Document:

Exhibit 10.1

 

VERITEX COMMUNITY BANK — LOAN NO. 1703864

VERITEX COMMUNITY BANK — LOAN NO.  (TERM LOAN FACILITY — SEPTEMBER 13, 2018)

 

SIXTEENTH AMENDMENT TO
 AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

THIS SIXTEENTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”) dated as of SEPTEMBER 13, 2018 (the “Amendment Effective Date”), is by and between (a) VERITEX COMMUNITY BANK, a Texas state bank, as successor-in-interest to SOVEREIGN BANK by merger (together with its successors and assigns, “Lender”), and (b) DAWSON GEOPHYSICAL COMPANY, a Texas corporation (“Debtor”), formerly known as TGC INDUSTRIES, INC.

 

RECITALS

 

WHEREAS, Debtor and Lender entered into that certain AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated as of SEPTEMBER 16, 2009 (as amended, modified, and restated from time to time, the “Agreement”), pursuant to which Lender agreed to make certain credit facilities available to Debtor on the terms and conditions set forth therein.

 

WHEREAS, the parties desire to amend the Agreement pursuant to the terms and conditions set forth herein.

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.                                      Defined Terms.  Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Agreement, as amended hereby.  Section 1(d) of the Agreement is hereby amended in its entirety to read as follows:

 

(d)                                 “Collateral” means:

 

(i)                                     All present and future accounts and general intangibles now owned or hereafter acquired;

 

(ii)                                  All equipment including; without limitation, all equipment identified on Exhibit 1(d) attached hereto, together with all replacements, accessories, additions, substitutions and accessions to all of the foregoing (such equipment as identified on Exhibit 1(b) being collectively, the “Term Loan Facility — September 13, 2018 - Equipment”);

 

(iii)                               All books, records, data, plans, manuals, computer software, computer tapes, computer systems, computer disks, computer programs, source codes and object codes containing any information, pertaining directly or indirectly to the Collateral described in clause (i) or (ii) above, as applicable, and all rights to retrieve data and other information pertaining directly or indirectly to the Collateral described in clause (i) or (ii) above, as applicable from third parties; and

 

(iv)                              All SUPPORTING OBLIGATIONS, PRODUCTS and PROCEEDS of all of the foregoing, as applicable (including without limitation, insurance payable by reason of loss or damage to the foregoing property).

 

2.                                      Amendment to Section 2(c) of the Agreement.  Section 2(c) of the Agreement is hereby deleted in its entirety and replaced with the following:

 

(c)                                  Term Loan Facility.  Subject to the terms and conditions set forth in this Agreement and the other Loan Documents, Lender hereby agrees to lend to Debtor in a single advance an aggregate sum not to exceed SIX MILLION FIVE HUNDRED EIGHTEEN THOUSAND ONE HUNDRED SEVEN AND 51/100 DOLLARS ($6,518,107.51) (the “Term Loan Facility — September 13, 2018”) on

 

SIXTEENTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT — PAGE 1

VERITEX COMMUNITY BANK — DAWSON GEOPHYSICAL COMPANY

 

 

SEPTEMBER 13, 2018 and continuing until the EARLIER of: (i) the acceleration of the Indebtedness pursuant to the terms of the Loan Documents; or (ii) SEPTEMBER 13, 2021.  Amounts repaid under the Term Loan Facility — September 13, 2018 may not be reborrowed.

 

3.                                      Amendment to Section 3 of Agreement.  Section 3 of the Agreement is hereby amended in its entirety to read as follows:

 

3.                                      Promissory Notes, Rate and Computation of Interest.  (i) the Revolving Credit Facility shall be evidenced by the Revolving Credit Note, and (ii) the Term Loan Facility — September 13, 2018 shall be evidenced by a Note (the “Term Loan Facility — September 13, 2018 — Note”).  Interest on each Note shall accrue at the rates set forth therein.  The principal of and interest on each Note shall be due and payable in accordance with the terms and conditions set forth in such Note and in this Agreement.

 

4.                                      Grant of Security Interest.  Lender and Debtor agree that (a) a separate and distinct portion of the Collateral shall secure the Revolving Credit Facility, and (b) a separate and distinct portion of the Collateral shall secure the Term Loan Facility — September 13, 2018.  Accordingly, as collateral security for the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the Indebtedness arising under the Revolving Credit Facility, Debtor hereby re-pledges to and re-grants Lender, a security interest in, all of Debtor’s right, title and interest in the Collateral described in Sections 1(d) of the Agreement, whether now owned by Debtor or hereafter acquired and whether now existing or hereafter coming into existence.  As collateral security for the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the Indebtedness arising under the Term Loan Facility — September 13, 2018, Debtor hereby pledges to and grants Lender, and re-pledges, a security interest in, all of Debtor’s right, title and interest in the Term Loan Facility — September 13, 2018 — Equipment and the Collateral described in Section 1(d)(iii) and (iv), whether now owned by Debtor or hereafter acquired and whether now existing or hereafter coming into existence.

 

5.                                      Conditions Precedent.  The obligations of Lender under this Amendment shall be subject to the condition precedent that Debtor shall have executed and delivered to Lender (a) this Amendment, (b) the Term Loan Facility — September 13, 2018 — Note, and (c) such other documents and instruments incidental and appropriate to the transaction provided for herein as Lender or its counsel may reasonably request.

 

6.                                      Payment Expenses.  Debtor agrees to pay all reasonable attorneys’ fees of Lender in connection with the drafting and execution of this Amendment.

 

7.                                      Ratifications.  Except as expressly modified and superseded by this Amendment, the Agreement and the other Loan Documents are ratified and confirmed and continue in full force and effect.  The Loan Documents, as modified by this Amendment, continue to be legal, valid, binding and enforceable in accordance with their respective terms.  Without limiting the generality of the foregoing, Debtor hereby ratifies and confirms that all liens heretofore granted to Lender were intended to, do and continue to secure the full payment and performance of the indebtedness arising under the Loan Documents.  Debtor agrees to perform such acts and duly authorize, execute, acknowledge, deliver, file and record such additional assignments, security agreements, modifications or agreements to any of the foregoing, and such other agreements, documents and instruments as Lender may reasonably request in order to perfect and protect those liens and preserve and protect the rights of Lender in respect of all present and future collateral.  The terms, conditions and provisions of the Loan Documents (as the same may have been amended, modified or restated from time to time) are incorporated herein by reference, the same as if stated verbatim herein.

 

8.                                      Representations, Warranties and Confirmations.  Debtor hereby represents and warrants to Lender that: (a) this Amendment and any other Loan Documents to be delivered under this Amendment (if any) have been duly executed and delivered by Debtor, are valid and binding upon Debtor and are enforceable against Debtor in accordance with their terms, except as limited by any applicable bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors’ rights and except to the extent specific remedies may generally be limited by equitable principles; (b) no action of, or filing with, any governmental authority is required to authorize, or is otherwise required in connection with, the execution, delivery and performance by Debtor of this Amendment or any other Loan Document to be delivered under this Amendment; and (c) the execution, delivery and performance by Debtor of this Amendment and any other Loan Documents to be delivered under this Amendment

 

SIXTEENTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT — PAGE 2

VERITEX COMMUNITY BANK — DAWSON GEOPHYSICAL COMPANY

 

 

do not require the consent of any other person and do not constitute a violation of any laws, agreements or understandings to which Debtor is a party or by which Debtor is bound.

 

9.                                      Release.  Debtor hereby acknowledges and agrees that it knows of no defenses, counterclaims, offsets, cross-complaints, claims or demands of any kind or nature whatsoever to or against Lender or the terms and provisions of or the obligations of Debtor under the Loan Documents and the other agreements, instruments and documents evidencing, securing, governing, guaranteeing or pertaining thereto, and that Debtor has no right to seek affirmative relief or damages of any kind or nature from Lender with respect thereto.  To the extent Debtor knows of any such defenses, counterclaims, offsets, cross-complaints, claims, demands or rights, Debtor hereby waives, and hereby knowingly and voluntarily releases and forever discharges Lender and its predecessors, officers, directors, agents, attorneys, employees, successors and assigns, from all possible claims, demands, actions, causes of action, defenses, counterclaims, offsets, cross-complaints, damages, costs, expenses and liabilities whatsoever with respect thereto, such waiver and release being with full knowledge and understanding of the circumstances and effects of such waiver and release and after having consulted legal counsel with respect thereto.

 

10.                               Multiple Counterparts.  This Amendment may be executed in a number of identical separate counterparts, each of which for all purposes is to be deemed an original, but all of which shall constitute, collectively, one agreement.  Signature pages to this Amendment may be detached from multiple separate counterparts and attached to the same document and a telecopy or other facsimile of any such executed signature page shall be valid as an original.

 

11.                               Reference to Loan Documents.  Each of the Loan Documents, including the Agreement and any and all other agreements, documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof containing a reference to any Loan Document shall mean and refer to such Loan Document as amended hereby.

 

12.                               Severability.  Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.

 

13.                               Headings.  The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.

 

NOTICE OF FINAL AGREEMENT

 

THE AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS THE SAME MAY BE AMENDED BY THIS AMENDMENT, REPRESENT THE FINAL AGREEMENT BETWEEN AND AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN AND AMONG THE PARTIES.

 

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

 

SIXTEENTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT — PAGE 3

VERITEX COMMUNITY BANK — DAWSON GEOPHYSICAL COMPANY

 

 

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the Amendment Effective Date.

 

	
LENDER:
    	
ADDRESS:
    
	
 
    	
 
    
	
VERITEX COMMUNITY BANK
    	
8214 Westchester Drive,   Suite 100
    
	
 
    	
Dallas, TX 75225
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Stephanie   Baird Velasquez
    	
 
    	
 
    
	
Name:
    	
Stephanie   Baird Velasquez
    	
 
    
	
Title:
    	
Market   President
    	
 
    
	
 
    	
 
    
	
With   copies of notices to:
    	
HUSCH BLACKWELL LLP
    
	
 
    	
2001 Ross Avenue,   Suite 2000
    
	
 
    	
Dallas, TX 75201
    
	
 
    	
Attention:
    	
Steven S. Camp
    
	
 
    	
 
    
	
DEBTOR:
    	
ADDRESS:
    
	
 
    	
 
    
	
DAWSON GEOPHYSICAL COMPANY
    	
101 E. Park Blvd.,   Suite 955
    
	
 
    	
Plano, TX 75074
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Wayne   Whitener
    	
 
    	
 
    
	
Name:
    	
Wayne   Whitener
    	
 
    
	
Title:
    	
Executive   Vice Chairman
    	
 
    

 

SIXTEENTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT — SIGNATURE PAGE 

VERITEX COMMUNITY BANK — DAWSON GEOPHYSICAL COMPANYBlueprint

 

EXHIBIT 4.2

 

FORM OF

SUBSCRIPTION AND INFORMATION AGENT AGREEMENT

 

This Subscription and Information Agent Agreement
(the “Agreement”)
is entered into as of this _________ day of September, by and
between GrowLife, Inc., organized and existing under the laws of
Delaware (the “Corporation”),
and Direct Transfer, LLC, a corporation having its principal
offices in _______ (“Direct
Transfer”).

 

WHEREAS, pursuant to a rights offering (the
“Rights
Offering”), the record
and beneficial holders of the Corporation’s common stock, par
value $0.0001 per share (the “Common
Stock”) as of the Record
Date (as defined in the applicable Offering Documents) (the
“Eligible
Holders”) will be given
the right (the “Subscription
Rights”) to subscribe for
an aggregate of approximately 500,000,000 Units, each Unit
consisting of one share of Common Stock and two 1⁄2 Warrants to
purchase Common Stock, in each case as more fully set forth in a
prospectus and related offering documents
(the “Offering
Documents”) to be
prepared by the Corporation and filed with the Securities and
Exchange Commission for the purpose of effecting the Rights
Offering; and

 

WHEREAS, the Corporation has authorized and directed the
Agent to hold funds submitted by the Eligible Holders who exercise
Subscription Rights (the “Subscription
Funds”) in accordance
with the terms and provisions of this Agreement;
and

 

WHEREAS, upon the terms and conditions set forth in the
applicable Offering Documents, the Agent will record properly
exercised Subscription Rights from Eligible Holders as of the
Record Date (as defined in the applicable Offering Documents), as
well as record and deposit the Subscription Funds for the purchase
of the Units pursuant to the Rights Offering;
and

 

WHEREAS, the Corporation desires that Direct Transfer act
as both Subscription Agent and Information Agent under the Rights
Offering (the “Agent”),
and Direct Transfer has indicated its willingness to do
so.

 

NOW,
THEREFORE, in consideration of
the mutual covenants contained herein, the parties hereto agree as
follows:

 

1.  Appointment of
Subscription and Information Agent. The Corporation hereby confirms the appointment
of Direct Transfer as Agent, and Direct Transfer hereby agrees to
serve as Agent, upon the terms and conditions set forth
herein.

 

2.  Acceptance and
Receipt of Subscription Documents.

 

A.  After receiving from the Corporation
acknowledgement of the commencement of the Rights Offering, the
Agent shall promptly mail or otherwise deliver to each Eligible
Holder as of the Record Date (a) the appropriate Offering Documents
as approved by the Corporation (which shall specify that the
exercise of Subscription Rights shall be effected, and risk of loss
of Subscription Funds shall pass, only upon receipt by the Agent of
the properly completed Subscription Rights Certificate (as defined
in the Offering Documents) and Subscription Funds required to
effect the exercise of Subscription Rights under the Rights
Offering) and (b) an envelope addressed to the Agent for use by
such holder in exercising his or her Subscription Rights (clauses
(a) and (b) collectively, the “Mailing”).

 

B.           The
Agent, upon receipt of Subscription Funds and duly, completely and
correctly executed Subscription Rights Certificates and other
documents for the exercise of Subscription Rights, shall make note
of such Subscriptions and Subscription Funds with respect to the
amount of shares subscribed for, including exercises of the Basic
Subscription Rights (as defined in the applicable Offering
Documents) and Over-Subscription Rights (as defined in the
applicable Offering Documents), and shall report such results to
the Corporation. Upon closing of the Rights Offering and as
promptly as feasible upon the Agent’s receipt of the
Corporation’s acceptance and approval of said Subscription
Rights Certificates, (i) the Corporation will authorize the Agent
to no longer accept any subscription documents and to prepare the
final subscription list, representing the number of Units for which
said Eligible Holder has subscribed, including exercises of the
Basic Subscription Rights (as defined in the applicable Offering
Documents) and Over-Subscription Rights (as defined in the
applicable Offering Documents), and shall report such results to
the Corporation, for the issuance of stock certificates by the
Corporation’s Transfer Agent, (the “Certificates”)
and (ii) the Agent will release to the Corporation the aggregate
Subscription Funds minus any fees and expense reimbursements
(incurred or reserved for disbursements) due to the Agent from the
Corporation (sections (i) and (ii) directly preceding constituting
the “Closing”).
No interest on the Subscription Funds will accrue to either the
Corporation, the Corporation’s Eligible
Holders. 

 

 

-1-

 

 

3.  Notification and
Processing. The Agent is hereby
authorized and directed to, and hereby agrees to perform certain
functions, including but not limited to the
following:

 

A.  Accept and respond to all telephone
requests from Eligible Holders for information relative to the
exercise of Subscription Rights (except that Agent will not answer
questions relating to the sufficiency of the consideration or the
tax implications of the Rights Offering); answer questions
regarding the proper method of exercising Subscription Rights,
including the completion of Subscription Rights Certificates and
other documents related to the Rights Offering; maintain a
toll-free number to respond to inquiries; provide assistance to
Eligible Holders and monitor the response to the Rights Offering;
enclose and re-mail the Subscriptions to interested Eligible
Holders; and provide periodic reports as requested to the
Corporation as to the status of the Rights
Offering.

 

B.  Date
stamp each document relating to its duties hereunder when
received;

 

C.  Receive
and examine all documents submitted to it in connection with the
exercise of rights under the Rights Offering and confirm whether
such documents are properly completed and executed in accordance
with the terms thereof. If Common Stock or warrants to purchase
Common Stock applicable to a subscription is held by more than one
record holder, the applicable Offering Documents must be signed by
each such holder; if a holder or joint holders (registrants) hold
more than one position in the Corporation, as indicated by
different accounts on the relevant record holder list, then
separate, properly completed and executed subscriptions must be
submitted for each such position held by that or those joint
holders (registrants).

 

D.  Retain
or return to any holders (as applicable) those Offering Documents
evidencing some deficiency in execution and make reasonable
attempts to inform such holders of the need to correct any such
deficiency. In any instance where the Agent cannot reconcile such
deficiencies, the Agent shall consult with the Corporation for
instructions as to whether the Agent may accept such exercise of
Subscription Rights. In the absence of such instructions by
Corporation in writing or email within twenty-four (24) hours after
Agent first requests such instructions, Agent is authorized not to
accept such exercise of Subscription Rights and shall notify the
exercising stockholder that its exercise is deficient;

 

E.  Accept
Subscription Rights Certificates and other documents signed by
persons acting in a fiduciary or representative capacity only if
such capacity is properly shown on the subscriptions and proper
evidence of their authority so to act has been
submitted;

 

F.  Accept
subscriptions for Units to be issued other than in the name that
appears on the Corporation record as Eligible Holder submitted for
such subscription, where (i) the signature thereon is guaranteed by
a financial institution Medallion Signature Guarantee, (ii) any
necessary stock transfer taxes are paid and proof of such payment
is submitted or funds therefor are provided to the Agent, or it is
established by the holder that no such taxes are due and payable
and (iii) the “Special Issuance Instructions” on the
Subscription Rights Certificate have been properly
completed;

 

G.  Retain
all subscriptions accepted and retain such documents pending
further instructions from the Corporation;

 

H.  Return
at the Corporation’s request any and all necessary records,
information and material concerning and representing unsubscribed
Units under the Rights Offering; and

 

I.  Maintain on a continuing basis a
list of Eligible Holders that have not yet subscribed pursuant to
the Rights Offering.

 

 

-2-

 

 

4.  Concerning
the Subscription and Information Agent.

 

The
Agent:

 

	
 

	

A.

	

Shall
have no duties or obligations other than those set forth herein,
including those described under “Included Services” on
Exhibit A, and no duties or obligations shall be inferred or
implied, nor shall Agent be obligated nor expected to perform those
services described under “Non-Included Services” on
Exhibit A

 

	
 

	

B.

	

May
rely on, and shall be held harmless by, the Corporation in acting
upon any certificate, statement, instrument, opinion, notice,
letter, facsimile transmission, telegram electronic mail or other
document, or any security delivered to it, and reasonably believed
by it to be genuine and to have been made or signed by the proper
party or parties;

 

	
 

	

C.

	

May
rely on and shall be held harmless by the Corporation in acting
upon written or oral instructions from the Corporation with respect
to any matter relating to its acting as Agent;

 

	
 

	

D.

	

May
consult on documents with counsel satisfactory to it (including
counsel for the Corporation) and shall be held harmless by the
Corporation in relying on the advice or opinion of such counsel in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion of such
counsel;

 

	
 

	

E.

	

Shall
make the final determination as to whether or not a Subscription
Rights Certificate received by Agent is duly, completely and
correctly executed in order to qualify for the Rights Offering and
Agent shall be held harmless by the Corporation in respect of any
action taken, suffered or omitted by Agent hereunder in good faith
and in accordance with its determination; shall not be obligated to
take any legal or other action hereunder which might, in its
judgment subject or expose it to any expense or liability unless it
shall have been furnished with an indemnity satisfactory to
it;

 

	
 

	

F.

	

Shall
not be liable or responsible for any recital or statement contained
in any Offering Document or any other documents relating thereto;
and

 

	
 

	

G.

	

Shall
not be liable or responsible for any failure of the Corporation to
comply with any of its obligations relating to the Offering,
including without limitation obligations under applicable
regulation or law.

 

This
Agreement does not contemplate any service to be provided by Agent
in the case where the conditions of the Rights Offering have not
been met in a timely manner. If necessary, service to be provided
by Agent under such circumstances and remuneration to Agent
therefor, will be established in a mutual agreement between Agent
and the Corporation, which will become a part of this
Agreement.

 

No
later than the business day after the Mailing, the Corporation will
provide Agent with a list of talking points dealing with
anticipated questions from Eligible Holders. It is understood and
agreed that Agent will not provide tax advice, will not interpret
tax regulations, will not opine regarding the merits of the Rights
Offering, and will not provide any comments related to any legal
proceedings related to the Corporation.

 

5.  Compensation of
the Agent by the Corporation.
The Corporation shall pay fees for the services rendered hereunder,
as set forth in the Fee Schedule (attached hereto as Exhibit A).
The Agent shall also be entitled to reimbursement from the
Corporation for all reasonable and necessary expenses paid or
incurred by it in connection with the administration by the Agent
of its duties hereunder. The fees must be paid upon execution of
this Agreement, before any services hereunder commence. An invoice
for any out-of-pocket and/or per item fees incurred will be
rendered to and payable by the Corporation within thirty (30) days
of the date of said invoice, except for invoiced estimated postage,
printing and mailing expenses, which funds must be received five
(5) business days prior to the scheduled Mailing date. It is
understood and agreed that all responsibilities and duties of, and
services to be performed by Agent shall cease if full payment for
its services has not been received in accordance with the above
schedule, and said services will not commence thereafter until all
payment due has been received by Agent.

 

 

-3-

 

 

6.  Reminder
Mailings. The Corporation
agrees that any follow up mailing program will be coordinated
exclusively through Agent, either by Agent or using a vendor that
Agent has previously approved. Agent may conduct follow up mailings
through electronic mail, to the extent the email address of the
intended recipient Eligible Holder has been provided by Corporation
to Agent.

 

7.  Performance.

 

The
Agent shall at all times act in good faith and agrees to use its
commercially reasonable efforts within reasonable time limits to
insure the accuracy and timeliness of all services performed under
this Agreement.

 

8.  Indemnification,
Limitation of Liability.

 

A.  The
Corporation covenants and agrees to indemnify and to hold the Agent
harmless against any claims, actions, judgments, liabilities,
costs, expenses (including reasonable fees of its legal counsel),
losses or damages, which may be paid, incurred or suffered by or to
which it may become subject, arising from or out of its duties
under this Agreement, except to the extent that such claims,
actions, judgments, liabilities, costs, expenses, losses or damages
are primarily a result of Agent’s gross negligence or willful
misconduct. Promptly after the receipt by the Agent of notice of
any demand or claim, or the commencement of any action, suit,
proceeding or investigation, the Agent shall notify the Corporation
thereof in writing. The Corporation shall be entitled to
participate at its own expense in the defense of any such claim or
proceeding, and, if it so elects at any time after receipt of such
notice, it may assume the defense of any suit brought to enforce
any such claim or of any other legal action or proceeding. Agent
will not, without the Corporation’s prior consent, settle or
compromise or consent to the entry of any judgment to any pending
or threatened action in respect of which indemnification may be
sought hereunder. For the purposes of this Section 8, the phrase
“any costs, expenses (including reasonable fees of its legal
counsel), losses or damages” means any amount paid or payable
to satisfy any claim, demand, action, suit or proceeding settled,
and all reasonable costs and expenses, including, but not limited
to, reasonable counsel fees and disbursements, paid or incurred in
investigating or defending against any such action, suit,
proceeding or investigation.

 

B.  Agent’s
aggregate liability during any term of this Agreement with respect
to, arising from, or arising in connection with this Agreement, or
from all services provided or omitted to be provided under this
Agreement, whether in contract, or in tort, or otherwise, is
limited to, and shall not exceed, the amounts paid or payable
hereunder by the Corporation to Agent as fees and charges, but not
including reimbursable expenses, except to the extent that such
liability arises primarily as a result of Agent’s gross
negligence or willful misconduct.

 

C.  In the event any question or dispute
arises with respect to the proper interpretation of this Agreement
or Agent’s duties hereunder or the rights of the Corporation
or of any Eligible Holder exercising Subscription Rights, Agent
shall not be required to act and shall not be held liable or
responsible for refusing to act until the question or dispute has
been judicially settled (and Agent may, if it deems it advisable,
but shall not be obligated to, file a suit in interpleader or for a
declaratory judgment for such purpose) by final judgment rendered
by a court of competent jurisdiction, binding on all Eligible
Holders and parties interested in the matter which is no longer
subject to review or appeal, or settled by a written document in
form and substance satisfactory to Agent and executed by the
Corporation and each such stockholder and party. In addition, Agent
may require for such purpose, but shall not be obligated to
require, the execution of such written settlement by all the
Eligible Holders and all other parties that may have an interest in
the settlement.

 

9.  Further
Assurance. From time-to-time
and after the date hereof, the Corporation shall deliver or cause
to be delivered to the Agent such further documents and instruments
and shall do and cause to be done such further acts as the Agent
shall reasonably request (it being understood that the Agent shall
have no obligation to make any such request) to carry out more
effectively the provisions and purposes of this Agreement, to
evidence compliance herewith or to assure itself that it is
protected in acting hereunder.

 

10. Term.
The Corporation may terminate this Agreement at any time by
providing 30 days’ written notification to the Agent. The
Agent may terminate this Agreement by providing the Corporation 30
days’ written notice, except that Agent may terminate this
agreement upon 10 days’ written notice at any time
Corporation has not paid in full an invoice from the Agent within
the time period described in section five (5) herein and
Corporation does not pay in full the invoice within 10 days
following receipt of written notice of such outstanding invoice.
Upon the effective date of termination of this Agreement, all cash
and other payments, without interest, and all other property then
held by the Agent on behalf of the Eligible Holders hereunder shall
be delivered by it to such successor agent or as otherwise shall be
designated in writing by the parties hereto. Upon termination of
this Agreement, all subscription documents received and related
documentation will be returned to the
Corporation.

 

 

-4-

 

 

11. Notices.
Until further notice in writing by either party hereto to the other
party, all written reports, notices and other communications
between the Agent and the Corporation required or permitted
hereunder shall be delivered or mailed by first class mail, postage
prepaid, addressed as follows:

 

	
 

	

If to
the Corporation, to:

	
 

	
 

	
 

	

GrowLife,
Inc.

5400
Carillon Point

Kirkland,
WA 98033

Attn:
Mark Scott

	
 

	
 

	
 

	
 

	

With a
copy (which shall not constitute notice)

	
 

	
 

	
 

	
 

	

Horwitz
& Armstrong, A Prof. Law Corp.

14
Orchard Suite 200

Lake
Forest, CA 92630

Attention:
Jessica Lockett & Lawrence Horwitz

	
 

	
 

	
 

	
 

	

If to
the Agent, to:

	

Direct
Transfer, LLC

500
Perimeter Park Drive Suite D

Morrisville
NC 27560

Attn:
Rights Offering

 

12. Governing
Law. This Agreement shall be
governed by and construed in accordance with the laws of the the
State of Delaware and shall inure to the benefit of, and the
obligations created hereby shall be binding upon, the successors
and assigns of the parties hereto.

 

13. Assignment.

 

A.  Except
as provided in Section 13(B) below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party
without the written consent of the other party.

 

B.  The
Agent may, without further consent on the part of the Corporation,
subcontract with subcontractors for systems, processing, telephone
and mailing services, and reminder mailing activities, as may be
required from time to time without (unless otherwise set forth
herein) additional fees payable by the Corporation; provided,
however, that the Agent shall be fully responsible to the
Corporation for the acts and omissions of any
subcontractor.

 

C.  Except
as explicitly stated elsewhere in this Agreement, nothing under
this Agreement shall be construed to give any rights or benefits in
this Agreement to anyone other than the Agent and the Corporation
and the duties and responsibilities undertaken pursuant to this
Agreement shall be for the sole and exclusive benefit of the Agent
and the Corporation. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective permitted
successors and assigns.

 

14. Amendment.
This Agreement may not be modified, amended or supplemented without
an express written agreement executed by each of the parties
hereto.

 

 

-5-

 

 

15. Counterparts.
This Agreement may be executed in separate counterparts, each of
which, when executed and delivered, shall be an original, but all
such counterparts shall together constitute but one and the same
instrument.

 

16. No Joint
Venture. This Agreement does
not constitute an agreement for a partnership or joint venture
between the Agent and the Corporation. Neither party shall make any
commitments with third parties that are binding on the other party
without the other party’s prior written
consent.

 

17. Force
Majeure. In the event either
party is unable to perform its obligations under the terms of this
Agreement because of acts of God, strikes, equipment or
transmission failure or damage that is reasonably beyond its
control, or other cause that is reasonably beyond its control
(except, in the case of the Agent, for acts of subcontractors),
such party shall not be liable for damages to the other for any
damages resulting from such failure to perform or otherwise from
such causes. Performance under this Agreement shall resume when the
affected party or parties are able to perform substantially that
party’s duties.

 

18. Consequential
Damages. Neither party to this
Agreement shall be liable for any consequential, indirect, special
or incidental damages under any provision of this Agreement or for
any consequential, indirect, penal, special or incidental damages
arising out of any act or failure to act hereunder even if that
party has been advised of or has foreseen the possibility of such
damages.

 

19. Severability.
If any provision of this Agreement shall be held invalid, unlawful,
or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or
impaired.

 

20. Confidentiality. The
Agent and the Corporation agree that all books, records,
information and data pertaining to the business of the other party
which are exchanged or received pursuant to the negotiation or the
carrying out of this Agreement, including the fees for services set
forth in the attached schedule, shall remain confidential and shall
not be voluntarily disclosed to any third party (except the
party’s attorneys, advisors and affiliates), except with the
written approval of the other party or as may be required by law or
regulatory authority.

  

21. Survival.
The provisions of Sections 4, 5, 7, 8, 9, 11, 12, 13, 18, 20, 21
and 22 shall survive any termination of this
Agreement.

 

22. Merger of
Agreement. This Agreement
constitutes the entire agreement between the parties hereto and
supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.

 

 

-6-

 

 

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

 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

DIRECT TRANSFER, LLC

	
 

	

GROWLIFE, INC.

	
 

	
 

	
 

	

By:

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

Title:

	
 

	
 

	

Title:

	
 

 

 

 

 

 

-7-

 

 

Exhibit A

 

AGENT FEES AND INCLUDED SERVICES

 

 Subscription and Information Agent Fess and costs
as set forth below. The following is an estimate and subject to
change:

 

Agent shall be entitled to reimbursement of all reasonable
out-of-pocket expenses including but not limited to postage,
stationery and supplies, which will be billed as incurred during
the performance of Agent’s duties hereunder, including
without limitation:

 

Out of pocket expenses

 

●

Postage
with shared Pre-Sort savings (to be paid in advance) 1

 

●

Overnight
delivery / courier service / photocopy service

 

●

Envelopes
– outer and BRE (Business Reply Envelopes) 1

 

●

Brochures
and enrollment materials

 

●

Insurance
and courier fees

 

●

Printing
of check forms and blank stock certificates

  

Although Agent may advance payment for these expenses and then
invoice Corporation, there are occasions when Agent may require
advance payment toward large expense items. 

 

 

-8-

 

 

INCLUDED SERVICES

 

●

Designating
a corporate action account manager to communicate with all parties
hereto and their counsel to establish the terms, timing and
procedures required to carry out Subscription Agent duties,
including document review and execution of legal agreements,
Subscription Rights Certificates and other Rights Offering
documents and communication materials, project management, and
on-going project updates and reporting.

 

●

Designating
an Information Agent account manager to review and become familiar
with all Offer Documents and provide expert assistance to Eligible
Holders related to matters concerning the Rights
Offering.

 

●

Preparing
labels that include name and address for the mailing of Offering
Documents.

 

●

Printing,
collating and assembling Offering Documents and envelopes for
mailing.

 

1 Rates are subject to
change upon U.S. and foreign postage rate
increases.

 

●

Addressing
and enclosing Offering Documents and return envelopes, for
one-time, one-day mailing to Eligible Holders.

 

●

Receiving,
opening and logging in returned Subscription Rights
Certificates.

 

●

Checking
Subscription Rights Certificates for validity against master
list.

 

●

Checking
for proper execution of all of Subscription Rights Certificates and
other documents necessary to effect a proper exercise of
Subscription Rights, including W-9’s (if
applicable).

 

●

Curing
defective subscriptions, including telephoning and writing Eligible
Holders in connection with unsigned or improperly executed
Subscription Rights Certificates and other Offering
Documents.

 

●

Soliciting
by mail W-9s from Eligible Holders who have not executed them or
whose TINs do not match our records.

 

●

Tracking
and reporting as required the number of Units to which Eligible
Holders have subscribed, including the exercise of the Basic
Subscription Right and any Over-Subscription Right.

 

●

Sealing,
addressing, posting (not including postage), and providing
envelopes for mailing to Eligible Holders.

 

●

Providing
stockholder relations services to all Eligible Holders related to
the Rights Offering, including phone, email, and regular mail
inquiries.

 

●

Dedicated
Toll Free Phone Number

 

NON-INCLUDED SERVICES

 

●

Services
associated with new duties, legislation or regulations which become
effective after the date of this Agreement (these will be provided
on an appraisal basis)

 

●

Reasonable
legal review fees if referred to outside counsel

 

 

 

-9-

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