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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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):  October
29, 2020

 

GROWGENERATION CORP

(Exact Name of Registrant as Specified in
its Charter)

 

Colorado   333-207889   46-5008129
(State or other Jurisdiction
of Incorporation)
  (Commission File Number)   (I.R.S. Employer 
Identification No.)

 

930 W 7th Ave, Suite A

Denver, Colorado 80204

(Address of Principal Executive Offices)

 

Registrant’s telephone number, including
area code:  (800) 935-8420

 

N/A

(Former Address of Principal Executive Offices)

 

Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation 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))

 

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. ☐  

 

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

 

Title of each class   Trading symbol   Name of each exchange on which registered
Common Stock, par value $0.001 per share   GRWG   The NASDAQ Stock Market LLC

  

 

  

Section 1. Registrant’s Business
and Operations

 

Item 1.01. Entry into a Material Definitive
Agreement

 

On
October 29, 2020, GrowGeneration Corp. and its wholly-owned subsidiary GrowGeneration California Corp. (collectively the “Company”) entered
into an asset purchase agreement to acquire the assets of Yeleko, LLC, Yeleko GUI, LLC, Healthy Harvest Hydro-Organics LLC,
and Oregon Hydro-Organics LLC (the “Purchase Agreement”), which collectively operated as The GrowBiz, in exchange for
$11 million in cash, approximately $15 million of GrowGeneration Corp. stock plus inventory of approximately $6 million. The GrowBiz
is the nation’s third-largest chain of hydroponic garden centers, with five stores
across California and Oregon
. The Company issued a press release on November 2, 2020 announcing its entry into the Purchase
Agreement, which is attached hereto as Exhibit 99.1.

 

The
transaction is expected to close in fiscal 2020. The Purchase Agreement also includes customary representations, warranties and
covenants of the Company and the Sellers. The Purchase Agreement also contains post-closing indemnification provisions pursuant
to which the Parties have agreed to indemnify each other against losses resulting from certain events, including breaches of representations
and warranties, covenants and certain other matters.

 

In
connection with the closings of the transactions contemplated by the Purchase Agreement, the Company and Ross Haley, the principal
Member of the Sellers, will enter into a Consulting agreement pursuant to which Mr. Haley will provide the Company with certain
consulting services for a limited time period following the closing.

 

This
summary of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the provisions
of Purchase Agreement, a copy of which is filed as Exhibit 2.01 to this Current Report on Form 8-K and incorporated herein by reference.

 

Section 7 – Regulation FD

 

Item 7.01. Regulation FD Disclosure

 

On November 2, 2020,
GrowGeneration Corp. (the “Company”) published a press release regarding
its
 acquisition of assets from Yeleko, LLC, Yeleko GUI, LLC, Healthy Harvest
Hydro-Organics LLC, and Oregon Hydro-Organics LLC.

 

A
copy of the press release is attached hereto as Exhibit 99.1. The information contained in this Current Report on Form 8-K (including
the exhibit) is being furnished and shall not be deemed “filed” for the 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
otherwise expressly stated in such filing.

 

Section 9 – Financial Statements
and Exhibits

 

Item 9.01. Financial Statements and
Exhibits

 

(c) Exhibits

 

Exhibit No.   Description
     
Item 2.01   Asset Purchase Agreement, dated as of October 29, 2020, by and among GrowGeneration Corp. and GrowGeneration California Corp. and Yeleko, LLC, Yeleko GUI, LLC, Healthy Harvest Hydro-Organics LLC, and Oregon Hydro-Organics LLC. Schedules and exhibits to this document are omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.
     
Item 99.1   Press Release, dated November 2, 2020

    

 

 

SIGNATURES

 

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

 

Date:  November 2, 2020 GrowGeneration Corp.  
     
  By: /s/ Darren Lampert
  Name: Darren Lampert
  Title: Chief Executive Officer

 

 

2

Exhibit 2.01

 

ASSET PURCHASE AGREEMENT

 

BY AND AMONG

 

GROWGENERATION CALIFORNIA CORP.

 

(a Delaware corporation),

 

GROWGENERATION CORP.

 

(a Colorado corporation),

 

YELEKO, LLC

 

(a California limited liability company),

 

YELEKO GUI, LLC

 

(a California limited liability
company),

 

HEALTHY HARVEST HYDRO-ORGANICS LLC

 

(a California limited liability company),

 

OREGON HYDRO-ORGANICS LLC

 

(an Oregon limited liability company),

 

YTGB
Operating Holdings LLC

 

(a California limited liability company),

 

and

 

PRINCIPALS

 

(as defined herein)

 

dated as of October 29, 2020

 

 

TABLE OF CONTENTS

 

    pg.
     
1 DEFINITIONS. 1
     
2 SALE AND PURCHASE OF ASSETS 1
       
  2.1 Sale of Assets. 1
  2.2 Assumption of Liabilities. 3
  2.3 Asset Purchase Price. 3
  2.4 Closing. 5
  2.5 Buyers Deliveries at Closing. 6
  2.6 Exclusivity; Bulk Transfers Law. 7
       
3 REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLERS 7
       
  3.1 Organization and Authority. 8
  3.2 Authority Relating to this Agreement; No Violation of Other Instruments. 8
  3.3 Debt. 9
  3.4 Ownership and Delivery of Assets. 9
  3.5 Compliance with Law. 10
  3.6 Investments in Others. 10
  3.7 Intellectual Property. 10
  3.8 Inventory. 11
  3.9 Contracts. 11
  3.10 Owned Real Property. 11
  3.11 Real Property Leases. 12
  3.12 Financial Statements. 12
  3.13 Absence of Undisclosed Liabilities; Absence of Certain Changes. 12
  3.14 Tax Returns and Payments. 13
  3.15 Absence of Certain Changes or Events. 13
  3.16 Litigation. 13
  3.17 Warranties. 14
  3.18 Negotiations with Other Parties. 14
  3.19 Powers of Attorney. 14
  3.20 Insurance. 14
  3.21 Limitations on Transferability. 14
  3.22 Accredited Investor. 15
  3.23 Brokers and Finders. 15
  3.24 No Registration of Shares or Warrants. 15
  3.25 Purchase for Own Account. 15
  3.26 Knowledge and Experience. 15
  3.27 Adequate Review. 16
  3.28 Independent Investigation. 16
  3.29 Capacity to Protect Own Interests. 16
  3.30 Residence. 16
  3.31 Employees. 16
  3.32 Employee Benefits. 17
  3.33 Environmental Matters. 18
  3.34 Customers and Suppliers. 18
  3.35 Certain Business Relationships With Affiliates. 19
  3.36 Books and Records. 19

 

 

TABLE OF CONTENTS

 

    pg.
     
4 REPRESENTATIONS AND WARRANTIES OF BUYER 19
       
  4.1 Corporate Organization and Authority. 19
  4.2 Authorization. 19
  4.3 Corporate Power. 19
  4.4 Litigation. 19
  4.5 Brokers and Finders. 19
  4.6 No Conflicts. 20
  4.7 Common Stock; Shares. 20
  4.8 Reports. 20
  4.9 Exemption From Registration. 20
  4.10 Independent Investigation and Reliance. 20
       
5 CONDITIONS TO THE OBLIGATIONS OF BUYER 21
       
  5.1 Representations and Warranties True at the Closing. 21
  5.2 Covenants Performed by Sellers. 21
  5.3 Authority Relating to this Agreement. 21
  5.4 Material Changes in Business of Company. 21
  5.5 No Action to Prevent Completion. 21
  5.6 Leases. 21
  5.7 Employee Bonuses. 21
  5.8 Replacement Guaranties. 21
  5.9 Delivery of Closing Documents. 22
       
6 CONDITIONS TO THE OBLIGATIONS OF SELLERS 22
       
  6.1 Representations and Warranties True at the Closing. 22
  6.2 Covenants Performed by Buyer and Issuer. 22
  6.3 Authority Relating to this Agreement. 22
  6.4 No Action to Prevent Completion. 22
  6.5 Replacement Guaranties. 22
  6.6 Delivery of Closing Documents. 23
       
7 EMPLOYMENT MATTERS. 23
       
  7.1 Independent Contractors and Employees. 23
  7.2 Liabilities In Respect of Employees. 23
       
8 INDEMNITY 24
       
  8.1 Sellers Indemnitors 24
  8.2 Buyers and Issuers Indemnity. 24
  8.3 Survival of Terms. 25
  8.4 Indemnification Claims Procedures. 25
  8.5 Third Party Payment of Damages. 26
  8.6 Mitigation. 26
  8.7 No Duplicative Damages. 26

 

 

TABLE OF CONTENTS

 

    pg.
     
  8.8 Forfeiture of Shares. 26
  8.9 Recourse to Principals. 26
  8.10 Deductible. 27
  8.11 Damages. 27
  8.12 Tax Matters. 27
  8.13 Adjustment to Asset Purchase Price for Tax Purposes. 28
  8.14 Exclusive Remedy. 28
       
9 MISCELLANEOUS 28
       
  9.1 Allocation of Asset Purchase Price. 28
  9.2 Restrictive Legends. 28
  9.3 Confidentiality; Press Releases and Public Announcements. 29
  9.4 Construction. 29
  9.5 Expenses; Transfer Taxes; Accounts Payable. 29
  9.6 Notices. 30
  9.7 Governing Law. 31
  9.8 Successors and Assigns. 31
  9.9 Entire Agreement. 31
  9.10 Amendment. 31
  9.11 Waiver. 31
  9.12 Schedules and Exhibits; Section References. 31
  9.13 Partnership. 31
  9.14 Specific Performance; Remedies. 32
  9.15 Severability. 32
  9.16 Further Representations. 32
  9.17 Counterparts. 32

 

 

LIST OF EXHIBITS

 

Exhibit A Definitions
   
Exhibit B-1 Bill of Sale
   
Exhibit B-2 Assignment and Assumption Agreement
   
Exhibit C-1 Sellers’/Parent’s Closing Certificate
   
Exhibit C-2 Buyer Closing Certificate
   
Exhibit D Non-Compete and Confidentiality Agreement
   
Exhibit E Assignment of Intangible Assets and Intellectual Property
   
Exhibit F Consulting Agreement
   
Exhibit G Warrant
   
Exhibit H-1 Sellers’/Parent’s Authorizing Resolutions and Certificate
   
Exhibit H-2 Buyer’s/Issuer’s Authorizing Resolutions and Certificate
   
Exhibit I [Intentionally Omitted]
   
Exhibit J Form 8594 (Purchase Price Allocation)
   
Exhibit K Employees
   
Exhibit L Employment Agreement
   
Exhibit M Stock Power and Letters of Instruction (Shares)
   
Exhibit N Letters of Direction (Cash)

 

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE
AGREEMENT (“Agreement”) is made and entered into as of the 29th day of October, 2020 (“Execution
Date
”) by and among (i) GrowGeneration California Corp., a Delaware corporation (“Buyer”)
with offices at 930 W 7th Ave, Suite A, Denver, Co 80204, (ii) GrowGeneration Corp., a Colorado corporation, as Issuer,
with offices at 930 W 7th Ave, Suite A, Denver, CO 80204, and (iii) Yeleko, LLC, a California limited liability company
(“Yeleko”), Yeleko GUI, LLC, a California limited liability company (“Yeleko GUI”),
Healthy Harvest Hydro-Organics LLC, a California limited liability company (“HHH”), Oregon Hydro-Organics
LLC, an Oregon limited liability company (“OHO”), each with its corporate headquarters located at 4441
Granite Drive #102, Rocklin, CA 95677 (each a “Seller” and collectively, “Sellers”),
(iv) YTGB Operating Holdings LLC, a California limited liability company (“Parent”), and (v) the Principals
(as defined below).

 

R E C I T A L S

 

A. Principals
are individuals indirectly holding all of the equity interests in Parent.

 

B. Parent
is the parent entity for, and directly or indirectly holds all equity interests in Sellers, all of which are direct or indirect
wholly-owned Subsidiaries of the Parent.

 

C. Sellers
are limited liability companies, doing business as “the Growbiz”, engaged in the business of sales of hydroponic and
gardening supplies (the “Business”).

 

D. Subject
to the terms and conditions of this Agreement, Buyer is willing to purchase, and each Seller is willing to sell its assets, rights
and properties of the Business.

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

DEFINITIONS. For the purposes of this
Agreement, capitalized terms used herein shall have the meanings set forth in Exhibit A.

 

SALE AND PURCHASE OF ASSETS.

 

2.1 Sale of Assets. On the
terms and subject to the conditions of this Agreement and for the consideration set forth herein, Seller shall at the Closing,
sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase and acquire from Seller, all of the assets of Sellers
used in the Business other than the Excluded Assets (the “Assets”). The Assets shall include the following:

 

2.1.1 Inventories.
Subject to the immediately following sentence and except for Obsolete Inventory, all inventories of, finished goods, inventory
for resale, supplies and repair materials of Sellers (taken as a whole), as of the Closing Date (collectively, the “Inventories”),
it being expressly agreed that all Obsolete Inventory will not be included in the Assets and will constitute Excluded Assets. In
addition, at Sellers’ option in its discretion, Assets may include all or a portion of any Seller’s Slow-Moving Inventory,
provided that, for purposes of calculating the Asset Purchase Price, any Slow-Moving Inventory included in the Assets will
be valued at sixty percent (60%) of the applicable Seller’s actual cost. A summary of such Slow-Moving Inventory on hand
as of August 26, 2020 is attached hereto as Schedule 2.1.1. For clarity, it is expressly agreed by the Parties that the
Sellers have the right to (i) keep all Obsolete Inventory all of which constitute Excluded Assets, and (ii) at Sellers’ option,
in their sole discretion (a) retain all or a portion of Slow-Moving Inventory in which case such retained Slow-Moving Inventory
constitute Excluded Assets and/or (b) sell, assign and transfer all or a portion of Slow-Moving Inventory to Buyer at Closing,
in which case such sold Slow-Moving Inventory constitute Assets. In the event that Sellers elect to keep any of the Slow-Moving
Inventory, Sellers and/or its Affiliates shall use such inventory for personal use only; provided that, each Seller may
attempt to sell or otherwise dispose of, facilitate others in selling or disposing of the Obsolete Inventory and/or the Slow-Moving
Inventory, and arrange for and effectuate a one-time sale or other disposal of (A) the Obsolete Inventory and/or (B) the Slow-Moving
Inventory, in each case whether or not in a manner that competes with Buyer’s business.

 

 

2.1.2 Fixed
Assets and Tangible Personal Property
. All fixed assets and tangible personal property of Sellers (other than the Inventories)
as of the Closing Date, including all equipment, supplies, furniture, fixtures, hardware (collectively, the “Fixed
Assets
”). A list of the Fixed Assets as of October 28, 2020 is attached hereto as Schedule 2.1.2.

 

2.1.3 Intangible
Personal Property
. All intangible property of the Sellers as of the Closing (collectively, “Intangible Assets”)
including without limitation, goodwill, software, copyrights software source codes, if any, customer lists, customer files, customer
records, trade and other association memberships, if any, in each case to the extent transferrable pursuant to applicable Law and
Contract. A detailed list of trade and other association memberships is attached hereto as Schedule 2.1.3.

 

2.1.4 Contracts.
All rights in and to the contracts of Sellers (other than any Excluded Contracts) listed on Schedule 2.1.4 (collectively,
the “Contracts”). Schedule 2.1.4 shows, for each Contract, the names of the parties, the subject
of the Contract and the consideration involved. At the Closing, Sellers will transfer and assign to Buyer, and Buyer will, subject
to Section 5.9, accept and assume, pay for, perform and discharge, the obligations and liabilities under express terms of
each Contract attributable to periods of time occurring from and after the Closing to the extent that such obligations and liabilities
do not arise from any breach, default or violation of such Contract by the applicable Seller prior to the Closing.

 

2.1.5 Lease
Related Expenses
. Any and all lease related expenses such as common area maintenance expense, taxes, triple net related charges,
etc. shall be prorated based upon the actual Closing with Buyer and Sellers each being responsible for their pro rate share of
expenses. Such
prorations shall be based upon the principle that Sellers shall be responsible for all liabilities and obligations incurred in
connection with the operation of the Business until the Closing Date, and Buyer shall be responsible for such liabilities and obligations
incurred by Buyer from and after the Closing Date. 

 

2.1.6 Intellectual
Property
. Any and all Intellectual Property owned by any Seller or licensed pursuant to any Contract.

 

 

2.1.7 Excluded
Assets
. Notwithstanding anything to the contrary contained in this Agreement, the Assets shall not include any of the assets
set forth in Schedule 2.1.7 (collectively, the “Excluded Assets”).

 

2.2 Assumption of Liabilities.

 

2.2.1 Upon
and subject to the terms and conditions of this Agreement, from and after the Closing the Buyer shall assume and become responsible
solely for the following obligations and liabilities of each Seller (collectively, the “Assumed Liabilities”):
(a) all obligations and liabilities under the capital lease agreements listed on Schedule 2.2.1 (the “Capitalized
Leases
”) attributable to periods of time occurring after the Closing to the extent that such obligations and liabilities
do not arise from any breach, default or violation of such Capitalized Lease by the applicable Seller prior to the Closing; (b)
all obligations and liabilities under each Contract occurring from and after the Closing to the extent that such obligations and
liabilities do not arise from any breach, default or violation of such Contract by the applicable Seller prior to the Closing;
(c) all obligations and liabilities arising out of or relating to the employment of or services rendered by any Hired Employee
to the Hiring Entity or any of its Affiliates after Closing; and (d) all obligations and liabilities set forth in Schedule 2.2.1.

 

2.2.2 Notwithstanding
the terms of Section 2.2.1 or any other provision of this Agreement to the contrary, the Buyer shall not assume or become
responsible for, and the Sellers shall remain liable for the Retained Liabilities.

 

2.3 Asset Purchase Price.

 

Subject to the terms and conditions of this Agreement, and in
full consideration for the Sellers’ transfer of the Assets at Closing, Buyer shall pay at the closing of the Transaction
(the “Closing”) in accordance with the Funds Flow, an aggregate purchase price (as may be adjusted pursuant
to Article 8, the “Asset Purchase Price”) equal to:

 

(i) the actual cost of Sellers’ Inventory as of the Closing, which as of the Execution Date is
estimated to be approximately $6,000,000 (which such amount does not include the cost of Slow-Moving Inventory), provided that
any Slow-Moving Inventory included in the Assets will be valued at sixty percent (60%) of the applicable Seller’s actual
cost; plus

 

(ii) the sum of $200,000 for the Fixed Assets; plus

 

(iii) the sum of $11,000,000 for the Intangible Assets (including goodwill); plus

 

(iv) the Shares issued to Parent (with each Share being valued at the lower of Per Share Value or the
closing price of the Issuer’s common stock on the Trading Day immediately preceding the date hereof (the “Issuance
Price
”)); minus

 

(v) an amount equal to (a) the Customer Deposits, minus (b) Vendor Deposits (“Net
Deposit Amount
”) only to the extent that Sellers (x) maintain any Customer Deposits for Inventory at the time of
Closing, and (y) do not transfer the corresponding Net Deposit Amount to Buyer at Closing; minus

 

 

(vi) the aggregate amount of Indebtedness (other than Indebtedness in respect of Capitalized Leases)
outstanding as of the Closing (the “Closing Indebtedness”).

 

The Asset Purchase
Price shall be subject to any and all adjustments, if any, pursuant to Article 8.

 

2.3.1 Post-Closing
True-Up of Shares
.

 

(a) In
the event that the closing price of the Common Stock on NASDAQ or other primary trading market for the Issuer’s common stock
(the “True-up Price”) on the one hundred ninety-seven (197) day anniversary of the Closing (the “Subsequent
Pricing Date
”) is greater than the Issuance Price, Parent shall not be entitled to any True-up Shares (as hereinafter
defined).

 

(b) In
the event that the True-up Price on the Subsequent Pricing Date is less than the Issuance Price, then the Issuer will issue the
Parent additional shares of the Issuer’s common stock (the “True-up Shares”) within three days
of the Subsequent Pricing Date, according to the following formula:

 

Number of True-up Shares to be
issued = ($15,250,000 divided by the True-up Price) less number of Shares issued to Parent at Closing.

 

Example #1: If the True-up Price
is $10 and the Shares previously issued to Parent at Closing is 762,500 (i.e. the Issuance Price is $20), then the number of True-up
Shares to be issued is equal to 762,500 calculated as follows:

 

($15,250,000/$10) less
762,500 = 762,500.

 

Example#2: If the True-up Price
is $5 and the Shares previously issued to Parent at Closing is 762,500 (i.e. the Issuance Price is $20), the number of True-up
Shares to be issued is equal to 2,287,500 Shares calculated as follows:

 

($15,250,000/$5) less
762,500 = 2,287,500

 

Notwithstanding the foregoing,
the maximum number of True-up Shares shall be limited to and shall not exceed 2,287,500 in any event.

 

2.3.2 Consulting
Agreement
. At Closing, Haley shall enter into a consulting agreement with the Issuer in the form attached hereto as Exhibit
F
(the “Consulting Agreement”) pursuant to which (and as full compensation thereunder), the Issuer
will issue to Haley warrants to acquire 250,000 shares of common stock of the Issuer (collectively, the “Warrants”)
with an exercise price and pursuant to the vesting schedule as set forth therein.

 

2.3.3 Revenue
Statement
. Immediately prior to the Closing, Sellers shall deliver to Buyer a statement of revenue of the Sellers, on a consolidated
basis, for the period beginning on January 1, 2020 and ending on the date closest to the Closing, which in no event shall be more
than five (5) days prior to the Closing, for which such information is readily available to Seller Parties.

 

 

2.4 Closing.

 

2.4.1 Closing
Date
. The Closing of the purchase and sale of the Assets shall take place at 9:00 a.m. Pacific time remotely upon mutual exchange
and receipt of signature pages via facsimile or .pdf copies of originally signed documents in escrow and authorized express release
by the Parties of all signature pages therefrom, upon which the Closing shall be deemed consummated notwithstanding any Party’s
failure or refusal to deliver originally executed signature pages. The Closing shall occur on such date and at such time as agreed
by Seller and Buyer, which date shall be no later than the fifth (5th) business day after all conditions to the Closing
set forth in Article 5 and Article 6 (in each case, other than those conditions that by their nature are to be satisfied
at the Closing, but subject to the satisfaction or waiver of those conditions at such time) shall have been satisfied or waived,
or at such other place, date or time as Buyer and Seller may agree in writing. The date of the Closing shall constitute the “Closing
Date
.”

 

2.4.2 Sellers’
Deliveries at Closing
. At the Closing, Sellers will deliver or cause to be delivered to Buyer:

 

(a) a
counterpart to the Bill of Sale in the form attached as Exhibit B-1 executed by Sellers;

 

(b) a
counterpart to the Assignment and Assumption Agreements in the form attached as Exhibit B-2 executed by Sellers;

 

(c) a
closing certificate executed by each of the Sellers, Parent and each of the Principals, in the form attached as Exhibit C-1;

 

(d) a
Non-Compete and Confidentiality Agreement executed at Closing by the parties set forth in the signature pages thereto, and in the
form attached as, Exhibit D;

 

(e) an
executed Assignment of Intangible Assets and Intellectual Property in a form attached as Exhibit E;

 

(f) a
counterpart to the Consulting Agreement in the form attached as Exhibit F executed by Haley;

 

(g) copies
of all of the waivers, permits, consents, approvals or other authorizations, and effected all of the registrations, filings and
notices set forth in Schedule 2.4.2(g), all of which are in such form as is acceptable to the Buyer in its reasonable discretion;

 

(h) a
counterpart to the Funds Flow executed by each Seller Party;

 

(i) an
executed payoff letter in a form as is acceptable to the Buyer in its reasonable discretion for all Indebtedness that is required
to be paid off on or prior to Closing and listed on Schedule 2.4.2(i);

 

 

(j) an
employment agreement executed by William Ford in the form attached hereto as Exhibit L;

 

(k) a
certificate of the Parent and Sellers certifying the authorizing resolutions of the Parent and Sellers attached hereto as Exhibit
H-1
;

 

(l) an
executed stock power and a letter of instruction from each Seller to whom Shares are issued at Closing instructing the Buyer and
the Issuer to transfer the Shares to Parent in the forms attached hereto as Exhibits M;

 

(m) letter
of payment direction from each Seller instructing the Buyer to pay the portion of the Purchase Price allocable to Seller directly
to Parent in the form attached hereto as Exhibit N (“Letter of Direction”);

 

(n) a
certificate from each Seller, pursuant to Treasury Regulations Section 1.1445-2(b), that Seller is not a foreign person within
the meaning of Code Section 1445 duly executed by Seller;

 

(o) an
entity status letter from the State of California Franchise Tax Board indicating that the Parent and each Seller (other than OHO)
is a good standing with the Franchise Tax Board dated as of a date within five (5) business days of the Closing Date; and

 

(p) such
other documents and instruments as may be reasonably requested by Buyer to effect the Contemplated Transaction.

 

2.5 Buyer’s Deliveries at Closing. At the
Closing, Buyer shall deliver or cause to be delivered to Seller Parties the following instruments:

 

2.5.1 a
counterpart to the Funds Flow executed by Buyer;

 

2.5.2 a
wire transfer of immediately available funds of (i) the Asset Purchase Price to the Parent on behalf of the Sellers in accordance
with the Letter of Direction, and (ii) Closing Indebtedness to the respective lenders, all in accordance with the Funds Flow;

 

2.5.3 a
counterpart to the Bill of Sale in the form attached as Exhibit B-1 executed by Buyer;

 

2.5.4 a
counterpart to the Assignment and Assumption Agreements in the form attached as Exhibit B-2 executed by Buyer;

 

2.5.5 a
closing certificate executed by Buyer in the form attached as Exhibit C-2;

 

2.5.6 a
counterpart to the Assignment of Intangible Assets and Intellectual Property in a form attached as Exhibit E executed by
Buyer;

 

2.5.7 a
counterpart to the Consulting Agreement in the form attached as Exhibit F executed by Issuer;

 

 

2.5.8 the
Warrants issued to Haley by Issuer in the form attached as Exhibit G representing the compensation under the Consulting
Agreement;

 

2.5.9 a
certificate of the Buyer and Issuer certifying the authorizing resolutions of Buyer and Issuer attached as Exhibit H-2;

 

2.5.10 evidence,
acceptable to Sellers in their reasonable discretion, of book-entry delivery of the Shares issued in the name of the Parent, as
per instructions from the Seller(s) issued Shares at Closing in accordance with Section 2.4.2(l) and in denominations as
detailed in Schedule 2.5.10;

 

2.5.11 Buyer
and Issuer Charter Documents as defined in Section 4.1; and

 

2.5.12 such
other documents and instruments as may be reasonably requested by Sellers to effect the Contemplated Transaction.

 

2.6 Exclusivity; Bulk Transfers Law.

 

2.6.1 From
the Execution Date through the Closing, the Seller Parties shall not, directly or indirectly, solicit or facilitate any inquiry,
proposal, offer or discussion with any party (other than the Buyer and Issuer) concerning any merger, stock sale, reorganization,
acquisition, sale of assets, or other similar business transaction involving the Sellers, the Assets or the Business, or (ii) engage
in discussions or negotiations with any party (other than the Buyer and the Issuer) concerning any such transaction. If a Seller
Party receives any inquiry, proposal or offer of the nature described herein, the Seller Parties shall promptly notify the Buyer
of the same, without any obligation to disclose the identity of the other party or the terms thereof to the extent that any such
disclosure would breach or otherwise violate any of confidentiality obligations of any Seller Party.

 

2.6.2 The
Buyer and the Seller Parties each hereby waive compliance with the provisions of the California bulk transfers statute applicable
to the transfers described in this Agreement. The Seller Parties shall indemnify and hold harmless the Buyer and the Issuer against
any and all liabilities which may be asserted by any third parties against the Buyer and/or the Issuer as a result of such noncompliance.

 

REPRESENTATIONS
AND WARRANTIES OF PARENT AND SELLERS

 

Subject to the disclosures
set forth in the Disclosure Schedule, (a) Sellers, Parent, Haley and Hansen, jointly and severally, with respect to the representations
and warranties regarding Sellers and Parent, and (b) each Principal (only on behalf of himself or herself, severally and not jointly
with any other Seller Party) with respect to the representations and warranties regarding such Principal, represents and warrants
to Buyer and Issuer, the statements contained in this Article 3 are true and correct as of the date of this Agreement, in
each case except to the extent any such representations and warranties are specifically made as of a particular date (in which
case such representations and warranties need only be true and correct as of such date).

 

 

3.1 Organization and Authority.

 

3.1.1 Each
Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the state of its
formation listed in Schedule 3.1.1 and has full limited liability company power and authority to own, operate or lease the
properties and assets now owned, operated or leased by it. Other than HHH and OHO (both of which are wholly-owned Subsidiaries
of Yeleko GUI), no Seller has any Subsidiaries.

 

3.1.2 Each
Seller is a limited liability company doing business collectively as “the Growbiz.” The Sellers are duly qualified
to conduct business and are in corporate and good standing under the laws of each jurisdiction listed in Schedule 3.1.2,
which jurisdictions constitute the only jurisdictions in which the nature of the Business or the ownership or leasing of its properties
requires such qualification except where the failure, individually or in the aggregate, to be so qualified would not reasonably
be expected to cause a Material Adverse Effect. Sellers have delivered to Buyer, true, complete and correct copies of each of their
certificates of formation and operating agreements to the extent of any such operating agreement.

 

3.1.3 All
capital and voting interests in the Sellers are owned by the Parent. There are no outstanding options, warrants, convertible securities
or other instruments giving any party the right to acquire any capital or voting interests of the Sellers or any of the capital
or voting interests of the Sellers owned by the Principals. Each direct and indirect member of Sellers is set forth in Schedule
3.1.3
and no Person, other than as disclosed in Schedule 3.1.3 has any ownership interest in Sellers.

 

3.2 Authority Relating to this Agreement; No Violation
of Other Instruments
.

 

3.2.1 The
execution and delivery of this Agreement and the performance of their obligations hereunder by Seller Parties have been duly authorized
by all necessary actions on the part of Seller Parties and, assuming execution and delivery of this Agreement by Buyer and Issuer,
this Agreement will constitute a legal, valid and binding obligation of the Seller Parties.

 

3.2.2 Except
as set forth on Schedule 3.2.2, neither the execution and delivery by the Seller Parties of this Agreement or any Ancillary
Seller Party Document, nor the consummation by the Seller Parties of the transactions contemplated hereby or thereby, will (a)
conflict with or violate any provision of any of the Sellers’ or Parent’s certificate of formation or operating agreement,
(b) require on the part of Seller Parties any notice to or filing with, or any Permit, authorization, consent or approval of, any
Governmental Authority, (c) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both)
a default under, result in the acceleration of obligations under, create in any Party the right to terminate, modify or cancel,
or require any notice, consent or waiver under, any Contract, (d) result in the imposition of any Lien upon any of the Assets or
(e) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Seller Parties or the Assets.

 

 

3.3 Debt.

 

 

3.3.1 All
of the indebtedness of Sellers (“Indebtedness”) are set forth in Schedule 3.3.1; provided, however,
that all accounts payable of the Sellers invoiced as of the Closing Date shall be set forth on the Funds Flow and paid on the Closing
Date in accordance therewith.

 

3.3.2 Except
as set forth in Schedule 3.3.2 (the “Assumed Indebtedness”), any and all Indebtedness, including
indebtedness in respect of which liens encumber the Assets, shall be paid off in full or otherwise fully satisfied, before or at
the Closing. Sellers have participated in the Paycheck Protection Program or other Covid-19 related loan or grant programs (“PPP
Loan
”). Notwithstanding anything to the contrary contained in this Agreement, (a) to the extent not forgiven on or
prior to Closing, Sellers shall at its option in its sole discretion, either (i) pay off in full the Indebtedness arising under
the PPP Loan on or prior to Closing, or (ii) obtain the consent of Signature Bank, as the lender of the PPP Loan (“PPP
Lender
”) to sale of the Assets contemplated by this Agreement together with the establishment of an escrow account
controlled by the PPP Lender with funds equal to the outstanding balance of the PPP loan, and (b) in no event shall Buyer have
any liability in respect of the PPP Loan.

 

3.4 Ownership and Delivery of Assets.

 

3.4.1 The
Sellers, taken as a group, are the true and lawful owners, and have good title to, or a valid leasehold interest in or license
to, all of the Assets, free and clear of all Liens other than Permitted Liens. The Assets (together with the Excluded Assets) comprise
all of the assets and material rights of the Seller Parties currently used in the Business. Assuming receipt of any third party
consents set forth in subsection (c) of Schedule 3.2.2, Sellers have, as of the Closing, all necessary power and authority
to transfer the Assets to Buyer free and clear of all Liens (other than Permitted Liens or Liens created by or as a result of Buyer
or Issuer).

 

3.4.2 The
Assets are sufficient for the conduct of the Sellers’ Business as presently conducted and together with the Excluded Assets
comprise all of the assets and material rights of Sellers currently used in the Business. Each tangible Asset is free from material
defects, has been maintained, in all material respects, in ordinary course of Sellers’ business, and is in good operating
condition and repair (subject to normal wear and tear and routine maintenance) and is suitable for the purposes for which it presently
is used. Other than ownership of stock in The ScottsMiracle-Gro Company (SMG), Seller Parties’ direct or indirect ownership
of the equity interests in Sellers and Parent, Parent’s ownership of the equity interests in Sellers, Sellers’ operation
and ownership of the Assets, Excluded Assets and the Business from and after the Execution Date up to the Closing, and Sellers’
continued ownership of the Excluded Assets from and after the Closing, the Seller Parties and their respective Affiliates do not
own or operate any Competitive Business. (as defined below). “Competitive Business” means a business
that consists primarily of the Retail Sale of hydroponic gardening products, including without limitation indoor plant grow lights
and propagation and irrigation supplies, to consumers in the continental United States; provided that, in no event will any business
of growing, processing or selling recreational and medical marijuana, and the paraphernalia necessary to consume such products
be deemed a Competitive Business. “Retail Sale” means a sale to the final consumer or final user of the
hydroponic gardening products. 

 

 

3.4.3 Attached
to Schedule 3.4.3 is a depreciation schedule of all Fixed Assets as of the Most Recent Balance Sheet Date.

 

3.5 Compliance with Law. Each Seller holds and,
at all times in the past three (3) years has held, all material licenses, permits and authorizations necessary for the lawful
conduct of the Business required to be held pursuant to all applicable Laws of Governmental Authorities having, asserting or claiming
jurisdiction over the Business or over any part of the Business’ operations, and in the past three (3) years, Sellers have
not received any written notice (or to Sellers’ Knowledge, oral notice) of any violation thereof. The Sellers are not in
violation of any decree, judgment, order, law or regulation of any court or other Governmental Authority, which violation would,
or would reasonably be likely to, result in a Material Adverse Effect on the Business. To Sellers’ Knowledge, each Seller
is currently conducting, and has at all times in the past three (3) years conducted, its business in compliance with each applicable
Law (including rules and regulations thereunder) of any federal, state, local or foreign government, or any Governmental Authority,
except for any violations or defaults that, individually or in the aggregate, have not had and would not reasonably be expected
to have a Material Adverse Effect on such Seller. In the past three (3) years, the Sellers have not received any written notice
or other written communication (or to Sellers’ Knowledge, oral notice) from any Governmental Authority alleging noncompliance
with any applicable law, rule or regulation.

 

3.6 Investments in Others.
Except as set forth in Schedule 3.6, Sellers do not conduct any part of the Business through any other Person that is an
Affiliate or related party of any Seller Party.

 

3.7 Intellectual Property.

 

3.7.1 Schedule
3.7.1
lists each patent, patent application, copyright registration or application therefor, mask work registration or application
therefor, and trademark, service mark and domain name registration or application therefor of each Seller.

 

3.7.2 The
Sellers own or, to Sellers’ Knowledge, have the right to use all Intellectual Property necessary (i) to use, manufacture,
have manufactured, market and distribute the Customer Deliverables and (ii) to operate the Internal Systems. The Sellers have taken
commercially reasonable measures to maintain in confidence all trade secrets and confidential information, that it owns or uses.
No other person or entity has any rights to any of the Intellectual Property owned by the Sellers (except pursuant to agreements
or licenses specified in Schedule 3.7.4), and, to Sellers’ Knowledge, no other person or entity is infringing, violating
or misappropriating any of the Intellectual Property owned by the Sellers.

 

3.7.3 To
the Sellers’ Knowledge, none of the Intellectual Property of Sellers, or the marketing, distribution, provision or use thereof,
infringes or violates, or constitutes a misappropriation of, any Intellectual Property rights of any person or entity. Schedule
3.7.3
lists any written complaint, claim or notice, or written threat thereof, received by the Sellers in the past three (3)
years alleging any infringement, violation or misappropriation of the Internal Systems, or the use thereof, or of any Intellectual
Property rights of any person or entity; and the Sellers have provided to the Buyer complete and accurate copies of all written
documentation in the possession of the Sellers relating to any such complaint, claim, notice or threat. The Sellers have provided
to the Buyer complete and accurate copies of all written documentation in the Sellers’ possession relating to claims or disputes
in the past three (3) years known to the Seller concerning any of the Sellers’ Intellectual Property.

 

 

3.7.4 Schedule
3.7.4
identifies each license or other agreement pursuant to which the Sellers have licensed, distributed or otherwise granted
any rights to any third party with respect to, any of the Sellers’ Intellectual Property. Except as described in Schedule
3.7.4
, the Sellers have not agreed to indemnify any person or entity against any infringement, violation or misappropriation
of any Intellectual Property rights with respect to any Customer Deliverables.

 

3.7.5 Other
than off the shelf software programs licensed by the Sellers pursuant to “shrink wrap” or “click-through”
licenses, Schedule 3.7.5 identifies each item of the Sellers’ Intellectual Property that is owned by a party other
than the Sellers, and the license or agreement pursuant to which any of the Sellers use it.

 

3.7.6 All
of the copyrightable materials incorporated in or bundled with the Customer Deliverables have been created by employees of the
Sellers within the scope of their employment by the Sellers or by independent contractors of the Sellers who have executed agreements
expressly assigning all right, title and interest in such copyrightable materials to the Seller. No portion of such copyrightable
materials was jointly developed with any third party who has any right, title and interest in such copyrightable materials.

 

3.8 Inventory. Other than Obsolete Inventory or
Slow-Moving Inventory, all Inventory of the Sellers, whether or not reflected on the Most Recent Balance Sheet, consists of a
quality and quantity usable and saleable in the ordinary course of Sellers’ business, except for obsolete items and items
of below-standard quality which have been written-off or written-down to net realizable value on the financial statements of Sellers
provided to Buyer.

 

3.9 Contracts. The Sellers have delivered to the
Buyer a complete and accurate copy of each Contract. With respect to each Contract: (i) the agreement is legal, valid, binding
and enforceable against the Seller party thereto and to Sellers’ Knowledge the other party or parties thereto and in full
force and effect; (ii) each Contract is assignable by such Seller party thereto to the Buyer without the consent or approval of
the counterparty(ies) thereto (except as set forth in Section 2.4 of the Disclosure Schedule); and (iii) neither the Seller
nor, to Sellers’ Knowledge, any other party to each such Contract, is in, in any material respect, breach or violation of,
or default under, any such Contract, and no event has occurred, is pending or, to the Sellers’ Knowledge is threatened,
which, after the giving of notice, with lapse of time, or otherwise, would constitute a breach or default, in any material respect,
by the Seller or, to Sellers’ Knowledge, any other party under such Contract.

 

3.10 Owned Real Property. Except as set forth on
Schedule 3.10, the Sellers do not own nor have they ever owned, any real property or any interest in real property.

 

 

3.11 Real Property Leases. Schedule
3.11
lists all Leases and lists the term of each such Lease, any extension options, and the rent payable thereunder. The
Sellers have delivered to the Buyer complete and accurate copies of all Leases. The premises leased by Sellers under each
such Lease is suitable for use in the ordinary course of business of the Business as currently conducted and, to
Sellers’ Knowledge, is not subject to any material damage (other than ordinary wear and tear).

 

With respect to each
Lease:

 

(a) there
are no oral agreements, forbearance programs or to Sellers’ Knowledge, disputes in effect as to such Lease, in each case
between Sellers and the counterparty thereto; and

 

(b) to
Sellers’ Knowledge, there is no Lien, easement, covenant or other restriction applicable to the real property subject to
such Lease which would reasonably be expected to materially impair the current uses or the occupancy by the Sellers of the property
subject thereto.

 

3.12 Financial Statements.
Attached to Schedule 3.12 are true and correct copies of (i) audited consolidated financial statements of the Business
for the 2018 and 2019 fiscal years of the Sellers (collectively, the “Audited Financial Statements”),
(ii) the Most Recent Balance Sheet; and (iii) unaudited consolidated financial statements of the Business for the period January
1, 2020 through September 30, 2020 (the “Unaudited Financial Statements”).

 

3.13 Absence of Undisclosed Liabilities; Absence of
Certain Changes
. The Sellers have no liability (whether known or unknown, whether absolute or contingent, whether liquidated
or unliquidated and whether due or to become due), except for (a) liabilities shown or reserved on the Most Recent Balance Sheet,
(b) liabilities which have been incurred in the ordinary course of business since the Most Recent Balance Sheet Date (none of
which results from, arises out of, or otherwise relates to any breach of Contract, breach of warranty, tort, infringement, or
violation of Law), or (c) contractual and other liabilities incurred in the ordinary course of business which are not required
by GAAP to be reflected on a balance sheet. Since the Most Recent Balance Sheet Date, there has occurred no event or development
which, individually or in the aggregate has had, or would reasonably be expected to have in the future, a Material Adverse Effect.

 

 

3.14 Tax Returns and Payments. Parent and each
of the Sellers has prepared and timely filed (taking into account extensions) all Tax Returns required to be filed by it with
respect to the Business and Assets, each such Tax Return has been prepared in compliance with all applicable Laws and regulations
in all material respects, and all such Tax Returns are true, complete and accurate in all material respects. All Taxes with respect
to the Assets or Business due and payable by the Parent or each of the Sellers (whether or not shown or required to be shown on
any Tax Return) have been timely paid (taking into account extensions). The Parent and each of the Sellers has withheld and timely
paid to the appropriate Governmental Authority all Taxes required to have been withheld and paid by it in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder, or other third party, and all Forms W-2 and 1099
required with respect thereto have been properly completed and timely filed. There is no Proceeding pending or threatened in writing
with respect to any Taxes for which the Parent or any Seller has or would reasonably be expected to have any liability. Neither
the Parent nor any Seller has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency (except, in each case, in connection with any automatic or automatically granted extension to
file any Tax Return). There are no Liens for Taxes on any of the Assets, except for Permitted Liens. Neither Parent nor any Seller
(i) is a party to any Tax sharing, Tax allocation, Tax indemnity or similar Contract other than any such Contract entered into
in the ordinary course of business the primary purpose of which is not related to Taxes, (ii) has ever been a member of an affiliated,
consolidated, combined, or unitary group and (iii) has liability for the Taxes of any other Person. In accordance with and to
the extent required by applicable Law, the Parent and each Seller has properly (x) collected and remitted all sales and similar
Taxes with respect to sales made to its customers and (y) for all sales that are exempt from sales and similar Taxes and that
were made without charging or remitting sales or similar Taxes, obtained, filed or delivered, as the case may be, sales and other
transfer tax exemption certificates for all transactions in which the Seller or any customer of the Seller has relied on such
certificates for exemption from sales or similar transfer taxes. Neither the Parent nor any Seller is currently the beneficiary
of any extension of time within which to file any Tax Return (except, in each case, in connection with any automatic or automatically
granted extension to file any Tax Return). There have never been any claims in writing by any Governmental Authority in a jurisdiction
where the Parent or any Seller does not file Tax Returns that any of them is or may be subject to taxation by that jurisdiction.
Parent and each Seller is not a “foreign person” within the meaning of Section 1445 of the Code. Neither the Parent
nor any Seller is subject to any private ruling of the Internal Revenue Service or comparable ruling of another Governmental Authority.
The Assets do not include any stock or other equity interests in any Person. No power of attorney that is currently in effect
with respect to the Assets has been granted by the Parent or any Seller that will remain in effect after the Closing (other than
powers of attorney granted to a payroll provider). None of the Assets is tax-exempt use property within the meaning of Section
168(h) of the Code. None of the Assets is (i) required to be treated as owned by another person pursuant to the so-called “safe
harbor lease” provisions of former Section 168(g)(1)(A) of the Internal Revenue Code of 1954, as amended, or (ii) subject
to Section 168(g)(1)(A) of the Code, (iii) subject to a disqualified leaseback or long-term agreement as defined in Section 467
of the Code, or (iv) subject to any long term contract within the meaning of Code Section 460. Neither the Parent nor any Seller
is currently, and has not been, a party to any “listed transaction” or “reportable transaction” as defined
in Section 6707A(c)(2) of the Code and Treasury Regulations Section 1.6011-4(b)(2) (as modified by published IRS guidance).

 

3.15 Absence of Certain Changes or Events. Since
December 31, 2019, there has been no event or change giving rise to a Material Adverse Effect.

 

3.16 Litigation. No Seller Party is a party to
any pending or, to the Knowledge of Sellers, threatened action, suit, proceeding or investigation, at law or in equity or otherwise
in, for or by any court or other governmental body which would reasonably be expected to have a Material Adverse Effect on: (i)
the condition, financial or otherwise, Assets, liabilities, business, prospects or results of operations of the Business; or (ii)
the Contemplated Transaction. No Seller Party is subject to any decree, judgment, order, law or regulation of any court or other
Governmental Authority which would reasonably be expected to have a Material Adverse Effect, or which would reasonably be expected
to prevent the Contemplated Transaction or the continuation by Buyer of the Business as currently conducted by Sellers.

 

 

3.17 Warranties. No product or service sold or
delivered by a Seller is subject to any guaranty, warranty, right of return, right of credit or other indemnity other than pursuant
to (i) the applicable standard terms and conditions of sale of such Seller, or (ii) manufacturers’ warranties for which
such Seller has no liability other than processing any such guaranty, warranty, right of return, right of credit or other indemnity.

 

3.18 Negotiations with Other Parties.
Neither Seller Parties, nor any other Person on their behalf is presently conducting negotiations with any other party regarding
any acquisition, merger or transaction similar to the Contemplated Transaction.

 

3.19 Powers of Attorney. There
are no outstanding powers of attorney with respect to any Asset executed on behalf of any of the Sellers.

 

3.20 Insurance. Schedule
3.20
lists each insurance policy (including fire, theft, casualty, comprehensive general liability, workers compensation,
business interruption, environmental, product liability and automobile insurance policies and bond and surety arrangements) maintained
by any Seller (“Insurance Policies”), all of which are in full force and effect. The Insurance Policies
are of the type and in amounts consistent with past practices of Sellers. There is no material claim pending under any Insurance
Policy as to which coverage has been denied or disputed in writing (or to Sellers’ Knowledge, disputed orally) by the underwriter
of any such Insurance Policy. All premiums due and payable under all Insurance Policies have been paid, no Seller is liable for
retroactive premiums or similar payments, and each Seller is otherwise in compliance in all material respects with the terms of
such policies. To Seller’s Knowledge, there is no threatened termination of any of the Insurance Policies.

 

3.21 Limitations
on Transferability
. The Seller Parties acknowledge that the Shares, and Haley acknowledges that the Warrants, are being
issued pursuant to exemption from registration under applicable federal and state securities laws. Sellers and Parent covenant
that in no event will Parent dispose of any of the Shares, Warrants or securities issuable upon exercise of the Warrants (other
than pursuant to Rule 144 or any similar or analogous rule), in each case except (i) pursuant to an effective registration statement
filed under the Securities Act or (ii) pursuant to a valid exemption from such registration. Each certificate representing the
Shares or in the case of book entry, the records of the Buyer’s stock transfer agent, shall contain the following legend:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND
NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH
REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS.

 

 

Each certificate representing the Warrants shall display the
following legend: 

 

NEITHER THE SECURITIES REPRESENTED BY
THIS CERTIFICATE NOR THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY BE OFFERED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT
THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS
AND THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS.

 

Upon request of Parent
or any lawful subsequent holder that any such legend is no longer required under the Securities Act or applicable state laws and
the delivery by Parent or any subsequent holder of a standard Rule 144 representation letter and opinion of counsel opining that
such legend may be removed from the Shares, the Issuer shall promptly cause the applicable legend to be removed from any certificate
representing or other evidence of the Shares.

 

3.22 Accredited Investor. Each Seller and Parent
hereby represents and warrants that it is an Accredited Investor.

 

3.23 Brokers and Finders. Each Seller Party represents
to Buyer and Issuers that it has not retained any Brokers in connection with the Contemplated Transaction.

 

3.24 No Registration of Shares or Warrants. Seller
Parties are aware that the Shares, and Haley is aware that the Warrants and shares of Common Stock of the Issuer to be issued
to Haley upon exercise of Warrants (the “Warrant Shares”), have not been registered under the Securities
Act of 1933, as amended (the “Securities Act”), and that the Shares, Warrants, and the Warrant Shares
are deemed to constitute “restricted securities” under Rule 144 promulgated under the Securities Act (“Rule
144
”). Seller Parties also understand that the Shares, Warrants, and the Warrant Shares are being offered and sold
pursuant to an exemption from registration contained in the Securities Act based in part upon Sellers’ and Parent’s
representations contained in this Agreement.

 

3.25 Purchase for Own Account.
As of the Closing, Sellers are and Parent will be acquiring the Shares, and Haley is acquiring the Warrants, for each of its own
account and none of such parties has any present intention of distributing or selling the Shares, Warrants, or the Warrant Shares
except as permitted under the Securities Act and applicable state securities laws.

 

3.26 Knowledge and Experience. Each Seller Party
has sufficient knowledge and experience in business and financial matters to evaluate the Buyer and the Issuer, its existing and
proposed activities and the risks and merits of this investment. Each Seller and Parent has the ability to accept the risk inherent
in this type of investment.

 

 

3.27 Adequate Review. Each Seller Party hereby
represents and warrants to the Issuer and the Buyer that: (i) they have been advised by the Issuer to review the periodic reports,
and filings made by the Issuer under the Securities Exchange Act of 1934 together with other public filings the Issuer has made
on the SEC EDGAR system; (ii) that all documents, records, and books pertaining to the Parent’s acquisition of the Shares
and the Warrants as may have been requested by the Sellers and/or the Parent have been made available or delivered to, and have
been examined by, the Sellers and the Parent; (iii) they have received all of the information it has requested from Buyer or Issuer
that they consider necessary or appropriate for deciding whether to acquire the Shares or Warrants; (iv) they have had an opportunity
to ask questions and receive answers from Buyer and Issuer regarding the Shares and Warrants; (v) they have not relied upon the
Issuer, the Buyer or any of their respective representatives for any such investigation or assessment of risk; and (v) they understand
the significant risks of this investment, including but not limited to the fact that the value of the Shares, Warrants and Warrant
Shares can increase or decrease after the date of issuance.

 

3.28 Independent Investigation.
Each Seller Party represents that, except as set forth in this Agreement, no representations or warranties have been made to any
Seller or the Parent by the Buyer, the Issuer or any of their respective officers, directors or agents, employees or affiliates
of any of them, and that in entering into this transaction, the Seller Parties are not relying upon information other than that
contained in this Agreement and the results of its own independent investigation.

 

3.29 Capacity to Protect Own Interests. Parent
has the capacity to protect its own interests in connection with the acquisition of the Shares and Haley has the capacity to protect
his own interests in connection with the acquisition of the Warrants and/or the Warrant Shares by virtue of its business or financial
expertise.

 

3.30 Residence. Each Seller and Parent represents
that the office or offices of Buyer in which its investment decision was made is located at the address or addresses of Buyer
set forth on the signature page hereto.

 

3.31 Employees.

 

3.31.1 Schedule
3.31.1
contains a list of (i) all employees of each of the Sellers (“collectively, “Employees”),
along with the date of hire, position, the annual rate of compensation of each such Employee (including wages, commissions and
bonus opportunity), accrued paid time off, and the legal employment status of each Employee who is not a U.S. citizen and (ii)
all independent contractors of each of the Sellers, along with a brief description of the services provided and the rate of compensation
of each such independent contractor. As of the Execution Date, no Employee, including but not limited to William Ford, has delivered
written notice (or to Sellers’ Knowledge, oral notice) of his/her intent to terminate employment with such Seller (other
than for the purpose of accepting employment with the Buyer following the Closing) or not to accept employment with the Buyer.
No Seller has promised any Hired Employee, orally or in writing, any increase in such Hired Employee’s current compensation
(including bonuses) or benefits.

 

 

3.31.2 The
Sellers are not a party to nor bound by any collective bargaining agreement, nor have they experienced any strikes, grievances,
claims of unfair labor practices or other collective bargaining disputes. To Sellers’ Knowledge, no organizational effort
has been made or threatened within the past three years by or on behalf of any labor union with respect to employees of any Seller.

 

3.31.3 Each
Seller operates in compliance in all material respects with all applicable laws relating to employees, there are no pending complaints
of which Sellers have received written notice (or to Sellers’ Knowledge oral notice) nor are there, to Sellers’ Knowledge,
any threatened complaints before any employment standards tribunal or human rights tribunal and there are no pending or to Sellers’
Knowledge, threatened workers’ compensation, employee discrimination or other such claims by any Employee. All individuals
characterized and treated by the Sellers as independent contractors are properly treated as independent contractors under all applicable
Laws.

 

3.32 Employee Benefits.

 

3.32.1 Schedule
3.32.1
contains a complete and accurate list of each Seller Plan.

 

3.32.2 Each
Seller Plan has been administered in all material respects in accordance with its terms and such Seller has in all material respects
met its obligations with respect to each Seller Plan and has made all required contributions thereto in accordance with applicable
laws. The Seller and each Seller Plan are in compliance in all material respects with the currently applicable provisions of ERISA
and the Code and all applicable interpretations and regulations thereunder as well as all other applicable laws. All filings and
reports as to each Seller Plan required to have been submitted to the Internal Revenue Service or to the United States Department
of Labor have been duly and timely submitted. No Seller Plan contains any securities issued by such Seller. The assets of each
Seller Plan which is funded are reported at their fair market value on the books and records of such Seller Plan.

 

3.32.3 Except
as set forth in Schedule 3.32.3, at no time has any Seller, or the ERISA Affiliate of any Seller, been obligated to contribute
to any (i) “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA); (ii) defined benefit plan subject to the
provisions of Section 412 of the Code; (iii) multiple employer plan (as defined in Section 413(c) of the Code); or (iv) “multiple
employer welfare arrangement” (as defined in Section 3(40) of ERISA).

 

3.32.4 There
are no unfunded obligations under any Seller Plan providing benefits after termination of employment to any employee of any Seller
(or to any beneficiary of any such employee), including but not limited to retiree health coverage and deferred compensation, but
excluding continuation of health coverage required to be continued under Section 4980B of the Code or other applicable law and
insurance conversion privileges under state law.

 

3.32.5 Any
amount that would be received (whether in cash or property or the vesting of property) as a result of the execution and delivery
of this Agreement by the Seller or the consummation of the transactions contemplated by this Agreement (including as a result of
termination of employment on or following the Closing Date) by any current or former director, officer, employee or consultant
of the Seller or any of its affiliates who is a “disqualified individual” (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any Seller Plan or otherwise would not be characterized as an “excess parachute payment”
(as defined in Section 280G(b)(1) of the Code).

 

 

3.32.6 The
Seller does not maintain any Seller Plan that is subject to the requirements of Section 409A of the Code.

 

3.32.7 Neither
the execution and delivery of this Agreement by the Seller nor the consummation of the transactions contemplated by this Agreement
will (A) entitle any current or former director, officer, employee or consultant of the Seller or any of its subsidiaries to severance
pay, (B) accelerate the time of payment or vesting or trigger any payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, or increase the amount payable or trigger any other material obligation pursuant to, any Seller
Plan or (C) result in any breach or violation of, or a default under, any Seller Plan.

 

3.33 Environmental Matters.

 

3.33.1 The
Sellers have complied with all applicable Environmental Laws. There is no pending or, to Sellers’ Knowledge, threatened civil
or criminal litigation, written notice of violation, formal administrative proceeding, or investigation, inquiry or information
request by any Governmental Authority, relating to any Environmental Law involving any Seller.

 

3.33.2 The
Sellers have no liabilities or obligations arising from the release of any Materials of Environmental Concern into the environment
or from the storage, disposal or handling of any Materials of Environmental Concern.

 

3.33.3 The
Sellers are not a party to or bound by any court order, administrative order, consent order or other agreement with any Governmental
Authority entered into in connection with any legal obligation or liability arising under any Environmental Law.

 

3.33.4 The
Sellers are not aware of any material environmental liability of any solid or hazardous waste transporter or treatment, storage
or disposal facility that has been used by any of the Sellers.

 

3.34 Customers and Suppliers. Schedule 3.34
sets forth a list of (a) Sellers’, taken as a whole, top ten (10) customers (including names), inclusive of the “commercial
sales team,” based on the revenues derived from customers during the Sellers’ 2019 fiscal year and the eight (8)-month
period ended on the Most Recent Balance Sheet Date and the amount of revenues accounted for by such customer during each such
period (each a “Material Customer” and collectively, the “Material Customers”),
and (b) each supplier that is any Seller’s sole and exclusive (pursuant to the terms of any Contract) supplier of any significant
product or service supplied to any Seller, and each supplier for which the Sellers (individually or in the aggregate) pay such
supplier amounts in excess of $30,000 per month (each a “Material Supplier” and collectively, the “Material
Suppliers
”). No such Material Customer or Material Supplier has provided Sellers with written notice (or to Sellers’
Knowledge, oral notice) within the past year that it will stop, or decrease the rate of, buying products or supplying products
to any Seller.

 

 

3.35 Certain Business Relationships
With Affiliates
. Except as set forth in Schedule 3.35, no Affiliate of any Seller Party (a) other than Sellers, owns
any Asset or any right, tangible or intangible, related to any such Asset, (b) has any claim or cause of action against any Seller
or related to any Asset, (c) is owed any money by any Seller; or (d) is a party to a Contract, whether written or oral, with any
of the Sellers.

 

3.36 Books and Records. The
books and records of the Sellers accurately reflect, in all material respects, the assets, liabilities, business, financial condition
and results of operations of the Sellers.

 

REPRESENTATIONS AND WARRANTIES OF BUYER.

 

Buyer and Issuer hereby represent and warrant to Seller which shall be true and correct as of the date of this Agreement and
will be true and correct as of the Closing, that:

 

4.1 Corporate Organization and Authority. Buyer
and Issuer are Delaware and Colorado Corporations, respectively, duly organized, validly existing, authorized to exercise all
its corporate powers, rights and privileges in Colorado, Delaware and California, and in good standing in the State of Colorado,
Delaware and California, and the Buyer and the Issuer have delivered to Seller, true, complete and correct copies of Articles
of Incorporation and Bylaws (collectively the “Buyer and Issuer Charter Documents”); and

 

4.2 Authorization. All corporate
action on the part of Buyer and Issuer, its officers, directors, and stockholders necessary for the authorization, execution,
delivery, and performance of all obligations under this Agreement and for the issuance of the Shares, Warrants and Warrant Shares
have been taken, and this Agreement constitutes a legally binding and valid obligation of Buyer enforceable in accordance with
its terms.

 

4.3 Corporate Power. Each
of Buyer and Issuer has all requisite legal and corporate power and authority to execute and deliver this Agreement and other
documents required to be delivered to Sellers pursuant to Section 2.5 (collectively, the “Ancillary Buyer and
Issuer Documents
”) to issue the Shares, Warrants, and Warrant Shares, and to carry out and perform its obligations
under the terms of the Agreement.

 

4.4 Litigation. There is no action, proceeding,
or investigation pending or to the knowledge of Buyer and Issuer, threatened in writing that questions the validity of the Agreement
and Exhibits or the right of Buyer or Issuer to enter into the Agreement or any of the Ancillary Buyer and Issuer Documents or
to consummate the Contemplated Transaction and the transactions contemplated by the Ancillary Buyer and Issuer Documents.

 

4.5 Brokers and Finders. Each of the Buyer and
Issuer represents that it has not retained a Broker in connection with the transaction contemplated by this Agreement.

 

 

4.6 No Conflicts. The execution, delivery and performance
of this Agreement and the Ancillary Buyer and Issuer Documents, the consummation of the Contemplated Transaction and the transactions
contemplated by Ancillary Buyer and Issuer Documents and the fulfillment of the terms hereof and thereof will not: (a) conflict
with, or result in a breach or violation of the Buyer and Issuer Charter Documents; (b) conflict with, or result in a default
(or would constitute a default but for a requirement of notice or lapse of time or both) under any document, agreement or other
instrument to which either Buyer or Issuer is a party or result in the creation or imposition of any lien, charge or encumbrance
on any of Buyer’s or Issuer’s properties pursuant to (i) any Law to which Buyer or Issuer or any of its respective
property or assets is subject, or (ii) any judgment, order or decree to which Buyer or Issuer is bound or any of its respective
property or assets is subject; or (c) violate any law, order, judgment, rule, regulation, decree or ordinance to which Buyer or
Issuer is subject, or by which Buyer or Issuer is bound.

 

4.7 Common Stock; Shares.
The authorized capital of Issuer consists solely of 100,000,000 shares of common stock of Issuer, $0.001 par value per share,
48,702,659 shares of which are issued and outstanding as of the date hereof. The Shares issued or to be issued in respect of the
Asset Purchase Price, the Warrant and Warrant Shares to be issued upon exercise of any Warrant have each been duly authorized
and, when issued in accordance with this Agreement or when issued and paid for in accordance with the Warrant, as the case may
be, will be duly and validly issued, fully paid and nonassessable, free and clear of all liens and encumbrances other than (i)
restrictions on transfer under applicable state and federal securities Laws and (ii) those as are created by Parent.

 

4.8 Reports. The Issuer has timely filed all reports,
registrations, documents, filings, statements and submissions together with any required amendments thereto, that it was required
to file with the Securities and Exchange Commission (the “SEC”) and any other Governmental Authority (the foregoing,
collectively, the “Company Reports”) and has paid all fees and assessments due and payable in connection therewith.
As of their respective filing dates, the Company Reports filed with the SEC complied in all material respects with all applicable
Law and applicable rules and regulations related to such filings, including that such Company Reports did not contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading. The Company Reports, including the documents incorporated by reference
in each of them, each contained all of the information required to be included in it.

 

4.9 Exemption From Registration. Assuming the accuracy
of Sellers’ and Haley’s representations contained in this Agreement and/or the Warrant, the offer and sale of the
Shares, the Warrants and the Warrant Shares, all as provided in this Agreement or the Warrants, are exempt from the registration
requirements of the Securities Act and are otherwise in compliance with the Securities Act.

 

4.10 Independent Investigation and Reliance. Buyer
has conducted its own independent investigation, review and analysis of Sellers, the Assets, and the Business. Buyer has been
provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of Sellers
and the Business for such purpose. In making its decision to enter into this Agreement and the Ancillary Buyer and Issuer Documents
and to consummate the transactions contemplated hereby and thereby, Buyer has relied solely upon its own investigation and the
express representations or warranties of Sellers set forth in Article 3 (as modified by the Schedules). Neither any Seller,
nor any other Person has made any representation or warranty, express or implied, regarding Sellers, the Assets, the Business
or this Agreement, except as expressly set forth in Article 3 (as modified by the Schedules) and neither Buyer, nor Issuer,
is relying on any representation or warranty, express or implied, regarding Sellers, the Assets, the Business or this Agreement,
except as expressly set forth in Article 3 (as modified by the Schedules).

 

 

CONDITIONS TO THE OBLIGATIONS OF BUYER.

 

Except as otherwise specifically set forth
herein or as contemplated by this Agreement, all obligations of Buyer under this Agreement are subject to the fulfillment, prior
to or at the Closing, of each of the following conditions:

 

5.1 Representations and Warranties
True at the Closing
. The representations and warranties of the Seller Parties contained in this Agreement shall be deemed
to have been made again at and as of the Closing Date and shall then be true (except to the extent any such representations and
warranties are specifically made as of a particular date, in which case such representations and warranties need only be true
and correct as of such date) in all material respects.

 

5.2 Covenants Performed by Sellers. Each of the
obligations of Sellers to be performed on or before the Closing pursuant to the terms of this Agreement shall have been duly performed
in all material respects.

 

5.3 Authority Relating to this Agreement. All limited
liability company actions and proceedings required to be taken by or on behalf of Seller and Parent and all actions required to
be taken by or on behalf of the Principals to execute, deliver and carry out this Agreement, shall have been duly and properly
taken.

 

5.4 Material Changes in Business
of Company
. Between the Execution Date and the Closing Date there shall have been no Material Adverse Effect.

 

5.5 No Action to Prevent Completion.
There shall not have been instituted and be continuing any action or proceeding by or before any court or other governmental body
to restrain, prohibit or invalidate the Contemplated Transaction.

 

5.6 Leases. Sellers shall
provide written confirmation that each of Sellers’ landlords has approved the assignment for the Leases located at (1) 4391
Granite Drive, Rocklin, CA, (2) 7611 Redwood Drive, Cotati, CA, (3) 933 Buckley Rd, San Luis Obispo, CA, (4) 2450 17th
Ave, Santa Cruz, CA, and (5) 11564 SW Pacific Hwy, Tigard OR.

 

5.7 Employee Bonuses. On or
before the Closing, the Sellers shall have paid to each Hired Employee the pro rata portion of his or her respective anticipated
bonus for the 2020 calendar year.

 

5.8 Replacement Guaranties.
The counterparty to each Contract on Schedule 6.5 shall have accepted the Replacement Guaranty (as defined below) without
requiring any Affiliate of Buyer that is a natural person make a personal guaranty. For the avoidance of doubt, nothing in this
Agreement, including without limitation in Section 2.1.4 or Section 6.5, but without limiting or derogating from
Seller’s rights in the event the conditions set forth in Section 6.5 are not satisfied, shall be construed to require
any Affiliate of Buyer that is a natural person make a personal guaranty.

 

 

5.9 Delivery of Closing Documents.
Seller Parties shall have delivered to Buyer all closing documents (in form and substance reasonably satisfactory to Buyer and
its legal counsel) required by this Agreement to be delivered at or prior to Closing, including those listed in Section 2.4.2
herein and all Ancillary Agreements.

 

CONDITIONS TO THE OBLIGATIONS OF SELLERS.

 

Except as otherwise specifically set forth
herein, all obligations of Sellers under this Agreement are subject to the fulfillment and satisfaction, prior to or at the Closing,
of each of the following conditions:

 

6.1 Representations and Warranties True at the Closing.
The representations and warranties of Buyer and Issuer contained in this Agreement shall be deemed to have been made again at
and as of the Closing Date and shall then be true (except to the extent any such representations and warranties are specifically
made as of a particular date, in which case such representations and warranties need only be true and correct as of such date)
in all material respects.

 

6.2 Covenants Performed by Buyer
and Issuer
. Each of the obligations of Buyer and Issuer to be performed on or before the Closing pursuant to the terms of
this Agreement shall have been duly performed in all material respects, provided however, the Buyer’s and Parent’s
obligation to make the payments contemplated by the Funds Flow and deliver the Shares and Warrants at Closing shall be absolute
and not qualified by materiality.

 

6.3 Authority Relating to this
Agreement
. All corporate and other proceedings required to be taken by or on behalf of Buyer and Issuer to authorize Buyer
and Issuer to execute, deliver and carry out this Agreement, shall have been duly and properly taken.

 

6.4 No Action to Prevent Completion.
There shall not have been instituted and be continuing or threatened any action or proceeding by or before any court or other
governmental body to restrain, prohibit or invalidate, or to obtain damages in respect of, the Contemplated Transaction.

 

6.5 Replacement Guaranties.
Schedule 6.5 lists all Contracts for which a Seller Party or any of its Affiliates has guaranteed the obligations of any
Seller under such Contracts (each, a “Seller/Affiliate Guaranty”), and for each such Contract with a
Seller/Affiliate Guaranty, Buyer or Issuer shall have, subject to Section 5.9 (i) provided the counterparty to each such
Contract with a guaranty, upon such terms and conditions acceptable to Buyer and such counterparty, that fully and completely
replaces (and terminates) each Seller/Affiliate Guaranty effective as of the Closing (each a “Replacement Guaranty”)
or (ii) obtain a termination of each Seller/Affiliate Guaranty effective as of the Closing in such form and substance as is reasonably
satisfactory to Buyer and the applicable guarantor. For the avoidance of doubt and notwithstanding the foregoing, the Seller Parties
shall use reasonably commercial efforts to help facilitate an introduction to, and preliminary communications between Buyer and,
the counterparties to the Contracts set forth in Schedule 6.5.

 

 

6.6 Delivery of Closing Documents. Buyer and Issuer
shall have delivered to Sellers all closing documents (in form and substance satisfactory to Sellers and their legal counsel)
required to be delivered pursuant to this Agreement at or prior to Closing, including those listed in Section 2.5 herein.

 

EMPLOYMENT MATTERS.

 

7.1 Independent Contractors and
Employees
. Effective upon the Closing, Buyer or one of its Affiliates (the “Hiring Entity”) shall
offer employment to each of the employees listed in Exhibit K, at a compensation amount substantially similar to Buyer’s
then existing compensation rates for similar employees employed by Buyer. Such offer of employment shall be conditioned upon each
such employee’s successful (as determined by Buyer in accordance with its hiring policies maintained in the ordinary course
of its business consistent with past practices) completion of the pre-employment screening required of all of the Hiring Entity’s
employees.  Any such Employee who accepts the Hiring Entity’s offer of employment described herein and successfully
completes the pre-employment screening shall be deemed a “Hired Employee” effective as of the Closing.  Buyer
shall or shall cause the Hiring Entity to: (i) give each Hired Employee credit under and in accordance with the terms of any benefit
plan or personnel policies of the Hiring Entity that cover the Hired Employee from and after the Closing for purposes of eligibility
and vesting for the Hired Employee’s service with any Seller prior to the Closing Date, excluding any vacation, sick leave
or severance policies of Hiring Entity; and (ii) with respect to each employee benefit plan maintained by the Hiring Entity
which is providing welfare benefits, including medical, life insurance, long-term disability insurance and long-term care insurance
(collectively, the “Welfare Plans”) to the Hired Employees on or after the Closing, use commercially
reasonable efforts to waive all preexisting-condition limitations, waiting periods, evidence of insurability or other exclusions
or limitations not imposed on the Hired Employee by the corresponding benefits plan of Sellers immediately prior to the Closing
Date; and (iii) use commercially reasonable efforts to give each Hired Employee credit for any deductible or co-payment amounts
or out-of-pocket maximum paid, and be subject to any annual maximum benefits, in respect of the plan year in which the Closing
Date occurs, to the extent that, following the Closing Date, such Hired Employee participates in any of the Buyer’s employee
benefits plans for which deductibles or co-payments are required or maximum benefits apply. The Sellers shall bear any and all
obligations and liabilities under the WARN Act resulting from employment losses.

 

7.2 Liabilities In Respect of Employees. Buyer
shall have no liability for Sellers’ liabilities in respect of accrued wages (including salaries and commissions), severance
pay, accrued vacation, sick leave or other benefits, or employee agreements of any type or nature on account of any Seller, retention
of or termination of independent contractors or employment of or termination of employees by any Seller, and the Sellers and Parent
(subject to Section 8.9) shall indemnify Buyer and hold Buyer harmless against liability arising out of any claims for
such pay or benefits or any other claims arising from any Sellers’ retention of or employment of or termination of such
independent contractors or employees, solely to the extent resulting from Sellers’ acts or omissions. For avoidance of doubt,
nothing in this Section 7.2 confers any liability or obligation to any Seller Party arising out of or relating to the employment
of or services rendered by any Hired Employee to the Hiring Entity or any of its Affiliates from or after the Closing.

 

 

INDEMNITY.

 

8.1 Sellers’ Indemnitors
Seller and Parent, jointly and severally, shall indemnify and hold harmless Buyer and Issuer from and against any and all
losses, costs, expenses, liabilities, obligations, claims, demands, causes of action, suits, settlements and judgments of every
nature, including the costs and expenses associated therewith and reasonable attorneys’ fees (“Buyer’s/Issuer’s
Damages
”) which arise out of: (i) the breach by any Seller Indemnitor of any representation or warranty in respect
of any Seller or the Parent made by any Seller Party in this Agreement and/or the Ancillary Seller Party Documents; (ii) the non-performance,
partial or total, of any covenant made by any Seller or the Parent in this Agreement and/or the Ancillary Seller Party Documents;
(iii) subject to the last sentence of Section 7.2, claims of any type or nature relating to claims by or relating to any
of Sellers’ independent contractors or employment of the Business’ employees by any of the Seller Indemnitors, in
each case arising from conduct prior to the Closing with respect to any Hired Employee, or any termination by any Seller of such
independent contractors or employees; (iv) the ownership or operation of the Assets by Sellers or in connection with the Business
activities of Sellers related to the Assets, in each case prior to the Closing Date; (v) Seller Parties’ portion of the
Transfer Taxes; and (vi) the Retained Liabilities. Each Principal, severally and not jointly with any other Seller Party, shall
indemnify and hold harmless Buyer and Issuer from and against any and all Buyer’s/Issuer’s Damages which arise out
of: (a) the breach of any representation or warranty in respect of such Principal and made by such Principal in this Agreement
and/or the Ancillary Seller Party Documents; and (b) the non-performance, partial or total, of any covenant of such Principal
pursuant to this Agreement and/or the Ancillary Seller and Parent Documents.

 

8.1.1 Notwithstanding
the terms and conditions of this Article 8, the aggregate liability of any and all Seller Indemnitors (including the Principals
pursuant to Section 8.9) for any and all Buyer’s/Issuer’s Damages: (a) (i) which arise out of any and all breaches
of representations or warranties (other than any Fundamental Representation) made by any Seller Indemnitor in any Transaction Document
shall in no event exceed 20% of the Asset Purchase Price, or (ii) which arise out of any breach of any Fundamental Representation
shall in no event exceed 40% of the Asset Purchase Price; and (c) which arise out of any Claims shall in no event exceed the Asset
Purchase Price, provided that the limitations set forth in this Section 8.1.1 shall not apply to a Seller Indemnitor’s
breach of Section 3.14 (Taxes) or a Seller Indemnitor’s fraud.

 

8.2 Buyer’s and Issuer’s Indemnity.
Buyer and Issuer, jointly and severally, shall indemnify and hold harmless each Seller Party from and against any and all losses,
costs, expenses, liabilities, obligations, claims, demands, causes of action, suits, settlements and judgments of every nature,
including the costs and expenses associated therewith and reasonable attorneys’ fees (“Seller Parties’
Damages
”) which arise out of: (i) the breach by Buyer or Issuer of any representation or warranty made by Buyer
or Issuer in this Agreement or any Ancillary Buyer and Issuer Document; (ii) the non-performance, partial or total, of any covenant
made by Buyer or Issuer pursuant to this Agreement or any Ancillary Buyer and Issuer Document; (iii) any Assumed Liabilities;
(iv) Buyer’s portion of any Transfer Taxes; or (v) the ownership or operation of the Assets by Buyer or in connection with
the business activities of Buyer or its Affiliates related to the Assets on or after the Closing.

 

 

8.3 Survival of Terms. All warranties, representations,
indemnification obligations, and covenants contained in any Transaction Document shall survive the Closing until the three (3)
year anniversary of the Closing Date (the “Claims Period”); provided however, the Claims Period
with respect to any representation or warranty (other than any Fundamental Representation) contained in any Transaction Document
shall survive the Closing until the eighteen (18) month anniversary of the Closing Date; provided further, the Claims Period
with respect to any warranties, representations, indemnification obligations and/or covenants relating to Section 3.14
(Taxes) shall survive until sixty (60) days after the expiration of the applicable statute of limitations; provided further,
the Claims Period with respect to any warranties, representations, indemnification obligations and/or covenants relating to the
Shares or Warrants shall survive the Closing for a period of ninety days after the full performance of the covenants relating
to the Warrants.

 

8.4 Indemnification Claims Procedures.

 

8.4.1 Upon
either Buyer or any Seller becoming aware of a Claim in respect of which indemnification is provided for pursuant to Section
8.1
or Section 8.2, respectively (each, an “Indemnified Party”), as the case may be, such
Indemnified Party shall give prompt written notice of such Claim to the other party (each, an “Indemnifying Party”).
Such notice shall (a) specify whether the claim arises as a result of a claim by a third party against the Indemnified Party (each,
a “Third Party Claim”), or whether the claim does not so arise (each, a “Direct Claim”),
(b) provide the basis for such Claim, and (c) the amount of the Claim and Buyer’s/Issuer’s Damages or Seller Parties’
Damages, as applicable, to the extent such information is available or reasonably ascertainable.

 

8.4.2 In
the case of a Direct Claim, the Indemnifying Party shall have sixty (60) days from its receipt of notice of the Claim (“Review
Period
”) to investigate the Claim and associated losses. For the purpose of such investigation, the Indemnified Party
shall make available to the Indemnifying Party all documents and other information relied upon by the Indemnified Party to substantiate
the Claim and associated losses, together with all such other documents and information as the Indemnifying Party may reasonably
request. The Parties shall negotiate in good faith the resolution of such Direct Claim during the thirty (30) days following the
Review Period.

 

8.4.3 In
the case of a Third Party Claim, the Indemnifying Party shall have the right to elect, within thirty (30) days of its receipt of
notice of such Claim from the Indemnified Party, to participate in and assume control of the negotiation, settlement or defense
of the Third Party Claim and the Indemnifying Party will not be liable for any indemnification of legal expenses subsequently incurred
by the Indemnified Party in connection with the defense of such Claim except as set forth otherwise herein. The Indemnified Party
shall have the right to participate in the negotiation, settlement or defense of such Third Party Claim and to retain counsel to
act on its behalf, provided that the fees and disbursements of such counsel shall be paid by the Indemnified Party unless the Indemnifying
Party consents to the retention of such counsel at its expense. The Parties will co-operate with each other in good faith in all
respects as may be reasonably necessary in connection with the defense, negotiation or settlement of any such Third-Party Claim.
The Indemnified Party shall co-operate in a reasonable manner with the Indemnifying Party so as to permit the Indemnifying Party
to conduct such negotiation, settlement and defense; and for this purpose the Indemnified Party shall preserve all relevant records,
documents, and information, in each case relating to the Third Party Claim, allow the Indemnifying Party access, upon reasonable
notice, to inspect and copy all such records, documents, and information, require its Representatives, as the Indemnifying Party
may reasonably request, to provide such statements and attend and give evidence at any trial or hearing in respect of the Third
Party Claim. If the Indemnifying Party elects not to defend the Third Party Claim, or fails to timely notify the Indemnified Party
in writing of its election to defend in accordance with this Section 8.4.3, the Indemnified Party may retain counsel and
control the defense of such Claim.

 

 

8.5 Third Party Payment of Damages. Payments by
an Indemnifying Party pursuant to this Article 8 in respect of any Damages shall be limited to the amount of Damages that
remains after deducting any insurance proceeds and any indemnity, contribution or other similar payment received or reasonably
expected to be received by the Indemnified Party in respect of such loss.

 

8.6 Mitigation. The Indemnified
Party shall use commercially reasonable efforts to mitigate Damages upon becoming aware of any event or circumstance that would
be reasonably expected to or does give rise to Damages, including by pursuing recoveries under any insurance policies and any
indemnity, contribution or other similar obligations owed by any Person (other than the Indemnifying Party) to the Indemnified
Person and incurring costs only to the minimum extent necessary to remedy the loss. If the Indemnified Party receives any payment
from any Person (other than the Indemnifying Party) in respect of Damages after an indemnification payment is made under this
Agreement for such Damages, the Indemnified Party shall promptly repay to the Indemnifying Party the amount of the indemnification
payment the Indemnifying Party would not have paid had the payment from the Person (other than the Indemnifying Party) reduced
the original indemnification payment in accordance with Section 8.4.

 

8.7 No Duplicative Damages.
Notwithstanding anything to the contrary contained in any Transaction Document, an Indemnified Party may not recover duplicative
indemnifiable Damages in respect of a single set of facts or circumstances under more than one representation, warranty, covenant,
or agreement in this Agreement or any other Ancillary Agreement.

 

8.8 Forfeiture of Shares. To the extent that Seller
Indemnitors are required to indemnify Buyer for Buyer’s/Issuer’s Damages (each, a “Claim”),
Seller Indemnitors may satisfy such Claim, at their sole option and upon written notice to Buyer and Issuer (“Election
Notice
”), by the payment of cash, by the forfeiture of Shares, or a combination of payment by cash and forfeiture
of Shares. Any such Election Notice shall specify the amount of the Claim that Seller Indemnitors have elected to satisfy by forfeiture
of Shares, the Market Value Price for each Share, and the number of Forfeited Shares. As soon as reasonably practicable following
delivery of any Election Notice, Issuer and Parent shall notify the applicable transfer agent to reduce the number of Shares then
remaining in Parent’s name by the number of Forfeited Shares. In the event that the amount of any Claim exceeds the value
of the Forfeited Shares, the Seller Indemnitors shall be required to pay any unpaid excess balance of such Claim in cash.

 

8.9 Recourse to Principals.
Notwithstanding anything in this Agreement to the contrary, in the event that Parent and/or any Seller fail to timely pay, when
due, the full amount of any Claim for which indemnification is provided by Parent and Sellers pursuant to the first sentence of
Section 8.1, each Principal, severally and not jointly, shall pay its Pro Rata Share of the amount of such unpaid Claim.

 

 

8.10 Deductible. Notwithstanding
anything to the contrary contained in any Transaction Document, Seller Indemnitors (and Principals pursuant to Section 8.9)
shall not have liability for any indemnification Claim or Buyer’s/Issuer’s Damages unless and until the accumulated
aggregate amount of Buyer’s/Issuer’s Damages for Claims indemnifiable hereunder exceeds $250,000 of the Asset Purchase
Price after which time the Buyer and Issuer shall have the right to claim and receive the full amount of Buyer’s/Issuer’s
Damages in excess of $125,000 for Claims indemnifiable hereunder; provided, however, that this Section 8.10 shall not apply
to indemnification Claims or Buyer’s/Issuer’s Damages arising out of Section 3.14 (Taxes) and Section 8.12
(Tax Matters) with respect to the filing of Tax Returns or liability for the reporting or payment of Taxes.

 

8.11 Damages. Notwithstanding
anything to the contrary contained in any Transaction Document, in no event shall Buyer’s/Issuer’s Damages or Seller
Parties’ Damages include punitive damages (except to the extent payable to a third party).

 

8.12 Tax Matters. The following
provisions shall govern the allocation of responsibility as between the Buyer and the Seller for certain Tax matters following
the Closing Date:

 

8.12.1 Tax
Returns
. The Buyer shall prepare and timely file all Tax Returns with respect to Property Taxes relating to the Assets for
the Straddle Period. The Buyer shall pay and discharge all Taxes shown to be due on such Tax Returns. No later than ten (10) business
days prior to the due date of such Tax Return, the Parent shall pay to the Buyer the amount of Taxes shown due on such Tax Return
which is attributable to the pre-Closing portion of the Straddle Period.

 

8.12.2 Apportionment.
For purposes of this Agreement, the amount of real property, personal property, and similar taxes (not based on income, profits
or gains) relating to the Assets (“Property Taxes”), and any Tax refunds relating to such Property Taxes,
attributable to the portion of the Straddle Period ending on the day before the Closing Date shall equal the Taxes for the entire
Straddle Period multiplied by a fraction, the numerator of which is the number of calendar days in the portion of the period ending
on the day before the Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period; provided,
however, if as a result of the purchase of the Assets, the value of any Asset is reassessed for purposes of determining the amount
of any Property Tax, any resulting increase in Tax for such Straddle Period shall be treated as being solely with respect to the
portion of the Straddle Period beginning on the Closing Date. For any Taxes other than Property Taxes (such as franchise Taxes,
Taxes that are based upon or related to income or receipts or net income, Taxes based upon production or occupancy or imposed in
connection with any sale or other transfer or assignment of property) for a Straddle Period the amount of any such Taxes attributable
to the pre-Closing portion such Straddle Period shall be determined based upon a hypothetical closing of the taxable year on such
Closing Date with the Closing Date being included in the pre-Closing portion of such Straddle Period. Notwithstanding any provision
in this Agreement to the contrary, the Buyer shall not be required to make any payment or disbursal to Parent, any Seller, or any
Governmental Authority relating to any Taxes attributable to the Assets or the Business for a taxable year (or portion thereof)
ending on or before the Closing Date. Each Party agrees to cooperate with each other Party in paying or reimbursing their respective
Tax obligations in accordance with this Section 8.12.

 

 

8.12.3 Cooperation.
The Buyer on the one hand, and the Parent and the Sellers, on other hand, shall cooperate fully, as and to the extent reasonably
requested by the other Party, in preparing and filing Tax Returns with respect to the Assets and the Business, including providing
complete and accurate records concerning the Tax basis of the Assets and such other information as may be reasonably necessary
with respect to the preparation and filing of such Tax Returns, and in connection with any audit or other Proceeding with respect
to Taxes related to the Assets or the Business. Such cooperation shall include the retention and (upon the other Party’s
request) the provision of records and information which are reasonably relevant to any such audit or other Proceeding.

 

8.13 Adjustment
to Asset Purchase Price for Tax Purposes
. The Parties shall treat any indemnity payment made under this Agreement
pursuant to this Article 8 as an adjustment to the Asset Purchase Price for all Tax purposes to the maximum extent
permitted by applicable Law. No party shall take any position on any Tax Return or filing, or before any Governmental
Authority, that is inconsistent with such treatment unless otherwise required by any applicable Law.

 

8.14 Exclusive
Remedy
. Notwithstanding anything to the contrary in this Agreement, but subject to (and without limiting any
Party’s rights under) Section 9.14 and the Warrants, the sole and exclusive remedy of any Indemnified Party
for any Damages and any Claims arising under or otherwise relating to this Agreement, the Contemplated Transactions,
Ancillary Agreements and/or the transactions contemplated by the Ancillary Agreements, is indemnification as set forth in
this Article 8.

 

MISCELLANEOUS 

 

9.1 Allocation
of Asset Purchase Price
. Exhibit J sets forth the allocation agreed to by Sellers and Buyer of the Asset Purchase
Price among the various items included in the Assets and Business being transferred by Sellers to Buyer for purposes of
determining the relevant tax consequences of the transactions contemplated by this Agreement. The Parties intend that Exhibit
J
conform to the requirements of Section 1060 of the Internal Revenue Code; and they agree to be bound thereby and to act
in accordance with it in the preparation and filing of Tax Returns (including Internal Revenue Service From 8594 and any
exhibits thereto), information returns, schedules or other filings made with the Internal Revenue Service or other
Governmental Authorities. Any adjustments to the Asset Purchase Price pursuant to Section 2.3.1 or Article 8
shall be allocated in a manner consistent with this Section 9.1 and Exhibit J. Each of the Parties shall
promptly notify the others of any challenge by any Governmental Authority to any allocation pursuant to this Section
9.1
.

 

9.2 Restrictive
Legends
. Issuer agrees to respond to any request of VStockTransfer, LLC, any subsequent transfer agent to Issuer or any
broker representing any Seller Party or Haley to remove the restrictive legend referenced in Section 3.21 within three
(3) business days of the request.

 

 

9.3 Confidentiality;
Press Releases and Public Announcements
. No party hereto shall issue a press release or otherwise publicize the
Contemplated Transaction or otherwise disclose the nature or contents of this Agreement until the Closing has occurred. From
and after Closing, any press release or other public announcement with respect to the Agreement or Contemplated Transactions
shall not be issued without the written approval of Buyer (which such approval shall not be unreasonably withheld,
conditioned or delayed), except as may be required by Law or any applicable listing agreement with a national securities
exchange as determined in the good-faith judgment of the Party or Affiliate of a Party proposing to make such release or
communication (in which case, such Party or Affiliate of a Party shall not issue or cause the publication of such press
release or other public announcement without providing the other Parties a reasonable opportunity to review and comment upon
such press release or other public announcement).

 

9.4 Construction.
Unless the context of this Agreement otherwise clearly requires: (a) references to the plural include the singular, and
references to the singular include the plural; (b) references to one gender include the other gender; (c) the terms
“hereof”, “herein”, “hereunder”, “hereto” and similar terms in this Agreement
refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) the terms “day” and
“days” mean and refer to calendar day(s) unless such reference specifically refers to business days; (e) the
terms “year” and “years” mean and refer to calendar year(s); and (f) all references herein to
“$” or dollars shall refer to United States dollars. Unless otherwise set forth in this Agreement, references in
this Agreement to: (i) any document, instrument or agreement (including this Agreement) (A) includes and incorporates all
annexes, exhibits, schedules and other attachments thereto; (B) includes all documents, instruments or agreements issued or
executed in replacement thereof; and (C) means such document, instrument or agreement, or replacement thereto, as amended,
modified or supplemented from time to time in accordance with its terms and in effect at any given time; and (ii) a
particular Law means such Law, as amended, modified, supplemented or succeeded from time to time, and in effect on the date
hereof. All Article, Exhibit, Annex and Schedule references herein are to Articles, Sections, Exhibits, and Schedules of this
Agreement, unless otherwise specified. The Article and Section headings contained in this Agreement are inserted for
convenience of reference only and shall not affect the meaning or interpretation of this Agreement.

 

9.5 Expenses;
Transfer Taxes; Accounts Payable

 

9.5.1 Subject
to Section 9.5.2, Each Party will pay its own costs and expenses, including legal and accounting expenses, related to the
transactions provided for herein, irrespective of when incurred. In the event of any legal action to enforce any of the obligations
set forth in the Agreement, the prevailing party shall be entitled to recover costs and reasonable legal fees.

 

9.5.2 All
Transfer Taxes shall be paid when due and shall be borne 50% by the Buyer and 50% by the Seller. Buyer shall timely file or cause
to be timely filed all necessary tax returns with respect to Transfer Taxes (“Transfer Tax Returns”),
and the Sellers will use commercially reasonable efforts to cooperate in filing such Transfer Tax Returns and reducing or eliminating
such Transfer Taxes. The Parent shall pay 50% of the amount due with respect to such Transfer Tax Return to the Buyer on the later
of (i) no less than three (3) business days prior to the due date for filing thereof, and (ii) five (5) business days after receipt
of such Transfer Tax Return to be filed by Buyer and written notice from Buyer as to the amount of Transfer Taxes allocable to
Sellers in accordance with this Section 9.5.2. Buyer and Sellers will each use its commercially reasonable efforts to avail
itself of any available exemptions from any such Transfer Taxes.

 

 

9.5.3 Not
later than forty-five (45) days following the Closing, Seller shall satisfy, in full, any of their then outstanding accounts payable
obligations (which for avoidance of doubt shall not include any accounts payable reflected on the Funds Flow).

 

9.6 Notices.
Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly
given on the date of service if served personally or by email, or five days after the date of mailing if mailed, by first
class mail, registered or certified, postage prepaid. Notices shall be addressed as follows:

 

If to Buyer or Issuer,
to:

 

GrowGeneration Corp. and GrowGeneration
California Corp.

930 W 7th Ave, Suite A

Denver, CO 80204

Attn: Monty Lamarito

Email: monty@growgeneration.com

 

with a copy (which shall not constitute
notice) to:

 

Robinson & Cole, LLP

1055 Washington Boulevard

Stamford, CT 06901

Attn: Mitch Lampert

Email: mlampert@rc.com

 

If to Sellers or Parent
prior to Closing, to:

 

c/o The Growbiz

4441 Granite Drive #102

Rocklin, CA 95677

Email: rosshaley@me.com

 

with a copy (which shall not constitute
notice) to:

 

Howard &
Howard Attorneys PLLC

200 S. Michigan
Avenue, 11th floor

Chicago,
Illinois 60604

Attn: Joseph
J. DeVito, Esq.; Jane S. Hahn, Esq.

Email: jjd@h2law.com;
jsh@h2law.com

 

 

If to Sellers or Parent
after the Closing, to:

 

The Growbiz

c/o Ross Haley

7775 McRanch Rd.

Auburn, CA 95602

Email: rosshaley@me.com

 

with a copy (which shall not constitute
notice) to:

 

Howard &
Howard Attorneys PLLC

200 S. Michigan
Avenue, 11th floor

Chicago,
Illinois 60604

Attn: Joseph
J. DeVito, Esq.; Jane S. Hahn, Esq.

Email: jjd@h2law.com;
jsh@h2law.com

 

or to such other address as a party has
designated by notice in writing to the other party in the manner provided by this section.

 

9.7 Governing
Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable
to contracts entered into and wholly to be performed in the State of California without regard to any choice or conflict of
law provision.

 

9.8 Successors
and Assigns
. This Agreement and Exhibits and the rights of the Parties hereunder may not be assigned and shall be binding
upon and shall inure to the benefit of the Parties, the successors of Parties, and the heirs and legal representatives of the
indirect members of the Sellers.

 

9.9 Entire Agreement.
This Agreement, together with the Schedules, Exhibits and other documents referenced herein, sets forth the entire understanding
of the Parties with respect to the Contemplated Transaction. Any and all previous agreements and understandings between or among
the Parties and/or their Affiliates regarding the subject matter hereof, whether written or oral, are superseded and replaced
by this Agreement.

 

9.10 Amendment.
This Agreement shall not be amended or modified except by a written instrument duly executed by each of the Parties.

 

9.11 Waiver.
Any extension or waiver by any party of any provision hereto shall be valid only if set forth in an instrument in writing signed
on behalf of such party.

 

9.12 Schedules
and Exhibits; Section References
. Each of the Schedules and Exhibits to this Agreement is incorporated herein by this reference
and expressly made a part of this Agreement. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein
shall be defined as set forth in this Agreement.

 

9.13 Partnership.
The relationship of the parties is that of “buyer” and “seller,” and nothing contained herein shall be
deemed to create a partnership or joint venture between the Parties.

 

 

9.14 Specific
Performance; Remedies
. Each Party acknowledges that the other Parties will be irreparably harmed and that there will be no
adequate remedy at law for any violation by any of them of any of the covenants or agreements contained in this Agreement and
its Exhibits, including the confidentiality obligations set forth in this Agreement or in any other agreement between any of the
Parties. It is accordingly agreed that, in addition to any other remedies which may be available upon (a) the breach of any such
covenants or agreements, each Party shall have the right to obtain injunctive relief to restrain a breach of, or otherwise to
obtain specific performance of covenants and agreements of the other Parties contained in this Agreement, and (b) a threatened
breach of any such covenants or agreements, each Party shall have the right to seek injunctive relief to restrain a threatened
breach of, or otherwise seek to obtain specific performance of covenants and agreements of the other Parties contained in this
Agreement.

 

9.15 Severability.
If any provision of this Agreement or Exhibit or the application thereof to any person or circumstances is held invalid or unenforceable
in any jurisdiction, the remainder hereof, and the application of such provision to such person or circumstances in any other
jurisdiction, shall not be affected thereby, and to this end the provisions of this Agreement shall be severable.

 

9.16 Further
Representations
. Each Party acknowledges and represents that it has been represented by its own legal counsel in connection
with the Contemplated Transaction, with the opportunity to seek advice as to its legal rights from such counsel. Each Party further
represents that it is being independently advised as to the tax consequences of the Contemplated Transaction and is not relying
on any representation or statements made by the other party as to such tax consequences. This Agreement shall not be construed
as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if all Parties had prepared it.
Without limiting the generality of immediately preceding sentence, in the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

 

9.17 Counterparts.
This Agreement and any other Transaction Document may be executed in counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same instrument. Counterparts signature page(s) whether to this Agreement or any
other Transaction Document may be delivered via 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 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. A signed copy of this Agreement
or any other Transaction Document delivered by e-mail or other means of electronic transmission shall be deemed to have the same
legal effect as delivery of an original signed copy of such Transaction Document.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be executed as of the date first above written.

 

SELLERS:   PARENT:
     
YELEKO, LLC   YTGB OPERATING HOLDINGS LLC
     
By:     By:  
  Ross Haley, Manager     Ross Haley, Manager
     
YELEKO GUI, LLC   PRINCIPALS:
     
By:     By:  
  Ross Haley, Manager     Ross Haley
     
    By:  
      Kristina Haley
     
HEALTHY HARVEST HYDRO-ORGANICS LLC    
     
By:     By:  
  Ross Haley, Manager     Ryan Haley
     
    By:  
      David Brooke
     
OREGON HYDRO-ORGANICS LLC    
     
By:                                                     By:                                
  Ross Haley, Manager     Ian Brooke
     
    By:  
      Brian Hansen

 

[Signature Page (1 of 2) to Asset Purchase
Agreement]

 

 

BUYER:  
   
GROWGENERATION CALIFORNIA CORP.  
   
By:    
  Darren Lampert, CEO  
   
ISSUER:  
   
GROWGENERATION CORP.  
   
By:    
  Darren Lampert, CEO  

 

[Signature Page (2 of 2) to Asset Purchase
Agreement]

 

 

Exhibit A – Definitions

 

Accounting Principles
means Sellers’ accounting methods, practices, principles, policies and procedures, classifications, judgments and valuation
and estimation methodologies used in preparing the Financial Statements.

 

Act” shall be
as defined in Section 3.21.

 

Affiliate” means,
with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, such specified Person. For purposes of this definition, “control”
(including the terms “controlled by” and “under common control with”), as applied to any Person, means
the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of that Person,
whether through the ownership of voting securities, by contract, or otherwise.

 

Agreement” shall
be as defined in the preamble to this Agreement.

 

Ancillary Agreements
means, other than this Agreement, the agreements, certificates and instruments executed and delivered pursuant to Section 2.4.2
or Section 2.5.

 

Ancillary Buyer and Issuer
Documents
” shall be as defined in Section 4.3.

 

Ancillary Seller Party Documents
means, collectively, the documents to which any Seller Party is a party and required to be delivered by any Seller Party at Closing
pursuant to Section 2.4.2.

 

Asset Purchase Price
shall be as defined in Section 2.3.

 

Assets” shall
be as defined in Section 2.1.

 

Assumed Liabilities
shall be as defined in Section 2.2.1.

 

Audited Financial Statements” shall
be as defined in Section 3.12.

 

Business” shall
be as defined in the Recitals to this Agreement.

 

Buyer” shall
be as defined in the preamble to this Agreement.

 

Buyer’s/Issuer’s
Damages
” shall be as defined in Section 8.1.

 

Buyer and Issuer Charter Documents
shall be as defined in Section 4.1.

 

Claim” means,
as the case may be, a Direct Claim or a Third Party Claim, as applicable.

 

Claims Period
shall be as defined in Section 8.3.

 

Closing” shall
be as defined in Section 2.3.

 

Closing Date
shall be as defined in Section 2.4.1.

 

 

Closing Price
shall mean, for any Trading Day, the closing sale price per share during regular (not extended) hours on such Trading Day of the
common stock of Issuer on the New York Stock Exchange as reported in The Wall Street Journal (or, if not reported in The Wall Street
Journal, as reported by another authoritative source mutually agreed by the Parties).

 

Codemeans the Internal Revenue
Code of 1986, as amended.

 

Common Stock
means common stock with $0 par value of Issuer.

 

Consulting Agreement
shall be as defined in Section 2.3.1.

 

Contemplated Transaction
means the transactions contemplated by this Agreement.

 

Contracts” shall
be as defined in Section 2.1.4.

 

Customer Deliverables
shall mean (a) the products that the Sellers currently market or sell or (b) the services that the Sellers currently provide.

 

Customer Deposits
means any cash or cash equivalents representing customer deposits received by Sellers to the extent of customer orders (or the
portion thereof) that remains unfulfilled as of Closing.

 

Damages” means
either Buyer’s/Issuer’s Damages or Seller Parties’ Damages, as the case may be and as the context so requires.

 

Debt” shall
be defined as any monies owed by the Business as enumerated in Schedule 3.3.

 

Direct Claim
shall be as defined in Section 8.4.1.

 

Disclosure Schedules
(or “Schedules”) means the disclosure schedules delivered by Sellers to Buyer and forming a part of this
Agreement.

 

Environmental Law
shall mean any federal, state or local law, statute, rule, order, directive, judgment, Permit or regulation or the common law relating
to the environment, occupational health and safety, or exposure of persons or property to Materials of Environmental Concern, including
any statute, regulation, administrative decision or order pertaining to: (i) the presence of or the treatment, storage, disposal,
generation, transportation, handling, distribution, manufacture, processing, use, import, export, labeling, recycling, registration,
investigation or remediation of Materials of Environmental Concern or documentation related to the foregoing; (ii) air, water and
noise pollution; (iii) groundwater and soil contamination; (iv) the release, threatened release, or accidental release into the
environment, the workplace or other areas of Materials of Environmental Concern, including emissions, discharges, injections, spills,
escapes or dumping of Materials of Environmental Concern; (v) transfer of interests in or control of real property which may be
contaminated; (vi) community or worker right-to-know disclosures with respect to Materials of Environmental Concern; (vii) the
protection of wild life, marine life and wetlands, and endangered and threatened species; (viii) storage tanks, vessels, containers,
abandoned or discarded barrels and other closed receptacles; and (ix) health and safety of employees and other persons. As used
above, the term “release” shall have the meaning set forth in CERCLA.

 

 

ERISA” shall
mean the Employee Retirement Income Security Act of 1974, as amended.

 

ERISA Affiliate
shall mean any entity which is, or at any applicable time was, a member of (1) a controlled group of corporations (as defined in
Section 414(b) of the Code), (2) a group of trades or businesses under common control (as defined in Section 414(c) of the Code),
or (3) an affiliated service group (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the
Code), any of which includes or included the Sellers.

 

Excluded Assets
shall be as defined in Section 2.1.7.

 

Excluded Contracts
means, collectively, any and all contracts of the Sellers that are not listed on Schedule 2.1.4.

 

Excluded Tax Liability
means: (i) Taxes of the Parent or any Seller with respect to any taxable period; (ii) all Taxes of the Parent or any Seller related
to or arising from the transactions contemplated under this Agreement or any other Transaction Document (other than the portion
of Transfer Taxes for which Buyer is liable pursuant to Section 9.5.2); (iii) all Taxes that are the responsibility of Parent
or any Seller pursuant to Section 8.12; and (iv) all Taxes asserted against or with respect to the Assets or the Business
for any Pre-Closing Period.

 

Execution Date
shall be as defined in the preamble to this Agreement.

 

Financial Statements
means, collectively the Most Recent Balance Sheet, the Audited Financial Statements, and the Unaudited Financial Statements.

 

Fixed Assets
shall be as defined in Section 2.1.2.

 

Forfeited Shares
means such number of Shares (rounded down to the nearest whole number) equal to the portion of the Buyer’s/Issuer’s
Damages in respect of which Sellers and Parent have elected to satisfy by forfeiture of Shares pursuant to Section 8.7,
divided by the Market Value Price.

 

Fundamental Representation
means any representation or warranty set forth in Sections 3.1.1 (Organization and Authority), 3.2.1 (Authority Relating
to this Agreement), 3.4.1 (Ownership), 3.14 (Taxes), 3.22 (Accredited Investor), 3.23 (Brokers and
Finders).

 

Funds Flow
means that certain flow of funds dated as of the Closing Date by and between Seller Parties, Buyer and Issuer setting forth the
payments to be made by Buyer or Issuer, as applicable, at Closing, in such form and substances as reasonably acceptable to the
Parties.

 

GAAP” shall
mean generally accepted accounting principles in the United States.

 

Governmental Authority
means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such
government or political 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.

 

 

Haley” means
Ross Haley, an individual.

 

Hansen” means
Brian Hansen, an individual.

 

HHH” shall be
as defined in the preamble to this Agreement.

 

Hiring Entity
shall be as defined in Section 7.1.

 

Indebtedness
shall be as defined in Section 3.3.1.

 

Indemnified Party
shall be as defined in Section 8.4.1.

 

Indemnifying Party
shall be as defined in Section 8.4.1.

 

Intangible Assets
shall be as defined in Section 2.1.3.

 

Intellectual Property
shall mean all:

 

(a) patents,
patent applications, patent disclosures and all related continuation, continuation-in-part, divisional, reissue, reexamination,
utility model, certificate of invention and design patents, patent applications, registrations and applications for registrations;

 

(b) trademarks,
service marks, trade dress, Internet domain names, logos, trade names and corporate names and registrations and applications for
registration thereof;

 

(c) copyrights
and registrations and applications for registration thereof;

 

(d) mask
works and registrations and applications for registration thereof;

 

(e) computer
software, data and documentation;

 

(f) inventions,
trade secrets and confidential business information, whether patentable or nonpatentable and whether or not reduced to practice,
know-how, manufacturing and product processes and techniques, research and development information, copyrightable works, financial,
marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information;

 

(g) other
proprietary rights relating to any of the foregoing (including remedies against infringements thereof and rights of protection
of interest therein under the laws of all jurisdictions); and

 

(h) copies
and tangible embodiments thereof.

 

Internal Systems
shall mean the internal information technology (IT) systems of the Sellers that are used in their business or operations, including
computer hardware systems, software applications and embedded systems.

 

Inventories
shall be as defined in Section 2.1.1.

 

 

Issuer” means
GrowGeneration Corp., a publicly held Colorado Corporation with symbol (NASDQ: GRWG) whose address is 930 W 7th Ave,
Suite A, Denver, Co 80204.

 

Law” means any
statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, or other rule of law
of any Governmental Authority.

 

Leases” means
collectively all leases and subleases for real property to which any Seller is a party.

 

Liens” shall
mean all liens, charges, easements, security interests, mortgages, conditional sale contracts, rights of way, restrictions, title
defects, claims or other encumbrances.

 

Market Value Price
means the average Closing Price of one (1) share of common stock of Issuer as of the Trading Day immediately preceding the date
on which Sellers and Parent have notified Buyer of its election elected to satisfy any Buyer’s/Issuer’s Damages by
forfeiture of Shares pursuant to Section 8.7.

 

Material Adverse Effect
shall mean an event which has a material adverse effect on the condition (financial or otherwise) of the Assets, the Business,
or results of operations, of the Sellers taken as a whole; provided, however, that “Material Adverse Effect”
shall not include any event, directly or indirectly, arising out of or attributable to: (a) any general economic, capital
market, financial or political conditions, whether foreign or in the United States; (b) factors generally affecting the industry
or markets in which any Seller operates or to which its respective products are sold; (c) an outbreak, escalation or material
worsening of hostilities, war, acts of terrorism (including cyber terrorism), epidemic, pandemic or disease outbreak (including
the COVID-19 virus, SARS-CoV-2 viruses and any mutation therefrom) or other calamity,
crisis or emergency (including natural disasters) or any governmental or other response to any of the foregoing, in each case whether
or not involving the United States; (d) changes, or proposed changes, in law or regulation, or interpretations or implementation
thereof; (e) changes in the hydroponics industry or wholesale or retail markets for hydroponics or hydroponics-related products
and operations, including those due to actions by competitors or regulators, (f) the Contemplated Transaction and the public
announcement thereof; (g)  the taking of any action (or omitting to take action) to the extent required by this Agreement
or consented to in writing by Buyer; (h) any event, change or effect resulting from the identity of Buyer or its Affiliates;
(i) any failure of Sellers to meet financial projections (but not excluding any of the reasons for or factors contributing
to the failure); (j) any event, change or effect resulting from the breach of this Agreement by Buyer; and (k) any matter
disclosed in the Disclosure Schedules or the Buyer is otherwise aware as of the Signing Date; except, in the case of (a) and
(b), as would reasonably be expected to have a material disproportionate effect on the Sellers relative to other comparable companies
operating in the industry in which Sellers operate (and then only to the extent of such disproportionate impact).

 

Materials of Environmental
Concern
” shall mean any: pollutants, contaminants or hazardous substances (as such terms are defined under CERCLA),
pesticides (as such term is defined under the Federal Insecticide, Fungicide and Rodenticide Act), solid wastes and hazardous wastes
(as such terms are defined under the Resource Conservation and Recovery Act), chemicals, other hazardous, radioactive or toxic
materials, oil, petroleum and petroleum products (and fractions thereof), or any other material (or article containing such material)
listed or subject to regulation under any law, statute, rule, regulation, order, Permit, or directive due to its potential, directly
or indirectly, to harm the environment or the health of humans or other living beings.

 

 

Most Recent Balance Sheet
shall mean the unaudited consolidated balance sheet of the Sellers as of the Most Recent Balance Sheet Date.

 

Most Recent Balance Sheet
Date
” shall mean September 30, 2020.

 

Obsolete Inventory
means any inventory on hand at the Closing that has not sold within the preceding twelve months from the Execution Date.

 

OHO” shall be
as defined in the preamble to this Agreement.

 

Parent” shall
be as defined in Section 2.5.

 

Per Share Value
means the value of one share of Issuer’s Common Stock at the time of Closing based on the “VWAP” of Issuer’s
common stock for the 120 Trading Days immediately preceding the Execution Date.

 

Permits” shall
mean all permits, licenses, registrations, certificates, orders, approvals, franchises, variances and similar rights issued by
or obtained from any Governmental Authority (including those issued or required under Environmental Laws and those relating to
the occupancy or use of owned or leased real property).

 

Permitted
Liens
” means (i) statutory Liens for Taxes, which are not yet due and payable; (ii) mechanics’, carriers’,
workers’, repairers’ and similar liens arising or incurred in the ordinary course of business securing amounts that
are not delinquent; (iii) Liens related to the Capitalized Leases; (iv) Liens relating to Indebtedness which will be repaid at
Closing in full; (v) statutory Liens of landlords with respect to any premise leased pursuant to any Lease arising or incurred
in the ordinary course of business; and (v) easements, rights of way, zoning ordinances and
other similar encumbrances affecting premises subject to each Lease which do not, individually or in the aggregate, prohibit, or
interfere in any material respect with, the current operation of the Business
.

 

Person” means
any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other
entity.

 

Post-Closing Period” means a taxable
period beginning on the Closing Date, and, in the case of any Straddle Period, the portion of such period beginning on and including
the Closing Date.

 

Pre-Closing Period
means a taxable period ending prior to the Closing Date, and in the case of any Straddle Period, the portion of such Period ending
the day prior to the Closing Date.

 

Principals
means, collectively, Haley, Hansen and each of the other individuals set forth in Schedule 1.

 

Proceeding
means all litigation, suits, actions, claims, charges, demands, complaints, material grievances, arbitrations, audits, examinations,
investigations, hearings, inquiries and other proceedings (in each case, whether civil, criminal, administrative, judicial or investigative,
whether formal or informal, public or private, or at law or in equity).

 

 

Pro Rata Share
means, with respect to each Principal, the percentage set forth opposite such Principal’s name in Schedule 1.

 

Retained Liabilities
shall mean any and all liabilities or obligations (whether known or unknown, absolute or contingent, liquidated or unliquidated,
due or to become due and accrued or unaccrued, and whether claims with respect thereto are asserted before or after the Closing)
of the Sellers and Parent which are not Assumed Liabilities. The Retained Liabilities shall include, without limitation, all liabilities
and obligations of the Sellers and Parent:

 

(a) arising
out of or relating to Excluded Assets, including without limitation Excluded Contracts, whether arising prior to or after the Closing;

 

(b) arising
out of or attributable to any Excluded Tax Liability;

 

(c) for
costs and expenses (other than Transfer Taxes for which Buyer is liable pursuant to Section 9.5.2) incurred in connection
with this Agreement or the consummation of the transactions contemplated by this Agreement;

 

(d) arising
prior to the Closing under the Contracts, and all liabilities for any breach, act or omission by the Sellers prior to the Closing
under any Contract;

 

(e) arising
out of events, conduct or conditions existing or occurring prior to the Closing that constitute a violation of or non-compliance
with any law, rule or regulation (including Environmental Laws), any judgment, decree or order of any Governmental Authority, or
any Permit or that give rise to liabilities or obligations with respect to Materials of Environmental Concern;

 

(f) any
claims for wages or other benefits, bonuses, accrued vacation, workers’ compensation, deferred compensation, severance, retention,
termination or other payments to any present or former employees, officers, directors, managers, retirees, independent contractors
or consultants of Seller for any period in which such Persons provided services to Seller, including any liabilities of any Seller
for employer FICA and unemployment taxes incurred and any liabilities for federal or state income tax and FICA taxes of employees
of any Seller which the Seller is legally obligated to withhold, and all liabilities resulting from the termination of employment
of employees of the Seller by any Seller that arose under any federal or state law or under any Seller Plan established or maintained
by the Sellers;

 

(g) payment
of pro rata portion of bonuses for employees as of the Closing in accordance with Section 5.7, including any liabilities
of the Parent or any Seller for employer FICA and unemployment taxes incurred and any liabilities for federal or state income tax
and FICA taxes of employees of Parent or any Seller which the Parent or Seller is legally obligated to withhold in respect of such
bonuses;

 

(h) all
accounts receivable;

 

(i) with
respect to any insurance policies of any Seller;

 

 

(j) to
indemnify any person or entity by reason of the fact that such person or entity was a director, officer, employee, or agent of
the Sellers or was serving at the request of the Sellers as a partner, trustee, director, officer, employee, or agent of another
entity (whether such indemnification is for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses,
or otherwise and whether such indemnification is pursuant to any statute, charter document, bylaw, agreement, or otherwise);

 

(k) injury
to or death of persons or damage to or destruction of property occurring prior to the Closing (including any workers compensation
claim); and

 

(l) except
as set forth on Schedule 3.3.2, all Indebtedness, including but not limited to the PPP Loan and all accounts payable obligations.

 

Review Period
shall be as defined in Section 8.4.2.

 

Rule 144” shall
be as defined in Section 3.25.

 

Securities Act
shall be as defined in Section 3.25.

 

Seller” and
Sellers” shall be as defined in the preamble to this Agreement.

 

Seller Indemnitors
means, collectively, the Seller Parties subject to the limitations set forth in Article 8.

 

Seller Parties
means, collectively, the Sellers, the Parent, and the Principals (and each a “Seller Party”).

 

Seller Parties’ Damages
shall be as defined in Section 8.2.

 

Seller Plan”,
Seller’s Plan” or “Sellers’ Plans” shall mean any Employee Benefit
Plan maintained, or contributed to, by the Seller, any Subsidiary or any ERISA Affiliate.

 

Sellers’ Knowledge
or any other similar knowledge qualification (whether of any Seller, the Parent or the Principals), means the actual knowledge
of Ross Haley and/or Brian Hansen, after commercially reasonable inquiry of those management-level employees of Sellers who, by
virtue of such employees’ job functions and duties, have knowledge of the matter subject to such inquiry.

 

Shares” shall
mean such number of shares of Issuer’s common stock equal to $15,250,000 divided by the Issuance Price.

 

Slow-Moving Inventory
means inventory on hand with respect to any product that is in excess of the average number of units of such product sold during
the previous 12 months.

 

Straddle Period
means any taxable period beginning before and ending after the Closing Date.

 

Subsidiary
means, with respect to any entity, any corporation, partnership, limited liability company, joint venture or other entity in which
such first entity, directly or indirectly, (a) owns any outstanding voting securities, equity securities, profits interest or capital
or equity interest, (b) is entitled to elect any members of the board of directors or similar governing body, or (c) in the case
of a limited partnership or limited liability company, is a limited partner, general partner or member any equity or voting interests
in the partnership or company.

 

 

Tax” means any
(i) federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales,
use, transfer, real property gains, registration, value added, excise, tax on “global intangible low-taxed income (as defined
in Section 951A of the Code), natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs,
duties, real property, personal property, shares, social security, unemployment, disability, payroll, license, employee or other
withholding, or other tax, of any kind whatsoever and any fee, custom, impost, assessment, obligation, levy, tariff, charge or
duty in the nature of a tax, including any interest, penalties or additions to tax or additional amounts in respect thereto, whether
disputed or not, and (ii) any liability in respect of any items described in clause (i) immediately foregoing by reason of (A)
being a transferee or successor or by having been a member of a combined, affiliated, unitary, consolidated or similar group or
otherwise by operation of Law or (B) by Contract or otherwise, in each case, under clauses (i) or (ii) immediately foregoing regardless
of whether affirmatively asserted by a Governmental Authority.

 

Tax Return
means any form, return, declaration, report, claim for refund, information return certificate, bill, document, declaration of estimated
Taxes or other information (including any schedule, appendix or attachment thereto) and any amendment thereof, required or permitted
to be filed in connection with the imposition, determination, assessment or collection of any Tax or the administration, implementation
or enforcement of or compliance with any Laws relating to any Tax.

 

Third Party Claim
shall be as defined in Section 8.4.1.

 

Trading
Day
” shall mean a day: (a) on which trading generally takes place on the New York Stock Exchange; (b) on which trading
in common stock of the Issuer has not been halted or suspended; and (c) on which common stock of the Issuer is actually traded.

 

Transaction Documents
means, collectively, this Agreement and the Ancillary Agreements.

 

Transfer Taxes
means, collectively, all transfer, documentary, sales, use, stamp, registration, conveyance, value added or other similar Taxes
or charges (together with any related fee, penalties, interest and additions to such Taxes) arising out of or incurred in connection
with, or associated with, this Agreement or the transactions contemplated by this Agreement.

 

Vendor Deposits
means any cash or cash equivalents paid by any Seller to any of its vendors in respect of any customer orders (or the portion thereof)
placed with such Seller that remains unfulfilled as of Closing.

 

Warrant Shares
shall be as defined in Section 3.25.

 

Warrants” shall
be as defined in Section 2.3.1.

 

Yeleko GUI
shall be as defined in the preamble to this Agreement.

 

 

Exhibit B-1 –
Bill of Sale

 

 

Exhibit B-2 –
Assignment and Assumption Agreement

 

 

Exhibit C-1 –
Sellers’/Parent’s Closing Certificate

 

 

Exhibit C-2 –
Buyer Closing Certificate

 

 

Exhibit D – Non-Compete
and Confidentiality Agreement

 

 

Exhibit E – Assignment
of Intangible Assets and Intellectual Property

 

 

Exhibit F – Consulting
Agreement

 

 

Exhibit G – Warrant

 

 

Exhibit H-1 Sellers’/Parent’s
Authorizing Resolutions and Certificate

 

 

Exhibit H-2 –
Buyer’s/Issuer’s Authorizing Resolutions and Certificate

 

 

Exhibit I

 

[INTENTIONALLY OMITTED]

 

 

Exhibit J – Form
8594 (Purchase Price Allocation)

 

 

Exhibit K – Employees

 

 

Exhibit L – Employment
Agreement

 

 

Exhibit M – Stock
Power and Letters of Instruction (Shares)

 

 

Exhibit N – Letters of Direction
(Cash)

 

 

 

Exhibit 99.1

 

 

 

GrowGeneration
Signs Asset Purchase Agreement to Acquire Nation’s Third-Largest Chain of Hydroponic Garden Centers

 

The
GrowBiz To Join GrowGen’s Portfolio, Expands Company’s Footprint in California and Oregon

 

Denver,
CO, November 2, 2020 /PRNewswire/
— GrowGeneration Corp. (NASDAQ: GRWG),
(“GrowGen” or the “Company”)
the nation’s largest chain of specialty hydroponic and organic garden centers,
today announced the signing of an asset purchase agreement to acquire The GrowBiz, the nation’s
third-largest chain of hydroponic garden centers, with five stores across California and Oregon. The transaction is expected to
close before fiscal year-end 2020.
Founded in 2010 by Ross and Ryan Haley, The GrowBiz comes with a team of experienced
executives and more than 60 full and part-time employees. Prior to founding The GrowBiz, Ross Haley served as CEO of Hawthorne
Gardening Company, a division of Scotts Miracle-Gro, and General Hydroponics, two recognized leaders in the hydroponics industry.
Upon close, Ross Haley will become a senior strategic advisor to the Company.

 

The
addition of The GrowBiz is expected to generate annual revenues approaching $50M. The acquisition will bring the total number of
GrowGen hydroponic garden centers in California to ten and Oregon to two. The new GrowGen locations include Rocklin, Cotati, Santa
Cruz and San Luis Obispo, California, and Portland, Oregon.

 

“We
are excited to add The GrowBiz to our portfolio before year end, with its impressive leadership and commercial teams,” said
Darren Lampert, GrowGen’s CEO. “We look forward to building on their combined experience and expanding our commercial
footprint. The GrowBiz acquisition represents our continued investment in purchasing the ‘best of breed’ hydroponic
operations in the U.S. and strengthening our management team with seasoned veterans from our industry.”

 

Added
Ross Haley, The GrowBiz’s CEO, “Hydroponics have been a staple in cannabis cultivation and as states across the country
continue to legalize, hydroponics stores are an incredible resource for consumers to learn about different cultivation methods. I’ve
seen first-hand over the years how our stores have helped people diversify their gardens, so they are able to cultivate and produce
cannabis
it’s empowering.  GrowGeneration’s continued expansion
is a testament that the stigma of cannabis prohibition is diminishing, and cannabis is indeed a legitimate business. I look
forward to moving to an advisory position with GrowGeneration as I continue to build out Lbs. Distribution
a
licensed cannabis distribution company in California.”

 

California
and Oregon Market and Projections:

 

California accounts
for 20% of the nation’s legal cannabis sales
By 2022, California’s
cannabis market is projected to hit $5B
Oregon could
achieve $1B in recreational and medical cannabis sales in 2020

 

For
more information about GrowGeneration, or to locate its stores, please visit www.growgeneration.com. For more information regarding
The GrowBiz transaction, please refer to the 8K.

 

 

About
GrowGeneration Corp.:

 

GrowGen
owns and operates specialty retail hydroponic and organic gardening stores. Currently, GrowGen has 31 stores, which include 5 locations
in Colorado, 6 locations in California, 2 locations in Nevada, 1 location in Arizona, 1 location in Washington, 6 locations in
Michigan, 1 location in Rhode Island, 4 locations in Oklahoma, 1 locations in Oregon, 3 locations in Maine and 1 location in Florida.
GrowGen also operates an online superstore for cultivators at growgeneration.com. GrowGen carries and sells thousands of
products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used
indoors and outdoors by commercial and home growers. Our mission is to own and operate GrowGeneration branded stores in all the
major states in the U.S. and Canada. Management estimates that roughly 1,000 hydroponic stores are in operation in the U.S. By
2025, the global hydroponics system market is estimated to reach approximately $16 billion.

 

Forward
Looking Statements:

 

This
press release may include predictions, estimates or other information that might be considered forward-looking within the meaning
of applicable securities laws. While these forward-looking statements represent our current judgments, they are subject to risks
and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these
forward-looking statements, which reflect our opinions only as of the date of this release. Please keep in mind that we are not
obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of
new information or future events. When used herein, words such as “look forward,” “believe,” “continue,”
“building,” or variations of such words and similar expressions are intended to identify forward-looking statements.
Factors that could cause actual results to differ materially from those contemplated in any forward-looking statements made by
us herein are often discussed in filings we make with the United States Securities and Exchange Commission, available at: www.sec.gov,
and on our website, at: www.growgeneration.com.

 

Press
Contact:

Sara Geisner
Trailblaze
sara@trailblaze.co

 

Investor
Contact:
John Evans
GrowGeneration
john.evans@growgeneration.com

 

Connect:

 

Website:
www.GrowGeneration.com
Facebook:
GrowGenerationCorp

 

Company Inquiries:

GrowGeneration Corp.
610-216-0057
michael@growgeneration.com

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