EXHIBIT 10.14

 

SUBORDINATION, POSTPONEMENT AND STANDSTILL AGREEMENT

 

TO:BRIDGING FINANCE INC., as agent    RE:URBAN-GRO, INC., URBAN-GRO CANADA
TECHNOLOGIES INC. and IMPACT ENGINEERING, INC.    DATE:February 27, 2020

 

Dear Sirs/Mesdames:

 

This is to confirm our agreement concerning the Obligors (as defined herein):

 

1.For the purposes hereof, the following terms shall have the following
meanings:

 

(a)“BFI” means BRIDGING FINANCE INC., as agent, and for greater certainty any
replacement of BFI in respect of its role as agent in relation to the BFI Debt;

 

(b)“BFI Assets” means all property, assets, rights and undertakings of the
Obligors of whatsoever nature and kind, now owned or hereafter acquired by or on
behalf of the Obligors and wherever located;

 

(c)“BFI Debt” means any and all debts, liabilities and indebtedness, direct or
indirect, present and future, of the Obligors to BFI (including without
limitation the lenders it represents), whether arising from dealings between BFI
and the Obligors or from dealings with any third party by which BFI may be or
become in any manner whatsoever a creditor of the Obligors, including, without
limitation, any and all indebtedness existing under or in connection with the
Loan Agreement;

 

(d)“BFI Security” means the security from time to time held by or for the
benefit of BFI on the BFI Assets to secure the BFI Debt;

 

(e)“Existing SL Debt” means the loans made by the Subordinated Lender to one or
more of the Obligors in existence as of the date hereof and described on the
attached Schedule “A”;

 

(f)“Loan Agreement” means the Loan Agreement between the Obligors and BFI dated
as of February 21, 2020 (as amended, supplemented, modified, restated or
replaced from time to time);

 

(g)“Obligors” means URBAN-GRO, INC., URBAN-GRO CANADA TECHNOLOGIES INC. and
IMPACT ENGINEERING, INC.;

 

(h)“SL Debt” means the Existing SL Debt and any and all indebtedness, direct or
indirect, present and future, of the Obligors to the Subordinated Lender;

 

 

 

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(i)“SL Loan Documentation” means all documentation evidencing and securing the
SL Debt, and all documentation entered into between any of the Obligors and the
Subordinated Lender ancillary to the SL Debt, including all SL Security as the
same may be amended, supplemented, revised, restated or replaced from time to
time;

 

(j)“SL Security” means the security from time to time held by or for the benefit
of the Subordinated Lender to secure the SL Debt; and

 

(k)“Subordinated Lender” means James Lowe, and his heirs, executors,
administrators and assigns.

 

2.Insofar as may be necessary, the Subordinated Lender hereby consents to the
BFI Debt and the granting of the BFI Security and declares that the foregoing
will not constitute an event of default under the terms of any SL Loan
Documentation. BFI hereby consents to the creation and existence of the Existing
SL Debt and declares that the same does not constitute an event of default under
the terms of the BFI Security or the Loan Agreement.

 

3.Unless and until the BFI Debt has been fully and finally repaid, the
Subordinated Lender hereby agrees that all payments of or in respect of the SL
Debt, on account of principal or interest or otherwise, shall be postponed and
subordinated to full and final payment of the BFI Debt, and the Subordinated
Lender shall not request or accept any payment or distribution of any kind on or
in respect of the SL Debt, including but not limited to principal or interest or
other payments in respect of the Existing SL Debt.

 

4.The Subordinated Lender represents and warrants in favour of BFI that Schedule
“A” completely, accurately and without omission describes the Existing SL Debt.

 

5.The Subordinated Lender hereby agrees that he will not be entitled to demand
or accelerate the maturity of the principal of the SL Debt or enforce any rights
or remedies at law or in equity under or in respect of the SL Debt, including
any rights provided pursuant to the Personal Property Security Act (“PPSA”) in
Ontario or similar legislation in any other province of Canada, the Uniform
Commercial Code in Colorado or any other state of the United States of America,
or similar legislation in any other jurisdiction, or pursuant to the SL Loan
Documentation, and shall not commence or participate in any bankruptcy or
insolvency proceedings, until such time as the BFI Debt has been fully and
finally repaid.

 

6.Without prejudice to the prohibitions in this Agreement:

 

(a)if the Subordinated Lender receives any payment in violation of this
Agreement, the Subordinated Lender shall receive such payment in trust for BFI
and shall remit it to BFI forthwith upon receipt. The Subordinated Lender shall
be liable to BFI for the BFI Debt to the extent of an amount equivalent to any
such sums received and not remitted to BFI; and

 

(b)if the Subordinated Lender takes possession or causes possession to be taken
of the BFI Assets or otherwise enforces the SL Loan Documentation in violation
of this Agreement, the Subordinated Lender shall yield or shall cause any party
holding the security for his benefit to yield, on demand, possession thereof and
any proceeds resulting from the realization thereupon to BFI or any party acting
for BFI.

 

7.In the event that any of the BFI Security shall become enforceable, BFI or any
party acting for BFI or for its benefit will be entitled to take possession of
the BFI Assets to the exclusion of the Subordinated Lender and parties acting
for him or for his benefit.

 

 

 

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8.BFI will be entitled to receive proceeds resulting from the realization upon
and collection of the BFI Assets in priority to the Subordinated Lender.

 

9.The Subordinated Lender hereby postpones and subordinates all SL Security to
the BFI Security, and hereby confirms that all BFI Security shall rank in
priority to the SL Security regardless of:

 

(a)the date of execution, attachment, registration, perfection or re-perfection
of any BFI Security or SL Security;

 

(b)the date of any advance or advances made to any of the Obligors;

 

(c)the date of default by any of the Obligors under any of the BFI Security or
the SL Security or the date of crystallization of any floating charge held by
the Subordinated Lender or BFI; or

 

(d)any priority granted by any principle of law or any statute, including,
without limitation, Bank Act (Canada), Bankruptcy and Insolvency Act (Canada),
the PPSA, the Uniform Commercial Code (of any US state) or any like legislation.

 

10.The priorities herein referred to shall apply notwithstanding any contrary
priority or registration or filing and without the necessity of any further
documentation on the part of either BFI or the Subordinated Lender. However, it
is understood that the Subordinated Lender shall, at the expense of the
Obligors, enter into any documentation which BFI may require, acting reasonably,
in order to confirm or formalize the priorities herein referred to.

 

11.In the event that any of the BFI Assets subject to the BFI Security are sold
by BFI or for the benefit of BFI, such assets shall be sold free of any rights
held by the Subordinated Lender under the SL Security (a “Permitted Sale”);
provided however that this section shall not be deemed to be a release by the
Subordinated Lender of any security, interest, lien on, or right to, the
proceeds of such Permitted Sale, but subject to the subordination in favour of
BFI contained herein.

 

12.The Subordinated Lender agrees to promptly give written notice by email to
Graham Marr at gmarr@bridgingfinance.ca with a written copy to BFI (attention
Graham Marr) at 77 King Street West, Suite 2925, P.O. Box 322, Toronto, Ontario,
M5K 1K7, of any default by any of the Obligors under or pursuant to the SL Loan
Documentation.

 

13.This Agreement will continue in force as long as any Obligor is indebted or
liable (either directly, indirectly or contingently) to BFI.

 

14.This Agreement will be governed by and construed in accordance with the laws
of the Province of Ontario and federal laws of Canada applicable therein.

 

15.This Agreement will ensure to the benefit of and be binding upon the
respective successors and assigns of the parties hereto.

 

16.This Agreement may not be amended, modified or otherwise altered except
pursuant to a written instrument executed by BFI and the Subordinated Lender.

 

17.This Agreement may be executed in any number of and by different parties
hereto, on separate counterparts, including by way of facsimile. .pdf or other
electronic means, all of which when so executed, shall be deemed an original,
but all such counterparts shall constitute one and the same agreement.

 

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This Agreement has been executed as of the date first stated above.

 

 

                /s/ James Lowe Witness:   James Lowe      

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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We hereby confirm and agree to the above as of the ela te firs t stated above.

 

 

  BR1DGING FINANCE INC., as agent       Per: /s/ signature     Name:
Title: Portfolio Manager

        Per:       Name:
Title:

 

 

 

 

 

 

 

 

 

 

 

 

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Each of the Obligors acknowledges that:

 

1. it has taken communication of the foregoing Agreement, is in agreement with
the terms thereof to the extent that it is affected thereby and undertakes to
cooperate with respect thereto;     2. any payments of the SL Debt shall be made
in accordance with this Agreement until all of the BFI Debt has been fully and
finally repaid;     3. this Agreement is for the benefit of the parties thereto
only as between themselves and in no manner diminishes, as between either of the
parties and the Obligors, any security or rights now or hereafter existing; and
    4. no rights or commitments have been created or implied in favour of the
Obligors by this Agreement, and the parties to this Agreement may, as between
themselves, in their sole discretion, alter the terms thereof as they see fit,
without reference to the Obligors.

 

We hereby confirm and agree to the above as of the date first state above.

 

  URBAN-GRO, INC.       Per: /s/ Bradley Nattrass     Name: Bradley Nattrass
Title: CEO

 

  URBAN-GRO CANADA TECHNOLOGIES INC.       Per: /s/ Bradley Nattrass     Name:
Bradley Nattrass
Title: CEO

 

  IMPACT ENGINEERING, INC.       Per: /s/ Bradley Nattrass     Name: Bradley
Nattrass
Title: CEO

 

 

 

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SCHEDULE “A”

DESCRIPTION OF EXISTING SL DEBT

 

1.    Loan from the Subordinated Lender to urban-gro, Inc. in the principal
amount of US$2,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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