THIS NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE. THIS NOTE HAS BEEN SOLD IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.

 

SOLIS TEK INC.

(a Nevada Corporation)

 

Secured Promissory Note

 

No. SLTK-1 Original Principal Amount: $1,500,000 Issuance Date:  May 10, 2018  

 

FOR VALUE RECEIVED, SOLIS TEK INC. (the “Borrower”), a Nevada corporation,
hereby promise to pay to the order of YA II PN, Ltd. or its registered assigns
(the “Holder”) (i) the outstanding portion of the amount set out above as the
Original Principal Amount (as reduced pursuant to the terms hereof pursuant to
scheduled payment, redemption, conversion, or otherwise, the “Principal”) when
due, whether upon the Maturity Date (as defined below), acceleration, redemption
or otherwise (in each case in accordance with the terms hereof); and (ii) to pay
interest (“Interest”) on any outstanding Principal at the applicable Interest
Rate (as defined below) from the Issuance Date until the same is paid, whether
upon the Maturity Date or acceleration, redemption or otherwise (in each case in
accordance with the terms hereof) pursuant to the terms of this Secured
Promissory Note (the “Note”). All amounts to be paid by the Borrower to the
Holder shall be made by wire transfer of immediately available funds to the
account listed on Schedule I hereto (or to any other account specified by the
Holder to the Borrower in writing) to be received on or before Maturity Date.

 

This Note is being issued pursuant to that certain Securities Purchase Agreement
of even date herewith, as amended and supplemented from time to time (the
“Securities Purchase Agreement”) among the Holder, the Borrower and the
Guarantors. Certain capitalized terms used herein but otherwise not defined
herein are defined in Section 16 or in the Securities Purchase Agreement. The
payment and performance of the Borrower’s obligations under this Note and the
other Transaction Documents are being jointly and severally guaranteed by Solis
Tek Inc. (“S-Tek”), a California corporation, Solis Tek East Corporation
(“S-East”), a New Jersey corporation, and Zelda Horticulture, Inc. (“Zelda”), a
California corporation, pursuant to that certain Global Guaranty Agreement (the
“Global Guaranty Agreement”) of even date herewith. S-Tek, S-East and Zelda are
collectively referred to as the “Guarantors.”

 

The obligations under this Note and the other Transaction Documents are secured
by that certain Amended and Restated Global Security Agreement (the “Security
Agreement”) of even date herewith among the Borrower, the Guarantors and the
Holder.

 

 

 

 

1.GENERAL TERMS

 

(a)       Maturity Date. All amounts owed under this Note shall be due and
payable on February 9, 2019 (the “Maturity Date”). On the Maturity Date, the
Borrower shall pay to the Holder an amount in cash representing all then
outstanding Principal and accrued and unpaid Interest.

 

(b)       Interest. Interest shall accrue on the outstanding Principal balance
hereof at a rate equal to 8% per annum (“Interest Rate”); provided that upon an
Event of Default hereunder the Interest Rate shall be 18% per annum until all
amounts outstanding hereunder received by the Holder. Interest shall be
calculated on the basis of a 365-day year and the actual number of days elapsed,
to the extent permitted by applicable law.

 

2.       NO PREPAYMENT PENALTY. The Borrower may prepay all or any part of the
balance outstanding hereunder at any time without penalty.

 

3.       REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Holder that the following are true and correct as of the date
hereof:

 

(a)(i) The Borrower has the requisite corporate power and authority to enter
into and perform its obligations under this Note and any related agreements, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Note and any related agreements by the Borrower and the consummation by it
of the transactions contemplated hereby and thereby, have been duly authorized
by the each Borrower’s Board of Directors and no further consent or
authorization is required by any Borrower, Board of Directors, or stockholders,
(iii) this Note and any related agreements have been duly executed and delivered
by the Borrower, (iv) this Note and any related agreements, constitute the valid
and binding obligations of the Borrower enforceable against each Borrower in
accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and remedies.

 

(b) The execution, delivery and performance by the Borrower of its obligations
under this Note will not (i) result in a violation of any Borrower’s
incorporation documents or any certificate of designation of any outstanding
series of preferred stock or (ii) conflict with or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Borrower or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and the rules and regulations of the Principal Market on
which the Common Stock is quoted) applicable to the Borrower or any of its
subsidiaries or by which any material property or asset of the Borrower is bound
or affected and which would cause a Material Adverse Effect.

 

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4.       EVENTS OF DEFAULT.

 

(a)       An “Event of Default”, wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

 

(i)       any representation, warranty or covenant made in this Note, any other
Transaction Document shall be or shall be untrue or inaccurate in any material
respect as of the date when made or on any Closing Date (as defined in the
Securities Purchase Agreement);

 

(ii)       the Borrower’s or any Guarantor’s failure to observe or perform, or
comply with, in any material respect, any covenant, agreement, warranty or
obligation contained in, or otherwise commit any material breach or default of
any provision of this Note, any other Transaction Document, or any Event of
Default shall have occurred on this Note, the Securities Purchase Agreement or
any other Transaction Document;

 

(iii)       the Borrower’s failure to pay to the Holder any amount of Principal,
Interest or other amounts when and as due and payable under this Note or any
other Transaction Document;

 

(iv)       the Borrower or any Guarantor shall default in any of its obligations
under any other note or any mortgage, credit agreement or other facility,
indenture agreement, factoring agreement or other instrument under which there
may be issued, or by which there may be secured or evidenced any indebtedness
for borrowed money or money due under any long term leasing or factoring
arrangement of the Borrower or any Guarantor in an amount exceeding $100,000,
whether such indebtedness now exists or shall hereafter be created and such
default shall result in such indebtedness becoming or being declared due and
payable and such default is not cured within five (5) Business Days

 

(v)       any Borrower or any subsidiary of any Borrower shall commence, or
there shall be commenced against any Borrower or any subsidiary of any Borrower
under any applicable bankruptcy or insolvency laws as now or hereafter in effect
or any successor thereto, or any Borrower or any subsidiary of any Borrower
commences, or there shall be commenced against any Borrower or any subsidiary of
any Borrower, any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or
similar law of any jurisdiction whether now or hereafter in effect relating to
any Borrower or any subsidiary of any Borrower, in each case which remains
un-dismissed for a period of 61 days; or any Borrower or any subsidiary of any
Borrower is adjudicated insolvent or bankrupt pursuant to a final,
non-appealable order; or any order of relief or other order approving any such
case or proceeding is entered; or any Borrower or any subsidiary of any Borrower
suffers any appointment of any custodian, private or court appointed receiver or
the like for it or any substantial part of its property which continues
un-discharged or un-stayed for a period of 61 days; or any Borrower or any
subsidiary of any Borrower makes a general assignment for the benefit of
creditors; or any Borrower or any subsidiary of any Borrower shall admit in
writing that it is unable to pay its debts generally as they become due; or any
Borrower or any subsidiary of any Borrower shall call a meeting of its creditors
with a view to arranging a composition, adjustment or restructuring of its
debts; or any corporate or other action is taken by any Borrower or any
subsidiary of any Borrower for the purpose of effecting any of the foregoing;

 

(vi)       the common stock of the Borrower shall cease to be authorized for
quotation or trading on the OTC Markets, or trading in the common stock of the
Borrower has been suspended for any reason, for a period of more than ten
Trading Days or the Borrower shall not have timely made any filing with the SEC
that it is required to file in accordance with applicable securities laws or the
rules promulgated thereunder; or

 

3

 

 

(vii)       the Borrower is a party to any agreement memorializing (1) the
consummation of any transaction or event (whether by means of a share exchange
or tender offer applicable to the Common Stock, a liquidation, consolidation,
recapitalization, reclassification, combination or merger of the Borrower or a
sale, lease or other transfer of all or substantially all of the consolidated
assets of the Borrower) or a series of related transactions or events pursuant
to which all of the outstanding shares of Common Stock are exchanged for,
converted into or constitute solely the right to receive, cash, securities or
other property, (2) a consolidation or merger in which the Borrower is not the
surviving corporation, or (3) a sale, assignment, transfer, conveyance or other
disposal of all or substantially all of the properties or assets of the Borrower
to another person or entity (each of (1), (2) and (3) a “Change in Control”)
unless in connection with such Change in Control, all Principal and accrued and
unpaid Interest due under this Note will be paid in full or the Holder consents
to such Change in Control.

 

5.       REMEDIES UPON DEFAULT.

 

(a)       During the time that any portion of this Note is outstanding, if (i)
any Event of Default has occurred, the Holder, by notice in writing to any
Borrower, may at any time and from time to time declare the full unpaid
Principal of this Note or any portion thereof, plus Interest accrued thereon
(the “Accelerated Amount”) to be due and payable immediately or (ii) any Event
of Default specified in Section 4(a)(v) has occurred the unpaid Principal of the
Note and the Interest accrued thereon shall be immediately and automatically due
and payable without necessity of further action.

 

(b)       The Holder need not provide and the Borrower hereby waives any
presentment, demand, protest or other notice of any kind, (other than required
notice of conversion) and the Holder may immediately enforce any and all of its
rights and remedies hereunder and all other remedies available to it under
applicable law. Such declaration may be rescinded and annulled by Holder at any
time prior to payment hereunder. No such rescission or annulment shall affect
any subsequent Event of Default or impair any right consequent thereon

 

6.       REISSUANCE OF THIS NOTE. Upon receipt by any Borrower of evidence
reasonably satisfactory to such Borrower of the loss, theft, destruction or
mutilation of this Note, and, in the case of loss, theft or destruction, of an
indemnification undertaking by the Holder to such Borrower in customary form
and, in the case of mutilation, upon surrender and cancellation of this Note,
the Borrower shall execute and deliver to the Holder a new Note representing the
outstanding Principal which Note (i) shall be of like tenor with this Note, (ii)
shall represent, as indicated on the face of such new Note, the Principal
remaining outstanding (iii) shall have an issuance date, as indicated on the
face of such new Note, which is the same as the Issuance Date of this Note, (iv)
shall have the same rights and conditions as this Note, and (v) shall represent
accrued and unpaid Interest from the Issuance Date.

 

4

 

 

7.       NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms hereof must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) Business Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:

 

If to the Borrower, to: Solis Tek Inc.   16926 S. Keegan Ave, Suite A   Carson,
CA 90746  

Attention: Alan Lien

Telephone: (888)998-8881

  Email: alien@solis-tek.com

 

With a copy to:

 

Bingham & Associates Law Group, APC

 

1106 Second Street, Suite 195

Encinitas, CA 92024

Attention: Stanley Moskowitz, Esq.

Telephone: (858)523-0100

Email: smoskowitz@san.rr.com

 

If to the Holder: YA II PN, Ltd.   1012 Springfield Avenue   Mountainside,
NJ  07092   Attention: Mark Angelo  

Telephone: (201) 985-8300

Email: mangelo@yorkvilleadvisors.com

    With a copy to: David Gonzalez, Esq.   1012 Springfield Avenue  
Mountainside, NJ  07092   Telephone: (201) 985-8300  
Email:  dgonzalez@yorkvilleadvisors.com

 

or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three Business Days prior to the effectiveness of such change.
Written confirmation of receipt (i) given by the recipient of such notice,
consent, waiver or other communication, (ii) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (iii)
provided by a nationally recognized overnight delivery service, shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.

 

5

 

 

8.       No provision of this Note shall alter or impair the obligations of the
Borrower, which are absolute and unconditional, to pay the Principal of or
Interest (if any) on, this Note at the time, place, and rate, and in the
currency, herein prescribed. This Note is a direct obligation of each Borrower.
As long as this Note is outstanding, the Borrower shall not and shall cause its
subsidiaries not to, without the consent of the Holder, (i) amend its articles
of incorporation, bylaws or other charter documents so as to adversely affect
any rights of the Holder under this Note; or (ii) enter into any agreement with
respect to any of the foregoing.

 

9.       GOVERNING LAW; MANDATORY JURIDICTION. TO INDUCE HOLDER TO PURCHASE THE
NOTES, THE BORROWER IRREVOCABLY AGREE THAT ANY DISPUTE ARISING UNDER, RELATING
TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR RELATED TO
ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS AGREEMENT ANY OTHER
TRANSACTION DOCUMENT (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH OF CONTRACT
OR TORT) SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE
AND/OR FEDERAL COURTS LOCATED IN UNION COUNTY, NEW JERSEY; PROVIDED, HOWEVER,
HOLDER MAY, AT ITS SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY OTHER
JURISDICTION. THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION
CLAUSE AND GOVERNED BY AND INTERPRETED CONSISTENT WITH NEW JERSEY LAW. BORROWER
HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL
COURT HAVING ITS SITUS IN SAID COUNTY, AND WAIVES ANY OBJECTION BASED ON FORUM
NON CONVENIENS. BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
AND CONSENT THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, DIRECTED TO THE BORROWER AS SET FORTH HEREIN IN THE
MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.

 

10.       If an Event of Default has occurred, then the Borrower shall reimburse
the Holder promptly for all reasonable out-of-pocket fees, costs and expenses,
including, without limitation, reasonable attorneys’ fees and expenses incurred
by the Holder in any action in connection with this Note, including, without
limitation, those incurred: (i) during any workout, attempted workout, and/or in
connection with the rendering of legal advice as to the Holder’s rights,
remedies and obligations, (ii) collecting any sums which become due to the
Holder in accordance with the terms of this Note, (iii) defending or prosecuting
any proceeding or any counterclaim to any proceeding or appeal; or (iv) the
protection, preservation or enforcement of any rights or remedies of the Holder.

 

11.       Any waiver by the Holder of a breach of any provision of this Note
shall not operate as or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Note. The failure of
the Holder to insist upon strict adherence to any term of this Note on one or
more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Note. Any waiver must be in writing.

 

12.       If any provision of this Note is invalid, illegal or unenforceable,
the balance of this Note shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances. If it shall be found that any
Interest or other amount deemed Interest due hereunder shall violate applicable
laws governing usury, the applicable rate of Interest due hereunder shall
automatically be lowered to equal the maximum permitted rate of interest. The
Borrower covenant (to the extent that it may lawfully do so) that each Borrower
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law or other law
which would prohibit or forgive the Borrower from paying all or any portion of
the Principal of or Interest on this Note as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Note, and the Borrower (to the extent they
may lawfully do so) hereby expressly waive all benefits or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Holder, but will suffer
and permit the execution of every such as though no such law had been enacted.

 

6

 

 

13.       Whenever any payment or other obligation hereunder shall be due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day.

 

14.       Assignment of this Note by the Borrower shall be prohibited without
the prior written consent of the Holder. Holder shall be entitled to assign this
Note in whole or in part to any person or entity without the consent of the
Borrower.

 

15.       THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE
RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE
OF THE SECURITIES PURCHASE AGREEMENT AND THIS NOTE.

 

16. CERTAIN DEFINITIONS For purposes of this Note, the following terms shall
have the following meanings:

 

(a)       “Business Day” means any day except Saturday, Sunday and any day which
shall be a federal legal holiday in the United States or a day on which banking
institutions in the United States are authorized or required by law or other
government action to close.

 

(b)       “Issuance Date” means the date this Note is executed and delivered by
the Borrower to the Holder as set forth on the first page of this Note.

 

(c)       “Trading Day” means a day on which the principal Trading Market is
open for trading.

 

(d)       “Trading Market” means any of the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in question:
the NYSE American, the Nasdaq Global Market, the Nasdaq Global Select Market,
the New York Stock Exchange, or the OTC Markets (or any successors to any of the
foregoing).

 

(e)       “Transaction Documents” shall have the meaning set forth in the
Securities Purchase Agreement.

 

7

 

 

IN WITNESS WHEREOF, each Borrower has caused this Note to be duly executed by a
duly authorized officer as of the date first set forth above.

 

  BORROWER:   SOLIS TEK INC.                       By:     Name:     Title:  

 

8

 

 

Schedule I

 

(Holder Account Information)

 

YA II PN, LTD.

 

-Wiring Instructions-       *Account Currency: USD Intermediary Bank: The Bank
of New York Mellon   One Wall Street   New York, NY10286

 

Routing # 021 000 018

Swift Code: IRVTUS3N

Account # 890 1050 210

Beneficiary Bank: DMS Bank and Trust Ltd.   20 Genesis Close   Grand Cayman
KY1-1104

 

Swift Code: CAYIKYKY

 

Beneficiary Account Name: YA II PN, Ltd   1012 Springfield Avenue  
Mountainside, NJ 07092

 

Beneficiary Account # 01680100

 

FBO: YA II PN, LTD (Please instruct your bank to include the FBO details in the
wire payment- Bank to Bank reference)

 

9