Document:

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE
AGREEMENT (this “Agreement”) is made and entered into as of the 26th day of September, 2019, by and between
KushCo Holdings, Inc., a Nevada corporation (the “Company”) and the purchaser executing the purchase signature
page attached hereto (the “Purchaser”);

 

WHEREAS, the Company
has prepared and filed with the Securities and Exchange Commission (the “SEC”), in accordance with the provisions
of the Securities Act of 1933, as amended (the “Securities Act”), and the applicable rules and regulations thereunder,
a registration statement on Form S-3 (Commission File No. 333-231019), including a base prospectus and a prospectus supplement
to the base prospectus, relating to the securities to be issued and sold pursuant to this Agreement. The term “Registration
Statement” as used herein refers to such registration statement (including all financial schedules and exhibits), as
amended or as supplemented, and includes information contained in the base prospectus and the prospectus supplement thereto (the
“Prospectus”) filed with the SEC pursuant to Rule 424(b) of the rules under the Securities Act and deemed to
be part thereof at the time of effectiveness (the “Effective Date”) pursuant to Rule 430A of the rules under
the Securities Act; and

 

WHEREAS, the Company
intends to pay each of Jefferies LLC and A.G.P/Alliance Global Partners (together, the “Placement Agents”) a
fee in respect of the sale of Units (as defined below) to Purchaser, and the Company has entered into a Placement Agency Agreement
(the “Placement Agency Agreement”) with the Placement Agents that contains certain customary representations,
warranties, covenants and agreements of the Company for the benefit of the Placement Agents alone.

 

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 Purchaser agree as follows:

 

ARTICLE I

PURCHASE AND SALE

 

1.1 Closing.
Purchaser shall purchase from the Company, and the Company shall issue and sell to Purchaser, a number of units (the “Units”),
each consisting of (i) one share (a “Share” and, collectively, the “Shares”) of common stock
of the Company, par value $0.001 per share (the “Common Stock”) and (ii) one warrant (the “Warrant”
and, collectively, the “Warrants”) to purchase 0.5 shares of Common Stock (and the fractional amount being the “Warrant
Ratio”), equal to Purchaser’s subscription amount as set forth on the signature page hereto (the “Subscription
Amount”) divided by the Purchase Price (as defined below). Upon satisfaction of the conditions set forth in Section 1.3,
the closing shall occur at the offices of the Company on September 30, 2019, or at such other place or on such other date as the
parties shall mutually agree, but in no event later than the second (2nd) Trading Day (as defined below in Section 3.3)
following the date hereof (or, if this Agreement is executed after 4:30 p.m. New York City time, the third (3rd) Trading
Day) (the “Closing”). The shares of Common Stock issuable upon the exercise of the Warrants are referred to
herein as the “Warrant Shares”. The Warrant Shares, collectively with the Shares and the Warrants, are referred to
herein as the “Securities”.

 

1.2 Per Unit Purchase
Price. The per unit purchase price shall be equal to $1.75 (the “Purchase Price”).

 

1.3 Closing Conditions.

 

(a) As a condition to
the Purchaser’s obligation to close, at the Closing, the Company shall have satisfied each of the conditions set forth below
or shall deliver or cause to be delivered to Purchaser the items set forth below, as appropriate:

 

(i) this Agreement
duly executed by the Company;

 

(ii) the Warrants duly
executed by the Company;

  

(iii) the representations
and warranties made by the Company herein, including in Annex II hereto, shall be true and correct in all material respects on
the date made and on the date of the Closing;

 

     

     

    

 

(iv) all covenants,
agreements and conditions contained in this Agreement, including in Annex II hereto, to be performed by the Company on or prior
to the date of the Closing shall have been performed or complied with in all material respects; and

 

(v) no statute, regulation,
executive order, decree, ruling or injunction shall have been enacted, promulgated, endorsed or threatened or is pending by or
before any governmental authority of competent jurisdiction which prohibits or threatens to prohibit the consummation of the transaction
contemplated by this Agreement.

  

(b) As a condition to
the Company’s obligation to close, at the Closing, Purchaser shall have satisfied each of the conditions set forth below
or shall deliver or cause to be delivered to the Company the items set forth below, as appropriate:

 

(i) this Agreement
duly executed by Purchaser;

 

(ii) the Purchaser
shall have complied with its obligations relating to settlement, funding and closing set forth on Annex I hereto (the terms of
which are expressly incorporated into this Agreement);

 

(iii) the representations
and warranties made by Purchaser herein shall be true and correct in all material respects on the date made and on the date of
the Closing;

 

(iv) Purchaser shall
have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by Purchaser at or before the Closing; and

 

(v) no statute, regulation,
executive order, decree, ruling or injunction shall have been enacted, promulgated, endorsed or threatened or is pending by or
before any governmental authority of competent jurisdiction which prohibits or threatens to prohibit the consummation of the transaction
contemplated by this Agreement.

 

(c) As of the date of
the Closing, there shall have been no Material Adverse Effect (as defined below) with respect to the Company since the date hereof.

 

(d) Purchaser’s
obligation to purchase the Units will be subject to the termination rights set forth in the Placement Agency Agreement having not
been exercised.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

 

2.1 Representations
and Warranties of the Company. Except as set forth in the Company’s public filings under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), the Company hereby makes the following representations and warranties
as of the date hereof and as of the date of the Closing to Purchaser:

 

(a) Organization and
Qualification. The Company is an entity duly incorporated, validly existing and in good standing under the laws of the State
of Nevada, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business
as currently conducted. The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or property owned by the Company makes such qualification
necessary, except where the failure to be so qualified or in good standing, as the case may be, would not have or reasonably be
expected to result in (i) a material adverse effect on the legality, validity or enforceability of this Agreement or that certain
Escrow Agreement dated as of the date hereof, by and among the Company, the Placement Agents and Continental Stock Transfer &
Trust Company (the “Escrow Agreement,” and together with this Agreement, the “Transaction Agreements”),
(ii) a material adverse effect on the results of operations, assets, business or financial condition of the Company, or (iii) a
material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under
the Transaction Agreements (any of (i), (ii) or (iii), a “Material Adverse Effect”).

 

     

     

    

 

(b) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by the Transaction Agreements and the Warrant and otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of the Transaction Agreements and the Warrant by the Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and no further action
is required by the Company in connection therewith. Each of the Transaction Agreements and the Warrant have been (or upon delivery
will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute
valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of
creditors’ rights generally; and (ii) as limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.

 

(c) No Conflicts.
The execution, delivery and performance of the Transaction Agreements and the Warrant by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the
Company’s Amended and Restated Certificate of Incorporation or Bylaws, or (ii) conflict with, or constitute a default (or
an event that 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 (with or without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which
any property or asset of the Company is bound or affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected; except
in the case of each of clauses (ii) and (iii), such as would not have or reasonably be expected to result in a Material Adverse
Effect.

 

(d) Filings, Consents
and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local or other governmental authority or other person
in connection with the execution, delivery and performance by the Company of the Transaction Agreements and the Warrants, other
than (i) the filing with the SEC of a Form 8-K and prospectus supplement relating to the Registration Statement, and applicable
Blue Sky filings, if any, and (ii) such as have already been obtained.

 

(e) Capitalization.
All of the outstanding shares of the Company’s Common Stock are, and all of the Shares, when issued, will be, duly authorized,
validly issued, fully paid and nonassessable, and free and clear of all liens created by the Company. The Warrant Shares have been
duly authorized, and if and when issued and delivered by the Company against payment therefor as provided by the Warrants, shall
be validly issued, fully paid and nonassessable, and free and clear of all liens created by the Company. All of the outstanding
shares of the Company’s Common Stock were, the Shares will be, and the Warrant Shares (if and when issued) will be, issued
in material compliance with all applicable federal and state securities laws, including available exemptions therefrom, and none
of such issuances were, and the issuance of the Shares and the Warrant Shares will not be, made in violation of any pre-emptive
or other rights. The Company has reserved from its duly authorized capital stock the number of shares of Common Stock issuable
pursuant to this Agreement and the Warrants. The issuance of the Shares and the Warrant Shares will not trigger any anti-dilution
rights of any existing securities of the Company.

 

(f) Registration Statement.
The Registration Statement has become effective under the Securities Act, and no stop order suspending the effectiveness of
the Registration Statement is in effect, and no proceedings for such purpose are pending before or threatened by the SEC; and any
request on the part of the SEC for additional information has been complied with.

 

(g) Securities
Law Disclosure. The Company shall (i) by 12 noon (New York City time) on September 26th, 2019, issue a press release
disclosing the material terms of the transactions contemplated hereby, and (ii) file a Current Report on Form 8-K, including
this Agreement, the Placement Agency Agreement and the form of Warrant as exhibits thereto, with the SEC within the time
required by the Exchange Act. From and after the issuance of such press release, the Company represents to the Purchaser that
it shall have publicly disclosed all material, non-public information delivered to the Purchaser 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 this Agreement, the Placement Agency Agreement and the form of Warrant. In addition, effective upon the
issuance of such press release, 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, agents, employees or affiliates on the one hand, and the Purchaser or any of its affiliates on the other
hand, shall terminate.

 

     

     

    

 

The Company acknowledges and agrees that
the Purchaser may rely on the representations and warranties made to the Placement Agents contained in Section 1 of the Placement
Agency Agreement, and that the representations contained in this Section 2.1 shall not modify, amend or affect such Purchaser’s
right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties
contained in the Placement Agency Agreement or any other document or instrument executed and/or delivered in connection with this
Agreement or the consummation of the transactions contemplated hereby.

 

2.2 Representations
and Warranties of Purchaser. Purchaser hereby represents and warrants as of the date hereof and as of the date of the Closing
to the Company as follows:

 

(a) Organization;
Authority. If Purchaser is not a natural person, such Purchaser is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with full right, corporate, limited liability or partnership power and authority
to enter into and to consummate the transactions contemplated by the Transaction Agreements and otherwise to carry out its obligations
thereunder. The execution, delivery and performance by Purchaser of the transactions contemplated by the Transaction Agreements
has been duly authorized by all necessary corporate or similar action on the part of Purchaser. The Transaction Agreements to which
it is a party have been duly executed by Purchaser, and when delivered by Purchaser in accordance with the terms thereof, will
constitute valid and legally binding obligations of Purchaser, enforceable against it in accordance with their terms except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement
of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.

 

(b) Information; Confidentiality.
Purchaser and its advisors, if any, have been furnished with all publicly available materials relating to the business, finances
and operations of the Company and such other publicly available materials relating to the offer and sale of the Units as have been
requested by Purchaser. Purchaser and its advisors, if any, have been afforded the opportunity to ask questions of the Company.
Neither such inquiries nor any other due diligence investigations conducted by Purchaser or its advisors, if any, or its representatives
shall modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained
herein. Purchaser understands that its investment in the Units involves a high degree of risk. Purchaser has sought such accounting,
legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of
the Units.

 

(c) No Governmental
Review. Purchaser 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 Units or the fairness or suitability of the investment in the Units,
nor have such authorities passed upon or endorsed the merits of the offering of the Units.

 

(d) Sales; Short Selling.
From and after the date Purchaser received any information about the existence of this offering, Purchaser has not offered, pledged,
sold, contracted to sell, sold any option or contract to purchase, purchased any option or contract to sell, granted any option,
right or warrant to purchase, loaned, or otherwise transferred or disposed of, directly or indirectly, any shares of Common Stock
or any securities convertible into or exercisable or exchangeable for Common Stock, entered into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, or directly
or indirectly, through related parties, affiliates or otherwise sold “short” or “short against the box”
(as those terms are generally understood, provided that, for the avoidance of doubt, the locating and/or borrowing of shares of
Common Stock shall not be included in this Section 2.2(d)) any equity security of the Company. Purchaser covenants that it will
not, nor will it authorize or permit any person acting on its behalf to, engage in any such transactions until following the public
disclosure of the transaction as contemplated by Section 2.1(g).

 

     

     

    

 

(e) Information Regarding
Purchaser. Purchaser has provided the Company with true, complete, and correct information regarding all applicable items set
forth on Purchaser’s signature page to this Agreement.

 

(f) Placement Agents
as Beneficiaries. Purchaser expressly acknowledges and agrees that all representations, warranties, covenants and agreements
made or given by the Purchaser to the Company herein, are also irrevocably made and given for the benefit of the Placement Agents
and that the Placement Agents are entitled to rely on the same in connection with the placement of the Units as if such representations,
warranties, covenants and agreements, as applicable, were made directly to the Placement Agents.

 

(g) Non-Reliance on
Placement Agents. Purchaser understands that the Placement Agents have acted solely as the agents of the Company in this placement
of the Units and not to the Purchaser. Purchaser further acknowledges that (i) the Placement Agents, their affiliates, and their
respective representatives make no representation or warranty with regard to the merits of the offering of the Units or as to the
completeness or accuracy of any information or materials such Purchaser may have received in connection therewith, and Purchaser
has not relied and will not rely on any information, representations or advice furnished by or on behalf of any of the Placement
Agents, their affiliates or their respective representatives, orally or in writing, in making a decision to purchase the Units,
(ii) it will be responsible for conducting its own due diligence investigation with respect to the Company and the offer and sale
of the Units, (iii) it will be purchasing Units based on the results of its own due diligence investigation of the Company and
(iv) it has negotiated the offer and sale of the Units directly with the Company, and the Placement Agents will not be responsible
for the ultimate success of any such investment.

 

(h) Purchaser Status.
At the time such Purchaser was offered the Securities, it was, and as of the date hereof is, either (i) an institutional investor
as such term is used in Section 5542(b)(8) of the Uniform Securities Act of 2002 or (ii) a resident of the State of California
who, by reason of his or her business or financial experience has the capacity to protect his or her own interests in connection
with the transaction contemplated by this Agreement and such Purchaser is purchasing the Securities for his or her own account
(or a trust account if the Purchaser is a trustee) and not with a view to or for sale in connection with the distribution of the
Securities.

 

ARTICLE III

MISCELLANEOUS

 

3.1 Fees and Expenses.
Each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other taxes and duties levied in connection with the sale of the Units.

 

3.2 Entire Agreement.
This Agreement, together with the annexes, exhibits and schedules thereto, contains the entire understanding of the parties with
respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such
matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

3.3 Notices. Any
and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of (a) the time of transmission, if such notice or communication is delivered via
facsimile or email attachment at the facsimile number or email address specified on the signature pages attached hereto prior to
6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile or email address at the facsimile number or email address on the signature pages attached hereto on
a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to
whom such notice is required to be given. The address for such notices and communications is set forth on the signature pages attached
hereto. For purposes of this Agreement, “Trading Day” shall mean a day on which the Company’s Common Stock is
traded on a national securities exchange or over-the-counter market, or, if the Company’s Common Stock is not then eligible
for trading on a national securities exchange or over-the-counter market, any day except Saturday, Sunday and any day on which
banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

     

     

    

 

3.4 Amendments;
Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment,
by the Company and Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

 

3.5 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. The language used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction will be applied against any party.

 

3.6 Successors and
Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.
Neither Company nor Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent
of the other party.

 

3.7 Termination.
In the event that the Placement Agency Agreement is terminated by the Placement Agents pursuant to the terms thereof, this Agreement
shall terminate without any further action or obligation on the part of the parties hereto.

 

3.8 Governing Law.
All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York.

 

3.9 Survival. The
representations, warranties, agreements and covenants contained herein shall survive the Closing and delivery of the Units.

 

3.10 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, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such facsimile signature page were an original thereof.

 

3.11 Severability.
If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will
attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate
such substitute provision in this Agreement.

 

3.12 Replacement
of Securities. If any certificate or instrument evidencing any of the 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, but not the posting of any surety or similar bond. 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 certificate.

 

3.13 Exculpation
of the Placement Agents. Each of the Company and Purchaser agrees for the express benefit of the Placement Agents, their affiliates
and their respective representatives that:

 

(a) None of the Placement
Agents, their affiliates or their representatives: (i) have any duties or obligations under this Agreement; (ii) shall be liable
for any improper payment made in accordance with this Agreement and the information provided herein by the Company; (iii) make
any representation or warranty, or have any responsibilities as to the validity, accuracy, value or genuineness of any information,
certificates or documentation delivered by or on behalf of the Company pursuant to this Agreement; or (iv) shall be liable (x)
for any action taken, suffered or omitted by any of them in good faith and reasonably believed to be authorized or within the discretion
or rights or powers conferred upon it by this Agreement or (y) for anything which any of them may do or refrain from doing in connection
with this Agreement, except for such party’s own gross negligence or willful misconduct or required by law.

 

     

     

    

 

(b) The Placement Agents,
their affiliates and their respective representatives shall be entitled to rely on, and shall be protected in acting upon, any
certificate, instrument, opinion, notice, letter or any other document or security delivered to any of them by or on behalf of
the Company.

 

3.14. Indemnification
of Placement Agents. The Purchaser agrees to indemnify and hold harmless the Placement Agents, their affiliates and their
respective representatives from and against all losses, liabilities, claims, damages, costs, fees and expenses whatsoever (including,
but not limited to, any and all expenses incurred in investigating, preparing or defending against any litigation commenced or
threatened) based upon or arising out of any improper payment or settlement of the Shares or Warrants made in accordance with this
Agreement and the information provided herein by the Purchaser.

 

 

 

(Signature Pages Follow)

 

 

     

     

    

 

IN WITNESS WHEREOF, the parties hereto have
caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated
above.

 

	KUSHCO HOLDINGS, INC.	 
	 	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 

 

Address for Notice:

KushCo Holdings, Inc.

6261 Katella Avenue, Suite 250

Cypress, California 90630

Attention: Arun Kurichety

 

 

With a copy to (which shall not constitute
notice):

 

Reed Smith LLP

599 Lexington Avenue, 26th Floor

New York, New York 10022

Facsimile: (212) 521-5450

Attn: Aron Izower and Marc D. Hauser

 

 

	 	Subscription Amount: $_______________________________
	 	 
	 	Purchase Price Per Unit: $________________________
	 	 
	 	Total Units: _______________________
	 	 
	 	Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose.
	 	 
	 	 
	 	Dated as of: _____________ __,  2019
	 	 
	 	 
	 	____________________________________
	 	PURCHASER
	 	 
	 	By:_______________________________________
	 	Print Name:_________________________________
	 	Title:______________________________________
	 	Address:___________________________________

 

     

     

    

 

Annex I

 

Closing and Delivery of the Units and
Funds.

 

		1.	Closing.

 

The Purchasers will
be notified in advance by the Placement Agents, in accordance with Rule 15c6-1 promulgated under the Securities Exchange Act of
1934, as amended (the “Exchange Act”) of the time and date of the Closing. At the Closing, the Company shall
cause Action Stock Transfer Corporation (the “Transfer Agent”) to deliver to the Purchaser the number of Shares
set forth on the signature page to the Agreement registered in the name of the Purchaser or, if so indicated on the Purchaser Questionnaire
attached hereto as Exhibit A-1, in the name of a nominee designated by the Purchaser and (b) the aggregate purchase
price for the Units being purchased by the Purchaser will be delivered by or on behalf of the Purchaser to the Company.

 

		2.	Delivery of Funds.

 

The Purchaser shall
settle the Shares purchased by such Purchaser through DTC’s Deposit/Withdrawal at Custodian (“DWAC”) delivery
system or shall receive the Shares in book-entry format in the name of the beneficial holder. No later than one (1) business
day after the execution of the Agreement by the Purchaser and the Company, the Purchaser shall remit by wire transfer the
amount of funds equal to the aggregate purchase price for the Units being purchased by the Purchaser to the following account designated
by the Company and the Placement Agents pursuant to the terms of that certain Escrow Agreement (the “Escrow Agreement”)
dated as of the date hereof, by and among the Company, the Placement Agents and Continental Stock Transfer & Trust Company
(the “Escrow Agent”):

 

Continental Stock Transfer &
Trust Company

ABA # 021000021

Account Name: Continental Stock
Transfer & Trust Company as Agent for Kushco Holdings Inc September 2019 Escrow

Account Number: 475-479939

 

Such funds shall be held in escrow until
the Closing and delivered by the Escrow Agent on behalf of the Purchasers to the Company upon the satisfaction, in the sole judgment
of the Placement Agents, of the conditions set forth in Section 1.3 of the Agreement. The Company and the Purchaser agree to indemnify
and hold the Escrow Agent harmless from and against any and all losses, costs, damages, expenses and claims (including, without
limitation, court costs and reasonable attorneys fees) (“Losses”) arising under this Section 2 or
otherwise with respect to the funds held in escrow pursuant hereto or arising under the Escrow Agreement, unless it is finally
determined that such Losses resulted directly from the willful misconduct or gross negligence of the Escrow Agent. Anything in
the Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for any special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of
the likelihood of such loss or damage and regardless of the form of action.

 

		3.	Delivery of Units.

 

No later than one (1) business day
after the execution of the Agreement by the Purchaser and the Company, the Purchaser, if the Shares are to be issued in
street name on behalf of the Purchaser, shall direct the broker-dealer at which the account or accounts to be credited with the
Shares being purchased by such Purchaser are maintained, which broker/dealer shall be a DTC participant, to set up a DWAC instructing
the Transfer Agent, to credit such account or accounts with the Shares. Such DWAC instruction shall indicate the settlement date
for the deposit of the Shares, which date shall be provided to the Purchaser by the Placement Agents. Simultaneously with the delivery
to the Company by the Escrow Agent of the funds held in escrow pursuant to Section 2 above, the Company shall
direct the Transfer Agent to credit the Purchaser’s account or accounts with the Shares pursuant to the information contained
in the DWAC.

 

If the Purchaser elects to hold the Shares in the name of the
beneficial holder, the Shares shall be issued in book-entry format. Simultaneously with the delivery to the Company by the Escrow
Agent of the funds held in escrow pursuant to Section 2 above, the Company shall direct the Transfer Agent to
issue the Shares pursuant to the ownership information provided by the Purchaser.

At the Closing, the Company shall cause to be delivered to the
Purchaser a Warrant to purchase a number of whole Warrant Shares determined by multiplying the number of Total Units set forth
on the signature page by the Warrant Ratio and rounding up to the nearest whole number.

 

     

     

    

 

EXHIBIT A-1

PURCHASER QUESTIONNAIRE

 

Pursuant to Section 1 of Annex
I to the Agreement, please provide us with the following information:

 

	1.  The exact name that your Shares and Warrants are to be registered in. You may use a nominee name if appropriate:	
         

         

	2.  The relationship between the Purchaser and the registered holder listed in response to item 1 above:	
         

         

	3.  The mailing address of the registered holder listed in response to item 1 above:	
         

         

	4.  The Social Security Number or Tax Identification Number of the registered holder listed in the response to item 1 above:	
         

         

	5.  Name of DTC Participant (broker-dealer at which the account or accounts to be credited with the Units are maintained):	
         

         

	6.  DTC Participant Number:	
         

         

	7.  Name of Account at DTC Participant being credited with the Shares:	
         

         

	8.  Account Number at DTC Participant being credited with the Shares:	
         

         

 

 

 

     

     

    

 

Annex II

 

Additional Agreements by the Company.

 

 

Section 1. Additional Representations and Warranties. Except
as set forth in the Company’s public filings under the Exchange Act, the Company hereby makes the following representations
and warranties as of the date hereof and as of the date of the Closing to the Purchaser:

 

1.1 Litigation. Except as
otherwise disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus, there is no action, suit, inquiry,
notice of violation, proceeding or investigation pending, or to the Company’s knowledge, threatened against or affecting
the Company, any of its subsidiaries or any of their respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”),
which (i) adversely affects or challenges the legality, validity or enforceability of any of this Agreement, the Escrow Agreement,
the Securities Purchase Agreements or the Shares or (ii) could, if there were an unfavorable decision, have or reasonably be expected
to result in a Material Adverse Effect. Neither the Company nor any of its subsidiaries, nor any director or officer thereof, is
or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or
a claim of breach of fiduciary duty. There has not been, and there is no pending or, to the Company’s knowledge, contemplated,
any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission
has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or
any of its subsidiaries under the Exchange Act or the Securities Act.

 

1.2. Transactions With Affiliates
and Employees. Except as described in the Registration Statement, the Time of Sale Prospectus or the Prospectus that have
not been described as required, none of the officers or directors of the Company or any of its subsidiaries and, to the knowledge
of the Company, none of the employees of the Company or any of its subsidiaries is presently a party to any transaction with the
Company or any of its subsidiaries (other than for services as employees, officers and directors), including any contract, agreement
or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or
from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee, shareholder, member or partner, in each case in excess of $120,000
other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of the Company, and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

 

1.3. No Integrated
Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 2.2 of the
Agreement, neither the Company, nor any of its affiliates, nor any 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 (a “Person”) acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval
provisions of any Trading Market on which any of the securities of the Company are listed or designated. “Trading Market”
means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question:
the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange,
OTCQB or OTCQX (or any successors to any of the foregoing).

 

Section 2. Additional Covenants of the Company.

 

2.1. Integration. The Company
shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security that would be integrated
with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing
of such subsequent transaction.

 

     

     

    

 

2.2. Warrant Shares. The Company
shall use best efforts to keep a registration statement (including the Registration Statement) registering the issuance of the
Warrant Shares effective during the term of the Warrants.

 

2.3. Shareholder Rights Plan.
No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that the Purchaser is an
“Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that the
Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the
Agreement, the Placement Agency Agreement or Warrant or under any other agreement between the Company and the Purchaser.

 

2.4. Non-Public Information.
Except with respect to the material terms and conditions of the transactions contemplated by the Agreement, the Placement Agency
Agreement and the Warrant, which shall be disclosed pursuant to Section 2.1(g) of the Agreement, neither the Company,
nor any other Person acting on behalf of the Company, will provide any Purchaser or its agents or counsel with any information
that constitutes, or the Company reasonably believes constitutes, material non-public information, unless prior thereto such Purchaser
shall have consented to the receipt of such information and agreed with the Company to keep such information confidential. To the
extent that the Company delivers any material, non-public information to a Purchaser without such Purchaser’s consent, the
Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of its subsidiaries,
or any of their respective officers, directors, agents, employees or affiliates, or a duty to the Company, any of its subsidiaries
or any of their respective officers, directors, agents, employees or affiliates not to trade on the basis of, such material, non-public
information, provided that the Purchaser shall remain subject to applicable law. To the extent that any notice provided pursuant
to the Agreement, the Placement Agency Agreement or Warrant constitutes, or contains, material, non-public information regarding
the Company or any of its subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current
Report on Form 8-K. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting
transactions in securities of the Company.

 

2.5.  Indemnification
of Purchasers. Subject to the provisions of this Section 2.5, the Company will indemnify and hold the Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in the Agreement or in the Placement Agency Agreement or Warrant or (b) any action instituted against
the Purchaser Parties in any capacity, or any of them or their respective affiliates, by any shareholder of the Company who is
not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Agreement, the Placement
Agency Agreement or Warrant (except to the extent, but only to the extent that such action is based upon a breach of such Purchaser
Party’s representations, warranties or covenants under the Agreement, the Placement Agency Agreement or Warrant or any agreements
or understandings such Purchaser Party may have with any such shareholder or any violations by such Purchaser Party of state or
federal securities laws or any conduct by such Purchaser Party which is finally judicially determined to constitute fraud,
gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of
which indemnity may be sought pursuant to the Agreement, such Purchaser Party shall promptly notify the Company in writing, and
the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser
Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time
to assume such defense and to employ counsel, or (iii) in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not
be liable to any Purchaser Party under the Agreement (y) for any settlement by a Purchaser Party effected without the Company’s
prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a
loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties,
covenants or agreements made by such Purchaser Party in the Agreement, the Placement Agency Agreement or Warrant. The indemnification
required by this Section 2.5 shall be made by periodic payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any
cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject
to pursuant to law.

 

     

     

    

 

2.6. Agreement
Not to Offer or Sell Additional Common Stock. During the period commencing on and including the date hereof and continuing
through and including the 90th day following the date of the Prospectus (such period, as extended as described below, being referred
to herein as the “Lock-up Period”), the Company will not, without the prior written consent of the Purchaser
(which consent may be withheld in its sole discretion), directly or indirectly: (i) sell, offer to sell, contract to sell
or lend any shares of Common Stock or Related Securities (as defined below); (ii) effect any short sale, or establish or
increase any “put equivalent position” (as defined in Rule 16a-1(h) under the Exchange Act) or liquidate or decrease
any “call equivalent position” (as defined in Rule 16a-1(b) under the Exchange Act) of any shares of Common Stock
or Related Securities; (iii) pledge, hypothecate or grant any security interest in any shares of Common Stock or Related
Securities; (iv) in any other way transfer or dispose of any shares of Common Stock or Related Securities; (v) enter
into any swap, hedge or similar arrangement or agreement that transfers, in whole or in part, the economic risk of ownership of
any shares of Common Stock or Related Securities, regardless of whether any such transaction is to be settled in securities, in
cash or otherwise; (vi) announce the offering of any shares of Common Stock or Related Securities; (vii) submit, file
or request the Commission to declare effective any registration statement under the Securities Act in respect of any shares of
Common Stock or Related Securities (other than as contemplated by (1) the Agreement with respect to the shares of Common Stock,
(2) the registration rights agreement, dated August 21, 2019, by and among the Company and the investors listed therein with respect
to 500,000 shares of Common Stock issuable upon exercise of warrants referenced therein and (3) clause (D) of the proviso below
with respect to shares of Common Stock issuable upon exercise of warrants); or (viii) publicly announce the intention to do any
of the foregoing; provided, however, that the Company may (A) effect the transactions contemplated hereby; (B) issue
shares of Common Stock or options to purchase shares of Common Stock, or issue shares of Common Stock upon exercise of options,
pursuant to any stock option, stock bonus or other stock plan or arrangement described in the Registration Statement, the Time
of Sale Prospectus and the Prospectus or board advisory agreement, but only if the holders of such shares of Common Stock or options
agree in writing with the Placement Agents not to sell, offer, dispose of or otherwise transfer any such shares of Common Stock
or options during such Lock-up Period without the prior written consent of the Placement Agents (which consent may be withheld
in their sole discretion); (C) issue shares of Common Stock upon exercise of any warrants or the conversion of any convertible
security outstanding on the date hereof and referred to in the Registration Statement, the Time of Sale Prospectus and the Prospectus;
provided that the terms of such securities are not amended or modified to increase the number of shares of Common Stock issuable
upon exercise or conversion of such securities, to reduce the exercise or conversion price of such securities or to extend the
term of any such securities; (D) issue warrants exercisable for 1 million shares of Common Stock in connection with the
Company’s contemplated equipment financing with Monroe Capital Management Advisors, LLC or its affiliates; (E) issue shares
of Common Stock in connection with the earn-out payment pursuant to the Membership Interest Purchase Agreement, dated July 11,
2018, between the Company and the members of Zack Darling Creative Associates, LLC; (F) issue 200,000 shares of Common Stock in
connection with the holdback payment pursuant to the Agreement and Plan of Merger, dated April 10, 2018, by and among the Company,
KCH Energy, LLC, Summit Innovations, LLC and Mark Driver, as amended; (G) enter into an agreement providing for the issuance by
the Company of shares of Common Stock, or any Related Security, in connection with the acquisition by the Company or any subsidiary
of the securities, business, technology, property or other assets of another person or entity, or pursuant to an employee benefit
plan assumed by the Company in connection with such acquisition and the issuance of any such securities pursuant to any such agreement;
or (H) enter into any agreement providing for the issuance of shares of Common Stock or Related Securities in connection with
joint ventures, commercial relationships or other strategic transactions, and the issuance of any securities pursuant to any such
agreement; provided, however, that the number of shares of Common Stock that the Company may sell or issue or agree to sell or
issue pursuant to clauses (G) and (H) together in the aggregate shall not exceed 5% of the total number of shares of Common Stock
issued and outstanding immediately following the completion of the transactions contemplated by the Agreement. For purposes of
the foregoing, “Related Securities” shall mean any options or warrants or other rights to acquire shares of
Common Stock or any securities exchangeable or exercisable for or convertible into shares of Common Stock, or to acquire other
securities or rights ultimately exchangeable or exercisable for, or convertible into, shares of Common Stock.

 

Section 3. Termination. The Agreement may be terminated
by the Purchaser by written notice to the Company and the Placement Agents, if the Closing has not been consummated on or before
October 4, 2019; provided, however, that no such termination will affect the right of any party to sue
for any breach by any other party (or parties).Exhibit 10.2

 

KUSHCO HOLDINGS, INC.

 

PLACEMENT AGENCY AGREEMENT

 

September 26, 2019

 

JEFFERIES LLC

c/o JEFFERIES LLC

520 Madison Avenue

New York, New York 10022

 

and

 

A.G.P./ALLIANCE GLOBAL PARTNERS

c/o ALLIANCE GLOBAL PARTNERS

590 Madison Avenue, 36th Floor

New York, New York 10022

 

Ladies and Gentlemen:

 

Introductory.
KushCo Holdings, Inc., a Nevada corporation (the “Company”), proposes, subject to the terms and conditions
herein, to issue and sell to certain investors (each, an “Investor” and collectively, the
“Investors”) up to an aggregate of 17,197,570 units (the “Units”), each consisting of
(i) one share (a “Share” and, collectively, the “Shares”) of its common stock, par
value $0.001 per share (the “Common Stock”) and (ii) one warrant in the form of Exhibit B attached
hereto (the “Warrant” and, collectively, the “Warrants”) to purchase 0.5 shares of Common
Stock. The aggregate of 8,598,785 shares of Common Stock issuable upon the exercise of the Warrants are referred to herein as
the “Warrant Shares”. The Warrant Shares, collectively with the Shares and the Warrants, are referred to
herein as the “Securities”. Jefferies LLC (“Jefferies”) and A.G.P./Alliance Global
Partners (“AGP”) have agreed to act as the placement agents (the “Placement Agents”) in
connection with such issuance and sale of the Units.

 

The Company has prepared
and filed with the Securities and Exchange Commission (the “Commission”) a shelf registration statement on Form S-3,
File No. 333-231019, including a base prospectus (the “Base Prospectus”), to be used in connection with
the public offering and sale of the Units, which was declared effective on May 6, 2019. Such registration statement, including
the financial statements, exhibits and schedules thereto, in the form in which it became effective under the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (collectively, the “Securities Act”),
including all documents incorporated or deemed to be incorporated by reference therein and any information deemed to be a part
thereof at the time of effectiveness pursuant to Rule 430A or 430B under the Securities Act, is called the “Registration
Statement.” Any registration statement filed by the Company pursuant to Rule 462(b) under the Securities Act in
connection with the offer and sale of the Units is called the “Rule 462(b) Registration Statement,” and from
and after the date and time of filing of any such Rule 462(b) Registration Statement the term “Registration Statement”
shall include the Rule 462(b) Registration Statement. As used herein, the term “Prospectus” shall mean
the prospectus supplement to the Base Prospectus that describes the Units and the offering thereof (the “Prospectus Supplement”),
together with the Base Prospectus. References herein to the Prospectus shall refer to both the Prospectus Supplement and the Base
Prospectus. As used herein, “Applicable Time” is 9:00 a.m. (New York City time) on September 26,
2019. As used herein, “free writing prospectus” has the meaning set forth in Rule 405 under the Securities
Act, and “Time of Sale Prospectus” means the Base Prospectus, as amended or supplemented immediately prior to
the Applicable Time, together with the free writing prospectuses, if any, identified in Schedule B-1 hereto and the
pricing information set forth on Schedule B-2 hereto. As used herein, “Road Show” means a “road
show” (as defined in Rule 433 under the Securities Act) relating to the offering of the Units contemplated hereby that
is a “written communication” (as defined in Rule 405 under the Securities Act).

 

    	 	 	 

     

    

 

All references in this
Agreement to the Registration Statement, the Base Prospectus and the Prospectus shall include the documents incorporated or deemed
to be incorporated by reference therein. All references in this Agreement to financial statements and schedules and other information
which are “contained,” “included” or “stated” in, or “part of” the Registration
Statement, the Rule 462(b) Registration Statement, the Base Prospectus, the Time of Sale Prospectus or the Prospectus, and
all other references of like import, shall be deemed to mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the Registration Statement, the Rule 462(b) Registration
Statement, the Base Prospectus, the Time of Sale Prospectus or the Prospectus, as the case may be. All references in this Agreement
to amendments or supplements to the Registration Statement, the Base Prospectus, the Time of Sale Prospectus or the Prospectus
shall be deemed to mean and include the filing of any document under the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder (collectively, the “Exchange Act”) that is or is deemed to be incorporated
by reference in the Registration Statement, the Base Prospectus, or the Prospectus, as the case may be. All references in this
Agreement to (i) the Registration Statement, the Base Prospectus or the Prospectus, any amendments or supplements to any of
the foregoing, or any free writing prospectus, shall include any copy thereof filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System (“EDGAR”) and (ii) the Prospectus shall be deemed to include
any “electronic Prospectus” provided for use in connection with the offering of the Units as contemplated by Section 3(m)
of this Agreement.

 

The Company hereby
confirms its agreements with the Placement Agents as follows:

 

Section 1.                   Representations
and Warranties of the Company. The Company hereby represents, warrants and covenants to each Placement Agent, as of the date
of this Agreement, as of the Closing Date (as hereinafter defined), as follows:

 

(a)               
Compliance with Registration Requirements. The Registration Statement has become effective under
the Securities Act. The Company has complied, to the Commission’s satisfaction, with all requests of the Commission for additional
or supplemental information, if any. No stop order suspending the effectiveness of the Registration Statement is in effect and
no proceedings for such purpose have been instituted or are pending or, to the best knowledge of the Company, are contemplated
or threatened by the Commission. At the time the Company’s Annual Report on Form 10-K/A for the year ended August 31,
2018 (the “Annual Report”) was filed with the Commission, or, if later, at the time the Registration Statement
was originally filed with the Commission, the Company met the then-applicable requirements for use of Form S-3 under the Securities
Act. The Company meets the requirements for use of Form S-3 under the Securities Act specified in the Financial Industry Regulatory
Authority, Inc. (“FINRA”) Conduct Rule 5110(B)(7)(C)(i). The documents incorporated or deemed to be incorporated
by reference in the Registration Statement, the Time of Sale Prospectus and the Prospectus, at the time they were or hereafter
are filed with the Commission, or became effective under the Exchange Act, as the case may be, complied and will comply in all
material respects with the requirements of the Exchange Act.

 

(b)               
Disclosure. The Base Prospectus and the Prospectus when filed complied in all material respects
with the Securities Act and, if filed by electronic transmission pursuant to EDGAR, was identical (except as may be permitted by
Regulation S-T under the Securities Act) to the copy thereof delivered to the Placement Agents for use in connection with
the Offering (as defined below). Each of the Registration Statement and any post-effective amendment thereto, at the time it became
or becomes effective, complied and will comply in all material respects with the Securities Act and did not and will not contain
any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. As of the Applicable Time, the Time of Sale Prospectus did not, and at the Closing Date (as
defined in Section 2), will not, contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Prospectus as
of its date, did not, and at the Closing Date, will not, contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
The representations and warranties set forth in the three immediately preceding sentences do not apply to statements in or omissions
from the Registration Statement or any post-effective amendment thereto, or the Prospectus or the Time of Sale Prospectus, or any
amendments or supplements thereto, made in reliance upon and in conformity with written information relating to any Placement Agent
furnished to the Company in writing by the Placement Agents expressly for use therein, it being understood and agreed that the
only such information consists of the information described in Section 9(b) below. There are no contracts or other documents
required to be described in the Time of Sale Prospectus or the Prospectus or to be filed as an exhibit to the Registration Statement
which have not been described or filed as required.

 

    	 	2	 

     

    

 

(c)                
Free Writing Prospectuses; Road Show. As of the determination date referenced in Rule 164(h)
under the Securities Act, the Company was not, is not or will not be (as applicable) an “ineligible issuer” in connection
with the offering of the Units pursuant to Rules 164, 405 and 433 under the Securities Act. Each free writing prospectus that
the Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission
in accordance with the requirements of the Securities Act. Each free writing prospectus that the Company has filed, or is required
to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or on behalf of or used or referred to by
the Company complies or will comply in all material respects with the requirements of Rule 433 under the Securities Act, including
timely filing with the Commission or retention where required and legending, and each such free writing prospectus, as of its issue
date and at all subsequent times through the completion of the public offer and sale of the Units did not, does not and will not
include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement
or the Prospectus including any document incorporated or deemed to be incorporated by reference therein that has not been superseded
or modified. Except for the free writing prospectuses, if any, identified in Schedule B-1, and electronic road shows,
if any, furnished to you before first use, the Company has not prepared, used or referred to, and will not, without your prior
written consent, prepare, use or refer to, any free writing prospectus. Each Road Show, when considered together with the Time
of Sale Prospectus, did not, as of the Applicable Time, contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(d)               
Distribution of Offering Material By the Company. Prior to the Closing Date, the Company
has not distributed and will not distribute any offering material in connection with the offering and sale of the Units other than
the Registration Statement, the Time of Sale Prospectus, the Prospectus or any free writing prospectus reviewed and consented to
by the Placement Agents, and the free writing prospectuses, if any, identified on Schedule B-1 hereto.

 

(e)                
Authorization of Agreements. This Agreement has been duly authorized, executed and delivered by
the Company. The Escrow Agreement (the “Escrow Agreement”), dated as of the date hereof, by and among the Company,
the Placement Agents and Continental Stock Transfer & Trust Company (the “Escrow Agent”) has been duly authorized,
executed and delivered by the Company. The Securities Purchase Agreements (as defined below) have been duly authorized and, upon
delivery as contemplated by this Agreement, will be duly executed and delivered by the Company. The Warrants have been duly authorized,
and when executed and delivered by the Company against payment therefor as provided by the Securities Purchase Agreements, will
constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally; and (ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.

 

(f)                 
Authorization of the Shares and Warrant Shares. The Shares have been duly authorized for issuance
and sale pursuant to this Agreement and, when issued and delivered by the Company against payment therefor as provided by the Securities
Purchase Agreements, shall be validly issued, fully paid and nonassessable. The Warrant Shares have been duly authorized, and if
and when issued and delivered by the Company against payment therefor as provided by the Warrants, shall be validly issued, fully
paid and nonassessable. The Company has reserved the Warrant Shares for issuance upon exercise of the Warrants in a number sufficient
to meet the current exercise requirements. The issuance and sale of the Shares is not, and the issuance of the Warrant Shares in
accordance with the terms and conditions of the Warrants will not be, subject to any preemptive rights, rights of first refusal
or other similar rights to subscribe for or purchase the Shares or the Warrant Shares, as applicable, except for such rights as
have been duly waived or exercised.

 

(g)               
No Applicable Registration or Other Similar Rights. There are no persons with registration or other
similar rights to have any equity or debt securities registered for sale under the Registration Statement or included in the offering
contemplated by this Agreement, except for such rights as have been duly waived.

 

    	 	3	 

     

    

 

(h)               
No Material Adverse Change. Except as otherwise disclosed in the Registration Statement, the Time
of Sale Prospectus and the Prospectus, subsequent to the respective dates as of which information is given in the Registration
Statement, the Time of Sale Prospectus and the Prospectus: (i) there has been no material adverse change, or any development
that could be expected to result in a material adverse change, in (A) the condition, financial or otherwise, or in the earnings,
business, properties, operations, operating results, assets, liabilities or prospects, whether or not arising from transactions
in the ordinary course of business, of the Company and its subsidiaries, considered as one entity or (B) the ability of the
Company to consummate the transactions contemplated by this Agreement and the Escrow Agreement or perform its obligations hereunder
and thereunder (any such change being referred to herein as a “Material Adverse Change”); (ii) the Company
and its subsidiaries, considered as one entity, have not incurred any material liability or obligation, indirect, direct or contingent,
including without limitation any losses or interference with their business from fire, explosion, flood, earthquakes, accident
or other calamity, whether or not covered by insurance, or from any strike, labor dispute or court or governmental action, order
or decree, that are material, individually or in the aggregate, to the Company and its subsidiaries, considered as one entity,
and have not entered into any transactions not in the ordinary course of business; and (iii) there has not been any material
decrease in the capital stock or any material increase in any short-term or long-term indebtedness of the Company or its subsidiaries
and there has been no dividend or distribution of any kind declared, paid or made by the Company or, except for dividends paid
to the Company or other subsidiaries, by any of the Company’s subsidiaries on any class of capital stock, or any repurchase
or redemption by the Company or any of its subsidiaries of any class of capital stock.

 

(i)                 
Independent Accountants. RBSM US LLP (“RBSM”), who has expressed its opinion
with respect to the financial statements (which term as used in this Agreement includes the related notes thereto) filed with the
Commission as a part of the Registration Statement, the Time of Sale Prospectus and the Prospectus, is (i) an independent
registered public accounting firm as required by the Securities Act and the Exchange Act and the rules of the Public Company Accounting
Oversight Board (“PCAOB”), (ii) in compliance with the applicable requirements relating to the qualification
of accountants under Rule 2-01 of Regulation S-X under the Securities Act and (iii) a registered public accounting
firm as defined by the PCAOB whose registration has not been suspended or revoked and who has not requested such registration to
be withdrawn. Marcum LLP, the Company’s current independent registered public accountant, is (i) an independent registered
public accounting firm as required by the Securities Act and the Exchange Act and the rules of the PCAOB, (ii) in compliance
with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X under
the Securities Act and (iii) a registered public accounting firm as defined by the PCAOB whose registration has not been suspended
or revoked and who has not requested such registration to be withdrawn.

 

(j)                 
Financial Statements. The financial statements filed with the Commission as a part of the Registration
Statement, the Time of Sale Prospectus and the Prospectus present fairly the consolidated financial position of the Company and
its subsidiaries as of the dates indicated and the results of their operations, changes in stockholders’ equity and cash
flows for the periods specified. Such financial statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes
thereto. The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Registration
Statement fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s
rules and guidelines applicable thereto. No other financial statements or supporting schedules are required to be included in the
Registration Statement, the Time of Sale Prospectus or the Prospectus. The financial data set forth in each of the Registration
Statement, the Time of Sale Prospectus and the Prospectus under the caption “Capitalization” fairly present the information
set forth therein on a basis consistent with that of the audited financial statements contained in the Registration Statement,
the Time of Sale Prospectus and the Prospectus. All disclosures contained in the Registration Statement, the Prospectus and any
free writing prospectus that constitute non-GAAP financial measures (as defined by the rules and regulations under the Securities
Act and Exchange Act) comply with Regulation G under the Exchange Act and Item 10 of Regulation S-K under the Securities Act, as
applicable. To the Company’s knowledge, no person who has been suspended or barred from being associated with a registered
public accounting firm, or who has failed to comply with any sanction pursuant to Rule 5300 promulgated by the PCAOB, has
participated in or otherwise aided in the preparation of, or audited, the financial statements or other financial data filed with
the Commission as a part of the Registration Statement, the Time of Sale Prospectus and the Prospectus.

 

(k)               
Company’s Accounting System. The Company and each of its subsidiaries make and keep accurate
books and records and maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions
are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization;
(iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences; and (v) the interactive data in eXtensible Business Reporting Language included
or incorporated by reference in the Registration Statement, the Time of Sale Prospectus and the Prospectus fairly presents the
information called for in all material respects and is prepared in accordance with the Commission’s rules and guidelines
applicable thereto.

 

    	 	4	 

     

    

 

(l)                 
Disclosure Controls and Procedures; Deficiencies in or Changes to Internal Control Over Financial Reporting.
The Company has established and maintains disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under
the Exchange Act), which are designed to ensure that material information relating to the Company, including its consolidated subsidiaries,
is made known to the Company’s principal executive officer and its principal financial officer by others within those entities,
particularly during the periods in which the periodic reports required under the Exchange Act are being prepared. The Company’s
disclosure controls and procedures were evaluated by management of the Company for effectiveness, and as of the end of the Company’s
most recent fiscal quarter (the “Evaluation Date”), as disclosed in the Company’s quarterly report on
Form 10-Q for the period ended the Evaluation Date (the “Q3 Form 10-Q”), management determined that the Company’s
disclosure controls and procedures were not effective as of the Evaluation Date to perform the functions for which they were established
as a result of the material weaknesses identified therein. As disclosed in the Q3 Form 10-Q, the Company has taken steps to enhance
its internal controls over financial reporting and intends to take additional steps to remediate the material weaknesses described
therein. Since the end of the Company’s most recent audited fiscal year, there has been no change in the Company’s
internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.

 

(m)             
Incorporation and Good Standing of the Company. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and has the corporate power
and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement,
the Time of Sale Prospectus and the Prospectus and to enter into and perform its obligations under this Agreement and the Escrow
Agreement. The Company is duly qualified as a foreign corporation to transact business and is in good standing in the State of
California and each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business.

 

(n)               
Subsidiaries. Each of the Company’s “subsidiaries” (for purposes of this Agreement,
as defined in Rule 405 under the Securities Act) has been duly incorporated or organized, as the case may be, and is validly
existing as a corporation, partnership or limited liability company, as applicable, in good standing under the laws of the jurisdiction
of its incorporation or organization and has the power and authority (corporate or other) to own, lease and operate its properties
and to conduct its business as described in the Registration Statement, the Time of Sale Prospectus and the Prospectus. Each of
the Company’s subsidiaries is duly qualified as a foreign corporation, partnership or limited liability company, as applicable,
to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business. All of the issued and outstanding capital stock or other equity
or ownership interests of each of the Company’s subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable and are owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance or adverse claim. None of the outstanding capital stock or equity
interest in any subsidiary was issued in violation of preemptive or similar rights of any security holder of such subsidiary. The
constitutive or organizational documents of each of the subsidiaries comply in all material respects with the requirements of applicable
laws of its jurisdiction of incorporation or organization and are in full force and effect. The Company does not own or
control, directly or indirectly, any corporation, association or other entity other than the subsidiaries listed in Exhibit 21
to the Company’s Annual Report on Form 10-K/A for the fiscal year ended August 31, 2018.

 

(o)               
Capitalization and Other Capital Stock Matters. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Registration Statement, the Time of Sale Prospectus and the Prospectus (other than
for subsequent issuances, if any, pursuant to employee benefit plans, or upon the exercise of outstanding options or warrants,
in each case described in the Registration Statement, the Time of Sale Prospectus and the Prospectus). The Securities conform in
all material respects to the description thereof contained in the Time of Sale Prospectus. All of the issued and outstanding shares
of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable and have been issued in compliance
with all federal and state securities laws. None of the outstanding shares of Common Stock was issued in violation of any preemptive
rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. There are no authorized
or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the Company or any of its subsidiaries other than those
described in the Registration Statement, the Time of Sale Prospectus and the Prospectus. The descriptions of the Company’s
stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, set forth
in the Registration Statement, the Time of Sale Prospectus and the Prospectus accurately and fairly presents the information required
to be shown with respect to such plans, arrangements, options and rights.

 

    	 	5	 

     

    

 

(p)               
Registration and Quotation. The Common Stock is registered pursuant to Section 12(b) or 12(g)
of the Exchange Act and is quoted on The OTC Market Group’s OTCQX market (“OTCQX”), and the Company has taken
no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act
or terminating the quotation of the Common Stock on the OTCQX, nor has the Company received any notification that the Commission
or the OTC Market Group is contemplating terminating such registration or quotation. To the Company’s knowledge, it is in
compliance with all applicable listing requirements of The OTC Market Group.

 

(q)               
Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required. Neither
the Company nor any of its subsidiaries is in violation of its charter or by-laws, partnership agreement or operating agreement
or similar organizational documents, as applicable, and is not in default (or, with the giving of notice or lapse of time, would
be in default) (“Default”) under any indenture, loan, credit agreement, note, lease, license agreement, contract,
franchise or other instrument (including, without limitation, any pledge agreement, security agreement, mortgage or other instrument
or agreement evidencing, guaranteeing, securing or relating to indebtedness) to which the Company or any of its subsidiaries is
a party or by which it or any of them may be bound, or to which any of their respective properties or assets are subject (each,
an “Existing Instrument”), except for such Defaults as could not be expected, individually or in the aggregate,
to have a material adverse effect on the condition (financial or other), earnings, business, properties, operations, assets, liabilities
or prospects of the Company (a “Material Adverse Effect”). The Company’s execution, delivery and performance
of this Agreement, the Securities Purchase Agreements and the Warrants, the Escrow Agreement, consummation of the transactions
contemplated hereby, thereby and by the Registration Statement, the Time of Sale Prospectus and the Prospectus and the issuance
and sale of the Units (including the use of proceeds from the sale of the Units as described in the Registration Statement, the
Time of Sale Prospectus and the Prospectus under the caption “Use of Proceeds”) (i) have been duly authorized
by all necessary corporate action and will not result in any violation of the provisions of the charter or by-laws, partnership
agreement or operating agreement or similar organizational documents of the Company or any subsidiary (ii) will not conflict
with or constitute a breach of, or Default or a Debt Repayment Triggering Event (as defined below) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant
to, or require the consent of any other party to, any Existing Instrument and (iii) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to the Company or any of its subsidiaries, other than
United States federal law as it applies the cultivation, distribution,
possession, and any other activity relating to Cannabis and/or its products, derivatives, and/or component parts, including, without
limitation, the Consumer Product Safety Act, the Poison Prevention Packaging Act, the Controlled Substances Act (as amended,
the “CSA”), the Agriculture Improvement Act of 2018 (as amended, the “2018 Farm Bill”) or
the Agricultural Act of 2014 (as amended, the “2014 Farm Bill”),
together with all guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial
precedents or authorities) and the interpretation or administration thereof by, and other determinations, directives, requirements
or requests of, any federal governmental authority relating thereto, each as may be in effect and/or amended from time to time
(collectively, “Federal Cannabis Laws”). No consent, approval, authorization or other order of, or registration
or filing with, any court or other governmental or regulatory authority or agency, is required for the Company’s execution,
delivery and performance of this Agreement, the Securities Purchase Agreements and the Warrants, the Escrow Agreement, and consummation
of the transactions contemplated hereby, thereby and by the Registration Statement, the Time of Sale Prospectus and the Prospectus,
except such as have been obtained or made by the Company and are in full force and effect under the Securities Act and such as
may be required under applicable state securities or blue sky laws or FINRA. As used herein, a “Debt Repayment Triggering
Event” means any event or condition which gives, or with the giving of notice or lapse of time would give, the holder
of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.

 

    	 	6	 

     

    

 

(r)                
Regulatory Compliance. Neither the Company nor any of its subsidiaries have received any request
for documents or information, inspectional observations, notice of adverse filing, warning letter, untitled letter or other correspondence
or notice from the Food and Drug Administration (“FDA”), the Consumer Product Safety Commission (the “CPSC”),
the Drug Enforcement Agency (the “DEA”) or the United States Department of Agriculture (the “USDA”)
or any other court or arbitrator or federal, state, local, or foreign governmental or regulatory authority in relation to potential
noncompliance by the Company or any of its subsidiaries with any applicable laws or regulations, including, without limitation,
the Federal Food, Drug and Cosmetic Act (21 U.S.C § 301 et seq.) (as amended, the “FDCA”), the CSA, the
2018 Farm Bill or the 2014 Farm Bill nor has the Company been subject to any seizure of documents, information, or products by
any regulatory authority. The Company and its directors, officers, and to the Company’s knowledge, its employees and agents
are and have been in compliance in all material respects with all applicable laws and the regulations promulgated pursuant to such
laws, and all other local, state, federal, national, supranational, and foreign laws, manual provisions, policies, regulations
and administrative guidance relating to the regulation of the Company. The Company has not, either voluntarily or involuntarily,
initiated, conducted or issued or caused to be initiated, conducted or issued, any recall, market withdrawal or replacement, safety
alert, post-sale warning, or other notice or action relating to the safety or efficacy of any product or the failure to comply
with any governmental law, rule or regulation regarding product labeling and no third-party has initiated or conducted any such
notice or action and there is no basis for any such notice or action.

 

(s)                
Criminal Laws.Neither the Company nor any of its subsidiaries has engaged in, or will engage
in, (i) any direct dealings or transactions in violation of U.S. federal or state criminal laws including, without limitation,
the Controlled Substances Act, the Racketeering Influenced and Corrupt Practices Act, the Travel Act or any anti money-laundering
statute, or (ii) any “aiding and abetting” of a violation of U.S. federal or state criminal laws statute.
No action, suit or proceeding by or before any U.S. court or governmental agency, authority or body or any arbitrator involving
the Company or any of its subsidiaries with respect to U.S. federal or state criminal laws is pending or, to the Company’s
knowledge, threatened.

 

(t)                 
Compliance with Laws. The Company and its subsidiaries have been and are in compliance with
all applicable laws, rules and regulations, except where failure to be so in compliance could not be expected, individually or
in the aggregate, to have a Material Adverse Effect.

 

(u)               
Litigation. Except as otherwise disclosed in the Registration Statement, the Time of Sale Prospectus
and the Prospectus, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending, or to the Company’s
knowledge, threatened against or affecting the Company, any of its subsidiaries or any of their respective properties before or
by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability
of any of this Agreement, the Escrow Agreement, the Securities Purchase Agreements or the Warrants or (ii) could, if there were
an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any of
its subsidiaries, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and there is
no pending or, to the Company’s knowledge, contemplated, investigation by the Commission involving the Company or any current
or former director or officer of the Company.

 

    	 	7	 

     

    

 

(v)               
Intellectual Property Rights. The Company and its subsidiaries own, or have obtained valid and
enforceable licenses for, the inventions, patent applications, patents, trademarks, trade names, service names, copyrights, trade
secrets and other intellectual property described in the Registration Statement, the Time of Sale Prospectus and the Prospectus
as being owned or licensed by them or which are necessary for the conduct of their respective businesses as currently conducted
or as currently proposed to be conducted (collectively, “Intellectual Property”) and, to the Company’s
knowledge, the conduct of their respective businesses does not and will not infringe, misappropriate or otherwise conflict in any
material respect with any such rights of others. The Intellectual Property owned by the Company and, to the Company’s knowledge,
the Intellectual Property licensed to the Company, has not been adjudged by a court of competent jurisdiction to be invalid or
unenforceable, in whole or in part, and the Company is unaware of any facts which would form a reasonable basis for any such adjudication.
To the Company’s knowledge: (i) there are no third parties who have rights to any Intellectual Property, except for
customary reversionary rights of third-party licensors with respect to Intellectual Property that is disclosed in the Registration
Statement, the Time of Sale Prospectus and the Prospectus as licensed to the Company or one or more of its subsidiaries; and (ii) there
is no infringement by third parties of any Intellectual Property. There is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim by others: (A) challenging the Company’s rights in or to any Intellectual Property,
and the Company is unaware of any facts which would form a reasonable basis for any such action, suit, proceeding or claim; (B) challenging
the validity, enforceability or scope of any Intellectual Property, and the Company is unaware of any facts which would form a
reasonable basis for any such action, suit, proceeding or claim; or (C) asserting that the Company or any of its subsidiaries
infringes or otherwise violates, or would, upon the commercialization of any product or service described in the Registration Statement,
the Time of Sale Prospectus or the Prospectus as under development, infringe or violate, any patent, trademark, trade name, service
name, copyright, trade secret or other proprietary rights of others, and the Company is unaware of any facts which would form a
reasonable basis for any such action, suit, proceeding or claim. The Company and its subsidiaries have complied with the terms
of each agreement pursuant to which Intellectual Property has been licensed to the Company or any subsidiary, and all such agreements
are in full force and effect. To the Company’s knowledge, there are no material defects in any of the patents or patent applications
included in the Intellectual Property. The Company and its subsidiaries have taken all reasonable steps to protect, maintain and
safeguard their Intellectual Property, including the execution of appropriate nondisclosure, confidentiality agreements and invention
assignment agreements and invention assignments with their employees, and no employee of the Company is in or has been in violation
of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement,
non-solicitation agreement, nondisclosure agreement, or any restrictive covenant to or with a former employer where the basis of
such violation relates to such employee’s employment with the Company. The Company and its subsidiaries have complied with
the duty of candor and good faith as required by the United States Patent and Trademark Office during the prosecution of the United
States patents and patent applications included in the Intellectual Property, and in all foreign offices having similar requirements.
None of the Company owned Intellectual Property or technology (including information technology and outsourced arrangements) employed
by the Company or its subsidiaries has been obtained or is being used by the Company or its subsidiary in violation of any contractual
obligation binding on the Company or its subsidiaries or any of their respective officers, directors or employees or otherwise
in violation of the rights of any persons.

 

(w)              
All Necessary Permits, etc. The Company and its subsidiaries possess such valid and current certificates,
authorizations or permits required by state, federal or foreign regulatory agencies or bodies (including, without limitation, those
administered by the FDA, the CPSC, the DEA or the USDA or by any foreign, federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA, the CPSC, the DEA or the USDA or otherwise governing public health,
consumer safety, consumer products, cannabis or cannabis-derived products) to conduct their respective businesses as currently
conducted and as described in the Registration Statement, the Time of Sale Prospectus or the Prospectus (“Permits”),
except where failure to possess any such Permit could not be expected, individually or in the aggregate, to have a Material Adverse
Effect. Neither the Company nor any of its subsidiaries is in violation of, or in default under, any of the Permits or has received
any notice of proceedings relating to the revocation or modification of, or non-compliance with, any Permit.

 

(x)               
Title to Properties. The Company and its subsidiaries do not own any real property. The Company
and its subsidiaries have good and marketable title to all of the personal property and other assets reflected as owned in the
financial statements referred to in Section 1(j) above (or elsewhere in the Registration Statement, the Time of Sale Prospectus
or the Prospectus), in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, adverse claims
and other defects. The real property, improvements, equipment and personal property held under lease by the Company or any of its
subsidiaries are held under valid and enforceable leases, with such exceptions as are not material and do not materially interfere
with the use made or proposed to be made of such real property, improvements, equipment or personal property by the Company or
such subsidiary.

 

    	 	8	 

     

    

 

(y)               
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States
federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction
to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown
or determined to be due on such returns, reports and declarations, and (iii) has set aside on its books provision reasonably adequate
for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company or of any of its subsidiaries know of no basis for any such claim.

 

(z)                
Insurance. The Company and its subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries
are engaged, including, but not limited to, directors and officers insurance coverage at least equal to $5,000,000. Neither the
Company nor any of its subsidiaries have any reason to believe that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.

 

(aa)             
Compliance with Environmental Laws. The Company and its subsidiaries (i) are in compliance with
all federal, state, local and foreign laws relating to pollution or protection of human health or the environment (including ambient
air, surface water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand
letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated
or approved thereunder (“Environmental Laws”); (ii) are in compliance with all federal, state, local and foreign
laws relating to the plastics industry, including legislation designed to reduce solid waste by requiring, among other things,
plastics to be degradable in landfills, minimum levels of recycled content, various recycling requirements, disposal fees, and
limits on the use of plastic products; (iii) have received all permits licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses; and (iv) are in compliance with all terms and conditions of any such
permit, license or approval where in each clause (i), (ii), (iii) and (iv), the failure to so comply could be reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect.

 

(bb)              
Periodic Review of Costs of Environmental Compliance. In the ordinary course of its business, the
Company conducts a periodic review of the effect of Environmental Laws on the business, operations and properties of the Company
and its subsidiaries, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation,
any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). No
facts or circumstances have come to the Company’s attention that could result in costs or liabilities that could be expected,
individually or in the aggregate, to have a Material Adverse Effect.

 

(cc)             
ERISA Compliance. The Company and its subsidiaries and any “employee benefit plan”
(as defined under the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published interpretations
thereunder (collectively, “ERISA”)) established or maintained by the Company, its subsidiaries or their “ERISA
Affiliates” (as defined below) are in compliance in all material respects with ERISA. “ERISA Affiliate”
means, with respect to the Company or any of its subsidiaries, any member of any group of organizations described in Sections 414(b),
(c), (m) or (o) of the Internal Revenue Code of 1986, as amended, and the regulations and published interpretations thereunder
(the “Code”) of which the Company or such subsidiary is a member. No “reportable event” (as defined
under ERISA) has occurred or is reasonably expected to occur with respect to any “employee benefit plan” established
or maintained by the Company, its subsidiaries or any of their ERISA Affiliates. No “employee benefit plan” established
or maintained by the Company, its subsidiaries or any of their ERISA Affiliates, if such “employee benefit plan” were
terminated, would have any “amount of unfunded benefit liabilities” (as defined under ERISA). Neither the Company,
its subsidiaries, nor any of their ERISA Affiliates has incurred or reasonably expects to incur any liability under (i) Title IV
of ERISA with respect to termination of, or withdrawal from, any “employee benefit plan” or (ii) Sections 412,
4971, 4975 or 4980B of the Code. Each employee benefit plan established or maintained by the Company, its subsidiaries or any of
their ERISA Affiliates that is intended to be qualified under Section 401(a) of the Code is so qualified and nothing has occurred,
whether by action or failure to act, which would cause the loss of such qualification.

 

    	 	9	 

     

    

 

(dd)             
Company Not an “Investment Company.” The Company is not, and will not
be, either after receipt of payment for the Units or after the application of the proceeds therefrom as described under “Use
of Proceeds” in the Registration Statement, the Time of Sale Prospectus or the Prospectus, required to register as an “investment
company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

 

(ee)             
No Price Stabilization or Manipulation; Compliance with Regulation M. Neither the Company
nor any of its subsidiaries has taken, directly or indirectly, any action designed to or that might cause or result in stabilization
or manipulation of the price of the Common Stock or of any “reference security” (as defined in Rule 100 of Regulation M
under the Exchange Act (“Regulation M”)) with respect to the Common Stock, whether to facilitate the sale
or resale of the Units or otherwise, and has taken no action which would directly or indirectly violate Regulation M.

 

(ff)              
Related-Party Transactions. There are no business relationships or related-party transactions involving
the Company nor any of its subsidiaries or any other person required to be described in the Registration Statement, the Time of
Sale Prospectus or the Prospectus that have not been described as required.

 

(gg)            
FINRA Matters. All of the information provided to the Placement Agents or to counsel for the Placement
Agents by the Company, its counsel, its officers and directors and the holders of any securities (debt or equity) or options to
acquire any securities of the Company in connection with the offering of the Units is true, complete, correct and compliant with
FINRA’s rules and any letters, filings or other supplemental information provided to FINRA pursuant to FINRA Rules or NASD
Conduct Rules is true, complete and correct.

 

(hh)           
Parties to Lock-Up Agreements. The Company has furnished to the Placement Agents a letter agreement
in the form attached hereto as Exhibit D (the “Lock-up Agreement”) from each of the persons listed
on Exhibit E. Such Exhibit E lists under an appropriate caption the directors and executive officers of
the Company. If any additional persons shall become directors or executive officers of the Company prior to the end of the Company
Lock-up Period (as defined below), the Company shall cause each such person, prior to or contemporaneously with their appointment
or election as a director or executive officer of the Company, to execute and deliver to Jefferies a Lock-up Agreement.

 

(ii)               
Statistical and Market-Related Data. All statistical, demographic and market-related data included
in the Registration Statement, the Time of Sale Prospectus or the Prospectus are based on or derived from sources that the Company
believes, after reasonable inquiry, to be reliable and accurate. To the extent required, the Company has obtained the written consent
to the use of such data from such sources.

 

(jj)              
No Unlawful Contributions or Other Payments. Neither the Company nor any of its subsidiaries nor,
to the best of the Company’s knowledge, any employee or agent of the Company or any subsidiary, has made any contribution
or other payment to any official of, or candidate for, any federal, state or foreign office in violation of any law or of the character
required to be disclosed in the Registration Statement, the Time of Sale Prospectus or the Prospectus.

 

(kk)           
Anti-Corruption and Anti-Bribery Laws. Neither the Company nor any of its subsidiaries nor any
director, officer, or employee of the Company or any of its subsidiaries, nor to the knowledge of the Company, any agent, affiliate
or other person acting on behalf of the Company or any of its subsidiaries has, in the course of its actions for, or on behalf
of, the Company or any of its subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity; (ii) made or taken any act in furtherance of an offer, promise,
or authorization of any direct or indirect unlawful payment or benefit to any foreign or domestic government official or employee,
including of any government-owned or controlled entity or public international organization, or any political party, party official,
or candidate for political office; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices
Act of 1977, as amended (the “FCPA”), the UK Bribery Act 2010, or any other applicable anti-bribery or anti-corruption
law; or (iv) made, offered, authorized, requested, or taken an act in furtherance of any unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment or benefit . The Company and its subsidiaries and, to the knowledge of the Company,
the Company’s affiliates have conducted their respective businesses in compliance with the FCPA and have instituted and maintain
policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

    	 	10	 

     

    

 

(ll)               
Money Laundering Laws. The operations of the Company and its subsidiaries are, and have been conducted
at all times, in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder
and any related or similar applicable rules, regulations or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering
Laws is pending or, to the best knowledge of the Company, threatened.

 

(mm)          
Sanctions. Neither the Company nor any of its subsidiaries, directors, officers, or employees,
nor, to the knowledge of the Company, after due inquiry, any agent, affiliate or other person acting on behalf of the Company or
any of its subsidiaries is currently the subject or the target of any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Department of the Treasury (“OFAC”) or the U.S. Department of State, the United Nations
Security Council, the European Union, Her Majesty’s Treasury of the United Kingdom, or other relevant sanctions authority
(collectively, “Sanctions”); nor is the Company or any of its subsidiaries located, organized or resident in
a country or territory that is the subject or the target of Sanctions, including, without limitation, Crimea, Cuba, Iran, North Korea,
and Syria; and the Company will not directly or indirectly use the proceeds of this offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, or any joint venture partner or other person or entity, for the purpose of financing
the activities of or business with any person, or in any country or territory, that at the time of such financing, is the subject
or the target of Sanctions or in any other manner that will result in a violation by any person (including any person participating
in the transaction whether as placement agent, advisor, investor or otherwise) of applicable Sanctions. For the past five years,
the Company and its subsidiaries have not knowingly engaged in and are not now knowingly engaged in any dealings or transactions
with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned
Country.

 

(nn)            
Brokers. Except pursuant to this Agreement, there is no broker, finder or other party that is entitled
to receive from the Company any brokerage or finder’s fee or other fee or commission as a result of any transactions contemplated
by this Agreement.

 

(oo)            
Forward-Looking Statements. Each financial or operational projection or other “forward-looking
statement” (as defined by Section 27A of the Securities Act or Section 21E of the Exchange Act) contained in the
Registration Statement, the Time of Sale Prospectus or the Prospectus (i) was so included by the Company in good faith and
with reasonable basis after due consideration by the Company of the underlying assumptions, estimates and other applicable facts
and circumstances and (ii) is accompanied by meaningful cautionary statements identifying those factors that could cause actual
results to differ materially from those in such forward-looking statement. No such statement was made with the knowledge of an
executive officer or director of the Company that is was false or misleading.

 

(pp)             
No Outstanding Loans or Other Extensions of Credit. The Company does not have any outstanding extension
of credit, in the form of a personal loan, to or for any director or executive officer (or equivalent thereof) of the Company except
for such extensions of credit as are expressly permitted by Section 13(k) of the Exchange Act.

 

(qq)            
Cybersecurity. The Company and its subsidiaries’ information technology assets and equipment,
computers, systems, networks, hardware, software, websites, applications, and databases (collectively, “IT Systems”)
are adequate for, and operate and perform in all material respects as required in connection with the operation of the business
of the Company and its subsidiaries as currently conducted, free and clear of all material bugs, errors, defects, Trojan horses,
time bombs, malware and other corruptants. The Company and its subsidiaries have implemented and maintained commercially reasonable
physical, technical and administrative controls, policies, procedures, and safeguards to maintain and protect their material confidential
information and the integrity, continuous operation, redundancy and security of all IT Systems and data, including “Personal
Data,” used in connection with their businesses. “Personal Data” means (i) a natural person’s
name, street address, telephone number, e-mail address, photograph, social security number or tax identification number, driver’s
license number, passport number, credit card number, bank information, or customer or account number; (ii) any information
which would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended; (iii) “personal
data” as defined by GDPR; (iv) any information which would qualify as “protected health information” under
the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and
Clinical Health Act (collectively, “HIPAA”); and (v) any other piece of information that allows the identification
of such natural person, or his or her family, or permits the collection or analysis of any data related to an identified person’s
health or sexual orientation. To the Company’s knowledge, there have been no breaches, violations, outages or unauthorized
uses of or accesses to same, except for those that have been remedied without material cost or liability or the duty to notify
any other person, nor any material incidents under internal review or investigations relating to the same. The Company and its
subsidiaries are presently in material compliance with all applicable laws or statutes and all judgments, orders, rules and regulations
of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the
privacy and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized
use, access, misappropriation or modification, except for such noncompliance as would not,
individually or in the aggregate have a Material Adverse Effect.

 

    	 	11	 

     

    

 

(rr)             
Compliance with Data Privacy Laws. To the Company’s knowledge, the Company and its subsidiaries
are, and at all prior times were, in material compliance with all applicable state and federal data privacy and security laws and
regulations, including without limitation HIPAA, and the Company and its subsidiaries have taken commercially reasonable actions
to prepare to comply with, and since May 25, 2018, have been and currently are in compliance with, the European Union General
Data Protection Regulation (“GDPR”) (EU 2016/679) (collectively, the “Privacy Laws”).
To ensure compliance with the Privacy Laws, the Company and its subsidiaries have in place, comply with, and take appropriate steps
reasonably designed to ensure compliance in all material respects with their policies and procedures relating to data privacy and
security and the collection, storage, use, disclosure, handling, and analysis of Personal Data (the “Policies”).
The Company and its subsidiaries have at all times made all disclosures to users or customers required by applicable laws and regulatory
rules or requirements, and none of such disclosures made or contained in any Policy have, to the knowledge of the Company, been
inaccurate or in violation of any applicable laws and regulatory rules or requirements in any material respect. The Company further
certifies that neither it nor any subsidiary: (i) has received notice of any actual or potential liability under or relating
to, or actual or potential violation of, any of the Privacy Laws, and has no knowledge of any event or condition that would reasonably
be expected to result in any such notice; (ii) is currently conducting or paying for, in whole or in part, any investigation,
remediation, or other corrective action pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement
that imposes any obligation or liability under any Privacy Law.

 

(ss)              
No Rights to Purchase Preferred Stock. The issuance and sale of the Units as contemplated
hereby will not cause any holder of any shares of capital stock, securities convertible into or exchangeable or exercisable for
capital stock or options, warrants or other rights to purchase capital stock or any other securities of the Company to have any
right to acquire any shares of preferred stock of the Company.

 

(tt)              
No Contract Terminations. Neither the Company nor any of its subsidiaries has sent or received
any communication regarding termination of, or intent not to renew, any of the contracts or agreements referred to or described
in the Time of Sale Prospectus, the Prospectus or any free writing prospectus, or referred to or described in, or filed as an exhibit
to, the Registration Statement, or any document incorporated by reference therein, and no such termination or non-renewal has been
threatened by the Company or, to the Company’s knowledge, any other party to any such contract or agreement, which threat
of termination or non-renewal has not been rescinded as of the date hereof.

 

(uu)           
FINRA Exemption. The Company was subject to the requirements of Section 12 or 15(d)
of the Exchange Act and filed all the material required to be filed pursuant to Section 13, Section 14 or Section 15(d)
for a period of at least thirty-six calendar months immediately preceding the filing of the Registration Statement. The Company
filed in a timely manner all reports required to be filed pursuant to Section 13, Section 14 or Section 15(d) of
the Exchange Act during the twelve calendar months and any portion of a month immediately preceding the filing of the Registration
Statement.

 

    	 	12	 

     

    

 

(vv)            
SEC Reports.The Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to
file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together
with the Prospectus and the Prospectus Supplement, being collectively referred to herein as the “SEC Reports”)
on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of
the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject
to Rule 144(i) under the Securities Act.

 

(ww)         
Company Activities. The Company and/or its subsidiaries, and to the Company’s knowledge,
their respective directors and officers, have not and do not have any current intention to, nor have the Company or any of its
subsidiaries directed any of their directors, officers, employees, agents or any other person to, cultivate, produce, process,
import, or distribute any “Marihuana” (as such term is defined in the CSA) in the United States of America, its territories
and possessions, any state of the United States and the District of Columbia or any other federal, provincial, state, municipal,
local or foreign jurisdiction where such activity is illegal under the laws of such jurisdiction. Neither the Company nor any of
its subsidiaries has exported any “Marihuana” (as such term is defined in the CSA) to any jurisdiction. The Company
and its subsidiaries have instituted and maintained and will continue to maintain policies and procedures reasonably designed to
ensure that the Company and its subsidiaries do not carry on any activities or distribute any products in a manner that violates
applicable federal, state or provincial laws (excluding Federal Cannabis Laws). The Company and its subsidiaries have instituted
and maintained, and will continue to maintain, policies and procedures reasonably designed to ensure that the Company and its subsidiaries,
and any entity in which the Company invests directly or indirectly, are in compliance with the foregoing. Neither the Company,
nor any of its subsidiaries, affiliates or control persons, has entered into any agreement or will enter into any agreement for
the manufacture, distribution and dispensing of “Marihuana” (as such term is defined in the CSA).

 

Any certificate signed
by any officer of the Company or any of its subsidiaries and delivered to any Placement Agent or to counsel for the Placement Agents
in connection with the Offering, or the purchase and sale, of the Units shall be deemed a representation and warranty by the Company
to each Placement Agent as to the matters covered thereby.

 

The Company has a reasonable
basis for making each of the representations set forth in this Section 1. The Company acknowledges that the Placement Agents
and, for purposes of the opinions to be delivered pursuant to Section 6 hereof, counsel to the Company and counsel to the
Placement Agents, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.

 

Section 2.                   
Agreement to Act as Placement Agents.

 

(a)               
Placement Agents. On the basis of the representations, warranties and agreements of the Company
herein contained, and subject to all the terms and conditions of this Agreement, between the Company and you, the Placement Agents
shall be the Company’s placement agents, acting on a reasonable best efforts basis, in connection with the issuance and sale
by the Company of the Units to the Investors in a proposed offering pursuant to the Registration Statement, with the terms of the
offering to be subject to market conditions and negotiations among the Company, the Placement Agents and the prospective Investors
(such offering shall be referred to herein as the “Offering”). As compensation for services rendered, and provided
that any of the Units are sold to Investors in the Offering, on the Closing Date (as defined in Section 2(c) hereof) of the
Offering, the Company shall pay to the Placement Agents an amount in the aggregate equal to 7% of the gross proceeds received by
the Company from the sale of the Units on the Closing Date (the “Placement Fee”). The sale of the Units shall
be made pursuant to the Registration Statement. The Company will enter into a securities purchase agreement with each Investor
in the form included as Exhibit A hereto (the “Securities Purchase Agreement” and, collectively,
the “Securities Purchase Agreements”) on the terms set forth in the Time of Sale Prospectus and the Prospectus
and as described on Schedule B-2 hereto. The Company shall have the sole right to accept offers to purchase the Units
and may reject any such offer in whole or in part.

 

    	 	13	 

     

    

 

(b)               
Reasonable Best Efforts Basis. This Agreement shall not give rise to any commitment by the Placement
Agents to purchase any of the Units, and the Placement Agents shall have no authority to bind the Company to accept offers to purchase
the Units. The Placement Agents shall act on a reasonable best efforts basis and do not guarantee that they will be able to raise
new capital in the Offering. The Placement Agents may retain other brokers or dealers to act as sub-agents on their behalf in connection
with the Offering, the fees of which shall be paid out of the Placement Fee. Prior to the earlier of (i) the date on which
this Agreement is terminated and (ii) the Closing Date, the Company shall not, without the prior written consent of the Placement
Agents, solicit or accept offers to purchase shares of Common Stock (other than pursuant to the exercise of options or warrants
to purchase shares of Common Stock that are outstanding at the date hereof) otherwise than through the Placement Agents in accordance
herewith.

 

(c)                
The Closing. Payment of the purchase price for, and delivery of, the Units shall be made at a closing
(the “Closing”) at the offices of Goodwin Procter LLP, counsel for the Placement Agents, located at 601 Marshall
Street, Redwood City, California 94063, at 10:00 a.m., New York City time, on or before September 30,
2019 or at such time on such other date as may be agreed upon in writing by the Placement Agents and the Company (such date of
payment and delivery being herein called the “Closing Date”). All such actions taken at the Closing shall be
deemed to have occurred simultaneously. No Units which the Company has agreed to sell pursuant to this Agreement and the Securities
Purchase Agreements shall be deemed to have been purchased and paid for, or sold by the Company, until such Units shall have been
delivered to the Investor thereof against payment therefor by such Investor. If the Company shall default in its obligations to
deliver the Units to an Investor whose offer it has accepted, the Company shall indemnify and hold the Placement Agents harmless
against any loss, claim or damage incurred by the Placement Agents arising from or as a result of such default by the Company.

 

(d)               
Payment for the Units. On the Closing Date, (i) the Company shall deliver, or cause to be
delivered, the Units to the Investors, and the Investors shall deliver, or cause to be delivered, the purchase price for their
respective Units to the Company pursuant to the terms of the Securities Purchase Agreements and (ii) the Company will wire
the amounts owed to the Placement Agents as provided in this Agreement.

 

(e)                
Delivery of the Units. The Units shall be registered in such names and in such denominations as
the Placement Agents shall request by written notice to the Company.

 

Section 3.                    Additional
Covenants of the Company. The Company further covenants and agrees with each Placement Agents as follows:

 

(a)               
Delivery of Registration Statement, Time of Sale Prospectus and Prospectus. The Company
shall furnish to you in New York City, without charge, prior to 10:00 a.m. New York City time on the business day
next succeeding the date of this Agreement and during the period when a prospectus relating to the Units is required by the Securities
Act to be delivered (whether physically or through compliance with Rule 172 under the Securities Act or any similar rule)
in connection with sales of the Units, as many copies of the Time of Sale Prospectus, the Prospectus and any supplements and amendments
thereto or to the Registration Statement as you may reasonably request.

 

(b)               
Placement Agents’ Review of Proposed Amendments and Supplements. During the period
when a prospectus relating to the Units is required by the Securities Act to be delivered (whether physically or through compliance
with Rule 172 under the Securities Act or any similar rule), the Company (i) will furnish to the Placement Agents for
review, a reasonable period of time prior to the proposed time of filing of any proposed amendment or supplement to the Registration
Statement, a copy of each such amendment or supplement and (ii) will not amend or supplement the Registration Statement (including
any amendment or supplement through incorporation of any report filed under the Exchange Act) without the Placement Agents’
prior written consent. Prior to amending or supplementing the Time of Sale Prospectus or the Prospectus (including any amendment
or supplement through incorporation of any report filed under the Exchange Act), the Company shall furnish to the Placement Agents
for review, a reasonable amount of time prior to the time of filing or use of the proposed amendment or supplement, a copy of each
such proposed amendment or supplement. The Company shall not file or use any such proposed amendment or supplement without the
Placement Agents’ prior written consent. The Company shall file with the Commission within the applicable period specified
in Rule 424(b) under the Securities Act any prospectus required to be filed pursuant to such Rule.

 

    	 	14	 

     

    

 

(c)                
Free Writing Prospectuses. The Company shall furnish to the Placement Agents for review,
a reasonable amount of time prior to the proposed time of filing or use thereof, a copy of each proposed free writing prospectus
or any amendment or supplement thereto prepared by or on behalf of, used by, or referred to by the Company, and the Company shall
not file, use or refer to any proposed free writing prospectus or any amendment or supplement thereto without the Placement Agents’
prior written consent. The Company shall furnish to each Placement Agent, without charge, as many copies of any free writing prospectus
prepared by or on behalf of, used by or referred to by the Company as such Placement Agent may reasonably request. If at any time
when a prospectus is required by the Securities Act to be delivered (whether physically or through compliance with Rule 172
under the Securities Act or any similar rule) in connection with sales of the Units (but in any event if at any time through and
including the Closing Date) there occurred or occurs an event or development as a result of which any free writing prospectus prepared
by or on behalf of, used by, or referred to by the Company conflicted or would conflict with the information contained in the Registration
Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances prevailing at such time, not misleading, the
Company shall promptly amend or supplement such free writing prospectus to eliminate or correct such conflict so that the statements
in such free writing prospectus as so amended or supplemented will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at such time,
not misleading, as the case may be; provided, however, that prior to amending or supplementing any such free writing prospectus,
the Company shall furnish to the Placement Agents for review, a reasonable amount of time prior to the proposed time of filing
or use thereof, a copy of such proposed amended or supplemented free writing prospectus, and the Company shall not file, use or
refer to any such amended or supplemented free writing prospectus without the Placement Agents’ prior written consent.

 

(d)               
Filing of Placement Agent Free Writing Prospectuses. The Company shall not take any action
that would result in a Placement Agent or the Company being required to file with the Commission pursuant to Rule 433(d) under
the Securities Act a free writing prospectus prepared by or on behalf of such Placement Agent that such Placement Agent otherwise
would not have been required to file thereunder.

 

(e)                
Amendments and Supplements to Time of Sale Prospectus. If the Time of Sale Prospectus is
being used to solicit offers to buy the Units at a time when the Prospectus is not yet available to prospective purchasers, and
any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Time of Sale Prospectus
so that the Time of Sale Prospectus does not include an untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances when delivered to a prospective purchaser, not misleading,
or if any event shall occur or condition exist as a result of which the Time of Sale Prospectus conflicts with the information
contained in the Registration Statement, or if, in the opinion of counsel for the Placement Agents, it is necessary to amend or
supplement the Time of Sale Prospectus to comply with applicable law, the Company shall (subject to Section 3(b) and Section 3(c)
hereof) promptly prepare, file with the Commission and furnish, at its own expense, to the Placement Agents and to any dealer upon
request, either amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale Prospectus
as so amended or supplemented will not include an untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances when delivered to a prospective purchaser, not misleading
or so that the Time of Sale Prospectus, as amended or supplemented, will no longer conflict with the information contained in the
Registration Statement, or so that the Time of Sale Prospectus, as amended or supplemented, will comply with applicable law.

 

(f)                 
Certain Notifications and Required Actions. After the date of this Agreement, the Company shall
promptly advise the Placement Agents in writing of: (i) the receipt of any comments of, or requests for additional or supplemental
information from, the Commission; (ii) the time and date of any filing of any post-effective amendment to the Registration
Statement or any amendment or supplement to the Time of Sale Prospectus, any free writing prospectus or the Prospectus; (iii) the
time and date that any post-effective amendment to the Registration Statement becomes effective; and (iv) the issuance by
the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto
or any amendment or supplement to the Time of Sale Prospectus or the Prospectus or of any order preventing or suspending the use
of the Time of Sale Prospectus, any free writing prospectus or the Prospectus, or of any proceedings to remove, suspend or terminate
from listing or quotation the Common Stock from any securities exchange upon which they are listed for trading or included or designated
for quotation, or of the threatening or initiation of any proceedings for any of such purposes. If the Commission shall enter any
such stop order at any time, the Company will use its best efforts to obtain the lifting of such order at the earliest possible
moment. Additionally, the Company agrees that it shall comply with all applicable provisions of Rule 424(b), Rule 433
and Rule 430A under the Securities Act and will use its reasonable efforts to confirm that any filings made by the Company
under Rule 424(b) or Rule 433 were received in a timely manner by the Commission.

 

    	 	15	 

     

    

 

(g)               
Amendments and Supplements to the Prospectus and Other Securities Act Matters. If any event
shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus so that the Prospectus
does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances when the Prospectus is delivered (whether physically or through compliance with Rule 172
under the Securities Act or any similar rule) to a purchaser, not misleading, or if in the opinion of the Placement Agents or counsel
for the Placement Agents it is otherwise necessary to amend or supplement the Prospectus to comply with applicable law, the Company
agrees (subject to Section 3(b) and Section 3(c)) hereof to promptly prepare, file with the Commission and furnish, at
its own expense, to the Placement Agents and to any dealer upon request, amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not include an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered
(whether physically or through compliance with Rule 172 under the Securities Act or any similar rule) to a purchaser, not
misleading or so that the Prospectus, as amended or supplemented, will comply with applicable law. Neither the Placement Agents’
consent to, nor delivery of, any such amendment or supplement shall constitute a waiver of any of the Company’s obligations
under Section 3(b) or Section 3(c).

 

(h)               
Blue Sky Compliance. The Company shall cooperate with the Placement Agents and counsel for the
Placement Agents to qualify or register the Units for sale under (or obtain exemptions from the application of) the state securities
or blue sky laws or Canadian provincial securities laws of those jurisdictions designated by the Placement Agents, shall comply
with such laws and shall continue such qualifications, registrations and exemptions in effect so long as required for the distribution
of the Units. The Company shall not be required to qualify as a foreign corporation or to take any action that would subject it
to general service of process in any such jurisdiction where it is not presently qualified. The Company will advise the Placement
Agents promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Units for offering,
sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the
issuance of any order suspending such qualification, registration or exemption, the Company shall use its best efforts to obtain
the withdrawal thereof at the earliest possible moment.

 

(i)                 
Use of Proceeds. The Company shall apply the net proceeds from the sale of the Units sold by it
in the manner described under the caption “Use of Proceeds” in the Registration Statement, the Time of Sale Prospectus
and the Prospectus.

 

(j)                 
Transfer Agent. The Company shall engage and maintain, at its expense, a registrar and transfer
agent for the Common Stock.

 

(k)               
Earnings Statement. The Company will make generally available to its security holders and to the
Placement Agents as soon as practicable an earnings statement (which need not be audited) covering a period of at least twelve
months beginning with the first fiscal quarter of the Company commencing after the date of this Agreement that will satisfy the
provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder.

 

(l)                 
Continued Compliance with Securities Laws. The Company will comply with the Securities Act and
the Exchange Act so as to permit the completion of the distribution of the Units as contemplated by this Agreement, the Registration
Statement, the Time of Sale Prospectus and the Prospectus. Without limiting the generality of the foregoing, the Company will,
during the period when a prospectus relating to the Units is required by the Securities Act to be delivered (whether physically
or through compliance with Rule 172 under the Securities Act or any similar rule), file on a timely basis with the Commission
and The OTC Market Group all reports and documents required to be filed under the Exchange Act.

 

    	 	16	 

     

    

 

(m)             
Company to Provide Copy of the Prospectus in Form That May be Downloaded from the Internet. If
requested by the Placement Agents, the Company shall cause to be prepared and delivered, at its expense, within one business day
from the effective date of this Agreement, to the Placement Agents, an “electronic Prospectus” to be used by
the Placement Agents in connection with the Offering. As used herein, the term “electronic Prospectus” means
a form of Time of Sale Prospectus, and any amendment or supplement thereto, that meets each of the following conditions: (i) it
shall be encoded in an electronic format, satisfactory to the Placement Agents, that may be transmitted electronically by the Placement
Agents to offerees and purchasers of the Units; (ii) it shall disclose the same information as the paper Time of Sale Prospectus,
except to the extent that graphic and image material cannot be disseminated electronically, in which case such graphic and image
material shall be replaced in the electronic Prospectus with a fair and accurate narrative description or tabular representation
of such material, as appropriate; and (iii) it shall be in or convertible into a paper format or an electronic format, satisfactory
to Jefferies, that will allow investors to store and have continuously ready access to the Time of Sale Prospectus at any future
time, without charge to investors (other than any fee charged for subscription to the Internet as a whole and for on-line time).
The Company hereby confirms that it has included or will include in the Prospectus filed pursuant to EDGAR or otherwise with the
Commission and in the Registration Statement at the time it was declared effective an undertaking that, upon receipt of a request
by an investor or his or her representative, the Company shall transmit or cause to be transmitted promptly, without charge, a
paper copy of the Time of Sale Prospectus.

 

(n)               
Agreement Not to Offer or Sell Additional Common Stock. During the period commencing on and including
the date hereof and continuing through and including the 90th day following the date of the Prospectus (such period, as extended
as described below, being referred to herein as the “Lock-up Period”), the Company will not, without the prior
written consent of the Placement Agents (which consent may be withheld in its sole discretion), directly or indirectly: (i) sell,
offer to sell, contract to sell or lend any shares of Common Stock or Related Securities (as defined below); (ii) effect any
short sale, or establish or increase any “put equivalent position” (as defined in Rule 16a-1(h) under the Exchange
Act) or liquidate or decrease any “call equivalent position” (as defined in Rule 16a-1(b) under the Exchange Act)
of any shares of Common Stock or Related Securities; (iii) pledge, hypothecate or grant any security interest in any shares
of Common Stock or Related Securities; (iv) in any other way transfer or dispose of any shares of Common Stock or Related
Securities; (v) enter into any swap, hedge or similar arrangement or agreement that transfers, in whole or in part, the economic
risk of ownership of any shares of Common Stock or Related Securities, regardless of whether any such transaction is to be settled
in securities, in cash or otherwise; (vi) announce the offering of any shares of Common Stock or Related Securities; (vii) submit,
file or request the Commission to declare effective any registration statement under the Securities Act in respect of any shares
of Common Stock or Related Securities (other than as contemplated by (1) this Agreement with respect to the shares of Common Stock,
(2) the registration rights agreement, dated August 21, 2019, by and among the Company and the investors listed therein with respect
to 500,000 shares of Common Stock issuable upon exercise of warrants referenced therein and (3) clause (D) of the proviso below
with respect to shares of Common Stock issuable upon exercise of warrants); (viii) effect a reverse stock split, recapitalization,
share consolidation, reclassification or similar transaction affecting the outstanding shares of Common Stock; or (ix) publicly
announce the intention to do any of the foregoing; provided, however, that the Company may (A) effect the transactions
contemplated hereby; (B) issue shares of Common Stock or options to purchase shares of Common Stock, or issue shares of Common
Stock upon exercise of options, pursuant to any stock option, stock bonus or other stock plan or arrangement described in the Registration
Statement, the Time of Sale Prospectus and the Prospectus or board advisory agreement, but only if the holders of such shares of
Common Stock or options agree in writing with the Placement Agents not to sell, offer, dispose of or otherwise transfer any such
shares of Common Stock or options during such Lock-up Period without the prior written consent of the Placement Agents (which consent
may be withheld in their sole discretion); (C) issue shares of Common Stock upon exercise of any warrants or the conversion of
any convertible security outstanding on the date hereof and referred to in the Registration Statement, the Time of Sale Prospectus
and the Prospectus, but only if the holders of such Shares agree in writing with the Placement Agents not to sell, offer, dispose
of or otherwise transfer any such shares of Common Stock or options during such Lock-up Period without the prior written consent
of the Placement Agents (which consent may be withheld in their sole discretion); (D) issue warrants exercisable for 1 million
shares of Common Stock in connection with the Company’s contemplated equipment financing with Monroe Capital Management Advisors,
LLC or its affiliates; (E) file any registration statement on Form S-8 or a successor form thereto; (F) issue shares of Common
Stock in connection with the earn-out payment pursuant to the Membership Interest Purchase Agreement, dated July 11, 2018, between
the Company and the members of Zack Darling Creative Associates, LLC; (G) issue 200,000 shares of Common Stock in connection with
the holdback payment pursuant to the Agreement and Plan of Merger, dated April 10, 2018, by and among the Company, KCH Energy,
LLC, Summit Innovations, LLC and Mark Driver, as amended; (H) enter into an agreement providing for the issuance by the Company
of shares of Common Stock, or any Related Security, in connection with the acquisition by the Company or any subsidiary of the
securities, business, technology, property or other assets of another person or entity, or pursuant to an employee benefit plan
assumed by the Company in connection with such acquisition and the issuance of any such securities pursuant to any such agreement;
or (I) enter into any agreement providing for the issuance of shares of Common Stock or Related Securities in connection with joint
ventures, commercial relationships or other strategic transactions, and the issuance of any securities pursuant to any such agreement;
provided, however, that the number of shares of Common Stock that the Company may sell or issue or agree to sell or issue pursuant
to clauses (H) and (I) together in the aggregate shall not exceed 5% of the total number of shares of Common Stock issued and outstanding
immediately following the completion of the transactions contemplated by this Agreement. For purposes of the foregoing, “Related
Securities” shall mean any options or warrants or other rights to acquire shares of Common Stock or any securities exchangeable
or exercisable for or convertible into shares of Common Stock, or to acquire other securities or rights ultimately exchangeable
or exercisable for, or convertible into, shares of Common Stock.

 

    	 	17	 

     

    

 

(o)               
Future Reports to the Placement Agents. During the period of five years hereafter, the Company
will furnish to the Placement Agents, c/o Jefferies, at 520 Madison Avenue, New York, New York 10022, Attention:
Global Head of Syndicate and c/o AGP, 590 Madison Avenue, 36th Floor, New York, New York 10022,
Attention: Thomas J. Higgins, Managing Director: (i) as soon as practicable after the end of each fiscal year, copies of the
Annual Report of the Company containing the balance sheet of the Company as of the close of such fiscal year and statements of
income, stockholders’ equity and cash flows for the year then ended and the opinion thereon of the Company’s independent
public or certified public accountants; (ii) as soon as practicable after the filing thereof, copies of each proxy statement,
Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other report filed by the
Company with the Commission or any securities exchange; and (iii) as soon as available, copies of any report or communication
of the Company furnished or made available generally to holders of its capital stock; provided, however, that the requirements
of this Section 3(o) shall be satisfied to the extent that such reports, statement, communications, financial statements or
other documents are available on EDGAR.

 

(p)               
Investment Limitation. The Company shall not invest or otherwise use the proceeds received by the
Company from its sale of the Units in such a manner as would require the Company to register as an investment company under the
Investment Company Act.

 

(q)               
No Stabilization or Manipulation; Compliance with Regulation M. The Company will not take, and
will ensure that no affiliate of the Company will take, directly or indirectly, any action designed to or that might cause or result
in stabilization or manipulation of the price of the Common Stock or any reference security with respect to the Common Stock, whether
to facilitate the sale or resale of the Units or otherwise, and the Company will, and shall cause each of its affiliates to, comply
with all applicable provisions of Regulation M.

 

(r)                
Enforce Lock-Up Agreements. During the Lock-up Period, the Company will enforce all agreements
between the Company and any of its security holders that restrict or prohibit, expressly or in operation, the offer, sale or transfer
of shares of Common Stock or Related Securities or any of the other actions restricted or prohibited under the terms of the form
of Lock-up Agreement. In addition, the Company will direct the transfer agent to place stop transfer restrictions upon any such
securities of the Company that are bound by such “lock-up” agreements for the duration of the periods contemplated
in such agreements, including, without limitation, “lock-up” agreements entered into by the Company’s officers,
directors and stockholders pursuant to Section 6(k) hereof.

 

    	 	18	 

     

    

 

(s)                
Warrant Shares. The Company will reserve and keep available for the exercise of the Warrants such
number of authorized but unissued shares of Common Stock as are sufficient to permit exercise in full of the Warrants.

 

(t)                 
Emerging Growth Company Status. The Company will promptly notify the Placement Agents if
the Company ceases to be an Emerging Growth Company at any time prior to the later of (i) the time when a prospectus relating
to the Units is not required by the Securities Act to be delivered (whether physically or through compliance with Rule 172
under the Securities Act or any similar rule) and (ii) the expiration of the Lock-Up Period (as defined herein).

 

Section 4.                    
Payment of Expenses. The Company agrees to pay all costs, fees and expenses incurred in connection with the performance
of its obligations hereunder and in connection with the transactions contemplated hereby, including without limitation (i) all
expenses incident to the issuance and delivery of the Units (including all printing and engraving costs), (ii) all fees and
expenses of the Escrow Agent and the registrar and transfer agent of the Common Stock, (iii) all necessary issue, transfer
and other stamp taxes in connection with the issuance and sale of the Units to the Placement Agents, (vi) all filing fees, attorneys’
fees and expenses incurred by the Company or the Placement Agents in connection with qualifying or registering (or obtaining exemptions
from the qualification or registration of) all or any part of the Units for offer and sale under the state securities or blue sky
laws and, if requested by the Placement Agents, preparing and printing a “Blue Sky Survey” or memorandum and any supplements
thereto, advising the Placement Agents of such qualifications, registrations, determinations and exemptions, (v) all fees
and expenses of the Company’s counsel, independent public or certified public accountants and other advisors, (vi) the fees
and expenses of the Placement Agents’ counsel in an amount not to exceed $100,000, (vii) all costs and expenses incurred
in connection with the preparation, printing, filing, shipping and distribution of the Registration Statement (including financial
statements, exhibits, schedules, consents and certificates of experts), the Time of Sale Prospectus, the Prospectus, each free
writing prospectus prepared by or on behalf of, used by, or referred to by the Company, and all amendments and supplements thereto,
and this Agreement, (viii) the costs and expenses of the Company relating to investor presentations on any “road show”,
including, without limitation, expenses associated with the preparation or dissemination of any electronic road show, expenses
associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with
the road show presentations with the prior approval of the Company, reasonable travel and lodging expenses of the Placement Agents,
employees and officers of the Company and any such consultants, and the cost of any aircraft chartered in connection with the road
show, and (ix) all other fees, costs and expenses of the nature referred to in Item 14 of Part II of the Registration
Statement. Except as provided in this Section 4 or in Section 7, Section 9 or Section 10 hereof, the Placement
Agents shall pay their own expenses, including the fees and disbursements of their counsel.

 

Section 5.                    
Covenant of the Placement Agents. Each Placement Agent severally and not jointly covenants with the Company not
to take any action that would result in the Company being required to file with the Commission pursuant to Rule 433(d) under
the Securities Act a free writing prospectus prepared by or on behalf of such Placement Agent that otherwise would not, but for
such actions, be required to be filed by the Company under Rule 433(d).

 

Section 6.                    
Conditions of the Obligations of the Placement Agents. The respective obligations of the several Placement Agents
hereunder shall be subject to the accuracy of the representations and warranties on the part of the Company set forth in Section 1
hereof as of the date hereof and as of the Closing Date as though then made, to the timely performance by the Company of its covenants
and other obligations hereunder, and to each of the following additional conditions:

 

(a)               
Comfort Letter. No less than one day prior to the Closing Date, the Placement Agents shall have
received from RBSM, the independent registered public accountant for the Company, a letter dated the date hereof addressed to the
Placement Agents, in form and substance satisfactory to the Placement Agents, containing statements and information of the type
ordinarily included in accountant’s “comfort letters” to placement agents, delivered according to Statement of
Auditing Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited financial statements and
certain financial information contained in the Registration Statement, the Time of Sale Prospectus, and each free writing prospectus,
if any.

 

    	 	19	 

     

    

 

(b)               
Compliance with Registration Requirements; No Stop Order.

 

(i)
The Company shall have filed the Prospectus with the Commission (including the information previously omitted from the Registration
Statement pursuant to Rule 430B under the Securities Act) in the manner and within the time period required by Rule 424(b)
under the Securities Act; or the Company shall have filed a post-effective amendment to the Registration Statement containing the
information previously omitted from the Registration Statement pursuant to Rule 430B, and such post-effective amendment shall
have become effective.

 

(ii)
No stop order suspending the effectiveness of the Registration Statement or any post-effective amendment to the Registration
Statement shall be in effect, and no proceedings for such purpose shall have been instituted or threatened by the Commission.

 

(c)                
No Material Adverse Change or Ratings Agency Change. For the period from and after the date of
this Agreement and through and including the Closing Date, in the judgment of the Placement Agents there shall not have occurred
any Material Adverse Change.

 

(d)               
Opinion of Counsel for the Company. On the Closing Date, the Placement Agents shall have received
the opinion of Reed Smith LLP, counsel for the Company, dated as of such date, in the form attached hereto as Exhibit C-1
and to such further effect as the Placement Agents shall reasonably request.

 

(e)                
Opinion of Nevada Counsel for the Company. On the Closing Date, the Placement Agents shall
have received the opinion of Holley, Driggs, Walch, Fine, Puzey, Stein & Thompson, Ltd., counsel for the Company with respect
to Nevada corporate matters, dated as of such date, in the form attached hereto as Exhibit C-2 and to such further
effect as the Placement Agents shall reasonably request.

 

(f)                 
Opinion of General Counsel for the Company. On the Closing Date, the Placement Agents shall have
received the opinion of General Counsel for the Company, dated as of such date, in the form attached hereto as Exhibit C-3
and to such further effect as the Placement Agents shall reasonably request.

 

(g)               
Opinion of Counsel for the Placement Agents. On the Closing Date, the Placement Agents shall have
received the opinion of Goodwin Procter LLP, counsel for the Placement Agents, in form and substance satisfactory to the Placement
Agents, dated as of such date.

 

(h)               
Officers’ Certificate. On the Closing Date, the Placement Agents shall have received a certificate
executed by the Chief Executive Officer or President of the Company and the Chief Financial Officer of the Company, dated as of
such date, to the effect set forth in Section 6(b)(ii) and further to the effect that:

 

(i)
for the period from and including the date of this Agreement through and including such date, there has not occurred any
Material Adverse Change;

 

(ii)
the representations, warranties and covenants of the Company set forth in Section 1 of this Agreement are true and
correct with the same force and effect as though expressly made on and as of such date; and

 

(iii)
the Company has complied with all the agreements hereunder and satisfied all the conditions on its part to be performed
or satisfied hereunder at or prior to such date.

 

(i)                 
Bring-down Comfort Letter. On the Closing Date, the Placement Agents shall have received from RBSM,
the independent registered public accountant for the Company, a letter dated such date, in form and substance satisfactory to the
Placement Agents, which letter shall: (i) reaffirm the statements made in the letter furnished by them pursuant to Section 6(a),
except that the specified date referred to therein for the carrying out of procedures shall be no more than three business days
prior to the Closing Date; and (ii) cover certain financial information contained in the Prospectus.

 

    	 	20	 

     

    

 

(j)                 
Lock-Up Agreements. On or prior to the date hereof, the Company shall have furnished to
the Placement Agents an agreement in the form of Exhibit D hereto from each of the persons listed on Exhibit E
hereto, and each such agreement shall be in full force and effect on the Closing Date.

 

(k)               
Rule 462(b) Registration Statement. In the event that a Rule 462(b) Registration
Statement is filed in connection with the offering contemplated by this Agreement, such Rule 462(b) Registration Statement
shall have been filed with the Commission on the date of this Agreement and shall have become effective automatically upon such
filing.

 

(l)                 
Additional Documents. On or before the Closing Date, the Placement Agents and counsel for
the Placement Agents shall have received such information, documents and opinions as they may reasonably request for the purposes
of enabling them to pass upon the issuance and sale of the Units as contemplated herein, or in order to evidence the accuracy of
any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained; and all
proceedings taken by the Company in connection with the issuance and sale of the Units as contemplated herein and in connection
with the other transactions contemplated by this Agreement shall be satisfactory in form and substance to the Placement Agents
and counsel for the Placement Agents.

 

If any condition specified
in this Section 6 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Placement
Agents by notice from the Placement Agents to the Company at any time on or prior to the Closing Date, which termination shall
be without liability on the part of any party to any other party, except that Section 4, Section 7, Section 9 and
Section 10 shall at all times be effective and shall survive such termination.

 

Section 7.                    
Reimbursement of Placement Agents’ Expenses. If this Agreement is terminated by the Placement Agents pursuant
to Section 6 or Section 11, or if the sale to the Investors of the Units on the Closing Date is not consummated because
of any refusal, inability or failure on the part of the Company to perform any agreement herein or in a Securities Purchase Agreement
or to comply with any provision hereof or thereof, the Company agrees to reimburse the Placement Agents (or such Placement Agents
as have terminated this Agreement with respect to themselves), severally, upon demand for all out-of-pocket expenses that shall
have been reasonably incurred by the Placement Agents in connection with the proposed purchase and the offering and sale of the
Units, including, but not limited to, fees and disbursements of counsel, printing expenses, travel expenses, postage, facsimile
and telephone charges.

 

Section 8.                    
Effectiveness of this Agreement. This Agreement shall become effective upon the execution and delivery hereof
by the parties hereto.

 

Section 9.                    
Indemnification.

 

(a)               
Indemnification of the Placement Agents. The Company agrees to indemnify and hold harmless each
Placement Agent, its affiliates, directors, officers, employees and agents, and each person, if any, who controls any Placement
Agent within the meaning of the Securities Act or the Exchange Act against any loss, claim, damage, liability or expense, as incurred,
to which such Placement Agent or such affiliate, director, officer, employee, agent or controlling person may become subject, under
the Securities Act, the Exchange Act, other federal or state statutory law or regulation, or the laws or regulations of foreign
jurisdictions where Units have been offered or sold or at common law or otherwise (including in settlement of any litigation, if
such settlement is effected with the written consent of the Company), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or any amendment thereto, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; or (ii) any
untrue statement or alleged untrue statement of a material fact included in the Time of Sale Prospectus, any free writing prospectus
that the Company has used, referred to or filed, or is required to file, pursuant to Rule 433(d) of the Securities Act, any
material or information provided to investors by, or with the approval of, the Company in connection with the marketing of the
offering of the Units, including any roadshow or investor presentations made to investors by the Company (whether in person or
electronically) (“Marketing Material”) or the Prospectus (or any amendment or supplement to the foregoing), or the
omission or alleged omission to state therein a material fact necessary in order to make the statements, in the light of the circumstances
under which they were made, not misleading; or (iii) any act or failure to act or any alleged act or failure to act by any
Placement Agent in connection with, or relating in any manner to, the Units or the offering contemplated hereby, and which is included
as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon any matter covered by clause (i)
or (ii) above; and to reimburse each Placement Agent and each such affiliate, director, officer, employee, agent and controlling
person for any and all expenses (including the fees and disbursements of counsel) as such expenses are incurred by such Placement
Agent or such affiliate, director, officer, employee, agent or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent,
arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with information relating to any Placement Agent furnished to the Company by the Placement Agents in writing
expressly for use in the Registration Statement, the Time of Sale Prospectus, any such free writing prospectus, any Marketing Material
or the Prospectus (or any amendment or supplement thereto), it being understood and agreed that the only such information consists
of the information described in Section 9(b) below. The indemnity agreement set forth in this Section 9(a) shall be in
addition to any liabilities that the Company may otherwise have.

 

    	 	21	 

     

    

 

(b)               
Indemnification of the Company, its Directors and Officers. Each Placement Agent agrees, severally
and not jointly, to indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act, against
any loss, claim, damage, liability or expense, as incurred, to which the Company, or any such director, officer or controlling
person may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent
of such Placement Agent), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, or any amendment thereto, or any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading or (ii) any untrue statement or alleged untrue
statement of a material fact included in the Time of Sale Prospectus, any free writing prospectus that the Company has used, referred
to or filed, or is required to file, pursuant to Rule 433 of the Securities Act or the Prospectus (or any such amendment or
supplement) or the omission or alleged omission to state therein a material fact necessary in order to make the statements, in
the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement,
the Time of Sale Prospectus, such free writing prospectus or the Prospectus (or any such amendment or supplement), in reliance
upon and in conformity with information relating to such Placement Agent furnished to the Company by the Placement Agents in writing
expressly for use therein; and to reimburse the Company, or any such director, officer or controlling person for any and all expenses
(including the fees and disbursements of counsel) as such expenses are incurred by the Company, or any such director, officer or
controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action. The Company hereby acknowledges that there is no information that the Placement Agents have furnished
to the Company expressly for use in the Registration Statement, the Time of Sale Prospectus, any free writing prospectus that the
Company has filed, or is required to file, pursuant to Rule 433(d) of the Securities Act or the Prospectus (or any amendment
or supplement to the foregoing). The indemnity agreement set forth in this Section 9(b) shall be in addition to any liabilities
that each Placement Agent may otherwise have.

 

(c)                
Notifications and Other Indemnification Procedures. Promptly after receipt by an indemnified party
under this Section 9 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof
is to be made against an indemnifying party under this Section 9, notify the indemnifying party in writing of the commencement
thereof, but the omission so to notify the indemnifying party will not relieve the indemnifying party from any liability which
it may have to any indemnified party to the extent the indemnifying party is not materially prejudiced as a proximate result of
such failure and shall not in any event relieve the indemnifying party from any liability that it may have otherwise than on account
of this indemnity agreement. In case any such action is brought against any indemnified party and such indemnified party seeks
or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the
extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that a
conflict may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such
action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional
to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel
to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying party’s election
so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable
to such indemnified party under this Section 9 for any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance
with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the
fees and expenses of more than one separate counsel (together with local counsel), representing the indemnified parties who are
parties to such action), which counsel (together with any local counsel) for the indemnified parties shall be selected by the Placement
Agents (in the case of counsel for the indemnified parties referred to in Section 9(a) above) or by the Company (in the case
of counsel for the indemnified parties referred to in Section 9(b) above)) or (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice
of commencement of the action or (iii) the indemnifying party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party, in each of which cases the fees and expenses of counsel shall be at
the expense of the indemnifying party and shall be paid as they are incurred.

 

    	 	22	 

     

    

 

(d)               
Settlements. The indemnifying party under this Section 9 shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or expense
by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by Section 9(c)
hereof, the indemnifying party shall be liable for any settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement.
No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement,
compromise or consent includes an unconditional release of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding and does not include an admission of fault or culpability or a failure to act by or on
behalf of such indemnified party.

 

Section 10.                
Contribution. If the indemnification provided for in Section 9 is for any reason held to be unavailable
to or otherwise insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then each indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified
party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Placement Agents, on the other
hand, from the offering of the Units pursuant to this Agreement or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of the Company, on the one hand, and the Placement Agents, on the other hand,
in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Placement
Agents, on the other hand, in connection with the offering of the Units pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total proceeds from the offering of the Units pursuant to this Agreement (before deducting expenses)
received by the Company, and the Placement Fee received by the Placement Agents, in each case as set forth on the front cover page
of the Prospectus, bear to the aggregate public offering price of the Units as set forth on such cover. The relative fault of the
Company, on the one hand, and the Placement Agents, on the other hand, shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company, on the one hand, or the Placement Agents, on the other hand, and the parties’
relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

    	 	23	 

     

    

 

The amount paid or
payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 9(c), any legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or claim. The provisions set forth in Section 9(c) with respect to
notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 10; provided,
however, that no additional notice shall be required with respect to any action for which notice has been given under Section 9(c)
for purposes of indemnification.

 

The Company and the
Placement Agents agree that it would not be just and equitable if contribution pursuant to this Section 10 were determined
by pro rata allocation (even if the Placement Agents were treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in this Section 10.

 

Notwithstanding the
provisions of this Section 10, no Placement Agent shall be required to contribute any amount in excess of the Placement Fee
received by such Placement Agent. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
The Placement Agents’ obligations to contribute pursuant to this Section 10 are several, and not joint, in proportion
to their respective placement commitments as set forth opposite their respective names on Schedule A. For purposes
of this Section 10, each affiliate, director, officer, employee and agent of an Placement Agent and each person, if any, who
controls an Placement Agent within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution
as such Placement Agent, and each director of the Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of the Securities Act and the Exchange Act shall have the same
rights to contribution as the Company.

 

Section 11.                
Termination of this Agreement. Prior to the purchase of the Units by the Investors on the Closing Date,
this Agreement may be terminated by the Placement Agents by notice given to the Company if at any time: (i) trading or quotation
in any securities of or guaranteed by the Company shall have been suspended or limited by the Commission or by The OTC Market Group,
or trading in securities generally on either the Nasdaq or the NYSE shall have been suspended or limited, or minimum or maximum
prices shall have been generally established on any of such stock exchanges; (ii) a general banking moratorium shall have
been declared by any of federal, New York or California authorities; (iii) there shall have occurred any outbreak or
escalation of national or international hostilities or any crisis or calamity, or any change in the United States or international
financial markets, or any substantial change or development involving a prospective substantial change in United States’
or international political, financial or economic conditions, as in the judgment of the Placement Agents is material and adverse
and makes it impracticable to market the Units in the manner and on the terms described in the Time of Sale Prospectus or the Prospectus
or to enforce contracts for the sale of securities; (iv) in the judgment of the Placement Agents there shall have occurred
any Material Adverse Change; or (v) the Company shall have sustained a loss by strike, fire, flood, earthquake, accident or
other calamity of such character as in the judgment of the Placement Agents may interfere materially with the conduct of the business
and operations of the Company regardless of whether or not such loss shall have been insured. Any termination pursuant to this
Section 11 shall be without liability on the part of (a) the Company to any Placement Agent, except that the Company
shall be obligated to reimburse the expenses of the Placement Agents and the Placement Agents pursuant to Section 4 or Section 7
hereof or (b) any Placement Agent to the Company; provided, however, that the provisions of Section 9 and Section 10
shall at all times be effective and shall survive such termination.

 

Section 12.                
No Advisory or Fiduciary Relationship. The Company acknowledges and agrees that (a) the purchase and sale
of the Units pursuant to the Securities Purchase Agreements with the Investors, including the determination of offering price of
the Units and the determination of the Placement Fee pursuant to this Agreement, are arm’s-length commercial transactions
between the Company, on the one hand, and the Investors or the several Placement Agents, as the case may be, on the other hand,
(b) in connection with the offering contemplated hereby and the process leading to such transaction, each Placement Agent
is and has been acting solely as a principal and is not the agent or fiduciary of the Company, or its stockholders, or its creditors,
employees or any other party, (c) no Placement Agent has assumed or will assume an advisory or fiduciary responsibility in
favor of the Company with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such
Placement Agent has advised or is currently advising the Company on other matters) and no Placement Agent has any obligation to
the Company with respect to the offering contemplated hereby except the obligations expressly set forth in this Agreement, (d) the
Placement Agents and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ
from those of the Company, and (e) the Placement Agents have not provided any legal, accounting, regulatory or tax advice
with respect to the offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors
to the extent it deemed appropriate.

 

    	 	24	 

     

    

 

Section 13.                
Representations and Indemnities to Survive Delivery. The respective indemnities, agreements, representations,
warranties and other statements of the Company, of its officers and of the several Placement Agents set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Placement Agent
or the Company or any of its or their partners, officers or directors or any controlling person, as the case may be, and, anything
herein to the contrary notwithstanding, will survive delivery of and payment for the Units sold hereunder and any termination of
this Agreement.

 

Section 14.                
Notices. All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and
confirmed to the parties hereto as follows:

 

	If to the Placement Agents:	Jefferies LLC
	 	520 Madison Avenue
	 	New York, New York 10022
	 	Facsimile:  (646) 619-4437
	 	Attention:  General Counsel
	 	 
	 	A.G.P./Alliance Global Partners
	 	590 Madison Avenue, 36th Floor
	 	New York, New York 10022
	 	Attention:  Thomas J. Higgins

 

	with a copy to:	Goodwin Procter LLP
	 	601 Marshall Street
	 	Redwood City, CA 94063
	 	Facsimile:  (650) 752-3139
	 	Attention:  Bradley C. Weber

 

	If to the Company:	KushCo Holdings, Inc.
	 	6261 Katella Avenue, Suite 250
	 	Cypress, California 90630
	 	Email: arun.kurichety@kushco.com
	 	Attention: Arun Kurichety

 

	with a copy to:	Reed Smith LLP
	 	599 Lexington Avenue, 26th Floor
	 	New York, New York 10022
	 	Facsimile:  (212) 521-5450
	 	Attention:  Aron Izower and Marc D. Hauser

 

Any party hereto may
change the address for receipt of communications by giving written notice to the others.

 

    	 	25	 

     

    

 

Section 15.                
Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto, and to
the benefit of the affiliates, directors, officers, employees, agents and controlling persons referred to in Section 9 and
Section 10, and in each case their respective successors, and no other person will have any right or obligation hereunder.
The term “successors” shall not include any purchaser of the Units as such from any of the Placement Agents
merely by reason of such purchase.

 

Section 16.                 Partial
Unenforceability. The invalidity or unenforceability of any section, paragraph or provision of this Agreement shall not affect
the validity or enforceability of any other section, paragraph or provision hereof. If any section, paragraph or provision of
this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes
(and only such minor changes) as are necessary to make it valid and enforceable.

 

Section 17.                
Recognition of the U.S. Special Resolution Regimes.

 

(a)               
In the event that any Placement Agent that is a Covered Entity becomes subject to a proceeding under a U.S. Special
Resolution Regime, the transfer from such Placement Agent of this Agreement, and any interest and obligation in or under this Agreement,
will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement,
and any such interest and obligation, were governed by the laws of the United States or a state of the United States.

 

(b)               
In the event that any Placement Agent that is a Covered Entity or a BHC Act Affiliate of such Placement Agent
becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised
against such Placement Agent are permitted to be exercised to no greater extent than such Default Rights could be exercised under
the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.

 

For purposes of this Section 17, (A) “BHC
Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance
with, 12 U.S.C. § 1841(k); (B) “Covered Entity” means any of the following: (i) a “covered
entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered
bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered
FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b); (C) “Default
Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§
252.81, 47.2 or 382.1, as applicable; and (D) “U.S. Special Resolution Regime” means each
of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank
Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.

 

Section 18.                
Governing Law Provisions. This Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York applicable to agreements made and to be performed in such state. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated hereby (“Related Proceedings”)
may be instituted in the federal courts of the United States of America located in the Borough of Manhattan in the City of New York
or the courts of the State of New York in each case located in the Borough of Manhattan in the City of New York (collectively,
the “Specified Courts”), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment of any such court (a “Related Judgment”), as to which
such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. Service of any process, summons, notice
or document by mail to such party’s address set forth above shall be effective service of process for any suit, action or
other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue
of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead
or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient
forum.

 

Section 19.                
General Provisions. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes
all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject
matter hereof. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless
in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by
each party whom the condition is meant to benefit. The section headings herein are for the convenience of the parties only and
shall not affect the construction or interpretation of this Agreement.

 

    	 	26	 

     

    

 

Each of the parties
hereto acknowledges that it is a sophisticated business person who was adequately represented by counsel during negotiations regarding
the provisions hereof, including, without limitation, the indemnification provisions of Section 9 and the contribution provisions
of Section 10, and is fully informed regarding said provisions. Each of the parties hereto further acknowledges that the provisions
of Section 9 and Section 10 hereof fairly allocate the risks in light of the ability of the parties to investigate the
Company, its affairs and its business in order to assure that adequate disclosure has been made in the Registration Statement,
the Time of Sale Prospectus, each free writing prospectus and the Prospectus (and any amendments and supplements to the foregoing),
as contemplated by the Securities Act and the Exchange Act.

 

[signature pages follow]

 

    	 	27	 

     

    

 

 

If the foregoing is
in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed copies hereof, whereupon
this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.

 

 

		Very truly yours,
	 	 	 
		KUSHCO HOLDINGS, INC.
	 	 	 
		By:	/s/ Nicholas Kovacevich
	 	 	Name: Nicholas Kovacevich
	 	 	Title: Chairman and Chief Executive Officer

 

The foregoing Placement
Agency Agreement is hereby confirmed and accepted by the Placement Agents in New York, New York as of the date first
above written.

 

JEFFERIES LLC

A.G.P./ALLIANCE GLOBAL PARTNERS

Acting individually and as Placement Agents

as named in the attached Schedule A.

 

JEFFERIES LLC

 

		By:	/s/ Will Pittman	 
	 	 	Name: Will
Pittman	 
	 	 	Title:
Managing Director	 

 

A.G.P./ALLIANCE GLOBAL PARTNERS

 

		By:	/s/
                                                                                                                 Thomas J. Higgins	 
	 	 	Name: Thomas J. Higgins	 
	 	 	Title:
Managing Director	 

 

    	 	28	 

     

    

 

Schedule A

 

Placement Agents

Jefferies LLC

A.G.P./Alliance Global Partners

 

    	 

     

    

 

Schedule B-1

 

Free Writing Prospectuses Included in
the Time of Sale Prospectus

 

None.

 

    	 

     

    

 

Schedule B-2

 

Pricing Information Included in the Time
of Sale Prospectus

 

	
        Composition of Each Unit:

         

         
	
        1 share of Common Stock

        and 1 Warrant
to purchase

        0.5 shares of Common Stock

        

	Exercise Price of Warrant:	$2.25
	Term of Warrant:	
        Five years

	Price per Unit:	
        $1.75

	Number of Units being sold by the Company:	17,197,570
	Placement Fee:	7% of the gross proceeds

 

    	 

     

    

 

Exhibit A

 

Form of Securities Purchase Agreement

 

    	 	A-1	 

     

    

 

Exhibit B

 

Form of Warrant

 

    	 	B-1	 

     

    

 

Exhibit C-1

 

Form of Opinion of Company Counsel

 

    	 

     

    

 

Exhibit C-2

 

Form of Opinion of Company Nevada Counsel

 

    	 

     

    

 

Exhibit C-3

 

Form of Opinion of Company General Counsel

 

    	 

     

    

 

Exhibit D

 

Lock-up Agreement

 

    	 	D-1	 

     

    

 

Exhibit E

 

Directors and Executive Officers

Signing Lock-up Agreement

 

	
        Name

         
	Title
	
        Nicholas Kovacevich

         
	Chairman and Chief Executive Officer
	
        Christopher Tedford

         
	Chief Financial Officer
	Rodrigo De Oliveira	
        Chief Operating Officer

         

	Jason Vegotsky	
        Chief Revenue Officer

         

	
        Eric Baum

         
	Director
	
        Barbara Goodstein

         
	Director
	
        Donald Hunter

         
	Director
	
        Dallas Imbimbo

         
	Director

 

    	 	E-1

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