Item 1.01 Entry into a Material Definitive Agreement.
On
The AJB Note has an original issuance discount of
Under the terms of the AJB Note, the Company may not sell a significant portion of its assets without the approval of AJB, may not issue additional debt that is not subordinate to AJB without the approval of AJB, must comply with the Company's reporting requirements under the Securities Exchange Act of 1934, and must maintain the listing of the Company's common stock on the OTC Market or other exchange, among other restrictions and requirements. The Company's failure to make required payments under the note or to comply with any of these covenants, among other matters, would constitute an event of default. Upon an event of default under the SPA or note, the note will bear interest at 18%, AJB may immediately accelerate the note due date, AJB may convert the amount outstanding under the note into shares of the Company's common stock at a discount to the market price of the stock, and AJB will be entitled to its costs of collection, among other penalties and remedies.
The Company provided customary representations and covenants to AJB in the SPA.
Also pursuant to the SPA, the Company paid AJB a commitment fee of 8,000,000
unregistered shares of the company's common stock (the "Commitment
The SPA, Note, Security Agreement and Registration Agreement are filed as exhibits 10.1-10.4 to this Current Report on Form 8-K. The descriptions above are qualified in their entirety by reference to the full text of these documents.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosure included under Item 1.01 above is incorporated by reference to this Item 2.03.
Item 3.02 Unregistered Sales of
The disclosure included under Item 1.01 above is incorporated by reference to this Item 3.02. The issuances to AJB were exempt from registration under Section 4(a)(2) of the Securities Act of 1933.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit Description 10.1 Securities Purchase Agreement datedSeptember 28, 2022 , betweenGrowlife, Inc. andAJB Capital Investments, LLC 10.2 Promissory Note datedSeptember 28, 2022 , issued byGrowlife, Inc. toAJB Capital Investments, LLC 10.3 Security Agreement datedSeptember 28, 2022 , betweenGrowlife, Inc. andAJB Capital Investments, LLC 10.4 Registration Rights Agreement datedSeptember 28, 2022 , betweenGrowlife, Inc. toAJB Capital Investments, LLC 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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