Exhibit 10.27

FOURTH EXCHANGE AGREEMENT
This Fourth Exchange Agreement (the “Agreement”) is entered into as of the 10th
day of November, 2020, by and among KushCo Holdings, Inc., a Nevada corporation
with offices located at 6261 Katella Avenue, Suite 250, Cypress, CA 90630 (the
“Company”) and the investor signatory hereto (the “Holder”), with reference to
the following facts:
A.Prior to the date hereof, pursuant to that Securities Purchase Agreement,
dated as of April 29, 2019, by and between the Company and the investors party
thereto (as the same has been amended, restated, amended and restated,
supplemented or otherwise modified prior to the date hereof, the “Securities
Purchase Agreement”), the Company issued a senior note (as the same has been
amended, restated, amended and restated, supplemented or otherwise modified
prior to the date hereof, the “Original Note”) to the Holder, as the initial
holder.
B.Prior to the date hereof, pursuant to that certain Exchange Agreement, dated
August 21, 2019 (the “First Exchange Agreement”), the Company exchanged the
Original Note for a new senior note (the “First Exchange Note”) and a warrant to
purchase Common Stock of the Company (the “Existing Warrant”).
C.Prior to the date hereof, pursuant to that certain Exchange Agreement, dated
November 8, 2019 (the “Second Exchange Agreement”), the Company exchanged the
First Exchange Note for a new senior note in the principal amount of $23,962,500
(the “Second Exchange Note”).
D.Prior to the date hereof, pursuant to that certain Exchange Agreement, dated
June 9, 2020 (the “Third Exchange Agreement”), the Company exchanged the Second
Exchange Note for (i) a new senior note in the aggregate principal amount of
$22.0 million (the “Third Exchange Note”, and together with the Securities
Purchase Agreement, the First Exchange Agreement, the Second Exchange Agreement,
and the Third Exchange Agreement, the “Existing Note Documents”) and (ii)
5,347,594 shares of the Company’s common stock, par value $0.001 per share (the
“Common Stock”).
E.Capitalized terms used but not otherwise defined herein shall have the
meanings as set forth in the Third Exchange Agreement (as amended hereby) or, as
the context may require, the Existing Note.
F.The Holder is the holder of the Existing Note issued under the Third Exchange
Agreement and has not assigned, transferred or exchanged the Existing Note.
G.Prior to the date of the Agreement, KIM International Corporation, an
Affiliate of the Company incurred a $1,900,000 unsecured, non-recourse “Paycheck
Protection Program” loan from The Bennington State Bank under the Coronavirus
Aid, Relief, and Economic Security (CARES) Act of 2020 (such loan, the “PPP
Loan”, and the date thereof, the “PPP Loan Date”).
H.The Company and the Holder desire to amend and waive certain provisions of the
Existing Note Documents and to permit the Transaction (as defined below) and to
waive any prospective defaults or events of default that would have otherwise
resulted
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Exhibit 10.27
therefrom (the “Prospective Defaults”) on the terms and subject to the
conditions set forth herein. References herein to the “Exchange” or the
“Transaction” shall mean the exchange of the Existing Note, for (x) a new senior
note with an amount due at maturity as set forth on the signature page of the
Holder attached hereto, in the form attached hereto as Exhibit A (the “New
Note”), and (y) such aggregate number of shares of Common Stock as set forth on
the signature page of the Holder attached hereto (the “New Shares”, and together
with the New Note, the “New Securities”).
I.The New Securities and this Agreement and such other documents and
certificates related thereto are collectively referred to herein as the
“Exchange Documents”.
J.The Exchange is being made in reliance upon the exemption from registration
provided by Section 4(a)(2) and Rule 144(d)(3)(ii) of the Securities Act of
1933, as amended (the “Securities Act”).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
1.Exchange. On the Closing Date (as defined below), subject to the terms and
conditions of this Agreement, pursuant to Section 4(a)(2) and Rule 144(d)(3)(ii)
of the Securities Act, the Holder shall convey, assign and transfer the Existing
Note to the Company in exchange for which the Company shall (a) issue the New
Note to the Holder and (b) issue the New Shares to the Holder by
deposit/withdrawal at custodian in accordance with the DWAC instructions on the
signature page of the Holder, which New Shares shall be issued without
restricted legend and shall be freely tradable by the Holder. On the Closing
Date, the Company shall deliver or cause to be delivered to the Holder (or its
designee) the New Note at the address for delivery set forth on the signature
page of the Holder attached hereto. Immediately following the delivery of the
New Securities to the Holder (or its designee), the Holder shall relinquish all
rights, title and interest in the Existing Note (including any claims the Holder
may have against the Company related thereto) and assign the same to the
Company, and the Existing Note shall be deemed canceled.
2.Ratifications; Incorporation of Terms under Transaction Documents.
2.2Ratifications. Except as otherwise expressly provided herein, the Securities
Purchase Agreement and each other Transaction Document, is, and shall continue
to be, in full force and effect and is hereby ratified and confirmed in all
respects, except that on and after the date hereof: (i) all references in the
Securities Purchase Agreement to “this Agreement”, “hereto”, “hereof”,
“hereunder” or words of like import referring to the Securities Purchase
Agreement shall mean the Securities Purchase Agreement as amended by this
Agreement, and (ii) all references in the other Transaction Documents to the
“Securities Purchase Agreement”, “thereto”, “thereof”, “thereunder” or words of
like import referring to the Securities Purchase Agreement shall mean the
Securities Purchase Agreement as amended by this Agreement.
2.2Amendments and Incorporation of Terms under Transaction Documents. Effective
as of the date hereof, the Securities Purchase Agreement and each of the other
Transaction Documents are hereby amended as follows (and any such agreements,
covenants and
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Exhibit 10.27
related provisions therein shall be deemed incorporated by reference herein,
mutatis mutandis, as amended as such):
(a) The defined term “Notes” is hereby amended to mean the New Note (as defined
herein).
(b)    The defined term “Transaction Documents” is hereby amended to include
this Agreement and the other Exchange Documents.
(c)    The defined term “Business Day” is hereby amended and restated as the
Business Day (as defined in the New Note).
2.3Amendment of First Exchange Agreement; Acknowledgement. Effective as of the
Closing Date, Section 17 of the First Exchange Agreement is hereby amended to
replace “New Note” with New Note (as defined herein). The Company hereby
acknowledges and agrees that, after giving effect to the foregoing amendment,
the MFN Termination Date (as defined in the First Exchange Agreement) shall not
occur until such dates as no New Note (as defined herein) remains outstanding.
3.Limited Waiver. The Holder hereby waives the Prospective Defaults and any and
all restrictions and remedies set forth in any Existing Note Document that would
otherwise prohibit the Transaction or any other transactions contemplated by the
Exchange Documents (as defined herein), solely as necessary to permit the
transactions contemplated in the Exchange Documents (as defined herein) and not
with respect to any other matter. Effective as of the time immediately prior to
the PPP Loan Date, the Holder waives any prohibitions in the Transaction
Documents that would otherwise prohibit the PPP Loan and any Prospective
Defaults (and, for the avoidance of doubt, the PPP Loan shall on and after the
PPP Loan Date be deemed to be “Permitted Senior Indebtedness” thereunder).
4.Company Representations and Warranties. As of the date hereof and as of the
Closing Date (as defined below):
4.1Each of the Company and each of its Subsidiaries are entities duly organized
and validly existing and in good standing under the laws of the jurisdiction in
which they are formed, and have the requisite power and authority to own their
properties and to carry on their business as now being conducted and as
presently proposed to be conducted. Each of the Company and each of its
Subsidiaries is duly qualified as a foreign entity to do business and is in good
standing in every jurisdiction in which the character of the properties owned or
leased by it or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not reasonably be expected to have a
Material Adverse Effect (as defined below). As used in this Agreement
(including, for the avoidance of doubt, the New Notes), “Material Adverse
Effect” means any material adverse effect on (i) the business, properties,
assets, liabilities, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company and its Subsidiaries, taken
as a whole; provided, however, that solely for purposes of this clause (i),
COVID-19, the declaration on March 13, 2020, of the national emergency relating
to COVID-19 and related executive actions, legislative and regulatory measures,
and the related impacts of the
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Exhibit 10.27
foregoing on the Company and its Subsidiaries shall not constitute a material
adverse effect on the business, properties, assets, liabilities, operations
(including results thereof), condition (financial or otherwise) or prospects of
the Company and its Subsidiaries, taken as a whole, (ii) the transactions
contemplated hereby or in any of the other Exchange Documents or any other
agreements or instruments to be entered into in connection herewith or therewith
or (iii) the authority or ability of the Company or any of its Subsidiaries to
perform any of their respective obligations under any of the Exchange Documents.
Other than the Persons set forth on Schedule 4.1, the Company has no
Subsidiaries.
4.2Authorization and Binding Obligation. The Company has the requisite power and
authority to enter into and perform its obligations under this Agreement, the
New Securities and each of the other agreements entered into by the parties
hereto in connection with the transactions contemplated by the Exchange
Documents and to consummate the Transaction (including, without limitation, the
issuance of the New Securities in accordance with the terms hereof and thereof).
As of the Closing Date, the execution and delivery of the Exchange Documents by
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby, including, without limitation, the issuance of the New
Securities will have been duly authorized by the Company’s Board of Directors
(or a duly authorized committee thereof) and no further filing, consent, or
authorization will be required by the Company, its Board of Directors or its
shareholders (other than such filings as may be required by any federal or state
securities laws, rules or regulations). This Agreement has been and, as of the
Closing Date, the other Exchange Documents to which the Company is a party will
have been, duly executed and delivered by the Company, and constitute or will
constitute, as applicable, the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies and except as rights to
indemnification and to contribution may be limited by federal or state
securities laws.
4.3No Conflict. Except for any waivers referred to in Section 3 above, the
execution, delivery and performance of the Exchange Documents by the Company and
the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the issuance of the New Securities) will
not (i) result in a violation of the Articles of Incorporation (as defined
below) or any other organizational documents of the Company or any of its
Subsidiaries, any capital stock of the Company or any of its Subsidiaries or
Bylaws (as defined below) of the Company or any of its Subsidiaries, (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party and the receipt by the Company of the Required Consents (as defined
below), or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including foreign, federal and state securities laws and
regulations and the rules and regulations of the OTCQX (the “Principal Market”)
and including all applicable federal laws, rules and regulations) applicable to
the Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected except, in the case of
clause
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Exhibit 10.27
(ii) or (iii) above, to the extent such violations that would not reasonably be
expected to have a Material Adverse Effect.
4.4No Consents. Except as set forth on Schedule 4.4 (the “Required Consents”),
neither the Company nor any Subsidiary is required to obtain any consent from,
authorization or order of, or make any filing or registration with (other than
such filings as may be required by any federal or state securities laws, rules
or regulations), any Governmental Entity or any regulatory or self-regulatory
agency or any other Person in order for it to execute, deliver or perform any of
its respective obligations under or contemplated by the Exchange Documents, in
each case, in accordance with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the Company or any
Subsidiary is required to obtain pursuant to the preceding sentence have been or
will be obtained or effected on or prior to the Closing Date, and neither the
Company nor any of its Subsidiaries are aware of any facts or circumstances
which might prevent the Company or any of its Subsidiaries from obtaining or
effecting any of the registration, application or filings contemplated by the
Exchange Documents.
4.5Securities Law Exemptions. Assuming the accuracy of the representations and
warranties of the Holder contained herein, the offer and issuance by the Company
of the New Securities is exempt from registration under the Securities Act
pursuant to the exemption provided by Section 4(a)(2) and Rule 144(d)(3)(ii)
thereof.
4.6Status of Existing Note; Issuance of New Securities.
(a)    The Company has no knowledge that the Existing Note is subject to dispute
and to the knowledge of the Company there is no action based on the Existing
Note that is currently pending in any court or other legal venue and to the
knowledge of the Company no judgments based upon the Existing Note have been
previously entered in any legal proceeding. The Company has not received any
written notice from the Holder or any other person challenging or disputing the
Existing Note, or any portion thereof, and prior to the Exchange, the Company is
unconditionally obligated to pay the entire aggregate principal amount
outstanding under the Existing Note (and any accrued and unpaid interest
thereunder) without defense, counterclaim or offset. Upon the Exchange, the
Company is unconditionally obligated to pay the entire aggregate principal
amount outstanding under the New Note (and any accrued and unpaid interest
thereunder) without defense, counterclaim or offset.
(b)    As of the Closing Date, (i) the issuance of the New Note will be duly
authorized and upon issuance in accordance with the terms of the Exchange
Documents shall be validly issued, fully paid and non-assessable and free from
all Liens (as defined in the New Note) and (ii) upon issuance in accordance
herewith, the New Shares will be validly issued, fully paid and nonassessable
and free from all Liens with respect to the issue thereof, with the holders
being entitled to all rights accorded to a holder of Common Stock. By virtue of
Section 4(a)(2) and Rule 144(d)(3)(ii) under the Securities Act, the New
Securities will have a Rule 144 (as defined below) holding period that will be
deemed to have commenced as of the Closing Date (as defined in the Securities
Purchase Agreement), the date of the original issuance of the Original Note to
the Holder. At any time on and after the date hereof and subject to the Holder’s
representations and warranties contained in Section 5 of this Agreement, neither
the New Note nor the New Shares shall be required to bear any restrictive legend
and shall be freely
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Exhibit 10.27
transferable by the Holder pursuant to and in accordance with Rule 144 of the
Securities Act (“Rule 144”), provided, for the avoidance of doubt, that the
Holder shall not be an affiliate of the Company and shall not have been an
affiliate during the 90 days preceding the date of any transfer.
4.7Transfer Taxes. On the Closing Date, all share transfer or other taxes (other
than income or similar taxes) that are required to be paid in connection with
the issuance of the New Note to be issued to the Holder hereunder will be, or
will have been, fully paid or provided for by the Company, and all laws imposing
such taxes will be or will have been complied with.
4.8Conduct of Business; Regulatory Permits. Neither the Company nor any of its
Subsidiaries is in material violation of any term of or in default under its
Articles of Incorporation, any certificate of designation, preferences or rights
of any other outstanding series of preferred stock of the Company or any of its
Subsidiaries or Bylaws or their organizational charter, certificate of
formation, memorandum of association, articles of association, Articles of
Incorporation or certificate of incorporation or bylaws, respectively. Neither
the Company nor any of its Subsidiaries is in material violation of any
judgment, decree or order or any statute, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries, and neither the Company
nor any of its Subsidiaries will conduct its business in violation of any of the
foregoing, except in all cases for possible violations which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Without limiting the generality of the foregoing, except as set
forth in the SEC Documents, the Company is not in material violation of any of
the rules, regulations or requirements of the Principal Market and has no
knowledge of any facts or circumstances that could reasonably lead to delisting
or suspension of the Common Stock by the Principal Market in the foreseeable
future. Except as set forth in SEC Documents, during the two years prior to the
date hereof, (i) the Common Stock has been listed or designated for quotation on
the Principal Market, (ii) trading in the Common Stock has not been suspended by
the Securities and Exchange Commission (“SEC”) or the Principal Market and (iii)
the Company has received no communication, written or oral, from the SEC or the
Principal Market regarding the suspension or delisting of the Common Stock from
the Principal Market. The Company and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate regulatory
authorities necessary to conduct their respective businesses, except where the
failure to possess such certificates, authorizations or permits would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit. There is no agreement, commitment,
judgment, injunction, order or decree binding upon the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries is a party which
has or would reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of the Company or any of its
Subsidiaries, any acquisition of property by the Company or any of its
Subsidiaries or the conduct of business by the Company or any of its
Subsidiaries as currently conducted other than such effects, individually or in
the aggregate, which have not had and would not reasonably be expected to have a
Material Adverse Effect on the Company or any of its Subsidiaries.
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Exhibit 10.27
4.9Transactions With Affiliates. Except as set forth in the SEC Documents or as
set forth on Schedule 4.9, none of the officers or directors of the Company or
its Subsidiaries and, to the knowledge of the Company, none of the employees of
the Company or its Subsidiaries is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees, officers and
directors) required to be disclosed under Item 404 of Regulation S-K under the
Exchange Act.
4.10Equity Capitalization.
(a)    Definitions:
i.“Common Stock” means (x) the Company’s shares of common stock, $0.0001 par
value per share, and (y) any capital stock into which such common stock shall
have been changed or any share capital resulting from a reclassification of such
common stock.
ii.“Preferred Stock” means (x) the Company’s blank check preferred stock,
$0.0001 par value per share, the terms of which may be designated by the board
of directors of the Company in a certificate of designations and (y) any capital
stock into which such preferred stock shall have been changed or any share
capital resulting from a reclassification of such preferred stock (other than a
conversion of such preferred stock into Common Stock in accordance with the
terms of such certificate of designations).
b.Authorized and Outstanding Capital Stock. As of the date hereof, the
authorized capital stock of the Company consists of (A) 265,000,000 shares of
Common Stock, of which 127,274,667 are issued and outstanding and 36,736,880
shares are reserved for issuance pursuant to Convertible Securities (as defined
below) exercisable or exchangeable for, or convertible into, shares of Common
Stock and (B) 10,000,000 shares of Preferred Stock, none of which are issued and
outstanding. No shares of Common Stock are held in the treasury of the Company.
c.Valid Issuance; Available Shares; Affiliates. All of such outstanding shares
are duly authorized and have been, or upon issuance will be, validly issued,
fully paid and nonassessable. The SEC Documents accurately set forth, as of the
dates referred to therein, the number of shares of Common Stock that are (A)
reserved for issuance pursuant to Convertible Securities (as defined below) and
(B) that are, as of the date referred to therein, owned by Persons who are
“affiliates” (as defined in Rule 405 of the Securities Act and calculated based
on the assumption that only officers, directors and holders of at least 10% of
the Company’s issued and outstanding Common Stock are “affiliates” without
conceding that any such Persons are “affiliates” for purposes of federal
securities laws) of the Company or any of its Subsidiaries. “Convertible
Securities” means any capital stock or other security of the Company or any of
its Subsidiaries that is at any time and under any circumstances directly or
indirectly convertible into, exercisable or exchangeable for, or which otherwise
entitles the holder thereof to acquire, any capital stock or other security of
the Company (including, without limitation, Common Stock) or any of its
Subsidiaries.
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Exhibit 10.27
d.Existing Securities; Obligations. Except as disclosed in the SEC Documents or
on Schedule 4.10: (A) none of the Company’s or any Subsidiary’s shares,
interests or capital stock is subject to preemptive rights or any other similar
rights or Liens suffered or permitted by the Company or any Subsidiary; (B)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares, interests or
capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares, interests or
capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares, interests or capital stock of the Company or any
of its Subsidiaries; (C) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the Securities Act; (D) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries; (E) neither the Company nor any Subsidiary has any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan
or agreement; and (F) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the New Note.
e.Organizational Documents. True, correct and complete copies of the Company’s
Articles of Incorporation, as amended and as in effect on the date hereof (the
“Articles of Incorporation”), and the Company’s Bylaws, as in effect on the date
hereof (the “Bylaws”), and the terms of all Convertible Securities and the
material rights of the holders thereof in respect thereto, are set forth in, or
filed as exhibits to, the SEC Documents, or otherwise set forth on Schedule
4.10.
4.11Indebtedness and Other Contracts. Except as disclosed in the SEC Documents
or on Schedule 4.11, neither the Company nor any of its Subsidiaries, (i) has
any outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing Indebtedness of the
Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound, (ii) is a party to any contract, agreement
or instrument, the violation of which, or default under which, by the other
party(ies) to such contract, agreement or instrument would reasonably be
expected to result in a Material Adverse Effect, (iii) is in violation of any
term of, or in default under, any contract, agreement or instrument relating to
any Indebtedness, except where such violations and defaults would not reasonably
be expected to result, individually or in the aggregate, in a Material Adverse
Effect (other than the Notes and the Securities Purchase Agreement), or (iv) is
a party to any contract, agreement or instrument relating to any Indebtedness,
the performance of which, in the judgment of the Company’s officers, has or is
expected to have a Material Adverse Effect. Prior to the date hereof, the
Company has repaid, in full, all of the outstanding obligations under the
Current Facility (as defined in the Original Note) and no outstanding disputes
exist between the lenders under the Current Facility and the Company or any of
its Subsidiaries.
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Exhibit 10.27
4.12Litigation. Except as set forth in the SEC Documents, there is no action,
claim, suit, investigation or proceeding before any Governmental Entity pending
or, to the knowledge of the Company, threatened against the Company or its
Subsidiaries wherein an unfavorable decision, ruling or finding would reasonably
be expected to, individually or in the aggregate, (i) materially adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, the Exchange Documents or (ii) have a
Material Adverse Effect. The Company is not a party to or subject to the
provisions of any injunction, judgment, decree or order of any court, regulatory
body, administrative agency or other governmental agency or body that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
4.13No Consideration Paid. No consideration, commission or other remuneration
has been paid by the Holder to the Company, its Subsidiaries or any of their
agents or affiliates in connection with the Exchange.
4.14Acknowledgement Regarding Holder’s Trading Activity. It is understood and
acknowledged by the Company that (i) following the public disclosure of the
transactions contemplated by the Exchange Documents, in accordance with the
terms thereof, the Holder has not been asked by the Company or any of its
Subsidiaries to agree, nor has the Holder agreed with the Company or any of its
Subsidiaries, to desist from effecting any transactions in or with respect to
(including, without limitation, purchasing or selling, long and/or short) any
securities of the Company, or “derivative” securities based on securities issued
by the Company or to hold any of the New Securities for any specified term; (ii)
the Holder, and counterparties in “derivative” transactions to which any the
Holder is a party, directly or indirectly, presently may have a “short” position
in the Common Stock which was established prior to the Holder’s knowledge of the
transactions contemplated by the Exchange Documents; (iii) the Holder shall not
be deemed to have any affiliation with or control over any arm’s length
counterparty in any “derivative” transaction; and (iv) the Holder may rely on
the Company’s obligation to timely deliver New Shares as and when required
pursuant to the Exchange Documents for purposes of effecting trading in the
Common Stock of the Company. The Company acknowledges that such aforementioned
hedging and/or trading activities do not constitute a breach of this Agreement,
the New Note or any other Exchange Document or any of the documents executed in
connection herewith or therewith.
4.15Disclosure. Except as disclosed in the SEC Filing (as defined below), the
Company confirms that neither it nor any other Person acting on its behalf has
provided the Holder or its agents or counsel with any information that
constitutes or could reasonably be expected to constitute material, non-public
information concerning the Company or any of its Subsidiaries, other than the
existence of the transactions contemplated by this Agreement and the other
Exchange Documents and any matters disclosed in the SEC Filing. A draft of the
Annual Report on Form 10-K for the period ended August 31, 2020 of Company and
its Subsidiaries provided by the Company to the Holder (or an affiliate of the
Holder) on November 9, 2020 is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The Company understands and confirms
that the Holder will rely on the foregoing representations in effecting
transactions in securities of the Company.
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Exhibit 10.27
5.Holder’s Representations and Warranties. As a material inducement to the
Company to enter into this Agreement and consummate the Exchange, the Holder
hereby represents and warrants with and to the Company, as of the date hereof
and as of the Closing Date, as follows:
5.1Reliance on Exemptions. The Holder understands that the New Securities are
being offered and exchanged in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and the
Holder’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Holder set forth herein and in the
other Exchange Documents in order to determine the availability of such
exemptions and the eligibility of the Holder to acquire the New Securities.
5.2No Governmental Review. The Holder understands that no United States federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the New Securities or the fairness or
suitability of the investment in the New Securities nor have such authorities
passed upon or endorsed the merits of the offering of the New Securities.
5.3Validity; Enforcement. This Agreement and the other Exchange Documents to
which the Holder is a party have been duly and validly authorized, executed and
delivered on behalf of the Holder and shall constitute the legal, valid and
binding obligations of the Holder enforceable against the Holder in accordance
with their respective terms, except as such enforceability may be limited by
general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.
5.4No Conflicts. The execution, delivery and performance by the Holder of this
Agreement and the other Exchange Documents to which the Holder is a party, and
the consummation by the Holder of the transactions contemplated hereby and
thereby will not (i) result in a violation of the organizational documents of
the Holder or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Holder is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to the Holder, except
in the case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of the
Holder to perform its obligations hereunder.
5.5Investment Risk; Sophistication. The Holder is acquiring the New Securities
hereunder as principal for its own account and in the ordinary course of its
business. The Holder has such knowledge, sophistication, and experience in
business and financial matters so as to be capable of evaluation of the merits
and risks of the prospective investment in the New Securities, and has so
evaluated the merits and risk of such investment, and can bear the economic
risks of such investment. The Holder is an “accredited investor” as defined in
Regulation D under the Securities Act. The Holder understands that no federal or
state agency
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Exhibit 10.27
has passed upon the merits or risks of an investment in the New Securities or
made any finding or determination concerning the fairness or advisability of
this investment.
5.6Ownership of Existing Note. The Holder owns the Existing Note free and clear
of any Liens (other than the obligations pursuant to this Agreement, the
Transaction Documents and applicable securities laws) and has the requisite
power and authority to enter into and perform its obligations under this
Agreement and each of the other Exchange Documents to which it is a party and to
consummate the Transaction.
5.7Transfer or Resale. The Holder understands that: (i) the New Securities have
not been and is not being registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, (B) the Holder shall have
delivered to the Company (if requested by the Company) an opinion of counsel, in
a form reasonably acceptable to the Company, to the effect that such New
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) the Holder
provides the Company with reasonable assurance that such New Securities can be
sold, assigned or transferred pursuant to Rule 144; (ii) any sale of the New
Securities made in reliance on Rule 144 may be made only in accordance with the
terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the
New Securities under circumstances in which the seller (or the Person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the Securities Act) may require compliance with some other exemption
under the Securities Act or the rules and regulations of the SEC promulgated
thereunder; and (iii) neither the Company nor any other Person is under any
obligation to register the New Securities under the Securities Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder. Notwithstanding the foregoing, the New Securities may be pledged in
connection with a bona fide margin account or other loan or financing
arrangement secured by the New Securities and such pledge of New Securities
shall not be deemed to be a transfer, sale or assignment of the New Securities
hereunder, and the Holder effecting a pledge of New Securities shall not be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Exchange
Document, including, without limitation, this Section 5.7.
6.Closing; Conditions. Subject to the conditions set forth below, the Exchange
shall take place at the offices of Kelley Drye & Warren LLP, 101 Park Avenue,
New York, NY 10178, on the Business Day immediately following such date as the
Company shall have satisfied all conditions to closing below, or at such other
time and place as the Company and the Holder mutually agree (the “Closing” and
the “Closing Date”).
6.1Condition’s to Holder’s Obligations. The obligation of the Holder to
consummate the Exchange is subject to the fulfillment, to the Holder’s
reasonable satisfaction, prior to or at the Closing, of each of the following
conditions (unless waived by the Holder in writing, prior to the Closing):
a.Representations and Warranties; Covenants. The representations and warranties
of the Company contained in this Agreement shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality
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Exhibit 10.27
or Material Adverse Effect, which are accurate in all respects) on the date
hereof and on and as of the Closing Date as if made on and as of such date
(except for representations and warranties that speak as of a specific date,
which are accurate in all material respects (except for those representations
and warranties that are qualified by materiality or Material Adverse Effect,
which are accurate in all respects) as of such specified date). The Company
shall have performed, satisfied and complied in all respects with the covenants,
agreements and conditions required to be performed, satisfied or complied with
by the Company at or prior to the Closing Date.
b.Issuance of New Note. At the Closing, the Company shall issue the New Note to
the Holder.
c.No Actions. No action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any court,
governmental agency or authority or legislative body to enjoin, restrain,
prohibit or obtain substantial damages in respect of, this Agreement or the
consummation of the transactions contemplated by this Agreement.
d.Proceedings and Documents. All proceedings in connection with the transactions
contemplated hereby and all documents and instruments incident to such
transactions shall be satisfactory in substance and form to the Holder, and the
Holder shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
e.No Event of Default. After giving effect to the Exchange, no Event of Default
(as defined in the New Note) or event that with the passage of time or giving of
notice would constitute an Event of Default shall have occurred and be
continuing.
f.Consents. The Company shall have obtained all governmental, regulatory or
third party consents and approvals (or waiver of such consents or approvals), if
any, necessary for the Exchange, including without limitation, those required by
the Principal Market, if any, and the Required Consents.
g.Listing. The Common Stock (A) shall be designated for quotation or listed (as
applicable) on the Principal Market and (B) shall not have been suspended, as of
the Closing Date, by the SEC or the Principal Market from trading on the
Principal Market.
h.Fees. The Company shall have paid, in full, to Kelley Drye & Warren LLP the
Counsel Expense Amount (as defined below) and all outstanding invoices delivered
by Kelley Drye & Warren LLP to the Company prior to the date hereof.
6.Condition’s to the Company’s Obligations. The obligation of the Company to
consummate the Exchange is subject to the fulfillment, to the Company’s
reasonable satisfaction, prior to or at the Closing, of each of the following
conditions (unless waived by the Company in writing, prior to the Closing):
a.Representations and Warranties. The representations and warranties of the
Holder contained in this Agreement shall be true and correct in all material
respects (except for those representations and warranties that are qualified by
materiality or
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Exhibit 10.27
material adverse effect, which are accurate in all respects) on the date hereof
and on and as of the Closing Date as if made on and as of such date (except for
representations and warranties that speak as of a specific date, which are
accurate in all material respects (except for those representations and
warranties that are qualified by materiality or material adverse effect, which
are accurate in all respects) as of such specified date).
b.No Actions. No action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any court,
governmental agency or authority or legislative body to enjoin, restrain,
prohibit, or obtain substantial damages in respect of, this Agreement or the
consummation of the transactions contemplated by this Agreement.
c.Proceedings and Documents. All proceedings in connection with the transactions
contemplated hereby and all documents and instruments incident to such
transactions shall be satisfactory in substance and form to the Company and the
Company shall have received all such counterpart originals or certified or other
copies of such documents as the Company may reasonably request.
7.Covenants.
7.1No Integration. None of the Company, its Subsidiaries, any of their
affiliates, or any Person acting on their behalf shall, directly or indirectly,
make any offers or sales of any security (as defined in the Securities Act) or
solicit any offers to buy any security or take any other actions, under
circumstances that would require registration of the New Note under the
Securities Act or cause this offering of the New Note to be integrated with such
offering or any prior offerings by the Company for purposes of Regulation D
under the Securities Act.
7.2Fees. At the closing, the Company shall pay Kelley Drye & Warren, LLP
(counsel to the Holder) an amount of up to $5,000 for the reasonable and
documented out-of-pocket legal fees and expenses incurred by the Holder in
connection with the Transaction (the “Counsel Expense Amount”). The Company
shall be responsible for the payment of any placement agent’s fees, financial
advisory fees, transfer agent fees, any legal fees with respect to the issuance
of any New Shares without restrictive legend, DTC (as defined below) fees or
broker’s commissions (in each case other than for Persons engaged by the Holder)
relating to or arising out of the transactions contemplated hereby. The Company
shall pay, and hold the Holder harmless against, any liability, loss or expense
(including, without limitation, reasonable attorneys’ fees and out-of-pocket
expenses) arising in connection with any claim relating to any such payment.
Except as otherwise set forth in the Exchange Documents, each party to this
Agreement shall bear its own expenses in connection with the sale of the New
Securities to the Holder.
7.3Holding Period. For the purposes of Rule 144, the Company acknowledges that
the holding period of the New Securities may be tacked onto both the holding
period of the Existing Note, the holding period of the First Exchange Note and
the holding period of the Original Note, and the Company agrees not to take a
position contrary to this Section 7.3. The Company acknowledges and agrees that,
subject to the Holder’s representations
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Exhibit 10.27
and warranties contained in Section 5 of this Agreement, the New Securities
shall not be required to bear any restrictive legend and shall be freely
transferable by the Holder pursuant to and in accordance with Rule 144,
provided, for the avoidance of doubt, that the Holder shall not be an affiliate
of the Company and shall not have been an affiliate during the 90 days preceding
the date of any transfer.
7.4Blue Sky. The Company shall, on or before the Closing Date, take such action
as the Company shall reasonably determine is necessary in order to obtain an
exemption for, or to, qualify the New Securities for sale to the Holder at the
Closing pursuant to this Agreement under applicable securities or “Blue Sky”
laws of the states of the United States (or to obtain an exemption from such
qualification), if any. Without limiting any other obligation of the Company
under this Agreement, the Company shall timely make all filings and reports
relating to the offer and sale of the New Securities required under all
applicable securities laws (including, without limitation, all applicable
federal securities laws and all applicable “Blue Sky” laws), and the Company
shall comply with all applicable foreign, federal, state and local laws,
statutes, rules, regulations and the like relating to the offering and sale of
the New Securities to the Holder.
7.5Reporting Status. Until the date no New Notes remain outstanding (the
“Reporting Period”), the Company shall timely file all reports required to be
filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate
its status as an issuer required to file reports under the 1934 Act even if the
1934 Act or the rules and regulations thereunder would no longer require or
otherwise permit such termination.
7.6Financial Information. The Company agrees to send the following to any holder
of the New Note (each, an “Investor”) during the Reporting Period (i) unless the
following are filed with the SEC through EDGAR and are available to the public
through the EDGAR system, within one (1) Business Day after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports on
Form 10-Q, any interim reports or any consolidated balance sheets, income
statements, stockholders’ equity statements and/or cash flow statements for any
period other than annual, any Current Reports on Form 8-K and any registration
statements (other than on Form S-8) or amendments filed pursuant to the
Securities Act, (ii) unless the following are either filed with the SEC through
EDGAR or are otherwise widely disseminated via a recognized news release service
(such as PR Newswire), on the same day as the release thereof, facsimile copies
of all press releases issued by the Company or any of its Subsidiaries and (iii)
unless the following are filed with the SEC through EDGAR, copies of any notices
and other information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders.
7.7Listing. The Company shall promptly secure the listing or designation for
quotation (as the case may be) of all of the New Shares upon each national
securities exchange and automated quotation system, if any, upon which the
Common Stock is then listed or designated for quotation (as the case may be)
(subject to official notice of issuance) and shall maintain such listing or
designation for quotation (as the case may be) of all New Shares from time to
time issuable under the terms of the Exchange Documents on such national
securities exchange or automated quotation system. The Company shall maintain
the Common Stock’s listing or authorization for quotation (as the case may be)
on the Principal Market, The New
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Exhibit 10.27
York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq
Global Market or the Nasdaq Global Select Market (each, an “Eligible Market”).
Neither the Company nor any of its Subsidiaries shall take any action which
could be reasonably expected to result in the delisting or suspension of the
Common Stock on an Eligible Market. The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section 7.7.
7.8Pledge of Securities. Notwithstanding anything to the contrary contained in
the Existing Note Documents nor the Exchange Documents, the Company acknowledges
and agrees that the New Securities may be pledged by a holder of the New
Securities without restriction in connection with a bona fide margin agreement
or other loan or financing arrangement that is secured by the New Securities.
The Company hereby agrees to execute and deliver such documentation as a pledgee
of the New Securities may reasonably request in connection with a pledge of the
New Securities to such pledgee by the Holder, provided that such documentation
does not expand the nature of the Company's obligations under any of the
Existing Note Documents and the Exchange Documents.
7.9Disclosure of Transaction.
a.On or before 9:30 a.m., New York time, on the first (1st) Business Day after
the date of this Agreement, the Company shall file a Current Report on Form 8-K
or any other periodic report filed pursuant to the Exchange Act (including all
attachments, the “SEC Filing”) describing the material terms of the transactions
contemplated by the Exchange Documents in the form required by the Exchange Act
and attaching this Agreement and the form of the New Note. From and after the
filing of the SEC Filing, the Company shall have disclosed all material,
non-public information (if any) provided to the Holder by the Company or any of
its Subsidiaries or any of their respective officers, directors, employees or
agents in connection with the transactions contemplated by the Exchange
Documents. In addition, effective upon the filing of the SEC Filing, the Company
acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its
Subsidiaries or any of their respective officers, directors, affiliates,
employees or agents, on the one hand, and the Holder or any of its affiliates,
on the other hand, relating to the transactions contemplated by the Exchange
Documents, shall terminate.
b.Except as may be required by the Securities Purchase Agreement or the New
Note, the Company shall not, and the Company shall cause each of its
Subsidiaries and each of its and their respective officers, directors, employees
and agents not to, provide the Holder with any material, non-public information
regarding the Company or any of its Subsidiaries from and after the date hereof
without the express prior written consent of the Holder (which may be granted or
withheld in the Holder’s sole discretion). To the extent that the Company
delivers any material, non-public information to the Holder without the Holder’s
consent, other than as required by the Securities Purchase Agreement or the New
Note, the Company hereby covenants and agrees that the Holder shall not have any
duty of confidentiality with respect to such material, non-public information.
Subject to the foregoing, neither the Company, its Subsidiaries nor the Holder
shall issue any press releases or any other public statements with respect to
the transactions contemplated hereby; provided, however, the Company shall be
entitled, without the prior approval of the Holder, to make any press release or
other public disclosure with respect to such transactions (i) in substantial
conformity with the 8-
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Exhibit 10.27
K Filing and (ii) as is required by applicable law and regulations.
Notwithstanding anything contained in this Agreement to the contrary and without
implication that the contrary would otherwise be true, the Company expressly
acknowledges and agrees that the Holder shall not have (unless expressly agreed
to by the Holder after the date hereof in a written definitive and binding
agreement executed by the Company and the Holder), any duty of confidentiality
with respect to any material, non-public information regarding the Company or
any of its Subsidiaries.
7.10Additional Issuance of Securities. The Company agrees that for the period
commencing on the date hereof and ending on the date immediately following the
30th Trading Days after the Closing Date (the “Restricted Period”), neither the
Company nor any of its Subsidiaries shall directly or indirectly issue, offer,
sell, grant any option or right to purchase, or otherwise dispose of (or
announce any issuance, offer, sale, grant of any option or right to purchase or
other disposition of) any equity security or any equity-linked or related
security (including, without limitation, any “equity security” (as that term is
defined under Rule 405 promulgated under the Securities Act), any Convertible
Securities (as defined below), any preferred stock or any purchase rights) (any
such issuance, offer, sale, grant, disposition or announcement (whether
occurring during the Restricted Period or at any time thereafter) is referred to
as a “Subsequent Placement”). Notwithstanding the foregoing, this Section 7.10
shall not apply in respect of the issuance of (i) shares of Common Stock,
restricted shares of Common Stock, restricted stock units or standard stock
options to purchase Common Stock or other standard equity linked securities to
directors, officers or employees of the Company in their capacity as such
pursuant to an Approved Stock Plan (as defined below), provided that (1) all
such issuances (taking into account the shares of Common Stock issuable upon
exercise of such options or vesting of restricted stock or restricted stock
units or other equity linked securities) after the date hereof pursuant to this
clause (i) do not, in the aggregate, exceed more than 5% of the Common Stock
issued and outstanding immediately prior to the date hereof and (2) the exercise
price of any stock options is not lowered, none of such stock options are
amended to increase the number of shares issuable thereunder and none of the
terms or conditions of any such stock options are otherwise materially changed
in any manner that adversely affects the Holder; (ii) shares of Common Stock
issued upon the conversion or exercise of Convertible Securities (other than
standard options to purchase Common Stock issued pursuant to an Approved Stock
Plan that are covered by clause (i) above) issued prior to the date hereof,
provided that the conversion, exercise or other method of issuance (as the case
may be) of any such Convertible Security is made solely pursuant to the
conversion, exercise or other method of issuance (as the case may be) provisions
of such Convertible Security that were in effect on the date immediately prior
to the date of this Agreement, the conversion, exercise or issuance price of any
such Convertible Securities (other than standard stock options to purchase
Common Stock issued pursuant to an Approved Stock Plan that are covered by
clause (i) above) is not lowered, none of such Convertible Securities (other
than standard stock options to purchase Common Stock issued pursuant to an
Approved Stock Plan that are covered by clause (i) above) are amended to
increase the number of shares issuable thereunder and none of the terms or
conditions of any such Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered
by clause (i) above) are otherwise materially changed in any manner that
adversely affects the Holder; or (iii) the New Securities (each of the foregoing
in clauses (i) through (iii), collectively the “Excluded Securities”). “Approved
Stock Plan” means any employee benefit plan which has been
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Exhibit 10.27
approved by the board of directors of the Company prior to or subsequent to the
date hereof pursuant to which shares of Common Stock, restricted stock,
restricted stock units, standard options to purchase Common Stock and other
standard equity linked securities may be issued to any employee, officer or
director for services provided to the Company in their capacity as such.
“Convertible Securities” means any capital stock or other security of the
Company or any of its Subsidiaries that is at any time and under any
circumstances directly or indirectly convertible into, exercisable or
exchangeable for, or which otherwise entitles the holder thereof to acquire, any
capital stock or other security of the Company (including, without limitation,
Common Stock) or any of its Subsidiaries.
7.11 Additional Registration Statements. At any time during the Restricted
Period, the Company shall not file a registration statement or an offering
statement under the Securities Act (other than a registration statement on Form
S-8 or such supplements or amendments to registration statements that are
outstanding and have been declared effective by the SEC as of the date hereof
(solely to the extent necessary to keep such registration statements effective
and available and not with respect to any Subsequent Placement)).
7.12Notices to Holder. All notices to Holder pursuant to the Exchange Documents
shall be delivered in accordance with the notice instructions set forth on the
signature page of the Holder attached hereto (or such other instructions
delivered in writing to the Company by the Holder from time to time).
8.Termination. If the Transaction is not consummated on or prior to the fifth
(5th) Business Day after the date hereof, the Holder may terminate this
Agreement by written notice to the Company and this Agreement shall thereafter
be null and void, ab initio.
9.Miscellaneous Provisions. Section 9 of the Securities Purchase Agreement (as
amended hereby) is hereby incorporated by reference herein, mutatis mutandis.
[The remainder of the page is intentionally left blank]

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Exhibit 10.27
IN WITNESS WHEREOF, the Holder and the Company have executed this Agreement as
of the date first set forth on the first page of this Agreement.

COMPANY:
KUSHCO HOLDINGS, INC.

By: /s/ Nicholas Kovacevich
Name: Nicholas Kovacevich
Title: Chairman and Chief Executive Officer

18

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IN WITNESS WHEREOF, the Holder and the Company have executed this Agreement as
of the date first set forth on the first page of this Agreement.

Amounts Due on the Maturity Date under Existing Note:

$22,000,000

Principal Amount of New Note:

$19,000,000

Aggregate Number of New Shares:

4,687,500

HOLDER:
HB SUB FUND II LLC

By:    

Name:    George Antonopoulos
Title:    Authorized Secretary
Hudson Bay Capital Management LP not individually, but solely as Investment
Advisor to HB Sub Fund II LLC

Address for Notices:
Please deliver any notices other than Pre-Notices to:

c/o Hudson Bay Capital Management LP
777 Third Avenue, 30th Floor
New York, NY 10017
Attention: Yoav Roth
Facsimile: (212) 571-1279
E-mail: investments@hudsonbaycapital.com
Residence: Cayman Islands

Please deliver any Pre-Notice to:

c/o Hudson Bay Capital Management LP
777 Third Ave., 30th Floor
New York, NY 10017
Facsimile: (646) 214-7946
Attention: Scott Black
General Counsel and Chief Compliance Officer

with a copy (for information purposes only) to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Telephone: 212-808-7540
Facsimile: (212) 808-7897
Attention: Michael Adelstein, Esq.
Email: madelstein@kelleydrye.com

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Exhibit 10.27
SCHEDULES TO EXCHANGE AGREEMENT
SCHEDULE 4.1
Subsidiaries

Entity NameJurisdiction of OrganizationAuthorized InterestsOutstanding
InterestsKush Energy, LLCColoradoMembership interests100% of membership
interests held by KushCo Holdings, Inc.Kush Supply Co. LLCNevadaMembership
interests100% of membership interests held by KushCo Holdings, Inc.Zack Darling
Creative Associates, LLCCaliforniaMembership interests100% of membership
interests held by KushCo Holdings, Inc.The Hybrid Creative
LLCCaliforniaMembership interests100% of membership interests held by Zack
Darling Creative Associates, LLCKoleto Innovations LLCNevadaMembership
interests100% of membership interests held by KushCo Holdings, Inc.KIM
International CorporationCalifornia10,000,000 shares of a single class of stock,
no par value specified10,000 shares of stock (all held by KushCo Holdings,
Inc.)KCH Distribution Inc.British Columbia1 common share1 share of common stock
(all held by KushCo Holdings, Inc.).

SCHEDULE 4.4
Required Consents
None
SCHEDULE 4.9
Transactions with Affiliates
The Company and its subsidiaries provide customary compensation for the benefit
of present and/or former directors, officers, and employees (including bonuses
and stock option programs), as well as customary benefits and indemnification
arrangements.
SCHEDULE 4.10
Equity Capitalization
Preemptive Rights

•Pursuant to the “Purchase Rights” set forth in Section 4(a) of the Existing
Warrant, Holder is entitled to receive, on an as-converted basis, options,
convertible securities, and rights to purchase stock, warrants, securities or
other property that are otherwise issued to the record holders of any class of
Common Stock of the Company on a pro rata basis
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Exhibit 10.27
•Pursuant to the “Purchase Rights” set forth in Section 4(a) of those certain
Warrants to Purchase Common Stock dated as of the date hereof and issued by the
Company to certain affiliates and related funds of Monroe Capital Management
Advisors, LLC (the “Specified Warrants”), the holder thereof is entitled to
receive, on an as-converted basis, options, convertible securities, and rights
to purchase stock, warrants, securities or other property that are otherwise
issued to the record holders of any class of Common Stock of the Company on a
pro rata basis
•Pursuant to the Securities Purchase Agreement, Holder is entitled to
participation rights for any “Subsequent Placement” (as defined therein) under
specified circumstances
•Pursuant to the New Note, the Holder has the right to receive warrants under
specified circumstances under the definition of “Permitted Senior Indebtedness”
(as defined therein)

Convertible or Exchangeable Securities
•Outstanding options to purchase 12,662,000 shares of common stock of KushCo
Holdings, Inc.
•Outstanding warrants (excluding the Existing Warrant and the Specified Warrants
(defined above) copies of which have been provided to Holder) to purchase
6,988,000 shares of common stock of KushCo Holdings, Inc.

SCHEDULE 4.11
Other Indebtedness
•Indebtedness incurred pursuant to the “Senior Secured Financing Agreement” (as
defined in the New Note)
•The Existing Note
•The PPP Loan
21