Document:

ex_158483.htm

Exhibit 4.2

 

FIRST SUPPLEMENTAL INDENTURE

 

Dated as of September 26, 2019

 

To

 

INDENTURE

 

Dated as of September 26, 2019

 

 

 

 

 

6.875% SENIOR NOTES DUE 2029

 

 

 

 

 

JMP GROUP LLC,

 

as the Company,

 

and

 

U.S. BANK NATIONAL ASSOCIATION,

 

as Trustee

 

 

 

 

TABLE OF CONTENTS

 

Page

 

	
			ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE

				
			1

			
	
			Section 1.1

				
			Relationship with Base Indenture

				
			1

			
	
			Section 1.2

				
			Definitions

				
			2

			
	 	 	 
	
			ARTICLE 2 THE NOTES

				
			3

			
	
			Section 2.1

				
			Form and Dating

				
			3

			
	
			Section 2.2

				
			Issuance of Additional Notes

				
			4

			
	 	 	 
	
			ARTICLE 3 REDEMPTION AND PREPAYMENT

				
			4

			
	
			Section 3.1

				
			Notice of Redemption; Selection of Notes

				
			4

			
	
			Section 3.2

				
			Optional Redemption

				
			4

			
	
			Section 3.3

				
			Mandatory Redemption

				
			4

			
	 	 	 
	
			ARTICLE 4 DEFEASANCE AND COVENANT DEFEASANCE

				
			5

			
	
			Section 4.1

				
			Defeasance and Covenant Defeasance

				
			5

			
	 	 	 
	
			ARTICLE 5 REMEDIES

				
			6

			
	
			Section 5.1

				
			Events of Default

				
			6

			
	
			Section 5.2

				
			References to Section 5 of the Indenture

				
			7

			
	
			Section 5.3

				
			Acceleration of Maturity; Rescission and Annulment

				
			7

			
	 	 	 
	
			ARTICLE 6 TRUSTEE

				
			8

			
	
			Section 6.1

				
			Notice of Defaults

				
			8

			
	 	 	 
	
			ARTICLE 7 REPORTS BY COMPANY

				
			9

			
	
			Section 7.1

				
			Reports by Company

				
			9

			
	 	 	 
	
			ARTICLE 8 SUPPLEMENTAL INDENTURES

				
			9

			
	
			Section 8.1

				
			Supplemental Indentures without Consent of Holders

				
			9

			
	
			Section 8.2

				
			Supplemental Indentures with Consent of Holders

				
			10

			
	 	 	 
	
			ARTICLE 9 MISCELLANEOUS

				
			11

			
	
			Section 9.1

				
			Trust Indenture Act Controls

				
			11

			
	
			Section 9.2

				
			Governing Law, Waiver of Trial by Jury

				
			11

			
	
			Section 9.3

				
			Successors and Assigns

				
			12

			
	
			Section 9.4

				
			Separability Clause

				
			12

			
	
			Section 9.5

				
			Counterparts

				
			12

			
	
			Section 9.6

				
			Effect of Headings and Table of Contents

				
			12

			

 

i

 

 

FIRST SUPPLEMENTAL INDENTURE (this “First Supplemental Indenture”), dated as of September 26, 2019, between JMP Group LLC, a limited liability company existing under the laws of the State of Delaware (the “Company”), and U.S. Bank National Association, a national banking association, as trustee (the “Trustee”).

 

RECITALS

 

A.     The Company has executed and delivered to the Trustee an indenture, dated as of September 26, 2019 (the “Base Indenture”), providing for the issuance from time to time of one or more series of the Company’s debentures, notes or other evidences of indebtedness.

 

B.     The Company desires and has requested the Trustee pursuant to Section 9.1 of the Base Indenture to join with it in the execution and delivery of this First Supplemental Indenture in order to supplement the Base Indenture (together with the First Supplemental Indenture, the “Indenture”) as and to the extent set forth herein to provide for the issuance and the terms of the Notes.

 

C.     The execution and delivery of this First Supplemental Indenture has been duly authorized by the board of directors of the Company.

 

D.     Concurrent with the execution hereof, the Company has caused to be delivered to the Trustee an Opinion of Counsel and an Officer’s Certificate (both as defined in the Base Indenture) pursuant to Sections 1.2 and 9.3 of the Base Indenture.

 

E.     All conditions and requirements necessary to make this First Supplemental Indenture a valid, binding and legal instrument in accordance with its terms have been performed and fulfilled by the parties hereto and the execution and delivery thereof have been in all respects duly authorized by the parties hereto.

 

NOW, THEREFORE, the Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 6.875% Senior Notes due 2029 (the “Notes”):

 

ARTICLE 1

DEFINITIONS AND INCORPORATION

BY REFERENCE

 

Section 1.1     Relationship with Base Indenture. The terms and provisions contained in the Base Indenture will constitute, and are hereby expressly made, a part of this First Supplemental Indenture and the Company and the Trustee, by their execution and delivery of this First Supplemental Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of the Base Indenture conflicts with the express provisions of this First Supplemental Indenture, the provisions of this First Supplemental Indenture will govern and be controlling in respect of the Notes.

 

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The Trustee accepts the amendment of the Base Indenture effected by this First Supplemental Indenture and agrees to execute the trust created by the Base Indenture as hereby amended, but only upon the terms and conditions set forth in this First Supplemental Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee in the performance of the trust created by the Base Indenture.

 

Section 1.2     Definitions. Capitalized terms used herein without definition shall have the respective meanings set forth in the Base Indenture. The following terms have the meanings given to them in this Section 1.2 only for purposes of this First Supplemental Indenture:

 

“Additional Notes” has the meaning assigned to such term in Section 2.2 hereof.

 

“Base Indenture” has the meaning set forth in the recitals to this First Supplemental Indenture, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

 

“DTC” has the meaning assigned to such term in Section 2.1(c) hereof.

 

“First Supplemental Indenture” means this First Supplemental Indenture, dated as of the date hereof, by and between the Company and the Trustee, governing the Notes, as amended, supplemented or otherwise modified from time to time in accordance with the Base Indenture and the terms hereof.

 

“Global Notes” means, individually and collectively, each of the Global Notes, in the form of Exhibit A hereto issued in accordance with Section 2.1 hereof.

 

“Indenture” means the Base Indenture, as supplemented by this First Supplemental Indenture, governing the Notes, together, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

 

“Initial Notes” means the first $36,000,000 aggregate principal amount of Notes issued under this First Supplemental Indenture on the date hereof at a price equal to 100% of the aggregate principal amount thereof.

 

“Notes” has the meaning assigned to it in the recitals to this First Supplemental Indenture.

 

“Prospectus” means the Prospectus dated September 19, 2019, pursuant to which the Initial Notes were offered.

 

“Significant Subsidiary” has the meaning assigned to such term in Regulation S-X under the Exchange Act.

 

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ARTICLE 2

THE NOTES

 

Section 2.1     Form and Dating. (a) The Notes and the Trustee’s certificate of authentication included thereon will be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note will be dated the date of its authentication. The Notes will be issued in registered form, without interest coupons, in denominations of integral multiples of $25 principal amount.

 

The terms and provisions contained in the Notes will constitute, and are hereby expressly made, a part of this First Supplemental Indenture, and the Company and the Trustee, by their execution and delivery of this First Supplemental Indenture, expressly agree to such terms and provisions and to be bound thereby. To the extent any provision of this First Supplemental Indenture or any Note conflicts with the express provisions of the Base Indenture, the provisions of this First Supplemental Indenture or the Notes, as the case may be, will govern and be controlling.

 

(b)     Notes issued in global form will be substantially in the form of Exhibit A attached hereto (including, with respect to any Global Note, the Global Note Legend thereon), and will be issued in permanent form. Each Note will represent such of the Outstanding Notes as will be specified therein and each will provide that it will represent the aggregate principal amount of Outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of Outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Note to reflect the amount of any increase or decrease in the aggregate principal amount of Outstanding Notes represented thereby will be made by the Trustee or the custodian of the Notes, at the direction of the Trustee, in accordance with written instructions given by the Holder thereof as required by Section 3.5 of the Base Indenture. The Trustee shall reflect any increase in the principal amount of any Global Note in an amount equal to such increase on the schedule attached to such Global Note.

 

(c)     The Company initially appoints The Depository Trust Company (“DTC”) to act as Depositary with respect to the Global Notes.

 

(d)     The Company initially appoints U.S. Bank National Association to act as Paying Agent with respect to the Notes.

 

(e)     The Notes shall not be:

 

(i)     exchangeable for nor convertible into the Capital Stock of the Company or any other security;

 

(ii)     guaranteed by any Person;

 

(iii)     secured by any collateral; or

 

(iv)     issuable upon the exercise of warrants.

 

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(f)     The Company will not pay additional amounts on Notes held by a person who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted.

 

Section 2.2     Issuance of Additional Notes. The Company will be entitled, upon delivery of an Officer’s Certificate and an Opinion of Counsel, to issue Additional Notes under the Base Indenture and this First Supplemental Indenture on the same terms and conditions as the Initial Notes issued on the date hereof, other than with respect to the date of issuance, the issue price and interest accrued prior to the issue date (“Additional Notes”), and with the same CUSIP number as the Initial Notes, provided that such Additional Notes constitute part of the same issue as the Initial Notes for U.S. federal income tax purposes. The Initial Notes issued on the date hereof and any Additional Notes issued will be treated as a single class for all purposes under this First Supplemental Indenture.

 

With respect to any Additional Notes, the Company will set forth in a resolution of its Board of Directors and an Officer’s Certificate, a copy of each which will be delivered to the Trustee, the following information:

 

(a)     the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this First Supplemental Indenture; and

 

(b)     the issue price, the issue date, the initial interest payment date and the CUSIP number of such Additional Notes.

 

ARTICLE 3

REDEMPTION AND PREPAYMENT

 

Section 3.1     Notice of Redemption; Selection of Notes. The Company will send, or cause to be sent, notice of any redemption at least 30 days but not more than 60 days before the date of redemption to each Holder of the Notes to be redeemed setting forth the information to be stated in such notice as provided in Section 11.4 of the Base Indenture. If less than all of the Notes are to be redeemed, the Notes to be redeemed shall be selected by the Trustee by such method as the Trustee deems to be fair and appropriate in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances.

 

Section 3.2     Optional Redemption. The Company may, at its option, at any time and from time to time, on or after September 30, 2021, redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to, but not including, the date of redemption. The Trustee shall reflect any decrease in the principal amount of any Global Note in an amount equal to such decrease on the schedule attached to such Global Note.

 

Section 3.3     Mandatory Redemption. The Company is not obligated to redeem or purchase any of the Notes pursuant to any sinking fund or analogous provision or at the option of any Holder.

 

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ARTICLE 4

DEFEASANCE AND COVENANT DEFEASANCE

 

Section 4.1     Defeasance and Covenant Defeasance. Section 4.2 of the Base Indenture, as amended pursuant to clause (b) below, shall be applicable to the Notes.

 

(b)     Section 4.2 of the Base Indenture shall be amended by amending and restating subclause (3) thereof in its entirety with respect to the Notes as follows:

 

“(3)     Upon the Company’s exercise of the above option applicable to this Section 4.2(3) with respect to any Securities of or within a series, the Company shall be released from its obligations to comply with any term, provision or condition under Section 8.1 with respect to such Securities (and, to the extent specified pursuant to Section 3.1, any other restrictive covenant added for the benefit of such Securities) on and after the date the conditions set forth in clause (4) of this Section 4.2 are satisfied (hereinafter, “covenant defeasance”), and such Securities shall thereafter be deemed to be not “Outstanding” for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with any such covenant, but shall continue to be deemed “Outstanding” for all other purposes hereunder. For this purpose, such covenant defeasance means that, with respect to such Outstanding Securities, the Company may omit to comply with, and shall have no liability in respect of, any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any covenant or by reason of reference in any such covenant to any other provision herein or in any other document, and such omission to comply shall not constitute a default or an Event of Default under Section 5.1(3) or Section 5.1(4), and the occurrence of any event described in Section 5.1(5) shall not be deemed to be an Event of Default with respect to the Notes; provided, however, that except as specified above, the remainder of this Indenture and such Securities shall be unaffected thereby; provided further, that the obligations of the Company with respect to the payment of Additional Amounts, if any, on such Securities as contemplated by Section 10.4 shall remain unsatisfied only to the extent that the Additional Amounts payable with respect to such Securities exceed the amount deposited in respect of such Additional Amounts pursuant to Section 4.2(4)(a) below; provided further, that notwithstanding a covenant defeasance with respect to Section 8.1, any Person to whom a sale, assignment, transfer, lease, conveyance or other disposition is made pursuant to Section 8.1, shall as a condition to such sale, assignment, transfer, lease, conveyance or other disposition, assume by an indenture supplemental hereto in form satisfactory to the Trustee, executed by such successor Person and delivered to the Trustee, the obligations of the Company to the Trustee under Section 6.7 and the second to the last paragraph of Section 4.2.”

 

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ARTICLE 5

REMEDIES

 

Section 5.1     Events of Default. Section 5.1 of the Base Indenture shall be amended and restated in its entirety with respect to the Notes as follows:

 

“Section 5.1     Events of Default.

 

“Event of Default,” wherever used herein with respect to the Notes, means any one of the following events:

 

(1)     failure by the Company to pay the principal of any Note when due, whether at maturity, upon redemption or otherwise;

 

(2)     failure by the Company to pay an installment of interest on any Note when due, if the failure continues for 30 days after the date when due;

 

(3)     failure by the Company to comply with its obligations under Section 8.1 of this Indenture;

 

(4)     failure by the Company to comply with any other term, covenant or agreement contained in the Notes or the Indenture, if such failure is not cured within 60 days after notice to the Company by the Trustee or to the Trustee and the Company by Holders of at least 25% in aggregate principal amount of the Notes then Outstanding;

 

(5)     a default by the Company or any of its Significant Subsidiaries in the payment when due, after the expiration of any applicable grace period, of principal of or interest on, indebtedness for money borrowed in the aggregate principal amount then outstanding of $10.0 million or more, or acceleration of the Company’s or any of its Significant Subsidiaries’ indebtedness for money borrowed in such aggregate principal amount then outstanding of $10.0 million or more so that it becomes due and payable before the date on which it would otherwise have become due and payable;

 

(6)     failure by the Company or any of its Significant Subsidiaries, within 30 days, to pay, bond or otherwise discharge any final, non-appealable judgments or orders for the payment of money the total uninsured amount of which for the Company or any of its Significant Subsidiaries exceeds $10.0 million, which are not stayed on appeal;

 

(7)     a decree or order by a court having jurisdiction in the premises shall have been entered adjudging the Company or any of its Significant Subsidiaries or any group of Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary bankrupt or insolvent, or approving as properly filed a petition seeking liquidation or reorganization of the Company or any of its Significant Subsidiaries or any group of Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary under any applicable bankruptcy, insolvency, reorganization or other similar law, and such decree or order shall have continued unvacated and unstayed for a period of 90 days; an involuntary case shall be commenced under any applicable bankruptcy, insolvency, reorganization or other similar law in respect of the Company or any of its Significant Subsidiaries or any group of Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary and shall continue undismissed for a period of 90 days or an order for relief in such case shall have been entered and such order shall have remained in force unvacated and unstayed for a period of 90 days; or a decree or order of a court having jurisdiction in the premises shall have been entered for the appointment on the ground of insolvency or bankruptcy of a receiver, custodian, liquidator, trustee or assignee in bankruptcy or insolvency of the Company or any of its Significant Subsidiaries or any group of Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary or of such Person’s or Persons’ property, or for the winding up or liquidation of Person’s or Persons’ affairs, and such decree or order shall have remained in force unvacated and unstayed for a period of 90 days; and

 

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(8)     the Company or any of its Significant Subsidiaries or any group of Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary shall institute proceedings to be adjudicated a voluntary bankrupt, shall consent to the filing of a bankruptcy proceeding against it, shall file a petition or answer or consent seeking liquidation or reorganization under any applicable bankruptcy, insolvency, reorganization or other similar law, shall consent to the filing of any such petition or shall consent to the appointment on the ground of insolvency or bankruptcy of a receiver or custodian or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its property, or shall make a general assignment for the benefit of creditors.”

 

Section 5.2     References to Section 5 of the Indenture. The Base Indenture shall be amended with respect to the Notes by (a) replacing each reference to “Section 5.1(5)” appearing therein with “Section 5.1(7)” and (b) replacing each reference to “Section 5.1(6)” appearing therein with “Section 5.1(8)”. For the avoidance of doubt, such amendments shall not apply to portions of the Base Indenture that are amended and restated pursuant to this First Supplemental Indenture.

 

Section 5.3     Acceleration of Maturity; Rescission and Annulment. Section 5.2 of the Base Indenture shall be amended and restated in its entirety with respect to the Notes as follows:

 

“Section 5.2     Acceleration of Maturity; Rescission and Annulment.

 

(a)     If an Event of Default, other than an Event of Default referred to in Section 5.1(7) or (8) above with respect to the Company (but including an Event of Default referred to in Sections 5.1(7) or (8) with respect to a Significant Subsidiary, or group of Subsidiaries that in the aggregate would constitute a Significant Subsidiary, of the Company), has occurred and is continuing, either the Trustee, by notice to the Company, or the Holders of at least 25% in aggregate principal amount of the Notes then Outstanding, by notice to the Company and the Trustee, may declare the principal of, and any accrued and unpaid interest on, all Notes to be immediately due and payable. In the case of an Event of Default referred to in Sections 5.1(7) or (8) above with respect to the Company (and not solely with respect to a Significant Subsidiary, or group of Subsidiaries that in the aggregate would constitute a Significant Subsidiary, of the Company), the principal of, and accrued and unpaid interest on, all Notes will automatically become immediately due and payable.

 

(b)     Notwithstanding paragraph (a) above, for the first 360 days immediately following an Event of Default relating to (i) the Company’s failure to file with the Trustee pursuant to Section 314(a)(1) of the Trust Indenture Act any documents or reports that it is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act or (ii) the Company’s failure to comply with its reporting obligations to the Trustee set forth under Section 7.4 of this Indenture, the sole remedy for any such Event of Default shall be the accrual of additional interest on the Notes at a rate per annum equal to (i) 0.25% of the outstanding principal amount of the Notes for the first 180 days following the occurrence of such Event of Default and (ii) 0.50% of the outstanding principal amount of the Notes for the next 180 days after the first 180 days following the occurrence of such Event of Default, in each case, payable quarterly at the same time and in the same manner as regular interest on the Notes. This additional interest will accrue on all outstanding Notes from, and including the date on which such Event of Default first occurs to, and including, the 360th day thereafter (or such earlier date on which such Event of Default shall have been cured or waived). In addition to the accrual of such additional interest, on and after the 360th day immediately following an Event of Default relating to such reporting obligations, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then outstanding may declare the principal amount of the Notes and any accrued and unpaid interest through the date of such declaration, to be immediately due and payable.

 

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(c)     The Holders of a majority in aggregate principal amount of the then Outstanding Notes by written notice to the Trustee may, on behalf of all of the Holders of such Notes, rescind or annul any declaration or acceleration and its consequences, if (i) the rescission would not conflict with any order or decree, (ii) all existing Events of Default with respect to such Notes (except nonpayment of principal or interest that has become due solely because of the acceleration) have been cured or waived and (iii) the Company has paid or deposited with the Trustee a sum of money sufficient to pay (A) all overdue installments of interest on the Notes, (B) the principal of the Notes which have become due otherwise than by the declaration of acceleration or automatic acceleration and interest thereon at the rate or rates borne by or provided in the Notes, (C) interest upon overdue interest at the rate or rates prescribed therefor in the Notes and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.”

 

ARTICLE 6

TRUSTEE

 

Section 6.1     Notice of Defaults. Section 6.3 of the Base Indenture shall be amended and restated in its entirety with respect to the Notes as follows:

 

“Section 6.3     Notice of Defaults.

 

If a default or Event of Default occurs and is continuing with respect to the Notes and if it is known by a Responsible Officer of the Trustee, the Trustee will mail to Holders of such Notes a notice of the default or Event of Default promptly but in any event within 30 days after a Responsible Officer of the Trustee has knowledge of the default or Event of Default. Except in the case of a default or Event of Default in payment of principal of or interest on any Note, the Trustee may withhold the notice if such default or Event of Default has been cured or waived or if and so long as a committee of Responsible Officers of the Trustee in good faith determines that withholding the notice is in the best interests of the Holders.”

 

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ARTICLE 7

REPORTS BY COMPANY

 

Section 7.1     Reports by Company. Section 7.4 of the Base Indenture shall be amended with respect to the Notes by (a) deleting the “and” appearing at the end of subclause (3) thereof, (b) replacing the period appearing at the end of subclause (4) thereof with “; and” and (c) inserting immediately after subclause (4) thereof the following subclause (5) in its entirety as follows:

 

“(5)     promptly notify the Trustee upon becoming aware of the occurrence of any default or Event of Default.”

 

ARTICLE 8

SUPPLEMENTAL INDENTURES

 

Section 8.1     Supplemental Indentures without Consent of Holders. Section 9.1 of the Base Indenture shall be amended and restated in its entirety with respect to the Notes as follows:

 

“Section 9.1     Supplemental Indentures without Consent of Holders.

 

Without the consent of any Holders of Notes, the Company (when authorized by or pursuant to a Board Resolution) and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form and substance satisfactory to the Trustee, for any of the following purposes:

 

(1)     to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company in the Indenture and in the Notes;

 

(2)     to add to the covenants of the Company or to surrender any right or power conferred on the Company pursuant to the Indenture;

 

(3)     to establish the form and terms of the Notes as permitted by the Indenture;

 

(4)     to evidence and provide for a successor Trustee under the Indenture or to provide for or facilitate the administration of the trusts under the Indenture by more than one Trustee;

 

(5)     to cure any ambiguity, to correct or supplement any provision in the Indenture that may be defective or inconsistent with any other provision of the Indenture or to make any other provisions with respect to matters or questions arising under the Indenture; provided that no such action pursuant to this clause shall adversely affect the interests of the Holders of Notes in any material respect;

 

(6)     to add to, delete from or revise the conditions, limitations and restrictions on the authorized amount, terms or purposes of issue, authentication and delivery of the Notes under the Indenture;

 

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(7)     to add any additional events of default with respect to the Notes;

 

(8)     to supplement any of the provisions of the Indenture as may be necessary to permit or facilitate the defeasance and discharge of the Notes, provided that such action does not adversely affect the interests of any Holder of an Outstanding Note in any material respect;

 

(9)     to make provisions with respect to the conversion or exchange rights of Holders of Notes;

 

(10)     to pledge to the Trustee as security for the Notes any property or assets;

 

(11)     to add guarantees in respect of the Notes;

 

(12)     to provide for certificated notes in addition to or in place of Global Notes;

 

(13)     to qualify the Indenture under the Trust Indenture Act;

 

(14)     to conform the text of the Indenture or the Notes to any provision of the “Description of Notes” set forth in the Prospectus to the extent that such provision, in the good faith judgment of the Company, was intended to be a verbatim recitation of a provision of the Indenture or the Notes; or

 

(15)     to make any other change that does not adversely affect the rights of Holders of Notes in any material respect.

 

The Trustee is hereby required to join with the Company and any guarantors in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.”

 

Section 8.2     Supplemental Indentures with Consent of Holders. Section 9.2 of the Base Indenture shall be amended and restated in its entirety with respect to the Notes as follows:

 

“Section 9.2     Supplemental Indentures with Consent of Holders.

 

With the consent of the Holders of not less than a majority in principal amount of the Outstanding Notes (including consents obtained in connection with a purchase of, or tender offer or exchange offer for Notes), by Act of said Holders delivered to the Company and the Trustee, the Company (when authorized by or pursuant to a Board Resolution) and the Trustee may enter into indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of modifying in any manner the rights of the Holders of Notes; provided, however, that no such supplemental indenture, without the consent of the Holder of each Outstanding Note affected thereby, shall:

 

(1)     change the Stated Maturity of the principal of, or any interest or additional amounts on, such Notes, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest or any additional amounts thereon, or change the redemption provisions or adversely affect the right of repayment at the option of the Holder, or change the place of payment or currency in which the principal of or any interest or additional amounts with respect to any Note is payable, or impair or affect the right of any Holder of Notes to institute suit for the payment after such payment is due (except a rescission and annulment of acceleration with respect to the Notes by the Holders of at least a majority in aggregate principal amount of the then Outstanding Notes of such series and a waiver of the payment default that resulted from such acceleration);

 

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(2)     reduce the percentage of Outstanding Notes, the consent of the Holders of which is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver or reduce the quorum required for voting; or

 

(3)     modify any of the provisions of the sections of the Indenture relating to supplemental indentures with the consent of the Holders, waivers of past defaults or securities redeemed in part, except to increase any such percentage or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of each Holder affected thereby.

 

A supplemental indenture that changes or eliminates any covenant or other provision of this Indenture that shall have been included expressly and solely for the benefit of one or more particular series of Securities, or that modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.

 

It shall not be necessary for any Act of Holders of Securities under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

 

Upon the request of the Company, accompanied by a copy of a Board Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Holders of Securities as aforesaid, the Trustee shall join with the Company and any guarantors in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.”

 

ARTICLE 9

MISCELLANEOUS

 

Section 9.1     Trust Indenture Act Controls. If any provision of this First Supplemental Indenture limits, qualifies or conflicts with the duties imposed by Section 318(c) of the Trust Indenture Act, the imposed duties will control.

 

Section 9.2     Governing Law, Waiver of Trial by Jury. This First Supplemental Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made or instruments entered into and, in each case, performed in said state. Each of the Company and the Trustee hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all rights to trial by jury in any legal proceeding arising out of or relating to the Indenture, the Notes or the transactions contemplated hereby.

 

11

 

 

Section 9.3     Successors and Assigns. All covenants and agreements in this First Supplemental Indenture by the Company shall bind its successors and assigns, whether so expressed or not.

 

Section 9.4     Separability Clause. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

Section 9.5     Counterparts. This First Supplemental Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. The exchange of copies of this First Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this First Supplemental Indenture as to the parties hereto and may be used in lieu of the original First Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section 9.6     Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

 

[Signature Pages Follow]

 

12

 

 

SIGNATURES

 

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, all as of the date first written above.

 

 

	
			 

				
			JMP GROUP LLC

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			/s/ Raymond S. Jackson

				
			 

			
	
			 

				
			 

				
			Name:  Raymond S. Jackson

			Title:    Chief Financial Officer

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION,

			as Trustee	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Alicia Pelletier	 
	 	 	Name:  Alicia Pelletier	 
	 	 	Title:    Officer	 

         

[Signature Page to JMP Group LLC – First Supplemental Indenture]

 

 

 

 

EXHIBIT A

 

FORM OF FACE OF NOTE

 

[GLOBAL NOTE LEGEND]

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY NOTE AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS NOTE SHALL BE A GLOBAL NOTE SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.

 

CUSIP No. 46629U 404

ISIN 46629U4040

 

JMP GROUP LLC

6.875% SENIOR NOTES DUE 2029

 

	
			No.___

				
			$_________

			
	 	
			As revised by the

			
	 	
			Schedule of Increases

			
	 	
			or Decreases attached hereto

			

 

 

Interest. JMP Group LLC, a limited liability company existing under the laws of the State of Delaware (herein called the “Company”), for value received, hereby promises to pay to ___________ or registered assigns, the principal sum of Thirty-Six Million United States dollars (U.S. $36,000,000), as revised by the Schedule of Increases or Decreases attached hereto, on September 30, 2029, and to pay interest thereon from September 26, 2019, or from the most recent interest payment date to which interest has been paid or duly provided for, quarterly in arrears on March 30, June 30, September 30 and December 30 of each year, commencing December 30, 2019, at the rate of 6.875% per annum, until the principal hereof is paid or made available for payment. Interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.

 

Method of Payment. The interest so payable, and punctually paid or duly provided for, on any interest payment date will, as provided in the Indenture (as defined on the reverse hereof), be paid to the Person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on the relevant record date for such interest, which shall be March 15, June 15, September 15 and December 15, as the case may be, next preceding such interest payment date.

 

A-1

 

 

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

Authentication. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

A-2

 

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

 

	
			 

				
			JMP GROUP LLC

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			 

				
			 

			
	
			 

				
			 

				
			Name:  

				
			 

			
	
			 

				
			 

				
			Title:  

				
			 

			

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes of the series designated therein referred to in the within-mentioned Indenture.

 

	
			Date of authentication:  

				
			U.S. BANK NATIONAL ASSOCIATION,

			as the Trustee

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			 

				
			 

			
	
			 

				
			 

				
			Authorized Signatory

				
			 

			
	
			 

				
			 

				
			 

				
			 

			

 

A-3

 

 

FORM OF REVERSE OF NOTE

 

Indenture. This Note is one of a duly authorized issue of securities of the Company (herein called the “Notes”), issued and to be issued in one or more series under an Indenture, dated as of September 26, 2019, as supplemented by the First Supplemental Indenture, dated as of September 26, 2019 (as so supplemented, herein called the “Indenture”), between the Company and U.S. Bank National Association, as Trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is one of the series designated on the face hereof, initially limited in aggregate principal amount to $36,000,000.

 

Place of Payment. Payments of the principal of and interest on the Notes shall be made in U.S. Dollars at the office of the Paying Agent. However, the Company may make any payments in respect of the Notes by check or wire transfer payable in U.S. Dollars. The Company may mail an interest check to the Holder’s last address. Notwithstanding the foregoing, so long as a Note is registered in the name of a Depositary or its nominee, all payments thereon shall be made by wire transfer of immediately available funds to the account of the Depositary or its nominee.

 

Optional Redemption. The Notes of this series are subject to redemption at the Company’s option, at any time and from time to time, on or after September 30, 2021, in whole or in part, upon not less than 30 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to, but not including, the date of redemption. If the date of redemption is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such interest record date, and no additional interest is payable to Holders whose Notes will be subject to redemption by the Company. Unless the Company defaults in payment of the redemption price, on and after the date of redemption, interest shall cease to accrue on the Notes or the portions thereof called for redemption.

 

Except as set forth above, the Notes will not be redeemable by the Company prior to maturity and will not be entitled to the benefit of any sinking fund.

 

Defaults and Remedies. If an Event of Default with respect to Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.

 

Amendment, Modification and Waiver. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Notes at the time outstanding. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Notes at the time outstanding, on behalf of the Holders of all Notes, to waive compliance by the Company with certain provisions of the Indenture. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

 

A-4

 

 

Covenants. The Indenture contains customary covenants that require the Company to pay the principal and interest on the Notes when due and provide the Trustee with a copy of the reports that the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.

 

Denominations, Transfer and Exchange. The Notes of this series are issuable only in registered form, without interest coupons, in denominations of integral multiples of $25. As provided in the Indenture and subject to certain limitations therein set forth, Notes of this series are exchangeable for a like aggregate principal amount of Notes of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

 

No service charge shall be made for any transfer or exchange of any Note, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

Persons Deemed Owners. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

 

Miscellaneous. The Indenture and this Note shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made or instruments entered into and, in each case, performed in said state.

 

All terms used in this Note and not defined herein shall have the meanings assigned to them in the Indenture.

 

A-5

 

 

SCHEDULE OF INCREASES OR DECREASES

 

The following increases or decreases in this Note have been made:

 

	
			Date of Exchange                               

				
			Amount of

			increase in

			Principal

			Amount of

			 this Note

				
			Amount of

			decrease in

			Principal Amount of

			 this Note

				
			Principal

			Amount of

			this Note

			following

			each decrease

			 or increase

				
			Signature of

			authorized

			signatory of

			 Trustee

			
	 	 	 	 	 

 

 A-6Exhibit 10.1

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is entered into as of _________, 2019 by and between General Cannabis Corp, a Colorado corporation (the “Company”), and each of the purchasers listed on Appendix I hereto (each, the “Purchaser” and together, the “Purchasers”).

WHEREAS, the Company desires to issue and sell, and the Purchasers desire to purchase,  a senior unsecured promissory note  in the form attached hereto as Exhibit A (the “Note”) and a warrant to purchase shares of the common stock, par value $0.001 per share, of the Company at an exercise price of $1.30 per share, in the form attached hereto as Exhibit B (the “Warrant”), on the terms and conditions set forth herein.  The Notes and the Warrants issued to the Purchasers are sometimes referred to herein as the “Securities”.

WHEREAS, on or about the date hereof, the Company desires to enter into one or more Securities Exchange Agreements (the “Securities Exchange Agreement”) with certain investors (the “Existing Investors”) holding an aggregate of $1,106,000 in principal amount of the Company’s senior secured promissory notes (the “Existing Notes”) previously issued to the Existing Investors by the Company pursuant to the Promissory Note and Warrant Purchase Agreement, dated April 20, 2018, as amended, among the Company and the Existing Investors, pursuant to which the Company shall issue to the Existing Investors (i) $1,106,000 in aggregate principal amount of Notes and (ii) Warrants to purchase an aggregate of 1,106,000 shares of Common Stock in exchange for the Existing Notes, on the terms and conditions set forth in the Securities Exchange Agreement.

WHEREAS, the Company desires to issue to the Purchasers and the Existing Investors, collectively, up to an aggregate principal amount of Notes of $5,000,000 and Warrants to purchase an aggregate of up to 5,000,000 shares of Common Stock.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.    

Definitions.  As used herein, the following terms shall have the following meanings:

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Transactions” means the transactions contemplated by this Agreement.

2.    

Authorization, Consent and Closing.  

(a)    

Authorization.  The Company has authorized the issuance and sale to the Purchasers of the Securities pursuant to this Agreement.

(b)    

Purchase and Sale.  Upon the terms and subject to the conditions set forth herein, at the Closing (as defined below) the Company shall issue and sell to each Purchaser, and each Purchaser agrees to purchase from the Company, (i) a Note in the principal amount set forth opposite such Purchaser’s name on Schedule I, and (ii) a Warrant to purchase the number of shares of Common Stock set forth opposite such Purchaser’s name on Schedule I, which shall equal one share of Common Stock for each $1.00 of principal amount of the Note issued to such Purchaser pursuant to this Agreement (collectively, the “Offering”).  The Company’s agreements with each Purchaser are separate agreements, and the sales of the Securities to each Purchaser are separate sales.

(c)    

The Closing.  The initial closing of the Offering (the “Closing”) shall take place substantially concurrently with the Closing Date (as defined in the Securities Exchange Agreement) (the “Initial Closing Date”). In the event there is more than closing, the term “Closing” shall apply to each such closing, unless otherwise specified herein.

(d)    

Closing Deliveries.  At the Closing,(i) The purchase and sale of the Securities shall take place remotely via the exchange of documents and signature, or at such other place as the Company and the Purchasers mutually agree upon, orally or in writing; and (ii) the Company shall deliver to each Purchaser the Note and the Warrant to be purchased by such Purchaser against (A) payment of the purchase price therefor by check payable to the Company or by wire transfer to a bank designated by the Company and (B) delivery of counterpart signature pages to this Agreement.

(e)    

Until such time as the aggregate amount of principal indebtedness evidenced by the Notes equals a total of $5,000,000, the Company may sell additional Notes and Warrants to such persons or entities as determined by the Company, or to any Purchaser who desires to acquire additional Notes and Warrants. 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 Notes and Warrants shall be deemed to be a “Purchaser” for purposes of this Agreement, and any notes and warrants so acquired by such additional purchaser shall be deemed to be “Notes”, “Warrants” and “Securities” as applicable.

3.    

Representations and Warranties of the Company.  The Company hereby represents and warrants to the Purchaser, as of the date hereof and as of the Closing Date, that:

(a)    

The Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Colorado.  The Company has all requisite corporate power and authority to carry out the Transactions.

(b)    

The execution, delivery and performance of this Agreement has been duly authorized by the Company.  This Agreement constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws relating to creditor’s rights generally, by general equitable principles and by any implied covenant of good faith and fair dealing.  The execution and delivery by the Company of this Agreement, the offering, sale and issuance of the Securities hereunder and the fulfillment of and compliance with the respective terms hereof and thereof by the Company, do not and shall not conflict with or result in a breach of the terms, conditions or provisions of, constitute a default under, result in a violation of, or require any authorization, consent, approval, exemption or other action by or notice to any third party or any court or administrative or governmental body pursuant to, (i) the organizational documents of the Company, (ii) any law, statute, rule or regulation to which the Company is subject, or (iii) any agreement, instrument, order, judgment or decree to which the Company is subject, except for any consents or approvals which have been obtained prior to the date hereof and, in the case of subclauses (ii) and (iii) above, for any conflict, result, default, right or other requirement that could not reasonably be expected to have a material adverse effect on the Transactions.

(c)    

When the Securities are issued in accordance with the terms hereof, the Securities will be validly issued.  The Company has taken all corporate action necessary to authorize the issuance of the shares of Common Stock for which the Warrants will be exercisable and, upon issuance of such shares of Common Stock in accordance with the terms of the Warrants, such shares of Common Stock will be validly issued, fully paid and non-assessable.

(d)    

The Offering is being made in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D (“Regulation D”) as promulgated by the SEC under the Securities Act.  The offering of Securities pursuant to the Securities Exchange Agreement is being made in reliance upon the exemption from registration provided by Section 3(a)(9) under the Securities Act. The Company may also issue additional Notes and/or additional Warrants for cash and/or other consideration received from the Purchasers or additional purchasers in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act and Rule 506 of Regulation D. To participate in the Offering, each Purchaser is required to represent and warrant to the Company that it is an “accredited investor” as such term is defined in Regulation D.

(e)    

The Company is not a party to or in any way obligated to make any payment relating to, any contract or outstanding claim for the payment of any broker’s or finder’s fee in connection with the origin, negotiation, execution or performance of this Agreement or the Offering, other than any such payments which have been or will be satisfied in full by the Company.

4.    

Purchaser's Investment Representations.  The Purchaser hereby represents and warrants to the Company, as of the date hereof and as of the Closing Date, that:

(a)    

The Purchaser has all requisite power and authority (and, if the Purchaser is an individual, legal capacity) to execute and deliver this Agreement and consummate the Transactions. The Purchaser has taken all action as and in the manner required by law or otherwise to authorize the execution, delivery and performance of this Agreement and the Transactions.

(b)    

The execution and delivery of this Agreement does not, and the consummation of the Transactions will not, violate (i) any material terms of any material contract or commitment of any kind or character to which the Purchaser is a party or by which the Purchaser or any of the Purchaser’s property may be bound, or (ii) to Purchaser’s knowledge, any law, regulation, rule, judgment or order applicable to the Purchaser or the Purchaser’s property.

2

(c)    

This Agreement constitutes the valid and binding obligation of the Purchaser, enforceable in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws relating to creditor’s rights generally, by general equitable principles and by any implied covenant of good faith and fair dealing.

(d)    

The Purchaser is an “accredited investor”, as defined under Rule 501(a) promulgated under Regulation D under the Securities Act. The Purchaser certifies to the Company that the information in this Section 4(d) is complete and accurate and may be relied upon by the Company to invoke any applicable exemption from federal and state securities laws in connection with Purchaser’s acquisition of the Securities hereunder.

(e)    

The Purchaser is acquiring the Securities for the Purchaser’s own account for investment purposes only and not for subdivision, fractionalization, resale or distribution; the Purchaser has no contract, undertaking, agreement or arrangement with any person to sell, transfer or pledge to such person or anyone else the Securities (or any portion thereof); and the Purchaser has no present plans or intentions to enter into any such contract, undertaking or arrangement.

(f)    

The Purchaser understands that the Securities have not and will not be registered under the Securities Act or the securities laws of any state, and cannot be sold or transferred without compliance with the registration provisions of the Securities Act, and the applicable state securities laws, or compliance with exemptions, if any, available thereunder.  The Purchaser expressly represents that (i) the Purchaser has such knowledge and experience in financial and business matters that it has the capacity to protect the Purchaser’s own interests in connection with the purchase of the Securities in the Offering; (ii) the Purchaser is capable of evaluating the merits and risks of an investment in the Company through the acquisition of the Securities; (iii) the Purchaser’s financial condition is such that it has no need for liquidity with respect to the Purchaser’s investment in the Company to satisfy any existing or contemplated undertaking or indebtedness; (iv) the Purchaser is able to bear the economic risk of the Purchaser’s investment in the Company for an indefinite period of time, including the risk of losing all of such investment, and loss of such investment would not materially adversely affect the Purchaser; and (v) the Purchaser has either secured independent tax advice with respect to the investment in the Company, upon which the Purchaser is solely relying, or the Purchaser is sufficiently familiar with the income taxation issues in connection with an investment in the Securities and the Offering that the Purchaser has deemed such independent advice unnecessary.

(g)    

The Purchaser expressly acknowledges that (i) no federal or state agency has reviewed or passed upon the adequacy or accuracy of the information set forth in the documents submitted to the Purchaser or made any finding or determination as to the fairness for investment, or any recommendation or endorsement of an investment in the Company; (ii) there are restrictions on the transferability of the Securities; (iii) there will be no public market for the Securities, and, accordingly, it may not be possible for the Purchaser to liquidate the Purchaser’s investment in the Company; and (iv) any anticipated federal or state income tax benefits applicable to the Securities may be lost through changes in, or adverse interpretations of, existing laws and regulations.

(h)    

The Purchaser acknowledges that the Company has made all documents pertaining to this Agreement and the transactions contemplated herein available and has allowed it an opportunity to ask questions and receive answers thereto and to verify and clarify any information contained in such documents.

(i)    

The Purchaser is not a party to or in any way obligated to make any payment relating to any contract or outstanding claim for the payment of any broker’s or finder’s fee in connection with the origin, negotiation, execution or performance of this Agreement or the purchase of the Securities in the Offering hereunder.

(j)    

The proposed investment in the Company by the Purchaser, including any beneficial owner of Purchaser or the investment (an “Underlying Beneficial Owner”), as the case may be, will not directly or indirectly contravene United States federal, state, international or other laws, rules or regulations, including anti-money laundering laws, rules and regulations (a “Prohibited Investment”) and no investment in the Company by the Purchaser or, if applicable, any Underlying Beneficial Owner will be derived from any illegal or illegitimate activities.

(k)    

The Purchaser understands that federal regulations and executive orders administered by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) prohibit, among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories, persons and entities (see, for a list of OFAC countries: www.treas.gov/ofac).  The Purchaser further represents and warrants that, to the best of its knowledge, none of the Purchaser, any of its affiliates, or, if applicable, any Underlying Beneficial Owner or related person, is a country, territory, person or entity named on an OFAC list, nor is the Purchaser nor any of its affiliates, or, if applicable, any Underlying Beneficial Owner or related person, a natural person or entity with whom dealings are prohibited under any OFAC regulations.

3

(l)    

Neither the Purchaser nor, if applicable, any Underlying Beneficial Owner or, to the best of Purchaser’s knowledge, any related person, is a foreign bank without a physical presence in any country other than a foreign bank that (i) is an affiliate of a depositary institution, credit union or foreign bank that maintains a physical presence in the United States or a foreign country, as applicable, and (ii) is subject to supervision by a banking authority in the country regulating such affiliated depositary institution, credit union or foreign bank (each, a “Regulated Affiliate”).

(m)    

Except as otherwise disclosed to the Company in writing: (i) neither the Purchaser nor, if applicable, any Underlying Beneficial Owner or, to the best of Purchaser’s knowledge, any related person, is resident in, or organized or chartered under the laws of, (A) a jurisdiction that has been designated by the Secretary of the Treasury under Section 311 or 312 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Interrupt and Obstruct Terrorism Act of 2001 (the “PATRIOT Act”) as warranting special measures due to money laundering concerns or (B) any foreign country that has been designated as non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering, of which the United States is a member and with which designation the United States representative to the group or organization continues to concur (a “Non-Cooperative Jurisdiction”); (ii) the subscription funds of the Purchaser and, if applicable, any Underlying Beneficial Owner, do not originate from, nor will they be routed through, an account maintained at (A) a foreign shell bank (see, for a definition of the foregoing: www.treasury.gov), (B) a foreign bank (other than a Regulated Affiliate) that is barred, pursuant to its banking license, from conducting banking activities with the citizens of, or with the local currency of, the country that issued the license, or (C) a bank organized or chartered under the laws of a Non-Cooperative Jurisdiction; and (iii) neither the Purchaser nor, if applicable, any Underlying Beneficial Owner or, to the best of Purchaser’s knowledge, any related person, is a senior foreign political figure, or any immediate family member or close associate of a senior foreign political figure, in each case within the meaning of the PATRIOT Act.

5.    

Covenants.

(a)    

Upon the terms and subject to the conditions of this Agreement, each of the Purchaser and the Company will use commercially reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable consistent with applicable law to consummate and make effective in the most expeditious manner practicable the Transactions.

(b)    

[Reserved]

(c)    

The Company agrees to file with the SEC as soon as reasonably practicable following the Closing Date a registration statement on Form S-3 or such other form (including a post-effective amendment to a registration statement) under the Securities Act then available to the Company (the “Registration Statement”) providing for the resale of the shares of Common Stock issuable upon exercise of the Warrants (the “Registrable Securities”).  The Company shall use its commercially reasonable efforts to cause such Registration Statement to be declared effective by the SEC.  Any Registration Statement shall provide for the resale from time to time, and pursuant to any method or combination of methods legally available to the Purchasers of any and all Registrable Securities.  The Company shall use its best efforts to maintain the effectiveness of the Registration Statement until the Registrable Securities (x) have been transferred or disposed of pursuant thereto, (y) have been transferred or disposed of pursuant to an exemption from the registration requirements of the Securities Act, provided that the Company shall have removed or caused to be remove any restrictive legend on such Registrable Securities or (z) cease to be outstanding.  The Company shall pay all registration expenses in connection with the registration of the Registrable Securities pursuant to this Agreement.  Each Purchaser participating in a registration pursuant to this Agreement shall bear such Purchaser’s proportionate share (based on the total number of Registrable Securities 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 Securities pursuant to this Agreement.  It shall be a condition precedent to the obligations of the Company to take any action pursuant to this paragraph 5(c) 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.

6.    

Conditions to the Obligations of the Purchaser.  The obligation of the Purchaser to purchase the Securities in the Offering at the Closing and the other obligations of the Purchaser hereunder required to be performed on the Closing Date shall be subject to the satisfaction (or waiver by the Purchaser) as of the Closing Date of the following conditions:

(i)

The representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects as of the Closing Date.

4

(ii)

The Company and its subsidiaries shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by it and its subsidiaries by the Closing Date.

7.    

Conditions to the Obligations of the Company.  The obligation of the Company to sell the Securities in the Offering at the Closing and the other obligations of the Company hereunder required to be performed on the Closing Date shall be subject to the satisfaction (or waiver by the Company) as of the Closing Date of the following conditions:

(i)

The representations and warranties of the Purchaser contained in this Agreement shall be true and correct in all material respects as of the Closing Date.

(ii)

The Purchaser shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by the Purchaser by the Closing Date.

8.    

Restrictions on Transfer or Re-Sale.  The Purchaser understands that (i) the sale or re-sale of the Securities has not been and is not being registered under the Securities Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold pursuant to an effective registration statement under the Securities Act, or (b) the Purchaser shall have delivered to the Company, at the cost of the Purchaser, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in comparable transactions and shall be reasonably acceptable to the Company, or other documentation satisfactory to the Company in its sole discretion, to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion shall be accepted by the Company, or (c) the Securities are sold or transferred to an affiliate of the Purchaser in a transaction that results in no change of beneficial ownership of the Securities and such affiliate agrees to sell or otherwise transfer the Securities only in accordance with this  Section 8 and is an “accredited investor” as such term is defined in Regulation D; and (ii) neither the Company nor any other person is under any obligation to register such Securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case).  

9.    

Legend.  

(i)

The Notes shall contain the restrictive legend set forth on the form of Note attached hereto as Exhibit A.  The Warrants shall contain the restrictive legend set forth on the form of Warrant   attached hereto as Exhibit B.

10.    

Miscellaneous.

(a)    

Remedies.  Purchaser shall have all rights and remedies set forth in this Agreement and all of the rights that any Purchaser has under any law.  The Purchaser shall not bring any equitable action for any reason that is likely to affect the Company’s ability to engage in any aspect of its business.

(b)    

Confidentiality.  Each party agrees that, except as otherwise compelled by law, court order or by a competent regulator, it will not issue any reports, statements or releases, in each case relating to this Agreement or the transactions contemplated hereby, without the prior written consent of the other party hereto.  

(c)    

Notices.  All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument and sent by e-mail to the e-mail address specified next to such party’s email address set forth herein, or in person, by facsimile, by nationally-recognized overnight courier, or by first class registered or certified mail, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee as follows: 

If to the Company:

General Cannabis Corp

6565 E. Evans Avenue

Denver, CO 80224

Attn:  Michael Feinsod, CEO

If to the Purchaser, to the address set forth on the signature page of the Purchaser attached hereto.

5

All such notices, requests, consents and other communications shall be deemed to have been delivered (a) in the case of e-mail, personal delivery or delivery by facsimile, on the date of such delivery, (b) in the case of nationally-recognized overnight courier, on the next business day and (c) in the case of mailing, on the third business day following such mailing if sent by certified mail, return receipt requested.

(d)    

Successors and Assigns.  All covenants and agreements in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not.  Prior to the Closing, no party shall assign this Agreement or any rights or obligations hereunder to any person without the prior written consent of the other party.

(e)    

Consent to Amendments.  Except as otherwise expressly provided herein, the provisions of this Agreement may not be amended and the Company may not take any action herein prohibited, or omit to perform any act herein required to be performed by it, unless the Company obtains the written consent of a the holders of a majority in principal amount of the Notes.  No other course of dealing between the Company and the Purchaser or any delay in exercising any rights hereunder operate as a waiver of any rights of the Purchaser.

(f)    

Survival of Representations and Warranties.  All representations and warranties contained herein or made in writing by any party in connection herewith shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, regardless of any investigation made by the Purchaser or on its behalf.

(g)    

Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

(h)    

Entire Agreement.  Except as otherwise expressly set forth herein, this Agreement and the Securities embody the complete agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or between the parties, written or oral, that may have related to the subject matter hereof in any way.

(i)    

Counterparts.  This Agreement may be executed in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement.

(j)    

Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.  EACH PARTY AGREES THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING IN ANY WAY TO THIS AGREEMENT SHALL BE BROUGHT IN A U.S. FEDERAL OR STATE COURT OF COMPETENT JURISDICTION SITTING IN NEW YORK, NEW YORK. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE JURISDICTION OF SUCH COURT AND HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY DEFENSE OF AN INCONVENIENT FORUM OR A LACK OF PERSONAL JURISDICTION TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING AND ANY RIGHT OF JURISDICTION OR VENUE ON ACCOUNT OF THE PLACE OF RESIDENCE OR DOMICILE OF ANY PARTY HERETO.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

(k)    

No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.  

(l)    

Descriptive Headings.  The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

[Signature Page Follows.]

6

[Signature Page to Securities Purchase Agreement.]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

THE COMPANY:

GENERAL CANNABIS CORP

			
	By:

	 

	 
	Name:

	Michael Feinsod

	 
	Title:

	Chief Executive Officer

THE PURCHASER:

	
	 

	Name:

		
	Address:

	 

	 
	 

	 
	 

	Email Address:

	 

					
	DATE OF PURCHASER EXECUTION:

	 
	 
	 
	,2019

Appendix I

			
	Name of Purchaser

	Principal Amount of Note

	Number of Common Shares Issuable Upon Exercise of Warrant

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

Exhibit A

Form of Note

[See attached]

Exhibit B

Form of Warrant

[See attached]

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