Document:

Exhibit 10.9
EXECUTION VERSION
RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT 
MISSION HOLDINGS US, INC.
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TABLE OF CONTENTS
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	1.
	Definitions
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	1

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	2.
	Agreement Among the Company and the Investors
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	4

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	2.1
	Right of First Refusal
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	4

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	2.2
	Right of Co-Sale
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	6

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	2.3
	Effect of Failure to Comply
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	7

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	3.
	Exempt Transfers
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	8

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	3.1
	Exempted Transfers
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	8

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	3.2
	Exempted Offerings
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	9

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	3.3
	Prohibited Transferees
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	9

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	4.
	Drag-Along Right
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	8

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	4.1
	Actions to be Taken
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	8

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	4.2
	Exceptions
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	9

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	4.3
	Restrictions on Sales of Control of the Company
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	10

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	4.4
	Irrevocable Proxy and Power of Attorney
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	11

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	4.5
	Manner of Voting
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	11

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	5.
	Investor Suitability
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	11

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	5.1
	General
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	11

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	5.2
	Transfer Restriction
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	12

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	5.3
	Repurchase Right Related To Suitability
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	12

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	5.4
	Other Restrictions
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	13

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	5.5
	Cooperation Upon Conversion
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	14

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	6.
	Buy-Out Option - Schwazze Investor
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	14

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	7.
	Transfers
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	15

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	7.1
	General Restrictions on Transfers
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	15

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	7.2
	Permitted Transfers
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	17

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	8.
	Legend
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	17

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	9.
	Lock-Up
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	187

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	9.1
	Agreement to Lock-Up
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	187

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	9.2
	Stop Transfer Instructions
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	198

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	10.
	Miscellaneous
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	198

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	10.1
	Term
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	198

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	10.2
	Stock Split
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	198

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	10.3
	Ownership
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	198

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	10.4
	Dispute Resolution
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	198

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	10.5
	Notices
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	209

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	10.6
	Entire Agreement
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	209

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	10.7
	Delays or Omissions
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	20

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	10.8
	Amendment; Waiver and Termination
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	20

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	10.9
	Assignment of Rights
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	20

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	10.10
	Severability
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	21

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	10.11
	Additional Investors
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	21

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	10.12
	Governing Law
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	21

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	10.13
	Titles and Subtitles
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	21

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	10.14
	Counterparts
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	21

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	10.15
	Covenants of the Company
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	21

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	10.16
	Specific Performance
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	21

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	10.17
	Further Assurances
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	21

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	10.18
	Consent of Spouse
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	21

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Schedule A - Investors
Exhibit A - Consent of Spouse
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RIGHT OF FIRST REFUSAL
AND CO-SALE AGREEMENT
THIS RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT (this “Agreement”), is made as of May 20, 2022 by and among Mission Holdings US, Inc., a Colorado corporation (the “Company”), and the Investors (defined below).
WHEREAS, the Company and the Investors are parties to that certain Preferred Stock Purchase Agreement, of even date herewith (the “Stock Purchase Agreement”), pursuant to which such Investors have agreed to purchase shares of the Convertible Preferred Stock of the Company, par value $0.0001 per share (the “Preferred Stock”); and
WHEREAS, the Company desire to further induce the Investors to purchase Preferred Stock.
		1.
	Definitions.

1.1       “Affiliate” means, with respect to any specified Investor, any other Investor who directly or indirectly, controls, is controlled by or is under common control with such Investor, including, without limitation, any general partner, managing member, officer or director of such Investor, or any venture capital fund now or hereafter existing which is controlled by one or more general partners or managing members of, or shares the same management company with, such Investor.
1.2       “Applicable Marijuana Codes” means, collectively or individually, as the context requires, any rules and regulations related to the business of growing, manufacturing, selling and/or distribution of marijuana products, including the provisions of the Colorado Medical Marijuana Code, the Colorado Retail Marijuana Code and/or the rules and regulations promulgated thereunder and the similar codes applicable in California with respect to the Company’s business and the rules and regulations promulgated thereunder.
1.3       “Applicable MED” means, collectively or individually, as the context requires, the Colorado MED and any other state or local marijuana enforcement division of any state in which the Company operates.
1.4       “Articles” means the Articles of Incorporation of the Company filed with the Colorado Secretary of State on November 2, 2020, as amended by the Articles of Amendment (including the Attachment to Amended Articles of Incorporation of Mission Holdings US, Inc.) filed with the Colorado Secretary of State on December 29, 2021 and the Designation, Preferences, Limitations and Relative Rights of Convertible Preferred Stock of the Company to be filed with the Colorado Secretary of State on or about the date hereof in connection with the transactions contemplated under the Stock Purchase Agreement, as may be further modified, amended, and/or restated from time to time.
1.5       “Board of Directors” means the Company’s board of directors as elected from time to time.
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1.6       “Capital Stock” means (a) shares of Common Stock and Preferred Stock (whether now outstanding or hereafter issued in any context), (b) shares of Common Stock issued or issuable upon conversion of Preferred Stock, and (c) shares of Common Stock issued or issuable upon exercise or conversion, as applicable, of stock options, warrants or other convertible securities of the Company, in each case now owned or subsequently acquired by any Investor or their respective successors or permitted transferees or assigns. For purposes of the number of shares of Capital Stock held by an Investor (or any other calculation based thereon), all shares of Preferred Stock shall be deemed to have been converted into Common Stock at the then-applicable conversion price.
1.7       “Colorado MED” means the Colorado Department of Revenue, Marijuana Enforcement Division, C.R.S. §§12-43.3-101, et seq., C.R.S 12-43.4-101, et seq. and 25-1.5-101, et seq.
1.8       “Common Stock” means shares of Common Stock of the Company, $0.0001 par value per share.
1.9       “Company Notice” means written notice from the Company notifying the selling Investor that the Company intends to exercise its Right of First Refusal as to some or all of the Capital Stock with respect to any Proposed Investor Sale.
1.10“Drag-along Sale” shall have the meaning set forth in Section 4.1. 1.11 “Family Members” shall have the meaning set forth in Section 7.2(b).
1.12“Investor Director” means a member of the Board of Directors elected by a holder or holders of the Company’s Preferred Stock exclusively and separately pursuant to the Articles.
1.13“Investor Notice” means written notice from an Investor notifying the Company and the selling Investor that such Investor intends to exercise its Secondary Refusal Right as to a portion of the Capital Stock with respect to any Proposed Investor Sale.
1.14“Investors” means the Persons named on Schedule A hereto, each person to whom the rights of an Investor are assigned pursuant to Section 10.9, each Person who hereafter becomes a signatory to this Agreement pursuant to Section 10.11 and any one of them, as the context may require.
1.15“Non-Selling Investors” shall have the meaning set forth in Section 2.1(c). 1.16 “Offered Stock” shall have the meaning set forth in Section 2.1(a).
1.17“Permitted Transfer” means a Transfer of Capital Stock carried out pursuant to Section 7.2.
1.18“Permitted Transferee” shall have the meaning set forth in Section 7.2.
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1.19“Person” means an individual, corporation, partnership, joint venture, limited liability company, governmental authority (including, without limitation, any federal, state, local, or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision), unincorporated organization, trust, association, or other entity.
1.20“Prohibited Transferee” shall have the meaning set forth in Section 3.3.
1.21“Proposed Investor Sale” means any sale, offer to sell or similar transfer for value of Capital Stock (or any interest therein) proposed by any Investor, unless such sale, offer to sell or similar transfer for value is pursuant to a Sale of the Company or is an exempt transfer under Section 3.
1.22“Proposed Investor Sale Notice” means written notice from an Investor setting forth the terms and conditions of a Proposed Investor Sale.
1.23“Proposed Purchaser” means any Person to whom an Investor proposes to make a Proposed Investor Sale.
1.24“Right of Co-Sale” means the right, but not an obligation, of a Non-Selling Investor to participate in a Proposed Investor Sale on the terms and conditions specified in the Proposed Investor Sale Notice.
1.25“Right of First Refusal” means the right, but not an obligation, of the Company, or its permitted transferees or assigns, to purchase some or all of the Offered Stock with respect to a Proposed Investor Sale, on the terms and conditions specified in the Proposed Investor Sale Notice.
1.26“Sale of the Company” means a transaction or series of related transactions in which a Person, or a group of related Persons, (a) acquires from stockholders of the Company shares representing more than fifty percent (50%) of the outstanding voting power of the Company (a “Stock Sale”), (b) acquires, leases, transfers or exclusively licenses all or substantially all of the assets of the Company (including, without limitation, cannabis licenses and permits necessary to the Company’s operations), or (c) results in a merger, consolidation, recapitalization or reorganization of the Company with or into another Person that results in the inability of the Investors to elect or designate a majority of the board of directors (or its equivalent) of the resulting entity or its parent company.
1.27“Secondary Notice” means written notice from the Company notifying the selling Investor and the other Investors that the Company does not intend to exercise its Right of First Refusal as to all shares of Offered Stock with respect to any Proposed Investor Sale.
1.28“Secondary Refusal Right” means the right, but not an obligation, of each Investor to purchase up to its pro rata portion (based upon the total number of shares of Capital Stock then held by all Investors) of the Offered Stock not purchased pursuant to the Right of First Refusal, on the terms and conditions specified in the Proposed Investor Sale Notice.
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1.29“Schwazze Investor” means Medicine Man Technologies, Inc. (d/b/a Schwazze), a Nevada corporation.
1.30“Transfer” means to, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate, or similarly dispose of, either voluntarily or involuntarily, by operation of law or otherwise, or to enter into any contract, option, or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation, or similar disposition of, any shares of Capital Stock owned by a Person or any interest (including a beneficial interest) in any Capital Stock owned by a Person. “Transfer”, when used as a noun, shall have a correlative meaning.
1.31“Transferee” means a recipient of, or proposed recipient of, a Transfer, including a Permitted Transferee.
1.32“Undersubscription Notice” means written notice from a Non-Selling Investor notifying the Company and the selling Investor that such Investor intends to exercise its option to purchase all or any portion of the Offered Stock not purchased pursuant to the Right of First Refusal or the Secondary Refusal Right.
		2.
	Agreement Among the Company and the Investors.

2.1Right of First Refusal.
(a)Grant. Subject to the terms of Section 3 below, each Investor hereby unconditionally and irrevocably grants to the Company a Right of First Refusal to purchase all or any portion of Capital Stock that such Investor may propose to transfer or sell in a Proposed Investor Sale (the “Offered Stock”), at the same price and on the same terms and conditions as those offered to the Proposed Purchaser.
(b)Notice. Each Investor proposing to make a Proposed Investor Sale must deliver a Proposed Investor Sale Notice to the Company and each other Investor not later than forty-five (45) days prior to the consummation of such Proposed Investor Sale. Such Proposed Investor Sale Notice shall contain the material terms and conditions (including price and form of consideration) of the Proposed Investor Sale, the identity of the Proposed Purchaser and the intended date of the Proposed Investor Sale. To exercise its Right of First Refusal under this Section 2, the Company must deliver a Company Notice to the selling Investor within fifteen (15) days after delivery of the Proposed Investor Sale Notice. In the event of a conflict between this Agreement and any other agreement that may have been entered into by an Investor with the Company that contains a preexisting right of first refusal, the Company and such Investor acknowledge and agree that the terms of this Agreement shall control and the preexisting right of first refusal shall be deemed satisfied by compliance with Section 2.1(a) and this Section 2.1(b).
(c)Grant of Secondary Refusal Right to Investors. Subject to the terms of Section 3 below, each Investor hereby unconditionally and irrevocably grants to the other Investors (the “Non-Selling Investors”) a Secondary Refusal Right to purchase all or any portion of the Offered Stock not purchased by the Company pursuant to the Right of First Refusal, as provided in this Section 2.1(b). If the Company does not intend to exercise its Right of First Refusal with respect to all of the Offered Stock subject to a Proposed Investor Sale, the
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Company must deliver a Secondary Notice to the selling Investor and to all Non-Selling Investors to that effect no later than fifteen (15) days after the selling Investor delivers the Proposed Investor Sale Notice to the Company. To exercise its Secondary Refusal Right, a Non-Selling Investor must deliver an Investor Notice to the selling Investor and the Company within ten (10) days after the Company’s deadline for its delivery of the Secondary Notice as provided in the preceding sentence.
(d)Undersubscription of Offered Stock. If options to purchase have been exercised by the Company and the Non-Selling Investors with respect to some but not all of the Offered Stock by the end of the ten (10) day period specified in the last sentence of Section 2.1(b) (the “Investor Notice Period”), then the Company shall, immediately after the expiration of the Investor Notice Period, send written notice (the “Company Undersubscription Notice”) to those Non-Selling Investors who fully exercised their Secondary Refusal Right within the Investor Notice Period (the “Exercising Investors”). Each Exercising Investor shall, subject to the provisions of this Section 2.1(d), have an additional option to purchase all or any part of the balance of any such remaining unsubscribed shares of Offered Stock on the terms and conditions set forth in the Proposed Investor Sale Notice. To exercise such option, an Exercising Investor must deliver an Undersubscription Notice to the selling Investor and the Company within ten (10) days after the expiration of the Investor Notice Period. In the event there are two (2) or more such Exercising Investors that choose to exercise the last-mentioned option for a total number of remaining shares in excess of the number available, the remaining shares available for purchase under this Section 2.1(d) shall be allocated to such Exercising Investors pro rata based on the number of shares of Offered Stock such Exercising Investors have elected to purchase pursuant to the Secondary Refusal Right (without giving effect to any shares of Offered Stock that any such Exercising Investor has elected to purchase pursuant to the Company Undersubscription Notice). If the options to purchase the remaining shares are exercised in full by the Exercising Investors, the Company shall immediately notify all of the Exercising Investors and the selling Investor of that fact.
(e)Forfeiture of Rights. Notwithstanding the foregoing, if the total number of shares of Offered Stock that the Company and the Non-Selling Investors have agreed to purchase in the Company Notice, Investor Notices and Undersubscription Notices is less than the total number of shares of Offered Stock, then the Company and the Non-Selling Investors shall be deemed to have forfeited any right to purchase such Offered Stock, and the selling Investor shall be free to sell all, but not less than all, of such Offered Stock to the Proposed Purchaser on terms and conditions substantially similar to (and in no event more favorable than) the terms and conditions set forth in the Proposed Investor Sale Notice, it being understood and agreed that (i) any such sale or transfer shall be subject to the other terms and restrictions of this Agreement, including, without limitation, the terms and restrictions set forth in Section 2.2; (ii) any future Proposed Investor Sale shall remain subject to the terms and conditions of this Agreement, including this Section 2; and (iii) such sale shall be consummated within forty-five (45) days after receipt of the Proposed Investor Sale Notice by the Company and, if such sale is not consummated within such forty-five (45) day period, such sale shall again become subject to the Right of First Refusal and Secondary Refusal Right on the terms set forth herein.
(f)Consideration; Closing. If the consideration proposed to be paid for the Offered Stock is in property, services or other non-cash consideration, the fair market
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value of the consideration shall be as determined in good faith by the Board of Directors and as set forth in the Company Notice. If the Company or any Investor cannot for any reason pay for the Offered Stock in the same form of non-cash consideration, the Company or such Investor may pay the cash value equivalent thereof, as determined in good faith by the Board of Directors and as set forth in the Company Notice. The closing of the purchase of Offered Stock by the Company and the Non-Selling Investors shall take place, and all payments from the Company and the Non-Selling Investors shall have been delivered to the selling Investor, by the later of (i) the date specified in the Proposed Investor Sale Notice as the intended date of the Proposed Investor Sale; and (ii) forty-five (45) days after delivery of the Proposed Investor Sale Notice.
2.2Right of Co-Sale.
(a)Exercise of Right. If any Capital Stock subject to a Proposed Investor Sale is not purchased pursuant to Section 2.1 above and thereafter is to be sold to a Proposed Purchaser, each Investor may elect to exercise its Right of Co-Sale and participate on a pro rata basis in the Proposed Investor Sale as set forth in Section 2.2(b) below and, subject to Section 2.2(d), otherwise on the same terms and conditions specified in the Proposed Investor Sale Notice. Each Investor who desires to exercise its Right of Co-Sale (each, a “Co-Sale Participant”) must give the selling Investor written notice to that effect within fifteen (15) days after the deadline for delivery of the Secondary Notice described above, and upon giving such notice such Co-Sale Participant shall be deemed to have effectively exercised its Right of Co-Sale. Any Investor who fails to give the selling Investor timely notice of exercise of its Right of Co-Sale will be deemed to have waived such Investor’s Right of Co-Sale with respect to the Proposed Investor Sale.
(b)Shares Includable. Each Co-Sale Participant may include in the Proposed Investor Sale all or any part of such Co-Sale Participant’s Capital Stock equal to the product obtained by multiplying (i) the aggregate number of shares of Capital Stock subject to the Proposed Investor Sale (excluding shares purchased by the Company or the Co-Sale Participant pursuant to the Right of First Refusal or the Secondary Refusal Right) by (ii) a fraction, the numerator of which is the number of shares of Capital Stock owned by such Co-Sale Participant immediately before consummation of the Proposed Investor Sale (including any shares that such Investor has agreed to purchase pursuant to the Secondary Refusal Right) and the denominator of which is the total number of shares of Capital Stock owned, in the aggregate, by all Co-Sale Participants immediately prior to the consummation of the Proposed Investor Sale (including any shares that all Co-Sale Participants have collectively agreed to purchase pursuant to the Secondary Refusal Right), plus the number of shares of Capital Stock held by the selling Investor. To the extent one (1) or more of the Co-Sale Participants exercises such right of participation in accordance with the terms and conditions set forth herein, the number of shares of Capital Stock that the selling Investor may sell in the Proposed Investor Sale shall be correspondingly reduced.
(c)Purchase and Sale Agreement. The Co-Sale Participant and the selling Investor agree that the terms and conditions of any Proposed Investor Sale in accordance with this Section 2.2 will be memorialized in, and governed by, a written purchase and sale agreement with the Proposed Purchaser (the “Purchase and Sale Agreement”) with customary terms and provisions for such a transaction, and the Co-Sale Participants and the selling Investor
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further covenant and agree to enter into such Purchase and Sale Agreement as a condition precedent to any sale or other transfer in accordance with this Section 2.2.
(d)Allocation of Consideration. The aggregate consideration payable to the Co-Sale Participants and the selling Investor shall be allocated based on the number of shares of Capital Stock sold to the Proposed Purchaser by each Co-Sale Participant and the selling Investor as provided in Section 2.2(b), provided that if a Co-Sale Participant wishes to sell Preferred Stock and the Proposed Investor Sale Notice was with respect to Common Stock, the price set forth in the Proposed Investor Sale Notice shall be appropriately adjusted based on the conversion ratio of the Preferred Stock into Common Stock.
(e)Purchase by Selling Investor; Deliveries. Notwithstanding Section 2.2(c) above, if any Proposed Purchaser(s) refuse(s) to purchase Capital Stock subject to the Right of Co-Sale from any Co-Sale Participant(s) or upon the failure to negotiate in good faith a Purchase and Sale Agreement reasonably satisfactory to the Co-Sale Participants, no Investor may sell any Capital Stock to such Proposed Purchaser(s) unless and until, simultaneously with such sale, such Investor purchases all Capital Stock subject to the Right of Co-Sale from such Co-Sale Participant or Participants on the same terms and conditions (including the proposed purchase price) as set forth in the Proposed Investor Sale Notice and as provided in Section 2.2(d). In connection with such purchase by the selling Investor, such Co-Sale Participant(s) shall deliver to the selling Investor any stock certificate or certificates, properly endorsed for transfer, representing the Capital Stock being purchased by the selling Investor (or request that the Company effect such transfer in the name of the selling Investor). Any such shares transferred to the selling Investor will be transferred to the Proposed Purchaser against payment therefor in consummation of the sale of the Capital Stock pursuant to the terms and conditions specified in the Proposed Investor Sale Notice, and the selling Investor shall concurrently therewith remit or direct payment to each such Co-Sale Participant the portion of the aggregate consideration to which each such Co-Sale Participant is entitled by reason of its participation in such sale as provided in this Section 2.2(e).
(f)Additional Compliance. If any Proposed Investor Sale is not consummated within sixty (60) days after receipt of the Proposed Investor Sale Notice by the Company and the Investors, the Investor proposing the Proposed Investor Sale may not sell any Capital Stock of such Investor unless they first comply in full with each provision of this Section 2. The exercise or election not to exercise any right by any Investor hereunder shall not adversely affect its right to participate in any other sales of Capital Stock subject to this Section 2.2.
2.3Effect of Failure to Comply.
(a)Transfer Void; Equitable Relief. Any Proposed Investor Sale not made in compliance with the requirements of this Agreement shall be null and void ab initio, shall not be recorded on the books of the Company or its transfer agent and shall not be recognized by the Company. Each party hereto acknowledges and agrees that any breach of this Agreement would result in substantial harm to the other parties hereto for which monetary damages alone could not adequately compensate. Therefore, the parties hereto unconditionally and irrevocably agree that any non-breaching party hereto shall be entitled to seek protective
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orders, injunctive relief and other remedies available at law or in equity (including, without limitation, seeking specific performance or the rescission of purchases, sales and other transfers of Capital Stock not made in strict compliance with this Agreement).
(b)Violation of First Refusal Right. If any Investor becomes obligated to sell any Capital Stock to the Company or any Investor under this Agreement and fails to deliver such Capital Stock in accordance with the terms of this Agreement, the Company and/or such Investor may, at its option, in addition to all other remedies it may have, send to such Investor the purchase price for such Capital Stock as is herein specified and transfer to the name of the Company or such Investor (or request that the Company effect such transfer in the name of an Investor) on the Company’s books any certificates, instruments, or book entry representing the Capital Stock to be sold.
(c)Violation of Co-Sale Right. If any Investor purports to sell any Capital Stock in contravention of the Right of Co-Sale (a “Prohibited Transfer”), each Investor who desires to exercise its Right of Co-Sale under Section 2.2 may, in addition to such remedies as may be available by law, in equity or hereunder, require the selling Investor to purchase from such Investor the type and number of shares of Capital Stock that such Investor would have been entitled to sell to the Proposed Purchaser had the Prohibited Transfer been effected in compliance with the terms of Section 2.2. The sale will be made on the same terms, including, without limitation, as provided in Section 2.2(d), and subject to the same conditions as would have applied had the Investor not made the Prohibited Transfer, except that the sale (including, without limitation, the delivery of the purchase price) must be made within ninety (90) days after the Investor learns of the Prohibited Transfer, as opposed to the timeframe proscribed in Section 2.2. Such Investor shall also reimburse each Investor for any and all reasonable and documented out-of-pocket fees and expenses, including reasonable legal fees and expenses, incurred pursuant to the exercise or the attempted exercise of the Investor’s Right of Co-Sale.
		3.
	Exempt Transfers.

3.1Exempted Transfers. Notwithstanding the foregoing or anything to the contrary herein, the provisions of Sections 2.1 and 2.2 shall not apply (a) in the case of an Investor that is an entity, upon a transfer of Capital Stock by such Investor to its stockholders, members, partners or other equity holders, (b) to a repurchase of Capital Stock from an Investor by the Company at a price pursuant to an agreement containing vesting or repurchase provisions approved by a majority of the Board of Directors, which shall include at least one (1) Investor Director (provided that at least one (1) Investor Director is elected and serving on the Board of Directors at the time of such approval) (c) to a pledge of Capital Stock that creates a mere security interest in the pledged Capital Stock, provided that the pledgee thereof agrees in writing in advance to be bound by and comply with all applicable provisions of this Agreement to the same extent as if it were the Investor making such pledge, or (d) in the case of an Investor that is a natural person, upon a transfer of Capital Stock by such Investor made for bona fide estate planning purposes, either during his or her lifetime or on death by will or intestacy to his or her spouse, child (natural or adopted), or any other direct lineal descendant of such Investor (or his or her spouse) (all of the foregoing collectively referred to as “family members”), or any other relative approved by unanimous consent of the Board of Directors, or any custodian or trustee of any trust, partnership or limited liability company for the benefit of, or the ownership interests of
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which are owned wholly by such Investor or any such family members; provided that in the case of clause(s) (a), (c), or (d), the Investor shall deliver prior written notice to the other Investors of such pledge, gift or transfer and such shares of Capital Stock shall at all times remain subject to the terms and restrictions set forth in this Agreement and such transferee shall, as a condition to such issuance, deliver a counterpart signature page to this Agreement as confirmation that such transferee shall be bound by all the terms and conditions of this Agreement as an Investor (but only with respect to the securities so transferred to the transferee), including the obligations of an Investor with respect to Proposed Investor Sale of such Capital Stock pursuant to Section 2; and provided further in the case of any transfer pursuant to clause (a) or (d) above, that such transfer is made pursuant to a transaction in which there is no consideration actually paid for such transfer.
3.2Exempted Offerings. Notwithstanding the foregoing or anything to the contrary herein, the provisions of Section 2 shall not apply to the sale of any Capital Stock to the public in an offering pursuant to an effective registration statement under the Securities Act of 1933, as amended.
3.3Prohibited Transferees. Notwithstanding the foregoing, no Investor shall transfer or sell any Capital Stock to (a) any entity which, in the determination of the Board of Directors, directly or indirectly competes with the Company; or (b) any customer, distributor or supplier of the Company, if the Board of Directors should determine that such transfer or sale would result in such customer, distributor or supplier receiving information that would place the Company at a competitive disadvantage with respect to such customer, distributor or supplier (each, a “Prohibited Transferee”).
		4.
	Drag-Along Right.

4.1Actions to be Taken. In the event that both the Board of Directors and Investors owning shares of Capital Stock representing more than fifty percent (50%) of the outstanding voting power of the Company approves a Sale of the Company or the Schwazze Investor elects to exercise the Buy-Out Option pursuant to Section 6 (a “Drag-along Sale”), then each Investor and the Company hereby agree, upon conversion of such Investor’s Capital Stock (if applicable):
(a)if such transaction requires stockholder approval, with respect to all shares of Capital Stock (the “Shares”) that such Investor owns or over which such Investor otherwise exercises voting power, to vote (in person, by proxy or by action by written consent, as applicable) all Shares in favor of, and adopt, such Sale of the Company (together with any related amendment to the Articles required in order to implement such Sale of the Company) and to vote in opposition to any and all other proposals that could reasonably be expected to delay or impair the ability of the Company to consummate such Sale of the Company;
(b)if such transaction is a Stock Sale, to sell the same proportion of Capital Stock beneficially held by such Investor as is being sold by the selling Investors to the Person to whom the selling Investors propose to sell their Shares, and, except as permitted in Section 4.3 below, on the same terms and conditions as the selling Investors;
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(c)to execute and deliver all related documentation and take such other action in support of the Sale of the Company as shall reasonably be requested by the Company or the selling Investors in order to carry out the terms and provision of this Section 3, including, without limitation, executing and delivering instruments of conveyance and transfer, and any purchase agreement, merger agreement, indemnity agreement, escrow agreement, consent, waiver, governmental filing, regulatory approval, share certificates duly endorsed for transfer (free and clear of impermissible liens, claims and encumbrances), and any similar or related documents;
(d)not to deposit, and to cause their Affiliates not to deposit, except as provided in this Agreement, any Shares owned by such party or Affiliate in a voting trust or subject any Shares to any arrangement or agreement with respect to the voting of such Shares, unless specifically requested to do so by the acquirer in connection with the Sale of the Company;
(e)to refrain from exercising any dissenters’ rights or rights of appraisal under applicable law at any time with respect to such Sale of the Company;
(f)if the consideration to be paid in exchange for the Shares pursuant to this Section 4 includes any securities and due receipt thereof by any Investor would require under applicable law (x) the registration or qualification of such securities or of any Person as a broker or dealer or agent with respect to such securities; or (y) the provision to any Investor of any information other than such information as a prudent issuer would generally furnish in an offering made solely to “accredited investors” as defined in Regulation D promulgated under the Securities Act, the Company may cause to be paid to any such Investor in lieu thereof, against surrender of the Shares which would have otherwise been sold by such stockholder, an amount in cash equal to the fair value (as determined in good faith by the Company) of the securities which such Investor would otherwise receive as of the date of the issuance of such securities in exchange for the Shares; and
(g)in the event that the selling Investors, in connection with such Sale of the Company, appoint an stockholder representative (the “Stockholder Representative”) with respect to matters affecting the Investors under the applicable definitive transaction agreements following consummation of such Sale of the Company, (x) to consent to (i) the appointment of such Stockholder Representative, (ii) the establishment of any applicable escrow, expense or similar fund in connection with any indemnification or similar obligations, and (iii) the payment of such Investor’s pro rata portion (from the applicable escrow or expense fund or otherwise) of any and all reasonable fees and expenses to such Stockholder Representative in connection with such Stockholder Representative’s services and duties in connection with such Sale of the Company and its related service as the representative of the Investors, and (y) not to assert any claim or commence any suit against the Stockholder Representative or any other Investor with respect to any action or inaction taken or failed to be taken by the Stockholder Representative in connection with its service as the Stockholder Representative, absent fraud or willful misconduct.
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4.2Exceptions. Notwithstanding the foregoing, an Investor will not be required to comply with Section 4.1 above in connection with any proposed Sale of the Company (the “Proposed Sale”), unless:
(a)any representations and warranties to be made by such Investor in connection with the Proposed Sale are limited to representations and warranties related to authority, ownership and the ability to convey title to such Shares, including, but not limited to, representations and warranties that (i) the Investor holds all right, title and interest in and to the Shares such Investor purports to hold, free and clear of all liens and encumbrances, (ii) the obligations of the Investor in connection with the transaction have been duly authorized, if applicable, (iii) the documents to be entered into by the Investor have been duly executed by the Investor and delivered to the acquirer and are enforceable against the Investor in accordance with their respective terms; and (iv) neither the execution and delivery of documents to be entered into in connection with the transaction, nor the performance of the Investor’s obligations thereunder, will cause a breach or violation of the terms of any agreement, law or judgment, order or decree of any court or governmental agency;
(b)the Investor shall not be liable for the inaccuracy of any representation or warranty made by any other Person in connection with the Proposed Sale, other than the Company (except to the extent that funds may be paid out of an escrow established to cover breach of representations, warranties and covenants of the Company as well as breach by any stockholder of any of identical representations, warranties and covenants provided by all stockholders);
(c)the liability for indemnification, if any, of such Investor in the Proposed Sale and for the inaccuracy or breach of any representations and warranties made by the Company or its stockholders (including the Investor) in connection with such Proposed Sale, is several and not joint with any other Person (except to the extent that funds may be paid out of an escrow established to cover breach of representations, warranties and covenants of the Company as well as breach by any stockholder of any of identical representations, warranties and covenants provided by all stockholders), and is pro rata in proportion to, and does not exceed, the amount of consideration paid to such Investor in connection with such Proposed Sale; and
(d)upon the consummation of the Proposed Sale (i) each holder of each class or series of the Company’s stock will receive the same form of consideration for their shares of such class or series as is received by other holders in respect of their shares of such same class or series of stock, (ii) each holder of Preferred Stock will receive the same amount of consideration per share of Preferred Stock as is received by other holders in respect of their shares of such same series, (iii) each holder of Common Stock will receive the same amount of consideration per share of Common Stock as is received by other holders in respect of their shares of Common Stock, and (iv) unless the holders of at least seventy-five percent (75%) of the Preferred Stock elect to receive a lesser amount by written notice given to the Company at least ten (10) days prior to the effective date of any such Proposed Sale, the aggregate consideration receivable by all holders of the Preferred Stock and Common Stock shall be allocated among the holders of Preferred Stock and Common Stock on the basis of the relative liquidation preferences to which the holders of each respective series of Preferred Stock and the holders of Common
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Stock are entitled in a Deemed Liquidation (as defined in the Articles) (assuming for this purpose that the Proposed Sale is a Deemed Liquidation) in accordance with the Articles in effect immediately prior to the Proposed Sale; provided, however, that, notwithstanding the foregoing, if the consideration to be paid in exchange for the Investor’s Shares pursuant to this Section 4.2(d) includes any securities and due receipt thereof by any Investor would require under applicable law (x) the registration or qualification of such securities or of any Person as a broker or dealer or agent with respect to such securities; or (y) the provision to any Investor of any information other than such information as a prudent issuer would generally furnish in an offering made solely to “accredited investors” as defined in Regulation D promulgated under the Securities Act, the Company may cause to be paid to any such Investor in lieu thereof, against surrender of the Investor’s Shares which would have otherwise been sold by such Investor, an amount in cash equal to the fair value (as determined in good faith by the Company) of the securities which such Investor would otherwise receive as of the date of the issuance of such securities in exchange for the Investor’s Shares.
4.3Restrictions on Sales of Control of the Company. No Investor shall be a party to any Stock Sale unless all holders of Preferred Stock are allowed to participate in such transaction and the consideration received pursuant to such transaction is allocated among the parties thereto in the manner specified in the Articles in effect immediately prior to the Stock Sale (as if such transaction were a Deemed Liquidation (as defined in the Articles)), unless the holders of at least seventy-five percent (75%) of the Preferred Stock elect otherwise by written notice given to the Company at least forty-five (45) days prior to the effective date of any such transaction or series of related transactions.
4.4Irrevocable Proxy and Power of Attorney. Each party to this Agreement hereby constitutes and appoints as the proxies of the party and hereby grants a power of attorney to the President of the Company, and a designee of the selling Investors, and each of them, with full power of substitution, with respect to the matters set forth in this Section 4, including, without limitation, votes regarding any Sale of the Company pursuant to this Section 4, and hereby authorizes each of them to represent and vote, if and only if the party (i) fails to vote, or (ii) attempts to vote (whether by proxy, in person or by written consent), in a manner which is inconsistent with the terms of this Agreement, all of such party’s Shares in favor of the approval of any Sale of the Company pursuant to and in accordance with the terms and provisions of this Section 4 or to take any action necessary to effect this Section 4. Each of the proxy and power of attorney granted pursuant to the immediately preceding sentence is given in consideration of the agreements and covenants of the Company and the parties in connection with the transactions contemplated by this Agreement and, as such, each is coupled with an interest and shall be irrevocable unless and until this Agreement terminates or expires pursuant to Section 10.1 or Section 10.8. Each party hereto hereby revokes any and all previous proxies or powers of attorney with respect to the Shares and shall not hereafter, unless and until this Agreement terminates or expires pursuant to Section 10.1 or Section 10.8 hereof, purport to grant any other proxy or power of attorney with respect to any of the Shares, deposit any of the Shares into a voting trust or enter into any agreement (other than this Agreement), arrangement or understanding with any Person, directly or indirectly, to vote, grant any proxy or give instructions with respect to the voting of any of the Shares, in each case, with respect to any of the matters set forth herein.
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4.5Manner of Voting. The voting of Shares pursuant to this Agreement may be effected in person, by proxy, by written consent or in any other manner permitted by applicable law. For the avoidance of doubt, voting of the Shares pursuant to this Agreement need not make explicit reference to the terms of this Agreement.
		5.
	Investor Suitability.

5.1General. The Investors acknowledge and understand that (a) part of the business of the Company is to grow, manufacture, sell and distribute marijuana products in accordance with the laws, rules and regulation in the states in which it operates, including without limitation, Colorado law and the rules and regulations issued by the Colorado MED, (b) the Company is not permitted to issue any Preferred Stock (or any other Capital Stock or other equity interest) to any Person or entity that cannot qualify or would be unsuitable for qualification under the provisions of the Applicable Marijuana Codes, and (c) the issuance of any Preferred Stock (or any other Capital Stock or other equity interest) in violation of this provision shall be void and any such Preferred Stock (or Capital Stock or other equity interest) shall be deemed not to be issued and outstanding until (i) the Company shall cease to be subject to the jurisdiction of any Applicable MED, or (ii) each Applicable MED shall, by affirmative action, validate said issuance or waive any defect in issuance.
5.2Transfer Restriction. No Preferred Stock (or any other Capital Stock or other equity interest) or other interest issued by the Company and no interest, claim or charge therein or thereto shall be transferred in any manner whatsoever except in accordance with the terms and provisions of this Agreement and the provisions of the Applicable Marijuana Codes, including any necessary consent or approval requirements promulgated thereunder. Any transfer in violation thereof shall be void until (a) the Company shall cease to be subject to the jurisdiction of any Applicable MED, or (b) each Applicable MED shall, by affirmative action, validate said transfer or waive any defect in said transfer.
5.3Repurchase Right Related To Suitability.
(a)If any Applicable MED at any time determines that any Investor (other than the Schwazze Investor) is unsuitable to hold any Preferred Stock (or any other Capital Stock or other equity interest) or other interest that prevents the Company from obtaining, maintaining, or renewing any cannabis license necessary to conduct the Company’s cannabis business activities, then the Company may, within sixty (60) days after the finding of unsuitability, purchase such Preferred Stock or other interests of such unsuitable Investor at an amount of consideration equal to the current market price as of the date of the finding of unsuitability as determined by a mutually agreed upon third party, which amount shall be paid by the Company, in the Company’s sole discretion and subject in all respect to the provisions of the Applicable Marijuana Codes and the approval of the Applicable MEDs, as follows:
(i)in cash, or
(ii)by an unsecured, non-recourse, non-convertible promissory note (y) with an interest rate equal to the prime rate published in the Wall Street Journal on the
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date of issuance of such note plus 3% per annum, and (z) payable over a period of five (5) years in quarterly installments of principal and accrued interest.
(b)If any Applicable MED at any time determines that the Schwazze Investor is unsuitable to hold any Preferred Stock (or any other Capital Stock or other equity interest) or other interest that prevents the Company from obtaining, maintaining, or renewing any cannabis license necessary to conduct the Company’s cannabis business activities, then the Company and the Schwazze Investor will work together in good faith to determine and agree upon an appropriate remedy acceptable to both parties for a reasonable period of time after the finding of unsuitability (but in no event more than thirty (30) days thereafter), provided that such remedy shall occur within sixty (60) days after the finding of unsuitability; provided, however, if such remedy is not determined and agreed upon by both parties during such thirty (30) period of time, then the Company may purchase such Preferred Stock or other interests of the Schwazze Investor in accordance with the terms of Section 5.3(a).
5.4Other Restrictions.
(a)Any Investor found unsuitable by an Applicable MED shall not hold directly or indirectly the beneficial ownership of any share, membership interest, or other interest in or to a licensee or holding company or intermediary company thereof beyond that period of time prescribed by the Applicable MED, and must be removed immediately from any position as a director, officer, member, manager or employee of such licensee or holding company or intermediary company thereof. In refusing to grant approval for the transfer of an interest or other involvement with a licensee, the Applicable MED or local licensing authority may determine that an individual or Person is unsuitable. In reviewing an application for licensure, the Applicable MED or local licensing authority may determine that an individual or Person is unsuitable.
(b)If the Applicable MED or local licensing authority determines a licensee or affiliated company thereof to be unsuitable or takes other disciplinary action, or if the licensee or affiliated company thereof, after the Applicable MED or local licensing authority serves notice to the licensee or affiliated company thereof, that a Person is unsuitable to be a stockholder, member or manager or to have any other direct or indirect relationship or involvement with such licensee or affiliated company thereof, the Company shall not:
(i)pay to any Person found to be unsuitable any dividend or interest on any stock or other interest, or make any payment or distribution of any kind whatsoever to such Person, except as expressly permitted herein for the buyout of the unsuitable Person;
(ii)recognize the exercise by any such unsuitable Person, directly or indirectly, or through any proxy, trustee or nominee, of any voting right conferred by any securities or interest in any securities; or
(iii)pay to any such unsuitable Person any remuneration in any form for services rendered.
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(c)The Company is obligated to pursue all lawful efforts to require such unsuitable Investor to relinquish all Preferred Stock and any other securities, membership interest and/or other interest, including, if necessary, the immediate purchase of such Preferred Stock or other securities, membership interest and/or other interest by the Company in accordance with the terms hereof.
5.5Cooperation Upon Conversion.Each Investor acknowledges and understands that any conversion of shares of Preferred Stock may require the approval of both state and local licensing authorities (including, without limitation, any Applicable MED). Upon any such conversion, the applicable Investor agrees to cooperate and comply with any and all requirements and conditions to obtain the approval of state and local licensing authorities (including, without limitation, any Applicable MED) with respect to such conversion.
6.Buy-Out Option - Schwazze Investor. During the period commencing on the date hereof through the third anniversary thereof, the Schwazze Investor shall have the right to purchase all, but not less than all, of the issued and outstanding shares of Capital Stock of the Company (the “Buy-Out Option”), subject to the following terms and conditions:
(a)The value of the issued and outstanding shares of Capital Stock in the purchase of the Company pursuant to the Buy-Out Option (the “Buy-Out”) shall be calculated as the greater of: (i) the Company’s LTM EBITDA multiplied by the greater of (A) 8.0x, or (B) 60% of the LTM EBITDA multiple of the Schwazze Investor (the “Schwazze Investor Multiple”), less the amount of debt of the Company, plus the amount of cash of the Company; or (ii) $1.82 per share of Capital Stock issued and outstanding. “LTM EBITDA” shall mean EBITDA measured for the period of the most recent twelve (12) consecutive months ending prior to the date of such determination. “EBITDA” shall, for a given period, mean net income, plus income taxes, plus interest expense, plus depreciation, plus amortization, as adjusted (i) for such pro forma adjustments giving effect to any acquisition, disposition or investment, as applicable, since the start of such period, (ii) for any “extraordinary items” of gain or loss as that term is defined by generally accepted account principles in the United States, and (iii) with respect to determining the Company’s EBITDA, to add back the cash salary of each employee of the Company that will not become an employee of the Schwazze Investor after the Buy-Out and the amount of any monitoring fees paid or owed to an Investor during such period.
(b)The Schwazze Investor Multiple shall be calculated using the 30-day variable weighted average price of the Schwazze Investor’s stock and will be measured from the date of the written notice to the Company and each Investor of the Schwazze Investor’s intention to purchase all of the Capital Stock of the Company.
(c)The Schwazze Investor shall have the right to exercise the Buy-Out Option on the 36th and 48th month anniversary of the date hereof (each, an “Anniversary Date”). The Schwazze Investor shall provide written notice (each, a “Notice of Exercise Consideration”) to the Company ten (10) days prior to an Anniversary Date of its desire to consider exercising the Buy-Out Option on such Anniversary Date and to make a request to inspect the books and records of the Company and to receive any other reasonably requested information with respect to the Buy-Out Option. Within ten (10) days of receipt of any such Notice of Exercise Consideration, the Company shall make such books and records available to the Schwazze
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Investor, during normal business hours and at its principal office, and provide such requested information to the Schwazze Investor. In such case, the Schwazze Investor shall have sixty (60) days from its access to such books and records and receipt of the requested information (the “Exercise Consideration Period”) to determine, and notify the Company and each Investor in writing, whether it will exercise the Buy-Out Option.
(d)If the Schwazze Investor elects not to exercise the Buy-Out Option on any Anniversary Date (either by not delivering a Notice of Exercise Consideration as required pursuant to Section 6(c) with respect to such Anniversary Date or, if the Schwazze Investor delivered a Notice of Exercise Consideration as required pursuant to Section 6(c) with respect to such Anniversary Date, but then determined not to exercise the Buy-Out Option prior to the expiration of the Exercise Consideration Period), the Company shall have the right to accept an offer to purchase all, but not less than all, of the issued and outstanding shares of Capital Stock of the Company from another Person, subject to the other terms of this Agreement, during the thirty (30) day period after the following applicable date: (i) such Anniversary Date if the Schwazze Investor does not deliver a Notice of Exercise Consideration as required pursuant to Section 6(c) with respect to such Anniversary Date, or (ii) the date that is the last day of the Exercise Consideration Period if the Schwazze Investor delivered a Notice of Exercise Consideration as required pursuant to Section 6(c) with respect to such Anniversary Date, but then determined not to exercise the Buy-Out Option prior to the expiration of the Exercise Consideration Period. If an offer from another Person is accepted by the Company during such thirty (30) day period, the Buy-Out Option will no longer be in effect; and
(e)The consideration paid by the Schwazze Investor pursuant to the Buy-Out Option must be comprised of at least forty percent (40%) cash and at least forty percent (40%) of the Schwazze Investor’s common stock, unless other amounts of consideration are agreed to by the Schwazze Investor, the Company and the Investors.
		7.
	Transfers.

7.1General Restrictions on Transfers.
(a)General Restrictions. Each Investor acknowledges and agrees that such Investor (or any Permitted Transferee of such Investor) shall not Transfer any Capital Stock except:
(i)as permitted pursuant to Section 7.2; or
(ii)in strict accordance with the restrictions, conditions, and procedures described in any other provision of this Agreement, as applicable.
(b)Other Restrictions. Notwithstanding any other provision of this Agreement (including Section 7.2), no Investor shall, directly or indirectly, Transfer any of its Capital Stock:
(i)except upon the authorization and approval of such Transfer by the Board of Directors;
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(ii)except as permitted under, and in accordance with, Colorado law, Applicable Marijuana Codes, and the rules and regulation issued by the Applicable MED and any other state or local rules and regulations that may affect such a business;
(iii)except as permitted under the Securities Act and other applicable federal or state securities or blue sky laws, and then, with respect to a Transfer of Capital Stock, if requested by the Company, only upon delivery to the Company of a written opinion of counsel in form and substance satisfactory to the Company to the effect that such Transfer may be effected without registration under the Securities Act;
(iv)if such Transfer would cause the Company to be required to register as an investment company under the Investment Company Act of 1940, as amended;
(v)if such Transfer would cause the assets of the Company to be deemed “Plan Assets” as defined under the Employee Retirement Income Security Act of 1974 or its accompanying regulations or result in any “prohibited transaction” thereunder involving the Company; or
(vi)to a Prohibited Transferee pursuant to Section 3.3.
(c)Joinder Agreement. Except with respect to any Transfer pursuant to a Drag-along Sale, no Transfer of Capital Stock pursuant to any provision of this Agreement shall be deemed completed until the Transferee shall have entered into a Joinder Agreement, in form and substance satisfactory to the Company.
(d)Transfers in Violation of this Agreement. Any Transfer or attempted Transfer of any Capital Stock in violation of this Agreement, including any failure of a Transferee, as applicable, to enter into a Joinder Agreement pursuant to Section 7.1(c), shall be null and void, no such Transfer shall be recorded on the Company’s books, and the purported Transferee in any such Transfer shall not be treated (and the Investor proposing to make any such Transfer shall continue be treated) as the owner of such Capital Stock for all purposes of this Agreement.
7.2Permitted Transfers. Subject to Section 7.1, including the requirement to enter into a Joinder Agreement pursuant to Section 7.1(c), the provisions of Sections 2.1, 2.2 and 4.1 shall not apply to any of the following Transfers by any Investor of any of its Capital Stock to the following Person(s) (each, a “Permitted Transferee”):
(a)to any Affiliate of any such entity Investor;
(b)to any such individual Investor’s spouse, siblings, descendants (including adoptive relationships and stepchildren), and the spouses of each such natural persons collectively, “Family Members”);
(c)a trust under which the distribution of Capital Stock may be made only to such individual Investor and/or any Family Members of such individual Investor;
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(d)a corporation, partnership, or limited liability company, the stockholders, partners, or members of which are only such individual Investor and/or Family Members of such individual Investor;
(e)for bona fide estate planning purposes, either by will or by the laws of intestate succession, to such individual Investor’s executors, administrators, testamentary trustees, legatees, or beneficiaries; or
(f)as set forth in Section 3.1.
8.Legend. Each certificate, instrument, or book entry representing shares of Capital Stock held by the Investors or issued to any permitted transferee in connection with a transfer permitted by Section 3.1 hereof shall be notated with the following legend:
THE SALE, PLEDGE, HYPOTHECATION, OR TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO, AND IN CERTAIN CASES PROHIBITED BY, THE TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT BY AND AMONG THE STOCKHOLDER, THE CORPORATION AND CERTAIN OTHER HOLDERS OF STOCK OF THE CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.
Each Investor agrees that the Company may instruct its transfer agent to impose transfer restrictions on the shares notated with the legend referred to in this Section 5 above to enforce the provisions of this Agreement, and the Company agrees to promptly do so. The legend shall be removed upon termination of this Agreement at the request of the holder.
9.Lock-Up.
9.1Agreement to Lock-Up. Each Investor hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the Company’s initial public offering (the “IPO”) and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days) (a) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Capital Stock held immediately prior to the effectiveness of the registration statement for the IPO; or (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Capital Stock, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of Capital Stock or other securities, in cash or otherwise. The foregoing provisions of this Section 9 shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, and shall only be applicable to the Investors if all officers, directors and holders of more than one percent (1%) of the outstanding Common Stock (after giving effect to the conversion into Common Stock of all outstanding Preferred Stock) enter into similar agreements. The underwriters in connection with the IPO are intended third-party beneficiaries of this Section 9 and shall have the right, power
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and authority to enforce the provisions hereof as though they were a party hereto. Each Investor further agrees to execute such agreements as may be reasonably requested by the underwriters in the IPO that are consistent with this Section 9 or that are necessary to give further effect thereto.
9.2       Stop Transfer Instructions. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the shares of Capital Stock of each Investor (and transferees and assignees thereof) until the end of such restricted period.Miscellaneous.
10.1Term. This Agreement shall automatically terminate upon the earlier of (a) immediately prior to the consummation of the Company’s IPO (other than a registration statement relating either to the sale of securities to employees of the Company pursuant to its stock option, stock purchase or similar plan or an SEC Rule 145 transaction); and (b) the consummation of a Sale of the Company and distribution of proceeds to or escrow for the benefit of the Investors in accordance with the Articles, provided that the provisions of Section 4 hereof will continue after the closing of any Sale of the Company to the extent necessary to enforce the provisions of Section 4 with respect to such Sale of the Company.
10.2Stock Split. All references to numbers of shares in this Agreement shall be appropriately adjusted to reflect any stock dividend, split, combination or other recapitalization affecting the Capital Stock occurring after the date of this Agreement.
10.3Ownership. Each Investor represents and warrants that such Investor is the sole legal and beneficial owner of the shares of Capital Stock subject to this Agreement and that no other Person or entity has any interest in such shares (other than a community property interest as to which the holder thereof has acknowledged and agreed in writing to the restrictions and obligations hereunder).
10.4Dispute Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state and federal courts of Denver County, Colorado or the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the above-named courts, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.
WAIVER OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE SUBJECT MATTER HEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS
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BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
The prevailing party shall be entitled to reasonable attorney’s fees, costs, and necessary disbursements in addition to any other relief to which such party may be entitled. Each of the parties to this Agreement consents to personal jurisdiction for any equitable action sought in the courts set forth in clause (a) above having subject matter jurisdiction.
10.5 Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or (a) upon personal delivery to the party to be notified, (b) when sent, if sent by electronic mail during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, or (c) one (1) business day after the business day of deposit with a nationally recognized overnight courier, postage prepaid, specifying next-day delivery. All communications shall be sent to the respective parties at their e-mail address and location address as set forth on Schedule A hereof or to such email address or location address as subsequently modified by written notice given in accordance with this Section 10.5. If notice is given to the Company, it shall be sent to 1880 S. Flatiron Court, Suite E, Boulder, Colorado 80301, Attn: Doug Burkhalter, Email: dburkhalter@missionholdings.us; and a copy (which shall not constitute notice) shall also be sent to 1880 S. Flatiron Court, Suite E, Boulder, Colorado 80301, Attn: Hadley Ford, Email: hford@missionholdings.us and Berger, Cohen & Brandt, L.C., 8000 Maryland Ave., Suite 1500, Clayton, Missouri 63105, Attn: David Spewak, Email: dspewak@bcblawlc.com.
10.6 Entire Agreement.This Agreement (including, the Exhibits and Schedules hereto) constitutes the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties are expressly canceled.
10.7 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.
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10.8 Amendment; Waiver and Termination. This Agreement may be amended, modified or terminated (other than pursuant to Section 10.1 above) and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument executed by (a) the Company, and (b) the holders of seventy-five percent (75%) of the shares of Common Stock issued or issuable upon conversion of the then outstanding shares of Preferred Stock held by the Investors (voting as a single class and on an as-converted basis). Any amendment, modification, termination or waiver so effected shall be binding upon the Company, the Investors and all of their respective successors and permitted assigns whether or not such party, assignee or other shareholder entered into or approved such amendment, modification, termination or waiver. Notwithstanding the foregoing, (i) this Agreement may not be amended, modified or terminated and the observance of any term hereunder may not be waived with respect to any Investor without the written consent of such Investor unless such amendment, modification, termination or waiver applies to all Investors in the same fashion, (ii) this Agreement may not be amended, modified or terminated and the observance of any term hereunder may not be waived with respect to any Investor without the written consent of such Investor, if such amendment, modification, termination or waiver would adversely affect the rights of such Investor in a manner disproportionate to any adverse effect such amendment, modification, termination or waiver would have on the rights of the other Investors under this Agreement, and (iii) Schedule A hereto may be amended by the Company from time to time in accordance with the Stock Purchase Agreement to add information regarding Additional Purchasers (as defined in the Stock Purchase Agreement) without the consent of the other parties hereto. The Company shall give prompt written notice of any amendment, modification or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, modification, termination or waiver. No waivers of or exceptions to any term, condition or provision of this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.
10.9 Assignment of Rights.
(a)Subject to the rights and restrictions on Transfers set forth in this Agreement, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement may not be assigned by any Investor except as provided in this Agreement (or as otherwise consented to in a prior writing by the Company and all of the other Investors) and any such assignment in violation of this Agreement shall be null and void. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.
(b)The rights of the Investors hereunder are not assignable without the Company’s written consent (which shall not be unreasonably withheld, delayed or conditioned), except (i) by an Investor to any Affiliate, or (ii) to an assignee or transferee who acquires shares of Capital Stock as permitted under this Agreement, including to any Permitted Transferee, it being acknowledged and agreed that any such assignment, including an assignment contemplated by the preceding clauses (i) or (ii), shall be subject to and conditioned upon any such assignee’s delivery to the Company and the other Investors of a counterpart signature page hereto pursuant
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to which such assignee shall confirm their agreement to be subject to and bound by all of the provisions set forth in this Agreement that were applicable to the assignor of such assignee.
(c)Except in connection with an assignment by the Company in connection with a sale or acquisition of the Company, whether by merger, consolidation, sale of all or substantially all of the Company’s assets, or similar transaction, the rights and obligations of the Company hereunder may not be assigned under any circumstances; provided, that the successor or acquiring Person agrees in writing to assume all of the Company’s rights and obligations under this Agreement.
10.10 Severability. In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.
10.11 Additional Investors. Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of the Preferred Stock after the date hereof, or as a result of a Transfer permitted pursuant to this Agreement, any purchaser or transferee of such shares of Preferred Stock shall become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement to the Company and the other Investors confirming their agreement to be subject to and bound by all of the provisions set forth in this Agreement, and thereafter shall be deemed an “Investor” for all purposes hereunder. No action or consent by the Investors shall be required for such joinder to this Agreement by such additional Investor, so long as such additional Investor has agreed in writing to be bound by all of the obligations as an “Investor” hereunder.
10.12 Governing Law. This Agreement shall be governed by the internal law of the State of Colorado without giving effect to any choice or conflict of law provision or rule (whether of the State of Colorado or any other jurisdiction).
10.13 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
10.14 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
10.15 Covenants of the Company. The Company agrees to use its best efforts, within the requirements of applicable law, to ensure that the rights granted under this Agreement are effective and that the parties enjoy the benefits of this Agreement.
10.16 Specific Performance. Each party acknowledges and agrees that each party hereto will be irreparably damaged in the event any of the provisions of this Agreement are
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not performed by the parties in accordance with their specific terms or are otherwise breached. Accordingly, in addition to any and all other remedies that may be available at law in the event of any breach of this Agreement, each Investor shall be entitled to specific performance of the agreements and obligations of the Company and the other Investors hereunder and to such other injunction or other equitable relief as may be granted by a court of competent jurisdiction.
10.17 Further Assurances. Each of the parties to this Agreement shall, and shall cause their Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and to give effect to the transactions contemplated hereby.
10.18 Consent of Spouse. If any Investor is married on the date of this Agreement, such Investor’s spouse shall execute and deliver to the Company a Consent of Spouse in the form of Exhibit A hereto (a “Consent of Spouse”), effective on the date hereof. Notwithstanding the execution and delivery thereof, such consent shall not be deemed to confer or convey to the spouse any rights in such Investor’s shares of Capital Stock that do not otherwise exist by operation of law or the agreement of the parties. If any Investor should marry or remarry subsequent to the date of this Agreement, such Investor shall within thirty (30) days thereafter obtain his/her new spouse’s acknowledgement of and consent to the existence and binding effect of all restrictions contained in this Agreement by causing such spouse to execute and deliver a Consent of Spouse acknowledging the restrictions and obligations contained in this Agreement and agreeing and consenting to the same.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Right of First Refusal and Co-Sale Agreement as of the date first written above.
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	COMPANY:

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	MISSION HOLDINGS, INC. 

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	By:
	/s/ Doug Burkhalter

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	Doug Burkhalter

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	Chief Executive Officer

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Signature Page To Right Of First Refusal And Co-Sale Agreement
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	INVESTORS:

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	MEDICINE MAN TECHNOLOGIES, INC.

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	By:
	/s/ Justin Dye

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	Justin Dye

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	Chief Executive Officer

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	[                     ]

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	By:
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	Name:
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	Title:
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Signature Page To Right Of First Refusal And Co-Sale Agreement
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SCHEDULE A
INVESTORS
[Intentionally Omitted]
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EXHIBIT A
CONSENT OF SPOUSE
I,                                                , spouse of                                                , acknowledge that I have read the Right of First Refusal and Co-Sale Agreement, dated as of May 20, 2022, to which this Consent is attached as Exhibit A (the “Agreement”), and that I know the contents of the Agreement. I am aware that the Agreement contains provisions regarding certain rights to certain other holders of Capital Stock of the Company upon a Proposed Investor Sale of shares of Capital Stock of the Company which my spouse may own including any interest I might have therein.
I hereby agree that my interest, if any, in any shares of Capital Stock of the Company subject to the Agreement shall be irrevocably bound by the Agreement and further understand and agree that any community property interest I may have in such shares of Capital Stock of the Company shall be similarly bound by the Agreement.
I am aware that the legal, financial and related matters contained in the Agreement are complex and that I am free to seek independent professional guidance or counsel with respect to this Consent. I have either sought such guidance or counsel or determined after reviewing the Agreement carefully that I will waive such right.
Dated as of the 20th day of May, 2022.
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	Signature

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	Print Name

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​Exhibit 10.10
EXECUTION VERSION
STOCKHOLDERS AGREEMENT
among
MISSION HOLDINGS US, INC.
and
EACH PERSON IDENTIFIED ON SCHEDULE A
dated as of
May 20, 2022
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TABLE OF CONTENTS
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	ARTICLE I DEFINITIONS
	4

	ARTICLE II MANAGEMENT AND OPERATION OF THE COMPANY
	10

	Section 2.01 Board of Directors.
	10

	Section 2.02 Voting Arrangements.
	11

	ARTICLE III TRANSFER OF INTERESTS
	13

	Section 3.01 General Restrictions on Transfer.
	13

	Section 3.02 Right of First Refusal
	15

	Section 3.03 Triggering Events for Company’s Option To Buy Shares
	17

	Section 3.04 Option Procedures
	18

	Section 3.05 Purchase Price
	19

	Section 3.06 Tag-Along Rights.
	21

	ARTICLE IV PREEMPTIVE RIGHTS
	22

	Section 4.01 Preemptive Rights.
	22

	ARTICLE V OTHER AGREEMENTS
	24

	Section 5.01 Corporate Opportunities.
	24

	Section 5.02 Confidentiality.
	24

	ARTICLE VI INFORMATION RIGHTS
	26

	Section 6.01 Financial Statements.
	26

	Section 6.02 Inspection Rights
	26

	ARTICLE VII REPRESENTATIONS AND WARRANTIES
	27

	Section 7.01 Representations and Warranties.
	27

	ARTICLE VIII TERM AND TERMINATION
	28

	Section 8.01 Termination.
	28

	Section 8.02 Effect of Termination.
	28

	ARTICLE IX MISCELLANEOUS
	29

	Section 9.01 Expenses.
	29

	Section 9.02 Further Assurances.
	29

	Section 9.03 Release of Liability.
	29

	Section 9.04 Notices
	29

	Section 9.05 Agreement Prepared by Company Counsel.
	30

	Section 9.06 Interpretation
	30

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	Section 9.07 Severability.
	31

	Section 9.08 Entire Agreement
	31

	Section 9.09 Successors and Assigns; Assignment.
	31

	Section 9.10 No Third-Party Beneficiaries.
	31

	Section 9.11 Amendment and Modification
	32

	Section 9.13 Governing Law.
	32

	Section 9.14 Submission to Jurisdiction.
	32

	Section 9.16 Equitable Remedies
	333

	Section 9.17 Remedies Cumulative
	33

	Section 9.18 Counterparts.
	33

	Section 9.19 Spousal Consent
	34

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3

STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this “Agreement”), dated as of May 20, 2022 (the “Effective Date”), is entered into among Mission Holdings US, Inc., a Colorado corporation (the “Company”), each Person identified on Schedule A hereto (each, an “Initial Stockholder” and collectively, the “Initial Stockholders”), and each other Person who after the date hereof acquires Shares of the Company and becomes a party to this Agreement by executing a Joinder Agreement (such Persons, collectively with the Initial Stockholders, the “Stockholders”).
RECITALS
WHEREAS, the Initial Stockholders have formed the Company for the purposes of conducting and operating the Business (defined below);
WHEREAS, the Company has authorized 70,000,000 Shares (defined below);
WHEREAS, as of the date hereof, each Stockholder owns the number and percentage of the issued and outstanding Shares set forth opposite the Stockholder’s name on Schedule A hereto; and
WHEREAS, the Initial Stockholders and the other parties hereto deem it in their best interests and in the best interests of the Company to set forth in this Agreement their respective rights and obligations in connection with their investment in the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I 
DEFINITIONS
Capitalized terms used herein and not otherwise defined shall have the meanings specified or referenced in this Article I.
“Acceptance Notice” has the meaning set forth in Section 4.01(c).
“Affiliate” means with respect to any Person, any other Person who, directly or indirectly (including through one or more intermediaries), controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control,” when used with respect to any specified Person, shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities or partnership or other ownership interests, by contract or otherwise; and the terms “controlling” and “controlled” shall have correlative meanings.
“Agreement” has the meaning set forth in the preamble.
“Applicable Law” means all applicable provisions of: (a) constitutions, treaties, statutes, laws (including the common law), rules, regulations, decrees, ordinances, codes, proclamations, declarations, or orders of any Governmental Authority; (b) any consents or approvals of any
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Governmental Authority; and (c) any orders, decisions, advisory or interpretative opinions, injunctions, judgments, awards, decrees of, or agreements with, any Governmental Authority.
“Applicable MED” means, collectively or individually, as the context requires, the Colorado MED and any other state or local marijuana enforcement division of any state in which the Company operates.
“Articles of Incorporation” means the Articles of Incorporation of the Company filed with the Colorado Secretary of State on November 2, 2020, as amended by the Articles of Amendment (including the Attachment to Amended Articles of Incorporation of Mission Holdings US, Inc.) filed with the Colorado Secretary of State on December 29, 2021 and the Designation, Preferences, Limitations and Relative Rights of Convertible Preferred Stock of the Company to be filed with the Colorado Secretary of State on or about the date hereof in connection with the transactions contemplated under the Stock Purchase Agreement, as may be further modified, amended, and/or restated from time to time.
“Board” has the meaning set forth in Section 2.01(a).
“Business” means growing, manufacturing, selling and distributing hemp and marijuana and hemp and marijuana products.
“Business Day” means a day other than a Saturday, Sunday, or other day on which commercial banks in the State of Colorado are authorized or required to close.
“By-Laws” means the by-laws of the Company, as amended, modified, supplemented, or restated from time to time in accordance with the terms of this Agreement.
“CBCA” means the Colorado Business Corporation Act, as amended from time to time and including any successor legislation thereto and any regulations promulgated thereunder.
“Colorado MED” means the Colorado Department of Revenue, Marijuana Enforcement Division, C.R.S. §§12-43.3-101, et seq., C.R.S 12-43.4-101, et seq. and 25-1.5-101, et seq.
“Company” has the meaning set forth in the preamble.
“Company ROFR Notice” has the meaning set forth in Section 3.02(d).
“Company ROFR Notice Period” has the meaning set forth in Section 3.02(d).
“Company ROFR Waiver Notice” has the meaning set forth in Section 3.02(e).
“Competitor” means any Person that, directly or indirectly, competes with the Company in the Business (or any portion thereof) and/or whose business is or includes the Business (or any portion thereof).
“Confidential Information” has the meaning set forth in Section 5.02(a).
“Corporate Opportunity” has the meaning set forth in Section 5.01.
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“Director” has the meaning set forth in Section 2.01(a).
“Disability” has the meaning set forth in Section 3.03(b).
“Divorce” means any legal proceeding to terminate or dissolve, or separate the Marital Relationship of a Stockholder, and includes an action for annulment, legal separation, or similar proceeding that involves a judicial division of joint or marital property of the Stockholder and his or her Spouse.
“Effective Date” has the meaning set forth in the preamble.
“Excluded Securities” means any Shares or other equity securities issued in connection with: (a) a grant to any existing or prospective consultants, employees, officers, or Directors pursuant to any stock option, employee stock purchase, or similar equity-based plans or other compensation agreement; (b) the exercise or conversion of options to purchase Shares, or Shares issued to any existing or prospective consultants, employees, officers, or Directors pursuant to any stock option, employee stock purchase, or similar equity-based plans or any other compensation agreement; (c) the conversion or exchange of any securities of the Company into Shares; (d) any acquisition by the Company of the shares of stock, assets, properties, or business of any Person; (e) any merger, consolidation, or other business combination involving the Company; (f) a share split, share dividend, or any similar recapitalization; or (f) any issuance of Financing Equity, in each case, approved in accordance with the terms of this Agreement.
“Exercise Period” has the meaning set forth in Section 4.01(c).
“Exercising Stockholder” has the meaning set forth in Section 4.01(d).
“Family Member” means with respect to any Stockholder that is a natural person, such Stockholder’s Spouse, parent, sibling, descendant (including adoptive relationships and stepchildren), and the Spouses of each such natural persons.
“Financing Equity” means any Shares, warrants, or other similar rights to purchase Shares issued to lenders or other institutional investors (excluding the Stockholders) in any arm’s length transaction providing debt financing to the Company.
“Fiscal Year” means, for financial accounting purposes, January 1 to December 31.
“GAAP” means United States generally accepted accounting principles in effect from time to time.
“Government Approval” means any authorization, consent, approval, waiver, exception, variance, order, exemption, publication, filing, declaration, concession, grant, franchise, agreement, permission, permit, or license of, from, or with any Governmental Authority, the giving of notice to, or registration with, any Governmental Authority, or any other action in respect of any Governmental Authority.
“Governmental Authority” means any federal, state, local, or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political
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subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations, or orders of such organization or authority have the force of law), or any arbitrator, court, or tribunal of competent jurisdiction.
“Governing Documents” means the Articles of Incorporation and the By-Laws.
“Initial Public Offering” means any offering of Shares pursuant to a registration statement filed in accordance with the Securities Act.
“Initial Stockholders” has the meaning set forth in the preamble.
“Issuance Notice” has the meaning set forth in Section 4.01(b).
“Involuntary Transfer” has the meaning set forth in Section 3.03(a).
“Joinder Agreement” means the joinder agreement in form and substance of Exhibit A attached hereto.
“Lien” means any lien, claim, charge, mortgage, pledge, security interest, option, preferential arrangement, right of first offer, encumbrance, or other restriction or limitation of any nature whatsoever.
“Majority Proposal” has the meaning set forth in Section 3.06(a).
“Marital Relationship” means a civil union, domestic partnership, marriage, or any other similar relationship that is legally recognized in any jurisdiction.
“New Securities” has the meaning set forth in Section 4.01(a).
“Non-Exercising Stockholder” has the meaning set forth in Section 4.01(d).
“Offered Shares” has the meaning set forth in Section 3.02(a).
“Offering Stockholder” has the meaning set forth in Section 3.02(a).
“Offering Stockholder Notice” has the meaning set forth in Section 3.02(b).
“Option Shares” has the meaning set forth in Section 3.04(a).
“Over-Allotment Exercise Period” has the meaning set forth in Section 4.01(d).
“Over-Allotment New Securities” has the meaning set forth in Section 4.01(d).
“Over-Allotment Notice” has the meaning set forth in Section 4.01(d).
“Permitted Transferee” means (a) with respect to any Stockholder that is an entity, any Affiliate of such Stockholder, (b) with respect to any Stockholder who is an individual: (i) such Stockholder’s Family Member; (ii) a trust under which the distribution of Shares may be made
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only to such Stockholder and/or any Family Member of such Stockholder; (iii) a charitable remainder trust, the income from which will be paid to such Stockholder during his or her life; (iv) a corporation, partnership, or limited liability company, the stockholders, partners, or members of which are only such Stockholder and/or Family Members of such Stockholder; or (iv) such Stockholder’s executors, administrators, testamentary trustees, legatees, distributees, or beneficiaries by will or by the laws of intestate succession, (c) with respect to Level 10 LLC, its sole shareholder, Paul Larson (or as permitted under clause (b) with respect to him), and (d) with respect to Crosstown Holdings, LLC (dba NFuzed), each of its two shareholders, Gregory Goldston or Mark Hartwig (or as permitted under clause (b) with respect to each of them).
“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association, or other entity.
“Preemptive Pro Rata Portion” has the meaning set forth in Section 4.01(c).
“Proposed Majority Purchaser” has the meaning set forth in Section 3.06(a).
“Prospective Purchaser” has the meaning set forth in Section 4.01(b).
“Purchase Price” has the meaning set forth in Section 3.05(c).
“Purchasing Stockholder” has the meaning set forth in Section 3.02(f).
“Related Party Agreement” means any agreement, arrangement, or understanding between the Company and any Stockholder or any Affiliate of a Stockholder or any Director, officer, or employee of the Company, as such agreement may be amended, modified, supplemented, or restated in accordance with the terms of this Agreement.
“Representative” means, with respect to any Person, any and all directors, managers, members, partners, officers, employees, consultants, financial advisors, counsel, accountants, and other agents of such Person.
“ROFR Notice” has the meaning set forth in Section 3.02(f). “ROFR Notice Period” has the meaning set forth in Section 3.02(f).
“Securities Act” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations thereunder, which shall be in effect at the time.
“Shares” means shares of common stock, $.0001 par value, of the Company and any securities issued in respect thereof, or in substitution therefor, in connection with any share split, dividend, or combination, or any reclassification, recapitalization, merger, consolidation, exchange, or similar reorganization.
“Special Majority Approval” means with respect to any matter that must be approved by the Board of the Company pursuant to this Agreement, if the approval of three (3) or less Directors is obtained for such approval, then such matter must be approved by (a) the affirmative
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vote of Stockholders holding at least fifty one percent (51%) of the issued and outstanding Shares; or (b) the written consent of the Stockholders holding at least fifty one percent (51%) of the issued and outstanding Shares.
“Spousal Consent” has the meaning set forth in Section 9.19.
“Spouse” means a spouse, a party to a civil union, a domestic partner, a same-sex spouse or partner, or any individual in a Marital Relationship with a Stockholder.
“Spouse’s Interest” has the meaning set forth in Section 3.03(c).
“Stipulated Value” has the meaning set forth in Section 3.05(a).
“Stockholders” has the meaning set forth in the preamble.
“Subsidiary” means with respect to any Person, any other Person of which a majority of the outstanding shares or other equity interests having the power to vote for directors or comparable managers are owned, directly or indirectly, by the first Person.
“Supermajority Approval” means with respect to any matter that must be approved by the Stockholders pursuant to this Agreement: (a) the affirmative vote of Stockholders holding at least 66 2/3% of the issued and outstanding Shares; or (b) the written consent of the Stockholders holding at least 66 2/3% of the issued and outstanding Shares.
“Tag - Along Stockholder” has the meaning set forth in Section 3.06(a).
“Tag — Along Right” has the meaning set forth in Section 3.06(a).
“Tag Notice” has the meaning set forth in Section 3.06(a).
“Third Party Purchaser” means any Person who, immediately prior to the contemplated transaction: (a) does not, directly or indirectly, own or have the right to acquire any outstanding Shares; or (b) is not a Permitted Transferee of any Person who, directly or indirectly, owns or has the right to acquire any Shares.
“Transfer” means to, directly or indirectly, sell, transfer, assign, gift, pledge, encumber, hypothecate, or similarly dispose of, either voluntarily or involuntarily, by operation of law or otherwise, or to enter into any contract, option, or other arrangement or understanding with respect to the sale, transfer, assignment, gift, pledge, encumbrance, hypothecation, or similar disposition of, any Shares owned by a Person or any interest (including a beneficial interest) in any Shares owned by a Person. “Transfer” when used as a noun shall have a correlative meaning.
“Terminating Stockholder” has the meaning set forth in Section 3.03(b).
“Termination of Employment of a Stockholder” has the meaning set forth in Section 3.03(b).
“Transferring Stockholder” has the meaning set forth in Section 3.03(c).
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“Valuation Firm” has the meaning set forth in Section 3.05(e).
“Waived ROFR Transfer Period” has the meaning set forth in Section 3.02(h).
ARTICLE II
MANAGEMENT AND OPERATION OF THE COMPANY
Section 2.01Board of Directors.
(a)Subject to Section 2.02, the Stockholders agree that the business and affairs of the Company shall be managed through a board of directors (the “Board”) consisting of five members (each, a “Director”). Subject to Section 2.01(b), when electing Directors to serve on the Board, (i) Donald Douglas Burkhalter, at any time during which he is an Initial Stockholder, shall have the right to designate one (1) Director, who shall initially be the individual identified on Schedule B hereto, and (ii) Hadley C. Ford, at any time during which he is an Initial Stockholder, shall have the right to designate one (1) Director, who shall initially be those individuals identified on Schedule B hereto. Each such Director shall hold office until the earlier to occur of: (i) the next annual stockholders’ meeting at which such Director’s successor is designated by the Initial Stockholder that designated such Director as set forth in this Section 2.01(a); or (ii) such Director’s term of office expires as set forth in Section 2.01(b).
(b)In the event that Donald Douglas Burkhalter or Hadley C. Ford, together with their respective Permitted Transferees, ceases to own at least five percent (5%) of the issued and outstanding Shares, then Donald Douglas or Hadley C. Ford, as the case may be, shall cease to have the right to designate the Directors that such Stockholder has pursuant to Section 2.01(a); provided, however, notwithstanding the foregoing, (i) as long as Donald Douglas Burkhalter or Hadley C. Ford is a duly appointed or elected officer of the Company, then such Stockholder shall have the right to designate one (1) director, and (ii) as long as the Initial Stockholders, collectively and together with their Permitted Transferees, own at least ten percent (10%) of the issued and outstanding Shares, Donald Douglas Burkhalter and Hadley C. Ford shall have the right to jointly designate one (1) additional director. In the event of such cessation of the right to designate directors pursuant to Section 2.01(a), (i) the term of office of all of the Directors designated by Donald Douglas Burkhalter or Hadley C. Ford, as applicable, shall expire; and (ii) the Directors remaining in office shall decrease the size of the Board to eliminate the resulting Director vacancies, unless the other Stockholders holding at least fifty percent (50%) of the issued and outstanding Shares consent otherwise.
(c)Each Stockholder shall vote all Shares over which such Stockholder has voting control and shall take all other necessary or desirable actions within such Stockholder’s control (including in its capacity as stockholder, director, member of a board committee, or officer of the Company, or otherwise, and whether at a regular or special meeting of the Stockholders or by written consent in lieu of a meeting) to elect to the Board any individual designated by Donald Douglas Burkhalter or Hadley C. Ford pursuant to Section 2.01(a).
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(d)Donald Douglas Burkhalter and Hadley C. Ford shall have the right at any time to remove (with or without cause) any Director designated by such Stockholder for election to the Board and each other Stockholder shall vote all Shares over which such Stockholder has voting control and shall take all other necessary or desirable actions within such Stockholder’s control (including in its capacity as stockholder, director, member of a board committee, or officer of the Company, or otherwise, and whether at a regular or special meeting of the Stockholders or by written consent in lieu of a meeting) to remove from the Board any individual designated by Donald Douglas Burkhalter or Hadley C. Ford, as applicable, that Donald Douglas Burkhalter or Hadley C. Ford, as applicable, desires to remove pursuant to this Section 2.01(d). Except as provided in the preceding sentence, unless Donald Douglas Burkhalter or Hadley C. Ford, as applicable, otherwise consents in writing, no other Stockholder shall take any action to cause the removal of any Directors designated by Donald Douglas Burkhalter or Hadley C. Ford.
(e)Subject to Section 2.01(b), in the event a vacancy is created on the Board at any time and for any reason (whether as a result of death, disability, retirement, resignation, or removal pursuant to Section 2.01(d)), the Initial Stockholder that designated such Director shall have the right to designate a different individual to replace such Director and each other Stockholder shall vote all Shares over which such Stockholder has voting control and shall take all other necessary or desirable actions within such Stockholder’s control (including in its capacity as stockholder, director, member of a board committee, or officer of the Company, or otherwise, and whether at a regular or special meeting of the Stockholders or by written consent in lieu of a meeting) to elect to the Board such individual designated by such Initial Stockholder.
(f)The Board shall have the right to establish any committee of Directors as the Board shall deem appropriate from time to time. Subject to this Agreement, the Governing Documents, and Applicable Law, committees of the Board shall have the rights, powers, and privileges granted to such committee by the Board from time to time. Any delegation of authority to a committee of Directors to take any action must be approved in the same manner as would be required for the Board to approve such action directly. Any committee of Directors shall be composed of the same proportion of Directors Donald Douglas Burkhalter and Hadley C. Ford shall then be entitled to appoint to the Board pursuant to Section 2.01(a).
Section 2.02Voting Arrangements.
(a)In addition to any vote or consent of the Board or the Stockholders of the Company required by Applicable Law, including the CBCA, the Company, without Supermajority Approval, shall not, and shall not enter into any commitment to:
(i)amend, modify, restate, or waive any provisions of the Articles of Incorporation or By-Laws;
(ii)(A) make any material change to the nature of the Business conducted by the Company; or (B) enter into any business other than the Business;
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(iii)(A) subject to Section 4.01 and Section 2.02(b), issue or sell Shares or other equity securities of the Company to any Person; or (B) enter into or effect any transaction or series of related transactions involving the repurchase, redemption, or other acquisition of Shares from any Person, in each case, other than any Excluded Securities approved in accordance with the terms of this Agreement or as otherwise contemplated by the terms of this Agreement;
(iv)incur any indebtedness (other than trade payables in the ordinary course of business), pledge or grant Liens on any assets, or guarantee, assume, endorse, or otherwise become responsible for the obligations of any other Person in excess of $100,000 in a single transaction or series of related transactions, or in excess of $500,000 in the aggregate at any time outstanding;
(v)make any loan or advance to, or a capital contribution or investment in, any Person in excess of $50,000, except with respect to the Company’s contemplated investment in Bioforma, LLC of approximately $350,000 (the “Bioforma Investment”);
(vi)enter into, amend in any material respect, waive, or terminate any Related Party Agreement other than the entry into a Related Party Agreement that is on an arm’s length basis and on terms no less favorable to the Company than those that could be obtained from an unaffiliated third party and any Related Party Agreement in connection with the Bioforma Investment;
(vii)enter into or effect any transaction or series of related transactions involving the sale, lease, license, exchange, or other disposition (including by merger, consolidation, sale of shares of stock, or sale of assets) by the Company of any assets, individually or cumulatively, having a value in excess of $150,000, other than sales of inventory in the ordinary course of business consistent with past practice;
(viii)initiate or consummate an Initial Public Offering or make a public offering and sale of Shares or any other securities; or
(ix)wind up, dissolve, liquidate, or terminate the Company or initiate a bankruptcy proceeding involving the Company.
(b)In addition to any vote or consent of the Board or the Stockholders of the Company required by Applicable Law, including the CBCA, the Company, without Special Majority Approval, shall not, and shall not enter into any commitment to:
(i)adopt or modify in any material respect an annual budget, operating budget, or business plan for the Company;
(ii)subject to Section 4.01, issue or sell Shares or other equity securities of the Company to any Person in a transaction or series of related transactions, where such issuance or sale is not equal to, and is not convertible into, an aggregate of more than twenty percent (20%) of the issued and
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outstanding Shares of the existing Stockholders on a fully diluted basis at the time of the issuance or sale, other than any Excluded Securities approved in accordance with the terms of this Agreement or as otherwise contemplated by the terms of this Agreement;
(iii)appoint or remove the Company’s auditors or make any changes in the accounting methods or policies of the Company (other than as required by GAAP);
(iv)establish a Subsidiary or enter into any joint venture or similar business arrangement;
(v)enter into or amend any material term of: (i) any employment agreement or arrangement with any senior employee of the Company; (ii) the compensation (including salary, bonus, deferred compensation, or otherwise) or benefits of any senior employee of the Company; (iii) any stock option, employee stock purchase, or similar equity-based plans; (iv) any benefit, severance, or other similar plan; or (v) any annual bonus plan or any management equity plan;
(vi)exercise any of its options granted pursuant to Section 3.03; or
(vii)settle any lawsuit, action, dispute, or other proceeding or otherwise assume any liability with a value in excess of $50,000 or agree to the provision of any equitable relief by the Company, other than in the ordinary course of business consistent with past practice.
ARTICLE III
TRANSFER OF INTERESTS
Section 3.01General Restrictions on Transfer.
(a)Except as permitted pursuant to Section 3.01(b) or in accordance with the procedures described in Section 3.02, Section 3.03 and Section 3.06, each Stockholder agrees that such Stockholder will not, directly or indirectly, voluntarily or involuntarily, Transfer any of its Shares.
(b)The provisions of Section 3.01(a), Section 3.02, Section 3.03 and Section 3.06 shall not apply to any of the following Transfers by any Stockholder of any of its Shares:
(i)to a Permitted Transferee; or
(ii)pursuant to a merger, consolidation, or other business combination of the Company with a Third-Party Purchaser that has been approved in compliance with Section 2.02(a)(vii) or Section 2.02(a)(ix).
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(c)In addition to any legends required by Applicable Law, each certificate representing the Shares of the Company now owned or that may hereafter be acquired by the Stockholders shall bear a legend substantially in the following form:
“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS AGREEMENT AMONG THE COMPANY AND ITS STOCKHOLDERS, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER SUCH ACT AND LAWS, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER.”
(d)Prior notice shall be given to the Company by a Stockholder of any Transfer of Shares, including Transfers to a Permitted Transferee. Prior to consummation of any Transfer by any Stockholder of any of its Shares, including a Transfer to a Permitted Transferee or a Third Party Purchaser, such Stockholder shall cause: (i) any transferee who is not already a party to this Agreement to execute and deliver to the Company a Joinder Agreement in which such transferee agrees to be bound by the terms and conditions of this Agreement; and (ii) if the transferee is an individual, any Spouse of such transferee to execute and deliver to the Company a Spousal Consent. Upon any Transfer of Shares by any Stockholder, in accordance with this Section 3.01(d) and the other terms of this Agreement, the transferee thereof shall be substituted for, and shall assume all the rights and obligations under this Agreement of, the transferor thereof.
(e)Notwithstanding any other provision of this Agreement, each Stockholder agrees that it will not, directly or indirectly, Transfer any of its Shares: (i) except as permitted under the Securities Act and other applicable federal or state securities laws, and then, if requested by the Company, only upon delivery to the Company of an opinion of counsel in form and substance satisfactory to the Company to the effect that such Transfer may be effected without registration under the Securities Act; (ii) if it would cause the Company or any of its Subsidiaries to be required to register as an investment company under the Investment Company Act of 1940, as amended; (iii) if it would cause the assets of the Company or any of its Subsidiaries to be deemed plan assets as defined under the Employee Retirement Income Security Act of 1974 or its accompanying regulations or result in any “prohibited transaction” thereunder involving the Company; (iv) except as permitted under, and in accordance with, the law, rules and regulations issued by any Applicable MED and any other state or local rules and regulations that may
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affect the Company’s Business, or (v) to any transferee that is not qualified or suitable for qualification under the provisions of the Colorado Medical Marijuana Code, the Colorado Retail Marijuana Code and/or the rules and regulations promulgated thereunder and the similar codes applicable in California or any other state in which the Company operates with respect to the Company’s Business and the rules and regulations promulgated thereunder. In any event, the Board may refuse the Transfer to any Person if such Transfer would have a material adverse effect on the Company as a result of any regulatory or other restrictions imposed by any Governmental Authority.
(f)Any Transfer or attempted Transfer of any Shares in violation of this Agreement shall be null and void, no such Transfer shall be recorded on the Company’s books, and the purported transferee in any such Transfer shall not be treated (and the purported transferor shall continue be treated) as the owner of such Shares for all purposes of this Agreement and the Governing Documents of the Company.
(g)This Agreement shall cover all of the Shares now owned or hereafter acquired by the Stockholders while this Agreement remains in effect.
Section 3.02Right of First Refusal.
(a)If at any time a Stockholder (such Stockholder, an “Offering Stockholder”) receives a bona fide offer from any Third Party Purchaser to purchase all or any portion of the Shares (the “Offered Shares”) owned by the Offering Stockholder and the Offering Stockholder desires to Transfer the Offered Shares (other than Transfers that are permitted by Section 3.01(b)), then the Offering Stockholder must first make an offering of the Offered Shares to the Company, first, and then to each other Stockholder, second, in accordance with the provisions of this Section 3.02.
(b)The Offering Stockholder shall, within five (5) Business Days of receipt of the offer from the Third-Party Purchaser, give written notice (the “Offering Stockholder Notice”) to the Company and the other Stockholders stating that it has received a bona fide offer from a Third-Party Purchaser and specifying:
(i)the number of Offered Shares to be Transferred by the Offering Stockholder;
(ii)the name of the Third-Party Purchaser;
(iii)the per share purchase price and the other material terms and conditions of the Transfer, including a description of any non-cash consideration in sufficient detail to permit the valuation thereof; and
(iv)the proposed date, time, and location of the closing of the Transfer, which shall not be less than sixty (60) days from the date of the Offering Stockholder Notice.
The Offering Stockholder Notice shall constitute the Offering Stockholder’s offer to Transfer the Offered Shares first to the Company and second to the
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other Stockholders, which offer shall be irrevocable until the end of the Company ROFR Notice Period and the ROFR Notice Period, as applicable.
(c)By delivering the Offering Stockholder Notice, the Offering Stockholder represents and warrants to the Company and to each other Stockholder that: (i) the Offering Stockholder has full right, title, and interest in and to the Offered Shares; (ii) the Offering Stockholder has all the necessary power and authority and has taken all necessary action to Transfer such Offered Shares as contemplated by this Section 3.02; and (iii) the Offered Shares are free and clear of any and all Liens other than those arising as a result of or under the terms of this Agreement.
(d)Upon receipt of the Offering Stockholder Notice, the Company shall have ten (10) Business Days (the “Company ROFR Notice Period”) to elect to purchase all (but not less than all) of the Offered Shares by delivering a written notice (a “Company ROFR Notice”) to the Offering Stockholder stating that it accepts the offer to purchase such Offered Shares on the terms specified in the Offering Stockholder Notice. Any Company ROFR Notice shall be binding upon delivery and irrevocable by the Company.
(e)If the Company does not deliver a Company ROFR Notice during the Company ROFR Notice Period, the Company shall be deemed to have waived its rights to purchase the Offered Shares under this Section 3.02, and the Offering Stockholder shall give written notice to each of the other Stockholders of such waiver of the Company’s rights to purchase the Offered Shares under this Section 3.02 (the “Company ROFR Waiver Notice”) within two (2) Business Days of the expiration of the Company ROFR Notice Period.
(f)Upon receipt of the Company ROFR Waiver Notice, each Stockholder shall have ten (10) Business Days (the “ROFR Notice Period”) to elect to purchase all (but not less than all) of the Offered Shares by delivering a written notice (a “ROFR Notice”) to the Offering Stockholder and the Company stating that it accepts the offer to purchase such Offered Shares on the terms specified in the Offering Stockholder Notice. Any ROFR Notice shall be binding upon delivery and irrevocable by the applicable Stockholder. If more than one Stockholder delivers a ROFR Notice, each such Stockholder (the “Purchasing Stockholder”) shall be allocated its pro-rata portion of the Offered Shares, which shall be based on the proportion of the number of Shares such Purchasing Stockholder owns relative to the total number of Shares all of the Purchasing Stockholders own.
(g)Each Stockholder that does not deliver a ROFR Notice during the ROFR Notice Period shall be deemed to have waived all of such Stockholder’s rights to purchase the Offered Shares under this Section 3.02, and the Offering Stockholder shall thereafter, subject to the rights of any Purchasing Stockholder, be free to sell the Offered Shares to the Third Party Purchaser in the Offering Stockholder Notice without any further obligation to such Stockholder pursuant to this Section 3.02.
(h)If no Stockholder delivers a ROFR Notice in accordance with Section 3.02(f), the Offering Stockholder may, during the sixty (60) day period immediately
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following the expiration of the ROFR Notice Period, which period may be extended for a reasonable time not to exceed ninety (90) days following expiration of the ROFR Notice Period, to the extent reasonably necessary to obtain any required Government Approvals (the “Waived ROFR Transfer Period”) (and subject to the requirements of Section 3.01(d)), Transfer all of the Offered Shares to the Third Party Purchaser on terms and conditions no more favorable to the Third Party Purchaser than those set forth in the Offering Stockholder Notice. If the Offering Stockholder does not Transfer the Offered Shares within such period or, if applicable, within the Waived ROFR Transfer Period, the rights provided hereunder shall be deemed to be revived and the Offered Shares shall not be Transferred to the Third-Party Purchaser unless the Offering Stockholder sends a new Offering Stockholder Notice in accordance with, and otherwise complies with, this Section 3.02.
(i)The Offering Stockholder, the Company and each Purchasing Stockholder, as the case may be, shall take all actions as may be reasonably necessary to consummate the Transfer contemplated by this Section 3.02, including entering into agreements and delivering certificates and instruments and consents as may be deemed necessary or appropriate.
(j)At the closing of any Transfer pursuant to this Section 3.02, the Offering Stockholder shall deliver to the Company or the Purchasing Stockholders, as the case may be, a certificate or certificates representing the Offered Shares to be sold (if any), accompanied by stock powers and all necessary stock transfer taxes paid and stamps affixed, if necessary, against receipt of the purchase price therefor from the Company or such Purchasing Stockholders, as the case may be, by certified or official bank check or by wire transfer of immediately available funds.
Section 3.03Triggering Events for Company’s Option To Buy Shares.
(a)Prior to any Involuntary Transfer of Shares during the life of a Stockholder (the “Transferring Stockholder”) for any reason (other than in connection with the Divorce of a Stockholder as addressed in Section 3.03(c)), the Transferring Stockholder or the Transferring Stockholder’s representative shall give prompt written notice to the Company disclosing in full the nature and details of the Involuntary Transfer, and the Company shall have the option, but not the obligation, to purchase all (but not less than all) of the Shares owned by the Transferring Stockholder at the effective date of the Involuntary Transfer pursuant to the terms of Section 3.04 and Section 3.05 of this Agreement. For the purposes hereof, an “Involuntary Transfer” includes, but is not limited to, a potential Transfer of Shares that occurs in connection with any of the following: (a) a sale upon execution or in foreclosure of any pledge, hypothecation, lien or charge; (b) a voluntary or involuntary petition under any federal or state bankruptcy, insolvency or related law; (c) the appointment of a receiver; (d) an assignment for the benefit of creditors; (e) attachment, assignment or other collection action; and (f) the appointment of a guardian or conservator for a Stockholder.
(b)Upon the Termination of Employment of a Stockholder (the “Terminating Stockholder”), the Company shall have the option, but not the obligation,
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to purchase all (but not less than all) of the Shares owned by the Terminating Stockholder at the effective date of termination pursuant to the terms of Section 3.04 and Section 3.05 of this Agreement. For purposes hereof, (a) “Termination of Employment of a Stockholder” means, in the case of any Stockholder who is, or subsequently becomes, an employee of the Company, the date of termination of his or her employment for any reason whatsoever (other than his or her death or Disability), including retirement or resignation, and (b) “Disability” means a Stockholder’s inability, due to illness, injury or other disability (either physical or mental), to perform his or her duties and responsibilities to the Company for 150 days out of any 365 day period or 90 consecutive days. In the event of a Termination of Employment of a Stockholder, no written notice shall be required. The Company shall be deemed to have received constructive notice as of the effective date of such Termination of Employment of a Stockholder.
(c)If the Marital Relationship of a Stockholder is terminated by death of the Stockholder’s Spouse or by Divorce, and the Stockholder does not succeed to all of the Spouse’s interest in the Shares held by the Stockholder at such time (the “Spouse’s Interest,” regardless of whether the interest is characterized as marital, nonmarital or separate property, or as property held as joint tenants), then the Spouse or Spouse’s estate shall sell to the Stockholder, and the Stockholder shall purchase, the Spouse’s Interest in the Shares for the Purchase Price set forth in Section 3.05.
Section 3.04Option Procedures.
(a)Whenever the Company has the option to purchase all of the Shares owned by a Transferring Stockholder pursuant to Section 3.03(a) or a Terminating Stockholder pursuant to Section 3.03(b) (in each case, the “Option Shares”), the following procedures shall apply:
(i)The right of the Company to purchase all (but not less than all) of the Option Shares shall be exercisable with the delivery of a written notice by the Company to the Transferring Stockholder or the Terminating Stockholder, as the case may be, within 60 days of (i) in the case of an Involuntary Transfer pursuant to Section 3.03(a), the receipt of the Transferring Stockholder’s written notice of Involuntary Transfer, or (ii) in the case of a Termination of Employment of a Stockholder pursuant to Section 3.03(b), the effective date of Termination of Employment of a Stockholder; provided, however, that if a Fair Market Value has to be determined by a Valuation Firm pursuant to Section 3.05(e), the time period in this Section 3.04(a)(i) shall not commence until the Valuation Firm has delivered its written determination of Fair Market Value to the Stockholders. The Company’s written notice of exercise shall be binding upon delivery and irrevocable by the Company.
(ii)The failure of the Company to deliver an exercise notice by the end of their respective option periods shall constitute a waiver of the applicable option rights under Section 3.03 with respect to the transfer of such Option Shares, but shall not affect their respective rights with respect to any future transfers of Option Shares.
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(b)The Company, if it elects to purchase Shares pursuant to this Section 3.04(a) may pay the applicable Purchase Price in (a) one lump sum by certified or official bank check or by wire transfer of immediately available funds or (b) installment payments evidenced by a promissory note (“Note”) made at the time of purchase, which shall bear interest at the Interest Rate (defined below) per annum. If paid in installment payments pursuant to a Note, the Company shall pay the Purchase Price plus accrued interest at the Interest Rate in 60 equal monthly installments. The promissory note shall contain a provision that in case of default in the payment of principal or interest, all remaining amounts shall become immediately due and payable at the election of the Person to whom the sums are payable. The Company shall have the right to pay all or any part of the note at any time or times in advance of maturity without penalty by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. For purposes of this Section 3.04(b), (i) “Interest Rate” means, at any given time, the greater of (A) five percent (5%), or (B) the Prime Rate in effect at such time, provided that the Interest Rate shall be determined, and adjusted if necessary, at the date of issuance of the Note and at the end of each calendar quarter thereafter (with any new rate being applicable on the first day of the next day), and (ii) “Prime Rate” means, for any day, the prime rate of interest published by the Wall Street Journal on such date.
(c)Each Stockholder shall take all actions as may be reasonably necessary to consummate any sale that complies with this Section 3.04 including, without limitation, entering into agreements and delivering certificates and instruments and consents as may be deemed necessary or appropriate.
(d)At the closing of any purchase and sale pursuant to this Section 3.04, the Transferring Stockholder or Terminating Stockholder shall deliver to the Company a certificate or certificates representing the Option Shares to be sold, accompanied by stock powers with signatures guaranteed and all necessary stock transfer taxes paid and stamps affixed, if necessary, against receipt of the promissory note or payment of the lump sum Purchase Price therefor from the Company as provided in Section 3.04(b).
(e)In the case of an option to purchase the Option Shares of a Transferring Stockholder pursuant to Section 3.03(a) or a Terminating Stockholder pursuant to Section 3.03(b), if the Company elects not to purchase all of the Option Shares, then such Option Shares shall continue to be subject to the restrictions imposed by this Agreement and the subsequent owner of the Option Shares pursuant to the applicable Involuntary Transfer or the Terminating Stockholder shall remain a party to this Agreement.
(f)If a Stockholder’s Shares are purchased by the Company in connection with an Involuntary Transfer or Termination of Employment of a Stockholder as described in Section 3.03 and Section 3.04, the applicable Stockholder shall cease to be a party to this Agreement and shall have no further rights or obligations hereunder, and this Agreement may be amended or terminated without such Stockholder’s consent.
Section 3.05Purchase Price.
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(a)As of the date of this Agreement, the value of each Share is agreed to be $1.82. Such value shall remain effective until a new stipulation is agreed to in accordance with Section 3.05(b) (such per Share value, as updated from time to time, the “Stipulated Value”).
(b)Within 120 days after the end of each fiscal year of the Company, the Stockholders shall agree upon the Stipulated Value, to be computed as of the end of such fiscal year. The Stipulated Value shall be agreed to by the Stockholders holding a majority of the issued and outstanding Shares, acting together and by written instrument.
(c)Except as set forth in Section 3.05(e), Section 3.05(f) and Section 3.05(g), in the event of a sale of Shares pursuant to Sections 3.03 and 3.04, the Purchase Price shall be the Stipulated Value in effect at such time multiplied by the number of Shares subject to sale (the “Purchase Price”).
(d)The failure of the Stockholders to update the Stipulated Value as provided for herein shall not affect the validity or enforceability of this Agreement.
(e)If the Stipulated Value has not been updated as provided by Section 3.05(b), then, except as set forth in Sections 3.05(e), (f) and (g), the Stipulated Value shall be determined by the Valuation Firm (defined below). For purposes of this Section 3.05(e), (i) the “Stipulated Value” shall equal the “Fair Market Value” as of the date of such valuation, which value shall be determined by the Valuation Firm based on a “market based valuation” methodology, with such valuation methodology to be approved by the Board, and (ii) “Valuation Firm” means an independent, nationally recognized valuation firm selected by the mutual agreement of the Company and the Stockholders holding a majority of the issued and outstanding Shares, acting together and by written instrument (the “Valuation Firm”). The Company shall provide the Valuation Firm with all reasonably necessary Company financial and other records as the Valuation Firm may request. The Valuation Firm shall deliver its written determination of Fair Market Value within sixty (60) days of its engagement to the Stockholders and the Company, and such determination of Fair Market Value shall be final, conclusive and binding on the parties. All costs and expenses associated with the retainer or employment of the Valuation Firm pursuant to this Section 3.05(e) shall be paid by the Company.
(f)In the event of a purchase of a deceased Spouse’s Interest as provided by Section 3.03(c) of this Agreement, the Purchase Price shall not be less than the value of the decedent’s interest as finally determined for federal estate tax purposes.
(g)In the event of a purchase of the Spouse’s Interest as provided by Section 3.03(c) of this Agreement, the Purchase Price shall be (a) the Stipulated Value or, if the parties have not updated the Stipulated Value as provided by Section 3.03(b) within 24 months immediately preceding the event triggering the sale, the Fair Market Value (per share), multiplied by (b) the number of Shares held by the Stockholder, and multiplied by (c) the fraction or percentage that represents the interest of the Spouse in the Stockholder’s Shares. For example, if a divorcing Stockholder has 100 Shares, and the Stipulated Value or Fair Market Value (per Share), as applicable, of each Share is
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determined to be $2.00, and the divorce court, decree or agreement awards the Spouse an interest of forty percent (40%) in the Shares, then the Purchase Price for the Spouse’s Interest in the Shares would be $80.00.
Section 3.06Tag-Along Rights.
(a)In the event the holders of a majority of the issued and outstanding Shares of the Company propose, by written notice to the Company (the “Majority Proposal”) to sell or otherwise transfer their Shares to a potential purchaser (a “Proposed Majority Purchaser”) (whether by way of a single transaction or group of related transactions), the non-selling Stockholders not party to such transaction(s) and/or a Majority Proposal (the “Tag-Along Stockholders”) shall have the right to require the Proposed Majority Purchaser to acquire all of such Tag-Along Stockholder’s Shares (the “Tag-Along Right”) as set forth in this Section 3.063.06, otherwise on the same terms and conditions afforded to the selling stockholders and specified in the Majority Proposal. Upon receipt by the Company of a Majority Proposal from such selling stockholders, the Company shall promptly give written notice to all non-selling stockholders of the Company of the Majority Proposal, the selling stockholder(s) and the associated Tag-Along Right (the “Tag Notice”). Each Tag-Along Stockholder who desires to exercise its Tag-Along Right must give the Company and the selling stockholder(s) written notice to that effect within fifteen (15) days of receipt of the Tag Notice.
(b)The selling stockholder(s) proposing to consummate a proposed sale with the Proposed Majority Purchaser must deliver a Majority Proposal in writing to the Company not later than forty-five (45) days prior to the consummation of such proposed sale. Such Majority Proposal shall contain the material terms and conditions (including price and form of consideration) of the proposed sale, the identity of the Proposed Majority Purchaser and the intended date of the proposed sale. Prior to the consummation of any proposed sale pursuant to this Section 3.063.06, the selling stockholder(s) shall cause: (i) the Proposed Majority Purchaser(s) to execute and deliver to the Company a Joinder Agreement; and (ii) if the Proposed Purchaser(s) are individuals, any Spouse of such Proposed Purchaser(s) to execute and deliver to the Company a Spousal Consent.
(c)The Tag-Along Stockholder(s) and the selling stockholder(s) agree that the terms and conditions of any proposed sale in accordance with this Section 3.06.06 will be memorialized in, and governed by, a written purchase and sale agreement with the Proposed Majority Purchaser with customary terms and provisions for such a transaction, and the Tag-Along Stockholder(s) and the selling stockholder(s) further covenant and agree to enter into such purchase and sale agreement as a condition precedent to any sale or other transfer in accordance with this Section 3.063.06.
(d)Notwithstanding Section 3.06(c), if any Proposed Majority Purchaser(s) refuse(s) to purchase Shares subject to the Tag-Along Right or upon the failure to negotiate in good faith a purchase and sale agreement reasonably satisfactory to the Tag-Along Stockholders, no Stockholder may sell any Shares to such Proposed Majority Purchaser(s) unless and until, simultaneously with such sale, such Stockholder purchases all Shares subject to the Tag-Along Right from such Tag-Along Stockholder(s) on the
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same terms and conditions (including the proposed purchase price) as set forth in the Majority Proposal. In connection with such purchase by such selling Stockholder, such Tag-Along Stockholder(s) shall deliver to the selling Stockholder any stock certificate or certificates, properly endorsed for transfer, representing the Shares being purchased by the selling Stockholder (or request that the Company effect such transfer in the name of the selling Stockholder). Any such Shares transferred to the selling Stockholder will be transferred to the Proposed Majority Purchaser against payment therefor in consummation of the sale of the Shares pursuant to the terms and conditions specified in the Majority Proposal, and the selling Stockholder shall concurrently therewith remit or direct payment to each such Tag-Along Stockholder the portion of the aggregate consideration to which each such Tag-Along Stockholder is entitled by reason of its participation in such sale as provided in this Section 3.06.06.
ARTICLE IV
PREEMPTIVE RIGHTS
Section 4.01Preemptive Rights.
(a)The Company hereby grants to each Stockholder the right to purchase its pro rata portion of any new Shares (other than any Excluded Securities) (the “New Securities”) that the Company may from time to time propose to issue or sell to any party.
(b)The Company shall give written notice (an “Issuance Notice”) of any proposed issuance or sale described in Section 4.01(a) to the Stockholders within five (5) Business Days following any meeting of the Board at which any such issuance or sale is approved. The Issuance Notice shall, if applicable, be accompanied by a written offer from any prospective purchaser (a “Prospective Purchaser”) seeking to purchase New Securities and set forth the material terms and conditions of the proposed issuance, including:
(i)the number of New Securities proposed to be issued and the percentage of the outstanding Shares that such issuance would represent;
(ii)the proposed issuance date, which shall be at least twenty (20) Business Days from the date of the Issuance Notice; and
(iii)the proposed purchase price per share.
(c)Each Stockholder shall for a period of fifteen (15) Business Days following the receipt of an Issuance Notice (the “Exercise Period”) have the right to elect irrevocably to purchase, at the purchase price set forth in the Issuance Notice, the amount of New Securities equal to the product of: (i) the total number of New Securities to be issued by the Company on the issuance date; and (ii) a fraction determined by dividing (A) the number of Shares owned by such Stockholder immediately prior to such issuance by (B) the total number of Shares outstanding on such date immediately prior to such issuance (the “Preemptive Pro Rata Portion”) by delivering a written notice to the
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Company (an “Acceptance Notice”). Such Stockholder’s election to purchase New Securities shall be binding and irrevocable. The failure of a Stockholder to deliver an Acceptance Notice by the end of the Exercise Period shall constitute a waiver of its rights under this Section 4.01 with respect to the purchase of such New Securities, but shall not affect its rights with respect to any future issuances or sales of New Securities.
(d)No later than five (5) Business Days following the expiration of the Exercise Period, the Company shall notify each Stockholder in writing of the number of New Securities that each Stockholder has agreed to purchase (including, for the avoidance of doubt, where such number is zero) (the “Over-Allotment Notice”). Each Stockholder exercising its right to purchase its Preemptive Pro Rata Portion of the New Securities in full (an “Exercising Stockholder”) shall have a right of over-allotment such that if any other Stockholder fails to exercise its right under this Section 4.01 to purchase its Preemptive Pro Rata Portion of the New Securities (each, a “Non-Exercising Stockholder”), such Exercising Stockholder may purchase all or any portion of such Non-Exercising Stockholder’s allotment (the “Over-Allotment New Securities”) by giving written notice to the Company setting forth the number of Over-Allotment New Securities that such Exercising Stockholder is willing to purchase within five (5) Business Days of receipt of the Over-Allotment Notice (the “Over-Allotment Exercise Period”). Such Exercising Stockholder’s election to purchase Over-Allotment New Securities shall be binding and irrevocable. If more than one Exercising Stockholder elects to exercise its right of over-allotment, each Exercising Stockholder shall have the right to purchase the number of Over-Allotment New Securities it elected to purchase in its written notice; provided, that if the Over-Allotment New Securities are over­subscribed, each Exercising Stockholder shall purchase its pro rata portion of the available Over-Allotment New Securities based upon the relative Preemptive Pro Rata Portions of the Exercising Stockholders.
(e)The Company shall be free to complete the proposed issuance or sale of New Securities described in the Issuance Notice with respect to any New Securities not elected to be purchased pursuant to Section 4.01(c) and Section 4.01(d) above in accordance with the terms and conditions set forth in the Issuance Notice (except that the amount of New Securities to be issued or sold by the Company may be reduced), provided, such issuance or sale is closed within thirty (30) Business Days after the expiration of the Over-Allotment Exercise Period; subject, however, to the extension of such thirty (30) Business Day period for a reasonable time not to exceed sixty (60) Business Days after the expiration of the Over-Allotment Exercise Period to the extent reasonably necessary to obtain any necessary Government Approvals. Prior to such proposed issuance or sale of New Securities, the Company shall cause: (i) each proposed holder of such New Securities to execute and deliver to the Company a Joinder Agreement; and (ii) if such proposed holder is an individual, any Spouse of such proposed holder to execute and deliver to the Company a Spousal Consent. In the event the Company has not sold such New Securities within such time period, the Company shall not thereafter issue or sell any New Securities without first again offering such securities to the Stockholders in accordance with the procedures set forth in this Section 4.01.
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(f)The closing of any purchase by any Stockholder shall be consummated concurrently with the consummation of the issuance or sale described in the Issuance Notice. Upon the issuance or sale of any New Securities in accordance with this Section 4.01, the Company shall deliver share certificates (if any) evidencing the New Securities, which New Securities shall be issued free and clear of any Liens (other than those arising hereunder and those attributable to the actions of the purchasers thereof), and the Company shall so represent and warrant to the purchasers thereof, and further represent and warrant to such purchasers that such New Securities shall be, upon issuance thereof to the Exercising Stockholders and after payment therefor, duly authorized, validly issued, fully paid, and non-assessable. Each Exercising Stockholder shall deliver to the Company the purchase price for the New Securities purchased by it by certified or bank check or wire transfer of immediately available funds. Each party to the purchase and sale of New Securities shall take all such other actions as may be reasonably necessary to consummate the purchase and sale, including entering into such additional agreements as may be necessary or appropriate.
ARTICLE V
OTHER AGREEMENTS
Section 5.01 Corporate Opportunities. Except as otherwise provided in the second sentence of this Section 5.01: (a) no Stockholder or any of its Permitted Transferees or any of their respective Representatives shall have any duty to communicate or present an investment or business opportunity or prospective economic advantage to the Company in which the Company may, but for the provisions of this Section 5.01, have an interest or expectancy (a “Corporate Opportunity”); and (b) no Stockholder or any of its Permitted Transferees or any of their respective Representatives (even if such Person is also an officer or Director of the Company) shall be deemed to have breached any fiduciary or other duty or obligation to the Company by reason of the fact that any such Person pursues or acquires a Corporate Opportunity for itself or its Permitted Transferees or directs, sells, assigns, or transfers such Corporate Opportunity to another Person or does not communicate information regarding such Corporate Opportunity to the Company. The Company renounces any interest in a Corporate Opportunity and any expectancy that a Corporate Opportunity will be offered to the Company; provided, that the Company does not renounce any interest or expectancy it may have in any Corporate Opportunity that is offered to an officer or Director of the Company whether or not such individual is also a Director or officer of a Stockholder, if such opportunity is expressly offered to such Person in his or her capacity as an officer or Director of the Company. The Stockholders hereby recognize that the Company reserves such rights.
Section 5.02Confidentiality.
(a)Each Stockholder acknowledges that during the term of this Agreement, it will have access to and become acquainted with trade secrets, proprietary information, and confidential information belonging to the Company and its Affiliates that are not generally known to the public, including, but not limited to, information concerning business plans, financial statements, and other information provided pursuant to this Agreement, operating practices and methods, expansion plans, strategic plans, marketing plans, contracts, customer lists, or other business documents that the Company treats as
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confidential, in any format whatsoever (including oral, written, electronic, or any other form or medium) (collectively, “Confidential Information”). In addition, each Stockholder acknowledges that: (i) the Company has invested, and continues to invest, substantial time, expense, and specialized knowledge in developing its Confidential Information; (ii) the Confidential Information provides the Company with a competitive advantage over others in the marketplace; and (iii) the Company would be irreparably harmed if the Confidential Information were disclosed to Competitors or made available to the public. Without limiting the applicability of any other agreement to which any Stockholder is subject, each Stockholder shall, and shall cause its Representatives to, keep confidential and not, directly or indirectly, disclose or use (other than solely for the purposes of such Stockholder monitoring and analyzing its investment in the Company) at any time, including, without limitation, use for personal, commercial, or proprietary advantage or profit, either during its association with the Company or thereafter, any Confidential Information of which such Stockholder is or becomes aware. Each Stockholder in possession of Confidential Information shall, and shall cause its Representatives to, take all appropriate steps to safeguard such information and to protect it against disclosure, misuse, espionage, loss, and theft.
(b)Nothing contained in Section 5.02(a) shall prevent any Stockholder from disclosing Confidential Information: (i) upon the order of any court or administrative agency; (ii) upon the request or demand of any regulatory agency or authority having jurisdiction over such Stockholder; (iii) to the extent compelled by legal process or required or requested pursuant to subpoena, interrogatories, or other discovery requests; (iv) to the extent necessary in connection with the exercise of any remedy hereunder; (v) to other Stockholders; (vi) to such Stockholder’s Representatives who, in the reasonable judgment of such Stockholder, need to know such Confidential Information and agree to be bound by the provisions of this Section 5.02 as if a Stockholder; or (vii) to any potential Permitted Transferee in connection with a proposed Transfer of Shares from such Stockholder, as long as such potential Permitted Transferee agrees in writing to be bound by the provisions of this Section 5.02 as if a Stockholder before receiving such Confidential Information; provided, that in the case of clause (i), (ii), or (iii), such Stockholder shall notify the Company and other Stockholders of the proposed disclosure as far in advance of such disclosure as practicable (but in no event make any such disclosure before notifying the Company and other Stockholders) and use reasonable efforts to ensure that any Confidential Information so disclosed is accorded confidential treatment satisfactory to the Company, when and if available.
(c)The restrictions of Section 5.02(a) shall not apply to Confidential Information that: (i) is or becomes generally available to the public other than as a result of a disclosure by a Stockholder or any of its Representatives in violation of this Agreement; (ii) is or has been independently developed or conceived by such Stockholder without use of Confidential Information; or (iii) becomes available to such Stockholder or any of its Representatives on a non-confidential basis from a source other than the Company, the other Stockholders, or any of their respective Representatives, provided, that such source is not known by the receiving Stockholder to be bound by a confidentiality agreement regarding the Company.
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(d)The obligations of each Stockholder under this Section 5.02 shall survive: (i) the termination, dissolution, liquidation, and winding up of the Company; and (ii) such Stockholder’s Transfer of its Shares.
ARTICLE VI
INFORMATION RIGHTS
Section 6.01Financial Statements. In addition to, and without limiting any rights that a Stockholder may have with respect to inspection of the books and records of the Company under Applicable Laws, including the CBCA, the Company shall furnish to each Stockholder, the following information:
(a)As soon as available, and in any event within one hundred and twenty (120) days after the end of each Fiscal Year, the audited balance sheet of the Company as at the end of each such Fiscal Year and the audited statements of income, cash flows, and changes in stockholders’ equity for such year, accompanied by the certification of independent certified public accountants selected in accordance with Section 2.02(g), to the effect that, except as set forth therein, such financial statements have been prepared in accordance with GAAP, applied on a basis consistent with prior years and fairly present in all material respects the financial condition of the Company as of the dates thereof and the results of its operations and changes in its cash flows and stockholders’ equity for the periods covered thereby.
(b)As soon as available, and in any event within forty-five (45) days after the end of each fiscal quarter, the reviewed balance sheet of the Company at the end of such quarter and the reviewed statements of income, cash flows, and changes in stockholders’ equity for such quarter, accompanied by the certification of independent certified public accountants selected in accordance with Section 2.02(g), to the effect that, except as set forth therein, such financial statements have been prepared in accordance with GAAP, consistently applied.
(c)To the extent the Company is required by Applicable Law or pursuant to the terms of any outstanding indebtedness of the Company to prepare such reports, any annual reports, quarterly reports, and other periodic reports (without exhibits) prepared by the Company as soon as available.
Section 6.02Inspection Rights.
(a)The Company shall, and shall cause its officers, Directors, and employees to: (i) afford each Stockholder that owns at least five percent (5%) of the outstanding Shares and the Representatives of each such Stockholder, during normal business hours and upon reasonable written notice, reasonable access at all reasonable times to its officers, employees, auditors, properties, offices, plants, and other facilities and to all books and records; and (ii) afford such Stockholder the opportunity to consult with its officers from time to time regarding the Company’s affairs, finances, and accounts as each such Stockholder may reasonably request upon reasonable notice.
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(b)The right set forth in Section 6.02(a) shall not and is not intended to limit any rights which the Stockholders may have with respect to the books and records of the Company, or to inspect its properties or discuss its affairs, finances, and accounts under the laws of the State of Colorado.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.01Representations and Warranties. Each Stockholder, severally and not jointly, represents and warrants to the Company and each other Stockholder that:
(a)For each such Stockholder that is not an individual, such Stockholder is a corporation or limited liability company, as applicable, duly organized, validly existing, and in good standing under the laws of the State of its organization or incorporation, as applicable.
(b)Such Stockholder has full capacity and, for each such Stockholder that is not an individual, corporate or limited liability company, as applicable, power and authority to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. For each such Stockholder that is not an individual, the execution and delivery of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate or limited liability company, as applicable, action of such Stockholder. Such Stockholder has duly executed and delivered this Agreement.
(c)This Agreement constitutes the legal, valid, and binding obligation of such Stockholder, enforceable against such Stockholder in accordance with its terms. The execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby require no action by, or in respect of, or filing with, any Governmental Authority.
(d)The execution, delivery, and performance by such Stockholder of this Agreement and the consummation of the transactions contemplated hereby do not: (i) conflict with or result in any violation or breach of any provision of any of the governing documents of such Stockholder; (ii) conflict with or result in any violation or breach of any provision of any Applicable Law; or (iii) require any consent or other action by any Person under any provision of any material agreement or other instrument to which the Stockholder is a party.
(e)Except for this Agreement, such Stockholder has not entered into or agreed to be bound by any other agreements or arrangements of any kind with any other party with respect to the Shares, including agreements or arrangements with respect to the acquisition or disposition of the Shares or any interest therein or the voting of the Shares (whether or not such agreements and arrangements are with the Company or any other Stockholder).
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(f)Subject to the other provisions of this Agreement, the representations and warranties contained herein shall survive the date of this Agreement and shall remain in full force and effect for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation, or extension thereof).
(g)Such Stockholder is qualified and suitable for qualification under the provisions of the Colorado Medical Marijuana Code, the Colorado Retail Marijuana Code and/or the rules and regulations promulgated thereunder and the similar codes applicable in California with respect to the Company’s Business and the rules and regulations promulgated thereunder, and the Stockholder has no reason to believe that it would not so qualify or be suitable.
ARTICLE VIII
TERM AND TERMINATION
Section 8.01Termination. This Agreement shall terminate upon the earliest of:
(a)the consummation of an Initial Public Offering;
(b)the consummation of a merger or other business combination involving the Company whereby the Shares become listed or admitted to trading on the Nasdaq Stock Market, the New York Stock Exchange, or another national securities exchange;
(c)the date on which none of the Stockholders holds any Shares;
(d)the termination, dissolution, liquidation, or winding up of the Company; or
(e)the agreement of the Stockholders holding all of the issued and outstanding Shares, acting together and by written instrument.
Section 8.02Effect of Termination.
(a)The termination of this Agreement shall terminate all further rights and obligations of the Stockholders under this Agreement except that such termination shall not effect:
(i)the existence of the Company;
(ii)the obligation of any party to this Agreement to pay any amounts arising on or prior to the date of termination, or as a result of or in connection with such termination;
(iii)the rights which any Stockholder may have by operation of law as a stockholder of the Company; or
(iv)the rights contained herein which by their terms are intended to survive termination of this Agreement.
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(b)The following provisions shall survive the termination of this Agreement: Section 5.02 (as and to the extent provided in Section 5.02(d)), this Section 8.02, Section 9.04, Section 9.12, Section 9.14, Section 9.15, Section 9.16, and Section 9.17.
ARTICLE IX
MISCELLANEOUS
Section 9.01Expenses. Except as otherwise expressly provided herein, all costs and expenses, including fees and disbursements of counsel, financial advisors, and accountants, incurred in connection with the preparation and execution of this Agreement, or any amendment or waiver hereof, and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.
Section 9.02Further Assurances. In connection with this Agreement and the transactions contemplated hereby, the Company and each Stockholder hereby agrees, at the request of the Company or any other Stockholder, to execute and deliver such additional documents, certificates, instruments, conveyances, and assurances and to take such further actions as may be required to carry out the provisions hereof and give effect to the transactions contemplated hereby.
Section 9.03Release of Liability. Except as otherwise provided herein, in the event any Stockholder Transfers all the Shares held by such Stockholder in compliance with the provisions of this Agreement without retaining any interest therein, then such Stockholder shall cease to be a party to this Agreement and shall be relieved and have no further liability arising hereunder for events occurring from and after the date of such Transfer.
Section 9.04Notices.
(a)All notices, requests, consents, claims, demands, waivers, and other communications hereunder shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or (i) upon personal delivery to the party to be notified; (ii) when sent, if sent by electronic mail during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, or (iii) one (1) business day after the business day of deposit with a nationally recognized overnight courier, postage prepaid, specifying next-day delivery.
(b)Such communications in Section 9.04(a) must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 9.04):
(i)if to the Company:
1880 S. Flatiron Court, Suite E
Boulder, Colorado 80301
Attn: Donald Douglas Burkhalter
With a copy to:
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1880 S. Flatiron Court, Suite E
Boulder, Colorado 80301
Attn: Hadley C. Ford
And
Berger, Cohen & Brandt, L.C. 
8000 Maryland Ave., Suite 1500
Clayton, Missouri 63105
Attn: David Spewak
(ii)if to a Stockholder, at the address set forth on Schedule A attached hereto;
(iii)if to a Permitted Transferee of Shares or any other Stockholder other than the Initial Stockholders (A) at the address set forth on the respective Joinder Agreement executed by such party; or (B) if an address is neither set forth on such Joinder Agreement nor provided to the Company in a notice given in accordance with this Section 9.04, at such party’s last known address; and
(iv)if to the Spouse of a Stockholder: (A) if applicable, in care of the Spouse’s attorney of record at the attorney’s address; or (B) if the Spouse is unrepresented, at the Spouse’s last known address.
Section 9.05Agreement Prepared by Company Counsel. Each Stockholder has read this Agreement and acknowledges that:
(a)counsel for the Company prepared this Agreement on behalf of the Company and not on behalf of any Stockholder;
(b)such Stockholder has been advised that a conflict may exist between such Stockholder’s interests, the interests of the other Stockholders, and/or the interests of the Company;
(c)this Agreement may have significant legal, financial planning, and/or tax consequences to the Stockholder;
(d)such Stockholder has sought, or has had the full opportunity to seek, the advice of independent legal, financial planning, and/or tax counsel of its choosing regarding such consequences; and
(e)counsel for the Company has made no representations to the Stockholder regarding such consequences.
Section 9.06Interpretation. For purposes of this Agreement: (a) the words “include,” “includes,” and “including” shall be deemed to be followed by the words “without limitation”;
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(b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto,” and “hereunder” refer to this Agreement as a whole. The definitions given for any defined terms in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Exhibits, and Schedules mean the Articles and Sections of, and Exhibits and Schedules attached to, this Agreement; (y) to an agreement, instrument, or other document means such agreement, instrument, or other document as amended, supplemented, and modified from time to time to the extent permitted by the provisions thereof; and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Exhibits and Schedules referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
Section 9.07Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal, or unenforceable, such provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.
Section 9.08Entire Agreement. This Agreement and the Governing Documents constitute the sole and entire agreement of the parties with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency or conflict between this Agreement and any Governing Document, the Stockholders and the Company shall, to the extent permitted by Applicable Law, amend such Governing Document to comply with the terms of this Agreement.
Section 9.09Successors and Assigns; Assignment. Subject to the rights and restrictions on Transfers set forth in this Agreement, this Agreement is binding upon and inures to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns. This Agreement may not be assigned by any Stockholder except as permitted in this Agreement (or as otherwise consented to in writing by all the other Stockholders prior to the assignment) and any such assignment in violation of this Agreement shall be null and void.
Section 9.10No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.
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Section 9.11Amendment and Modification. This Agreement may only be amended, modified, or supplemented by an instrument in writing executed by the Company and the Stockholders holding at least seventy-five percent (75%) of the issued and outstanding Shares; provided, however, that any provision of this Agreement requiring the written consent or agreement of the Stockholders holding a higher percentage of the issued and outstanding Shares can only be amended by an instrument in writing executed by the Company and the Stockholders holding such higher percentage of the issued and outstanding Shares; provided, further, however, that this Section 9.11 can only be amended with the approval of all Stockholders. Any such written amendment, modification, or supplement will be binding upon the Company and each Stockholder.
Section 9.12Waiver. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.
Section 9.13Governing Law. This Agreement, including all Exhibits and Schedules hereto, and all matters arising out of or relating to this Agreement, shall be governed by and construed in accordance with the internal laws of the State of Colorado without giving effect to any choice or conflict of law provision or rule (whether of the State of Colorado or any other jurisdiction).
Section 9.14Submission to Jurisdiction.
(a)The parties hereby agree that any suit, action, or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby, whether in contract, tort, or otherwise, shall be brought in the state or federal courts located in Denver, Colorado, so long as one of such courts shall have subject-matter jurisdiction over such suit, action, or proceeding.
(b)Each of the parties hereby irrevocably consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action, or proceeding and irrevocably waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court. Service of process, summons, notice, or other document by certified or registered mail to the address set forth in Section 9.04 shall be effective service of process for any suit, action, or other proceeding brought in any such court.
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(c)The prevailing party shall be entitled to reasonable attorney’s fees, costs, and necessary disbursements in addition to any other relief to which such party may be entitled. Each of the parties to this Agreement consents to personal jurisdiction for any equitable action sought in the courts set forth in clause (a) above having subject matter jurisdiction.
Section 9.15Waiver of Jury Trial. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL ACTION, PROCEEDING, CAUSE OF ACTION, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, INCLUDING ANY EXHIBITS AND SCHEDULES ATTACHED TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
Section 9.16Equitable Remedies. Each party hereto acknowledges that a breach or threatened breach by such party of any of its obligations under this Agreement would give rise to irreparable harm to the other parties, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, each of the other parties hereto shall, in addition to any and all other rights and remedies that may be available to them in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance, and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).
Section 9.17Remedies Cumulative. The rights and remedies under this Agreement are cumulative and are in addition to and not in substitution for any other rights and remedies available at law or in equity or otherwise.
Section 9.18Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
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Section 9.19Spousal Consent. Each Stockholder who has a Spouse on the date of this Agreement shall cause such Stockholder’s Spouse to execute and deliver to the Company a spousal consent in the form of Exhibit B hereto (a “Spousal Consent”), pursuant to which the Spouse acknowledges that he or she has read and understood the Agreement and agrees to be bound by its terms and conditions. If any Stockholder should marry or engage in a Marital Relationship following the date of this Agreement, such Stockholder shall cause his or her Spouse to execute and deliver to the Company a Spousal Consent within fifteen (15) Business Days thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.
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	COMPANY:

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	MISSION HOLDINGS, INC., a Colorado corporation

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	By:
	/s/ Doug Burkhalter

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	Doug Burkhalter

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	Chief Executive Officer

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	STOCKHOLDERS:

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	MEDICINE MAN TECHNOLOGIES, INC.

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	By:
	/s/ Justin Dye

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	Justin Dye

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	Chief Executive Officer

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	[                     ]

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	By:
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	Name:
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	Title:
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SCHEDULE A
STOCKHOLDERS
[Intentionally Omitted]
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SCHEDULE B
DIRECTORS
Director appointed by Donald Douglas Burkhalter:
		●	Donald Douglas Burkhalter

Director appointed by Hadley C. Ford:
		●	Hadley C. Ford

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EXHIBIT A
FORM OF JOINDER AGREEMENT
JOINDER AGREEMENT
Reference is hereby made to that certain Stockholders Agreement, dated as of May 20, 2022, (as amended from time to time, the “Stockholders Agreement”), by and between Mission Holdings US, Inc., a Colorado corporation (the “Company”), each Person identified on Schedule A thereto, and each other Person who after the date thereof acquires Shares of the Company and becomes a party thereto by executing this Joinder Agreement. Pursuant to and in accordance with Sections 3.01(d) and 4.01(e) of the Stockholders Agreement, the undersigned hereby agrees that upon the execution of this Joinder Agreement, it shall become a party to the Stockholders Agreement and shall be fully bound by, and subject to, all of the covenants, terms and conditions of the Stockholders Agreement as though an original party thereto and shall be deemed to be a Stockholder of the Company for all purposes thereof.
Capitalized terms used herein without definition shall have the meanings ascribed thereto in the Stockholders Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of [DATE].
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	[TRANSFEREE STOCKHOLDER]

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	Name:
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	Title:
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EXHIBIT B
FORM OF SPOUSAL CONSENT
CONSENT OF SPOUSE
I,                                        , spouse of                        , acknowledge that I have read the Stockholders Agreement, dated as of May 20, 2022, by and between Mission Holdings US, Inc., a Colorado corporation (the “Company”), each Person identified on Schedule A thereto, and each other Person who after the date thereof acquires Shares of the Company and becomes a party thereto by executing the Joinder Agreement, to which this Consent is attached as Exhibit B (as the same may be amended or amended and restated from time to time, the “Agreement”), and that I understand the contents of the Agreement. I am aware that my spouse is a party to the Agreement and the Agreement contains provisions regarding, among other things, the voting and transfer of shares of Shares (as defined in the Agreement) of the Company which my spouse may own, including any interest I might have therein. Capitalized terms used herein without definition shall have the meanings ascribed thereto in the Agreement.
I hereby agree that I and any interest, including any community property interest, that I may have in any Shares subject to the Agreement shall be irrevocably bound by the Agreement, including, without limitation, any restrictions on the transfer or other disposition of any Shares or voting or other obligations as set forth in the Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to the exercise of any rights and obligations under the Agreement.
This Consent shall be binding on my executors, administrators, heirs and assigns. I agree to execute and deliver such documents as may be necessary to carry out the intent of the Agreement and this Consent.
I am aware that the legal, financial and related matters contained in the Agreement are complex and that I am free to seek independent professional guidance or counsel with respect to this Consent. I have either sought such guidance or counsel or determined after reviewing the Agreement carefully that I will waive such right. I am under no disability or impairment that affects my decision to sign this Consent, and I knowingly and voluntarily intend to be legally bound by this Consent.
Dated as of                          
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	Signature

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	Print Name

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