Document:

Exhibit 10.1 

SECURITIES PURCHASE
AGREEMENT

 

This Securities
Purchase Agreement (this “Agreement”) is made and entered into as of May 1, 2013, by and between GrowLife, Inc.,
a Delaware corporation (“Company”), and the investor listed on the signature page hereof (“Purchaser”).

 

RECITALS

 

WHEREAS, the Company
desires to sell to the Purchaser, and the Purchaser desires to purchase from the Company, on the terms and conditions set forth
in this Agreement, the Company’s OID Secured Bridge Note Due October 31, 2013, in the form of Exhibit A attached hereto,
in the original principal amount of $280,000 (“Note”); and

 

WHEREAS, in connection
with such purchase of the Note, the Company has agreed to issue to the Purchaser a five-year warrant (“Warrant”)
in the form of Exhibit B attached hereto representing the right to acquire 5 million shares (“Warrant Shares”)
of common stock, par value $0.0001 per share (“Common Stock”), of the Company;

 

NOW, THEREFORE,
in consideration of the foregoing, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.              
AGREEMENT TO PURCHASE AND SELL SECURITIES. Subject to the terms and conditions of this Agreement, the Purchaser
hereby agrees to purchase from the Company, and the Company hereby agrees to sell and issue to the Purchaser, the Note and Warrant
at the Closing (as defined below). The aggregate purchase price for the Note and Warrant shall be $250,000 (“Purchase
Price”). As used herein, the term “Securities” shall mean the Note, the Warrant and Warrant Shares.

 

		2.	CLOSING.

 

(a)            
The purchase and sale of the Note and Warrant shall take place at the offices of Peter J. Weisman, P.C., within five (5) calendar
days after the date of this Agreement, on such date as the Company and the Purchaser may agree either in writing or orally (the
“Closing”).

 

(b)           
At the Closing, against delivery of the Purchase Price by wire transfer of immediately available funds in accordance with
the Company’s instructions, the Company shall issue and deliver or cause to be delivered to the Purchaser the originally
executed Note and Warrant. At the request of the Purchaser, the Note and Warrant shall be delivered to the Purchaser’s counsel
in advance of Closing to be held in escrow pending Closing.

 

3.              
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to the Purchaser, as
of the date hereof and as of the Closing, that:

 

(a)            
Organization and Existence; Authority/Capacity. The Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation with full right, power and authority to enter into this Agreement, the
Note and Warrant (“Transaction Documents”) and to consummate the transactions contemplated hereby and otherwise
to carry out, perform and discharge its obligations under such documents.

 

(b)           
Due Authorization. All corporate actions on the part of the Company necessary for the authorization, execution, delivery
of, and the performance of all obligations of the Company under this Agreement, including the authorization, issuance, reservation
for issuance and delivery of the Securities, have been taken and no further consent or authorization of the Company, the Board
of Directors of the Company or the Company’s stockholders is required. Each of the Note, Warrant and this Agreement constitutes
the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally, and (ii) the effect of rules of law governing the availability
of equitable remedies.

 

(c)            
Valid Issuance of the Note. When issued at the Closing, the Note and Warrant will be (and, upon payment pursuant
to the terms of the Warrant, the Warrant Shares will be), duly authorized, validly issued, fully paid and non-assessable, free
and clear from all taxes and liens, claims and encumbrances imposed by the Company, other than restrictions under applicable securities
laws, and will not be subject to any preemptive rights or similar rights that have not been waived by the holders thereof. The
Company has reserved for issuance, and at all times hereafter will reserve for issuance, a sufficient number of shares of Common
Stock to permit all Warrant Shares to be issued upon full exercise of the Warrant.

 

(d)           
No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company, and the consummation
by the Company of the transactions contemplated thereby, do not and will not (i) conflict with or violate any provision of the
Company’s organizational documents, (ii) conflict with, result in a breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, result in the creation of any lien upon any of the properties or
assets of the Company or any of its subsidiaries pursuant to, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument to
which the Company (or any of its subsidiaries) is a party or by which any property or asset of the Company (or any of its subsidiaries)
is bound or affected, except to the extent such conflict, breach, default, lien or right would not reasonably be expected to result
in a material adverse effect on the Company, or (iii) result in a violation of any constitution, statute, law, rule, regulation,
order, judgment, injunction, decree, ruling, charge or other restriction of any court or governmental authority to which the Company
(or any of its subsidiaries) is subject (including without limitation federal, state and foreign securities laws and regulations)
or by which any material property or asset of the Company (or any of its subsidiaries) is bound or affected, except to the extent
such violation would not reasonably be expected to result in a material adverse effect on the Company.

 

(e)            
Exchange Act Documents. Since January 1, 2012, the Company has filed all reports, schedules, statements and
other documents required to be filed by it with the Securities and Exchange Commission (the “SEC”) pursuant
to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the
rules and regulations promulgated thereunder (the “Exchange Act Documents”). Each of the Exchange Act Documents,
as of the respective dates thereof (or, if amended or superseded by a filing or submission, as the case may be, prior to the Closing
date, then on the date of such filing or submission, as the case may be), (1) did not contain any untrue statement of a material
fact nor omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under
which they were made, not misleading and (2) complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder applicable to such Exchange Act Document. The Company and its subsidiaries
have no liabilities or obligations which are not disclosed in the Exchange Act Documents, other than those liabilities or obligations
incurred in the ordinary course of the Company's or its subsidiaries' respective businesses since the date of the financial statements
contained therein which liabilities and obligations, individually or in the aggregate, do not have, and could not reasonably be
expected to result in, a material adverse effect on the Company. Since December 31, 2012, other than as set forth in the Company’s
most recent Form 10-K filed with the SEC, there has not been and there exists no event, occurrence, circumstance, condition or
development (whether with or without notice or the passage of time or both) that, individually or in the aggregate, has had or
could reasonably be expected to result in a material adverse effect on the Company.

 

4.              
REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER. The Purchaser represents and warrants to the Company that:

 

(a)            
Due Authorization. All action on the part of the Purchaser necessary for the authorization, execution, delivery of
and the performance of the transactions contemplated by this Agreement have been taken and no further consent or authorization
of the Purchaser is necessary. This Agreement, when delivered by the Purchaser in accordance with the terms hereof, will constitute
Purchaser’s legal, valid and binding obligation, enforceable in accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors’
rights generally and (ii) the effect of rules of law governing the availability of equitable remedies.

 

(b)           
Purchase for Own Account. The Securities are being acquired for investment for the Purchaser’s own account,
not as a nominee or agent, in the ordinary course of business, and not with a view to the public resale or distribution thereof
within the meaning of the Securities Act of 1933, as amended (the “Securities Act”). The Purchaser does not
have any agreement or understanding, direct or indirect, with any other person to sell or otherwise distribute the Securities.
Notwithstanding the foregoing, the parties hereto acknowledge the Purchaser’s right at all times to sell or otherwise dispose
of all or any part of the Securities in compliance with applicable federal and state securities laws and as otherwise contemplated
by this Agreement.

 

(c)            
Investment Experience and Knowledge of the Company. Purchaser represents that it is an accredited investor within
the meaning of Regulation D under the Securities Act. The Purchaser has substantial experience as an investor in private placement
transactions of securities of public companies similar to the Company and acknowledges that it can bear the economic risk of its
investment in the Securities and has such knowledge and experience in financial or business matters that it is capable of evaluating
the merits and risks of this investment in the Securities and protecting its own interests in connection with this investment.
The Purchaser has also had the opportunity to ask questions of and receive answers from the Company and its management regarding
the Company and the terms and conditions of this investment.

 

		5.	SECURITY INTEREST.

 

(a)            
Grant of Security Interest. Each of the Company and each of its subsidiaries hereby grants and pledges to the Purchaser
a continuing security interest in the Collateral (as defined below) to secure prompt repayment of any and all obligations under
the Note and to secure prompt performance by the Company and each of its subsidiaries of each of its covenants and duties hereunder
and under the Note and Warrant. Such security interest shall constitute a valid, security interest in the presently existing Collateral,
and will constitute a valid, security interest in later-acquired Collateral. Notwithstanding any termination of this Agreement
or of any filings undertaken related to Purchaser’s rights under the Codes, the Purchaser’s security interest in and
lien on the Collateral shall remain in effect for so long as any obligations are outstanding hereunder or under the Note or Warrant.
Other than pursuant to a Change of Control Transaction (as defined in the Note), the Company shall not, and shall cause its subsidiaries
not to, sell, assign, transfer, convey or license any of its assets (other than inventory) without the prior written consent of
the Purchaser.

 

(b)           
Perfection of Security Interest. Each of the Company and each of its subsidiaries authorizes Purchaser to file at
any time financing statements, continuation statements and amendments thereto, and additional security agreements, that (i) either
specifically describe the Collateral or describe the Collateral as all assets of Company and each of its subsidiaries of the kind
pledged hereunder, and (ii) contain any other information required by the Codes for the sufficiency of filing office acceptance
of any financing statement, continuation statement, or amendment. Where Collateral is in possession of a third party bailee, Company
and each of its subsidiaries shall take such steps as Purchaser reasonably requests for Purchaser to (i) obtain an acknowledgment,
in form and substance satisfactory to Purchaser, of the bailee that the bailee holds such Collateral for the benefit of Purchaser,
and (ii) obtain “control” of any Collateral consisting of investment property, deposit accounts, letter-of-credit rights
or electronic chattel paper (as such items and the term “control” are defined in Revised Article 9 of the Uniform Commercial
Code) by causing the securities intermediary or depositary institution or issuing banks to execute a control agreement in form
and substance satisfactory to Purchaser. Each of the Company and each of its subsidiaries shall take such other actions as Purchaser
requests to perfect its security interests granted under this Agreement. The Company shall pay any and all third party expenses
incurred by the Purchaser in connection with the preparation and filing of any such perfection documents. The Company shall, and
shall cause its subsidiaries to, enter into an additional security agreement with respect to the Collateral in form and substance
reasonably satisfactory to the Purchaser to effect the intent and purposes of this Section 5.

 

(c)            
Collateral Definitions.

 

“Collateral”
means the collateral in which the Purchaser is granted a security interest by this Agreement and which shall include the all personal
property of the Company and its subsidiaries, whether presently owned or existing or hereafter acquired or coming into existence,
wherever situated, and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds, products
and accounts thereof, including, without limitation; all proceeds from the sale or transfer of the Collateral and of insurance
covering the same and of any tort claims in connection therewith, and all dividends, interest, cash, notes, securities, equity
interest or other property at any time and from time to time acquired, receivable or otherwise distributed in respect of, or in
exchange for, any or all of any securities pledged hereunder; all goods; all contract rights and other general intangibles (including
all intellectual property); all accounts; all books and records; negotiable collateral; and all investment property. Terms used
in this definition shall have the meanings defined in the Codes, as applicable.

 

“Codes” means
each and every Uniform Commercial Code, as amended or supplemented from time to time, as in effect in each jurisdiction in which
the Company and each subsidiary is organized.

 

		6.	MISCELLANEOUS.

 

(a)            
Successors and Assigns. The terms and conditions of this Agreement will inure to the benefit of and be binding upon
the respective successors and permitted assigns of the parties. The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Purchaser. The Purchaser may assign its rights under this Agreement to any person
to whom such Purchaser assigns or transfers any of the Securities, provided that such transferee agrees in writing to be bound
by the terms and provisions of this Agreement, and such transfer is in compliance with the terms and provisions of this Agreement
and permitted by federal and state securities laws.

 

(b)           
Expenses. On or prior to the Closing, the Company shall pay the Purchaser or its counsel the non-accountable sum
of $2,500 for its legal fees and expenses. To the extent not paid prior to the Closing, the Purchaser may withhold and offset the
balance of such amount from the payment of its Purchase Price otherwise payable hereunder at Closing, which offset shall constitute
partial payment of such Purchase Price in an amount equal to such offset. Except as set forth above, 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, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchaser.

 

(c)            
Governing Law. This Agreement will be governed by and construed and enforced under the internal laws of the State
of New York, without reference to principles of conflict of laws or choice of laws.

 

(d)           
Survival. The representations and warranties of the Company contained in Section 3 of this Agreement
and of the Purchaser contained in Section 4 of this Agreement shall survive the Closing.

 

(e)            
Counterparts; Electronic Delivery. This Agreement may be executed in any number of counterparts, each of which shall
be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument,
and such counterparts may be delivered electronically via PDF or facsimile.

 

(f)            
Headings. The headings and captions used in this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement.

 

(g)           
Notices. Any notices and other communications required or permitted under this Agreement shall be in writing and
shall be delivered (i) personally by hand or by courier, (ii) mailed by United States first-class mail, postage prepaid
or (iii) sent by facsimile or other electronic transmission directed to the address or facsimile number or other address for
electronic transmission set forth below. All such notices and other communications shall be deemed given upon (i) receipt
or refusal of receipt, if delivered personally, (ii) three (3) days after being placed in the mail, if mailed, or (iii) confirmation
of facsimile transfer or other electronic transmission, if faxed or emailed.

 

If to the Company:

 

[20301
Ventura Blvd, Suite 126,

Woodland
Hills, California 91364]

Fax:

Attention:
Chief Executive Officer

 

If to the Purchaser:

	
         

        c/o Gemini Strategies LLC, Inc.with
        copy to:

        619 South Vulcan, Suite 203

        Encinitas, CA 92024767 Third Avenue,
        6th Floor

        Attn: Steven WintersNew York, NY 10017

        Fax: (760) 697-1119Fax: (212) 676-5665

        Email: steve@geministrategies.comEmail:
        pweisman@pweisman.com

         
	
         

        With a copy to:

        Peter J. Weisman, P.C.

        2 Rector St., 3rd Floor

        New York, NY 10006

        Email: pweisman@pweisman.com

         

 

(h)           
Amendments and Waivers. This Agreement may be amended and the observance of any term of this Agreement may be waived
only with the written consent of the Company and the Purchaser. Any amendment effected in accordance with this Section 6(h)
will be binding upon the Purchaser, the Company and their respective successors and assigns.

 

(i)             
Severability. If any provision of this Agreement is held to be unenforceable under applicable law, such provision
will be excluded from this Agreement and the balance of the Agreement will be interpreted as if such provision were so excluded
and will be enforceable in accordance with its terms.

 

(j)             
Entire Agreement. This Agreement, together with all exhibits and schedules thereto, constitutes the entire agreement
and understanding of the parties with respect to the subject matter hereof and thereof and supersede any and all prior negotiations,
correspondence, agreements, understandings, duties or obligations between the parties with respect to the subject matter hereof
and thereof.

 

(k)           
Waivers. No waiver by any party to this Agreement of any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such
right accruing to it thereafter.

 

(l)             
Remedies. In addition to being entitled to exercise all rights provided herein or granted
by law, including recovery of damages, the Purchaser and the Company will be entitled to specific performance under this Agreement.
The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agree to waive in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.

 

(m)         
Guaranty. Each of the undersigned subsidiaries of the Company hereby absolutely, unconditionally and irrevocably
guarantees to the Purchaser and its successors, indorsees, transferees and assigns, the prompt and complete payment by the Company
when due (whether at the stated maturity, by acceleration or otherwise) of all obligations of the Company under the Note. The Company
represents and warrants that, other than the undersigned subsidiaries, it has no subsidiaries. The Company shall cause any future
subsidiary of the Company to immediately enter into a guaranty of the Company’s obligations under the Note in form and substance
reasonably satisfactory to the Purchaser.

 

[Signature
Page Follows]

 

    	 

    	 

    

IN WITNESS WHEREOF, as
of the date first written above, the parties hereto have duly executed, or caused their authorized officers to duly execute,
this Agreement.

 

COMPANY:

 

GROWLIFE, INC.

 

 

By: 

Name:

Title: 

 

COMPANY SUBSIDIARIES/GUARANTORS:

 

PHOTOTRON, INC., a
California corporation

 

 

By: 

Name:

Title:

 

SG TECHNOLOGIES CORP.,
a Nevada corporation

 

 

By: 

Name:

Title:

 

GROWLIFE HYDROPONICS,
INC., a Delaware corporation

 

 

By: 

Name:

Title:

 

BUSINESS BLOOM INC.,
a California corporation

 

 

By: 

Name:

Title:

 

SOJA, INC., a California
corporation

 

 

By: 

Name:

Title:

 

 

 

PURCHASER:

 

GEMINI MASTER FUND, LTD.

By: GEMINI STRATEGIES LLC, INC., as investment
manager

 

 

By: 

Name:Steven Winters

Title: President

 

 

    	 

    	 

    

 

Exhibit A

 

FORM OF OID
SECURED BRIDGE NOTE

    	 

    	 

    

Exhibit B

 

FORM OF WARRANTExhibit 10.2

 

Original Issue Date: May 1, 2013$280,000.00

 

 

GrowLife,
INC.

 

OID SECURED BRIDGE NOTE DUE OCTOBER 31,
2013

 

This OID Secured Bridge
Note of GrowLife, Inc., a Delaware corporation (the “Company”), having its principal place of business at 20301
Ventura Blvd, Suite 126, Woodland Hills, California 91364 (this “Note”), is duly authorized and validly issued.

 

FOR VALUE RECEIVED, the
Company promises to pay to the order of GEMIINI MASTER FUND, LTD., a Cayman Islands company, or its registered assigns (the “Holder”),
or shall have paid pursuant to the terms hereunder, on or before October 31, 2013 (the “Maturity Date”) or such
earlier date as this Note is required or permitted to be repaid as provided hereunder, the principal sum of $280,000.00.

 

This Note is subject to
the following additional provisions:

 

Section 1.Definitions.
 For the purposes hereof, in addition to the terms defined elsewhere in this Note (a) capitalized terms not otherwise defined
herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:

 

“Bankruptcy
Event” means any of the following events: (a) the Company or any Subsidiary thereof commences a case or other proceeding
under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar law of any jurisdiction relating to the Company or any Subsidiary thereof; (b) there is commenced against the Company
or any Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement; (c) the Company
or any Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or
proceeding is entered; (d) the Company or any Subsidiary thereof suffers any appointment of any custodian or the like for it or
any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment; (e) the Company
or any Subsidiary thereof makes a general assignment for the benefit of creditors; (f) the Company or any Subsidiary thereof calls
a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (g) the Company
or any Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any
of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

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

 

“Change
of Control Transaction” means the occurrence after the date hereof of any of (i) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Securities Exchange
Act of 1934, as amended) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by
contract or otherwise) of in excess of 33% of the voting securities of the Company, or (ii) the Company merges into or consolidates
with any other entity, or any entity merges into or consolidates with the Company and, after giving effect to such transaction,
the stockholders of the Company immediately prior to such transaction own less than 66% of the aggregate voting power of the Company
or the successor entity of such transaction, or (iii) the Company sells or transfers all or substantially all of its assets to
a third party and the stockholders of the Company immediately prior to such transaction own less than 66% of the aggregate voting
power of the acquiring entity immediately after the transaction, or (iv) a replacement at one time or within a three year period
of more than one-half of the members of the Company’s board of directors which is not approved by a majority of those individuals
who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of
directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors
who are members on the date hereof), or (v) the execution by the Company of an agreement to which the Company is a party or by
which it is bound, providing for any of the events set forth in clauses (i) through (iv) above.

 

“Event
of Default” shall have the meaning set forth in Section 5.

 

“Fundamental
Transaction” means any Change of Control Transaction.

 

“Mandatory
Default Amount” means the sum of (i) 120% of the outstanding principal amount of this Note, plus 100% of accrued and
unpaid interest hereon, and (ii) all other amounts, costs, expenses and liquidated damages due in respect of this Note.

 

“New
York Courts” shall have the meaning set forth in Section 6(d).

 

“Original
Issue Date” means the date of the issuance of this Note, regardless of any transfers of any Note and regardless of the
number of instruments which may be issued to evidence this Note.

 

“Purchase
Agreement” means that certain Securities Purchase Agreement, dated on or about the date hereof, among the Company
and the Holder, as amended, modified or supplemented from time to time in accordance with its terms.

 

“Subsidiary”
means any direct or indirect subsidiary of the Company currently existing or formed or acquired after the date hereof.

 

Section 2.Default Interest;
Prepayment.

 

a)              
Interest Rate. Since this Note was originally issued at a discount to the principal
amount hereof, no interest shall accrue hereunder unless and until an Event of Default occurs. After an Event of Default hereunder,
interest shall accrue daily on the outstanding principal amount of this Note at a rate per annum equal to 18%.

 

b)              
Prepayment. The Company may prepay or redeem any portion of the principal amount of
this Note without the prior written consent of the Holder. 

 

Section 3.Negative Covenants.
As long as any portion of this Note remains outstanding, the Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly:

 

a)                   
enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed
money of any kind which indebtedness matures, in whole or in part, on a date before the 60th day following the Maturity
Date; or

 

b)                   
repay, repurchase or offer to repay, repurchase or otherwise acquire any indebtedness
for borrowed money or any indebtedness to any current or former employees, officers or directors of the Company (other than regularly
scheduled principal and interest payments as such terms are in effect as of the Closing date and disclosed in the Exchange Act
Documents).

 

Section 5.Events of Default.

 

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

 

                                                                            
i.         
any default in the payment of (A) the principal amount under this Note, or (B) interest, liquidated damages and other
amounts owing under this Note as and when the same shall become due and payable (whether on the Maturity Date or by acceleration
or otherwise) which default is not cured within 3 business days;

 

                                                                          
ii.         
the Company shall fail to observe or perform any other covenant or agreement contained in this Note which failure
is not cured, if possible to cure, within 30 days after notice of such failure is delivered by the Holder or after the Company
has become or should have become aware of such failure, whichever is earlier;

 

                                                                        
iii.         
a default or event of default (subject to any grace or cure period provided in the applicable agreement, document
or instrument) shall occur under (A) the Purchase Agreement or Warrant or (B) any other material agreement, lease, document or
instrument to which the Company or any Subsidiary is obligated (and not otherwise covered below);

 

                                                                        
iv.          the
Company or any Subsidiary shall be subject to a Bankruptcy Event;

 

                                                                          
v.          the
Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced,
any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation
greater than $10,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness
becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

 

                                                                        
vi.          the
Company shall be a party to any Change of Control Transaction or shall agree to sell or dispose of all or in excess of 33% of its
assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction);

 

                                                                      
vii.          any
monetary judgment, writ or similar final process shall be entered or filed against the Company, any Subsidiary or any of their
respective properties or other assets for more than $10,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days; or

 

                                                                    
viii.          any
Event of Default under any of the Company’s 6% Senior Secured Convertible Notes.

 

b)              
Remedies Upon Event of Default. If any Event of Default occurs, the outstanding principal
amount of this Note, plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the
date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default
Amount. After the occurrence and during the continuance of any Event of Default, the interest rate on this Note shall accrue at
an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. In connection with such
acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or
other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its
rights and remedies hereunder and all other remedies available to it under applicable law.

 

Section 6.Miscellaneous.

 

a)              
Notices. Any and all notices or other communications or deliveries to be provided by
the Holder hereunder, shall be in writing and delivered personally, by facsimile, by email or sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth above, or such other facsimile number, email or address as
the Company may specify for such purpose by notice to the Holder delivered in accordance with this Section. Any and all notices
or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by
facsimile, by email or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number
or address of the Holder appearing on the books of the Company, or if no such facsimile number, email or address appears, at the
principal place of business of the Holder. Any notice or other communication or deliveries hereunder shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile or email
at the facsimile number or email address specified to such party prior to 8:30 p.m. (New York City time), (ii) the date immediately
following the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number
or email address specified to such party between 8:30 p.m. (New York City time) and 11:59 p.m. (New York City time) on any date,
(iii) the second Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications
shall be as set forth in the Purchase Agreement.

 

b)              
Absolute Obligation. Except as expressly provided herein, no provision of this Note
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages
and accrued interest, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed.
This Note is a direct debt obligation of the Company. 

 

c)              
Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed,
the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of
or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen
or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably
satisfactory to the Company, as well as an affidavit and indemnification agreement in form and substance reasonably acceptable
to the Company.

 

d)              
Governing Law. All questions concerning the construction, validity, enforcement and
interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning
the interpretation, enforcement and defense of the transactions contemplated by this Note, the Purchase Agreement or Warrant (whether
brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced
in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”).
Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to
the enforcement of this Note or the Purchase Agreement), 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 such New York Courts, or such New York Courts
are improper or inconvenient venue for such proceeding. 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 via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note 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 other manner permitted by applicable law. Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out
of or relating to this Note or the transactions contemplated hereby. If either party shall commence an action or proceeding to
enforce any provisions of this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party
for its attorney’s fees and other costs and expenses reasonably incurred in the investigation, preparation and prosecution
of such action or proceeding.

 

e)              
Waiver; Amendments. Any waiver by the Company or the Holder of a breach of any provision
of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any
other provision of this Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note
on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence
to that term or any other term of this Note. Any waiver by the Company or the Holder must be in writing. This Note shall not be
directly or indirectly effectively modified or amended without the prior written consent of the Holder.

 

f)               
Successors and Assigns. This Note may be assigned by the Holder with the prior written
consent of the Company. This Note may not be assigned by the Company, except to a successor in the event of a Fundamental Transaction.
This Note shall be binding on and inure to the benefit of the parties thereto and their respective successors and assigns.

 

g)              
Severability. If any provision of this Note is invalid, illegal or unenforceable, the
balance of this Note shall remain in effect, and if any provision is inapplicable to any person or entity or circumstance, it shall
nevertheless remain applicable to all other persons, entities and circumstances.

 

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

 

i)               
Headings. The headings contained herein are for convenience only, do not constitute
a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.

 

j)               
Assumption.  Any successor to the Company or any surviving entity in a Fundamental
Transaction shall (i) assume, prior to such Fundamental Transaction, all of the obligations of the Company under this Note, the
Purchase Agreement and Warrant pursuant to written agreements in form and substance satisfactory to the Holder (such approval not
to be unreasonably withheld or delayed) and (ii) issue to the Holder a new Note of such successor entity evidenced by a written
instrument substantially similar in form and substance to this Note, including, without limitation, having a principal amount and
interest rate equal to the principal amount and the interest rate of this Note and having similar ranking to this Note, which shall
be satisfactory to the Holder (any such approval not to be unreasonably withheld or delayed).  The provisions of this Section
shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations
of this Note.

 

k)              
No Usury. To the fullest extent permitted by law, the Company agrees not to insist
upon or plead or in any manner whatsoever claim, and shall resist any and all efforts to be compelled to take the benefit or advantage
of, usury laws wherever enacted, in force at the time of execution of this Note or hereafter, in connection with any action that
may be brought by the Holder in order to enforce any right or remedy under this Note or other Transaction Documents. Notwithstanding
any provision to the contrary contained herein, it is expressly agreed and provided that the total liability of the Company under
this Note for payments in the nature of interest shall not exceed the maximum lawful interest rate authorized under applicable
law. If the effective interest rate otherwise applicable under this Note exceeds such maximum lawful interest rate, then such applicable
interest rate shall be reduced so as not to exceed such maximum lawful interest rate.

 

l)               
Secured. All obligations hereunder are secured by a security interest in all assets of the
Company and its Subsidiaries pursuant to the Purchase Agreement.

 

*********************

    	 

    	 

    

IN WITNESS WHEREOF, the
Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.

 

 

	
        GrowLife,
        INC.

         

         

	
        By:__________________________________________

        Name:

        Title:

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