, or by which the Company or its properties or assets are bound, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under, any such indenture, agreement or other instrument, or result in the creation or imposition of any lien of any nature whatsoever upon any of the properties or assets of the Company, except to the extent the effect thereof will not be materially adverse to the Company’s ability to fulfill its obligations under this Agreement and the Warrants.

(f)

Legal Proceedings. There is no order or action pending, or, to the knowledge of the Company, threatened against or affecting the Company in connection with the Company’s performance hereunder. There is no matter as to which the Company, or, to the knowledge of the Company, any affiliate of the Company has received any notice, claim or assertion which otherwise has been threatened against or affecting the Company in connection with its performance hereunder.

4.

Covenants of the Company and the Purchasers.

(a)

The Company agrees to file with the Commission as soon as reasonably practicable following the date of this Agreement a registration statement on Form S-1 or such other form under the Act then available to the Company (the “Registration Statement”) providing for the resale of the shares of Common Stock purchased hereunder, including any shares of Common Stock issuable upon exercise of the Warrants (collectively, the “Registrable Securities”). The Company shall use its commercially reasonable efforts to cause such Registration Statement to be declared effective by the Commission as soon as practicable after the initial filing thereof (but in no event later than March 31, 2018). Any Registration Statement shall provide for the resale from time to time, and pursuant to any method or combination of methods legally available by the Purchasers of any and all Registrable Securities. The Company shall use its commercially reasonable efforts to maintain the effectiveness of the Registration Statement; provided, however, that failure to do so shall not constitute a breach under this Section 4. 

(b)

The Company shall pay all registration expenses in connection with the registration of the Registrable Shares pursuant to this Agreement. Each Purchaser participating in a registration pursuant to this Section 4 shall bear such Purchaser’s proportionate share (based on the total number of Registrable Shares sold in such registration) of all discounts and commissions payable to underwriters or brokers and all transfer taxes and transfer fees in connection with a registration of Registrable Shares pursuant to this Agreement.

(c)

If the Company’s Registration Statement registering the resale of the Registrable Shares does not become effective on or prior to March 31, 2018, other than as a result of the Commission being unable to accept such filings, then each Purchaser’s sole remedy shall be to receive an additional Warrant from the Company on substantially the same terms and conditions. For the avoidance of doubt, such additional Warrant shall be exercisable for the number of shares of Common Stock equal to 100% of the Common Stock purchased by such Purchaser pursuant Section 1(a)(i) of this Agreement.

(d)

It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 4 with respect to Registrable Securities of any selling Purchaser that such selling Purchaser shall furnish to the Company such information as reasonably requested by the Company to effect the registration of such Purchaser’s Registrable Securities, including information regarding such selling Purchaser, the Registrable Securities held by it, and the intended method of disposition, as well as in connection with any sale of Registrable Securities by the Purchasers.

5.

Representations and Warranties of the Purchasers. Each Purchaser hereby represents and warrants to the Company that:

(a)

Authorization. Such Purchaser has full power and authority to enter into this Agreement. This Agreement, when executed and delivered by the Purchaser, will constitute a valid and legally binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of a specific performance, injunctive relief, or other equitable remedies.

(b)

Purchase Entirely for Own Account. This Agreement is made with the Purchaser in reliance upon the Purchaser’s representation to the Company, which by the Purchaser’s execution of this Agreement, the Purchaser hereby confirms, that the Securities to be acquired by the Purchaser will be acquired for investment for the Purchaser’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Securities. The Purchaser has not been formed for the specific purpose of acquiring any of the Securities.

(c)

Knowledge. The Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities.

(d)

Restricted Securities. Purchaser understands that the Securities have not been registered under the Act by reason of a specific exemption from the registration provisions of the Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Securities are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold the Securities indefinitely unless they are registered with the Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company’s obligation to register or qualify the Securities for resale is limited to the registration rights provided to Purchasers pursuant to this 

Agreement. The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Securities, and on requirements relating to the Company which are outside of the Purchaser’s control, and which the Company is under no obligation and may not be able to satisfy.

(e)

No Public Market. The Purchaser understands that there is no public market now for Warrants and only a limited market exists for the Company’s Common Stock and the Company has made no assurances that a significant public market will ever exist for the Warrants.

(f)

Legends. The Purchaser understands that the Securities, and any securities issued in respect thereof or exchange therefor, may bear one or all of the following legends:

(i)

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

(ii)

Any legend required by the Blue Sky laws of any state to the extent such laws are applicable to the shares represented by the certificate so legended.

(g)

Accredited Investor. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act and has completed the investor questionnaire attached as Schedule B.

6.

Conditions of the Purchasers’ Obligations at Closing. The obligations of each Purchaser to the Company under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived:

(a)

Representations, Warranties and Covenants. The representations and warranties of the Company contained in Section 3 (including those incorporated by reference) shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing and the Company shall have complied with all covenants in this Agreement as of or prior to the Closing.

(b)

Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Securities pursuant to this Agreement shall be obtained and effective as of the Closing.

7.

Conditions of the Company’s Obligations at Closing. The obligations of the Company to each Purchaser under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived:

(a)

Representations, Warranties and Covenants. The representations and warranties of each Purchaser contained in Section 4 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing and the Purchaser shall have complied with all covenants in this Agreement as of or prior to the Closing.

(b)

Payment of Purchase Price.  The Purchaser shall have delivered the purchase price specified in Section 1 for the number of shares of Common Stock and Warrants to purchase shares of Common Stock set forth opposite such Purchaser’s name on Schedule A hereto.

(c)

Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Securities pursuant to this Agreement shall be obtained and effective as of the Closing.

8.

Miscellaneous and Other Covenants.

(a)

Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

(b)

Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Colorado without giving effect to principles of conflicts of law.

(c)

Counterparts. This Agreement may be executed in two or more counter­parts, each of which shall be deemed an original and all of which together shall constitute one instrument.

(d)

Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

(e)

Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service or confirmed electronic mail or facsimile, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, if such notice is addressed to the party to be notified at such party’s address or facsimile number as set forth below or as subsequently modified by written notice. The Company covenants that in the event that any Purchaser gives notice of their exercise of the Warrants, the Company will promptly notify all other Purchasers of such exercise.

(f)

Finder’s Fee. Each party represents that it neither is nor will be obligated for any finder’s fee or commission in connection with this transaction. Each Purchaser agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder’s fee (and the costs and expenses of defending against such liability or asserted liability) for which each Purchaser or any of its officers, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless each Purchaser from any liability for any commission or compensation in the nature of a finder’s fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

(g)

Amendments and Waivers. 

(i)

Any term of this Agreement may be amended or waived only with the written consent of the Company and the holders of at least a majority of the Common Stock to be purchased hereunder. Any amendment or waiver effected in accordance with this Section 7(g) shall be binding upon each Purchaser and each transferee of the Securities, each future holder of all such Securities, and the Company.

(ii)

Each Purchaser holding Series B Warrants issued pursuant to the 2016 Purchase Agreement by executing and delivering this Agreement irrevocably waives, and agrees to cause any future transferee of the Series B Warrants to waive, its right pursuant to Section 7 of the Series B Warrants to have an adjustment made to the Exercise Price (as defined in the Series B Warrants) as a result of the issuance of the Units. For the avoidance of doubt any adjustment to the Exercise Price so waived shall not be included in any calculations of a future adjustment pursuant to Section 12 of the Series B Warrants.   

(h)

Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith, in order to maintain the economic position enjoyed by each party as close as possible to that under the provision rendered unenforceable. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

(i)

Entire Agreement. This Agreement, and the Exhibits hereto and the other documents referred to herein and therein constitute the entire agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements existing between the parties hereto are expressly canceled.

(j)

Exculpation Among Purchasers. Each Purchaser acknowledges that it is not relying upon any person, firm or corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. Each Purchaser agrees that no Purchaser nor the respective controlling persons, officers, directors, partners, agents, or employees of any Purchaser shall be liable for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the Securities.

(k)

Expenses. Each of the Parties shall be responsible for their respective expenses and costs incurred in connection with the negotiation, documentation and execution of this Agreement and the other agreements, and documents contemplated herein and therein. 

The parties have executed this Securities Purchase Agreement as of the date first written above.

					
	 
	COMPANY:

	 
	 

	 
	GENERAL CANNABIS CORP.:

	 
	 
	 

	 
	 
	 

	 
	By:

	 

	 
	 
	 

	 
	 
	 

	 
	Address:

	6565 E. Evans Avenue

	 
	 
	Denver, Colorado 80224

	 
	 
	 

	 
	Facsimile:

	(303) 997-1972

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	PURCHASER:

	 
	 

	 
	Name of Purchaser:

	 
	 
	 

	 
	 
	 
	 

	 
	 
	 

	 
	By:

	 

	 
	 
	 

	 
	 
	Name:

	 

	 
	 
	Title:

	 

	 
	 
	 

	 
	 
	 

	 
	Address:

	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	Facsimile:

	 

	 
	 
	 

	 
	Email:

	 

	 
	 
	 

SCHEDULE A

SCHEDULE OF PURCHASERS

Closing Dated October 9, 2017

						
	 
	 
	 
	 
	Consideration to be

Paid at Closing

	Name

	Number of

Shares

	Number of

Warrant Shares

	Purchase Price

	Amount of Debt Cancelled

	Cash

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	TOTALS

	 
	 
	 
	 
	 

SCHEDULE B

FORM OF INVESTOR QUESTIONNAIRE

GENERAL CANNABIS CORP.

For Individual Investors Only

(All individual investors must INITIAL where appropriate. Where there are joint investors both parties must INITIAL):

				
	Initial

	 
	 
	I certify that I have a “net worth” of at least $1 million either individually or through aggregating my individual holdings and those in which I have a joint, community property or other similar shared ownership interest with my spouse. For purposes of calculating net worth under this paragraph, (i) the primary residence shall not be included as an asset, (ii) to the extent that the indebtedness that is secured by the primary residence is in excess of the fair market value of the primary residence, the excess amount shall be included as a liability, and (iii) if the amount of outstanding indebtedness that is secured by the primary residence exceeds the amount outstanding 60 days prior to the execution of this Agreement, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability.

	 

	 

	 

	 

	 

	 

	 

	 
	 
	 
	 

	Initial

	 
	 
	I certify that I have had an annual gross income for the past two years of at least $200,000 (or $300,000 jointly with my spouse) and expect my income (or joint income, as appropriate) to reach the same level in the current year.

	 

	 

For Non-Individual Investors

(all Non-Individual Investors must INITIAL where appropriate):

				
	Initial

	 
	 
	The undersigned certifies that it is a partnership, corporation, limited liability company or business trust that is 100% owned by persons who meet either of the criteria for Individual Investors, above.

	 

	 
	 
	 
	 

	Initial

	 
	 
	The undersigned certifies that it is a partnership, corporation, limited liability company or business trust that has total assets of at least $5 million and was not formed for the purpose of investing in Company.

	 

	 
	 
	 
	 

	Initial

	 
	 
	The undersigned certifies that it is an employee benefit plan whose investment decision is made by a plan fiduciary (as defined in ERISA §3(21)) that is a bank, savings and loan association, insurance company or registered investment adviser.

	 

	 

	 
	 
	 
	 

	Initial

	 
	 
	The undersigned certifies that it is an employee benefit plan whose total assets exceed $5,000,000 as of the date of the Agreement.

	 

	 
	 
	 
	 

	Initial

	 
	 
	The undersigned certifies that it is a self-directed employee benefit plan whose investment decisions are made solely by persons who meet either of the criteria for Individual Investors, above.

	 

	 
	 
	 
	 

	Initial

	 
	 
	The undersigned certifies that it is a U.S. bank, U.S. savings and loan association or other similar U.S. institution acting in its individual or fiduciary capacity.

	 

	 
	 
	 
	 

	Initial

	 
	 
	The undersigned certifies that it is a broker-dealer registered pursuant to §15 of the Securities Exchange Act of 1934.

	 
	 
	 
	 

	Initial

	 
	 
	The undersigned certifies that it is an organization described in §501(c)(3) of the Internal Revenue Code with total assets exceeding $5,000,000 and not formed for the specific purpose of investing in Company.

	 

	 
	 
	 
	 

	Initial

	 
	 
	The undersigned certifies that it is a trust with total assets of at least $5,000,000, not formed for the specific purpose of investing in Company, and whose purchase is directed by a person with such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.

	 

	 

	 

	 
	 
	 
	 

	Initial

	 
	 
	The undersigned certifies that it is a plan established and maintained by a state or its political subdivisions, or any agency or instrumentality thereof, for the benefit of its employees, and which has total assets in excess of $5,000,000.

	 

	 

	 
	 
	 
	 

	Initial

	 
	 
	The undersigned certifies that it is an insurance company as defined in §2(a)(13) of the Securities Act of 1933, as amended, or a registered investment company.

	 

SCHEDULE B-1

GENERAL CANNABIS CORP.

Investor Questionnaire

(Must be completed by Purchaser)

Section A - Individual Purchaser Information

Purchaser Name(s): ________________________________________________________________________

Individual executing Profile or Trustee: _________________________________________________________

Social Security Numbers / Federal I.D. Number: _______________________________________________________________________________________

Date of Birth: _________________ Marital Status: _________________

Joint Party Date of Birth:_________________

Investment Experience (Years): ___________

Annual Income: _________________

Net Worth: ________________

Home Street Address: ________________________________________________________________________

Home City, State & Zip Code: __________________________________________________________________

Home Phone: ________________________ Home Fax: _____________________

Home Email: _______________________________

Employer: _________________________________________________________________________________

Employer Street Address: _____________________________________________________________________

Employer City, State & Zip Code: _______________________________________________________________

Bus. Phone: __________________________ Bus. Fax: _______________________

Bus. Email: ________________________________

Type of Business: ________________________________________________________________________

Please check if you are a FINRA member or affiliate of a FINRA member firm: _______

Section B – Entity Purchaser Information

Purchaser Name(s): ________________________________________________________________________

Authorized Individual executing Profile or Trustee: _______________________________________________________________________

Social Security Numbers / Federal I.D. Number: _______________________________________________________________________

Investment Experience (Years): ___________

Annual Income: _______________

SCHEDULE B-2

Net Worth: ________________

Was the Trust formed for the specific purpose of purchasing the Units?

[ ] Yes [ ] No

Principal Purpose (Trust)___________________________________________________

Type of Business: ________________________________________________________

Street Address: __________________________________________________________

City, State & Zip Code: ____________________________________________________

Phone: ________________________ Fax: ________________________

Email: __________________________

Section C – Form of Payment – Check or Wire Transfer

____ Check payable to “GENERAL CANNABIS CORP.”

____ Wire funds from my outside account according to the “To subscribe for Units of Common Stock and Warrants to Purchase Shares of Common Stock in the private offering of GENERAL CANNABIS CORP.”

Section E – Securities Delivery Instructions (check one)

____ Please deliver my securities to the address listed in the above Investor Questionnaire.

____ Please deliver my securities to the below address:

______________________________________

______________________________________

______________________________________

______________________________________

			
	Purchaser Signature

	 
	Date

	 
	 
	 

	 
	 
	 

SCHEDULE B-3

Exhibit A 

Form of WarrantExhibit 10.2

Exhibit 10.2

NEITHER THIS WARRANT NOR THE SECURITIES FOR WHICH THIS WARRANT IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

		
	Warrant 2017-N-__

	Issue Date: October [•], 2017

GENERAL CANNABIS CORP.

SERIES 2017 WARRANT

TO PURCHASE SHARES OF COMMON STOCK

THIS Series 2017 WARRANT (the “Warrant”) certifies that, for value received, ________________ or his assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business of the twenty-fourth (24th) month after the Initial Exercise Date (the “Expiration Date”) but not thereafter, to subscribe for and purchase from General Cannabis Corp., a Colorado corporation, (the “Company”), up to [ ] shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s $0.001 par value common stock, (“Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to $0.50 per share, subject to adjustment hereunder (the “Exercise Price”).

1.

The Holder may exercise this Warrant, in whole or in part, upon surrender of this Warrant, with the exercise form annexed hereto duly executed, at the office of the Company, or such other office as the Company shall notify the Holder in writing, together with a certified or bank cashier's check payable to the order of the Company in the amount of the Exercise Price multiplied by the number of shares of Common Stock being purchased.

2.

“Principal Market” shall include the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTCQB (or any successors to any of the foregoing) (whichever is at the time the principal trading exchange or market for the Common Stock), or any securities exchange or other securities market on which the Common Stock is then being listed, quoted or traded. The Company will from time to time take all action which may be necessary so that the Warrant Shares, immediately upon their issuance upon the exercise of the Warrant, will be listed on the Principal Market on which other shares of Common Stock are then listed, if any.

Pursuant to Section 4 of the Securities Purchase Agreement, dated as of October [•], 2017, the Company has agreed to file with the Securities and Exchange Commission a registration statement on Form S-1 or such other form under the Securities Act of 1933, as amended (the “Securities Act”), providing for the resale of the Warrant Shares and any shares of capital stock or other securities issued or issuable with respect to this Warrant, as a result of any stock split, stock dividend, recapitalization, exchange, or similar event or otherwise.

3.

The person or persons in whose name or names any certificate representing Common Stock is issued hereunder shall be deemed to have become the holder of record of the Common Stock represented thereby as of the close of business on the date on which this Warrant is exercised with respect to such shares, whether or not the transfer books of the Company shall be closed. Until such time as this Warrant is exercised or terminates, the Exercise Price payable and the number and character of securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter provided.

4.

The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 1 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Form of Exercise (attached hereto as Exhibit A), the Holder (together with the Holder’s affiliates, and any other person or entity acting as a group together with the Holder or any of the Holder’s affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock equivalents), subject to a limitation on conversion or exercise analogous to the limitation contained herein, beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this 

Section 4, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 4 applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Form of Exercise (attached hereto as Exhibit A) shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. Upon the written or oral request of a Holder, the Company shall within two trading days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 4 by an amount determined by the Holder in its sole discretion. Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4 to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

5.

The Company covenants that it will at all times reserve and keep available a number of its authorized Common Stock, free from all preemptive rights, which will be sufficient to permit the exercise of this Warrant. The Company further covenants that such shares as may be issued pursuant to the exercise of this Warrant will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens, and charges. Unless previously exercised, this Warrant shall expire at 5:00 p.m. Eastern Standard Time, on the Expiration Date and shall be void thereafter or can be extended at the Company’s discretion.

6.

In the event that the Common Stock closes at a price of at least $5.00 per share for 10 consecutive trading days, the Company may give the Holder notice of the Company’s intention to redeem this Warrant. During the 10 day period following such notice, the Holder may exercise such Warrant. Following such 10 day period, the Company shall pay the Holder a price of $.01 per share that this Warrant is exercisable for and the Holder shall have no further right to exercise this Warrant. 

7.

In order to prevent dilution of the purchase rights granted under this Warrant, the Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 7 (in each case, after taking into consideration any prior adjustments pursuant to this Section 7).

(a)

If the Company shall, at any time or from time to time after the Initial Exercise Date, issue or sell, or is deemed to have issued or sold, any shares of Common Stock without consideration or for consideration per share less than the Exercise Price in effect immediately prior to such issuance or sale (or deemed issuance or sale), then immediately upon such issuance or sale (or deemed issuance or sale), the Exercise Price in effect immediately prior to such issuance or sale (or deemed issuance or sale) shall be reduced (and in no event increased) to an Exercise Price equal to the lowest price per share at which any such share of Common Stock has been issued or sold (or is deemed to have been issued or sold); provided, that if such issuance or sale (or deemed issuance or sale) was without consideration, then the Company shall be deemed to have received an aggregate of $0.01 of consideration for all such shares so issued or deemed to be issued. This section shall not be applicable to any issuance of options issued pursuant to the Company’s existing stock option plan.

8.

If the Company subdivides its outstanding Common Stock, by split-up or otherwise, or combines its outstanding Common Stock, the Exercise Price then applicable to shares covered by this Warrant shall forthwith be proportionately decreased in the case of a subdivision, or proportionately increased in the case of a combination.

9.

This Warrant shall terminate, if not earlier exercised, in the event of an Acquisition (as defined herein).  In the event the Company is proposed to be acquired, the Company shall provide the Holder with all information with respect to the Acquisition that is otherwise provided to shareholders of the Company at such time and from time to time during the pendency of the Acquisition, including (but not limited to) the proposed price to be paid in the proposed Acquisition.  The Holder shall have the right to exercise this Warrant on or prior to the closing date with respect to the proposed Acquisition; if the Warrant is not exercised on or prior to such closing date, the Warrant shall expire upon the occurrence of the closing of the Acquisition. For the purpose of this Warrant, “Acquisition” means any sale or other disposition of all or substantially all of the assets of the Company, or any reorganization, consolidation, or merger of the Company where the holders of the Company’s securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction.

10.

If a voluntary or involuntary dissolution, liquidation or winding up of the Company (other than in connection with a merger or consolidation of the Company) is at any time proposed during the term of this Warrant, the Company shall give written notice to the Holder at least ten calendar days prior to the record date of the proposed transaction. The notice shall contain: (1) the date on which the transaction is to take place; (2) the record date (which must be at least ten days after the giving of the notice) as of which holders of the Common Stock entitled to receive distributions as a result of the transaction shall be determined; (3) a brief description of the transaction; (4) a brief description of the distributions, if any, to be made to holders of the Common Stock as a result of the transaction; and (5) an estimate of the fair market value of the distributions. On the date of the transaction, if it actually occurs, this Warrant and all rights existing under this Warrant shall terminate.

11.

In no event shall any fractional share of Common Stock of the Company be issued upon any exercise of this Warrant. If, upon exercise of this Warrant as an entirety, the Holder would, except as provided in this Section 11, be entitled to receive a fractional share of Common Stock, then the Company shall issue the next higher number of full Common Stock, issuing a full share with respect to such fractional share. If this Warrant is exercised at one time for less than the maximum number of Common Stock purchasable upon the exercise hereof, the Company shall issue to the Holder a new warrant of like tenor and date representing the number of Common Stock equal to the difference between the number of shares purchasable upon full exercise of this Warrant and the number of shares that were purchased upon the exercise of this Warrant.

12.

No adjustments in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least five cents in such price, provided however, that any adjustments which by reason of this Section 12 are not required to be made shall be carried forward and taken into account in any subsequent adjustment.

13.

Whenever the Purchase Price is adjusted, as herein provided, the Company shall promptly deliver to the Holder a certificate setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

14.

If at any time prior to the expiration or exercise of this Warrant, the Company shall pay any dividend or make any distribution upon its Common Stock or shall make any subdivision or combination of, or other change in its Common Stock, the Company shall cause notice thereof to be mailed, first class, postage prepaid, to Holder at least ten calendar days prior to the record date set for determining the holders of Common Stock who shall participate in such dividend, distribution, subdivision, combination or other change. Such notice shall also specify the record date as of which holders of Common Stock who shall participate in such dividend or distribution is to be determined. Failure to give such notice, or any defect therein, shall not affect the legality or validity of any dividend or distribution.

15.

The Company will maintain a register containing the names and addresses of the Holder and any assignees of this Warrant. Holder may change its address as shown on the warrant register by written notice to the Company requesting such change. Any notice or written communication required or permitted to be given to the Holder may be delivered by confirmed facsimile or telecopy or by a recognized overnight courier, addressed to Holder at the address shown on the warrant register.

16.

This Warrant has not been registered under the Securities Act or any state securities laws (“State Acts”) or regulations in reliance upon exemptions under the Securities Act, and exemptions under the State Acts. Subject to compliance with the Securities Act and State Acts, this Warrant and all rights hereunder are transferable in whole or in part, at the office of the Company at which this Warrant is exercisable, upon surrender of this Warrant together with the assignment hereof properly endorsed.

17.

In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company may issue a new warrant of like tenor and denomination and deliver the same (a) in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or (b) in lieu of any Warrant lost, stolen, or destroyed, upon receipt of evidence satisfactory to the Company of the loss, theft or destruction of such Warrant (including a reasonably detailed affidavit with respect to the circumstances of any loss, theft, or destruction) and of indemnity with sufficient surety satisfactory to the Company.

18.

Unless a current registration statement under the Securities Act, shall be in effect with respect to Common Stock to be issued upon exercise of this Warrant, the Holder, by accepting this Warrant, covenants and agrees that, at the time of exercise hereof, and at the time of any proposed transfer of Common Stock acquired upon exercise hereof, the Company may require Holder to make such representations, and may place such legends on certificates representing Common Stock issuable upon exercise of this Warrant, as may be reasonably required in the opinion of counsel to the Company to permit such Common Stock to be issued without such registration.

19.

This Warrant does not entitle Holder to any of the rights of a stockholder of the Company.

20.

Nothing expressed in this Agreement and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties to this Agreement any covenant, condition, stipulation, promise, or agreement contained herein, and all covenants, conditions, stipulations, promises and agreements contained herein shall be for the sole and exclusive benefit of the parties hereto and their respective successors and assigns.

21.

The provisions and terms of this Warrant shall be construed in accordance with the laws of the State of Colorado.

[SIGNATURE PAGE TO FOLLOW]

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

			
	 
	GENERAL CANNABIS CORP.:

	 
	 
	 

	 
	By:

	 

	 
	 
	Name:

	 
	 
	Title:

EXHIBIT A

FORM OF EXERCISE

Date: ____________________

To: GENERAL CANNABIS CORP./[TRANSFER AGENT]

The undersigned hereby subscribes for _______ shares of common stock of General Cannabis Corp. covered by this Warrant and hereby delivers $___________ in full payment of the purchase price.

The certificate(s) for such shares should be issued in the name of the undersigned or as otherwise indicated below:

 

		
	 
	 

	 

	 

	 

	Signature:

	 

	 

	 

	 

	 

	Printed Name

	 

	 

	 

	 

	 

	Name for Registration, if different

	 

	 

	 

	 

	 

	Street Address

	 

	 

	 

	 

	 

	City, State and Zip Code

	 

	 

	 

	 

	 

	Social Security Number

EXHIBIT B

FORM OF ASSIGNMENT

For Value Received, the undersigned hereby sells, assigns and transfers unto the assignee(s) set forth below the within Warrant certificate of General Cannabis Corp.; together with all right, title and interest therein, and hereby irrevocably constitutes and appoints ___________________________________ attorney, to transfer the said Warrant on the books of the within-named Company with respect to the number of Common Stock set forth below, with full power of substitution in the premises.

 

							
	Name(s) of

Assignee(s)

	 

	Social Security or other Identifying Number(s) of Assignee(s)

	 

	Address

	 

	No. of Shares

	 

	 

	 

	 

	 

	 

	 

Dated: ______________________________

		
	 

	 

	 

	Signature

	 

	 

	 

	NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE WARRANT IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATSOEVER.

	 

	 

	 

	 

	 

	Print Name and Title

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