Exhibit
10.2


EXECUTION
VERSION


 


SUBSCRIPTION
AGREEMENT


 


This
Subscription Agreement is entered into and dated as of August 21, 2019 (this "Agreement"), by and among KushCo
Holdings, Inc., a Nevada corporation with offices located at 11958 Monarch Street, Garden Grove, CA 92841 (the "Company")
and the Subscribers identified on the Schedule of Subscribers attached hereto (each, a "Subscriber" and,
together, the "Subscribers"). Capitalized terms not defined below shall have the meaning as set forth in Section
1.1.


 


RECITALS


 


A.          The
Company and each Subscriber is executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (together with the rules and regulations promulgated thereunder,
the "1933 Act"), and Rule 506 of Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the 1933 Act.


 


B.          The
Company is a borrower under that certain Financing Agreement, dated as of the date hereof, by and among the Company and certain
of its subsidiaries, as borrowers, certain subsidiaries of the Company, as guarantors, the lenders from time to time party thereto,
and Monroe Capital Management Advisors, LLC ("Monroe"), as administrative agent for the lenders thereunder, and
as collateral agent for the lenders thereunder (as amended, amended and restated, supplemented or otherwise modified from time
to time, the "Financing Agreement").


 


C.           To
induce the Subscribers (or Affiliates thereof) to enter into the Financing Agreement, the Company wishes to issue, upon the terms
and conditions stated in this Agreement, a warrant to acquire up to that aggregate number of shares of Common Stock set forth
opposite such Subscriber's name in column (3) on the Schedule of Subscribers, in the form attached hereto as Exhibit
A (the "Warrants") (as exercised, collectively, the "Warrant Shares").


 


D.           Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement,
in the form attached hereto as Exhibit B (the "Registration Rights Agreement"), pursuant to which the
Company has agreed to provide certain registration rights with respect to the Registrable Securities (as defined in the Registration
Rights Agreement) under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws.


 


E.           The
Warrants and the Warrant Shares are collectively referred to herein as the "Securities."


 




     

     


    

 


NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Company and each Subscriber, severally and not jointly, agree as
follows:


 


ARTICLE
I.

DEFINITIONS


 


1.1          Definitions.
In addition to the terms defined elsewhere in this Agreement, the following terms shall have the meanings set forth in this Section 1.1:


 


"1934
Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


 


"Affiliate"
shall have the meaning ascribed to such term in Rule 405 of the 1933 Act.


 


"Business
Day" means any day except Saturday, Sunday and any day which is a federal legal holiday or a day on which banking institutions
in the State of New York are authorized or required by law or other governmental action to close.


 


"Common
Stock" means (i) the Company's shares of Common Stock, par value $0.001 per share, and (ii) any share capital into which
such Common Stock shall have been changed or any share capital resulting from a reclassification, reorganization or recapitalization
of such Common Stock.


 


"Designee"
means Monroe.


 


"Eligible
Market" means the Principal Market, The Nasdaq Capital Market, the NYSE American, The Nasdaq Global Select Market, The
Nasdaq Global Market or The New York Stock Exchange, Inc.


 


"Governmental
Authority" shall mean any: (a) nation, state, commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, provincial, local, municipal, foreign or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental division, department, agency, commission, commissioner,
bureau, tribunal, instrumentality, official, ministry, fund, foundation, center, organization, board, unit, body or Person and
any court or other tribunal); or (d) regulatory or self-regulatory organization (including the Principal Market or other applicable
Eligible Market).


 


"Lien"
means any mortgage, deed of trust, lien, charge, claim, encumbrance, security interest, right of first refusal, preemptive right
or other restrictions of any kind.


 


"Person"
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


"Principal
Market" means OTCQX.


 


"Proceeding"
means an action, claim, suit, inquiry, investigation or proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or, to the Company's knowledge, threatened in writing.


 




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"Required
Holders" means the holders of Warrants representing at least a majority of the number of shares of Common Stock issuable
upon exercise of the Warrants then outstanding (without taking into account any limitations on the exercise of the Warrants set
forth therein) and shall include the Designee so long as the Designee or any of its Affiliates holds any Warrants.


 


"SEC
Reports" shall mean all reports, schedules, forms, applications and other documents, together with any amendments required
to be made with respect thereto, required to be filed by the Company under the 1933 Act and the 1934 Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two (2) years preceding the date hereof (or such shorter period as the Company was
required by law or regulation to file such materials).


 


"Subsidiary"
has the meaning as set forth in the Financing Agreement.


 


"Trading
Day" means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded; provided that "Trading Day" shall not include any day on which the Common Stock is scheduled to
trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time
of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).


 


"Transaction
Documents" means this Agreement, the Warrants, the Registration Rights Agreement and any other documents, certificates
or agreements executed or delivered in connection with the transactions contemplated hereby.


 


ARTICLE
II.

PURCHASE AND SALE


 


2.1          Purchase
and Sale of the Securities. Subject to the terms and conditions of this Agreement, each Subscriber agrees, severally and not
jointly, to purchase from the Company, and the Company agrees to sell and issue to each Subscriber, at the Closing, such Warrants
to acquire up to that aggregate number of Warrant Shares as is set forth opposite such Subscriber's name in column (3) on the
Schedule of Subscribers.


 


2.2          Closing.
The issuance of the Warrants pursuant to the terms of this Agreement (the "Closing") shall take place at the
offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, NY 10022, at 10:00 a.m. (New York City time) on the date
hereof, or at such other time and place as the Company and the Subscribers mutually agree upon in writing (the "Closing
Date"). The Closing may also be undertaken remotely by electronic transfer of Closing documentation. On the Closing Date,
the Company shall deliver to each Subscriber a Warrant pursuant to which such Subscriber shall have the right to acquire up to
such aggregate number of Warrant Shares as is set forth opposite such Subscriber's name in column (3) of the Schedule
of Subscribers, duly executed on behalf of the Company and registered in the name of such Subscriber or its designee.


 




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2.3          Tax
Matters. To the extent that the parties ascribe a value to the Warrants, for U.S. federal income tax purposes, the parties
agree to treat the Warrants as being issued in exchange for the Subscriber's commitment to extend the loans pursuant to the Financing
Agreement and the parties agree to amortize the value ascribed to the Warrants over the term of the Financing Agreement in a manner
comparable to the amortization of original issue discount.


 


ARTICLE
III.

REPRESENTATIONS AND WARRANTIES


 


3.1          Representations
and Warranties of the Company. The Company hereby represents and warrants as of the date hereof and as of the Closing Date
(except for representations and warranties that speak as of a specific date, which shall be made as of such date) to each of the
Subscribers, except as set forth in the Schedules delivered herewith:


 


(a)       Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its respective obligations hereunder and thereunder.
Other than the Required Approvals (as defined in Section 3.1(c)), the execution and delivery by the Company of each of
the Transaction Documents and the consummation by it of the transactions contemplated hereunder and thereunder have been duly
authorized by all necessary action on the part of the Company and no further consent or action is required by the Company, or
its board of directors or shareholders. Each Transaction Document has been (or upon delivery will have been) duly executed by
the Company, and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the
Company, enforceable against the Company, in accordance with its 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 law.


 


(b)       No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Warrants and the
Warrant Shares and the reservation for issuance of the Warrant Shares) do not and will not (x) conflict with or violate any
provision of the Company's or any Subsidiary's certificate or articles of incorporation, bylaws or other organizational or charter
documents, (y) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become
a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or
give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both)
of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding
to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound
or affected, or (z) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction
of any Governmental Authority to which the Company or a Subsidiary is subject (including, without limitation, foreign, federal
and state securities laws and regulations and the rules and regulations of the Principal Market), or by which any property or
asset of the Company or a Subsidiary is bound or affected; except in the case of clause (y) or (z) above, as would not, reasonably
be expected to, (i) result in a material adverse effect, in or affect the transactions contemplated hereby or the other Transaction
Documents, (ii) adversely affect the legality, validity, binding effect or enforceability of any Transaction Document, (iii) have
or result in a material adverse effect on the operations, properties, results of operations, assets, business, liabilities or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iv) adversely impair the Company's
authority or ability to perform fully on a timely basis its obligations under any Transaction Document (any of (i), (ii), (iii)
or (iv), a "Material Adverse Effect").


 




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(c)       Filings,
Consents and Approvals. Neither the Company nor any Subsidiary is required to obtain any consent, waiver, authorization, permit
or order of, give any notice to, or make any filing or registration with, any Governmental Authority or other Person in connection
with the execution, delivery and performance by the Company of the Transaction Documents, other than the filing by the Company
of a Notice of Sale of Securities on Form D with the SEC under Regulation D and state and applicable Blue Sky filings (collectively,
the "Required Approvals"). All Required Approvals have been obtained or effected on or prior to the Closing Date
or will be made timely after the Closing Date, and neither the Company nor any Subsidiary are aware of any facts or circumstances
which might prevent the Company or any Subsidiary from obtaining or effecting any of the registration, application or filings
contemplated by the Transaction Documents. The Company is not in violation of the requirements of the Principal Market and has
no knowledge of any facts or circumstances which would reasonably be expected to result in the delisting or suspension of the
Common Stock in the foreseeable future.


 


(d)       Issuance
of the Securities. The issuance of the Warrants is duly authorized and, upon issuance in accordance with the terms of the
Transaction Documents, will be validly issued and, except as set forth in Schedule 3.1(d), free from all preemptive or
similar rights, taxes, Liens and charges with respect to the issue thereto and will constitute valid and legally binding obligations
of the Company. As of the Closing, the Company shall have reserved from its duly authorized capital stock not less than the maximum
number of Warrant Shares issuable upon exercise of the Warrants (without taking into account any limitations on the exercise of
the Warrants set forth therein). Upon exercise in accordance with the Warrants, the Warrant Shares when issued, will be validly
issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, Liens and charges with respect to
the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock (as set forth in the applicable
charter documents). Subject to the accuracy of the representations and warranties of the Subscribers in this Agreement, the offer
and issuance by the Company of the Securities is exempt from registration under the 1933 Act.


 


(e)       Capitalization.
The number of shares and type of all authorized, issued and outstanding capital stock of the Company has been set forth in the
SEC Reports and has changed since the date set forth in the most recent applicable SEC Report only to reflect exercises of stock
options and other convertible securities that have not been required to be reported by the Company under the 1934 Act. Without
limiting the foregoing, as of the date hereof, immediately prior to the issuance of the Warrants, the authorized capital stock
of the Company consists of (i) 265,000,000 shares of Common Stock, of which 90,040,693 shares are issued and outstanding,
13,658,000 shares are reserved for issuance pursuant to issued and outstanding options and 6,988,000 shares are reserved for issuance
pursuant to securities (other than the aforementioned options) exercisable or exchangeable for, or convertible into, shares of
Common Stock; and (ii) 10,000,000 shares of preferred stock, par value $0.001 per share ("Preferred Stock"),
none of which is outstanding. Other than as stated in the immediately preceding sentence, the Company does not have any outstanding
securities that are exercisable or exchangeable for, or convertible into, shares of Common Stock. All of such outstanding shares
are duly authorized and have been, or upon issuance will be, validly issued and are fully paid and nonassessable. Except as set
forth in Schedule 3.1(e), no securities of the Company are entitled to preemptive or similar rights, and no Person has
any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. There are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities. The Company does not have any stock appreciation rights, "phantom
stock" plans or agreements or any similar plan or agreement.


 




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(f)       Certain
Fees. No brokerage or finder's fees or commissions are or will be payable by the Company to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated
by this Agreement. The Subscribers shall have no obligation with respect to any fees or with respect to any claims (other than
such fees or commissions owed by a Subscriber pursuant to written agreements executed by such Subscriber which fees or commissions
shall be the sole responsibility of such Subscriber, if any) made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated by this Agreement. The Company shall indemnify
and hold harmless the Subscribers, their employees, officers, directors, agents, and partners, and their respective Affiliates,
from and against all claims, losses, damages, costs (including the costs of preparation and attorney's fees) and expenses suffered
in respect of any such claimed or existing fees, as such fees and expenses are incurred.


 


(g)       Private
Placement; No Integrated Offering; No General Solicitation; No Disqualification Events. Assuming in part the accuracy of each
Subscriber's representations and warranties set forth in Sections 3.2(c)-(g), (i) no registration under the 1933
Act is required for the offer and sale of the Securities by the Company to the Subscribers under the Transaction Documents, and
(ii) the issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Principal Market.
Assuming in part the accuracy of the Subscribers' representations and warranties set forth in Section 3.2, neither the
Company, the Subsidiaries, any of their respective Affiliates, nor any Person acting on their behalf has, directly or indirectly,
made any offers or sales of any Company security or solicited any offers to buy any security, under circumstances that would require
registration of the issuance of any of the Securities under the 1933 Act, whether through integration with prior offerings or
otherwise or cause this offering of the Securities to require approval of shareholders of the Company for purposes of the 1933
Act or any applicable shareholder approval provisions, including, without limitation, under the rules and regulations of any exchange
or automated quotation system on which any of the securities of the Company are listed or designated. Neither the Company, the
Subsidiaries nor their Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. With respect
to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933 Act ("Regulation D Securities"),
none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company
participating in the offering hereunder, any beneficial owner of 20% or more of the Company's outstanding voting equity securities,
calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with
the Company in any capacity at the time of sale, nor any other Person covered by Rule 506(d) (each, an "Issuer Covered
Person" and, together, "Issuer Covered Persons") is or has been subject to any of the "Bad Actor"
disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a "Disqualification Event"), except
for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has determined that no Issuer Covered Person is
subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under
Rule 506(e), and has furnished to the Subscribers a copy of any disclosures provided thereunder. No Person has been or will be
paid (directly or indirectly) remuneration for solicitation of Subscribers or potential purchasers in connection with the sale
of any Regulation D Securities. The Company is not aware of any Person that has been or will be paid (directly or indirectly)
remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation D Securities.


 




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(h)       Application
of Takeover Protections. The Company and its Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, interested shareholder, business combination, poison pill (including any distribution
under a rights agreement, or similar arrangement or plan ) or other similar anti-takeover provision under the Company's certificate
or articles of incorporation, bylaws or other organizational or charter documents or the laws of its jurisdiction of incorporation
that is or could become applicable to the Subscribers as a result of the Subscribers and the Company fulfilling their obligations
or exercising their rights under the Transaction Documents, including without limitation as a result of the Company's issuance
of the Securities and the Subscribers' ownership of the Securities. The Company and its Board of Directors have taken all necessary
action, if any, in order to render inapplicable any shareholder rights plan or similar arrangement relating to accumulations of
beneficial ownership of shares of Common Stock or a change in control of the Company or any Subsidiary.


 


(i)       Registration
Eligibility. The Company is eligible to register the Registrable Securities for resale by the Subscribers using Form S-1 promulgated
under the 1933 Act.


 


(j)       Transfer
Taxes. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be
paid in connection with the sale and transfer of the Securities to be sold to each Subscriber 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.


 


(k)       Shell
Company Status. The Company is not, and has never been, an issuer identified in, or subject to, Rule 144(i).


 




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(l)       Investment
Company Status. Neither the Company nor any Subsidiary is, and upon consummation of the sale of the Securities, and for so
long any Subscriber holds any Securities, will be, an "investment company," a company controlled by an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment
company" as such terms are defined in the Investment Company Act of 1940, as amended.


 


(m)       U.S.
Real Property Holding Corporation. The Company is not, has never been, and so long as any Securities remain outstanding, shall
not become, a U.S. real property holding corporation within the meaning of Section 897 of the Code and the Company shall so certify
upon any Subscriber's request.


 


(n)       Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as
amended (the "BHCA") and to regulation by the Board of Governors of the Federal Reserve System (the "Federal
Reserve"). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total
equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any
of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank or any entity that
is subject to the BHCA and to regulation by the Federal Reserve.


 


3.2          Representations
and Warranties of the Subscribers. Each Subscriber hereby, as to itself only and for no other Subscriber, represents and warrants
as of the date hereof and as of the Closing Date (except for representations and warranties that speak as of a specific date,
which shall be made as of such date) to the Company as follows:


 


(a)       Organization;
Authority. Such Subscriber is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution, delivery and performance
by such Subscriber of the Transaction Documents to which it is a party have been duly authorized by all necessary action on the
part of such Subscriber. Each of the Transaction Documents to which such Subscriber is a party has been duly executed by such
Subscriber and, when delivered by such Subscriber in accordance with terms hereof, will constitute the valid and legally binding
obligation of such Subscriber, enforceable against it in accordance with its 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.


 


(b)       No
Conflicts. The execution, delivery and performance of the Transaction Documents by such Subscriber and the consummation by
such Subscriber of the transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any
provision of such Subscriber's certificate or articles of incorporation, bylaws or other organizational or charter documents,
(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 such Subscriber is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any Governmental Authority to which such Subscriber is subject (including, without limitation,
foreign, federal and state securities laws and regulations); except in the case of clause (ii) or (iii) above, as would not, reasonably
be expected to have, individually or in the aggregate, a material adverse effect on the ability of the Subscriber to perform its
obligations thereunder.


 




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(c)       Investment
Intent. Such Subscriber is acquiring the Securities as principal for its own account for investment purposes and not with
a view to distributing or reselling such Securities or any part thereof in violation of applicable securities laws, without prejudice,
however, to such Subscriber's right at all times to sell or otherwise dispose of all or any part of such Securities in compliance
with applicable federal and state securities laws. Nothing contained herein shall be deemed a representation or warranty by such
Subscriber to hold the Securities for any period of time. Such Subscriber understands that the Securities have not been registered
under the 1933 Act, and therefore the Securities may not be sold, assigned or transferred unless pursuant to (i) an
effective registration statement under the 1933 Act with respect thereto or (ii) an
available exemption from the registration requirements of the 1933 Act.


 


(d)       Subscriber
Status. At the time such Subscriber was offered the Securities, it was, and at the date hereof it is, and on each date on
which it exercises the Warrants (other than pursuant to a cashless exercise), it will be, an "accredited investor" as
defined in Rule 501(a) under the 1933 Act.


 


(e)       Experience
of such Subscriber. Such Subscriber, either alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Subscriber is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.


 


(f)       General
Solicitation. Such Subscriber is not purchasing the Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio
or presented at any seminar or any other general advertisement or, to such Subscriber's knowledge, any other general solicitation.


 


(g)       Access
to Data. Such Subscriber has received and reviewed information about the Company and has had an opportunity to discuss the
Company's business, management and financial affairs with its management and to review the Company's facilities. Such Subscriber
acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits
and risks of investing in the Securities; (ii) access to information about the Company and its respective financial condition,
results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with respect to the investment. The foregoing, however,
does not limit or modify the representations and warranties made by the Company in this Agreement or the SEC Reports or any other
provision in this Agreement or the SEC Reports or the right of the Subscribers to rely thereon. Such Subscriber has sought such
accounting, legal and tax advice as it has considered necessary to make an informed decision with respect to its acquisition of
the Securities.


 




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(h)       Transfer
or Resale. Such Subscriber understands that except as provided in the Registration Rights Agreement: (i) the Securities have
not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (A) subsequently registered thereunder, (B) such Subscriber shall have delivered to the Company
(if requested by the Company) an opinion of counsel selected by such Subscriber, reasonably satisfactory to the Company as to
such counsel and to the form of opinion and at the sole expense of such holder, to the effect that such Securities may be sold,
assigned or transferred without registration under the applicable requirements of the 1933 Act; provided, however,
that Schulte Roth & Zabel LLP shall be deemed reasonably satisfactory to the Company; provided, further, that
no such opinion shall be required to sell, assign or otherwise transfer all or any portion of such Securities to an Affiliate
of the holder of the Securities, or (C) such Subscriber provides the Company with assurance reasonably satisfactory to the Company
in the form of a customary representation letter that such Securities are, or can be, sold, assigned or transferred pursuant to
Rule 144 promulgated under the 1933 Act (or a successor rule thereto) (collectively, "Rule 144"); (ii) any sale
of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144; and (iii) neither
the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder.


 


(i)       Reliance
on Exemptions. Such Subscriber understands that the Securities being offered and sold to it 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 such Subscriber's compliance with, the representations, warranties, agreements, acknowledgements
and understandings of such Subscriber set forth herein in order to determine the availability of such exemptions and the eligibility
of such Subscriber to acquire the Securities.


 


(j)       No
Governmental Review. Such Subscriber 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 Securities or the fairness or suitability of
the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.


 




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(k)       Legends.
Such Subscriber understands that the certificates or other instruments representing the Warrants and, until such time as the resale
of the Warrant Shares have been registered under the 1933 Act as contemplated by the Registration Rights Agreement, the stock
certificates representing the Warrant Shares, except as set forth below, shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such stock certificates):


 


[NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE 1933 ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I)
IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT OF 1933, AS AMENDED, OR (B) AN
OPINION OF COUNSEL SELECTED BY THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD OR SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.


 




    	 	- 11 -	 



     


    

 


Certificates
representing the Warrants and Warrant Shares shall not contain such legend if (i) such Securities are registered for resale on
an effective registration statement under the 1933 Act, (ii) in connection with a sale, assignment or other transfer, such holder
provides the Company with an opinion of counsel, reasonably satisfactory to the Company as to such counsel and to the form of
opinion and at the sole expense of such holder, to the effect that such sale, assignment or transfer of the Securities may be
made without registration under the applicable requirements of the 1933 Act; provided, however, that Schulte Roth
& Zabel LLP shall be deemed reasonably satisfactory to the Company; provided, further, that no such opinion
shall be required to sell, assign or otherwise transfer all or any portion of such Securities to an Affiliate of the holder of
the Securities, or (iii) the Securities are, or can be, sold, assigned or transferred pursuant to Rule 144 without the requirement
for the Company to be in compliance with the current public information requirement under Rule 144 and without volume or manner
of sale restrictions. The Company shall, at its sole expense, cause its counsel to issue a legal opinion to its transfer agent,
if required by its transfer agent or by a holder of the Securities, to effect the removal of the legend hereunder. Upon request
by the Company or its counsel, the holder of the Securities shall deliver a customary representation letter to counsel of the
Company in connection with a legend removal pursuant to the foregoing clause (iii). For the avoidance of doubt no legal opinion
shall be required to sell, assign or transfer the Securities pursuant to Rule 144 or to remove legends from the Securities when
such Securities are eligible to be sold, assigned, transferred pursuant to Rule 144. The Company shall be responsible for the
fees of its transfer agent and all The Depository Trust Company ("DTC") fees associated with such issuance. If
the Company shall fail for any reason or for no reason to issue to the holder of the Securities, within two (2) Trading Days following
the delivery by the holder to the Company or its transfer agent of a certificate representing the Securities issued with a restricted
legend (such date, the "Legend Removal Date" and such failure, a "Legend Removal Failure"),
a certificate without such legend to such holder or to issue such Securities to such holder by electronic delivery at the applicable
balance account at DTC, and on or after the Legend Removal Date the holder purchases (in an open market transaction or otherwise)
Common Stock relating to the applicable Legend Removal Failure (a "Legend Buy-In"), then, in addition to all
other available remedies available to such holder, the Company shall, within two (2) Trading Days after the holder's request and
in the holder's discretion, either (i) pay cash to the holder in an amount equal to the holder's total purchase price (including
brokerage commissions, if any) for the Common Stock so purchased (the "Legend Buy-In Price"), at which point
the obligation of the Company to deliver such unlegended Securities or to credit the balance account of the Holder or the Holder's
designee at DTC shall terminate, or (ii) promptly honor its obligation to deliver to the holder such unlegended Securities as
provided above and pay cash to the holder in an amount equal to the excess (if any) of the Legend Buy-In Price over the product
of (A) such number of shares of Common Stock, times (B) any trading price of the Common Stock selected by the Holder in writing
as in effect at any time during the period beginning on the applicable Legend Removal Date and ending on the date the Company
makes the applicable cash payment. Nothing shall limit the holder's right to pursue any other remedies available to it hereunder,
at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to
the Company's failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such shares
of Common Stock) as required pursuant to the terms hereof. Additionally, if the Company fails for any reason to deliver to the
holder the Warrant Shares subject to an Exercise Notice (as defined in the Warrant) by the applicable Legend Removal Date, the
Company shall pay to such holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject
to such exercise (based on the Weighted Average Price (as defined in the Warrant) of the Common Stock on the date of the applicable
Exercise Notice), $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such Legend Removal Date until such Warrant Shares are delivered
or such holder rescinds such exercise.


 


The
Company acknowledges and agrees that no Subscriber makes or has made any representations or warranties with respect to the transactions
contemplated hereby or by any other Transaction Document other than those specifically set forth in Section 3.2.


 


ARTICLE
IV.

OTHER AGREEMENTS OF THE PARTIES


 


4.1          Register;
Pledge.


 


(a)       The
Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by
notice to each holder of Securities), a register for each series of the Warrants in which the Company shall record the name and
address of the Person in whose name the Warrants have been issued (including the name and address of each transferee) the number
of Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company shall keep the register open and available
at all times during business hours for inspection of any Subscriber or its legal representatives.


 




    	 	- 12 -	 



     


    

 


(b)       The
Company acknowledges and agrees that a Subscriber may from time to time pledge or grant a security interest in some or all of
the Securities in connection with a bona fide margin agreement secured by the Securities and, if required under the terms of such
agreement, such Subscriber may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer
would not be subject to approval of the Company and no legal opinion of the pledgee, secured party or pledgor shall be required
in connection therewith. Further, no notice shall be required of such pledge, but Subscriber shall notify the Company as promptly
as practicable prior to any subsequent transfer or foreclosure. At the appropriate Subscriber's expense, the Company will execute
and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with
a pledge or transfer of the Securities.


 


4.2          Integration.
The Company shall not, and shall use its reasonable best efforts to ensure that no Affiliate of the Company shall, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the 1933
Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the
1933 Act of the sale of the Securities to the Subscribers or that would be integrated with the offer or sale of the Securities
for purposes of the rules and regulations of the Principal Market.


 


4.3          Reservation
and Listing of Securities. So long as any Subscriber owns any Warrants, the Company shall take all action necessary to at
all times after the date hereof have authorized, and reserved for the purpose of issuance, no less than the maximum number of
shares of Common Stock issuable upon exercise of the Warrants then outstanding (without taking into account any limitations on
the exercise of the Warrants set forth in the Warrants) (the "Required Reserve Amount"). If at any time the number
of shares of Common Stock authorized and reserved for issuance is not sufficient to meet the Required Reserve Amount, the Company
will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation,
calling a special meeting of shareholders to authorize additional shares to meet the Company's obligations under Section 3.1(d)
and this Section 4.3, in the case of an insufficient number of authorized shares, obtain shareholder approval of an
increase in such authorized number of shares, and voting the management shares of the Company in favor of an increase in the authorized
shares of the Company to ensure that the number of authorized shares is sufficient to meet the Required Reserve Amount. The Company
shall, as applicable (i) prepare and timely file with the Principal Market
an additional shares listing application covering all of the shares of Common Stock issued or issuable under the Transaction Documents,
(ii) use reasonable best efforts to cause such shares of Common Stock to be approved for listing on the Principal Market
as soon as practicable thereafter, (iii) provide to the Subscribers evidence of such listing, and (iv) use reasonable
best efforts to maintain the listing of such Common Stock on the Principal Market or another Eligible Market.


 




    	 	- 13 -	 



     


    

 


4.4          Form
D and Blue Sky. The Company shall file a Form D with respect to the Securities as required under Regulation D and to provide
a copy thereof to the Subscribers. 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 Securities for sale to the Subscribers 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), and shall provide evidence of any such action so taken to the Subscribers on or
prior to the Closing Date. 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 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 federal, state and local laws, statutes, rules, regulations and the like relating to the offering and
sale of the Securities to the Subscribers.


 


4.5          Indemnification.
In consideration of each Subscriber's execution and delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Subscriber and each other holder of the Securities and all of their shareholders, partners, members,
officers, directors, employees and direct or indirect investors and any of the foregoing Persons' agents or other representatives
(including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively,
the "Indemnitees") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "Indemnified
Liabilities"), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation
or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby or (c) any cause
of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement
of the Transaction Documents or (ii) the status of such Subscriber or holder of the Securities as an investor in the Company
pursuant to the transactions contemplated by the Transaction Documents. For the avoidance of doubt, clauses (a) and (b) of the
preceding sentence are intended to apply, and shall apply, to direct claims asserted by any Subscriber against the Company as
well as any third party claims asserted by an Indemnitee (other than a Subscriber) against the Company. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. To the extent that
the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law. Except as otherwise
set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section 4.5 shall
be the same as those set forth in Section 6 of the Registration Rights Agreement.


 




    	 	- 14 -	 



     


    

 


4.6          Reporting
Status; Financial Information. Until the date on which the Subscriber shall have sold all of the Securities (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. The Company agrees to send the following
to each Subscriber 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,
shareholders' 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 1933 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 shareholders of the Company generally, contemporaneously with the making available or giving thereof
to the shareholders.


 


ARTICLE
V.

CLOSING DELIVERABLES


 


5.1         Closing
Deliverables of the Company. At the Closing, the Company shall deliver to the Subscribers the following:


 


(a)       Officer's
Certificate. The representations and warranties of the Company shall be true and correct in all respects as of the date when
made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific
date which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in
all respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or
complied with by the Company at or prior to the Closing Date. Such Subscriber shall have received a certificate, executed by the
Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect in the form attached hereto as Exhibit C.


 


(b)       Secretary's
Certificate. Such Subscriber shall have received a certificate, executed by the Secretary of the Company, dated as of the
Closing Date, to (w) the resolutions consistent with Section 3.1(a) as adopted by the Company's Board of Directors in a form reasonably
acceptable to such Subscriber, (x) the Company's Articles of Incorporation, (y) the Company's Bylaws and (z) the incumbency and
specimen signature of each officer of the Company who may sign this Agreement and the other Transaction Documents, and as to such
other matters as may be reasonably requested by such Subscriber in the form attached hereto as Exhibit D.


 


(c)       Transaction
Documents. The Company shall have duly executed and delivered to such Subscriber (A) each of the Transaction Documents
and (B) such Warrants (for such aggregate number of shares of Common Stock as is set forth across from such Subscriber's name
in column (3) of the Schedule of Subscribers).


 


(d)       Legal
Opinions. Such Subscriber shall have received the opinions of (i) Reed Smith LLP and (ii) Holley, Driggs, Walch, Fine,
Puzey, Stein & Thompson, Ltd., the Company's outside counsels, each dated as of the Closing Date, in the forms attached hereto
as Exhibit E1 and Exhibit E2, respectively.


 




    	 	- 15 -	 



     


    

 


ARTICLE
VI.

MISCELLANEOUS


 


6.1          Fees
and Expenses. The Company shall reimburse Monroe or its designee(s) (in addition to any other expense amounts paid to any
Subscriber prior to the date of this Agreement) for all reasonable actual costs and expenses incurred in connection with the transactions
contemplated by the Transaction Documents (including all reasonable legal fees and disbursements in connection therewith and documentation
and implementation of the transactions contemplated by the Transaction Documents) on or prior to the Closing, which amount shall
be paid by the Company at the Closing. The Company shall pay, and hold each Subscriber harmless against, any liability, loss or
expense (including, without limitation, reasonable attorney's fees and out-of-pocket expenses) arising in connection with any
claim relating to any payment, including, without limitation, any placement agent's fees, financial advisory fees, or broker's
commissions (other than for any Persons engaged by any Subscriber) relating to or arising out of the transactions contemplated
hereby. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in
connection with the sale of the Securities to the Subscribers.


 


6.2          Entire
Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements
between the Subscribers, the Company, their Affiliates and Persons acting on their behalf with respect to the matters discussed
herein, and this Agreement and the other Transaction Documents contain the entire understanding of the parties with respect to
the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Subscriber
makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the Required Holders, and any amendment to this Agreement
made in conformity with the provisions of this Section 6.2 shall be binding on all Subscribers and holders of Securities.
No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.
No such amendment shall be effective to the extent that it applies to less than all of the holders of the applicable Securities
then outstanding. The Company has not, directly or indirectly, made any agreements with any Subscribers relating to the terms
or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents.
Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement and the Financing Agreement,
no Subscriber has made any commitment or promise or has any other obligation to provide any financing to the Company or otherwise.
No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any
of the Transaction Documents unless the same consideration (other than the reimbursement of legal fees) also is offered to all
of the parties to the Transaction Documents or holders of the Warrants, as the case may be.


 




    	 	- 16 -	 



     


    

 


6.3          Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered: (i) upon delivery, when delivered personally; (ii) upon delivery, when
sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party); (iii) upon delivery, when sent by electronic mail (provided that the sending party does not receive an automated rejection
notice) or (iv) one (1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses, facsimile numbers and email addresses for such communications shall
be:


 


	If
    to the Company:	KushCo
        Holdings, Inc.

        11958
        Monarch Street

        Garden
        Grove, California 92841

        Telephone:        (714)
        462-4603

        Attention:          Arun
        Kurichety

        Email:                 arun.kurichety@kushco.com

	 	 
	With
    a copy (for information purposes only) to:	Burns
        & Levinson LLP

        125
        Summer Street

        Boston,
        MA 02110

        Telephone:        (617)
        345-3000

        Facsimile:          (617)
        345-3299

        Attention:           Frank
        A. Segall, Esq.

        Email:                 fsegall@burnslev.com

	 	 
	If
    to the Transfer Agent	Action
        Stock Transfer Corporation

        2469
        E. Fort Union Blvd, Suite 214

        Salt
        Lake City, UT 84121

        Telephone:       (801)
        274-1088

        Attention:          Justeene
        Blankenship

        Email:                 jb@actionstocktransfer.com

	 	 
	If
    to a Subscriber:	To
    its address and facsimile number set forth on the Schedule of Subscribers, with copies to such Subscriber's representatives
    as set forth on the Schedule of Subscribers.


 




    	 	- 17 -	 



     


    

 


	With
    a copy (for information purposes only) to:	Schulte
        Roth & Zabel LLP

        919
        Third Avenue

        New
        York, NY 10022

        Telephone:       (212)
        756-2000

        Facsimile:          (212)
        593-5955

        Attention:          Ji
        Hye You, Esq.

        Email:                 jihye.you@srz.com



 


or
such other address as may be designated in writing hereafter, in the same manner, by such Person by two (2) Business Days' prior
notice to the other party in accordance with this Section 6.3. Written confirmation of receipt (A) given by the recipient
of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile
machine or email transmission containing the time, date, recipient facsimile number or e-mail address and an image of the first
page of such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or
(iii) above, respectively.


 


6.4          Construction.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. No specific representation or warranty shall limit the generality or applicability of a more general
representation or warranty. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity
to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to
be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments
hereto.


 


6.5          Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
the Subscribers. Any Subscriber may assign its rights under this Agreement to any Person to whom such Subscriber assigns or transfers
any Securities, provided such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions
hereof and of the applicable Transaction Documents that apply to the "Subscribers." Notwithstanding anything to the
contrary herein, Securities may be pledged to any Person in connection with a bona fide margin account or other loan or financing
arrangement secured by such Securities.


 


6.6          No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that
each Indemnitee is an intended third party beneficiary of Section 4.5 and may enforce the provisions of such Sections directly
against the parties with obligations thereunder.


 




    	 	- 18 -	 



     


    

 


6.7          Governing
Law; Venue; Process Agent; Waiver of Jury Trial. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York
(except for matters governed by corporate law in the State of Delaware), without regard to the principles of conflicts of law
thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of
Manhattan. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting
in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement). Each party
hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing
a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address
in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR
THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.


 


6.8          Survival.
The representations, warranties, agreements and covenants contained herein shall survive the Closing and the delivery and/or exercise
of the Securities, as applicable.


 


6.9          Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by an e-mail which contains a portable document format (.pdf) filed of an executed signature page, such signature page shall
create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the
same force and effect as if such signature page were an original thereof.


 


6.10        Severability.
If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).


 




    	 	- 19 -	 



     


    

 


6.11        Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
the Transaction Documents, whenever any Subscriber exercises a right, election, demand or option under a Transaction Document
and the Company does not timely perform its related obligations within the periods therein provided, then such Subscriber may
rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand
or election in whole or in part without prejudice to its future actions and rights.


 


6.12        Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
the Subscribers and the Company will be entitled to specific performance under the Transaction Documents. Any Person having any
rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or
other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights
granted by law. Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all
of its obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Subscribers. The
Company therefore agrees that the Subscribers shall be entitled to seek specific performance and/or temporary, preliminary and
permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity
of proving actual damages and without posting a bond or other security.


 


6.13        Payment
Set Aside. To the extent that the Company makes a payment or payments to any Subscriber hereunder or pursuant to any of the
other Transaction Documents or any Subscriber enforces or exercises its rights hereunder or thereunder, and such payment or payments
or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company
or any Subsidiary by a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law,
state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not
been made or such enforcement or setoff had not occurred.


 


6.14        Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.


 


6.15       Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities.


 




    	 	- 20 -	 



     


    

 


6.16       Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to the Transaction Documents, such payment shall
be made in lawful money of the United States via wire transfer of immediately available funds by providing the Company with prior
written notice setting out such request and such Subscriber's wire transfer instructions; provided that such Subscriber may elect
to receive a payment of cash by a check drawn on the account of the Company and sent via overnight courier service to such Person
at such address as previously provided to the Company in writing (which address, in the case of each of the Subscribers, shall
initially be as set forth on the Schedule of Subscribers attached to the Subscription Agreement). Whenever any amount expressed
to be due by the terms of this Warrant is due on any day which is not a Business Day, the same shall instead be due on the next
succeeding day which is a Business Day.


 


6.17       Most
Favored Nations. The Company hereby represents and warrants as of the date hereof and covenants and agrees that, from the
date hereof through the date that the Parent Note (as defined in the Finance Agreement) is no longer outstanding (the "MFN
Termination Date"), none of the terms offered to any Person with respect to any warrant to purchase Common Stock issued
on the Closing Date, including, without limitation, the warrants to purchase shares of Common Stock issued to HB Sub Fund II LLC
(including any security subsequently exchanged therefor), including, without limitation with respect to any consent, release,
amendment, settlement, or waiver relating to any exchange of any such security (each a "Settlement Document"),
is or will be more favorable to such Person (other than any reimbursement of legal fees) than those of the Subscribers and the
Transaction Documents. If, and whenever during the period beginning on the date hereof and ending on the MFN Termination Date,
the Company enters into a Settlement Document, then (i) the Company shall provide written notice thereof to the Subscribers immediately
following the occurrence thereof and (ii) the terms and conditions of this Agreement shall be, without any further action by any
Subscriber or the Company, automatically amended and modified in an economically and legally equivalent manner such that the Subscribers
shall receive the benefit of the more favorable terms and/or conditions (as the case may be) set forth in such Settlement Document,
provided that upon written notice to the Company at any time any Subscriber may elect not to accept the benefit of any such amended
or modified term or condition, in which event the term or condition contained in this Agreement and in the other Transaction Documents
shall apply to such Subscriber as it was in effect immediately prior to such amendment or modification as if such amendment or
modification never occurred with respect to such Subscriber. The provisions of this Section 6.17 shall apply similarly and equally
to each Settlement Document entered into on or prior to the MFN Termination Date.


 


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOLLOW]


 




    	 	- 21 -	 



     


    

 


IN
WITNESS WHEREOF, each Subscriber and the Company have caused their respective signature page to this Agreement to be duly
executed as of the date first written above.


 


	 	COMPANY:
	 	 
	 	KUSHCO
    HOLDINGS, INC.
	 	 
	 	By:	/s/
    Christopher Tedford
	 	 	Name:	Christopher
    Tedford
	 	 	Title:	Chief
    Financial Officer


 


[Signature
Page to Subscription Agreement]


 




     

     


    

 


IN
WITNESS WHEREOF, each Subscriber and the Company have caused their respective signature page to this Agreement to be duly
executed as of the date first written above.


 


	 	Monroe
    Capital private credit fund III LP
	 	 	 	 
	 	 	By:
    Monroe Capital private credit fund IIi LLC,
	 	 	its general partner
	 	 	 	 
	 	 	 	By:	/s/  Mike
    Meyer
	 	 	 	Name:	Mike Meyer
	 	 	 	Title:	Director


 


[Signature
Page to Subscription Agreement]


 




     

     


    

 


IN
WITNESS WHEREOF, each Subscriber and the Company have caused their respective signature page to this Agreement to be duly
executed as of the date first written above.


 


	 	Monroe
    Capital Private Credit fund iiI (Unleveraged) LP
	 	 	 	 
	 	 	By:
    Monroe Capital private credit Fund iIi LLC,
	 	 	its general
    partner
	 	 	 	 
	 	 	 	By:	/s/  Mike
    Meyer
	 	 	 	Name:	Mike Meyer
	 	 	 	Title:	Director


 


[Signature
Page to Subscription Agreement]


 


 




     

     


    

 


IN
WITNESS WHEREOF, each Subscriber and the Company have caused their respective signature page to this Agreement to be duly
executed as of the date first written above.


 


	 	Monroe
    PRIvate credit Fund A LP
	 	 	 	 
	 	 	By:
    Monroe private Credit Fund A LLC,
	 	 	its general
    partner
	 	 	 	 
	 	 	 	By:	/s/  Mike
    Meyer
	 	 	 	Name:	Mike Meyer
	 	 	 	Title:	Director


 


[Signature
Page to Subscription Agreement]


 




     

     


    

 


IN
WITNESS WHEREOF, each Subscriber and the Company have caused their respective signature page to this Agreement to be duly
executed as of the date first written above.


 


	 	Monroe
    capital PRIvate credit Fund I LP
	 	 	 	 
	 	 	By:
    Monroe CAPital private Credit Fund I LLC,
	 	 	its general partner
	 	 	 	 
	 	 	 	By:	/s/  Mike
    Meyer
	 	 	 	Name:	Mike
    Meyer
	 	 	 	Title:	Director


 


[Signature
Page to Subscription Agreement]


 




     

     


    

 


IN
WITNESS WHEREOF, each Subscriber and the Company have caused their respective signature page to this Agreement to be duly
executed as of the date first written above.


 


	 	Monroe
    CAPITAL PRIvate credit Fund VT LP
	 	 	 	 
	 	 	By:
    Monroe CAPITAL private Credit Fund VT LLC,
	 	 	its general partner
	 	 	 	 
	 	 	 	By:	/s/  Mike
    Meyer
	 	 	 	Name:	Mike
    Meyer
	 	 	 	Title:	Director


 


[Signature
Page to Subscription Agreement]


 




     

     


    

 


IN
WITNESS WHEREOF, each Subscriber and the Company have caused their respective signature page to this Agreement to be duly
executed as of the date first written above.


 


	 	MONROE CAPITAL FUND O,
    LLC
	 	 	 
	 	By:	/s/  Mike
    Meyer
	 	 	Name:	Mike
    Meyer
	 	 	Title:	Director


 


[Signature
Page to Subscription Agreement]


 




     

     


    

 


SCHEDULE
OF SUBSCRIBERS


 


	(1)	(2)	(3)	(4)
	 	 	 	 
	Subscriber	Address
    and Telephone Number	Number
        of

        Warrant
        Shares
	Legal
        Representative's

        Address
        and Facsimile Number

	 	 	 	 
	Monroe Capital
    Private Credit Fund III LP	Monroe
        Capital LLC

        311
        S. Wacker Drive, 64th floor

        Chicago,
        IL 60606

        Attention:
        Mike Meyer

        Telephone:
        312-523-2393
	253,952	Schulte
        Roth & Zabel LLP

        919 Third Avenue

        New York, New York 10022

        Attention:      Ji Hye You, Esq.

        Facsimile:       (212) 593-5955

        Telephone:    (212) 756-2000

        Email:
        jihye.you@srz.com

	Monroe Capital
    Private Credit Fund III (Unleveraged) LP	Monroe
        Capital LLC

        311
        S. Wacker Drive, 64th floor

        Chicago,
        IL 60606

        Attention:
        Mike Meyer

        Telephone:
        312-523-2393
	60,333	Schulte
        Roth & Zabel LLP

        919 Third Avenue

        New York, New York 10022

        Attention:      Ji Hye You, Esq.

        Facsimile:
              (212) 593-5955

        Telephone:    (212) 756-2000

        Email:
        jihye.you@srz.com

	Monroe Private
    Credit Fund A LP	Monroe
        Capital LLC

        311
        S. Wacker Drive, 64th floor

        Chicago,
        IL 60606

        Attention:
        Mike Meyer

        Telephone:
        312-523-2393
	71,429	Schulte
        Roth & Zabel LLP

        919 Third Avenue

        New York, New York 10022

        Attention:      Ji Hye You, Esq.

        Facsimile:
              (212) 593-5955

        Telephone:    (212) 756-2000

        Email:
        jihye.you@srz.com



 




     

     


    

  


	Monroe
    Capital Private Credit Fund I LP	Monroe
        Capital LLC

        311
        S. Wacker Drive, 64th floor

        Chicago,
        IL 60606

        Attention:
        Mike Meyer

        Telephone:
        312-523-2393
	42,857	Schulte
        Roth & Zabel LLP

        919 Third Avenue

        New York, New York 10022

        Attention:      Ji Hye You, Esq.

        Facsimile:
              (212) 593-5955

        Telephone:    (212) 756-2000

        Email:
        jihye.you@srz.com

	Monroe Capital
    Private Credit Fund VT LP	Monroe
        Capital LLC

        311
        S. Wacker Drive, 64th floor

        Chicago,
        IL 60606

        Attention:
        Mike Meyer

        Telephone:
        312-523-2393
	32,143	Schulte
        Roth & Zabel LLP

        919 Third Avenue

        New York, New York 10022

        Attention:      Ji Hye You, Esq.

        Facsimile:
              (212) 593-5955

        Telephone:     (212) 756-2000

        Email:
        jihye.you@srz.com

	Monroe Capital
    Fund O, LLC	Monroe
        Capital LLC

        311
        S. Wacker Drive, 64th floor

        Chicago,
        IL 60606

        Attention:
        Mike Meyer

        Telephone:
        312-523-2393
	39,286	Schulte
        Roth & Zabel LLP

        919 Third Avenue

        New York, New York 10022

        Attention:      Ji Hye You, Esq.

        Facsimile:
              (212) 593-5955

        Telephone:    (212) 756-2000

        Email:
        jihye.you@srz.com

	Total:	 	500,000	 


 




     

     


    

 


EXHIBIT
A


 


Warrants


 




     

     


    

 


EXHIBIT
B


 


Registration
Rights Agreement


  




     

     


    

 


EXHIBIT
C


 


Officer's
Certificate


 




     

     


    

 


EXHIBIT
D


 


Secretary's
Certificate


  




     

     


    

 


EXHIBIT
E


 


Opinions


 




     

     


    

 


Schedule
3.1(d)


 


		1.	Pursuant
                                         to the Senior Note issued to HB on April 30, 2019 pursuant to the HB Agreement (the "HB
                                         Note"), HB has the right to receive warrants resulting from the issuance of warrants
                                         by the Company in connection with certain debt financings, as further described therein.



 


 




     

     


    

 


Schedule
3.1(e)


 


Preemptive
Rights


 


		1.	Pursuant
                                         to the HB Note, HB has the right to receive warrants resulting from the issuance of warrants
                                         by the Company in connection with certain debt financings, as further described therein.



 


		2.	Pursuant
                                         to Section 4(j) of the Securities Purchase Agreement, dated as of April 29, 2019, by
                                         and between the Company and the Buyers listed therein (the "Buyers"), the Company
                                         granted certain participation rights to the Buyers in connection with Subsequent Placements
                                         (as defined therein).



 


		3.	Pursuant
                                         to the "Purchase Rights" set forth in Section 4(a) of that certain Warrant
                                         issued to HB as of the date hereof, HB 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.



 


		4.	Pursuant
                                         to the "Purchase Rights" set forth in Section 4(a) of the Warrants dated as
                                         of the date hereof and issued by the Company to the Subscribers, such Subscribers are
                                         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.