UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): March 20, 2020

 

urban-gro, Inc.

(Exact Name of Registrant as Specified in Charter)

 

Colorado

(State or Other Jurisdiction of Incorporation)

     
000-52898   46-5158469
(Commission File Number)   (IRS Employer Identification No.)
     

1751 Panorama Point, Unit G

Lafayette, Colorado

  80026
(Address of Principal Executive Offices)   (Zip Code)

(720) 390-3880

(Registrant’s Telephone Number, Including Area Code)

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

     

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class  

Trading

Symbol(s)

 

Name of each exchange

on which registered

N/A   N/A   N/A

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

     

 

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On March 20, 2020 (the “Separation Date”), urban-gro, Inc. (the “Company”) accepted the resignation of Larry Dodson, Chief Technology Officer of the Company, and agreed that Mr. Dodson’s employment with the Company would terminate effective immediately.

 

In connection with his departure, the Company and Mr. Dodson entered into a Separation Agreement (the “Separation Agreement”) on the Separation Date. The Separation Agreement will become effective, enforceable and irrevocable on the 8th day after the date on which it was executed and not revoked by Mr. Dodson (the “Effective Date”). The Separation Agreement supersedes all prior agreements between Mr. Dodson and the Company, except Mr. Dodson has agreed to certain ongoing obligations contained in the Confidentiality Agreement, Nondisclosure of Information and Assignments Agreement, and Non-Compete Agreement (the “Non-Compete Agreement”), each dated September 20, 2018, between Mr. Dodson and the Company.

 

In consideration for Mr. Dodson’s timely executing (not timely revoking) the Separation Agreement, for complying with its terms, including a release and waiver of claims and agreement to comply with certain obligations referenced in the Separation Agreement, and for surrendering any and all shares of Company common stock held by Mr. Dodson and any and all rights and entitlements related to any equity of the Company (including but not limited to any rights to shares of the Company common stock, vested or unvested, under any restricted stock award agreement), the Company agreed, among other things, to provide Mr. Dodson the following: (i) a severance payment in the aggregate amount equal to $27,500 (subject to required reductions and withholdings) in four equal lump sum payments; (ii) the Company will enter into a Stock Option Agreement on the Effective Date, which grants Mr. Dodson the right and option to purchase 330,000 shares of the Company’s common stock at an exercise price of $1.00 per share, pursuant to the Company’s 2019 Equity Incentive Plan, on the terms and conditions substantially in the form attached hereto as Exhibit 10.2 (the “Stock Option Agreement”); (iii) an amendment to the Non-Compete Agreement as provided in the Separation Agreement; and (iv) payment for Mr. Dodson’s accrued, unused vacation days in an aggregate amount equal to $13,103.89.

 

The foregoing summaries of the Separation Agreement and the Stock Option Agreement do not purport to be complete and are qualified in their entirety by the full text of the Separation Agreement and the Stock Option Agreement, copies of which are filed as Exhibit 10.1 and 10.2, respectively, hereto and are incorporated herein by reference.

 

Item 7.01 Regulation FD Disclosure

 

On March 23, 2020, the Company issued a press release announcing the departure of Mr. Dodson as described in Item 5.02 above. A copy of the press release is attached hereto as Exhibit 99.1.

 

The information in Item 7.01 of this Current Report on Form 8-K (including Exhibit 99.1) is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

  10.1 Separation Agreement, dated as of March 20, 2020, by and between urban-gro, Inc. and Larry Dodson.
     
  10.2 Form of Stock Option Agreement to be entered into on the Effective Date by and between urban-gro, Inc. and Larry Dodson.
     
  99.1  Press Release of urban-gro, Inc. dated March 23, 2020.

 

 

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

             
        URBAN-GRO, INC.
Date: March 23, 2020            
        By:  

/s/ Bradley Nattrass

        Name:   Bradley Nattrass
        Title:   Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit 10.1

 

SEPARATION AGREEMENT

 

This Separation Agreement (the “Agreement”) is entered into by and between urban-gro, Inc. (the “Company”) and Larry Dodson (“Employee”).

 

1.                Employee’s last day of employment with the Company is March 20, 2020 (the “Termination Date”). As of the Termination Date, Employee no longer is an employee, agent, or other representative of the Company or any of the Releasees (as defined below). By the first regular Company payroll date following the Termination Date, the Company will pay Employee for Employee’s accrued, unused vacation days in the amount of Thirteen Thousand, One Hundred and Three Dollars and Eighty Nine Cents ($13,103.89) (minus applicable deductions and withholdings).

 

2.                In consideration of Employee timely executing (and not timely revoking) this Agreement, for complying with its terms and with the Surviving Provisions (as defined below), and for surrendering any and all shares of Company common stock held by the Employee and any and all rights and entitlements related to any equity of the Company (including but not limited to any rights under any restricted stock award agreement), the Company will provide Employee with the following:

 

(a)    The Company will pay Employee a severance payment in the total gross amount of Twenty Seven Thousand, Five Hundred Dollars and Zero Cents ($27,500) (minus applicable deductions and withholdings) (the “Severance Payment”), payable in four (4) co-equal installments commencing on the Company’s first regularly scheduled payroll date that is at least thirty (30) days after the Termination Date and continuing every four (4) weeks thereafter until paid in full;

 

(b)   On the Effective Date (as defined below), the Company will grant the Employee the right and option to purchase 330,000 shares of the Company’s common stock, pursuant to the Company’s 2019 Equity Incentive Plan, on the terms and conditions substantially in the form attached hereto as Exhibit A;

 

(c)    The Company will consider in good faith Employee’s suggestions in connection with any press release regarding Employee’s resignation (except as otherwise required by law or business necessity); and

 

(d)   The Company and Employee hereby amend and modify Employee’s non-competition obligations set forth in Section 1(b) of the Non-Compete Agreement (as defined below), by adding the following sentence to the end of Section 1(b): “Further, the parties agree that, during the 12 months following the termination of Employee’s employment, this covenant shall not restrict Employee from working for any entity that is not a direct competitor of the Company; provided that, for avoidance of doubt, Edyza Inc. shall not be considered a direct competitor of the Company.” For avoidance of doubt, all of Employee’s other obligations under the Surviving Provisions will remain in full force and effect and will continue to bind Employee in accordance with their terms.

 

3.                The benefits received by Employee and Employee’s eligible dependents under the Company’s medical plan(s) will cease as of March 31, 2020. Thereafter, pursuant to governing law and independent of this Agreement, Employee will be entitled to elect benefit continuation coverage at Employee’s own expense under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for Employee and any eligible dependents, if Employee timely applies for such coverage. Information regarding Employee’s eligibility for COBRA coverage, and the terms and conditions of such coverage, will be provided to Employee in separate correspondence.

 

 

 

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4.                In exchange for the consideration provided to Employee pursuant to this Agreement, Employee, on behalf of Employee and all of Employee’s heirs, executors, administrators, and assigns (collectively, “Releasors”), hereby releases and forever waives and discharges any and all claims, liabilities, causes of action, demands, suits, rights, costs, expenses, or damages of any kind or nature (collectively, “Claims”) that Employee or any of the other Releasors ever had, now have, or might have against the Company and/or any of the Company’s respective current, former, and/or future affiliates, subsidiaries, parents, related companies, controlling shareholders, divisions, directors, members, trustees, officers, general partners, limited partners, employees, agents, attorneys, successors, and/or assigns (collectively, with the Company, the “Company Group” and each a “Company Group Member”); and each Company Group Member’s respective current, former, and future directors, members, trustees, controlling shareholders, subsidiaries, general partners, limited partners, affiliates, related companies, divisions, officers, employees, agents, and attorneys (collectively, with the Company Group, the “Releasees” and each a “Releasee”), arising at any time prior to and including the date Employee executes this Agreement, whether such Claims are known to Employee or unknown to Employee, whether such Claims are accrued or contingent, including, but not limited to, any and all (a) Claims arising out of, or that might be considered to arise out of or to be connected in any way with, Employee’s employment or other relationship with any of the Releasees, or the termination of such employment or other relationship; (b)  Claims under any contract, agreement, or understanding that Employee may have with any of the Releasees, whether written or oral, whether express or implied, at any time prior to the date Employee executes this Agreement (including, but not limited to, under Employee’s employment agreement with the Company dated August 18, 2018 (the “Employment Agreement”); Employee’s confidentiality agreement with the Company dated September 20, 2018 (the “Confidentiality Agreement”); Employee’s Nondisclosure of Information and Assignments Agreement with the Company dated September 20, 2018 (the “Nondisclosure of Information and Assignments Agreement”); and Employee’s Non-Compete Agreement with the Company dated September 20, 2018 (the “Non-Compete Agreement”); (c) Claims arising under any federal, state, foreign, or local law, rule, ordinance, or public policy, including, without limitation, (i) Claims for discrimination, harassment, or retaliation under any such law, including but not limited to Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, 42 U.S.C. § 1981, the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621 et seq., the Older Workers Benefit Protection Act, the Colorado Anti-Discrimination Act, the Colorado Lawful Off-Duty Activities Statute, and the Colorado Genetic Information Non-Disclosure Act, (ii) Claims arising in tort, and (iii) Claims for compensation, wages, commissions, bonuses (including, without limitation, any claim to deferred compensation), vacation pay, personal pay, sick or safe time pay, any other fringe benefits, attorneys’ or experts’ fees or costs, forum fees or costs, or any tangible or intangible property of Employee’s that remains with any of the Releasees; and (d) Claims arising under any other applicable law, regulation, rule, policy, practice, promise, understanding, or legal or equitable theory whatsoever; provided, however, that Employee does not release (A) any claims that arise after the date Employee executes this Agreement; (B) any claims for breach of this Agreement or to enforce the terms of this Agreement; (C) any right to indemnification to which Employee otherwise may be entitled (if any) under the Company’s directors and officers (D&O) insurance policies with respect to the period of Employee’s employment; (D) any vested benefits under any employee benefit pension plan; and (E) any claims that cannot be waived or released as a matter of law. Employee specifically intends the release of Claims in this Section 4 to be the broadest possible release permitted by law.

 

5.                                    Employee acknowledges and agrees that the consideration provided in Section 2 of this Agreement is in full discharge of any and all obligations owed to Employee, monetarily or otherwise, with respect to Employee’s employment or the termination thereof, and exceeds any payment, benefit, or other thing of value to which Employee might otherwise be entitled. Employee understands that Employee will not receive any other or different compensation or benefits, including any bonus, pro-rata bonus, or other amounts or interests, for 2019, 2020, or any other year, except as explicitly set forth herein.

 

6.                                         Employee represents that Employee has never commenced or filed, or caused to be commenced or filed, any lawsuit or arbitration against any of the Releasees. Except as otherwise provided in Section 4 of this Agreement, Employee further agrees not to directly or indirectly commence, file, or in any way pursue, or cause or assist any person or entity to commence, file, or pursue, any lawsuit or arbitration against any of the Releasees in the future. For avoidance of doubt, nothing in this Agreement, any other agreement between Employee and the Company, or any Company policy shall prevent Employee from filing a charge with the Equal Employment Opportunity Commission (the “EEOC”) or any other government agency or participating in any EEOC or other agency investigation; provided that Employee cannot receive monetary relief in connection with an EEOC charge or any charge filed with a state or local administrative agency.

 

 

 

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7.                                         Employee acknowledges and agrees that except as otherwise provided herein, nothing in this Agreement modifies, supersedes, or changes: (a) the following Sections of the Confidentiality Agreement, which remain in full force and effect and continue to bind Employee following the Termination Date in accordance with their terms: Section 1 (Confidentiality), Section 2(a) (Disclosure of Obligations), Section 2(b) (Conflict of Obligations), Section 2(c) (Remedies), Section 2(d) (Liquidated Damages), Section 2(e) (Attorney’s Fees), Section 2(f) (Entire Agreement), Section 2(g) (Survival), Section 2(h) (Governing Law and Forum), Section 2(i) (Severability), Section 2(j) (Modification and Waiver), Section 2(k) (Heirs and Assigns), and Section 2(l) (Headings); (b) the following Sections of the Non-Compete Agreement, which remain in full force and effect and continue to bind Employee following the Termination Date in accordance with their terms: Section 1 (Non-Competition) (as modified herein), Section 2 (Confidentiality), Section 3 (Non-Solicitation), Section 4(a) (Disclosure of Obligations), Section 4(b) (Conflict of Obligations), Section 4(c) (Remedies), Section 4(d) (Liquidated Damages), Section 4(e) (Attorney’s Fees), Section 4(f) (Entire Agreement), Section 4(g) (Survival), Section 4(h) (Governing Law and Forum), Section 4(i) (Severability), Section 4(j) (Modification and Waiver), Section 4(k) (Heirs and Assigns), and Section 4(l) (Headings); or (c) the Nondisclosure of Information and Assignments Agreement, which remains in full force and effect and continues to bind Employee following the Termination Date in accordance with its terms (collectively, all of the foregoing in (a), (b), and (c), the “Surviving Provisions”). Employee also shall treat this Agreement as Confidential Information (as defined in the Confidentiality Agreement and the Non-Compete Agreement), and shall not disclose any information concerning this Agreement to any person or entity without the prior written consent of the Company, except as otherwise provided herein and/or in the Surviving Provisions. Notwithstanding the foregoing, in accordance with the Defend Trade Secrets Act, 18 U.S.C. § 1833(b), and other applicable law, nothing in this Section 7, this Agreement, the Surviving Provisions, or any other agreement or Company policy shall prevent Employee from, or expose Employee to criminal or civil liability under federal or state trade secret law for, (A) directly or indirectly sharing any trade secrets of the Company or other Confidential Information (except information protected by the Company’s attorney-client or work product privilege) with law enforcement, an attorney, or any federal, state, or local government officials, regulators, or agencies (including the EEOC or the Securities and Exchange Commission) for the purpose of investigating, reporting, or complaining of a suspected violation of law, whether in response to a subpoena or otherwise, without notice to the Company, or (B) disclosing the Company’s trade secrets in a filing in connection with a legal claim, provided that the filing is made under seal. Further, nothing in this Agreement or otherwise shall prevent Employee from discussing or disclosing information related to Employee’s general job duties or responsibilities and/or employee compensation. Any disputes arising under this Agreement shall be resolved in accordance with the dispute resolution terms provided in Sections 2(c) and 2(h) of the Confidentiality Agreement and Sections 4(c) and 4(h) of the Non-Compete Agreement.

 

8.                                         Except as provided in Section 7 above, Employee shall not, whether in private or in public, directly or indirectly, (a) make, publish, encourage, ratify, or authorize, or aid, assist, or direct any other person or entity in making or publishing, any remarks, statements, postings, or other communications, whether in written, oral, digital, or any other form, that in any way defame, criticize, malign, impugn, reflect negatively on, or disparage any Releasee, or place any Releasee in a negative light, in any manner whatsoever; or (b) make or publish any public comments regarding any of the Releasees to, through, or on any media source or outlet, including, but not limited to, any reporters, news outlets, television stations, bloggers, weblogs, websites, magazines, periodicals, journals, “apps,” or the like, or in any movie, book, or theatrical production, nor will Employee assist any other person or entity to do any of the foregoing.

 

9.                                         Employee agrees that on or prior to the Termination Date, Employee shall have complied with Section 1(d) of the Confidentiality Agreement and Section 2(d) of the Non-Compete Agreement, including returning to the Company Group (without retaining copies) all of the property of the Releasees in Employee’s possession, custody or control, including, but not limited to, all Confidential Information, proprietary materials, passwords, usernames, access codes, documents, records, and computer media in any form (and all copies thereof), computer hardware, cellular phones, laptops, software, disks, keys, tablets, blackberries and other electronic devices, security or access cards, and other equipment (including the password(s) to use such property), and Employee represents that no other materials that Employee has received, generated, or maintained during Employee’s time at the Company will be retained by Employee after the Termination Date. In addition, Employee acknowledges and agrees that the Company has returned all of Employee’s personal property to Employee.

 

10.                                      Employee agrees that following the Termination Date, Employee shall, without receiving any additional consideration beyond what is provided herein, cooperate in a fulsome and timely manner with the Company Group Members in connection with answering questions they may have and ensuring the smooth transition of Employee’s knowledge, role, and responsibilities to other employees at the Company and its affiliates. The Company will endeavor to schedule any such cooperation for times convenient for Employee, and to not unduly disrupt Employee’s other personal or professional pursuits.

 

 

 

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11.                                      Employee represents and warrants that Employee is not aware of any facts or circumstances that Employees knows or believes to be either (a) a past or current violation of the Company’s or any of its affiliates’ rules and/or policies, or (b) a past or current violation of any laws, rules, and/or regulations applicable to the Company or any of its affiliates. This Agreement, and all statements or negotiations relating hereto, does not represent an admission of liability or finding of wrongdoing by the Company, or any of Releasees.

 

12.                                      Should Employee materially breach this Agreement or any of the Surviving Provisions, then: (a) the Company shall have no further obligations to Employee under this Agreement (including but not limited to any obligation to make any further payments to Employee); (b) the Company shall be entitled to recoup the amount of the Severance Payment Employee received pursuant to this Agreement, plus the reasonable attorneys’ fees and costs the Company incurs in recouping such amounts from Employee, except for the amount of $500; (c) the Company’s modification of Employee’s non-competition obligations pursuant to Paragraph 2 above shall be deemed revoked, such non-competition obligations shall be considered part of the Surviving Provisions, and the Company shall be entitled to enforce Employee’s non-competition obligations to the full extent permitted by law; (d) the Company shall have all rights and remedies available to it under this Agreement and any applicable law or equitable theory; and (e) all of Employee’s promises, covenants, representations, and warranties under this Agreement and the Surviving Provisions shall remain in full force and effect.

 

13.                                      If any term or provision of this Agreement (or any portion thereof) or the Surviving Provisions is determined by an arbitrator or a court of competent jurisdiction to be invalid, illegal, or incapable of being enforced, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect. Upon a determination that any term or provision (or any portion thereof) is invalid, illegal, or incapable of being enforced, the Company and Employee agree that an arbitrator or reviewing court shall have the authority to “blue pencil” or modify this Agreement so as to render it enforceable and effect the original intent of the parties to the fullest extent permitted by applicable law.

 

14.                                      This Agreement (i) may be executed in identical counterparts, which together shall constitute a single agreement, and facsimile, PDF, and other true and accurate copies of this Agreement will have the same force and effect as originals hereof; (ii) shall be fairly interpreted in accordance with its terms and without any strict construction in favor of or against either party, notwithstanding which party may have drafted it; (iii) shall be deemed to have been made in the State of Colorado, and shall be governed by and construed in accordance with the laws of the State of Colorado, excluding any choice of law principles; (iv) along with the Surviving Provisions constitutes the Parties’ entire agreement, arrangement, and understanding regarding the subject matter herein, superseding any prior or contemporaneous agreements, arrangements, or understandings, whether written or oral, between Employee on the one hand and the Company on the other hand regarding the same subject matter, and Employee specifically acknowledges and agrees that notwithstanding any discussions or negotiations Employee may have had with any of the Releasees prior to the execution of this Agreement, Employee is not replying on any promises or assurances other than those explicitly contained in this Agreement; and (v) may not be modified, amended, discharged, or terminated, nor may any of its provisions be varied or waived, except by a further signed written agreement between the parties.

 

15.                                      For purposes of this Agreement, the connectives “and” and “or” shall be construed either disjunctively or conjunctively as necessary to bring within the scope of a sentence all facts or information that might otherwise be construed to be outside of its scope.

 

16.                                      This Agreement is intended to be interpreted and applied so that the payments and benefits set forth herein shall either be exempt from the requirements of Section 409A of the Internal Revenue Code, as amended, and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”), or shall comply with the requirements of such provisions, and accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. Notwithstanding the foregoing or anything in this Agreement to the contrary, neither the Company or any affiliate of the Company, nor any of their respective officers, directors, employees, or agents make any guarantee that the terms of this Agreement as written or the payments or benefits hereunder comply with, or are exempt from, Code Section 409A, and none of the foregoing shall have any liability, including, without limitation, for any tax, interest, penalty, or damages, for the failure of the terms of this Agreement to comply with, or be exempt from, Code Section 409A. Each payment made under this Agreement will be treated as a separate payment for purposes of Code Section 409A and the right to a series of installment payments under this Agreement is to be treated as a right to a series of separate payments.

 

 

 

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17.                                      (a) Employee understands that this Agreement includes a release covering all Claims arising or accruing on or prior to the date this Agreement is executed, including Claims under the Age Discrimination in Employment Act (“ADEA”), whether those Claims are presently known to Employee or hereafter discovered. Employee understands that Employee will have twenty-one (21) days from the date of Employee’s receipt of this Agreement to consider this Agreement’s terms, execute this Agreement, and return the signed Agreement via email, facsimile, or overnight courier (via FedEX or UPS) to Brad Nattrass, urban-gro, Inc., 1751 Panorama Point, Suite G, Lafayette, CO, 80026, 720-390-3880, brad@urban-gro.com. To the extent that Employee executes this Agreement prior to the end of this twenty-one (21) day period, Employee hereby knowingly and voluntarily waives the remainder of this period. If Employee fails to execute and return this Agreement within the twenty-one (21) day period, then this Agreement (including but not limited to the Company’s obligations under Section 2 above) will be null and void and of no force or effect.

 

(b) Employee acknowledges that if Employee timely executes this Agreement, Employee will have seven (7) days from the date Employee executes this Agreement (the “Revocation Period”) to revoke this Agreement, by providing written notice of such revocation via email, facsimile, or overnight courier (via FedEX or UPS) to Brad Nattrass, urban-gro, Inc., 1751 Panorama Point, Suite G, Lafayette, CO, 80026, 720-390-3880, brad@urban-gro.com. If Employee revokes this Agreement within the Revocation Period as provided herein, then this Agreement will be null and void and of no force or effect (including but not limited to the Company’s obligations under Section 2 above). If Employee does not revoke this Agreement within the Revocation Period as provided herein, this Agreement will become fully binding, effective, irrevocable, and enforceable on the eighth (8th) calendar day after Employee executes it (the “Effective Date”).

 

(c) By signing below, Employee expressly acknowledges, represents, and warrants that Employee has carefully read this Agreement; that Employee fully understands the terms, conditions, and significance of this Agreement and its final and binding effect; that no other promises or representations were made to Employee other than those set forth in this Agreement; that Employee is fully competent to manage Employee’s business affairs and understands that Employee may be waiving legal rights by signing this Agreement; that the Company has advised Employee to consult with an attorney concerning this Agreement; that Employee has executed this Agreement voluntarily, knowingly, and with an intent to be bound by this Agreement; and that Employee has full power and authority to release Employee’s Claims as set forth herein and has not assigned any such Claims to any other individual or entity.

 

[Signature Page Follows]

 

 

 

 

 

 

 

 

 

 

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urban-gro, Inc.  
   
   
By:/s/ Bradley Nattrass 3/20/2020
       Name: Bradley Nattrass Date
       Title:   CEO  
   
   
   
EMPLOYEE  
   
   
/s/ Larry Dodson 3/20/2020
Larry Dodson Date

 

 

 

 

 

 

 

Signature Page to Separation Agreement

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EXHIBIT A TO SEPARATION AGREEMENT

 

 

STOCK OPTION AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit 10.2

 

THE SECURITIES WHICH ARE THE SUBJECT OF THIS STOCK OPTION AGREEMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

 

STOCK OPTION AGREEMENT

UNDER THE

URBAN-GRO, INC. 2019 EQUITY INCENTIVE PLAN

 

This Stock Option Agreement (“Option Agreement”) is made and entered into by and between urban-gro, Inc. (“urban-gro” or the “Company”) and Larry Dodson (the “Optionee”), as of [●], 2020 (the “Grant Date”). The Options granted to the Optionee pursuant to this Option Agreement shall be granted under the urban-gro, Inc. 2019 Equity Incentive Plan, as amended from time to time (the Plan), and shall be subject to the terms and conditions of the Plan.

 

WHEREAS, the Company has entered into that certain Separation Agreement with the Optionee as of March 20, 2020, which sets forth the terms of the Optionee’s separation from service with the Company (the “Separation Agreement”);

 

WHEREAS, part of the consideration to be provided to the Optionee under the Separation Agreement is the right and option to purchase 330,000 shares of the Company’s Common Stock, subject to the Optionee executing (and not timely revoking) the Separation Agreement and complying with the terms of the Separation Agreement;

 

WHEREAS, the Optionee has executed (and not timely revoked) the Separation Agreement;

 

WHEREAS, the Company desires to grant the right and option to purchase 330,000 shares of the Company’s Common Stock to the Optionee, subject to the terms and conditions of this Option Agreement and the Plan; and

 

WHEREAS, the Optionee desires to receive such right and be the holder of such options, subject to the terms and conditions of this Option Agreement and the Plan.

 

NOW, THEREFORE, in consideration of the premises, mutual covenants and agreements contained herein, and such other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.     Grant of Stock Options; Option Terms. Subject to the terms and conditions of this Option Agreement and the Plan, the Company hereby grants to the Optionee as of the Grant Date, subject to the terms hereof and the Plan, the right and option to purchase all or a portion of 330,000 shares of Common Stock of the Company (the “Shares”), on or before the Expiration Date (as defined below) (the “Options”). No exercise as to a portion of the Shares shall preclude a later exercise or exercises as to additional portions. The Options are Nonqualified Stock Options (not intended to be within the meaning of Section 422 of the Code). The Options granted hereunder shall expire at 12:01 a.m. mountain time on the day immediately following the date on which the Exercise Period (as defined below) expires.

 

2.     Terms and Conditions of the Option. The Options shall be subject to the following terms and conditions:

 

2.1       Exercise Price. The price to be paid for each Shares with respect to which an Option is exercised, shall be $1.00 (the “Exercise Price”).

 

2.2.       Vesting and Exercisability. The Options granted to the Optionee pursuant to this Option Agreement shall become vested and fully exercisable on the Grant Date. The Options shall remain exercisable for the period commencing on the Grant Date and expiring on the five (5) year anniversary of the Grant Date (the “Exercise Period”).

 

 

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2.3       Method of Exercise. This Option may be exercised by the Optionee in whole or in part from time to time, subject to the conditions contained in the Plan and in this Option Agreement by delivery, in person, by facsimile or electronic commission (if confirmed) or through the mail, to the Company at its principal executive office in Colorado (Attention: Chief Financial Officer), of a written notice of exercise. Such notice must be in a form satisfactory to the Committee, must identity this Option, must specify the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), must be signed by the person or persons so exercising the Option, and must include such other representations and agreements as may be required by the Company. If this Option is being exercised, as provided by the Plan and/or this Option Agreement, by any person or persons other than the Optionee, the notice must be accompanied by appropriate proof of right of such person or persons to exercise this Option. Payment of the full aggregate Exercise Price as to all Exercised Shares must accompany the exercise notice. This Option shall be deemed exercised upon receipt by the Company of such fully executed exercise notice accompanied by such aggregate Exercise Price and any other documentation required by the Company. The Optionee or person exercising the Option is responsible for filing any reports of remittance or other foreign exchange filings required in order to pay the Exercise Price. The Option shall not be exercisable with respect to fractions of a Share.

 

2.4       Stock Adjustments. In the event of any stock split, reverse stock split, stock dividend, reorganization, reclassification, combination, recapitalization or other like change with respect to the Company shares, the shares and number of shares of any class or series affected thereby, and all calculations provided for that are based upon numbers of shares of any class or series (or prices therefor) affected thereby, shall be equitably adjusted as determined by the Committee to the extent necessary to provide Optionee the same economic effect as contemplated by this Option Agreement prior to such stock split, reverse stock split, stock dividend, reorganization, reclassification, combination, recapitalization or other like change.

 

2.5            Limitation on Exercise. The grant of this Option and the issuance of Shares upon exercise of this Option are subject to compliance with all applicable laws. This Option may not be exercised if the issuance of Shares upon exercise would constitute a violation of any applicable laws. In addition, this Option may not be exercised unless (i) a registration statement under the Securities Act of 1933, as amended (the “Securities Act”) is in effect at the time of exercise of this Option with respect to the Shares; or (ii) in the opinion of legal counsel to the Company, the Shares issuable upon exercise of this Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The Optionee is cautioned that unless the foregoing conditions are satisfied, the Optionee may not be able to exercise the Option when desired even though the Option is vested. As a further condition to the exercise of this Option, the Company may require the Optionee to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. Any Shares that are issued will be “restricted securities” as that term is defined in Rule 144 under the Securities Act, and will bear an appropriate restrictive legend, unless they are registered under the Securities Act. The Company is under no obligation to register the Shares issuable upon exercise of this Option.

 

2.6       Method of Payment. The total Exercise Price of the Shares to be purchased upon exercise of this Option must be paid entirely in cash or cash equivalent (including check, bank draft or money order); provided, however, that the Committee, in its sole discretion, may allow such payments to be made, in whole or in part, by:

 

(A)   subject to any conditions or limitations established by the Company, other Shares that have a Fair Market Value on the date of surrender or attestation equal to the aggregate Exercise Price;

 

(B)   consideration received by the Company under a broker-assisted sale and remittance program acceptable to the Company (Officers and Directors shall not be permitted to use this procedure if this procedure would violate Section 402 of the Sarbanes-Oxley Act of 2002, as amended);

 

(C)   subject to any conditions or limitations established by the Company, retention by the Company of so many of the Shares that would otherwise have been delivered upon exercise of the Option as have a Fair Market Value on the exercise date equal to the aggregate exercise price of all Shares as to which the Option is being exercised, provided that the Option is surrendered and cancelled as to such Shares; or

 

(D)   any combination of the foregoing methods of payment.

 

 

 

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2.7    Non-Transferability of Option. This Option may not be transferred in any manner other than by will or by the laws of descent and distribution, and may be exercised during the lifetime of the Optionee only by the Optionee. The terms of this Option Agreement shall be binding upon the executors, Company’s, heirs, successors, and assigns of the Optionee. This Option may not be assigned, pledged, or hypothecated by the Optionee whether by operation of law or otherwise, and is not subject to execution, attachment, or similar process. Notwithstanding the foregoing, if this Option is designated as a Nonqualified Stock Option, the Company may, in its sole discretion, allow the Optionee to transfer this Option as a gift to one or more family members. For purposes of this Option Agreement, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships), any individual sharing the Optionee's household (other than a tenant or employee), a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which the Optionee or one or more of these persons control the management of assets, and any entity in which the Optionee or one or more of these persons own more than 50% of the voting interest.

 

2.8    Tax Obligations. The Optionee shall make appropriate arrangements with the Company for the satisfaction of all applicable Federal, state, local, and foreign income taxes, employment tax, and any other taxes that are due as a result of the Option exercise. The Committee, in its sole discretion, may permit the Optionee to satisfy such obligations by any of the following means or a combination of such means: (i) tendering cash or cash equivalent (including check, bank draft or money order) or (ii) authorizing the Company to withhold Shares that otherwise would be issued to the Optionee pursuant to the exercise of this Option. The Company may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.

 

3.       Restrictions on Resale. The Optionee shall not sell any Shares at a time when applicable law, Company policies or an agreement between the Company and its underwriters prohibit a sale.

 

4.     Lock-Up Agreement. In connection with any underwritten public offering of Shares made by the Company pursuant to a registration statement filed under the Securities Act, the Optionee shall not offer, sell, contract to sell, pledge, hypothecate, grant any option to purchase or make any short sale of, or otherwise dispose of any Shares (including but not limited to Shares subject to this Option) or any rights to acquire Shares of the Company for such period beginning on the date of filing of such registration statement with the Securities and Exchange Commission and ending at the time as may be established by the underwriters for such public offering; provided, however, that such period shall end not later than 180 days from the effective date of such registration statement. The foregoing limitation shall not apply to shares registered for sale in such public offering.

 

5.     Independent Legal and Tax Advice. The Optionee acknowledges that (a) the Company is not providing any legal or tax advice to the Optionee and (b) the Company has advised the Optionee to obtain independent legal and tax advice regarding this Option Agreement and any payment hereunder.

 

6.     No Rights in Shares. The Optionee shall have no rights as a stockholder in respect of any Shares, unless and until the Optionee becomes the record holder of such Shares on the Company’s records.

 

7.     Miscellaneous.

 

7.1    Entire Agreement; Governing Law; Venue. The Plan and this Option Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, including, but not limited to, the Separation Agreement. This Option Agreement shall interpreted under the Colorado Corporation Law excluding (to the greatest extent permissible by law) any rule of law that would cause the application of the laws of any jurisdiction other than the Colorado Corporation Law. Any legal proceeding related to the Plan and this Option Agreement will be brought in an appropriate Colorado court, and the parties to this Option Agreement consent to the exclusive jurisdiction of such court for this purpose.

 

7.2    Amendment and Waiver. Other than as provided in the Plan, this Option Agreement may be amended, waived, modified or canceled only by a written instrument executed by the parties to this Option Agreement or, in the case of a waiver, by the party waiving compliance. The Optionee acknowledges that a waiver by the Company of breach of any provision of this Option Agreement shall not operate or be construed as a waiver of any other provision of this Option Agreement, or of any subsequent breach by the Optionee or any other participant in the Plan.

 

 

 

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7.3       No Guarantee of Continued Service. This Option Agreement is not an employment or service agreement, and no provision of this Option Agreement shall be construed or interpreted to create any employment or service relationship between the Optionee and the Company for any time period.

 

7.4        No Fractional Shares. All provisions of this Option Agreement concern whole Shares. If the application of any provision hereunder would yield a fractional Share, such fractional Share shall settled in cash.

 

7.5       Plan. The terms and provisions of the Plan are incorporated herein by reference, and the Optionee hereby acknowledges receiving a copy of the Plan. In the event of a conflict or inconsistency between the terms and provision of the Plan and the provisions of this Option Agreement, the terms of this Option Agreement shall govern and control. All capitalized terms not defined herein shall have the meaning ascribed to them as set forth in the Plan.

 

7.6       No Guarantee of Tax or Other Consequences. The Company makes no commitment or guarantee that any tax treatment will apply or be available to the Optionee or any other person. The Optionee has been advised, and provided with ample opportunity, to obtain independent legal and tax advice regarding this Option Agreement.

 

7.7        Representation and Warranties of the Optionee. By the Optionee’s signature and the signature of the Company’s representative below, the Optionee and the Company agree that this Option is granted under this Option Agreement and governed by the terms and conditions of this Option Agreement and the Plan. The Optionee has reviewed this Option Agreement and the Plan in their entirety, has had an opportunity to obtain the advice of counsel before executing this Option Agreement and fully understands all provisions of this Option Agreement and the Plan. The Optionee hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Company upon any questions relating to this Option Agreement and/or the Plan.

 

7.8       Electronic Delivery. The Optionee agrees that the Company may deliver all documents relating to the Plan or this Option (including prospectuses required by the Securities and Exchange Commission), and all other documents that the Company is required to deliver to its security holders or the Optionee (including annual reports, proxy statements and financial statements), either by e-mail or by e-mail notice of a Web site location where those documents have been posted. The Optionee may at any time (i) revoke this consent to e-mail delivery of those documents; (ii) update the e-mail address for delivery of those documents; (iii) obtain at no charge a paper copy of those documents, in each case by writing the Company. The Optionee may request an electronic copy of any of those documents by requesting a copy in writing from the Company. The Optionee understands that an e-mail account and appropriate hardware and software, including a computer or compatible cell phone and an Internet connection, will be required to access documents delivered by e-mail.

 

7.9       Notices. Any notice necessary under this Option Agreement shall be addressed to the Company at its principal executive office in Colorado (Attention: Chief Financial Officer) and to the Optionee at the address appearing in the personnel records of the Company for such Optionee or to either party at such other address as either party hereto may hereafter designate in writing to the other. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.

 

7.8 Severability. Every provision of this Option Agreement is intended to be severable and any illegal or invalid term shall not affect the validity or legality of the remaining terms.

 

7.9       Headings and Sections. The headings and sections contained herein are provided for convenience only and are not to serve as a basis for interpretation of construction, and shall not constitute a part of this Option Agreement.

 

7.10       Counterparts. This Option Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Option Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

 

[Signature page follows]

 

 

 

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urban-gro, Inc.

 

 

  By:___________________________________
  Name:
 

Title:

 

   
 

OPTIONEE

 

  By:___________________________________
  Name: Larry Dodson
 

Residence Address:______________________

 

______________________________________

 

______________________________________

 

 

 

 

 

 

Signature Page to Stock Option Agreement

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Exhibit 99.1

 

 

 

 

urban-gro Announces Departure of Larry Dodson, CTO

 

Dodson Led the Integration of Wireless Crop Monitoring Technology into urban-gro’s offering; Edyza to Continue the Development and Sales of Technology to Agriculture, Horticulture and Cannabis Markets

 

FOR IMMEDIATE RELEASE

 

 

Lafayette, Colo., (March 23, 2020) – urban-gro, Inc. (OTCQX: UGRO) (“urban-gro” or the “Company”), a leading engineering design services company that integrates complex equipment systems into high-performance indoor cannabis cultivation facilities around the world, has announced the departure of Larry Dodson, CTO, effective March 20, 2020.

 

“Larry Dodson has provided exceptional contributions to the growth of urban-gro,” said Bradley Nattrass, CEO and Chairman of urban-gro. “As urban-gro has evolved into a full-service engineering design firm for indoor cultivation facilities, Larry is leaving us to focus on working closely with Edyza who has developed a proprietary industrial IoT platform, which urban-gro is a leading investor. Edyza’s corporate DNA is built to innovate and adapt their powerful sensor platform quickly to the needs of today’s cannabis and horticulture markets, and Larry already has a strong working relationship with the Edyza management team.”

 

“Working as urban-gro’s CTO has been a rewarding experience and a career highlight. I am grateful to Brad Nattrass and the urban-gro team,” says Larry Dodson. “Ag-tech innovations are moving quickly both for cannabis and traditional horticulture industries. With a strong relationship with the Edyza team, it’s a logical step for me to assist Edyza to continue to push this leading-edge technology to the agriculture markets.”

 

urban-gro and Edyza formed a strategic partnership that led to the successful deployment of Edyza’s high density sensor platform for controlled environmental agriculture across several large urban-gro accounts. With the recent restructuring of the partnership, Edyza will directly manage the existing deployments originated by urban-gro and will begin direct marketing and sales efforts to all agriculture markets.

 

“With our joint efforts with urban-gro, we now have a proven track record in providing cultivators, researchers, facility managers, and investors greater visibility into the environments within their greenhouse,” stated Atul Patel, CEO and Co-Founder of Edyza. “We are excited to have Larry bring his hands-on experience with deploying and marketing our solutions.”

 

Edyza’s high density sensor platform has been able to bring visibility of canopy environments with a 10 cubic feet level accuracy to successfully help growers identify anomalies in their growing conditions, pinpoint mechanical inefficiencies with HVAC and dehumidification systems, and take decisive actions in their workflows based on real tangible data.

 

About urban-gro, Inc.

urban-gro, Inc. (OTCQX: UGRO) is a leading engineering design services company that integrates complex equipment systems into high-performance indoor cannabis cultivation facilities around the world. Our highly tailored, plant-centric approach to the design, procurement, and systems integration provides a single point of accountability throughout the project lifecycle. urban-gro further ensures operational efficiency and economic advantage for commercial cultivators through a full spectrum of professional services and product solutions focused on facility optimization and promoting environmental health. In every engagement, our unwavering focus is on solutions that ensure success. Visit www.urban-gro.com to learn more. Follow urban-gro on Instagram, Facebook, Twitter and LinkedIn.

 

 

 

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About Edyza

Edyza is a hardware and software technology company that enables dense sensor and control networks in agriculture, healthcare, and other environments that require precise micro-climates. Edyza’s high density internet of things (HD-IoT) wireless communication software uses a proprietary channel method to enable thousands of sensors and actuators to communicate in close proximity with extraordinary power efficiency and minimal interference. Combined with its fog, edge and cloud computing software platform, Edyza offers unprecedented levels of data with the scale, precision, and resolution needed for machine learning, predictive analytics, and automation. Edyza is based in Irvine, California and has 30 years of combined experience in wireless, big data, and software-as-a-service. Edyza builds nervous systems for the physical world with our IoT-HD technologies. To learn more, visit www.edyza.com.

 

Safe Harbor Statement

 

This press release may contain forward looking statements which are based on current expectations, forecasts, and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially from those anticipated or expected, including statements related to future relationship between urban-gro and Edyza and any anticipated synergies relating thereto. These risks and uncertainties are further defined in filings and reports by us with the U.S. Securities and Exchange Commission (SEC).  Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors detailed from time to time in our filings with the Securities and Exchange Commission.

 

For inquiries, please contact:

 

Investor Relations Contact:
Phil Carlson

KCSA Strategic Communications

Email: pcarlson@kcsa.com

Phone: (212) 896-1233

 

Media Contact:
Anne Graf

KCSA Strategic Communications

Email: agraf@kcsa.com

Phone: (786) 390-2644

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