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Exhibit 10.24
 
October 1, 2017
 
Mr. David Reichwein
208 1/2 South Poinsettia Place
Los Angeles, CA 90036
 
Re: Offer Letter
 
Dear Mr. Reichwein:
 
On behalf of GrowLife, Inc. (“Company”), it is my pleasure to extend to you this
letter of employment for the position of Vice-President of Research and
Development, effective as of October 1, 2017, reporting to Marco Hegyi, Chief
Executive Officer of the Company. Your duties will include the research,
development and go-to-market of innovative products and services with 50%+ gross
margins for the Company’s distribution channels, and the management of the
related personnel and resources. This agreement is conditioned upon the close of
GrowLife’s acquisition of assets as contemplated in the Letter of Intent dated
September 20, 2017.
 
1.            Compensation.
 
a.           Base Wage. In this exempt position, you will earn a base salary of
$150,000 on an annualized basis, subject to applicable tax withholding. Your
salary will be payable pursuant to the Company’s regular payroll policy.
 
b.           Incentive Compensation. Starting on the first quarter (“Q1”) you
are eligible to earn a quarterly commission based on 10% of tile gross margin
dollars.
 
c.       Transfer of Ownership Bonus. As additional compensation for the work
that you have done in the gross margin contribution to GrowLife you will receive
a one-time bonus of 6% of the gross margin of the latest four quarter that
GrowLife has received from the 100% ownership of tile business should PHOT be
sold in a majority to another party. This bonus will represent the complete
release of all intellectual property ownership of any GrowLife related assets.
 
2.            Employee Benefits.
 
a.           Paid Time Off. You will be eligible to accrue up to 15 days of paid
Personal Time Off “PTO” per calendar year, pro-rated for the remainder of this
calendar year. PTO may be used for vacation, sick or other personal needs. The
PTO days will not roll forward between years.
 
 
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b.          Group Plans. The Company will provide you with the opportunity to
participate in the benefits plans made available to other similarly situated
employees, including medical, and life insurance, as available, subject to any
eligibility requirements imposed by such plans.
 
3.            Equity Award.
 
a.           Stock Option. Subject to approval by the Company’s Board of
Directors, the Company will grant you an option to purchase 20,000,000 shares of
the Company’s Common Stock (“Shares”) under the Company’s 2011 Stock Incentive
Plan (“SIP”), with an exercise price per share set at the date of grant. Upon
full ownership of the tile and coating assets, 10,000,000 of these options will
be immediately fully vested and the remaining 10,000,000 shares will vest on a
quarterly basis over a period of two years beginning on the date of grant (the
“Vesting Commencement Date”). One eight (1/8th) of the Shares will vest one
quarter after the Vesting Commencement Date, and thereafter 1/8th of the Shares
shall vest each quarter on the same day of each quarter corresponding to the
Vesting Commencement Date until all shares have vested, provided that you do not
cease to be an employee of the Company prior to such date. The stock option
grant shall be subject to the terms and conditions of the Company’s SIP,
including vesting requirements. No right to any stock is earned or accrued until
such time that the Shares vest, nor does the grant confer any right to continue
vesting or employment.
 
In addition, notwithstanding the foregoing, in the event that your continuous
status as employee to the Company is terminated by the Company without Cause (as
defined below) or you terminate your employment with the Company for Good Reason
(as defined below), in either case upon or within twelve (12) months after a
Change in Control (as defined in the Company’s Stock Plan) then, subject to your
execution of a standard release of claims in favor of the Company (or its
successor), 100% of the total number of Shares shall immediately become vested.
 
4.           Employment Conditions.
 
a.           Right to Work. Add standard terms.
 
b.           Verification of Information. Add standard terms.
 
 
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c.           No Conflicting Obligations. You understand and agree that by
accepting this offer of employment, you represent to the Company that your
performance will not breach any other agreement to which you are a party and
that you have not, and will not during the term of your employment with the
Company, enter into any oral or written agreement in conflict with any of the
provisions of this letter or the Company’s policies. You are not to bring with
you to the Company, or use or disclose to any person associated with the
Company, any confidential or proprietary information belonging to any former
employer or other person or entity with respect to which you owe an obligation
of confidentiality under any agreement or otherwise. The Company does not need
and will not use such information and we will assist you in any way possible to
preserve and protect the confidentiality of proprietary information belonging to
third parties. Also, we expect you to abide by any obligations to refrain from
soliciting any person employed by or otherwise associated with any former
employer and suggest that you refrain from having any contact with such persons
until such time as any non-solicitation obligation expires.
 
d.           General Obligations. As an employee, you will be expected to adhere
to the Company’s standards of professionalism, loyalty, integrity, honesty,
reliability and respect for all. Please note that the Company is an equal
opportunity employer. The Company does not permit, and will not tolerate, the
unlawful discrimination or harassment of any employees, consultants, or related
third parties on the basis of sex, race, color, religion, age, national origin
or ancestry, marital status, veteran status, mental or physical disability or
medical condition, sexual orientation, pregnancy, childbirth or related medical
condition, or any other status protected by applicable law. Any questions
regarding this EEO statement should be directed to Human Resources.
 
5.           Severance Benefits.
 
a.          General Terms. In no way limiting the Company’s policy of employment
at-will, if your employment is terminated by the Company without Cause (as
defined below), and other than as a result of your death or disability, the
Company may offer certain severance benefits to you. As a condition to your
receipt of such benefits, you will be required to comply with your continuing
obligations (including the return of any Company property), resign from all
positions you hold with the Company, and execute the Company’s standard form of
release agreement releasing any claims you may have against the Company.
 
b.           Cause. For the purposes of this letter, “Cause” shall mean:
(i) your engaging in illegal conduct that was or is reasonably likely to be
materially injurious to the business or reputation of the Company or its
affiliates; (ii) your violation of a federal or state law or regulation that
results in material harm to the Company’s business; (iii) your material breach
of the terms of any confidentiality agreement or invention assignment agreement
between you and the Company; (iv) your being convicted of, or entering a plea of
nolo contendere to, a felony (other than a traffic violation) or committing any
act of fraud against, or the misappropriation of material property belonging to,
the Company or its affiliates; or (v) your repeated failure to substantially
perform your duties and responsibilities to the Company after notification by
the President or the Board of Directors of such failure and a reasonable
opportunity to cure such failure (30 days).
 
 
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c.           Good Reason. For the purposes of this letter, “Good Reason” shall
mean any of the following, without your express written consent: (i) a
significant reduction of your duties or responsibilities relative to your duties
or responsibilities in effect immediately prior to such reduction or your
removal from such duties or responsibilities, unless you are provided with
comparable duties and responsibilities; provided, however, that a reduction in
duties or responsibilities solely by virtue of the Company being acquired and
made part of a larger entity shall not constitute “Good Reason”; (ii) a material
reduction by the Company of your base salary as in effect immediately prior to
such reduction if there is no corresponding reduction in duties or
responsibilities (unless such reduction constitutes an across-the-board salary
reduction, approved by the Board of Directors of the Company, applicable to all
similarly-situated employees at the Company); (iii) a material reduction by the
Company in the kind or level of employee benefits to which your are entitled
immediately prior to such reduction with the result that your overall benefits
package is significantly reduced (unless such reduction constitutes an
across-the-board reduction, approved by the Board of Directors of the Company,
applicable to all similarly-situated employees at the Company); and (iv) the
failure of the Company to obtain the assumption of the material obligations of
your employment offer letter with the Company or of the restricted stock
purchase agreement by any successors.
 
6.         As a Company employee, you will be expected to abide by the Company’s
rules and standards. Specifically, you will be required to sign an
acknowledgment that you have read and that you understand the Company’s rules of
conduct which are included in the Company Handbook, which the Company will soon
complete and distribute.
 
7.       As a Company employee, the Company will, at the Company’s expense,
provide you with all the requisite facilities, equipment, software, and supplies
necessary for you to complete the duties of your role in accordance with the
Company’s policies.
 
8.         As a condition of your employment, you are also required to sign and
comply with an At-Will Employment, Confidential Information, Invention
Assignment and Arbitration Agreement which requires, among other provisions, the
assignment of patent rights to any invention made during your employment at the
Company, and non-disclosure of Company proprietary information. In the event of
any dispute or claim relating to or arising out of our employment relationship,
you and the Company agree that (i) any and all disputes between you and the
Company shall be fully and finally resolved by binding arbitration, (ii) you are
waiving any and all rights to a jury trial but all court remedies will be
available in arbitration, (iii) all disputes shall be resolved by a neutral
arbitrator who shall issue a written opinion, (iv) the arbitration shall provide
for adequate discovery, and (v) the Company shall pay all but the first $125 of
the arbitration fees. Please note that we must receive your signed Agreement
before your first day of employment.
 
 
 
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To indicate your acceptance of the Company’s offer, sign and date this letter
and return it, along with a signed and dated original copy of the
Confidentiality Agreement, on or before October 15, 2017. This letter, together
with the Confidentiality Agreement, set forth the terms of your employment with
the Company and supersedes any prior representations or agreements, whether
written or oral. This letter will be governed by the laws of Washington, without
regard to its conflict of laws provisions. This letter may not be modified
except by a written agreement, signed by the Chief Executive Officer of the
Company.
 
Very truly yours,
 
GROWLIFE, INC.
 
By: /s/ Marco Hegyi
(Signature)
 
Name: Marco Hegyi
 
Title: Chief Executive Officer
 
Agreed to and accepted:
 
Signature: /s/ David Reichwein
 
Printed Name: David Reichwein
 
Date: October 1, 2017
 
 
 
 
 
 
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