Item 1. Plan Information
GrowGeneration, Corp.,
a Colorado corporation, previously named EasyLife, Corp. until June 25, 2014 (the “Company”), is filing this Registration
Statement in order to register 2,500,000 shares of common stock, par value $0.001 per share (the “Common Stock”) and
such additional shares of Common Stock reserved for issuance pursuant to the Company’s 2014 Equity Incentive Plan (the “2014
Plan”).
The documents containing
the information specified in this Part I will be sent or given to participants in the 2014 Plan as specified by Rule 428(b)(1)
of the Securities Act of 1933, as amended (the “Securities Act”). Such documents are not being filed with the U.S.
Securities and Exchange Commission (the “Commission”) either as part of this Registration Statement or as prospectuses
or prospectus supplements pursuant to Rule 424 of the Securities Act. These documents and the documents incorporated by reference
in Item 3 of Part II of this Registration Statement, taken together, constitute a prospectus that meets the requirements of Section
10(a) of the Securities Act (the “Prospectus”).
General
The 2014 Plan was approved
by the Company’s Board of Directors and stockholders on March 6, 2014.
The general purpose
of the 2014 Plan is to provide an incentive to the Company’s employees, directors, consultants and advisors by enabling them
to share in the future growth of the Company’s business. The Company’s Board of Directors believes that the granting
of stock options, restricted stock awards, unrestricted stock awards and similar kinds of equity-based compensation promotes continuity
of management and increases incentive and personal interest in the welfare of the Company by those who are primarily responsible
for shaping and carrying out its long range plans and securing its growth and financial success.
The Company’s
Board of Directors believes that the 2014 Plan will advance the Company’s interests by enhancing its ability to (a) attract
and retain employees, consultants, directors and advisors who are in a position to make significant contributions to its success;
(b) reward its employees, consultants, directors and advisors for these contributions; and (c) encourage employees, consultants,
directors and advisors to take into account the Company’s long-term interests through ownership of its shares.
Description of the 2014 Equity Incentive
Plan
The following description
of the principal terms of the 2014 Plan is a summary and is qualified in its entirety by the full text of the 2014 Plan, which
was attached as Exhibit 10.5 to the Company’s Registration Statement on Form S-1 filed with the Commission on November 9,
2015.
Administration
.
The
2014 Plan is administered by the Company’s Board of Directors. The Board of Directors may grant options to purchase shares
of Common Stock, stock appreciation rights, restricted stock units, restricted or unrestricted shares of Common Stock, performance
shares, performance units, other cash-based awards and other stock-based awards. The Board of Directors also has broad authority
to determine the terms and conditions of each option or other kind of equity award, adopt, amend and rescind rules and regulations
for the administration of the 2014 Plan and amend or modify outstanding options, grants and awards. The Board of Directors may
delegate authority to the chief executive officer and/or other executive officers to grant options and other awards to employees
(other than themselves), subject to applicable law and the 2014 Plan. No options, stock purchase rights or awards may be made under
the 2014 Plan on or after the ten year anniversary of the adoption of the 2014 Plan by the Board of Directors, but the 2014 Plan
will continue thereafter while previously granted options, stock appreciation rights or awards remain subject to the 2014 Plan.
Eligibility
.
Persons
eligible to receive options, stock appreciation rights or other awards under the 2014 Plan are those employees, consultants, advisors
and directors of the Company and its subsidiaries who, in the opinion of the Board of Directors, are in a position to contribute
to the Company’s success.
Shares Subject to the 2014 Plan
.
The
aggregate number of shares of Common Stock available for issuance in connection with options and awards granted under the 2014
Plan is 2,500,000, subject to customary adjustments for stock splits, stock dividends or similar transactions. Incentive stock
options may be granted under the 2014 Plan with respect to all of those shares. If any option or stock appreciation right granted
under the 2014 Plan terminates without having been exercised in full or if any award is forfeited, or if shares of Common Stock
are withheld to cover withholding taxes on options or other awards, the number of shares of Common Stock as to which such option
or award was forfeited, or which were withheld, will be available for future grants under the 2014 Plan. No employee, consultant,
advisor or director may receive options or stock appreciation rights relating to more than 1,000,000 shares of Common Stock in
the aggregate in any calendar year.
Options
.
Options granted
under the 2014 Plan may be either “incentive stock options” that are intended to meet the requirements of Section 422
of the Internal Revenue Code of 1986, as amended (the “Code”) or “nonstatutory stock options” that do not
meet the requirements of Section 422 of the Code. The Board of Directors will determine the exercise price of options granted under
the 204 Plan. The exercise price of stock options may not be less than the fair market value, on the date of grant, per share of
Common Stock issuable upon exercise of the option (or 110% of fair market value in the case of incentive options granted to a ten-percent
stockholder).
If on the date of grant
the Common Stock is listed on a stock exchange or is quoted on the automated quotation system of Nasdaq, the fair market value
shall generally be the closing sale price on the last trading day before the date of grant. If no such prices are available, the
fair market value shall be determined in good faith by the Board of Directors based on the reasonable application of a reasonable
valuation method.
No option may be exercisable
for more than ten years (five years in the case of an incentive stock option granted to a ten-percent stockholder) from the date
of grant. Options granted under the 2014 Plan will be exercisable at such time or times as the Board of Directors prescribes at
the time of grant. No employee may receive incentive stock options that first become exercisable in any calendar year in an amount
exceeding $100,000. The Board of Directors may, in its discretion, permit a holder of an option to exercise the option before it
has otherwise become exercisable, in which case the shares of Common Stock issued to the recipient will continue to be subject
to the vesting requirements that applied to the option before exercise.
Generally, the option
price may be paid (a) in cash or by certified bank check, (b) through delivery of shares of Common Stock having a fair market value
equal to the purchase price, or (c) a combination of these methods. The Board of Directors is also authorized to establish a cashless
exercise program and to permit the exercise price (or tax withholding obligations) to be satisfied by reducing from the shares
otherwise issuable upon exercise a number of shares having a fair market value equal to the exercise price.
No option may be transferred
other than by will or by the laws of descent and distribution, and during a recipient’s lifetime an option may be exercised
only by the recipient. However, the Board of Directors may permit the holder of an option, stock appreciation right or other award
to transfer the option, right or other award to immediate family members or a family trust for estate planning purposes. The Board
of Directors will determine the extent to which a holder of a stock option may exercise the option following termination of service
with the Company.
Stock Appreciation Rights
.
The
Board of Directors may grant stock appreciation rights independent of or in connection with an option. The Board of Directors will
determine the other terms applicable to stock appreciation rights. The exercise price per share of a stock appreciation right will
be determined by the Board of Directors, but will not be less than 100% of the fair market value of a share of Common Stock on
the date of grant, as determined by the Board of Directors. The maximum term of any stock appreciation rights granted under the
2014 Plan is ten years from the date of grant. Generally, each stock appreciation right will entitle a participant upon exercise
to an amount equal to:
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the excess of the fair market value on the exercise date of one share of our common stock over the exercise price,
multiplied by
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the number of shares of Common Stock covered by the stock appreciation right.
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Payment may be made
in shares of Common Stock, in cash, or partly in Common Stock and partly in cash, all as determined by the Board of Directors.
Restricted Stock and Restricted Stock
Units
.
The Board of Directors may award restricted common stock and/or restricted stock units under the 2014
Plan. Restricted stock awards consist of shares of stock that are transferred to a participant subject to restrictions that may
result in forfeiture if specified conditions are not satisfied. Restricted stock units confer the right to receive shares of Common
Stock, cash, or a combination of shares and cash, at a future date upon or following the attainment of certain conditions specified
by the Board of Directors. The Board of Directors will determine the restrictions and conditions applicable to each award of restricted
stock or restricted stock units, which may include performance-based conditions. Dividends with respect to restricted stock may
be paid to the holder of the shares as and when dividends are paid to stockholders or at the time that the restricted stock vests,
as determined by the Board of Directors. Dividend equivalent amounts may be paid with respect to restricted stock units either
when cash dividends are paid to stockholders or when the units vest. Unless the Board of Directors determines otherwise, holders
of restricted stock will have the right to vote the shares.
Performance Shares and Performance
Units
.
The Board of Directors may award performance shares and/or performance units under the 2014 Plan. Performance
shares and performance units are awards, denominated in either shares or U.S. dollars, which are earned during a specified performance
period subject to the attainment of performance criteria, as established by the Board of Directors. The Board of Directors will
determine the restrictions and conditions applicable to each award of performance shares and performance units.
Transferability of Awards
.
Unless determined otherwise by the Board of Directors, an award under the 2014 Plan may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during
the lifetime of a participant, only by the participant. If the Board of Directors makes an award transferable, such award may only
be transferred (i) by will, (ii) by the laws of descent and distribution, (iii) to a revocable trust, or (iii) as permitted by
Rule 701 of the Securities Act.
Effect of Certain Corporate Transactions
.
The
Board of Directors may, at the time of the grant of an award, provide for the effect of a change in control (as defined in the
2014 Plan) on any award, including (i) accelerating or extending the time periods for exercising, vesting in, or realizing gain
from any award, (ii) eliminating or modifying the performance or other conditions of an award, or (iii) providing for the cash
settlement of an award for an equivalent cash value, as determined by the Board of Directors. The Board of Directors may, in its
discretion and without the need for the consent of any recipient of an award, also take one or more of the following actions contingent
upon the occurrence of a change in control: (a) cause any or all outstanding options and stock appreciation rights to become immediately
exercisable, in whole or in part; (b) cause any other awards to become non-forfeitable, in whole or in part; (c) cancel any option
or stock appreciation right in exchange for a substitute option; (d) cancel any award of restricted stock, restricted stock units,
performance shares or performance units in exchange for a similar award of the capital stock of any successor corporation; (e)
redeem any restricted stock, restricted stock unit, performance share or performance unit for cash and/or other substitute consideration
with a value equal to the fair market value of an unrestricted share of Common Stock on the date of the change in control; (f)
cancel any option or stock appreciation right in exchange for cash and/or other substitute consideration based on the value of
Common Stock on the date of the change in control
,
and cancel any option or stock appreciation right without
any payment if its exercise price exceeds the value of Common Stock on the date of the change in control; or (g) make such other
modifications, adjustments or amendments to outstanding awards as the Board of Directors deems necessary or appropriate.
Amendment, Termination
.
The
Board of Directors may amend the terms of awards in any manner not inconsistent with the 2014 Plan, provided that no amendment
shall adversely affect the rights of a participant with respect to an outstanding award without the participant’s consent.
In addition, the Board of Directors may at any time amend, suspend, or terminate the 2014 Plan, provided that (i) no such amendment,
suspension or termination shall materially and adversely affect the rights of any participant under any outstanding award without
the consent of such participant and (ii) to the extent necessary to comply with any applicable law or stock exchange rule, the
2014 Plan requires the Company to obtain stockholder consent. Stockholder approval is required for any plan amendment that increases
the number of shares of common stock available for issuance under the 2014 Plan or changes the persons or classes of persons eligible
to receive awards.