Blueprint





 







Exhibit 10.26

 



EQUITY PURCHASE AGREEMENT

 


This
equity purchase agreement is entered into as of August 29, 2019
(this “Agreement”), by and between GROWLIFE INC., a
Delaware corporation (the “Company”), and TRITON FUNDS
LP, a Delaware limited partnership (the
“Investor”).

 


WHEREAS,
the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to
the Investor, from time to time as provided herein, and the
Investor shall purchase up to Two Million Five Hundred Thousand
Dollars ($2,500,000) of the Company’s Common Stock (as
defined below);

 



NOW, THEREFORE, the parties hereto agree as follows:

 



ARTICLE I CERTAIN DEFINITIONS

 


Section
1.1 DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings specified or indicated (such
meanings to be equally applicable to both the singular and plural
forms of the terms defined):

 


“Agreement”
shall have the meaning specified in the preamble
hereof.

 


“Bankruptcy
Law” means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.

 


“Capital
Call” shall mean the right of the Company to require the
Investor to purchase shares of Common Stock, subject to the terms
and conditions of this Agreement.

 


“Capital
Call Notice” shall mean a written notice, substantially in
the form of Exhibit A hereto, to Investor setting forth the Capital
Call Shares which the Company intends to require Investor to
purchase pursuant to the terms of this Agreement.

 


“Capital
Call Shares” shall mean all shares of Common Stock issued, or
that the Company shall be entitled to issue, per applicable Capital
Call Notice in accordance with the terms and conditions of this
Agreement.

 


“Claim
Notice” shall have the meaning specified in Section
9.3(a).

 


“Clearing
Costs” shall mean all of the Investor’s broker and
Transfer Agent fees, excluding commissions.

 


“Clearing
Date” shall be the date on which the Investor receives the
Capital Call Shares as DWAC Shares in its brokerage
account.

 


“Closing”
shall mean one of the closings of a purchase and sale of shares of
Common Stock pursuant to Section 2.3.

 




 

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“Closing
Certificate” shall mean the closing certificate of the
Company in the form of Exhibit B hereto.

 


“Closing
Date” shall mean the date that is no later than two (2)
Trading Days after the Clearing Date.

 


“Commitment
Amount” shall mean Two Million Five Hundred Thousand Dollars
($2,500,000).

 


“Commitment
Period” shall mean the period commencing on the Execution
Date and ending on the earlier of (i) the date on which the
Investor shall have purchased Capital Call Shares pursuant to this
Agreement equal to the Commitment Amount, (ii) June 30, 2020, or
(iii) written notice of termination by the Company to the Investor
upon a material breach of this Agreement by Investor.

 


“Common
Stock” shall mean the Company’s common stock, $0.0001
par value per share, and any shares of any other class of common
stock whether now or hereafter authorized, having the right to
participate in the distribution of dividends (as and when declared)
and assets (upon liquidation of the Company).

 


“Common
Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at
any time Common Stock, including, without limitation, any debt,
preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive, Common
Stock.

 


“Company”
shall have the meaning specified in the preamble to this
Agreement.

 


“Custodian”
means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.

 


“Damages”
shall mean any loss, claim, damage, liability, cost and expense
(including, without limitation, reasonable attorneys’ fees
and disbursements and costs and expenses of expert witnesses and
investigation).

 


“Dispute
Period” shall have the meaning specified in Section
9.3(a).

 


“Document
Preparation Fee” shall mean $5,000 in cash payable from the
first Capital Call.

 


“DTC”
shall mean The Depository Trust Company, or any successor
performing substantially the same function for the
Company.

 


“DTC/FAST
Program” shall mean the DTC’s Fast Automated Securities
Transfer Program.

 


“DWAC”
shall mean Deposit Withdrawal at Custodian as defined by the
DTC.

 




 

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“DWAC
Eligible” shall mean that (a) the Common Stock is eligible at
DTC for full services pursuant to DTC’s Operational
Arrangements, including, without limitation, transfer through
DTC’s DWAC system, (b) the Company has been approved (without
revocation) by the DTC’s underwriting department, (c) the
Transfer Agent is approved as an agent in the DTC/FAST Program, (d)
the Capital Call Shares are otherwise eligible for delivery via
DWAC, and (e) the Transfer Agent does not have a policy prohibiting
or limiting delivery of the Capital Call Shares, as applicable, via
DWAC.

 


“DWAC
Shares” means shares of Common Stock that are (i) issued in
electronic form, (ii) freely tradable and transferable and without
restriction on resale and (iii) timely credited by the Company to
the Investor’s or its designee’s specified DWAC account
with DTC under the DTC/FAST Program, or any similar program
hereafter adopted by DTC performing substantially the same
function.

 


“Exchange
Act” shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated
thereunder.

 


“Exchange
Cap” shall have the meaning set forth in Section
7.1(c).

 


“Execution
Date” shall mean the date of this Agreement.

 


“FINRA”
shall mean the Financial Industry Regulatory Authority,
Inc.

 


“Indemnified
Party” shall have the meaning specified in Section
9.2.

 


“Indemnifying
Party” shall have the meaning specified in Section
9.2.

 


“Indemnity
Notice” shall have the meaning specified in Section
9.3(e).

 


“Investment
Amount” shall mean the Capital Call Shares referenced in the
Capital Call Notice multiplied by the Purchase Price.

 


“Investor”
shall have the meaning specified in the preamble to this
Agreement.

 


“Lien”
means a lien, charge, pledge, security interest, encumbrance, right
of first refusal, preemptive right or other
restriction.

 


“Material
Adverse Effect” shall mean any effect on the business,
operations, properties, or financial condition of the Company and
the Subsidiaries that is material and adverse to the Company and
the Subsidiaries and/or any condition, circumstance, or situation
that would prohibit or otherwise materially interfere with the
ability of the Company to enter into and perform its obligations
under any Transaction Document.

 


“Minimum
Closing Price” shall mean the closing price of the Common
Stock on the Clearing Date is equal to or greater than
$0.006.

 

“Person”
shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
 


“Principal
Market” shall mean any of the national exchanges (i.e. NYSE,
NYSE AMEX, Nasdaq), or principal quotation systems (i.e. OTCQX,
OTCQB, OTC Pink, the OTC Bulletin Board), or other principal
exchange or recognized quotation system which is at the time the
principal trading platform or market for the Common
Stock.

 




 

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“Purchase
Price” shall be $0.006 per share.

 


“Registration
Statement” shall have the meaning specified in Section
6.3.

 


“Regulation
D” shall mean Regulation D promulgated under the Securities
Act.

 


“Rule
144” shall mean Rule 144 under the Securities Act or any
similar provision then in force under the Securities
Act.

 


“SEC”
shall mean the United States Securities and Exchange
Commission.

 


“SEC
Documents” shall have the meaning specified in Section
4.5.

 


“Securities”
mean the Capital Call Shares.

 


“Securities
Act” shall mean the Securities Act of 1933, as
amended.

 


“Short
Sales” shall mean all “short sales” as defined in
Rule 200 of Regulation SHO under the Exchange Act.

 


“Subsidiary”
means any Person the Company wholly-owns or controls, or in which
the Company, directly or indirectly, owns a majority of the voting
stock or similar voting interest, in each case that would be
disclosable pursuant to Item 601(b)(21) of Regulation S-K
promulgated under the Securities Act.

 


“Third
Party Claim” shall have the meaning specified in Section
9.3(a).

 


“Trading
Day” shall mean a day on which the Principal Market shall be
open for business.

 


“Transaction
Documents” shall mean this Agreement and all schedules and
exhibits hereto and thereto.

 


“Transfer
Agent” shall mean the current transfer agent of the Company,
and any successor transfer agent of the Company.

 



ARTICLE II PURCHASE AND SALE OF COMMON STOCK

 


Section
2.1 CAPITAL CALLS. Upon the terms and conditions set forth herein
(including, without limitation, the provisions of Article VII), the
Company shall have the right, but not the obligation, to direct the
Investor, by its delivery to the Investor of a Capital Call Notice
from time to time, to purchase Capital Call Shares provided that
the amount of Capital Call Shares shall not exceed the Beneficial
Ownership Limitation set forth in Section 7.1(g).

 


Section
2.2 MECHANICS.

 


(a) CAPITAL CALL NOTICE. At any time and from time
to time during the Commitment Period, except as provided in this
Agreement, the Company may deliver a Capital Call Notice to
Investor, subject to satisfaction of the conditions set forth in
Section 7.2 and
otherwise provided herein. The Investor shall submit payment for
the Capital Call Shares as set forth in the Section 2.3
below.

 




 

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(b)
DATE OF DELIVERY OF CAPITAL CALL NOTICE. A Capital Call Notice
shall be deemed delivered on (i) the Trading Day it is received by
email by the Investor if such notice is received on or prior to
8:30 a.m. New York time or (ii) the immediately succeeding Trading
Day if it is received by email after 8:30 a.m. New York time on a
Trading Day or at any time on a day which is not a Trading
Day.

 


Section
2.3 CLOSINGS. The Closing of a Capital Call shall occur no later
than two (2) Trading Days following the Clearing Date. The Closing
shall occur upon the date in which the Investor shall deliver the
Investment Amount as requested in the Capital Call Notice, by wire
transfer of immediately available funds to an account designated by
the Company, so long as the Minimum Closing Price was met as of the
Clearing Date.

 



ARTICLE III REPRESENTATIONS AND WARRANTIES OF INVESTOR

 



The Investor represents and warrants to the Company
that:

 


Section
3.1 INTENT. The Investor is entering into this Agreement for its
own account and the Investor has no present arrangement (whether or
not legally binding) at any time to sell the Securities to or
through any Person in violation of the Securities Act or any
applicable state securities laws; provided, however, that the
Investor reserves the right to dispose of the Securities at any
time in accordance with federal and state securities laws
applicable to such disposition.

 


Section
3.2 NO LEGAL ADVICE FROM THE COMPANY. The Investor acknowledges
that it has had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with its own legal
counsel and investment and tax advisors. The Investor is relying
solely on such counsel and advisors and not on any statements or
representations of the Company or any of its representatives or
agents for legal, tax or investment advice with respect to this
investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.

 


Section
3.3 ACCREDITED INVESTOR. The Investor is an accredited investor as
defined in Rule 501(a)(3) of Regulation D, and the Investor has
such experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in the
Securities. The Investor acknowledges that an investment in the
Securities is speculative and involves a high degree of
risk.

 


Section
3.4 AUTHORITY. The Investor has the requisite power and authority
to enter into and perform its obligations under the Transaction
Documents and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of the Transaction
Documents and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary action and no further consent or authorization of the
Investor is required. The Transaction Documents to which it is a
party has been duly executed by the Investor, and when delivered by
the Investor in accordance with the terms hereof, will constitute
the valid and binding obligation of the Investor enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, or similar laws relating to, or affecting
generally the enforcement of, creditors’ rights and remedies
or by other equitable principles of general
application.

 




 

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Section
3.5 NOT AN AFFILIATE. The Investor is not an officer, director or
“affiliate” (as that term is defined in Rule 405 of the
Securities Act) of the Company.

 


Section
3.6 ORGANIZATION AND STANDING. The Investor is an entity duly
incorporated or formed, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation with
full right, corporate, partnership, limited liability company or
similar power and authority to enter into and to consummate the
transactions contemplated by the Transaction
Documents.

 


Section
3.7 ABSENCE OF CONFLICTS. The execution and delivery of the
Transaction Documents, and the consummation of the transactions
contemplated hereby and thereby and compliance with the
requirements hereof and thereof, will not (a) violate any law,
rule, regulation, order, writ, judgment, injunction, decree or
award binding on the Investor, (b) violate any provision of any
indenture, instrument or agreement to which the Investor is a party
or is subject, or by which the Investor or any of its assets is
bound, or conflict with or constitute a material default
thereunder, (c) result in the creation or imposition of any lien
pursuant to the terms of any such indenture, instrument or
agreement, or constitute a breach of any fiduciary duty owed by the
Investor to any third party, or (d) require the approval of any
third-party (that has not been obtained) pursuant to any material
contract, instrument, agreement, relationship or legal obligation
to which the Investor is subject or to which any of its assets,
operations or management may be subject.

 


Section 3.8
DISCLOSURE; ACCESS TO INFORMATION. The Investor had an opportunity
to review copies of the SEC Documents filed on behalf of the
Company and has had access to all publicly available information
with respect to the Company. The Investor and its counsel
have had a reasonable opportunity to perform and satisfy themselves
with the results of the searches and other due diligence reviews
reasonable or customary in a transaction of a similar nature,
including opportunity to ask questions of management with respect
to the Company.

 


Section
3.9 MANNER OF SALE. At no time was the Investor presented with or
solicited by or through any leaflet, public promotional meeting,
television advertisement or any other form of general solicitation
or advertising.

 



ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
COMPANY

 


The
Company represents and warrants to the Investor that, except as
disclosed in the SEC Documents or except as set forth in the
disclosure schedules hereto:

 




 

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Section
4.1 ORGANIZATION OF THE COMPANY. The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, with the
requisite power and authority to own and use its properties and
assets and to carry on its business as currently conducted. Neither
the Company nor any Subsidiary is in violation nor default of any
of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.
Each of the Company and the Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be
expected to result in a Material Adverse Effect and no proceeding
has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.

 


Section
4.2 AUTHORITY. The Company has the requisite corporate power and
authority to enter into and perform its obligations under the
Transaction Documents. The execution and delivery of the
Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action and no further consent
or authorization of the Company or its Board of Directors or
stockholders is required. The Transaction Documents have been duly
executed and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws
relating to, or affecting generally the enforcement of,
creditors’ rights and remedies or by other equitable
principles of general application.

 


Section
4.3 CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of (a) 6,000,000,000 shares of Common
Stock, par value of $0.0001 per share, of which approximately 3.8
billion shares of Common Stock are issued and outstanding and (b)
10,000,000 shares of preferred stock of which 0 shares are issued
and outstanding. Except as set forth on Schedule 4.3, the Company
has not issued any capital stock since its most recently filed
periodic report under the Exchange Act, other than pursuant to the
exercise of employee stock options under the Company’s stock
option plans, the issuance of shares of Common Stock to employees
pursuant to the Company’s employee stock purchase plans and
pursuant to the conversion and/or exercise of Common Stock
Equivalents outstanding as of the date of the most recently filed
periodic report under the Exchange Act. No Person has any right of
first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by
the Transaction Documents. Except as set forth on Schedule 4.3 and
except as a result of the purchase and sale of the Securities,
there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into
or exercisable or exchangeable for, or giving any Person any right
to subscribe for or acquire any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock or Common Stock Equivalents. The
issuance and sale of the Securities will not obligate the Company
to issue shares of Common Stock or other securities to any Person
(other than the Investor) and will not result in a right of any
holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. There are no
stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to
which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s
stockholders.

 




 

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Section
4.4 LISTING AND MAINTENANCE REQUIREMENTS. The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act,
and the Company has taken no action designed to, or which to its
knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the
Company received any notification that the SEC is contemplating
terminating such registration. Except as set forth on Schedule 4.5,
the Company has not, in the twelve (12) months preceding the date
hereof, received notice from the Principal Market on which the
Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance
requirements of such Principal Market. The Company is, and has no
reason to believe that it will not in the foreseeable future
continue to be, in compliance with all such listing and maintenance
requirements.

 


Section 4.5 SEC DOCUMENTS; DISCLOSURE.
Except as set forth on Schedule 4.5,
the Company has filed all reports, schedules, forms, statements and
other documents required to be filed by the Company under the
Securities Act and the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the one (1) year preceding the date
hereof (or such shorter period as the Company was required by law
or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the
“SEC Documents”) on a timely basis or has received a
valid extension of such time of filing and has filed any such SEC
Documents prior to the expiration of any such extension. As of
their respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act and the
Exchange Act, as applicable, and other federal laws, rules and
regulations applicable to such SEC Documents, and none of the SEC
Documents when filed contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the
SEC Documents comply as to form and substance in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods
involved (except (a) as may be otherwise indicated in such
financial statements or the notes thereto or (b) in the case of
unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the
Company as of the dates thereof and the results of operations and
cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, immaterial, year- end audit
adjustments). Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction
Documents, the Company confirms that neither it nor any other
Person acting on its behalf has provided the Investor or its agents
or counsel with any information that it believes constitutes or
might constitute material, non-public information. The Company
understands and confirms that the Investor will rely on the
foregoing representation in effecting transactions in securities of
the Company.

 




 

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Section
4.6 VALID ISSUANCES. The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid, and
non-assessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction
Documents.

 


Section
4.7 NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Capital Call
Shares, do not and will not: (a) result in a violation of the
Company’s or any Subsidiary’s certificate or articles
of incorporation, by-laws or other organizational or charter
documents, (b) conflict with, or constitute a material default (or
an event that with notice or lapse of time or both would become a
material default) under, result in the creation of any Lien upon
any of the properties or assets of the Company or any Subsidiary,
or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture,
instrument or any “lock-up” or similar provision of any
underwriting or similar agreement to which the Company or any
Subsidiary is a party, or (c) result in a violation of any federal,
state or local law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations)
applicable to the Company or any Subsidiary or by which any
property or asset of the Company or any Subsidiary is bound or
affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse
Effect) nor is the Company otherwise in violation of, conflict with
or in default under any of the foregoing. The business of the
Company is not being conducted in violation of any law, ordinance
or regulation of any governmental entity, except for possible
violations that either singly or in the aggregate do not and will
not have a Material Adverse Effect. The Company is not required
under federal, state or local law, rule or regulation to obtain any
consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it
to execute, deliver or perform any of its obligations under the
Transaction Documents (other than any SEC, FINRA or state
securities filings that may be required to be made by the Company
subsequent to any Closing or any registration statement that may be
filed pursuant hereto); provided that, for purposes of the
representation made in this sentence, the Company is assuming and
relying upon the accuracy of the relevant representations and
agreements of Investor herein.

 


Section
4.8 NO MATERIAL ADVERSE CHANGE. No event has occurred that would
have a Material Adverse Effect on the Company that has not been
disclosed in subsequent SEC filings.

 




 

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Section
4.9 LITIGATION AND OTHER PROCEEDINGS. Except as disclosed in the
SEC Documents or as set forth on Schedule 4.9, there are no
actions, suits, investigations, inquiries or proceedings pending
or, to the knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective
properties, nor has the Company received any written or oral notice
of any such action, suit, proceeding, inquiry or investigation,
which would have a Material Adverse Effect. No judgment, order,
writ, injunction or decree or award has been issued by or, to the
knowledge of the Company, requested of any court, arbitrator or
governmental agency which would have a Material Adverse Effect.
There has not been, and to the knowledge of the Company, there is
not pending or contemplated, any investigation by the SEC involving
the Company, any Subsidiary or any current or former director or
officer of the Company or any Subsidiary.

 


Section
4.10 REGISTRATION RIGHTS. Except as set forth on Schedule 4.10, no
Person (other than the Investor) has any right to cause the Company
to effect the registration under the Securities Act of any
securities of the Company or any Subsidiary.

 



ARTICLE V COVENANTS OF INVESTOR

 


Section
5.1 COMPLIANCE WITH LAW; TRADING IN SECURITIES. The
Investor’s trading activities with respect to shares of
Common Stock will be in compliance with all applicable state and
federal securities laws and regulations and the rules and
regulations of FINRA and the Principal Market.

 


Section
5.2 SHORT SALES AND CONFIDENTIALITY. Neither the Investor, nor any
affiliate of the Investor acting on its behalf or pursuant to any
understanding with it, will execute any Short Sales during the
period from the date hereof to the end of the Commitment Period.
For the purposes hereof, and in accordance with Regulation SHO, the
sale after delivery of a Capital Call Notice of such number of
shares of Common Stock reasonably expected to be purchased under a
Capital Call Notice shall not be deemed a Short Sale. The Investor
shall, until such time as the transactions contemplated by the
Transaction Documents are publicly disclosed by the Company in
accordance with the terms of the Transaction Documents, maintain
the confidentiality of the existence and terms of this transaction
and the information included in the Transaction
Documents.

 



ARTICLE VI COVENANTS OF THE COMPANY

 


Section
6.1 LISTING OF COMMON STOCK. The Company shall promptly secure the
listing of all of the Capital Call Shares to be issued to the
Investor hereunder on the Principal Market (subject to official
notice of issuance) and shall use commercially reasonable best
efforts to maintain, so long as any shares of Common Stock shall be
so listed, the listing of all such Capital Call Shares from time to
time issuable hereunder. The Company shall use its commercially
reasonable efforts to continue the listing and trading of the
Common Stock on the Principal Market (including, without
limitation, maintaining sufficient net tangible assets) and will
comply in all respects with the Company’s reporting, filing
and other obligations under the bylaws or rules of FINRA and the
Principal Market.

 




 

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Section
6.2 EQUITY LINES AND CONVERTIBLE NOTES. So long as this Agreement
remains in effect, the Company covenants and agrees that it will
not, without the prior written consent of the Investor, enter into
an equity line of credit agreement with any other party. For the
avoidance of doubt, nothing contained in the Transaction Documents
shall restrict, or require the Investor’s consent for, any
agreement providing for the issuance or distribution of any equity
securities of the Company pursuant to any agreement or arrangement
that is not covered in this Section 6.2.

 


Section
6.3 FILING OF CURRENT REPORT AND REGISTRATION STATEMENT. The
Company agrees that it shall file a Current Report on Form 8-K,
including the Transaction Documents as exhibits thereto, with the
SEC within the time required by the Exchange Act, relating to the
transactions contemplated by, and describing the material terms and
conditions of, the Transaction Documents (the “Current
Report”). The Company shall permit the Investor to review and
comment upon the final pre-filing draft version of the Current
Report at least two (2) Trading Days prior to its filing with the
SEC, and the Company shall give reasonable consideration to all
such comments. The Investor shall use its reasonable best efforts
to comment upon the final pre-filing draft version of the Current
Report within one (1) Trading Day from the date the Investor
receives it from the Company. The Company shall also file with the
SEC, within thirty (30) calendar days from the date hereof, a new
registration statement (the “Registration Statement”)
covering only the resale of the Capital Call Shares.

 



ARTICLE VII CONDITIONS TO DELIVERY OF CAPITAL CALL NOTICES AND
CONDITIONS TO CLOSING

 


Section
7.1 CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO ISSUE AND
SELL CAPITAL CALL SHARES. The right of the Company to issue and
sell the Capital Call Shares to the Investor is subject to the
satisfaction of each of the conditions set forth
below:

 


(a)
ACCURACY OF INVESTOR’S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Investor shall be true and
correct in all material respects as of the date of this Agreement
and as of the date of each Closing as though made at each such
time.

 


(b)
PERFORMANCE BY INVESTOR. Investor shall have performed, satisfied
and complied in all respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by the Investor at or prior to such
Closing.

 


(c)
PRINCIPAL MARKET REGULATION. The Company shall not issue any
Capital Call Shares, and the Investor shall not have the right to
receive any Capital Call Shares, if the issuance of such Capital
Call Shares would exceed the aggregate number of shares of Common
Stock which the Company may issue without breaching the
Company’s obligations under the rules or regulations of the
Principal Market (the “Exchange Cap”).

 




 

11








 






 

 


Section
7.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF INVESTOR TO PURCHASE
CAPITAL CALL SHARES. The obligation of the Investor hereunder to
purchase Capital Call Shares is subject to the satisfaction of each
of the following conditions:

 


(a)
EFFECTIVE REGISTRATION STATEMENT. The Registration Statement, and
any amendment or supplement thereto, shall remain effective for the
resale by the Investor of the Capital Call Shares and (i) neither
the Company nor the Investor shall have received notice that the
SEC has issued or intends to issue a stop order with respect to
such Registration Statement or that the SEC otherwise has suspended
or withdrawn the effectiveness of such Registration Statement,
either temporarily or permanently, or intends or has threatened to
do so and (ii) no other suspension of the use of, or withdrawal of
the effectiveness of, such Registration Statement or related
prospectus shall exist.

 


(b)
ACCURACY OF THE COMPANY’S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company shall be true and
correct in all material respects as of the date of this Agreement
and as of the date of each Closing (except for representations and
warranties specifically made as of a particular date).

 


(c)
PERFORMANCE BY THE COMPANY. The Company shall have performed,
satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company.

 


(d)
NO INJUNCTION. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or adopted by any court or governmental authority of
competent jurisdiction that prohibits or directly and materially
adversely affects any of the transactions contemplated by the
Transaction Documents, and no proceeding shall have been commenced
that may have the effect of prohibiting or materially adversely
affecting any of the transactions contemplated by the Transaction
Documents.

 


(e)
ADVERSE CHANGES. Since the date of filing of the Company’s
most recent SEC Document, no event that had or is reasonably likely
to have a Material Adverse Effect has occurred.

 


(f)
NO SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK. The
trading of the Common Stock shall not have been suspended by the
SEC, the Principal Market or FINRA, or otherwise halted for any
reason, and the Common Stock shall have been approved for listing
or quotation on and shall not have been delisted from the Principal
Market. In the event of a suspension, delisting, or halting for any
reason, of the trading of the Common Stock, as contemplated by this
Section 7.2(f), the Investor shall have the right to return to the
Company any amount of Capital Call Shares associated with such
Capital Call, and the Investment Amount with respect to such
Capital Call shall be reduced accordingly.

 




 

12








 






 

 


(g)
BENEFICIAL OWNERSHIP LIMITATION. The number of Capital Call Shares
then to be purchased by the Investor shall not exceed the number of
such shares that, when aggregated with all other shares of Common
Stock then owned by the Investor beneficially or deemed
beneficially owned by the Investor, would result in the Investor
owning more than the Beneficial Ownership Limitation (as defined
below), as determined in accordance with Section 16 of the Exchange
Act and the regulations promulgated thereunder. For purposes of
this Section 7.2(g), in the event that the amount of Common Stock
outstanding, as determined in accordance with Section 16 of the
Exchange Act and the regulations promulgated thereunder, is greater
on a Closing Date than on the date upon which the Capital Call
Notice associated with such Closing Date is given, the amount of
Common Stock outstanding on such Closing Date shall govern for
purposes of determining whether the Investor, when aggregating all
purchases of Common Stock made pursuant to this Agreement, would
own more than the Beneficial Ownership Limitation following such
Closing Date. The “Beneficial Ownership Limitation”
shall be 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of
shares of Common Stock issuable pursuant to a Capital Call
Notice.

 


(h)
PRINCIPAL MARKET REGULATION. The issuance of the Capital Call
Shares shall not exceed the Exchange Cap.

 


(i)
NO KNOWLEDGE. The Company shall have no knowledge of any event more
likely than not to have the effect of causing the Registration
Statement to be suspended or otherwise ineffective (which event is
more likely than not to occur within the fifteen (15) Trading Days
following the Trading Day on which such Capital Call Notice is
deemed delivered).

 


(j)
NO VIOLATION OF SHAREHOLDER APPROVAL REQUIREMENT. The issuance of
the Capital Call Shares shall not violate the shareholder approval
requirements of the Principal Market.

 


(k)
OFFICER’S CERTIFICATE. On the date of delivery of each
Capital Call Notice, the Investor shall have received the Closing
Certificate executed by an executive officer of the Company and to
the effect that all the conditions to such Closing shall have been
satisfied as of the date of each such certificate.

 


(l)
DWAC ELIGIBLE. The Common Stock must be DWAC Eligible and not
subject to a “DTC chill.”

 


(m)
SEC DOCUMENTS. All reports, schedules, registrations, forms,
statements, information and other documents required to have been
filed by the Company with the SEC pursuant to the reporting
requirements of the Exchange Act shall have been filed with the SEC
within the applicable time periods prescribed for such filings
under the Exchange Act.

 



ARTICLE VIII LEGENDS

 


Section
8.1 NO RESTRICTIVE STOCK LEGEND. No restrictive stock legend shall
be placed on the share certificates representing the Capital Call
Shares.

 


Section
8.2 INVESTOR’S COMPLIANCE. Nothing in this Article VIII shall
affect in any way the Investor’s obligations hereunder to
comply with all applicable securities laws upon the sale of the
Common Stock.

 




 

13








 






 

 



ARTICLE IX NOTICES; INDEMNIFICATION

 


Section
9.1 NOTICES. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be
in writing and, unless otherwise specified herein, shall be (a)
personally served, (b) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (c) delivered
by reputable air courier service with charges prepaid, or (d)
transmitted by hand delivery, telegram, or email as a PDF,
addressed as set forth below or to such other address as such party
shall have specified most recently by written notice given in
accordance herewith. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (i) upon
hand delivery or delivery by email at the address designated below
(if delivered on a business day during normal business hours where
such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during
normal business hours where such notice is to be received) or (ii)
on the second business day following the date of mailing by express
courier service or on the fifth business day after deposited in the
mail, in each case, fully prepaid, addressed to such address, or
upon actual receipt of such mailing, whichever shall first
occur.

 



The addresses for such communications shall be:

 



If to the Company:

 



GROWLIFE INC, 5400 Carillon Point, Kirkland, WA 98033

 



Email: mscott@growlifeinc.com

 



If to the Investor:

 



TRITON FUNDS LLC 1262 Prospect Street La Jolla, CA
92037

 



Email: tritonfunds@tritonfunds.com

 



Either party hereto may from time to time change its address or
email for notices under this Section 9.1 by giving at least ten
(10) days’ prior written notice of such changed address to
the other party hereto.

 


Section
9.2 INDEMNIFICATION. Each party (an “Indemnifying
Party”) agrees to indemnify and hold harmless the other party
along with its officers, directors, employees, and authorized
agents, and each Person or entity, if any, who controls such party
within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act (an “Indemnified Party”) from
and against any Damages, joint or several, and any action in
respect thereof to which the Indemnified Party becomes subject to,
resulting from, arising out of or relating to (i) any
misrepresentation, breach of warranty or nonfulfillment of or
failure to perform any covenant or agreement on the part of the
Indemnifying Party contained in this Agreement, (ii) any untrue
statement or alleged untrue statement of a material fact contained
in the Registration Statement or any post-effective amendment
thereof or supplement thereto, or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading, (iii) any
untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or contained in the final
prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the
omission or alleged omission to state therein any material fact
necessary to make the statements made therein, in the light of the
circumstances under which the statements therein were made, not
misleading, or (iv) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation under the Securities Act,
the Exchange Act or any state securities law, as such Damages are
incurred, except to the extent such Damages result primarily from
the Indemnified Party’s failure to perform any covenant or
agreement contained in this Agreement or the Indemnified
Party’s negligence, recklessness or bad faith in performing
its obligations under this Agreement; provided, however, that the
foregoing indemnity agreement shall not apply to any Damages of an
Indemnified Party to the extent, but only to the extent, arising
out of or based upon any untrue statement or alleged untrue
statement or omission or alleged omission made by an Indemnifying
Party in reliance upon and in conformity with written information
furnished to the Indemnifying Party by the Indemnified Party
expressly for use in the Registration Statement, any post-effective
amendment thereof or supplement thereto, or any preliminary
prospectus or final prospectus (as amended or
supplemented).

 




 

14








 






 

 


Section
9.3 METHOD OF ASSERTING INDEMNIFICATION CLAIMS. All claims for
indemnification by any Indemnified Party under Section 9.2 shall be
asserted and resolved as follows:

 


(a)
In the event any claim or demand in respect of which an Indemnified
Party might seek indemnity under Section 9.2 is asserted against or
sought to be collected from such Indemnified Party by a Person
other than a party hereto or an affiliate thereof (a “Third
Party Claim”), the Indemnified Party shall deliver a written
notification, enclosing a copy of all papers served, if any, and
specifying the nature of and basis for such Third Party Claim and
for the Indemnified Party’s claim for indemnification that is
being asserted under any provision of Section 9.2 against an
Indemnifying Party, together with the amount or, if not then
reasonably ascertainable, the estimated amount, determined in good
faith, of such Third Party Claim (a “Claim Notice”)
with reasonable promptness to the Indemnifying Party. If the
Indemnified Party fails to provide the Claim Notice with reasonable
promptness after the Indemnified Party receives notice of such
Third Party Claim, the Indemnifying Party shall not be obligated to
indemnify the Indemnified Party with respect to such Third Party
Claim to the extent that the Indemnifying Party’s ability to
defend has been prejudiced by such failure of the Indemnified
Party. The Indemnifying Party shall notify the Indemnified Party as
soon as practicable within the period ending thirty (30) calendar
days following receipt by the Indemnifying Party of either a Claim
Notice or an Indemnity Notice (as defined below) (the
“Dispute Period”) whether the Indemnifying Party
disputes its liability or the amount of its liability to the
Indemnified Party under Section 9.2 and whether the Indemnifying
Party desires, at its sole cost and expense, to defend the
Indemnified Party against such Third Party Claim.

 


(i)
If the Indemnifying Party notifies the Indemnified Party within the
Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to
this Section 9.3(a), then the Indemnifying Party shall have the
right to defend, with counsel reasonably satisfactory to the
Indemnified Party, at the sole cost and expense of the Indemnifying
Party, such Third Party Claim by all appropriate proceedings, which
proceedings shall be vigorously and diligently prosecuted by the
Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with the consent of
the Indemnified Party in the case of any settlement that provides
for any relief other than the payment of monetary damages or that
provides for the payment of monetary damages as to which the
Indemnified Party shall not be indemnified in full pursuant to
Section 9.2). The Indemnifying Party shall have full control of
such defense and proceedings, including any compromise or
settlement thereof; provided, however, that the Indemnified Party
may, at the sole cost and expense of the Indemnified Party, at any
time prior to the Indemnifying Party’s delivery of the notice
referred to in the first sentence of this clause (i), file any
motion, answer or other pleadings or take any other action that the
Indemnified Party reasonably believes to be necessary or
appropriate to protect its interests; and provided, further, that
if requested by the Indemnifying Party, the Indemnified Party will,
at the sole cost and expense of the Indemnifying Party, provide
reasonable cooperation to the Indemnifying Party in contesting any
Third Party Claim that the Indemnifying Party elects to contest.
The Indemnified Party may participate in, but not control, any
defense or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this clause (i), and except as
provided in the preceding sentence, the Indemnified Party shall
bear its own costs and expenses with respect to such participation.
Notwithstanding the foregoing, the Indemnified Party may take over
the control of the defense or settlement of a Third Party Claim at
any time if it irrevocably waives its right to indemnity under
Section 9.2 with respect to such Third Party Claim.

 




 

15








 






 

 


(ii)
If the Indemnifying Party fails to notify the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to
defend the Third Party Claim pursuant to Section 9.3(a), or if the
Indemnifying Party gives such notice but fails to prosecute
vigorously and diligently or settle the Third Party Claim, or if
the Indemnifying Party fails to give any notice whatsoever within
the Dispute Period, then the Indemnified Party shall have the right
to defend, at the sole cost and expense of the Indemnifying Party,
the Third Party Claim by all appropriate proceedings, which
proceedings shall be prosecuted by the Indemnified Party in a
reasonable manner and in good faith or will be settled at the
discretion of the Indemnified Party(with the consent of the
Indemnifying Party, which consent will not be unreasonably
withheld). The Indemnified Party will have full control of such
defense and proceedings, including any compromise or settlement
thereof; provided, however, that if requested by the Indemnified
Party, the Indemnifying Party will, at the sole cost and expense of
the Indemnifying Party, provide reasonable cooperation to the
Indemnified Party and its counsel in contesting any Third Party
Claim which the Indemnified Party is contesting. Notwithstanding
the foregoing provisions of this clause (ii), if the Indemnifying
Party has notified the Indemnified Party within the Dispute Period
that the Indemnifying Party disputes its liability or the amount of
its liability hereunder to the Indemnified Party with respect to
such Third Party Claim and if such dispute is resolved in favor of
the Indemnifying Party in the manner provided in clause (iii)
below, the Indemnifying Party will not be required to bear the
costs and expenses of the Indemnified Party’s defense
pursuant to this clause (ii) or of the Indemnifying Party’s
participation therein at the Indemnified Party’s request, and
the Indemnified Party shall reimburse the Indemnifying Party in
full for all reasonable costs and expenses incurred by the
Indemnifying Party in connection with such litigation. The
Indemnifying Party may participate in, but not control, any defense
or settlement controlled by the Indemnified Party pursuant to this
clause (ii), and the Indemnifying Party shall bear its own costs
and expenses with respect to such participation.

 


(iii)
If the Indemnifying Party notifies the Indemnified Party that it
does not dispute its liability or the amount of its liability to
the Indemnified Party with respect to the Third Party Claim under
Section 9.2 or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes its
liability or the amount of its liability to the Indemnified Party
with respect to such Third Party Claim, the amount of Damages
specified in the Claim Notice shall be conclusively deemed a
liability of the Indemnifying Party under Section 9.2 and the
Indemnifying Party shall pay the amount of such Damages to the
Indemnified Party on demand. If the Indemnifying Party has timely
disputed its liability or the amount of its liability with respect
to such claim, the Indemnifying Party and the Indemnified Party
shall proceed in good faith to negotiate a resolution of such
dispute; provided, however, that if the dispute is not resolved
within thirty (30) days after the Claim Notice, the Indemnifying
Party shall be entitled to institute such legal action as it deems
appropriate.

 


(b)
In the event any Indemnified Party should have a claim under
Section 9.2 against the Indemnifying Party that does not involve a
Third Party Claim, the Indemnified Party shall deliver a written
notification of a claim for indemnity under Section 9.2 specifying
the nature of and basis for such claim, together with the amount
or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of such claim (an “Indemnity
Notice”) with reasonable promptness to the Indemnifying
Party. The failure by any Indemnified Party to give the Indemnity
Notice shall not impair such party’s rights hereunder except
to the extent that the Indemnifying Party demonstrates that it has
been irreparably prejudiced thereby. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the claim
or the amount of the claim described in such Indemnity Notice or
fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim or the amount of
the claim described in such Indemnity Notice, the amount of Damages
specified in the Indemnity Notice will be conclusively deemed a
liability of the Indemnifying Party under Section 9.2 and the
Indemnifying Party shall pay the amount of such Damages to the
Indemnified Party on demand. If the Indemnifying Party has timely
disputed its liability or the amount of its liability with respect
to such claim, the Indemnifying Party and the Indemnified Party
shall proceed in good faith to negotiate a resolution of such
dispute; provided, however, that if the dispute is not resolved
within thirty (30) days after the Claim Notice, the Indemnifying
Party shall be entitled to institute such legal action as it deems
appropriate.

 




 

16








 






 

 


(c)
The Indemnifying Party agrees to pay the Indemnified Party,
promptly as such expenses are incurred and are due and payable, for
any reasonable legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such
Claim.

 


(d)
The indemnity provisions contained herein shall be in addition to
(i) any cause of action or similar rights of the Indemnified Party
against the Indemnifying Party or others, and (ii) any liabilities
the Indemnifying Party may be subject to.

 



ARTICLE X MISCELLANEOUS

 


Section
10.1 GOVERNING LAW; JURISDICTION. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of
Delaware without regard to the principles of conflicts of law. Each
of the Company and the Investor hereby submits to the exclusive
jurisdiction of the United States federal and state courts located
in California, County of Orange, with respect to any dispute
arising under the Transaction Documents or the transactions
contemplated thereby.

 


Section
10.2 JURY TRIAL WAIVER. The Company and the Investor hereby waive a
trial by jury in any action, proceeding or counterclaim brought by
either of the parties hereto against the other in respect of any
matter arising out of or in connection with the Transaction
Documents.

 


Section
10.3 ASSIGNMENT. The Transaction Documents shall be binding upon
and inure to the benefit of the Company and the Investor and their
respective successors. Neither this Agreement nor any rights of the
Investor or the Company hereunder may be assigned by either party
to any other Person.

 


Section
10.4 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the Company and the Investor and their respective
successors, and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person, except as set forth in
Section 9.3.

 


Section
10.5 TERMINATION. The Company may terminate this Agreement at any
time by written notice to the Investor in the event of a material
breach of this Agreement by the Investor. In addition, this
Agreement shall automatically terminate on the earlier of (i) the
end of the Commitment Period; (ii) the date that the Company sells
and the Investor purchases the Commitment Amount; (iii) the date in
which the Registration Statement is no longer effective, or (iv)
the date that, pursuant to or within the meaning of any Bankruptcy
Law, the Company commences a voluntary case or any Person commences
a proceeding against the Company, a Custodian is appointed for the
Company or for all or substantially all of its property or the
Company makes a general assignment for the benefit of its
creditors; provided, however, that the provisions of Articles III,
IV, V, VI, IX and the agreements and covenants of the Company and
the Investor set forth in Article X shall survive the termination
of this Agreement.

 




 

17








 






 

 


Section
10.6 ENTIRE AGREEMENT. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of
the Company and the Investor with respect to the matters covered
herein and therein and supersede all prior agreements and
understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents,
exhibits and schedules.

 


Section
10.7 FEES AND EXPENSES. Except as expressly set forth in the
Transaction Documents or any other writing to the contrary, each
party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company
shall pay all Transfer Agent fees (including any fees required for
same-day processing of any instruction letter delivered by the
Company), stamp taxes and other taxes and duties levied in
connection with the delivery of any Securities to the
Investor.

 


Section
10.8 COUNTERPARTS. The Transaction Documents may be executed in
multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument
which shall be enforceable against the parties actually executing
such counterparts and all of which together shall constitute one
and the same instrument. The Transaction Documents may be delivered
to the other parties hereto by email of a copy of the Transaction
Documents bearing the signature of the parties so delivering this
Agreement.

 


Section
10.9 SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision;
provided that such severability shall be ineffective if it
materially changes the economic benefit of this Agreement to any
party.

 


Section
10.10 FURTHER ASSURANCES. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions
contemplated hereby.

 


Section
10.11 NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be
applied against any party.

 


Section
10.12 EQUITABLE RELIEF. The Company recognizes that in the event
that it fails to perform, observe, or discharge any or all of its
obligations under this Agreement, any remedy at law may prove to be
inadequate relief to the Investor. The Company therefore agrees
that the Investor shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving
actual damages.

 




 

18








 






 

 


Section
10.13 TITLE AND SUBTITLES. The titles and subtitles used in this
Agreement are used for the convenience of reference and are not to
be considered in construing or interpreting this
Agreement.

 


Section
10.14 AMENDMENTS; WAIVERS. No provision of this Agreement may be
amended or waived by the parties from and after the date that is
one (1) Trading Day immediately preceding the initial filing of the
Registration Statement with the SEC. Subject to the immediately
preceding sentence, (i) no provision of this Agreement may be
amended other than by a written instrument signed by both parties
hereto and (ii) no provision of this Agreement may be waived other
than in a written instrument signed by the party against whom
enforcement of such waiver is sought. No failure or delay in the
exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or
privilege.

 


Section
10.15 PUBLICITY. The Company and the Investor shall consult with
each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and
no party shall issue any such press release or otherwise make any
such public statement, other than as required by law, without the
prior written consent of the other parties, which consent shall not
be unreasonably withheld or delayed, except that no prior consent
shall be required if such disclosure is required by law, in which
such case the disclosing party shall provide the other party with
prior notice of such public statement. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of the
Investor without the prior written consent of the Investor, except
to the extent required by law. The Investor acknowledges that the
Transaction Documents may be deemed to be “material
contracts,” as that term is defined by Item 601(b)(10) of
Regulation S-K, and that the Company may therefore be required to
file such documents as exhibits to reports or registration
statements filed under the Securities Act or the Exchange Act. The
Investor further agrees that the status of such documents and
materials as material contracts shall be determined solely by the
Company, in consultation with its counsel.

 



[Signature Page Follows]

 


 




 

19








 






IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as
of the day and year first above written.

 



GROWLIFE INC.

 



By:

 



/s/ Marco Hegyi

 



Name: Marco Hegyi

 



Title: Chief Executive Officer

 



TRITON FUNDS LP

 



By: /s/ Tyler Hoffman

 



Name: Tyler Hoffman

 



Title: Authorized Signatory

 



[Signature Page to equity purchase agreement]

 


 




 

20








 







DISCLOSURE SCHEDULES TO EQUITY PURCHASE AGREEMENT

 



Schedule 4.3 – Capitalization

 



Schedule 4.5 – SEC Documents

 



Schedule 4.9 – Litigation

 



Schedule 4.10 – Registration Rights

 




 

21








 







EXHIBIT A

 



FORM OF CAPITAL CALL NOTICE

 



TO: TRITON FUNDS LP

 


We
refer to the equity purchase agreement, dated as of August __,
2019, (the “Agreement”), entered into by and between
GROWLIFE INC., and you. Capitalized terms defined in the Agreement
shall, unless otherwise defined herein, have the same meaning when
used herein.

 



We hereby:

 



1) Give you notice that we require you to purchase __________
Capital Call Shares; and

 



2) Certify that, as of the date hereof, the conditions set forth in
Section 7.2 of the Agreement are satisfied.

 



GROWLIFE INC.

 



By: _______________________

 



Name:

 



Title:

 




 

22








 







EXHIBIT B

 



FORM OF OFFICER’S CERTIFICATE OF GROWLIFE INC.

 



Pursuant to Section 7.2(k) of that certain equity purchase
agreement, dated as of August __, 2019 (the
“Agreement”), by and between GROWLIFE INC. (the
“Company”) and TRITON FUNDS LP (the
“Investor”), the undersigned, in his capacity as Chief
Executive Officer of the Company, and not in his individual
capacity, hereby certifies, as of the date hereof (such date, the
“Condition Satisfaction Date”), the
following:

 


1.
The representations and warranties of the Company are true and
correct in all material respects as of the Condition Satisfaction
Date as though made on the Condition Satisfaction Date (except for
representations and warranties specifically made as of a particular
date) with respect to all periods, and as to all events and
circumstances occurring or existing to and including the Condition
Satisfaction Date, except for any conditions which have temporarily
caused any representations or warranties of the Company set forth
in the Agreement to be incorrect and which have been corrected with
no continuing impairment to the Company or the Investor;
and

 


2.
All of the conditions precedent to the obligation of the Investor
to purchase Capital Call Shares set forth in the Agreement,
including but not limited to Section 7.2 of the Agreement, have
been satisfied as of the Condition Satisfaction Date.

 


Capitalized
terms used herein shall have the meanings set forth in the
Agreement unless otherwise defined herein.

 


IN
WITNESS WHEREOF, the undersigned has hereunto affixed his hand as
of the ____________ __, 2019.

 



By: _______________________

 



Name:

 



Title:

 


 

 


 




 

23








 







REGISTRATION RIGHTS AGREEMENT



 


REGISTRATION
RIGHTS AGREEMENT (this
“Agreement”),
dated as of August 29, 2019, by and between GROWLIFE INC.,
a Delaware corporation (the
“Company”),
and TRITON
FUNDS LP,
a Delaware limited partnership
(together with it permitted assigns, the “Buyer”).
Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the common stock
purchase agreement by and between the parties hereto, dated as of
the date hereof (as amended, restated, supplemented or otherwise
modified from time to time, the “Purchase
Agreement”).


 



WHEREAS:



 


In exchange for the purchase and sale of Two
Million Five Hundred Thousand Dollars ($2,500,000) of Capital Call
Shares (“Purchase Notice Shares”) and to induce the
Buyer to enter into the Purchase Agreement, the Company has agreed
to provide certain registration rights under the Securities Act of
1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the
“Securities
Act”), and applicable
state securities laws.


 


NOW,
THEREFORE, in consideration of
the promises and the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Buyer hereby
agree as follows:


 


1. DEFINITIONS.


 


As
used in this Agreement, the following terms shall have the
following meanings:


 


a. “Investor”
means the Buyer, any transferee or assignee thereof to whom a Buyer
assigns its rights under this Agreement in accordance with Section
9 and who agrees to become bound by the provisions of this
Agreement, and any transferee or assignee thereof to whom a
transferee or assignee assigns its rights under this Agreement in
accordance with Section 9 and who agrees to become bound by the
provisions of this Agreement.


 


b. “Person”
means any individual or entity including but not limited to any
corporation, a limited liability company, an association, a
partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental
agency.


 


c. “Register”,
“registered”,
and “registration”
refer to a registration effected by preparing and filing one or
more registration statements of the Company in compliance with the
Securities Act and/or pursuant to Rule 415 under the Securities Act
or any successor rule providing for offering securities on a
continuous basis (“Rule
415”), and the
declaration or ordering of effectiveness of such registration
statement(s) by the United States Securities and Exchange
Commission (the “ SEC ”).


 


d. “Registrable
Securities” means (a) an
aggregate of up to ● Purchase Notice Shares and any shares of common
stock issued to the Investor as a result of any stock split, stock
dividend, recapitalization, exchange or similar event or otherwise
with respect thereto.


 


e. “Registration
Statement” means one or
more registration statements of the Company covering only the sale
of the Registrable Securities.


  




 

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2. REGISTRATION.


 


a. Mandatory
Registration. The Company
shall, within thirty (30) Business Days from the date hereof, file
with the SEC an initial Registration Statement covering the maximum
number of Registrable Securities (beginning with the Purchase
Notice Shares) as shall be permitted to be included thereon in
accordance with applicable SEC rules, regulations and
interpretations so as to permit the resale of such Registrable
Securities by the Investor, including but not limited to under Rule
415 under the Securities Act at then prevailing market prices (and
not fixed prices), as mutually determined by both the Company and
the Investor in consultation with their respective legal counsel,
subject to the aggregate number of authorized shares of the
Company’s Common Stock then available for issuance in its
Certificate of Incorporation. The initial Registration Statement
shall register only the Registrable Securities. The Investor and
its counsel shall have a reasonable opportunity to review and
comment upon such Registration Statement and any amendment or
supplement to such Registration Statement and any related
prospectus prior to its filing with the SEC, and the Company shall
give due consideration to all reasonable comments. The Investor
shall furnish all information reasonably requested by the Company
for inclusion therein. The Company shall use its reasonable best
efforts to have the Registration Statement and any amendment
declared effective by the SEC at the earliest possible date. The
Company shall use reasonable best efforts to keep the Registration
Statement effective, including but not limited to pursuant to Rule
415 promulgated under the Securities Act and available for the
resale by the Investor of all of the Registrable Securities covered
thereby at all times until the earlier of (i) the date as of which
the Investor may sell all of the Registrable Securities without
restriction pursuant to Rule 144 promulgated under the Securities
and (ii) the date on which the Investor shall have sold all the
Registrable Securities covered thereby and no Available Amount
remains under the Purchase Agreement (the
“Registration
Period”). The
Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they
were made, not misleading.


 


b. Rule
424 Prospectus. The
Company shall, as required by applicable securities regulations,
from time to time file with the SEC, pursuant to Rule 424
promulgated under the Securities Act, the prospectus and prospectus
supplements, if any, to be used in connection with sales of the
Registrable Securities under the Registration Statement. The
Investor and its counsel shall have a reasonable opportunity to
review and comment upon such prospectus prior to its filing with
the SEC, and the Company shall give due consideration to all such
comments. The Investor shall use its reasonable best efforts to
comment upon such prospectus within one (1) Business Day from the
date the Investor receives the final pre-filing version of such
prospectus.



 


c. Sufficient
Number of Shares Registered. In
the event the number of shares available under the Registration
Statement is insufficient to cover all of the Registrable
Securities, the Company shall amend the Registration Statement or
file a new Registration Statement (a “New
Registration Statement”),
so as to cover all of such Registrable Securities (subject to the
limitations set forth in Section 2(a)) as soon as practicable, but
in any event not later than fifteen (15) Business Days after the
necessity therefor arises, subject to any limits that may be
imposed by the SEC pursuant to Rule 415 under the Securities Act.
The Company shall use it reasonable best efforts to cause such
amendment and/or New Registration Statement to become effective as
soon as practicable following the filing thereof. Unless the
Registration Period has ended, in the event that any of the
Purchase Notice Shares are not included in the Registration
Statement, or have not been included in any New Registration
Statement and the Company files any other registration statement
under the Securities Act (other than on Form S-4, Form S-8, or with
respect to other employee related plans or rights offerings)
(“Other
Registration Statement ”) then the Company shall include in such
Other Registration Statement first all of such Purchase Notice
Shares that have not been previously registered, and second any
other securities the Company wishes to include in such Other
Registration Statement. Unless the Registration Period has ended,
the Company agrees that it shall not file any such Other
Registration Statement unless all of the Purchase Notice Shares
have been included in such Other Registration Statement or
otherwise have been registered for resale as described
above.


 


d. Offering.
If the staff of the SEC (the “Staff’) or the SEC seeks
to characterize any offering pursuant to a Registration Statement
filed pursuant to this Agreement as constituting an offering of
securities that does not permit such Registration Statement to
become effective and be used for resales by the Investor under Rule
415 at then-prevailing market prices (and not fixed prices), or if
after the filing of the initial Registration Statement with the SEC
pursuant to Section 2(a), the Company is otherwise required by the
Staff or the SEC to reduce the number of Registrable Securities
included in such initial Registration Statement, then the Company
shall reduce the number of Registrable Securities to be included in
such initial Registration Statement (with the prior consent, which
shall not be unreasonably withheld, of the Investor and its legal
counsel as to the specific Registrable Securities to be removed
therefrom) until such time as the Staff and the SEC shall so permit
such Registration Statement to become effective and be used as
aforesaid. Unless the Registration Period has ended, in the event
of any reduction in Registrable Securities pursuant to this
paragraph, the Company shall file one or more New Registration
Statements in accordance with Section 2(c) until such time as all
Registrable Securities have been included in Registration
Statements that have been declared effective and the prospectus
contained therein is available for use by the Investor.
Notwithstanding any provision herein or in the Purchase Agreement
to the contrary, the Company’s obligations to register
Registrable Securities (and any related conditions to the
Investor’s obligations) shall be qualified as necessary to
comport with any requirement of the SEC or the Staff as addressed
in this Section 2(d).




 

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3. RELATED
OBLIGATIONS.


 


With
respect to the Registration Statement and whenever any Registrable
Securities are to be registered pursuant to Section 2 including on
any New Registration Statement, the Company shall use its
reasonable best efforts to effect the registration of the
Registrable Securities in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall have
the following obligations:


 


a.
The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to any
registration statement and the prospectus used in connection with
such registration statement, which prospectus is to be filed
pursuant to Rule 424 promulgated under the Securities Act, as may
be necessary to keep the Registration Statement or any New
Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of
all Registrable Securities of the Company covered by the
Registration Statement or any New Registration Statement until such
time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the
seller or sellers thereof as set forth in such registration
statement.


 


b.
The Company shall permit the Investor to review and comment upon
the Registration Statement or any New Registration Statement and
all amendments and supplements thereto at least two (2) Business
Days prior to their filing with the SEC, and not file any document
in a form to which Investor reasonably objects. The Investor shall
use its reasonable best efforts to comment upon the Registration
Statement or any New Registration Statement and any amendments or
supplements thereto within two (2) Business Days from the date the
Investor receives the final version thereof. The Company shall
furnish to the Investor, without charge any correspondence from the
SEC or the staff of the SEC to the Company or its representatives
relating to the Registration Statement or any New Registration
Statement.


 


c.
Upon request of the Investor, the Company shall furnish to the
Investor, (i) promptly after the same is prepared and filed with
the SEC, at least one copy of such registration statement and any
amendment(s) thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits,
(ii) upon the effectiveness of any registration statement, a copy
of the prospectus included in such registration statement and all
amendments and supplements thereto (or such other number of copies
as the Investor may reasonably request) and (iii) such other
documents, including copies of any preliminary or final prospectus,
as the Investor may reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities owned
by the Investor. For the avoidance of doubt, any filing available
to the Investor via the SEC’s live EDGAR system shall be
deemed “furnished to the Investor”
hereunder.


 


d. The Company shall use reasonable best efforts
to comply with any applicable securities or
“blue
sky” laws of California,
(ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain
the effectiveness thereof during the Registration Period, (iii)
take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for
sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section
3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process
in any such jurisdiction. The Company shall promptly notify the
Investor who holds Registrable Securities of the receipt by the
Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities
for sale under the securities or “blue sky” laws of
California or its receipt of actual notice of the initiation or
threatening of any proceeding for such
purpose. 


 




 

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e.
As promptly as practicable after becoming aware of such event or
facts, the Company shall notify the Investor in writing of the
happening of any event or existence of such facts as a result of
which the prospectus included in any registration statement, as
then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and
promptly prepare a supplement or amendment to such registration
statement to correct such untrue statement or omission, and deliver
a copy of such supplement or amendment to the Investor (or such
other number of copies as the Investor may reasonably request). The
Company shall also promptly notify the Investor in writing (i) when
a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when a registration statement or any
post-effective amendment has become effective (notification of such
effectiveness shall be delivered to the Investor by email or
facsimile on the same day of such effectiveness and by overnight
mail), (ii) of any request by the SEC for amendments or supplements
to any registration statement or related prospectus or related
information, and (iii) of the Company’s reasonable
determination that a post-effective amendment to a registration
statement would be appropriate.


 


f.
The Company shall use its reasonable best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of
any registration statement, or the suspension of the qualification
of any Registrable Securities for sale in any jurisdiction and, if
such an order or suspension is issued, to obtain the withdrawal of
such order or suspension at the earliest possible moment and to
notify the Investor of the issuance of such order and the
resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such
purpose.


 


g.
The Company shall (i) cause all the Registrable Securities to be
listed on each securities exchange on which securities of the same
class or series issued by the Company are then listed, if any, if
the listing of such Registrable Securities is then permitted under
the rules of such exchange, or (ii) secure designation and
quotation of all the Registrable Securities on the Principal
Market. The Company shall pay all fees and expenses in connection
with satisfying its obligation under this Section.


 


h.
The Company shall cooperate with the Investor to facilitate the
timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be
offered pursuant to any registration statement and enable such
certificates to be in such denominations or amounts as the Investor
may reasonably request and registered in such names as the Investor
may request.


 


i.
The Company shall at all times provide a transfer agent and
registrar with respect to its Common Stock.


 


j.
If reasonably requested by the Investor, the Company shall (i)
immediately incorporate in a prospectus supplement or
post-effective amendment such information as the Investor believes
should be included therein relating to the sale and distribution of
Registrable Securities, including, without limitation, information
with respect to the number of Registrable Securities being sold,
the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities; (ii) make all required
filings of such prospectus supplement or post-effective amendment
as soon as practicable upon notification of the matters to be
incorporated in such prospectus supplement or post¬effective
amendment; and (iii) supplement or make amendments to any
registration statement.


 


k.
The Company shall use its reasonable best efforts to cause the
Registrable Securities covered by any registration statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to consummate the disposition of
such Registrable Securities.


 


l. Within three (3) Business Days after any
registration statement which includes the Registrable Securities is
ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel for the Company to deliver, to the transfer
agent for such Registrable Securities (with copies to the Investor)
confirmation that such registration statement has been declared
effective by the SEC in the form attached hereto
as Exhibit
A. Thereafter, if requested by
the Buyer at any time, the Company shall require its counsel to
deliver to the Buyer a written confirmation whether or not the
effectiveness of such registration statement has lapsed at any time
for any reason (including, without limitation, the issuance of a
stop order) and whether or not the registration statement is
current and available to the Buyer for sale of all of the
Registrable Securities.




 

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m.
The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investor of Registrable
Securities pursuant to any registration statement.


 


4. OBLIGATIONS
OF THE INVESTOR.


 


a.
The Company shall notify the Investor in writing of the information
the Company reasonably requires from the Investor in connection
with any registration statement hereunder. The Investor shall
furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.


 


b.
The Investor agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and
filing of any registration statement hereunder.


 


c.
The Investor agrees that, upon receipt of any notice from the
Company of the happening of any event or existence of facts of the
kind described in Section 3(f) or the first sentence of 3(e), the
Investor will immediately discontinue disposition of Registrable
Securities pursuant to any registration statement(s) covering such
Registrable Securities until the Investor’s receipt of the
copies of the supplemented or amended prospectus contemplated by
Section 3(f) or the first sentence of 3(e). Notwithstanding
anything to the contrary, the Company shall cause its transfer
agent to promptly deliver shares of Common Stock without any
restrictive legend in accordance with the terms of the Purchase
Agreement in connection with any sale of Registrable Securities
with respect to which an Investor has entered into a contract for
sale prior to the Investor’s receipt of a notice from the
Company of the happening of any event of the kind described in
Section 3(f) or the first sentence of Section 3(e) and for which
the Investor has not yet settled.


 


5. EXPENSES
OF REGISTRATION.


 


All
reasonable expenses, other than sales or brokerage commissions,
incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without
limitation, all registration, listing and qualifications fees,
printers and accounting fees, and fees and disbursements of counsel
for the Company, shall be paid by the Company.




 

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6. INDEMNIFICATION.


 


a. To the fullest extent permitted by law, the
Company will, and hereby does, indemnify, hold harmless and defend
the Investor, each Person, if any, who controls the Investor, the
members, the directors, officers, partners, employees, agents,
representatives of the Investor and each Person, if any, who
controls the Investor within the meaning of the Securities Act or
the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”) (each, an
“Indemnified
Person”), against any
losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, attorneys’ fees, amounts paid in settlement
or expenses, joint or several, (collectively,
“Claims”)
incurred in investigating, preparing or defending any action,
claim, suit, inquiry, proceeding, investigation or appeal taken
from the foregoing by or before any court or governmental,
administrative or other regulatory agency, body or the SEC, whether
pending or threatened, whether or not an indemnified party is or
may be a party thereto (“Indemnified
Damages”), to which any
of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in the Registration Statement,
any New Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification
of the offering under the securities or other
“blue
sky” laws of any
jurisdiction in which Registrable Securities are offered
(“Blue
Sky Filing”), or the
omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement
of a material fact contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which
the statements therein were made, not misleading, (iii) any
violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable
Securities pursuant to the Registration Statement or any New
Registration Statement or (iv) any material violation by the
Company of this Agreement (the matters in the foregoing clauses (i)
through (iv) being, collectively, “Violations”).
The Company shall reimburse each Indemnified Person promptly as
such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them
in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim by an Indemnified Person arising out of or
based upon a Violation which occurs in reliance upon and in
conformity with information about the Investor furnished in writing
to the Company by such Indemnified Person expressly for use in
connection with the preparation of the Registration Statement, any
New Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by
the Company pursuant to Section 3(c) or Section 3(e); (ii) with
respect to any superseded prospectus, shall not inure to the
benefit of any such person from whom the person asserting any such
Claim purchased the Registrable Securities that are the subject
thereof (or to the benefit of any person controlling such person)
if the untrue statement or omission of material fact contained in
the superseded prospectus was corrected in the revised prospectus,
as then amended or supplemented, if such revised prospectus was
timely made available by the Company pursuant to Section 3(c) or
Section 3(e), and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving
rise to a violation and such Indemnified Person, notwithstanding
such advice, used it; (iii) shall not be available to the extent
such Claim is based on a failure of the Investor to deliver or to
cause to be delivered the prospectus made available by the Company,
if such prospectus was timely made available by the Company
pursuant to Section 3(c) or Section 3(e); and (iv) shall not apply
to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld. Such indemnity shall
remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investor pursuant
to Section 9.


 


b.
Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any
action or proceeding (including any governmental action or
proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be
made against any indemnifying party under this Section 6, deliver
to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly
noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel with the fees and expenses to
be paid by the indemnifying party, if, in the reasonable opinion of
counsel retained by the indemnifying party, the representation by
such counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel
in such proceeding. The Indemnified Party or Indemnified Person
shall cooperate fully with the indemnifying party in connection
with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or claim. The
indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any
action, claim or proceeding effectuated without its written
consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant
or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such claim or litigation.
Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such
action.



 


c.
The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or
Indemnified Damages are incurred.




 

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d.
The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party
or Indemnified Person against the indemnifying party or others, and
(ii) any liabilities the indemnifying party may be subject to
pursuant to the law.


 


7. CONTRIBUTION.


 


To
the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent
permitted by law; provided, however, that: (i) no seller of
Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any seller of Registrable
Securities who was not guilty of fraudulent misrepresentation; and
(ii) contribution by any seller of Registrable Securities shall be
limited in amount to the net amount of proceeds received by such
seller from the sale of such Registrable Securities.


 


8. REPORTS
AND DISCLOSURE UNDER THE SECURITIES ACTS.


 


With a view to making available to the Investor
the benefits of Rule 144 promulgated under the Securities Act or
any other similar rule or regulation of the SEC that may at any
time permit the Investor to sell securities of the Company to the
public without registration (“Rule
144”), the Company
agrees, at the Company’s sole expense,
to:


 


a.
make and keep public information available, as those terms are
understood and defined in Rule 144;


  


b.
use reasonable efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains
subject to such requirements and the filing of such reports and
other documents is required for the applicable provisions of Rule
144;


 


c.
furnish to the Investor so long as the Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting and or disclosure
provisions of Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably
requested to permit the Investor to sell such securities pursuant
to Rule 144 without registration; and


 


d.
take such additional action as is requested by the Investor to
enable the Investor to sell the Registrable Securities pursuant to
Rule 144, including, without limitation, delivering all such legal
opinions, consents, certificates, resolutions and instructions to
the Company’s Transfer Agent as may be requested from time to
time by the Investor and otherwise fully cooperate with Investor
and Investor’s broker to effect such sale of securities
pursuant to Rule 144.


  


9. ASSIGNMENT
OF REGISTRATION RIGHTS.


 


The
Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the
Investor. The Investor may not assign its rights under this
Agreement without the written consent of the Company.


 


10. AMENDMENT
OF REGISTRATION RIGHTS.


 


No
provision of this Agreement may be amended or waived by the parties
from and after the date that is one Business Day immediately
preceding the initial filing of the Registration Statement with the
SEC. Subject to the immediately preceding sentence, no provision of
this Agreement may be (i) amended other than by a written
instrument signed by both parties hereto or (ii) waived other than
in a written instrument signed by the party against whom
enforcement of such waiver is sought. Failure of any party to
exercise any right or remedy under this Agreement or otherwise, or
delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.




 

30








 






 


 


11. MISCELLANEOUS.


 


a.
A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such
Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more Persons with
respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from
the registered owner of such Registrable Securities.


 


b.
Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement 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 or email (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
for such communications shall be:


 


If
to the Company:


GROWLIFE
INC.


5400
Carillon Point


Kirkland,
WA 98033


mscott@growlifeinc.com


 


If
to the Investor:


TRITON
FUNDS LLC 


1262
PROSPECT STREET 


LA
JOLLA, CA 92037 


E-mail:
tritonfunds@tritonfunds.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 (3) Business Days
prior to the effectiveness of such change. Written confirmation of
receipt (A) given by the recipient of such notice, consent, waiver
or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine or email account
containing the time, date, recipient facsimile number or email
address, as applicable, and an image of the first page of such
transmission or (C) 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.



 


c. The corporate laws of the State of California
shall govern all issues concerning this Agreement. All other
questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal
laws of the State of California, without giving effect to any
choice of law or conflict of law provision or rule (whether of the
State of California or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the
State of California. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting the
State of California, County of Los Angeles, for the adjudication of
any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. If
any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this
Agreement in that jurisdiction or the validity or enforceability of
any provision of this Agreement in any other
jurisdiction. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES
NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY. 




 

31








 






 


 


d.
This Agreement and the Purchase Agreement constitute the entire
agreement among the parties hereto with respect to the subject
matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred
to herein and therein. This Agreement and the Purchase Agreement
supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and
thereof.


 


e.
Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties hereto.


 


f.
The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning
hereof.


 


g. This Agreement may be executed in identical
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement,
once executed by a party, may be delivered to the other party
hereto by email in a “.pdf”
format data file of a copy of this Agreement bearing the signature
of the party so delivering this Agreement.


 


h.
Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.


 


i.
The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and
no rules of strict construction will be applied against any
party.


 


j.
This Agreement is intended for the benefit of the parties hereto
and their respective successors and permitted assigns, and is not
for the benefit of, nor may any provision hereof be enforced by,
any other Person.


 


IN
WITNESS WHEREOF, the parties
have caused this Agreement to be duly executed as of day and year
first above written. 


 


	
 

	


THE COMPANY:


	
 

	


GROWLIFE INC.



By: /s/ Marco
Hegyi



Marco Hegyi



Chief Executive Officer


	
 

	

 



THE INVESTOR:


	
 

	


TRITON FUNDS LP



By: /s/ Tyler
Hoffman



Tyler Hoffman



Authorized Signatory


 


 


 







 


 


 




 

32








 






 



EXHIBIT A



 



TO REGISTRATION RIGHTS AGREEMENT



 



FORM OF NOTICE OF EFFECTIVENESS 



OF REGISTRATION STATEMENT



 



_____________, 2019



 



Re: [__________]



 



Ladies and Gentlemen:



 


We are counsel to GROWLIFE
INC., a Delaware corporation
(the “Company”),
and have represented the Company in connection with that certain
Purchase Agreement, dated as of August __, 2019 (the
“Purchase
Agreement”), entered into
by and between the Company and TRITON FUNDS LP (the
“Buyer”)
pursuant to which the Company has agreed to issue to the Buyer
shares of the Company’s Common Stock, $0.0001 par value (the
“Common
Stock ”), in an
amount up to Two Million Five Hundred Thousand Dollars ($2,500,000)
(the “Purchase
Notice Shares”), in
accordance with the terms of the Purchase Agreement. In connection
with the transactions contemplated by the Purchase Agreement, the
Company has registered with the U.S. Securities & Exchange
Commission the following shares of Common
Stock:


 


(1)
Purchase Notice Shares to be issued to the Buyer upon purchase from
the Company by the Buyer from time to time in accordance with the
Purchase Agreement.



 


Pursuant to the Purchase Agreement, the Company
also has entered into a Registration Rights Agreement, of even date
with the Purchase Agreement with the Buyer (the
“Registration
Rights Agreement”)
pursuant to which the Company agreed, among other things, to
register the Purchase Notice Shares under the Securities Act of
1933, as amended (the “Securities
Act”). In connection with
the Company’s obligations under the Purchase Agreement and
the Registration Rights Agreement, on [__________], 2019, the
Company filed a Registration Statement (File No. 333-[__________])
(the “Registration
Statement”) with the
Securities and Exchange Commission (the “SEC”)
relating to the resale of the Purchase Notice
Shares.


 


In
connection with the foregoing, we advise you that a member of the
SEC’s staff has advised us by telephone that the SEC has
entered an order declaring the Registration Statement effective
under the Securities Act at [__________] [A.M./P.M.] on
[__________], 2019 and we have no knowledge, after telephonic
inquiry of a member of the SEC’s staff, that any stop order
suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by,
the SEC and the Purchase Notice Shares are available for resale
under the Securities Act pursuant to the Registration Statement and
may be issued without any restrictive legend.


 


	
 

	


Very truly yours,


	
 

	


[Company Counsel]


 



By: ________________________________


	


cc: TRITON FUNDS LLC

	
 

	
 







 


 




 

33








 







Section 4.3 CAPITALIZATION

 



On July 23, 2019, GrowLife, Inc., a Delaware corporation (the
“Company”), closed the transactions described below
with Odyssey Research and Trading, LLC, a Utah limited liability
company (“Odyssey”).


 



Securities Purchase Agreement, Secured Promissory Notes and
Security Agreement


 



On July 23, 2019, the Company executed the following agreements
with Odyssey: (i) Securities Purchase Agreement; (ii) Secured
Promissory Notes; and (iii) Security Agreement (collectively the
“Odyssey Agreements”). The Company entered into the
Odyssey Agreements with the intent to acquire working capital to
grow the Company’s businesses.


 



The total amount of funding under the Odyssey Agreements is
$1,105,000. The Convertible Promissory Note carries an original
issue discount of $100,000 and a transaction expense amount of
$5,000, for total debt of $1,105,000. The Company agreed to reserve
three times the number of shares based on the redemption value with
a minimum of 500 million shares of its common stock for issuance
upon conversion of the Debt, if that occurs in the future. If not
converted sooner, the Debt is due on or before July 22, 2020. The
Debt carries an interest rate of ten percent (10%). The Debt is
convertible, at Odyssey’s option, into the Company’s
common stock at $0.010 per share subject to adjustment as provided
for in the Secured Promissory Notes.


 



The Company’s obligation to pay the Debt, or any portion
thereof, is secured by all of the Company’s assets as
described in Schedule A to the Security Agreement attached hereto
and incorporated herein by this reference.


 



Proposed Secured Advance Note


 



The Company expects to close a Secured Advance Note for $308,400 to
provide $250,000 in cash for working capital and to fund EZ-Clone
Enterprise, Inc. growth. The Note repays weekly over 39 weeks. In
the case of default it can be converted into common
shares.


 



Section 4.4 LISTING AND MAINTENANCE REQUIREMENTS

 



As of March 4, 2019, GrowLife, Inc. (the “Company”)
began to trade on the Pink Sheet stocks
system. The company’s bid
price has closed below $0.01 for more than 30 consecutive calendar
days. 


 



Section 4.5 SEC DOCUMENTS; DISCLOSURE

 



None.

 


 

 


 

 




 

34