Exhibit 2.3
SECOND AMENDMENT TO
ASSET PURCHASE AGREEMENT
THE SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT (this “Second
Amendment”) is made and entered into as of the 10th day of January 2023, by and among Bridgetown Mushrooms, LLC, an Oregon limited
liability company (the “Seller”), GrowLife, Inc., a Delaware corporation (the “Purchaser”), and
Trevor Huebert (the “Executive”). Seller, Purchaser, and Executive are sometimes hereinafter collectively referred
to as the “Parties.”
RECITALS
WHEREAS, Seller and Purchaser entered into that certain Asset Purchase Agreement dated as of June 1, 2022. Which
was subsequently amended pursuant to the First Amendment to Asset Purchase Agreement dated as of November 14, 2022 (collectively, the
“Agreement”), pursuant to which Seller agreed to sell and Purchaser agreed to purchase certain assets, properties,
rights and interests relating to the Business (as defined in the Agreement) which assets, properties, rights and interests are more particularly
described in the Agreement, on all of the terms and conditions set forth therein.
WHEREAS, Seller and
Purchaser desire to amend the Agreement on the terms and conditions set forth herein.
NOW THEREFORE, in consideration
of the promises, terms and conditions contained herein and such other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Seller and Purchaser hereby agree as follows:
A. Defined
Terms and Recitals. Except as otherwise defined, all capitalized terms used herein but not otherwise defined shall have the meanings
set forth in the Agreement. Seller and Purchaser hereby agree that the recitals set forth hereinabove are true and correct and incorporated
into this First Amendment.
B. Amendments
to Agreement. The Parties agree that from and after the date of this First Amendment, the Agreement shall be amended as follows:
1. Section
2.5(a) of the Agreement (Purchase Price) shall be restated in entirety as follows:
“The purchase price (the “Purchase
Price”) for the Assets shall be the following:
| |
(i) |
$157,000 in cash, which has already been paid to Seller; |
| |
|
|
| |
(ii) |
$43,000 in the form of cancellation and forgiveness of the indebtedness owed to Purchaser by Seller under the Secured Promissory Note dated May 19, 2022 (the “Prior Loan”); |
| |
|
|
| |
(iii) |
$138,546 in the form of a promissory note attached hereto as Exhibit
E (the “Promissory Note”), which shall be payable in installments of (1) $38,546 on January 31, 2023, (2) $50,000
on February 28, 2023, and (3) $50,000 on March 31, 2023; |
| |
|
|
| |
(iv) |
$340,000 in the form of shares of Purchaser Stock, as calculated using
the Purchaser Stock Trading Price as of the Closing Date |
- 2 -
| |
|
(the “Stock Consideration”), of which $240,000 in shares of Purchaser Stock shall be issued
to Seller and $100,000 in shares of Purchaser Stock shall be issued to Lindsey Schwartz (“Lender”) on behalf of Seller in
satisfaction of certain obligations of Seller to Lender; and |
| |
|
|
| |
(v) |
Assumption by Purchaser of certain of Seller’s debt in the aggregate amount of $161,546. |
C. Exhibit
E to the Agreement (Escrow Agreement) shall be replaced with a new Exhibit E, which shall be the form of Promissory Note attached hereto
as Exhibit E.
D. No
Further Modification. Except as set forth herein, the Agreement remains unmodified and in full force and effect. In the event of
any inconsistency between the provisions of the Agreement and this First Amendment, the terms of this First Amendment shall control.
E. Governing
Law. This First Amendment shall be governed by, construed and enforced in accordance with the laws of the State of Washington.
F. Reaffirmation
of Agreement. This First Amendment shall be deemed a part of the Agreement for all purposes, and the Agreement remains in full force
and effect in accordance with its terms and as modified herein.
G. Counterparts
and Facsimile. This First Amendment may be executed in two or more counterparts, which when taken together shall constitute one and
the same instrument. This First Amendment may be signed and transmitted electronically (including, without limitation, via DocuSign);
the signature of any person on an electronically transmitted or electronically signed copy shall be considered an original signature;
and the electronically signed and/or transmitted copy shall have the same binding effect as a manually signed and transmitted document.
H. Successors
and Assigns. This First Amendment, and the assumptions, releases and indemnities set forth herein, shall be binding on and inure to
the benefit of the Parties hereto and their respective successors and assigns and any future owners of the Property.
[INTENTIONALLY LEFT BLANK]
- 2 -
IN WITNESS WHEREOF, the Parties
have caused this Second Amendment to be executed as of the day and year first written above.
GROWLIFE, INC.
By: /s/ Dave Dohrmann
Name: Dave Dohrmann
Title: President
BRIDGETOWN MUSHROOMS, LLC
By: /s/ Trevor Huebert
Name: Trevor Huebert
Title: Managing Member
EXECUTIVE
/s/ Trevor Huebert
Trevor Huebert
- 3 -
AMENDED AND RESTATED PROMISSORY NOTE
| Principal Amount: $138,546 |
January 11, 2023 |
WHEREAS, GrowLife, Inc., a
Delaware corporation (the “Obligor”), Bridgetown Mushrooms, LLC, an Oregon limited liability company, (the
“Creditor”) are parties to the Asset Purchase Agreement, dated June 1, 2022, as amended by the First Amendment to
Asset Purchase Agreement, dated November 14, 2022, and by the Second Amendment to Asset Purchase Agreement, dated January 11,
2023 (collectively, the “Purchase Agreement”), wherein the Obligor purchased certain business assets from the
Creditor; and
WHEREAS, in connection with
the Purchase Agreement, Obligor hereby promises to pay to the Creditor the principal amount of this Promissory Note as set forth
above (the “Principal”). Capitalized terms used herein without definition shall have the meanings assigned to
them in the Purchase Agreement.
A. Interest
and Payments.
1. Interest.
The Principal will bear interest at the rate of eight percent (8.00%) per annum ("Interest Rate"). Interest will be calculated
on a basis of a thirty (30) day month and three hundred sixty (360) day year.
2. Schedule
of Payments. Principal payments will become due and payable which shall be payable in installments of (1) $38,546 on January 31, 2023,
(2) $50,000 on February 28, 2023, and (3) $50,000 on March 31, 2023, together with accrued and unpaid interest thereon will be due and
payable (“Maturity Date”). A sample amortization schedule reflecting the calculation of payments of Principal and interest
payable thereon is attached hereto as Exhibit A.
3. Voluntary
Payments. Obligor shall have the right at any time and from time to time, upon notice to the Creditor, to prepay, in whole or in part
and without any premium or penalty, the Principal and accrued interest hereunder. Partial prepayments shall be applied first to the accrued
and outstanding interest then due and payable.
4. Form
of Payment. Principal and interest due hereunder to be paid in lawful money of the United States of America in federal or other immediately
available funds.
B. Security
Interest. To secure the obligations of the Borrower under this Note, the Obligor and the Creditor shall enter into a pledge and security
agreement of even date herewith, substantially in the form attached as Exhibit B (the “Security Agreement”)
pursuant to which the Obligor shall grant and convey to the Creditor a first priority security interest in all of the property set forth
in Exhibit C attached hereto (the “Collateral”) to secure the payment of the Principal this Note.
C. Events
of Default.
1. Definition
of Events of Default. The occurrence of any one or more of the following events shall constitute an "Event of Default"
hereunder:
(a) Obligor's
breach of the obligation to pay the principal or the interest under the Note within thirty (30) business days after the date that it is
due and payable;
- 1 -
(b) Any
material portion of the Purchased Assets is attached, seized, levied on, or comes into possession of a trustee or receiver to secure debt
of the Obligor (other than pursuant to this Note), and the attachment, seizure or levy is not removed in sixty (60) days; and
(c) Obligor
(A) has an order for relief entered against it under the federal Bankruptcy Code or similar bankruptcy or insolvency law and such order
is not dismissed within sixty (60) days, (B) makes an assignment for the benefit of creditors, (C) applies for or seeks the appointment
a receiver, liquidator, assignee, trustee or other similar official for it or of any substantial part of its property or any such official
is appointed, other than upon Company's request, and such unrequested appointment continues for sixty (60) days, or (D) institutes proceedings
seeking an order for relief under the federal Bankruptcy Code or similar bankruptcy or insolvency law or seeking to adjudicate it a bankrupt
or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or any of
its debts under other applicable federal or state law relating to creditor rights and remedies, or any such proceeding is filed against
it, other than upon Obligor's request, and such unrequested proceeding continues undismissed or unstayed for sixty (60) days.
2. Remedies
on Event of Default.
(a) During
the continuance of an Event of Default, Creditor shall have all rights available to it under this Note, the Security Agreement, the Uniform
Commercial Code and other applicable law.
(b) All
of Creditor's rights and remedies with respect to the Collateral, whether established hereby or by any other agreements, instruments or
documents or by law, shall be cumulative and may be exercised singly or concurrently.
D. Other
Provisions.
1. Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of Washington, without giving effect to
conflicts of law principles.
2. Venue.
With respect to any disputes arising out of or related to this Note, Obligor and Creditor consent to the exclusive jurisdiction of, and
venue in, the state courts in the King County, Washington (or in the event of exclusive federal jurisdiction, the courts of the Western
District of Washington).
3. Enforcement
Costs. Obligor shall reimburse Creditor for the reasonable attorneys' fees and expenses that it incurs in enforcing its rights
under this Note in any legal proceedings.
4. Notices.
All notices and other communications shall be governed by Section 10.1 of the Purchase Agreement.
5. Severability.
Whenever possible each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but
if any provision is prohibited by or invalid under applicable law, it shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of the provision or the remaining provisions of this Note.
6. Amendment
Provisions. This Note may not be amended or modified, nor may any of its terms be waived, except by written instruments signed by
Obligor and Creditor.
- 2 -
7. Restatement
of Prior Note. This Note amends, restates, replaces and supersedes in its entirety that certain Promissory Note Secured by Deed of
Trust in the original principal amount of three hundred thousand dollars ($300,000.00), executed by Obligor in favor of Creditor dated
as of January 1, 2023 (“Prior Note”). In the event of any inconsistency between the terms and conditions of this Note,
on the one hand, and the Prior Note, on the other hand, then the terms and conditions of this Note shall control. Upon receipt of this
Note, Creditor agrees to promptly return to Obligor or destroy any copy of the Prior Note that is in Creditor’s possession.
8. Binding
Effect. This Note shall be binding upon, and shall inure to the benefit of, Obligor and Creditor and their respective successors and
assigns; provided, however, that Obligor's rights and obligations shall not be assigned or delegated without Creditor's
prior written consent, given in its sole discretion.
[Signature Pages Follow]
- 3 -
IN WITNESS WHEREOF, Obligor has
executed and delivered this Note as of the date first written above.
GROWLIFE, INC.
By: /s/ Dave Dohrmann
Name: Dave Dohrmann
Title: President
[Signature Page to Promissory Note]
- 4 -
Exhibit A
Payment Schedule
Payment
Number |
Payment
Due Date |
Total
Payment |
Principal
Payment |
Interest
Payment |
Accrued
Interest |
Remaining
Balance |
| 1 |
January 31, 2023 |
$38,546.00 |
$38,546.00 |
$0.00 |
$923.64 |
$100,923.64 |
| 2 |
February 28, 2023 |
$50,000.00 |
$50,000.00 |
$0.00 |
$672.82 |
$51,596.46 |
| 3 |
March 31, 2023 |
$51,940.44 |
$50,000.00 |
$1,940.44 |
$343.98 |
$0.00 |
- 5 -
Exhibit B
Security Agreement
(attached)
- 6 -
Exhibit C
Collateral
(attached)
- 7 -
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement
(this “Agreement”) is entered into as of this 11th day of January, 2023 (the “Effective Date”) among
Bridgetown Mushrooms LLC, an Oregon limited liability company (the “Secured Party”) and GrowLife, Inc., a Delaware
corporation (the “Pledgor”).
RECITALS
A. Pledgor
and Secured Party are parties to that certain Asset Purchase Agreement, dated June 1, 2022, as amended by the First Amendment to the Asset
Purchase Agreement, dated November 14, 2022, and by the Second Amendment to Asset Purchase Agreement, dated January 11, 2023 (the “Purchase
Agreement”), pursuant to which Pledgor acquired substantially all of the assets of Secured Party upon the terms and subject
to conditions set forth therein (the “Acquisition”);
B. Pursuant
to the Purchase Agreement, Pledgor issued to Secured Party a promissory note in the principal amount of $138,546, date January 11, 2023
(the “Note”), and
C. Pursuant
to the terms of the Note, the parties are entering into this Agreement, pursuant to which Pledgor shall pledge and grant to Secured Party
a first priority security interest in the Pledged Collateral after the Maturity Date (as described and defined below and in the Note).
AGREEMENT
NOW, THEREFORE, in consideration
of the foregoing and of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions
and Interpretation. Unless otherwise defined herein, all other capitalized terms used herein shall have the respective meanings
given to those terms in the Note and in Article 8 or 9 of the Uniform Commercial Code from time to time in effect of the State of Oregon,
applicable to Pledgor (the “UCC”), provided, however, that if by reason of mandatory provisions of law, any or all
attachment, perfection or priority of Secured Party’s security interest in any item or portion of the Pledged Collateral is governed
by the UCC as in effect in a jurisdiction other than the State of Oregon, the term “UCC” shall mean the Uniform Commercial
Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection
or priority and for purposes of definitions relating to such enforcement.
2. The
Pledge. To secure Pledgor’s Obligations (as defined below), Pledgor pledges and assigns to Secured Party, and grants to
Secured Party a continuing first priority security interest in and all of Pledgor’s rights, title and interest, whether now existing
or hereafter arising, in the property set forth in Exhibit C of the Note (the “Pledged Collateral”). Pledgor’s
obligations secured by this Agreement (the “Obligations”) shall mean and include all loans, advances, indebtedness,
liability, and obligations, owed by Pledgor to Secured Party of every kind and description (whether or not evidenced by any note or instrument
and whether or not for the payment of money), now existing or hereafter arising under or pursuant to the terms of the Note, or any other
agreement or instrument between Pledgor and Secured Party, including without limitation, all interest, fees, charges, expenses, attorneys’
fees and costs and accountants’ fees and costs chargeable to and payable by Pledgor hereunder and thereunder, in each case, whether
direct or indirect, absolute or contingent, due or to become due, and whether or not arising after the commencement of a proceeding under
Title 11 of the United States Code (11 U.S.C. Section 101 et seq.), as amended from time to
- 1 -
time (including post-petition interest) and whether
or not allowed or allowable as a claim in any such proceeding and whether Pledgor be bound alone or with another or others.
3. Pledgor’s
Representations and Warranties. Pledgor hereby represents and warrants as follows:
(a) Authorization.
No approval, consent, authorization of, filing registration or qualification with, or other action by, Pledgor or any other Person or
Governmental Authority is or will be necessary to permit the valid execution, delivery and performance of this Agreement by Pledgor and
the consummation of the transactions or creation of the Pledged Collateral and granting the first priority security interest contemplated
hereby other than the delivery of certificates or instruments representing the Pledged Collateral to Secured Party and the filing of appropriate
UCC financing statements and compliance with securities laws in respect of any sale of the Pledged Collateral, as applicable. As used
in this Agreement, the term “Governmental Authority” shall mean any national, foreign, or local judicial, legislative, executive,
administrative or regulatory body or authority, and the term “Person” shall mean an individual, a partnership, a joint venture,
a corporation, a limited liability company, a limited liability partnership, a trust, an incorporated organization and a Governmental
Authority or any other legal entity.
(b) No
Conflicts. The execution, delivery and performance by Pledgor of this Agreement and the consummation of the transactions contemplated
hereby and the creation and granting of the security interests and Pledged Collateral to Secured Party contemplated hereby do not and
will not (1) conflict with or violate any provision of any applicable law, statute, rule, regulation, ordinance, license or tariff or
any judgment, decree or order of any court or other Governmental Authority binding on or applicable to Pledgor or any of its properties
or assets or Pledgor; (2) conflict with, result in a breach of, constitute a default of or an event of default under, or an event, fact,
condition or circumstance which, with notice or passage of time, or both, would constitute or result in a conflict, breach, default or
event of default under, require any consent not obtained under, or result in or require the acceleration of any indebtedness pursuant
to, any indenture, agreement or other instrument to which Pledgor is a party or by which he or it or they, or any of its or their properties
or assets are bound or subject; (3) conflict with or violate any provision of the articles of organization, operating agreement or any
other member’s agreements or organizational documents of Pledgor or any agreement or other obligation by either Pledgor; or (4)
result in the creation or imposition of any lien of any nature whatsoever upon any of the properties or assets of Pledgor.
(c) Pledged
Collateral.
(1) Pledgor
is the sole record and beneficial owner the Pledged Collateral following the Acquisition. The Pledged Collateral (and will be to the extent
such are acquired after the date hereof), free and clear of any and all liens, pledges, encumbrances, or charges, and Pledgor has not
optioned or otherwise agreed to sell, hypothecate, pledge, or otherwise encumber or dispose of the Pledged Collateral. The obligations
of Pledgor hereunder are not subordinated in any way to any other obligations of Pledgor. Except for this Agreement, the Note, and the
Purchase Agreement, Pledgor is not a party to or bound by any agreement, document or instrument that otherwise relates to the Pledged
Collateral.
(2) The
pledge of the Pledged Collateral creates a valid security interest in the Pledged Collateral, which security interest, upon Secured Party
taking possession of the Pledged Collateral will be a perfected first priority security interest by Pledgor with respect to securing the
payment of the Obligations by Pledgor to Secured Party and other obligations hereunder; and
- 2 -
(3) Pledgor
is the sole owner of the Pledged Collateral and has full legal authority and power to execute, deliver, and perform this Agreement and
to consummate the transactions contemplated hereunder, and Pledgor is under no restriction, limitation or disability that would prevent
any of the foregoing.
(d) Litigation.
There is no action, suit, proceeding or investigation pending or threatened (1) against or affecting the Pledged Collateral, Pledgor,
this Agreement or the transactions contemplated hereby, or (2) could reasonably be expected to prevent the validity of this Agreement
or the right or ability of Pledgor to enter into this Agreement or to consummate the transactions contemplated hereby.
(e) Truthful
Disclosure. The representations and warranties made by Pledgor, or Pledgor in this Agreement do not contain any untrue statement of
a material fact or omit to state any fact necessary to make the statements herein misleading and there is no material fact known to Pledgor
which Pledgor has not disclosed to Secured Party in writing.
5. Covenants.
So long as the Obligations under the Note and other Loan Documents are outstanding,
(a) Pledgor
shall take all necessary and appropriate actions to ensure that this Agreement and the liens and pledges created hereby are and remain
enforceable against Pledgor in accordance with its terms and that Pledgor complies with Pledgor’s obligations hereunder. Pledgor
shall not (i) cause or permit to be done, or enter into or make or become a party to any agreement, arrangement or commitment to do or
cause to be done, any of the things prohibited by this Agreement or that would breach this Agreement, or (ii) enter into or make or become
a party to any agreement, document or instrument or arrangement that conflicts with this Agreement or that would prevent Pledgor from
complying herewith and/or performing hereunder.
(b) Pledgor
hereby agree to take or cause to be taken promptly such further actions, obtain such consents and approvals and duly execute and deliver
or cause to be executed and delivered such further agreements, assignments, instructions or documents Secured Party may request in its
permitted discretion with respect to or in order to fully effectuate the purposes, terms and conditions of this Agreement and the consummation
of the transactions contemplated hereby, whether before, at or after the performance and/or consummation of such transactions or the occurrence
of any Event of Default, including, without limitation, any of the foregoing necessary or required or requested by Secured Party in its
permitted discretion to create, perfect, maintain, preserve, continue, validate or otherwise protect, and from time to time renew, Secured
Party's perfected first priority security interest in the Pledged Collateral. Without limiting the foregoing, upon the exercise by Secured
Party or agents of any right or remedy which requires any consent, approval or registration with, consent, qualification or authorization
by, any Person, Pledgor shall execute and deliver, or cause the execution and delivery of, all applications, certificates, instruments
and other documents that Secured Party or any of its affiliate or agents may be required to obtain for such consent, approval, registration,
qualification or authorization.
(c) Pledgor
(i) shall (A) maintain at all times the pledge of the Pledged Collateral to Secured Party, for its benefit, and Secured Party's perfected
first priority security interest, for its benefit, on the Pledged Collateral; and (B) defend the Pledged Collateral and Secured Party's
perfected first priority interest in the Pledged Collateral, for its benefit, thereon and pledge thereof against all claims and demands
of all Persons at any time and pay all costs and expenses (including, without limitation, in-house documentation and diligence fees and
legal expenses and reasonable attorneys’ fees and expenses) in connection with such defense, which, at Secured Party’s discretion,
may be added to the Obligations, and (ii) shall not sell, lease, transfer, pledge, encumber, restrict, assign or otherwise dispose of
any of the Pledged Collateral or any
- 3 -
interest therein or create, incur,
assume or suffer to exist any lien on the Pledged Collateral or any interest therein.
(d) Pledgor
shall (i) keep materially true, complete, and accurate records with respect to the Pledged Collateral, (ii) not take or permit to be taken
any action in connection with the Pledged Collateral or otherwise the effect of which would be or have a material adverse effect on the
value of the Pledged Collateral (as determined by Secured Party in its sole discretion).
(e) Pledgor
shall notify Secured Party at least ten (10) days before any change of the state of incorporation, corporate name, federal tax identification
number or address of either Pledgor.
(f) Pledgor
shall notify Secured Party in writing (“Secondary Lien Notice”) at least ten (10) days before (A) creating, incurring,
or consenting to the creation, incurrence of any lien on the Pledged Collateral, or (B) signing or filing under the UCC of any jurisdiction
any financing statement which names the Pledgor as a debtor, or sign any security agreement authorizing any secured party thereunder to
file such financing statement with respect to the Pledged Collateral. Upon Secured Party’s request, following receipt of such Secondary
Lien Notice, Pledgor shall promptly execute and deliver to Secured Party a financing statement with respect to the Pledged Collateral
naming Secured Party or its designee as the secured party and Pledgor as the debtor and including any other information as may be required
by the UCC and/or as Secured Party may reasonably request in order to perfect and protect any security interest granted or purported to
be granted hereby or to enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral.
6. Events
of Default; Remedies.
(a) Event
of Default. An Event of Default shall be deemed to have occurred under this Agreement upon the occurrence and during the continuance
of an Event of Default under the Note, including but not limited to Pledgor’s default in the payment of the Repayment Amount under
the Note on the Maturity Date.
(b) Rights
Under the UCC. In addition to all other rights granted hereby, and otherwise by law, Secured Party shall have, with respect to the
Pledged Collateral, the rights and obligations of a secured party under the UCC.
(c) Sale
of Pledged Collateral. Pledgor acknowledge and recognize that Secured Party may be unable to effect a sale of all or a part of the
Pledged Collateral and may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obligated
to agree, among other things, to acquire the Pledged Collateral for their own account, for investment and not with a view to the distribution
or resale thereof. Pledgor acknowledge that any such private sales may be at prices and on terms less favorable to Secured Party, and
agree that so long as such sales are (i) made in good faith, and (ii) conducted at arms-length, such private sales shall be deemed to
have been made in a commercially reasonable manner. Notwithstanding, Secured Party shall have the right to cancel the Pledged Collateral
in lieu of a sale thereof.
(d) Notice.
In any case where notice of sale is required, five (5) business days’ notice shall be deemed reasonable notice. Secured Party
may resort to the Pledged Collateral or any portion thereof with no requirement on the part of Secured Party to proceed first against
any other person or property.
8. Release
of the Pledged Collateral. Pursuant to the terms of the Note, this first priority secured interest in the Pledged Collateral will
be released upon Pledgor completing all of its Obligations under the Note. However, if any of the Event of Default has occurred, Secured
Party reserves the right to
- 4 -
exercise and enforce its rights and remedies hereunder
with respect to any Pledged Collateral as set forth in Section 6 of this Agreement and the Note.
9. Miscellaneous.
(a) 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 a reputable overnight courier service with charges prepaid, or (d) transmitted by hand delivery,
telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written
notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (i) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated
below (if delivered on a business day during normal business hours), or the first business day following such delivery (if delivered other
than on a business day during normal business hours), (ii) on the first business day following the date deposited with an overnight courier
service with charges prepaid, or (iii) on the fifth business day following the date of mailing pursuant to subpart (b) above, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be as set forth in the Purchase
Agreement.
(b) Non
Waiver. No failure or delay on Secured Party’s part in exercising any right hereunder shall operate as a waiver thereof or of
any other right nor shall any single or partial exercise of any such right preclude any other further exercise thereof or of any other
right.
(c) Amendments
and Waivers. This Agreement may not be amended or modified, nor may any of its terms be waived, except by written instruments signed
by Pledgor and Secured Party. Each waiver or consent under any provision hereof shall be effective only in the specific instances for
the purpose for which given.
(d) Assignments.
This Agreement shall be binding upon and inure to the benefit of Secured Party and its respective successors and assigns; provided,
however, that neither Pledgor nor Secured Party may assign any rights and duties hereunder without the prior written consent of Secured
Party.
(e) Cumulative
Rights, Etc. The rights, powers and remedies of Secured Party under this Agreement shall be in addition to all rights, powers and
remedies given to Secured Party by virtue of any applicable law, rule or regulation of any governmental authority, the Note or any other
agreement, all of which rights, powers, and remedies shall be cumulative and may be exercised successively or concurrently without impairing
Secured Party’s rights hereunder. Pledgor waives any right to require Secured Party to proceed against any Person or to exhaust
any collateral or to pursue any remedy in Secured Party’s power.
(f) Payments
Free of Taxes. All payments made by Pledgor under this Agreement shall be made by Pledgor free and clear of and without deduction
for any and all present and future taxes, levies, charges, deductions, and withholdings. In addition, Pledgor shall pay upon demand any
stamp or other taxes, levies, or charges of any jurisdiction with respect to the execution, delivery, registration, performance and enforcement
of this Agreement. Upon request by Secured Party, Pledgor shall furnish evidence satisfactory to Secured Party or such Secured Party that
all requisite authorizations and approvals by, and notices to and filings with, governmental authorities and regulatory bodies have been
obtained and made and that all requisite taxes, levies, and charges have been paid.
- 5 -
(g) Partial
Invalidity. If any time any provision of this Agreement is or becomes illegal, invalid, or unenforceable in any respect under the
law or any jurisdiction, neither the legality, validity or enforceability of the remaining provisions of this Agreement nor the legality,
validity or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby.
(h) Expenses.
Each of Pledgor and Secured Party shall bear its own costs in connection with the preparation, execution, and delivery of, and the exercise
of its duties under, this Agreement and the Note. Pledgor shall pay on demand all reasonable fees and expenses, including reasonable attorneys’
fees and expenses, incurred by Secured Party with respect to any amendments or waivers hereof requested by Pledgor or in the enforcement
or attempted enforcement of any of the Obligations or in preserving any of Secured Party's rights and remedies (including, without limitation,
all such fees and expenses incurred in connection with any “workout” or restructuring affecting this Agreement, the Note or
the Obligations or any bankruptcy or similar proceeding involving Pledgor or Secured Party).
(i) Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington, without giving effect
to the conflicts of laws principles thereof (except to the extent governed by the UCC). The parties hereby submit to the exclusive jurisdiction
of the courts of the state of Washington. By execution and delivery of this Agreement, Pledgor (a) accept the non-exclusive jurisdiction
of the aforesaid courts and irrevocably agree to be bound by any judgment rendered thereby, (b) waive personal service of process, (c)
agree that service of process upon it may be made by certified or registered mail, return receipt requested, pursuant to Section 9(a)
hereof, and (d) waive any objection to jurisdiction and venue of any action instituted hereunder and agrees not to assert any defense
based on lack of jurisdiction, venue, convenience or forum non conveniens. Nothing shall affect the right of Secured Party to serve
process in any manner permitted by law or shall limit the right of Secured Party to bring proceedings against Pledgor in the courts of
any other jurisdiction having jurisdiction. Pledgor acknowledge that they participated in the negotiation and drafting of this Agreement
and that, accordingly, it shall not move or petition a court construing this Agreement to construe it more stringently against one party
than against any other.
(j) Jury
Trial. EACH OF PLEDGOR, DEBTOR AND SECURED PARTY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVE ALL
RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties executing such counterparts,
and all of which together shall constitute one instrument. A facsimile, telecopy, .pdf scan or other reproduction of this Agreement may
be executed by one or more parties hereto and delivered by such party by facsimile or any similar electronic transmission device pursuant
to which the signature of or on behalf of such party can be seen. Such execution and delivery shall be considered valid, binding, and
effective for all purposes.
Remainder of Page Intentionally Omitted; Signature
Page to Follow
- 6 -
IN WITNESS WHEREOF, the parties
have caused this Pledge and Security Agreement to be executed as of the day and year first above written.
GROWLIFE, INC.
By: /s/ David Dohrmann
Name: David Dohrmann
Title: President
AGREED AND ACKNOWLEDGED
BRIDGETOWN MUSHROOMS, LLC
By: /s/ Trevor Huebert
Name: Trevor Huebert
Title: Managing Member
- 7 -
SCHEDULE
A
PLEDGED COLLATERAL
(to be provided by Secured Party)
- 8 -
