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Item 1.01.
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Entry Into a Material Definitive Agreement.
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Securities Exchange Agreement
On September 17, 2019, General Cannabis Corp, a Colorado corporation (the Company), entered into a Securities Exchange Agreement (the Securities Exchange Agreement) with certain investors (the Existing Investors) that held an aggregate of $1,106,000 principal amount of senior secured promissory notes (the Original Notes) previously issued to the Purchasers by the Company pursuant to the Promissory Note and Warrant Purchase Agreement, dated April 20, 2018, as amended, among the Company and the Purchasers (the Original Notes Agreement). The Original Notes comprised the aggregate principal amount of indebtedness then outstanding under the Original Notes Agreement.
Pursuant to the Securities Exchange Agreement, on September 17, 2019, the Company issued to the Existing Investors, in exchange for the cancellation of the Original Notes, (a) an aggregate of $1,106,000 principal amount of senior unsecured promissory notes (the Notes) and (b) warrants (the Warrants) to purchase an aggregate of 1,106,000 shares of common stock, par value $0.001 per share, of the Company (the Common Stock).
The Notes will bear interest at an annual rate of 12% and will mature on October 31, 2020 (the Maturity Date). The Warrants are exercisable at an exercise price of $1.30 per Warrant, subject to adjustment as provided in the Warrants, at any time prior to (a) the earlier of (x) the Maturity Date and (b) an Acquisition (as defined in the Warrants) or (b) if the Note is prepaid at any time pursuant to the terms thereof, October 31, 2022.
Pursuant to the Securities Exchange Agreement, the Company agreed to file with the Securities and Exchange Commission a registration statement on Form S-3 (or such other form, including a post-effective amendment, as is then available to the Company) as soon as reasonably practicable providing for the resale of the Common Stock issuable upon exercise of the Warrants and to use commercially reasonable efforts to cause such registration statement to be declared effective.
The foregoing description of the Securities Exchange Agreement, the Notes and the Warrants do not purport to be complete and are qualified in their entirety by reference to the forms of Securities Exchange Agreement, Note and Warrant filed as Exhibits 10.1, 4.1 and 4.2, respectively, to this Current Report on Form 8-K and incorporated herein by reference.