Document:

Exhibit

EX 10.3
EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made effective as of January 2, 2019 (“Effective Date”) and entered into as of the date of last signature below (“Execution Date”) by and between AXON ENTERPRISE, INC., a Delaware corporation, (“Company”) and Joshua M. Isner, an individual (“Executive”), also referred to herein each individually as “Party” or collectively as “Parties.”
RECITALS
WHEREAS, prior to the Effective Date, Company employed Executive pursuant to the terms and conditions of Executive Employment Agreement dated December 1, 2017 by and between Company and Executive (“Previous Agreement”);
WHEREAS, on February 12, 2019, Company’s shareholders approved a new employee compensation plan entitled, “eXponential Stock Performance Plan” or “XSPP”, which plan the Previous Agreement did not contemplate;
WHEREAS, Company wishes to continue to employ Executive as its Chief Revenue Officer on the terms and conditions set forth herein, which contemplate the XSPP;
WHEREAS, Executive desires to be assured of certain minimum compensation from Company for Executive’s services during the term of this Agreement and to be protected, and compensated, in the event of any Change in Control (as defined in Section 10(a) below) affecting Company; and
WHEREAS, Company desires to provide for the reasonable protection of Company’s confidential business and technical information which has been developed by Company in recent years and will be developed in the future at substantial expense.
NOW, THEREFORE, in consideration of the mutual promises contained herein, including, without limitation, Executive’s participation in the XSPP, Company and Executive each intend to be legally bound, covenant and agree as follows:
AGREEMENT
1.EMPLOYMENT.  Upon the terms and conditions set forth in this Agreement, Executive shall continue employment as Company’s Chief Revenue Officer.  Except as expressly provided herein, the termination of this Agreement by either Party shall also terminate Executive’s employment with Company.
2.DUTIES.  Executive shall be responsible for directing and managing Company’s global sales operations and business and shall have such duties, authorities and responsibilities commensurate with the duties, authorities and responsibilities of persons in similar capacities in similarly sized companies, and such other duties and responsibilities as Company’s President shall assign to Executive from time to time.  Executive shall serve Company faithfully, loyally, honestly and to the best of Executive’s ability and shall devote Executive’s full-time and best efforts to Company.
3.OUTSIDE ACTIVITIES.  Nothing in this Agreement shall preclude Executive, with Company’s prior written approval, from engaging in civil, charitable or religious activities, or from serving as a consultant to or on any board of directors, managers or other board of advisors or companies or organizations which will not present any direct conflict of interest with Company, compete with Company, or adversely affect the performance of Executive’s duties hereunder.  Executive shall obtain Company’s prior written approval for such activities and services, which may be withheld in Company’s sole discretion.
4.TERM.  Subject to the provisions of Sections 6 and 10, Executive’s employment shall commence on the Effective Date and continue for a period of one year (the “Initial Term”). This Agreement will automatically renew and continue for successive one-year terms following the Initial Term (each a “Renewal Term”). The Initial Term and any Renewal Terms are collectively referred to herein as the “Term.”  In any event, unless otherwise agreed to by the 

parties, this Agreement shall automatically terminate, without notice, when Executive reaches seventy (70) years of age.
5.COMPENSATION.
(a)Base Salary.  Company shall pay Executive a base salary (“Base Salary”), in substantially equal periodic installments and in accordance with Company’s standard payroll practices and applicable law, at the rate set by the Compensation Committee of Company's Board of Directors ("Committee"). Executive’s Base Salary will be reviewed periodically by and may be adjusted based on Executive’s performance and any compensation review conducted by the Committee. Such review will be based upon both individual and Company performance.
(b)Commission Target.  During the Term, to the extent Executive is eligible to participate in any annual commission target program adopted by the Committee (“Company Commission Plan”), the Committee, in its sole discretion and depending on Executive and Company’s attainment of the performance objectives established by the Committee (i.e., the actual amount payable to Executive may be more or less than the target amount), will determine whether Executive receives the entire annual target commission.  Any annual commission paid to Executive pursuant to this Agreement shall be paid not later than March 15 of the calendar year following the calendar year in which such commission was earned. Except as provided in Section 7(a)(ii)(1)(c) below, Executive must be employed on the date the commission is paid to receive Executive's annual commission.
(c)Equity Awards.  During the Term, Executive shall be eligible to receive grants of stock options, restricted stock units, and other forms of equity compensation awards (time and/or performance based, collectively referred to as the “Equity Awards”).  Such Equity Awards, if any, shall be made in the sole discretion of the Committee and will be subject to the terms and conditions established by the Committee, Company’s then existing equity incentive plan document (“Plan”), and the award agreement that Executive must execute as a condition to receive the awards.  Except as otherwise stated in Sections 7(a)(ii) and 10 below, if any terms or conditions contained in this Agreement conflict with any terms and conditions contained in the Plan or an Equity Award agreement, the following order of precedence shall apply to the relevant documents for purposes of determining which document controls the applicable term or condition: (1) the Plan; (2) Equity Award agreements, except for the eXponential Stock Unit Award Agreement between Company and Executive (“XSU Award Agreement”); (3) this Agreement; and (4) the XSU Award Agreement.
(d)Fringe Benefits.  During the Term, Executive shall be eligible to participate in any benefit plans, including, but not limited to, retirement plans, 401(k) savings plans, disability plans, life insurance plans and health, vision, and dental plans available to other executive employees of Company. The terms and conditions of Executive’s participation in such plans shall be set forth in the relevant benefit plan documents.  Executive shall also be entitled to take paid time off (“PTO”) in accordance with Company’s then existing PTO policy.
(e)Business Expenses. Company shall, in accordance with, and to the extent of, its policies in effect from time to time, bear all customary reasonable and necessary business expenses (including the advancement of certain expenses) incurred by Executive in performing his duties as an executive of Company, provided that Executive accounts promptly such expenses to Company in the manner prescribed from time to time by Company.  Any expenses that are to be reimbursed pursuant to this Agreement that are subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), shall:  (i) be paid no later than the last day of Executive’s tax year following the tax year in which the expense was incurred; (ii) not affect or be affected by any other expenses that are eligible for reimbursement in any other tax year of Executive; and (iii) not be subject to liquidation or exchange for any other benefit.
(f)Section 409A of the Internal Revenue Code.  This Agreement is intended to comply with Section 409A of the Code to the extent subject thereto and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted and administered in compliance with Section 409A of the Code.  Any payments described in this Agreement that are due within the “short-term deferral period” or intended to fit within the “separation pay exception” as defined in Section 409A of the Code shall not be treated as deferred compensation for purposes of Section 409A unless otherwise required by the Code. Notwithstanding anything in this Agreement to the contrary, if Company concludes that any of the payments described in Section 7 or Section 10 are subject to Section 409A of the Code, such payments will not be made prior to Executive’s “separation from service” as defined in Treasury Regulation Section 1.409A-1(h)(applying 

the default rules of Treasury Regulation Section 1.409A-1(h). In addition, if the payments described in Section 7 or Section 10 are subject to Section 409A of the Code, and if Executive is a “specified employee” as defined in Treasury Regulation Section 1.409A-1(i)(1) on the date of Executive termination of employment, then, to the extent required by Section 409A of the Code, the payments described in Section 7 or Section 10 shall be delayed and paid on the earlier of (i) first day of the seventh month following Executive’s separation from service or (ii) Executive’s death. Executive acknowledges that Company makes no representations or warranties regarding the tax treatment or tax consequences of any compensation, benefits or other payments under this Agreement, including by operation of Section 409A of the Code to the payments described in this Agreement. Neither the time nor schedule of any payment under this Agreement may be accelerated or subject to further deferral except as permitted by Section 409A of the Code and Executive does not have any right to make any election regarding the time or form of any payment due under this Agreement. For purposes of Section 409A of the Code, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments under Treasury Regulation Section 1.409A-2(b)(2)(iii).
(g)Commissions. During the Term, to the extent Executive is eligible to participate in any sales commission program adopted by the Committee (“Company Commission Plan”), the Committee, in its sole discretion and depending on Executive and Company’s attainment of the performance objectives established by the Committee (i.e., the actual amount payable to Executive may be more or less than the target amount), will determine whether Executive receives the entire annual target commission. In the event Company overpays any commissions to Executive during the Term or thereafter, Executive agrees to promptly refund Company the amount of such overpayment following notice of such overpayment from Company.
6.TERMINATION.  Subject to the respective continuing obligations of the parties pursuant to Sections 8 through 17, this Agreement may be terminated prior to the expiration of its then remaining applicable Term as follows:
(a)By Company.  Company may terminate this Agreement and Executive’s employment under the following circumstances, and in any such case, the compensation due and owing by Company to Executive following any such early termination of this Agreement shall be paid as set forth in Section 7:
(i)For Cause.  Company may terminate this Agreement immediately for “Cause.” For purposes of this Agreement, “Cause” shall be defined as: (1) Executive’s commission of fraud, misrepresentation, theft or embezzlement of Company assets; (2) Executive’s violations of law or of Company policies material to the performance of Executive’s duties; (3) Executive’s repeated insubordination or failure to comply with any valid and legal directive of Executive’s supervisor; (4) Executive’s engagement in dishonesty, illegal conduct, or misconduct, which is, in each case, injurious to Company or its affiliates; (5) Executive’s conviction of, or plea of guilty or nolo contendere to a crime that constitutes either a felony or a misdemeanor involving embezzlement, misappropriation, moral turpitude or fraud, if such crime materially impairs Executive’s ability to perform services for Company or results in harm to Company or its affiliates; (6) Executive’s material breach of the provisions of this Agreement, including specifically, without limitation, the restrictive covenant obligations described in this Agreement; or, (7) the repeated failure to perform Executive’s duties as required by Section 2 after written notice of such failure from Company (other than any such failure resulting from incapacity due to physical or mental illness); provided, however, in the event of any proposed termination for Cause related to Executive’s poor performance, Executive’s termination shall be effective upon the expiration of a thirty (30) day cure period following written notice by Company and a lack of adequate corrective action having been undertaken by Executive to the reasonable satisfaction of Company, in its sole discretion, during such thirty (30) day cure period.
(ii)Without Cause.  Company may terminate this Agreement without Cause by giving eleven (11) months' written notice to Executive. 
(iii)Death.  If Executive should die during the Term of this Agreement, this Agreement shall immediately terminate effective on the date of Executive’s death.
(iv)Disability.  If Executive’s becomes “Disabled” during the Term of this Agreement, this Agreement shall immediately terminate on the effective date of Executive’s Disability.  For purposes of this Agreement, “Disability” and “Disabled” mean that Executive is physically or mentally disabled from performing the essential 

functions of Executive’s position, by reason of either: (1) Executive is unable to perform Executive’s duties under this Agreement by reason of any medically determinable physical or mental impairment that is expected to result in death or is expected to last for a continuous period of not less than twelve (12) months; or (2) Executive is, by reason of any medically determinable physical or mental impairment that is expected to result in death or is expected to last for a continuous period for not less than twelve (12) months, receiving income replacement benefits for a period of not less than twelve (12) months under a long-term disability insurance plan covering Executive.  Notwithstanding anything expressed or implied above to the contrary, Company will fully comply with its obligations under the Americans with Disabilities Act, and with any other applicable federal, state or local law, regulation or ordinance, governing the employment of individuals with disabilities.
(b)By Executive.  Executive may terminate this Agreement for any reason or no reason whatsoever by giving sixty (60) days’ written notice to Company (which notice period may be waived, in writing, by Company), and in such case, the compensation due and owed by Company to Executive following any such early termination of this agreement shall be paid as set forth in Section 7.
7.COMPENSATION PAYABLE FOLLOWING EARLY TERMINATION.
(a)In the event of any termination by Company pursuant to Section 6(a), Executive shall be entitled to the following:
(i)For Cause.  If Company terminates Executive for Cause, Executive’s Base Salary shall immediately cease as of the termination date and Executive shall be entitled to: Executive’s earned and unpaid Base Salary through the termination date, reimbursement for any accrued (but unpaid) expenses through the termination date, and the vested employee benefits, if any, to which Executive is entitled pursuant to the terms and conditions of Company’s benefit plans (the “Accrued Obligations”).
(ii)Without Cause.  
(1)If Company terminates Executive’s employment without Cause, and if Executive signs (and does not revoke) the release described in Section 13, Executive shall be entitled to receive the following:
(a)the Accrued Obligations;
(b)a cash severance payment equal to one (1) month of Executive’s then Base Salary (“Severance Benefit”), payable in substantially equal periodic installments, in accordance with Company’s standard payroll practices and applicable law, with the first installment due during the first payroll period following the effective date of Executive’s termination;  
(c)Executive’s annual target commission, if any, Executive would have received pursuant to the then-existing Company Commission Plan for the calendar year in which Executive’s effective date of termination of employment occurs, with such amount paid during the first payroll period following the date of termination, provided, however, that if Executive’s notice of termination of employment and effective date of such termination occur in different calendar years, Executive shall also receive Executive’s annual actual commissions for the calendar year in which Executive received notice of termination of employment, with such amount paid in the same manner each participant in the Company Commission Plan receives his or her commission; 
(d)to the extent permitted by the applicable equity incentive plan document, any previously awarded but unvested Equity Awards subject solely to time based vesting (collectively, “Time-Based Equity Awards”) that would have vested during the one-month period following the effective date of termination if Executive had remained employed during such period shall vest within ten (10) business days following the effective date of termination;
(e)all XSUs (as defined in XSU Award Agreement) held by Executive, if any, applicable to the Tranches (as defined in the XSU Award Agreement) unattained by Company as of the date of notice 

of termination will vest within ten (10) business days following the expiration of the revocation period applicable to the release described in Section 13 if Company has attained the Market Capitalization Goal (as defined in the XSU Award Agreement) applicable to each respective Tranche as of the date of notice of termination (for purposes of clarity, Company will disregard Operational Goals (as defined in the XSU Award Agreement) in determining whether a Tranche vests pursuant to this subsection) (collectively, “Current XSU Tranche Benefit”);
(f)in addition to any XSUs that vest pursuant to Section 7(a)(ii)(1)(e) above, all XSUs held by Executive, if any, applicable to the lowest-numbered Tranche unattained by Company as of the date of notice that did not vest pursuant to Section 7(a)(ii)(1)(e) above will partially vest, on a prorated basis, within ten (10) business days following the expiration of the revocation period applicable to the release described in Section 13, determined by dividing the (i) excess, if any, of the Six-Month Market Capitalization (as defined in the XSU Award Agreement) over the Market Capitalization Goal of the last attained tranche by (ii) the difference between the Market Capitalization Goal of the lowest-numbered unattained Tranche that did not vest pursuant to Section 7(a)(ii)(1)(e) above and the Market Capitalization Goal of the last attained Tranche, including the Tranche that did vest pursuant to Section 7(a)(ii)(1)(e) above, and (iii) multiplying that percentage by the number of XSUs associated with the unattained Tranche that did not vest pursuant to Section 7(a)(ii)(1)(e) above (for purposes of clarity, Company will disregard Operational Goals in determining whether a Tranche vests pursuant to this subsection) (collectively, “Next XSU Tranche Benefit”); and
(g)a pro rata portion of the annual actual commission Executive would have received pursuant to the then-existing Company Commission Plan had Executive continued employment through the end of calendar year in which Executive’s effective date of termination of employment occurs.
(2) For the avoidance of doubt, if the offer of the release expires or if the release described in Section 13 is timely executed but revoked, the termination or forfeiture of unvested Time-Based Equity Awards shall occur effective upon such expiration or revocation.
(3)For purposes of clarity and notwithstanding the XSU Award Agreement, the Holding Period Requirements (as defined in the XSU Award Agreement) shall not apply with respect to XSUs that vest pursuant to Section 7(a)(ii) above.  Furthermore, and notwithstanding the XSU Award Agreement, in the event no Tranches vest pursuant to Section 7(a)(ii)(1)(e) above, Company shall not be required to issue Executive a number of shares of Stock (as defined in the XSU Award Agreement) pursuant to the XSU Award Agreement (namely, its Section 3(c)) and, instead, Executive will receive the Next XSU Tranche Benefit, if any.
(iii)Death.  In the event of Executive’s death, and if Executive’s spouse (or representative of Executive’s estate) signs (and does not revoke) the release described in Section 13, Executive’s spouse (or estate) shall be entitled to the following; 
(1)Accrued Obligations and the Severance Benefit (except the amount of the cash severance payment shall be increased from one (1) month to eighteen (18) months), with the first installment due for the first payroll period following the expiration of the release revocation period described in Section 13, below;  
(2)a pro rata portion of the annual target commission Executive would have received pursuant to the then existing Company Commission Plan had Executive continued employment through the end of the calendar year in which Executive’s death occurs, with such amount paid to Executive’s spouse (or estate) at the same time and in the same manner each participant in the Company Commission Plan receives his or her commission; and, 
(3)to the extent permitted by the applicable Equity Award agreement, any previously awarded (but unvested) Equity Awards shall vest within ten (10) business days following the expiration of the revocation period applicable to the release described in Section 13, and in the event performance-based Equity Awards vest pursuant to this Subsection 7(a)(iii)(3), such vesting occurs according to the target for such Equity Awards as opposed to actual attainment. 

(iv)Disability.  In the event of Executive’s Disability, and if Executive (or lawfully authorized representative of Executive) signs (and does not revoke) the release described in Section 13, Executive shall be entitled to the following: 
(1)Accrued Obligations and the Severance Benefit (except the amount of the cash severance payment shall be increased from one (1) to eighteen (18) months), with the first installment due for the first payroll period following the expiration of the release revocation period described in Section 13, below;  
(2)a pro rata portion of the annual target commission Executive would have received pursuant to the then existing Company Commission Plan had Executive continued employment through the end of the calendar year in which Executive’s termination of employment occurs, with such amount paid to Executive at the same time and in the same manner each participant in the Company Commission Plan receives his or her commission; and, 
(3)to the extent permitted by the applicable Equity Award agreement, any previously awarded (but unvested) Equity Awards shall vest within ten (10) business days following the expiration of the revocation period applicable to the release described in Section 13, and in the event performance-based Equity Awards vest pursuant to this Subsection 7(a)(iv)(3), such vesting occurs according to the target for such Equity Awards as opposed to actual attainment.
(v) Any payments made pursuant to this subsection shall first be provided and paid pursuant to Company’s existing disability policy, as then in effect, and then will be further supplemented by Company as provided for in this subsection. 
(b)Resignation.  In the event of any termination by Executive pursuant to Section 6(b), Executive shall be entitled to the Accrued Obligations.
8.CONFIDENTIAL INFORMATION. 
(a)Executive agrees to maintain the confidentiality of and not use, directly or indirectly, confidential and proprietary information of Company. Confidential information includes but not limited to: (i) matters of a technical nature such as materials, models, devices, products, trade secret processes, techniques, data, formulas, inventions (whether or not patentable), specifications and characteristics of products and services planned or being developed; (ii) research subjects, methods and results; (iii) matters of a business nature such as information about costs, margins, pricing policies, markets, sales, suppliers, customers, product plans and marketing plans or strategies; (iv) recorded communication; or (v) other information of a similar nature that is not generally disclosed to the public (“Confidential Information”). Executive represents that Executive will return all Company Confidential Information in Executive’s possession to Company upon termination of Executive’s employment with Company.
(b)Executive agrees that, following Executive’s termination of employment for any reason, Executive will not directly or indirectly, alone or as a partner, officer, director, or shareholder of any other firm or entity, use the Confidential Information to solicit or attempt to influence any client, customer or other person to direct its purchase of products or services away from Company.
(c)The parties agree to maintain absolute confidentiality and secrecy concerning the terms of this Agreement and will not reveal, or disseminate by publication in any manner whatsoever this document or any matters pertaining to it to any other person except (i) Executive may disclose this Agreement to potential employers, in order to comply with his obligations contained herein; and (ii) as required by legal process or SEC rules (including, without limitation, any SEC rules designed to protect “whistle blowers”); and (iii) this Agreement does not limit Executive’s ability to communicate with any government agencies regarding matters within their jurisdiction or otherwise participate in any investigation or proceeding that may be conducted by any government agency, including providing documents or other information, without notice, to the government agencies. This confidentiality provision does not apply to communications necessary between Company management, its attorneys and auditors or members of its Board of Directors, Executive’s immediate family members, attorneys, or legal and financial planners or tax preparers who are also bound by this confidentiality provision. Nothing in this Agreement shall prevent Executive from the disclosure 

of confidential Information or trade secrets that: (i) is made: (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  In the event that Executive files a lawsuit alleging retaliation by Company for reporting a suspected violation of law, Executive may disclose Confidential Information or trade secrets related to the suspected violation of law or alleged retaliation to Executive’s attorney and use the Confidential Information or trade secrets in the court proceeding if Executive or Executive’s attorney: (i) files any document containing Confidential Information or trade secrets under seal; and (ii) does not disclose the Confidential Information or trade secrets, except pursuant to court order.  Company provides this notice in compliance with the Defend Trade Secrets Act of 2016.
(d)All information which Executive has a reasonable basis to consider Confidential Information or which is treated by Company as being Confidential Information shall be presumed to be Confidential Information, whether originated by Executive, or by others, and without regard to the manner in which Executive obtains access to such information.
(e)Executive agrees that Company shall have the right to notify any future or prospective employers, or individuals or entities with whom Executive may be entering into a contractual relationship, of the provisions of this Section 8 for purposes of ensuring that Company’s interests are protected.  
9.INVENTIONS.  
(a)For purposes of this Section 9, the term “Inventions” means discoveries, improvements and ideas (whether or not in writing or reduced to practice) and works of authorship, whether or not patentable or copyrightable: (i) which relate directly to the business of Company, or to Company’s actual or demonstrably anticipated research or development; (ii) which result from any work performed by Executive for Company; (iii) for which equipment, supplies, facilities or trade secret information of Company is utilized; or (iv) which were conceived or developed during the time Executive was obligated to perform the duties described in Section 2.
(b)Executive agrees that all Inventions made, authored or conceived by Executive, either solely or jointly with others, during Executive’s employment with Company (except as otherwise provided above), shall be the sole and exclusive property of Company. Upon termination of this Agreement, Executive shall turn over to a designated representative of Company all property in Executive’s possession and custody belonging to Company. Executive shall not retain any copies or reproductions of correspondence, memoranda, reports, notebooks, drawings, photographs or other documents relating in any way to the affairs of Company which came into Executive’s possession at any time during the Term of this Agreement.
(c)Executive is hereby notified that this Agreement does not apply to any invention for which no equipment, supplies, facility, or trade secret information of Company was used and which was developed initially on Executive’s own time and: (i) which does not relate: (1) directly to the business of Company; or (2) to Company’s actual or demonstrably anticipated research, development or products; or (ii) which does not result from any work performed by Executive for Company.
10.CHANGE IN CONTROL.
(a)General.  It is expressly recognized that Executive’s position with Company and agreement to be bound by the terms of this Agreement represent a commitment in terms of Executive’s personal and professional career which cannot be reduced to monetary terms, and thus, necessarily constitutes a forbearance of options now and in the future open to Executive in Company’s areas of endeavor.  This Section 10 is intended to allay any concerns Executive may have in connection with a potential Change in Control. For purposes of this Agreement, “Change in Control” shall have the meaning ascribed to it in Company’s 2019 Stock Incentive Plan (or any successor equity incentive plan adopted by Company in the future).
(b)Termination by Executive for Good Reason Following a Change in Control. If, during the Term of this Agreement, a Change in Control occurs, and if Executive terminates Executive’s employment for Good Reason 

during the thirty-six (36) month period following such Change in Control, and if Executive signs (and does not revoke) the release described in Section 13, Executive shall be entitled to receive:
(i)The Accrued Obligations and the Severance Benefit (except the amount of the cash severance payment shall be increased from one (1) month to thirty-six (36) months), payable in substantially equal periodic installments, in accordance with Company’s standard payroll practices, with the first installment due during the first payroll period following the expiration of the release revocation period described in Section 13, below.
(ii)A pro rata portion of the annual target commission Executive would have received pursuant to the then existing Company Commission Plan (or any successor plan) had Executive continued employment through the end of the calendar year in which Executive’s termination of employment occurs, with such amount paid to Executive at the same time and in the same manner each participant in the Company Commission Plan receives his or her commission.
(iii)To the extent permitted by the then existing equity incentive plan document, any previously awarded (but unvested) Equity Awards (both time and performance-based), and other forms of equity that may have been previously awarded to Executive shall vest within ten (10) business days following the expiration of the revocation period applicable to the release described in Section 13 and, to the extent permitted by Section 409A of the Code, shall become immediately payable and/or exercisable within ten (10) days following the expiration of the release revocation period; provided, however that the foregoing shall not apply to XSUs, which shall be treated as set forth in the applicable Equity Award agreement.  Any termination or forfeiture of unvested Equity Awards that could vest pursuant to the prior sentence and otherwise would have occurred on or prior to the effective date of the release will be delayed until such date. For the avoidance of doubt, if the offer of the release expires or if the release is timely executed but revoked, the termination or forfeiture of unvested Equity Awards shall occur effective upon such expiration or revocation.  Notwithstanding the foregoing, any performance-based Equity Awards that vest pursuant to this Subsection 10(b)(iii) shall vest according to the target for such Equity Awards as opposed to actual attainment.
(iv)An additional lump sum cash payment equal to twelve (12) times the monthly amount that is charged to COBRA qualified beneficiaries for the same medical and dental coverage options elected by Executive (and Executive’s dependents) immediately prior to the termination date, with such amount payable during the first payroll period following the expiration of the release revocation period described in Section 13.
(v)For purposes of this Section 10(b), “Good Reason” means: (1) a material reduction of Executive’s duties, authority or responsibilities, in effect immediately prior to such reduction; (2) a material reduction of Executive’s then-existing Base Salary; or (3) Company’s material breach of this Agreement. Notwithstanding the foregoing, no termination by Executive shall constitute a termination for Good Reason unless: (x) Executive gives Company notice of the existence of the condition constituting Good Reason within thirty (30) days following the initial occurrence thereof; (y) Company does not remedy or cure the Good Reason condition within thirty (30) days of receiving such notice described in (x); and (z) Executive terminates employment within thirty (30) days following the end of the cure period described in (y).
(c)Termination by Company Prior to a Change in Control.  If, during the Term of this Agreement, Executive’s employment is terminated without Cause during the six (6) month period preceding a Change in Control at the request of a third party purchaser in contemplation of such Change in Control, and such Change in Control is consummated by such third-party purchaser, upon the closing of such Change in Control, if Executive signs (and does not revoke) the release described in Section 13, Executive shall be entitled to receive: 
(i)The Accrued Obligations and the Severance Benefit (except the amount of the severance cash payment shall be increased from one (1) month to thirty-six (36) months), payable in substantially equal periodic installments, in accordance with Company’s standard payroll practices, with the first installment due during the first payroll period following the expiration of the release revocation period described in Section 13, below.
(ii)A pro rata portion of the annual target commission Executive would have received pursuant to the then existing Company Commission Plan (or any successor plan) had Executive continued employment through 

the end of the calendar year in which Executive’s termination of employment occurs, with such amount paid to Executive at the same time and in the same manner each participant in the Company Commission Plan receives his or her commission.
(iii)To the extent permitted by the then existing equity incentive plan document, any previously awarded (but unvested) Equity Awards, and other forms of equity that may have been previously awarded to Executive shall vest within ten (10) business days following the expiration of the revocation period applicable to the release described in Section 13; provided, however that the foregoing shall not apply to XSUs, which shall be treated as set forth in the applicable Equity Award agreement. Notwithstanding the foregoing, any performance-based Equity Awards that vest pursuant to this Subsection 10(c)(iii) shall vest according to the target for such Equity Awards as opposed to actual attainment.
(iv)An additional lump sum cash payment equal to twelve (12) times the monthly amount that is charged to COBRA qualified beneficiaries for the same medical and dental coverage options elected by Executive (and Executive’s dependents) immediately prior to the termination date, with such amount payable during the first payroll period following the expiration of the release revocation period described in Section 13.
(d)XSU; Termination by Company Without Cause.  Notwithstanding anything to the contrary set forth in the applicable XSU Award Agreement or the Plan, if Executive’s employment is terminated by Company without Cause during the ninety (90) days prior to, or one (1) year after, a Change in Control, and if Executive signs (and does not revoke) the release described in Section 13, then Executive shall receive the Current XSU Tranche Benefit and Next XSU Tranche Benefit, subject to the terms and conditions of Sections 7(a)(ii)(1)(e) and 7(a)(ii)(1)(f) above.
11.Executive Covenants.  In consideration of Executive’s continued employment with Company and the benefits and payments described in this Agreement, Executive agrees to comply with and adhere to the following covenants during Executive’s period of employment with Company, including during any notice period of termination of employment and during a period of twelve (12) months commencing upon notice of termination of Executive’s employment with Company for any reason:
(a)Covenant Not to Compete.  Executive agrees that during the Term of this Agreement, including the notice of termination of employment periods specified in this Agreement and during the twelve (12) month period following notice of termination of Executive’s employment with Company for any reason (the “Non-Compete Period”), Executive will not, directly or indirectly, own, control, manage, operate, or act for or on behalf of, assist in, engage in, have any financial interest in, or participate in any way, including as an owner, partner, employee, officer, agent, board member, consultant, advisor, volunteer, shareholder or investor in any entity, person, business or enterprise that is engaged in the design, manufacture, marketing, selling, importing, exporting, servicing or supporting of less lethal weapons, law enforcement cameras, digital evidence management, Record Management Systems, machine learning, artificial intelligence or any other technology or products that Company is engaged in or is on the roadmap to enter over the Non-Compete Period at the time of termination of employment; or related professional services marketed, sold or provided to public safety customers in connection with the products mentioned above throughout the world (the “Company Business”).
Executive acknowledges that Executive’s continued employment with Company and the payments specified in this Agreement are sufficient consideration for this covenant not to compete.  Executive further acknowledges that Company is engaged in marketing and selling its products throughout the world and that this Covenant Not to Compete is necessary and reasonable to protect Company and that Company will suffer irreparable harm and other damages in the event of a breach of this provision.  Executive acknowledges that Executive’s training and experience have prepared him/her for employment or other business opportunities to sell product and perform services for businesses other than those in the Company Business.  Accordingly, Executive acknowledges that the restrictions contained in this covenant not to compete will not unduly prevent him from obtaining employment or business opportunities other than in the Company Business.  Executive also acknowledges that the time, scope and the geographic area of this Covenant Not to Compete are reasonable and necessary to protect the interests of Company and the Company Business.  

(b)No Solicitation of Customers.  Executive shall not contact, or cause to be contacted, directly or indirectly, or engage in any form of oral, verbal, written, recorded, transcribed, or electronic communication with any Customer for the purposes of conducting business that is competitive or similar to that of Company or for the purpose of disadvantaging Company’s business in any way.  It is not a breach of this subsection for Executive to respond to an unsolicited inquiry from a Customer by informing that Customer that “I am subject to a contractual restriction and am unable to assist you,” or words of similar effect.  For purposes of this Agreement, “Customer” shall mean all persons or entities that have used or inquired of Company’s services concerning Covered Business at any time during the Term.  Executive acknowledges and agrees that Company’s list of Customers was cultivated with great effort and secured through the expenditure of considerable time and money by Company.
(c)Covenant Not to Recruit and Hire.  Executive shall not: (i) directly or indirectly hire, solicit, or recruit, or attempt to hire, solicit, or recruit, any employee of Company to leave their employment with Company, nor shall Executive contact any employee of Company, or cause an employee of Company to be contacted, for the purpose of leaving employment with Company; or (ii) solicit, encourage, or induce, or cause to be solicited, encouraged or induced, directly or indirectly, any supplier, vendor or contractor who conducted business with Company at any time during the two-year period preceding the termination of Executive’s employment with Company, to terminate or adversely modify any business relationship with Company or not to proceed with, or enter into, any business relationship with Company, nor shall Executive otherwise interfere with any business relationship between Company and any such supplier, vendor or contractor.
(d)Covenant Not to Disparage.  Executive agrees not to make any statements, written or verbal, or cause or encourage others to make any statements, written or verbal, including but not limited to any statements made via social media, on websites or blogs, that defame, disparage or in any way criticize the personal or business reputation, practices, or conduct of Company, or any of its affiliates, its directors, officers, employees, or its products. Executive acknowledges and agrees that this prohibition extends to statements, written or verbal, made to anyone, including but not limited to, the news media, any member of the Board of Directors or advisory board, competitors, vendors, employees (past and present) and clients.
(e)Acknowledgements.  Executive further acknowledges that Executive’s fulfillment of the obligations contained in this Agreement, including, but not limited to, his obligation neither to disclose nor to use Company Confidential Information other than for Company’s exclusive benefit and Executive’s obligations not to compete and not to solicit contained in subsections (a) and (b) above, is necessary to protect Company Confidential Information and, consequently, to preserve the value and goodwill of Company.  The covenants set forth in subsections (a) through (e) above are necessarily of a special, unique and extraordinary nature, and the loss arising from a breach thereof cannot reasonably and adequately be compensated by money damages, as such breach will cause Company to suffer irreparable harm.  Accordingly, in the event of any breach or threatened breach of any of the covenants set forth in this subsections (a) through (e) above, Company will be entitled to seek an injunctive or other extraordinary relief from a court of competent jurisdiction to restrain the violation or threatened violation of such covenants by Executive or any person acting for or with Executive in any capacity.  The remedy set forth herein will be cumulative and not in limitation of any other available remedies.
The covenants contained in subsections (a) through (e) above shall be construed as a series of separate covenants, one for each city, county and state of any geographic area in which Company sold products or services.  In the event that the provisions of subsections (a) through (e) above are deemed to exceed the time, geographic or scope limitations permitted by applicable law, then such provisions shall be reformed to the maximum time, geographic or scope limitations, as the case may be, then permitted by such law.  In the event that the court does not exercise the power granted to it in the prior sentence, Executive and Company agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term.
12.NO ADEQUATE REMEDY.  The parties declare that is impossible to measure in money the damages which will accrue to either party by reason of a failure to perform any of the obligations under this Agreement. Therefore, if either party shall institute any action or proceeding to enforce the provisions hereof, such person against whom such action or proceeding is brought hereby waives the claim or defense that such party has an adequate remedy at law, and 

such person shall not urge in any such action or proceeding the claim or defense that such party has an adequate remedy at law.
13.General Release of Claims by Executive.  To receive the severance and/or benefits described in Section 7 or Section 10, Executive (or Executive’s spouse or estate, if applicable) must no later than sixty (60) days following Executive’s termination date (or in the case of Section 10(b), no later than sixty (60) days following the date of the Change in Control), execute (and not revoke) a release in substantially the form attached hereto as Exhibit A. The release shall be provided to Executive prior to, or within, five (5) days following Executive’s termination (or a Change in Control, if applicable). Executive (or Executive’s spouse or estate, if applicable) shall have twenty-one (21) days following the date on which the release is given to Executive (or Executive’s spouse or estate, if applicable) to sign and return the release to Company. After return to Company, Executive (or Executive’s spouse or estate, if applicable) shall have seven (7) days to revoke the release.  Notwithstanding anything in this Agreement to the contrary, if Company concludes, in the exercise of its discretion, that the severance and/or benefits are subject to Section 409A of the Code, and if the consideration period described in the release, plus the revocation period described in the release spans two (2) calendar years, the severance payments and benefits shall not begin to be paid to Executive (or Executive’s spouse or estate, if applicable) until the second calendar year.
14.Company Property.  All computers, tablets, phones, equipment, records, files, records, lists (including computer generated lists), data, drawings, documents, equipment and similar items relating to Company’s business that Executive generated or received from Company remains Company’s sole and exclusive property. Executive further represents that Executive has not copied or caused to be copied, printout, or caused to be printed out any documents or other material originating with or belonging to Company. Executive agrees to promptly return to Company all property of Company in Executive’s possession upon termination of his employment with Company including all Company documents, equipment, or other materials.
15.EXECUTIVE WARRANTIES AND REPRESENTATIONS.  Executive warrants and represents that:
(a)Except as otherwise provided in this Agreement, Company has paid all wages, bonuses, commissions, and any and all other benefits due to Executive up to the date that Executive has signed this Agreement;
(b)Throughout Executive’s employment, up to the date that Executive has signed this Agreement, Executive was fully and appropriately compensated for all hours worked in accordance with the Fair Labor Standards Act and other applicable laws, if any;
(c)Up to the date that Executive has signed this Agreement, Executive has been provided with all leave to which Executive is entitled under Company policy and applicable law, including but not limited to the Family and Medical Leave Act;
(d)Executive has carefully read and fully understands the terms and conditions of this Agreement;
(e)Executive is not waiving rights or claims that may arise after the date this Agreement is executed;
(f)Executive is executing this Agreement knowingly and voluntarily, without any duress, coercion or undue influence by Company, its representatives, or any other person;
(g)Executive has not relied upon any representations or statements made by Company or its representatives which are not specifically set forth in this Agreement;
(h)Executive has had ample opportunity to consult with an attorney of Executive’s choice and to have that attorney review and explain to Executive the terms of this Agreement and its consequences before executing this Agreement;
(i)Executive has the capacity to act on Executive’s own behalf and on behalf of all who might claim through Executive to bind them to the terms and conditions of this Agreement;

(j)Executive has pending no claim, complaint, grievance or any document with any federal or state agency or any court seeking money damages or relief against Company; and
(k)The benefits in this Agreement constitute good and valuable consideration and Executive is fully satisfied with the terms and conditions of this Agreement.
16.Cooperation.  Executive agrees, during the Term and all time thereafter, to cooperate with Company regarding any claims, litigation, or related matters involving Company, including providing truthful: (a) information by phone, email, or otherwise upon reasonable request; and (b) testimony by deposition or in court as may be reasonably required, with Company paying reasonable compensation, travel and per diem expenses.
17.MISCELLANEOUS.
(a)Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of all successors and assigns of Company, whether by way of merger, consolidation, operation of law, assignment, purchase or other acquisition of substantially all of the assets or business of Company and shall only be assignable under the foregoing circumstances and shall be deemed to be materially breached by Company if any such successor or assign does not absolutely and unconditionally assume all of Company’s obligations to Executive hereunder. Any such successor or assign shall be included in the term “Company” as used in this Agreement.
(b)Notices.  All notices, requests and demands given to, or made, pursuant hereto shall, except as otherwise specified herein, be in writing and be delivered or mailed to any such party at its address which:
		
	(i)
	In the case of Company shall be:

Axon Enterprise, Inc.
17800 North 85th Street
Scottsdale, Arizona 85255

		
	(ii)
	In the case of Executive shall be:

Executive’s current address or email address on file with Company
Either party may, by notice hereunder, designate a change of address. Any notice, if mailed properly addressed, postage prepaid, registered or certified mail, shall be deemed dispatched on the registered date or that stamped on the certified mail receipt, and shall be deemed received within the fifth business day thereafter, or when it is actually received, whichever is sooner.
(c)Captions.  The various headings or captions in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement.
(d)Governing Law.  The validity, construction, rights, obligations, remedies and performance of this Agreement shall be governed by the laws of the State of Arizona. The parties agree that any action or proceeding initiated to enforce this Agreement shall be brought solely in the State of Arizona. Any dispute involving or affecting this agreement, or the services to be performed shall be determined and resolved by binding arbitration in the County of Maricopa, State of Arizona, in accordance with the Rules of the American Arbitration Association then in effect, and with applicable law. BY SIGNING THIS AGREEMENT, EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY DISPUTE DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT.  Both parties will bear their own costs, attorneys’ fees and other expenses incurred in connection with the preparation and/or review of this Agreement.  Should Executive or Company employ an attorney to enforce any of the provisions of this Agreement, or to recover damages for the breach of any terms of this Agreement, the prevailing party shall be entitled to recover all reasonable costs, damages and expenses, including attorneys’ fees incurred or expended in 

connection therewith.  The phrase “prevailing party” shall mean the party who is determined in the proceeding to have prevailed or who prevails by dismissal, default, judgment, or otherwise.
(e)Construction.  Wherever 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 shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement.
(f)Waivers.  No failure on the part of either party to exercise, and no delay in exercising, any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any right or remedy granted hereby or by any related document or by law.
(g)No Conflicting Business.  Executive agrees that he will not, during the Term of this Agreement, transact business with Company personally, or as an agent, owner, partner, shareholder of any other entity; provided, however, Executive may enter into any business transaction that is, in the opinion of Company’s Board of Directors, reasonable, prudent or beneficial to Company, so long as any such business transaction is at arms-length as though between independent and prudent individuals and is ratified and approved by Company’s Board of Directors.
(h)Tax Consequences.  Company makes no representations or warranties with respect to the tax consequences of the payment of any sums to Executive under the terms of this Agreement. Executive agrees and understands that Executive is responsible for payment, if any, of local, state and federal taxes on the sums paid by Company and any penalties or assessments.
(i)Entire Agreement.  This Agreement contains the complete, entire understanding of the parties. In executing this Agreement, neither party relies on any term, condition, promise or representation other than those expressed in this Agreement. This Agreement supersedes all prior and contemporaneous oral and written agreements and discussions with respect to the subject matter of this Agreement and all prior employment agreements are deemed cancelled and terminated. This Agreement is intended to be effective in its entirety and if any provision of this Agreement is determined to be invalid or otherwise unenforceable, then the entire Agreement shall be deemed invalid or unenforceable.
(j)Counterparts.  This Agreement shall be executed in at least two counterparts, each of which shall constitute an original, but both of which, when taken together, will constitute one in the same instrument.
(k)Amendment.  This Agreement may be modified only by written agreement executed by both parties hereto.
18.SECTION 280G OF THE CODE.  Sections 280G and 4999 of the Internal Revenue Code (“Code”) may place significant tax burdens on both Executive and Company if the total payments made to Executive due to certain change in control events described in Section 280G of the Code (the “Total Change in Control Payments”) equal or exceed Executive’s 280G Cap.  For this purpose, Executive’s “280G Cap” is equal to Executive’s average annual compensation in the five (5) calendar years preceding the calendar year in which the change in control event occurs (the “Base Period Income Amount”) times three (3).  If the Total Change in Control Payments equal or exceed the 280G Cap, Section 4999 of the Code imposes a 20% excise tax (the “Excise Tax”) on all amounts in excess of one (1) times Executive’s Base Period Income Amount.  In determining whether the Total Change in Control Payments will equal or exceed the 280G Cap and result in the imposition of an Excise Tax, the provisions of Sections 280G and 4999 of the Code and the applicable Treasury Regulations will control over the general provisions of this Section 18. All determinations and calculations required to implement the rules set forth in this Section 18 shall take into account all applicable federal, state, and local income taxes and employment taxes (and for purposes of such calculations, Executive shall be deemed to pay income taxes at the highest combined federal, state and local marginal tax rates for the calendar year in which the Total Change in Control Payments are to be made, less the maximum federal income tax deduction that could be obtained as a result of a deduction for state and local taxes (the “Assumed Taxes”)).

(a)Subject to the “best net” exception described in Section 18(b), in order to avoid the imposition of the Excise Tax, the total payments to which Executive is entitled under this Agreement or otherwise will be reduced to the extent necessary to avoid equaling or exceeding the 280G Cap, with such reduction first applied to the cash severance payments that Executive would otherwise be entitled to receive pursuant to this Agreement and thereafter applied in a manner that will not subject Executive to tax and penalties under Section 409A of the Code.
(b)If Executive’s Total Change in Control Payments minus the Excise Tax and the Assumed Taxes (payable with respect to the amount of the Total Change in Control Payments) exceeds the 280G Cap minus the Assumed Taxes (payable with respect to the amount of the 280G Cap), then the total payments to which Executive is entitled under this Agreement or otherwise will not be reduced pursuant to Section 18(a).  If this “best net” exception applies, Executive shall be fully responsible for paying any Excise Tax (and income or other taxes) that may be imposed on Executive pursuant to Section 4999 of the Code or otherwise.
(c)Company will engage a law firm, a certified public accounting firm, and/or a firm of reputable executive compensation consultants (the “Consultant”) to make any necessary determinations and to perform any necessary calculations required in order to implement the rules set forth in this Section 18.  The Consultant shall provide detailed supporting calculations to both Company and Executive and all fees and expenses of the Consultant shall be borne by Company.  If the provisions of Section 280G and 4999 of the Code are repealed without succession, this Section 18 shall be of no further force or effect.  In addition, if this provision does not apply to Executive for whatever reason, this Section shall be of no further force or effect.
[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the Execution Date.
	
			
	AXON:
	EXECUTIVE:
	 

	AXON ENTERPRISE, INC., a corporation organized under the laws of the State of Delaware, U.S.A.
	Joshua M. Isner, an individual
	 

	By: /s/ Luke S. Larson
	By: /s/ Joshua M. Isner

	Name: Luke S. Larson
	 

	Title: President
	 
	 

	 
	 
	 

Exhibit A

Form of Release Agreement

This Confidential Severance Agreement and General Release (“Release”) is made and entered into by and between Joshua M. Isner (“Employee”) and Axon Enterprise, Inc., a Delaware corporation (“Axon” or the “Company”) (Employee and Axon are collectively referred to as the “Parties” and separately as a “Party”).  This Release is intended to settle and dispose of all liability, rights, claims, demands, actions or causes of action that Employee may have against Axon and/or its current or former shareholders, principals, parent companies, subsidiaries, affiliated companies, divisions, directors, officers, employees, staff, agents, contractors, assigns, affiliates, attorneys, predecessors, successors, indemnitors, insurers, and all those for whom the above referenced parties may have legal responsibility (collectively referred to as the “Released Parties”). 
RECITALS
A.    Employee and Axon mutually agree that Employee’s employment with Company will terminate effective __________________.  
B.    In consideration for the severance benefits described in Executive Employment Agreement entered into by and between Axon and Employee dated _______________ (the “Employment Agreement”), Employee agrees as follows:
COVENANTS
NOW, THEREFORE, IN CONSIDERATION of the covenants, agreements, recitals and promises provided and identified herein, the sufficiency of which is expressly acknowledged, the Parties agree as follows:
1.    Severance.  Provided that Employee signs and complies with this Release and has not exercised Executive’s right of revocation pursuant to section 2(b)(ii), Axon agrees to pay to Employee the severance and benefits described in the Employment Agreement (the “Severance Benefits”), at the times, and subject to the terms and conditions set forth in the Employment Agreement.  Employee acknowledges and agrees that Executive would not otherwise have been entitled to the Severance Benefits had Executive not elected to sign this Release.  Employee acknowledges that Executive has been paid all of Executive’s salary, wages, bonuses, accrued vacation and paid time off (if applicable), commissions, referral fees, penalties, benefits, or any other monies owed to Employee by or from any of the Released Parties, Executive is owed (and shall be owed in the future) nothing further from any of the Released Parties. 

1.Employee’s Release.  In consideration of the covenants set forth herein:
		
	(a)
	Full Release and Waiver.  Employee, on behalf of himself/herself, Executive’s marital community, if any, and Executive’s heirs and assigns, irrevocably, unconditionally, and expressly releases, waives, acquits, and forever discharges the Released Parties from any and all claims, complaints, causes of action, liabilities, obligations, agreements, controversies, damages, suits, rights, costs, losses, debts, expenses, and demands of any kind (including attorneys’ fees and costs actually incurred) of any nature whatsoever, whether known or unknown, suspected or unsuspected which Employee has, ever has had, or may have and which are based on acts or omissions which Employee knew or should have known about at the time of the signing of this Release.  This FULL RELEASE AND WAIVER includes, without limitation and to the fullest extent permitted by law, all rights and claims arising under the following laws, as amended: Title VII of the Civil Rights Act; Civil Rights Act of 1866 (Section 1981); Lilly Ledbetter Fair Pay Act; Fair Credit Reporting Act; Labor Management Relations Act; Equal Pay Act; Americans with Disabilities Act; Age Discrimination in Employment Act; Fair Labor Standards Act; Older Workers Benefits Protection Act; Family Medical Leave Act; Rehabilitation Act; Occupational Safety and Health Act and its state equivalent; Genetic Information Nondiscrimination Act; Pregnancy Discrimination Act; False Claims Act; Sarbanes-Oxley Act; Employment Retirement Income Security Act; National Labor Relations Act; Health Insurance 

Portability and Accountability Act; Arizona Civil Rights Act; Arizona Drug Testing of Employees Act; Arizona Medical Marijuana Act; the anti-retaliation provisions of Arizona workers’ compensation; Arizona Employment Protection Act; Arizona state wage payment laws including the Arizona Wage Act, Arizona Minimum Wage Act, and Arizona Equal Pay Act; wage claims of all types, including, but not limited to, those for non-payment, late payment, overtime, rest periods, meal periods, bonuses, deductions, wage statements, and/or penalties; wrongful termination in violation of public policy; unfair business practices; any other local, state, or federal statute, regulation, or ordinance; any contract, express or implied; any covenant of good faith and fair dealing, express or implied; any state or federal whistleblower statute or regulation; any tort; any legal restriction on Axon’s right to terminate Employee; and/or other common law or statutory causes of action Employee may now have, has had, or could have been alleged as of the Effective Date.  Employee understands that Employee is not releasing or giving up any claims for any events or actions that happen after Executive signs this Release.
		
	(i)
	Employee promises and covenants not to file, commence, or initiate any suits, grievances, demands, or causes of action against the Released Parties on the basis of any claim released herein.

		
	(ii)
	This Release includes any claims that Employee’s spouse, agents, heirs, or assigns, if any, may have against the Released Parties, including those arising from or in any way related to Employee’s work and/or employment with Axon and/or the Released Parties.  

		
	(iii)
	It is understood and agreed that this is a full, complete and final general release of any and all claims, as described herein, and that Employee and Axon agree that it shall apply to all unknown, unanticipated, unsuspected and undisclosed claims, demands, liabilities, actions or causes of action, in law, equity or otherwise, as well as those which are now known, anticipated, suspected or disclosed.  

		
	(iv)
	This Release does not apply to any claim Employee may have under the workers’ compensation or unemployment compensation statutes or any other claim, which, as a matter of law, cannot be released by private agreement.  

		
	(1)
	This Release does not limit Employee’s ability to communicate with any applicable government agencies or otherwise participate in any manner in any investigation or proceeding that may be conducted by any government agency.  This Release is not intended to affect the rights and responsibilities of government agencies to enforce the laws within their jurisdiction, including but not limited to the Equal Employment Opportunity Commission (“EEOC”), the National Labor Relations Board (“NLRB”), the Occupational Safety and Health Administration (“OSHA”),  the Arizona Division of Occupational Safety and Health (“ADOSH”), the Securities and Exchange Commission (“SEC”), the Civil Rights Division of the Arizona Attorney General Office (“ACRD”), or any other applicable local, state, or federal agency.  This means that by signing this Release, Employee may still exercise Executive’s protected right to file an administrative charge with, or participate in an investigation or proceeding conducted by, a local, state, or federal government agency.  However, if a government agency commences an investigation or other legal action against the Released Parties on Employee’s behalf, Employee specifically waives and releases Executive’s right to recover monetary damages or other benefits or remedies of any sort whatsoever arising from the governmental action (including any legal action, agency charge, lawsuit, claim, proceeding, or investigation against the Released Parties).  The aforementioned waiver of monetary damages and other benefits or remedies does not apply to the Securities Exchange Act of 1934 or the Dodd-Frank Wall Street Reform and Consumer Protection Act, if applicable.  Employee acknowledges that this Release 

may be used by the Released Parties as a defense to any actions taken by Employee that may be in violation of this Release. 
		
	(v)
	Employee represents that Executive has not filed any charge or complaint with, or participated in, an investigation or proceeding conducted by the EEOC, NLRB, OSHA/ADOSH, SEC, ACRD or any other local, state, or federal government entity or agency.  Employee specifically acknowledges and represents that Executive has already disclosed to Company any and all information, if any, regarding any action or inaction that Executive reasonably believes, or believed to be, taken by the Released Parties and in violation of law.  To the extent Employee has not made such disclosures to date, Employee represents such information, if any, does not or did not exist to disclose now or in the future. 

		
	(b)
	Waiver of Age Discrimination in Employment Claims.  As noted above, this Release is intended to release and discharge all claims Employee may have under the Age Discrimination in Employment Act (“ADEA”).  To satisfy the requirements of the Older Workers’ Benefits Protection Act (“OWBPA”), Employee acknowledges the following:

		
	(i)
	Employee has read and understands the terms of this Release.  Employee acknowledges that Executive has 21 calendar days from receipt of this Release to consider whether to sign this Release and that Employee may sign the Release any time within this time period.  If Employee signs before the 21-day period expires, Employee does so to expedite the Release and waives the right to take the remaining days to consider the Release.  Employee understands and agrees that the Release will be automatically revoked and withdrawn if not accepted and delivered to Human Resources at Company’s address with a copy to Legal@Company.com within 21 calendar days after receipt.

		
	(ii)
	Employee can revoke Employee’s signature any time within seven (7) calendar days after signing it.  To revoke Employee’s signature pursuant to the OWBPA, Employee must do so in writing, sent to Human Resources at Company’s address with a copy to Legal@Company.com before the expiration of the seven-day period.  If Employee’s signature is not revoked at the expiration of the seven days, this Release will be enforceable and irrevocable.

		
	(iii)
	Employee agrees that this Release is not effective and no money will be paid or owed towards the Severance Benefits until all of the following have occurred:  (1) Employee signs the Severance Release in the time period identified in this section above; and (2) the 7-day revocation period contained in this section has passed; and (3) Employee has not revoked Employee’s signature during this time period (hereinafter the “Effective Date”).  If Employee does not timely sign and/or revokes this Release, then this Release shall be null and void, and no payments shall be made and/or due under this Release.

		
	(iv)
	Employee understands that this waiver and release does not apply to any rights or claims that may arise after execution date of this Release.  Employee has been advised hereby that Employee has the right to consult with an attorney, if desired, prior to executing this Release and acknowledges that Executive has received all advice Employee deems necessary concerning this Release.

2.Confidentiality of Release.  Employee agrees to treat all terms and conditions contained herein and all discussions leading up to this Release as strictly confidential and will not disclose them to anyone other than Executive’s (if applicable) respective attorneys, Executive’s spouse, Executive’s tax preparers, government agencies who have specifically requested a copy of this Release, to individuals necessary for Company to effectuate payment, or as otherwise required by law (“Authorized Individuals”).  Employee agrees Executive will not disclose or publish or cause to be disclosed or published the existence, amount of, or content of the terms of this Release, except to Authorized Individuals.  If Employee discloses any such information to Authorized Individuals, 

Executive will advise that person or entity of the terms of the confidentiality provision of this Release and require their consent to comply with that agreement, to the extent permissible by law.  The confidentiality of the terms and conditions contained herein is part of the consideration inducing Company to enter into this Release.  Employee agrees that this provision is a material provision to the Release, and that Company would not have entered into this Release, but for the inclusion of this provision.  Employee shall not disclose any information regarding this Release to individuals other than the Authorized Individuals, unless advance written authorization has been received by Employee from the CEO of Axon.  Violation of this section will constitute a material breach of the Release and entitle Company to pursue all remedies at law including seeking damages (including but not limited to the amount paid pursuant to this Release) and injunctive relief without posting bond with a court of competent jurisdiction to restrain any further violations of this Release.
3.Nondisparagement.  Employee covenants and agrees that Executive will not communicate any false and derogatory statements about the Released Parties in any manner whatsoever, including oral and/or written statements and comments on social networking applications, blogs, or internet websites.   
4.References.  Company agrees to provide an employment reference for Employee.  Specifically, Company will only confirm Employee’s dates of employment, job title, salary, and will communicate that Executive left on amenable terms.  If any third party (e.g., prospective employer, lender) wishes to verify Employee’s employment with Company, Employee shall advise that person or entity to contact Company’s Human Resources Department.  Company may designate another contact for Employee to direct reference requests, at Company’s sole discretion.
5.Return of Company Property.  Employee affirms that Executive has returned all Company property to Company as of the date this Release is executed, including but not limited to files, documents, records, copies, confidential information, Company-provided credit cards, keys, uniforms, computers, phones, equipment, and tools.
6.Entire Release.  This Release constitutes the full and complete understanding of the Parties.  There are no other agreements or representations, written or oral, pertaining to the subject matter hereof, and the Release supersedes any and all prior understandings, representations, warranties, and agreements between the parties pertaining to the subject matter hereof. The Parties may modify this Release only in a writing signed by all Parties. 
7.Acknowledgment.  Employee acknowledges and agrees that Executive has read this Release in full; that Executive has had reasonable time to consider its terms; that Executive has been advised to consult with an attorney regarding this Release; and that Executive has signed this Release without coercion and of Executive’s own free will, knowingly and voluntarily, understanding its terms, and understanding the final and binding effect of execution of this Release.  Employee understands that this Release is a FULL RELEASE AND WAIVER OF ALL CLAIMS against the Released Parties.
9.     No Reapply.  Employee acknowledges that the relationship with Company has been severed and, therefore, agrees not to apply for, seek employment, seek work, nor accept employment with, Company or any of its affiliated companies.  Employee further acknowledges Executive will not seek work as a consultant, independent contractor, or temporary worker with Company. 
10.    Assignment.  The rights and obligations of the Released Parties and/or Axon shall inure to the benefit of their successors and assigns.  Employee’s rights and obligations under this Release may not be assigned by Employee without prior written consent by the CEO of Axon.  Employee affirms Executive has not assigned any of Executive’s rights or obligations under this Release as of the Effective Date.
11.    Governing Law and Jurisdiction.  The rights, obligations, and remedies, as specified under this Release, shall be interpreted and governed in all respects by the laws of the State of Arizona.  The Parties agree that any action or proceeding initiated to enforce this Release shall be brought solely in the state or federal district court within Maricopa County in the State of Arizona, and the Parties hereby irrevocably submit to the exclusive jurisdiction of these courts.  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS RELEASE IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY 

MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS RELEASE.
12.    Attorneys’ Fees and Costs.  Both Parties will bear their own costs, attorneys’ fees and other expenses incurred in connection with the preparation and/or review of this Release.  Should Employee or the Released Parties (which specifically includes Axon) employ an attorney to enforce any of the provisions of this Release, or to recover damages for the breach of any terms of this Release, the prevailing party shall be entitled to recover all reasonable costs, damages and expenses, including attorneys’ fees incurred or expended in connection therewith.  The phrase “prevailing party” shall mean the party who is determined in the proceeding to have prevailed or who prevails by dismissal, default, judgment, or otherwise.
13.    No Admission of Liability.  This Release is not to be construed as an admission of liability by the Released Parties.  Employee agrees, admits, and acknowledges that no representation of fact or opinion has been made by any Released Party or such representative, either jointly, individually, or collectively, to induce this Release.  Employee agrees that the Released Parties have not admitted liability or wrongdoing of any sort, and that the Released Parties have not made any representation as to liability or wrongdoing of any sort.
14.    Severability.  If any provision of this Release is held illegal, invalid, or unenforceable, such holding shall not affect any other provisions hereof.  In the event that any provision is held illegal, invalid, or unenforceable, such provision shall be limited, deleted, or severed so as to affect the intent of the Parties to the fullest extent permitted by applicable law and the validity and enforceability of the remaining provisions shall not be affected.
15.    Cooperation.  The Parties agree to cooperate fully, execute any supplementary documents, and take all additional actions that might be necessary or appropriate to give full force and effect to the basic terms and intent of this Release.
16.    Counterparts.  This Release may be executed in counterparts, one or more of which may be facsimiles or PDFs, but all of which shall constitute one and the same Release.
EMPLOYEE HAS CAREFULLY READ THE FOREGOING RELEASE, HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY, KNOWS AND UNDERSTANDS THE CONTENTS OF THIS RELEASE, AND SIGNS THIS RELEASE VOLUNTARILY AND AGREES TO ABIDE BY ITS TERMS.  

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the Parties have hereby approved and executed this Release as of _____________________, ______.
AXON ENTERPRISE, INC.

______________________________________
[________________]
Its: [________________]

EXECUTIVE
_______________________________________
Joshua M. IsnerExhibit 4.1

Exhibit 4.1

COMMON STOCK PURCHASE WARRANT

GENERAL CANNABIS CORP

			
	Warrant Shares:_______________

	 
	Issue Date: May __, 2019

	 
	 
	Initial Exercise Date: May__, 2019

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,         or its 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 5:00 p.m. (New York City time) on May __, 2024 (the “Termination 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 common stock (the “Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1. Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated May __, 2019, among the Company and the purchasers signatory thereto.

Section 2.

Exercise.

a)          Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

b)          Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $1.30, subject to adjustment hereunder (the “Exercise Price”).

c)          In the event that the registration statement registering, or the prospectus contained therein is not available for, the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = as applicable: 

(i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is 

1

executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

d)           “Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

e)           “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this Section 2(c).

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise.

f)          Mechanics of Exercise.

i.          Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) this Warrant is being exercised via cashless exercise pursuant to Section 2(c) above, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of 

2

delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by the Warrant Share Delivery Date. If the Company fails for any reason to deliver to the  Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

ii.           Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii.           Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise by delivering written notice to the Company at any time prior to the Company delivering such Warrant Shares.

iv.           Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise, but did not receive (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver, but failed to deliver, to the Holder in connection with the exercise at issue multiplied by (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000.  The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

v.           No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

vi.           Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

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vii.           Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

viii.           Holder’s Exercise Limitations. 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 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), 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 and Attribution Parties 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 (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) 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 or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of 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 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise 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 Attribution Parties) 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. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one (1) Trading Day 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 or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be [4.99%/9.99%] 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 notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation 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 2(e) 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.

Section 3. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 3.

a)           Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant 

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shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b)           Adjustment Upon Issuance of shares of Common Stock.  If and whenever on or after the date hereof, the Company issues or sells (or enters into any agreement to issue or sell), or in accordance with this Section 3 is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Securities issued or sold or deemed to have been issued or sold in an Exempt Issuance, as defined in the Purchase Agreement) for a consideration per share (the “New Issuance Price”) less than a price equal to the Exercise Price in effect immediately prior to such issuance or sale or deemed issuance or sale (such Exercise Price then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Applicable Price then in effect shall be reduced to an amount equal to the New Issuance Price.  For all purposes of the foregoing (including, without limitation, determining the adjusted Exercise Price and the New Issuance Price under this Section 3(b)), the following shall be applicable:

(i)

Issuance of Options.  If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share.  For purposes of this Section 3(b)(i), the “lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof”  shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person).  Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the terms of or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

(ii)

Issuance of Convertible Securities.  If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share.  For the purposes of this Section 3(b)(ii), the “lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person).  Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 3(b), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.

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(iii)

Change in Option Price or Rate of Conversion.  If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 3(b)), the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold.  For purposes of this Section 3(b)(iii), if the terms of any Option or Convertible Security that was outstanding as of the date of the Purchase Agreement are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease.  No adjustment pursuant to this Section 3(b) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.

(iv)

Calculation of Consideration Received.  If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities” and together with the Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate consideration per share of Common Stock with respect to such Primary Security shall be deemed to be the lower of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in accordance with Section 2(b)(i) or 2(b)(ii) above and (z) the lowest VWAP of the shares of Common Stock on any Trading Day during the five (5) Trading Day period (the “Adjustment Period”) immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public announcement is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day in such five Trading Day period and if this Warrant is exercised, in whole or in part, on any given Exercise Date during any such Adjustment Period, solely with respect to such portion of this Warrant exercised on such Exercise Date, such applicable Adjustment Period shall be deemed to have ended on, and included, the Trading Day immediately prior to such Exercise Date).  If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of consideration received by the Company therefor.  If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt.  If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be).  The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Holder.  If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder.  The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

(v)

Record Date.  If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).

c)           Number of Warrant Shares.  Simultaneously with any adjustment to the Exercise Price pursuant to Section 3(a) and/or 3(b) above, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise contained herein).

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d)           Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a), 3(b) and 3(c) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

e)           Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

f)           Fundamental Transaction. If, at any time while this Warrant is outstanding, the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person in which the stockholders of the Company immediately prior to such merger or consolidation do not own, directly or indirectly, at least a majority of the voting power of the surviving entity immediately after such merger or consolidation, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the voting power of the outstanding shares of Common Stock, or (iv) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the voting power of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”), in each case receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction; provided, however, if the 

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Fundamental Transaction is not within the Company's control, including not approved by the Company's Board of Directors, Holder shall only be entitled to receive from the Company or any Successor Entity, as of the date of consummation of such Fundamental Transaction, the same type or form of consideration (and in the same proportion), at the Black Scholes Value (as defined below) of the unexercised portion of this Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (ii) the greater of (x) the last VWAP immediately prior to the public announcement of such Fundamental Transaction and (y) the last VWAP immediately prior to the consummation of such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds within five Business Days of the Holder’s election (or, if later, on the effective date of the Fundamental Transaction). The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein.

g)           Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

h)            Notice to Holder.

i.

 Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

ii.

 Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share 

8

exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Section 4.   Transfer of Warrant.

a)          Transferability.  Subject to compliance with any applicable securities laws, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

b)          New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Issue Date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

c)          Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

Section 5. Miscellaneous.

a)          No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3. Without limiting the rights of a Holder to receive Warrant Shares on a “cashless exercise,” and to receive the cash payments contemplated pursuant to Sections 2(d)(i) and 2(d)(iv), in no event will the Company be required to net cash settle a Warrant exercise.

b)          Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

c)          Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

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d)

Authorized Shares.

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant. 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

e)          Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

f)          Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

g)          Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that the right to exercise this Warrant terminates on the Termination Date. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

h)          Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

i)          Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

10

j)          Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

k)          Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

l)          Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

m)          Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

n)          Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Page Follows)

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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:

	 

	 
	 
	 

12

NOTICE OF EXERCISE

TO:         GENERAL CANNABIS CORP

			
	(1)

	 
	The undersigned hereby elects to purchase                                      Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

	 
	 
	 

	(2)

	 
	Payment shall take the form of (check applicable box):

	 
	 
	 

	 
	 
	[  ] in lawful money of the United States; or

	 
	 
	 

	 
	 
	[  ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

	 
	 
	 

	(3)

	 
	Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

	 
	 
	 

                                                                             

The Warrant Shares shall be delivered to the following DWAC Account Number:

			
	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

[SIGNATURE OF HOLDER]

Name of Investing Entity:                                                                                                    

Signature of Authorized Signatory of Investing Entity:                                                       

Name of Authorized Signatory:                                                                                           

Title of Authorized Signatory:                                                                                             

Date:                                       

13

EXHIBIT B

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to 

		
	Name:

	 

	 
	(Please Print)

	 
	 

	Address:

	 

	 
	(Please Print)

		
	Phone Number:

	 

	 
	 

	Email Address:

	 

	 
	 

	Dated:

	 

	 
	 

	Holder’s Signature:

	 

	 
	 

	Holder’s Address:

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